‘NZ Not for Sale’ campaign to oppose trade agreement

Media release New Zealand Not For Sale Campaign

The New Zealand Not For Sale Campaign will be formally launched in Christchurch on November 11, in conjunction with the launch of Professor Jane Kelsey’s book on the Transpacific Partnership Free Trade Agreement.

The NZ Not For Sale Campaign has been set up to oppose the Transpacific Partnership because it is against New Zealand’s best economic, environmental and social interests.

“The trade agreements we already have are linked with high international debt, job losses, asset stripping, risky speculation, increasing sales of land to overseas owners, running down public assets and services, and loss of tino rangatiratanga and national sovereignty’’, says the Campaign Secretary, Dr Christine Dann.

Hillary Clinton comes bearing poisoned chalice for NZ

By Murray Horton

CAFCA 

As if 2,000 earthquakes haven’t been enough punishment for Christchurch, now we’re going to have Hillary Clinton visiting us (and Wellington) this week.

A major focus for her NZ visit  will be the negotiations which are well underway for the US and a number of other countries to join an expanded Trans-Pacific Strategic Economic Partnership (currently comprising NZ, Chile, Brunei, and Singapore, and known as the P4 Agreement), with 2011 as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement.

Video: Raj Patel on the battle for the world food system

Raj Patel, author of The Value of Nothing and Stuffed and Starved, interviewed by Jill Hickson and Simon Cunich for Green Left Weekly and Links International Journal of Socialist Renewal. 

The battle for the world food system: an interview with Raj Patel from Jill Hickson on Vimeo.

The battle for the world food system: an interview with Raj Patel from Jill Hickson on Vimeo.

ANZ wins Roger Award 2009

by Murray Horton

CAFCA

The full Judges’ Report is available at www.cafca.org.nz, follow the Roger Award links from the Homepage.

Finalists: ANZ, BNZ, Infratil, Newmont, Rio Tinto Aluminium NZ, Rymans, Telecom, Transpacific and Westpac. There were two finalists for the Accomplice Award – the Business Round Table, and the Auckland City Council and its officials (as part of the nomination of Transpacific Industries).

Criteria: the transnational (a corporation which is 25% or more foreign-owned) which is worst in each or all of the following:  Economic Dominance - Monopoly, profiteering, tax dodging, cultural imperialism. People - Unemployment, impact on tangata whenua, women, children, abuse of workers/conditions, health and safety of workers and the public, cultural imperialism. Environment - Environmental damage, abuse of animals. Political interference - Cultural imperialism, running an ideological crusade. 

Trans-Pacific Partnership: NZ jumping onto a sinking ship

by Murray Horton

CAFCA

Talks started in Melbourne today for the US, Australia, Peru and Vietnam to join an expanded Trans-Pacific Strategic Economic Partnership (TPP, currently comprising NZ, Chile, Brunei, and Singapore, known as the P4 Agreement), with November 2011, when the US hosts APEC, as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement. Already the Americans have said that they see this as more than a mere free trade deal but as a vehicle for broader Asia/Pacific economic integration, which has enormous political implications. Alarm bells should be loudly sounding.

Asia Economy: The Coming Fury

by Walden Bello

from Foreign Policy in Focus

9 February 2009

For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply.

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The rebirth of Keynesianism?

The Coming Capitalist Consensus by Walden Bello from Foreign Policy in Focus 28 December 2008 Not surprisingly, the swift unraveling of the global economy combined with the ascent to the U.S. presidency of an African-American liberal has left millions anticipating that the world is on the threshold of a new era. Some of President-elect Barack Obama’s new appointees – in particular ex-Treasury Secretary Larry Summers to lead the National Economic Council, New York Federal Reserve Board chief Tim Geithner to head Treasury, and former Dallas Mayor Ron Kirk to serve as trade representative – have certainly elicited some skepticism. But the sense that the old neoliberal formulas are thoroughly discredited have convinced many that the new Democratic leadership in the world’s biggest economy will break with the market fundamentalist policies that have reigned since the early 1980s.

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Rising Prices Reinforce Need for Food Security Policies

by Martin Khor

from Institute of Science in Society

15 July 2008

The new key to food security is self-sufficiency, not trade, and policies are needed to expand local food production and invigorate the agricultural sector particularly in developing countries.

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John Minto - Plenty of food for all

by John Minto from Workers Charter May 2008 Rising food prices around the world have dominated the news for the past several weeks. Riots have taken place in many countries as prices rise beyond what families can afford. Here in New Zealand the rising price of dairy products is at the sharp end, but for the world’s poorest it’s the price of grain which is critical. So with food prices rising there must be a shortage, right? Surely it means more people competing for the same amount of food. This is the conventional view from the market but it’s not true. There is no shortage of food in the world. The problem is the price. The world’s poorest can’t afford to pay for food which is why every night 850 million humans go to bed hungry with this number rising rapidly. Last year the grain harvest worldwide was 2.1 billion tonnes. It was five percent higher than the previous year so with more food surely the price should be falling. But no. Less than half of this bumper harvest is available as food for human need. Most of the rest goes to feeding animals for meat production (760 million tonnes) and providing the growing demand for biofuels (100 million tonnes) So there is plenty of food but the poor can’t afford it. Hungry kids in developing countries can’t compete with SUV drivers in countries like New Zealand or the appetite for meat in developed countries spurred by the growing middle class in India and China. We are all surely now aware that the grain needed to produce a single tankful of biodiesel for an SUV would feed a family in a developing country for a year. There have been the predictable calls for genetic engineering to improve food production but just as with the so-called green revolution in the 1960s this is a façade. It is the free market policies demanded of developing countries which go to the very heart of the problem. Pricing food on a world market favours those who can pay more to sustain a higher standard of living with the ‘non-food’ use of food. But there are good-news stories amid the gloom and suffering. We are in the middle of Fairtrade fortnight promoted by Trade Aid. It should be an encouragement to all of us to do even the small things we can as individuals to promote a better world in defiance of traditional market forces. What makes Fairtrade products different is that they are imported from certified producers, usually co-operatives, which ensure a better return direct to the growers. For example coffee growers in Guatemala and Ethiopia typically receive 10% to 15% more for their products from Fairtrade buyers. In some cases, depending on the world price for coffee, growers have gained up to three times what they otherwise would have received via local markets. Likewise buying Fairtrade olive oil, dates and almonds from Palestine supports local communities under oppressive occupation. The benefits go much further. More local schools and medical clinics being built. Sustainable development is taking a big step forward in areas where Fairtrade products are sourced at fairer prices. These products are now widely available but our supermarket chains are reluctant to stock them. Next time you are in the supermarket look for the Fairtrade logo and ask the staff what fair trade products are stocked. A small dig in the market ribs of those addicted to profit-based economics will help lots of people get a fairer go. Another good news story is Uganda. Amid the world food crisis this country in central Africa which has had such a bloody, turbulent transition from colonial rule is largely riding out the food crisis by ignoring years of bad advice. Uganda’s rice output has increased two and a half times since 2004 and is expected to reach up to 180,000 tonnes this year. Amid rising food prices globally the cost of rice in Uganda is much the same as it was before the food crisis. The reason is tariffs. Against the neo-liberal advice from the likes of the World Bank and International Monetary Fund tariffs have increased the price of imported rice and dramatically stimulated local food production. The country is much closer to self-sufficiency and food security and points the way forward for developing countries. There's a lesson here for New Zealand too. John Minto is the editor of Workers Charter, a monthly broad left paper. To subscribe email admin@workerscharter.org.nz Subs are $40 a year (10 issues). Also read:

• MARXIST FORUM: The Global Food Crisis - Fact or Fiction?
• Ticker Tape Ain’t Spaghetti
• FOOD CRISIS: "The greatest demonstration of the historical failure of the capitalist model"
• FOOD CRISIS (Part Two): Capitalism, Agribusiness, and the Food Sovereignty Alternative
• Solutions to the food crisis: immediate demands and longer term goals

FOOD CRISIS (Part Two): Capitalism, Agribusiness, and the Food Sovereignty Alternative

by Ian Angus Editor of Climate and Capitalism

Read Part One

When food riots broke out in Haiti last month, the first country to respond was Venezuela. Within days, planes were on their way from Caracas, carrying 364 tons of badly needed food.

The people of Haiti are “suffering from the attacks of the empire’s global capitalism,” Venezuelan president Hugo Chàvez said. “This calls for genuine and profound solidarity from all of us. It is the least we can do for Haiti.”

Venezuela’s action is in the finest tradition of human solidarity. When people are hungry, we should do our best to feed them. Venezuela’s example should be applauded and emulated.

But aid, however necessary, is only a stopgap. To truly address the problem of world hunger, we must understand and then change the system that causes it.

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Rod Donald was right

Chinese free trade deal will cost human rights and environment

from Green Weekly 16 April 2004 Like a free lunch with Roger Douglas, there is no such thing as ‘free trade’ with China. “Business will go out of business, workers will be put out of work and Labour will lose the support of labour,” said Rod Donald. China’s labour standards make Dickensian sweatshops look enlightened with the number of work related deaths per year equivalent to the population of Greater Wellington. The list of human rights violations are long and include; exporting goods made by bonded and prison labour; prohibiting strikes; repressing attempts to organise unions apart from one government controlled entity; and not ratifying international conventions eliminating forced labour and guaranteeing workers the right to organise. “Free trade means we’ll be forced into a ‘race to the bottom’, as our own labour and environmental standards will be compromised, and our trade deficit with China will balloon past the present $1.3 billion,” said Rod.

Read this! Excellent analysis of the global financial crisis

For an understanding of the global financial crisis and US imperialism Raymond Lotta's article provides plenty of insight. It's long, but very well written. The system is indeed mad, as Lotta convincingly shows us. And it's clear that the corporate imperialists will only "save" the system by destroying the rest of us. While Lotta's analysis focuses on the barbarism of capitalism, it's the mass grassroots struggles around the world which offer hope. The Venezuelan Revolution is one such beacon. There are lessons to be learnt from the revolutionary process in Venezuela that can help us here in Aotearoa. On the UNITYblog sidebar are a number of good articles looking at the exciting things happening in Venezuela. SW-NZ has argued that the Venezuelan Revolution, in the context of global economic, ecological and political crisis and intensifying inter-imperialist rivalry, can play a hugely important role in inspiring people around the world, but can also bring people and movements together. (See Organising to build a global broad left movement, 17.11.07). Nothing less than a global movement of the world's grassroots majority will be capable of bringing justice and sanity to the world. Financial Meltdown & the Madness of Imperialism by Raymond Lotta from Countercurrents.org 16 April, 2008 “The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.” - David Wessel, economics editor, Wall Street Journal, March 27, 2008. “Be greedy when others are fearful.” - Warren Buffet, leading investment capitalist, quoted by The Economist, April 5, 2008 “[To the possessor of money capital] the process of production appears merely as an unavoidable intermediate link, as a necessary evil for the sake of money-making. All nations with a capitalist mode of production are therefore seized periodically by a feverish attempt to make money without the intervention of the process of production.” - Karl Marx, Capital, Volume II, ‘The Circuit of Money Capital’ The U.S. economy is experiencing the most wrenching financial turmoil since the Great Depression of the 1930s. Global markets have been reeling – as massive loans have turned bad, speculative bubbles have popped, and giant financial institutions have tottered. Financial turbulence originating in the U.S. has slowly expanded and worsened. There is now a global credit crisis. Banks and financial institutions are weighed down by huge losses caused by “non-performing loans.” Lending channels are choked up, as lenders are being called to pay back their loans, to clean up their balance sheets, and fearful that they are “throwing good money after bad” and won’t be paid back. There is real danger of a breakdown of the financial system. The new president of the International Monetary Fund has stated that the current turmoil poses the greatest financial crisis since the 1930s.1 The U.S. has been at the center of what is now a global financial storm. Bear Stearns, one of the largest and oldest investment banks in the U.S., collapsed in mid-March. The Federal Reserve Bank – which regulates and lubricates the U.S. banking system, and which also plays a special role in the world capitalist economy – has stepped in on an unprecedented scale. Continue

Pheonix

Though the headlines are low key and the reporting muted, Behind the scenes the Labour Government is quietly bathing in the praise of profiteers and business leaders celebrating the new deal, But will Free Trade with China revisit the ashes of Phoenix on working people? In the late 90's I got a week's work in Onehunga stripping out a manufacturing plant, disconecting and dismantling all the machinery, while fork hoists stood by to load it all on to trucks. The company was called Phoenix Sheet Metal. And they manufactured electric hot water cylinders that are installed in houses. (you have probably got one in your house.) The workers, all members of the EPMU told me that they were all being laid off. I asked them if their company was losing money. They told me, no the company was quite profitable. But they said the company's owner had found out that he could make even bigger profits from importing Mac Intosh computers, and consequently he had decided to close his factory and sell off all machinery and reinvest the money in becoming a computer importer. As they say money always chases the highest return. From then on hot water cylinders installed in New Zealand have also been imported. Pat O Dea

The rebirth of Keynesianism?

The Coming Capitalist Consensus

by Walden Bello from Foreign Policy in Focus 28 December 2008

Not surprisingly, the swift unraveling of the global economy combined with the ascent to the U.S. presidency of an African-American liberal has left millions anticipating that the world is on the threshold of a new era. Some of President-elect Barack Obama’s new appointees – in particular ex-Treasury Secretary Larry Summers to lead the National Economic Council, New York Federal Reserve Board chief Tim Geithner to head Treasury, and former Dallas Mayor Ron Kirk to serve as trade representative – have certainly elicited some skepticism. But the sense that the old neoliberal formulas are thoroughly discredited have convinced many that the new Democratic leadership in the world’s biggest economy will break with the market fundamentalist policies that have reigned since the early 1980s. One important question, of course, is how decisive and definitive the break with neoliberalism will be. Other questions, however, go to the heart of capitalism itself. Will government ownership, intervention, and control be exercised simply to stabilize capitalism, after which control will be given back to the corporate elites? Are we going to see a second round of Keynesian capitalism, where the state and corporate elites along with labor work out a partnership based on industrial policy, growth, and high wages – though with a green dimension this time around? Or will we witness the beginnings of fundamental shifts in the ownership and control of the economy in a more popular direction? There are limits to reform in the system of global capitalism, but at no other time in the last half century have those limits seemed more fluid.

President Nicolas Sarkozy of France has already staked out one position. Declaring that “laissez-faire capitalism is dead,” he has created a strategic investment fund of 20 billion euros to promote technological innovation, keep advanced industries in French hands, and save jobs. “The day we don’t build trains, airplanes, automobiles, and ships, what will be left of the French economy?” he recently asked rhetorically. “Memories. I will not make France a simple tourist reserve.” This kind of aggressive industrial policy aimed partly at winning over the country’s traditional white working class can go hand-in-hand with the exclusionary anti-immigrant policies with which the French president has been associated.

Global Social Democracy

A new national Keynesianism along Sarkozyan lines, however, is not the only alternative available to global elites. Given the need for global legitimacy to promote their interests in a world where the balance of power is shifting towards the South, western elites might find more attractive an offshoot of European Social Democracy and New Deal liberalism that one might call “Global Social Democracy” or GSD.

Even before the full unfolding of the financial crisis, partisans of GSD had already been positioning it as alternative to neoliberal globalization in response to the stresses and strains being provoked by the latter. One personality associated with it is British Prime Minister Gordon Brown, who led the European response to the financial meltdown via the partial nationalization of the banks. Widely regarded as the godfather of the “Make Poverty History” campaign in the United Kingdom, Brown, while he was still the British chancellor, proposed what he called an “alliance capitalism” between market and state institutions that would reproduce at the global stage what he said Franklin Roosevelt did for the national economy: “securing the benefits of the market while taming its excesses.” This must be a system, continued Brown, that “captures the full benefits of global markets and capital flows, minimizes the risk of disruption, maximizes opportunity for all, and lifts up the most vulnerable – in short, the restoration in the international economy of public purpose and high ideals.”

Joining Brown in articulating the Global Social Democratic discourse has been a diverse group consisting of, among others, the economist Jeffrey Sachs, George Soros, former UN Secretary General Kofi Annan, the sociologist David Held, Nobel laureate Joseph Stiglitz, and even Bill Gates. There are, of course, differences of nuance in the positions of these people, but the thrust of their perspectives is the same: to bring about a reformed social order and a reinvigorated ideological consensus for global capitalism.

Among the key propositions advanced by partisans of GSD are the following:

- Globalization is essentially beneficial for the world; the neoliberals have simply botched the job of managing it and selling it to the public; - It is urgent to save globalization from the neoliberals because globalization is reversible and may, in fact, already be in the process of being reversed; - Growth and equity may come into conflict, in which case one must prioritize equity; - Free trade may not, in fact, be beneficial in the long run and may leave the majority poor, so it is important for trade arrangements to be subject to social and environmental conditions; - Unilateralism must be avoided while fundamental reform of the multilateral institutions and agreements must be undertaken – a process that might involve dumping or neutralizing some of them, like the WTO’s Trade-Related Intellectual Property Rights Agreement (TRIPs); - Global social integration, or reducing inequalities both within and across countries, must accompany global market integration; - The global debt of developing countries must be cancelled or radically reduced, so the resulting savings can be used to stimulate the local economy, thus contributing to global reflation; - Poverty and environmental degradation are so severe that a massive aid program or “Marshall Plan” from the North to the South must be mounted within the framework of the “Millennium Development Goals”; - A “Second Green Revolution” must be put into motion, especially in Africa, through the widespread adoption of genetically engineered seeds. Huge investments must be devoted to push the global economy along more environmentally sustainable paths, with government taking a leading role (“Green Keynesianism” or “Green Capitalism”); - Military action to solve problems must be deemphasized in favor of diplomacy and “soft power,” although humanitarian military intervention in situations involving genocide must be undertaken.

The Limits of Global Social Democracy

Global Social Democracy has not received much critical attention, perhaps because many progressives are still fighting the last war, that is, against neoliberalism. A critique is urgent, and not only because GSD is neoliberalism’s most likely successor. More important, although GSD has some positive elements, it has, like the old Social Democratic Keynesian paradigm, a number of problematic features.A critique might begin by highlighting problems with four central elements in the GSD perspective.

First, GSD shares neoliberalism’s bias for globalization, differentiating itself mainly by promising to promote globalization better than the neoliberals. This amounts to saying, however, that simply by adding the dimension of “global social integration,” an inherently socially and ecologically destructive and disruptive process can be made palatable and acceptable. GSD assumes that people really want to be part of a functionally integrated global economy where the barriers between the national and the international have disappeared. But would they not in fact prefer to be part of economies that are subject to local control and are buffered from the vagaries of the international economy? Indeed, today’s swift downward trajectory of interconnected economies underscores the validity of one of anti-globalization movement’s key criticisms of the globalization process.

Second, GSD shares neoliberalism’s preference for the market as the principal mechanism for production, distribution, and consumption, differentiating itself mainly by advocating state action to address market failures. The kind of globalization the world needs, according to Jeffrey Sachs in The End of Poverty, would entail “harnessing…the remarkable power of trade and investment while acknowledging and addressing limitations through compensatory collective action.” This is very different from saying that the citizenry and civil society must make the key economic decisions and the market, like the state bureaucracy, is only one mechanism of implementation of democratic decision-making.

Third, GSD is a technocratic project, with experts hatching and pushing reforms on society from above, instead of being a participatory project where initiatives percolate from the ground up.

Fourth, GSD, while critical of neoliberalism, accepts the framework of monopoly capitalism, which rests fundamentally on deriving profit from the exploitative extraction of surplus value from labor, is driven from crisis to crisis by inherent tendencies toward overproduction, and tends to push the environment to its limits in its search for profitability. Like traditional Keynesianism in the national arena, GSD seeks in the global arena a new class compromise that is accompanied by new methods to contain or minimize capitalism’s tendency toward crisis. Just as the old Social Democracy and the New Deal stabilized national capitalism, the historical function of Global Social Democracy is to iron out the contradictions of contemporary global capitalism and to relegitimize it after the crisis and chaos left by neoliberalism. GSD is, at root, about social management.

Obama has a talent for rhetorically bridging different political discourses. He is also a “blank slate” when it comes to economics. Like FDR, he is not bound to the formulas of the ancien regime. He is a pragmatist whose key criterion is success at social management. As such, he is uniquely positioned to lead this ambitious reformist enterprise.

Reveille for Progressives

While progressives were engaged in full-scale war against neoliberalism, reformist thinking was percolating in critical establishment circles. This thinking is now about to become policy, and progressives must work double time to engage it. It is not just a matter of moving from criticism to prescription. The challenge is to overcome the limits to the progressive political imagination imposed by the aggressiveness of the neoliberal challenge in the 1980s combined with the collapse of the bureaucratic socialist regimes in the early 1990s. Progressives should boldly aspire once again to paradigms of social organization that unabashedly aim for equality and participatory democratic control of both the national economy and the global economy as prerequisites for collective and individual liberation.

Like the old post-war Keynesian regime, Global Social Democracy is about social management. In contrast, the progressive perspective is about social liberation.

Walden Bello is a columnist for Foreign Policy In Focus, a senior analyst at the Bangkok-based Focus on the Global South, president of the Freedom from Debt Coalition, and a professor of sociology at the University of the Philippines.

Financial Meltdown & the Madness of Imperialism

by Raymond Lotta from Countercurrents.org 16 April, 2008 “The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.” - David Wessel, economics editor, Wall Street Journal, March 27, 2008. “Be greedy when others are fearful.” - Warren Buffet, leading investment capitalist, quoted by The Economist, April 5, 2008 “[To the possessor of money capital] the process of production appears merely as an unavoidable intermediate link, as a necessary evil for the sake of money-making. All nations with a capitalist mode of production are therefore seized periodically by a feverish attempt to make money without the intervention of the process of production.” - Karl Marx, Capital, Volume II, ‘The Circuit of Money Capital’ The U.S. economy is experiencing the most wrenching financial turmoil since the Great Depression of the 1930s. Global markets have been reeling – as massive loans have turned bad, speculative bubbles have popped, and giant financial institutions have tottered. Financial turbulence originating in the U.S. has slowly expanded and worsened. There is now a global credit crisis. Banks and financial institutions are weighed down by huge losses caused by “non-performing loans.” Lending channels are choked up, as lenders are being called to pay back their loans, to clean up their balance sheets, and fearful that they are “throwing good money after bad” and won’t be paid back. There is real danger of a breakdown of the financial system. The new president of the International Monetary Fund has stated that the current turmoil poses the greatest financial crisis since the 1930s.1 The U.S. has been at the center of what is now a global financial storm. Bear Stearns, one of the largest and oldest investment banks in the U.S., collapsed in mid-March. The Federal Reserve Bank – which regulates and lubricates the U.S. banking system, and which also plays a special role in the world capitalist economy – has stepped in on an unprecedented scale. The Federal Reserve took responsibility for $30 billion of basically worthless assets held by Bear Stearns. This paved the way for another financial titan, JP Morgan Chase, to take over the firm. In addition, the Federal Reserve has injected huge amounts of funds into the financial system to ward off additional bank failures and to restore international confidence in the U.S. economy – and to prevent the financial crisis from becoming a total financial breakdown. Fortune magazine in its April 14 issue analyzes the stakes this way: “The fear – a justifiable one – is that if one big financial firm fails, it will lead to cascading failures throughout the world. Big firms are so interlinked with one another and with other market players that the failure of one large counterparty, as they’re called, can drag down counterparties all over the globe. And if the counterparties fail, it could down the counterparties’ counterparties, and so on.”2 PART I. A FIRST CUT: UNFOLDING OF THE CRISIS The financial tornado gathered force in the spring of 2007, starting in the housing sector. The housing boom of the last few years was a boom in mortgage finance. Lenders, and these were not neighborhood finance companies or street-corner usurers but big corporate financial giants, were seeking to make big profits from their ability to tap into foreign capital flooding into the U.S. over the last decade. The Federal Reserve accommodated and encouraged this by keeping interest rates low. A. Subprime Lending Enter the world of subprime lending. Subprime loans are loans made to borrowers who would not qualify for a prime mortgage – because they might have “bad credit histories,” etc. And these loans were aggressively marketed, pushed on people through all kinds of deceitful means, with Black and Latino households disproportionately targeted and victimized (see Revolution, ‘Subprime Mortgage Crisis,’ April 13, 2008). The originators of these subprime loans, along with various financial middle-men, then “securitized” these loans. This means they combined these loans into larger groups of loans, turned them into complex financial products, and then sold them on financial markets. They sought to maximize fees and to “transfer risk” by quickly selling off these loans to other banks and institutional investors (like mutual and pension funds, university endowments, etc.). But as housing prices turned down and as interest rates went up, homeowners (or those who thought they were homeowners) found themselves strapped with adjustable mortgages requiring larger payments. And many could not afford payments. This triggered a wave of defaults. Investors and institutions that had purchased these mortgage securities (loans that had been grouped into bonds returning interest) found themselves with billions of dollars of near worthless assets. The financial insurers of these loans, yet another layer of “financial middle-men,” could not cover the risks and damage. B. Global Financial Shocks In the summer of 2007, fears of big financial losses caused stock market indexes around the world to plummet, including those in the rapidly growing regions of the Third World. A financial contagion was taking hold. Over a trillion dollars of funds from around the globe – with much of this from Asia and oil-exporting countries – were invested in the U.S. subprime market. The collapse in the value of mortgage and credit instruments originating in the U.S. weakened the financial balance sheets of banks and other overseas holders of these investments and set off tremors. For instance, in Great Britain, there was a run on the Northern Rock bank; a German bank required a bailout; and a leading French bank was hit hard. At the same time, financial institutions in the U.S. and elsewhere holding securities of crumbling or dubious value sought to strengthen their overall financial positions. They not only had to “write down,” that is, greatly reduce the value of the bad (“nonperforming”) loans they held. They also had to sell off “healthier” holdings in other parts of the world (investments unrelated to the subprime activities) in order to meet immediate financial commitments. And these sell-offs have had their own destabilizing global repercussions. This was especially the case last year in the stock markets of the Third World. C. New Dangers and New Risks By March 2008, the prices of stock of the big Wall Street players involved in this investment activity, firms like Goldman Sachs and Merrill Lynch, had fallen by some 40 percent. And since the onset of the credit crisis, financial institutions in the U.S. have “written down” more than $230 billion in mortgage loans and other assets.3 The Federal Reserve has moved to head off financial panic and to stimulate growth. But these moves have aroused new fears in the still unsettled world financial markets. Why? There are concerns about the Federal Reserve’s and U.S. Treasury’s ability to absorb what might amount to be hundreds of billions of dollars in bad investments. There are concerns about the ability of the Federal Reserve to pump huge amounts of funds into the U.S. financial system to keep it afloat. There are concerns that short-term and ad hoc efforts to slash interest rates and bail out financial firms may stoke inflation and further weaken the dollar. This dimension of the crisis, the fragility of the dollar, looms large. It has everything to do with empire. The international role of the dollar – as the world’s leading currency for settling transactions, clearing debts, and holding foreign exchange reserves – is a linchpin of U.S. global supremacy. It is also a linchpin of the whole current global economic order. But the dollar has been battered in international currency markets. In the last few months, it has sunk to new lows against the euro (the currency used in most of Western Europe), against the Japanese yen, and against the Swiss franc. Now the dollar has declined considerably in value relative to other major currencies since 2000. But this has been cushioned, managed, and kept functional by the ability of the U.S. economy to attract huge amounts of foreign exchange and foreign capital into financial markets, especially to finance U.S. Treasury debt. And one of the “disaster scenarios” most worrisome to U.S. imperialist policy makers is the danger of a global run on the dollar: private investors and central banks of other countries unloading their dollar holdings for stronger currencies. D. A Reflection: Transparency and Anarchy In early April, on the eve of a gathering of the world’s finance ministers and treasury officials, the International Monetary Fund issued a report on the financial damage caused by the collapse of the housing and credit markets. It warned that financial institutions worldwide might face losses approaching $1 trillion over the next two years.4 This calculation is far above what had been previously estimated. And according to some financial analysts, even this is a gross understatement. The free market is extolled by bourgeois ideologues for its “transparency.” This is the idea that markets, prices, and interest rates convey all necessary information: about supply, efficiency, choice, and reward. But one of the distinguishing features of this crisis is the incredible and pervasive lack of knowledge among lenders, borrowers, traders, and insurers about the quality and backing of what they borrow from others – and even of what they lend to others! Things are obscured, covered up, and very opaque. * There is the anarchy of capitalism, as giant agglomerations of capital battle others for market share and profits, and pursue competitive strategies that have unforeseen effects on the larger system. * There is the emergence of a newer banking system operating parallel to the older commercial banks. These are the so-called hedge funds, private equity firms, and investment banks. They move huge amounts of capital in and out of financial markets to take advantage of momentary and slight changes in bond prices, interest rates, and currency exchange rates. They borrow against assets that have a shadow existence, far removed from the actual production of value. They have led in creating new financial instruments, in which all kinds of loans of varying risk are bundled together into interest-yielding bonds and the like. And this newer banking system operates in a more unregulated environment than do the commercial banks. * This is a highly competitive, turbo-charged financial world, where huge blocks of capital seek quick gains at the expense of others. In this setting, speculation, fraud, and deception become part of survival strategies. One example of this in the unfolding of the financial crisis: financial agencies that rate the risk of things like mortgage-backed securities earn higher fees for providing favorable ratings on these new “financial products.” So they lied and deceived investors about real risk. This led to mis-pricing and to baseless expectations of return on investments. E. A Reflection: A House, Is Not Always a House As we descend from the skyscrapers of finance to ground level, the human toll comes into clearer view. At the start of 2008, nearly 1.3 million homes in the U.S were in some phase of foreclosure. That works out to more than one in every 100 U.S. households. According to Moody’s Economy.com: “not since the Depression has a larger share of Americans owed more on their homes than they are worth.”5 Think about it. Something as basic and essential as shelter is commodified. A house becomes an investment; its purchase underwritten by tradable financial instruments; and the lure of homeownership then engulfed by the devastating trade winds of the market. And what happens? People’s savings are wiped out. Their creditworthiness is damaged if not destroyed. And many face the prospect of homelessness. The problem is not that people don’t need houses. Nor is it that society doesn’t have the resources or knowledge to build houses. The problem is that capital stands as a barrier to meeting human need. PART II A SECOND CUT: DEEPER CAUSES AND IMPLICATIONS Where all this financial turmoil might lead cannot be predicted. A gigantic, speculative credit bubble has burst. Problems in U.S. lending markets and the U.S. banking system have brought on an economic slowdown in the U.S. This in turn is triggering a global slowdown. Consumer goods exporters of Asia that have relied heavily on trade with the U.S. are especially vulnerable. And so too are countries in Eastern Europe that have borrowed heavily to finance growth. Here is one tiny snapshot of the fallout and pain from the financial crisis. The U.S. housing slump has led to the loss of some 100,000 construction jobs, many that had been filled by undocumented immigrants. That has dramatically slowed the growth of money sent back home by these workers. After nearly quadrupling to $24 billion in 2006 from $6.6 billion in 2000, these earnings sent home grew only 3 percent in 2007, the slowest rate of growth in 20 years.6 Families in Mexico have come to depend on these remittances for food and clothing and other basic essentials. The buildup and collapse of this latest speculative bubble, and intensifying financial fragility that could lead to massive breakdown, are in fact outward expressions of deeper processes and transformations at work in the world capitalist economy. We need to take a step back. A. Globalization and Financialization For the last 15 years, world capitalist expansion has pivoted on a particular international dynamic and structure. This has involved heightened financialization and parasitism in the advanced capitalist countries – with the United States at the epicenter of this process; and the fuller integration of low-cost, export-producing countries of the Third World into the world capitalist market – with China at the epicenter of this process. The turning point in this process was the collapse of the social-imperialist Soviet Union in 1990-91. With the implosion of the Soviet bloc, the main geopolitical obstacle to U.S. imperialist freedom of action was removed. At the same time, and very much in connection with this, imperialist globalization accelerated. (This is analyzed in considerable depth in Notes on Political Economy: Our Analysis of the 1980s, Issues of Methodology, and the Current World Situation, 2000, RCP Publications.) Over the last 15 years, a globally integrated cheap-labor manufacturing economy, with huge labor reserves from China, India, and other parts of the Third World, along with labor from the former Soviet bloc, has been forged. The globalization of production has had enormous effects on world accumulation: raising profitability for imperialist capital, acting to compress wages, and lowering inflationary pressures. The integration of cheap-labor manufacturing into world production is now so deep that in the U.S., fully half of imports (mostly consumer goods) come from the Third World. A revealing statistic: a University of California study looked into who gains when an iPod manufactured by national firms in China is sold in America for $299. Only $4 stays in China with the firms that assemble the devices, while $160 goes to American companies that design, transport, and retail iPods.7 When we speak of capitalist accumulation, we are referring to the competitive production of surplus value (the source of profit) based on the exploitation of wage labor; and the investment and reinvestment of profit on an expanding, cost-cheapening, and technologically more productive basis. When we speak of “financialization,” we are referring to three particular features of the larger structure of capitalist accumulation in this period of imperialist globalization: a) the growing political and economic power of the financial layers of the capitalist class; b) the vast expansion of financial activities and of financial services, like organizing and financing corporate takeovers, insuring investments against risk, creating new financial instruments, etc. – activities in which profit-making involves the siphoning, centralization, and reinvestment of surplus value through financial channels; and c) the increasing separation of finance from production. This process of financialization has gone the furthest in the United States, and it is a major factor in U.S. imperialism’s ability to preserve and extend its dominance in international financial markets.8 Financialization is also a means through which wealth, and effective control over productive forces, is centralized by the imperialist countries – even as production has grown more geographically dispersed and increasingly carried out within subcontractural networks in the Third World. Financialization involves efforts to squeeze out more “value” from already created value. One measure of this is that in 2006, the daily volume of trading in foreign exchange markets and in derivatives (financial instruments) added up to $11.4 trillion – which almost equals the annual value of global merchandise exports that year. In terms of the shifts in the structure of the U.S. economy, the financial sector’s share of total corporate profits has risen from 8 percent in 1950 to 31 percent last year.9 B. Financialization and Production As far removed as finance may be from processes of production, and as elaborate and multi-layered as its operations have become, finance cannot break free of the sphere of production. Even as it objectively seeks to do so – and even as the disjuncture between the two spheres (production and finance) grows – it is the underlying conditions and profitability of production that set the overall conditions for the accumulation of capital. Imperialism is a worldwide system of production and exchange. It is the structure of social production – it is the global production of surplus value based on exploitation of people – that is at the foundation of this whole system. And in relation to the production of surplus value, “financialization” is both parasitic and functional. It is parasitic in the sense that financialization drains value from production. But financialization is functional to the workings of global capitalism in the sense that it facilitates the gathering of money capital into ever-larger agglomerations of capital and finds new profit-yielding channels in which to rapidly invest it – and just as quickly to withdraw it! Global capital faces all kinds of financial uncertainties and risks on its competitive global playing field as it moves through different channels, or circuits, of production. And the “risk-management” techniques provided by the global financial system are actually vital to the accumulation of capital, to the success of “risk-taking,” in the turbo-charged globalized economy.10 That’s why, for example, money jumps into Thai real estate markets one day, and pulls out and goes into ethanol production in Brazil the next – and then back to mortgage securities. And there is something else: the inflows and outflows of short-term and speculative capital also act as a perverse means of imposing discipline on and restructuring capitals – major manufacturing firm can be starved of credit or threatened with a leveraged buyout. And this kind of “financial discipline” has been imposed on whole countries in the Third World – aided, abetted, and orchestrated by the U.S.-dominated International Monetary Fund. All this is part of the reason that financial instability is a constant feature of capitalism in its more globalized and financialized forms of existence. Financialization and the globalization of production have been tightly bound up with each other. It can be put this way: there is a relationship between sweatshop labor in Guangdong province in China, the recycling of China’s export earnings into the U.S. Treasury and U.S. financial markets, and the credit-financed expansion in the U.S. of the last decade. Or, to put it more graphically, there is a link between the agony of superexploited labor in the bowels of the new industrial zones of the Third World, the feverish search for high and quick returns at the top of the financial pyramids, and the chaos of the housing markets with people losing their homes in the U.S. This is an extreme concentration of the nature of world capitalism. This world is highly bound together by production, trade, and finance. The requirements of life (consumer goods) and the requirements of production (machines and raw materials, etc.) are socially produced, that is, they involve the collective and interconnected efforts of wage-laborers in factories, warehouses, and so forth. But this wealth, the technology and means of producing it, and knowledge itself – all this is privately controlled and deployed by a small capitalist class. C. Barriers, Contradictions, and Shifting Tectonic Plates What we are witnessing now is that a particular dynamic of growth, marked by intensified financialization, is generating new contradictions and new barriers to sustained accumulation. The level of debt to economic output in the U.S. is at an all-time high. The financing of the trade and government deficits of U.S. imperialism (that is, providing credit for purchases of imports and having investors buy Treasury debt) depends on a steady and growing inflow of capital from abroad. But the weakening of the dollar and the emergence of competitor currencies, like the euro, increasingly threatens these mechanisms. And very crucial to this has been the process where dollars earned by countries like China through trade with the U.S., are then recycled back into the U.S. economy through purchase of Treasury bonds and other investments. In the U.S., the financial sector is seriously strained and is a flashpoint of heightened global financial instability, if not breakdown, leading to a major economic slump. Here we come to a basic point of this analysis: A financial crisis has broken out because of the severe imbalances built up between the financial system – and its expectations of future profits – and the accumulation of capital, that is, the structures and actual production of profit based on exploitation of wage-labor. The imperialist state is intervening to head off further damage and to discipline and restructure the financial system. But the very complexity of the “financial packages” created during the speculative boom – with their bundled-up loans and long strings of finance – are producing new challenges for policy-makers. As one Yale economist put it, perhaps unintentionally echoing a phrase from Marx: ‘like the sorcerer’s apprentice, we have created things we do not understand and cannot easily control.”11 This explosive uncertainty is developing against a larger international canvas. Major shifts are taking place in the world capitalist economy. The European market recently eclipsed the U.S. market in size. China’s growing demand for raw materials to fuel its export economy is making it a new player in the scramble for resources and control over them. And China’s increasing importance as a supplier of capital to the U.S. is giving it new leverage. Russia is reemerging as a world imperialist player, owing in part to its vast energy reserves and rising oil and gas prices. At the same time, and at this very moment of financial crisis, U.S. imperialism’s freedom of maneuver is severely hobbled – and this includes its ability to stimulate the economy through fiscal and monetary policy. The United States has never run such large current account deficits and no single country’s deficit has ever bulked as large relative to the global economy. D. The Military Fix Which brings us to one of the “dirty little secrets” of the financial crisis: the military needs and the military costs of empire – and “greater empire.” There is a brute fact of imperialist accumulation. The whole imperialist system rests on the domination of vast swaths of the globe through savage force, with the U.S. military colossus playing a special role. The U.S. military helps “create the conditions” for U.S. domination, pro-U.S. client regimes in the Third World, and conditions for investment by U.S. corporations. In the Bush era, U.S. imperialism has been attempting to parlay its military might into a new world order. This involves a restructuring of global political and production relations that will enable it to resolve or mitigate some of the problems and tensions it faces – and to lock in its global supremacy over rivals and potential rivals for decades to come. The U.S. share of world production has declined to about 20 percent, down from 30 percent forty years ago. But U.S. imperialism is compensating for this by pressing its military advantage as sole imperialist “superpower” (since the collapse of the Soviet Union). In a recent study, Chalmers Johnson has calculated that defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. Leaving out the wars in Iraq and Afghanistan, defense spending has doubled since the mid-1990s.12 Militarization is also embedded in the U.S. economy. It is a key structural component of growth, scientific research, and technological prowess of U.S. imperialism. And because of its sheer size, it also plays a role in the attempts of the U.S. imperialist state to “manage” and stimulate the economy. But the recent wave of militarization has put enormous financial strains on U.S. imperialism. It has produced huge deficits that cannot be sustained without the inflow of capital into the U.S. And the wars for “greater empire” are incurring astronomically greater costs than military and government planners had anticipated. Not least because of the setbacks and difficulties U.S. imperialism has encountered in Iraq and Afghanistan. This is a sharp contradiction for U.S. imperialism – because in many ways it is staking the future of empire on these wars; but these wars have become more costly to wage. And it is the height of hypocrisy for Democrats to now blame the Iraq war for financial crisis – as they consistently voted for war-spending authorizations, to the tune of $500 billion. PART III: CONCLUSION This is a financial crisis of historic proportions. And like many other events in the world, this crisis points to the fundamental irrationality and cruelty of the system. It also shows the vulnerability of imperialism to sharp turns that could open up new possibilities for revolutionary advance. But things unfold in complex, unpredictable, and historically conditioned ways. And as serious and potentially destabilizing as this crisis may become, it is also possible that U.S. imperialism could turn this crisis to its advantage. We live in an age of “endless war” and environmental devastation. We live in an ever-more globalized capitalist system that thrives on the toil and agony of the great bulk of humanity but that cannot escape the anarchy that lies at its very foundations. There is necessity and freedom for the imperialists. And so too for the people. Footnotes 1. Quoted in Steven R. Weisman, ‘Financial Regulators Suggest Tighter Controls,’ The New York Times, April 12, 2008. 2. Allan Sloan, ‘On the Brink of Disaster,’ Fortune, April 14, 2008, p. 82. A useful discussion of derivatives, hedge funds, and the like is found in ‘The Predators’ Ball Resumes: Financial Mania and Systemic Risk,’ Interview with Damon Silvers, Multinational Monitor, May-June 2007. 3. S. Tully, ‘What’s Wrong With Wall St. and How to Fix It,’ Fortune, April 14, 2008, p. 72; Reed Abelson and Louise Story, ‘G.E. Earnings Drop, Raising Broader Fears,’ The New York Times, April 12, 2008. 4. Sean Farrell, ‘Financial turmoil could cost $1trn, warns IMF as global growth comes under threat,’ Independent.co.uk, 9 April 2008. 5. Data from RealityTrac.com, January 29, 2008; Moody’s Economy.com, February 21, 2008. 6. The New York Times, January 24, 2008. 7. Cited in Charlemagne, ‘Winners and losers,’ The Economist, March 1, 2008, p. 56. 8. Among informative studies of financialization, neoliberalism, and dollar hegemony are David Harvey, A Brief History of Neoliberalism (London: Oxford, 2005); Andrew Glyn, Capitalism Unleashed (London: Oxford, 2006); Kevin Phillips, American Theocracy (New York: Viking, 2006); Ramaa Vasudevan, ‘Finance, Imperialism, and the Hegemony of the Dollar,’ Monthly Review, April 2008; and C.P. Chandrasekhar, ‘Continuity or Change? Finance Capital in Developing Countries a Decade after the Asian Crisis,’ Economic and Political Weekly, December 15, 2007. 9. See Chandrasekhar, ‘Continuity or Change,’ pp. 37-38; The New York Times, December 11, 2007. 10. On financialization as a means to contain financial disorder and to impose neoliberal discipline, see Christopher Rude, ‘The Role of Financial Discipline in Imperial Strategy,’ in Leo Panitch and Colin Leys, eds., Socialist Register 2005: The Empire Reloaded (London: Merlin Press, 2004). 11. David Dapice, ‘Bad Spell on Wall Street,’ Policyinnovations.org, January 24, 2008. 12. Chalmers Johnson, ‘Why the US has really gone broke,’ mondediplo.com (English edition), February 5, 2008. Raymond Lotta is author of the books, America in Decline and Maoist Economics and the Road to Revolutionary Communism, a member of URPE and contributor to Revolution Newspaper

Rising Prices Reinforce Need for Food Security Policies

by Martin Khor from Institute of Science in Society 15 July 2008 The new key to food security is self-sufficiency, not trade, and policies are needed to expand local food production and invigorate the agricultural sector particularly in developing countries Desperate measures to cope with soaring food prices revive debate over food security In response to rising world food prices, some food-importing developing countries have lowered their tariffs to mitigate the high prices of imports. At the World Trade Organisation (WTO), agricultural exporters are questioning the need for the instruments of special products (SP) and special safeguard mechanism (SSM) designed to protect food security, livelihood, and rural development against trade. But the G33 group of developing countries and its members say that their case for SP and SSM has grown even stronger, as the food crisis is due to inadequate production in many developing countries, forcing them to increase their dependence on imports that has now become so costly. Although importing countries can cut tariffs to reduce prices now, in the longer term their farmers will need local markets and incentives for them to revive agriculture production. The current crisis has also revived the debate over food security. In recent years, international financial institutions have promoted the view that cheaper imports make local food production no longer a matter of necessity, and many developing countries reduced food production on the advice of those agencies. The rise in food prices in the past two years has increased the cost of imports and inflated food prices in local markets. This was exacerbated by shortages experienced in countries placing import orders, for rice, for example, only to find supplies cut by export restrictions. The ensuing street protests in many countries have added a considerable sense of urgency to the worsening situation. Suddenly, the paradigm of food security has shifted back to the traditional concept of greater self-sufficiency instead of relying on cheaper imports. In the immediate period, emergency food supplies have to be shipped to affected countries, but the long-term solution must include increased local food production. This raises the question of barriers to local food production and how to overcome those barriers. Barriers to local food production for self-sufficiency The current food crisis has been precipitated by a number of factors including climate extremes, such as the drought that has drastically cut wheat harvests in Australia, the rising cost of inputs, especially oil and oil-based products (fuel, chemical fertilizers and pesticides) and above all, the switch of land use from the production of food to bio-fuels. However, a more important contributing factor is the decline in agriculture in many developing countries that has been happening over the past decades, in most cases, due to the structural adjustment policies of the IMF and World Bank. The countries were asked or advised to dismantle marketing boards and guaranteed prices for farmers' products; to phase out or eliminate subsidies and support for fertilizer, machines, agricultural infrastructure; and to reduce tariffs of food products to very low levels. Many countries that were net exporters or self-sufficient in numerous food crops experienced a decline in local production and a rise in imports that had become cheaper because of the reduced tariff. In addition, some imports are from developed countries that heavily subsidize their food products. Consequently, the local farmers were subjected to unfair competition, and in many cases, failed to survive. How Ghana’s agriculture was destroyed by the World Bank and the IMF Ghana is a case in point. From the 1960s through to the 1980s its policies to promote self-sufficiency in food had involved the government actively encouraging the agricultural sector through marketing, credit and subsidies for inputs. This had facilitated an expansion of food production for example, in rice, tomato, and poultry. But from the mid-1980s onwards and especially in the 1990s under World Bank and International Monetary Fund (IMF) conditionalities - programmes for economic and political reform attached to the provision of funds - the policies for self-sufficiency were reversed. The subsidy for fertilizer was eliminated, and its price rose very significantly. The marketing role of the state was phased out. The system of minimum guaranteed prices for rice and wheat was abolished, as were many state agricultural trading enterprises and the seed agency responsible for producing and distributing seeds to farmers, and subsidized credit also ended. Simultaneously, applied tariffs for most agricultural imports were reduced significantly to the present 20 percent. That, on top of the dismantling of state support, left local farmers unable to compete with imports artificially cheapened by high subsidies, especially in rice, tomato and poultry. Rice output in the 1970s could meet all local needs, but by 2002, imports made up 64 percent of domestic supply. Rice output in the Northern region fell from an annual average of 56 000 tonnes (in 1978-80 to only 27 000 tonnes for the whole country in 1983. In 2003, the US exported 111 000 tonnes of rice to Ghana. In the same year, the US government gave $1.3 billion in subsidies for rice. A government study found that 57 percent of US rice farms would not have covered their cost if they did not receive subsidies. In 2000-2003, the average costs of production and milling of US white rice was $415 per tonne, but it was exported for just $274 per tonne, a price 34 percent below its costs. Tomato was a thriving sector, especially in the Upper East region. As part of a privatization programme, tomato-canning factories were sold off and closed, while tariffs were reduced. This enabled the heavily subsidized EU tomato industry to penetrate Ghana, and displace the livelihoods of tomato farmers and industry employees. Tomato paste imported in Ghana rose from 3 200 tonnes in 1994 to 24 077 tonnes in 2002. Local tomato production has stagnated since 1995, while tomato-based products from Europe made inroads into African markets. In 2004, EU aid for processed tomato products was 298 million euros, and there are many more millions of euros in indirect aid (export refunds, operational funds for producer organisations, etc). Ghana’s poultry sector started to grow in the late 1950s, reaching its prime in the late 1980s and declined steeply in the 1990s. The decline was due to the withdrawal of government support and the reduction of tariffs. Poultry imports rose by 144 percent between 1993 and 2003, and a significant share of this were heavily subsidized poultry from Europe. In 2002, 15 European countries exported 9 010 million tonnes of poultry meat for Euro 928 million, at an average of Euro 809 per tonne. It is estimated that the total subsidy on exported poultry (including export refunds, subsidies for cereals fed to the poultry, etc) was Euro 254 per tonne. Between 1996 and 2002, EU frozen chicken exports to West Africa rose eight-fold, due mainly to import liberalization, practically wiping out the half million chicken farmers in Ghana. In 1992, domestic farmers supplied 95 percent of Ghana’s market, but this share fell to 11 percent in 2001. In 2003, Ghana’s parliament raised the poultry tariff from 20 to 40 percent. This was still much below the bound rate (allowed by the World Trade Organisation) of 99 percent. However, the IMF objected to this move and the new approved tariff was not implemented. The IMF representative in Ghana told Christian Aid that it pointed out to the government the raising of tariff was not a good idea, and the government reflected on it and agreed. Many farmers groups and NGOs in Ghana have protested to the government. WTO completes the debacle Some developments in the trade negotiating arena are also a source of concern. The Doha negotiations at the World Trade Organisation (WTO) are mandated to substantially reduce domestic support in developed countries. But to date, that has not materialised. Another source of concern is the new US Farm Bill. According to several analyses, including those oif the US administration, the Bill will continue the present system of subsidies, and will even expand support in some ways for several commodities. For example, the Bill guarantees that 85 percent of the domestic market for sugar will be met by local production. The Bill also allows a farm family with an income of up to $1.5 million to obtain subsidies, compared to the limit of $200 000 per farmer proposed by the Bush administration. The Bill thus ‘locks in’ the US system and its levels of subsidies for the next 5 years, and also constrains what the US negotiators can offer in the WTO Doha negotiations. A major loophole in the WTO agriculture agreement is that countries are obliged to reduce their bound levels of domestic support that are deemed ‘trade distorting’ but there are no constraints on the amount of subsidies deemed non-distorting or minimally distorting, which are placed in the so-called Green Box. Recent studies have shown, however, that many of the Green Box subsidies are also trade-distorting. The Doha negotiations are unlikely to place new effective disciplines on the Green Box. Therefore, the major subsidizing countries can change the type of domestic subsidies they give, while reducing the "trade-distorting subsidies" and continue to provide similar levels of farm subsidies. Meanwhile, the developing countries are being asked to reduce their agricultural tariffs further. The Chair's proposal at the Doha talks is for a maximum 36 percent tariff cut for developing countries, and 24 percent for small vulnerable economies. This is sizable, and compares with the 24 percent cut in the previous Uruguay Round. Most developing countries are advocating that the instruments of SP and SSM be set up as part of the WTO talks to promote food security and farmers’ livelihoods and rural development. SP would exempt important food products from tariff cuts or at least allow for more lenient cuts. SSM would enable a developing country to impose an additional duty on top of the bound rates in situations of reduced import price or increased import volume, in order to protect the local farmers. However, there is considerable opposition from some exporting countries to having these instruments that can work in an effective way. Free trade agreements reduce tariffs even further In the bilateral or regional free trade agreements involving developed and developing countries, the developing countries are asked to reduce or eliminate their tariffs by even more. For example, in the Economic Partnership Agreements between ACP countries and the EU, the ACP (group of African, Caribbean and Pacific less developed countries) are asked to eliminate their tariffs on 80 percent of their tariff lines over different time periods, among which are agricultural products. Key policies and measures for food security The economic and trade policies followed by many developing countries, often at the advice of international financial institutions, or as part of multilateral and bilateral trade agreements, have contributed to the stunting of the agriculture sector in developing countries. In order to increase food production in developing countries for food security, a number of policies and measures need to be implemented. Developing countries must be allowed to provide adequate support to their agriculture sector and to have a realistic tariff policy to advance their agriculture, especially as developed countries’ subsidies are continuing at a high level. The developed countries should quickly reduce their actual levels of subsidy. The agriculture policy paradigm in developing countries must be allowed to change. Countries should have the policy space to expand public expenditure on agriculture. Governments in developing countries must be allowed to provide and expand support to the agriculture sector. Developing countries should place high priority on expanding local food production. Accompanying measures and policies should thus be put in place. The countries should be allowed to calibrate their agricultural tariffs in such a way as to ensure that the local products can be competitive and the farmers’ livelihoods and incomes are sustained, and national food security assured. The proposals of developing countries (led by the G33) on special products and special safeguard mechanism at the WTO should be supported. Effective instruments that can meet the aims should be established. The policies of the World Bank, IMF and regional development banks should be reviewed and revised as soon as possible, so that they do not continue to be barriers to food security and agricultural development in developing countries. The actual levels (and not just the bound levels) of agricultural domestic subsidies in developed countries should be effectively and substantially reduced. There should also be new and effective disciplines on the Green Box subsidies to ensure that this category does not remain an ‘escape clause’ that allows distorting subsidies detrimental to developing countries. There should be a review of many of the FTAs between developed and developing countries, including the Economic Partnership Agreements between the EU and ACP countries. In light of the food crisis and the changing paradigm on food security, developing countries that have signed or are in the process of negotiating FTAs should ensure that the FTAs provide enough policy space to allow sufficiently high tariffs on agricultural imports to safeguard the principles of food security, farmers' livelihoods and rural development. Developed countries should also not make demands that adversely affect food production in developing countries. Martin Khor is Director of the Third World Network, and this article is a revised and edited version of part of a paper on food crisis and climate change presented at a round-table at the FAO Summit on Food Security in Rome on 4 June 2008. For further details see Khor M. The impact of trade liberalization on agriculture in developing countries: the experience of Ghana. TWN, Penang, 2008.

Carbon Trading: 21st Century Indulgences

by PAT O'DEA, Socialist Worker (NZ) Martin Luther, a 16th century church professor at Wittenberg Catholic University, was troubled. The citizens of Wittenberg, many of whom belonged to Luther's flock, were in the habit of seeking forgiveness of sins by purchasing indulgences. Luther had previously already preached in condemnation of indulgences. When on Halloween, the Eve of All Saints, in 1516, he again spoke out, drawing everyone's attention to his revolutionary view that the Pope could not free souls from purgatory. He condemned the very idea that money payments could wash away sins as pernicious. Logically it simply meant that the wealthy could sin with impunity. Martin Luther courageously did this, despite the fact that the Castle Church at Wittenberg and even the university where he was employed were both dependent to a large extent on this lucrative source of revenue. Here in 21st Century New Zealand Green Party politicians fail to condemn Carbon Trading, allowing the rich to sin with impunity. And instead have given their secular blessing. They could do worse than heed Martin Luther, who once wrote; "....Indulgences are most pernicious because they induce complacency and thereby imperil salvation."

Make Capitalism History- 100,000 march against the G8 in Germany

The German authorities mounted the biggest security operation since the Second World War for the G8 at Heilingandamm near the north German town of Rostock.

They sent 16,000 riot police to the area, destroyers packed with marines up the Wranow Estuary and a fleet of fighter planes to patrol the skies.

Despite this much hyped build up, over 80,000 people travelled from Germany and around the world to join the anti-G8 demonstration last Saturday.

Demonstrators streamed from two meeting points in the suburbs to the old harbour near the city centre.

There were pensioners groups, climate change campaigners, anti-war groups and impressive trade union delegations.

Local families mingled with student groups from all over the country marching alongside mobile sound systems. There were large groups of young anarchists, many dressed in black.

But perhaps most impressive of all were the massive red contingents on both marches organised by the new left party Die Linke.

The party brings together activists who have left the SPD, Germany’s equivilant to New Labour, radical socialists and the PDS, the remnants of the East German Communist Party.

It is currently at 12 percent in the polls and played a vital role in the mobilisation for the G8, especially in the final couple of weeks.

A spokesperson for Die Linke estimated there were 6,000 people on their contingents.

As well as hyping the threat of violence, the G8 organisers had picked a remote part of Germany – its most sparsely populated region – for their meeting.

They had widely trailed plans to use the meeting to tackle some of the world’s most pressing problems, especially the threat of climate change.

The huge and radical demonstration showed once again how many see through their rhetoric and oppose their real agenda.

Decline

Rostock is an old port and shipbuilding city in decline and is now an area of high unemployment.

The biggest of the two demonstrations marched through miles of monotonous housing projects and empty factories, picking up support on the way.

The atmosphere was relaxed, like a huge political festival. As our anti-war contingent reached the harbour scuffling broke out some metres ahead of us between groups of anarchists and some riot police.

Within seconds hundreds of paramilitary police in green uniforms poured into the area from three directions.

A stick, one or two stones and a flare were thrown and the police started baton charging the anarchist groups mercilessly. Other protesters were pushed over and trampled.

One man was thrown out of a wheelchair and beaten by a group of about 15 police officers. A young woman held by her mother fled past us with blood pouring across her face.

From that point on throughout the evening there were sporadic attacks by police using baton charges, water cannon and tear gas.

There were hundreds of police vans and armoured personnel carriers lining all the cities main streets. All other traffic was banned.

The police seemed to be trying to give the impression that Rostock was under military occupation.

But the protesters were defiant, 30,000 or so stayed in the harbour to hear the speeches and dance at a concert.

Others walked the streets and sat in outdoor cafes and restaurants. On Sunday morning

many of the marchers came back in to the centre of the town to join a demonstration against genetically modified foods or go to a conference on climate change.

Launch

At lunchtime there was an international anti-war assembly in one of the cities central squares addressed by anti-war German MPs among others.

The assembly agreed to launch a campaign to pull Nato troops out of Afghanistan.

The German movement has called a demonstration against the war in Afghanistan on 15 September.

After the demonstration the town of Rostock was almost completely undamaged.

We heard of three cars that had been overturned and set alight and a few wheelie bins that had been turned over.

Some of them had been lifted back up. A tiny number of protesters had allowed themselves to be provoked by the massive police presence.

But the police’s military-style manoeuvres that flashed over the world’s TV screens appeared to be just that – manoeuvres designed to intimidate.

The media coverage of the G8 protests will have to be challenged by the movement around the world.

But the biggest roars of approval in Rostock’s harbour last Saturday night were for the speaker who said, “We should accept no lectures about violence.

“We are not the ones responsible for the deaths of hundreds of thousands in Iraq, we are not the ones threatening to bomb Iraq.

“We are marching for peace and justice, concepts the leaders of the G8 do not even understand.”

The following should be read alongside this article:
» ‘We’re not asking for help. We are telling them to get out of the way’
» Marching for migrants rights in Rostock