tag:blogger.com,1999:blog-35911867844565191392024-03-06T08:25:54.512+00:00Economics of ImperialismAnalysis of how the world economy worksTony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.comBlogger286125tag:blogger.com,1999:blog-3591186784456519139.post-26425372970608059482022-09-05T10:22:00.009+01:002023-12-10T10:51:46.552+00:00Russia, China, BRICS, World Economy<div><p class="MsoNormal" style="margin-bottom: 6pt;">Rich countries run the world
economy. The G7 – the US, UK, Germany, France,
Italy, Japan and Canada – directly manage all major international bodies or
greatly influence how these work. In the process, they set the terms for
international trade and investment. Any country that disobeys their US-led
‘rules-based order’ is faced with sanctions, economic isolation and military
threats. But the past six months have seen accelerating moves to build a
framework <i>outside</i> this web of domination. This article assesses those
building blocks for a new world economy.</p><p class="MsoNormal" style="margin-bottom: 6pt;"><!--[if gte mso 9]><xml>
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<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">1. Introduction: BRICS momentum</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">The BRICS acronym represents
Brazil, Russia, India, China and South Africa. They are <i>not</i> in the rich G7,
but account for some 40% of the world’s population compared to the G7’s 10%.
Each has a different political stance, but they have a common interest in
cooperating for national economic development. A BRIC country group was set up
in 2006; South Africa joined the original four in 2011. Subsequent years saw
little progress in cooperation. Instead, it was China that pressed ahead,
through its Belt and Road Initiative, an infrastructure, transport, trading and
investment project that came to include more than 140 countries.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">One reason for the BRICS’
previous lack of progress was the elections of Prime Minister Modi in India and
President Bolsonaro in Brazil that helped the US fuel suspicion in those
countries about China. Another was Russia’s earlier stance, when it saw more
immediate benefits from trying to expand trade and investment links with the
countries of western Europe. Yet, in the wake of Russia’s invasion of Ukraine
and multiple sanctions against Russia from the Western powers, the BRICS
project has sprung back into life! Several other countries now line up to join
it.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Why is this? Why would a country
risk any dealings with Russia and face the disapproval of, even sanctions from,
the US and Europe? It looks like an odd thing to do only if one follows the
Western mainstream media. Contrary to Western propaganda about universal
condemnation by the ‘international community’, sanctions against Russia have <i>not</i>
been followed by countries with 85% of the world’s population!<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
The following chart gives a geographical picture of the sanctioners: none in
Africa, none in Latin America (apart from a few small islands) and very few in
Asia. Those decisions might rest on different reasons, but it is undeniable
that many countries have a less than happy memory of Western escapades on their
territories. More than a few recognise the support that Russia has given them
in the past. That is quite apart from any knowledge they have – likely more
than is common in Western societies – of the provocations that led to Russia’s
invasion of Ukraine.<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"><b>The So-Called ‘International
Community’ Sanctioning Russia</b></h3>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix783ocEdt9rCJi4pmZgS-THQepVOHX1KuH0HZdtiRhz9NvKxqTo2W180YMkSbTyM1L_liheY4E-HdSeHOXBUpn892rmsP5TYBCF4J8xl0RW1drXYrc2R6119w7IqYQSPKTqHwGU2XGttYOnEoGvVe_gf1abXwhUAoojx6gEyBIlfQrIuL4HgSaPS6/s1629/1.%20Sanctions%20on%20Russia,%20world%20map,%2011Apr2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="797" data-original-width="1629" height="314" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix783ocEdt9rCJi4pmZgS-THQepVOHX1KuH0HZdtiRhz9NvKxqTo2W180YMkSbTyM1L_liheY4E-HdSeHOXBUpn892rmsP5TYBCF4J8xl0RW1drXYrc2R6119w7IqYQSPKTqHwGU2XGttYOnEoGvVe_gf1abXwhUAoojx6gEyBIlfQrIuL4HgSaPS6/w640-h314/1.%20Sanctions%20on%20Russia,%20world%20map,%2011Apr2022.JPG" width="640" /></a></div><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The lack of reality in the
West’s notion of an ‘international community’ united against Russia was also
shown in July this year, when Russia’s foreign minister Sergei Lavrov received
a warm reception from his Arab League counterparts in Egypt. He later met
representatives of the African Union in Ethiopia and went on a tour of several
other countries.<a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This review starts by examining
some of the key resources in the BRICS countries, together with Argentina,
Egypt, Iran, Saudi Arabia and Turkey, other potential BRICS members. These
additional candidates underline how the BRICS grouping is not an ideological
bloc, but a pragmatic alliance. They have certainly <i>not</i> decided to end
all relations with the Western powers, but they have seen the limitations these
have for their own development – most evidently in the case of Russia, and to a
lesser extent also China – given the sanctions regimes imposed by the West.
Furthermore, the BRICS are increasingly allied with other political-economic
groups outside the Western sphere of influence, as will be detailed.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">BRICS and other allied countries
are not the only, and may not even be the main ones, that produce key
resources. A feature of the world economy, and a progressive one, is that
countries trade their resources and provide what others may need but do not
have. But this trade is greatly impacted by Western sanctions, especially from
the US, and – often in line with US policy – also the UK and the European Union
countries. So it also critical <i>where</i> things are produced, and what
economic or political ties exist.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">After noting some basic
products, food and energy, the review covers a wide range of other metals and
materials, highlighting the ones that are mainly produced in the expanding
BRICS group. There follows a brief assessment of technology, the growing
transport, political and trade links, and lastly an overview of the financial
relationships being established between some key groups of non-Western
countries.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">If these countries cooperate,
then as a group they can produce more or less anything they need. <i>They do
not have to rely on being permitted to operate by the Western powers</i> and
can be in a position to conduct business outside the usual spheres of bullying,
via sanctions or other aspects of the dominant world order.</p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">2. Food</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;"><span class="d2edcug0hpfvmrgzqv66sw1bc1et5uqllr9zc1uhjq4qci2qa3bd9o3vb1v8xokwoo9gr5id">Countries
aim to produce food for their citizens, if they can, so China and India with
big populations are also big producers. Otherwise countries must depend upon
what may be an insecure supply from others. Climate conditions and landscape
have a big effect on what can actually be produced, and the volume potentially
exported, which also affects the type of food a population normally eats. Next
is a snapshot of the production of wheat, corn and rice, together with the
populations of the selected countries. These are the most important staple food
items for majority of people on the planet, although people do ‘not live by
bread alone’.</span><a href="#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a><span class="d2edcug0hpfvmrgzqv66sw1bc1et5uqllr9zc1uhjq4qci2qa3bd9o3vb1v8xokwoo9gr5id"></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"></p>(Updated for BRICS-11, if Argentina actually joins!)</div><div> </div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOK5i6GFLywzadhhKEbSiKt7GdbK1rY1wRM5fhn0PVNGihLf-jgp9L48WhkPiXioJjR2aJKznPDh9on9Q8kaoO43XiKhCIZorwIapY6_XP6TznC_lz9V_ZGS7Ih82Fzb776bgni1LYVGUFxduRA44XkM3LyDb3sJOyM0hHk6ZtLNswwbDlx6jpIFMVWBc/s762/2a.%20BRICS,%20etc,%20grains%20production%202021,%20update%20BRICS-11,%20Dec2023.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="762" data-original-width="715" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOK5i6GFLywzadhhKEbSiKt7GdbK1rY1wRM5fhn0PVNGihLf-jgp9L48WhkPiXioJjR2aJKznPDh9on9Q8kaoO43XiKhCIZorwIapY6_XP6TznC_lz9V_ZGS7Ih82Fzb776bgni1LYVGUFxduRA44XkM3LyDb3sJOyM0hHk6ZtLNswwbDlx6jpIFMVWBc/w600-h640/2a.%20BRICS,%20etc,%20grains%20production%202021,%20update%20BRICS-11,%20Dec2023.JPG" width="600" /></a></div><br /><div><br /></div><div style="text-align: center;">---</div><p></p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">3. Energy</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">A similar picture can be given
for energy output. <span class="d2edcug0hpfvmrgzqv66sw1bc1et5uqllr9zc1uhjq4qci2qa3bd9o3vb1v8xokwoo9gr5id">The
expanded BRICS group produces plenty of coal (mainly China), but a bit less oil
and gas as a share of the world total, while the US stands out as a major
energy producer. Note that China has greatly expanded, and is very big, in
solar, wind and hydroelectric ‘green’ energy, not just in fossil fuels.
However, such energy sources, though increasing rapidly, are only a minority of
China’s total energy supply, and this is the same for almost all other
countries.</span></p><p>(Updated for BRICS-11, if Argentina actually joins!)</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoW0VI1nzdZ-s0eBa_vIIH3VbaVrsOsihyphenhyphen4yDtsjvuNOavS7nxSgs7oNitz1MClcooAlZpgop0s7aia0WIrTn5j4wb8X5s478qEO-K9nLu7jn1u2GFyAQStR3iSabIveGJNCSGRCgiBc3iMWU9u3c91KU_rarHiEiq17qam33Rf6KArurIeXt0KgWyXug/s700/3a.%20BRICS,%20etc,%20energy%20production%202021,%20update%20for%20BRICS-11,%20no%20Ethiopia%20data,%20Dec2023.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="591" data-original-width="700" height="540" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoW0VI1nzdZ-s0eBa_vIIH3VbaVrsOsihyphenhyphen4yDtsjvuNOavS7nxSgs7oNitz1MClcooAlZpgop0s7aia0WIrTn5j4wb8X5s478qEO-K9nLu7jn1u2GFyAQStR3iSabIveGJNCSGRCgiBc3iMWU9u3c91KU_rarHiEiq17qam33Rf6KArurIeXt0KgWyXug/w640-h540/3a.%20BRICS,%20etc,%20energy%20production%202021,%20update%20for%20BRICS-11,%20no%20Ethiopia%20data,%20Dec2023.JPG" width="640" /></a></div><br /><p><br /> </p><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Concerns about climate change
mean that coal, oil and gas are looked upon in a different light these days!
However, they remain by far the key source of energy for most countries: 82% of
the world’s total energy consumption in 2021. Nuclear energy accounted for only
4% of world consumption; hydroelectricity and renewable energy sources made up
about 7% each. Renewables are growing relatively quickly, however, as new
capacity is installed for solar, wind and hydroelectric power generation.
China’s prominence in the main areas of ‘green’ energy is shown in the
following images.<a href="#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">For solar energy, China’s share
of the global total is 36%:</p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAuKY3QxZjBKx1HDc7a1Wv1Y3h4y3Ip1NmoftH2E-JQCGmwBULuwrLWt9QWddwdOjerkT5fNhJosc59lOXN-7IGrTCxJXZl3ltTHoHYRBvn-MDdSYeWOfTZhcSeOv3_7566QLxXUwTDOCodB4g_t_7e7yPv_ZD3nAKcTBjRWTsYpXOetARy2bPbhmY/s531/4.%20Solar%20energy%20capacity%20end-2021,%20BP%20Stats%20review,%20Jun2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="519" data-original-width="531" height="391" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAuKY3QxZjBKx1HDc7a1Wv1Y3h4y3Ip1NmoftH2E-JQCGmwBULuwrLWt9QWddwdOjerkT5fNhJosc59lOXN-7IGrTCxJXZl3ltTHoHYRBvn-MDdSYeWOfTZhcSeOv3_7566QLxXUwTDOCodB4g_t_7e7yPv_ZD3nAKcTBjRWTsYpXOetARy2bPbhmY/w400-h391/4.%20Solar%20energy%20capacity%20end-2021,%20BP%20Stats%20review,%20Jun2022.JPG" width="400" /></a></div><br /><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">For wind energy, it is 40%:</p><p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkcodw3Ln-GbK8S92Fr4bo14g18ALX6msOgQKq3VlsjUMeuKZAp0w-9iNTuHnM_8yPSxLySUVer0zuwCWdo6jHzXrCHIvxS8FbE_kyDfN2RscxjjdGRgUYKG8or86zYgOYnY9MaqGxAJV7zJEjhpSQIs8MBbkxTMk4BkytdeXJpEKBMTB1zjFjt_n0/s551/5.%20Wind%20energy%20capacity%20end-2021,%20BP%20Stats%20review,%20Jun2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="525" data-original-width="551" height="381" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkcodw3Ln-GbK8S92Fr4bo14g18ALX6msOgQKq3VlsjUMeuKZAp0w-9iNTuHnM_8yPSxLySUVer0zuwCWdo6jHzXrCHIvxS8FbE_kyDfN2RscxjjdGRgUYKG8or86zYgOYnY9MaqGxAJV7zJEjhpSQIs8MBbkxTMk4BkytdeXJpEKBMTB1zjFjt_n0/w400-h381/5.%20Wind%20energy%20capacity%20end-2021,%20BP%20Stats%20review,%20Jun2022.JPG" width="400" /></a></div><br /> <p></p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">For hydroelectricity it is 30%:</p><p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZaMJqvwcBL7IRlYwwbK4tooQLF10XMXnkLXBnhzsw2wrv-hEjvAemKBvuyGWmgjoPN-s6tsTNvZHtdHOvoM7TJUaQLPdngWsuZgj2ZkeXxVa_6URJcZab2VGXudom-W62_mfBDJTOCgg3F3K6Z-xtD2Gwm22-2FkewNimMFGCM8w4d1vACvcsFIus/s581/6.%20Hydroelectricity%20generation%202021,%20BP%20Stats%20review,%20Jun2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="581" height="368" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZaMJqvwcBL7IRlYwwbK4tooQLF10XMXnkLXBnhzsw2wrv-hEjvAemKBvuyGWmgjoPN-s6tsTNvZHtdHOvoM7TJUaQLPdngWsuZgj2ZkeXxVa_6URJcZab2VGXudom-W62_mfBDJTOCgg3F3K6Z-xtD2Gwm22-2FkewNimMFGCM8w4d1vACvcsFIus/w400-h368/6.%20Hydroelectricity%20generation%202021,%20BP%20Stats%20review,%20Jun2022.JPG" width="400" /></a></div><br /> <p></p><p class="MsoNormal" style="margin-bottom: 6pt;">In addition to this ‘green
energy’ capacity, China is also very prominent in the <i>global supply chain</i>
for these products, as the next chart shows:<a href="#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a></p><p class="MsoNormal" style="margin-bottom: 6pt;"><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"> </span></span></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCWD3Ai2NlQ9FCZWUSGAcNW-D0WIK9feFhjzvgZYkoFUTMGp2w2bv6bxASt-lJApHhkcnF1WQDM8_bpr_YvRQlKxyDzPDphl51mzRtrVybSEOoLOJKiRqi0KJFOVrZJQ9RqCfF-p9p6VTuViOG8NoZN4amMr4zk36ajqdoe7x2y_NoOV3019C46eSn/s639/7.%20China%20dominates%20Green%20energy%20suply-chain,%20Harvard.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="373" data-original-width="639" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCWD3Ai2NlQ9FCZWUSGAcNW-D0WIK9feFhjzvgZYkoFUTMGp2w2bv6bxASt-lJApHhkcnF1WQDM8_bpr_YvRQlKxyDzPDphl51mzRtrVybSEOoLOJKiRqi0KJFOVrZJQ9RqCfF-p9p6VTuViOG8NoZN4amMr4zk36ajqdoe7x2y_NoOV3019C46eSn/w640-h374/7.%20China%20dominates%20Green%20energy%20suply-chain,%20Harvard.JPG" width="640" /></a></div><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">4. Metals, minerals, rare earths</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">A country might have very big
reserves of a raw material. If it has, then can it process the material, or
produce what is needed for an end-product, let alone being able to make the
end-product itself? But if one notes only the refining or end-product
manufacturing, where do the basic material inputs come from? Can the country
producing at <i>any</i> stage get access to the technology or machinery
required? The following review covers selected raw materials for which there
are data for a wide range of countries, and it notes the relevant stages of
production.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There is a vast range of metals,
minerals and rare earths needed for making all kinds of items. Although in some
cases it might be possible to substitute one element for another, often the
existing technologies do not allow it. Furthermore, almost all products are
made with many inputs. For example, a mobile phone usually contains more than
50 elements – from copper, to lithium, nickel and zinc, to neodymium,
palladium, phosphorus and thulium.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Here I focus on where the BRICS
countries account for a large share of the world’s resources. The different
stages through which a raw material goes, from extraction to the refining and
manufacturing before it becomes (part of) a final product would need to be
taken into account to get the full picture. There are also multiple uses for
the products and by-products of different stages of the production process.
Furthermore, metals are often used in combination with other metals or chemical
elements (alloys, compounds, coatings) to improve their strength, resistance to
corrosion, etc. This review sidesteps such a complex web of links and aims only
to give an outline. Items are considered in alphabetical order, with a note of
their key uses.<a href="#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Bauxite, Alumina, Aluminium: </b>Bauxite
is the ore that is mined, processed into alumina and then refined into
aluminium metal by smelting. Key uses of aluminium are for drinks cans,
aircraft and other transport vehicles, in the construction industry and in many
other areas, encouraged by its good strength and low density.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Around 32% of world bauxite
production comes from African countries, 28% from Australia and 22% from China.
For alumina, China produced 53% in 2021, Australia 15%, Brazil 8% and India 5%.
China was similarly prominent in aluminium smelter production, with 57% of the
world total. India and Russia had just under 6% each. So the BRICS countries
have an important share of these resources. Many countries have aluminium
smelters, but production is energy-intensive, and access to relatively cheap
energy is a key part of the economics here.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Cement</b> is an important
material for the construction industry and 2021 saw 4,400 million tonnes
produced worldwide. China accounted for 57% of that, reflecting its massive
construction programmes. India, next in line, produced nearly 8%.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Copper</b> is essential for
electrical wiring and motors, and is widely used in plumbing and industrial
machinery. Chile is the world’s biggest mine producer of copper, but China had
the biggest share of world <i>refinery</i> production in 2021, at 38%, ten
times that of the US. Russia’s refinery output was just below the latter’s.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Australia is by far the leading
mine producer of <b>iron ore</b>, used to make steel, with 35% of the world
total. The five BRICS countries as a group nevertheless have a 45% share between
them, with China and Brazil the biggest of the five. In terms of <b>steel</b>
output, China accounted for nearly ten times more than any other country in
2021, producing for 58% of the world total. Other BRICS countries had a further
12%.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Lithium </b>is a key element,
especially for the production of lithium-ion batteries used in mobile phones,
other devices, and in electric vehicles. It is the least dense of all the
metals and can give batteries a high power-to-weight ratio. One survey cites
Australia as having the biggest lithium mine production in 2021 with 55,400
tonnes out of a world total of 106,000. Chile was next with 26,000 tonnes,
China third with 14,000 and Argentina fourth at 6,000.<a href="#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Palladium </b>and<b> platinum</b>
can often be substituted for one another in many industrial uses, such as
catalytic converters in auto engines and these metals are also used to remove
toxic emissions from vehicle exhaust fumes. South Africa has the largest mine
production of each metal; 40% of world output of palladium and 72% of platinum.
Russia is the second biggest producer, with 37% and 11%, respectively.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Rare earths</b> are a group
of 17 soft, heavy metals. The ‘rare’ term refers to how they are not often
found in economically exploitable deposits. These elements are used in batteries,
magnets, lasers, lenses and X-ray machines, among other things, and have been
increasingly used with the growth of modern technologies. Much to the chagrin
of the Western powers, China accounts for the bulk of world mine production of
rare earths, with 60% of the total. Russia and India each have another 1%. The
US has 15% of total rare earth mine production; Australia 8%.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Titanium</b> is often used in
alloys to produce strong, corrosion-resistant, lightweight materials for jet
engines, industrial processes and many military uses. China produces about half
the world supply of titanium sponge, and Russia about 10%. Russia has been a
major supplier of titanium to Europe’s aerospace industry.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b>Tungsten</b> has a high
melting point, high density and hardness that can make it a useful alloy
material, especially for industrial and military uses. In 2021, China accounted
for 84% of world mine production of tungsten, Russia another 3%.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">If a group of countries has a
good supply of food, energy, metals and raw materials, that is not much good if
there is little ability to transform these into the relevant products, or to
transport these products between the different countries. So the next two
sections look briefly at technology and transport links.</p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">5. Technology</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">A longstanding view of
mainstream Western economics is that the rich countries are rich because they
have better technology and higher productivity, and so higher living standards,
than poor countries. Of course, this belief overlooks how much of the world’s
manufacturing industry – including all the latest technology – has migrated to
the ‘cheap labour’ countries in recent decades. While many of the main advances
in production and communications technology have originated in the rich Western
powers, they have often used these inventions/innovations as ‘intellectual
property’ that can be licensed to the countries that actually do the producing.
For example, in 2021, the US had export revenues of $56.4bn for the licences to
use the outcomes of its research and development, and another $36.6bn for
licences to reproduce or distribute its computer software.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">These days, the rich countries
dominate production only in a few areas that can be more easily monopolised,
for example in specialist engineering and medical equipment or in
pharmaceuticals. So, for example, they will produce specialist steel output,
not the mass-produced items. Yet, this strategy tends to fail when other
countries also build up their own research and technology! The case of <b>semiconductor
production</b> is illustrative, showing that the US and Japan are important in
the first parts of the supply chain, but Taiwan and South Korea are critical,
and China also has a key position.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Much of the world supply of the
inputs for semiconductors comes from companies based in the US, with Japan and
the Netherlands having an important role too. Other countries, such as South
Korea and Taiwan, successfully developed their own industries. The latter were
helped by being favoured by Western imperialism as safe, controlled outposts,
and they were able to overcome what otherwise could have been significant trade
barriers.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">South Korea and Taiwan stand out
in semiconductor device manufacturing, foundries and design. But China’s Huawei
and SMIC also have an entry in the latter two areas. This is due to China’s
huge investments in modern technology, giving encouragement to local companies.
China still has to catch up with the leading global companies in all stages,
but that outcome is a likely prospect in coming years – ironically, spurred by
US sanctions aiming to hold back China and its key companies, particularly
Huawei.<a href="#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a></p><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtMT_XxDD1P1lQyZr8r1voCuw72sCyCnEtlhTL3E1J_hbe1JJQnXuN9Wzw13g74ABAxuExlfvI7KCRXxbCNKrNZgAid1GSO1NVRKI2mwNJyb8wT3DlKE1PVMhbOSwS4uirqHyrzcxupQW6tYbhlWf0XTPruMPDKuYGxsw_c0hZVZvOYJSxXAr7wLvO/s865/8.%20PIIE,%20Semiconductor%20process%20chain%20suppliers,%20Dec2020.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="865" data-original-width="638" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtMT_XxDD1P1lQyZr8r1voCuw72sCyCnEtlhTL3E1J_hbe1JJQnXuN9Wzw13g74ABAxuExlfvI7KCRXxbCNKrNZgAid1GSO1NVRKI2mwNJyb8wT3DlKE1PVMhbOSwS4uirqHyrzcxupQW6tYbhlWf0XTPruMPDKuYGxsw_c0hZVZvOYJSxXAr7wLvO/w472-h640/8.%20PIIE,%20Semiconductor%20process%20chain%20suppliers,%20Dec2020.JPG" width="472" /></a></div><br /><p class="MsoNormal" style="margin-bottom: 6pt;"><br /></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">One indication of the continued
prominence of China’s R&D comes from the record of patent applications
compiled by the World Intellectual Property Organization (WIPO). Although the
number of patents need not tally with the volume of significant inventions or
innovations, they will give an idea of what is going on. In 2020, patent
applications from China were by far the largest in the world, 2.5 times more
than from the US in second place, and five times more than from Japan in third
place. The top three areas for Chinese patents were in computer technology,
measurement, and electrical machinery, apparatus and energy. Other leading patent-applying
countries were the US, Japan, South Korea and Germany, each with a different
area of specialisation. India and Russia were also in the top 10.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"><b>Filing for Patents in 2020, Top 10 Countries<br /></b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhP9Gb0tivX957itU7gP_hk5qHc-39vHwKmnRfBecbP9P7cJ_5mUI651FJ04XDVwUFh1IQuWDcIxRu_J2DXkjaZz0d2tsnqUWlsKCYeNG3SUzgIuUavDjUmkdr7VRXZSDoqKjVreXZhSZXqxPtJz-QybPIZBNuszVpd3mMhJoD8TFBrK5YScFoD3CaK/s678/9.%20WIPO,%20Patent%20applications%202019-2020,%20Dec2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="678" data-original-width="621" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhP9Gb0tivX957itU7gP_hk5qHc-39vHwKmnRfBecbP9P7cJ_5mUI651FJ04XDVwUFh1IQuWDcIxRu_J2DXkjaZz0d2tsnqUWlsKCYeNG3SUzgIuUavDjUmkdr7VRXZSDoqKjVreXZhSZXqxPtJz-QybPIZBNuszVpd3mMhJoD8TFBrK5YScFoD3CaK/w366-h400/9.%20WIPO,%20Patent%20applications%202019-2020,%20Dec2021.JPG" width="366" /></a></div><br /> <p></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> <br /></p>Readers following technology
news will be familiar with China’s advances in 5G communications, in
which it is the world leader, in quantum computing and in artificial
intelligence. In each of these areas, the rich Western powers either no longer
have a leading position, or one that is diminishing rapidly.
<p class="MsoNormal" style="margin-bottom: 6pt;">For Russia, the longstanding
hostility from the West, plus Western sanctions, have led it to focus on
military and space technology as a means of defence, rather than on areas that
might pay off in producing industrial and consumer goods. So Russia has the
world’s first hypersonic missiles and, arguably, a lot of battlefield equipment
that is more advanced and with a greater capacity than that produced by NATO
countries. Following Gazprom’s trouble with getting Germany’s Siemens to repair
and replace turbines for the Nord Stream 1 gas pipeline, one report noted that <i>Iran</i>
was able to provide suitable alternative turbines.<a href="#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a></p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">6. Economic developments: BRI</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">China’s Belt and Road Initiative
(BRI) was launched in 2013. It is hugely ambitious and aims to develop ports,
shipping lanes, roads, railways, bridges and other infrastructure, including
power stations and high voltage electricity grids. The project is promoted and
largely funded by China, and its potential attracted 146 countries by the end of
2021. Rather than being confined to the Eurasian landmass, there are BRI member
countries in southern Asia, the Middle East, Africa and Latin America.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The next chart gives the BRI’s
geographical reach, and the year when a ‘Memorandum of Understanding’ was
signed by the countries concerned. There appears to be no <i>formal</i> signing
of an MoU on Russia’s part, so it is not included in this particular chart. But
there has evidently been much Russian economic cooperation with China, so
Russia is included in the BRI in a later image.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQLMhHuXEuv1jvwy9BzmrW9FkO7X8bLX_hfHHN2qICwag16Np-ntEoiUDjxfDBNOzpzMWWQI4ZpfheX_RGnPKzDMfBn-Zax8I0BKqLikHwUzYjkMLSzerDEuDqrQbSvOzubojHbFd8jnUAA6JA5V1hDJq4MXV34DgZsrDHIFPupn0miCQUterlg55H/s1021/10.%20BRI%20countries,%20end-2021,%20better%20image%20span.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="538" data-original-width="1021" height="338" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQLMhHuXEuv1jvwy9BzmrW9FkO7X8bLX_hfHHN2qICwag16Np-ntEoiUDjxfDBNOzpzMWWQI4ZpfheX_RGnPKzDMfBn-Zax8I0BKqLikHwUzYjkMLSzerDEuDqrQbSvOzubojHbFd8jnUAA6JA5V1hDJq4MXV34DgZsrDHIFPupn0miCQUterlg55H/w640-h338/10.%20BRI%20countries,%20end-2021,%20better%20image%20span.JPG" width="640" /></a></div><br /> <p></p><p class="MsoNormal" style="margin-bottom: 6pt;">In a pathetic attempt to counter
China’s BRI in June this year, the US proposed a ‘Partnership for Global
Infrastructure and Investment’ along with other G7 members. The supposed $600bn
plan was full of rhetoric and promises, but with few specifics and even less
cash actually being committed. The implicit fundamental condition for countries
to receive any funds from it was to sign up to the Western ‘rules-based order’!<a href="#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a>
Real life BRI-related infrastructure <i>projects</i> weigh far more heavily in
the minds of governments assessing development possibilities than such
rhetorical games. Here are some <i>recent</i> BRI projects:</p>
<ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">China has organised the building of dams to
generate hydroelectric power in <b>Laos</b>. These can also export
electricity, and can be used for expanding the railway system, such as the
China-Laos Railway, opened in December 2021.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Building of <b>Indonesia</b>’s first high speed
rail link between Jakarta and Bandung is near completion. Bullet trains
will be delivered in coming months, for the line to open in mid-2023.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">The road and rail Padma Bridge project was opened
in June 2022, and connects 21 areas in southern <b>Bangladesh</b>.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Many projects financed and built with considerable
help from China have been completed in African countries. In January 2022,
China announced support for the massive extension of <b>Kenya</b>’s
Mombasa-Nairobi railway to <b>Uganda</b>, <b>South Sudan</b>, and the <b>DR
Congo</b>. The railway will be linked to the Addis Ababa line, and then to
<b>Djibouti</b> and <b>Eritrea</b>.<a href="#_ftn12" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a></li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">In February 2022, <b>Argentina</b> and China signed
a deal whereby China will build an $8bn nuclear power plant, Atucha III.
This will be the biggest of Argentina’s nuclear plants, providing an
electrical output of 1,200 MW.</li></ul>
<p class="MsoNormal" style="margin-bottom: 6pt;">News coverage of the BRI
investments in the Western media always focuses on the supposedly exorbitant
costs, the reported bribery of corrupt politicians, and how they burden the
receiving economy with ‘unsustainable debt’. And yet, the schemes almost always
succeed in boosting local economic development. That media coverage makes no
attempt to measure the Chinese investments against the Western alternatives,
which are often no projects at all. Further, such reports ignore the Western
methods of exerting political and financial pressure to influence policy in
developing countries – via the IMF, the World Bank, or more directly through
bullying and bribery.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The Western complaints of
corruption, debt, etc, are usually just sour grapes, and are hardly specific to
China’s involvement. Such problems are often linked to widespread corruption in
the ruling government elites, as in <b>Sri</b> <b>Lanka</b>’s Hambantota
International Port project. Sri Lanka’s debt problems have little or nothing to
do with China: around 90% of Sri Lanka’s outstanding debt is to <i>Western</i>
banks, and is usually at much higher interest rates than those on China’s
loans.<a href="#_ftn13" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Finally, on the BRI, the
argument here is not that <i>only</i> China is financing economic development,
or that the countries concerned do not make efforts themselves. The point is
that China has clearly stood out as assisting such developments with large
scale finance on attractive terms – at least better than otherwise available –
and an ability to bring many projects to fruition. At a minimum, by its
potential involvement in such projects, China also creates an alternative to
what might be on offer from Western banks and corporations, and this gives
developing countries more bargaining power to get a better deal.</p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">7. Transport links: BRI, INSTC</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">If a group of cooperating
countries has most of the products it needs and the technology with which to
make them, then what about transport links between the countries concerned?
Countries bordering each other, or in close proximity, usually have road, rail
or sea connections, as well as by air. That these exist is nothing exceptional,
and may not indicate any formal alliance or significant economic ties. Yet
there are interesting, and growing, connections between many of the BRICS
members and <i>these are part of definite projects over the past decade</i>,
not links that have developed haphazardly over the past century and more. These
projects also encompass many countries outside the formal BRICS grouping, and
they form the skeleton around which a ‘non-Western’ economic body can be built,
especially, but not only, in the Eurasian region.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The following network map shows
a part of China’s BRI network, discussed in the previous section. It does not
show any extension into Latin America, but it does highlight some of the main
connections into Eurasia, Europe and East Africa. The BRI’s spread into Western
Europe has in recent years been very active – for example, the rail freight
line from Western China into Duisburg, Germany, the world’s largest inland port
with connections across Europe. However, the European connections could well be
brought into question if the EU countries continue their disastrous foreign
policy tie up with a US that is getting more aggressively anti-China!</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"><b>China’s Belt & Road
Initiative Network <a href="#_ftn14" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a></b></h3>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHypK3sys2B2TFs0_I-LfnXwTMQnTleXhujPL6aWoXGmtc7gjcvMRX4GXLEftRBsx0bf1vpyhXFXaTEDrBPXtl6YGm5_vo9Zvlkbo99Pl-Iu-ApPnVFEkmJ9d0Bl1a11p_dIxapOAXvHfvd1HZ_wbCDndz4iII_jVDPIVJDGmkQm1mKOSpN0mk0t_E/s837/11.%20China,%20Belt&Road,%20best%20one,%20Oct2019.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="506" data-original-width="837" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHypK3sys2B2TFs0_I-LfnXwTMQnTleXhujPL6aWoXGmtc7gjcvMRX4GXLEftRBsx0bf1vpyhXFXaTEDrBPXtl6YGm5_vo9Zvlkbo99Pl-Iu-ApPnVFEkmJ9d0Bl1a11p_dIxapOAXvHfvd1HZ_wbCDndz4iII_jVDPIVJDGmkQm1mKOSpN0mk0t_E/w640-h386/11.%20China,%20Belt&Road,%20best%20one,%20Oct2019.JPG" width="640" /></a></div><br /><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There is also a separate, but
complementary, transport network, the International North South Transport
Corridor (INSTC) promoted by Russia. The founding members of the INSTC in
September 2000 were Russia, India and Iran. The project now includes a number
of other Eurasian countries, and it has invested in many road, rail and sea
transport links, shown in the image below.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Compared to the BRI, the INSTC
has a more definite Eurasian bias, and links to other regional initiatives.
Great efforts have been made to streamline and reduce costs. Such moves entail
sorting out customs borders, the taxation on trade, freight costs and
connecting up more efficiently the potential switches from road, to rail, to
ship along the many routes – for example around or over the Caspian Sea, or
from north-west Russia through Iran and then via the Arabian Sea to Mumbai,
India. The potential for this transport network to have a positive impact on
economic development in the countries involved should be clear.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">By including Iran, like the BRI,
the INSTC network indicates how far removed it is from the sanctions regimes of
the Western powers! Most of the transport routes do not traverse sea lanes at
risk of Western control, so this also offers an extra measure for their
economic security.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"><b>The INSTC and the Eurasian
Transport Framework <a href="#_ftn15" name="_ftnref15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[15]</span></span></a></b></h3><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnqmV6qBL9WlPdVvnB1gdpdDl81t_eDPT-8tdH1jsRFj4ZpxiTD9kaqXylRYQVO04ZY48DHO1Hxl5Nc1NL3QrrTp27EYz3_MrENe6nDqTxVpMsyMz7tqV2_jU9jCj_mRKdcOauIbTvP3kta4-lr8LCVTUHoxhby5G6g2VKlJXjtnp8CP2HiMoky6cV/s892/12.%20Eurasian%20transport%20network,%20Eurasian%20Devt%20Bank,%202021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="753" data-original-width="892" height="540" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnqmV6qBL9WlPdVvnB1gdpdDl81t_eDPT-8tdH1jsRFj4ZpxiTD9kaqXylRYQVO04ZY48DHO1Hxl5Nc1NL3QrrTp27EYz3_MrENe6nDqTxVpMsyMz7tqV2_jU9jCj_mRKdcOauIbTvP3kta4-lr8LCVTUHoxhby5G6g2VKlJXjtnp8CP2HiMoky6cV/w640-h540/12.%20Eurasian%20transport%20network,%20Eurasian%20Devt%20Bank,%202021.JPG" width="640" /></a><p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"></p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">8. Political links: SCO, EAEU, CSTO</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">There are many conflicting
aspects of the political alliances between countries in these projects. For
example, India is a member of the US-led ‘Quadrilateral Security Dialogue’, usually
referred to as the Quad, a strategic security format composed of Australia,
India, Japan and the US that is aimed at China. Similarly, Turkey, that wants
to join the BRICS group, is also a NATO member, the US-led organisation that
militarily backs Ukraine against Russia. Many others could be noted, not least
Saudi Arabia’s opposition to Iran,<a href="#_ftn16" name="_ftnref16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[16]</span></span></a>
and they would not seem to bode well for expanding BRICS, let alone for the
other political groupings. Yet, the momentum behind the recent changes makes
one draw a different conclusion.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">That momentum is based on an
effort by these countries to generate economic development. In the past, that
was possible for some countries seen by major Western powers as key for
sustaining their hold on the world economy. For example, consider the ‘Asian
tigers’ of the 1960s to the 1980s – Hong Kong, Singapore, South Korea and
Taiwan. The first two were favoured financial and trading posts of British
imperialism, the second two were given political-economic concessions by US imperialism
that helped boost their national economies. In the latter case, those countries
were also valued by the US as counter weights versus North Korea and China.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">In more recent years, a number
of other economies, particularly in Asia, have also grown. But often this has
been in a one-sided fashion, where they are very dependent, low-wage sites for
the offshore production of cheap goods for Western consumers. The limitations
of that mode of ‘development’ are now more clear for many countries, and they want
something better. China’s model looks a much more attractive option! It is more
attractive still because it is offered with no interference in a country’s
internal politics. It is also part of a large group of countries establishing
wider cooperation outside the Western-prescribed channels.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>The Shanghai Cooperation
Organisation</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">The Shanghai Cooperation
Organisation (SCO) is a more definitive group of countries than the BRICS, or
those in the China-led BRI. The SCO was established in 2001 from an earlier 1996
group that had focused on sorting out border tensions between them. India and
Pakistan became full members in June 2017, bringing the current total of eight
countries with this status. The SCO now has broad, clearly stated political and
economic aims:<a href="#_ftn17" name="_ftnref17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[17]</span></span></a></p>
<ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l2 level1 lfo2; tab-stops: list 36.0pt;">strengthening mutual trust and neighbourliness
among the member states;</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l2 level1 lfo2; tab-stops: list 36.0pt;">promoting their effective cooperation in politics,
trade, the economy, research, technology and culture, as well as in
education, energy, transport, tourism, environmental protection, and other
areas;</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l2 level1 lfo2; tab-stops: list 36.0pt;">making joint efforts to maintain and ensure peace,
security and stability in the region;</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l2 level1 lfo2; tab-stops: list 36.0pt;">moving towards the establishment of a democratic,
fair and rational new international political and economic order.</li></ul>
<p class="MsoNormal" style="margin-bottom: 6pt;">The evidence shows that one
cannot dismiss these objectives as just abstract, empty homilies. They want to
get comprehensive areas of cooperation between the member countries, and the
objective is to build a new international system.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Reports of SCO membership are
often not clear, partly because there are graduated steps before becoming a
full member, first as a Dialogue Partner, then as an Observer, then as a
Member. The next chart is based on the latest information on the SCO’s website,
and also includes items from recent news reports that Syria, Egypt, Saudi
Arabia, Qatar and the United Arab Emirates want to sign up.<a href="#_ftn18" name="_ftnref18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[18]</span></span></a>
If that happens, it is a major blow to US and UK influence in the Gulf and
Middle East region. Iran is also expected to move to become a full member in
September 2023. Note that a US application to join the SCO as an observer was
rejected in 2005, and it is not likely to be repeated.<a href="#_ftn19" name="_ftnref19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[19]</span></span></a></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;"><b>Shanghai Cooperation
Organisation: Members & Applicants<br /></b></h3><h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b> </b></h3>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-ZbC0utXYyla6El6T_GB_y6MiKtdw70v5lQnMNGzixi_gXycm2uJy2Gvyl7N0_1eqjej6cJXlhjpMLT26oJkqccXp1dZn7D5g25-uHcI8tUqoO9lXJYc1zOhLC5hP9DGVdMthw7Dkmbi0J2OpKbzTwkrnSvqWKb0rzC40vaCJXvSgxgPfGvEjE5lo/s1318/13.%20Shangai%20Cooperation%20Org%20status,%20Mem,%20Obs,%20Dial,%20Apply%20&%20Legend,%208Aug2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="671" data-original-width="1318" height="326" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-ZbC0utXYyla6El6T_GB_y6MiKtdw70v5lQnMNGzixi_gXycm2uJy2Gvyl7N0_1eqjej6cJXlhjpMLT26oJkqccXp1dZn7D5g25-uHcI8tUqoO9lXJYc1zOhLC5hP9DGVdMthw7Dkmbi0J2OpKbzTwkrnSvqWKb0rzC40vaCJXvSgxgPfGvEjE5lo/w640-h326/13.%20Shangai%20Cooperation%20Org%20status,%20Mem,%20Obs,%20Dial,%20Apply%20&%20Legend,%208Aug2022.JPG" width="640" /></a></div><br /><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There are other political groups
in the Eurasian region, including the Eurasian Economic Union (EAEU) and the
Collective Security Treaty Organisation (CSTO). Membership of each consists of
Russia, plus five or six ex-Soviet states and some other observers. These
groups do not have much pulling power for countries outside the former Soviet
bloc, and the economic and political ties between member countries are also
somewhat fragile. One member of the EAEU, Kakazhstan, was concerned that it
would have to follow Western sanctions against Russia or risk becoming
sanctioned itself and be cut off from Western markets and inward investment.<a href="#_ftn20" name="_ftnref20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[20]</span></span></a>
Three members of the CSTO also took part in a US-led military exercise in early
August this year in Dushanbe, Tajikistan!<a href="#_ftn21" name="_ftnref21" style="mso-footnote-id: ftn21;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[21]</span></span></a>
Nevertheless, the EAEU and CSTO have overlapping memberships, and many shared objectives,
with the SCO and the BRI, and with the INSTC transport network noted before.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This can be a confusing set of
acronyms for readers who have not followed these developments. To make the
country links clearer, focusing just on the BRICS countries, the BRI and the
SCO, the next chart shows how far the memberships overlap for 45 countries.
(The chart does not include all 146 BRI members, and misses out many in Latin
America and Africa.)</p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDT0-01MTcz5SLRJtQNW-EXIxfhZ5FSztPsg7vFDowTLBFAuYxnK_M8GnEcjLe4VcIeh2kWq6dIL6-3hu0pg4UBHaW2slWEShIoir0J0QqUALp1y9ibG-jHOhVm6qr5zoe4POhJPYlZere6v81VK48ZsgUb-9ppy5Evh2QvSBwaXTrUGRY5aaUdO3e/s880/14.%20Eurasia,%20BRICS%20&%20SCO%20&%20part%20BRI,%20update3,%202Sep2022.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="789" data-original-width="880" height="574" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDT0-01MTcz5SLRJtQNW-EXIxfhZ5FSztPsg7vFDowTLBFAuYxnK_M8GnEcjLe4VcIeh2kWq6dIL6-3hu0pg4UBHaW2slWEShIoir0J0QqUALp1y9ibG-jHOhVm6qr5zoe4POhJPYlZere6v81VK48ZsgUb-9ppy5Evh2QvSBwaXTrUGRY5aaUdO3e/w640-h574/14.%20Eurasia,%20BRICS%20&%20SCO%20&%20part%20BRI,%20update3,%202Sep2022.JPG" width="640" /></a></p>
<p align="center" class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">9. Sanctions, trade, finance, US dollar,
alternatives</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">Recently, non-Western countries
have made make their plans for closer, direct economic cooperation more of a
reality, not a vague hope for the future. Much of the explicit political
momentum behind this has come from Russia, but China has also been heavily
involved, given its extensive economic ties. Russia had already responded to
previous Western sanctions and began to develop ways of not relying upon
business operations that could easily be closed off by the US and its allies.
Following the new, extraordinarily wide range of sanctions imposed after
Russia’s invasion of Ukraine, other countries have also woken up to seek
alternatives.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There are two main ways the West
imposes sanctions,<a href="#_ftn22" name="_ftnref22" style="mso-footnote-id: ftn22;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[22]</span></span></a>
and different ways these can be avoided or minimised. But that is not as simple
to do as it might first appear, and all the alternatives imply the need to set
up a system <i>outside</i> the existing one that dominates the world economy.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Mechanisms of Western
sanctions</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">One sanctions method is on <b>international</b>
<b>trade</b>, where some, even all, exports to or imports from a targeted
country are stopped. While the target of US sanctions might find other
suppliers or other export markets than the US, the problem is that US allies
will often follow suit – or else they might themselves be fined or threatened.
As the case of Russia has shown, the sanctions can also be extended into things
like air, sea, rail and road transport, and insurance services, not just on
goods. What this has spelled out is that relying on the continued workings of
‘normal’ business with the Western powers puts a country at risk! China has
found the same to be true, although so far on a smaller scale and in a more
limited scope, principally related to its trade with the US and not so much
(yet) with Europe.<a href="#_ftn23" name="_ftnref23" style="mso-footnote-id: ftn23;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[23]</span></span></a>
Even if sanctions are circumvented, as often happens, that can mean extra costs
for doing international trade.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">A second method is for the
US/Western countries to try and ban <b>financial transactions</b> with a target
country. This can be done, or those transaction made very difficult, by
preventing that country’s companies and banks from having access to the SWIFT
system, or to be able to complete deals involving the US dollar (or euro, etc).
It might be thought that an easy way out would be simply not to use SWIFT, or
not to use the dollar, but that is not so easy in practice.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The <b>SWIFT</b> system is a
bank <i>messaging</i> system for payments, <i>not</i> the payments themselves.
It is the standard system used to pass on instructions for most <i>international</i>
payments.<a href="#_ftn24" name="_ftnref24" style="mso-footnote-id: ftn24;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[24]</span></span></a> The
operation is based in Belgium, although the US National Security Agency
monitors the messages going through SWIFT! Alternative messaging systems do
exist, including one set up by Russia, but these have so far been used by few
other countries, and they need banks to adopt another set of identification
codes and communication procedures.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Similarly, a country could
decide not to use the <b>US dollar</b> in its external trade, but that would
stand against the overwhelming use of that currency in global transactions.
Most of the goods and services traded internationally are priced in dollars,
from commodities like oil, metals and agricultural products, to aerospace,
pharmaceuticals and weapons, let alone the bulk of financial securities. That
is why the US dollar is involved in 88% of all foreign exchange transactions.<span class="MsoFootnoteReference"> <a href="#_ftn25" name="_ftnref25" style="mso-footnote-id: ftn25;" title=""><span style="mso-special-character: footnote;">[25]</span></a></span></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The problem of using the US
dollar to transact is that all flows of funds between accounts – no matter
where the buyers/sellers are based – must pass through the US banking system.
This is not evident at first. After all, if a German bank wanted to transfer
dollars to a French bank, why would they need to go via the US? Yet that is how
the transfer works, via one of their branches, or a correspondent bank with
which they have links, <i>actually inside the US banking system</i>. As a
result, they can be monitored by the US authorities, which can fine or shut
down any bank doing a disallowed transaction on its territory. The US Treasury
even has a special department to enforce economic and trade sanctions, appropriately
called the Office of Foreign Assets Control!<a href="#_ftn26" name="_ftnref26" style="mso-footnote-id: ftn26;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[26]</span></span></a></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Some ways around them</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">Yet, ways around this network of
US/Western domination are possible. It is then a question of the countries
concerned about this having the political will to step outside the established
Western systems they use and to make an effort to build something else, or to
work in other ways. That political will has been growing in many countries over
the past year, as the following examples show:</p>
<ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><b>Russia</b> has an alternative to SWIFT, called <b>SPFS</b>.
At present there are around 52 foreign organisations from 12 countries
using the SPFS system, but the numbers should grow.<a href="#_ftn27" name="_ftnref27" style="mso-footnote-id: ftn27;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[27]</span></span></a>
“Russia has offered countries belonging to the Shanghai Cooperation
Organisation to join its financial messaging system (SPFS), the Russian
equivalent of SWIFT. Moscow wants to boost the volume of settlements in
national currencies, the country’s Economic Development Minister Maxim
Reshetnikov said on Tuesday [16 August].”<a href="#_ftn28" name="_ftnref28" style="mso-footnote-id: ftn28;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[28]</span></span></a></li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><b>India</b> is reported to have agreed to pay for
Russian oil with Russian rubles, not US dollars, and <b>Turkey</b> will
also pay for some Russian gas supplies with rubles.<a href="#_ftn29" name="_ftnref29" style="mso-footnote-id: ftn29;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[29]</span></span></a>
Russia had already stipulated in March that payments for its <b>gas</b>
supplies to <b>Europe</b> had to be settled in rubles. This was to be done
by customers paying in euros as in the contract, but also opening a ruble
account at <b>Gazprombank</b> which did the FX transaction into rubles.
After controversy and misunderstanding, customers for three-quarters of
the gas complied.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><b>India</b>’s central bank has allowed the expanded
use of the Indian rupee in trade settlements for imports and exports with
Russia and other countries.<a href="#_ftn30" name="_ftnref30" style="mso-footnote-id: ftn30;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[30]</span></span></a>
India was also reported to be paying for Russian coal in non-dollar
currencies, including the UAE dirham, Hong Kong dollar and Chinese
renminbi, as well as the euro.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><b>Indonesia</b> and <b>China</b> in 2021 planned
to reduce their reliance on the US dollar and to start using their own
currencies for bilateral trade and investment.<a href="#_ftn31" name="_ftnref31" style="mso-footnote-id: ftn31;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[31]</span></span></a>
Currency swap arrangements between their respective central banks to
assist this trading are already in place.<a href="#_ftn32" name="_ftnref32" style="mso-footnote-id: ftn32;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[32]</span></span></a></li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;">In what could become a major break in the usual <b>OPEC</b>
oil pricing deals, formerly all in terms of US dollars, <b>Saudi Arabia</b>
in March this year was reported to be ready to accept payments in Chinese
renminbi for sales to <b>China</b>.<a href="#_ftn33" name="_ftnref33" style="mso-footnote-id: ftn33;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[33]</span></span></a>
This would follow other Saudi moves to diversify its revenues, as well as
to signal a closer relationship with a major trading partner.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;">After Visa and Mastercard pulled out of Russia
earlier in 2022, Russia has expanded the international links for <b>Mir</b>,
its domestic electronic payment card system. This was also another way of
avoiding the SWIFT system for (smaller scale) international payments, if
other countries would accept it. So far over a dozen countries accept the
Mir card, mostly those in the former Soviet Union, but also in <b>South
Korea</b>, <b>Turkey</b>, <b>India</b>, <b>Vietnam</b> and <b>Cuba</b>.<a href="#_ftn34" name="_ftnref34" style="mso-footnote-id: ftn34;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[34]</span></span></a>
It will also be accepted in <b>Iran</b> and <b>Sri Lanka</b> by the end of
2022. The Mir card is linked to <b>China</b>’s Alibaba online retail
service, AliExpress, and to China’s UnionPay system – although this latter
link has been limited by sanctions on Russia.</li><li class="MsoNormal" style="margin-bottom: 6pt; mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;">The <b>BRICS</b> countries are discussing a <b>new</b>
<b>international reserve currency, </b>possibly based upon a basket of
their own currencies. This will take a long time to work out and
implement, but signals another move away from the US dollar as a reserve
currency and also the IMF’s Special Drawing Rights (SDR) basket currency.<a href="#_ftn35" name="_ftnref35" style="mso-footnote-id: ftn35;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[35]</span></span></a></li></ul>
<p class="MsoNormal" style="margin-bottom: 6pt;">Such examples are many and
growing. While still on a very small scale compared to the volume of deals in
global trade and finance, they show the potential for a new system to be built.
In this process, Russia has done most of the political advocacy, and is most
determined to give a robust response to the Western sanctions it has faced.
Russia’s Deputy Foreign Minister recently said that the US dollar and the euro
have become ‘toxic’ and that the Western-made financial system is “unsuitable
for the conditions of a multipolar world order and has essentially become an
instrument for achieving political goals of one group of countries”.<a href="#_ftn36" name="_ftnref36" style="mso-footnote-id: ftn36;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[36]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">By comparison, although China
has played a big part in building an alternative system, particularly with the
BRI, it has been on a much quieter path. China does not wish to upset its
relations with Western countries more than necessary so that it may still achieve
its development aims. The US provocations around Taiwan may well change that
stance, however.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Extracting the entrenched US
dollar</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">One other point of difference
between the approaches of Russia and China can be seen in their countries’
foreign investments. Russia, having long suffered from Western sanctions, has
very little exposure to the West, except through its large foreign exchange
reserves. It made a big effort to reduce the holdings of US dollars in its
reserves and instead built up holdings of gold and especially Chinese renminbi
securities in the period to end-2021. But it made the mistake of not expecting
the EU countries to follow US sanctions as avidly as they did – and even to a
more extreme level! – so it also built up its holdings of euro deposits and
securities. I would estimate that of the $300bn of Russia’s FX reserve assets
seized/frozen/stolen earlier this year, at most ‘only’ about $60-70bn was in US
dollars, while up to $210bn was in euros, with the rest in other Western
currencies.<a href="#_ftn37" name="_ftnref37" style="mso-footnote-id: ftn37;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[37]</span></span></a></p><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjIj5rCbT5HRfny_-5rflJ3WMsgBI_DfXHTo3tILY31idWZ_-mC4xKy2zdVczZ1MQuRRJB4z6TpjFcnvtPZXtOnOUOurrCZWqIZMRHc9iDlT1zP0igIICA8Rg1DfQBEqih9cnblANr7G_uETnsHk5Hk34K0p41sek6Wwbaf6X91Aqr5xP9Yv4XYv2b/s872/15.%20Russia%20FX%20reserve%20breakdown,%202015-2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="509" data-original-width="872" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjIj5rCbT5HRfny_-5rflJ3WMsgBI_DfXHTo3tILY31idWZ_-mC4xKy2zdVczZ1MQuRRJB4z6TpjFcnvtPZXtOnOUOurrCZWqIZMRHc9iDlT1zP0igIICA8Rg1DfQBEqih9cnblANr7G_uETnsHk5Hk34K0p41sek6Wwbaf6X91Aqr5xP9Yv4XYv2b/w640-h374/15.%20Russia%20FX%20reserve%20breakdown,%202015-2021.JPG" width="640" /></a></div><br /><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">China’s holdings of Western
investments are far bigger, both in its FX reserves and in other investments.
The official figures detailing those held in the US are understated because
they do not count the all investment that has come from Chinese companies, for
example via tax havens such as the Cayman Islands. Yet they still show a total
of $2,046bn for mid-2021 in US equities and bonds, counting both mainland China
and Hong Kong.<a href="#_ftn38" name="_ftnref38" style="mso-footnote-id: ftn38;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[38]</span></span></a> Much of the
$1,603bn bond holdings component registered will be for China’s and Hong Kong’s
FX reserves.<a href="#_ftn39" name="_ftnref39" style="mso-footnote-id: ftn39;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[39]</span></span></a> While there
has been some fall in these holdings in the past year, there has been no sign
yet of any significant move to cut them.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There are two main reasons for
this. Firstly, global trading remains very US-dollar dominated and, as a
by-product of this, official institutions and private companies hold dollar
assets in their balances and reserves. Secondly, the Hong Kong dollar has an
exchange rate tied to the US dollar as part of a currency board system, so the
central bank authorities need US dollar securities holdings to back this up.<a href="#_ftn40" name="_ftnref40" style="mso-footnote-id: ftn40;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[40]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">It will take a long time before
the US dollar can be expunged from China’s financial markets, and still longer
from other Asian markets. Yet the developments noted here indicate that a
definite move is under way to diminish the role of Western currencies in the
trade and investment relationships between the countries taking part in these
non-Western groupings. In any case, for as long as the Western powers do not
actually seize Chinese assets, cut China out of SWIFT or stop it from being
able to complete transactions in US dollars, etc, then China can continue to
use these funds as it wishes.</p>
<p align="center" class="MsoNormal" style="margin-bottom: 18pt; text-align: center;">---</p>
<h1 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">10. Conclusion: World in transition</span></b></h1>
<p class="MsoNormal" style="margin-bottom: 6pt;">China has been the principal
economic motor behind what has been discussed, although one should not ignore
its political initiatives. We can expect the latter to be stepped up as the US
gets further into panic mode about its ability to dominate the world system.
Russia has been the more explicit political motor, and its ability to have that
role is also linked to its valuable economic resources.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">A world economy seen through the
lens of GDP data and financial power gives a very distorted picture. On the
IMF’s latest estimate for 2022, Russia stands below Italy, the smallest of the
G7 countries, in terms of its nominal GDP. Russia’s stock exchange, foreign
investments, banking system and currency barely register in a tally of global
markets. But it did not take long for European countries, and even the US, to
suffer from the sanctions they had enthusiastically imposed on Russia! A far
worse outcome for them awaits if they decide to go down the same route against
China. Producing necessities for people’s living standards is not such a dumb
thing to do after all.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">That is one lesson from the
events of the past months. A longer and harsher lesson already learned by many
other countries is that if they are looking for economic development, the
Western imperial system offers them nothing. Until recently, there had been
little other recourse. But economic and political groups outside the political
control of the Western powers are growing. The West will do its best to
sabotage these, but they will continue to attract members because they can offer
countries a better future.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The ruling Western powers will
not give up their ability to dominate and exploit others without fighting back.
They have a lot to defend, especially the US which relies upon ‘full spectrum
dominance’ – from its influence over major international institutions, to its
securing the central role for the US dollar in world trade and finance, to its
promotion of militarism and crises in every region of the planet. Although the
West European countries – the UK, Germany and France, especially – look like
minor players by comparison, they are also important in this network of
domination. They fear losing their place in it and so have jumped
enthusiastically on the US bandwagon, despite their economies now suffering
badly.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Economic and political sanctions
on Russia were first aimed at punishing a country that had the means to defend
itself from encroachment. They were also a means of trying to force the rest of
the world to fall into line, to make clear that nobody can disobey the ‘rules-based
order’. That term signals the flouting of any notion of international law and
replaces it with whatever the ruling powers see as necessary to sustain <i>the
existing</i> <i>order</i> that serves them. Yet, the evidence suggests that
many countries are now waking up and will cooperate in building a <i>different</i>
framework for the world.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This is all very much a work in
progress and it could suffer setbacks. One condition for its success is
Russia’s success in Ukraine, the conflict that was promoted by and prolonged by
the US and its NATO allies. A defeat for the latter will be a severe political
blow to the hegemony of the ‘West’. It will also be a signal for more countries
to join the alternative project!</p><br /><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 5 September 2022</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Western
media coverage usually cites the number of UN votes on these issues, but that
ignores how each country in the UN has one vote, whether its population is less
than 50,000 or over 1 billion. Many sanctioners were tiny population countries,
often islands that were either bullied by or under the control of the Western
powers.</p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> For some of
the background to the Ukraine conflict, I would recommend reading this article
by Jacques Baud, a former Swiss intelligence officer:<b><span style="color: red;"> </span></b><a href="https://www.thepostil.com/the-hidden-truth-about-the-war-in-ukraine/">https://www.thepostil.com/the-hidden-truth-about-the-war-in-ukraine/</a>.
Other people who have informative material on this question, and know what they
are talking about, include (retired) US colonel Douglas Macgregor, Professor
John Mearsheimer and Scott Ritter.</p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> See: <a href="https://mid.ru/ru/foreign_policy/news/1824184/?lang=en">https://mid.ru/ru/foreign_policy/news/1824184/?lang=en</a></p>
</div>
<div id="ftn4" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> It was not
possible to give a concise summary of global meat, fish/seafood, vegetable and
fruit production.</p>
</div>
<div id="ftn5" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> The
following three charts for 2021 are produced from data in BP’s<i> Statistical
Review of World Energy, 2022.</i></p>
</div>
<div id="ftn6" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> Source:
Belfer Center, Harvard Kennedy School, <i>The Great Tech Rivalry: China vs the
U.S</i>., December 2021, p34. This report would more consistently be titled
‘The US vs China’!</p>
</div>
<div id="ftn7" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> Data below
are taken largely from US Geological Surveys of world resources, with some
additional information from other sources indicated. Recycled material is not
considered here, but in some cases it might be an important additional
resource. Data are for the year 2021 unless otherwise noted.</p>
</div>
<div id="ftn8" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a> BP, <i>Statistical
Review of World Energy, 2022</i>.</p>
</div>
<div id="ftn9" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a> The
following chart on the companies involved in the semiconductor supply chain was
taken from Chad P Bown, ‘How the United States marched the semiconductor
industry into its trade war with China’, <i>Peterson Institute for
International Economics</i>, December 2020. Also see my article on the US
versus Huawei: <a href="https://economicsofimperialism.blogspot.com/2019/04/racism-imperial-anxiety-us-vs-huawei.html">https://economicsofimperialism.blogspot.com/2019/04/racism-imperial-anxiety-us-vs-huawei.html</a>.
Note that Huawei has also consistently been the top global company measured by
patent applications, a sign that the US sanctions have done nothing to dampen
China’s R&D. On 25 July 2022, <i>Asiatimes</i> reported that China’s SMIC
has been able to produce a 7 nanometre chip, ahead of the US and Europe,
although one that may be inferior to those produced in South Korea and Taiwan.
See <a href="https://asiatimes.com/2022/07/smics-7-nm-chip-process-a-wake-up-call-for-us/">https://asiatimes.com/2022/07/smics-7-nm-chip-process-a-wake-up-call-for-us/</a></p>
</div>
<div id="ftn10" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a> <a href="https://en.topcor.ru/27056-turbiny-nemeckogo-koncerna-siemens-v-rossii-mozhet-zamenit-iran.html">https://en.topcor.ru/27056-turbiny-nemeckogo-koncerna-siemens-v-rossii-mozhet-zamenit-iran.html</a></p>
</div>
<div id="ftn11" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> The
official US statement on this is at <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/26/fact-sheet-president-biden-and-g7-leaders-formally-launch-the-partnership-for-global-infrastructure-and-investment/">https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/26/fact-sheet-president-biden-and-g7-leaders-formally-launch-the-partnership-for-global-infrastructure-and-investment/</a></p>
</div>
<div id="ftn12" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref12" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> See this
article by Matthew Ehret for further details of projects for economic
development in Africa, by both Russia and China: <i>Russia in Africa:
Connecting continents with soft power</i>, 1 August 2022, here <a href="https://thecradle.co/Article/Analysis/13716">https://thecradle.co/Article/Analysis/13716</a></p>
</div>
<div id="ftn13" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref13" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a> For a
surprisingly fair assessment of China’s investments and the dominant influence
of local country factors, see the UK’s Royal Institute of International
Affairs’ Chatham House paper entitled <i>Debunking the Myth of ‘Debt-trap
Diplomacy’ How Recipient Countries Shape China’s Belt and Road Initiative</i>,
August 2020. Another debunking is in <i>The Atlantic</i>, 6 February 2021, an
article entitled <i>The Chinese ‘Debt Trap’ Is a Myth</i>, at <i><a href="https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/">https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/</a></i></p>
</div>
<div id="ftn14" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref14" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a> Source:
Oziewicz and Bednarz, ‘Challenges and opportunities of the Maritime Silk Road
initiative for EU countries’, <i>Scientific Journals of the Maritime University
of Szczecin</i>, October 2019.</p>
</div>
<div id="ftn15" style="mso-element: footnote;">
<p class="MsoNormal" style="mso-layout-grid-align: none; text-autospace: none;"><a href="#_ftnref15" name="_ftn15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"><span style="mso-special-character: footnote;">[15]</span></span></span></a><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"> Source: Eurasian
Development Bank, Reports and Working papers, 21/5, <a href="https://eabr.org/en/analytics/special-reports/the-international-north-south-transport-corridor-promoting-eurasia-s-intra-and-transcontinental-conn">https://eabr.org/en/analytics/special-reports/the-international-north-south-transport-corridor-promoting-eurasia-s-intra-and-transcontinental-conn</a></span></p>
</div>
<div id="ftn16" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref16" name="_ftn16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[16]</span></span></a>
Interestingly, there are reports of some rapprochement of Saudi Arabia with
Iran. If continued, this would be a major political development in the region. <a href="https://www.france24.com/en/live-news/20220722-iran-says-saudi-ready-to-move-reconciliation-talks-to-higher-level">https://www.france24.com/en/live-news/20220722-iran-says-saudi-ready-to-move-reconciliation-talks-to-higher-level</a></p>
</div>
<div id="ftn17" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref17" name="_ftn17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[17]</span></span></a> The SCO’s
two official languages are Chinese and Russian, but there is also an English
language website: <a href="http://eng.sectsco.org/about_sco/">http://eng.sectsco.org/about_sco/</a></p>
</div>
<div id="ftn18" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref18" name="_ftn18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[18]</span></span></a> The next
SCO annual summit that may decide these issues is on 15-16 September 2022, in
Samarkand, Uzbekistan.</p>
</div>
<div id="ftn19" style="mso-element: footnote;">
<p class="MsoNormal"><a href="#_ftnref19" name="_ftn19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[19]</span></span></a> <span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;">See this early report on the
SCO: <a href="https://www.theguardian.com/commentisfree/2006/jun/16/shanghaisurprise">https://www.theguardian.com/commentisfree/2006/jun/16/shanghaisurprise</a></span></p>
</div>
<div id="ftn20" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref20" name="_ftn20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[20]</span></span></a> Kazakhstan
also aimed to attract Western companies exiting Russia after the sanctions were
imposed. See <a href="https://caspiannews.com/news-detail/kazakhstan-in-talks-with-foreign-companies-planning-to-relocate-from-russia-2022-7-21-0/">https://caspiannews.com/news-detail/kazakhstan-in-talks-with-foreign-companies-planning-to-relocate-from-russia-2022-7-21-0/</a></p>
</div>
<div id="ftn21" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref21" name="_ftn21" style="mso-footnote-id: ftn21;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[21]</span></span></a> See the
very-pleased-with-itself US Centcom report here: <a href="https://www.centcom.mil/MEDIA/NEWS-ARTICLES/News-Article-View/Article/3123432/regional-cooperation-2022-military-exercise-begins-in-dushanbe/">https://www.centcom.mil/MEDIA/NEWS-ARTICLES/News-Article-View/Article/3123432/regional-cooperation-2022-military-exercise-begins-in-dushanbe/</a></p>
</div>
<div id="ftn22" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref22" name="_ftn22" style="mso-footnote-id: ftn22;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[22]</span></span></a> The
discussion here focuses mainly on US-promoted sanctions, but the UK and EU
countries are also quite fond of sanctions on their own account. The EU
sanctions regime is outlined here: <a href="https://finance.ec.europa.eu/eu-and-world/sanctions-restrictive-measures/overview-sanctions-and-related-tools_en">https://finance.ec.europa.eu/eu-and-world/sanctions-restrictive-measures/overview-sanctions-and-related-tools_en</a></p>
</div>
<div id="ftn23" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref23" name="_ftn23" style="mso-footnote-id: ftn23;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[23]</span></span></a> A key
example of recent years was when Chinese 4G and 5G telecoms equipment was
branded a ‘security risk’ by the US in its bid to destroy China’s Huawei
technology company.</p>
</div>
<div id="ftn24" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref24" name="_ftn24" style="mso-footnote-id: ftn24;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[24]</span></span></a> Note that
when one company has to pay another for goods received, it does not normally do
so by cash, but by bank transfer to that company’s account. So the bank plays a
key part in settling the transaction. When the payment goes outside the
national bank network, SWIFT is the most commonly used message system to direct
it to the correct destination.</p>
</div>
<div id="ftn25" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref25" name="_ftn25" style="mso-footnote-id: ftn25;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[25]</span></span></a> By
comparison, the BIS global survey for 2019 showed the euro – the currency of 19
European countries – was involved in only 32% of all FX deals. Despite China
being the world’s biggest trading country, China’s renminbi made up only 4%,
reflecting how most goods are priced in terms of US dollars, as well as the
bulk of transactions being financial, outside of commercial trade. Note that
the total shares of <i>all</i> currencies add to 200% because there are two
currencies involved in a single transaction.</p>
</div>
<div id="ftn26" style="mso-element: footnote;">
<p class="MsoNormal"><a href="#_ftnref26" name="_ftn26" style="mso-footnote-id: ftn26;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[26]</span></span></a> <span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;">See <a href="https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information">https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information</a></span></p>
</div>
<div id="ftn27" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref27" name="_ftn27" style="mso-footnote-id: ftn27;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[27]</span></span></a> <a href="https://www.reuters.com/world/europe/russia-central-bank-will-not-name-banks-linked-swift-alternative-2022-04-19/">https://www.reuters.com/world/europe/russia-central-bank-will-not-name-banks-linked-swift-alternative-2022-04-19/</a></p>
</div>
<div id="ftn28" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref28" name="_ftn28" style="mso-footnote-id: ftn28;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[28]</span></span></a> <a href="https://www.rt.com/business/560916-russia-sco-financial-messaging-system/">https://www.rt.com/business/560916-russia-sco-financial-messaging-system/</a></p>
</div>
<div id="ftn29" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref29" name="_ftn29" style="mso-footnote-id: ftn29;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[29]</span></span></a> <a href="https://thecradle.co/Article/news/14217">https://thecradle.co/Article/news/14217</a></p>
</div>
<div id="ftn30" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref30" name="_ftn30" style="mso-footnote-id: ftn30;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[30]</span></span></a> <a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/india-introduces-mechanism-for-international-trade-settlements-in-rupees/articleshow/92806691.cms?from=mdr">https://economictimes.indiatimes.com/news/economy/foreign-trade/india-introduces-mechanism-for-international-trade-settlements-in-rupees/articleshow/92806691.cms?from=mdr</a></p>
</div>
<div id="ftn31" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref31" name="_ftn31" style="mso-footnote-id: ftn31;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[31]</span></span></a> <a href="https://www.thejakartapost.com/news/2021/06/28/indonesia-china-to-reduce-us-dollar-in-bilateral-trade.html">https://www.thejakartapost.com/news/2021/06/28/indonesia-china-to-reduce-us-dollar-in-bilateral-trade.html</a></p>
</div>
<div id="ftn32" style="mso-element: footnote;">
<p class="MsoNormal"><a href="#_ftnref32" name="_ftn32" style="mso-footnote-id: ftn32;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[32]</span></span></a> <span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"><a href="http://global.chinadaily.com.cn/a/202109/09/WS61394a15a310efa1bd66e407.html">http://global.chinadaily.com.cn/a/202109/09/WS61394a15a310efa1bd66e407.html</a></span></p>
</div>
<div id="ftn33" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref33" name="_ftn33" style="mso-footnote-id: ftn33;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[33]</span></span></a> <a href="https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541">https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541</a></p>
</div>
<div id="ftn34" style="mso-element: footnote;">
<p class="MsoNormal"><a href="#_ftnref34" name="_ftn34" style="mso-footnote-id: ftn34;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[34]</span></span></a><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"> See <a href="https://interfax.com/newsroom/top-stories/81357/">https://interfax.com/newsroom/top-stories/81357/</a>.
For a recent report on Turkey and Russia, see: <a href="https://www.rt.com/business/560359-turkey-unveils-russia-trade-plans/">https://www.rt.com/business/560359-turkey-unveils-russia-trade-plans/</a>
and on Iran, plus other information on Mir: <a href="https://thecradle.co/Article/news/14395">https://thecradle.co/Article/news/14395</a>.</span></p>
</div>
<div id="ftn35" style="mso-element: footnote;">
<p class="MsoNormal"><a href="#_ftnref35" name="_ftn35" style="mso-footnote-id: ftn35;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[35]</span></span></a> <span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;">The SDR components are 88%
from Western currencies; with 43% US dollars, 29% euros and close to 7.5% each
for the Japanese yen and UK pound. China’s renminbi accounts for 12%. <a href="https://www.imf.org/en/News/Articles/2022/07/29/pr22281-press-release-imf-determines-new-currency-amounts-for-the-sdr-valuation-basket">https://www.imf.org/en/News/Articles/2022/07/29/pr22281-press-release-imf-determines-new-currency-amounts-for-the-sdr-valuation-basket</a></span></p>
</div>
<div id="ftn36" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref36" name="_ftn36" style="mso-footnote-id: ftn36;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[36]</span></span></a> ‘Russia
moves away from “toxic” dollar and euro in economic relations with partners’,
20 August 2022, <a href="https://tass.com/politics/1496159">https://tass.com/politics/1496159</a>.</p>
</div>
<div id="ftn37" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref37" name="_ftn37" style="mso-footnote-id: ftn37;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[37]</span></span></a> Data in the
next chart are from annual reports of Russia’s central bank, with the latest
available data for end-2021. ‘Other FX’ were likely all to be other Western
currencies, including Japanese yen. The figures for stolen FX reserves do not
include the private assets of Russian citizens (‘oligarchs’) or corporate
assets seized illegally by Western governments.</p>
</div>
<div id="ftn38" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref38" name="_ftn38" style="mso-footnote-id: ftn38;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[38]</span></span></a> See <a href="https://home.treasury.gov/news/press-releases/jy0753">https://home.treasury.gov/news/press-releases/jy0753</a></p>
</div>
<div id="ftn39" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref39" name="_ftn39" style="mso-footnote-id: ftn39;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[39]</span></span></a> Most
central banks hold a large proportion of US dollars in their FX reserves,
reflecting its importance in global trade and investment, although that share
has been falling slowly. China’s share of dollars has not officially been
published since 2016, when it was 59%. It is now likely to be less than 50%,
compared to a global average of just under 60% for countries reporting their
allocations to the IMF. Although it is a more visible sign of the US dollar’s
influence, central bank dollar holdings are only a minor part of its pervasive
role in global finance.</p>
</div>
<div id="ftn40" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref40" name="_ftn40" style="mso-footnote-id: ftn40;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[40]</span></span></a> Hong Kong
is obviously part of China, but its economic data is counted separately in
statistical reports. Hong Kong’s financial system is also run separately from
that in mainland China.</p></div></div>Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com7tag:blogger.com,1999:blog-3591186784456519139.post-44228597478728768662021-10-18T15:09:00.006+01:002021-10-19T00:16:37.315+01:00Winston Churchill & British Imperialism<p> <!--[if gte mso 9]><xml>
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</p><p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5OtPSwYh51SYQjkyDJf3sy7v7dk8PmrOlmvkI0Q-IJlgDwTSj23DHUrMkHDkIkg086_79Xg-yZ2uepu9m7vVTyoG_widoIKt_mRviiRmIvfHZgHSgf4SFp2YJzNhBnZOE3AJuf_sEYJQ/s483/Churchill+V+sign.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="355" data-original-width="483" height="294" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5OtPSwYh51SYQjkyDJf3sy7v7dk8PmrOlmvkI0Q-IJlgDwTSj23DHUrMkHDkIkg086_79Xg-yZ2uepu9m7vVTyoG_widoIKt_mRviiRmIvfHZgHSgf4SFp2YJzNhBnZOE3AJuf_sEYJQ/w400-h294/Churchill+V+sign.JPG" width="400" /></a></div><br /> <p></p><p class="MsoNormal" style="margin-bottom: 6pt;">Even patriotic Brits know that
their hero Winston Churchill did not win World War 2 or fly a Spitfire. What
they, and others, may <i>not</i> know is how his statements often shed a clear
light on British imperialism. From Britain’s reliance on colonies, to the
political rationale for giving the working class some welfare services, Churchill’s
rhetorical flourishes in speeches, newspaper articles, and deliberations with
his peers, illuminate things all too often absent from contemporary political
consciousness.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The text cited below is in
chronological order. Information is taken from many sources,<span class="MsoFootnoteReference"><a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="mso-special-character: footnote;">[1]</span></a></span>
including articles previously on this blog and from other material I have put
onto Twitter and Facebook. But it should not overtax the modern attention span.
I do not claim or aim to cover everything, and will give a few lines of context
where these might be helpful.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">When all of these statements
were made, except one, Churchill had a senior position in the British
government of the day, or had even been Prime Minister. They are not just the
musings of a random reactionary and empire enthusiast.</p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Social welfare and a stake in
the country, 1909</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">Social welfare measures have
often been introduced by the ruling class to boost loyalty to the state, apart
from the need to have a reasonably healthy and educated workforce. It has
worked in rich countries. Here is Winston Churchill backing unemployment
benefits in a <i>Daily Mail</i> article from August 1909:</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“The idea is to increase the stability of our institutions
by giving the mass of industrial workers a direct interest in maintaining them.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">With a ‘stake in the country’ in the form of insurances
against evil days these workers will pay no attention to the vague promises of
revolutionary socialism.”</p><p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;"> </p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Splendid colonial
possessions, 1914</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">In a comment to his British
Cabinet colleagues in January 1914, Churchill <span style="color: black;"><a href="https://economicsofimperialism.blogspot.com/2011/06/winston-churchill-told-it-like-it-was.html">noted</a>:</span></p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“We are not a young people with an innocent record and a
scanty inheritance... We have engrossed to ourselves an altogether
disproportionate share of the wealth and traffic of the world. We have got all
we want in territory, and our claim to be left in the unmolested enjoyment of
vast and splendid possessions, mainly acquired by violence, largely maintained
by force, often seems less reasonable to others than to us.”</p><p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Colonial terror, 1919-1921</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">This is his support for the RAF's request to use mustard gas in Mesopotamia (today’s Iraq):</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“I do not understand this squeamishness about the use of gas
... I am strongly in favour of using poisoned gases against uncivilised tribes.
… Gases can be used which … would leave a lively terror and yet would leave no
serious permanent effect [!] on most of those affected.”</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Unfortunately for the RAF, no
gas bombs were available at that time (April 1919). Churchill had already used most of them against
the Bolsheviks! But he did find some later for use in Mesopotamia, in 1920 to
help put down a rebellion. I would add that the RAF was also seen as a good, inexpensive means of putting down colonial revolts and encouraging tax payments with machine guns and regular bombs, not just gas.<br /></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">And here is his opinion on using
gas to subdue Afghanistan, in May 1919:</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“The objections of the India Office to the use of gas
against natives are unreasonable. Gas is a more merciful weapon than [a] high
explosive shell … The moral effect is also very great. There can be no
conceivable reason why it should not be resorted to.”</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">In line with his general view of
the world, he only thought such gas was ‘hellish poison’ when used on white
people, eg British soldiers in the First World War.</p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Gold Standard, Imperial
status, 1925</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">Britain returned to the gold
standard in 1925, in a move roundly condemned by JM Keynes. But Keynes, always
wanting to be a helping hand for British imperialism, gave no indication that
he understood the logic of the move. Churchill, by contrast, was very clear in
his comments at the <a href="https://economicsofimperialism.blogspot.com/2012/12/churchill-keynes-gold-empire-historical.html">time</a>:</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“If we had not taken this action, the whole of the rest of
the British Empire would have taken it without us, and it would have come to a
gold standard, not on the basis of the pound sterling, but a gold standard of
the dollar.”</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">And</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“I have only one observation to make on the merits. In our
policy of returning to the gold standard we do not move alone. Indeed, I think
we could not have afforded to remain stationary while so many others moved. The
two greatest manufacturing countries in the world on either side of us, the
United States and Germany, are in different ways either on or related to an
international gold exchange. Sweden is on the gold exchange. Austria and
Hungary are already based on gold, or on sterling, which is now the equivalent
of gold. I have reason to know that Holland and the Dutch East Indies – very
important factors in world finance – will act simultaneously with us today. As
far as the British Empire is concerned – the self-governing Dominions – there
will be complete unity of action. The Dominion of Canada is already on the gold
standard. The Dominion of South Africa has given notice of her intention to
revert to the old standard as from 1st July. I am authorised to inform the
Committee that the Commonwealth of Australia, synchronising its action with
ours, proposes from today to abolish the existing restrictions on the free
export of gold, and that the Dominion of New Zealand will from today adopt the
same course as ourselves in freely licensing the export of gold.”</p><p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Pro-Italian fascism, against
‘beastly’ Leninism, 1927</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">Here is a page from Ponting’s book on Churchill's trip to Italy
in 1927:</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEillq6o_QkNVZd-DabDNYC80AqkvaVR1Si0ydvGKMH3NTJWGc-cX4e9KwISMol4buPwcXw4QuUbnKiCIENyMrOUJj4zNPB0j95BTqlEWCykVQW3gbrup_kNP6uOWwX91f3-34Ze0lHy1ts/s661/Churchill+on+Mussolini+1927-%252C+Ponting+book+p350.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="661" data-original-width="637" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEillq6o_QkNVZd-DabDNYC80AqkvaVR1Si0ydvGKMH3NTJWGc-cX4e9KwISMol4buPwcXw4QuUbnKiCIENyMrOUJj4zNPB0j95BTqlEWCykVQW3gbrup_kNP6uOWwX91f3-34Ze0lHy1ts/w385-h400/Churchill+on+Mussolini+1927-%252C+Ponting+book+p350.JPG" width="385" /></a></div><br /><span style="color: red;"></span><p></p><p class="MsoNormal" style="margin-bottom: 6pt;"><span style="color: red;"><span style="color: black;">So much for Churchill being the
steadfast anti-fascist! </span></span></p><p class="MsoNormal" style="margin-bottom: 6pt;"><span style="color: red;"><span style="color: black;"> </span><br /></span></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Britain’s imperial parasitism
& the welfare payoff, 1929</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">On 15 April 1929, Churchill
spoke in Parliament about the City’s revenues, and its role as a global broker,
as well as the big returns on British foreign investments:</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“The income which we derive each year from commissions and
services rendered to foreign countries is over £65,000,000, and, in addition,
we have a steady revenue from foreign investments of close on £300,000,000 a
year, 90 per cent of which is expressed in sterling. Upon this great influx
there is levied, as a rule, the highest rates of taxation. In this way we are
helped to maintain our social services at a level incomparably higher than that
of any European country, or indeed of any country.” (Hansard)</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">(Other related information <a href="https://economicsofimperialism.blogspot.com/2018/07/the-good-old-days.html">here</a>) <br /></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Note that both kinds of revenue
noted in the quotation above do not all come from the colonies, at least not
directly, and most will have derived from transactions with and investments in
other major countries. Nevertheless, such revenues were important for social
services even before the post-1945 ‘welfare state’. I give an updated,
contemporary assessment of these in my book, <a href="https://www.amazon.co.uk/City-London-Global-Power-Finance/dp/1784785024/ref=sr_1_1?dchild=1&keywords=norfield+city&qid=1634565569&sr=8-1"><i>The City</i></a>.</p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Britain’s colonies and its
status in the world, 1939</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">This is <span class="css-901oaocss-16my406r-poiln3r-bcqeeor-qvutc0">from Churchill’s address to
West Indies sugar plantation owners! It is cited in Peter Fryer's book, <i>Black
People in the British Empire</i>, 1988, Pluto Press:</span></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b><span style="color: red;"></span></b></p><div class="separator" style="clear: both; text-align: center;"><b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXYddKeCY3HRWns8kHYjayvOblPwqMPJHXway-65EDVHt1Ok96JOrzSfCoi1cSa4SRXVdRLw4LDzXgNtdNqS5BKP10Xce28gduJmQrl-uSg62m9lZ0khi3xgZzLYS2XdVSTWTLSn0hPyo/s602/Churchill+on+colonies+%2526+Empire%252C+Fryer+book+2%252C+p4.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="264" data-original-width="602" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXYddKeCY3HRWns8kHYjayvOblPwqMPJHXway-65EDVHt1Ok96JOrzSfCoi1cSa4SRXVdRLw4LDzXgNtdNqS5BKP10Xce28gduJmQrl-uSg62m9lZ0khi3xgZzLYS2XdVSTWTLSn0hPyo/w400-h175/Churchill+on+colonies+%2526+Empire%252C+Fryer+book+2%252C+p4.JPG" width="400" /></a></b></div><p></p><br /><h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>The ‘cradle to the grave’
welfare state, state ownership, NHS, etc, 1943</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">These are excerpts from a 1943
speech from Churchill as Prime Minister during World War 2. The measures
introduced by the Labour Government from 1945 were largely prefigured in this
address.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><span style="color: red;"></span></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhti0GRhyphenhyphen-Bj10fDPpSX8DY__3Ehuj3EUDHmr35O7A1yjfDBNwCPgcOLLooXh_wo1BAPUsZS_N9miB7wKan3QTIh2xGolGoaDCrK9dKEtZtXZcN-J7ktm146B6GKXDUZfA8h0-m2VuSKD8/s874/Churchill+speech%252C+excerpts+on+welfare%252C+21Mar1943.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="874" data-original-width="651" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhti0GRhyphenhyphen-Bj10fDPpSX8DY__3Ehuj3EUDHmr35O7A1yjfDBNwCPgcOLLooXh_wo1BAPUsZS_N9miB7wKan3QTIh2xGolGoaDCrK9dKEtZtXZcN-J7ktm146B6GKXDUZfA8h0-m2VuSKD8/w477-h640/Churchill+speech%252C+excerpts+on+welfare%252C+21Mar1943.JPG" width="477" /></a></div><br /> <p></p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Thanks for the bomb, 1952</b></h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">To finish with a bang, here is
Churchill as Prime Minister again, thanking the Labour Party for its efforts in
making the UK a nuclear weapons power:</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“All those concerned in the production of the first British
atomic bomb are to be warmly congratulated on the successful outcome of an
historic episode and I should no doubt pay my compliments to the Leader of the
[Labour] Opposition and the party opposite for initiating it.” <i>Hansard</i>,
24 October 1952</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 18 October 2021</p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Where not
otherwise indicated, the quotations are taken from Clive Ponting’s excellent
book, <i>Churchill</i>, 1994.</p>
</div>
</div>
Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com4tag:blogger.com,1999:blog-3591186784456519139.post-27880088507657927842021-09-14T10:48:00.008+01:002021-10-30T11:18:04.955+01:00World Power<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><p class="MsoNormal" style="margin-bottom: 6pt;">Few countries can exert much
power in the rest of the world. There are just five permanent members of the
United Nations Security Council, the ones who can cast vetoes on important UN
decisions. Or take the G7, a US-led political forum of rich countries that has,
well, seven members. The concentration of global power is extreme, and it rests
upon the different ways a country can have influence over how the world works.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Some of these ways are obvious,
for example, using military power to force another country to submit. Many are
not, especially those that are linked into the system that envelops the world
economy. Five dimensions of international power can be used to gauge the status
of countries.<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> These show
not only how the US is far more prominent in the hierarchy than suggested by a
simple measure of economic size, such as GDP. They also map the relative
importance of other countries and throw new light on a major geopolitical issue
today: the rise of China.</p>
<h2 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">China rising</span></b></h2>
<p class="MsoNormal" style="margin-bottom: 6pt;">China was once seen mainly as an
important supplier of cheap goods and a valuable dynamo for the world economy.
Now the US looks upon China as the biggest threat to its global interests.
Every year, many hundreds of pages on this topic are published for the US
Congress, adding to a steady stream of material directed at US policymakers
from think tanks and lobby groups.<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">In 1990, China accounted for
just 2% of the world's GDP. Since then, that share has doubled every decade and
China will likely account for 18% in 2021.<a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a>
This has worried the small group of countries that dominates the world’s key
institutions, because quantitative changes can also bring about qualitative
shifts. Will they be able to stay in charge as they had done, now that a
country from outside the rich club has risen to the fore? That question is
posed especially for the US. All those institutions – the United Nations, the
IMF, the World Bank, the World Trade Organisation and others – have been shaped
by it.<a href="#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a>
The first three also have headquarters in Washington DC or in New York.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Russia – formerly, the Soviet
Union – is the traditional US political enemy. Yet, it is principally a
military obstacle, notwithstanding the more recent US belief that it can
influence Presidential elections through buying Facebook advertisements. China,
by contrast, presents a much wider challenge to how the US sets the rules for
the world, as seen when it ignores US-inspired sanctions against countries such
as Iran. US political rhetoric and economic measures against China picked up
with President Trump, and they have continued unabated with the new Biden
administration. All the international meetings held by Biden and his officials
since the start of the 2021 – at the G7, at NATO, in Europe and in Asia – have
had a strong anti-China theme.</p>
<h2 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">Measuring power</span></b></h2>
<p class="MsoNormal" style="margin-bottom: 6pt;">Power has many dimensions. Here
are five aspects of economic and political power that are relevant for a
country’s <i>international</i> influence.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Economic size is one measure of
a country’s weight in the world, usually measured by its <b>GDP</b>. That GDP
number is broadly related to the size of its domestic market, how many big
corporations it has, and how important it is in international trade. The US is
the world’s biggest economy, accounting for roughly 24% of world GDP. G7
countries – the US, Japan, Germany, the UK, France, Italy and Canada – together
account for 45% of world GDP, despite having only 10% of the world’s
population. GDP counts for more than people when it comes to power and
influence.<a href="#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a></p><p class="MsoNormal" style="margin-bottom: 6pt;"><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"> </span></span></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKQnlcvPw8mVSPZ_8BRt3keScqpgwinMHDr_hh7wuE0oK4A9hsvHs4b5pRZIQ8xi79SA54U4IvPsy16rUXGlPa8C1cHXBYGCROY7WLTVkjS6c7r6EHaheNvo1HsoT7jXLw54J7TPC1dhI/s804/Index+of+Power%252C+Top+6%252C+2020%252C+TN%252C+details%252C+notes%252C+14Sep2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="794" data-original-width="804" height="632" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKQnlcvPw8mVSPZ_8BRt3keScqpgwinMHDr_hh7wuE0oK4A9hsvHs4b5pRZIQ8xi79SA54U4IvPsy16rUXGlPa8C1cHXBYGCROY7WLTVkjS6c7r6EHaheNvo1HsoT7jXLw54J7TPC1dhI/w640-h632/Index+of+Power%252C+Top+6%252C+2020%252C+TN%252C+details%252C+notes%252C+14Sep2021.JPG" width="640" /></a></div>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">By 2020, China’s GDP was just
under three-quarters of that for the US. Japan’s GDP was roughly a quarter the
size of the US, Germany was at nearly a fifth, and the UK and France were each
at roughly one-eighth. All countries have been affected by the Covid-19
pandemic, and it has had little effect on their relative positions. However, US
sanctions will have curbed China’s growth to some extent in recent years.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">A country’s <b>foreign assets</b>
are another important measure of power. Such assets include the ownership of
companies operating in other countries, together with holdings of financial
securities, such as equities and bonds, and ownership of real estate.<a href="#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a>
These indicate how much control it has over resources in other countries, and
the size of the assets is related to the potential revenues it can gain from
them.<a href="#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">At the end of 2020, the US had
by far the highest stock of foreign assets, at roughly $22.7 trillion. Germany
was next in line, but well below that with ‘only’ $6.3 trillion, and the
Netherlands, the UK and France followed. China and Hong Kong’s foreign assets
amounted to just under $5 trillion.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">These asset ownership numbers,
as much other published information, do not allow for the flows of finance
between major countries and tax havens. Tax havens are registered as the owners
of significant foreign assets in official data, yet most of their funds
originally come from major country investors.<a href="#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a>
This should not have much effect on the top level calculations used here.<a href="#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">International lending and
borrowing by <b>banks</b> is a third measure. These data show how much a
country is involved in channelling funds around the world, and are also linked
to how far that country is a finance hub that can profit from international
dealing. London is the largest centre for international banks. While it may be
a surprise that London is bigger than Wall Street on this measure, that is
because much US banking business is oriented towards the domestic US economy,
not so much internationally.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Nevertheless, Brexit has had
some impact on UK international banking. With the UK outside the single market
for financial services in the EU, some banks have shifted their operations from
the UK and into EU centres. France has gained most ground because of this, and
jumped into second place just behind the UK by the end of 2020, moving ahead of
the US, which was in third place (see the next chart).</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEju8TpkxKY7Umc7ZwFWIsGDlxvZLqlXLIi9OtC78xV8uHpUeIj3xz6ahOwU_7YrvD-S9GqWiEWHIPvLTuKsioSxJ_C4n8pgJkyqO9GfDkBJ0Zx3LUKKJXhqD037vf-7vc_GK8XBa-xBi3A/s930/BIS%252C+International+banking%252C+FR%252C+US%252C+JP%252C+DE+vs+UK%252C+2015-20.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="559" data-original-width="930" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEju8TpkxKY7Umc7ZwFWIsGDlxvZLqlXLIi9OtC78xV8uHpUeIj3xz6ahOwU_7YrvD-S9GqWiEWHIPvLTuKsioSxJ_C4n8pgJkyqO9GfDkBJ0Zx3LUKKJXhqD037vf-7vc_GK8XBa-xBi3A/w640-h384/BIS%252C+International+banking%252C+FR%252C+US%252C+JP%252C+DE+vs+UK%252C+2015-20.JPG" width="640" /></a></div><br /><p></p><p class="MsoNormal" style="margin-bottom: 6pt;">How much a country’s currency is
used in foreign exchange (<b>FX</b>) deals for trade and investment is another
aspect of its economic status in the world. Directly or indirectly, this also
adds to its global power. This is most evident for the US with the dollar,
which is involved in 88% of all currency deals.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Most commodities and important
industrial goods, including oil, metals, grains, technology, pharmaceutical and
aerospace products, are priced for trade in terms of US dollars. The same is
true for many investment and financial deals, helped by the US having the
world’s largest stock and bond markets, with international private and official
funds buying those securities. Even the China-led Asian Infrastructure
Investment Bank conducts its business mainly in US dollars.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">US power in this FX dimension
relies on the fact that nearly all deals involving US dollars must be settled
through the <i>domestic US banking system</i>. Images of drug dealers and
criminals crossing borders with bags of cash may be good for the cinema, but
they do not represent what really happens to international transfers of funds.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This means that if the US
government doesn’t like you – whether you are an individual, a company or a
country – then it can try to prevent you from doing currency deals, even if you
are not based in the US. If a bank nevertheless does deal with you in dollars,
or even in another currency, then the US can fine that bank and threaten to
shut it out of the huge US market. The US government’s Treasury Department has
a special agency for this purpose, appropriately named the Office of Foreign
Assets Control.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Other countries with important
currencies could try to exert power in the same way, but their currencies have
far less international significance. For example, the euro’s share of world FX
markets is just 32%,<a href="#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a>
with the Japanese yen half of that in third place and the UK’s pound sterling
in fourth.<a href="#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> So far,
China’s renminbi currency has remained very minor in terms of global trading,
at around 4%.<a href="#_ftn12" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> This is
based upon the relatively late inclusion of China in financial markets,
together with many more government controls on the flow of capital than is the
case for other major countries.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The amount of <b>military
spending</b> is a simple gauge of how far a country can use force against
another, or threaten to use it, and is the fifth measure of power used. The US
is once again in the top rank here, and it also has military bases in over 50
countries. By contrast, China has bases in just three other countries
(Djibouti, Myanmar and Tajikistan).</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Even if much US military
spending is, in reality, more of an indirect subsidy to the domestic US economy
and corporations, or is on equipment with inflated prices, its total spending
of a huge $778bn in 2020 still gave the US plenty of scope to project power.
This sum was more than three times bigger than China’s and twelve times bigger
than Russia’s. The US lead over other major countries in military spending has
increased in the past two years.</p>
<h2 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">Power outcomes</span></b></h2>
<p class="MsoNormal" style="margin-bottom: 6pt;">Each of the five factors has
some limitations regarding its accuracy or coverage. But together they give a
good summary of power and are available for a large number of countries. This
measurement of global power is endorsed by how the results for the top 20
countries include the five permanent members of the UN Security Council, all of
the G7, and most of the G20 countries.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">A country may have a high score
on one component and very little on another, but all except a few countries in
the world have a negligible score on <i>all</i> of them. The US has an index
score of 93.2, with China well below in second position at 37.7. Only six other
countries have an index score above 10.0. More than 150 countries score less
than 1.0. This picture of the extreme hierarchy of power is a challenge to
anyone who uses the term ‘international community’!</p><p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghESbZAnmEUAQsZLpLb-jML97YD_mCAEv668Y-JVWrrTPEX0xqtf57rJpZrAQCsdi1bQkWqJMVU6AiOq9fRmzboSrhg1VRfWPaaIUzXs1rlkLIxF6BscXNh18kOL3WLwww4osFHJ0Cn3o/s822/Index+of+Power%252C+Top+20+in+2020%252C+TN%252C+14Sep2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="635" data-original-width="822" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghESbZAnmEUAQsZLpLb-jML97YD_mCAEv668Y-JVWrrTPEX0xqtf57rJpZrAQCsdi1bQkWqJMVU6AiOq9fRmzboSrhg1VRfWPaaIUzXs1rlkLIxF6BscXNh18kOL3WLwww4osFHJ0Cn3o/w640-h494/Index+of+Power%252C+Top+20+in+2020%252C+TN%252C+14Sep2021.JPG" width="640" /></a></div><p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"><b><span style="font-size: 11pt; mso-bidi-font-size: 12.0pt;">Sources & notes:</span></b><span style="font-size: 11pt; mso-bidi-font-size: 12.0pt;"> See the first chart for
details.</span></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This calculation of power
depends upon individual country values and does not consider the effect of
alliances between countries, or factors that are not as easy to quantify, such
as cultural influence. If included, these would only add to the power of the US
and generate a more towering image. Consider NATO, for example, which accepted
that the ‘North Atlantic’ security region extended into Afghanistan, the first
US target after September 2001. Or consider how US social media companies
dominate the Internet, how the world’s youth wear baseball caps, like,
backwards, and how even India’s massive film industry calls itself ‘Bollywood’.</p>
<h2 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">What next?</span></b></h2>
<p class="MsoNormal" style="margin-bottom: 12pt;">The US is worried about the
rise of China’s economy, although US power extends much further than a simple
economic measure would suggest. A look at the power index for the major
countries over the past two decades shows how China has also built some non-GDP
dimensions of power, notably in military spending, international banking and
the ownership of foreign investment assets.</p><p class="MsoNormal" style="margin-bottom: 12pt;"> </p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioeOEAVqsH58ND17Qgf8385ipOFWSBQAoRNXi2lt9lLzJ5lga0BTPCSNbihK3hapFwddCtRnt6hkXEVHQmWebln-imuZzvA3Yir3_ksrVZqyihcOjQzdKMSR4FPxoYJZLD9CiFeKi3q4Q/s802/Index+of+Power%252C+Top+6+breakdown%252C+TN%252C+2004-2020%252C+14Sep2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="619" data-original-width="802" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioeOEAVqsH58ND17Qgf8385ipOFWSBQAoRNXi2lt9lLzJ5lga0BTPCSNbihK3hapFwddCtRnt6hkXEVHQmWebln-imuZzvA3Yir3_ksrVZqyihcOjQzdKMSR4FPxoYJZLD9CiFeKi3q4Q/w640-h494/Index+of+Power%252C+Top+6+breakdown%252C+TN%252C+2004-2020%252C+14Sep2021.JPG" width="640" /></a></div><br /><p class="MsoNormal" style="margin-bottom: 6pt;"><b><span style="font-size: 11pt; mso-bidi-font-size: 12.0pt;">Sources & notes:</span></b><span style="font-size: 11pt; mso-bidi-font-size: 12.0pt;"> See the first chart for
details.</span></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">In recent years, China dislodged
the UK in number two spot on this ranking of world power. The UK is the world’s
fifth largest economy, but has its status boosted by its role in international
banking. That reflects its position in world finance, although the form that
this takes is also changing with the rise of China and other Asian countries,
and the relative decline of European economies.<a href="#_ftn13" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a>
The more that international business grows outside of the traditionally
dominant group of countries, the less important are the rules that they impose
for how the world economy must work.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The US sees the rise of China
not just as unwelcome competition, especially in the technology sphere, but
also as a serious future threat to its hegemonic status, one that must be dealt
with today. Other countries closely linked to the US, and especially other
Anglo members of the ‘5 Eyes’ spying network (UK, Australia, Canada, New
Zealand) are in a similar position, because they have been an integral part of
a system that has dominated the world since 1945. That is why the rise of China
inevitably becomes a geopolitical issue.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Some countries in Europe,
particularly Germany, have a different perspective. Politically they are
pro-US, and they are also economically cautious about China. But they would
also like to have an alternative to relying solely upon the US, or US
permission, whether that is for technology, for energy, or for other vital
supplies. They are right to be concerned that the US is inclined to unilateral
policy moves that can go against European interests. That remains true under
Biden, although his administration stepped back from its former hard stance
against the completion of the Nord Stream 2 gas pipeline from Russia.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Not surprisingly, China has
responded to the US policies over the past decade, and the risk that as a
result of these policies it could be pushed to the edges of a world economy
controlled by hostile countries.<a href="#_ftn14" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a>
A key part of its response has been to press ahead with the massive trade and
investment programme begun in 2013: the ‘Belt and Road Initiative’. This
involves more than 130 countries, mainly in Asia, Europe and Africa, but also
extending into Latin America. Faced with US sanctions and political manoeuvres,
China is building up a network over which the US and its allied powers have far
less control.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">These developments will foment
divisions in the world that every country will have to deal with. In the next
few years, we will live in interesting times as the established powers led by
the US fight to maintain their domination.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 14 September 2021</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> <b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;"> </span></b></p><h2 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b><span style="font-size: 14pt; mso-bidi-font-size: 12.0pt;">APPENDIX</span></b></h2>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigr8jbh6fT99_PUa8XVnjl2aPIWF3NruFVRcBhPpO5M5JbAZfx2fc2Ekc3J9ke8k6RqpaXZc-wBhwWFsCaOeCNlfmCDFIPXEc-S4PaYdyUMh48lBfGtZc5QVkyiRPnyXfdbCsCGkRZ9KY/s859/Methodology+box%252C+Index+of+Power%252C+Sep2021.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="859" data-original-width="648" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigr8jbh6fT99_PUa8XVnjl2aPIWF3NruFVRcBhPpO5M5JbAZfx2fc2Ekc3J9ke8k6RqpaXZc-wBhwWFsCaOeCNlfmCDFIPXEc-S4PaYdyUMh48lBfGtZc5QVkyiRPnyXfdbCsCGkRZ9KY/w482-h640/Methodology+box%252C+Index+of+Power%252C+Sep2021.JPG" width="482" /></a></div><br /> <p></p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> This article
updates my analysis of September 2019, where I showed that the Index of Power
had put China in #2 position. See <span style="color: red;"></span><a href="https://economicsofimperialism.blogspot.com/2019/09/index-of-power-update-2018-19-china-2.html ">here.</a> <span style="mso-spacerun: yes;"> </span>The Index calculation here adds a country’s
foreign portfolio assets to its direct investment assets, to get a better
measure of its total foreign assets. (Previously, I only counted FDI, but I
have since found good data on portfolio assets.) It also makes some adjustments
to eliminate possible double counting of intra-China relations between China
and Hong Kong, which are treated as separate countries in all official data.
See the Appendix to the article for more details.</p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> For example,
the US-China Economic and Security Review Commission has issued annual reports
since 2000. Its December 2020 report was nearly 600 pages:
https://www.uscc.gov/annual-report/2020-annual-report-congress</p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> Sources for
GDP and other data used are given in the Appendix to this article. The US share
of the world economy has fallen from 30% in 1990 to 24% in 2021.</p>
</div>
<div id="ftn4" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> The former
institutions, or its predecessor, the GATT for the WTO, emerged from the
post-1945 political realignment led by the US. The President of the World Bank
is almost always a US citizen, while the Managing Director of the IMF is always
a European. The WTO has had a more diverse list of Directors General. Decisions
by each institution are rarely passed if the US disagrees, a result helped in
the case of the IMF by a voting allocation that always enables the US to block
any IMF action.</p>
</div>
<div id="ftn5" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> GDP numbers
can be calculated in various ways. Here, the nominal value of GDP in a single
currency is used to compare countries.</p>
</div>
<div id="ftn6" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> In standard
official statistics, ownership of 10% or more of a company in another country
is considered foreign <i>direct</i> investment. Ownership of less than 10% of
the company’s equity is considered a foreign <i>portfolio</i> investment, as
are holdings of foreign debt securities. These are all added together here to
give the measure of a country’s total foreign assets.</p>
</div>
<div id="ftn7" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> Large corporations,
usually from rich countries, can also profit from their commercial domination
of producers in other countries via so-called supply chains, for example,
Apple’s relationship with its suppliers, or western fashion companies getting
their products made in Asian countries. However, these relationships are difficult, if not
impossible, to measure.</p>
</div>
<div id="ftn8" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a> One study
shows, for example, how a nationality-based measure could greatly increase the
registered US and other major country holdings of bonds and equities in particular
countries. These holdings are under-estimated by the usual residency-based
measures in official data, as the residency can also be a tax haven. See pages
44 and 48, especially, of:
https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_2019118_Revised.pdf</p>
</div>
<div id="ftn9" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a> This is
because the data I use measure <i>total</i> outflows from a country, which
should include the funds first sent to tax havens before being resent
elsewhere. However, the ‘round tripping’ of funds to escape tax would not be
counted properly. For example, if US investors sent funds to a company registered
in the Cayman Islands for the purpose of investing back in US assets, that first flow
would appear as a foreign asset of the US when it is not.</p>
</div>
<div id="ftn10" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a> The euro’s
share of global FX markets is divided up among the 19 euro country members
according to their relative GDPs. Germany has the biggest share of that,
followed by France, Italy and Spain.</p>
</div>
<div id="ftn11" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> Note that
the total shares of all currencies add to 200% because there are two currencies
in each foreign exchange deal.</p>
</div>
<div id="ftn12" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref12" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> Less
surprisingly, the separate Chinese currency of Hong Kong also has only a small
role in world FX trading. Its currency value is tied very tightly to the US
dollar’s.</p>
</div>
<div id="ftn13" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref13" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a> See Tony
Norfield, <i>The City: London and the Global Power of Finance</i>, Chapter 9
and the Afterword to the paperback edition, Verso, 2017.</p>
</div>
<div id="ftn14" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref14" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a> For a
discussion of these topics, see my articles ‘Racism & Imperial Anxiety: US
vs Huawei’, 16 April 2019, <a href="https://economicsofimperialism.blogspot.com/2019/04/racism-imperial-anxiety-us-vs-huawei.html">here</a>, and ‘China and US Power’, 14 July 2020, <a href="https://economicsofimperialism.blogspot.com/2020/07/china-us-power.html">here</a>, each one on
EconomicsofImperialism.blogspot.com.</p>
</div>
</div>
Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-9938267496188160032021-09-12T16:38:00.003+01:002021-09-21T23:05:34.189+01:00Imperialism & the Working Class<p> <!--[if gte mso 9]><xml>
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</p><p class="MsoNormal" style="margin-bottom: 6pt;"><i></i></p><div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjN2SbZ4TgiV2qz2eK6H-l1kjnfZcVZ09DcgBsfKabPtIZpjgUvXYS4HHcLmMFOEr-05OtW7qT82IxL7mQos4f3RrHY7hp0OajnI0-KTI6uODieXW4ltzoCl6EhF_YnPwQKgogqIcAwFFQ/s595/Discovering+Imperialism%252C+book+cover%252C%252C+Day+etc%252C+2012.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="595" data-original-width="398" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjN2SbZ4TgiV2qz2eK6H-l1kjnfZcVZ09DcgBsfKabPtIZpjgUvXYS4HHcLmMFOEr-05OtW7qT82IxL7mQos4f3RrHY7hp0OajnI0-KTI6uODieXW4ltzoCl6EhF_YnPwQKgogqIcAwFFQ/w429-h640/Discovering+Imperialism%252C+book+cover%252C%252C+Day+etc%252C+2012.JPG" width="429" /></a></i></div><i><br /> </i><p></p><p class="MsoNormal" style="margin-bottom: 6pt;"><i>Discovering Imperialism:
Social Democracy to World War I</i> is an anthology put together by Richard Day
and Daniel Gaido, in which they translate many articles not previously
available in English.<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
They also give valuable introductions to the authors and the political times in
which they lived. Their book raises many issues arising from contemporary
imperialism, and shows the political consequences of the different ways in
which imperialism was understood. Lenin’s <i>Imperialism: the Highest Stage of
Capitalism</i>, written in 1916, is not included in the book, but it is clear
that this work, although the best, was just one of a large number of
publications on the question.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Many articles and debates the book covers, from the 1890s up
to around 1916, remain relevant today. This is especially true for those relating to nationalism
and imperialism, even though the forms taken by imperialism have changed a lot
in the past century. However, the book’s articles, and its editors, do not
explore a critical feature.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">How was it that the anti-imperialists
often had the better arguments – and sometimes even won – but they were
nevertheless beaten by social forces, both inside and outside the debating
forums of social democracy? A devastating, murderous war was the result, in
which the working classes of the major powers fought alongside their rulers.
Only in Russia was there a practical, political and successful response to the
outbreak of war – led by the Bolsheviks in the 1917 Russian Revolution.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Here I want to focus on one
issue that arises from a quotation the book provides from Friedrich Engels in
1885:<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">“The truth is this: during the period of England’s
industrial monopoly the English working-class have, to a certain extent, shared
in the benefits of the monopoly. These benefits were very unequally parcelled
out amongst them; the privileged minority pocketed most, but now and then even
the great mass had at least a temporary share. And that is the reason why,
since the dying-out of Owenism, there has been no socialism in England. With
the breakdown of that monopoly, the English working-class will lose that
privileged position; it will find itself generally – the privileged and leading
minority not excepted – on a level with its fellow-workers abroad. And that is
the reason why there will again be socialism in England.”</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Here, Engels notes the absence
of any socialist movement in England, sensibly disregarding the largely
irrelevant, small socialist groupings that were around at the time. Both Marx
and Engels recognised that this absence needed to be explained, since England
was the most capitalistically developed country in the world and had a large
proletariat. Why was this proletariat not drawn to socialism by their
experience of capitalism? Comments from Marx and Engels elsewhere did note the <i>bourgeois</i>
politics of the English ‘labour movement’, but here Engels here pins down the
cause.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The monopoly of England in the
world economy went well beyond industry. It was also heavily backed up by
domination in the areas of international commerce and finance – shipping,
warehousing, trade finance, insurance, loans, etc. For example, from 1874-193,
Britain actually had a <i>deficit</i> on its balance of trade amounting to
around 5-6% of GDP per year: exports of goods were well below imports, though
the latter were principally raw materials and foodstuffs. Massive revenues from
services, particularly financial ones, and from foreign investments, offset
this big deficit, and gave Britain a current account <i>surplus</i> of around
5% per annum.<a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">All these revenues, not industry
alone, gave England its economic fortune and allowed relatively favourable
conditions for the working class. While Engels notes that it was the more
privileged sections of workers who benefited most from this, the benefits also
extended to the mass of people. This is not to say that they were always having
a great time. The point was that these – even potential – benefits acted as a
dampener on anti-capitalism.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">This is the critical issue. The
usual argument from the left is that it is the trade union or labour
movement/party leaders who corrupt the masses, compromise with the bosses and
back capitalism. While the practice and political outlook of these leaders
support such an assessment, it also ignores how the masses themselves can be
open to being politically ‘corrupted’. Workers were not ignorant of wider
developments in the country or where their immediate economic interests lay. In
Britain, especially, the popular press was full of stories about the colonies,
foreign markets and Britain’s status in the world.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The political problem is not
this so-called labour aristocracy (though this mistaken argument was also used
by Lenin); the problem instead is far more fundamental. It is one where the
political and economic experience of the mass of people makes them see benefits
in being loyal to the rich capitalist state to which they ‘belong’.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Popular loyalty to the state is
expressed very directly whenever that state is under threat or challenged by
others. That is because those threats or challenges are also threats and
challenges to ‘our way of life’. People may not go on a march to call for war,
but they will almost always agree with potential military action,
overwhelmingly support military spending and extol ‘our boys’ when they go to
fight.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Getting a popular endorsement
for military aggression is fairly easy when there seems to be little risk
involved. In the 2001 invasion of Afghanistan, that country was not in a
position to fight back. The 2003 invasion of Iraq was a little trickier for
popular opinion, given stories that the evil dictator might have had ‘weapons
of mass destruction’. If the opponent is a major country, then the build up of
popular opinion in favour of action takes a bit longer. Still, as shown by the
example of the British-German naval arms race in the early 1900s, there was
enough support on both sides of the conflict-to-come to continue an escalation
into war.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">I would excuse Engels
for his attempt in 1885 at revolutionary optimism, thinking that a future
breakdown of England’s monopoly would once again lead to socialism in Britain.
At least he took proper account of the current situation. If we did the same,
we would be able to recognise what has happened to the mass of people in
many richer countries – especially in the US, the UK and in the rest of north
west Europe. It has <i>not</i> been a move towards socialism as their privileges
in the world economy are challenged. Instead, a nationalist and pro-imperialist
mentality has become more aggressive in defence of those privileges.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 13 September 2021</p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Published by
Brill in 2012. The book is over 950 pages; while the hardback is on sale for a ridiculously
high price, the paperback edition is much cheaper.</p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> This text is
taken from an article by Engels in the German Social Democratic Party’s <i>Die
Neue Zeit</i> in June 1885, ‘England in 1845 and in 1885’. That article was
originally published some months earlier in the English paper, <i>Commonweal</i>.
The article is available in Marx & Engels’ <i>Collected Works</i>, Volume
26, p301.</p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> See P J Cain
and A G Hopkins, <i>British Imperialism: 1688-2000</i>, Pearson 2002, p165.</p>
</div>
</div>
Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-80558342242834152542021-04-06T10:01:00.001+01:002021-04-06T10:01:37.308+01:00Cryptocrap<p> <!--[if gte mso 9]><xml>
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</p><p class="MsoNormal" style="margin-bottom: 6.0pt;">These points are about private
‘digital currencies’ like Bitcoin, not about central bank e-currencies, on
which I will write another time. In what follows, the term ‘Bitcoin’ is used to
refer also to other types of cryptocurrency.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Bitcoin’s growth from just being
a tech curiosity was driven by popular discontent with banks and banking
systems, mainly in the US after 2008.<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a></p><p class="MsoNormal" style="margin-bottom: 6.0pt;"><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"> </span></span></p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;"><b></b></p><div class="separator" style="clear: both; text-align: center;"><b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhm3oJII-aFSTd28VXZ8LJpG_68zDSaw5iB-5lHcYsiWKwQPkABXhxr6A7h7M1fDLUhRrgp2WrPzFQHElZLPY7dfbtVvnJxUgLZ3kQSnHKjsRNLi3FMG3H-KAXkchHoBFJ-0Ws9t6ziXFw/s563/Bitcoin.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="558" data-original-width="563" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhm3oJII-aFSTd28VXZ8LJpG_68zDSaw5iB-5lHcYsiWKwQPkABXhxr6A7h7M1fDLUhRrgp2WrPzFQHElZLPY7dfbtVvnJxUgLZ3kQSnHKjsRNLi3FMG3H-KAXkchHoBFJ-0Ws9t6ziXFw/w400-h396/Bitcoin.JPG" width="400" /></a></b></div><b><br /> </b><p></p><h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Supply & Demand</b></h3>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">One aspect is a digital ‘coin’,
whose supply is generated by a computer algorithm that is progressively more difficult
to solve and which supposedly reaches an absolute limit. (Supporters hope
computing technology does not catch up too quickly!)</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Demand for this coin could drop
to zero, but instead has been boosted by a prolonged period of extremely low,
even zero-negative, interest rates and erratic stock markets and commodity
prices. These made other outlets for surplus investor funds look less
attractive, and have led to a big jump in speculative interest.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">The market for Bitcoin and
published prices are now run through relatively new exchanges, some of which
have been hacked with the loss of coin accounts of users. Financial companies
have also moved into offering Bitcoin-related funds to their clients, as
another way to collect management fees.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Transfers</b></h3>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Another important aspect of
Bitcoin is the ‘blockchain’ transfer mechanism for shifting ownership of the
coins. This is a form of Internet-based system, running outside of the private
banking system of any country. This has also been an attraction, especially for
those annoyed with bank charges. But central banks, and others, are now copying
blockchain systems for the secure transfer of information and titles of
ownership. Official e-currencies will also be a challenge to Bitcoin.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Even students of idiotic
populism are bemused that some people have placed trust both in an algorithm
and in a transfer mechanism they do not understand, and over which they have no
means of redress or protection (like deposit insurance) if anything goes wrong.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">A small number of sellers of
goods and services have begun to accept payment in Bitcoin, largely as a
marketing and PR exercise. But the Bitcoin amount to pay still depends upon its
price versus the currency in which the goods and services are priced. No wages
or salaries are paid in Bitcoin; neither can any taxes be paid in Bitcoin.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Price risk</b></h3>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">The sharp trend higher in
Bitcoin prices since October 2020 has continued to fuel demand, despite the
dramatic volatility. ‘Buy on dips!’ is the speculative mantra for now. But a
strongly rising trend means that nobody would be foolish enough to borrow
Bitcoin and make it a long-term liability. This will certainly limit any wider
use of Bitcoin in the economy, though it would add to its attraction as a
speculative asset. If Bitcoin prices fall, that could easily prompt an extreme
depreciation, given the nature of the demand for it so far. Even a flattening
out of Bitcoin prices would risk an abrupt reversal; especially if/when global
interest rates begin to rise.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Tony Norfield, 6 April 2021</p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> In my
previous article about Bitcoin <a href="https://economicsofimperialism.blogspot.com/2014/06/bitcoin-digital-alternative.html">here</a>,
I underestimated how far low interest rates and speculative mania would boost
its price, but the key points I made there remain valid.</p>
</div>
</div>
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</p>Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com3tag:blogger.com,1999:blog-3591186784456519139.post-30322737472978809312021-01-20T13:41:00.001+00:002021-01-20T18:15:05.667+00:00The UK’s Singapore-on-Thames Delusion<p>
</p><p class="MsoNormal" style="margin-bottom: 6pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5-RYG5u_tMDQ_swCiz6nVLYelNAJYcUO6IEricyacuf9II19ezTfR91JjBW_BNVvqTXmR4gOAZd-FEkqYr8K0sktmojQBMnhmtIAtWuVLdluZLdNeKvTVjhPQLtJ2qK1-bBNcIwL9V3k/s583/Thames+scene.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="459" data-original-width="583" height="315" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5-RYG5u_tMDQ_swCiz6nVLYelNAJYcUO6IEricyacuf9II19ezTfR91JjBW_BNVvqTXmR4gOAZd-FEkqYr8K0sktmojQBMnhmtIAtWuVLdluZLdNeKvTVjhPQLtJ2qK1-bBNcIwL9V3k/w400-h315/Thames+scene.JPG" width="400" /></a></div><br /><p></p><p class="MsoNormal" style="margin-bottom: 6pt;">I will not spend much time on
this topic because it is so ridiculous. But the notion that the UK can become a
‘Singapore-on-Thames’ seems to underlie some Brexit fantasies. Do these have
any foundation?</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">First, here are some basic
facts. The UK’s GDP is roughly 8 times bigger than Singapore’s; its population
is more than 10 times bigger. Singapore used to be a British colony, and
developed from being a key Asian trading hub for the East India Company. The UK
is a declining imperialist power. It once had a go-between role for the US in
Europe, and still remains a major backer of imperial oppression around the world, but now has its pretensions at diplomatic expertise seen as very
irritating.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;">Singapore sling <br /></h3><p class="MsoNormal" style="margin-bottom: 6pt;">In the field of finance, the UK
was already a multiple of Singapore’s weight in the world economy before it
finally left the European Union: 6 times bigger in international banking, 5
times bigger in FX trading and 30 times bigger in financial derivatives
turnover. Whereas Singapore has a regional niche in global finance, the UK has
been a leading global player. </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">It will be difficult, not to say
impossible, to further extend the UK’s financial position outside the EU. Any
belief that messing up links with the major trading bloc in Europe is a good
economic decision – while remaining outside USMCA, RCEP and other trading blocs
– would also need to undergo a sanity check.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Some reports have suggested that
City of London financial companies contributed a great deal to the Vote Leave
campaign in the 2016 UK Brexit referendum. Quite likely some did, though these
seem mainly to have been hedge funds and so-called venture capitalists. By
contrast, the overwhelming majority of City business, from banks, to life
insurance companies, to pension funds and other asset managers, to legal and
accounting firms, were clearly pro-Remain.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">All City business has benefited
from the existing UK tax laws developed over decades. But the hedge funds and
so on would have been far less dependent upon EU-related business
relationships, or will have dealt more directly with ‘offshore’ centres and
Switzerland. That will account for the divided opinion. In the broader
corporate arena, with one or two exceptions, businesses were pro-Remain, with only a section
of small businesses being pro-Leave. Nevertheless, big companies did little to
voice that opinion before the 2016 vote because they did not want to annoy half
of their customers.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The end result was that, for
reasons explained elsewhere on this blog (see <a href="https://economicsofimperialism.blogspot.com/2016/06/political-fundamentals-and-uk-brexit.html">here</a> and <a href="https://economicsofimperialism.blogspot.com/2016/06/brexit-developments.html">here</a>), despite capitalist opinion being
greatly against it, the British working class helped enable Brexit, by 52%
versus 48% in 2016. A more up-to-date measure of that political outlook can be
seen in <a href="https://economicsofimperialism.blogspot.com/2019/12/all-quiet-on-western-front.html">maps</a> showing the large December 2019 Conservative election majority vote in
England.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;">Where does this leave
Singapore-on-Thames?</h3>
<p class="MsoNormal" style="margin-bottom: 6pt;">Singapore has exports that are
some 90% bigger than its GDP, whereas UK exports are ‘only’ around 30% of GDP.
So, onwards and upwards to Singapore-on-Thames? As you might expect, there are
a few problems with this perspective.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Singapore is a small country and
an entrepôt centre, with lots of re-exports. This produces a total exports number
that is much higher than GDP because it is not based on the value-added measure
that goes into a GDP calculation. In theory, the UK could also become an
entrepôt centre, but the economic benefits of such a move are very limited.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">More than that, any such move
implies enforcing a low labour cost economic strategy. Evidently, that implies
cutting labour costs. This is at the heart of capitalist economics, and has
been explicitly embraced by Conservative pundits. </p>
<p class="MsoNormal" style="margin-bottom: 6pt;">To use the UK political cliché,
the EU would also be very clear in protesting against this kind of policy for
being in breach of the ‘level playing field’ of fair competition between the UK
and the EU post-Brexit. The EU was once grateful to the UK for proposing policies
to cut labour costs, but now that is seen both as destabilising an already
shaky EU economic system and as an unwelcome, aggressive trade policy from an
ex-member of the club.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">One could imagine some benefits
of a Singapore-on-Thames – for example, free wifi and a good transport system,
like in the real Singapore. But stupidity is its own reward, and the reality is going to be much harsher.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 20 January 2021</p>
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</xml><![endif]--></p>Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-88358845669938990222020-12-11T16:45:00.000+00:002020-12-11T16:45:41.859+00:00Airbnb's As and Bs<p class="MsoNormal" style="margin-bottom: 6.0pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM3p1TkgcdjFDzXuMnxyYkOv9begeNzAeX_RfJPQe0uf7b9O48OoZrwr8UoCkcnyI_oL6dhnx-8Cd-WvoR3FockuHn-bYfQUFdulUWM1bEHdyKlF38WaP15TPKCdvYv__yLMvSuSmycpI/s634/airbnb+logo.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="634" data-original-width="585" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM3p1TkgcdjFDzXuMnxyYkOv9begeNzAeX_RfJPQe0uf7b9O48OoZrwr8UoCkcnyI_oL6dhnx-8Cd-WvoR3FockuHn-bYfQUFdulUWM1bEHdyKlF38WaP15TPKCdvYv__yLMvSuSmycpI/w369-h400/airbnb+logo.JPG" width="369" /></a></div><br /> <p></p><p class="MsoNormal" style="margin-bottom: 6.0pt;">You would think that in a
capitalist market one person’s million dollars would count the same as
another’s. After all, money is the measure of all things, as is shown by the
nonsense of putting a price on carbon emissions, or by economists judging how
much you value having access to water by the price you would be prepared to pay
for it. But in the mechanism of imperial finance, such equality does not hold.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">This is most clearly shown in
what is allowed by the powers that run the financial system. For example, the
US makes sure that its dollar-dominated international banking network only
accepts or pays funds from companies or countries that do not face its many
sanctions. That is evident to those who read the news media. What is far less obvious
are the ways in which, even among the rich, and even within the US itself, the
financial system offers other means of reinforcing the inequality of wealth and
power.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Take Airbnb’s recent sale of
shares on the market in its IPO. The company raised around $3.7bn by selling a
small stake in its ownership via 51.55 million so-called Class A shares, and
that valued the whole company at around $47bn. A big jump in its shares from
the offer price of $68 to around $140 gained market news attention, but a more
interesting story was in the background, one that concerns what a Class A share
represents.</p>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: left;"><b>Class inequality, even among
capitalists</b></h3>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">As I have pointed out before in
reviews of <a href="https://economicsofimperialism.blogspot.com/2017/10/google-eyed.html">Google</a>, <a href="https://economicsofimperialism.blogspot.com/2017/09/facebooks-advertising-machine.html">Facebook</a> and other Big
Tech companies, contrary to common prejudice, Class B is better than Class A.
The A shares give the holder just 1 vote each. By contrast, Airbnb’s B shares
have 20 votes each. This is an extreme divergence, even by Google/Facebook
standards, where the B/A ratio is 10/1. The B shares were not on sale, and they
are principally held by the company’s three founders and an American ‘venture
capitalist’ firm, Sequoia Capital.<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a></p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">So, the 51.55 million A shares
have that many votes, while the more than 300 million B shares have around 6 billion
votes! It also implies that no matter how many further share offers there are
of A shares, it is very unlikely that the small number of holders of the B
shares will ever lose control of the company.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">I should add here that I don’t
care about this. I just want to point out a growing practice that favours
monopolistic control of business resources, and one that gets little coverage.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">More usually, the news media
will focus on other things, such as the elaborate schemes employed by such
companies to avoid taxation. Recently there has also been discussion of the
monopolistic barriers to entry set up by such companies, and the ‘buy or bury’
tactics used by Facebook and others.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">By contrast, this is a more
hidden feature of the contemporary capitalist markets that flagrantly
contradicts notions of ownership implying control. It is nevertheless quite
consistent with the other aspects of the monopolisation of economic power seen
today.</p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;"> </p>
<p class="MsoNormal" style="margin-bottom: 6.0pt;">Tony Norfield, 11 December 2020</p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> There are
also Class C and H shares, also with no voting power, but these are not
relevant to the points made here.</p>
</div>
</div>
Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-21539766251016163932020-12-02T15:54:00.004+00:002020-12-03T09:17:25.203+00:00The Mao-Roosevelt No Meeting, 1945<p> <!--[if gte mso 9]><xml>
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</p><p class="MsoNormal" style="margin-bottom: 6pt;">In January 1945, Mao Tse-tung<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
sent a message to US President Roosevelt asking to visit the US and discuss
future relationships with China. The message got blocked by a US diplomat in
China, and Roosevelt apparently did not receive it. But its existence is not
disputed. Mao’s request was even referenced by the same diplomat in his
telegram to Roosevelt some days later.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">By 1945, Mao’s armed forces had
gained the upper hand in the fight against the Japanese in China, outdoing the
Koumintang troops run by Chiang Kai-shek, despite the latter getting much more
military support from the Americans. The US was basically backing both sides in
China at this point. It knew that Chiang was a self-aggrandising crook (his
nickname among American diplomats was ‘Cash My Check’). Some US diplomats were
also open to the ‘communists’, seeing them only as focusing on agrarian reform
and economic development, and also recognising their military prowess. Remember
too that this was a time for the Americans when rabid anti-communism had not
yet fully taken hold, and it was in any case focused on the Soviet Union.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">According to an important
article by Barbara Tuchman,<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a>
the previously mentioned diplomat, Patrick Hurley, was following the basic line
of American policy. This was to get unity of the two Chinese forces, but under
the control of the Kuomintang. The growing relative strength of Mao’s side was
underestimated, and US officials believed that a ‘democratic’ – and pliable –
China was there for the taking after the defeat of Japan. They did not
anticipate the anger with which the apparent US rejection of the request from
Mao would be received.</p><p class="MsoNormal" style="margin-bottom: 6pt;"><!--[if gte mso 9]><xml>
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</p><p class="MsoNormal" style="margin-bottom: 6pt;">The relevant text of the message relayed by US military observers in Yenan to the US office in Chungking was as
follows: </p>
<p class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">Yenan Government wants [to] dispatch to America an
unofficial rpt unofficial group to interpret and explain to American civilians
and officials interested the present situation and problems of China. Next is
strictly off record suggestion by same: Mao and Chou will be immediately
available either singly or together for exploratory conference at Washington
should President Roosevelt express desire to receive them at White House as
leaders of a primary Chinese party.</p><p class="MsoNormal" style="margin-bottom: 6pt;">One can speculate on what might
have happened if Mao and Chou En-lai had made the trip, which would have been
Mao’s first trip outside China. Tuchman recognises that many other domestic US
and world political events made it very unlikely, even if the original telegram
had got through, and even if Roosevelt had lived longer. But she notes that
there might have possibly been a different future course of events, including
for Korea just a few years later.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">There is a lot of mythology
about the history of Chinese communism. China was backed into a corner by
imperialism, war and the threat of further intervention. But Mao would have
been happy to come to some kind of deal with the US – not the colonial
British and French – to get support for economic development.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;">The images below are from pages
10 and 12 of a long telegram from Hurley to Roosevelt on 13 January 1945.</p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6ZZRdM2BaH3EuvQ-VPymACXw_C0RMm5zH2F6uBRTizWKSjBEcB5r2aECubgtwPsNIGKWRSGwM3qC4z_y6vIqLp4YrHOE3Xl5wDldxXlspjXsR33qiDGByWDfO60HpbeVjVMm6wahLbVU/s776/Hurley+telegram+to+Roosevelt%252C+13Jan1945%252C+p10+Mao+US+visit+request.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="620" data-original-width="776" height="512" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6ZZRdM2BaH3EuvQ-VPymACXw_C0RMm5zH2F6uBRTizWKSjBEcB5r2aECubgtwPsNIGKWRSGwM3qC4z_y6vIqLp4YrHOE3Xl5wDldxXlspjXsR33qiDGByWDfO60HpbeVjVMm6wahLbVU/w640-h512/Hurley+telegram+to+Roosevelt%252C+13Jan1945%252C+p10+Mao+US+visit+request.JPG" width="640" /></a></div><br /><p></p>
<p class="MsoNormal" style="margin-bottom: 6pt;"> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrmV6HDGs124H20QyxYd6KK86a6gbteaRREwbevECjKKOU_HUxWzqDRD8Rgx30lkaPbJpr5vpK8kps1TYGVfOKwiZgKD0h8Wxm_jHYdt2X8XaTWz5pfKx1M_6kRobFlXIebTKw6XVUOoI/s760/Hurley+telegram+to+Roosevelt%252C+13Jan1945%252C+p12%252C+Mao+US+visit+request.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="651" data-original-width="760" height="549" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrmV6HDGs124H20QyxYd6KK86a6gbteaRREwbevECjKKOU_HUxWzqDRD8Rgx30lkaPbJpr5vpK8kps1TYGVfOKwiZgKD0h8Wxm_jHYdt2X8XaTWz5pfKx1M_6kRobFlXIebTKw6XVUOoI/w640-h549/Hurley+telegram+to+Roosevelt%252C+13Jan1945%252C+p12%252C+Mao+US+visit+request.JPG" width="640" /></a></div><br /><p></p>
<p class="MsoNormal" style="margin-bottom: 6pt;">Tony Norfield, 2 December 2020</p><p class="MsoNormal" style="margin-bottom: 6pt;">(updated with message text on 3 December 2020) <br /></p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Here I shall
refer to the old anglicised spellings of the Chinese names, given the telegrams
noted below from 1945.</p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> ‘If Mao Had
Come to Washington in 1945: An Essay in Alternatives’, <i>Foreign Affairs</i>,
October 1972. Much of the information here is taken from this article, which
also gave good references allowing a search of the US official archives. I
could find no online copy of the original message from Mao to Roosevelt that
was relayed via US military observers in Yenan to the US office in Chungking, China, but note its message in the main text, using Tuchman's article. I did find a copy of
Ambassador Hurley’s later telegram to Roosevelt in January 1945 that confirmed
such a request had been made, shown in the two images above. An amusing biographical profile of the ‘erratic’
Hurley is available on Wikipedia.</p>
</div>
</div>
<br /><br />Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-88965018515999653092020-08-26T12:29:00.001+01:002020-12-08T16:32:28.866+00:00The Lebanon Complex<br />
<div class="MsoNormal" style="margin-bottom: 6pt;">
In the wake of the devastating
explosion in Beirut, the western media has had an almost universal response.
That is to focus on corruption and incompetence in Lebanon’s ruling groups and
to demand change. Lebanon’s populace is also exasperated with the political
elites, and many protestors have even threatened to kill them. But an
examination of Lebanon’s political system shows not only how it has been shaped
by its former colonisers; its workings also follow from the limits that imperialism
today places on economic and political development.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEo8c3XO6kCNT8wrBi0A_VBFb_3V05IVYOzB66sHwpzc0vb27rZUPU0VQCLjeiJD4m0D5LWRsrMtrXhoMy9QPj6Hxebdjd6qNxt15Ik7k85X01EL2CbWOvatg3dzzC8UxyEYUIb8YmjAU/s1600/Lebanon%252C+ME+map.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="847" data-original-width="1282" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEo8c3XO6kCNT8wrBi0A_VBFb_3V05IVYOzB66sHwpzc0vb27rZUPU0VQCLjeiJD4m0D5LWRsrMtrXhoMy9QPj6Hxebdjd6qNxt15Ik7k85X01EL2CbWOvatg3dzzC8UxyEYUIb8YmjAU/s640/Lebanon%252C+ME+map.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<span style="color: red;"></span></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Confessional modes</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Lebanon’s political system falls
outside of the standard democratic model lauded by the Anglosphere, because
there is an allocation of political positions according to the different
religious groups in the country. Yet, looking a little more closely at the
reality of the former model, one will find how the middle classes manipulate
the system in their favour, how it depends on mutual favours, how rich families
have multi-generational power and how they have legions of hangers on. But
different strokes for different folks, so let us consider the evolution of
Lebanon’s confessional one.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This mode of having a government
shared out among different religious groups has a history dating back to the
first half of the 19th century.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
Lebanon was then a minor province of the Ottoman Empire and made up of a number
of different religious communities, principally Maronite Christians but also
Islamic sects. There were clashes between such communities in the Empire,
sometimes ending in bloodshed, even massacres, and religious labels often
fundamentally confused what was really a class struggle, particularly between
peasants and landlords. Being aware of the different groups, the Ottoman’s
policy was essentially one where people could follow their own religion and
were left alone, as long as they paid their taxes to the Sublime Porte in
Constantinople (later called Istanbul) and didn’t cause trouble.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In May-June 1860, a massacre of
Christians in Lebanon was the pretext for European powers to get involved and
to take advantage of the declining Ottoman Empire. In an early version of
today’s imperial hype of ‘responsibility to protect’, the Europeans, especially
France, put pressure on the Ottomans to grant Mount Lebanon special status.
France had interests in the Eastern Mediterranean region and had already
developed links with the Catholic Maronites in Lebanon.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
A conference of European powers
and the Ottoman Empire met in September 1860 to determine how Lebanon should be
governed. The outcome was to create an autonomous <i>sanjak</i> or province of
Mount Lebanon, with a non-Lebanese Christian governor chosen by the Ottoman
sultan, assisted by a 12-member council chosen on a confessional basis. This
was under the protection of the six powers – Britain, France, Russia, Prussia,
Austria and Turkey. This new ‘autonomous Lebanon’ excluded Beirut, Tyre and
Sidon on the coast and the Bekaa Valley to the East.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
After some debate, in 1864 the
12-member council was amended. Instead of each of the six main religious groups
having two members each – which under-represented the Maronites, who made up
the majority of the population (perhaps 60% of the total)<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a>
– the Maronites were now to have four seats. Three seats were allocated to the
Druze, two for Greek Orthodox Christians, one for a Greek Catholic, and one
each from the Sunni and Shia communities. This gave the Christians a majority
of 7:5, as well as a Christian governor. It also set the course for a sectarian
representative system in Lebanon, rather than a system being based on political
leaders chosen by the whole country in a democratic vote.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Political reallocation</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
There was a problem with
France’s new <i>pied à terre</i> of Mount Lebanon. It was too small to be
economically viable and even the Maronites, although happy to be in a majority,
were concerned that there might be shortages of food and little room for
development.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> Feeling ever
so free to reorganise somebody else’s land, like other colonists, France later
dealt with that situation when it joined the British in carving up the Ottoman
Empire.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
France gained a Mandate from the
League of Nations after World War One to rule the former Ottoman regions of
Lebanon and Syria. Being worried about the viability of Mount Lebanon, and also
worried about resurgent Arab nationalism in Syria, it decided to expand Lebanon
at Syria’s expense. By adding the Beirut, Sidon, Tyre and Bekaa regions to
Mount Lebanon, the geographical Lebanon we know today was born as <i>Le Grand
Liban</i>, or Greater Lebanon. This reduced the numerical preponderance of the
Maronites and other Christian groups versus the Muslims, but that was an easy
price to pay when you could also fix the politics.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt83upzoqB5-QnR48CotGbd1FjRVPURHOQqHs8qhf6-wEX-tKeOOxPOrT8h1_xzucZXiZMlfN6d7BQolTHCG9-p9sCrcRuJjBH8bVpot2XyTd0LlFcRON98fWCiA-3BPCf-wdZ5-X0gQ4/s1600/French+Mandate+in+Syria%252C+Lebanon%252C+1922%252C+Wiki.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="852" data-original-width="1051" height="323" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt83upzoqB5-QnR48CotGbd1FjRVPURHOQqHs8qhf6-wEX-tKeOOxPOrT8h1_xzucZXiZMlfN6d7BQolTHCG9-p9sCrcRuJjBH8bVpot2XyTd0LlFcRON98fWCiA-3BPCf-wdZ5-X0gQ4/s400/French+Mandate+in+Syria%252C+Lebanon%252C+1922%252C+Wiki.JPG" width="400" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<span style="color: red;"></span></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In 1926, France imposed a
constitution for Lebanon that set up a bicameral parliament and a president.
Seats in parliament and in the cabinet were distributed on the basis of
religious affiliation: the president was always to be a Maronite, the prime
minister a Sunni and the president of the Chamber of Deputies a Shia. There
would always be a Greek Orthodox and a Druze member of the cabinet, while the
Maronite president had the right to choose the prime minister.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
So far so good for the French,
but it was far from a lasting <i>fait accompli</i>. </div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Economic and political
evolution</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Arab nationalists in Syria and
elsewhere opposed French control of Lebanon. Just as importantly, in Lebanon
there was discontent with France’s limits on what the government could do and
with whom it could have political and economic relationships. What made this
troublesome for France was its weak position by the 1930s, when it had little
to offer, while within Lebanon there was a growing cooperation between the
Maronite and the Sunni elites.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
What brought the latter together
was a joint interest in developing commercial and financial relationships with
other countries. Even the ‘Greater Lebanon’ was still only a very small state,
with few natural resources and a tiny population of less than one million
people. It was never going to be a base for significant industry or
agriculture. However, Lebanon had several key ports, especially in Beirut, was
well positioned on the eastern Mediterranean and had long been a trading centre
with financing available. The Maronite elites had traditionally looked
westerly, while the Sunni merchants had stronger relationships in the Arab
hinterland. France had played a useful role for them both as a sponsoring
power, and France had better ties with the Maronites, but they would both be
open to other deals.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This came to a head by the early
1940s, prompted by the disruption of the Second World War. Lebanon got a
version of independence from France in 1943, and the ‘Free French’ who had
invaded Lebanon in 1941 to oust the Vichy regime left Lebanon in 1946 under
pressure from the British.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In 1943, a National Pact was
agreed. This was a version of earlier deals in which the Maronites held on to
the main sources of political power. The 1943 Pact gave the Christians a
slightly lower 6:5 ministerial advantage, but still an advantage despite
Christians no longer being a majority of the population. The previous rule was
kept that the president was to be a Maronite and the prime minister a Sunni;
the parliamentary speaker was to be a Shia. The wider political agreement in
the Pact was that the Christians would no longer look to France and Muslims
would not look to Syria or to Arab union. Ties with the west and with Arab
states were allowed if Lebanon’s independence were recognised.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This continuing advantage of the
Christians might look anomalous, but the Pact signalled the fundamental</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
‘unity of the Christian and Muslim [mainly Sunni - TN]
members of the commercial-financial bourgeoisie … By working together in an
independent Lebanon, the Muslim and Christian bourgeoisies could build a
trading and banking centre which would serve as an <i>entrepôt</i> for the West
and the Arab world.’<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It was in the Arab bourgeoisie’s
interests to keep Christian majority rule. This was both because the ability to
pursue their common interests with the Christians might otherwise be
threatened, and also because increased Muslim representation, including more
for the Shia, would have limited the Sunni control of state institutions. This
had the desired effect. For example, the Sunni poor tended to see the rich as
only the Christians, and they kept to an Arab/Muslim loyalty, rather than a
class one. The Christian-dominated state and President in Lebanon were more
likely to be the focus of their discontent, not capitalism or their own
confessional leaders.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Some redistribution, on
confessional lines</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
While the confessional form of
government and political authority helped to hide class divisions, it also had
a downside for the different ruling elites. They now had to deliver for their
particular communities, and any inter-communal conflict would also put them on
the spot: ‘what are you doing to defend us?’ To make the system workable, there
had to be agreement between the different groups on sharing out jobs,
privileges and influence, and to make sure that those in the weakest position
would not cause trouble. This was reflected in the National Pact of 1943, and
also in the various other forms of agreement that came after.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In practice, this still meant a
strong position of the Christians, especially the Maronites, given their
economic prominence. However, the Maronites depended upon the presence of other
Christian sects to add to their number, and they too saw that a deal with the
Muslims was essential.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
On the Muslim side, the Sunni
group was in the most favourable economic position. They had done relatively
well in the Ottoman Empire and remained probably the largest of the Islamic
sects up to the 1970s. The Shia, the second largest Muslim community up to that
point (after which they probably outnumbered the Sunni) tend to be lower down the
economic scale, and have made up most of the poor in rural, suburban and city
areas. At least partly as a result, they have been the most under-represented
in Lebanon’s political system. This is not saying that every Sunni is rich and
every Shia is poor, but the characterisation holds for each group as a whole.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The result of this political
evolution was a peculiar ‘welfare state’ managed largely through the different
confessional groups. This is the origin of what the western media likes to
disparage as ‘corruption’, but is the type of government that arose in an
ex-colony that was unable to create a single, or a more united ruling class to
lord it over the rest of the population.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>No escape from the imperial
environment</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Lebanon had a prime position in
the regional economy as a commercial and financial centre after the Second
World War. Heading into the post-war boom, what could possibly go wrong? It
turned out that the delicate balance of internal forces was easily disrupted
even in the absence of direct colonial power, both by external forces and by
internal ones. These combined to produce a bewildering array of multi-faceted
and changing alliances – something that one might have expected, given the
disparate nature of Lebanon’s domestic political groups that were also in the
process of changing. This article will not attempt to cover all these issues,
but to discuss only the most important ones.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
On the external side, a very
significant event for Lebanon was the turmoil caused by the big powers setting
up the state of Israel in Palestine in 1948, and Israel’s expulsion of
Palestinian refugees.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a>
Broader events in the Middle East region likewise had an impact on Lebanon. For
example, pro-western Christian President Camille Chamoun did not break
relations with the French and British who, along with Israel, had invaded Egypt
in the Suez adventure of 1956. He also seemed to be open to US and British
plans for an anti-Soviet military alliance, the Baghdad Pact set up in 1955. In
1958, he opposed Lebanon joining the newly created (but short-lived) United
Arab Republic of Syria and Egypt, and he invited the US to intervene with
troops in the 1958 crisis that is sometimes called Lebanon’s first civil war.
The Maronites were worried about the security of their position in the country,
while at the same time going against a lot of Muslim opinion.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Together with the former
‘external factors’ – the quotation marks reflecting the more-than-usual
artificial nature of country borders in the Middle East – Syria, Saudi Arabia
and, after the 1979 revolution, later Iran, also had interests in Lebanon.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Palestinian refugees and
repercussions</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
More than 100,000 Palestinian
refugees went across the northern border to Lebanon in 1947-48; many more
followed in later years, particularly after the war in 1967. This influx of
mainly Muslim refugees was a problem for a country with less than 1.5 million
people in 1948 and still only around 2.5 million by 1975.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a>
Apart from being an economic burden, this further exacerbated Christian worries
about Arab nationalism. As Palestinian militants fought back against their
dispossession by Israel, this also made other Lebanese communities,
particularly those in the south of the country, fearful that Israel would
attack them too.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
By the mid-1970s, the results
were toxic, and also not entirely predictable. Many Shia in southern Lebanon
resented the presence of Palestinian fighters and one group, the Amal Movement,
principally made up of Shia, turned against and attacked them in 1976. However,
Maronite forces were the main opponents of the Palestinians and their armed
groups, the most important of which was the Palestinian Liberation Organisation
(PLO).</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The principal Maronite political
group was the Phalanges Party. It started as a paramilitary youth organisation
in 1937, modelled after the Spanish and Italian fascist parties, and had a
version of Lebanese nationalism that was opposed especially to pan-Arabism. It
came to greater prominence from the 1950s. Until the 1980s, it ran the most
organised militias in Lebanon, fighting both Palestinian and leftist groups.
Its record shows how it gained a gruesome expertise in large-scale killings,
with implicit or explicit help from other forces.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Events in Lebanon often have a
murky chain of causation and even outcome, and there are sometimes plausible
claims of ‘false flag’ attacks or assassinations to provoke a response between
different armed groups in Lebanon. However, there is little dispute about the
Phalange militia being involved in the 1975 bus massacre that killed 27 people
and wounded 19, mainly Palestinians but also Lebanese. Many writers have even
regarded this as the start of the prolonged 1975-1990 civil war.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Palestinians in Lebanon did not
only face the Phalangists. In 1976, Syrian troops entered Lebanon on the
invitation of the Lebanese president, and shortly began operations against the
PLO whom they blamed for destabilising the country. In August 1976, supported
by Syria, Maronite forces attacked the Tel-al-Zaatar Palestinian refugee camp
in East Beirut and murdered 1,000-1,500 civilians.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Maronite militia had been
supplied with weapons and military advisers by Israel, which was pleased with
the result. This relationship continued in an even more outrageous crime in
1982; one that has had a more prominent place in the history books, so it need
only be noted briefly here: the massacres at Sabra and Chatila.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In 1982, after their second
invasion of Lebanon (the first was in 1978), Israel moved to eliminate the Palestinians
in Beirut, targeting areas where they claimed PLO fighters were based.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a>
Principally, the Israelis used their Phalangist allies for this. The direct
Israeli action was shelling the Sabra refugee camp and the Chatila
neighbourhood, blocking off exits and illuminating the area with flares, then
allowing the Phalangists to go to work. Killing and massacre are words too
clinical to describe the murder, mutilation, gang rape and torture that
resulted. From 16-18 September, anywhere from 1,400 to 3,500 people died,
overwhelmingly civilians, both Palestinians and Lebanese Shia.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Israeli intervention in Lebanon
was undoubtedly a critical factor in the fracturing of Lebanese politics, but
it was far from being the only one. Israel managed to engineer the expulsion of
the PLO from Lebanon, but it was unable to cement a lasting alliance with the
Maronites, who themselves were losing political ground in the country. The
result of the 1982 episode of war, after Israeli troops eventually pulled out
(except for their continued occupation of the Shebaa Farms area), was the
increased presence of Syria and the rise of Hezbollah.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Syria</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The rationale for the Syrian
government’s intervention in Lebanon was its fear of regional disruption caused
by conflict with the Israelis, including in Syria. This was together with its
concern about growing Sunni influence via the PLO. Syria backed anti-PLO
Palestinian and Lebanese groups and sought more influence in Lebanon. Syria’s
political system, like Lebanon’s, was an uneasy compromise between rival
groups. But in contrast to Lebanon, it was one that had resulted in a stronger
central government.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
From 1976 to 2005, Syria had
more than 20,000 troops in Lebanon, and initially the Arab League endorsed
these as a peacekeeping force. Although Lebanon had asked Syria to leave in
1986, Syria’s presence gained some legitimacy by 1991 and the two countries
signed a treaty and a security pact. These gave Syria responsibility for the
defence of Lebanon from external threats, while Lebanon promised that it would
not be a threat to Syria. Over time, however, Syria’s military presence in
Lebanon came to be opposed both by internal and external forces, and Syrian
troops pulled out in 2005.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>The Taif Agreement</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Syria’s military exit was its
delayed response to the 1989 Taif Agreement. This was a plan negotiated in
Taif, Saudi Arabia, for ending the civil war and the implementing political
changes in Lebanon. As one might have expected, a number of other countries
were involved in drawing up the Agreement, otherwise known as the National
Reconciliation Accord. These included Saudi Arabia, Egypt, Syria, France, Iran
and the US.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Agreement took away some of
the Lebanese (Maronite) President’s powers, enhanced the power of the Sunni
prime Minister and, a little more in line with demographic reality, gave the
Christians and Muslims an equal number of seats in the Chamber of Deputies.
This abolished the advantage previously favouring Christians, but they were
still over-represented. Various studies have put the Christian share of the
population at well below 50% at that point, and still lower today, partly due
to emigration, but there has been no official government breakdown of the
population by religion since 1932. Some statistics are just too dangerous,
because they might contradict the (only?) political deal that the ruling elites
find manageable.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<span style="color: red;"></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGGXroORT1xedZiCIm3GbTgDTtfA8nx6LTiKftYgSeytMUC-rVHMw0jxZLqAPIp0J8ZPZDt0eaZ3PDRjQtoHIHitZe3YsQSCAtQN7N3vTjIwdVaRko_Ts2jyZ79E_3Ze285h6l5utzBH0/s1600/Lebanon%252C+Seat+allocation+before-after+Taif%252C+Wiki.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="477" data-original-width="358" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGGXroORT1xedZiCIm3GbTgDTtfA8nx6LTiKftYgSeytMUC-rVHMw0jxZLqAPIp0J8ZPZDt0eaZ3PDRjQtoHIHitZe3YsQSCAtQN7N3vTjIwdVaRko_Ts2jyZ79E_3Ze285h6l5utzBH0/s400/Lebanon%252C+Seat+allocation+before-after+Taif%252C+Wiki.JPG" width="300" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
One other important aspect of
the Taif Agreement was how it called for the disarmament of the many armed
groups within Lebanon. Such militias were rife, since a divided bourgeoisie
does not often have a national army it can rely upon. However, there was an
exception to the rule on militias: Hezbollah.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Hezbollah</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
If you were religious, it would
be difficult to think of a better name for your political group than the ‘Party
of God’. Due to Hezbollah’s important role in fighting Israel from 1982 and its
wider significance in Lebanon, especially among the Shia community, the Taif
Agreement allowed it to keep its arms as a ‘resistance force’.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Hezbollah began after 1979 as a
rival to the older Amal Movement in southern Lebanon and was backed by Iran
after the Islamic revolution of that year overthrew the Shah. It grew to have
support in many areas of the country, with the key points of its 1985 manifesto
gaining resonance: to expel the French and Americans from Lebanon, to bring the
Phalangists to justice and to allow people to choose the form of government
they want. Naturally, it also called on people to choose an Islamic government,
but that did not stop it getting support from people who did not want one.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Together with Amal, Hezbollah
today represents most of the Shia in Lebanon, but just noting that would greatly
underestimate its political clout. It is a key player in Lebanon’s parliament,
including having alliances with other parties, even Maronites; it has the most
effective military force in the country and it runs an extensive social welfare
programme in Lebanon, including hospitals and educational facilities.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In military terms, Hezbollah has
many claims to fame, although it has not said that all the things attributed to
it were its responsibility, and they may not be. Notable are: the April 1983
suicide bombing of the US Embassy in Beirut, with 17 US dead, including two
senior CIA officers; in October 1983, more than 240 US marines and 58 French
paratroopers were killed by a truck bomb in Beirut; in March 1984, the
kidnapping of William Buckley, CIA station chief in Beirut (he died in
captivity in June 1985). There were many more.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Perhaps the biggest episode was
the war with Israel in July-August 2006. After Hezbollah fighters crossed into
Israel and killed or imprisoned a number of Israeli soldiers, Israel bombed
southern Lebanon and Beirut and began the massive destruction of civilian infrastructure,
including schools, roads, bridges, mosques, churches and medical facilities.
Over 1,000 Lebanese were killed, the vast majority civilians, more than 4,000
were injured and a million people were displaced. Israel’s land, sea and air
blockade on Lebanon lasted until September 2006.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn12" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Despite the destruction in
Lebanon, Hezbollah gained political ground both in Lebanon and outside. It had
managed to survive, not to surrender, and was able to inflict embarrassing
losses on the much more powerful, US-funded Israeli forces. This has made
Hezbollah difficult for Israel and western powers to deal with. The US and the
UK have declared that Hezbollah is a ‘terrorist’ organisation, and the EU has
used that term for its military wing. But its prominent status in Lebanon has
been unchanged, and in recent years it has used its military experience to
fight against ISIL both in Syria and in Iraq.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Saudi and Iranian money</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
While Israel’s mode of influence
in Lebanon was via Christian politicians, as well as via direct
military attacks and intervention, Saudi Arabian and Iranian influence has been through the
Muslim community, which makes up more than half the population. The two biggest
Muslim groups in Lebanon are the Sunnis and the Shia, roughly equal in size,
and the principal links have been Saudi-Sunni and Iran-Shia.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Saudi influence in Lebanon has
been led by money, including bribes. Along with some other Gulf states, Saudi
Arabia has been an important source of subsidy for the Lebanese economy,
helping to finance projects, including reconstruction after the 2006 war with
Israel. To that extent, it has been of some benefit to all Lebanese, not just
Sunnis, but this subsidy has been under threat in recent years. This is both
because of Saudi Arabia’s anger at Iranian and Syrian involvement in Lebanon
and because of lower oil prices reducing Saudi revenues.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Iran has far less available
money than Saudi Arabia, but has also had a significant role in Lebanese
politics. It is able to be far more effective in providing not only military
supplies and training, but also food aid and other assistance. The western
media focus is on Iran’s support for Hezbollah, but this should not be
overstated. Just as the Saudis cannot entirely control the politics of the
Sunnis, Iran is also limited in what it can do. Compromise between different
Lebanese factions is a necessity that all domestic players accept, whatever the
pressures may be from their external sponsors.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Lebanon’s economy</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Data on Lebanon’s economy are
patchy and unreliable. The war in Syria from 2011, which led at one point to
more than a million refugees fleeing to Lebanon, has added to the data problem.
But one has to deal with what is available. Here I briefly examine some balance
of payments data that throw more light on Lebanon, rather than focus on the
latest period of crisis that has seen inflation accelerate to around 90% and
the economy in a state of collapse, even before the explosion at Beirut’s port.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
At first sight, the broad
patterns in these data are consistent with what one would expect from a small
economy that was very involved in international trade. For example, exports and
imports of goods and services are each a large share of GDP. However, the
average for exports from 1990-2010 was a bit over 30% of GDP while the average
for imports was nearly 60%.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn13" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a>
This massive gap of close to 24% of GDP is unusual, and it was at close to the
same rate in later years. The total of other factors on the current account did
not reduce this gap in ‘current’ payments. Although one, remittances from
expatriate Lebanese workers, saw significant inflows, others, including
payments on debt servicing, saw big outflows. This implies – if the data are at
all indicative of reality – that there had been a persistent and large net
inflow of funds into Lebanon on the country’s financial accounts.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
These net financial inflows
tally with the sharp rise in Lebanon’s foreign debt to around 150% of its GDP.
They also reflect the large scale of financial support for Lebanon from Saudi
Arabia and others that are not fully documented. Part of this support has come
in the form of foreign investment, especially into Lebanese real estate; other
money has come in the form of deposits in Lebanese banks, including the central
bank. Media reports in recent years have noted a flight of money from Lebanon.
Saudi Arabia’s funding of Lebanon’s balance of payments, unwittingly or not,
will have made this exit less costly for Lebanon’s capitalists.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Conclusion</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Lebanon highlights many features
of imperialism today. Despite its colonial past and a system of government that
was bound to exacerbate communal tensions, it might still have managed to carve
out a niche for itself and become a relatively prosperous trading centre in the
Eastern Mediterranean.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn14" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a>
But that prospect was crushed by the geopolitics of the region, from the
creation of the Israeli state, to the interference of the major powers, to the
impact of crises in surrounding countries as they too tried to forge some kind
of future.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It is especially galling to have
media pundits cite ‘corruption’ in Lebanon as the problem when the country’s
history has been shaped by outside forces, and when the choices it faced for
development meant fitting in with the colonial or imperial set up.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The imperial focus today is on
Hezbollah. It has provided Lebanon with the only effective force to counter
persistent attacks from Israel, and also runs a much-needed welfare system.
That is bad enough for ‘western’ opinion; worse still are its links with Iran
and Syria – other countries that do not do what they are told. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
So, never letting a crisis go to
waste, in the wake of the devastating explosion in the port of Beirut we find
that curbing, or eliminating, Hezbollah’s role in Lebanon is a major imperial
objective, one shared by both Saudi Arabia and Israel. This is the rationale
behind their calls for ‘reform’ in Lebanon, and would appear to be a condition
for giving the country anything more than minimal aid.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
All citizens of Lebanon are
angry at the political regime, and they have wanted to change it for decades.
But there is no chance of them being able to decide on a new system without
external pressure. Imperialism today presents many countries with problems that
cannot be resolved. Lebanon is one of them.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Tony Norfield, 26 August 2020</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> A valuable
source for historical and more recent information is Samir Khalaf, <i>Civil and
Uncivil Violence in Lebanon</i>, Columbia University Press, 2004.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> Taxes were
higher on non-Muslims, yet they were also able to hold relatively prestigious
positions within the Ottoman administration.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> The
Maronites were a Christian sect that welcomed the First Crusade in 1096. Much
later, they adopted Catholicism and the authority of the Pope.</div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> There are
conflicting accounts of population sizes for the different groups, but an
objective of the French was to maintain a significant grouping of Christians in
any version of Lebanon. The Maronites need not be the majority of the
population, however, and being in a minority would make them more dependent
upon French support.</div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> There had
been a famine in Beirut and Mount Lebanon with up to 200,000 deaths in World
War One, due to a blockade, the Ottomans requisitioning food supplies for the
army and a swarm of locusts devouring crops.</div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> The French
had arrested Lebanese ministers in November 1943, but the British later forced
their release. The British had some support from Muslims and Druze, and were
concerned to balance out their other plans as well as undermining French
influence in the region. There were more French attacks on attempts at
independence in both Lebanon and Syria, but the British finally engineered a
French withdrawal from both in 1945-46. France retaliated against the British
by backing the Zionist militias in Palestine.</div>
</div>
<div id="ftn7" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> Michael
Johnson, <i>Class & Client in Beirut</i>, Ithaca Press, 1986, p118.</div>
</div>
<div id="ftn8" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a> The terror
programme of Zionist militias began even before the new state was established
in May 1948. Israel’s expulsions, and its pervasive land grabbing, also
continued well after 1948. Most Palestinians fled to Jordan, fewer to Lebanon,
and fewer still to Egypt. By September 1949, the UN estimated there were
711,000 Palestinian refugees from Israeli-controlled territory. Israel has
prevented their return.</div>
</div>
<div id="ftn9" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a> Lebanon’s
population rose to around six million by 2018. That includes nearly 200,000
Palestinian refugees and roughly a million refugees from Syria after 2011; it
excludes the many Lebanese who had moved to other countries.</div>
</div>
<div id="ftn10" style="mso-element: footnote;">
<div class="MsoNormal" style="margin-bottom: 3pt;">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"><span style="mso-special-character: footnote;">[10]</span></span></span></a><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"> Apart from attacks by
missiles and aircraft, Israel has invaded Lebanon on many occasions – notably
in 1978, 1982, 1993, 1996 and 2006. It has not only seized land across
Lebanon’s southern border but also bombed and invaded Beirut.</span></div>
</div>
<div id="ftn11" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> See <i>Lebanon’s
Legacy of Political Violence</i>, International Center for Transitional
Justice, September 2013, for more details of this and numerous other events in
Lebanon from 1975 to 2008.</div>
</div>
<div id="ftn12" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref12" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> <i>Lebanon’s
Legacy of Political Violence</i>, pp83-88.</div>
</div>
<div id="ftn13" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref13" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a> Note that
trade statistics data do not measure value added, just the value of the goods
and services exported and imported, whereas the GDP data measure value added.
This can mean that entrepôt centre countries might have exports or imports that
are a very large share of GDP. The excess of imports over exports is
nevertheless still a gap that has to be covered by other inflows on the
international balance of payments.</div>
</div>
<div id="ftn14" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref14" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a> Back in
1981, I visited Beirut briefly as part of a business trip to the Middle East. I
had an interview with a businessman who knew about the demand for certain
products both in Lebanon and also more widely in the region. The interview was
conducted to the sound of gunfire down the street.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-57458211021862211332020-07-14T09:59:00.002+01:002020-10-31T10:50:21.723+00:00China & US Power<br />
<div class="MsoNormal" style="margin-bottom: 6pt;">
Can China do much to fight back
against the power wielded by the US in the world economy? At first sight, that
looks unlikely. China is big, but world trade is conducted in dollars, and the
US has economic, political and military influence across the globe. The usual
result of a tally of US might is that its position as hegemon is unassailable.
But that would overlook how measures of its strength depend upon the world
staying in the form that US power has created since 1945. If it doesn’t, then
these will not count for as much. As one might expect, China has been
responding to US attacks, and the outcome is likely to foment a split in the
world economy.</div>
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<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO-yVBi0oos2X8jNQMg_RTPG_8-Pe0mriIScNhbSnx4nW13XP_NDyjJDYkQzGTC6jXZbKRCqKUK_4FDVu2YFoYLeCQ9fs4tGnor_5aTYI2EY1vPRCA4A28E5Rx69YDXY7fU_GFVSUFRWw/s1600/Trump+%2526+Xi%252C+with+flags.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="689" data-original-width="830" height="331" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO-yVBi0oos2X8jNQMg_RTPG_8-Pe0mriIScNhbSnx4nW13XP_NDyjJDYkQzGTC6jXZbKRCqKUK_4FDVu2YFoYLeCQ9fs4tGnor_5aTYI2EY1vPRCA4A28E5Rx69YDXY7fU_GFVSUFRWw/s400/Trump+%2526+Xi%252C+with+flags.JPG" width="400" /></a></div>
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<br /></div>
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-------</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Imagine you wanted to travel
from one city to another, but the train company wouldn’t sell you a ticket.
Neither would the bus company. Then you were not allowed to buy or hire a car.
And anyone who sold you or lent you a bicycle would be fined, or would face
imprisonment. With due allowance for analogy, that is similar to what has
happened to Cuba, Venezuela, Iran, North Korea and anyone else that the US does
not like.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Woe betide you if you are on the
wrong side of the US. Then you will find it very difficult to ‘travel’ in the
world economy, that is to have any trade or financial dealings. It is not only
the sanctions the US imposes; these are also followed to varying degrees by its
allies in Europe, Japan and elsewhere. Could the same thing happen to China? It
already has, but so far only to a limited extent.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
I begin by discussing important
dimensions of US power in the world, with a focus on the economic, commercial
and financial aspects. I will not deal with the mountains of US weaponry and
its means of intimidation with worldwide military bases, although these are
significant. The remainder of the article deals with how the rise of China is
reshaping the world economy and acting as an alternative focal point to the US.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
Many countries are paying attention to this, even if the ‘western’ powers do
not like it.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Economy & trade in the
US-China balance</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In the past few years, the
Trump-led US administration has stepped up anti-China moves. Even if Trump does
not get re-elected in November, this direction of policy is not likely to be
reversed by the Democrats. We have seen higher tariffs on China’s exports,
attempts to block its companies from receiving any US-made (or designed)
products, particularly in the technology sphere, as well as pressure on US
allies to exclude Huawei and other important Chinese companies from their
domestic markets on supposed ‘security’ grounds.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China’s importance in the world
economy means that these exclusion tactics cannot easily be extended. Although
the US administration has trumpeted, so to speak, a new objective to cut China
out of the supply chains that its big corporations have profitably been using
for decades, even the ‘great again’ America must know that this would take many
years to achieve.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The US is the world’s biggest
economy. With a population of some 328 million people, its GDP in 2019 was
$21,439 billion. China has a much bigger population of around 1.4 billion
people, but a smaller GDP, estimated at $14,140 billion. China is nevertheless
number two in the world, and would be a little bit closer to the US when Hong
Kong’s $373bn is added to the mainland China number. Both countries have huge
domestic markets of interest to foreign companies, and each has a relatively
small volume of international trade when compared to GDP, giving their domestic
economies some insulation from the vagaries of the world market. China and the
US are the biggest two global exporters and importers of goods, but China is
far ahead on exports and the US leads in imports.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
A Bank of England report
included an interesting chart of the international trade in goods, showing how
China was bigger than the US in trade with Asia and South America, and the US
was bigger than China with the rest of North America and with Europe.
Unfortunately, Africa was left out of account in this chart, but China’s direct
trade with Africa in 2019 was more than three times larger than that of the US.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
<b>China’s importance in
international goods trade, 2018</b></h3>
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<br /></div>
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</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The trade pattern shows there
are already different relative strengths of the two countries in relation to
the rest of the world. Geography goes some way to account for that difference,
but one also has to take note of how US companies export from outside the US –
including from China – and that many products from China will contain US
components. China has a far smaller volume of foreign direct investment and
ownership of foreign companies, so its role in world trade is overstated when
compared to the US by this simple country-to-country trade picture.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>FX power plays</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
US economic power in the world
is shown most easily in the foreign exchange market. This comprises a multitude
of transactions, usually across borders, for goods, services and flows of money
to buy and sell equities, bonds, commodities, real estate and so forth. Most
internationally traded commodities, like oil, copper, wheat and gold, are
priced in terms of US dollars, as are many industrial goods like aircraft and
chemicals, let alone weapons and illegal drugs. Many countries also have their own
currencies directly tied or more loosely linked to the dollar, nearly all
central banks hold reserves of US dollar-based securities, and all
international companies have dollar bank accounts. As a result, the US dollar
is involved in 88% of all exchanges between one currency and another on the
international market.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This gives the US government
more power than you might think. If a person or a company receives money from
selling, or pays money to buy something, then that money has to shift between
the bank accounts of the buyer and the seller. When that money happens to be US
dollars, the transaction has to go through the US banking system, perhaps
indirectly, even if both the buyer and the seller are not located in the US.
So, if the US government does not like you, your company, or your country, it
can block your ability to use the US banking system. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
That would exclude you from the
usual channels of world trade and international business transactions. There
may be other ways to avoid the dollar entirely and get a transaction done, but
these will likely be more costly. And they will also run the risk of the US
government using other means of intimidation – for example, when it levies a
fine on any bank that processed a deal with you and threatens to stop that bank
from operating in the US. This is one way in which the political objectives of
the US administration are advanced by its economic power and influence, with no
guns needing to be fired.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>The centre of gravity</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Not only is the US dollar by far
the most widely used global currency, the US also has the biggest markets for
financial securities, ie for bonds, equities, futures and options contracts.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a>
US markets are the centre of gravity for world capitalism. Even though the bulk
of transactions in such markets are done within the US itself, the linkages in
the global system mean that they filter through quickly into other countries.
That is why financial news reports focus most on policy decisions by the US
central bank, the Federal Reserve, and the ups and downs of the US stock
markets usually have knock on effects elsewhere.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The New York Stock Exchange is
the biggest equity market by far, with a capitalisation of nearly $23,000bn at
the end of 2019. Nasdaq, also in New York, was the second largest, at nearly
$11,000bn capitalisation. Next in line was Japan’s Tokyo Stock Exchange, at a
mere $5,700bn, with London at less than $5,000bn. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It is only when China’s three
stock exchanges, in Hong Kong, Shanghai and Shenzhen, are taken together that
they come anywhere near the US. At the end of 2019, their total market
capitalisations amounted to around $10,500bn. However, the Chinese exchanges do
have a slightly higher number of corporations listed, some 5,900 compared to a
little over 5,300 in the two US markets.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The reason for considering these
things is that they are not narrowly financial. For example, a company’s market
capitalisation – the total value of its shares – indicates the potential
leverage the company has in the broader market. A higher capitalisation means
that it can more easily borrow funds from banks, issue bonds itself to get
funds, or use its own shares as a means of payment in its takeovers of other
companies. Microsoft and Google stand out here, each having done more than 200
takeovers of actual or potential rivals, or of companies that will help them
build up a monopolistic position in the market.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It is mostly US companies that
figure at the top of the rankings for market capitalisation. In recent years,
it has been the Big Tech corporations like Apple, Amazon and Microsoft, each
having a number over $1,000bn. China’s Alibaba and Tencent are the only two
non-US companies in this top rank, but with valuations of half that of the
largest US corporations.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Financial markets magnify US
economic power. Not only does the US stock market present its corporations with
many billions of market value, that value is also denominated in US dollars, a
currency readily acceptable in most of the world. In global terms, it is ‘real
money’. Corporations wanting to takeover another will find it easier to do so
with US dollars than euros, Japanese yen or sterling, let alone Australian
dollars or Norwegian kroner. Apart from its size, liquidity and access to
funds, that explains the attraction for companies of listing on the US equity
market.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>China and the US dollar</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The US authorities run access to
the dollar, especially the Treasury and the Federal Reserve central bank. So
why is it that China, seen by the US as its most dangerous antagonist, has let
its economy be dominated by dollars?</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
First, if China wanted to
operate in the world economy, it had little choice 30-40 years ago but to
accept the existing structure of world trade and finance. Asia’s economies in
particular were, and still are, bound up with the US dollar, through close ties
of their currencies and through flows of trade, investment and loans. China has
also for a long time followed a policy of keeping its domestic currency
relatively stable versus the dollar, even in the wake of the severe crisis that
hit emerging markets in the late 1990s. This, along with capital controls,
helped keep its economy growing steadily by curbing one source of potential
instability.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Second, one method of limiting
the impact of possible capital flight is to build up foreign exchange reserves.
If foreign investors have assets in China, whether through direct investment in factories, in buying equities or debt securities, then
little could be done about the domestic effect on market prices if they sold those assets. But this would
not lead to a serious shortage of funds or a collapse of the currency if
China’s central bank could sell dollars it already had to counter these flows.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This was an important rationale
behind China boosting its official foreign exchange reserves from just $5bn in
1994 to a massive $3.84 trillion by 2014. Some reserves were shifted into
state-sponsored purchases of foreign assets (often done using US dollars), some
into covering the bad loans of domestic banks, some into offsetting downward
pressure on the value of China’s currency in the FX market.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
That has still left what may
look like an extravagant volume of reserves, totalling $3.1 trillion by
end-June 2020. However, such funds have been required on a ‘safety first’
policy.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Consider that China has received
a large volume of foreign investment inflow. By the end of 2018, the cumulative amount was $2.8 trillion of direct investment in China, $0.7 trillion in equities and
$0.4 trillion in China’s debt securities. Not all of this near-$4 trillion is
at risk from capital flight – a chunk of it will also come from Hong Kong – but
how much might be vulnerable is unknown. China also has foreign assets of its
own that could be sold if necessary: $1.9 trillion in foreign direct
investments, and roughly $0.5 trillion in foreign equity and debt securities.
This reckoning puts in perspective what otherwise looks like absurdly big
foreign exchange reserves.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
If anyone thought that a
country’s FX reserves had much to do with its international trade in goods and
services, the previous figures should put paid to that. Or contrast what
happens when you are not as much at the mercy of a potentially destabilising
flow of funds. The US has foreign exchange reserves of just $129bn, less than
10% of China’s.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>China’s dollar holdings at
risk?</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Close to half of China’s foreign
exchange reserves is held in terms of US dollars,<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a>
from bank accounts to US Treasury bills and other interest-bearing securities,
to gold.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a>
The rest is held in other currency denominations, especially the euro. Not just
the central bank, but Chinese state agencies, as well as non-state companies
and investors, also hold US securities and dollar bank accounts, as well as
having dollar liabilities. Could the US government seize China’s dollar assets,
or limit China’s access to them?</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
If seizure of China’s assets
looks implausible, consider what has happened to Venezuela’s gold reserves held
in the Bank of England’s vaults, or to payments that have long been overdue to
Iran! The US could, in principle, also say that the security certificates owned
by China – often held in the big US-based custodian banks like Bank of New York
Mellon, State Street, JPMorgan Chase, etc – are now invalid pieces of paper, or
computer registered items, which belong to an enemy state and now will not be recognised.
That would be an extreme measure, also undermining the US ability to attract
further funds and investment, so it is unlikely. Such things are usually only
done to ‘little’ countries to show them who is boss. But it remains a risk that
China’s policy has to manage.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Over recent years, there has
been lots of speculation that China could reduce its dollar risk by selling the
Treasuries and other US securities that its government and companies own. This
would be a foolish thing to do quickly on a large scale, since the prices of
the securities could fall in response.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a>
Much more importantly, it would also remove the easy access to US dollar funds
that China has, and will continue to need, given the dollar-dominated global
financial system. What China’s authorities have done instead is to cut back new
dollar exposure and quietly offload dollars in the market.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
A more comprehensive way of
reducing the risk that China faces from US sanctions would be to build another
economic, commercial and financial network. Over the past decade, that is
exactly what China has been doing.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Your money is no good here</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Almost all of the measures used
to highlight US economic power depend upon a link to the dollar-based system,
for example, the dollar’s domination of the global FX market, the huge
capitalisation values of US corporations, and the scale and influence of US
financial markets. But what if something shakes the foundations of this power
and the global system begins to take on a different form?</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Up to now, China’s rise has been
evident in production and trade figures. By comparison, its development in the
more financial sphere has been limited, but let’s take a look at some of these
numbers and what they mean.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The US dollar rules the FX
system, with 88% of the $6.6 trillion daily turnover involving the dollar on
one side of the transaction. By comparison, even the euro is only at 32%, and
China’s currency, the renminbi, is at just 4%.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a>
Yet, 38% of the total volume of FX trading is between the dealing banks
themselves, and 55% is between banks and other financial institutions,
including 9% with hedge funds and other speculators. Only 7% of FX trading is
with non-financial firms! What would happen if international financial dealing
were less important, especially in US securities? This calls into question the
solidity of the dollar’s pre-eminent position in FX markets and in the world at
large.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
A similar thing applies to the
financial power of big US corporations. For example, with a market
capitalisation of around $1.6 trillion each in mid-July, it would seem that
Amazon, Apple and Microsoft can do pretty much what they like: buy up any
budding rival company, run a predatory pricing policy or extend their
monopolistic positions further in other ways. But just as a company’s share
price can collapse when its prospects no longer look as rosy as before, so can
its apparent financial power if it is not able to operate as it wants and finds
its markets cut off.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
So far these things have not
affected the big US corporations very much, although they have faced more
constraints than they would like in China’s domestic market. They have not been
able to compete well with the domestic champions Alibaba (e-commerce, payments
systems, finance), Baidu (a search engine) and Tencent (various operations,
from video games to e-commerce, to finance). The boot has instead been on the
other foot, as China’s big companies have been edged out of the US and face
restrictions in the markets of US allies. Nevertheless, that could change if
the US-dominated structure of world markets changes, a development that is well
under way.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>World in flux</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China has prepared itself
against US hostility for years. That didn’t take a lot of strategic insight,
given the numerous reports to the US Congress complaining about the Chinese
‘threat’ – ie the threat to US hegemony in the world economy, not simply a
military calculation. Three international projects have been key: the ‘One Belt
One Road’ project launched in 2013, now called the ‘Belt and Road Initiative’
(BRI); the Asian Infrastructure Investment Bank (AIIB), launched by China in
2013-14, and the BRICS Development Bank, now called the New Development Bank
(NDB), proposed in 2013-14 and starting up in 2015.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The NDB is headquartered in
Shanghai, and initially had enthusiastic support from all its founding members,
Brazil, Russia, India, China and South Africa (hence BRICS). They account for
20% of world GDP and 40% of the world’s population, and the NDB looked like it
was going to become a big player in development finance. But little activity
seems to have taken place in the last couple of years, although there have been
important, separate bilateral deals between China and Russia and between China
and Iran.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
At least partly, this has been
due to renewed tensions between India and China, the latest being over their
shared border in the north-west of India and India’s ban on the use of 59
Chinese phone apps, including TikTok. The election of Bolsonaro in Brazil, who
has criticised China’s investments in the country, is another factor. More
importantly, in recent years both India and Brazil have come more under the
influence of the US and more anti-China in their policy stance. Bolsonaro has
even tried to emulate Trump in this regard, as he has done in his disastrous handling
of the coronavirus pandemic.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Asian Infrastructure
Investment Bank (AIIB) has had a more active time, and it now has more than 100
member countries. Not surprisingly, the US did not join, but several of its
close allies did, including the UK and Australia. It is a moot point whether
the latter were defying the US, or whether they saw joining as a means of
keeping an eye on what China was up to – apart from also not wanting to be on
the outside to tender for any new contracts. China accounts for nearly 30% of
the AIIB’s capital of $100bn, and for 26% of the voting power. Since 2016, this
bank has financed a number of power, energy and road projects in the
Philippines, Bangladesh, Pakistan, India, Indonesia, Egypt, Turkey and
elsewhere.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Belt and Road</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Belt and Road Initiative is
a much more serious plan from China. It has involved more than 130 countries in
its projects, and some 30 international organisations. The basic idea is to
develop ports, shipping lanes, roads and other infrastructure, including high
voltage electricity grids, in a vast enterprise spanning the next 30 years.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The plan’s scope can be seen in
the following image, where its routes run all around Asia and Europe and extend
into East Africa. It could be considered the beginning of a single market area,
but it is nowhere near that yet. Although trade, investment and transit
arrangements have been made with other countries along the routes, those
countries may often have a cautious approach to dealing with China.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
<b>Where the Belts and Roads go</b></h3>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyXyFtS4ElKr-j6KmBfxaw-uAmnHXH2Ymo24dZlJwDfstzFON66Ql5MRA3mdVedI4oez1MQzo69OstfmyWtyRmhHYntw_ABLJfRX8NEYXIEp2K5BO5AIjTzUpVZvgblorgKSkGvFVRF2I/s1600/China%252C+Belt%2526Road%252C+best+one%252C+Oct2019.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="506" data-original-width="837" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyXyFtS4ElKr-j6KmBfxaw-uAmnHXH2Ymo24dZlJwDfstzFON66Ql5MRA3mdVedI4oez1MQzo69OstfmyWtyRmhHYntw_ABLJfRX8NEYXIEp2K5BO5AIjTzUpVZvgblorgKSkGvFVRF2I/s640/China%252C+Belt%2526Road%252C+best+one%252C+Oct2019.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Source: Ewa Oziewicz and Joanna
Bednarz, 'Challenges and opportunities of the Maritime Silk Road initiative',
October 2019</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Europe, in particular, is wary.
Not only because the relevant powers are not used to a ‘developing country’
having so much leverage, but also because they have been within the US sphere
of influence. Yet they are growing worried about that, given Trump’s
unilateralist ‘America First’ approach that has also targeted their industries
for extra import tariffs, and their fear of the role of US Big Tech
corporations. While they have joined in some moves to curb Chinese companies,
this has been only to a limited extent so far.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
As the political leaders of the
European Union, Germany and France will have to make up their minds which way
to jump. Yet that process will take some time to play out. For the time being,
they are working on trying to cohere the EU itself as the UK leaves, and they
hope that the EU can play the role of being an independent actor in the world
economy.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The UK, ex-EU and ex-much else,
is far more tied to the US. It has legions of political figures and economic
interests integrated with the Anglosphere global set up, from the UN Security
Council, to military cooperation, to the ‘Five Eyes’ spy network, to the rules
applied to finance and trade at the BIS, IMF and WTO, to deluded hopes for a
special Brexity relationship with the US in the future. These things will weigh
on British decision-making, and the resulting disarray in and confusion of an
arrogant imperial power should be amusing to observe.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Belt and Road project is
very important for China, and opponents can easily cast it as simply a tool
with which China secures safe routes for its exports and imports. It has also
had negative media coverage because of signs of unequal deals, projects that
have led to large indebtedness for the country concerned, or projects in which
a commercial port is claimed to be a cover for a potential Chinese naval base
(as in Sri Lanka), or potential Chinese takeover and ownership when the debt
cannot be repaid or serviced.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Evidence I have seen points to a
more positive assessment. At least some of the problems with projects have been
due to local corruption as much as to any Chinese misdemeanour. It is also
worth noting that China’s infrastructure development plans often include
building schools and hospitals as well as improving energy supply. The BRI
should act to integrate more isolated areas into the world economy, greatly
speed up logistics, travel and transport, and help these regions grow. It is
not in China’s long-term interests that cooperating regions and countries
become mere servicing wastelands.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>The Xinjian crossing</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The BRI’s routes traverse areas
in which US imperialism has long sought to gain influence, many of which were formerly
inside the USSR – including Kazakhstan, Uzbekistan, Turkmenistan and Georgia –
and also Iran and Russia itself. One area along the route that has been
prominent in the news media recently is Xinjiang in north western China.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Xinjiang, or to give it the
official title, the Xinjiang Uyghur Autonomous Region, is home to around 25
million people, of which 45% are of the Uyghur ethnic group, and many of these
are Muslim. It is China’s largest natural gas producing region, and has been
the locus for many attacks by Islamic separatists, especially since the 1990s.
Plausible reports claim that this was a ‘blowback’ from previous Chinese arming
and training of Islamic guerrillas to fight Russia in Afghanistan in the 1980s.
China, along with Pakistan, Saudi Arabia and others, cooperated with the US CIA
in this period, and trouble brewed for China in this region when the guerrillas
came home.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The US, UK and other western
powers have a long history of using Islamic militants to do their dirty work of
political disruption and destabilisation, even though it often comes back to
bite them. Just think of Osama Bin Laden and the support the US also gave his
organisation to attack the Russians in Afghanistan. Or the British support for
Islamic militants in Egypt against Nasser and in Libya against Gaddafi.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a>
It is therefore no surprise that the US has been heavily involved in promoting
Uyghur separatists, and that western news media have been full of stories about
Chinese ‘concentration camps’ and brainwashing centres for Uyghurs.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
BRI &
the Xinjiang Region</h3>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZqM_CNWeuROU1vxjRQhObrZeWBbNTr0Cy_XUqn7KiCq2h_xuazyYgL7_wl0djmtHYuYSEBSNC3hdvfBcdtujn-T7A6YxqkcX8OcZQLcuP4WWgPE0PQU1JbDT88HBrcDDoa_rXbTTzhmM/s1600/China%252C+Xinjiang+bit+of+BRI%252C+official+China%252C+July2020.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="319" data-original-width="796" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZqM_CNWeuROU1vxjRQhObrZeWBbNTr0Cy_XUqn7KiCq2h_xuazyYgL7_wl0djmtHYuYSEBSNC3hdvfBcdtujn-T7A6YxqkcX8OcZQLcuP4WWgPE0PQU1JbDT88HBrcDDoa_rXbTTzhmM/s640/China%252C+Xinjiang+bit+of+BRI%252C+official+China%252C+July2020.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Source: World Affairs blog, see
footnote 12.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It would take too long and be
too off topic to cover this in more detail, but my basic view is this. China
has not been kind to separatist forces in Xinjiang and may well have clamped
down on them harshly. It has also encouraged Han Chinese to move into Xinjiang.
But there is no evidence of actual or cultural ‘genocide’ of Uyghurs and the
region has even had some autonomy from strict regulations imposed elsewhere in
the country, for example, on population and family policy. The western media
view of all this is readily available; for an informed alternative view, I give
some sources in a footnote.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn12" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a>
Surely, anyone with any sense would see that there could not possibly be a ‘Save
the Muslims’ motive behind the western propaganda about Xinjiang.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Hong Kong less important for
China now</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
As the US anxiety and
near-hysteria about China has grown, another opportunity has arisen for
mischief – in Hong Kong, especially since early 2019. There have been
widespread protests in this ‘special administrative region’ of China against
the introduction of laws that would increase mainland China’s authority and
potentially suppress dissent and opposition to government policy. Although led
principally by students, the protests clearly had support from a large section
of the population of Hong Kong.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Beijing was obviously none too
pleased with this, and its paranoia alarm bells rang loudly when some
demonstrators carried US flags and called for the US to impose sanctions on
Hong Kong to force China to drop its proposals. (The US has now done it.) With
the CIA-backed National Endowment for Democracy supporting the protests and
with Joshua Wong, one of the leading students, cosying up to arch reactionary
and regime-change interventionist, US Senator Marco Rubio, the stage was set
for a Chinese clampdown.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China’s political system is
authoritarian, but one should not fall for the hypocrisy of western powers
lamenting the threat to a tradition of democracy in Hong Kong. Prior to UK
talks with China in 1984 about the handover of Hong Kong in 1997, there was no
sign of democracy, but instead an oligarchic Legislative Council, an advisory
body to the British Governor. Full elections to this Council only began in
1995. So ‘democracy’ began to be introduced only just before Britain was going
to lose its colony after 99 years.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
What will be China’s policy
towards Hong Kong now? To answer this question, it is worth noting the role it
has played in relation to China.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
When it was a British colony,
Hong Kong specialised as an entrepot centre in Asia, with a large port
operation and a big financial sector. As China grew as a global production
base, particularly from the 1980s, Hong Kong also thrived as the ‘western’ gateway
into China, with booming cross-border deals. In turn, China used Hong Kong to
gain experience of international markets, from how best to run a port to how to
manage banking and finance.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Hong Kong is now less important
for China than it might seem. Its GDP is less than 3% of mainland China’s, and
its 7.5 million people could be seen as barely a rounding error compared to
China’s total. It is nevertheless politically inconceivable that China would
allow Hong Kong to become fully ‘independent’ or to secede. In the event of
continued protests about rule by mainland China, a much more likely policy
would be to slowly run down the remaining economic reliance China has on Hong
Kong. This is no doubt on the minds of some Hong Kong residents, not all of
whom are anti-Beijing.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Hong Kong’s population has
significantly higher living standards than the average in mainland China, and
US dollar millionaires make up a surprising 7% of the population. Such factors
will have influenced the protest movement in Hong Kong, and there have also
been many signs of locals resenting mainlanders. Some of the latter have been
attacked for supposedly being Beijing loyalists; others have faced opposition
from locals who felt their presence was driving up prices and rents. I think
that fear of an economic ‘levelling down’ is at least as significant a factor
in the protests as any call for democratic rights.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
<b>Top 10 World Container Ports,
Volume in millions of TEU *</b></h3>
<table border="1" cellpadding="0" cellspacing="0" style="border-collapse: collapse; border: medium none; margin-left: 14.4pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt;">
<tbody>
<tr>
<td style="border: 0.5pt solid windowtext; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
<b>Rank</b><span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-left: none; border: 0.5pt solid windowtext; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; mso-line-height-alt: 0pt; text-align: center;">
<b>Port</b><span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-left: none; border: 0.5pt solid windowtext; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; mso-line-height-alt: 0pt; text-align: center;">
<b><span style="mso-fareast-font-family: "Arial Unicode MS";">2018</span></b></div>
</td>
<td style="border-left: none; border: 0.5pt solid windowtext; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; mso-line-height-alt: 0pt; text-align: center;">
<b><span style="mso-fareast-font-family: "Arial Unicode MS";">2017</span></b></div>
</td>
<td style="border-left: none; border: 0.5pt solid windowtext; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; mso-line-height-alt: 0pt; text-align: center;">
<b><span style="mso-fareast-font-family: "Arial Unicode MS";">2016</span></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
<span style="font-family: "times new roman";">1</span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Shanghai, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
42.01<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
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<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
40.23<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
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<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
37.13<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
2<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
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Singapore<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
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36.60<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
33.67<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
30.90<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
3<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Shenzhen, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
27.74<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
25.21<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
23.97<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
4<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Ningbo-Zhoushan, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
26.35<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
24.61<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
21.60<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
5<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Guangzhou Harbor, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
21.87<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
20.37<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
18.85<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
6<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Busan, South Korea<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
21.66<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
20.49<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
19.85<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
7<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Hong Kong, S.A.R, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
19.60<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
20.76<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
19.81<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
8<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Qingdao, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
18.26<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
18.30<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
18.01<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
9<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Tianjin, China<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
16.00<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
15.07<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
14.49<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: 0.5pt solid windowtext; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 36pt;" width="48"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
10<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 158.4pt;" width="211"><div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
Jebel Ali, Dubai, United Arab Emirates<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 57.6pt;" width="77"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
14.95<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
15.37<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
<td style="border-bottom: solid windowtext .5pt; border-color: currentcolor windowtext windowtext currentcolor; border-left: none; border-right: solid windowtext .5pt; border-style: none solid solid none; border-top: none; border-width: medium 0.5pt 0.5pt medium; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 63pt;" width="84"><div align="center" class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm; text-align: center;">
15.73<span style="mso-fareast-font-family: "Arial Unicode MS";"></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; margin: 6pt 0cm;">
<span style="color: red;"></span></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Source: Worldshipping.org. Note
*: The data represent total port throughput, including empty containers. A TEU
is a ‘Twenty-foot Equivalent Unit’. The dimensions of one TEU are equal to a
standard 20-foot shipping container.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
One way of judging the ability
of China to sideline Hong Kong, if it wants to, is by looking at its importance
as a port. A list of the top world container ports – containers are critical in
the trade of goods – has mainland China with six in the top 10. Hong Kong’s
port is large, but is ranked number seven and is only roughly half the size of
Shanghai’s at number one. Shenzhen, at number three and also bigger than Hong
Kong, is only around 15 kilometres from Hong Kong (although a bit further to
travel by sea!).</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Out of control</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Rivalries in the world economy
can bring unexpected results, especially when a former underdog can now
pro-actively resist. The world order is no longer entirely one where, as Bob
Dylan put it, ‘You’re dancing with whom they tell you to, or you don’t dance at
all’. How far China is able to build stable alliances for an economic area that
limits US interference, and whether it too becomes oppressive, remain to be
seen. But in the meantime it has offered many countries an alternative to the
rich country model of development, one that has left poor countries poor.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Prospects for the Anglosphere
powers are not good. Political idiocy born of generations of arrogance now adds
to their difficulties in navigating a world that is changing increasingly
outside their control. Examples of their recent responses to Chinese technology
sum up their problem. China’s Huawei produces very good, and cheaper, 4G and 5G
products, including infrastructure and smartphones, and ByteDance also has a
popular media app, TikTok. Instead of saying, ‘we have something even better’,
the US and others respond by claiming, with no evidence, that they pose a
security risk and that Chinese products should be rejected.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
By contrast, Germany, the most
productivist of the European powers, has shown more enthusiasm for China-led
developments than others. The Belt and Road Initiative already has an important
outlet in Duisburg, the world’s largest inland port, where it is the first
European stop for 80% of Chinese trains:</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
“Every week, around 30 Chinese trains arrive at a vast
terminal in Duisburg’s inland port, their containers either stuffed with
clothes, toys and hi-tech electronics from Chongqing, Wuhan or Yiwu, or
carrying German cars, Scottish whisky, French wine and textiles from Milan
heading the other way.”<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn13" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a></div>
<div class="generic-articlebodyarticle-details-type--pcontent--p" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm; margin: 0cm 0cm 6pt;">
<span style="font-family: "times new roman";">Duisburg’s main problem seems to be that
‘for every two full containers arriving in Europe from China, only one heads
back the other way, and the port only earns a fifth of the fee from empty
containers that have to be sent back to China’.</span></div>
<div class="generic-articlebodyarticle-details-type--pcontent--p" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm; margin: 0cm 0cm 6pt;">
<span style="font-family: "times new roman";">At the other end of the line, another
German company, BMW, has praised China’s technical know how:</span></div>
<div style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
<span style="font-family: "times new roman";">“The auto industry is
undergoing a major transformation driven by technological development. In the
midst of industrial upgrading and transformation, we need to keep an open mind
and to collaborate with outstanding Chinese innovation powerhouses.”<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn14" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a></span></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
To say the least, these things
suggest that China’s growing importance in the world economy will be difficult
for the US to curb. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Tony Norfield, 14 July 2020</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Other
articles on this blog have also analysed US-China relationships, including one
from May <span style="color: red;"><a href="https://economicsofimperialism.blogspot.com/2011/05/americas-war-with-china_1210.html">2011</a></span>, looking at the growing strategic
tensions, one in April <span style="color: red;"><a href="https://economicsofimperialism.blogspot.com/2019/04/racism-imperial-anxiety-us-vs-huawei.html">2019</a></span> on the economic and
technology competition and another in September <span style="color: red;"><a href="https://economicsofimperialism.blogspot.com/2019/09/index-of-power-update-2018-19-china-2.html">2019</a></span>
on the relative positions of the major powers. I cover the coronavirus pandemic <span style="color: red;"></span><a href="https://economicsofimperialism.blogspot.com/2020/06/viruses-imperialism.html">here</a>.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> The US makes
much of the links, actual or alleged, between top Chinese companies and the
Chinese Communist Party, the military, etc. For reasons that only an evil
commie would speculate upon, it seems to forget that Amazon, Google and myriads
of other US corporations, not just the arms producers, derive a lot of funding
and regular contracts from the US government, the CIA and the Pentagon.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> See the <a href="https://economicsofimperialism.blogspot.com/2019/10/fx-imperialism.html">article</a> <i>FX & Imperialism</i><span style="color: red;"></span> on this
blog, 7 October 2019, for further details of the role of the US dollar compared
to other currencies.</div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> Although
London is the biggest market for dealing in foreign currency and for interest
rate swaps.</div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> Both totals
will include some companies listed on more than one exchange. Nearly 20% of
companies on the two US exchanges are foreign companies; there is no comparable
figure available for China, but it is likely very much lower.</div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> China does
not usually disclose the currency composition of its FX reserves, but China’s SAFE has reported that the dollar component of reserves fell from 79% in
1995 to 58% in 2014. It will have fallen further since 2014, and is likely now
a little under 50%. The absolute volume of dollars held will have risen up to
2014, given the big rise in total reserves, but will have likely fallen since.</div>
</div>
<div id="ftn7" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> Over the
past 10-15 years, China’s central bank has boosted its gold reserves from 600
tonnes to 1,917 tonnes. At $1,700 per troy ounce, this amounts to ‘only’
$106.5bn and a little over 3% of the reserves total at present.</div>
</div>
<div id="ftn8" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a> I say prices
‘could’ rather than ‘would’ fall because of the huge size of the US
interest-bearing securities market, especially for shorter-term US Treasuries
and agencies, which would limit the response to any selling by China.</div>
</div>
<div id="ftn9" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a> FX deals
involve <i>two</i> currencies, so adding the shares of all currencies traded
would give 200%, not 100%.</div>
</div>
<div id="ftn10" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a> Going
against US sanctions, in July 2020, China and Iran have drafted a deal covering
trade, investment and military cooperation. See <i>New York Times</i>, ‘Defying
U.S., China and Iran Near Trade and Military Partnership’, 11 July 2020. This
Iran-China cooperation has been going on for several years. Notably, most of
the payments between China and Iran, if not all, exclude the US dollar.</div>
</div>
<div id="ftn11" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> For the
less well known British escapades in this respect, see the book by Mark Curtis,
<i>Secret Affairs: Britain’s Collusion with Radical Islam</i>, 2010.</div>
</div>
<div id="ftn12" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref12" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> See <a href="https://thegrayzone.com/2020/03/05/world-uyghur-congress-us-far-right-regime-change-network-fall-china/amp/?fbclid=IwAR2v55KejPL-BQzOoz6sLaC7ov8AF1VzdcNAXfIVb7MUyxeHwMLRm4JKVM8">here</a>, and for the more official Chinese responses, see <a href="https://worldaffairs.blog/2019/07/05/xinjiang-and-uyghurs-what-youre-not-being-told/?fbclid=IwAR0c5WM0cBrNlovsyB12R5FdGhJgWHWGyoNXI3FrOSphJG_lL2aeiD7iMpI">here</a> and <a href="https://seektruthfromfact.wordpress.com/2020/07/10/concentration-camps-and-genocide-the-truth-about-xinjiang/">here</a>.</div>
</div>
<div id="ftn13" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref13" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a> <i>The
Guardian</i>, Germany’s ‘China City’, 1 August 2018.</div>
</div>
<div id="ftn14" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref14" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a> Comment
from Jochen Goller, president and CEO of BMW Group Region China, <i>Asia Times</i>,
6 July 2020.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com13tag:blogger.com,1999:blog-3591186784456519139.post-33183777374045246022020-07-01T08:23:00.000+01:002020-07-01T08:23:02.066+01:00Richie Rich & Friends<!--[if gte mso 9]><xml>
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<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Being the biggest rich
capitalist country, the US also has the largest number of wealthy people. Quite
how many will come as a bit of a surprise for those who have heard the ‘1% versus
99%’ slogan; it is not just Bill Gates and Jeff Bezos.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
People might understand wealth
as starting at different levels – a life changing fifty thousand for me might be
just a nice holiday for you. However, a common statistical definition of wealth
is of people with ‘net worth’ – the value of their assets, including housing,
minus their debts, including mortgages – in excess of $1 million.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
On this definition, there are
just over 18.6 million US citizens who are wealthy.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
That is nearly 6% of the US population, and a higher proportion of the
population if one considers wealthy families, including children.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a>
Of course, a million dollars does not go far these days. But don’t worry, among
this group are people with much more than that: there are three million with
over $5m of wealth, and 1300 people with over $500m.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
This accumulation of wealth does
not only finance impressive lifestyles that can be the subject of TV shows and
magazine features. The assets owned will generate an income in addition to any
lucrative employment the wealth holders have, and these funds will form the
basis of investment by financial asset managers, hedge funds and others.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
In
that way, the fortunes of many millions of US citizens will be directly bound
up with the prospects for capitalist financial markets, not only in the US but
also around the world. No need to wonder why there is so much political support
for the US military and measures taken against any threat to the capitalist
order. A large, pro-imperialist section of the working class plays a key role in the political outlook too, as Trump will testify, but here is an important material base.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
On the population percentage
measure of wealth, the US does not have the highest number in the world. Not every
American is rich, it need hardly be said. A review of other countries suggests
that Switzerland probably tops the table, with 9.5% of its citizens having net
assets of more than $1m. The Netherlands and Denmark have figures between 4%
and 5%, and other countries in Western Europe are generally above 2%, as is Japan.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<h3 style="text-align: center;">
Dollar Millionaires by Wealth, 2019</h3>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEht4_3ySBrGoT6eL0hZnFHyCkgcv3Y1g3l69i6w0H_2N3bA42PPbbuPlAYEYs-vaVOxExQTRqEONBouj1yVOKvSKRV38lkyQRQ43TzRhGftVeGiS-2ZOvBnoE10dRwFJd1ektGtM9Q6Wuw/s1600/Millionaires+by+country%252C+best%252C+2019.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="482" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEht4_3ySBrGoT6eL0hZnFHyCkgcv3Y1g3l69i6w0H_2N3bA42PPbbuPlAYEYs-vaVOxExQTRqEONBouj1yVOKvSKRV38lkyQRQ43TzRhGftVeGiS-2ZOvBnoE10dRwFJd1ektGtM9Q6Wuw/s640/Millionaires+by+country%252C+best%252C+2019.JPG" width="378" /></a></div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
</div>
<div style="text-align: center;">
Source: Calculated from Credit Suisse Global Wealth Report 2019</div>
<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Notably, the ‘Five Eyes’
countries in the Anglosphere group – the US, UK, Canada, Australia and New Zealand
– each has percentages above 3.5%. They have to have some unifying thing to
talk about and be able to afford the correct attire to attend their nostalgic
parties.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The poor countries of the world
just can’t hack it compared to the rich guys. China, the supposedly great
capitalist power, has a mere 4.4 million people with over $1m of wealth, just 0.3%
of its huge population. They might be commies after all. Russia also has just
0.2% of its population with over a million dollars. So much for state capitalism. Presumably, the other
Russian recipients of looted state assets are keeping a low profile in New
York, London and Cyprus.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Hong Kong, counted separately in
all statistical journals from China, despite belonging to China, better fits
the bill. Its population of just 7.5m includes over 500,000 people with more
than a million dollars and an impressive 153 with more than $500m. The
respective percentages are 6.9% and 0.0021%. The latter number is very small,
but five times that for the US. Taiwan also has 2.2% of its population who have
more than $1m of wealth.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Other poor countries don’t often
get above 0.1% in the millionaire-plus stakes. India, South Africa, Mexico and
Brazil are at 0.1%; Indonesia and Egypt demand an extra decimal place, at 0.04%
and 0.05% respectively, for the percentage of the population who have more than
$1m of wealth.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Perhaps the United Arab Emirates
and Saudi Arabia are the biggest surprises. Despite untold energy wealth, this
has filtered through to an even smaller range of people than you might have
thought. The percentage of millionaire-plus people is higher in the UAE at
1.3%; possibly because there are more royal families to share it with compared
to the total population than is the case for Saudi Arabia, at just 0.4%.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The moral of this story is
clear. If you want to improve your chances of being rich, make sure your
parents come from a rich country.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: "Times New Roman"; font-size: 12.0pt; mso-ansi-language: EN-GB; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Tony Norfield, 1 July 2020</span>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> This wealth
number and the related ones that follow are taken from the Credit Suisse <i>Global
Wealth Report 2019 </i>and the associated databook. Percentages of population
data are calculated using Internet sources for population numbers.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> For example,
if a married couple each had more than $1m of wealth, it would make sense to
include their non-adult children in the total of wealthy people.</div>
</div>
</div>
<br />
<br />
<br />Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-11318407892157116252020-06-18T11:52:00.001+01:002020-06-18T11:52:39.902+01:00Race, Unemployment & US Elections<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
What role does race play in US
presidential elections? It may not be the decisive factor, but it <i>is</i> one
that has an important influence. Just look at Trump’s continued pandering to
his core, white working class vote. This question can be examined by looking at
race and unemployment.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Economics is often seen as the
key to winning elections. If the economy is doing well, then the incumbent
party usually expects to prevail; if not, then it risks losing. Of course, a
statistic like GDP might be on the up, but if you have lost your job, then you
are not likely to feel good about that. A more relevant economic number for
elections is the unemployment rate, and that is the focus of this piece.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Some 70% of the US population is
white, while around 13% is black, and the US keeps records of the unemployment
by racial identity. As everyone should know, given the many decades of
segregation and discrimination after the period of slavery, blacks are in a
generally worse economic situation than whites. This is very clear in their
relative unemployment rates.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<h3 class="separator" style="clear: both; text-align: center;">
<span style="font-size: large;"><b>US Unemployment Rates in
Black & White</b></span> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEtHrHzfOA245I1g44XxN6pCGpfRMQR8PK3p2ha2QtDxpc9o6s7hwJ-Yc_Fm1E3kNGvsNDdknRRlx3MV_QjxrOHqWG0AJYPZ0EXVmydSsD88qMv8BuBHD_rHVKzmhDsPMFmCTc3Y_-mTQ/s1600/US+unemployment+rate%252C+white%252C+black%252C+1976-May2020.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="471" data-original-width="806" height="371" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEtHrHzfOA245I1g44XxN6pCGpfRMQR8PK3p2ha2QtDxpc9o6s7hwJ-Yc_Fm1E3kNGvsNDdknRRlx3MV_QjxrOHqWG0AJYPZ0EXVmydSsD88qMv8BuBHD_rHVKzmhDsPMFmCTc3Y_-mTQ/s640/US+unemployment+rate%252C+white%252C+black%252C+1976-May2020.JPG" width="640" /></a></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The chart indicates that when
recession hits and unemployment rises for whites, it rises much more for
blacks. In fact, at all times black unemployment is higher, although the margin
narrowed sharply from around eight percentage points in 2011 to around four
percentage points by late 2016, and further, to just two points, by end-2019.
In recent months, the COVID-19 crisis has seen both rates jump up in the US.
The white unemployment rate rose to 14.2 in April 2020, then fell back to 12.4
in May. But the black rate soared to 16.7% in April and was higher still in
May, at 16.8%.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Could the sharply narrowing
margin of higher black unemployment to the end of 2016 have had an impact on
Trump’s Presidential victory that year? The white unemployment rate hardly
changed in 2016, and this might seem an odd thing to speculate upon. Yet, there
is plenty of evidence that white racism gets fuelled when whites feel they are
not getting as good an economic deal as blacks.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
A recent book by Jonathan Metzl,
<i>Dying of Whiteness</i>, highlights this very point. He shows how many poor
whites are happy to vote for welfare cuts, even those that badly affect
themselves, just to make sure that those they think do not deserve welfare
payments – mainly blacks and hispanics – do not get them. So the relative
improvement in the position of blacks in the labour market could have played a
part in Trump’s success.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
I do not claim that race or
racial resentment can explain everything about US election outcomes. I am also
aware that Trump did not get the most votes in 2016, and that he was just
better at playing the Electoral College game than were the Democrats. Yet when
the record of white and black unemployment rates is examined, interesting
patterns emerge.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
<b>US Presidential elections &
unemployment changes by race, 1992-2016</b></h3>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKYGgooFSHwjnYe2AX9_y7_Pv7gWs_xCr6Ca_Kx8vDY4pMYt1qyAz3bBHfyXz7GZ6P135qLtrjbHELOvnkI6qbKmTZbMU7LnESV54KQm2giGel-11WV9HKUKMiKqte-rC-oi9Onpm2HuE/s1600/Unemployment+%2526+elections%252C+18Jun2020.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="731" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKYGgooFSHwjnYe2AX9_y7_Pv7gWs_xCr6Ca_Kx8vDY4pMYt1qyAz3bBHfyXz7GZ6P135qLtrjbHELOvnkI6qbKmTZbMU7LnESV54KQm2giGel-11WV9HKUKMiKqte-rC-oi9Onpm2HuE/s640/Unemployment+%2526+elections%252C+18Jun2020.JPG" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b><i>Note:</i></b><i> * average % unemployment rate from
August-October minus average unemployment rate January-March, for the year of
the Presidential election campaign up to November’s election.</i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The previous table sets out
details of changes in the unemployment rates for whites and blacks, together with
any change in ruling party – Democrat or Republican – since Clinton first took
office in January 1993. I assume that the relevant thing to look at is not the
level of the unemployment rate, but whether it has gone up or down in the
months leading up to the regular early November election time. Specifically, I
look at the average unemployment rate for August, September and October, the
months closest to the vote, and see how much that is higher or lower than the
average for January, February and March of the same year. The averaging evens
out any blip there might be for a single month. I do not allow for any other
factors, such as wars, the perceived threats from other countries, moral
panics, or the supposedly charismatic or particularly useless political leaders
vying for the top job.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
For the past seven presidential
elections in the US, the table shows that:</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
a) White unemployment going up
during election year means that the incumbent party loses the election. This is
not surprising, given that whites are by far the majority of the electorate.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
b) However, when the white
unemployment rate was unchanged in 2000, the incumbent party, the Democrats,
still lost. Notably, in that year the black unemployment rate went <i>down</i>.
In 2000, white unemployment stayed very close to a low 3.5%, while black
unemployment fell from 8.2% at the start of the year to 7.3% just ahead of the
election.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
c) Trump and the Republican
Party was helped by these earlier trends in 2016, because <i>both</i> white
unemployment rose a little <i>and</i> black unemployment fell. White
unemployment was in a narrow range of 4.2% to 4.4% during 2016 and nothing
exceptional, while black unemployment fell from 8.9% in March to a low of 8.0
in August.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Conclusion</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The previous data support the
idea of there being a racial dimension to US elections. That is not much of a
revelation, for the US or for many other countries, but the evidence also
suggests another angle which people are far less likely to have considered. A
fall in black unemployment, with the associated improvement in black peoples’
livelihoods, seems to be a factor influencing white voters (the biggest
electoral group) to protest about the incumbent party in government and either
not to vote or to vote them out of office.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
With the economic disruption
from the COVID-19 crisis, it will be difficult to apply this simple analysis of
unemployment rates to the forthcoming election in November, where Trump will
seek a second term. Nevertheless, it is likely that racial oppression,
discrimination and police brutality are going to remain big issues in US
politics. The deciding factor will be how far white voters stay with Trump.
They are not only the biggest group of voters, they are usually also the group with the
highest voter turnout.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 18 June 2020</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> A recent
Reuters report gave a quick summary of racial economic inequality in the US,
looking at unemployment, home ownership, net assets and stock ownership <a href="https://www.reuters.com/article/us-usa-economy-wealthgap-idUSKBN23M1EK?taid=5ee7a0dccc071f00018dd140&utm_campaign=trueAnthem:+Trending+Content&utm_medium=trueAnthem&utm_source=twitter">here</a> </div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> Pew Research
Center estimates that in the 2016 US Presidential election 65.3% of whites
voted, 59.6% of blacks (down from over 65% in 2012, and ahead of whites for the
first time), 49.3% of Asians and 47.6% of Hispanics.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-53449267589398913552020-06-09T11:35:00.001+01:002020-11-05T19:44:36.129+00:00Viruses & Imperialism<!--[if gte mso 9]><xml>
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<div class="MsoNormal" style="margin-bottom: 6pt;">
The coronavirus pandemic
highlights many features of imperialism today. But people often misunderstand
what is happening and can easily end up giving a reactionary response.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
For example, if modern capitalist production methods, especially in agriculture
with factory farming, are seen by some to have caused or at least exacerbated
this pandemic, how is it that viral outbreaks most commonly start in less
developed capitalist countries? Or if, as some ecologists suppose, the pandemic
is a sign of ‘nature’ responding to human intrusion, what are we to think of
programmes to eliminate mosquito-borne malaria? This article begins with
relevant facts about viruses, and then looks at developments in China, the US
and the UK.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Appendices to the article
discuss the ‘R’ reproduction number for a virus and the report on potential
virus deaths that influenced UK government policy. Technical details and
sources are given in footnotes.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Viruses</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Contrasting with the global
mayhem it has caused, a virus can be seen as just a submicroscopic infectious
particle. It can replicate itself only within a host cell – of a plant, an
animal or a human being, and it can sometimes transfer from one type of host to
another. It may cause serious disease and death, or be relatively harmless. How
problematic it might become depends upon the social and economic context.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Scientists estimate that about
three-quarters of new human diseases originate from existing viruses in
animals:</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
“Animals that harbour and can transmit a particular virus
but are generally unaffected by it are said to act as a natural reservoir for
that virus. For example, the H1N1 virus that caused the 2009 flu pandemic<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a>
… was likely passed to humans from pigs; for this reason, it was originally
called ‘swine flu’.”<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
There are around 150 animal
viruses that affect humans, and there are possibly half a million more that
could potentially do so.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The virus causing Covid-19
disease is thought to have come from a bat, which then passed on the virus to
another animal and then it was passed onto humans. Along the way, this virus,
like others, can mutate as it gets reproduced in the host’s cells, which can
make it more, or perhaps less lethal to humans. The first outbreak of the
disease was in Wuhan, capital city of Hubei province in China, and the most
widely suspected original location was a ‘wet market’ in Wuhan that was selling
freshly killed animals for meat.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Despite conspiracy theories,
there is no evidence whatsoever that the virus was manufactured in or escaped from
a laboratory, in China or anywhere else. Such accusations ignore how easy viral
transmission can be when other factors come into play.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
What made the new virus,
SARS-Cov-2,<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> frightening
was that it was roughly 10 times more deadly than the regular seasonal flu
virus and that it could be transmitted more readily, since many who were
infected and who could pass it on had no symptoms themselves. Even those who
ended up having severe, life-threatening symptoms would usually only develop
these after more than a week or so, giving the virus plenty of time to spread
to family, friends and accidental contacts.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
But the real issue for zoonotic
viruses – the ones infecting humans that come from animals – is the
animal-human connection.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a>
The cells in all animals, including humans, are more similar than one might
think. While many animal viruses have not been known to infect humans, there
are still plenty that might. If a virus particle exists in a cow, a pig, a
chicken, a bat or wherever, then there is also a chance that it can attach
itself to particular cells in the human body. The more that animals and humans
interact, the greater the chance. Equally, some viruses infecting humans can be
passed on to animals.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Nature & society</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In economically developed
countries, most animals are kept away from people – apart from household pets
that have not been found to be a threat to health. The risks of infection in
livestock farming, etc, are also generally known and are kept under control
with hygiene measures and vaccinations, although there have still been
outbreaks. Some people may not like the capitalistic, large-scale farming of
animals, but in this respect they tend to work well.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The risks of zoonotic viral
epidemics have been far greater in the poorer countries of Asia, Africa and
Latin America. In these countries, markets are more common where live animals –
not only ‘exotic’ animals, but also ducks and chickens – are slaughtered and
sold for meat. These can raise the risk of human infection from viruses,
including providing a forum for originating <i>new</i> viruses, especially if
the trading is not strictly regulated and the markets are not kept sufficiently
clean.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
So, while the virus particles
provide the potential for viral epidemics, that potential is only realised in
particular social-economic contexts. An important context was brought out by a
2017 study of emerging infectious diseases globally. It argued that such
diseases, and almost all recent pandemics ‘originate in animals, mostly
wildlife, and their emergence often involves dynamic interactions among
populations of wildlife, livestock & people within rapidly changing
environments’.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> <span lang="EN-US" style="color: black; mso-ansi-language: EN-US; mso-bidi-font-size: 9.5pt;">Among
the factors involved were large land-use change programs such as logging and
mining concessions, dam building, and road development.</span></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The risk of new infectious
diseases emerging is clearly a global problem. As the chart taken from the 2017
study brings out, the risk spans every continent, although to different degrees
in each country.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Estimated risk of emerging
infectious diseases by location</b></h4>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiC1D4pIcy1R_23C5AlWuDQGj0V4VOKGrBYKNjY4A6ytUeq_2O8V066hAGyN6mVVvZVBMzSNDcRHMmhKfQpCAW7vfZaYb-V4LSxBmUke0R2BXgIzQiie03W691aQAHJ6nTzVEUsB6fCWVU/s1600/Zoonotic+virus+event+risk%252C+2017.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="450" data-original-width="962" height="297" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiC1D4pIcy1R_23C5AlWuDQGj0V4VOKGrBYKNjY4A6ytUeq_2O8V066hAGyN6mVVvZVBMzSNDcRHMmhKfQpCAW7vfZaYb-V4LSxBmUke0R2BXgIzQiie03W691aQAHJ6nTzVEUsB6fCWVU/s640/Zoonotic+virus+event+risk%252C+2017.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Source:
https://nature.com/articles/s41467-017-00923-8.pdf. Note that the projection
used in the map diminishes the area of countries closer to the equator and
increases that of regions nearer the poles.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
These development-driven
environmental changes have been going on for centuries, also pre-dating modern
capitalism. What makes them more problematic now is the greater integration of
the world economy, with more opportunities for travel, the expansion of urban
areas and the shift of populations from the countryside to towns, especially if
some former peasants wish to continue their previous ways.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
But this does <i>not</i> imply
that economic development should stop, or that travel and global integration
are bad things that should be reversed. We do not need to adopt <i>The League
of Gentlemen’s</i> ‘local shops for local people’ approach. Development gives
evident benefits for humanity, not just in economic terms, but also by
improving social connections, knowledge of the world, science and health. To
take just one example of public health achievements: average life expectancy
was less than 50 years before 1900, even in the richer countries; today it is
more than 60 years even in the poorest and up to 80 years in the richest.
Unless you believe in an afterlife and would be pleased to meet your maker at
the earliest opportunity, that has to be a good thing.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Humanity has made progress by
understanding, modifying and channelling nature to meet human needs. One should
not think that the reckless way capitalism treats the environment is something
that is inherent in all possible forms of economic system. The latter view
would call a halt to development, despite 10% of the world still being in
extreme poverty, and it would support the reactionary idea that ‘nature’ is a barrier
that should be left alone. Viruses and other diseases have been dealt with in
the past, and can be dealt with again. But, as the following sections will
show, imperialism today creates many barriers to achieving this.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b><span lang="EN-US" style="color: black; mso-ansi-language: EN-US; mso-bidi-font-size: 9.5pt;">Capitalism
& disease inequality</span></b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Capitalism will not readily
minimise the risk of diseases emerging, since it costs money to do so. But an
epidemic is still bad for business, and might also affect the ruling groups. So
governments in rich countries will usually impose some health measures, promote
widespread vaccinations and find other ways to stop or limit the spread of
disease. Such measures mean, for example, that smallpox, measles, polio,
malaria and cholera have been almost eliminated.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a>
These things also apply to capitalist agriculture and animal farming, where big
efforts are made to<span style="color: red;"> </span>keep animals free from
disease. If infected meat got into consumer products, food production companies
would see their business collapse. Witness what happened to the demand for
British beef after the outbreak of BSE, or ‘mad cow disease’, in the late
1980s!</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
By contrast, poorer countries
have fewer sources of funds to deal with disease, and less scope for doing this
when capitalist exploitation is less restricted. Dominated by the rich powers
and their companies, they can do little to thwart the capitalist objective to
screw out as much profit as possible. Poor countries are also more burdened
with dangerous levels of pollution – often based on their dealings with the
rich – and many of their population groups do not even have easy access to
clean drinking water. The social and environmental changes brought about by the
ruthless, capitalist one-sided development of poorer countries have destructive
consequences, but that is an argument to stop this destruction, not to stop
development itself.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>China & the latest virus</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Substantial evidence links the
emergence of Covid-19 to a ‘wet market’ in Wuhan that sold fresh meat, fish and
other perishable goods. Animals were also slaughtered for meat on customer
demand. These types of market are common in many developing countries,
particularly in Asia and Africa, but they are not unknown in richer countries,
for example fish markets selling live fish, crabs, lobsters, etc. The earlier
comments made about the possible transmission of disease clearly imply that
such markets should at least be tightly regulated. But China’s authorities have
been concerned that closing the markets would encourage these practices to
continue outside of a formal market setting, which could make things worse.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In many respects, the problem
comes down to consumers not being happy that the meat is fresh, unless they see
the animal killed. That in turn reflects a worry both about the quality of
shop-bought meat and a desire to do things the old, trusted way as in
traditional livestock farming and in more rural communities. These traditional
ways will not easily disappear until safer, new methods gain acceptance, but it
is very likely that China’s government will take stronger measures against wet markets
in future.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Chinese authorities had been
slow to act on the outbreak in late 2019, and censored the initial warnings
from medical personnel. However, they then acted quickly and decisively,
including locking down Wuhan and other cities in the Hubei region on 23
January, thus affecting over 50 million people (other regions came shortly
after). Detailed information on the new virus was given to scientists
internationally by early January 2020. An English language article was also
published on 24 January in the prestigious medical journal, <i>The Lancet</i>,
warning about the risk of human-human infection.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China’s state is authoritarian
and can sometimes seem to act in a paranoid manner. However, this country has a
history of being dominated by major powers in Europe, by Japan and also by the
US. That history, added to the more recent hostility of the US, gives plenty of
material to support such a political response: <i>they really are out to get me</i>!
Note that the US has military bases around China – including in South Korea and
in Okinawa Island, Japan – and it is the major supplier of weapons to Taiwan,
an island province that China rightfully claims.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a>
China has no military bases around the US.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>One Flu Over the Cuckoo’s
Nest</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
US President Trump has used the
latest virus pandemic to increase hostility to China, attacking the World
Health Organization for being too ‘China-centric’ and stepping up the pressure
on US allies to impose economic sanctions on the country’s major companies.
This anti-China stance is a common theme in all US political thinking, worried
as it is about the rise of China as a rival power. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Trump blames China for ‘covering
up’ the virus in its early stages, thus setting the stage for a pandemic. There
may be some validity to that view, but even if so, there are no grounds on
which to criticise China’s subsequent actions. The allegation of a cover up
does not excuse the delayed reaction of the US authorities when the virus was
widely known about. It also has to answer reports on US mainstream media that
the US intelligence agencies (the CIA) knew of a viral outbreak in China in
November 2019. Of course, the CIA’s main concern was that it might affect US
forces in Asia!<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
POTUS#45 has distinguished
himself in this pandemic, easily exceeding any stupidity measure of which his
critics might have thought him capable. From comparing the virus to a normal,
regular flu epidemic, to promoting a drug, hydroxychloroquine, used for other
conditions that was untested and possibly dangerous for Covid-19, to even suggesting
that somehow injecting or ingesting household bleach might be a way of fending
off the virus, his statements have stunned most observers, including the
administration’s medical advisers.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Still, an egomaniac might easily
become distracted by the fear that economic damage from the Covid-19 crisis,
and now the protests against racist violence by the US police, could undermine
his hopes for re-election as president in November. Who could expect any
coherent strategy for dealing with the virus?</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
I will not deal with those
economic outcomes of collapsed output and employment, which are easily found in
daily news reports. But it is worth noting that in recent years severe cutbacks
in funding to federal and state agencies responsible for dealing with such crises
will have hindered an effective anti-virus policy in the US. For example, in
2018 the Trump administration ‘streamlined’, as the euphemism goes, the Global
Health Security and Biodefense team, and put it into a more general directorate
combining arms control and non-proliferation, weapons of mass destruction,
terrorism, and global health and biodefence. At the same time, maintenance
contracts on stockpiled ventilators lapsed and there was an insufficient
stockpile of medical equipment. All this added to the confusion caused by the
president’s own absurd statements.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
To crown all these achievements,
on 29 May President Trump terminated the US relationship with the World Health
Organization, following up his previous decision to suspend US funding for it. His
rationale was the previously alleged Chinese culpability and, for good measure,
adding to his anti-China policies, he has also announced that in future Hong
Kong would no longer have special trade and investment relationships with the
US.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>The English Patient</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The US tops the world in the
number of Covid-19 cases and in the number of fatalities from it, the latter
passing the 100,000 mark just after US Memorial Day. But at least the US has a
population of 328 million; the UK with its 67 million has no such size excuse
for having the second highest number of virus deaths on the planet.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
There are many parallels between
the UK and the US handling of the virus impact. For example: the lack of
specialist medical and personal protective equipment that would, in former
times, have been seen as a necessary stockpile for emergencies; a too long
delayed, confused and halting ‘strategy’ by the government to deal with the
crisis, and a political leadership that tried to bluff its way through a
pandemic and push back any criticism with an escalating series of half-truths
and outright lies. One could also cite the narcissism of both Trump and UK
Prime Minister Johnson as the reason they always have something else on their
minds than dealing with the pandemic.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Johnson claims to be following
the recommendations of his scientific advisers. This gives him cover for any
decision his government makes that goes wrong. More than that, the scientists
concerned have basically colluded with the government. Here is the editor of <i>The
Lancet</i>, Richard Horton, recently criticising the somewhat less than
independent role of many UK scientists:</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
“Every day a cast of experts – led by the chief scientific adviser,
Sir Patrick Vallance, and the chief medical officer, Chris Whitty – lends
credibility to this government by annealing their reputations with those of
ministers. …</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
“The failures within the scientific and medical
establishment do not end with government experts. The UK is fortunate to have
an array of scientific and medical institutions that promote and protect the
quality of science and medicine in this country – royal colleges, the Academy
of Medical Sciences and the Royal Society. Their presidents have been elected
to defend and advance the reputation of medicine and medical science. And yet
they have failed to criticise government policy. Why? Surely their silence
amounts to complicity.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; margin: 0cm 1cm 6pt;">
“ … When advisers are asked questions, they speak with one
voice in support of government policy. They never deviate from the political
scripts.”<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In the UK, available resources
for managing the pandemic were focused on the National Health Service, to the
detriment of care homes. The sharply rising death toll in UK care homes was
ignored for weeks until accumulating news media reports forced a modest change
in government policy. It would clearly have been straying too far into the
political arena for the main medical advisers to point out this problem in
public.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Probably the most egregious
policy error of the UK government was to have ignored for several weeks what
was going on in Italy. That country’s health system was quickly in a state of
collapse as infections and the death toll from Covid-19 soared. At least Italy
had some excuse of being surprised at how quickly the virus could spread; the
UK did not.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The first, outrageous policy
response from the government was to go for ‘herd immunity’. The rationale was
this: no vaccine was available for the new disease, it looked like the death
rate among those infected was ‘only’ around 1%, so letting a large number of
people get it and then recover would provide a buffer of immune people in the
population – assuming, of course, that one could not get infected again later.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
How disastrous this policy could
turn out to be should have been obvious from the start. A rate of 1% for deaths
might sound low, but not when the herd was judged to include 50-80% of the UK
population! It would have implied anything from 300,000 to 550,000 deaths in
total. Yet it took another two weeks or so for the implications to sink in. The
bias of policy finally changed the week after a report from Imperial College,
published on 16 March, spelled out to the government the potential scale of
deaths under different scenarios, from no measures taken to a complete lockdown
and suppression of the virus.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Government policies</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Lockdown policies in many
economies to contain the new virus led to a slump in economic activity, output,
employment and incomes. To some extent, richer countries were able to offset
the disaster caused for people’s livelihoods by offering subsidies for wages,
increasing grants and cheap loans to companies and reducing the cost of
borrowing. The scale of the extra spending and liabilities taken on has been
truly colossal.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn12" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> Poorer
countries were, as usual, in a much worse position, with their populations
facing penury or facing risks of being infected with the virus if they
continued working.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The global spread of the virus
has nevertheless been very uneven. Some countries have so far been relatively
lucky to escape from a big impact, whatever may have been the response of their
governments. Others have had experience with previous epidemics and were well
prepared to deal with this one. However, countries with right-wing, populist
leaders – notably the US, UK and Brazil – have tended to be much worse at
implementing an effective anti-virus policy.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The advantages enjoyed by richer
countries in their virus-crisis spending plans are brought out by the very low,
even <i>negative</i> yields they pay on government debt issues. But it is naïve
in the extreme to assume that such high borrowing will have no cost. Interest
rate costs on the debt may be minimal, but the extra debt itself has to be paid
back and will be an economic burden – via taxation or spending cuts – in future
years. That debt is added to already high levels compared to GDP. Among other
reports about this issue on this blog, see <a href="https://economicsofimperialism.blogspot.com/2018/08/another-day-older-and-deeper-in-debt.html">here</a><span style="color: red;"></span>.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Some debts owed by companies, eg
short-term low interest loans, might be paid back fairly quickly if the
collapse of business activity stops and is partially reversed in the next six
months. Yet that still leaves them with a net loss of revenue and far worse
prospects than they had assumed before the crisis. In the UK’s case, the Bank
of England has forecast 2020 GDP at <i>minus</i> 14% in 2020. While it
projected a hard-to-believe bounce back of 15% in 2021, even that would still
leave 2021’s GDP lower than in 2019.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn13" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a>
Similar down/up hopes and guesses will apply to all countries in the rest of
2020 and in 2021. The Bank was also optimistic because private banks now have
much better capital ratios than in 2007-08, so they are better able to bear
losses from loans not repaid. But that is not saying much compared to that disastrous
episode.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Viruses & Moribund
Capitalism</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
From the point of view of ruling
elites, viruses along with many other diseases are usually seen as being a
little too indiscriminate. They can infect or kill anyone, rich or poor, so it
makes sense to have public health systems in place to deal with them or to
limit their damage, both to the national population and in economic terms. This
particular virus has, however, been far more global, far more quickly and with
a far greater impact than any other in recent memory.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The big, rich countries were
well aware of the risk of pandemics, often had specialist teams of scientists
to study and monitor them, and also supported international health
institutions. This should make shocking the British and US delays and
incompetence in dealing with the latest virus. But it is not much of a surprise
when you examine the political leaderships in each country. And if you ask how
did such people ever get into positions of responsibility, that question is
answered by the fact that very large numbers of people voted for them. It is
not in the nature of these ugly beasts to be prepared for a public health
crisis, especially when there are other political objectives in mind, whether
that is a Brexit fantasy or re-election.</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
The imperial grinding machine: what goes in, what comes out</h4>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgT0mYfYUsU9rY7SqDBcLtIZ8vVZmMy19bAft7dKInbxo_zMp16VqNtwHpfJhjAcI20-XMnuHlQZ8BSa1H-8Q1u2pgrTPtLVWkAr1QJl53sKBSKSQNM6q2x1qiy06EygvydCmdzdRjqK4Y/s1600/Imperial+grinding+machine%252C+Apr2019.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="689" data-original-width="709" height="387" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgT0mYfYUsU9rY7SqDBcLtIZ8vVZmMy19bAft7dKInbxo_zMp16VqNtwHpfJhjAcI20-XMnuHlQZ8BSa1H-8Q1u2pgrTPtLVWkAr1QJl53sKBSKSQNM6q2x1qiy06EygvydCmdzdRjqK4Y/s400/Imperial+grinding+machine%252C+Apr2019.JPG" width="400" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In previous articles I have
covered many aspects of imperialism, looking at how the major countries have
exploited the world and wreaked havoc. One image I have used is of the imperial
grinding machine, where the resources of the world available to meet humanity’s
needs end up in crises, poverty, racism, war and oppression. The latest virus
episode throws a different light on these topics, one that shows how they are
not even good at protecting the more vulnerable in their own populations. While
the major powers can handle the economic costs, or postpone the economic
impact, this contrasts with many other countries where local populations are
faced with the choice of losing their livelihoods or risking death.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Health risks and viruses are
clearly global issues, but these cannot be dealt with effectively in the
imperialist world economy. Even the international bodies set up to manage
health are poorly funded and cannot work well to contain disease. Trump cutting
funds to the World Health Organization is bad enough, but there have also been
moves from the US to prevent future vaccines and medicines for Covid-19 from
being ‘public goods’ available to all countries and not bound by patent rights.
The UK also backs the US approach.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn14" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a>
Both the US and UK governments are providing huge sums to their own
pharmaceutical companies, and want them to benefit from any vaccine or
treatment breakthrough by the patent protection of such ‘intellectual
property’. In March, Trump even attempted to get exclusive rights to a
potential vaccine from a German pharmaceutical company!<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn15" name="_ftnref15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[15]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Every day the capitalist economy
answers the question of what life is worth by asking back: how much can you
pay? The world’s resources are monopolised by the major countries, but they
still screw it up. Unable to run the economy without threats, violence and
terror, we now see clearly that they cannot even save their own citizens’
lives.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Tony Norfield, 9 June 2020</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Appendices:</b></h3>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>a) Talking out of their Rs?</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
It is difficult to estimate how
many people have been infected with a virus when there are few tests carried
out, as is still the case in most countries. Full population tests may not be
necessary for an accurate view of infections, since representative samples, as
in opinion polls, might be sufficient. But with regular opinion polls, for
voting preference, etc, there is usually already a good population-based
estimate of voters, by age, gender, social circumstances, previous voting
choice, likelihood to vote, and so on. This helps a pollster build a
representative sample to reflect the population; the larger the sample, the
more accurate it is. With this new virus, however, it is not possible to get
many of the same kind of key, relevant data items, and without large scale
testing, judgements on the course of the infection will be far less reliable
than most opinion polls. In the absence of data, models for predicting the
virus make many assumptions based on little evidence.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Early in the outbreak, recorded
hospital deaths indicated that older people were more vulnerable to Covid-19,
especially those who also had other diseases that led to difficulties
breathing. It also seemed that younger people, especially children, were far
more likely to develop only mild, or even no symptoms, even if they had been
infected. But each of these assumptions is being at least partially revised as
more evidence accumulates. One other unexplained feature of the virus is that
the non-white section of the population seems to be more vulnerable to
developing bad symptoms and dying. This seems to be the case even when factors
such as socio-economic status and occupation are taken into account. All this
makes estimates of the potential impact of the virus very uncertain.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Yet one virus parameter commonly
promoted is its ‘basic reproduction rate’ R<sub>0</sub> (or R in the usual
discourse, and in what follows). This parameter reflects the degree to which
one infected person will infect someone else, and is critical for the future
path of the virus in a population.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn16" name="_ftnref16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[16]</span></span></a>
If the R number is two and that person goes on to infect another two people,
and they each do the same, and so on, then there is a doubling of the numbers
in each round of infection, which may be every couple of days. This leads to an
exponentially rising number of infections.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn17" name="_ftnref17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[17]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
An R number remaining less than
1.0 means the virus will diminish and eventually die out; the lower the number,
the more quickly. A number that stays above 1.0 means that infections could
grow until more or less everyone is impacted, and grow more quickly, the bigger
the R. So, governments would like to promote any reports of R < 1.0 from
scientists in order to get out of the lockdown that is damaging economies.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
But the reports of various R
numbers in the media, no matter which scientists they are from, need to be read
with caution. To put this in a fuller perspective, it is worth reading a
critical article on such calculations from the US Centers for Disease Control
and Prevention, published in January 2019. Its main point is that ‘many of the
parameters included in the models used to estimate R are merely educated
guesses; the true values are often unknown or difficult or impossible to
measure directly’.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn18" name="_ftnref18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[18]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Without mass testing, it will be
difficult to get a good estimate of the virus reproduction rate, let alone the
percentage of the population that has been infected. Of course, if the number
of new cases diagnosed in tests trends lower, then one can argue that the R
number has dropped, but all that is really being said is that the number of new
cases is lower!</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>b) The Imperial College virus
model</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The media reports of Imperial’s
projected UK deaths from the virus – from around 250,000 to 500,000 – had the
salutary effect of making the UK government wake up. Three months on, those
numbers seem crazily pessimistic, even though the reality of around 50,000 at
present is no cause for celebration and the impact of the virus is far from
over. Yet the report made a very well argued case in favour of suppressing the virus,
to prevent both an extremely high death toll and the collapse of the health
system.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn19" name="_ftnref19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[19]</span></span></a>
A closer look at the report also qualifies the headline numbers.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
One of Imperial’s scenarios did
project 510,000 deaths, but that was if the R number for the virus were 2.4,
and it was in ‘the (unlikely) absence of any control measures or spontaneous
changes in individual behaviour’.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn20" name="_ftnref20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[20]</span></span></a>
Mitigation, with some measures, was projected to result in 250,000 deaths, even
assuming all patients could be treated in hospital (which was not very likely).
So their recommendation was that much firmer measures would be needed to
suppress the virus. In the most extreme range of measures they considered,
schools and colleges being closed, social distancing, household quarantine and
home isolation of cases, then, on various scenarios about the R value, total
deaths from the virus could probably be reduced to less than 50,000.
Interestingly, they did not consider any economic lockdown scenario in the 16
March report, but they noted that the effects on the economy would be profound.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
I think the only criticism that
can be made of the Imperial report – apart from my scepticism about being able
to calculate R numbers with any precision – is that its extreme scenarios for
deaths were pretty unlikely to come about. The ‘spontaneous changes’ in
behaviour it noted were possible would have been <i>inevitable</i> if people
began to see a high number of fatalities from the virus. Even with the low
death toll in the UK in the early stages, people were ahead of the government
in curbing their activity well before the government’s lockdown measures on 23
March. Some usually busy shopping streets, for example, were already becoming
deserted by early March.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Critics of
capitalism can be reactionary too, as Marx and Engels explained in the <i>Communist
Manifesto, </i>especially Part III. See <a href="https://www.marxists.org/archive/marx/works/download/pdf/Manifesto.pdf">here</a>.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> First
recorded in Mexico and the US. Regarding the H1N1 virus name, the H and the N
refer to two proteins on the surface of the virus particle, hemagglutinin and
neuraminidase, which help the virus attach to a target cell. The numbers refer
to the form of those particular proteins, so you can also get H5N1, H9N2, etc,
for different viruses.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> <i>Campbell
Biology</i>, Pearson, 2018, p428.</div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> This name
when expanded means Severe Acute Respiratory Syndrome Coronavirus number 2,
after the first viral outbreak of this type seen in 2002-04. That episode had a
death rate of close to 10%, but less than 10,000 cases in total. The term
‘coronavirus’ describes the crown-like shape of the glycoprotein spike on the
surface of this type of viral particle that enables it to attach to certain
receptors in the host cell. Covid-19 means the Coronavirus <i>disease</i> of
2019, with the relevant symptoms, and the first cases have been traced back to
November-December 2019.</div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> Examples of other
animal origin viruses of recent years that have been passed on, helped by the
proximity of humans to the animals concerned, including eating them, are: Avian
flu 1997-, 2007-, 2013- (chickens, ducks, geese), Nipah virus 1998- (bats,
pigs), SARS 2002-04 (bats), Middle East Respiratory Syndrome 2012- (camels),
Ebola 2013-20 (bats, monkeys), Zika 2007- (mosquitoes). Bats and poultry have
been such a common channel for human viruses that it is surprising that horror
films about zombies and devastating viruses fail to mention them. Note that
viruses are far from being the only problem; bacterial infections can also be
widespread and deadly.</div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> See Allen et
al, ‘Global hotspots and correlates of emerging zoonotic diseases’, <i>Nature
Communications</i>, 24 October 2017, <a href="https://nature.com/articles/s41467-017-00923-8.pdf.">here.</a></div>
</div>
<div id="ftn7" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> Viruses
cause smallpox, measles and polio, malaria is caused by a mosquito-borne
parasite and cholera is caused by a bacterium, usually through poor sanitation.
Smallpox, a dreadful disease with a 30% death rate, killed up to 300 million
people in the 20th century, but has been eliminated worldwide since 1980 due to
a global effort.</div>
</div>
<div id="ftn8" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[8]</span></span></a> China’s
Communist Party is not known for its openness to criticism, but its paranoia
index will also have been dialled up by protests in Hong Kong. Joshua Wong, one
of the leading activists, has had discussions with US Senator Marco Rubio,
known for his reactionary and interventionist policies; some have also called
for US economic sanctions to be imposed on Hong Kong - which Trump has now done
- and carried US flags on demonstrations.</div>
</div>
<div id="ftn9" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[9]</span></span></a> ABC <a href="https://abcnews.go.com/Politics/intelligence-report-warned-coronavirus-crisis-early-november-sources/story?id=70031273">news report</a> of 9 April 2020.</div>
</div>
<div id="ftn10" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[10]</span></span></a> Richard
Horton, ‘How can any scientists stand by this government now?’, <i>The Guardian</i>,
27 May 2020.</div>
</div>
<div id="ftn11" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[11]</span></span></a> A very good
report on the timeline of UK government measures and the rationale behind them,
including the medical advice given, is <i>The Guardian</i>, ‘The inside story
of the UK’s Covid-19 crisis’, 29 April 2020. The Imperial College report is
reviewed in the Appendix.</div>
</div>
<div id="ftn12" style="mso-element: footnote;">
<div class="MsoNormal">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref12" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[12]</span></span></a> <span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"><!--[if gte mso 9]><xml>
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</xml><![endif]--></span>US federal government measures, including spending, grants
and guarantees, amount to some $3 trillion, in addition to vast new loans and
securities purchases from the Federal Reserve. The EU is also planning a €750bn
fund, in addition to individual country measures. The UK government will likely
borrow more than £300bn, with up to some £80bn going on various income subsidies.
I will not detail all these spending plans, but those interested could consult
the European think tank Bruegel’s report covering 10 EU countries plus the UK
and US <a href="https://www.bruegel.org/publications/datasets/covid-national-dataset/">here</a>.<span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"></span></div>
</div>
<div id="ftn13" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref13" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[13]</span></span></a> Note that starting
from 100 for GDP, minus 14% gives 86. Adding 15% to that only gives 98.9, lower
than at the start.</div>
</div>
<div id="ftn14" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref14" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[14]</span></span></a> See the
interesting report from <i>Asia Times</i>, ‘US declares a vaccine war on the
world’, 28 May 2020.</div>
</div>
<div id="ftn15" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref15" name="_ftn15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[15]</span></span></a> An article
on the attempted deal in March is <a href="https://www.politico.eu/article/trump-coronavirus-vaccine-germany-curevac/">here</a>.</div>
</div>
<div id="ftn16" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref16" name="_ftn16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[16]</span></span></a> If the R
value is high, it does not matter so much for public health if the spreading of
the virus in a population gets stopped at an early stage by appropriate
measures.</div>
</div>
<div id="ftn17" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref17" name="_ftn17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[17]</span></span></a> I will not
deal with the mathematics here, but note that media reports usually only focus
on the total of <i>new</i> infections, on the 5th round, for example, not the
total of <i>all</i> infections, including past ones, that is much higher, of
course. In the case of R = 2, new infections are 32 by the 5th round, but all
infections by then amount to 63.</div>
</div>
<div id="ftn18" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref18" name="_ftn18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[18]</span></span></a> See Paul
Delamater, ‘Complexity of the Basic Reproduction Number (R<sub>0</sub>)’, <i>EID
Journal</i>, January 2019, <a href="https://wwwnc.cdc.gov/eid/article/25/1/17-1901_article?fbclid=IwAR2ZlcP9vkWCEqwgetj0G_aM2niZORNXgVZohZ6S5KEmeahYBwEic-pYiPg">here</a>. </div>
</div>
<div id="ftn19" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref19" name="_ftn19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[19]</span></span></a> Imperial
College Covid-19 Response Team, <i>Impact of non-pharmaceutical interventions
(NPIs) to reduce COVID-19 mortality and healthcare demand</i>, 16 March 2020.</div>
</div>
<div id="ftn20" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref20" name="_ftn20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[20]</span></span></a> A similar
projection for the US had a total of 2.2 million deaths.</div>
</div>
</div>
<br />Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com22tag:blogger.com,1999:blog-3591186784456519139.post-19737445875597906432020-05-10T14:04:00.002+01:002020-05-10T14:04:57.195+01:00A Break for Science
<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
There have been no articles on
this blog since early February this year. Largely, this has been based on my
interest in the coronavirus pandemic. Since mid-2019, I had in any case started
reading up on biology, prompted by my own health problems, and the pandemic has
greatly expanded that interest. I had little formal education in natural
sciences, and have only in recent years come to see how fascinating they are,
making ‘economics’ look intellectually trivial and pretty dull by comparison.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
As for the economic slump
engendered by the coronavirus, I think little can usefully be added on this
blog to the almost daily, easily available information. (For my more regular
comments, see my Twitter account, <a href="https://twitter.com/StubbornFacts">Stubborn Facts</a>, or the Facebook page, <a href="https://www.facebook.com/groups/793664624149887/">Imperialism Today</a>) Yes, this will be the biggest capitalist crisis possibly ever, at least
in terms of collapsing output. But that much is obvious. For readers of this
blog, what should also have been obvious is that the already accumulated debts
in the system – onto which vast amounts more are being loaded – will make any
subsequent recovery very difficult.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
Capitalism’s troubles have now become more acute, but if/when they are less
acute, perhaps in 3-6 months’ time, the chronic problems revealed in debt will
become less able to be postponed and more likely to result in conflict. Already
there is a stirring of ‘China must pay!’ sentiment in the US.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
One purpose of my more recent
self-education is to avoid the often wrong virus-capitalism arguments of many writers.
While I do not plan now to fill this blog with disquisitions on viruses, in the
next week or so I should have completed an article on putting the pandemic into
an imperial context.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 10 May 2020</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Look in the
‘Search this blog’ box at the top right of the page and insert the word ‘debt’
for a series of articles.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-30593509929205392092020-02-03T09:36:00.000+00:002020-02-03T10:51:11.431+00:00Brexit & the British Working Class *<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Much has been written on Brexit,
stage 1 of which occurred on 31 January. But a key point has been ignored: the
UK’s departure from the European Union is due to a reactionary revolt by the
British (mainly English) working class. This went against the established
policy of the political elites, bourgeoisie, ruling class – call them what you
want – and will lead to many problems. As such, it represents the first time in
very many decades that the ‘popular will’ of a vote has contradicted capitalist
business interests. However, this is no reason for socialists to be happy.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
In the UK parliament, most MPs
were in favour of remaining in the EU. Yet they had to watch their backs and
worry about the people who had elected them: 52% of the UK electorate had voted
for Brexit in the 2016 referendum and, more importantly, 64% of Parliamentary
constituencies had done so. The biggest bloc of ‘Leave’ voters was in England.
To show this was not a one-off decision, English voters rallied to the
Conservatives and their ‘Get Brexit Done!’ slogan in December’s General
Election. A survey showed that more than half of working class votes in Britain
were for the Conservatives or the Brexit Party. As a result, the Conservatives
now have the largest majority in Parliament since 1987.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
It was no surprise that the
Brexit issue dominated the General Election, since it has featured in all UK
political discussion for years. Pro-Brexit sentiment grew in the aftermath of
the 2008 financial crisis, when British workers complained about the squeeze on
their living standards. They did not blame capitalism, or even UK government
policies. For many, the culprit was the EU, and especially the migration of
workers from the EU that was seen as putting pressure on jobs, housing and
social services.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> In 2016,
when Brexiters chanted ‘Take Back Control’, what they meant was control of EU
immigration. This could be done only by leaving the EU.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
This factor helped build a
successful political alliance between a large section of the British working class
and other longstanding critics of the EU. The latter were a disparate group.
They included Conservative ideologues, those nostalgic for the days of Empire
and who wanted to see ‘Great Britain’ operating more freely in the world, some
business people who were annoyed at EU market regulations, and even some on the
left who saw the EU as an evil capitalist plot and dreamed of a more
British-inspired (!) set of international relations. These diverse forces only
gained political momentum once the British (English) working class joined them.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
The Social Contract </h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Working class support for Brexit
was a protest. But it was a protest against how they thought the British state
was not doing enough to protect them – against immigration and the pressure on
living standards. So, economic arguments in favour of staying in the EU had
little effect, because they thought that getting out of the EU would encourage
the state to help them. The British working class has long had a loyal
commitment to the British state. As long as that state offered some economic
and social protection, it would not cause too much trouble. It was a kind of
‘social contract’. The immigration question became important in this context
because it helps to identify the national, British-based working class as the
legitimate recipient of state assistance versus the immigrants (or even
refugees) from other countries. In this political outlook, the issue of
inadequate housing, jobs and services delivered by capitalism becomes a moan
about the supply of housing, jobs and services taken by migrants. In earlier
decades, the moan was about blacks and Asians. In the past decade it has been
more about white (East) Europeans who had rights to move to the UK under EU
labour market rules.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
By contrast, business opinion in
Britain was consistently against Brexit. However, companies had to be careful
in their public comments because they did not want to annoy half their
customers. It was only in the past year that they warned how Brexit would
disrupt supply chains, put important trading relationships at risk and damage
investment, but this had little effect on popular opinion. The capitalist
enthusiasts for Brexit were few, usually small companies wanting to avoid EU
regulations. They, and others, overlooked an inconvenient point that world
trade is already divided up among major trading blocs, especially in North
America, Europe and Asia. There is no big, free world market to join outside
the EU, and the UK will be stepping out of the deals that the EU has already
negotiated with other countries.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
After Brexit Day on 31 January,
at first nothing much will seem to change for the UK. It will be excluded from
EU decision-making, and a number of EU-related outlets for British citizens
will begin to close down, such as employment and education opportunities.
Otherwise, Brits will see most EU-related things going on as normal, probably
up to the end of 2020. Even trade with the EU will not change abruptly before
then.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Nevertheless, the Brits will
still feel able to blame their woes on the EU. The Conservative Government’s
objective is to do what it likes after leaving EU membership, but to still have
trade access to the EU market as it was before. The remaining 27 countries of
the EU cannot agree to this, so there will be many disputes and plenty of room
for EU bashing in the forthcoming negotiations. There also remains a ‘divorce
bill’ to settle, whereby the UK is liable to pay the EU tens of billions after
it cancelled its previous membership commitments.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
It is doubtful that the British
working class will turn against the Conservative Government as the dream of a
bright future outside the EU fades away. It may not take long before their
promise of more investment in poor areas of the country is exposed as a fraud,
but that does not mean there will be any progressive resistance. Instead, the
greater likelihood is that the working class will double down on aggressive
nationalism.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 3 February 2020<br />
<br />
Note: * This is the English version of an article published on 2 February in the Spanish language journal <i>Ideas de Izquierda</i>, together with an article by Michael Roberts, <a href="https://www.laizquierdadiario.com/A-donde-va-Gran-Bretana-Dos-opiniones-sobre-el-Brexit">here.</a></div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> See <span style="color: red;"><a href="https://economicsofimperialism.blogspot.com/2019/10/british-workers.html">here</a></span> for a fuller discussion of the data on EU
immigration and the working class response to it.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> Just ahead
of the 2016 EU referendum, I explained the politics of Brexit, the imperialist 'social contract' and the working
class Brexit vote in more detail <a href="https://economicsofimperialism.blogspot.com/2016/06/political-fundamentals-and-uk-brexit.html">here.</a></div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com9tag:blogger.com,1999:blog-3591186784456519139.post-76191291474773870672019-12-18T17:52:00.000+00:002019-12-18T21:03:35.848+00:00Oath of Allegiance<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirPLTRw8VyDmeakqnioGOVFCG00UiitZUAwKvcR_rjieidV7yxCGGdH5wc6YLyR9uhtWm-1SrAO4KWwCq7-W7mtJV4dEDpCwDiafcQL1YI4_7RbQjwP8y8JPI5udLygUFtEXhxp9qrdNA/s1600/Black+Rod+Dec2019.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="355" data-original-width="444" height="318" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirPLTRw8VyDmeakqnioGOVFCG00UiitZUAwKvcR_rjieidV7yxCGGdH5wc6YLyR9uhtWm-1SrAO4KWwCq7-W7mtJV4dEDpCwDiafcQL1YI4_7RbQjwP8y8JPI5udLygUFtEXhxp9qrdNA/s400/Black+Rod+Dec2019.JPG" width="400" /></a></div>
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Anyone observing the opening of
the new UK Parliament session yesterday will have been aware of the fatuous flummery of
absurd rituals. But this is just window dressing, complete with garters, for a
more fundamental point: all new members of Parliament must give an Oath of
Allegiance to the Crown or else they cannot take their seats. Nobody thinks
that the Queen runs Parliament, but this oath acts as a shorthand way by which
patriotism and solidarity with the British state is expressed, no matter which
government is in power.</div>
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The Oath takes one of two forms.
The most commonly used is:</div>
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I, [member’s name], swear by Almighty God that I will be
faithful and bear true allegiance to Her Majesty Queen Elizabeth, her heirs and
successors, according to law. So help me God.</div>
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For those whose belief in the
Almighty is a little shaky, but who still believe in the majesty of the British
state, the version is:</div>
<div style="margin-bottom: 6.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm;">
I, [member’s name], do solemnly, sincerely and truly declare and affirm
that I will be faithful and bear true allegiance to Her Majesty Queen
Elizabeth, her heirs and successors, according to law. </div>
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Being an atheist is now OK, but
failing to have the correct national faith is not.</div>
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So it is that the Irish
republican party, Sinn Féin, boycotts the House of Commons, despite having won
seats in the British Parliament. As Mary Lou McDonald, the leader of Sinn Féin,
put it, party members would not be willing to ‘swear an oath to a foreign
power’.</div>
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Jeremy Corbyn, soon to be not
leader of the Labour Party, and all other sitting MPs have taken the Oath. But
that did not stop him being criticised for failing to pay attention to the
Queen’s speech on Christmas Day. This was a sure sign of insufficient
patriotism, and one to be included with his other alleged misdemeanours in the <i>vox
pop</i> media interviews at the time of the General Election.</div>
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The political climate that all
this suggests is pretty bad. It gets worse still when you consider the
mentality that must underlie the singing of the National Anthem at all big
events, especially in sports.</div>
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Study the main verse of this
obsequious dirge and weep:</div>
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God save our gracious Queen!</div>
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Long live our noble Queen!</div>
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God save the Queen!</div>
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Send her victorious,</div>
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Happy and glorious,</div>
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Long to reign over us,</div>
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God save the Queen.</div>
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However, it does not take much
deciphering to see that this is not really an expression of undying love for
the monarch, although you will not get far in Britain without showing due
deference. It is the hope that h/she will persist, but as the head of a
victorious, happy and glorious country of ‘us’. The eternal reign – eternal
because the Anthem is applied to succeeding monarchs – is therefore a deep,
patriotic wish that British power will persist too, and that its magic will
enrich all loyal subjects.</div>
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British citizens want to count
themselves as beneficiaries of such magic and will sing the Anthem. It is an
incantation, an expression of exaggerated pride and bolstered self-confidence
to give hope for a better future for ‘us’. It is no wonder that their members
of Parliament have to take the Oath of Allegiance.</div>
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<span style="font-family: "times new roman"; font-size: 12.0pt;">Tony Norfield, 18 December 2019</span><!--[if gte mso 9]><xml>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com3tag:blogger.com,1999:blog-3591186784456519139.post-81538369899508344072019-12-13T09:33:00.000+00:002019-12-14T12:48:43.965+00:00All Quiet on the Western Front<br />
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The British elected, by a big
majority, a Conservative government run by certified liars and incompetents in
order to ‘Get Brexit Done’.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
What a contrast to the countries that have recently seen widespread protests
about a lack of democracy, corruption in government and attacks on the living
standards of the mass of people. Mass action has worried the ruling elites from
France to Georgia, from Hong Kong and South Korea to Iran, Iraq and Lebanon,
from Chile and Brazil to Algeria and Sudan. In the UK, the electorate has
endorsed the ruling elite.</div>
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The lack of a pulse in the
British ‘labour movement’ – unless moaning can be seen as a sign of political
life – confirms my longstanding scepticism about the potential for anything
progressive happening in Britain. The British working class will likely learn
nothing positive from the outcome, and may well become even more conservative
and reactionary when it suffers the consequences.<br />
<br />
In the map below, from the BBC, the dominant Conservative vote in England is shown in <span style="color: blue;">blue</span>, while the Labour Party constituencies are in <span style="color: red;">red</span>, the Liberal Democrats in <span style="color: #e69138;">orange</span> and the Scottish National Party in yellow.</div>
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<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifS33YgflY07CVZjQF4tEPLzdbXzZ6fm4MDWgzH7MOIihs2JhXJJfDVAAUMbQib_dIoA628E20R9WN423B9eJGKjYrhf5DmuTOC8HvvJxG5_XO7TJYXhNCketmKqHAauEpiR12Pg89oAE/s1600/UK+GE+Dec+2019+map%252C+BBC.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="412" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifS33YgflY07CVZjQF4tEPLzdbXzZ6fm4MDWgzH7MOIihs2JhXJJfDVAAUMbQib_dIoA628E20R9WN423B9eJGKjYrhf5DmuTOC8HvvJxG5_XO7TJYXhNCketmKqHAauEpiR12Pg89oAE/s640/UK+GE+Dec+2019+map%252C+BBC.JPG" width="491" /></a></div>
<br />
<br /></div>
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Tony Norfield, 13 December 2019</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> The
Conservative Party message was ‘Get Brexit Done’ and this gained them a large
majority of seats in Parliament. The irony was that, according to a BBC report,
only 48% of UK votes were for Brexit-supporting parties! But this potential
anomaly was widely known, leading to many advocating tactical voting in the
‘first past the post’ UK electoral system. In Scotland, the Scottish National
Party won 48 of 59 seats and was strongly against Brexit. It is worth noting
the relative population and seat numbers for the UK: England 56 million people
and 533 seats; Scotland 5.4m and 59 seats, Wales 3.1m and 40 seats, Northern
Ireland 1.9m and 18 seats. The General Election results are principally
determined by the English vote, which this time supplied 345 of the Conservatives’ 365
seats in the 650-seat Parliament.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-76842530911682533992019-10-22T13:32:00.000+01:002019-10-22T22:46:51.712+01:00British Workers<br />
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As we wait impatiently while the
Brits go through the interminable travail of Brexit, let us have a look at who
they are. Not directly in a social, cultural or political sense, but by
reviewing the data on UK employment. Work gives a foundation for people’s daily
lives and will, in turn, have an impact on society, culture and politics. The
employment numbers challenge the conceptions of many, especially those with a
narrow ‘industrial’ view of the British working class. They also highlight that
a surprising number of people, for various reasons, are not working at all, and
that UK residents originally from other European Union countries are more
likely to be employed than indigenous Brits.</div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Swamped?</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
According to the UK Office for
National Statistics, the total UK population was 65.6 million people in 2018,
with a couple of percent more women than men. Roughly 86% of these were born in
the UK. Poland and India were the countries of origin for the largest number of
others, each with 832,000. Pakistan (535k), Romania (392k) and the Irish
Republic (369k) were next in line as other countries of origin. Even for Poland
and India, their share of the total population was just under 1.3% each.
Calculations of people by their claimed nationality give only slightly
different data, and the overall picture is not simply that most people in the
UK were born in the UK, as one would expect, but also that there has been no
great influx of people from any one other country.</div>
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Even if the EU were taken as a
whole, UK residents born in the 27 other EU countries amounted to only 3.6
million people, just 5.5% of the UK population. That figure was a slightly
higher 5.8% in England, the major Brexit-voting country. Although this share is
about three times higher than in 2004, a rapid increase, the still low
percentage leads one to suspect that the anti-EU sentiment revealed in the
dominant English Brexit vote (53.4% for Leave) has been based on something more
than simply the scale of the EU immigration numbers.</div>
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A number of commentators have
argued that it was the rapid influx of EU migrants after the accession to the
EU of Poland and other countries in 2004 that led to worries on the part of
British people about their domestic culture and ‘way of life’ being undermined
by this development.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
A look at the UK’s employment data will suggest a different perspective.</div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>What about the workers?</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
In mid-2019, there were about
41.3 million people in the UK aged 16-64, the prime age group for employment.
Of these, 31.5 million, or 76%, were employed, 1.3 million were unemployed and
8.6 million were ‘economically inactive’. Employed and unemployed are
reasonably straightforward terms – although with changing definitions – but the
latter one is worth examining further.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The ‘economically inactive’
category includes those who are students, those who are looking after the
family or home, the temporarily sick, the long-term sick, ‘discouraged workers’
and the retired. It also includes some other reasons for inactivity, but
basically means those who have not been seeking work in the past four weeks and
who are not available for work in the next two weeks. It does not include those
registered as unemployed.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
At 8.6 million people, the
number of the ‘inactives’ is surprisingly high: 21% of the population aged 16
to 64. Nevertheless, the inactivity rate has fallen over the past five decades,
largely because of more women working. Over 40% of women were ‘inactive’ in the
1970s, but this has fallen to around 25-26% today. By comparison, the
inactivity rate of males aged 16-64 has risen a lot – from around 6% in the
1970s to 16% in 2001, and it was 16.4% in the latest period. This is one way
that the capitalist labour market, in its usual perverse manner, has tackled
gender inequality. It is also linked to how female earnings can still remain
below male earnings doing the same job, despite laws against such
discrimination.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
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The surprise at the high number
is reduced when one takes account of 2.2 million students and another 2 million
people looking after the family or home included in the total. But that still
leaves another two big categories: 1.1 million who have retired before the age
of 65, and 2.1 million who are long-term sick. Only 1.9 million of the 8.6
million inactives are recorded as wanting to have a job.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
In addition to the inactive
numbers, in mid-2019 there were also 333,000 people who had been unemployed for
over a year but were still looking for a job. They are counted in the
unemployment figures, which totalled 1.3 million, 3.9% of the workforce.</div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Economic activity divergence</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
There is a big divergence
between the proportion of UK-born people who are economically ‘active’ and
those who were born in other EU countries. In mid-2019, 76.3% of the <b>UK-born</b>
population aged 16-64 was economically active, a rate which has slowly
increased from a recession-hit 71% in 2010. By comparison, for those born in
the original group of EU member states, named the EU-14,<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a>
the activity rate was higher, at 80.2% in 2019. </div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Much higher again was the
economic activity rate of those born in the EU-A8 countries, among the group
that joined the EU in 2004,<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a>
and which contains the famous ‘Polish plumber’: it was 85.2%. For Romania and
Bulgaria, who joined the EU in 2007, the economic activity rate was highest of
all, at 86.2%.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Recent migrants will tend to be
the more economically mobile and more likely to be in the active workforce.
They will also include fewer students, fewer people who have retired before the
age of 65 and fewer long-term sick. These factors will tend to push the
economically active rate of that population group higher. However, at the same
time, there are other things, some less amenable to coverage in official
statistics, yet clear in numerous anecdotal reports, which also account for the
higher employment rate of the newer EU members.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
For the EU countries that joined
from 2004, a <span style="color: red;"></span><a href="https://www.bbc.co.uk/news/uk-45565124">BBC report</a>
last year showed that these workers had hourly pay rates around 25% less than
for UK nationals. This was despite them having average skill levels higher than
for UK nationals. The skill-pay relationship only seemed to apply for workers
from the EU-14 countries: their skill levels were much higher than for UK
nationals, although they had pay rates only around 10% higher.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Many of those from the newer EU
members included in the British working class have done low-paid jobs that
British-born workers were reluctant to do, such as food processing and picking
fruit and vegetables in fields. However, they are also in more skilled
occupations, and not simply the skilled manual ones that led to the ‘Polish
plumber’ term.</div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Workforce breakdown</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Turning back to the British
workforce, the following table gives a breakdown of the number of jobs in the
UK by sector in June 2019. These sectors are based on standard classifications
and are a bit broad. They can also be impacted by changes in the labour market
over time. For example, if I recall correctly, it used to be the case that
canteen workers in a workplace used to be counted in the total of people in
that particular workplace sector. But with the outsourcing of most canteen
services to outside companies, they would mostly be included instead under
‘accommodation and food services’. Nevertheless, the breakdown of the types of
jobs done in the UK does a lot to question the common ideas people have about
the relative importance of different jobs.</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
For example, while Britain may
not be a ‘nation of shopkeepers’, it turns out that the biggest sector of UK
employment has five million people in the wholesale and retail trades. The
large numbers in health, professional, education and administration will not be
a surprise to many, but each of these areas employs more people than the whole
of manufacturing industry, which itself is not that far ahead of accommodation
and food services. The much-maligned financial and insurance services sector
employs over a million people, not all of whom are in the City of London.
Another million have jobs in the arts, entertainment and recreation sector, and
there are ten times more people employed in estate agencies than in mining and
quarrying. A further detail is that more than 150,000 have ‘jobs’ in the armed
forces.</div>
<h4 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Table: UK Employment
Breakdown, June 2019</b></h4>
<table border="1" cellpadding="0" cellspacing="0" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-table-layout-alt: fixed;">
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<b>Employment in sector</b></div>
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<b>Number (000)</b></div>
</td>
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<b>Percent</b></div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Wholesale, retail trade, incl repair of vehicles</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
4,997</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
14.0%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Human health & social work activities</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
4,538</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
12.7%</div>
</td>
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<tr>
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Professional, scientific, technical activities</div>
</td>
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3,156</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
8.8%</div>
</td>
</tr>
<tr>
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Education</div>
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2,970</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
8.3%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Administration, support services</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
2,968</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
8.3%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Manufacturing</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
2,729</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
7.7%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Accommodation & food services</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
2,470</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
6.9%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Construction</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
2,369</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
6.6%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Transport & storage</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,789</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
5.0%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Information & communication</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,620</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
4.5%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Public administration, defence, etc </div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,510</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
4.2%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
<i><span style="mso-spacerun: yes;"> </span>of which,
HM armed forces</i></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<i>152</i></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<i>0.4%</i></div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Financial & insurance services</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,113</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
3.1%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Arts, entertainment, recreation</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,053</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
3.0%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Real estate activities</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
572</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1.6%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Agriculture, forestry & fishing</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
366</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1.0%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Water supply, sewerage, etc</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
239</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
0.7%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Electricity, gas, etc</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
141</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
0.4%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Mining & quarrying</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
57</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
0.2%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
Other sectors</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
1,010</div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
2.8%</div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
<b>Total jobs in all sectors</b></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<b>35,667</b></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<b>100%</b></div>
</td>
</tr>
<tr>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 230.4pt;" valign="top" width="307"><div class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 3.0pt;">
<b><i>Note: Services sector total</i></b></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 90.0pt;" valign="top" width="120"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<i>29,766</i></div>
</td>
<td style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 54.0pt;" valign="top" width="72"><div align="right" class="MsoNormal" style="margin-bottom: 4.0pt; margin-left: 0cm; margin-right: 5.65pt; margin-top: 3.0pt; text-align: right;">
<i>83.5%</i></div>
</td>
</tr>
<tr>
<td colspan="3" style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 374.4pt;" valign="bottom" width="499"><div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Note:</b> The data count
the number of jobs in each sector and not the number of different people. The
total of jobs exceeds the total number of people in the workforce.</div>
</td>
</tr>
<tr>
<td colspan="3" style="border: none; padding: 0cm 5.4pt 0cm 5.4pt; width: 374.4pt;" valign="bottom" width="499"><div class="MsoNormal" style="margin-bottom: 6.0pt;">
Source: ONS, <i>Labour Market
Overview, UK:</i> <i>October 2019</i></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 12.0pt;">
Overall, services sector jobs make up nearly 84% of the
total number of jobs in the UK. This makes the common refrain from the British
left about ‘industry’ – let alone ‘manufacturing’, which got a special mention
in Jeremy Corbyn’s Brexit policy statement in Parliament on Saturday 19 October
– seem more than a little out of touch with the reality of contemporary
employment.</div>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Conclusion</b></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Many British workers voted for
Brexit in June 2016, and many were enticed by the ‘take back control’ argument
of the Leave campaign – a phrase that was a poorly disguised attack on
migration from the EU. The data show that although the number of EU migrants
into the British workforce rose fairly rapidly after 2004, it remained a
relatively small proportion of the total. The data also indicate that an
underlying problem for British-born workers was the much higher employability
of the more recent EU migrants, whether that was due to their higher levels of
skill or to their lower wage rates, or both.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Workers often react to labour
market competition in a reactionary way. The irony is that they usually support
the capitalist system and the capitalist labour market, but then complain if
how these operate does not turn out well for them. The result is that they call
upon the state to stop or control immigration. Far from any notion of ‘workers
of the world unite’, the sentiment instead has been ‘British jobs for British
workers’, something supported by the Labour Party and, implicitly, by sections
of the useless left.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
A basic minimum demand for
anyone with a sense of justice is that all workers should get the same rights
and protections, ‘immigrant’ or not. That might be the most justice one can get
from a labour market based upon a capitalist system that oppresses workers and
destroys society.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 22 October 2019</div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> A
comprehensive assertion of this view is from academic authors Roger Eatwell and
Matthew Goodwin in their <i>National Populism: The Revolt Against Liberal
Democracy</i>, Pelican 2018, which I critique <span style="color: red;"><a href="https://economicsofimperialism.blogspot.com/2018/12/liberals-populist-right-politics-of.html">here.</a></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> This point
excludes the other feature of the labour market, that many occupations are
dominated by one gender, and those with a preponderance of women often have
lower wage rates.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> The EU-14 is
made up from those countries who joined the EU before 2004, but excluding the
UK in these UK statistics of other countries. The 14 are: Belgium, Denmark,
France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal,
Spain, Austria, Finland and Sweden. The latter three joined the EU in 1995.</div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> In 2004, 10
countries joined an expanded EU, but the EU-A8 definition excludes Malta and
Cyprus who also joined then, presumably because they were formerly British
colonies. The EU-A8 countries are: Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia and Slovenia.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com2tag:blogger.com,1999:blog-3591186784456519139.post-70356125108378193702019-10-07T12:02:00.002+01:002020-12-18T08:06:19.763+00:00FX & Imperialism<br />
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">What
affects the exchange rate of a country’s currency? The answer depends on where
that country stands in the world economy. Not simply because an exchange rate
is the value of one currency versus another, so that you must weigh up two or
more countries. It is mainly because the capitalist world economy acts both as
a force that bears down upon everyone and because the most powerful countries
within the system also have the most influence over how this works. Exchange
rate theories ignore this latter point and this prevents an understanding of
imperialism today.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a></span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">1. FX
and the law of value</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Some
countries may link their national currency to that of an important trading
bloc, as does Denmark and some peripheral EU countries to the euro. Others may
closely tie their national currency to the currency in which their major
exports and imports are priced, as in the case of Saudi Arabia and Hong Kong
with the US dollar. Still others may decide to join a regional currency union,
or some such arrangement, in order to limit the degree to which fluctuations in
currency values might destabilise their international trade and also their
domestic economies. Such policies will change the ways in which pressures from
the world exert themselves, but they will not get rid of those pressures.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">For
example, a country whose exchange rate has been fixed against another still
finds itself vulnerable economically if it becomes uncompetitive in the world
market. It would face less demand for its goods and services, rising unemployment
and also less ability to sell its bonds or equities to capitalist investors
unless the yields were made more attractive. Among other things, this is what
happened to Greece, despite Greece remaining a euro member country, and this
has also become evident in some other euro countries.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">This
is not to say that a country can easily escape from these pressures by
devaluing its currency. Every policy decision has its related cost, although
some costs will be worse than others. The point is that every country is still
potentially at the mercy of the market, with moves in currency values being
only one means by which the market’s judgement is transmitted.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Here
is the breakdown of trading in the global FX market by currency, showing the top 10 currencies. That trading
amounted to $6.6 trillion <i>daily</i> in April 2019, according to the latest
survey from the Bank for International Settlements released in September. Note
that since a currency transaction involves two currencies, the sum of all the
percentages would be 200%, not 100%:</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt;">
<tbody>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">Currency</span></b></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="center" class="MsoBodyText2" style="margin-bottom: 6pt; text-align: center;">
<b><span color="windowtext">2019 % share</span></b></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">US
dollar</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">88</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Euro</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">32</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Japanese
yen</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">17</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">UK
sterling</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">13</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Australian
dollar</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">7</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Canadian
dollar</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">5</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Swiss
franc</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">5</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Chinese
renminbi</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">4</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Hong
Kong dollar</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">4</span></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt; width: 140.4pt;" valign="top" width="187"><div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">New
Zealand dollar</span></div>
</td>
<td style="padding: 0cm 5.4pt; width: 90pt;" valign="top" width="120"><div align="right" class="MsoBodyText2" style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 36.85pt; margin-top: 0cm; margin: 0cm 36.85pt 6pt 0cm; text-align: right;">
<span color="windowtext">2</span></div>
</td>
</tr>
</tbody></table>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">As
one might expect, the rich ‘Anglo-American’ countries dominate global currency
trading. The euro is less than half as important as the US dollar, despite
being the currency of 19 countries. Even the New Zealand dollar is traded more
than the Indian rupee and nearly twice as much as the Brazilian real. Below, I
examine how the structure of the imperialist world economy finds its reflection
in the foreign exchange market, looking first at theories of how exchange rates
are determined.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">2. Exchange
rate theories</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Economists
have many theories for exchange rates, but the feature they all have in common
is that <i>they ignore the structure of the world economy</i>! They might take
into account a country’s average price level or rate of inflation compared to
others, its productivity growth, its balance of international payments, or the
yield on financial assets as ways in which to determine the ‘fair value’ of its
currency against others. While it is reasonable to include such things in the
analysis, what is missing in these approaches is that they tend to use the same
set of variables for each country. Different countries are distinguished by the
importance a particular variable might have, with little attention paid to how
a country’s status in the world economy can be decisive.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">‘Purchasing
power parity’ (PPP) is probably the simplest theory of explaining what the
underlying value of a currency should be. It is not the favourite theory, but
is a constituent part of many others. The basic idea is that the price of a
typical good should be the same in two countries, after allowing for differences
in taxation, transport costs, etc. If that good costs $1.20 in the US and €1.00
in a euro country, then the PPP value of the euro is $1.20. Then, if the euro
is worth $1.30 or $1.10, the euro is either over-valued or under-valued,
respectively.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Of
course, there is no such thing as a typical good, and a wide variety of goods
and services also have to be taken into account. Typically, the PPP approach
uses a base year as a suitable starting point for the two (or more) economies,
and then looks at the rates of inflation in average price levels since then.
For example, if prices have risen in the US by 10% over the past few years but
have not changed in the euro countries, then the implied level of the US dollar
in the market should be 10% lower versus the euro to compensate for this. If
the dollar’s value in the foreign exchange market does <i>not</i> fall, then
its ‘real exchange rate’ will have risen, implying a loss of US
competitiveness.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">One
problem with PPP analysis is what index of prices to use: consumer prices,
producer prices, or a deflator reflecting the whole of GDP? Excluding certain
items or not? Different indices will give different results.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">More
importantly, the PPP approach does not easily allow for changes in product
quality, or new, successful products brought into the international market. Nor
does it take account of the impact on exchange rates of changes in world
commodity prices. In the latter case, for example, if oil prices rise from $50
per barrel to $100, then significant oil exporting countries will see a sharp
rise in their export revenues. These things can justify a rise in the ‘real
exchange rate’ of a currency and make it sustainable, whereas PPP analysis
rests on the view that the real exchange rate of a currency should stay unchanged.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">PPP
analysis is used mainly as a guide to currency values based on inflation
trends. It will tend to have more validity when the inflation rate in one
country is dramatically above those in others, signalling that the value of the
currency should fall in the market. This has recently been the case in
Venezuela and Argentina.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Other
theories of exchange rates broaden out the economic analysis to take account of
factors not directly related to the trade in goods. This is just as well, since
the influences on an exchange rate go well beyond that. However, these are
commonly ‘equilibrium’ exchange rate theories, and usually they try to find an
exchange rate for a currency that is compatible with a range of macro-economic
targets. This attempt raises more questions than it answers.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Such
targets may be a current account balance (including goods and services trade,
and income receipts and payments) that is seen as sustainable over the
long-term, underlying flows on the financial accounts (direct investment,
portfolio investments, etc), and reasonable levels of domestic employment. Good
luck with trying to figure out what those numbers should be!</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">This
‘equilibrium’ approach also tends to sanitise what happens in reality. Partly
because it is based on a view that there is some stable, equilibrium level for
all the variables that could potentially be achieved, when the global
capitalist market is forever disrupting the best-laid plans. Also because some
equilibriums are more equal than others, and there is no explanation given for
this.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhovr0p9IL_doPpxqcEwzT32WgHYUbQuLPQvFsAUMufyVJn8aeFKPnTGF1r1Q9YnhIr81gIv2a9TBSS3vm4BZ8AkxnLbsiPnLuCNQZd7Bwl0CXAoAI_tidV7goyVkMSv9OFzJlhqijZpk/s1600/Currency+symbols%252C+scale+FX%252C+colour.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="274" data-original-width="574" height="190" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhovr0p9IL_doPpxqcEwzT32WgHYUbQuLPQvFsAUMufyVJn8aeFKPnTGF1r1Q9YnhIr81gIv2a9TBSS3vm4BZ8AkxnLbsiPnLuCNQZd7Bwl0CXAoAI_tidV7goyVkMSv9OFzJlhqijZpk/s400/Currency+symbols%252C+scale+FX%252C+colour.JPG" width="400" /></a></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">3. Balance
of payments and the US dollar market</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Take
the US dollar, for example. There are some important features of the US
international balance of payments that the equilibrium theories may attempt to
count but will not delve into.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">A
country’s balance of payments covers all the transactions between it and
foreign residents. This includes not simply exports and imports of goods and
services, but also flows of profits, interest and dividends to and from the
country, investment in foreign portfolio assets (equities and bonds), foreign
buying of domestic portfolio assets, and direct investment and banking flows,
among other things.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">At
first sight, such transactions appear to reflect the supply of and demand for
US dollars in the foreign exchange market. For example, if US exports of goods
in one month amounted to $150bn and US imports of goods were $200bn, there
would be a deficit of $50bn on this part of the accounts, giving a net supply
of dollars into the market that would exert downward pressure on its exchange
rate (leaving aside the other items for the moment).<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a>
But this is not what happens. Instead, the way in which transactions take place
is conditioned by the structure of the world market.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
dominant role of the US means not only that almost 100% of US exports are
priced in US dollars, so that its exporters receive their domestic currency
when they sell to other countries. Over 90% of US imports are also priced in
terms of US dollars, so companies exporting to the US receive dollars, rather
than euros, Japanese yen, Chinese renminbi, etc. In principle, the latter could
then sell these dollars and buy euros, etc, so putting the dollar’s exchange
rate under pressure. But in practice they will keep a dollar-based bank account
for most of the funds.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">This
is because the US dollar is used for the contract pricing of much international
trade, from oil and other commodities to aerospace, engineering and technology
supplies, and their dollar accounts will be used for their own imports of
dollar-priced goods. The result is that the US trade deficit does not lead to a
comparable net sale of US dollars.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">So
the prominent position of the US dollar in the global market makes the dollar’s
exchange rate far less vulnerable to a big US deficit than is the case for
other currencies. This was a simple example from the trade account part of the
balance of payments. It gets more complicated when looking at the flows of
investment income and finance, but the same factors apply: the power
relationships in the world economy.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">4. Investment
income, finance and FX pressures</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">‘Fundamental
equilibrium’ FX theories project that a country with rising net foreign
liabilities (as implied by persistent current account deficits) will find its
exchange rate declining in value. Mainstream economic theory also has the view
that rates of return should equalise across all kinds of investment, so it
expects that a country with growing net liabilities on its foreign investment
position will find that its net investment income will fall into deficit. This
is because it will pay more on the rising value of assets that foreigners hold
in the country than it receives on the relatively declining value of assets
that it holds in other countries. Let’s see how these projections (do not) work
for the US dollar.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
US has had a current account deficit in every year since the early 1990s, and
this has been reflected in a rising value of net liabilities to the rest of the
world.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a>
By the end of 2018, the US foreign liabilities were a staggering $9.6 trillion
more than the foreign assets held by US residents – this was up from a deficit
of a ‘mere’ $1 trillion in 1999. Yet, despite this, the US still had a huge net
investment income in 2018 of $267bn in 2018! It received $1078m of income on
its assets of $23.7 trillion, but paid out just $811m on its far greater
liabilities of $33.3 trillion.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a>
Also, the US Fed’s broad index of the US dollar’s nominal value versus other
currencies rose by 15% from January 2006 to July 2019, and was also 6% higher
in inflation-adjusted terms.<span class="MsoFootnoteReference"> <a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span style="mso-special-character: footnote;">[5]</span></a></span>
What is going on?</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Two
related points account for this apparent anomaly: there are different types of
asset and liability, and the investment returns on each also tend to be
different, contrary to much economic theory. On so-called ‘foreign direct
investment’ (FDI), where an investor has 10% of more of a foreign company’s
equity, the returns tend to be highest. On ‘portfolio investments’, which
includes money allocated by asset managers, pension funds, insurance companies,
etc, into foreign equities and bonds, the returns are usually lower than on
FDI. Returns are usually lowest of all on money market investments, including
loans and deposits. Such returns will vary with economic conditions, but this
pattern has been true for the major countries in the past several decades,
particularly with the fall of money market interest rates to historically low
levels.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Guess
what? US foreign assets are concentrated in the higher-yielding FDI and equity
assets. These accounted for two-thirds of US foreign assets at end-2018.
Meanwhile, over half of US foreign liabilities (the investment foreigners have
in the US) are concentrated in the lower-yielding US debt and money market
instruments. That is how the US earns more on less, while foreigners earn much
less on much more, giving the US that net investment income of $267bn.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">A
big reason behind this favourable outcome for the US is not that foreigners are
a bit stupid and satisfied with low yields, while the US is a centre of shrewd
capitalist investors who make well-judged forays into the rest of the world
economy. Instead it is a reflection of US global power.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
US government can often force weaker countries to accept US investment on
favourable terms, and the volume of US wealth puts its capitalists in a strong
position to take advantage of any weakness elsewhere. Another benefit for the
US comes from one consequence of the role of the US dollar mentioned before.
Foreign central banks, as well as foreign companies doing international
business, are in effect obliged to hold reserves of US dollar funds to manage
their economic risks and guard against any financial mishap. These are funds
held as US Treasury and agency securities, US dollar deposits and other items
that give a low return.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a></span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">5. What
about the rest?</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
US pattern of privilege and relative insulation from changes in currency values
does not apply to other countries to the same degree, and especially not to
countries far lower in the world pecking order. For example, many so-called
‘emerging market’ economies often borrow funds from investors that are
denominated in US dollars or another major currency. If the exchange rate of
their own currency falls, that can greatly increase the value of their debts,
apart from raising the cost of their imports.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">These
latter countries also find that the flows of international investment into
their financial markets tend to be fickle and destabilising. If a country
becomes a favoured investment location, billions will flow in to buy companies,
bonds and property – boosting prices, because the scale of such flows will
overwhelm the relatively small domestic financial markets. Then, when the
favourable sentiment turns sour, investors move on to the next big thing, or
conditions in world financial markets worsen, the flows can easily reverse and
prompt a collapse.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">They
also have little access to longer-term, more secure funding, or to the far less
volatile inflows that come from foreign central bank investments. The US dollar
accounts for around 60% of central bank foreign exchange reserves that totalled
$11.7 trillion in mid-2019. The euro’s share is next in line, though much
smaller at 20%, and the currencies of Japan, the UK, China, Canada and
Australia trail far behind the euro. </span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Being
one of the big boys helps in FX markets, as in all the others. In contrast to the leeway given to the US, which occasionally shuts down its own
government operations and more frequently strikes out in the world with
unilateral policies, weaker countries in the global pecking order can barely
put a foot wrong before they find it stamped on.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">6. Market
analysis pragmatism</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
failure of economic theories to get to grips with the reality of the
imperialist world market leads FX market participants – dealers, speculators,
investors, advisers – to sideline those theories. Not because they want to
analyse imperialism, but because they want to find something that works. So
they adopt a range of pragmatic tools with which to try and judge the likely
pressures on exchange rates.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Chart
or ‘technical’ analysis is one method, where previous patterns of price moves
are used to assess potential trigger points and trends in the FX market. That
is an endorsement of the view that ‘the market is always right’, even if it has
just completely changed its mind! A problem for technical analysis is that
‘key’ price levels expected to trigger a sharp price move, if broken, are
usually well known. The result is that other market speculators buy or sell a
currency to force prices through such levels. These days, automatic trading
systems do a lot of this, commonly reversing position when a price level has
been broken to gain a small profit. In this way, they also, as a by-product,
undermine the validity of the signals they have depended upon!</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
huge scale of the international currency markets – trading some $6.6 trillion <i>per
day</i> in 2019 – helps endorse the pragmatic approach. After all, if many
companies are buying/selling currencies to manage their business, including
hedging against adverse FX moves, if asset managers, investment companies,
hedge funds and banks are forever shifting funds into different markets, then
it is unlikely that a simple model will work for currency valuation, or, more
importantly, to judge currency risk. This can lead to the use of what one might
call brainless correlation analysis.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Here,
the job is to find another market price, anything, that seems to have a
relationship to the changing level of one currency versus another. It could be
the price of gold or oil, futures market expectations for changes in interest
rates, z-scores of implied option volatility or market positioning data held by
banks or by trading exchanges. It does not really matter much whether there is
an identifiable causal relationship between the things being correlated. If it
looks like the US dollar, the euro, sterling, etc, goes up or down when the
implied volatility on the S&P 500 equity index goes down or up, then that’s
good enough, just as long as the relationship holds for a while and gives some
kind of lead on the forthcoming move in currency values.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">When
fully dressed up statistically, these correlations are often part of a set of
FX market signals used by market participants. Wherever possible, if only to
avoid embarrassment, some kind of market causation is usually inferred. No
analyst would admit to using the price of lean hog futures on the Chicago
Mercantile Exchange to judge the next move in the Norwegian krone versus the
euro, even if there happened to be a decent correlation between the two.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">7. Hidden
FX hedging</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">At
the risk of complicating further a discussion of what might seem to some as
already a little arcane, I will turn to FX hedging. Basically, this means doing
deals in the FX markets that reduce or eliminate the currency risk that is
faced. It may look like a subsidiary aspect of the FX market, but hedging can
play a big role in driving currency values up or down, often for reasons not
evident to market observers.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">All
bigger companies tend to hedge their risk in currency markets, in other words
to protect themselves against adverse moves in currency values for the things
they need to buy or sell. For example, if a euro-based company knows it will
receive $100m in three months’ time, then it will face a loss if the exchange
rate of the US dollar falls against the euro. So it may decide to insure itself
against the dollar’s fall. The most common way is for the company to do a deal
to sell the $100m in the FX forward market at a fixed price for three months’
time.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">If
it does this, then there are two potential costs. Firstly, the dollar may
actually rise in value, not fall, so the company has missed out on a higher
euro value for its future revenues. However, if it does nothing, then it is
just gambling the dollar will rise or at least not fall, and the whole point of
the hedging exercise is to eliminate risk. Secondly, the FX forward deal will
usually be done at an exchange rate that is different from the prevailing
‘spot’ rate of the currency.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
way it works is that if three-month US deposit rates are higher than the
deposit rate on the base currency – the euro, Japanese, yen, sterling, etc –
then the forward value of the dollar will be <i>lower</i> by the same degree.
If three-month US deposit rates are lower, then the forward value of the dollar
is correspondingly <i>higher</i> than the spot rate. If that were not the case,
then there would be an arbitrage gap, and dealers would buy and sell the
dollars in the spot and forward markets to bring about the required
relationship between the spot rate and the forward rate. Nevertheless, although
the two rates would be different, the forward value of the dollar would be
fixed, thus eliminating risk.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">8. Dollar-yen
hedging</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Taking
the example of the US dollar versus the Japanese yen, the FX market prices work
as follows. If US 3-month interest rates are 2.0%, Japanese yen 3-month rates
are minus 0.1%, and the US-dollar is worth 107.0 yen in the spot market, then
the 3-month forward value of the dollar would be lower than 107.0 to offset the
higher US interest rate. The interest rate gap is 2.1% per annum in favour of
the US dollar, but the term is only for three months, so the forward value of
the US dollar would be roughly 0.5% (a quarter of 2.1%) less than the spot
value, or close to 106.4.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a>
So, if the Japanese company sells dollars in the forward market, it will lose
roughly 0.5% compared to prevailing exchange rates in the spot market. However,
it will have eliminated the risk to its finances that the dollar will fall even
further.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">That
0.5% (or 2.1% annualised) number is the cost of hedging currency risk for three
months. It rises and falls with the degree to which the US dollar interest rate
is above the Japanese yen interest rate. If the two deposit rates were equal,
then the cost of hedging would be close to zero; if Japanese rates were above
US rates, then there would be a forward currency <i>gain</i> compared to the
spot rate for the Japanese company in hedging its dollar risk.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">In
Japan’s case, its close to zero or even negative interest rates for many years
has meant that there has almost always been a positive cost of hedging. Yet,
when the premium of US rates over Japan’s falls to very low levels, this
reduces that cost and can encourage its corporates and investors to increase
their hedging activity as the expense of eliminating currency risk is reduced.
Equally, if US interest rates rise versus Japan’s, then the cost of hedging
will also rise and this will tend to reduce the amount of hedging that is done.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Admittedly,
this can all appear like an obscure FX market technicality. But it becomes an
important driver of foreign exchange moves when the amounts concerned are not
just the odd $100m, and instead are measured in the tens, even hundreds of
billions of dollars.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Consider
the example of Japan’s life insurance companies. They have hundreds of billions
of dollars in foreign bond and equity investments, funded by their insurance
premiums, and the returns on their investments are used to pay out on policies.
Principally, they invest in bonds, to gain a regular income from coupons and
interest payments, and the many years of low interest rates in Japan have led
them to seek better returns in foreign securities. While their domestic
policies pay out in terms of Japanese yen, the income and the asset value of
their foreign investments is in US dollars, euros, sterling, etc. So they are
exposed to a lot of foreign exchange risk.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">How
much risk can be illustrated by the largest Japanese life insurer, Nippon Life.
The company has invested huge sums in foreign securities, mainly bonds. At the end
of March 2019, it held a total of ¥14.2 trillion in foreign bonds, nearly
$130bn, about 60% of which were in US dollars, nearly 30% in euros and near 10%
in sterling. Its policy is to hedge the currency risk on these bond assets, but
not fully. (Foreign equity holdings are far smaller, as for other life
insurance companies, and tend not to be hedged) How much hedging depends both
upon its expectations for currency markets and the cost of hedging, with the
latest data showing that roughly 60% of Nippon Life’s currency risk on foreign
bonds is hedged.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Other
Japanese life insurance companies have similar policies, although their hedging
ratios will differ. In total, the foreign bond holdings of the lifers probably
amount to some $300bn, perhaps more.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Now
consider what happens in currency markets when hedging activity changes. Just
taking the Japanese life insurers, and excluding other investment companies
whose activities will also have an impact, there could be a very big amount of
foreign currency buying or selling.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">If
the average hedge ratio was 50% on $200bn of US dollar bond holdings, then the
lifers will have done forward selling of the US dollar of roughly $100bn for
the next three months. However, when it is time to renew the hedge, the cost of
hedging may have risen a lot (<i>higher</i> US deposit interest rates versus
Japan), so they decide only to hedge 25%. The net effect would be to buy $50bn
in the FX market and so boost the dollar’s value versus the Japanese yen.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Alternatively,
if the cost of hedging fell a lot (with the US Fed <i>cutting</i> interest
rates), the hedge ratio may rise to 75%. Then they would sell another $50bn in
the FX market. It might even rise to 100%, when they would sell an extra
$100bn, pressuring the dollar’s value lower. This latter move was one factor in
the US dollar’s collapse versus the Japanese yen from 2008 to 2011, from around
100-110 down to 75-80, as the US Fed cut interest rates towards 0.25% and also
came close to pushing the cost of hedging down to zero.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">These
large-scale US dollar buying or selling actions would be driven by the cost of
hedging. They would be independent of whatever the average Japanese life
insurance company thought of Donald Trump, the US Fed or US political
developments!</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<i><span color="windowtext">Mutatis
mutandis</span></i><span color="windowtext">, similar pressures in the FX
market will follow from European asset managers adjusting their hedge ratios on
US investments, or US asset managers doing the same for their European
investments, and so forth. Note that the FX hedging decision is separate from
the decision to buy or sell the underlying asset (usually applying only to
bonds), and that lots of dollars, etc, may be sold, even if the asset manager
maintains its dollar, etc, bond holdings.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">That’s
enough on FX hedging.</span></div>
<h3 class="MsoBodyText2" style="margin-bottom: 6pt;">
<b><span color="windowtext">9. FX
markets express economic power</span></b></h3>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">The
privileged position of the US stands out in global FX markets, from US
companies facing far less currency risk than others, to the country receiving
low cost financing for its consumption and military adventures. However, these
are not things that any US politician has seen fit to recognise; it is an
outlook not confined to Trump and friends. Instead the powerful position of the
US is taken as a given, and one that they will fight to sustain, with pressures
on other countries to open up their markets and submit to the imperial law of
value.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">As
the example of FX hedging shows, moves in currency markets may have little to
do with the standard assessment of trade balances. Instead, the full panoply of
wealth, investment and financial dealing also has to be taken into account. In
particular, a country is a player in these markets if it belongs to the rich
club that dominates the international flows of funds. If it does not, then it
has to wait in the wings and seek to gain access to the funds available by
showing the requisite degree of obeisance to the major capitalist powers.</span></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<br /></div>
<div class="MsoBodyText2" style="margin-bottom: 6pt;">
<span color="windowtext">Tony
Norfield, 7 October 2019</span></div>
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> My <i>bona
fides</i> for discussing the FX market are the more than 20 years I spent
analysing financial markets, including more than 10 when I was global head of
FX research at a major European bank. During that time I constructed a number
of models for the FX market, or participated in their development, paying
attention to the many and varied theories available.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> This example
also ignores that payments for the goods generally do not occur at the same
time as the actual imports and exports are despatched and delivered.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> There is not
a one-to-one relationship, however, because the value of assets and of
liabilities changes with changes in financial market prices and the value of
the US dollar versus other currencies.</div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[4]</span></span></a> These
asset-liability figures exclude financial derivatives.</div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[5]</span></span></a> See
https://www.federalreserve.gov/releases/h10/summary/jrxwtfbc_nm.htm</div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[6]</span></span></a> To some
extent, a number of countries have become aware of this and have diversified
their foreign asset holdings from low-yielding debt securities into equities,
property and other assets by setting up ‘sovereign wealth funds’, etc, that are
separate from central bank FX reserves.</div>
</div>
<div id="ftn7" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[7]</span></span></a> This example
is only approximate, to indicate the size of the difference between spot and
forward FX values. In the market, the bid-offer spread, day count, form of
interest rate, etc, also have to be taken into account.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-84580570659582093132019-09-25T15:11:00.000+01:002019-09-25T15:11:31.485+01:00Labour, Imperialism & Finance
<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Following are slides for my
presentation on a panel at ‘The World Transformed’ conference in Brighton on
Monday 23 September. It was well-attended, with probably some 400-500 people
under the ‘Big Tent’, some out in the rain. The topic was ‘financialisation’, a
term that I find misleading at best. Those who use this term often do not understand the role financial markets play, and often it is a cloak for
their soppy reformist policies. So I decided to switch the focus to imperialism
and finance instead, and to expose UK Labour Party hypocrisy.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
I had fifteen minutes, as did
the other panel speakers, Yanis Varoufakis, Ann Pettifor and Kali Akuno. My
presentation was marred by the lack of a promised presentation screen. It
led to me fumbling a little over my notes instead, but I should have realised that
this absence was close to inevitable. There was a good reception for what I said,
but most acclaim, unsurprisingly at this Labour Conference-related event, was
given to the ‘Oh, Jeremy Corbyn!’ angle taken by Varoufakis and Pettifor.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
The Q&A period enabled me to
develop points on the hypocrisy of the Labour Party’s reliance on the rest of
the world for a living and its support for Britain’s imperial status –
illustrated with reference to how the 1945 Labour government funded the
introduction of the welfare state (see <span style="color: red;"></span><a href="https://economicsofimperialism.blogspot.com/2015/10/origins-of-uk-welfare-state.html">here</a> for
details).</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8DpAYsy7NQgCfdEqIx7nJC8k5jMg_rw6XB4qw7R5cuyhNitUVqfCMpw8sxJyy7l-bfn7PfelGDn0C_wFdqzrVi-4kULjF5lh05Yl5r6b-48M0JVkAbmfEuhVbJw1FtnuXag50FXjthiI/s1600/TN+at+TWT+finance+session%252C+23Sep2019.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="577" data-original-width="814" height="451" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8DpAYsy7NQgCfdEqIx7nJC8k5jMg_rw6XB4qw7R5cuyhNitUVqfCMpw8sxJyy7l-bfn7PfelGDn0C_wFdqzrVi-4kULjF5lh05Yl5r6b-48M0JVkAbmfEuhVbJw1FtnuXag50FXjthiI/s640/TN+at+TWT+finance+session%252C+23Sep2019.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
And so, to the slides below …</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: "Times New Roman"; font-size: 12.0pt; mso-ansi-language: EN-GB; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Tony Norfield, 25 September 2019</span><br />
<span style="font-family: "Times New Roman"; font-size: 12.0pt; mso-ansi-language: EN-GB; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;"><br /></span>
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<span style="font-family: "Times New Roman"; font-size: 12.0pt; mso-ansi-language: EN-GB; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;"><br /></span>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com4tag:blogger.com,1999:blog-3591186784456519139.post-33102358636430042592019-09-17T10:44:00.001+01:002021-09-14T10:53:31.129+01:00Index of Power Update, 2018-19: China #2[<b>Note added 14 September 2021:</b> An update to the Index of Power, with some improvements to data, especially that of using total foreign investment assets, not just FDI, is published <a href="https://economicsofimperialism.blogspot.com/2021/09/world-power.html">here</a>.] <br />
<div class="MsoNormal" style="margin-bottom: 6pt;"> </div><div class="MsoNormal" style="margin-bottom: 6pt;">This is an update of the
statistics for my Index of Power, using data for 2018-19 and discussing what a
country’s ranking reflects. The major change is that China’s rank has shifted
up and it has now taken the UK’s place at number 2 in the world. The US still
remains in a commanding position, well ahead of the other major countries, but
its lead has shrunk in the latest reading, especially versus China. Countries
in positions four to ten, when the Index was last updated in early 2018, remain
in the same rank positions with the new data.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Index highlights the
dramatic inequality of power in the world. In the top group, only China, the
UK, Japan, France and Germany have an index value that is more than 20% of that
for the US. Only 30 countries have a total index value that is more than 2% of
the US number; the world’s remaining 170 or so countries count for even less. </div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
Index of Power </h3>
<div class="separator" style="clear: both; text-align: center;">
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<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Index evolution</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
I first constructed this Index
in early 2012 and named it an ‘Index of Imperialism’. My objective was to use
readily available data to gauge different dimensions of the international
status of countries. Since then, I have changed the title of the Index and also
some of the components, but the underlying logic is the same.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The title was changed to the
‘Index of Power’ because this seemed a better description of what it was
measuring. It didn’t make much sense to call the lower ranking countries
‘imperialist’, but only little ones, or having an implicit assumption that the
higher a country’s ranking, the more imperialist it was.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
I had always pointed out that
any description of a country as imperialist would have to depend upon first
assessing its role in the world economy. Taking Luxembourg as an example, it is
only a small cog in the world system (number 24 in the new Index), but it is an
integral part of the European-based imperial machine and plays a particular
role within it. The Index number, nevertheless, is meant to reflect relative
positions of power in the world economy.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Which brings me to which aspects
of political and economic power are covered. Largely they are based on economic
data, and they are also biased in favour of those measures that reflect a
country’s <i>international</i> reach. These do not directly measure political
power, but it is evident, for example, that a bigger economy will tend to have
more weight in its dealings with the rest of the world than a smaller one. I
would have been happy to include some more directly political components, but
could think of none that seemed relevant and easily measurable for a wide range
of countries. That the top fifteen countries ranked by the Index include all
the permanent voting members of the UN Security Council, and also the G10
members, confirms that there is a broad correlation of the components used with
real-world political power.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The five original components of
my Index in 2012 were: GDP, foreign direct investment assets, military
spending, the importance of a country’s currency in central bank FX reserves
and a country’s ownership of the major international banks. The first three –
GDP, FDI and military spending – have stayed in all the later versions. But I
found much better and more representative measures for the final two components
during my later investigations, including data for more countries. For these
latter two, I now use the global volume of trading in particular currencies and
the value of international bank loans and deposits centred in different
countries.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
These revised Index components
were fully discussed in my 2016 book, <i><span style="color: red;"><a href="https://www.amazon.co.uk/City-London-Global-Power-Finance/dp/1784785024/ref=sr_1_1?keywords=city+norfield&qid=1568712749&s=books&sr=1-1">The City</a></span></i>, Chapter 5, ‘The World Hierarchy’, including the
rationale for the particular data items used and the limitations they had. Yet,
people being what they are, some writers have still managed to misinterpret
what I said, so I will again review the key points below. I will also note the
small amendments to how I have dealt with data for China in the latest Index
values (which, however, is not the reason for China’s rise to #2), and discuss
how to interpret China’s position in the world economy.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Index construction</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The five components of my Index
of Power are:</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<b>GDP:</b> GDP measured in
nominal US dollars, using IMF data for 2018.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<b>FDI:</b> The stock of foreign
direct investment assets, using UNCTAD data for end-2018.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<b>FX:</b> The volume of global
transactions in a currency, with April 2019 as the base period, using the
latest BIS survey of September 2019 (euro transactions are allocated among the
19 euro members).</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<b>Banks:</b> The outstanding
international loan assets and deposit liabilities of banks in a particular
country, using data from the BIS for end-2018.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<b>Military:</b> the military
spending of countries, measured in nominal US dollars, using data from SIPRI
for 2018.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
---</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Three data components – GDP, FDI
and Military – are available for most countries in the world, although the data
may be a little old or not available in some cases. The two other components
are available only for a smaller group of countries – 57 for FX (including all
euro members) and 47 for Banks – although it is very likely that the countries
left out will have minimal readings.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Each of the components is
weighted equally in the Index. The country with the largest component reading
gets a score of 100 for that item, and other countries get a scaled down
number. So, for example, if Country A has the biggest GDP, then it is 100, and
country B, with a quarter of that GDP is 25. To complete the Index, components
are added up for each country then divided by 5.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
If a country is the biggest in
all components, its final Index number will be 100. That is almost true for the
US, which has a value of 92.4, with the biggest GDP, FDI, FX and Military, but
coming second to the UK as a location for Banks (rather, <i>international</i>
banking).</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Below I discuss the limitations
of the available data used for the index components.</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>GDP</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
One can always doubt whether an
economic statistic really does measure what it claims to measure. Nevertheless,
Gross Domestic Product (GDP) has the big advantage of being an easily available
item of data for almost all countries. For my current purpose, one problem with
GDP is that it overstates the value of output that accrues to a particular
country when it has net payments of income to foreign investors, and
understates that value when the country has net income from foreign investment.
For example, Ireland’s GDP is overstated in this respect, because it has to
make big payments to foreign investors – more is produced in the country than
ends up staying there. By contrast, Norway’s GDP underestimates how much
revenue Norway receives because it gets big net payments from its foreign
investments. An alternative measure, GNP, includes that difference, but is much
less easily or widely available.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In any case, it is worth
pointing out that GNP and GDP do not allow for the way economic data count
value produced. As <a href="https://monthlyreview.org/2012/07/01/the-gdp-illusion/">John Smith</a> pointed out,
these measures are better understood as measuring value <i>appropriated</i> by
a country, rather than value <i>created</i> in that country.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
GDP does not measure a country’s
international influence directly. But a country’s ‘weight’ in the world economy
is an important factor in its potential influence, and GDP is one measure of
that weight. It is also better to look at nominal GDP, not on a Purchasing Power
Parity basis, as a truer measure of this global weight. You cannot buy anything
on the world market with PPP dollars, which do not exist.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
GDP’s value as a component of a
power index can be seen in another way: one can look at GDP as measuring
population multiplied by GDP per head of population. This allows for the fact
that in the world economy people count only insofar as they also have incomes,
and how much income!</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In the case of China’s GDP, the
number I have used is the GDP of China itself, plus that for Hong Kong and
Macau, which are counted separately in official data. Macau is a new addition
compared to the last Index calculation, but this increases China’s total index
number by less than 0.1.</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>FDI</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Foreign direct investment is one
measure of a country’s foreign ownership of assets, and its ability to exploit
others in the world economy. However, especially given the registration of FDI
in tax havens, a problem is that not all of the ultimate country owners of
these assets are identified. In the case of the Republic of Ireland and the
British Virgin Islands, and also for some other countries, they would score
relatively highly on this index measure, but little of the FDI recorded as
coming from these locations is owned by their residents.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
Also, FDI is distinguished from portfolio investment in official data. To count
as FDI, the investment has to account for more than 10% of a foreign company’s
assets; otherwise it is counted as ‘portfolio’ investment.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Portfolio investment in equities
and bonds is huge, but data covering it is much more patchy than for FDI, and
is even less likely to identify the ultimate country-based owners. A very high
proportion of portfolio investment is done through global investment funds that
also make use of tax havens. </div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Another weakness of FDI data is
that it does not include the economic privileges in economic relationships that
major companies in the rich countries have with their suppliers in poor
countries, or others in their ‘supply chains’, privileges backed by their states
in international trade and investment deals. This omission is difficult to
rectify, but the FDI numbers are one measure of a country’s international
reach, and so will likely be correlated also with such privileges. I use FDI
data as a rough guide to a country’s ability to exploit labour and resources in
other countries. Though it has obvious flaws, I have not found any better data
with a wide international scope for this purpose.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Data for China raise a problem
under this heading. Some of China’s FDI is into Hong Kong, and some of Hong
Kong’s is into China, so just adding up the two figures would exaggerate the
international reach (outside China/HK) of the FDI for all of China. Previously,
I included only China’s FDI number and left out that for Hong Kong, thinking
this would give a decent estimate of the number for China as a whole. After
recently finding a report on the source and destination of the FDI stock, it
turns out that it did. Using figures in that report for the FDI stock at
end-2018, I am confident that the latest FDI index component for China as a
whole is reasonably accurate.</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>FX</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Every three years, the Bank for
International Settlements conducts a survey of the trading in foreign exchange.
It is the most comprehensive account of how far a country’s currency is used in
international markets, something that I think is one important reflection of
that country’s international influence. As discussed in <i>The</i> <i>City</i>,
Chapter 7, ‘The Imperial Web’, there are certain market privileges that accrue
to a country’s companies and governments if their currency is used widely in
the world.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This updated Index of Power uses
the latest BIS survey published on 16 September 2019, with a base month of
April 2019 for counting the volume of trading. As in previous Index
calculations, the US dollar is by far the dominant currency used worldwide,
being involved in 88% of all transactions in 2019. By comparison, the euro,
consisting of 19 countries, is involved in just 32% of all transactions. (Note
that two currencies are involved in an FX deal, so the total shares add to 200%
when counting all of them) The Index weight for the euro’s FX component is
allocated among all euro members according to their relative GDPs.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
In the latest 2019 survey, the
market share of the Chinese renminbi (CNY) has remained at 4%, the same as in
2016. It remains the 8th most traded currency, up from 17th in 2010. Given that
part of China’s territory is Hong Kong, which has its own currency the Hong
Kong dollar (HKD), I have had to judge how to use data on its trading. For
simplicity, I have just added up the two numbers for the CNY and HKD. This
boosts the China ranking, since the HKD’s share of currency trading rose from
2% in 2016 to 4% in 2019. But this does little to exaggerate the figure for China
as a whole. Not all CNY or HKD currency trading is in the CNY versus the HKD,
and the FX component has only a small impact on China’s overall index number
when divided by five.</div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Banks</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
International bank lending and
borrowing based in a particular country is another measure of a country’s
importance in the financial sphere. It does not include other bank activities,
or the operations of other financial institutions, but the scale of such
borrowing and lending is a reasonable proxy for a country’s international
financial status. That conclusion would have to be questioned when a country is
the base for large-scale international banking activity that is operated almost
exclusively by foreign banks, since, usually for tax reasons, the country is
favoured as a financial dealing hub.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
As noted before, this is the
only index component in which the US falls short of the top position, coming in
second behind the UK. That may well change in future with the impact of Brexit,
if/when it goes ahead, on reducing the operations of banks based in the UK,
especially with regard to the rest of Europe, an important part of their
business. But it was true at the end of 2018. While banking activity in the US
is much bigger than elsewhere, a large portion of it is oriented towards the
domestic US economy, so does not count in this index calculation.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The China-Hong Kong relationship
emerges again in how to deal with the data for international banking. Hong Kong
has a slightly bigger international banking sector than China, having initially
been developed as a regional commercial and finance hub for British imperialism
well before the growth of mainland China’s banking business. I do not have
enough information to judge how much of their ‘international’ dealing is
between each other and how much is with external countries, and have taken the
simple approach of using an average of the index score for China and Hong Kong
as an estimate of the external number for China as a whole.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a></div>
<h4 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Military</b></h4>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Big spending on the military
does not necessarily mean that a country has military clout and an ability to
intimidate other countries, but it usually does. Despite the record of
exorbitant cost overruns in military projects, ships crashing into each other
and missiles or missile defence systems that don’t work, the scale of such
spending is a measure of military power, the most explicit political component
of my Index of Power.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
As before, the US is by far the
biggest spender. China comes second, but with less than 40% of the US number.
The only other countries with even around 10% of the US number are France,
Russia, Saudi Arabia and India. On the latest SIPRI numbers, the UK was at
7.7%.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
One might well argue that China
can buy more firepower with $1bn than the US, given cheaper costs and probably
less scope for armaments producers to milk the taxpayer. Also, while China is
likely to be behind the US in overall technological capability, this may not be
true in all areas. Many of the US advances could prove to be unworkable, or be
as effective as the Boeing software ‘upgrade’ to its 737 Max jets.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
US military power is also
boosted beyond its own huge spending by how it encourages other capitalist
countries to join in and follow its strategic aims, in particular with NATO.
This acquiescence adds to the influence it can project by the large number of
military bases it has all over the world, </div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>China: Duck theory versus
historical materialism</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
With China at number 2 in my
global power ranking, the question arises as to whether it should be considered
an imperialist country. My view is that it should not. Nevertheless, this is a
big topic that I will deal with only summarily here, noting what should be
taken into account when deciding how to characterise China.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Firstly, it is not so much the
actions of a country that should define it as the dynamic of the economy and
society that produces such actions. In turn, this will also depend upon the
international situation and a country’s position in it as much as on the
internal political system. The term ‘imperialist’ should apply only to those
capitalist countries with a dominant position in the world that are, directly
or indirectly, part of the system of oppression, control and violence that acts
to keep that system in place.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China is not a fully-fledged
capitalist country with politicians and companies joining in the carve up of
the world. Its newly minted billionaires do not have free rein to do more or
less what they like within China, and even its privileged bureaucrats could
find themselves jailed, or dead, if they step too far out of line with what the
ruling party thinks is best for the country.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Critics of China would seem to
be able to point to many things to justify calling it imperialist. For example,
there is China’s political oppression of the 11 million population of the
Uighur ethnic group in its Xinjiang region; China’s many deals for raw material
supplies from Latin America and Africa; big loans to corrupt politicians for
infrastructure projects that might later be paid off by being switched into
Chinese ownership of ports, etc; its attempt to control territorial waters in
the South China Sea, including creating a number of islands, and its growing
volume of foreign investment.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
But this is only a ‘duck
theory’, pointing to similar things that the classic imperialist countries have
done, or are still doing, to conclude that China is the same as them. In some
respects, China may ‘look like a duck’, ‘swim like a duck’, etc, but that does
not mean it has duck DNA. In other words, the dynamic of China’s economic and
political system is not that of an imperialist power.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Above all, the imperialist
dynamic is based upon a country trying to boost capitalist profitability and
being in a position to do so, especially through the control of foreign markets
and areas of investment. By contrast, China’s policy since the founding of the
People’s Republic in 1949 has been largely defensive, trying to develop without
being dismembered by the major powers, as it had been throughout the previous
century. Its objective is to find a means of surviving in a hostile world
economy run by the major capitalist countries.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Initially, this had disastrous
results, as with the ‘Great Leap Forward’ in 1958-62 and millions of deaths by
famine. By the 1970s, however, China began a cautious engagement with the world
economy. It aimed to limit the impact of market forces in special economic
zones, restricted the influence and property rights of foreign businesses, held
back the formation of a domestic capitalist class and tried to build the foundations
of an industrial economy through state spending and investment plans. Despite
many negatives, including lots of pollution and wasted resources, this proved
to be successful. It brought hundreds of millions of people out of grinding
poverty and ended up with China as a major producer, one that has even begun to
be successful in areas of modern technology, such as 5G mobile communications –
much to the alarm of the US!</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This striking record does not
endorse China’s often repressive, and sometimes politically stupid, government
policies. But it should serve at least as a counter-weight to the critiques of
rich country, liberal democracy enthusiasts who are so eager to find fault with
China, but who pay little or no attention to the depredations of their own
governments, and all too often act to echo the anxiety of their own ruling
elites that China has out-competed them.</div>
<h3 class="MsoNormal" style="margin-bottom: 6pt;">
<b>Conclusion</b></h3>
<div class="MsoNormal" style="margin-bottom: 6pt;">
The Index of Power is a summary
way of representing each country’s importance in the world economy and can be
used to track changes in status over time. For the top 20 countries there had
previously been minor changes in ranking. This time around, the major changes
concern the advance of China and the slipping back of the UK. Such a
development counts for more than it might at first appear to do, because it
reflects the diminished influence of the Anglo-American system.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
Both changes in status were
fairly predictable, with economic growth and investment boosting China’s, while
Brexit turmoil has helped lower the UK’s rank. That has not made it any easier
for the US. While the US index value remains way ahead of all the others, it
has shrunk in absolute terms, and particularly in relative terms with respect
to China.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
This move, under way for a
number of years, has been reflected in an increasingly aggressive policy of the
US government towards China. The US does not only have multiple military bases
surrounding China, in Okinawa, Japan, South Korea and elsewhere (China has none
around the US), it has also stepped up its more specifically economic
offensive. A key US target here is China’s flagship telecoms and electronics
company, Huawei, and its 5G technology, the latter an area in which US
companies are well behind the competition. The US uses its influence over
allies and other subordinates to encourage them to boycott Huawei on laughable
security grounds.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
China is also a problem for the
US in other respects. For example, it has recently offered Iran, a longstanding
<i>bête noire</i> of American imperialism, huge investments worth several hundred
billions of dollars, in contradiction to US edicts. By incorporating Iran into
its mega development project, the Belt and Road Initiative, China is not only
ignoring US sanctions, it will also be dealing with Iran in non-US dollar
currencies. This puts a further squeeze on US global influence and is another
threat to its formerly unrivalled hegemony.</div>
<div class="MsoNormal" style="margin-bottom: 6pt;">
<br /></div>
<span style="font-family: "times new roman"; font-size: 12pt;">Tony Norfield, 17 September 2019</span>
<br />
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> For this
reason, Ireland is excluded from the graph shown of the top index countries. It
would have come in at number 17. Among others, a number of US corporations have
done ‘tax inversions’ to incorporate in Ireland and so reduce their tax bills.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> The Cayman
Islands stand out here, and this territory has also been excluded from the
Index of Power graph shown above.</div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[3]</span></span></a> What to do
with Macao, a special administrative region of China, is another conundrum,
although a small one. I have excluded its data from the bank index calculation
for China, although these are part of the BIS country report on banks’ foreign
assets and liabilities. Were Macao properly included this would boost China’s
total index number a little.</div>
</div>
</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com5tag:blogger.com,1999:blog-3591186784456519139.post-30157315032744212052019-07-18T17:40:00.000+01:002019-07-18T17:40:03.246+01:00Debt Update<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
<div style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">For the first time in a decade, the ratio
of debt to GDP fell back in 2018 for both advanced and emerging market
economies. It nevertheless remains high, much higher than at the start of the
2007-08 crisis, and has also continued to rise in some major economies.</span></span></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">The first chart shows the global picture,
broken down into the two main country groups counted by the Bank for
International Settlements. The ‘advanced’ countries are basically 22 rich ones;
the ‘emerging market’ economies are 21 others.* Note also that the data cover
the outstanding credit advanced to the non-financial sector, including
non-financial corporations, the government and households.</span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq8V1ZbsCbRa2z7-QRAhoIFJvXKPohDADb5iskdwMbpBSi5ofp_6smwkpoO0flYoQ4nSQ7fQAL2RVQVQWJ5gatIgnWymSsu5w8OmXomgQqbUvY5i-jwXFTMjyqAT8PS8AuyMYXPWjhEtI/s1600/Debt+ratios+to+2018.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="458" data-original-width="719" height="404" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq8V1ZbsCbRa2z7-QRAhoIFJvXKPohDADb5iskdwMbpBSi5ofp_6smwkpoO0flYoQ4nSQ7fQAL2RVQVQWJ5gatIgnWymSsu5w8OmXomgQqbUvY5i-jwXFTMjyqAT8PS8AuyMYXPWjhEtI/s640/Debt+ratios+to+2018.JPG" width="640" /></a></div>
<div style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="font-family: Georgia, "Times New Roman", serif;"><br /></span></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">Data for the ratio of
debt-to-GDP are given in the next table. It shows that Japan remains a basket
case, and its debt ratio has continued to rise. France looks to be in one of
the worst positions among the major capitalist countries, with its debt ratio
also rising and going above 300% of GDP. While the debt held by the French
government has held steady, it has grown among households and corporations.
This will keep President Macron and the <i>Gilets Jaunes </i>busy. Elsewhere
among the euro countries, the debt ratio has been falling, notably in Germany. </span></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<h3 class="MsoNormal" style="margin-bottom: 6pt; text-align: center;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">Total credit to the non-financial sector, 2013-18 (% GDP) </span></span></h3>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
</div>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; margin-left: 32.4pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt;">
<tbody>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>2013</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>2015</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>2017</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>2018</b></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Advanced economies</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
268.4</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
266.5</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
277.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
265.5</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Emerging market economies *</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
153.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
171.2</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
191.8</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
183.2</div>
</td>
</tr>
<tr style="height: 11.35pt; mso-height-rule: exactly;">
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>US</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
247.4</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
247.2</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
250.5</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
249.8</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Japan</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
363.4</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
362.0</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
370.9</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
375.3</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>UK</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
267.7</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
267.1</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
283.1</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
279.3</div>
</td>
</tr>
<tr style="height: 11.35pt; mso-height-rule: exactly;">
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>China</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
212.7</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
239.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
253.4</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
254.0</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>South Korea</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
220.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
232.0</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
231.2</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
238.2</div>
</td>
</tr>
<tr style="height: 11.35pt; mso-height-rule: exactly;">
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
<td style="height: 11.35pt; mso-height-rule: exactly; padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<br /></div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Germany</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
192.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
185.2</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
178.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
175.7</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>France</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
281.9</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
300.8</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
310.0</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
311.0</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Italy</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
253.5</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
270.6</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
259.7</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
252.6</div>
</td>
</tr>
<tr>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 223.05pt;" valign="bottom" width="297">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b>Euro area average</b></div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
264.0</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
271.3</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
262.8</div>
</td>
<td style="padding: 0cm 5.4pt 0cm 5.4pt; width: 42.55pt;" valign="bottom" width="57">
<div class="MsoNormal" style="margin-bottom: 2.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
258.2</div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
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<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">Brexit Britain saw the debt
ratio fall a little in 2018, but the odds must be for a further rise of
indebtedness this year and next. If likely PM-to-be BoJo can waste so much
money as London mayor – from water cannons to garden bridges, buses and a cable
car – just think what an empowered narcissist’s plans could be!</span></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZu25hFtxMpnHtR0uQNu-ZEz1dlp-uBncUTIPo9fJWd7bHNxlXuGxmiwBRKm74XhRoWIwujzN0AYBCxf6ZvTpbUBhf6YXQhrDUIx3psAe_NDjtMsifnUCSb2UKryUan5hon5nVVCW0lM8/s1600/China+debt+ratios%252C+2007-2013.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="462" data-original-width="701" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZu25hFtxMpnHtR0uQNu-ZEz1dlp-uBncUTIPo9fJWd7bHNxlXuGxmiwBRKm74XhRoWIwujzN0AYBCxf6ZvTpbUBhf6YXQhrDUIx3psAe_NDjtMsifnUCSb2UKryUan5hon5nVVCW0lM8/s640/China+debt+ratios%252C+2007-2013.JPG" width="640" /></a></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">China’s debt ratio has risen
among the fastest in the past decade or so. Yet the total, at close to 250%,
has stabilised in the past year or so and is now similar to that in the US.
Ironically, the breakdown shows that ‘communist’ China’s government debt ratio
at just below 50% is only half that in the ‘free market’ US, where it registers
close to 100% of GDP. </span></span></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">China’s household debt is also
lower than in the US, but its non-financial corporate debt is much higher.
Nevertheless, around 100% is a common government debt ratio for major
countries. Even Germany’s is only just below 70%. So these data would suggest
that China has plenty of room, if it chose, to boost its government debt and
bail out any corporates in trouble (quite apart from the ability to use its
$3.1 trillion of FX reserves).</span></span></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">Tony Norfield, 18 July 2019</span></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;">
</span></span><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: small;"><span>Note: * The BIS emerging market economies are: Argentina, Brazil, Chile, China,
Colombia, the Czech Republic, Hong Kong SAR, Hungary, India, Indonesia, Israel,
South Korea, Malaysia, Mexico, Poland, Russia, Saudi Arabia, Singapore, South
Africa, Thailand and Turkey.</span></span></span><br />
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com8tag:blogger.com,1999:blog-3591186784456519139.post-51975866763640666582019-07-15T10:24:00.001+01:002019-07-15T10:26:26.351+01:00China & World Trade<span data-offset-key="dgh2-0-0"><span data-text="true">Just in case you had forgotten that China is a major part of the global economy, here is a chart from the Bank of England's Financial Stability Report. It shows that China's share of the international trade in goods is bigger than others for South America and Asia (including Japan and Australia). It is nearly as big as total European trade with the US.</span></span><br />
<br />
<span data-offset-key="dgh2-0-0"><span data-text="true">Annoyingly, Africa is left out of the chart calculations, but I suspect China is also biggest there.</span></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4aNlL8otQDBifTFZTHxmi3KHgar8OgrYQZwnsGzSHaPyf5rCHX7ipS_EbaJ6kQaWMtLWBCFwlYV4VyyCguq-i0sxAFw3gZSMNmI3ZjEdPv8Orc8Ry9qDj4spS_vIbi7DkKHbRQKB1ems/s1600/China+%2526+global+trade+2018%252C+BoE+Fin+Stab+rep+July2019.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="735" data-original-width="986" height="476" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4aNlL8otQDBifTFZTHxmi3KHgar8OgrYQZwnsGzSHaPyf5rCHX7ipS_EbaJ6kQaWMtLWBCFwlYV4VyyCguq-i0sxAFw3gZSMNmI3ZjEdPv8Orc8Ry9qDj4spS_vIbi7DkKHbRQKB1ems/s640/China+%2526+global+trade+2018%252C+BoE+Fin+Stab+rep+July2019.JPG" width="640" /></a></div>
<br />
<span data-offset-key="dgh2-0-0"><span data-text="true">This is a stubborn fact that Trump and friends will find it difficult to deal with as they attempt to bully and isolate China in the world economy. It is also one reason they are very likely to fail.</span></span><br />
<span data-offset-key="dgh2-0-0"><span data-text="true"><br /></span></span>
<span data-offset-key="dgh2-0-0"><span data-text="true">Tony Norfield, 15 July 2019</span></span>Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-58229822298731705182019-07-07T09:24:00.002+01:002019-07-07T09:24:39.642+01:00Looking Out from the Waste Land
<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
A dull day; even the drizzle got
bored and left.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
No respite from conversations
overheard,</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Language may as well be dead;
just wasted breath.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Only the incurious can thrive.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Just water the weeds, leave
roots intact.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Prejudice consoles all that
survive.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Explain what these people refuse
to know?</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
When ideas upset brains, and
rarely seed</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Or give a grip to hold against
the flow?</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
No raw material with which to
build,</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Just a pulp or the wrong kind of
sand</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Covers a land where none can be
skilled.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
I can only study the world and
write –</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
As the imperial machine grinds
on –</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
For eyes elsewhere to read and
find some light.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 7 July 2019</div>
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</xml><![endif]-->Tony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.com0tag:blogger.com,1999:blog-3591186784456519139.post-24387732558218069632019-06-18T06:59:00.000+01:002019-06-18T06:59:09.083+01:00The Promised Land
<br />
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Palestine really was the
Promised Land. So much so that it was promised to <i>three</i> different groups
within a couple of years.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a>
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.</div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLvt1sBU1EoQly3l-Y7nzxQu17mYNEFmU7GNU08gFI7CUQiNgDFyPcgp7mbo7dsnHDUp4cec8urnZOxkK6aC3qPt-WIZZQt1NMBojs9Xj6XcQzMd6hDJTazyr5VxNAS6hQnIv9MjlKiSU/s1600/Ottoman+Palestine+1878%252C+Passia.org.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="947" data-original-width="687" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLvt1sBU1EoQly3l-Y7nzxQu17mYNEFmU7GNU08gFI7CUQiNgDFyPcgp7mbo7dsnHDUp4cec8urnZOxkK6aC3qPt-WIZZQt1NMBojs9Xj6XcQzMd6hDJTazyr5VxNAS6hQnIv9MjlKiSU/s640/Ottoman+Palestine+1878%252C+Passia.org.JPG" width="464" /></a></div>
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<b><b>Map of Ottoman Palestine, 1878
</b></b>(Source: www.passia.org/maps/view/2)<b> </b></div>
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</h3>
<h3 class="MsoNormal" style="margin-bottom: 6.0pt;">
<b>Balfour Declaration</b></h3>
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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:</div>
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“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.”</div>
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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.</div>
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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.</div>
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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.</div>
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There were several other strands
in the British political class that led up to the 1917 Declaration.</div>
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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.</div>
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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.</div>
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<b>The Hussein option</b></h3>
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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 <i>before</i>
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.</div>
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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.</div>
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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.</div>
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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.</div>
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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!</div>
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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 François 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.<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a></div>
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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.</div>
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<b>A deal with the Ottomans?</b></h3>
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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.</div>
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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.</div>
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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:</div>
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“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.”</div>
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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.</div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
Tony Norfield, 18 June 2019</div>
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<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[1]</span></span></a> Some
material for this article is taken from the very informative book by Jonathan
Schneer, <i>The Balfour Declaration</i>, Bloomsbury, London, 2011.</div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=3591186784456519139#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;">[2]</span></span></a> 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.</div>
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