The Global Gamble: Washington's Faustian Bid for World Dominance

The Global Gamble lVashington's Faustian Bid for llVorld Dom:inance

PETER GOWAN

VERSO

London· I'lew Yorl:

TO MY SONS

First publishod h~' Verso -t mlH Ii) Peter Gowan 19n9 All rights rusmved The 11I0rai rIghts of the author havu boon

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Verso UK: G )I.·leard Stroet, London \VIF oEG USA: 1110 Vanek Streut. New York. NY tOOH--tliIJ(i wW\\'. vorsohooks.!:ol1l

Vorso IS tim IIllpnnt of Now L(lfl Books ISBN l-U5~l8-1-1174-5 ISBN l-II!i!J/J.J-Z7t-2 (pbk)

British Library Catalugumg in Publica lion Data t\ catalogue rncord for this hook IS available from the Brilish Librar.\' Library of Congress Cataloging-III.Publication Dala A catalog rucord for this book is i1vailable li'DlIl the Lihrary of Congmss Types!!t by 1\·1 Rules Printed and hOllnd ill Groat )]l'ilal Tllrhuh'lIn' . .\'171' Lip 1/"'/11/' :!~9 (I !19H). 5. A 1Il:~I()r "XI:\'PIIOII 10 Ihis hlilldllt:ss has heell (h,' \\'ork or Susall Slr,II\~'" whll ('onsl:lIllll' SI",~hl I'; ,·dUCII,· liS Oil II", p"li(i('s ..1" illll"rllallllllallllllllcl;lry alld lillam"jal albirs "'I"'Clalll' III III:,. claSSIC S(,.,/h'K /11/1/ Jki(i," I'o/i,:\' (()xfllrd UIlln-rsll\' Press, 1!17l), :\ p,lIh,lm-OIling arl!o de oil Ihe IIf slales III glllhalisawJII IS Leo I'anll.-II, ''1'111" R"le "I' S(;II,·S 11\ l :("IlOltisallOll-. S"nl//i,,' U,:t;W"I' ( I !IW,)_ ~.

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INTROlll'< :TI< IN l;. I tic! n()l \'"1,1.

r 'Ilark,,!.,

10 Sllg,~l"st

thai

ll'lISIOIiS In:1W('.'1l

:111

JII'P""';1111 .. ili'Ti

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the ~o;'lb of ~(I\'l:I"lUIIt'llh and Ih(' clYl1atn-

;""t'SUg;'ill'"' Sc,' Ruhl'l'! Bllyer alld Ihlll('l I)rad,,' (",b.). S/II/'" ."Utl/I/s/ .\,,,,1:,,/.1: Tit.' i,illl//' U{(;illhtlli:llrlfl" (RcJllll"ligc·. 1~1~J(i), i, Sail Ill .. I 1llIlIllllgillll: 'Trall"",",,"al Oq'::lIl1salilllls II. W.. rld 1'"liflCs'. \lini,1 i'oiilin, ~:; ('-\I'ril !!17Tt. H.' ..

;11,' ","

7

TIlE

(;(.OIl:\l.IS,\TION (;A~mt.E

states,Japan, till: countries of the SOlllh and of IIII.' ronner Soviet Bloc to the reg-lIllc. \.\'t' also look at how the n'glllle clllHribllteci w\I'ards clI,\II~in~ the US domestic finanCial, .... conOllllc and poJillcal systems. In chapter!), we l1'Y 1O place the DWSR and its effects into till: framework of the (i\'namlcs o{" illlernalJOllal politICs as a whole in the early Im)(ls. We took at these ISSllI:S, so to speak, from the :Ingle of thl: lead slall:: the Linnell States. ,\nd we tn' to build III the erIccts of the SOVIet Bloc collapse Oil how American leaders formulated their strategic g-oals and recombined tllelr tactics. I arg-ue that lhey ralJonally hacl to, and did, recog-llise that theIr ke\' challenge lay ill East and SDuth-East Asia. To tackle 1Ilat challenge amI III li'ustratc (inure cl1allenges LO US global lcaderslllp. they had to radicalise the D\VSR and llIay perhaps have used It as an IIlstrulllent of ecollomic statecraft in East .-\sla: the e\'IC(I.'IICe is CII'Clllllstanllal bUl significallt. In chapter li we arg-ue thal the conventional \'lew or the IIn/i)ldillg oj' tIll: central drama or the East ASIan cnsis JIl lhe autumn of 1997 - lhe events in SOllth Korea - is mistaken lIlsobr as It assumes the cell tral actors to have lJeen exc\usivciy market ('orces, A cntlcai role was pinetarv OHler was de"d and the whole negllLJalJoll lizzled (JUt. The Nixon admil1lstrallon thus g"ined its dollar standard and III tlte lIphe;l\'ais or the early 1~170s lIlCl'easlllg lIulllbers or coulltnes were r01'(L'(\ lu al)anclon attempts to matlltalll I1xeci exchange rales bl'lWeell their currellCles and the dollar. ThiS sUlte(t the US admlnlstratioll because 11 wisIH:r1 to furce a I-evalualion on other states and could now do so throu.!4'h Us own polin' for the dollar. ThiS was all enormousl\' IIIl]Jortanl developmellt, because, Il'r rcasons whlell we will disCI ISS i"lel: LIlt' LIS ~O\'L'I'n111elll COUld, alone amol1g governments, mOl'e the cxchange price of the dollar ag;lll1st OLilCl' CUITenCles hy huge amoul1LrJ.: do bUSiness witll pcopk Iinlll all O\'CI' lhl' wodrl. Funds 1I0\\' (lut f"rOlll and back III to lhosl' t\\'O n'llll'l'S ('1'0111 most ("{I \ II II i'll'S or the world. Bllt thiS docs 1111/ (// aI/mean th,11 all Ihl' lillilnl'1i1llllar);,l'L~ of tile world arc l\llilied III a single, IIltq{rat.ed finallcial markt'l. On till: (011 t rar\'. linallCl,t\ marKets n:mallll'c\ - ;l1Ic1largel\' slill n:l1lalll - rompanllll'llla\iwd, not only between COltlllneS bUl even Wllhlll COlllllnes: we call sec thiS if Wl'

or

or

or

rcalisc titat eVen \\'1 till II Eurolam[ arter the launch or Ihl' cum Iherc will slill hc ,~nhsl"IlII;I1 b:IITIL'r,o; lU thc full Integl'allllll of fillallClal lllarkets, BUl what did happl'1l III till' 19iOs was thaI I,Olldull alld Ncll' \i.II"\;, operators did bq~ill to eSlal)Iisl1 linkag"cs bctwcen their international liIlallCial lIlarkcts and I1allonallin:lIlcial s\'stellls around the world which wen' far slrollg'er than ill Ihl' 191i(Js, The CXP:1I1SIOIi ur thcst' II lIC I'll a lIollai pm'ate Ii (lallnal operal1oIlS call bc appreciated /)\' conlpanll~ thc SIZl' or intern:tllollal ballk loans and bOlld lellclin~ hctwl'l'n I ~17:1 and I~l~)(): hank iO;lIlS rosc froll! S,(() hillioll in I ~17:i 10 wcll O\'lT S:~/J() billioll lw I \)!HJ; dllrlng thc salllC pcnoel bond lending rose almosl lCllli)lcl. froll\ S 19 billion to ow... S 170 hilliuII, TOIl!;. or a g;!ollll{ lin:lnoallll:II'kc!. rathcr thall or the JIlncaSIIl~ JIll1uenu~ or thc Amcrlcan lin:tllCJ;d markct ovcr othcr nalloll:iI linanCial llJarkets, ubscures the powcr dillH:nslon us linanciai dOIllIll;!nCe, Those who belicvl' lhat the ;Jr\il'ClI\'e 'Allll'lIcan' IS l!"l\'lal or e\'l:n redundant should ask thcmselves a Simple qucstion: would Ihe\', theil, hc C]lJItc happy Ihllll an l'COIWJllIC :IIHI polilJcai pnJllt of'ncll' if' thc IIllerllalJonai iillallclal SVSIl'Ill was dO)1lIIJ;ltcC( hy tIll' lllark\'ls and "pl'l-awrs or Cllilla or Iraq, .I"S1 so IOllg as thc\' could oner similar kinds of crcdit or other lillallcial services Oil Similar terms to those on,Vall Street? Btl! III lllakl' 11ll' pOlllt IllllCh llIorc directlY. \n~ GlJ) slIllph' lIole 111;11 hccause thl' ,-\mcrH.:an lill;lllnal lIlarkct:-. h"n: bl'L'1I dOJlllllant \\'Ilhlll lhc hierarchlcai IIctworks or finanCial markets. access to that market. dilTer('nt kinels or linka!!;es I)Cl\Wl'1I natiollal eCllllOllllCS alld th:11 market. and prlCl: m()\,Clllelll~ WJlillJl tilat Illarkct. have had enonllOllS eCl 1l101i1iC {/ lid /J(}{illmf Sl~lIiIiGliln" The stun' SII1Cl' till' I~J7()s has hecl! om' or ).!;roWlng pressure rrom Ihl' \\'all Sirecl celllrl' \0 wcakell thc barncrs to IlS pCllclr:lIJ1l11 IlllO r\OIl1CSliC lill:\IlnOli svstCJll~, This pressure has a lnpk targcl: lirs!. III rl'I11(l\'l' barners 10 tIll,' In'L' !lo\\' 01 funds III t)lIlh c1irccliolls betwcl'1l \\':111 Strel'1 :lIld pn\'atc operators wlllllll the tar),{ct slate: second, lIJ gl\'C full ng'hts 10 Wall Street operalors LD do buslncss WJlhlll tile lillallnal srstl'll1S alld eCOlltlJIIIl'S of Ihe largct stales: am! ltllnl/v. 10 redl'slgll lhl' linanuat S\'Sll'IIIS of larget stales III Iii III with lhc husiness stratq{ll's or Wall Street operators ,lIld or tilelr All Il'J'IGUl cJ i Cll ts (lrallsllatJ ollal rorporallllils. mollt'\' marh:.e I III III LJal I'll nets, etL), or course, Wall Strn:l alld I.olldon ha\'e 1I0t haci a ll1ol]()polv, Tok~'o has ~r()\\'1\ ami SOllll' (If till' hl!!;!-(csl linallcial opl'rat()rs ;Ire .Japallese, Frankfurt, Zunch. Pans. Hong Kong and Singapore arc: all IInpo)'\anl. nut 1I01l!: or 11,,:sl' other Cl'lltrc,~ as rct COilles dose Itl Iwallillg tile ,~II.C or Wall Streel ;lI1d l.ondoll, allcl III liJll'i',llurs Gill lackle probll'lll~ "f CXCh;1111; lil!'t'lg·1l t'XCh:lIlg'l' reservl's: il was the CliITelll'\' III wlllch 7(i,H ptT relll or all IlIll'rllatlOIlOlI b;lI1k loalls were dl'IHlIllIlIa!l'CI. III which :l!J.!j per (,l'1I1 or alllllll'rll:ltiollal hOlld issues \I'l're

or

TI-IE (;1 _011 ..\1 .IS.-\T!O!'i

C'-\~III1.E

dcnOllllllatecl, aml.J.-I.:i pcr cent Dfal! ElII"OClIITCI1C\' cicposlts: the dollar alsl) served as tile 1\l\'lllcmg ClIrrCIln' 1'01' ·li,l) pCI' CCllt Dr world trac\e and W,IS one oj' thc Iwo Oll'l'enCICS III H:-; pcr ccnt or all 1()rcl~n ex('l!allge trans,lcliOI1S, Ane! il' IIltra-European transactlOlls were elilllll1atecl frOill tlll's(' ligures, Ille dollar's dOll1l11ance on:r all other transactions III the GlICI-{LlI'ICS ..,1' hstec\ ahove bccoml's ovcrwhclllllng-, - , ~

n", i)\-\-'SI? 11m/IIII'

CIJI1l 11'1I iI!JllfI (

Nollflll o/,U/'g'lll/l's

The nouon thallhere arc regimes 111 international reiauons was lirst pllt 1'111'warcl III the 19iOs bv Rohen Keohane and.loseph Nyc.:!' ;111(1 was g-I\'en IlS classIC dc:lilHlIoll b\' Stephen Kramer 111 19H:t:!K Krasncr eidilll'd reglllll'S as 'pnllClplt:s, ltorms, rllies alld deCIS(()n-ll1ai;.lJl~ procecilln:!'o .Irollnd \\'ll1ch aClOr expeclallons cOl1verge III Ll gl\'en isslle an:a', ThiS concept has become extremel\' mlluelltial III the analYSIS or international reiauol1s ;lI1el III the rllnCll()nlJl~ or multi-lateral or~aI1lSallons. Th'ifll)' U,jllrm. I ~Ji 1-19i·1 (!'ids"", I !17i), :!, Sl"" .I"hll \\'illialllslIlI. nu' I';,il/lll' IIf 1""·"I1I/IIIII/II/,I/(JII ..I,,,.\" U,p".m, I (Ii I-i·' (:\l'I"II1, r~li7l, I' :Ii :1, S,',· T.. , /1;111, ()/'rc. T/,,./III/1I,''\/,,,r" ,I. S,·," A, .\, KlIllu!'! alld S, ~\;'"'III'. "Thl' 1'lllillr:oI [('001100111\' or \Iiddl .. Ea,'II"1'II (IiI'. III (:" R. D, l'lIllt"rl,ill :'lId R" SllIhbs. /'u/iliml h"",,/I'\' 11111/ /1,,' CIIIIII!!'I"!!' (;1"/,,,1 (htf,.,. (~I:ll'IlIillall. I ~1!1·1)" :J. S,," \'. H, 0PP"IIIIl'IIIl, '\I'h)" ()il I'l'Ir", (:00 L'p~ TIlpe lor US lin;\IInal 0pt'r;\lors II) lillk lip with tIn' t'X-lIllllll'lIkLlllir;ls Oflhc regllHI III orgll..'s ol'spl'culau\'c, corrupl and eXlrellll'i\, prolil;liJil' \'(:11lures. through pnriliLY could be IlltT lT1l1 .Iud III i\\cXICI> ) m)4-9=>, I :\.!) PCI' CCil!. J~ Thl' IMF hOls piayeci a ct'lllnd role III disiribllllllg Ilwse Cosh;, dOIll!2; so in Llle aCLlve sernct' or thl' L'III1l'c1 Stalt'S hUL with tlw passive acceptance or lile oLher G:1 Slates.

'1·11E F.\'{)I.l;Tl()N ()FTI1F I,'(/s( Ci'll/ ral (/ lid /':astl'J'JI

[H\'SR

:)\

1-.'11 ro/H'

The rl.'corel ol"thc.:se COlllltrleS ulldn lile DWSR sillce nl!IO IS o\'erwlll'llIlIlIgly the same SIDn' oi" 1!',Ig-eclv as Lllat of Illostllf Latin Amenca 111 the 19HOs, The propagandisls of till' DWSR han; e\'en reasoll to cOllgralllbte I.hClllsehes on in I rOc\Ul;lllg capllaiiSIllll1l0 a nU\lIber of these UIUlltl'll'S, gl\'ClI.llIst how terrible the expenence has l)(:e11 for the bulk. of the populau()n of the regH)!). TCII \'cars arler I Ill' pr()u;ss slancd Olll\' tlllt' COllllln·, I'olalld. has d.l\n:d Ilself bOlck to Ils stallSl1cal GDP per Glplla or 19H9, And Ihe deep gloom across the lInnzon of the enure regioll has I)een lifted onlv by flashes of lightning rrom lillanciall;rlses. exploding III one coulHr\, ,l("ln '\Ilother.

TIll'

A'I'W

Growth em/n'

The Ill'\\, growth (elltre III East ,\I\(I South-East :\sia Inducted Chilla, South Korea. Taiwan and ilHTeaslIlgl\' also the counlnl'S rurtlll'r SOlllh, Thl'\' were unilied 1)1)1 bv lhe fan thai theY ,til sh;lred lhe saml' 111lt'l"nal d('\'l:,iupme11l nlO(lt.:i but br the ElCt thaI theIr lllort,ull as a direCl Stllllulator o'-llw CC
These mour. The respecuve Iea(l countries were Ilr course the UK and the US. In hOlh cases, the lead coulllries' econOlllles had grown for a whole historical period through Interaclion wnit the rest of the (,1lI-e: Jill' the UK that had ml'allt \"'esterll Europe clilrlnf,{ Llle nllleteellth cenwr\,: for thl' US it had ml'alll v"estern Europe lInpose dependent gmups 111 power who will servc US buslI1css IlltercSLS. But such aClivJt~, cannot be cDI~jurcd Ollt oj" lhe 'IIr: it u!;lIaJlv rcgulrcs the eXlslellce of a perccl\'cd dOll1e~lIc threat (tradiltOllally from the Left) whIch thc ~tl\'Cnllllenl 01" lite day IS PCI"CC1\'l'c1 b\" a ~r()lIr \\"Ithin liw do III 11\;1Il I. class as (;tiling to flt'al wJlh. Such preconditIOns

,'{I

1'()\\'E1{ PC II.ITlCS :\,"iD TIlE U .INTOi'< :\/l,\/I'-JISTRArII IN

did lIot exisl in a rq.\"lon el~J()vl1lg unparalleled economIC ad\'ance and I~lced b\' 110 slgniIicallt domestic sOCIal IhreaL~, \i:1 il" b0111 lhese t:IClics are 1I1l;lyailable, there seellls to be all irrcsoh·able dilcllll1l,l: glVl'1I Illat sl.lle S\l\'CIClgIllY has to Ill: accqlled, thc LIS has 1\0 cJWlce hUlto adlll'\'e Its goals I\'IUllll them stales 111f,lI/gll the eXlstil\~ dominallt SOCIal class \\'Ilhlll them, The problem LhllS I)ecnmes one of how lO chang"e the onel1taLJoll of these dOlllinant sonal grollps, 2) fjngru{illg sIal/'s /1//0 (/ US·{/'{{ (/{/;al/u' agalll.l/ Iltal /II I'Xdlflllgl'j;)" (lS.\"('/.1 /(}

us /lroll'fllOlI

SIIIIII'/',\'/I'nwi

11,,.('(//

.If/

Ih" slr/I,'s fllllnTIII'r/II/1I'1I 11t"11' ,'m/WI/IIC

lIS o/II'm;1I1"\

TillS IS lhc claSSIC LIS laCllC III" tilt' Cold "\'ar period. Samuel HIIllllllgton has explal\lCd hoI\' lIS lacllCs worked: 'Weslern Ellrope, l.atin Amenca, Eas[ ASia, and much or Solllh ASia. the i\/iddle East and ;\I'rica rell \\'Ulllll whal was ellphenIlSlIl'aJl\' referred to:lS "the Free \Yorld", and ",hal I\';IS. III fact, a SeclIl'llr ZOIlC, The go"eJ'llllll'nIS \l'lllllll thiS 1.01ll.: /()\II1(1 It III Ihelr 1I11erests: (a) to accept an expliCit or IllIpliclI guarantee iw Washlllglon or tilt, independeIlce of lhelr country and, in SOllll' cast'S, the audlOl'lt\' oj' the go\'ernml'lll: (h) III PCI'Illlt access LO thell' COUll I!'\' to a \'ariel\' or liS go\'L'I'Illl)CIlIal and nOIl·g()\'l:rnIlH'IlI.li org;\lHsatJlllls pllhillng go"rs which thost' org;\Illsallons cOllsldered important. The grl'at 1)IIIk or the [olllllnes or Europe anet the Thll'c\ ''''orld rOlllld the a(l\'alllagl~s or lC\I1Snall(Hlal access to oUlwClgh the costs allemptlllg to stop it. ':!H .-\11(\ as Da\'ld Rllt hkopl' has a((ded, In Lhl' postwar wars' Pax ,.\Illl'l'Icana· Gillie \\'ilh all IIllplicll pnce tag to nations that acccpted the l'S ~L'l'unl" UlJlhrdla. If a COlllllr" depended Oil the L! lilted States 1'01' seellnt\' protecllOIl, II dcalt with tllc Unlle(i Statl's on lrade and [OllllllcI'Cial 1lI'lIll'rs.':!~1 The el1ican' or lhe tactic depended upon two cOlldiuuns: first. the ahility the US til persuade: tIll' local rlomll1ant sOclai groups that Illl"· faced all external threat: and secolldh·, the US's alJilit\' III persu;lde these same grollP~ lh,lI lhl' LIS ,md only the LIS had the regglllg (III' LIS inter\'CtllHIII.:1II The distlllClIye US org,ulIsatlOnalll1orlcl the g-ianl curporalion could thus enter foreIgn laholll' and pror!lIcl markl'ls. spn'acling lirSl to Callaria thcn to Western Eum]Jl' (filcilitaled by the EC's rilles amI redewlopmellt) and IIH~)) 1111 to othcr parts the world, In tbls way. r.lIher Ihalllll the pl'lIll1tive militarist conccpuollS or n:alist lheory. militarr powL'r played a cenlral roie III postwar capitalist power politICS. With the collapse of the SO\'lallllliltiialcral (lc;d, Such oilers arL' thcll takL'II bark 10 Asia allclllirlll'd 11110 allOliler lhreat oLII)ilateralmOllopoll'uliless ,-\SEAN deals, Alld so Oil, Tilt, Clinton acimllllslrauoll thus used the t~ll'lIr fir Liln'all'lll'd l'Xc\lISlOl1 With skill: it laid l'llOnllCIII'i l'arly L'lllphasls Oil till' suppOSl'dl\' maSSl\'l' StralCg-IC slglliJictal L;S exports lltal wellt 10 r\Sla 1I1lTl'ased 1"rolll 15 pl'r celll III 19~)O to ~() per l'l'llI III 199!i, But liS shan: of' wlall'x(>orts to lhl' rq{toll HI Iwellty-lin' kl'y procluclcategorlcs ('ell frolll J:j.:l per relllill 1~)90 to I~.:\ per cenl ill 19!/(l . .Iapan's silarc fl'lI frolll !!O,:l per cClIl to IS pl'!" Cl'lIl ;111([ Lhe Ell's frolll ((l,,1 per cellt Lo J5.i pcr cent. Tllesl' declilles can Ill' c"ptlll1l'd ror the lI10st part IJv lhl' nsl' of" inlra-Aslan I'XpOrls: lhl'lr shaJ'l' rose rroll1 Tl.~ per lT1l1 111 Hl~)() III ;>H.{j pn Cl"1l1 ill I~JWi, ·('I()\\"l'HT. III kl'\' 1I1~1;1I1CL·S. US share loss was clue specificallY to gains IwJapan allrllhe FU, ··Ii Tal)le 5.\, uSing a diITen.:nl ddlll It 1011 o1"i\sla and excludillg illlra-:\slan Irack, ulJderlilll'S hoI\' wl'ak l11l: LIS POSlI101l was, relall\"(' 10 Japan.

or

llr

or

Table 5,1

G7 EXpOrl'i to A'iia in I !)!I(i

":x/lllrllllg mllli/ry

liSA

~!I

.lapan

.J'\

(;lTl1I;IIlI·

III

UK

G

haiy

:1

Fr;UII'I'

,I

(:anilda

q

~lItt·~: :\ ... 1:1 111I'hllha~

(:h;u",

Such

~"IfJ

S')lllh , Jf..IlIg "(lug. Tultd

SlallSlics suggesl

J"cgulll II',IS

1),'n/'III".!!'· r{,L'II/1i

thai I)\"

l'nrl"~I.

I'xl/ll// 1/,(1)1:,'/

·\SE-·\;\. IJltli ... j':1 ki ... 1.1 11 , J ~)~JI) -:- S:F,f) hilJi,,".

I.·.'\:POI I.' H'

l'arh'

19!1i Illl' LIS Cljllpalg-n towards the

hiling-.

Or was It: TIll're IS olle weapoll III thl' locker ol'tlll' US TreaslIr\' whICh we nol vel iunked ;11: liS ability to cxploitt\le l)ol\;Il'-Wall Street RC~lIlle as ;lll 11lSIrllJJll'l1l for l'IIITL'lll'\' and lill:lncial \"arbn', Thl' liSt' Ill' the \)WSR as han~

TilE

(;I.()Il.\l.IS:\TI()~

(;:\:.ml.l-.

stich an IIlslnunelll is easily expiallled, The reglllll's polittcal eCOllOl11lt'S did 1lI11 sufrer from lhe usual kind oi" Thll·d \Yorid vulnerability: dOllll'stlcally poliucally weak slales whose weakness was expresser! as lllg-h hudgl't dl'lit:J!s icading- !II hif.{h bnrro\l'lI1~s and debts Iln internattullal finannal marl,Cls, The rq~I()1I s stales were not IIlciebled in lillS way, Thclr nIilleraiJility 10 tilt, DWSR arose In Ihe lirsl pl;ICl' ;l! ll1e ClllTl'nCV pole Ili" the D\VSR, The\" were lIIainly n~lialll lin expun-led ~ro\\,lh. ThiS made Ihl'lll ,'uillerailk 10 stron).'; 1110\'cmenls III ClIlTenCICS, Since their ClIITenCICS were malllir lied to the dullar and lhe\' exportcd slgnilicounr\ 10 occllr: lllL' clY!lallllCS or such IllllIlows or runds, linkcd III tile dOll1eSlIC US hUSIIICSS cvelL', arL' wl'1I known. US Treasury Secr('tal'l' Ruhlll is .lorns, ':\ Ne\\' ForeIgn Policy fill' a New Era', N,o" lillk ·/j·/II".\. ~l lkn'lIlhl'r I !l!l!!. H. Asp"u III Dclcnc" had a 1lI11\"(' ani\'lst, radical aJ.;"nda_ I:'. S"", hll- exalllpl", Anlholl)' I-Ianl,,\", 'The C1illlllll :\ppm:Kh: IdealislII aud I'n\(!elll"(", 'l1I1' I\llIld '/il//III' (February 1!19:\). IIi. Of lhis lisl one parilal dissident was Rohert ReIch: he sharl'd a hcli"r in Slale ac!toll III IlIt"rnallOllalt'Cllllomics and his CDIICel'n 1'01' lahour slanrlards aud protectIon clluld h,' IIsl'!'II!1V IIlslrlllllelllali~ed ill el"!lI101I11C dipllllllacv ",'er lmde ISSIll'S. 1I\ll he lacked SOIlll' or Ihe Amen"aFirsl-III-b'el'ylhiug wal oflhe lIlhers alld drupped (Jill oflh" adllllluslI~llIOII e\·enllla!l\". 17. GiOia IIlal'lnl allllJan Roorl, '1Ilalllt;lIlIlIIg Global DlIlIllll:llln:: The Ullu"d Slaies as a EII\"('p"an and ASlall 1'00\'"r' III Manalllll' \-all LeeulI'en and An[;e \bll'lIla (l'ds.), Sd,·m ....

'"I1M

POWER POLITICS AND THE Cl.INTON

'-\[)~[[N[STRAT[ON

101

:\1111'1'11"1111 fOfr'lglI PolitI' tli th,' TII/,II "llh,' e,."lIlf\' (NI'lherlands AlIalllic : III Richard lhldh'lII s ,,11,,'rll'ls,' IIl1ponalli hook, 1..-((I/I()1II11' .'ilf/lo'm/I, 11111 SIIS",II Sirang-l', wilholll IISIllg- Ihl' 1"1'111 Siall'crafl, has illllllllllal"d a l-!;rl'al d .. al ill Iwr IITllilll-:' Oil po[ilics a1l;0"1' III Ill' I' 1(1\)7), p, :1:\. "'I. Halik for 1IIl"rllali',,"al SI'lIkllll'IIIS. '( :('1111';11 nalll; SlIl'I',,\, or Fo('elgll E~('h;III!{(' ;11111 Ikm';IIII'l'S "('I1'kel '-\"'1\'1\\", :\1;1\' 1\)\11,. (iO, C:Ill'lIraad Vrolijk, 'lll'l'I\'aU\'l' Erre,,!.s Oil 1\ IOlll'l;I 1'1' TrallSlIl1SSlOIi . (\\'orl.illg' I'apl'r "r Ih" Inll.'l'JIallllllal ;\(11111'1011'\' Flllld. \\'1' /!II/ 1~ I. I \I!I/), Ii I, . ;\Iahalhir, SOl'< 's and Ihl' (:lIrn'lIcy 1\larkl'I~·. EfIlI/OIII/,'/, ~7 S"Ill1'lliheJ' 1\1\)7. ti~. Sl'" Ihl' I-'illl/l/l/lli Till/I'.\ li.r Ih,' 1"'1 W(Tk or i\1:1\' I!lUI alii I Ihl' (irsl 1\\'1> "'"(,1,, Of.lllh' 1!1\)7, t,:I, S"". fi,r ,'xalllple, J. AII: (;.-\i\III1.1·:

the 1i\·(F to Imposl' UpOIl South Klln:a lhi~tlla~ cau~ed tl1,. Lhat It \\',IS g-ood, III some way or other. for Ihl' health AmerIcan lHlSlness. These pn)pOSllIOI1S cuulel be 1lI11l1l11;t1ly true only if the SlIlllllllts ur r\mencan lInance engagmg" 111 LhlS speutlallon could, III sOIlle way or other. rIg the markets. ThiS aL lirsL seems improbabk. IL would reqlllre some or all or t.lle rol\owlIIg conditions: t.haL Lhe\' had el1ormO\lS market power. hug-c mohilised runds LhaL could dictate slwrL-run pl"ll:e IIw\'cmellls 1\1 thcsc llIarkCl~; bUl if thl'\' were compeLlIlg against e;lcl1 other Llle\' could Clc Lhem Lo Will. In LTCM's case, all Lince condiLiolls seeIll to have been mcL. f"irsL. It was abie to mobilise realiy ellorlllOUS SUIIlS. livlF sludies had indicated Lhal hedgc runds cOlliel mohilisc ioans alllOllllUI\~ tn twel\t\· limes theIr capit~.t, But as we ha\'e seell, LTCl\.J could Illobilise 2~)() LImes IL11111 Ill' ""'11 as all UIIIII\('I1
ThIS camp;ugn should 110t hl' seen as being driven by a slllgll' compllision, such as the search (i)r cheap la!)ollr ur thc scarch 1'01' markets, IL IS beLtel' ne\\'ed as an explollalio11 of power O\'er the IIllcrn;!tlonal polillcal ecollOIllY In' the US ami the El.' ill order In extract l'\Try possible useful ad\'autag-e through re-engllleertllg sOLletles outSide Ihc Cllre; or, to put malters the other wav rOUIlc!, In expel as 11lan~' problellls as call Iw expelled ()II!\\'ards h01ll the core SOClctK'S, Financial tTISl'S in the South, depcndellCies Oil US and Eli markets, IlIllented debt i>urch:us, lIlabiliues 1Il steer eCOn011l1eS III the El('e or bell'ildenng changes in the internalional ecollomic l'I1\'II'OllmenL - allthest' Elnors han' hl'ell sCll.ed lIPI)1l I)\' Ihl' ;\tlanllc powers as IllstrUllll'llts ror g-allll1lg- posluons III the c()untries cOllcenH..'d: for s(.'ll.ing cOlltrol or product markets, for bu~'ing local companv assets to ccnLralise capllal IInder AII;\I111C control. for l'XplOltlllg huge pools or ('heap labour (shut oul bv ever-stronger Illlmlgration I)arders rr01l1 ;u:cess t() core econonues), for taking effective control of financIal sySIl'IllS ("or speculatIvc purposes, ~allling 11I~her margillal nclds for the /wnsloll fUllds of till' popUlatlOlls or tile North and for ellgagIng III orglcs of spcculalloll and frequcn tlv COITUpt and crimInal acliVI tIes, i\'Iost of Ilwse aCll\'IUCS are presl'lIled ;IS the "err 0pposlLe: as te;lchlllg the suppllserlly 1~]\Or;IIH ;Ind InUlllllwtelll governmellts of the South how \O!'l1l1 Ihelr aff;ll\'s properly, as Ilelping thelll til pav oIf dehts, as sllppl)'lng them WIlIt aiel Ihrough FDI etc. The pallern of Japanese capJlalist expanslo]\ has h('en different 1lI the J9HOs aile! 1990s SImply because Japanese capllalislll lIas been Ell' 1I1U1'e gellUillely productive as a Ilallonal capllalist system Ihall the capllalisllls of Ihe ,\Lbnllc worlel, ''''hile tIll.' bulk or so-callcel FDrcl~ll Direct )m'eSLIlIl'lIt 111 Eastern Europe or III Ihe South Iw Atlantic capitals has hccl! a maller or laking over cOlllpanles and market shares, .Japanese capllalislll's huge surpluses or \"aJuL' ha\'e iJeen chanllclh:c1 inlo the creatloll of IIL'I" prllcilll'tive assets III E;lst anel SOl1lh-East ASIa and have heen compatihle WIlh \'1..'1'\' rapid rates or growth and sUI)stalltialmclustl'lal dl'velopmenl In rhe reg-lOlL The rapaCious llIercantilism or so much of EU's Iracle p()lil'~' Inwards thc Slauh and towards East CC\llral alld EasLern Europe. ali(I the fin\'e or the US to compensale for competlllvc weakllesses III Ils prorillcti\'e sectors lilnHI~h lakillg- predawn' ach'allta~e of" irs mOlwtarv al\(llillallual"~eclor dOIllIIl,IIlCe, has contrasted "'lUI the.lapanese capacilY to stimulate anel fed comrorlable WIlIt raplcl ~rowth III East and SOlllh-East ASia, BlIt the I'CSUit or tht" COIllbilled (/\'IIB ..\l.1S:\TIOl" C:\\II\\.E

possihili t)' or an emergCIlL reglonai bloc cell Ired econolllicallv III Japan but potl'lIliallv IIlcluding China as well. Therc IS, as Vcl, no concluslvc l'\"Idence tll"t thc Cliutoll acll11lnlstrallfll1 "eLcCt straLCg"\Callv frolll 199;) to lise the cioll;!]' pnce rise. pressure to dismantle controls 011 the capllal account, 1ll110ll'S of hot 1l101H:r and IlnanCl.t! warfare b\' the US hedge funds to brlllg coullLl'Ies 111 Easl and Somh-East ASia to their knees, There is much clrclllllslallllai eVlclence to suggest stratl'gil' planning, But the qlleslloll n:mains 0pCIl. What is not III (\OUbl b that 011CC the ilecige I'1mds had slnKk, the US Trcasllrv laUllched a dramallC' assault aga1l1st tile sOClai relations ofproduclloll III South Korea wnh the aUll of achlevlIlg a GIt'irhsrha/(1IIIg of Korean assets and US capitalism. BlIl the vel")' success or that assauiL was too Illllch rex the sGuTecl tissue of the political cconOllllCS on thc n:st of the periphery to sustain. Thosl' \\'l)IIlHls ml1iCleci by earlier tntllnpils of the DWSR, III RUSSIa and other parIs of Eastern Europe alld in Latin Amenca, had not heait'd sumclentlv to wllhstand the strains from the East ASian c!'isis and the resulting panic or '9:-\ revealed the heart or globalisauoJ1 to be an cxtraordinary hlack hole of rampalll Wall Street speculation. The G7 package of so-called reforms of the IIlternatlOnallinanci.d system IS l1l>lhlllg more than an allempt 10 keep lhl' whoie speculative show Oil thc road. It may be thought that the US go\'ernmelll and the European UlIlOn are sCl'Iousiy cOlmp.ugning to dismantle all controls on capilal accounts and to cOlllpictelv open all economics to the complete freedom of 1!10W'menl or all forms of core capllal at all tlllles, If they wcre allempung to do thIS IL cOllld only 1)(.' describcd as lunacy. Their aims l1a\'e been much l110re linuted, namely to gain till' nghl to open up any economy as the), please alld lo usc multilatcral treatics as a baSIS (i)r Iapng siege to any political eCOlIOI11\' whose government is at'tcmpting to protect assets against capllI],l' b,' pO\\'crrul Atbntlc capitalist groups. The .-\tJanllc powers havc to balance thclI' thll's\ (ill' cOlltrol ol'er markets and assets and pools or labour against tllel], need to p\'eser\'e the stability or at least tile \'iability or stall's and polillcal eCOnOIllIl'S outslcle the core. There arc mall\, 111 the Atianuc \1'OrId and elsewhere who would hope. «)]' thc best or rcasons, that the political fragmclltation lIf the world 11110 a Balkallised patc!Jw()J'k oJ'states couid be ovcrcome lw steps towards gCIltlllle worid government. This wouid, IIldeed, he a desirahle goal. But II wouie! be a grave error to assullle that the CllITelll HI'IF I'VB struclllres are a gellllll1e step III that dil'cctioll. ThL' reality IS that these strlH:lure,~ are less gelllllllely supranational III their fUllctlOning thall thc\' wen' ullder tht' Bn:lton 'Voods regllne and an: far less so than was envisaged Iw Kernes ancl Dexter '''''hile whcll ther negotiated the Bretton Wnoels regllllc dUrIng tIlt' war. Whal is overiuoked by the proponents or de\'cloplllg thcse IIlSlllUliollS further along their current lines IS the J'actlh.ll the pl'lllClpal obstacle to Ihe

CIJIlstructlOn or gcnuinc organs or global go"ernance lies in the most pu\\'errul states tilemselves, It IS they who have the most to iose from sLlch a ciel'L'loprneJll because at prcsl:nt (he\' ('onl('()1 these llIultilateral organlsalions Ii))" the purpose oi" furthering tllelr own power and illlerests. And the elllirc livlF /WB system IS dcslgncd to shih thc costs thc powcr-plars of thc :\Uantic worlel on to the bulk or humanity, whICh li\'cs In thc South. It IS dispJl'ltlllg ror man" to havc to Elcc thc prospect or rcturnmg managcrlal aUlIIllIIIllV to lIallon staLcs III order to acl\'ance towards a more ~emllnel\' ullilied world. It might be thuught possible to enVIsage a coaliLion or Illediulll-sizcd states bCll1g fllrmeclLO take dOllllllance out of the hands of the Ullucd States government anrl orgalllsc a svslem of global govcrnance which IS at ieasl hased upon a hroader "lIlel of oligarcillc co-operation hetween. sa\'. the largest twcnty countrlcs (largl'st. that IS. III populaLlon terms). This couici bc SCCll as a gcnuinc stcp forward. Em Simply to Slate it I~ to scc ho\\' distantly UlOplan such a programme or rdorm curren Lly is, ctespitc Ihc I;ICL thaL Llll' Atlantic powl'rs could still han"' lhc 1Il11lall\'c WHhl!) such a forum on lIIostlsSllCS. Thc\' arc addicted lIImOlllllalllinp; tlll'lr grip Oil thc wodd cconomv and \\'orlel politics, comc what ilia\,. Rclatlons bctween thc capitalist corc and pertphcry havc undergonc cxtraordinary transformatiolls durml:{ the twcnticth CClllll!,\'. In mall\' ways thc IIptllllallimn or thc relatlollshlp rrlllll the angle or corc CCOlllll11lCS was thaL thc Europl'all emplrcs. \\'Ith the 13rttish rclatiollsillp to India Ill'lnl:{ thc paradigm. Thl~ lI\abilit)' of th\.: corc slatcs to handle thclI' own II1ternal rclauons durtng the twenlleth centlll"v produccd paradOXical results. Thc c(lmbinallon or lWO dcvOlstatll1g European wars anrl new, 1~lr more produclI\'e .-\ml:ncan produclIon tecllllolog-ICS gencl"ated ;\ ncw phase or postwar p;rowth ill the corc. And till' rtsing Al11el'lcan capualislI1 ncedcd to break up thc Europeall emplrcs rathcr than build a ncw CXclUSIVC cmpirc or its own. Bm with thc rl'(urn orstal:{nallon in the ALialltic CCOnOI11ICS. It has heen thc lIl1Itcd Slates which has fell II sci I' (0 be In Ilcl'd of ;1 ('lIllcllonal l'C)lIIyaJenL or Britain's Indian Emplrl': a largc SllIlI'Cl' of cheap IIlplltS I())' US induslI'I' ;lIIcl a vital cil-s1I11:1L10n for cycr larger sharcs of US exports and local markct cOlllrol. and onc that wOllld, in addiuOIL pav Ie))' ils OWII aelmll1lstrallOIl and, likl' nlllc1l"l"lIth-cClltllJ'\' India, pay a handsollw tribute to thc IInpenal power. All thc~l' rcqllll"cmcnis hal'l' becn sought IJ\' tlie LIS lISlIIg tht, DWSR and thc SOCial englllel'rlll).{ aCtlVlllcs of thc [i\,IF /WB dltnng thc 19HOs and I 990s. Japan III thc 19HOs and 19~)Os, Iikc the US at thc cnd of thc war, l\as had no nced lill' sllch an impenal systcm: It clIlIld have sllslalncd continuing and l'xpandin).!; g-rowlh in lis IT).{lOn or thl" worlrl. sorllllg olllll.llnor difliclIltlcs likc a properLv bllbblc in Thailand, CIIITenC\' misalignlllcllls clC. Wl\tlOUl SIgnificant difficult\', Bill It could have cionc so onl" if the LIS had bccn so locked in conllin wuh thc ELI as to have 1ctJapan carn on Wllholtt disruption. Thc deterllllnatIon or SlIcceSSIW US adnlll1lsu"ations SIIICl' tht' ) Q70s Lo put

or

or

TI-IE (;U)\\:\LlS_HION (;_-\1\1111.1-:

Amenca first has (Ierlved from the ratiollai appreclallon of' Ille enorl1lous _pnvilL'!_~es and benefits whIch the LOp capllalist pll\\'l:r gallls /"rol1l iWlIlg Illl top wllhlll an illlernallonal capnalist system, HlII the struggle lill- power between capllalisl slales Gill no iongel- be a zer()-~lIIll gallle, ThIS IS IIl1t because tlw LllIllcd States needs a IlOonllllg.lap'llle~e 01 German l'(OIlOIlI\' I(JI' thl.: pro~pcrlt\' of Ihe :\,l1Iel'lcan pcopk, :\lIIencall kacicrs 1\'0 1I 1 lI11ellllOIlS of ELI leaders, the l'Ul'O could 1I11derll1llle till' capant" Df rill' US [0 Illallllalll Lhl' DWSR qUill' <jllld,ly" Thc resllit of' thiS (Il'H'IDPllll'lll u)lIiri bl' se\"JOllS trallsallantll: slr;llllS, -,lralllS !llal willlcnd to hc all 1l11' ~reattT if the',' occllr III {: amollgsl Ihc parLl{:s of Ihl' sllclai dClllocrallc L.eft. For (irtccII years

Europcan sOCIal delllouac\, has bC~~Il a pllliucalllldlit\" \\'ull liS Il'adcrships III Fralll'l'. Ital\', SP,1I11 and Belgium shanng as mLlch 111 ('ollllllon ill the lield oj' dill"Ct lillallClaJ (,(lITllptloll as 111 ;\Ilythlllg clse, ..\s ['or Bhllrs I.aboll!' kadl'Isll'lJ, Il IS houg'ht :111(( p,nd (ill', But the 1\('\\' Cl'!'lIlall Fill,lIKe ~liIlISt{'I', l.alilll\;IIIll:. IS ccn;lIn!\, dilTcl'cl11. He IS a dl'I('l"lllllwd European Keytlesiol1l \\'lth a ~Ir()[\g will ;lIlcl a political ()JJoI\'JlIg III a plliilll'.tI CCIlIlIlIll\' that is allSoillll'I\' cellirai. ThiS r,lIses the possibility Or.1 I\C\'llCSlOlnlslll nOI So IlIl1ch rooted III lIle KC\,llcs or I'cdi,~tribllting- incol1lt' wllhlll a na[lollal economy to boost elTccu\'c demOllld - althoug-h such I'cdisu'il}lltloll \\'ollid bc a good thill~~ III l\sclI- hut III Ihc Kcynes or ideas for OJ'!..('III1SIII)!; Ihe postwar inlernallollal ~'('OIHlI1lY li)l' g-I'flll'th: the Kcvlles who souglll to propose the kind 'linallu,1i l'cprcssioIl' and stallst dcvelopmcnt slr;ltq.,'" ('or the world. placill~ prodUC!l\'l' g-rowth II) the saddle and OI').,(alllslll!-{cllLh'lIlaSla (i)1' the l'entlcra llIudel that is no\\' I'athe\' bIZarrely tlHHtl-{ht of b\' mall\' as an East ,\siall

or

111\'l~llllon,

I lIullk that thIS IS a tIJcol'clical possibility, .IUSI ,IS capllaiisill !re radical currents, The\' will draw the conclusion that ~\'larx was right abow captlalislll being ulumatel,' IIlcapable of' proVIding a \"I,lblc frame\\'ork for sustainable hllman soclcty 011 thIS planct.

======PART

II = = = = =

Politics i11 the Globalisation Period

===============8=============== The Gulf War, Iraq and Western Liberalism

The states or tile North Atiantic have, Slllce the days of PalmersLOI1, i"reqllelllly hOIsted the Jlai{ or liberalislll on theIr wav to war. But rarely since I~H5 ha\'l~ the pnnuples oi"nghl, law and.lllstICe been invoked as stron!{j~· as III tilt' Gill 10 arms Ii»' Desert Storm. The popul;lllons of Bntal11 ami AmencOl were l'ncouraged to believe tllat half a million troops and one hundred billion dollars were be1l1g cOlllmllleci to aninllal1\'e actIOn on behalf of lIte rtl-{hls of the people oj" Kuwall and, II1deed, 10 the inallgural10n oj" a new glob:t1 order oljllsLice. In Ihl' first pan of thIS chapter. I In' to lI1Hallgle the disparate strands that make up IhlS langllai{e of rights lIsed Iw western leaders 10 Yllldicate Desen Storm. I then hrillg logether the prInciples of ey:!lual1oll deploved by the liberal ClllTent dOlllinant 111 Briwl1l and Ihe United Statcs today - rti{htsbaser! Illdividuali.ml - wiLh all analvsls or the (;1111' conflict. TIllS enables all t'xploratHIIl oj" the degn.:e 10 \\'illch go. tis aIlCI acl10llS J)) the \\"ar Gill bcjllstiJied in liberai terms, and reycals the severe lilllllations of a convelllHlual rights-based approach. In the second part, I ll1rn to the 'enelllY' - Iraq -111 order to examme the evolution or this state, so many orwilose people have bel'1l killed ))\' the militar\' forces and eC01101ll1l" lJlockades 11(" Bntain anrl lhe US. and to challenge the lIIost llllluenltal. liberal aC('Ollllt of the dcvclopn1elll or Ilwdern Iraq and or its Ba·athlstITi{IIIU':.

Liberalism and the InvaSion of Kuwait

r.·lost versIOns of Anglo-AlIIerIcan liberai aIlCI natllral-ngh IS tJlInking emp)o\, a IIniversalist standard oi"judg-eJ1lclltlO evaluate IIlternal10nal pO)illCS. They repudiate the norlllal1\,l' stallcc Dr the realists. who Illsist, 111 the wonls oj" theIr postwar don~ll. HailS Morg:lIlthau, thallhl' 1l:lllOllal inlerestls 'the OIlC glllding star, OIlL' sl,lI1darcl or thllllgln, Dill' rule or actloll' 111 such matters.' ].II

I-l~

POLITICS 1:-: '1'111-: CU JB:\I.IS:\TION PERIO])

Rig-hls-based liberals readily ackllllwledg-e, or course, lilal lIluch of what stall'S -lI1dtlding- Iileir own - actually rio Ilcars lillIe rciaLioll III lilt' professed Itleal. Inc\ee(1 mam' would ag-ree thai [he polillcal l'ulLure Ill"l shapes 1IIl' eXeCllLIveS or Ihese slales is Ell' closer to the norms or i\'lorg-allthau tllall III lhelr OWll, altlwug-h ther would deplore that EtcL Withlll this selling, the leaders 1ll both tile US and UK sllug-llt tll 1l1Ohilisl' liberal oplI)ton rol\o\\'lJlg the IrMp IIl\'aSIOIl of KUlI'atl b\' appl',ding- lJOI Simply to natlon,ll state interests hut, allO\'nnClpit- 10 hOlh occupations, Yel nOI 11111\' dil1CC. 11 call be argucd lhallhe IraqI state was righlll' (killed am' gam III polil1ral SlaLus afLl'r

POLlTI(:S IN THE

(;J.{

)1\.\l.lS.·\TI{)1\I PERil)!)

Kuwait. 1L is surd,' true.: tllal the.: cOlllestlill' posllIonal j.!;oods likl' polillc;)1 prc.:sll),;e.: II) Ilw hlL'r;II'Clw Ill' sl;lIc~ IS \llllll"thmg Iilwr;lb should cleplore, But a pl'inuplcri lilx-r;llislll ((l1lcer11l'cl with JUSUCl' 1'01' all human be1l1gs itas 110 1l1teresllll tailonng lis polic\' 10 the apportiollment or such goods 01' their wIthdrawal froIll Ollt! Siale or another, That enl1re approach IS a relic or states' ngllts thlllkm),;. The view tllal i1t1ad.illj.!; Iraq would hal'l" the salutor\, eHect or de Lerrlllg ruture aggression IS uncon\'l1\cing, The most Il would (10 is dcnlOnstrate that aggression Without US approval does not pay, for \I'e have ahllndalll e\'ldence that aggression or anl1exatlon iIIllh US appro\'ai does pa\' (ill the case 01 tile US - Panama, Grenada, and 1Il Ih"l of its allies - ;vJorocco, Israel. Indonesia, Turkl'V anel so on), The I raqi offer was extreJllcl\, eml>;IlT;lsslng to Washlllgton lJeGlllSe the US had I)e heen made, , , [EJ ven thc prcss financed and COil trolled Iw the oil slatcs III the regIon and 1Il Europe [covercd] the 1;!I)Ulous oil-wealth or mdi\'lduais: tales of corruption, gambling and squan([enng. The corrcsponding IInprcsslon IS that cven if corrupllon docs occur on some scale 111 Iraq, the surplus has largely been plowed into the counu'y for Il.S developmenl.':!I; Not that the Ba';uhist regllne was seeklllg to stimulate popular movements lD overtllrow the sheikhdoms, But it was thrcaten1l1g to pull thesc regimes wllhm its regIOnal sphere of inlluence as a means of insuring them against subversion from below; none or these ruling groups, illcludill).{ Lhe Saudis, can recl safe in their own societies wlthollt an outslcie protector, Sad dam I-Iusselll could no doubt have livecl qlllle happily wltll Llle sheikhs and even lIle Saudis iJ'1 place, hut only on hIS terms - a potentIal challengc 10 the established role or the US. It thereli)re fi)llo\\'s thaL a crushing US milHan' vlClOry m'er Iraq. with 110 concession to negotiation. was mtcnded to demonstrate ullequl\'ocally to all groups 111 the reglOll who ultimately COI1trolled theIr deslllW and who didnol.

US global !)OWI',. IlIlen'sls ThiS docs not explain, however, why the US admilllstration repudiated both the offer to withdraw !i'om Kuwall ten days I>e/i)rc the ground war started and the su))sequclll Soviet peace plan, ill favour of bombmg InlCjI l(lI'Ces 111 the KuwaitI theatre and a ground campaign - a response in no way demanded hy the lIllt'rests set Ollt above, To understand US ;tllllS we I11I1SI. then, apprec'lillc a fllrther nlctor fuelling the Blish adlllllllSlration's desire ror a crusiling l11ilitan \,ICtOJ-Y: the need for a 'demonstratlon war' l.et liS note lWO repeated themes of Preslcklll Bush: the New ''''orld Order and the

THE (;UI.F WAR AND WESTERN L1BERALlSi\1

161

Vietnam syndrome. Both sig-nalleci giobal motlvatiolls fi)r the Will". And as I"ar as the Vietnam s>'Jlclrome was conccrned, thc US had tn demonstrate thallt lI"as 110 Illl1g-er jllsi a IIlIclear super-state with reel of clay whell It came to fig-llIlllg- a cOJl\'ellllonai war ag-alllst an ellemy in the SOlllh. It had to show thc lI"ill ancl the militar\" capaCity 1111 IIII' p:ro/llu/ (IS 11"./1 rJ.\ /11 11i(' fill" to pn:vail ;1g-aIllst a suhstallual C01l\'Cllllullallllllrcss a rcgloll;d 1'l'~IIlIl' oj" o(lprcsslOs, the monarchy was cngagcci WIth lhe Bnllsh III lighllllg olle re\'olt after another, Let LIS lake a.~ our source not sOllie leftist anll-imperialist but Lhe cOllsen';\U\'C, anu-n;\w)\1alist Elie Kedoune. He wntes that 'The Nonll as" whole had to be coerced h\' the Royal Air Force' II1LO submlSSIOI\,:11 a more or less

THE (;UI.F \\,AR .. \;-.1D WESTERN

LlIIERAl.IS~1

UIIHllltlOllS las/;.: 'Bomlmlg- .' lllllillhe \'CIT e\'c orilldqJlltlll,!!; hllge estates - the IllggcsL III thl' 1'.licidlc East- HI trib.t! hCilcis who clcnHlllstralt'd thclI' politlcil loyaltv to Londoll, Thus. at a stroke, a IIC\\' ruling ciass or ~OH'nlllll'lll sl1l'ikhs was established. 111 Lhc words of l\,l;l]or Pulk)', reporting to the ci\'il cOInllllssloner 1JI Ba~hdad on (i AUg-lISl 19~(): ·i·...lall\' or thCIll \\'l'n' small IIICII or lit) account lIlltil \\'t' m.uk Ihclll powcrful and nch,' Thc Civil C:omIllISSlOl1l'r or thatlll\\e, \Vilsol\. wrote later: 'Thc Shaikhs wen' 111 IIlllsl l:i1Sl'S c1inTt\" dept'ndent Ull thc l:1\,j'1 .tr\'ailin~ measure to the emeq~ell('e or the masses as ;1 /I lI'n' , ,:.:1 Thus Khalil betra\,s whal other liheral \\'rtlcrs likl' Kornhauser. lISlIlg mass-society theory bllt seeking lu I'emalll wllhill a liberaltI/'II/OIT/II,,: (j'allle or ref(~ren('e, prel'er to obscure: Ilamel\', a stnmg hias agalllsl popular clelllOl:racr and a deSIre for IIlSlItullollS that will bJock. ('ragmellt ,\\lel control popular polillcal in\'oin:melll.'·1 Whell Khalil speakS ofthc mass Ilelllg'struClul'eless he should nallle til(: real controlling structures over lite 1lI.ISS of people (,IS oppllsni to thl' parliament III whIch thl' people were llot lIl\'olved); the IIlSLtltlliOIlS or lanc\lordis\ll, sheikhh' cOlllrollJr cl\'il adlllllllstrallOll, tribalist legal coen:ioll and so rorth, Furthermore, lle should register lhe abSl'IllT orany structures for 11l\'olvillg lhe people in C\\'illik, far less 1'01' chanlll'liing theIr l'llergl~':-' 111 tilL' public sphere - no InclllSI\t' iocal governmentlllSlIllltlons. 110 legal induslnai-reiallons organisatiolls, no well'are-statc (I)' erluciliollal EteilillCS, 110 C\\'ic, cullllr,d or IelslIn: cClltn:s, The nllly iarge ll1ilerlted ci\'lC IIlSlll11[\(ln wlIclllllg the wJHlle poplilation was tile: army, \0\,11
or

or

I'OI.lTICS IN TI-IE taDBAI.ISATION PERIOD

also helped to sustain a paLlenl of state-dependent iJldusu·tal developmeill. The Iraqi state was not portrayed as a means of emancipawll1 for the country's working- populauon. but as the resource and authority best able t.o construct a strong [raq. capable ofleading- the Arab nation. There IS nothll1gunllsua[. or course, about such statIst politiCS: most of wday's IInpenalist powers went through .lust sllch a phase. Neyerthciess, 111 a regu'J\1 [ike the Gulf. where the world's strongest supeq)ower has Important II1terests, thiS pr~jeCl was fraught wHh great nsks.

RI'Sj){)IISI' (II 1111' 1/"{1I11(/1I HI'lIO/I/(/lJ1/

In [rail. the Shah's drive to d0ll1111ate the Gulf had produced a mi[itan· build-up and growlI1g hostility to Iraq. ThiS had caused the Ba-ath to devciop Its own military strength in the [970s, funded by Its oil revenues. The subsequent I~lll of the Shah 111 the IslamiC revolution transformed the po[itical equation in the regIOn and presented the Ba'athistleadcrsll1p With an irresistible temptation. The centre of Lhat equation had been the protection of Amen can interests in Saudi A.rabta and the Gu[f. [raq. s[nH out of this secunty structure, had been on the defensive regionally and impelled to concentrate upon ItS domestic programmes. The Iranian revoiullon did not.lust remove America's regional policeman; It created a state claiming leadership of the Islamic worid and therefore posed a mortal threat to the Saudi order. Thus the opportunity arose li)l· the Iraqi regllne to become the military linchpm of Amenca's new security system in the Gu[f, a mit' whIch the SOCIal weakness of Saudi Arabia prevented It li·om pla)1I1lg. There also eXisted. of course, a powerful domesuc lI1cenUve for the Ba'athisls to intervene militari[y in tile regIOn: for clearly the Islamic revolution posed a direct tiueat because of the re[iglolls appeal of Shia Iran to the people of southern Iraq. A military victory wou[d serve declslveiy to hillel Iraqi Shias into a coml11on political identity WIth the rest of Iraq. The Ba'athist leaclersillp. politically sophisticated and keen to expiOl( lhlS regional development, could also spot a further set of incentives. By becomIllg the sword defending the mterests of the West in the GulI~ it would escape the panah status given It during the I 970s, and thereby gam access LO the metropolitan centres or\Nestern capitalism: loans, new technologies. IIIvestment expertise, training and so forth. as well as entry into the world oj" legitimate intenlatlOnal diplomacy - sOl11ethlllg soieiy III the gift of (he Atlantic states. Only Ol~e question remained: would it work? The Americans assured Baghdad that It would: that the Iral1lan armed forces were III chaos anri a qUick war would presel1l few nsks. But this turned nut 10 be nonsense. Eight years of atroCIOus suffenng were the resuIL. By 1982 Saddam Husse111 had

THE (;VU: \\'..\i{ .. \1\:1) WESTERN \.II1ER,\L1SlIl

177

realised that IllS plan for a qlllck VICLOr\, had het'll a dclllSlIlI1 and hc sought to' exiriGlle hiS rq~lIllc frolll thc wal' throug-h a ncgotiated scUlemClll. However. the Iraman govcrnJllent made the rellloval of Sad dam Hussein the preconditlllJ1 for peace, whIch pro\'okcd 111 turll ;1Il cver IlHlfC brlltallraqi llIilitary respollsc ;Igainst the l1lorc P()\\TfJ'lIl state, JIlcluding the lISl: or pOlson gas Oil Ii'ollt-linc Iralliall troops. By till' tlllle a nq~()llated peace was ill place. III 19H1'l, It was ablllHlalltlv clear that tilt' dCClslOn to attack Iran had l1een a gravc political ami military IlIlSGliclllatioll. A million people had died. oil wealth had been sqll;\J1dered. alld the go\'errlmelH harl lost cOlltrol or Kurdis[an. ECOIIOlIllC rL'C()\'L'I'\' had the recollstruclIon or a d;lIl1agl~d and o\'{:rhllrdencrl st;ill' alld sIlCl;1I fabnr - not lO Illl'lltlOll the rep;lIr oJ'siJatthe Ba", hili lilli' hl'III"'1'1I tI", "I\'il-polili('al nglll' "I' II", tIl;~)"rily "I' 1i.1I\\,:1I1 , "'III"eI )1l1('1I1a11011 ami 11\1' 1II1I10nll'_ [,ilt .. rali'1II, p:trllclliarh' 111 11t,,-'I' ("O\'lIlS ho,lilt- I" Iltl' 1'lIl1n: llIll"'" Ill' 1'"11 .. 1'111',, 1I:tllllllal lI'ill, "'''IIIe1 slln'ly "'(,Igh lit" nl'il-('Illilll'al ngltls "flit .. II II 11-1\ II lI'a II I ,,,III .. d (l11(llllallllll Ill' KII\\".1I1 1',,1'\' It "a\'i I\', II t, l"l,' .. e'lIlIl-( 10 I\llll' 111:11 Ih,' II!:II"I' "'ori; "I' lilll'r:d Ih"lIl'I' Ill' tI", lasl II\'Il Ikc:tlks, .I1lhIl Ra\\'ls s :1 'fh,.,./"r OIJ"I/I(I', sllllpll' elo,'s Iwl add,."" lit" ISSII" of 1\111\' II) ("'fille a clI'il-I'"lil1('al ,'0,,11111111 ill", :\s 111"\;111 lIaITI' oltwrl'.-" 'TI,,' odd Illillg ahout R;\\\'1s ~ 1n'tllIlIl'llt or 111l' lJ'It:!'>IIOIl huw a p~IIII1·III.lr ."OIIlJUlllllty IS In Ill' dC'filll'cI rill' ,hI,: plIrpu."Il'S oJ"~, ,heor!' IJf.JIlSllft· l!'i Ih,ll Itt' dut·" lIul di~ru!'o~ It . . . Raw I." , , , 111:1\' b .. Ii.,1'illorisill'cl. ':, Dalm,:nciorrs r~WlllOll urtill' wlwk Idea lira \,'c'st ...'!' II system is all Illlplied \\'arlllllg agallisl soual ellglllcel'1ng to adlle\'l' a (11I'Cl:(\ c1ecollo;:cl1\,lsaLHlIl. Sachs dekn(ls SUdl :.;rand planlllllH (In the groll\ld~ Ihal the wurld IS ~()\'erlled b\' svstl'lllS (Communism and capllalisml \\'\JOSl' m'llll structural i'l'alllrl's Ill' SOCloeconOllllC and pO\\'l'r relallonshlps are perkllly llllrtl'rsl'IIHLtbll': howl'n:r \'"nahle 111 del"il tlllT nl'H,rtlH'less h'I\'C. so 1.0 speak. till' same b"slc gelletlc codes, But DahrL'll(\od"s second concern IS thL' pnmac\' or rl'specllng thl' eXlst1Il~ tisslIl' of sOC1ai instilUtions and tn streng-then SOCIal inslIllIlIonalisation by llltroduun,l.{ openness: the rree circulal10ll Ill' ideas and the hllilding or COllsensus through debate, negotiation and compronllse, ThIS ;Ipproach would place llle de\'eloPJllL'/H ora iq~al ,~tatL' anel polilicalliberalislll aho\'(: schemes ror systemic challge: the latter should g-rll,," out or the' Opl'1I souel" or 'CI\'il sOCletv' Sachs re.Jecls thIS, saYll1g thal ir the states or Ihe rl'~Ion adopted DahrcnriolTs approach 'Dr open expenmenlaLHlll, I duubt that Ihe trallSiilrmallflll w{)uic( he possihll' al all, at least Wllhollt cosIl\' a1ld dangerous wrong turns' TilliS, \\'11011 nllglll be calleel Sachs's 1Il\'l'rled Lel\llllSIII IS IllClll' Ihall a matler style: It relates 10 the enllre lllL'Lhoc\o\(Jh'Y of IllS llIodl'l: Itl' I~ ;\ strollg- belie\'er that hl' - or at ieast the \Vesl - can plall III sllch a way as III ellabk Lhl' peoples Ill' Ihe a'guJIl to a\'lllCl coslh' \\Tong tU ... I\ ;lIld he sllllllltaneollsl\' hdic\'L's thai krL 10 tlIl'lI' own col\l'[l\H' l'rrorl.~ tlle~' wOllld take wrong tllrns or IIlciee(1 mIght not opt iilr ills goals at.111. The corollap'oJlhl'sl' news IS that the polic\' he advocates will entail a sl'qUl'IlCe or en'lIts III whICh lIlslIttllton;11 cOllsolidatioll and democratic slabilisatlon brIllg lip lhl' rear.

or

/) Palh fllill Out/JIll 01 0 UI'g1l1l/0/1.111/·1

Sachs's pulin' has had as its (J1~le[1 IIDI IlIdivldual slatl's hUI Ihl' entire post-COllllllulllSt region oj' Eastenl Europe, He ad\'anced IllS ideas in lillC With the nl'WS Dj' Ihe Amencan and Bnllsh go\'enlll1elll~ a~ to how III trallsJill' III EaSl(:rll EUr()pl~ as a reg-lOll. And he Cllll11lerp\l~ed illS rC:';lollal goals wllll all altCl'nall\'l' solutloll which dovctailL'd Willi 11ll' French gll\'l'\,nIllL'lIt's gl'lIeral apprnacii. We \\'ill SlIll1lllanSl' Ille regional polin' ",llIdl Sachs opposed \)e(l!'l' llIrllltlg !II illS alternative:

I) ~)

EIH:OllJ'OIglllg tile l(lJ'lller C1'vIEA reglOll. IIlclllcling Ihe USSR, 10 remain lill ked lTOIlIlI1lICall\', J.t'a\'Jll~ 11H' l'\'011l1l011 or SOCioeClllIllllllC rorn's III l'arh ,'(lIuJIn' II> the

190

3)

-I)

l'OI.lTI(:S I", TilE (;J,C)\\AI.lS:\TI(';-; I'ER\(lI'

Interplay of forces Wilhlll lhe cOlin try conccrned, WIlholll lISllIg wcstern pressure to Impose a particular s\'ste1l1, jI,'Iaking the emphasis or wcstern polio' (hat of ecollOllllC rl'\w;Jllll the reglOll as a whole, uSlIlg, I'DI' eXOllllpk, a rcgulIlai (il'n:lopllll"lll hallk (II' tilal purpose. Rt.:Jecling a peSpl'CL1\'C o/" hrlllglltg some ex-Commulllst ('oulltnes IIllo lhe EC in the shon or mediulll tcrlll. Instead, ofrcnng a pall-European Confe(leraL1on elllbraullg both the EC and the East. Illcluding till' USSR.

The allernative, Amencan approach, orwillch Sachs was a passIOnate acl\'Ocale, involved: 1) 2)

:I)

4)

S)

G)

7)

Breaking lip the Comecon reg)(m and above all, brcal;.ing Easl Ct~lllral European counlrtes from the lISSR. l\·laking a root and br.IJlch switch to ;1 panlcular rorm fir GlpllalisllllslltuuonaJ slruclllrc 111 c;lcl1 state a precondition (i))' 1)orlllalislIlg n:latHIJl!> With that stale. Thcrerorc imposlIlg a 11Ith-and-spokes structure Oil dlc rdauolIslllj1 between lIlc \-Vcst alld East Central Europe," with each largel SI;lle III the n:glOlI relatIng- 10 till' t>l))er~ pnnupall\' VIa lis rel.IIIIlIlSlllP \\'llh lhe western hub. Starung the process or reglOnai transformation III the states Wll)) the most politIcally sympathetIc governmcnts alld thcll llslIlg both Ilegalwc and posluve incentivcs to ex tcnclthe rcquired mix of (lomestlc policies across the regIOn as a Whole, The ell tIre process would he carnecl ('orward hI' the C;lp;lClt~' alld will of wcstern stales to' pro\'lde, 111 till: IlJaIIl via their Illuitilateral organls;llions, Ille necessary positive lIH'elltin:s Ii.)r co-opcral1\'c gm'ernlllcl11s and constrall1l the western world IS a illSlOrIl'al alld SOCIOpOlitical chance lill' thl' West and for Russia also,' Buttil(' really ingenIOus aspect orSachs's wod;. has bet'll the \\';1\'111 \\"Illch ill: has.l"stilied the sudden openlllg or targct economIes 10 glllbaicapilal as tlw necessan' lirst steps III g"on:rnnwllt polin' ror what \\"l' would IlOl"Illalll' thlllk oj' ;IS clI)Ilalislll, Hc .Iustilies a suddcn sWl\ch to l"ret' Ir;HIe; cad\' l'I>Il\'ertihilit\, IS .Justilied as a means to anchor world prices In Ihe dOlllesllc context and as a springboard to eCOllomlC J't~vl\'al through tr.all': and FDI is indispensable lill' prtVallsallon and restructuring, All westerll autlWrtlles han: .l(lIl,,:d Sachs III IIlsisung- on these aspects or hIS polin', The role of FDI IS parLIcularlr stressed, Th LIS thl' .lOll I t study br Ihe 1[1.,1 F, the World Ball k, Ihl' OEeD and the EBRD oj" the SOVIet econOIll\', carried Ollt al till' hehcst or Ilw (;7 in 19~)O-91, pUlIltccl Ollt Ihat rorelgll din..'cl IIl\'estIlH'nt would he 'crucial III the transillon' ~I The OEeD concurs 111 liS own stud\' t.hat.llls 'crUCial to the process or transition to a market ecollomy' ,~~ It also adds Ihat. 'the pn\'atisalloll pmcess must extl'llslvciv reI\' on FDI'"~::C:rl'ating Ihe IIlstllllllonal cOllclitiom for FDI is thus lIot olllv tIll' omega of ST: II IS Ihe alpha as \l'e11.

3) TIlt' hi')' S/lOd. Tlwm/,." ,ir/on

It is preCIsely because' Sachss !-{oal is an IIISUlllll1 :\1 Ihe dOIlll'SlIC il'n:lthese slulllps \\'l're, 111 facI, Ihe direct Cll1lSl'qucnce or two aspens or the ST shock: the collapse of erJiXlI\'C demand - emphaSised sLl'llllg-iy fw Korll:u - aud Ihl' credit crullch 10 Impose a hard budget COIlstralllL UpOIl enterprises, ThiS credil crunch was l'xaCerbaled by the absence or any \'iable co-ordinating IIIl'chanislil 1'01' redeploYIng raCIors or produclion: the old plalllllllg mechallislll was deslnl~'e([ alld a capitalist mechallism - \'iabk IinallCialmarkels ali(I a finanCial s\'stelll - diel lIotl'xisl. \'\'hal COIICl:nIS LIS here is 1101 tile COl1l1l1lling- debate as to till' n:lalivt' wClght or the t\\'o f;l('lors, IHII Simply Ihe ul1delliable /;1('( that the deprcsslOn was a core reatllre of the ('nllre ST programllll', ST supportcrs han' advanced a ilosl or other arg-ulllelll.~ to .Iustif\, the depreSSion dfl'C! of the Illorlel. Thl'\' havc clalllled Ihal. ComnH1I1ist induslnai goods wcre wOl'lhlcss; Ihal thcre was a IIced fiJI' a growth In sernces; Ihal the goods Wel'l' 110 longer 'l1ccessan'> Theworthlcss' argllllll'1I1 has heclI nICely expn'sscd Il\' (;anon :\sh with his remark Ihat relurnlI1g Ihe reglOll 10 capitalism IS like transi'ol'1lI111g a fish soup hack 1I1to the aqllartlllll f'rolll willch II was madl',c,~ But tillS aq~lI11H:IH secms I() be hasl'd more Oil allil-Comllllillism thall hard C'\'Idcllre, \Vhal the c\'Ic\ellcl' shows is thaI when Ihe EC lowered ils Cold War balTlers III 19~)()-~' I to lInports rrom the Visegrad COl1l1tnl'S, the laller's exports surged as follows: lakmg I ~)Xq as 11111, Polalld's exports 10 tht' Fe J'()Sl' 10 ~OH,~ in

20-1

l'OI.lTleS IN TilE (;U)l\ALlS:\TION I'FRIO!)

cmrellll1S ciollars III 1992. CI.l:chosio"akia'sJlImpl:(1 III 2i)O, alld HlIn~;II'\"s to 17H,1), These ~allls were nul conJilled to tradillllll;1I export secturs (whIch were III ', per Cl'nl of llll' Russian poplllalllll1 fell belm\' IhlS Iinc. while the figure 1'01' cililclrL'1I lIlIckr liheen was a llorril)'lIlg -Hi--17 pl"\' lTIll. :\ Slll(\" C;\I'IWC\ Ollt by CARE ami lilt' LIS Celllrt' liJl' Disease (:()\llrollll 19~1~ fDlmd Ilial 1111 avcrage RU~SI'1Il penslOlls were below witat the Wurld Bank e~lI­ lIlalL'C\ to he tillIwd "aim' or exp(Jn_~ (i-Oil) all till' East Central an(1 East European Ullllll1WS 1' bl' ~ I per cent, Ib exporLlic and prmlle cn:c1itors. TillS has trans)"orlllcd the finanCial pOSition or tIll: government anri has also cn:atccl the baSIS ror stronger confidence III the future on the part oj' plwal!: capitaL (Hung-an has had hea\,ler per capita debt.~ and has not dd'aulted, unlike Puiand, Bulgaria and RUSSia; yet it has Ilot eve II gamed debt relil:f. Illuch iess i()I-gin:lless.)liO But even III Poland, reC()Ven' has still been undermined b\' 11Il' IMF's eLl"I\"e in the early 19~IOs to make the light a~alllst IIltlalion lhrou14h go\'ernment spending ClitS the centrepiece uf policy. I ts catchphrase has been that there IS no trade-orr between JinanCiai stabilisallon and growth. But III an Eastern Europe whose recovery has had to be domestic-consumption-led the causality has J10wecl in a diametrically opposile clireClion rrom the IMF's polic,,: wilhout growth there couic\ be no finanCial stabilisalI<m. P"IF policy fill" finanCial stabilisation tended to de(:pell recession amI tlllls further destabilised Jinances. GOll\lIlka has tned to explam thiS siump-deepenlllg polin' bv the ract that the Il'vIF's Illission is supposedly the world-Wide light ag-amsl ml1allon. HI I n other words, econOllllC recovery in lhe region is not pan of the IrvIF'sJoll. TIllS does not cxpialll why the Ij\'IF was opposed to plugging deficlls by PoliSh-style debt n:cluctlon or the recent j\·!exlcan-style transrer or macro· economic support rUJl{k GOll1ulka. very milch an \l\IF 1I1Slflel- Oil liS East European operations, explains the IMF's thmking on tIllS. He IS wonh quoting at length: 'The Illlpact or foreign assistance can be slIbstanLJal, evell vllal, only on a few occasions, especially when Il IS 111 the f()I'm of grants and debt reductions. However, large grants, irnot linked to perli)rlllance, reduce the financial discipline of local economic agenL~, and l11a\' have all Impact 011 tranSltloll econOlllles similar to tllat of a soft IHldgel COl\st.ralllt on state ellterprlses _ Most or til esc econOlllles are already hea\'ily indebted, 'lIIci thiS gives them lillie room for cOlltracllllg Ilew debt. A rill' l1lore Important rorelgn impact may cOllle li'om the mllow of\·Vestern private Il1vestment anrl know-how. However, internal reform ef/()rts rather Ihan external finanCial assistallce seem needed li)r this inllow to la);.e place.'li~ GOJlllllka, though slightlv evasive, does ackllowiedge that dellt reduclions and grants call make a vltai impacl.llut hiS baSIC pOllltlwlies hiS ()wn earlier

NI·:O,I.JBERAUS:\1 FOR F,.-\STERN ElIIWI'F. sll~gesLJon

that the IMF was simpl\' lixaLed on IIlllallolJ: helping governdde the slump would not put sunicienL pressure on them to push through to thc end the lllstitutional cngllleering to gam FDI, and lhls FDI would be the real lcvcr or reco\,cn·. Thc meanlllg or thiS IS dear: the I i\·IF was using the slump as an IIlSlrllmenl ror fapl(1 social engmeenlJ~' at a nllcro ieveilo creale: lhc desired goal or a slate opell 1O FDI. The 1l\,IF's domeslic lIeo-lib .... ral agenda could have heen dispiaced debt cancellation or lllacroecollOllllC grants. Sachs IUlI1sdr has nicely summansed tile resulting policy III the case or Russia: 'the SUIllS [transrerreelli'OlIl westel'll public bodies] have been derisory "Virtually all western "aid" has come in the rorm or export credits to Russian enterprises, wllb short periods or repaymcnt, rather than in the rorm or grants and IDng-lcnn loans [() the RUSSian budge I , , , Ovcrall support rrolll wcsLern gO\'ernlllcnts 1"01' tile RUSSIan bl1c1~Tt, \'Ilall" needed J(lI' slabilisalllJlI, has het'll essentIallv nil, In 199·1, there was essentially a cOlllpletc mllapsc [on II1ternal1onai assistance from govern men ts Oil behaH' or RUSSian rci/lnn', H:1 Sachs has not slIpp0\'led this polin'. His ST model presupposes massl\'e del)l cancellations and granls for macroecon0l11lC assIstance as well as Jill' more political purposes, I-Ie predicts till' catastrophic consl'qllenccs in Illany paris 01" lhl' regJOn hom western Elilure to delinT tbls aspect or lhl' polin', (:ven warning or CIvil war, Yel he docs not acknowkclge llle obvious ('orollar)': tilal hiS ST model was built on sanel as regards hiS assumptions ahout the driving rorces within western govcrnments and IFls. His cx pOSl allcmpts to shift blame on 10 people like Gomulka, li:>l' thmkinp; like 'bureaucrats' prc-occupied by W~lstc, cannot absolvc him or 'hure;lunatic' IIltelleclual. errors III not graspmg the politicai dnvt's govcrning Illl' western powers and the IFls Ihe\' control. lIIell"ts

At the ievcl or IlIlCro-economlc reSlr\ll:LUnng, the ST lllodd amI the IFls han' shared a common approach, The rl'struClllnng shollld not he carned out Ilv governlllent llldustrial poliCIes, It should IH' lerllo 'market. SIgnals' and 'market forccs" allel espeCially 10 weSlern markct furn.:s enlering through FDI. The lask or target governmellls IS snnplY lO depress wages, to Impose hard-bUdget constraints upon state cnlerpnses and lo prtVallse for cash, Market Signals and forccs will do the rest. Puhlic sector lIltervenlionIsm wouiel certalll h' be necessal'Y, bll[ it would lake ll!e ronn of the ',Vorld Bank and tile IMF l'XCrllllg the necessan'll'verage to r.:nslIn: this approach was rullowed,

214

POLITICS Ii" THE (;(.()I\:\I.IS,\TI()N PERIOn

Till' PI'/IJ/(/()'

or

Marhl'(

!-III"(('S

It is now generallY rn:o)..{llIscd that tile 1ll,Irkcl slg'llals of slulllp ClllldillOIlS were thoroughh· distortccl ami could gin' no glllciance as to which t:lllt:rprises could survive and prosper III normal market conditions. R. \,inlr(J\'a's study or the C:SFR COlllirms tillS: she shows that there was a sign ilicalll downward restructul'lI1)..{ 'toward sllllple energy and matcrial-dcmanding production proccsses, which are becollllllg 1I111ch more ac\valllagC()!lS to export, espeCially due to the rapid c\eyallle necessary to sh u t clowll e\'en III rlustnes with a promismg demand' _~:, Brada SUIllS up thc Hunganan cxperience tl" pOllltlllg oul that the "(11' ill the same year.H!1 These results were achieved by tl1reatelllllg to wllllhoiclli\·IF or 'VB loans. Thc \VB has also blol'kcd !{()"cnllIlCIllS rrom rl'.~lrUl'lllnng SI;Ill'-nWlIl,d L'llltTpnses berore pnVallS11I!{ them. Saclls has claimed that thiS was unrealIslll' because ~()"ertlmcllts lackcd the resources 111 pcrsollllellu do thiS, But the 'VB lOok 110 chanccs alld ban lied them from appl"111~ what reSOlll'CCS the\' had. It explamed Lhat 'Such phYSical restrucllInng IS bcst donc Iw pn\'ale owners.'!I(J It tl\ererorc required the Iillannal Capal'ltll's of Polalld's Industrial Develo(lllll'lll Agcl\n' be prohibited. Tlw \VB's agrecment With t he Polish gO\'tTllllll'lll Oil this mallcr l'XplaIllS: '11> ..\·s l'XIStlllg lillallnal pOrlfolio will be trallslCrrcd to lillallnal llISLllulions, Loans ttl enterpnsl's will bc sold or Lransrcrrcd to finanCIal Cllllllcs capable or malla!{111g credit nsks ... IDA's eC]ull\, 111\'esLmcllls 111 entcrprises will ht: transferred to CCJUltv holding' cntities, such as IIIdcpelldellt companics, [Jl'1vate funds, priv Eastern governments which failed to lake slIch measures COlllclllot cxpect the western IIlstitutions, espeCially the ll'vlF and the Eli, 10 ease excluslOllary embargoes on their panicipallol1 In the western product or capitalmad.ets. Thus, the If'vlF and WB loans to Romania were hlockc(1 \)ec;{use ils pl'lvausalion schellll' limited parllCipalloll hy f()I'l'I~n lI1VcSlors, Western politicai pressure was llsed to gain the only two major deals conciudeci between Romal1la and western lllultinallonals,!I!i Equalh'

NEO-l.lI~[R:\l.lS~1

~17

FOR EASTERN El!({OPE

Important has heen Jl'vIF pressure li)l" governments to sell state assets, IIlcluding tht~ public utiliues, to western compallles 1Il order to reduce liscai de/icils. Such western pn:ssure Oil the ;ISSl'! suppiv Side has bl'l'll combmed wllh wcstern state subSidies at all sta~es III the process o/" pnvausll1l-( lO western nlllltm.7 252.1 2.2!)O.:1

Notes: I) (::.:. (:OIlIlIHIIlll'lltS. ~) p; l'aplll'IlIS. :n This r()\",~r!'o ami puhlic "dlllllllSlralJOIl, Sour",': EC COllrt "{':\\Ie1il",., R"porls,

100

l'ducatltJIl alld Ir~lIIl1l1g.

~XH.X

IL7

:).:1 1110

llw .',ona)

SlOl'lor

5) TIlt' Th('{Jry (lnd Pmrfl((' (!(FJ)j

It is no exag-gerallon to say that FDI has been offered Lo the peoples ol'the regIOn as a deus ex macilma bringing a unl\'e('sal pallacea for all theIr ills. FDI was presented both [)y 5T theorists anel the wcstcrn Illultilaterallllsliunions as both the key means for restructuring state enterpnses in the East and as the lever for brmglll)!; dvnanllc growth and prospcnt)' to the target coulIlry. The first or thcse chums risks beconllng cIrcular: FDI was to be Ihe key means of pnvatisle lhcm 111 \'anou~ plan's, He thcn Incs (0 ridicule .lonathall SIL'(:k or the (;,ul/(Iia /I because It1 Steele s importa11t book, 1~'fl'n/(/ll?uHI(f, lhlS g-loh"li.,('(llI'orld 'exls\'~ 01111' Sr)~'(·I,.,dl\', iLlL ,dl', Llovd IS here lIIuddling lWo \'crl' different ph~' thc banks. Instcad, the WB lIas lIq~cd DraCOI";!1I bankrllptn laws alld all .ISSel-Slnpplllg. labllur-shedding approach to rCSlrllCllII'Illg, It has lakclI IlS lead from lhe Signals of collapsed markets and reCllllI'ed aCliun as follows: 'Typically, thc restrllctlll'lng pl;lIIs will in\'olve clOSIIll,{ loss-makll1g productioll units, car\'ln~ Ollt llol1-esscnllai aClInUes, di\'l'slIng I1nl1-procluCll\'C or IIlHler-ut ilised assets and sheddillg cxcess labour, 'I::, Both thl' Ii\,IF and \VB havc showll nOl tile slightest cunCt:rn for protcctmg the educational in[i'astructures and public R&D blHlgets ,IS \I'd I as olher infrastrllctllres for ensuring- a rlllUrC capaci t\' to at)sorb and dirrusc nc\\' techll()togles throllghDllt the eU)IWlll\', Year aftcr year lH.:alth ,lI1rl crillcOilIon spcllcling III the \,iscg-ra(1 COllllll'les has bCl'1l n:duce(l.t:'s III SI()\'akia. ror l'xaIII p\e, 111 1~)9:) l'ducatlon spl'nding was rcduceci 1)\' :l() per cent. In I-I ungar\' III Lile spl'lng- or I 99!'J. lllC JivIF rCCluired the go"crnlllclltlO charge ret'S 1'01' hi~her cduciliun as a condition 1'01' pro\'lding nt'\\' 10ans,l:;~1 .-\galllsl tillS haci;gToullcill'c han: scell cataStropl!K declilles III n,,..,!) hudgcts atT(I~S the n:glOlI,

Cardinal goals or ST havc bccn, according lo Sachs, tiw OIclllc\'ement or dClllocrac\' and freedolll. Althollgh Sachs Illillself has not cmphaslsed lhe building or' Civil SOCK't\", thiS has been a constant thclllc oj' ST supporters, Yet thest' ~().ns 11a\'l: been treatt'd as cnds and not Illc;\I)s, ,-\S ends, thl'\' have hl't'll disclIrst\'l~I" \'ery Importallt iJCGllISe the\' have beL'1I IIsed as core .JUSlific.lllOl\s of the Illeans or ST. I-Iowc\'cr Ihl' liberal prlllciple that ends silollid g'oH:rJ) 1111'('("t fill' 1l1l1l1l1ml eCtlllOlHlC and sOCIal ~o'iclant\', InSOUCiance on those Issues, as S,IChs has ll10rc or less ackntlwlcdg-ccL led to catastrophe III Yug-osia\'la, The tensIOns or ST plawd a cClltral role 111 the cicstrucllOll ufCze.:choslo\'akia (whosc pnpulallons were.: licl1lcd a vote Oil the.: Issue), BlIt these features or thc c1riye havc been most L'vldell I III t he polin' towards RIISSla and the Former SOl'jet Union,

nil' Civil (/1/1/ {hi' (;1"/111111111111

till' NI'lII (.'((jJl{o/i,/

(;filII

The \Vest has lIq.{ed that those who mallag-ed to accIIll\ulate llHll\e\--Capllal uncler Comlllunism should rorm the core o/" the llew donll..'sl1C capllalis( class, These people ha\'l' he.:1.'1l III ,I III I\" illeg-ai currenc" speculators allrl black marketcers as well as corrupt IIll'lIlbers o/"slate admilllslraliolls, l'speuall\" 111 the import-export sectors, Sudl people have shown l'lItreprelll'urIal spml, albeit o/" a crImulal kind, l.ord Howl', appoillled ad\'lser !ll the Ukralll1.111 gOVl'rllment ll\ 1991, was gUlll' li-ank Oil IhlS POll!!. I-Ie.: urged Ihl' IH:cd for the
PO l.I TI< :S IN TI-I E. (;[.OB:\U.s.\TION I'Elm III

strallled politics emerg-mg III till: r~g-]()n. Th~ post-COI11IllUl1lst partIes l1a\'e WOn support from electorates because, alLllO\I~h LlH:I1lSc!\,cs COI1lIll11tcd 10 fllrlh~r pn\'
~E()-l.IllLlnl.lS:-'1

FOR L\STERf',; l-:t'I{(WE

L)~l

-

..... ,!J

ST supporters have cert;lIni\" bcell I)Olh disJl1:1\'l'd and l'lllbarrassl'r\ bv Illl' \'IC(lIrICS' tlfl he cx-( :o/llll)tlfllSl P:ll'Ill'S III lhl" n:glOll. Tilt"\" llaH' also, rather oddl\', blTl1 slIrpnsed lhal t(IlISl' dl'cianllg" Lhl'lllscln:s Liberals, 1I0W Illl'xlricahi\' Hlclltilied \\'lIh ST. haH' been Oil the rl'lrl'al III mosl COlllllrlCS,l:d \(:t (lcSplll' tht' n:~ilil'IICL' til Ille (ll'llIocra[Jc process III Lts(crll Ellrope, the Illl'ssa~t' or lhe elt:('\oral "II'Wries of the ex-ColllIlHlIlISl part It'S pro\'ldes all111lpnnalll challenge to the Wl'Sl.lliS a warnillg lhalthe eieclOralcs ui'llH: regioll rqeCl L11l' drin: for ST ;tS impll'nH:llted by lhl' western powers o\'er the last (in,' years, Voters III L11l' regioll wcre IIllIl~ TI'e Japalll'se Finannal Scn'lt"cs group, NOlllura. iliadI..' lhl' rollo\\'JIlf{ cOl11parall\'l' .Il1cigcllIent un the ROJllaniali CCOI!OIll\" ~ 199-1 pcrformance: 'Rumania, little notlccd by thc \Vest, delivcrcd las\. rcar prohably Ille most lin preSSl\'C pl-rfonnallt"c III EaslCrn Europe.' 1:,:1 TillS (Illes not Illean that the Romanl,1I1 l'xpencncl' should hc erected as somc son or SlIpel"lor stl'. II. Sachs IS pI'IlII"d hl'r";,, Wl'llillg 'Ih,' d,'wlnplllg II'odd' hUI Ihis l1\ust b";1 III1Spl'llll: the n"J1"~1 shtlw, 11: :; (I !I!I:!). Tllt'lr "il)rlliallolls sho\\' Illal 'f!;rowlh 11\'1"1' till' whole 1!IHH-:20Itl p"n,"1 i., IIl1lik"'\" ("WIIIIII'I.- .. Ihl' opl 1111 I'll(' ."·,·IIi1n".lo k;l(llll a lIIalor illlprLI\"(~­ '11~111 ll' the n .. ~ah\·L:' li\'1I1g :"I1_\u\'\",nt~ uf E.lsle~ u rH1"t,pl'

I:'(i.lhid. ):;;. S;r.-hs, 'CIII"oliciallll!-: Cap,talislIl. p. (iO.

=============10=============

Neo-Liberalism and Civil Society

Across East Centrai Europe 111 the late 19HOs, young intelleclUais were SIlUIIgdown at theIr desks to write ess.n's on clvi[ socIety. [n [9~J [ III the Soviet U1l101l, desks were being cleared for the same PllJ-pose: to win a Suros sciwiarshlp to the \,Vest by showlI1g where YOU stood Oil ch'i[ society. Alumlll came Il)r a diet of sel1111lars In places like Oxrord to [earn abollL our w()lIeierrui lIlsti tllllons (although, naLllrall)" one wouidn't hrag). The en tire experience was a refreshing one for all concerlled, Not least for the teachers. Aner aiL Ihese students seemed to be[ieve in it all, at a tlllle whell mam' or the iecLllrers were llot at all sure what to lhlllk, boml)antcd as the,' were by the stl'idellt assaults on their [ibel'al values, on I11stiulll0nS or ch'il societ\'like theIr own [iberaluniversities, the BBC, the lug-her cl\'il sen'lce WIth llS ethIC of public serVIce, the locai authorities, the seriolls press, the well;lre sernces, the teachers, the health service, and u-ade unioIlIslll, Go\'erlllllellt lw disCUSSIOlI was ndicttled as the talk shop or the challel'lllg classes. In short the ven' Idea or the liberal dcmocratIc state was ulleler assault. And the a!tack was being waged WIth all the most sophisticatcd techniqucs or mass suggestion. not least by savagmg liberalism in the language or liberalism Itself. The authontanan populists werc iaYlIlg II1to CIvil society in the colours or s()callee! nco-liberalism.

Ubl'nils \'1.'I:WS NI'O-libaals

For decades western liberals had seen a strong- Civil society as an lI11eg-rai elemenlll'llhin the state aCllllg- as a countcrvailing IlJlTe to the powcr ora secrellve slale executive and to market rorces in the deterll1l1lallon or public plllic\'. Civil socIety lIlvolved a nctwork of aSSOClallollS and IIlstitulions, many or them supported by public funcis. whICh exerted democratic pressures, calling both slate cxecutivc bodies and big huslI1css to accoull L ~-JR

NEO-I.IBER:\I.ISM AND CIVIl. SOCIETY

And cIvil souet\' was underpllllled by a strong welfare Slate, provicl ,lhrnug-h IlS education svstelll, public health systems, public houslIlg other local serVIces a Illll1illllllll basis for citizcnshlp, The role of civil s ety was a polillcal one wlthll1 the liberal democratic view of the statl: ensure that public polin' was g-overned by WICie diSCUSSIOn and public p sure by the CllJzens Liuollgh a Illvnad or civil associations and illstillllil Civil S017/'/.), W(lS lIIilxml 10 /III' sialt' (IS (/ {f/lo-gmwrn/'(! !ib(~ml d('/IIoC/w)', w bemg always III tension with the Slate execuuve anet With 'the unaccepti face or ca pllalismIn the 1970s. tile attack was rather crude: the cn weill up that the s was too weak because of democratic on:rload. All the pressures from I society (then called special interests) were making western count -ungovernable' In the EIHOs the target and the alln remamed the same, the discurslVe tactics changed I HO per cent. Neo-liheralism was born 'the IIlcIivlcluaJ' was belllg crushed by a rapacIous state, The crusade launched ag-ainst 'the Slate' to rree the lIldiVlduaI. the ecollomy and UI Tom Cobblev. Traditional liberal suspicion or the state eXl'clIlive has bel'1l replaced by ulitv towards thl' weIJ~lre Slate, The threat now camc rrom thc Inlalld Re\'ci hehllld which stood the slnistel- rorccs or local goverl1melll SOCIal sen departmenL~. teachers and the (:ll cals in the Direct l.abour Departmellt the trade ulllon barons amongst the cleaners III the health serYIce, Libl were IOlrilO SLOp WOIT}'lllg abolll cl\'illiberues ancl rail\' around to sharpell sword of the state against the miliCI'S. Those who ol~JeClecl were clubbed chaLLering classes. the cOllsensus mongers or worse. The nco-liberals also took up the language or civil society to lurn the eral concept on lis hea(t. Insteacl or belllg a network of associations institutions for ll1\'1gilaung state eXeCUll\'es and market forces and art lating collective interests and concerns, it was til hecollle a 1IllXUlrc or bUSiness charitable roulldations and sclf~help institutiollS for the desen poor on olle Side; and archipelagos or unaccollntable quangus 1'01' mal mg- a depoliticised, privatised, publicly passl\'e lIIc1i\'lclual consllmer 011 other. The IIlstllulIons of thiS nco-liberal civil society are above all Iher ensure that the poplllalloll stops pnonllsll1g the public welfare. SLOpS II lI1g for cnllecti\'C snllllions to socictv's problems, In the name or fret SOCICty (or till' -incli\'lclual') from the (welrare) sliution ror rn:{'riom ag
ofSlIppOrl Sln':lIltllllS

Table 11,2 OM

Communist ParI)' T,',msfol'llla!ious I JfIil' 0/ (://("'~"

;\'((1//1'

Polish llllJll'd Workns

Feh, I ~)~)O

I-iullganall SOCialist Workcrs

Sepl. I m'm .-\pril 1990 Fell, I ~)~)O Parl\' hroke lip

Bulgariau

COllllllUlllst

Yugosla\' l.eague or (:ollllllllnists Alballia 11 \Vorke rs Romanian COllllllunlst Nalloll,,1 S"I",1l11l1l Frollt

Socialisl Ullllr ((;nR) SI"I""\; (;"1111111111 lSI i\IClIII\'llcgTo

.IUIIC 19~1I

Jail, I !)!)() .lui\' ImJ:\ Fcll, I ~J9() I ~)~)() 1!)91

SOCIal Delllocrats or llll' Polish Rt'Jmhlic I-I utlganall SOCIalist I'any BlIlgan;1I\ Socialist Pan),

Alhanlall Socialisl I'arl\' NatlOIl"t Sah'atlotl Front Pal'll' "I' RUlIlalllan SI) Panl" of IkJllocralJl" Ldt Pan\' "I' DClllocratic l.en D('I\J(I(T;II\(" 1';lrt" .. rSocialisls

1\leallwhile III what, III a bror .-\lbanl'I.~I' These IIl11la) SllcCt~sses were not JlllIIllL'nlar\,: these parties retatlled strong- support even if" thev quentl\' til ~() Illto opposition.

\\'cn~. III Bui~an;l

ancl :\Ihania. subse-

TIll' Fa(I' of//II' !VolI-COII/II//lIIISi .'-iooal ])1'lI/lIITa//( P{/rill's

Some h;tH' suggested 1.11at the pnnclpaI cause of" post-C(JlIllllunist stren~th in the Viscgra', UL ga1l1ed a genuine base

Till': 1'< )S'[~C();-'(\llINIST

I'AI~TIES

IN THE

EAST

Oil Ihc Len III IIw 19~):~ {'l{'nlons, pollill)4 7,;\ pCI' Ce11l, AI Ihe sallie lillie, this lertist (;I'h~nlatlon was ullllblllec\ wnh anu-COIllIllUI1ISIll, Tht' eerlllan S()(:ial DemolT.nic leadership SUppOrll'CI LIL financially in the hope tllat the nrganisaLlon could be useel to splil the Polish ex-COml1lUnlsts, A prominent post-Coll1lllunist intellectual. LllnellLOwlCz, was drawn m'er \0 the pany and eff'orts were made to open a splil W1lhlll the post-COl1lmUllIsts between Cz~'moszewlcz ancl Miller hy preselltilll-{ the latter as an ullreconstructed COlllllllllllSI. However, these tactics Iilileci and II1steacl UL itself was splil in the 19~):l PreSldenLlal ciecLlons, as Lamel1lowicz was expelled ror SlIPPOrLlllg post-Comlllunlst lea riel' K\\'asl1lt'\\'ski's candidacy while other ieaders of' lhe LIL c;lml);lI~ned on hehalf' or Delllocratic UnHm candidate Jacek Kurotl, The rcsult was that the LIl.'s own candidate recclvcd negligible sllppon. But nOIl-Coll1lllunist SOCIal Dell10crats did succl'ed ill OlIl-distanclIIg the post-Col11lllunists III two cOlllllnes III the rq~ion: the Czech Republic and Slm'enia, Tlw Slm'elle d\,lHlIllICS wcre !{o\'erncd bv the break-up YugoslaVIa. Whill' thl' Yug-os\;l\' Le Illake a leftist appeal to the electorate; and the capant\' of tIll" SOCIal Democrats to establish .1 SCI'IOIlS tracll- lllllOll base. Financial support from thl' \Vest or course helpecl: tile party was f'unded from top (0 I)OIIOIll rrolll lhe \Vest. BIlt without the otiler ElclOrs. the nlOne\, would havl' been useless. The decline III support or the Czech COllll\lullist.~ was not oniy the result ofthclr continued adheSIOn to thc COllllllullisllradilion: I11cleed, after 199() theIr support actually rose ancll\l ioeal elections the\' gallleci aimost I H per ccnt or the votl' - the illghest \'ote or any C01l11l1UlllSl Part\' in cOIlLInental Europe III the early 1990s. Hilt III 199;~ the Comlllunist Part\' was IWCIl br IIlternal cOIlIliCl, which tllrlll'd the party II1wards and lI1\'o\\'ed hmh the expuisHlIl ora neo-Stalinist group anc! 1Ill: defection urgroups on tile party's

or

~70

POI.ITICS IN TilL

(;J.(lI\-\l.ISXI'I()~

I'ERIOII

Rig-ilL. The m;qority rorces III tllc pany were at tilt: same tilllc ullable (0 dc\'t:iop a coherellt strat(~gic H\eIllltY for thc pal'l\-.~/'i At the SilllW !IIlle the Czech SOCIal Democrats Wl're ablc til prest'lIL Ihernselvcs as a SCrIOUS groupmg tll lhl' Left of thc lll'o-liberais. III rile lirst planIhev n:cnutl'cl lilt' tT()[Hlllllst Komarek, Klaus's boss hl'fore the \'e\n'[ Rcvolutlon, wbo bl'came a hOllsci1old Ilame throughout rhe ("Olllltn' III \ ~J~J() because oj" hIs eCOllomlC rcJiJl'1ll I(\l:as agalllst the (;O\llll1l111lsts and II'ho LiH:1I crlLiClsed Klaus's Ileo-lihnal eCll\lO\l1IC ideolog" III a dctaikd. II'cll-inrormed Il'a\', olTtTlll~ Ills own aiternall\'e el'lInOllllC strait',.,"'. ThIS \\';, ... ullIqUl' III lhe n:glOll: tlw best-kllown lloll-Colllmunist e(OI101ll1t' expert. with IInpcccabJt- politicallTedellllals, olTenng :11\ :\lI!1lOrItallH' ;t1tl'rllatin' !tl II c( )-liberalism. The second IInportallL achIevement or the SOCIal DeJllocrats was t!lCII' ahilit)' to develop I1llhlellCe wllh Lile former orIiual Lrade UIlIOII ulIlleriert rurgl"Cl1l'SS allel, ("OllltlllH:(1 \1'llh l'l"llIlOl1l1C growlh, thl~ has g-i\,l'1l the panics of lilC Len in gO\"l~rJllnellt SUI11C ruom li)r llIaIlOC\l\TC, But both Bl1lgana and Hllngary have I;tced IIHlI'e or less ClHluJlualliliallClal cnsls,:lII Sol!lLJons to mallY 0[' thest' problems could h~l\"l' beell E\riJilatl~r1 it" the Ell had opcned ItS IlI:lI"kcts wlddr ror till' reg-lOll s exports, p;lrtKlllari~' the l'Xports its llI11re ach':lI1cl'd IIldllslnal sectors, Hilt the gO\"tTlltnl'IIIS o\" lite ELI had no eCOnOl1llC 1I1lcrCSllll taking such a step ag-alllst a backgroulld or IOllg-tcrlll stag-I1:1 lI011 alld sal lira tcd domestic markets \\"1 t h III the E U COIllbincd wllh illgll ic\'ds ur IIllemployment. At titl' sallic 1II11l', the cconOl1l1C and thc state lillaIlClal crises gan' the westenl powers a qUill' extraurdinar~'· de~ree \c\'eragc ()\'cr the g'O\'l'''' llilents or llll' rq.!;H11l: the\' U 1lIid ciCil\' glll'l'rJllllt:lllS accc~s to finance and lliL'\' cllIlld dCIl\' thelll a track subslI!lllc' ["or COIlll'COIl slIllph' hy lIlailltallllllg t.hl' Coid \'\'ar l'lIllmrgol's uscd Iw tlte EC agalnsl thc SlJ\'let Bloc, This Il'verage was placed 111 lite ser\'JCc 0/';111 l'xtn~l1ld" :lmhllHlIlS \\'(,SIl~rJl GlIIlp:lI)!;1l ror dillrolighgolllg- SOCl:li cnglllecl'IlIg with!! I thl' H'g-'OII to cs!ahlish a IICW SOCIal rcgl1llC: tlte a'placemcnt Ill" rcg-lIlles of strong sonal and CCOII01l11C protel'll!l1l III these [tlunll'll's WIth n:glllles II'lIh less SOCIal protectlOIl than, sa\" the LII\. and II'ltll a g-J()b.iliscd' illSlllllliollai EKe [0 lite outside world, III other words an eXll"l'llll' I'ol'm 01' opell door fl»' proriucts ancl capItal, Illcluding IHll, slinrt-terlll 1II1l1ll'" l1ows, These reglllle guals were gwclI the label mal'i,l't \''l'1I1 II 111\\" hilt Wl'n' III rcalit\, ge'IH'd [o"' would be structurally weakcned, uniess it replaced I-lorn with a lIeo-liheral as ieader. But the party membersillp continued to support the leadership while being strong-h' opposed [0 lhe poliCies forced upon it. At the same time, the government soughl to rehuild understanding With the trade Ulllons by offering subslanl1al \\'ag-e Increases and bv j';llsing the minimullI wag-e,:;!1 For dilTerent reasons, neither Romania's nor Bulg-ana\ g-overlllllcllls were 1l1luall\, susceptible to the kind of pressure which EKed the \-IS» ill

THE

POS'FCO~I~ll'NIST

PARTIES IN THE EAST

281

1-lunJ,;arr. In Romania. the absellce or a debt burden coupled with thc go\"ernnlelrl''s L1~I1\ COil trol over t he domestic finanCIal systcm g-avc thc IFls and wcstern linanClallllultinaLlonais lillie markct icvcragc, whilc the strong domcstlc nationalist consensus III Romania mC:lntthat t.he Idcological linka~e wllh domcstic nco-liberalism was vcrr weak. The Romanian g-o\'(:rnmcnt's scarch fiJI' access to western financial markcts lhereforc produced 1i\,IF packag-cs focused m:llllly upon purcl\' financial rClrenchll1r Bulganan policy-makers gl'lll'r;dl), III the currenl CIlIIl~'~l. The Wesl's trade embargo agamst Yugosia\'l:\ hampered the dC\l,'loplllelll of Ell-Bulg;lI'Irmation o/" the rormer SO\"ll't Bloc 1I1lo liberal dC1llocracies would generatc a slInilar harmo1l\' or shared valucs across lhe whole of the continent. Lilus making- rcal collccl1\'e secllntv based Dil com mOil observance

POLITICS IN TilE C;t.oB:\l.IS:\TION PERICh)

of shared norms and ruies a realiLY. Such were the declaraLOrv prillCiples of the NATO powers dUring- the 1990s. And, IJlcieccl, sllch are tlH.'lr declared principles Loday. Of course, peace and securi Lv depend upon more Litan the cleslg'n of sectlnty and poliucal IIlsUtuuons. The\' rest on economic and SOCial precondiuons: withoUL prosperity and/or economic deveIopment, slIcll values and instituLions can come under stram, if 1I0L collapse. ThiS was the pOin t at which the roit: of the EU and the otller institutions or the West's political economy raised great hopes in Central and Eastern Europe. As 111 the case ofwestcrn Europe alter the war, the CEECs now hopCCI that they would be offered a devc!opment-onented II1seruon III the IIlternatlonal divlsioll of iabour and that the hllter wouid soon be anchored in their accessioll to the EC/EU. And even if tillS EU did not stretch as far eastwanb as RUSSia (despite John iYh~Jor\ declared aim of including RUSSia) a ITgllne of free u-ade woulcllink the EU to a prosperous CIS. The EU. committed preCisely to European unit), and having always recog-1l1secl thaI Europe lI1c1uded Budapest and Solia e\'en if it was IlIlcertalll about Kiev and lvloscow. would adapt to accommodate tile CEECs. Agalllst thiS background, the CEECs have spent the last decade transforming themsdves into market economies and libel'al democraCies. Today both privatt: capllalism and liberal democracy IS the norm - lholl~h not UIlIversal - across the former Soviet Bloc regIOn. The transforlllation to capitalism has been extremciy costly 111 econolllic, social and health terms. But the peoples of the regioll have largely accepted these pnVa110llS Jillone overnding reason: the goal of entering the club of \Vest European-style prospent)', democracy and peace ol1cred to them Iw the leadel-s of the western alliance. Of courSe, neither the capitalism nor the democracy that have emerged are per/en from the standpoint of libel-al norms_ BlIl that onlv makes these CEE slates Similar to Lheir Iit.- fmm perfect coullterparts In the Wesl. The main Lhing is that they have passed the test set for Ihem by the 'West European states: Liley have been accepted into the Council of Europe. They are on targel. But now the goalposts are being moved.

NATO EII/all!/IIII'lit

In 1994 the US adlllll1islration indicated it was In J~IVO\l1' of NATO's eastward eniargemelll. It then retreated somewhat, gl\'lng 110 date alld promoting the PartnerShip for Peace as pel-haps even an altel'1laL1ve. But in I 99[), after the RUSSian Pn!sldenual elecuons were out of the way, Washington lifted enlargement to the top of NATO's agenda ane! the process of enlarging NATO began at the Madrid SUllImit ill July 1997 in order to be completed b~' 19~)9.

'1'1-1 E ENL·\RCEi\IENT OF N.-\T() ANn TIll'. Ell

The rorm or the Amencan camp:lIgn for enlaq~ell1ell( IS lllteresllng becali'se' of ffi; complete lack or credibility. We arc led to belie\'c Ihal picking sllllahle entrants 10 NATO has notiung to do wIlh geopoliLics hllL is raLher abouL which sLates of the region have achieved high enough standards of democraC\' and market eCOJlomy to he worth\'. Thus, dUring Secretary (;eneral Solana;s tour of the CEECs 111 199[): The secreLary general will be making ILclear that no decisions have beeJl taken vet and that each applicanl will beJlIdged on II1ciividual ment,' a NalO ofliClal inl
iVl'W iJit'/sIII/I 0/ La/J() II ,.

Thus, by default, the Gi deCISIon .Ilthe Pans sllmmllof 19H9 lU gin' the I1'vlF the lead lilr handling the hea\'ilv Illdebted Polish .lIlei J-Illngarian economIes laId the hasls f()r the US approach to completelY dominate the 1l1lq~ratlon or the CEECs. TillS approach was already IJelllg tried out on YllgoslavJa and at the start or 1990, the US launched Its agenda throughout the region by making the Polisll Balcercll\'lCz Plan (he flagship for liS operations throughout the region. The US Secret.lr" of St11;\ terms. Tablc 12.1

Compal'ison of GDP Pcr Capila ($US) I WilJ

/(/II:!

our-I1HenSI\'e parts of tlIClr production cirnl1ts. TIlIrcllv, these aurac, tinlls will be used by bIg capllal in Western Europe 10 threaten to cxit eastwards unlcss \-Vesterll E1lrope Amencanises ils Iab(lur markets, t.lIrns the \·h·Il;IIT States llllll mlnllllal sali:ty nets and allows British or AmenGIlIsl"ll- sOClalllll'f]ualit\'. !l0"l'n\', urban {leca" allel pnson POP1llatlOllS. "\'estern Europe will be distmguishable fmlll the USA (Jllly by Ihl' \'Irulence of its 1111('1"11011 racisl. neo-I;lsClst amI Xel\OplHlhlc JIlovemenls. :\ml. increaslllgiy, the Europe wllhin the Sl'CllrIt\' pCrImetcr will be unilied b,' !"car of the ug'lv arc of powrtv and political tlIrbuicnce strctchmg li'om the Kalinlllgrad tnangll' to thl..' Balkan mOllntalllS. ThIS will bc the spuntaIll'OIlS result or the current IIltcrnalJonal political eCOIlUIlW rCI-{Il11e for Ihe l'xdudcd regIOn of Soutll-Easter!l and Eastern Europe, a!lel of thc curreJll NATO power pn~JeCl \ capnClous cOl'rci\'e diplomacy. It IS simph' utopian to Im;lglne Ihat the current trenels III RUSSIa, Ukr,lllll' and SOllth Eastern Europe can COJIlllltle nllldl longer without gran' ;lllcl tl"al-{Ic consequences. Bill tillS spolllancous drif"[ will not casily be changeel: the I-{lobalisationCUlll-llco-liberal polin' cvcle IS still Oil liS upward curVl' in Europe and there IS slill a nch yein of resources 1'01' capllall-{rowth to be dug out of western welbre states, CEEC dl..'ht and the CEEC pn\'atisalrons oj" stOltI..' ell terpnses. espeCIally the pul)lie utili lies. And Ihe political path towards an aiternativc is lirmh' I)locked hy Ihl' lack ... r kderal democrac\' wnlull Ihe EU, the disarray 011 the European lel"t ali(I the g-real power interests of the United States III western Enrasla, II will thl'n~f()re take Illore than persuasIOn to ch,lIlgl' course III Europe. TherapIes will not hI..' applied until an exogenous shock hrlllgs hOllle the truth that the 'Vesl's IIllerillckllIg strllctures or aCCllIlHliaLHlI1 alJ(l gm'ernancl..' arc \lot acceplabic. The best kind of stich shocJ;. leading to therapy wOlliel he a sOClai Illm'elllcnl Il\' the peoples of Europe to demand a New Deal. The worst would be a blow-out in the I-{lohaliseellinanClal SVSlcm or a full-scak breakdown of order III the bIg repuhlics of the former SOVIet LIIIlUII.

Thne IS a lle\'Crtllcicss pcrrcul\' \'I,lhle altl'J"llalr\'c Pllti() stratq,'y for Ihc rellllcgralHlIl of Europe Oil a capllalist baSIS. Inn ([ IS olle that would reql1lre a I>rl"11;. \\'llh the Americall-Ierl l{Jubalisauoll-lIeo-libcral approach 111 cco1l01lJll"S and with the AmerlGIll power polillcs stratcg-~' liJr lhe European rel{ioll. Thus Ihe obstacles to all alternatlvc lie not III polin- Ideas but 111 political trends. The allcrnau\'e strateh'Y IS (1I1e centred UpOIl market growth wnhlll the

I'Ol.lTICS IN THE CLOB:\l.IS:HION PFIU!)()

EaSlern regIOn; a strategy for rapId reIIHh\stl'l~t1isall()ll 1I1 tlH~ East through \'cr\' I(\rge IIlJ'raslrllcLUrc pn~jccts and thwIIgh ;\ serIOUS pan-Europcan campaIgn for the desperatel" nceded n:\'1val 01' CCOIlOIllIC dcveiopllH.'nl III the CIS, parllclliari\' Russia and Ukrallle, The 1lIIF ciJllii:I'l'nn: thaI \'ear. ~I, Rohen ChlllC, 'Ballkill~ 011 a Calaslrophe: (;uidclilles'May Help I'rnl'nl Fresh DisaSlers III Ellwr~IlIH r-.JarkCl.~', Fill/III/wI Til/II', .., :! I Octoher I !HHi, 10, See Woodward, lJt/lllml 'hug"'/.\', li,r a plollccnn~ account of this I"ollapsl', I I. Amhony Rohinson, Fillllllna/ Tilll"", II Ikt'clllh,'r 1!I!J(i. I:!. Ihid. F()rel~1I