Sunday, December 20, 2015

Michael Hudson — The IMF Changes its Rules to Isolate China and Russia

A nightmare scenario of U.S. geopolitical strategists is coming true: foreign independence from U.S.-centered financial and diplomatic control. China and Russia are investing in neighboring economies on terms that cement Eurasian integration on the basis of financing in their own currencies and favoring their own exports. They also have created the Shanghai Cooperation Organization (SCO) as an alternative military alliance to NATO.[1]And the Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank tandem in which the United States holds unique veto power.
More than just a disparity of voting rights in the IMF and World Bank is at stake. At issue is a philosophy of development. U.S. and other foreign investment in infrastructure (or buyouts and takeovers on credit) adds interest rates and other financial charges to the cost structure, while charging prices as high as the market can bear (think of Carlos Slim’s telephone monopoly in Mexico, or the high costs of America’s health care system), and making their profits and monopoly rents tax-exempt by paying them out as interest.
By contrast, government-owned infrastructure provides basic services at low cost, on a subsidized basis, or freely. That is what has made the United States, Germany and other industrial lead nations so competitive over the past few centuries. But this positive role of government is no longer possible under World Bank/IMF policy. The U.S. promotion of neoliberalism and austerity is a major reason propelling China, Russia and other nations out of the U.S. diplomatic and banking orbit....
The IMF Changes its Rules to Isolate China and Russia
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University


Dan Lynch said...

As Arthur Silbur likes to say, the rule is .... "the ruling class rules!"

BTW Tom I'm sure you saw Sy Hersh's latest piece about the infighting between the Pentagon and Obama. Sy claims that the Pentagon was actually less hawkish than Obama!

"If the American public saw the intelligence we were producing daily, at the most sensitive level, they would go ballistic." ~ DIA director.

"Obama didn’t know, but Obama doesn’t know what the Joint Chiefs does in every circumstance and that’s true of all presidents."

Lots of other tidbits, like Obama had authorized the flow of Libyan weapons through Benghazi to Syria.

Tom Hickey said...

I would not call it "the Obama administration" as much as neocon control of US policy. I don't think that Obama is actually a card carrying neocon himself (or John Kerry for that matter), although he (they) may be, but many key people around him are.

Neocons are obsessed with the USSR and think of Russia in those terms. Their goal is to ensure that Russia never becomes a world power through regime change and partition. They view Iran and Syria as USSR cronies.

Under the neocons, the US has cast its lot with Israel and the Sunni Islamic states (KSA, Qatar and UAE). As result, US policy is heavily influenced toward destroying governments that the Israeli and Sunni Islamic states consider undesirable in the region as matter of US national interest.

The military is focused on US national security. The political class and the deep state are focused on US national interests, of which national security is only one aspect. As a result the political class and deep state are often at odds with the military. The former wins since under current arrangements the military is under civilian control.

Dan Lynch said...

Well, who made the decision to staff the executive branch with hawks like Peggy Nuland and Ash Carter?

Democratic hawks like Zbigniew Brzezinski may not be card carrying neo-cons but they are hawks nonetheless. They give some lip service to human rights and R2P but the end result is the same.

Glad to see you posting again.

Tom Hickey said...

Thanks, Dan.

Zbig is a realist, while neocons are idealists. Obama has stated that he himself is not a realist. But a neocon would never have done the deal with Iran over nukes.

Zbig is not a conservative hawk after the manner of John McCain. He is rather a liberal hardliner.

Neocon Victoria Nuland wife of neocon extraordinaire Robert Kagan, was a protégé of Strobe Talbot in the Clinton Administration, kept on in the Bush-Cheney Administration directly under Cheney, and taken under the wing of Hillary Clinton in the Obama Administration. She would likely become a key player in a Clinton II Administration, perhaps secretary of state. She is already a key player in the US deep state.

Ash Carter is a hardliner boarding on hawk. Why did Obama hire him? As a bridge to bring the military in line. Obama thinks that the cabinet and the Pentagon should be working for the president as the decider. The cabinet and the Pentagon think that the president should work with them. That's not Obama's style. I don't see that as Carter's style either.

Matt Franko said...

"Neocons are obsessed with the USSR "

Evidence please Tom?

They are rather 'obsessed' with Israel...

Matt Franko said...

" this positive role of government is no longer possible under World Bank/IMF policy."


Dan Lynch said...

That's right, @Matt, the World Bank & IMF were designed from the get-go to project and protect U.S. influence.

@Tom, the U.S. military may supposed to serve the civilian government, but the Nuremberg principles still apply (at least they SHOULD apply) and no conscientious soldier should obey an order to do something illegal -- and just about everything the U.S. military does is illegal !

Sy's article adds more credibility to Chuck Hagel's claim that Obama lacks a coherent foreign policy. Obama has a reputation for being indecisive and hesitant, and trying to please everyone. This shows up in his foreign policy as well as domestic policy. Obama is not a leader. He should stick to giving speeches, which I'm sure he'll do after he leaves office. :-)

Tom Hickey said...

"Neocons are obsessed with the USSR "

Evidence please Tom?

They are rather 'obsessed' with Israel...

It's possible to have multiple obsessions.

I say that the neocons are still obsessed with the USSR because the desire to deal with Iran, and Syria as former allies of the USSR is a precautionary measure to ensure that the Russian Empire cannot be recreated in the future. This obsession greatly increased and they take it verified by Russian ops in Ukraine and Syria.

The necons are convinced that Russia is inherently expansionary and is now seeking to reclaim its historical empire.

I don't think this is true of the Putin administration, although it may be true of the Russian conservatives, which is the second most powerful group in Russia and in the event that Putin would be replaced, this is the party that would take over.

Tom Hickey said...

I think the Obama administration has a pretty clear foreign policy and it is the foreign policy that the US has had since WWII and especially since the fall of the Berlin Wall (Iron Curtain) and the disintegration of the USSR. That policy is permanent US global hegemony through full spectrum dominance.

What is not agreed upon is the strategy and tactics of implementing this policy under current conditions.

Obama has two basic principles:

1. Don't do stupid stuff. (Obama regards most of the counterproposals as involving doing stupid stuff.)

2. No boots on the ground if possible and avoid mission creep.

The other matter in a liberal democracy is not getting too far ahead of the public on sensitive matters like war. A lot of what the opposition is concerned about is the political aspect of the Obama administration's micromanagement of strategy and tactics.

The leadership style of some leaders is for the top leadership to be concerned chiefly with policy, leaving strategy and tactics to subordinates. That's not Obama's style. Subordinates don't like that style.

Anonymous said...

They are rather 'obsessed' with Israel...

They're related issues Matt. In the post-Cold War period the neocons and some liberal allies attempted to win control of Russia and its rich natural resources via various gangsters and agents serving US and Israeli interests, and laundering money to covert operations as they made themselves rich. Although the precise details of these spooky shadow lands are impossible for us ordinary mortals to know with certainty, and are viewed favorably or unfavorably depending on one's political orientation, the various pieces of the puzzle go together tell a somewhat unified story of various competing camps of crooks, thugs, mafiosi, thieves, ideologues and spy agencies:

Dan Lynch said...

@Tom, "global hegemony" may be a goal, but it is not a strategy.

"Don't do stupid things" may be a goal, but it is not a strategy. In fact, Obama has done a whole lot of stupid things.

"No boots on the ground" implies using mercenaries, drones, and proxies. That may be a strategy but it's a stupid strategy as the Carter/Reagan support for Al Qaeda demonstrated.

It does no good to oust one uncooperative leader if an even more uncooperative, more radical leader takes his place, as is usually the case as Andrew Cockburn has explained.

Obama's policy has resulted in chaos, destabilization, and radicalization. Pepe Escobar calls it the "empire of chaos;" Chuck Hagel calls it "incoherent."

There's two ways to view the chaos/incoherent policy 1) it's a Machavellian plot to to make it easier for Israel and the West to dominate the Middle East or 2) it's stupid and incompetent. Occam's Razor sides with "stupid and incompetent."

Obama is neither a chess player like JFK nor a ideologue like Reagan or Zbig. As Hagel pointed out, during foreign policy meetings Obama seemed to tune out and play with his Blackberry. Obama is a slacker. I know the type, I went to school with them, I've worked with them. They get along in the world by talking a good talk but don't pull their weight at actually doing stuff.

Tom Hickey said...

Policy is value-based and it is about goals. It is used to set and prioritize objectives. US foreign policy is based on using diplomacy first, then economic pressure, and then subversion, then military pressure, and finally military conflict. Military policy is a subset of foreign policy.

Current US foreign policy is to prevent the emergence of any power capable of challenging US dominance of land, sea, air, space and cyberspace militarily or developing an economy on a par with the US, superior technological capability, and so forth.

Thus the overall policy is global hegemony based on full spectrum dominance.

That foreign policy is given to the state department, defense department, and leadership of clandestine services to implement

This is accomplished through a grand strategy formulated at the level of the general staff and strategies in various theaters of operation by the relevant staff.

Strategy is implemented through tactics in the various theaters by the field commanders and their subordinates down the chain of command.