Apr 272017
 

By Michael Nevradakis, 99GetSmart

maxresdefault

Dear listeners and friends,

This week on Dialogos Radio, the Dialogos Interview Series will feature a timely interview with award-winning British economist Roger Bootle. Bootle is the founder and chairman of Capital Economics in London, a specialist adviser to the British House of Commons Treasury Committee, a columnist for The Daily Telegraph, the author of “The Trouble With Europe,” and the winner of the prestigious Wolfson Prize in Economics for his proposal titled “Leaving the Euro: A Practical Guide,” proposing how any Eurozone member could depart from the Eurozone in an orderly fashion. Bootle will speak to us about Brexit and the process which lies ahead for Britain, the prospects for Great Britain’s economy going forward, how Brexit will impact the European Union and Eurozone, and his award-winning plan for how any country can exit from the Eurozone and why he believes countries like Greece should depart.

In addition, this week’s broadcast will feature a special interview with Leonidas Babanis, organizer of this year’s Greek Panorama exhibition, set to take place in New York City’s Grand Central Station on from May 11-13. Dialogos Radio is an international communication sponsor for this exhibition, and Babanis will talk to us about what visitors and attendees can expect to find at this year’s event.

Tune in for these two exclusive interviews, plus some great Greek music, on this week’s English-language broadcast of Dialogos Radio! For more details and our full broadcast schedule, visit http://dialogosmedia.org/?p=6880.

Interview with Turkish Journalist Gürkan Özturan Published in Mint Press News

Our interview with Turkish journalist Gürkan Özturan of dokuz8news has recently been published in Mint Press News. In this timely interview, Özturan discusses the Turkish constitutional referendum and the political changes transpiring in the country, the vision of Tayip Erdogan for Turkey, the ongoing conflict with the Kurds, and the stripping away of rights for opposition political parties and journalists in the country.

Find this interview online here: http://www.mintpressnews.com/the-turkish-referendum-and-descent-towards-absolute-rule-interview-with-journalist-gurkan-ozturan/227015/.

Best,
Dialogos Radio & Media

Apr 262017
 

Originally posted at dokuz8HABER, 99GetSmart

kazim-kizil-cbna-hakaretten-tutuklandi-

Documentarist and video-activist for Kamera Sokak, Kazım Kızıl has been arrested and sent to Menemen Prison. On April 17th, Kazım was detained while covering the protests in Izmir, Bornova after the referendum results had been perceived as illegitimate by many citizens. At the Küçükpark Square in Bornova, university students had called for a rally titled “No, We have Won”. The police intervened the rally and detained protesters, not allowing the press to take visuals from the site.

After Kazım was detained, his lawyer Dinçer Çalım stated that he was sent to court for arrest for non-compliance with Article 2911 -law regulating the meetings and rallies- and article 299 of Turkish Penal Code, ‘insult to President’. However during the questioning at the prosecutor’s office, issues related to “inciting violence” has been asked and new accusations have been made against Kazım.

Lawyer Çalım said, “There were 19 suspects in this file. The prosecutor did not take statements from those who have already given before. Kazım had given his statement in the police headquarters and prosecutor ‘accidentally’ also sent him to court for ‘insult to President’. They already do not look at the files, send everyone to court for arrest. There is no tweet or statement where Kazım has insulted the president.”

After 19 people have been detained, nine have been released and 10 have been arrested. Kazım Kızıl, Baran Bozdaş, Hasan Benli and Doğan Barış Halidi have been transferred to Menemen T Type Prison while female students Emine Ababa, Ezgi Toker and Enise Irin have been transferred to Şakran Women’s Prison.

There have started petitions and campaigns for Kazım’s freedom with the hashtag #FreeKazim.

Apr 112017
 

By James Petras99GetSmart

2015-03-13t155640z1lynxmpeb2c0s3rtroptp4syria-crisis

Introduction

Every day and throughout the world we read and hear of turmoil, of threats, violence, divisions, wars for peace and peace for wars, freedom as oppression and oppression as freedom.

In a world where words have lost their meanings and meanings have no words, how do we go about understanding turmoil?

Surely, economies rise and decline, new empires become dominant and old powers attempt to regain their power.

Does global turmoil ‘up end’ the established order?  Or does it add up to hot air, flatulence, loud, smelly, empty and of short duration?

Is turmoil more than gaseous air, an after-dinner deep throated salute to the cook? Or is it a result of transformations of substance, albeit piles of broken societies stacked as precisely located horse buns?

In plain English: we experience turmoil … but we struggle to understand its significance. We ask: who benefits? And the quacks answer: Everybody, nobody and somebody.

We will argue that most turmoil receives grave attention but is of little consequence.

Turmoil has many facets and is expressed by many voices, but it seldom leads to substantive outcomes.

A caveat: I am not a Burkean conservative fearful of turmoil, nor a modern version of Candide finding a silver earring in every cauliflower ear.

Turmoil does, on rare occasion, result in greater freedom and justice, but certainly not as a product of a unipolar world.

Turmoil ‘Turmoil’ Everywhere You Turn

The United States faces ‘unprecedented turmoil’. The chattering classes debate with fervor and solemnity questions of momentous importance.

The two major parties arouse passions over whether one hundred million votes were tampered by a feisty bear, hacking a national committee of garrulous roosters, changing the voting result.

A world historic event! Crowing arouses world attention.

The snoopy bear, or so we are told, was investigated by the former President’s staff, men and women.  One million security officials studied, in great depth, untold number of rumors. They scrutinized the dinner tables with high-powered secret cameras to find if the bear chose to sit next to US officials eager for cash and access to honey pots.

Turmoil spread to the stock market and the Federal Budget, facing a shut-down, which will close government offices, stops pensions and salaries. Rumors have it that the Interior Department will lose control of federal lands and the crafty bear will exploit it.

As the clock ticks to doomsday – utter turmoil lurks in the hearts and minds of Congress. The White House gloats, the media points to the Bear in the White House.

Wall Street worries not, since it buys and owns both Parties: It will tell them when to end the Kabuki strife. The turmoil will conclude with an amicable agreement. The budget turmoil was only a scare: flatulence without ‘substance’.

Global Turmoil

Turmoil reigns across the globe because adversaries near and far resist the overtures of an endearing missile up their orifices.

We mean war! This is no idle congressional chatter and boisterous bursts of military clap trap. The US sends bombs and missiles to defeat our adversaries by killing civilians. We empty the cities to capture the terrorists.

Wars become ‘Historical ’ because they are of long duration leading to relentless defeats!

Turbulence goes on because of oil, Israel and terrorists (proximity is an unintended coincidence!).

When turmoil ends, we may inherit a land without people and a people with depleted uranium – to paraphrase the modern philosopher queen, Golda Meir.

Turmoil Strikes the Heartland of Our Unipolar World

Let us be absolutely clear: We are not always pointing our middle finger at the US as the root of turmoil. If we go beyond roots and examine branches and falling, dying leaves, millions are involved in the turmoil. It is the joint responsibility of our living and their dead.

Syria is a case in point. We have only killed less than a million, and then ten million abandoned their land and chose our liberty over our terrorists. By the way, how can our terrorists be call terrorists if, with our guns in hand, they stave off the greedy bear — the very same bear who stole our election.

Syria is in turmoil because as Henry Kissinger wisely noted: “If a people is foolish enough to vote for a government that has failed to understand our unipolar world, they deserve their fate”.

Turmoil: Turkey

Turkey is rife with turmoil because it refused to surrender to a false coup by a false leader named Gulan. He happens to live and plot in the US. He was hoping to repay our hospitality with expanded Turkish air bases and open highways for our mercenaries, arms and funds to liberate civilians and recover headless cadavers in Syria.

When the Turkish Sultan dared to imitate our leaders by extending imprisonment to all who opposed him, we denounced him for not consulting us on whom to jail or not jail.

Ankara now threatens our Kurds, who use our arms and Special Forces to liberate the Syrian borders along southeastern Turkey (Kurdistan).

The Turks claim to see a conspiracy to unify the secessionist Turkish Kurds with our freedom-loving annexationist Syrian Kurds. United Kurdistan may be a true ally for now, but who’s to say that in our game of unipolar chess we could turn the Kurds back into pawns if they become unruly under independence and fall prey to the appeals of the roaming Bear.

Turmoil in Korea

In Korea, turmoil is rife! But is it a tempest in a teapot, or a nuclear pressure cooker ready to explode?

We are there. We allowed the North to exist.  We only bombed four million of their citizens and limited our defenses to stationing our navy, air force, army and missiles along the North Korean border.

They had the effrontery to seek negotiations for a peace treaty, disarmament and a neutralized Korea. Some quasi-traitors from our side, who deviated from our unipolar mission, had almost reached an agreement.  Our President Obama slapped them back and pursued missiles, sanctions and visions of mushroom clouds to bring them under our heel.

President Kim Jong-Un played deaf and blind to our requests for surrender. So when we engaged in a full dress rehearsal for war off their coast – avoiding any incident – the roly-poly Kim Jong-Un shot four fearful missiles into the Sea of Japan, a mere five thousand miles from Silicon Valley and Hollywood , an existential threat.

Our experts detected turmoil: a wider and deeper threat to our respected and long-standing supremacy in Asia.

Turmoil in China

China is fomenting turmoil by supplying our importers with consumer goods; buying our debts, spending only $3 trillion of our T notes; grabbing our markets with their exports while we pursue peaceful wars.

China has stirred our pot, over there and even here. They teamed up with Vlad the Snooping Bear, the same one who fooled 50 million voters to elect Trump, the protectionist. Sly Chinese now entice our Asian trading partners. They close huge trade deals while we openly proclaim that the Pacific Ocean is an American lake –though it’s not on any map. Chinese rock piles in the South China Sea are global threats, pirate lairs, missile and mussel hangouts.

We reject the One-Party State in China. In America, we have two parties. Bi-Partisan leaders propose that China end the turmoil by closing their labs, research centers, factories and universities and open wide their door with a sign on the entrance of the Forbidden Kingdom: “OxyContin for Sale: Discounted Prices from our Billionaire Pain-killer Partners.”

Yemen in Turmoil

Turmoil in Yemen exists only because the people want to be free of our ‘dear friends, the hand-chopping and head-chopping Saudi Monarchs.

We are for diversity! We fraternize with Saudi-funded mercenary terrorists, Jewish land-grabbers, Egyptian tyrants and Libyan tribal allies, who blend with all of the above!

As our President tells it: “If the Yemenis don’t recognize that they are the poorest country in the Middle East and choose instead to resist the richest tyrants in the region, who are allied with the US, British and French arms merchants. Then the Yemenis, facing our precision bombs, which never miss a school, hospital or food warehouse, must be embracing a ‘death wish’.”

These stubborn Yemenis fighters should stop and study the US Marine Corp porno-website, whose once famous motto has morphed from Semper Fideles to ‘Just lay back and enjoy the violation!’

Truth from the Trump Tower

Turmoil is not necessary if the other side does not provoke our unipolar visionaries and our unsavory allies.

Turmoil in Iran

Iran must be our biggest threat – after Russia, China and others among our ‘biggest enemies of the moment’ – because the Iranians haven’t started a war in the last 200 years. But according to Israeli intelligence who pass their secret information while staying at the Trump Towers, the Persians are preparing secret nuclear weapons, sending secret agents, operating out of secret mosques, run by secret mullahs to launch invasions … while hiding behind their history of non-aggression.

The devious Iranians are sending food and medicine to starving Yemen: This is a Shia plot to infiltrate the Sunni Saudi oil fields to measure if the size of oil wells matter.

We signed fake nuclear pacts with Iran to increase sanctions in order to clear the Straits of Hormuz to allow our Hebrew brethren to breathe freely when Tehran is bombed!

Turmoil in Latin America

Turmoil is a Latin American phase borrowed from overhearing conversations between the Pentagon and Bankers regarding how to topple unfriendly democratic demagogues.

Friendly turmoil allowed us to pre-empt a coup against an incompetent elected regime in Brazil, which committed a stupid bookkeeping error. We put in its place a mega corrupt President who was our man to hand over the jewels of their economy to the people who will make America strong again.

We don’t select individuals — we shepherd flocks, led astray by center-left turmoil, by promoting  peace-loving and dynamic wolves. From Mexico to Patagonia, oil giveaways are common currency that surely activate the economy – our economy.

Argentina led the way. The ‘vulture’ speculator, Paul Singer, didn’t have to raise a peep or pick a pocket: Five billion in cash just jumped from their pocket into his.

Turmoil returned as Argentina’s workers failed to find jobs in closed factories, and they couldn’t afford to buy newspapers to look for the want ads; besides these ‘deplorables’ can’t read them because the lights are turned off for not paying the one hundred percent increase in the electrical bill.

The general strike of millions of Argentine workers is just a Latin expression of ‘blowing off steam’ whispered a clever New York professor into the ear of a Wall Street broker.

She received tenure because she always looked through the wrong end of the telescope, to study their turmoil.

We mainly fleece the big Latin sheep first, but we do not neglect the lesser Andean herd. Peru and Chile elected presidents who will shear their people, not of  bags of wool, but of tons of copper from their mines.

Turmoil in Dissenting Countries

We may occasionally welcome, and even promote, turmoil if it turns out the oil fields have passed to greedy elected Presidents who claim that petroleum is part of their national patrimony. We generously passed a hundred million dollars to a diverse group of generals, bankers, upscale street thugs and NGOers who seized the Presidential palace and in a fit of wrong-headed compassion merely kidnapped (but did not kill) the greedy elected President. One million slum dwellers, fooled by fake solidarity, protested the regime change. The elected demagogue was reinstated.

The oil-greedy president was re-elected a dozen times.

We were not discouraged because the president foolishly freed our leaders, in a fit of compassion, so they could pursue a coup replay.

We promoted turmoil in phases, with material incentives. We dubbed our coup-masters, “democrats”, and helped them launder billions from the Treasury, hoard food in private warehouses and smuggle contraband to free markets in Colombia in exchange for sending cocaine to our markets via Venezuelan airports.

We don’t rely on coups, until we are forced to, since we finally won two elections; One in Venezuela and the other in the Organization of American Colonies. Any act in defense of the elected president is a gross violation of the Democratic Chatter-Charter, which we wrote in English and procured a translation by our Secretary General Luis Almagro. We mispronounced his name as “El Amargo” – the ‘bitter one’ – which is dead wrong, as he fawns over us while attacking Latinos who resist us.

The United Kingdom: Turmoil of ‘Great Historic Consequences’

We are told that Brexit (the UK departure from the European Union) has created turmoil around the world. In the City of London and the European Union, among bankers, investors and overseas professionals in Great Britain and pensioners in Southern France and Spain, there are cries of despair and regret: What idiot allowed a free and popular vote over the EU?

Turmoil, Prime Minister Theresa May tell us, is ‘all for the best in the best of all worlds’. We are closing our doors to foreign interlopers without shedding our moneylenders and money launderers. We will no longer act as vassals to serve the oligarchs of Brussels; we got better oligarchs at home with a long tradition of training our vassals to serve our empire.

We need not share our export profits with the greedy Germans, nor the tourist markets with pompous French; nor slight our ale-swillers at the Brighton shore for the warm beer at crowded Benidorm.

Once free of the turmoil, our monarchy will sign off lucrative arms agreements with its counterpart in Saudi Arabia. The EU will have to absorb all the Yemeni refugees fleeing the Anglo-Saudi bombardments. We will keep our banks in the City and every ruler with his secret swindle will still come to us.

The United Kingdom will experience a rebirth of an English-speaking free market empire! The Commonwealth will continue to look to us for football scores even if we recruit half our teams from the former colonies.

Of course, English society will change a bit if we leave the EU. We will slow the flow of immigrants but we will not raise wages. Immigration is about ‘values’ not jobs and wages! We will let our workers know who is boss, lest some turmoil results in a united front between departing speculators and our knighted trade union officials.

There is no turmoil in the City over Brexit. Some critics claim that investors and money managers will move to the Continent because they now will have to carry their passports to travel to and fro between each transaction. It’s hard to believe that a mere flash of a passport could be such a nuisance!

The EU real estate accountants claim that England must pay back $80 billion euros for joint holdings in property and cash. An entirely outrageous divorce settlement given the intangible gains the Brussels crowd received from using the British name in  overseas transactions or imperial endeavors.

UK will experience some initial turmoil when the foreign and our unpatriotic speculators depart. But we can easily replace them with our highly competent English lads and lasses.

We may experience some initial discomfort if Scotland votes to skip off to the EU and the Northern Irish decide to fall in line with the Popish bunch in the South and sign off with the EU.

There are some rumors that Wales, provoked by the extremist Language Society, might jump ship to the EU, angry over the English buying farming cottages for summer homes – “They denounce them as illegal immigrants”!

We have already announced that we may lose half our kingdom to the EU shortly, but we have given notice that we are ready to defend our rock of Gibraltar and the seaweed stalwarts at our Malvinas Island. Let some Wall Street idlers josh about our empire amounting to a rock-island, they should think twice about its significant. China has colonized unpopulated rocks, which are a fraction the size of our rock! And no one dares to joke about China’s rock island empire building!

The EU is stirring turmoil by insisting that the political divorce precedeour trade agreements: This is an unprecedented step according to our respected High Courts of Justice.

Brussels wants to monopolize trade and investment transactions among their vassal member states. We say we will keep to free trade and let their banks go in order to free our financial institutions. We will tell them to keep their refugees and immigrants!

England will be smaller but better! We will deepen our ties with Anglo-speaking nations!

There might be some turmoil in convincing the other Anglophones to join a sterling zone and to revise their trade ties with China, the US and other regions.

Scoffers may say the ‘Brexiters’ are hallucinating sentimentalists who believe that  Merry Old England can refashion  a great ‘global union of states’, a ‘union’ of London – New York – Toronto – Canberra – Johannesburg – Buenos Aires .

But there might be some misunderstandings … New York’s Wall Street competes with the City; it poaches high-powered bankers and is advising its subsidiaries to hold out on the high-end rentals at Canary Wharf. Can the City of London build a trans-Atlantic oil pipeline from Canada in order to compete with Keystone pipeline between Alberta and New Orleans?

The sad fact is that the US has already replaced the British Empire and is highly unlikely to share any markets with an isolated and fragmented UK converted into “Merry Old England” – an England which faces turmoil between the workers of the Midlands, the City bankers and the rentiers in the South.

The best bet is for the City of London  to secede and become an independent City State and long for the success of Venice several centuries past.

Conclusion: Their Turmoil and Ours

Turmoil is everywhere but some turbulence is better than others. When the US-EU provokes turmoil – wars against adversaries in the Middle East, North and Central Africa, Asia and Latin America– it is a bitter pill necessary to cure the disease of disobedient regimes, which had sought to go their own wrong way.

The turmoil, which destabilizes us and our allies and vassal regions, is putting a spanner in the wheels of progress and development.

Turmoil is part of our changing reality.  We are neither rigid nor dogmatic; we are pragmatic. We promote progressive turmoil, so when democratic Turkey overthrows the Syrian regime we can incite a turbulent coup to replace the dictator of Ankara.

To be scientifically correct we must start from the assumption that turmoil, big or small, national or international, a rock pile or a continent, is a class question!  Which classes are behind or in front of the turmoil and which classes benefit!

Apr 082017
 

By James Petras99GetSmart

Capture

Introduction

Over the past two decades hundreds of thousands of Americans have died prematurely because of irresponsibly prescribed narcotic ‘pain killers’ and other central nervous system depressants, like tranquillizers and their deadly interactions. The undeniable fact is that they have been mostly from the white working and lower middle class from rural and deindustrialized regions. The governing elite and oligarch macro-decision makers have quietly dismissed this sector of the country as ‘surplus’. The victims or their surviving family members have no chance of redress for the widespread malpractice and greed that led to their addiction or death. The government as a whole and the oligarch-controlled mass media have deliberately failed to document and investigate the deep causes for the epidemic, except to spout the usual superficial ‘clichéd explanations’.

We will proceed to discuss the scope and depth of the epidemic and to identify the primary causes. We will then proceed to offer alternatives.

Comparative Data

The US can claim the dubious distinction of having highest rate of growth of premature deaths among its young and middle age working and lower middle class citizens among the the advanced countries of Europe and Asia. Even most not-so-advanced countries have been spared such an increase in pre-mature mortality, outside of war. This uniquely American devastation is concentrated among the poorer, less educated whites living in small cities, towns and rural areas.

The trends are no longer deniable: Over the last sixteen years (2000-2016), the death rate among US workers between ages 50 – 54 doubled from 40 to 80 per 100,000[1]. In contrast, the mortality rate in Germany among a similar demographic declined from 60 to 42/100,000 and in France from 55 to 40 per 100,000[2]. Moreover within the US, the mortality rate for marginalized white workers has increased compared to that of African Americans and Hispanics. This upward shift in pre-mature death indicates significant deterioration in living standards for a huge slice of the US population. The main causes of death include a dramatic increase in suicide, complications of obesity and diabetes, and especially ‘poisoning’ – a broad term to include alcohol, illegal drugs, and, especially, prescribed opioid pain medications and an array of mixed drug interactions.

Some self-described ‘experts’ in addiction claim that the increasing mortality rates among US workers are due to ‘globalization and automation’[3]. This is an example of what we mean by ‘superficial’ or ‘fake explanations. This is because this phenomenon has not occurred elsewhere in other industrialized countries. Even though countries, like Japan, Canada and the United Kingdom, have seen their economies shift with ‘globalization’ and advanced automation, none have experienced declining mortality among their core population.

Mortality in the UK, Canada and Australia among workers remains at about 40 deaths per 100,000 – half the rate of the US, despite similar demographics and participation in the global market. The key to understanding this phenomenon lies in how American capital and the ruling structure have responded to the needs of its labor force, made redundant by shifts in the economy.

Within the United States, low wage young and middle age white workers with only high school education and less, especially those engaged in manual labor, experience four times higher mortality compared to college graduates. The dramatic increase in the mortality within this demographic corresponds to the increasing proportion of American workers and their families who no longer have access to adequate employer-provided health care. Premature deaths have risen with the demise of well-paid, secure manufacturing jobs for this sector of society.

In other words, as big corporate capitalism enjoys an ever-rising rate of profit through relocation of factories abroad, through automation, or by contracting immigrant and part-time uninsured US workers and therefore eliminating comprehensive health coverage for US workers, preventable worker deaths increase. Other advanced capitalist market economies in Europe and Asia have maintained intact universal national health and social welfare systems, which effectively serve to mitigate the damage that increasing job insecurity and falling living standards have on worker health. These systems continue to save millions of lives. This is one of the starkest contrasts between the US health care system and the systems operating in the rest of the industrialized world!

‘Oxycontin’, the White Plague

The root cause for the astronomical rise of worker mortality in the US is first and foremost the decision of the capitalist class to drop comprehensive, quality health coverage for its workers while lowering wages and shipping many jobs abroad. As a result, US workers, struggling with declining incomes, cannot afford to pay the astronomical insurance premiums, co-pays and high deductible for themselves or their family members. They cannot pay for expensive ‘physical therapy and rehabilitation’ after an injury and often opt for a prescription narcotic to deal with chronic pain while they continue to work.

Secondly, medical ‘providers’ (physicians, nurse practitioners, physician assistants) are under intense pressure from their employers to spend as little time as possible with patients suffering from chronic pain or injuries, especially those with limited resources. Their salaries and bonuses often depend on the number of patients they can see in a day. Writing prescriptions, especially narcotics, sedatives, anxiolytics and sleep aids save doctors and corporate-run hospitals time and money. Careful history taking, skillful physical examinations, experienced insights and long-term, supportive treatment plans with effective follow-up for an injured worker or chronic pain sufferer are rare indeed (and big money losers)!

Billions of synthetic opioid narcotics have been cheaply manufactured and prescribed at extraordinary levels of profits – far exceeding those of the so-called ‘block-buster’ drugs. The billionaire owners of pharmaceutical companies specializing in narcotic pain medications have hired legions of drug salespeople to work with doctors and pain clinics in a largely unregulated field, without any intervention or oversight form the capitalist state. The lobbyists for the pharmaceutical industry spent hundreds of millions of dollars on politicians and bureaucrats to protect their profits even as the number of overdose deaths among prescription opioid addicts grew. The total absence of any state intervention in this epidemic is unique in the industrialized world. This malevolent indifference proves that there is an unstated, but official, Social Darwinism operating at the highest levels, an ideology and practice once relegated to ardent fascists and eugenicists.

What Gives Big Capital Impunity for Murder?

Poisoning from prescribed narcotics, or fatal drug-alcohol-tranquilizer mixtures, comprise the single most important and preventable cause of early death among workers. Those workers, who have graduated from prescription drug addiction to street drugs, should still be included in this group of growing overdose deaths – because their addictions ultimately started in their local clinic. Although they have never met, the street dealers have their business affiliates in the corporate world and neatly scrubbed pain clinics.

While these early deaths by overdose cause incredible suffering to friends and family members of the victims, they are seen as a positive trend for ‘big capital’ – which is why the epidemic has remained largely hidden for almost two decades. Small town newspapers routinely devote long, loving paragraphs to describe a departed octogenarian, including tender references to their final illnesses, while the overdose death of a middle-aged father or mother laid off from a job is mourned in anonymity and silence.

Premature worker deaths by overdose mean higher profits on a grand scale because they lower the overall corporate cost for severance, pensions, worker safety measures and whatever health coverage the employer might provide. Unemployment benefits are cut, and local taxes for schools and services are lowered as the working class population declines. Demand for social services decline with the drop in population. It is no coincidence that the sharp increase in premature deaths among workers in the US coincides with the incredible concentration of wealth among the country’s top oligarchs.

In this climate, tight corporate control over wages, benefits and increasing job insecurity has spread deep fear among workers. Terrified of the poverty that would devastate their families with the loss of a decent job, most workers continue to work despite injuries and illness, often by taking prescription and other narcotics just to get through the day. Their insecurity, anxieties and insomnia are treated with other pharmaceuticals that compound the danger of overdose. Theirs fears and the poisonous workplace environment discourage them from taking any sick leave or demanding effective physical or rehabilitative therapy through their employer’s health plans.

The most ‘effective’ and heavily promoted painkillers, like Oxycontin, happen to be most rapidly addictive and deadly. The pharmaceutical industry deliberately glossed over the dangerously addicting nature of these ‘wonder drugs’ through their drug representative visits to hospitals and clinics. Most of the victims of these addicting drugs have been low wage or unemployed workers, while the medical prescribers are subservient to their capitalist employers and big pharmaceutical companies. The pharmaceutical industries are protected by the State at the top. Corporate hospital and pain clinic directors and providers are protected in the ‘middle’.

The perpetrators of mass murder by overdose have profited immensely and with total impunity for the ensuing havoc – unlike the small street pushers who crowd the huge industrial-size prisons. No security, police or federal agency would ever dare prosecute the directors of these big pharmaceutical corporations. Indeed, the security and justice arm of the state act as accomplice to addiction, although police are no more immune to prescription drug addiction than are nurses and other health providers with access or on-the-job injuries. In fact, the problem of addiction overdose death among security and health care personnel (often victims of suicide by overdose after having lost their jobs to drug dependency) constitutes an undocumented and un-mourned public tragedy. This problem also extends to soldiers returning from imperial wars in the Middle East and South Asia.

The contradictions of a society granting impunity for the corporate perpetrators of this epidemic of death, the ‘opioid war’ against the surplus working class, while spending billions of public money to incarcerate petty street dealers and users, describes a federal and state government in disarray and denial and unable to effectively intervene on behalf of its citizens.

Last year’s presidential primary races and the election campaign broadcast (for the first time) many national politicians being confronted by small town citizens alarmed by the devastation of drug addiction and overdoses in their communities. Candidate Trump made several highly emotional statements about this issue. Interestingly, the Democratic Party presidential candidate Clinton totally failed to ever mention this crisis in her campaign despite touting her ‘record on health care’.

In recent months, the scale of drug overdose deaths in the rural and small town communities led to popular demands for government action. And as predictable as summer mosquitos, a small armies of academics, experts and NGOers buzzed in to plead for greater funding for ‘research, education and treatment’. The same owners of pain clinics, that produced so many addicts, now expanded their business horizons by setting themselves up as ‘Addiction Treatment Centers’ to complement the Community Addict support groups, which have popped up like mushrooms.

None of these arguably opportunist ventures are inclined to engage in political ‘education’ to mobilize the worker-victims of addiction and other citizens to demand a universal national health system like other countries where the prescription addiction problem does not exist. They don’t even address the problem of workplace injury and the workers’ lack of access to effective rehab and physical therapy facilities rather than treatment with opioids. The medical community would rather send their patients to these treatment centers – where more addictive drugs, like methadone, are used to treat addiction – than face the real devastating consequences of the broken profit-mad US private insurance-controlled health care system and organize to truly serve their patients.

By the same token, the nation’s labor departments and labor unions at the federal and state levels have studiously ignored the toll that this has taken on the labor force. A New York Times editorial (October 16, 2016) pointed out that millions of working age men are totally out of the job market due to ‘pain and disability’ and a substantial proportion are on prescription narcotics.The long-term effect is clear: These addictions have destroyed internal worker discipline, essential for productive industry. It would be unimaginable for the German or Chinese industrialists and policy makers to accept the long-term consequences of such a phenomenon. This is just one glaring example of how cavalier the American oligarch and political classes view their native work force.

Murderers and their victims have come to be defined by their social class and not by their ‘education’ or access to ‘technology’. The capitalists of the pharmaceutical industry produce deadly products and distribute them at huge mark-ups to tens of thousands of for-profit pharmacies. The working and lower middle class recipients are the addicted victims.

For their part, capitalists and oligarchs have absolutely no need for any health insurance. They have their own exclusive boutique clinics and stables of elite doctors and nurses to provide them with the highest standards of care. They would never dream of allowing their family members to be prescribed the addicting products that have devastated so many millions of lesser citizens and made them such enormous profits. Although we may never see, let alone visit, these elite clinics, the deadly consequences of the medical-health care apartheid are not hard to fathom.

With predictable optimism, the US mass media reported that the drug overdose crisis has provided the organ transplantation industry with many needed body parts. Such silver linings!

As a group, the capitalist perpetrators of this ‘opioid war against the working class’ can easily donate tens of millions of dollars to presidential candidates and other political leaders to ensure that appointees to the so-called regulatory bodies will work hard to protect their profits rather than the health of the citizens. These oligarchs enjoy near total and eternal immunity from government regulators. If any outrage over the immense human losses to addiction ever manage to filter into their rarified lives of fine art philanthropy and other elite activities, they can rely on legions of public and media ‘moralists’ to blame the victims for their life destroying habits.

One such company is Purdue Pharmaceuticals, the maker of OxyContin. It is owned by the oligarch Sackler Family, whose founders are among the most elite high cultural philanthropists in the country. Since entering the unimaginably lucrative US ‘pain’ market in 1995, OxyContin has earned Purdue over $35 billion dollars and brought the Sacklers into the Olympian heights of the America’s ‘Uber-rich’. None of curators in the Sackler Galleries or the Sackler Wing at the Metropolitan Museum of Art would dream of displaying any ‘social realist’ depiction of the immense human suffering and loss caused by the drugs their bosses have peddled to millions of low-income Americans. But then tastes have changed: ‘Social realism’ is obsolete in the class-apartheid America that the Sacklers and their friends enjoy.

Quality research and investigation into major demographic changes is also obsolete. Describing the promiscuous dissemination of prescription opioids as one of the ‘biggest mistakes in the history of modern medicine’, a former FDA commissioner, did nothing to curtail the epidemic during his tenure (1990-1997) or to draw attention to the devastation after stepping down until just recently. Dr. David Kessler joined the chorus bemoaning the opioid epidemic after the highly publicized overdose death of the rock star Prince, writing an Op-Ed in the New York Times on May 6, 2016.

Academics receive grants from big national foundations to ‘study addiction’, focusing on the individual psychological disorders affecting the victims of overdose and the social pathologies of the street dealers.  This deflects attention from the corporations, which profit from, and the capitalist decision makers, who set the stage for, massive deadly addiction on a national scale. But university careers, peer recognition and fat research grants are not awarded to anyone foolish enough to identify the killer corporations, or the dangerous work conditions, the overtime, low pay, and increasing rates of injuries and despair which send the workers from one killer employer to ‘Big Daddy Pharma’, and the doctors who encourage them to rely on addictive pain killers rather than demand better pay, better health care, better work conditions and a real future for their families.

There is a crying need for effective action. The reality of hundreds of thousands of ‘deaths by prescription’ and millions of addicts should call for a special national prosecutor and body of dedicated, independent investigators who are willing to identify the profit motive among the country’s highest elite as the underlying basis for this continuing crisis. Any investigation should pursue the wide net of racketeers and enablers, ranging from lobbyists and corrupt bureaucrats and regulators to doctors and publicists, because this epidemic has touched tens of millions of working Americans, their families and friends, workmates and communities. And where are the child advocates to represent the interests of the thousands of addicted infants born to rural ‘Oxy-Moms’ and whose neonatal withdrawal crises have overwhelmed the capacity of rural and small city hospitals?

Alternatives

Ending the cycle of addiction and overdose deaths requires more than just making photo-ops at small town treatment centers. It requires focusing on the role of prescription opioids and the prosecution of corporate criminals. This includes prosecuting capitalists who exploit vulnerable workers, denying them protection, safe working conditions and access to quality health care. What is required is a fundamental change in capital-worker relations in this country.

Corporate economic strategies, which undermine wages and security, require an expanding reserve army of low paid or unemployed workers. With so many American workers disabled or dropped from the work force because of addiction, many temporary replacement workers are immigrant, who have been raised, trained and educated at the expense of their own country or society. This was once called the ‘brain drain’, but now includes the ‘brain and skilled brawn drain’. The fact that other societies have spent their resources to raise and educate these workers who then immigrate has allowed US capitalists and political decision makers to drastically cut social spending for education and health for American workers.

To counter this trend, a rational immigration policy in this country should address this issue and be calibrated to the size, scope and security of the domestic labor force. It must limit the power of capital to freely hire and fire American workers – and devastate entire communities.

The lobbyists of ‘Big Pharma’ and the state regulators, who profited from or just ignored the growing problem of drug addiction and overdose deaths should be treated like any other criminal charged with causing death or injury.

Doctors, who have decided to prescribe highly addictive narcotics in large quantities leading to addiction and fatal overdose, should be re-educated and monitored or face the loss of their license and prosecution. Early on in the epidemic, they knew about the addictive nature of these drugs. Not a few doctors and other medical personnel found themselves ‘hooked’. Recidivist operators of ‘pill mills’ should face serious penalties, including long incarceration. Health care providers could have decided to fight to secure their injured patients’ access to effective rehabilitation and physical therapy. Their easy mercenary choices have facilitated a disaster. How are they different from the notorious consultant psychologists, hired by the US government, to devise system of torture against detainees?

But others tried to raise the alarm: Pharmacists, doctors, nurses, and government regulators who resisted the pressure to prescribe or promote opioids for profit and instead tried to intervene to protect vulnerable patients or raise the alarm should be recognized and rewarded. Many faced professional retaliation for as ‘whistle-blowers’. The US, with its  ‘profit over patient’ ethos in health care, is the only industrialized nation to witness these demographic trends. This should be a cautionary tale to any country considering adopting US style health care and its lucrative but deadly approach to chronic ‘pain’. A recent investigation in the Los Angeles Times, entitled ‘OxyContin goes global – “We’re only just getting started” (December 18, 2016) details the mega-million dollar campaign of multinational opioid producers to break into other markets and documents an abrupt increase in overdose deaths.

An essential component to solving this huge crisis would be for the country to adopt a universal, publically funded, national health program. This could be funded by eliminating the cap on social security taxes and repatriating and taxing the trillions of overseas US corporate profits in tax havens; as well as by taxing big inheritance as a social redistributive remedy for immense wealth accumulation. This would open up opportunities in education, social mobility and careers. Only then will we see a decrease opioid addiction among the downwardly mobile workers and overdose deaths and reverse the trend of increasing mortality.

Taxes should be levied on corporations relocating abroad to combat capital flight. Speculative financial transactions, like stock trading, should be subject to a 1% sales tax.

A comprehensive national health system would drastically reduce the high administrative overhead. Unethical and unnecessary treatments and procedures and other scams endemic in our current ‘for profit’ health care system would be dramatically reduced. The resources, thus saved would go to effective health care and related services.

These financial, judicial and social services reforms would support a universal national health system expanded right on the existing Medicare structure, which has effectively served the older population for decades. This would help promote the growth a robust domestic labor market of secure, healthy and productive and well-paid workers.

Previous and current US Presidential Administrations and other political leaders have wasted trillions of public dollars on ‘multiple foreign wars on terror’ and ‘regimes change’ and financed the largest prison-industrial complex in human history, while ignoring the pre-mature death and destruction of their own citizens due to ‘legal’ pharmaceutical and medical practices. Alternatives have been left to future generations to ponder. Today there is a growing grass-root demand to end this crisis. The marginalized workers and rural poor who massively voted for the first time against ‘Big Pharma’s Candidate’ Hillary Clinton and elected the opportunist ‘billionaire’ Donald Trump were concentrated in the same areas devastated by the opioid (and worker suicide) epidemic. This marginalized sector, long scorned by the traditional politicians and dismissed by Candidate Clinton as ‘deplorables’, would require very little convincing to support a national health system as a first step to addressing the life and death crisis facing working Americans.

Furthermore the global trends toward implementing technological innovations, such as robots, automation and artificial intelligence, currently serve capitalist profits by making workers redundant and easier to exploit, as well as cutting out expensive health care and pensions. This change in capital-labor relations can and should be replaced with one, which uses technology to benefit the workers by improving the conditions of works and reducing the work week from 40 to 30 hours at the same pay (a once widespread worker demand during the 1950’s).

But these changes will not come from the ‘classless’ research projects of corporate-funded academics, or from the vacuous educational seminars given by NGO ‘experts’.

Meaningful battles against this ‘class war by prescription’ will depend on sustained solidarity and struggle. Workers will have to shake off this scourge. They have nothing to lose but their degrading and dangerous addictions. They have a world and a real future to win. Only they can ‘make America great again!’

[1] Shawn Donnan, “White ‘deaths of despair’ surge in US”, Financial Times, 3/24/2017

[2] ibid

[3] ibid

Apr 042017
 

By Eric Toussaint, 99GetSmart

arton14659-698a4

Mexico is the only former colony which, in the 19th and the first half of the 20th century, won decisive victories over its creditors through its own determination. In 1861 Mexico repudiated a portion of the external and internal debt being demanded of the country and in 1867 overcame a large French expeditionary force. Under the pressure of an authentic popular revolution, starting in 1914 and for more than thirty years, Mexico once again suspended repayment of its debt. During that period, with popular mobilization and social progress reaching high and low points, profound economic and social reforms were put in place, and after the Second World War Mexico’s economy gained in strength. This little-known history deserves to be put into the spotlight because it should serve as inspiration for today. It shows that determined struggle by a country under the domination of the major powers and international finance can make major social advances. It also proves that no victory is definitive and irreversible, a fortiori if those who govern fail to defend it.

This study devoted to Mexico during the period from the early 19th century to the Second World War demonstrates how a peripheral State can successfully repudiate a debt even if its collectors are backed by the imperial powers and their gunboat diplomacy.

This article is the sixth in the series “Debt: The Subordination of Latin America.” The first two articles are: “How the South paid for the Northern crises and for its own subjugation” http://www.cadtm.org/How-the-South-paid-for-the, “How Debt and Free Trade Subordinated Independent Latin America” http://www.cadtm.org/How-Debt-and-Free-Trade. “What other countries can learn from Costa Rica’s debt repudiation”, http://www.cadtm.org/What-other-countries-can-learn; The USA’s repudiation of the debt demanded by Spain from Cuba in 1898, http://www.cadtm.org/The-USA-s-repudiation-of-the-debt; “History: the Policies of the United States toward its Neighbours in the Americas in the 19th and early 20th Centuries,” http://www.cadtm.org/History-the-Policies-of-the-United. To these should be added an article devoted to “Three Waves of Public-Debt Repudiations in the USA during the 19th Century,” http://www.cadtm.org/Three-Waves-of-Public-Debt

The series devoted to the Americas complements five earlier articles on the Mediterranean: “Newly Independent Greece had an Odious Debt round her Neck” http://www.cadtm.org/Newly-Independent-Greece-had-an, “Greece: Continued debt slavery from the late 19th century to the Second World War” http://www.cadtm.org/Greece-Continued-debt-slavery-from, “Debt as an instrument of the colonial conquest of Egypt” http://www.cadtm.org/Debt-as-an-instrument-of-the, “Debt: how France appropriated Tunisia” http://www.cadtm.org/Debt-how-France-appropriated.

The local dominant classes lent to the colonial Spanish State

Spain conquered Mexico with fire and sword beginning in 1519. |1| Madrid called its colony “New Spain.” The war of independence began in 1810 and ended in victory for independence in 1821. At the end of the 18th century, the local dominant classes, including the clergy, were lending to the colonial State and also to the home country at a rate of 5%. Mine owners, big landowners, rich Spanish merchants established in Mexico, and the Mexican clergy lent large sums to Madrid at an interest rate that varied between 5% and 6%. These loans, which financed Spain’s European wars, were raised by selling Spanish bonds to Mexico’s ruling classes to contribute to Spain’s war against England in 1782 and against revolutionary France in 1793-94. When Mexico’s war of independence began in 1810-11, the ruling classes cut off credit to the Spanish government in Mexico City and Madrid. The risks were too high. |2| Only the Spanish merchants residing in Mexico were still lending money to the colonial government in Mexico City in 1813, at a rate of 5%, |3| since they had every interest in seeing the independence movement defeated and because they were convinced that should the Spanish camp be defeated, they would be compensated by Madrid.

The struggle for independence was conducted, with a few exceptions, by well-off sectors of the population who were of European origin and who, following the example of the rest of Latin America, wanted to rid themselves of the colonial yoke. |4| As throughout the continent at that period, the movement was led by “creoles” – sons and daughters of parents of European origin born in the Spanish colonies. The leaders of the independence movement had little regard for the indigenous populations, who accounted for some 80% of Mexico’s six million inhabitants. |5| Following independence in 1821, Agustín de Iturbide, the new head of State, questioned whether or not the debt of the former colonial regime should be repaid. He envisaged three options: primo, repudiate the debt, since it was accumulated in the interests of the colonial power that had exploited the country; secundo, confiscate the Church’s property and sell it to repay the debt; tertio, issue bonds in London in order to pay off old debts. |6| In order to avoid conflict with the local ruling classes, who were the holders of a large portion of colonial debt, the President decided against repudiation. Similarly, to reassure the powerful clergy, he decided not to nationalize Church property.

Iturbide with the Trigarante Army in the capital on 27th of September (1821)

Iturbide with the Trigarante Army in the capital on 27th of September (1821)

So, against the interests of the people, Iturbide opted to borrow in London and devote a significant part of the proceeds from the bond issue to repaying colonial debt. Mexico’s ruling classes, or a large part thereof, had an interest in their country taking on foreign debt. The article “How Debt and Free Trade Subordinated Independent Latin America”, http://www.cadtm.org/How-Debt-and-Free-Trade, gives a brief analysis of Mexico’s bond issues in London in 1824-25. They set off a chain of events that were to unfold over the entire 19th century and strongly affect the country’s history in its relations with foreign powers. The terms of the loans were clearly abusive, as was their management.

In February 1824, Mexico issued bonds in London through the intermediary of the bank Goldsmith and Company. The conditions were harsh in that they gave Goldsmith abusive advantages. Whereas Mexico issued debt worth the equivalent of 16 million Mexican pesos (3.2 million pounds sterling – NB: hereinafter, pounds sterling = £), the country actually received only 5.7 million pesos or approximately, £1.14 million), or a mere 35% of the amount borrowed. Taking into account the interest to be paid whereas it actually received 5.7 million pesos, Mexico committed to repaying 40 million pesos (16 million pesos in capital and another 24 million pesos in interest, since the rate was fixed at 5%) over a period of 30 years. To express it simply, Mexico received 1 and had to pay back 7. Even at the time of the bond issue, Goldsmith made enormous profits.

In 1825, Mexico borrowed the same amount (16 million pesos or £3.2 million) from another financial firm, Barclay and Company, |7| and actually received 6.5 million pesos (£1.3 million). Again, over 30 years, Mexico committed to repaying 44.8 million pesos (16 million pesos in capital plus 28.8 million pesos in interest, since the rate was set at 6%).

Despite what the official narrative claims, the suspension of debt repayment by Mexico and other Latin America countries (and also Greece) beginning in 1827 was not the cause of the London financial-market crisis. It was the consequence. Neither was it caused by the upheavals which have continued to affect Latin America and other countries, such as Greece, until this day.

The crisis broke out suddenly in London in December 1825 as a result of the bursting of the speculative financial bubble that had swelled over the preceding years and mainly affected domestic British activities. In addition, egged on by the speculative fever, London bankers massively granted credits to countries waging independence struggles (the decisive battles fought by Simón Bolívar took place in Latin America in 1824, the Greek separatists were in a fragile position in their conflict with the Ottoman Empire, etc.) When the crisis started in London, the Latin American countries and Greece were repaying their external debts as normal.

In Mexico’s case, the two financial firms Goldsmith and Barclay that had issued Mexican bonds in 1824-25 had made considerable profits at the country’s expense. It should also be pointed out that Goldsmith had skimmed off the interest and the repayment of the capital corresponding to the years 1824-25 from the 1824 issue. But in addition, a quarter of the amount of the 1825 issue, made through Barclay, was used to repay Goldsmith for the year 1826! Goldsmith speculated on the Mexican bonds: whereas the bank had purchased them from Mexico at 50 % of their nominal value, it sold a great number to third parties at 58 % of their value. Later, in early 1825 when the market euphoria was at its height, the firm was selling them at 83% of their face value. |8| However, the firm of Goldsmith went bankrupt in London in February 1826, and Barclay and co. failed in August 1826. |9| Clearly, Mexico was not responsible for the failures; rather it was one of the victims. Due to Barclay’s failure, Mexico lost £304,000 that had been skimmed off by the firm to prepay the interest and the beginning of repayment of capital for the entire year 1826 and part of 1827.

The payment default of Mexico and many other countries that occurred on 1 October 1827 was caused by the sudden shut-off of credit that happened in December 1825. Up to then, through 1824-25, access to credit in London had been largely unimpeded. Mexico however, like the other debtor countries, had been counting on further credits from London in order to repay the preceding ones. The conditions the countries had agreed to on the loans made it impossible for them to continue repayment without new loans. In other words, the credit conditions of 1824-25 were so unfavourable to the newly independent debtor countries that they were unable to repay without further borrowing.

In the early 1830s, Lorenzo de Zavala, Mexico’s Minister of Finance, |10| stated that Mexico should have refrained from seeking credit in London because Mexico’s economic resources were sufficient. |11| Zavala, it should be noted, was president of the Constitutional Congress at the time of the bond issues of 1824-25. Lucas Alaman, who was minister in 1824, also recognized a posteriori, in 1852, that the London issue had been disastrous. |12| José Mariano Michelena, who replaced Borja Migoni, who had negotiated the 1824 and 1825 loans, in London in 1825 condemned the usurious rates. |13| And yet an author such as Jan Bazant, in a work published in 1968 and considered authoritative in academic circles, wrongly states that Mexico’s borrowing on the London market was a good choice and that, all things considered, the credit conditions were not so disastrous after all. |14| Bazant’s main argument consists of pointing out that other countries accepted conditions that were just as unfavourable. It is not a convincing argument. Objective criteria such as the issuance price, the actual interest rate, and the commissions paid must be considered. Mexico agreed to conditions it should have refused to accept. But in any event the 1824 Goldsmith loan was by far the most abusive of all those granted to Latin American countries during the 1820s. |15| That other governments accepted loans on conditions that were against the interests of their countries does not make those entered into by Mexico any more legitimate. Moreover countries like Paraguay and Egypt refused to resort to foreign borrowing during this same period, and managed very well without. It was when Egypt eventually did agree to massive foreign loans, in the 1850s, that its situation became disastrous. |16|

The close link between domestic and foreign debt 

In contrast with the loans they granted to the Spanish colonial State at rates of 5 to 6%, the local ruling classes extracted usurious rates (12% to 30%, and even more |17|) from the new Mexican State, with foreign loans serving in part to repay the domestic debt. The rich Mexicans (big landowners – latifundistas –, powerful merchants, or owners of mines) who lent to the State had every interest in seeing the Mexican authorities continue to seek foreign loans. These loans were then used in large part to repay internal debt; and they had other advantages: they were a source of profit for Mexico’s ruling classes, who themselves purchased the Mexican bonds abroad. They were a source of the foreign hard currency needed by Mexican capitalists for importing foreign products (capital goods, consumer goods, armaments, etc.)

By financing a whole range of the State’s activities through borrowing, the Mexico authorities avoided increasing the taxes paid by those same wealthy citizens.

The use to which the two bond issues of 1824-1825 were put is a good illustration of this: 25% of the total amount went to repay internal debt; 15% was used for arms purchases in London; 8% went to purchase tobacco from major Mexican producers (the tobacco was then re-sold by the State); and 52% was used to pay the State’s current expenditures (payment of back wages, pensions, administrative expenditure). |18| This means that 0% was used for investments in development or for social expenditure.

The example of Mexico is very interesting from the following point of view: Mexican capitalists took on English or French citizenship to avail themselves of the protection of the London or Paris governments. The pretext used by France, Britain and Spain to justify invading Mexico in late 1861 was precisely the necessity of securing repayment of the debts owed by Mexico to French, British or Spanish citizens. Yet in fact some of those citizens were in reality rich Mexicans residing in Mexico but who had adopted a European nationality to obtain the support of the European powers in their conflict against their own State. In the literal sense, they were what is called in Spanish “vende patria” (“those who sell out their country”).

The debt restructurings of 1830 and 1840

As pointed out above, Mexico suspended repayment of its foreign debt (the Goldsmith and Barclay loans in October 1827) and its government attempted to make use of internal debt by agreeing, in 1828, to extremely high interest rates – the local ruling classes were very demanding: on 1 June 1828, the Mexican capitalist Manuel Lizardi granted a loan at an annual rate of 536%; on 23 July 1828, Angel González lent at 232%. |19| We should add that nine years later, in London, Lizardi’s financial firm served as intermediary between the Mexican government and the holders of Goldsmith and Barclay securities, pocketing substantial commissions (see below). |20|

The country entered into negotiations with London creditors who in 1829 had created a Mexican bondholders committee. In 1831, the Mexican authorities made enormous concessions to creditors. Whereas the arrears of interest for the period between October 1827 and April 1831 amounted to £1.1 million, they agreed to that interest being turned into a debt of £1.6 million (this is called capitalization of interest or transformation of unpaid interest into outstanding capital).

How did things stand after the 1831 agreement between Mexico and the creditors? In 1824-25 Mexico received approximately £2.44 million, and repaid £2 million in the form of interest and capital repayment between 1824 and 1827, receiving no further funds until 1831, and found itself with a debt that had increased from £6.4 million to £6.85 million. In the case of the Goldsmith loan of 1824, between February 1824 and July 1827 Mexico paid back £1.57 million whereas it had received only £1.13 million in all. |21| Mexico should have repudiated the loan due to the unconscionable nature of the contract, especially since the Goldsmith firm went bankrupt in 1826. Yet in 1831 Mexico recognized an outstanding debt of £2.76 million on the Goldsmith loan. |22|

In 1831, Mexico resumed foreign-debt repayments for a period of one year. In 1837, whereas it had received no further external loans, Mexico struck a new agreement with the creditors in London. The debt grew yet again – from £6.85 million to £9.3 million. Mexico made interest and capital repayments from 1842 to 1844. New negotiations took place in 1846, during which Manuel Lizardi reaped considerable – and fraudulent – profits from his country for the benefit of the bondholders’ committee. Despite the payments made in 1842-44, Mexico’s debt increased from £9.3 million to a little over £10 million, without the slightest additional credit being granted. This was purely an accounting trick that increased the outstanding debt for the creditors’ benefit while giving Mexico some semblance of relief. The additional commission that went to Manuel Lizardi totalled £876,000. After pocketing that sum, Lizardi dissolved his financial firm in order to escape future litigation.

In 1847, the USA made war on Mexico in order to annexe an enormous portion of its territory. The USA took half of Mexico, annexing what are today the States of Nevada, Utah, Colorado, New Mexico, Arizona and California. Troops occupied the capital, Mexico City, for a time.

Territories lost by Mexico in favor of the United States in 1848

Territories lost by Mexico in favor of the United States in 1848

After the war, Washington paid compensation for the annexed territories (15 million Mexican pesos, or approximately £3 million). A large part of that amount then went to repay the internal debt to the local ruling classes and to resume repayment of foreign debt between 1851 and 1853 (still in repayment of the 1824-25 loans). |23|

The disastrous international conventions signed by Mexico between 1851 and 1853 with Britain, France and Spain

In December 1851, Mexico agreed to sign an international convention with Britain under which it recognized a debt and declared that it was ready to indemnify British subjects and firms who had suffered losses in the past when the Mexican authorities had suspended repayments on internal debt that had been bought up by British firms. This convention was imposed by coercion: if Mexico wanted to issue new bonds in London, it had to sign this international treaty. If it refused, Mexico faced British military intervention on the pretext of obtaining justice for its subjects. Apart from the fact that this convention was weighted in favour of British subjects and companies, granting them excessively high repayments, it contained a measure that was even more harmful and scandalous and which deserves a brief explanation: a firm owned by a Mexican capitalist had obtained, using this convention, the guarantee of a large compensatory payment on the grounds that its owner, Martinez del Rio, had acquired British citizenship in 1843. The Mexican firm that had purchased Mexican internal-debt bonds succeeded in internationalizing that debt through the naturalization of its owner. |24|

The same year, Mexico signed a similar convention with Spain. Two others were to follow during 1852-53 |25| ; and between 1851 and 1853, Mexico entered into three such conventions with France. |26| According to Jan Bazant, half of the debt recognized by Mexico by virtue of these international conventions was in reality held by Mexican capitalists who had acquired British or Spanish nationality.

Britain, France and Spain, in forcing these conventions on Mexico, created an international instrument of coercion. By signing, Mexico relinquished part of its sovereignty and gave the foreign powers an argument for declaring war over unpaid debts. Until then the Mexican courts had refused claims by British, Spanish or French subjects concerning internal debt. And foreign courts did not deal with claims from their own citizens and firms if they involved the internal debt of a sovereign nation like Mexico. In agreeing to sign these conventions, Mexico was agreeing that its internal debt be turned into external debt, and that foreign States represent private citizens. As explained above, Mexico also agreed to allow Mexican subjects (capitalists, as it happens) who had acquired foreign nationality to have their interests defended by foreign powers.

Concretely, the domestic debts were replaced by Mexican government bonds that had international value and were repaid using customs revenues. The new external debt inherited from these conventions amounted to 14.2 million pesos (or a little less than £3 million). It’s important to make it clear that that amount does not correspond to any payment of funds to Mexico from foreign sources. Once again, it was simply a piece of accounting sleight of hand that transformed an internal debt into external debt. External debt, which before the conventions stood at 52.7 million pesos (a little more than £10 million) |27| corresponding to the unconscionable Goldsmith and Barclay loan of 1824-1825, increased by 14.2 million pesos to 66.9 million pesos. |28|

Clearly, in signing these conventions the Mexican authorities –comprised of representatives of the local ruling classes – acted against the interests of their country and of Mexico’s people.

We will see what advantages the foreign powers sought to gain from these conventions in the 1860s. Ten years later, the threat dramatically took concrete form when Mexican capitalists, beginning in 1861-1862, supported the French, British and Spanish invasion and backed France’s imposing of an Austrian prince as Emperor of Mexico. To permanently avoid the trap of international debt recognition conventions and the accompanying abandonment of sovereignty, the Mexican Congress adopted a decree prohibiting them in 1883 (see below).

The Revolution of Ayutla and the struggle between Liberals and Conservatives

In 1855, the dictatorship of the conservative Santa Anna was overthrown by the Revolution of Ayutla and the Liberal Party came to power.

On the right, Juan Álvarez, named by the Plan of Ayutla as one of the 3 leaders of the forces of the liberation

On the right, Juan Álvarez, named by the Plan of Ayutla as one of the 3 leaders of the forces of the liberation

In order to promote the development of a capitalist bourgeoisie in Mexico, the Liberals wanted to expropriate land belonging to the clergy and the indigenous communities. |29| The laws passed to this effect are referred to as the Reform, and were reaffirmed in the Constitution of 1857. In reaction, the Conservative Party, representing the interests of the clergy and large landowners, launched the War of the Reform against the Liberals in power, with the support of Pope Pius IX. The Liberal Benito Juárez, who had become president in 1858, was overthrown by Conservative generals. General Zuloaga, commander of the military garrison in the capital, usurped the presidency. Benito Juárez was forced to leave Mexico City and organized armed resistance against the usurpers from the North, while enjoying support from all over the country. Between 1858 and 1 January 1861, two governments coexisted – the Conservative government, which remained in Mexico City, and the Liberal one, whose seat moved about according to the needs of the war.

The scandal of the Jecker bonds issued by General Zuloaga, the usurper president

In 1858, the Finance Minister of the Conservative president of the period attempted to conduct a major operation to restructure/convert the internal debt for a total of 57 million pesos. The new bonds began to sell at 5% of their nominal value, after which the price fell to 0.5%! Mexico indebted itself to the tune of 57 million pesos and in return received only 443,000 pesos (less than 1% of the nominal value of the issue!) and some older bonds. It was a total fiasco for the treasury, but a gold mine for the bond purchasers. And in particular for the Swiss banker Jean-Baptiste Jecker, |30| established in Mexico City since 1835. A large shareholder in silver mines (the Taxco and Mineral Catorze mines), he had purchased a large number of bonds at between 0.5% and 5% of their value. One year later, Mexico issued more bonds internally using Jecker’s services. Jecker acquired bonds for a total value of 15 million pesos, and in exchange paid Mexico’s public treasury 618,927 pesos (approximately 4% of the value of the bonds) and bonds issued the previous year with a nominal value of 14.4 million pesos but which he had bought for next to nothing. The total cost of the operation for Jecker was 1.5 million pesos (that is, the purchase of a large part of the bonds issued in 1858 and the new 15-million-peso issue of Jecker bonds).

On 3 November 1858 Benito Juárez issued a decree from the city of Veracruz, revealed to the citizens of Mexico City by the clandestine press, which said:

Benito Juárez

                  Benito Juárez

“Benito Juárez,

Constitutional interim President of the United States of Mexico, hereby informs all inhabitants of the Republic that: By virtue of the powers vested in me, I deem it appropriate to decree the following: Any person who, directly or indirectly, shall give aid to the individuals who have refused obedience to the supreme Constitutional government by supplying money, food, ammunition or horses, shall through that act alone forfeit the full value of the amounts or the goods that shall have been delivered to them, and will in addition be liable to pay the Treasury a fine amounting to twice the amount of money, or twice the value of the goods that shall have been supplied.

Issued at the Palace of the General Government at Veracruz, 3 November, 1858.” |31|

Jecker and the local capitalists who were financing the illegal government had been warned.

Repudiation of the internal debt and suspension of payment of the external debt in 1861

Having defeated the Conservatives’ army, Benito Juarez triumphantly entered the capital on New Year’s Day 1861. Juárez and his government repudiated the internal loans contracted by the usurpers between 1858 and the end of 1860.

Nevertheless, he offered to compensate Jecker for the amount he had actually spent, or 1.5 million pesos. Jecker refused and sought the support of France in order to guarantee maximum profit. Emperor Napoleon III was looking for a pretext for launching new colonial conquests: he wanted to take possession of Mexico (whose territory was three times bigger than France) and its silver mines. The French government demanded that Mexico repay the bonds held by Jecker (who, remember, was a Swiss national) and Mexican bonds held by French citizens at face value. The fallacious nature of the argument they used becomes even more obvious when we learn that France granted French citizenship to Jecker in March 1862, whereas the invasion had already begun three months earlier, in early January of 1862 (see below).

France had already attacked Mexico in 1839

France had already used the pretext of damages caused to its citizens in Mexico to obtain trade advantages. In the chaotic post-independence period, French merchants in Mexico suffered losses, and some had even been killed during the disturbances.

In September 1838, the pastry shop of a Frenchman, Remontel, was looted in Tacubaya. Louis-Philippe’s France demanded 600,000 pesos (3 million francs) for damages and in compensation for “forced loans.” When the Mexican authorities refused, France sent in a squadron which took possession of San Juan de Ulúa and destroyed the port of Veracruz. The Mexicans referred to this intervention as the Guerra de los pasteles (Pastry War) to show the disproportion between the pretext and the effects.

Indeed the war did have consequences for Mexico, who had to rebuild the port of Veracruz and lost customs revenue while the port was out of service. It was forced to sign the Treaty of Veracruz, in March 1839, under which it agreed to pay the 600,000 pesos being demanded, but above all granted trade advantages to France, in particular for importation of fabrics and luxury products.

Jecker went bankrupt in May 1860, and among his assets the liquidators found Mexican bonds from 1858 and 1859 for an amount of 68 million pesos, which means that Jecker had only sold a small number of them, despite what he claimed. |32| This brings to mind what the French banker Erlanger did regarding the Tunisian bonds issued in Paris in 1863, (see http://www.cadtm.org/Debt-how-France-appropriated). It should also be pointed out that the Duke of Morny, Napoleon III’s half-brother and President of the National Assembly, later acquired 30% of the Jecker bonds. |33|

As indicated earlier, Benito Juárez, after emerging victorious from the power struggle between Liberals and Conservatives in late 1860, attempted to restore order to the country’s finances. Britain recognized him as President in February 1861 with the hope that his government would resume repayment of the debt stemming from the Goldsmith (1824) and Barclay (1825) loans, honour the convention of 1851, and take on the debts contracted since then by the successors. |34| But in May 1861, Benito Juárez decided to suspend repayment of the debt outstanding from the Goldsmith and Barclay loans for one year. In July 1861, he extended the suspension of payment to two years. No payments were made to Britain, France or Spain, who had backed the usurping Conservative presidents between 1858 and 1860.

The French invasion and occupation of Mexico (1862-1867)

On 31 October 1861, Britain, France and Spain entered into an international convention under which the three colonial powers agreed to use force against Mexico to obtain payment of its debts. |35| The conventions signed by Mexico between 1851 and 1853 were cited as justification for the aggression. The US executive attempted mediation: Washington offered to lend Mexico the money it needed to resume payments to Britain, France and Spain. But the US Senate finally rejected that proposal |36| and preparations for invasion continued. The Spanish landed in December 1861, the British on 4 January 1862, and the French four days later. The French expeditionary corps was by far the largest. In the end, only France pursued the invasion. Britain and Spain were opposed to France’s plan to conquer Mexico, abolish the Republic, and install a monarchy. The British and Spanish officially objected to France’s totally disproportionate demands and declared the convention of October 1861 null and void.

Maximilien 1st, emperor of Mexico.

Maximilien 1st, emperor of Mexico.

The British and Spanish withdrew from Mexico in April 1862. The French troops took a year to reach the Capital and occupy it to install – with the support of part of the local ruling classes – a Catholic monarchy. Prince Maximilian of Austria was proclaimed Emperor. During his reign, which lasted until 1867, he unsuccessfully sought popular support by launching certain social reforms.

Maximilian of Austria was clearly a puppet emperor serving France’s interests. Recognition of the Jecker debts contracted by the Conservative presidents in 1858-1860 was among his first acts. Another consisted in issuing a new international loan in Paris and London for 200 million French francs (40 million pesos, or £8 million). |37|

The new loan was successful only in Paris, where it was managed by two banks, the Crédit Mobilier and Fould-Oppenheim & Cie. The Crédit Mobilier had been founded in 1852 and benefited from the protection of Bonaparte. |38| The Fould-Oppenheim & Cie bank was directly tied to Napoleon III’s Finance Minister Achille Fould, who was the brother of the bank’s owner. The conditions of issuance were similar to those of the Goldsmith loan of 1824. Whereas Mexico indebted itself for 200 million francs, the sale of the bonds brought in only 100 million francs, a large part of which remained in France. Maximilian of Austria issued a second loan in Paris in April 1864 for 110 million francs (22 million pesos). The entirety of that amount remained in France. |39|Maximilian sought a final loan in early 1865 for 250 million francs (50 million pesos). |40| Of the total debt of 560 million francs contracted by Mexico, only 34 million francs actually arrived in Mexico. |41| More than half of the amount borrowed went directly to the French ministry of Finance. As for Jecker, he received 12.6 million francs.

The international military expedition sent by Napoleon III ended in bitter defeat; the French troops withdrew in February 1867. |42| During his brief reign, Maximilian, acting entirely as France’s surrogate, tripled Mexico’s foreign debt. Once Benito Juárez returned to the presidential palace in Mexico City and permanently ended the occupation, he repudiated all debts contracted by Maximilian of Austria and had him executed in June 1867. He also reaffirmed the repudiation of the interior debt contracted between late 1857 and late 1860 by the Conservative presidents Zuloaga and Miramon.

During the struggle against French occupation, in 1865 the government of Benito Juárez had contracted a debt with the United States amounting to 3 million pesos. That debt was honoured. Clearly the regime of Benito Juárez needed Washington’s support against the other colonial powers. It is also clear that Washington again adopted an imperialistic policy toward Mexico once the War of Secession was ended. As we shall see further on, the strategy used took the form of a policy of investments, in particular in railways. Later, Washington again resorted to military intervention after the Mexican Revolution broke out in 1910.

After Benito Juárez returned to power, Britain pressured him to resume repayment of the former foreign debt stemming from the convention of 1851. Mexico answered that this convention was no longer valid, since in the interim Britain had participated in a military expedition against Mexico in 1862 and then recognized the occupying regime of Maximilian of Austria. |43|

As for the outstanding debts corresponding to the Goldsmith (1824) and Barclay (1825) loans, Mexico did not repudiate them but made no payments until 1886.

And regarding the convention of 1852-53 with France, Mexico held that it was no longer valid in light of the invasion. Note that France eventually accepted Mexico’s position, and that diplomatic relations were fully restored between the two countries in 1880 without France demanding that former debts be recognized. This constitutes an important victory for Mexico. France did not want to lose the possibility of investing in Mexico and understood that to persist in making unacceptable demands on Mexico would get it nowhere.

We shall see that the government of Porfirio Díaz later adopted a policy toward France and other powers that was against the country’s interests where external debt was concerned.

The Porfirio Díaz regime (1876-1910) and the return to massive indebtedness

Young Porfirio Diaz

Young Porfirio Diaz

A new period in Mexico’s history began in 1876 when General Porfirio Díaz (a Liberal who had served under Benito Juárez) violently overthrew the Liberal government of Sebastián Lerdo de Tejada, who had succeeded Benito Juárez in 1872. This was the beginning of the Porfiriato, an authoritarian Liberal regime that would “modernize” the country by opening it much more to foreign capital, encouraging the accumulation of capital by a national bourgeoisie through expropriation and the accelerated development of capitalist relations of production, without completely ending pre-capitalist forms of exploitation.

The Porfiriato extended the Liberal reforms begun by Benito Juárez using even more authoritarian methods. |44| From that point of view, there was continuity. |45| On the other hand, whereas Juárez and Mexico had defied creditors’ demands for repayment of internal and external public debt, Porfirio Díaz adopted a policy that favoured the creditors. His government recognized old debts, including some that had been repudiated by Congress and by the Juárez government.

Mexico in 1880

Mexico in 1880

Between 1880 and 1884, Díaz handed power to General Manuel González, a faithful collaborator. During this period major debt restructuring was conducted, leading to a new cycle of massive indebtedness. The Porfiriato lasted until the Revolution of 1910. Between 1888 (the date of the first international bond issue during the Porfiriato) and 1910, Mexico’s external debt was multiplied by a factor of 8.5, increasing from 52.5 million to 441.4 million pesos, and internal public debt doubled.

A most edifying calculation

In 1883, when Mexico’s Congress adopted the law establishing the limits of the debt to be renegotiated with the creditors, it came to approximately 100 million pesos. Between 1888 and 1911, Mexico paid approximately 200 million pesos in interest and capital repayment and its total public debt (external and internal) reached 578 million pesos. |46| In other words, Mexico paid back twice what it owed and ended up six times more indebted. The amount actually received by Mexico was extremely small, because the increase in the debt was essentially the result of juggling accounts during successive restructurings. In addition, the funds actually received were very badly spent, generally in the form of subsidies to capitalist railway owners (see below).

Despite this catastrophic bottom line, several authors considered to be authorities on debt have praised the Porfiriato. William Wynne writes: “The advent of President Díaz to power in 1877 marked the commencement of an era of peace and strong government, and in 1885-86, a definitive and workable settlement of the early loans was embodied in a comprehensive scheme of financial readjustment. With this accomplished, a new chapter began to be written in the country’s foreign debt history, indeed, in the whole social and economic life of the nation. A succession of new loans was contracted and applied in a fair measure to the building of railways and public works, while foreign capital in considerable amounts was employed privately in the exploitation of the rich natural resources.” (p. 3-4) |47|

Jan Bazant, in the conclusion of his book on debt in Mexico, writes: “During the Porfiriato, material progress could not be attained by other methods than those employed – methods which consisted in considerable growth of foreign debt and foreign investments, as in other countries.” (p. 240) |48|

These two citations clearly demonstrate their authors’ bias. They do not hesitate to embellish the Porfiriato and the regime’s policies of indebtedness, which in reality were catastrophic for the country and its population.

Caught again in the machinery of debt 

Mexico ceased repayments of foreign debt in 1861 from Benito Juárez’s arrival in Mexico City and through 1888. |49| Note that the Juárez government, in the late 1860s, had the good sense to buy back a large quantity of the bonds affected by the conventions entered into with Britain in the early 1850s |50| at 10% of their value. For one thing, the cost of repurchase was low, and also, since the operation removed the bonds from circulation, the country saved money on interest payments and avoided future claims.

Porfirio Diaz in 1902

Porfirio Diaz in 1902

After he took power, General Porfirio Díaz sought to restructure the old debts in order to enrich the Mexican capitalists who held a large share of them and to improve relations with the major foreign powers. This he managed to do in 1888.

Since the Mexican Constitution did not allow him to be re-elected indefinitely, he passed on the presidency to General Manuel González between 1880 and 1884. González furthered negotiations with the creditors. In 1883, he succeeded in persuading the Mexican Congress to allow the government to negotiate new loans while acknowledging part of the old foreign debt – in particular that part related to the outstanding amounts of the Goldsmith (1824) and Barclay (1825) loans. The decree adopted by the Congress on 14 June 1883 |51| clearly repudiated the following debts: all debts contracted by the illegitimate (usurper) governments, those contracted by General Zuloaga and his successor, Miramon, between 17 December 1857 and 24 December 1860, and those contracted or renegotiated by Maximilian of Austria. |52|

One very important provision of the decree was that regardless of the origin of the credit and the nationality of the creditors, the debt must remain within Mexican jurisdiction, without the possibility of being granted any international dimension nor any revenue of the State being furnished to repay it. In including this provision, Congress wanted to deny the foreign powers the possibility of attacking Mexico under the pretext of forcing compliance with an international convention on external debt. Declaring that the debt must remain Mexican meant that in case of litigation with creditors, foreign or domestic, the only competent jurisdiction was Mexico’s. Declaring that no particular revenue of the State could be seized in repayment of debt protected Mexico’s right to make repayments only if it considered that it had the resources to do so. The limitations set by the law clearly show that for the majority of Congress members and Mexican public opinion, it was inconceivable to resume repayment of certain debts that were deemed “illegitimate” or “impure,” in the terms used in public debate by the main protagonists of the period.

The Decree of 14 June 1883, then, has twofold significance: on the one hand, it authorized the government of Manuel González to renegotiate old foreign debt; on the other, the legislature established constraints, limiting the concessions the government could make in meeting creditors’ demands.

On 1 June 1884, the government of Manuel González violated the Decree of 14 June 1883 by entering into an agreement with the international creditors in order to repay debts stemming from the conventions signed with Britain in the early 1850s. |53| The agreement with the creditors was finally submitted to Congress for ratification in November 1884. This caused major disturbances among parliamentarians and in the streets. |54| The members of Congress who opposed the agreement demanded a prior audit of the debts in order to determine their validity and legitimacy and decide what should be repudiated. The government attempted to force the agreement through Congress, causing major protests. Students led the demonstrations, and the repression resulted in one death. The debate in Congress was suspended, but that did not stop the González government, and then that of Porfirio Díaz, from entering into an agreement with the London Convention creditors, compensating them at a highly favourable rate and within a very short time. |55| As we have seen, at least half of the so-called “London” debt was held by Mexican capitalists. It is highly probable that 30 to 50% of the London bonds were held by Manuel González himself and by his brother-in-law, Ramon Fernandez, Mexico’s ambassador to France. |56|

The difficulties González encountered in Congress at the end of his term of office and the street demonstrations, all echoed by the press of the period, clearly show that debt was a central element in the national debate and that the orientation adopted by the government was rejected by a large part of the population.

Following these major incidents, Porfirio Díaz began his second term on 1 December 1884 and further reinforced the budgetary policy aimed at repaying the debt and seeking new loans.

In 1888, the restructuring of debt inherited from the Goldsmith and Barclay loans

Finally, Mexico issued new foreign debt in 1888, two thirds of the proceeds of which went to repay the balance of the Goldsmith and Barclay debt, by then more than 60 years old.

Let us bear in mind that in 1824 and 1825, Mexico had received £2.7 million (approximately 13.5 million pesos) from the Goldsmith and Barclay loans. Subsequently, it repaid £5.1 million (more than twice the amount actually received), including £4 million in payment of interest and £1.1 million in repayment of capital.

In 1888, Mexico used £5.4 million (27 million pesos) to repay the balance of the Goldsmith and Barclay debt. This was an out-and-out swindle. It went against the interests of the nation and served the narrow interests of the Mexican capitalists who held part of the old bonds. |57| Of course, foreign bondholders also benefited. And it was all at the expense of the Mexican Exchequer.

The 1888 bond issue, according to many major authors such as Jan Bazant, put an end to the 1824-25 debts, whereas in reality that old debt was replaced by a new debt of 34 million pesos |58| which Mexico was forced to repay until 1910, and whose balance was included in the debt renegotiations that took place between 1922 and 1942.

We can in no way agree with Bazant’s assessment, to wit: “With the 1888 loan the chapter of the 1824 and 1825 loans is closed. […] We can conclude that despite the many complications these loans had brought about for the country, in the final analysis they were a beneficial operation.” |59|

The 1824-1825 loans, restructured for the last time in 1888 (bearing in mind that they had already been restructured four times between 1830 and 1850 |60|) were a terrible yoke borne by the Mexican people.

Consequences of the Porfiriato debt policies

During the Porfiriato, the government imposed budgetary measures in order to produce sufficient financial leeway to cover debt repayments. Austerity measures included lowering public sector wages, increasing taxes and refusing any social spending.

Seven bond issues were made. The first one, in 1888, was essentially, as we have seen, to cover the reimbursement of previous bond issues. Those of 1899 and 1910 were again for similar repayments. That of 1893 was for general government costs. The 1889, 1890 and 1904 borrowing went straight to funding Mexican and foreign investors building railways.

By observing the nationalities, the localities and the names of the foreign banks providing the Porfiriato loans, we can trace the rise of big capital and the newly developing international financial centres. While the 1824-1825 issues were made in London by English bankers, or in Paris by French bankers the 1888, 1893, 1899 agreements were made in Berlin with German bankers (Bleichroeder, Deutsche Bank, Dresdner Bank). As of 1899 American banks make their presence felt, notably JP Morgan (now the biggest bank in the US) and in 1910 the French came back in force, under the banner of the Banque de Paris et des Pays-Bas (today the biggest bank in France: BNP Paribas). |61|

What is also striking is that the return of Mexico to the European Financial markets in 1888 as a borrower coincides with a general rise in European bank lending to Latin American countries. Since 1873, and into the 1880s, European financial markets had been through a crisis that cut the flows of credit and were only just finding a renewed interest in lending to peripheral countries. They were particularly drawn to feverish Latin American railway investments, whether in Argentina, Brazil, Uruguay or Mexico.

Mexican indebtedness furnished regular, juicy incomes to Mexican and foreign capitalists holding Mexican debt which, as we shall see, was used to lavish gifts on big private railway companies. These companies, after having furnished their owners with quick profits, were at their own request, nationalized at great cost to the State. To cover these costs the State resorted to more borrowing.

Contrary to affirmations that the State’s foreign borrowing was beneficial, enabling the economy to open up and assuring the construction of infrastructures, there are convincing arguments that it would have been possible to financially stimulate real development useful to the population without resorting to borrowings rife with extortion, fraud and embezzlement. Old illegitimate debts should have been cancelled. (In this case the first two loans would have been unnecessary and so would the second two – taken on to service the first two). The private railway companies that built the infrastructure should not have been subsidized. Rather, it should have been built as a public service project with other priorities than the exportation of commodities and the importation of finished products from Europe or the US. Taxes could have been levied on the incomes and fortunes of the richest and on the profits of the mining companies in order to avoid, as far as possible, recourse to borrowing. What should have been done is organize agrarian reform, stimulate domestic industrial production, promote the domestic market and develop the educational system.

The Porfiriato agricultural policy

Under the Porfiriato, grabbing the land of the Campesinos, villages and indigenous peoples was institutionalized by surveying companies charged with establishing the boundaries of unclaimed lands. The government sold the lands to the bourgeoisie and paid the surveying companies for their work with stretches of the land that they had themselves delineated. But these lands were rarely unused; they were usually common property. The bourgeoisie, with the help of the vast repressive means of the State and private militias, waged a fierce war against the poorly armed peasantry, who possessing only their land and access to water, fought desperately. Peasant rebellions were put down and the haciendas of the big landowners spread over ever greater territories in spoliation of the villages. The process permitted, at the same time, to dispossess the population of its common property and to create a class of peasantry possessing only their labour which they were soon forced to sell to Capitalists to gain their livelihoods. |62|

Adolfo Gilly said of these violent spoliations: “This accelerated process of accumulation dependent on precapitalist economic structures coincided with a worldwide phase of capitalist expansion, which distinguished it from the classic primitive accumulation process. From this aspect the phenomenon showed certain resemblances with the extermination of the Indians in the US, and other resemblances with imperialist countries’ colonial wars; it was in fact a colonial war waged by a bourgeois government against its own people.” |63|

In a society that was still largely agricultural, Mexican capitalism developed primarily around the haciendas, vast agricultural properties formed around a walled-in central structure containing the owner’s villa, employees’ quarters and other buildings necessary for the functioning of the domain (administration block, church, granaries etc.). While the hacienda was brought to Mexico by the Spanish colonists, it considerably spread under the Porfiriato. According to Adolfo Gilly, because of its capacity to use and occupy neighbouring lands, the hacienda “is remarkably adaptable to produce or labour market changes, able to contract into a certain self-sufficiency or expand to exterior markets depending on the economic conjuncture.” |64| It employs workers of different kinds such as peones, indentured peasants bound to the hacienda by debts, and day labourers taken on as needed. As well as this combination of different social relations of production, the political power in the hacienda is held by the ruling class, which completes the strong central power of the Porfiriato at a local level.

As a good demonstration of the catastrophic nature of the Porfiriato agricultural policy, from the point of view of the general population: corn is the Mexican staple diet and local growers know very well how to produce it, but in 1891-92, Mexico had to import vast quantities of corn from the US to avoid famine. |65| The problem was that the big land owners preferred to use the land intensively for other uses such as cattle, sugar, coffee, tobacco and sisal.

A 19th century Mexican historian, Francisco Bulnes, denounced the government’s 28 favourites to whom they sold 50 million hectares (235 million acres) of land that were then sold on to foreign companies. Bulnes claims that half of the State of Lower California was sold to an American capitalist of German origin for next to nothing. Three million hectares (7.4 million acres) of excellent land in the state of Chihuahua were made over to a certain Hearst. The Rockefellers and the Aldriches are said to have obtained enormous amounts of land in the State of Cohuila. |66|

In 1910 land ownership was highly concentrated. Mexico had a population of a little over 15 million inhabitants in a territory of 197 million hectares (486 million acres). 834 land owners between them possessed nearly 168 million hectares (415 million acres) of that. |67|

The railways

General Ulysses S. Grant, former President of the United States and holder of a concession to build a railroad line from Mexico City to Oaxaca, declared in 1880:

“The Mexicans have a country of vast resources, and these [rail-] roads will develop them to the mutual benefit of both republics. We are now buying […] sugar, coffee, tobacco and numerous other articles from countries […] where they are largely produced by slave labor. We are constantly paying into their treasuries a large amount annually for duties, and we give them back nothing but sterling exchange. […] Mexico is not only our neighbor, but she is a Republic. If fostered, she can produce nearly all of those articles, and will take in exchange what our manufacturers produce. They will take from us cotton goods, locomotives, cars, railroad iron, rolling-stock, all the machinery necessary to the running of a railroad, agricultural implements, wagons, carriages, musical instruments, jewellery, clocks, watches, and a thousand and one other things too numerous to mention.” |68|

Map of Mexico’s railways in 1903

Map of Mexico’s railways in 1903

Before the liberal Porfirio Díaz replaced his predecessor, the equally liberal Sebastián Lerdo de Tejada had been less willing to allow Washington to spread its railway infrastructure deep into Mexico. Referring to the semi-arid regions that separated Mexico from the US he declared, “Between the strong and the weak, let’s leave the desert”. |69| But Porfirio Díaz threw the doors wide open to the interests of Mexico’s northern neighbour.

The first railway line was inaugurated in 1873 and serious extensions went on from 1880, when the infrastructure counted 1,086 km, to the end of the Porfiriato in 1910. The infrastructure grew to 9,558 km in 1890, 14,000 km in 1900 and 19,025 km in 1910. |70| Construction and exploitation was trusted to US and British companies who enjoyed many advantages: abundant State subsidies, free transfer of land, requisitioned and badly paid work force, exonerations from taxes and duties, even the organization of their own private police forces.

A quarter of the federal State revenue was allocated to subsidising private railway companies. |71| By 1890 half of the domestic debt was allocated to subventions for capitalist owners of the railways (37 million pesos out of a debt of 74 million pesos). |72| Public subsidies covered between half and two-thirds of real construction costs. Grants were paid by the kilometre.

Karl Marx writing about railways in 1879

According to Karl Marx, “There is no doubt that in the colonies and in semi-colonial States the introduction of railways has accelerated the social and political disintegration, as in the more advanced States, the final development and thus the final change in capitalist production was faster. In each State, except in England, the governments enriched and supported the railway companies at the cost of the Exchequer. In the United States they were freely granted the ownership of vast tracts of public land, not only the land necessary for railway construction, but also several kilometres along either side (…). They became the biggest of the landowners, just at the time when immigrant farmers were seeking to create their farms along the railways to ensure the convenient transport of their produce […] Railways initiated a dynamic for the development of foreign trade, but trade in the countries that produced mainly raw materials for export came at the cost of increasing hardship for the labouring masses. .[…] The new indebtedness taken on by governments for the railways has increased their tax burden.” (Letter from Karl Marx to Danielson, 1879, cited by A. Gilly, p. 281, CADTM translation.)

The railways’ first goal was to favour external trade routes, so that the lines could be connected to the US network. All the regions they crossed were integrated into the budding capitalist economy, pushing up land prices and intensifying the spoliation of the peoples, as previously mentioned, while destroying their pre-capitalist life styles. Politically, railways also permitted the central authorities to affirm their power as they could quickly intervene in a rebellious region. |73|

At the beginning of the 1900s the two main rail networks were owned by private US companies. |74| In 1904 Mexico purchased one of them from the Speyer bank for $9 million. Previously, the Mexican government had borrowed to subsidize this network and now borrowed a further $40 million, of which, only $16 million ever appeared in the Mexican Exchequer. This $40 million loan was to be repaid at 5% interest over a period of fifty years, the final repayment scheduled for 1954. |75| In 1909 Mexico financed the purchase of the other network from its US owners by borrowing from US banks associated with the railway’s owners.

Purchasing rail networks brought 13,744 km under the management of the Mexican State or two-thirds of the total Mexican infrastructure. In fact the Mexican and US owners wanted to sell off their interests because the systems were no longer as profitable as when the State was massively subsidising them. |76| The State purchased them at high prices and to do so borrowed from the banks that owned much of the network.

Gilly also wrote “Considered together, the development of a domestic market, the integration of the economy into the New World economy and the development of capitalist production under the Porfiriato are one and the same phenomenon, the remarkable dynamism of which is borne out by several observations. Along with the railways the whole communications system progressed: the telegraph, which ran along the rails; roads, ports, postal services. Cities inaugurated drinking water and electric street lighting networks.” |77|

Foreign investment

Foreign capital investment is essential to industrialize the country:

“Around 1884, foreign investment in the country amounted to 110 million pesos. In 1911, it reached 3,400 million pesos […]. These investments were in the following sectors: railways 33.2% ; mining 24%; oil 3.1%; public debt 14.6%; commercial 4.9%; banking 3.6%; electricity and public services 7% ; agriculture, stock-breeding and forestry 5.7% ; industry and transformation 3.9%. 62% of total foreign investment came from Europe (90% of which was British or French) and 38 % from North America. However, Mexico represented only 5.5% of European foreign investment whereas it took 45.5% of US foreign investments.” |78|

Towards the end of the Porfiriato, when drilling started for the oil that had been discovered in 1901, the investments came from Britain and the US.

The end of the Porfiriato and the beginning of the 1910 Revolution

“For a generation Porfirio Díaz ruled Mexico with an iron hand. During that period he transformed a turbulent and bandit-ridden land into a peaceful and law-abiding country in which life and property were secure.” |79| For William Wynne, jurist and author of this opinion, the rights to be defended are those of capitalists seeking to grab the country’s and people’s resources. A dictatorship such as that of Porfirio Díaz helps this along and by doing so gains this kind of approval. In Wynne’s opinion it is fundamental that the country get into debt and the creditors be repaid without the legitimacy or legality of the loans being contested. Wynne saw the Porfiriato measures as positive.

In fact, there was such a widespread process of dispossession, spoliation and exploitation that revolution was brewing and ready to burst. It started by a rejection of Porfirio Díaz’s authoritarianism but from the beginning it included social and identity issues. The communities of despoiled indigenous peasants wanted justice. They wanted the return of lands that had been stolen from them, so as to regain their livelihoods. The workers wanted better labour laws and political rights. Other social sectors, victims of capitalist development under the Porfiriato, made demands and eventually joined the revolution that set its mark on the Mexico of the 1910s.

Emiliano Zapata

Emiliano Zapata

Revolution broke out in response to calls to resistance when in 1910 the by now very unpopular General Porfirio Díaz, at the age of 80 and in power since 1876, was again re-elected. The calls were notably made by Francisco I. Madero, son of a wealthy capitalist family, |80| who had founded the National Anti-re-election Party in 1909.

After a difficult start, the uprising, which had met its first successes in the north of the country, spread to other regions, notably to Morelos (south of the capital) where the indigenous leader Emiliano Zapata and his companions fought for the restitution of common lands plundered by big landowners. The successes of the revolution forced Porfirio Díaz to resign in May 1911 and go into exile in Europe. |81|

Once elected president in October 1911, Madero tried to channel the ongoing revolution. He refused the agrarian reforms demanded by Emiliano Zapata |82| and his partisans but he also annoyed US conservatives. He was assassinated in February 1913 after a coup d’état set-up by the US Embassy and led by General Victoriano Huerta, who Madero had put at the head of the Strategic Military Command. William H. Taft was president of the USA |83| and had direct interests in several US conglomerates active in Mexico. |84|

Victoriano Huerta

Victoriano Huerta

In 1911-12 Mexico borrowed $20 million from the Speyer bank in New York who, as we have seen, had previously granted loans to the Porfirio Díaz regime in 1904 and 1909. The 1912 loan was partly used to pay the interest on the first loan and was to be repaid in record time in 1913. After Madero’s assassination, the usurper, Huerta, managed to raise the equivalent of 58 million pesos in Paris in June 1913. The US banks were clearly becoming aware of the extent of the revolution and the dangers it represented for them; whereas European banks jumped at the chance to lend to the dictator during the euphoric period that preceded the First World War. French banks (mainly the Banque de Paris et des Pays Bas and Société Générale) subscribed 45 % of the total amount, German banks (including Deutsche Bank) 19% and an English bank also subscribed for 19%. The New York banks JP Morgan and Kuhn Loeb only subscribed 12%. Speyer did not take part in the loan but supported it as the funds would be used to pay the loans it had granted in 1911-12. By January 1914 Huerta was in a financial stranglehold and suspended debt repayments. |85| Mexico did not resume payments until 30 years later after having won an enormous victory against its creditors (see further on). Mexico did not resort to foreign banks again until the second half of the 1950s (US banks became Mexico’s principal lenders).

The Mexican revolution 1910-20

The Mexican revolution had deep-seated implications. The principal protagonists were the indigenous peasantry (who made up the majority of the population), while the workers’ role, although important, was only secondary. |86| Nevertheless, the repression of the miners in 1906 in Cananea, in the east of the State of Sonora, and of the workers of Río Banco, at Veracruz, had exacerbated popular discontent and contributed to creating the conditions that led to the revolution.

Pancho Villa and his escort, 1911

Pancho Villa and his escort, 1911

The movement led by Zapata was the most advanced among the population. It was very widespread in the State of Morelos and became the “Commune of Morelos”. Zapata and his movement promoted, as of November 1911, the Ayala Plan which went much further than President Madero’s, known as the Saint Luis de Potosi Plan.

While Madero went no further than to revise decisions through which the Porfiriato plundered vast stretches of land at the expense of indigenous communities and Campesinos, the Ayala Plan called for arms to put an end to private ownership of the vast stretches of land. Zapata and his Plan called for the redistribution of the land to the smallholders who worked it, and for the land seized by aggressively applied laws going back to 1856, to be returned to the communities who had been dispossessed. The war-cry was “Reform, Liberty, Justice and Law”.

Madero organized the repression of the Zapatista movement that he wanted to destroy as well as against socialist and anarchist movements in the north. The elimination of Madero by Huerta was welcomed by the ex-Porfirists, the Catholic Church and the armed forces. The repression against the popular movements intensified.

Venustiano Carranza

Venustiano Carranza

Venustiano Carranza, a liberal leader and admirer of Benito Juárez, called for the overthrow of General Huerta and so made a momentary alliance with the Southern Liberation Army and with Pancho Villa, |87| who had created the Northern Division near the US border. Carranza repudiated the debt Huerta had signed in 1913. Meanwhile, the democrat Woodrow Wilson succeeded William Taft as US President. Taft’s policy concerning Huerta was not the same; he considered him a usurper and preferred to await the outcome before granting US recognition. To sway the balance, Wilson sent 44 US navy ships to block the port of Veracruz on the pretence of preventing German arms supplies from reaching Huerta.

Although the social ideas and objectives of Pancho Villa |88| were less progressive than those of the Zapatistas, the two groups came to an agreement in order to influence the process. Their armies met in Mexico City at the end of November 1914. The two leaders came together at the presidential palace on 6 December 1914, in opposition to Carranza.

Finally, after much difficulty and several battles against Huerta’s and Pancho Villa’s troops, who represented opposite sides, Carranza gained the advantage and Huerta was forced into exile in July 1914, after which, Washington recognized Carranza as de facto President. From then on the US intervened directly to end the threats from Zapata and Villa, whose intentions were a threat to the interests of its big businesses (plantations, mining, oil, etc.).

To help Carranza destroy Zapata’s social basis and organize his assassination Washington sent him 53,000 rifles in 1915. Carranza launched an offensive against Zapatista resistants: mass executions and deportations took place, villages were destroyed, a 100km long trench was dug around the capital city to protect it against Zapatist attacks and chemical weapons supplied by Washington were also used. |89| Yet despite the magnitude of the atrocities committed the objective completely failed. The Zapatista army was again operational within a year.

Furthermore, on 15 March 1915, the US sent an expeditionary force of 12,000 troops (5,000 according to some authors), under General Pershing, to the State of Chihuahua to eliminate Pancho Villa. Among the other officers were two future generals, Patton, who made their names at the battle of the Ardennes in the winter of 1944, and Eisenhower, who was to become 34th President of the United States of America after the Second World War. The operation was a fiasco; Pancho Villa’s resistance won through.

The failure to quell Pancho Villa’s forces and the Zapatista movement was clearly due to the enormous popular support the two movements enjoyed. Fierce repression could not end it for as long as the revolutionary momentum lasted, which it did until 1918-1919.

In order to consolidate his power, Carranza passed social measures applicable to rural as well as to urban sectors. He was well aware that to take the sting out of the Zapatista movement it was necessary to meet some of the popular demands.

When the capital was retaken without hostilities after the Zapatista and Villista troops’ voluntary withdrawal (neither had ever had the intention of taking power or of occupying the capital), Carranza applied his new measures to the rural and urban sectors and made agreements with the trade unions which included the distribution of humanitarian aid. He supported the electricians’ union against their bosses and arrested tradesmen and 180 priests. The leaders of the “Worldwide Workers” Anarchist unions signed an agreement with Carranza and the influential General Obregon to join the war against Pancho Villa in exchange for concessions. |90| On 6 January 1915, Carranza passed a law of agrarian reform of limited application with the intention of alienating Zapata’s and Villa’s rural base.

A year after the pact with the Anarchists Carranza ended the concessions. He no longer had any use for them; Villa’s Northern Division had been destroyed. Repression started against the workers and the unions. Repression quashed a great general strike that began in Mexico City on 31 July 1916. |91| At the same time, during July and August 1916, there was a massive offensive against the Zapatistas in the State of Morelos.

In spite of all these tragic and unpopular acts, in January 1917 Carranza managed to consolidate his power and give it a cloak of legitimacy by adopting what was, for its day, one of the world’s most socially advanced constitutions. This constitution included some elements of the Ayala Plan. It stated that the Nation should keep control of its natural resources, and that the Peasantry should have access to the land. It announced an agrarian reform and social rights (an eight hour day, union rights, the right to strike, a minimum wage, limitations on the work of women and children).

Letter from Emiliano Zapata to the Russian Revolution dated 14 February 1918.

It would be wrong to imagine that Emiliano Zapata limited his visions to Mexico and the Campesinos. The following extracts of his letter to the Russian revolutionaries clearly show the importance he gave to solidarity between the two great revolutions of the time and the necessity of cooperation between workers and peasants:

“We would win much, Humanity and Justice would win much, if all the peoples of the Americas and the older European Nations understood that the cause of the Mexican Revolution and the cause of Russia incarnate and represent the cause of Humanity, the supreme interest of all the oppressed peoples […]

Here as there, there are inhuman masters, who, greedy and cruel from father to son, brutally exploit the great masses of the peasantry. Here as there, enslaved men, men of broken spirit, are starting to awaken, to cry out, to act, to revolt.

It is not surprising that the proletariat of the World applauds and admires the Russian Revolution, in the same way that they will join, sympathize and support our Mexican Revolution as soon as they realize what its goals are […].

This is why the diffusion and propaganda effort that you have undertaken in the name of truth is so interesting; this is why you should go to all the associations and workers’ centres in the World to have them realize the importance of taking on the double task of raising the awareness of the worker’s struggle and forming the peasantry’s class consciousness. It must not be forgotten that because of their interdependence, the emancipation of the workers cannot succeed unless it goes hand in hand with the liberation of the peasantry. Otherwise, the bourgeoisie will always be able to get the upper hand by setting one against the other, for example, using the ignorance of the peasants to combat and restrict the workers’ rightful anger, or enrol unaware workers to fight their country brothers.”

We can see here why the Mexican ruling classes and the US government wanted to be rid of Emiliano Zapata. |92|

In April 1919, Carranza managed, through trickery, to have Zapata assassinated.

In 1920, Carranza was ousted by the General Alvero Obregon, a key collaborator. Some months later, on 1 September 1920, Obregon was officially elected President with more than one million votes. He had the support of union leaders, particularly those of the Confederacion Regional Obrera Mexicana(CROM, the Regional Confederation of Mexican Workers), a trade union founded in 1918. In 1920, Obregon persuaded Villa to lay down his arms and demobilize his remaining loyal soldiers. In return, he would receive a pension and his grade of regimental General in the federal army would be recognized. Villa too was assassinated, in 1923.

The revolutionary dynamic petered out during 1918-1919. The most ardent and visionary men and women, such as Emiliano Zapata and his partisans, were either eliminated or absorbed by the capitalist system. The country had a very progressive constitution but it was only partially applied and the local ruling classes quickly started to work towards abolishing the important concessions they had been forced into during the revolution.

Successive governments gradually buried the great social conquests achieved between 1911-1917 but they resurfaced in force as of 1934 (see further on). The governments also sought compromise with the creditors from 1921.

Debt renegotiations from 1921

Between 1922 and 1942 (20 years!), extended negotiations were held with a consortium of creditors chaired by one of the executive officers at JPMorgan.

In February 1919, a cartel of banks to which Mexico owed money was set up and called the International Committee of Bankers on Mexico. It was chaired T. W. Lamont, who represented JPMorgan and brought together banks from the US, the UK, France, the Netherlands, Belgium, Switzerland and Germany.

In 1921, President A. Obregón invited T. W. Lamont to Mexico to start negotiations that resulted in an agreement in June 1922. |93| It was a bad agreement for the country that clearly showed the government’s political orientation. It was close to the Porfiriato policy in terms of indebtedness, i.e. its subjection to the interests of local ruling classes and of international banks that were creditors for both external and internal debts.

Through this agreement President Obregón and his government acknowledged a public debt of US$ 500 million. In 1910 it had amounted to 220 million which, with additional loans after that date, i.e. those contracted by the usurper Huerta between 1911 and 1913, came to a total of US$ 30 million (The 20 million lent by Speyer Bank had been paid back with a loan contracted in Paris in 1913). President Obregón thus agreed to acknowledge a debt that was twice the amount actually due. |94| On top of that, he agreed to add 200 million as default interest. |95| It was a thorough betrayal of the country’s and the Mexican people’s interests, especially since the debt contracted by dictator Porfirio Díaz (US$ 220 million) as well as loans by the usurper Huerta (US$ 30 million) clearly constituted odious debt. They had been contracted against the interests of the people with the full knowledge of the creditor banks. |96|

The Mexican Congress, controlled by the president, sanctioned the agreement and Mexico started paying back in 1923, but the amounts to be paid were so high and the fiscal deficit so deep that on 30 June 1924, Obregón suspended debt repayments. Mexico resumed negotiations with Lamont from JPMorgan and these resulted in another agreement in 1925, which was again sanctioned by Congress. To resume repayments, the new Mexican president, Plutarco Ellias Calles (in office from December 1924 to November 1928), negotiated a credit line with the Committee of Bankers. Some payments took place in 1926, but in 1927 Mexico again suspended repayments.

In 1928 the Committee of Bankers sent a commission of experts to analyze the situation. In their report the experts criticized the government for its social spending, particularly in public education. They considered that Mexico had invested too much in irrigation works and in setting up a system of public credit for farmers. They acknowledged that in order to avoid another revolution, public expenditure was necessary but estimated that government spending had been excessive. |97|

Negotiations between the government and the Committee of Bankers were resumed. Another agreement was signed in 1930 but for the first time since 1922 many MPs were opposed to ratification. Four MPs from the State of Chihuahua even introduced a bill demanding a ten-year moratorium on debt repayment so as to use the money for socially useful expenditure. |98| The government rather than run the risk of a minority in Congress, did not put the agreement with the Committee of Bankers to the vote.

Meanwhile export revenues declined as a consequence of the October 1929 Wall Street crisis and the project of resuming debt repayments was perceived with increasing anger by the population. In January 1932, Congress voted a law that cancelled the latest agreement between the government and the Committee of Bankers. Eventually on 1st September 1933, President Abelardo Rodriguez announced that Mexico would not resume repayment of its external debt.

Lázaro Cárdenas’ presidency (1934-1940) prepares the 1942 victory against creditors

In December 1934, Lázaro Cárdenas started a presidential mandate that was extended until December 1940. Over those six years Cárdenas carried out major left-wing reforms, some of which made it possible to implement for the first time some of the revolutionary aspirations of the years 1910-1917 and the 1917 Constitution.

Lázaro Cárdenas became president in a context of social struggle such as workers’ strikes. His orientation was quite different from that which had prevailed since 1920. He opposed his predecessor Plutarco Ellias Calles. He refused to resume negotiations with the Committee of Bankers.

Lázaro Cárdenas

Lázaro Cárdenas

One of the first measures Cárdenas took concerned the reform of public education. Article 3 of the Constitution as modified in December 1934 stipulated that state education was to be “socialist in character”, and that as well as excluding any religious doctrine it was to fight fanaticism and prejudice. Schools had to foster among the young a “rational and accurate” perception of the universe and of social life. The explanation given of the rationale behind the bill introduced to the Chamber of Representatives was that a socialist education as set down in Article 3 did not mean an immediate transformation of the economic system but the preparation of the human material needed to carry the revolution forward and consolidate its work. Indeed the country’s future belonged to the socialist youth, educated and trained in Mexican schools. It was incumbent upon those young people, the text said, to fulfil the aspirations of Mexico’s oppressed and labouring classes. Though the implementation of these principles was limited due to the system’s inertia, they had a deep and lasting impact on Mexican society.

Land Reform

According to one of the provisions in Article 27 of the 1917 Constitution, which provided for land to be expropriated by ejidos, |99| Lázaro Cárdenas expropriated some 45 million acres that had previously belonged to big Mexican landowners and foreign companies. He distributed this land to indigenous agrarian communities in the form of traditional collective properties known as ejidos. So the land was no longer the property of private individuals. Apart from meeting the fundamental demands formulated by Emiliano Zapata and in the Ayala plan, the aim was to give back to local communities what they had been robbed of and to promote a self-sufficient kind of farming that would meet the needs of the local markets. The farming communities that received land could use it as they pleased but were not allowed to sell it. Those ejido communities developed decision-making procedures to run the land. Cárdenas’ government created a public bank, Banco Nacional de Crédito Ejidal or Banjidal (the National Bank for éjido Credit) and also financed the training of technicians to improve the yield of the land. Cárdenas’ land reform differed from the policies of former governments which had only restored a limited quantity of land to private individual owners.

Nationalization of oil and railways

The 1936 railway workers’ strike resulted in the complete nationalization of the railways.

In 1938, the nationalization of oil was brought about by a strike of the workers in the oil industry. Oil extraction, which had started at the end of the Porfiriato, was in the hands of UK and US companies. Paragraph 4 of Article 27 in the 1917 Constitution stated that oil-field reserves were the property of the nation. In 1937, oil workers began a determined confrontation with the owners of the oil companies who would not grant the pay-rise demanded by the workers. On 18 March 1938, Lázaro Cárdenas stepped in to put an end to the confrontation by expropriating the oil companies. He added that within ten years foreign owners would be compensated. This infuriated foreign capitalists and the UK severed its diplomatic relations with Mexico so as to put maximal pressure on its government. |100| Cárdenas did not budge. He created the public company Petróleos Mexicanos (Pemex). Cárdenas’ decision was met with huge enthusiasm in the population. Pemex (let us recall) was privatized sixty-five years later, in 2013, in the context of hardening neoliberal policies.

International policy

Cárdenas’ government was also one of the few to provide the Spanish Republicans with weapons, thus breaching the blockade by the British and French governments. Churchill vehemently decried Mexico’s position. Cárdenas’ government also welcomed and supported 40,000 Spanish Republicans after they were defeated by Franco, who had been massively armed by Nazi Germany and Fascist Italy. Cárdenas also hosted Trotsky, the Russian revolutionary persecuted by Stalin to whom no European government was willing to grant either a visa or a right to extended residence. |101| Cárdenas befriended the Russian exile, which did not prevent one of Stalin’s agents from murdering Trotsky in Mexico City in August 1940.

Cárdenas was also very popular because as soon as he became president, he cut his salary by half, left the traditional presidential palace (Chapultepec Castle, the former residency of New Spain’s viceroys) to move to a less ostentatious place called Los Pinos and converted the former castle into a national museum of Mexican history. At the end of his mandate, his fellow citizens could see that he had not accumulated any riches for himself.

To sum up, we can say that although Lázaro Cárdenas did not try to break away from capitalism, he carried out structural reforms that improved the people’s living conditions. They partly met fundamental demands formulated during the 1910-1917 Revolution and strengthened the country’s sovereignty over its natural resources. Cárdenas also conducted an anti-imperialist international policy that supported solidarity among peoples.

The 1942 victory against creditors

Cárdenas’ refusal to resume debt payment or even negotiations with the international Committee of Bankers brought victory. His former Defense Minister, Manuel Ávila Camacho, was elected to take over as President and Cárdenas became Defense Minister.

From 1941, as he wanted to improve the US relationship with Mexico, President Franklin Delano Roosevelt insisted that US bankers, starting with JPMorgan, give up and acknowledge the Mexican government’s repudiation. In December 1941 Washington was about to enter the Second World War and needed the support of its Mexican neighbour (as well as that of Brazil, another country that had stopped paying its debt). The agreement that put an end to the conflict between the international Committee of Bankers and Mexico was an act of surrender on the part of the banks. While the Committee demanded payment of debts estimated at US$ 510 million (capital and interest), the final agreement mentioned payment of less than US$ 50 million: a cut of over 90%.

Moreover, what is most remarkable is the rate used for compensation of default interest: 1/1,000 for delays before 1923, 1/100 for 1923-1943. |102| Now in many debt restructuring agreements in the 19thcentury or in the first half of the 20th century, all default interest was turned into owed capital. Let us recall that the agreement signed between Obregón and the international Committee of Bankers in 1922 meant that Mexico acknowledged a debt of US$ 500 million! And 20 years had gone by. By agreeing to pay a debt of US$ 50 million (capital and default interest included), the Mexican government won a resounding victory.

There is more: security holders had to hand in their securities and have them registered and stamped by the Mexican authorities before they could claim any compensation! Bankers had to register securities with the Mexican government: this was unprecedented. Note also that German banks that were part of the international Committee of Bankers were not allowed to register their securities because they were perceived as helping an enemy power.

Better still, from 1940 onward Washington tried to buy Mexican oil even though Mexico had paid no oil compensation. The Sinclair oil company started buying oil from the public company Pemex. Sinclair, that had demanded US$ 32 million of compensation, finally settled for US$ 8 million compensation partly paid with dollars Pemex had received from Sinclair in payment for 20 million barrels of oil over four years. Eventually a general agreement was reached and Mexico promised to pay US$ 23 million as compensation for all the US oil companies that had been expropriated in 1938. |103|

Thanks to the agreement on its debt, to other political measures taken under Cárdenas and to the general context after the Second World War, Mexico was able to unfold a policy of economic development while carrying out a strict form of protectionism until the 1950s. Mexico did not borrow from private banks again until the late 1950s.

Final remarks and conclusions 

Mexico is the only former colony that managed to defeat its creditors on its own in the 19th and first half of the 20th centuries. In 1861, Mexico repudiated a large portion of the debt that was claimed and gained complete victory in 1867. Next, less than twenty years later, ruling classes and the dictator Porfirio Díaz managed to backpedal, which is typical of the collusion and duplicity of the upper classes in a dominated country who see their own interest in submission to European or US imperialist powers.

When Porfirio Díaz was eventually overruled and a genuine popular revolution took over, Mexico again suspended debt payments for over thirty years (from 1914 to the end of the Second World War) and simultaneously implemented in-depth social and economic reforms. The victory over Mexico’s creditors was complete albeit not final.

The present paper shows how important it is to understand what occurred in Mexico between its independence in 1821 and the end of the Second World War. The other country that succeeded in repudiating its debt on its own was the USSR in 1918. The common point with Mexico is the coincidence of a revolutionary process and debt repudiation. There are also differences: 1. the Bolshevik government simply wiped the Tsarist debt away; |104| 2. at the time of the 1917 revolution Russia was an imperialist power, though a declining one, while Mexico was a former Spanish colony that was eyed greedily by the US and ascending European imperialisms. The other countries that successfully repudiated debts were major powers such as the US |105| – or were protected by one of them – as was the case of Costa Rica, protected by the US against the UK in the early 1920s. |106| This is why the Mexican experience is unique and deserves to be more widely known. |107| Yet very little has been published about it. Dominant thinking hardly wishes Mexico’s real history to be acknowledged. Among left-wing movements we have a lot of catching up to do and it is to be hoped that this article will play its part.

Acknowledgements: The author is grateful to Victor Isidro, Nathan Legrand, Carlos Marichal, Alejandro Manriquez, Silvia Elena Meza, Damien Millet and Claude Quémar for their comments and/or their help in locating sources.

The author is fully responsible for any mistakes that may occur in this paper.

Translation: Snake Arbusto, Vicki Briault Manus, Mike Krolikowski, Christine Pagnoulle.


Bibliography

- ALAMAN, Lucas. 1849. Historia de México (History of Mexico), Vol. I, https://archive.org/details/histori… (In Spanish.)
- ALAMAN, Lucas. 1845. Liquidación general de la deuda esterior de la República Mexicana hasta fin de diciembre de 1841 (General liquidation of the external debt of the Mexican Republic until end of December 1841), Mexico City: Impreso por I. Cumplido. (In Spanish.)
- BAZANT, Jan. 1968. Historia de la deuda exterior de Mexico, 1823-1946 (History of Mexico’s External Debt, 1823-1946), El Colegio de México, Centro de Estudios Históricos, Mexico, 1995, 282 p. (In Spanish.) https://www.google.com.mx/#q=histor…
- BAIROCH, Paul. 1993. Mythes et paradoxes de l’histoire économique, La découverte, Paris, 1999, 288 p. (In French.)
- BATOU, Jean. 1990. Cent ans de résistance au sous-développement. L’industrialisation de l’Amérique latine et du Moyen-Orient face au défi européen. 1770-1870. Université de Genève-Droz.1990. 575 p. (In French.)
- BORCHARD, Edwin. 1951. State Insolvency and Foreign Bondholders. General Principles. Vol. 1. New Haven: Yale University Press, 351 p.
- BRITTO, Luis, El pensamiento del Libertador – Economía y Sociedad, BCV, Caracas, 2010. (In Spanish.)
- GALEANO, Eduardo. 1970. Las venas abiertas de América latina, Siglo XXI, Mexico, 1993, 486 p. (In Spanish.) Edition in French: Les veines ouvertes de l’Amérique latine, Plon, coll. « Terre humaine »,‎ Paris, 1981, 435 p.
- GILBART, James William. 1834. The History and Principles of Banking, London, 1834, 220 p.
- GILLY Adolfo. 1995. La révolution mexicaine 1910-1920, Éditions Syllepse, Paris. (In French.)
- KÉRATRY, Emile de. 1867. La créance Jecker : les indemnités françaises et les emprunts mexicains, Paris : Librairie internationale,
http://gallica.bnf.fr/ark:/12148/bp… (In French.)
- KING, Jeff. 2016. The Doctrine of Odious Debt in International Law. A Restatement, University College London, 2016, 222 p.
- LADD, William. 1839. The War between France and Mexico. The Advocate of Peace (1837-1845), 2(15), 241-253. Retrieved from http://www.jstor.org/stable/27886999
- LUXEMBURG, Rosa. 1913. The Accumulation of Capital, see https://www.marxists.org/archive/lu…
- MANDEL, Ernest. 1972. Le troisième âge du capitalisme, Paris: La Passion, 1997, 500 p. (In French.). See also Late Capitalism at https://www.marxists.org/archive/ma…
- MARICHAL, Carlos. 1989. A Century of Debt crises in Latin America, Prince¬ton, University Press, Princeton, 283p.
- MARICHAL, Carlos. 2003. “Deuda externa y politica in Mexico 1946-2000”, in Capítulo en Ilán Bizberg y Lorenzo Meyer (eds), Una historia contemporánea de México: transformaciones y permanencias, Vol. I, Mexico: Océano, 2003, p. 451-491. (In Spanish.)
- MARX–ENGELS, La crise, col. 10/18, Union générale d’éditions, 1978, 444 p. (In French.)
- REINHARDT Carmen and ROGOFF Kenneth. 2009. This Time is different. Eight Centuries of financial Folly, Princeton University Press, 512 p.
- SACK, Alexander Nahum. 1927. Les effets des transformations des États sur leurs dettes publiques et autres obligations financières, Recueil Sirey, Paris. (In French.)
An almost complete version of the file in French is available for download at http://cadtm.org/IMG/pdf/Alexander_…. Specific instances of cases when the doctrine of odious debt was used can be found at https://en.wikipedia.org/wiki/Odiou… and http://www.cadtm.org/Odious-debt?lang=en
- SISMONDI, Jean de. 1819. Nouveaux principes d’économie politique ou de la richesse dans ses rapports avec la population, Paris, 1827. (In French.) The French text can be accessed at https://play.google.com/store/books…
- TAIBO II, Paco Ignacio. 2006. Pancho Villa: una biografía narrativa (In Spanish.) Published in French as Pancho Villa, Roman d’une vie, (translated by Claude Bleton) Paris: Payot & Rivages, coll. “Petite bibliothèque Payot”, 2 volumes de 752p. and 704p., 2012 (2009).
- TOUSSAINT, Éric. 2004. La finance contre les peuples. La bourse ou la vie, CADTM-Bruxelles/CETIM-Genève/Syllepse-Paris, 640 p. (In French.). See English version Your Money or Your Life at http://www.cadtm.org/Your-money-or-our-life (free download).
- TOUSSAINT, Éric. 2016. “Newly Independent Greece had an Odious Debt round her Neck”, http://www.cadtm.org/Newly-Independent-Greece-had-an
- TOUSSAINT, Éric. 2016. “Greece: Continued Debt Slavery from the late 19th century to the Second World War” http://www.cadtm.org/Greece-Continued-debt-slavery-from
- TOUSSAINT, Éric. 2016. “Debt as an instrument of the colonial conquest of Egypt”, http://www.cadtm.org/Debt-as-an-instrument-of-the
- TOUSSAINT, Éric. 2016. “Debt: How France Appropriated Tunisia”,
http://www.cadtm.org/Debt-how-France-appropriated
- WYNNE, William. 1951. State Insolvency and Foreign Bondholders. Selected Case Histories of Governmental Foreign Bond Defaults and Debt Readjustments. Vol. 2. New Haven: Yale University Press, 1951, 652 p.


Footnotes

|1| Prior to the Spanish conquest, the population of present-day Mexico was between 18 and 25 million. Less than a century later, in around 1600, it had fallen to approximately 3.5 million (source: Jean Batou, see fn 5). According to a lower estimate by Angus Maddison, Mexico’s population was 7.5 million in 1500 and diminished by two thirds after the Spanish conquest, to some 2.5 million in 1600. Source: Angus Maddison, L’économie mondiale : statistiques historiques, (The Global Economy: Historical Statistics) OCDE, Paris, 2003, p. 120. Thomas Calvo, a specialist in Hispanic America, gives the following figures for the population of the Aztec empire and its dependencies prior to the Spanish conquest: 17.5 million inhabitants, of which the Northern territories: 2.5 million; central Mexico: 15 million; Chiapas: 0.8 million. Source: Thomas Calvo, L’Amérique ibérique de 1570 à 1910 (Iberian America from 1570 to 1910), Nathan Université, 1994, p. 14.

|2| See Jan Bazant, Historia de la deuda exterior de Mexico 1823-1946, (History of Mexican Foreign Debt 1823-1946), El Colegio de México, Centro de Estudios Históricos, Mexico City, 1995, p. 18-19.

|3| See Bazant, p. 21, and Alaman, p. 323.

|4| There had been uprisings of indigenous peoples several times during the preceding centuries, and some, such as the Yaquis of Sonora in Mexico, continued their struggle after independence, because they derived no benefit from it.

|5| Evolution of Mexico’s population between 1600 and 2015 (in millions of inhabitants): 1600: 3.5; 1700: 4.0; 1800: 5.7; 1850: 7.7; 1895: 12.7; 1910: 15.1; 1940: 19.6; 1950: 25.8; 1990: 86.0; 2000: 97.4; 2015: 121.7. Source: Jean Batou through 1990 (p. 171) and official statistics from 1895 (date of the first official census).

|6| See Bazant, p. 27-28.

|7| The full name was “Barclay, Herring, Richardson and Company” – not to be confused with Barclays, the high street bank.

|8| See Morning Chronicle, London, 8th February 1825, cited by William Wynne, “State Insolvency and Foreign Bondholders.
Selected Case Histories of Governmental Foreign Bond Defaults and Debt Readjustments.” Vol. 2., 1951, p. 5.

|9| J. Bazant, p. 48.

|10| Lorenzo de Zavala, who had participated in the struggle for independence, was a big landowner in Texas. He turned against his country in 1836 when he took part in the funding of an independent republic of Texas. In retaliation, Mexico stripped him of his nationality. The United States annexed Texas in 1845.

|11| J. Bazant, p. 39.

|12| L. Alaman, p. 983.

|13| J. Bazant, p. 39.

|14| J. Bazant, p. 233

|15| This can be seen from the table compiled by Bazant himself, p. 46.

|16| See “Debt as an instrument of the colonial conquest of Egypt” http://www.cadtm.org/Debt-as-an-instrument-of-the

|17| J. Bazant, p. 45.

|18ibid., p. 234.

|19ibid., p. 54.

|20| J. Bazant, p. 67-70

|21ibid., p. 53

|22ibid., p. 58

|23| In 1853, under new pressure and the expansionist ambitions of the US, Santa Anna sold the territory of Mesilla (a transaction known as the “Gadsden purchase”) for $10 million .This amount was devoted to fighting the liberal rebels (the Ayutla Plan) who wanted to overthrow Santa Anna, who had managed to remain in power until 1855.

|24| William Wynne, State Insolvency and Foreign Bondholders. Selected Case Histories of Governmental Foreign Bond Defaults and Debt Readjustments. New Haven: Yale University Press, Vol. 2., 1951, p.16. See also J. Bazant, p. 96.

|25ibid., p. 16-17.

|26ibid., p. 18.

|27| J. Bazant, p. 96.

|28| In 1856, the internal debt of 41 million pesos was more than half the total amount of the external debt, which was 68.6 million pesos. Total public debt, internal and external, was 109.6 million pesos. J. Bazant, p. 97.

|29| According to recent research by Mexican historians, the indigenous communities resisted fairly well against the application of the laws adopted as from 1856 aimed at putting their ancestral lands up for sale. While feigning to accept the laws, they managed to protect themselves. It was only later, during the long presidency of Porfirio Díaz, that expropriation of land became widespread.

|30| See his biography at https://fr.wikipedia.org/wiki/Jean-… (in French only). This biography may only be approximate.

|31| Cited by Émile de Kératry, La créance Jecker : les indemnités françaises et les emprunts mexicains, (Jecker Bonds : French Compensation and Mexican Loans), Librairie internationale, 1867, p. 17, accessible at: http://gallica.bnf.fr/ark:/12148/bp… (in French).

|32| E. de Kératry, p. 30 and W. Wynne p. 20.

|33| J. Bazant, p. 100. See also E. de Kératry, op. cit.

|34| W. Wynne, p. 21.

|35| W. Wynne, p. 25.

|36| It should be remembered that the War of Secession began in April 1861 and ended in April 1865.

|37| 1 peso = 5 French francs; 1 pound sterling = 5 pesos; 1 pound sterling = 25 French francs.

|38| The Crédit Mobilier suffered the same fate as the French expedition into Mexico, failing in 1867.

|39| J. Bazant, p. 103.

|40| This final fraudulent loan provoked such protest that Napoleon III compensated the holders of the bonds for a total of 87 million French francs. It is certain that some of the beneficiaries of this compensation had taken part in the fraud. And it is equally clear that the amount of 87 million francs increased France’s public debt for the benefit of the rich individuals who had acquired the bonds. See J. Bazant, p. 103; W. Wynne, p. 30.

|41| Calculations by J. Bazant, p. 105, based in particular on É. de Kératry.

|42| Of the 38,493 troops France sent to Mexico, 6,654 – one sixth of them – died of wounds or of disease. In 1863, the Khedive of Egypt supported France by sending a battalion of 450 soldiers to the Mexican Empire, including many Sudanese, whose resistance to tropical diseases was supposedly higher. From 1864-1865, Austria-Hungary sent 7,000 men (Poles, Hungarians, etc.) in support of the foreign aggression. Belgian soldiers also took part. Source: https://en.wikipedia.org/wiki/Frenc…. The King of Belgium, Léopold II (who reigned from 1865 to 1909), having colonial ambitions, sought to obtain advantages from the conquest of Mexico. He began carrying out his colonial projects in 1885 with the conquest of the Congo. Charlotte, Léopold II’s sister, was the wife of Maximilian of Austria. She actively supported Bonaparte’s projects and those of her father, Léopold I.

|43| W. Wynne, p. 29.

|44| Porfirio Díaz’s slogan, “Order and Progress,” is evidence of his belief in the Positivist ideology that was well established in Latin America during this period.

|45| It should be made clear that Benito Juárez did not actively seek to better the living conditions of the peonesand other peasants. Benito Juárez did away neither with the semi-slavery the peones lived under because of their inherited debts nor with the private prisons and the bodily mutilations at the haciendas. This failure to defend the peasants and indigenous communities and the attacks on their communal lands resulted in uprisings, notably that of the Chamulas in Chiapas in 1869; the resistance movement led by Julio Chávez López (based on socialist/anarchist principles) in the late 1860s in Chalco and Texcoco; and the continued struggle of the Yaqui people in the State of Sonora.

|46| Calculated by the author based on Jan Bazant (in particular p. 147, 160, 175, 176, and 272).

|47| W. Wynne, p. 3-4.

|48| J. Bazant, p. 240.

|49| With one single exception – repayment of the three-millions peso loan contracted in 1865 with the United States by the government of Benito Juárez for purchasing armaments used to overcome the French occupation. Repayment of this loan ended in 1893.

|50| J. Bazant, p. 109.

|51| See the text of the decree: http://cdigital.dgb.uanl.mx/la/1080… , p. 326 to 328.

|52| Jeff King, The Doctrine of Odious Debt in International Law. A Restatement, University College London, 2016, p. 72-73.

|53| J. Bazant, p. 127.

|54| See the press of the period: El Monitor, Mexico City No. 278, 19 November 1884; El Nacional, Mexico City, No. 242, 19 November 1884; La Libertad, Mexico City, No. 243, 31 October 1884.

|55| W. Wynne, p. 45.

|56| J. Bazant, p. 134.

|57| Furthermore, in violation of the repudiation pronounced by Benito Juárez in 1867 and the Decree of June 1883, the government agreed to include in the compensation payment of a part of the cost of the bonds issued by Maximilian of Austria to the creditors under the restructuring of the “London” debt. See J. Bazant, p. 130.

|58| The new debt, the consequence of repayment of the balance of the Goldsmith and Barclay loans, in fact amounted to 34 million pesos because in order to actually borrow 27 million, Mexico was forced to recognize a new debt that was greater than that amount, since the new issue was sold for less than its nominal value and a commission had to be paid to the German bank Bleichroeder, which managed the loan.

|59| J. Bazant, p. 237.

|60| J. Bazant, p. 234-235; W. Wynne, p. 7-13.

|61| W. Wynne, p. 57.

|62| In the late 19th and early 20th century, capitalist development was not based on a ’free’ work force only, as it combined capitalist productive relations (waged labour) with pre-capitalist forms of exploitation, and even certain forms of slavery. Entire indigenous communities were deported to forced labour on tobacco and sisal plantations.

|63| A. Gilly, p. 21.

|64ibid., p. 28.

|65| W. Wynne, p. 51.

|66| J. Bazant, p. 177.

|67| A. Gilly, p. 36.

|68| The Papers of Ulysses S. Grant, Vol. 30: October 1, 1880 – December 31, 1882 edited by John Y. Simon, Southern Illinois Univ. Press, Carbondale, 2008

|69| J. Bazant, p. 123.

|70| A. Gilly, p. 32.

|71| J. Bazant, p. 125.

|72| J. Bazant, p. 141-142.

|73| Several years later the revolutionaries made full use of the railways to move troops.

|74| J. Bazant, p. 165.

|75| J. Bazant, p. 167-169.

|76| This was happening in many countries throughout the World at that time.

|77| A. Gilly, p. 33-34.

|78ibid., p. 35.

|79| W. Wynne, p. 59.

|80| Madero studied in Baltimore, at the HEC in Paris, the University of California, Berkeley, and Culver Academy in Indiana.

|81| During his exile Porfirio Díaz lived at Interlaken in Switzerland, then in Paris. He was received with honours in Germany by Guillaume II, who was about to let loose the First World War. He visited Egypt and spent time in Rome and Naples. He died on the 2 July 1915 in Paris and is buried in Montparnasse cemetery. In exile he was well considered and provided for. Some Mexican neoliberal nabobs wish to have his remains returned to Mexico.

|82| Emiliano Zapata (1879-1919) was the revolutionary who carried the rights of the indigenous communities the furthest. His armed struggle was intrinsically linked to the popular masses particularly in his home state of Morelos. His programme went beyond the the concerns of the rural masses even if they were his main concern.

|83| Concerning the policies of US President (1909 – 1913) Taft see: http://www.cadtm.org/what-other-countries-can-learn

|84| J. Bazant, p. 181.

|85| W. Wynne, p. 64.

|86| During the porfiriato, the workers first organized in the mines, then on the railways. In the former the proletariat had the benefit of the revolutionary trade union experience of the US miners. The worker’s movement was also nourished by class struggles from many parts of the World, notably the experience of the Paris commune in 1871. Socialist publications appeared: El Socialista in 1872, La Comuna in 1874, that later became La Comuna mexicana. The first labour confederation; “The Great Circle of Workers”, implanted in the textile industry and the crafts, appeared in 1872. This organization started to dissolve in 1879, separating into factions supporting two different bourgeois candidates in the 1880 elections. Adolfo Gilly wrote: “this decomposition of the Great Circle marked the end of the epoch and coincided with the beginning of the period of impetuous capitalistic development of the 1880s-90s, when the young industrial proletarian movement produced a more authentically union-based organization, especially in the railways, mines and textile industries” (A. Gilly, p.41). Despite the fierce repression of the Porfirio Diaz regime there were 250 strikes between 1876 and 1911. Whether they were successful or not they developed the political organization of the productive forces against the contradictions of capitalism and prepared the explosion of revolution that occurred in 1910. Anarchist tendencies had a real influence on the revolution. They were most expounded by the Flores Magon brothers. In 1911 one of the brothers, with the support of anarchists of various nationalities, including a hundred or so internationalists from the US organisation, “Industrial Workers of the World”, took part in occupying two poorly-defended Mexican villages close to the US border, Mexicali (pop. 300) and Tijuana (pop.100). For five months the commune of Lower California experimented with libertarian communism, the abolition of private property, collective working of the land and among other experiments, the grouping of producers, before being invaded. That was the end of the attempt to establish a socialist libertarian republic.

|87| Pancho Villa (1878-1923) was a smallholder whose relations with the justice system were strained after conflicts with big landowners. He was an outlaw and lived by various means including cattle-rustling in the mountain regions. It was in the unequal struggle against Porfirio Diaz’s rural police that he developed his great fighting skills. Moreover Villa rapidly showed a strong gift for military organization not only in his relations with his foot soldiers but also with regard to his commanding officers. This ability to organize won him over the labour sectors in the North, mainly miners and railway workers who joined his army. This is no mere detail: the railwaymen in Villa’s army were central to his use of the railway for movements of revolutionary troops. Source: A. Gilly, p. 90.

|88| Nevertheless, when Pancho Villa was the the governor of the State of Chihuahua in 1913 he applied radical measures favouring the people to the detriment of the interests of the local ruling classes. See Paco Ignacio Taibo II, Pancho Villa, Roman d’une vie, (Life Story of Pancho Villa), Paris: Petite bibliothèque Payot, 2012, Volume 1, Chapter 23.

|89| See Jan Martinez Ahrens, « Toda la municion contra Zapata » (All ammunition against Zapata), El Pais, 24 December 2016, (in Spanish).

|90| According to Adolfo Gilly, this decision to sign a pact did not win the approbation of the general assembly that was held on 8 February 1915. There was strong opposition. Nevertheless 9000 “workers” formed the red battalions, including an “Anarchist first aid corps”, in Obregas’ army that fought against the Northern Division. See A. Gilly, p. 157-159.

|91| A. Gilly, p. 179.

|92| in A. Gilly, p. 228-229.

|93| W. Wynne, p. 66-67.

|94| J. Bazant, p. 239. J. Bazant, who is as a rule in favour of any compromise with creditors, says this amount of 500 million is simply incredible.

|95| W. Wynne, p. 68.

|96| A reasoned definition of odious debt can be found in the online article by Éric Toussaint, “The Doctrine of Odious Debt: from Alexander Sack to the CADTM”, http://www.cadtm.org/The-Doctrine-of-Odious-Debt-from

|97| W. Wynne, p. 77.

|98| W. Wynne, p. 82. See also the New York Times of 30 November 1930.

|99| An ejido is the name given in Mexico to a communal property by a group of indigenous farmers who work the land together. In an ejido, the principle is that members of the community be granted the land’s usufruct with no legal possibility of selling or ceding it. In 1993, President Salinas de Gortari, who carried forward the neoliberal policies initiated by his predecessors, had the Constitution modified so as to enable massive sales of ejidos. One of the aims of the Zapatista uprising on 1 January 1994 was to question this government policy.

|100| Diplomatic relations between the two countries were restored in October 1941 because London was looking for allies against Nazi Germany and feared a possible alliance between Mexico and Berlin.

|101| Another element that substantiates Cárdenas’ sympathy for revolutionary movements, though not at a time when he was president, is that he helped Fidel Castro and Che Guevarra to get out of prison a couple of weeks before sailing to Cuba in the Granma. Fidel and the Che had been emprisoned in Mexico City after the Batista government had told the Mexican authorities that some guerrillas were operating in the country. While in prison, Fidel managed to have the warden release him and him alone, after which, in an audience with Cárdenas, he enlisted his help to liberate the other prisoners. Cárdenas showed some empathy with Fidel’s project.

|102| W. Wynne, p. 97 and table p. 106.

|103| W. Wynne, p. 94-95.

|104| See Eric Toussaint http://www.cadtm.org/Demystifying-Alexander-Nahum-Sack

|105| See “Three Waves of Public-Debt Repudiation in the USA during the 19th Century”, http://www.cadtm.org/Three-Waves-of-Public-Debt as well as “The USA’s repudiation of the debt demanded by Spain from Cuba in 1898: What about Greece, Cyprus, Portugal, etc.?”, http://www.cadtm.org/The-USA-s-repudiation-of-the-debt

|106| See ‘What other countries can learn from Costa Rica’s debt repudiation’, http://www.cadtm.org/What-other-countries-can-learn. We must emphasize that Costa Rica did repudiate the debt claimed by Britain in a sovereign and unilateral way. Had the US not then given the country its support, the Costarican people might yet have been victorious in resisting almost certain aggression from Great Britain. Similarly in the case of Cuba, the army of Cuban independence fighters (the mambis) might have got the better of Spain, had the colonizing country tried to make them pay for their independence.

|107| The same applies to what happened in the USSR, which will be developed in another article.

auton5-c93f5Author

Eric Toussaintis a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy(2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

Apr 022017
 

By Michael Nevradakis, 99GetSmart

karousos3-1-300x207The transcript of Dialogos Radio’s interview with economist and analyst Dimitris Karousos. This interview aired on our broadcasts for the week of March 22-28, 2017. Find the podcast of this interview here.

MN: Joining us today on Dialogos Radio and the Dialogos Interview Series is economist and economic analyst Dimitris Karousos, who is a member of the political directorate of Greece’s United Popular Front, and who has enjoyed a long career working for financial institutions within and outside of Greece. Mr. Karousos, thank you very much for joining us today.

DK: Thank you for your kind invitation.

MN: Let’s begin by discussing the recent deal that was reached between the Greek government and its European lenders. The Greek government has engaged in a big PR show, portraying this new agreement as one that will not deliver even one euro’s worth of new austerity measures, as a result of the so-called “equivalent measures” that will be adopted. This begs the question, if the net sum of these new measures is zero, then why enact them? And continuing along this line of thinking, what does the new agreement actually entail and mean for Greece?

DK: As we now find ourselves in Oscar season, it is clear that the Oscar for best director should go to the communications team of the Greek government, as their new dogma which claims that 1+1=0 is one of the most absurd things that the Greek people have heard yet. Indeed, “professor” Tsipras, by claiming that 1+1=0, seems to be reinventing the rules of mathematics. In other words, the government is attempting to claim that for every euro of austerity measures and cuts that will be enacted, there will be one euro in equivalent measures to offset those cuts. This, of course, is a blatant lie, because if there indeed will be no impact, these measures would not be needed.

The Greek government is lying, and this can be demonstrated in three ways. First, the troika—meaning the European Commission, the European Central Bank, and the International Monetary Fund—is not discussing the possibility of cuts in the special property tax and the value added tax, and indeed is not even allowing these issues to be brought to the negotiating table.

Second, the troika, instead of tax cuts, is insisting on the enactment of the so-called Juncker growth package, named after the president of the European Commission Jean-Claude Juncker. This package is essentially the European Union’s Partnership Agreement, known as ESPA, but this is not a true replacement because Greece already qualifies for funds from this agreement regardless. Therefore, somebody needs to explain how low wage earners who are now faced with a lower tax-free threshold and will be forced to pay taxes, or how pensioners who will face further cuts to their pensions, will benefit from the European Union’s Partnership Agreement, which in the first place has nothing to do with this group of people, since it is concerns only entrepreneurs and supposedly offsets these cuts.

Third, whatever “equivalent” measures are agreed upon will only begin to be enforced if and only when Greece has fully and successfully enacted new cuts to wages and pensions, as foreseen in the new austerity package with 3.6 billion euro worth of cuts.

MN: The deal which was recently reached foresees the achievement of a primary budget surplus of at least 3.5% of the Greek GDP in 2019, while we are also hearing that Greece’s primary surplus for the month of January surpassed targets. Is this a good thing, however? Are primary surpluses a positive thing for a country like Greece, with the economy in the state that it is in?

DK: Here, we should first make it clear that no economy which has found itself in a similar condition to that of Greece has been able to recover through the enforcement of strict austerity and the pursuit of surpluses.

The economists Barry Eichengreen and Ugo Panizza, in a study of theirs, examined 235 countries and found that there were only 36 cases of countries which were able to maintain, for a five year period on average, a primary budget surplus of at least 3 percent of GDP, representing 15 percent of the total sample. In the same study, they found that there were only 17 cases of countries which, over an average of eight years, maintained a primary budget surplus of at least 3 percent of GDP, representing just 9 percent of total cases. There were only 12 cases of countries which, over a ten year period, maintained a primary budget surplus of at least 3 percent of GDP. It should be noted that Germany, the strongest economy in Europe, was not one of these countries!

In other words, they are asking Greece to achieve something that not even an economy at the level of Germany’s has been able to ever achieve! It should also be added that Eichengreen and Panizza note that extraordinarily strict fiscal policies—austerity in other words—with the goal of achieving a high primary budget surplus, may in fact achieve the opposite results, leading to recession and to political and social turmoil. These policies, in other words, may lead to the opposite outcome from that which is intended.

MN: With this new agreement which has been reached, do you believe that the risk of a so-called Schauble-style Grexit has been averted, or does it remain a distinct possibility? And continuing on that frame of thought, what would this German-proposed Grexit, which would include the imposition of a dual or parallel currency, mean for Greece?

DK: Not only has the threat of a Schauble-style Grexit and the imposition of a dual or parallel currency not been surpassed, but I believe it remains the plan that will be put into place. I believe that the following will happen: once the Greek government completes the so-called “troika review” of its finances with an agreement for new austerity measures totaling 3.2 to 3.6 billion euros, the troika will break up the next installment of so-called “bailout” funds into sub-installments. Once the German elections have occurred, then a fake “crisis” between Greece and its creditors will be orchestrated, and that is when the Schauble plan, named of course after the German finance minister, will be imposed. This plan would entail Grexit and the imposition of a dual or parallel currency within Greece.

The circulation of a dual or parallel currency will mean an even more rapid internal devaluation and will signify the immediate impoverishment of the Greek populace. There will be one currency used for internal transactions, such as the payment of salaries and pensions, while whatever euros are still in circulation will be collected and used towards the payment of the national debt, which will continue to be denominated in euros.

This would be a terrible development for Greece, as this dual or parallel currency will face constant devaluation versus the euro, as it will not be hard currency and nobody will want it. If you go to the greengrocer or the bakery, for instance, they might accept the dual currency at an exchange rate far lower than the official peg set by the government. The black market for euros will flourish and the economic catastrophe will be total and complete. The introduction of what will essentially be an IOU, or script, will not only completely destroy the Greek economy but it will also discredit the idea of a national, domestic currency in the eyes of the populace.

MN: Something which, of course, is not frequently discussed by analysts, journalists, and by the mass media in general is the difference between a dual or parallel currency on the one hand, and a national domestic currency on the other hand. What is the distinction and why is one better than the other?

DK: The differences are as follows. By definition, a parallel or dual currency means that there is a different currency in use for domestic transactions, from that which is used for external transactions. A national or domestic currency, on the other hand, is a currency that is issued by a nationalized central bank, such as the Bank of Greece, which would be completely state-owned. With a domestic currency, Greece would not be borrowing the currency that it will put into circulation, it will instead mint the currency itself. It is a wealth instrument, not a debt instrument. Furthermore, a national or domestic currency means that the state itself, because it mints its own currency, does not borrow it from any other central bank.

MN: Explain for us the steps which Greece could follow in order to undertake an orderly departure from the Eurozone and return to a true domestic currency. How could the various dangers that we keep hearing about, such as the risk of hyperinflation or a catastrophic devaluation of the new currency or a difficulty in importing goods, be averted?

DK: The political party which I am a part of, the United Popular Front, also known as EPAM, has described, in detail, 15 necessary steps which are required in order for a smooth transition to take place to a new national, domestic currency.

Every step in this process is absolutely necessary, and no steps can be skipped, as it will impact the entire transition to a domestic currency. The most important of these steps are as follows:

First, disputing the legality of the debt and declaring an immediate stoppage of payments.

Second, declaring the immediate cancelation of all of the memorandums and associated legislation which completely altered the legal and political status of the Greek state and imposed the troika-led occupation.

Third, departure from the European Union and the Eurozone.

Fourth, the imposition of a national, domestic currency.

Fifth, the nationalization of the Bank of Greece, the country’s central bank.

Sixth, the imposition of capital controls in order to prevent money from leaving the country.

Seventh, the liquidation of Greece’s four major banks, while these banks remain in operation.

Eighth, enacting measures to ensure that transactions are able to take place smoothly during the period of transition to the new currency.

Ninth, ensuring the adequate supply of goods in the marketplace.

Tenth, protecting consumers and vigorously policing the marketplace and the prices of goods.

Eleventh, immediately restoring wages and pensions to pre-memorandum levels.

Finally, implementation of “seisachtheia,” an ancient Greek precedent which refers to the forgiveness of the debts of households, as well as small- and medium-sized businesses.

MN: Let’s tackle these issues one at a time… How has Greece’s membership in the European Union since 1981 and in the Eurozone since 2002 impacted Greece’s productive and industrial capacity? And, as a second part to this question, is there any possibility of Greece’s agricultural or productive or industrial capacity increasing within the European Union and within the Eurozone?

DK: There is absolutely no chance of recovery for the Greek productive sector and Greek industry as long as the country remains within the European Union and the Eurozone, especially when harsh austerity and the memorandums are being imposed. How can industry recover when taxes and pension fund contributions surpass 60 percent of a corporation’s revenue? How can the Greek economy recover when its biggest industry, tourism, is saddled with the highest tax rate in the Mediterranean region? How can the Greek economy recover when there is so much bureaucracy and political uncertainty?

The end result of all of this is that Greece’s competitiveness has dropped to 86th place worldwide, despite all of the austerity measures, the memorandums, the economic “growth” which repeatedly has been promised, and the constant “fiscal adjustment” policies and “reforms” that have been enacted. Despite all of this, Greece now ranks lower in competitiveness than countries such as Namibia, Tajikistan, Albania, and Guatemala.

MN: You have spoken about the balance of goods and services in Greece and about Greece’s foreign currency reserves. What do these statistics show and what would they mean for Greece in terms of a potential departure from the Eurozone and the EU and return to a domestic currency?

DK: There is no possibility that there will be shortages of imported goods, and this is the case because Greece’s balance of goods and services, after so many years of economic depression and as a result of the internal devaluation that has taken place, is close to being balanced. In very simple terms, this means that Greece, from its exports, tourism, and shipping sectors earns all of the necessary foreign currency which it needs to pay for all of its imports. Therefore, it follows that there will be no shortage of imported goods.

In addition, according to the most recent figures available from the Bank of Greece from the third quarter of 2016, the central bank has in its reserves foreign currency totaling approximately 31.5 billion euros. At the same time, Greece’s banking system has, among its assets, a long-term foreign bond portfolio totaling 55.7 billion euro. Together, this totals almost 87 billion euros, which could be used as foreign currency reserves in the immediate aftermath of the departure from the Eurozone. Therefore, it is easy to understand that there is no chance of there being any shortages in the marketplace and that Greece’s needs would be met for several years to come.

MN: There is, of course, also the Greek public debt to contend with. Is this debt sustainable, to begin with? What would you propose regarding dealing with the debt, and what does international law and international legal precedent have to say, with regards to actions Greece could implement regarding its debt?

DK: Very much on purpose, the Greek people have been led to believe that an “unsustainable” debt is one which is very difficult to repay, but which can, at some point and after the enactment of very strict measures, be repaid. This is absolutely false! We have been led to believe this because, first of all, it has been necessary to maintain the hope that Greece, by enforcing these harsh austerity measures, will be able to repay its debt and will, as a result, accept these difficult measures.

In reality, an unsustainable debt is a debt which, no matter what a country does, cannot ever be repaid or even reduced, no matter how many measures are enforced. With mathematical certainty, such a debt will simply increase over time. This is the case in Greece. When Greece received its first so-called “bailout” the public debt was 122 percent of GDP. From 122 percent it increased to 129 percent, then 148 percent, then 170 percent, it has reached 177 percent, and is projected to increase to 188 percent and later 200 percent of GDP if we continue down this path!

The first loan agreement which Greece signed in 2010 and which, it should be stressed, was not ratified by the Greek Parliament, was a product of fraud and coercion. Articles 48 through 52 of the UN’s Vienna Convention on the Law of Treaties allow for the cancelation of a treaty or agreement when it is a product of deceit or threats. This would permit Greece, with a written statement delivered to the UN General Assembly via the UN’s Secretary General, to announce to the international community that it is denouncing its illegal public debt.

In addition, the official report of the United Nations Commission on Human Rights (UNCHR) which was published on its website on the 7th of March 2014, harshly criticizes the Greek government for its methodical and repeated violations of human rights, and specifically the individual, political, economic, social, and cultural rights of Greece’s people.

MN: In our previous interview, in January 2016, we spoke about the recapitalization of the Greek banking system which had just been completed. In what condition does the Greek banking sector find itself in today? Are we headed to yet another recapitalization, and what would such a development mean?

DK: I would argue that the Greek banking system now finds itself in worse shape than in the beginning of 2016, if we take into consideration something which the mass media and most analysts typically neglect to tell us, namely, that the deferred tax accounts for 40 percent of the equity of Alpha Bank, 71 percent of the equity of the National Bank of Greece, 75 percent of the equity of Eurobank, and 58 percent of the equity of Piraeus Bank. This alone means that a new recapitalization is coming.

Moreover, another negative and indeed tragic aspect is that, from the beginning of this year, 1.5 to 1.7 billion euros’ worth of new high-risk loans have been added to the banking system. These loans include mortgages, consumer loans, and business loans, and 80 percent of these loans have been refinanced.

In addition, 2.7 million loans, totaling almost 100 billion euros, are at the risk of default, as payments towards those loans have not been made in over three months. This is a ticking time bomb for the financial system. While this is happening, the deposits of households and individual depositors in Greece have dipped below 100 billion euro for the first time since 2003!

It is therefore clear to me that we will soon see a new recapitalization of the Greek banking system, totaling 7 to 10 billion euros.

MN: How has the British economy performed ever since the referendum result in favor of Brexit this past summer, and how do you believe the British economy will perform if and when the process of exiting the European Union is completed? Do you believe the widely-held fears of adverse economic impacts will be proven to be correct, or do you believe the opposite will be true?

DK: Even though it is surely too soon to draw a definite conclusion, what we can say from now is that in contrast with the various “Cassandras” who foresaw the total collapse of the economy of Great Britain, what we are seeing is that the British economy grew by 0.6 percent in the final quarter of 2016, exceeding expectations.

In fact, the Bank of England once again revised upward its growth projections for the British economy for 2017, raising its projection from 1.4 percent of GDP, initially forecast in November 2016, to a growth rate of almost 2 percent of GDP. The higher projection is largely a result of increased consumer spending, which has occurred despite the fear mongering that the British public faced as a result of the Brexit vote.

Two additional aspects that are important and which should also be noted is the reduction of the public deficit by 400 million Pounds and the increase in average weekly wages of British workers by 2.8 percent on a year-to-year basis.

MN: The new president of the United States, Donald Trump, seems to have taken a position in favor of Brexit and against the Eurozone, displaying an evident preference for reaching bilateral trade agreements with individual countries, rather than large-scale trade deals with the Eurozone as a whole. On a domestic basis, Trump has promised the return of domestic jobs, of factories and corporations and businesses that have left the country. How do you view the economic policies and promises of the Trump administration and what would they mean for the European and global economies?

DK: The turn inward being undertaken by the United States will gradually lead to the repatriation of U.S. dollars. As a result, it is likely that countries whose national debt is in large part denominated in U.S. dollars, as is the case with Turkey, where 65 percent of its debt as a percentage of GDP is in dollars, as well as developing countries whose major public- and privately-owned industries have outstanding loans in U.S. dollars, will face increased difficulties from the upward pressures on the dollar in the international financial markets.

In addition to all of this, we need to take into consideration the ongoing trade battle between the United States and China, and the efforts of the United States to achieve energy autonomy, and in particular, the elimination of dependence on the OPEC nations. This means the replacement of approximately three million barrels of oil per day which are currently imported, replaced by domestic energy sources. It is easy to understand that this will hurt countries like Saudi Arabia and Venezuela in particular.

As for Trump’s domestic economic policy, the jury is still out. We will just have to wait and see.

MN: Well Mr. Karousos, thank you very much for taking the time to speak with us today here on Dialogos Radio and the Dialogos Interview Series, and for your thoughtful analysis.

DK: Thank you very much for having me.

Mar 252017
 

By James Petras99GetSmart

1067306056

Introduction

From their dismal swamps, US academic and financial journal editorialists, the mass media and contemporary ‘Asia experts’, Western progressive and conservative politicians croak in unison about China’s environmental and impending collapse.

They have variably proclaimed (1) China’s economy is in decline; (2) the debt is overwhelming; a Chinese real estate bubble is ready to burst; (3) the country is rife with corruption and poisoned with pollution; and (4) Chinese workers are staging paralyzing strikes and protests amid growing repression – the result of exploitation and sharp class inequality. The financial frogs croak about China as an imminent military threat to the security of the US and its Asian partners. Other frogs leap for that fly in the sky – arguing that the Chinese now threatens the entire universe!

The ‘China doomsters’ with ‘logs in their own eyes’ have systematically distorted reality, fabricated whimsical tales and paint vision, which, in truth, reflect their own societies.

As each false claim is refuted, the frogs alter their tunes: When predictions of imminent collapse fail to materialize, they add a year or even a decade to their crystal ball. When their warnings of negative national social, economic and structural trends instead move in a positive direction, their nimble fingers re-calibrate the scope and depth of the crisis, citing anecdotal ‘revelations’ from some village or town or taxi driver conversation.

As long-predicted failures fail to materialize, the experts re-hash the data by questioning the reliability of China’s official statistics.

Worst of all, Western ‘Asia’ experts and scholars try ‘role reversal’: While US bases and ships increasingly encircle China, the Chinese become the aggressors and the bellicose US imperialists whine about their victim-hood.

Cutting through the swamp of these fabrications, this essay aims to outline an alternative and more objective account of China’s current socio-economic and political realty.

China: Fiction and Fact

We repeatedly read about China’s ‘cheap wage’ economy and the brutal exploitation of its slaving workers by billionaire oligarchs and corrupt political officials. In fact, the average wage in China’s manufacturing sector has tripled during this decade. China’s labor force receives wages which exceed those of Latin America countries, with one dubious exception. Chinese manufacturing wages now approach those of the downwardly mobile countries in the EU. Meanwhile, the neo-liberal regimes, under EU and US pressure, have halved wages in Greece, and significantly reduced incomes in Brazil, Mexico and Portugal. In China, workers wages now surpass Argentina, Colombia and Thailand. While not high by US-EU standards, China’s 2015 wages stood at $3.60 per hour – improving the living standards of 1.4 billion workers. During the time that China tripled its workers ‘wages, the wages of Indian workers stagnate at $0.70 per hour and South African wages fell from $4.30 to $3.60 per hour.

This spectacular increase in Chinese worker’s wages is largely attributed to skyrocketing productivity, resulting from steady improvements in worker health, education and technical training, as well as sustained organized worker pressure and class struggle. President Xi Jinping’s successful campaign for the removal and arrest of hundreds of thousands of corrupt and exploitative officials and factory bosses has boosted worker power. Chinese workers are closing the gap with the US minimum wage. At the current rate of growth, the gap, which had narrowed from one tenth to one half the US wage in ten years, will disappear in the near future.

China is no longer merely a low-wage, unskilled, labor intensive, assembly plant and export-oriented economy. Today twenty thousand technical schools graduate millions of skilled workers. High tech factories are incorporating robotics on a massive scale to replace unskilled workers. The service sector is increasing to meet the domestic consumer market. Faced with growing US political and military hostility, China has diversified its export market, turning from the US to Russia, the EU, Asia, Latin America and Africa.

Despite these impressive objective advances, the chorus of ‘crooked croakers’ continue to churn out annual predictions of China’s economic decline and decay. Their analyses are not altered by China’s 6.7% GNP growth in 2016; they jump on the 2017 forecast of ‘decline’ to 6.6% as proof of its looming collapse! Not be dissuaded by reality, the chorus of ‘Wall Street croakers’ wildly celebrate when the US announces a GNP increase from 1% to 1.5%!

While China has acknowledged its serious environmental problems, it is a leader in committing billions of dollars (2% of GNP) to reduce greenhouse gases – closing factories and mines. Their efforts far exceed those of the US and EU.

China, like the rest of Asia, as well as the US, needs to vastly increase investments in rebuilding its decaying or non-existent infrastructure. The Chinese government is alone among nations in keeping up with and even exceeding its growing transportation needs – spending $800 billion a year on high speed railroads, rail lines, seaports, airports subways and bridges.

While the US has rejected multi-national trade and investment treaties with eleven Pacific countries, China has promoted and financed global trade and investment treaties with more than fifty Asia-Pacific (minus Japan and the US), as well as African and European states.

China’s leadership under President Xi Jinping has launched an effective large-scale anti-corruption campaign leading to the arrest or ouster of over 200,000 business and public officials, including billionaires, and top politburo and Central Committee members. As a result of this national campaign, purchases of luxury items have significantly declined. The practice of using public funds for elaborate 12 course dinners and the ritual of gift giving and taking are on the wane.

Meanwhile, despite the political campaigns to ‘drain the swamp’ and successful populist referenda, nothing remotely resembling China’s anti-corruption campaign have taken root in the US and the UK despite daily reports of swindles and fraud involving the hundred leading investment banks in the Anglo-American world. China’s anti-corruption campaign may have succeeded in reducing inequalities. It clearly has earned the overwhelming support of the Chinese workers and farmers.

Journalists and academics, who like to parrot the Anglo-American and NATO Generals, warn that China’s military program poses a direct threat to the security of the US, Asia and indeed the rest of world.

Historical amnesia infects these most deep diving frogs. Forgotten is how the post WW2 US invaded and destroyed Korea and Indo-China (Vietnam, Laos and Cambodia) killing over nine million inhabitants, both civilian and defenders. The US invaded, colonized and neo-colonized the Philippines at the turn of the 20th century, killing up to one million inhabitants. It continues to build and expand its network of military bases encircling China, It recently moved powerful, nuclear armed THADD missiles to the North Korean border, capable of attacking Chinese and even Russian cities. The US is the world’s largest arms exporter, surpassing the collective production and sale of the next five leading merchants of death.

In contrast, China has not unilaterally attacked, invaded or occupied anyone in hundreds of years. It does not place nuclear missiles on the US coast or borders. In fact, it does not have a single overseas military base. Its own military bases, in the South China Sea, are established to protect its vital maritime routes from pirates and the increasingly provocative US naval armada. China’s military budget, scheduled to increase by 7% in 2017, is still less than one-fourth of the US budget.

For its part, the US promotes aggressive military alliances, points radar and satellite guided missiles at China, Iran and Russia, and threatens to obliterate North Korea. China’s military program has been and continues to be defensive. Its increase is based on its response to US provocation. China’s foreign imperial thrust is based on a global market strategy while Washington continues to pursue a militarist imperial strategy, designed to impose global domination by force.

Conclusion

The frogs of the Western intelligentsia have crocked loud and long. They strut and pose as the world’s leading fly catchers – but producing nothing credible in terms of objective analyses.

China has serious social, economic and structural problems, but they are systematically confronting them. The Chinese are committed to improving their society, economy and political system on their own terms. They seek to solve immensely challenging problems, while refusing to sacrifice their national sovereignty and the welfare of their people.

In confronting China as a world capitalist competitor, the US official policy is to surround China with military bases and threaten to disrupt its economy. As part of this strategy, Western media and so-called ‘experts’ magnify China’s problems and minimize their own.

Unlike China, the US is wallowing at less than 2% annual growth. Wages stagnate for decades; real wages and living standards decline. The costs of education and health care skyrocket, while the quality of these vital services decline dramatically. Costs are growing, unemployment is growing and worker suicide and mortality is growing. It is absolutely vital that the West acknowledge China’s impressive advances in order to learn, borrow and foster a similar pattern of positive growth and equity. Co-operation between China and the US is essential for promoting peace and justice in Asia.

Unfortunately, the previous US President Obama and the current President Trump have chosen the path of military confrontation and aggression. The two terms of Obama’s administration present a record of failing wars, financial crises, burgeoning prisons and declining domestic living standards. But for all their noise, these frogs, croaking in unison, will not change the real world.

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Mar 242017
 

By Michael Nevradakis, 99GetSmart

20110629_Moutza_demonstrations_Greek_parliament_Athens_GreeceThe votes for Brexit and for Donald Trump are the result of some Russian plot but are a necessary rebellion against a corrupt neoliberal globalist order amongst just of of whose crimes is the economic strangulation of Greece.

It’s a typical winter’s evening in Athens. This has been a cold winter, and the air is brisk. And wherever I go, the sweet smell of “success” is in the air. By “success” I am referring to none other than the vaunted “European dream,” and the “success story” of the Greek economy, as described by Greece’s former prime minister Antonis Samaras in late 2014, and as often repeated—even if not in those exact terms—by Greece’s “first time left” prime minister, Alexis Tsipras, far more recently. That scent of success comes from the noxious fumes of the fireplaces and makeshift furnaces which newly impoverished Greeks have lit to keep warm, since well over 80 percent of households are said to be unable to afford absurdly taxed heating oil for their homes.
Elderly woman scavenging for food in a rubbish bin in the middle class Athens suburb of Elliniko. In January, a high-level SYRIZA government minister stated that “he no longer sees people searching the garbage for food.” Photo Credit: Antonis Pothitos

Elderly woman scavenging for food in a rubbish bin in the middle class Athens suburb of Elliniko. In January, a high-level SYRIZA government minister stated that “he no longer sees people searching the garbage for food.” Photo Credit: Antonis Pothitos

This piece though is not meant to be about Greece, but about the United States, the anti-Russian hysteria that has taken hold, and the attacks that the newly inaugurated Trump administration is facing from protesters, the media, and the “deep state.” What does all of this have to do with Greece though? Everything. Crisis-stricken Greece represents a microcosm of what is transpiring in the United States and much of Europe today, and offers a useful lens through which to analyse current developments.

Living in Greece over the past four-plus years, I’ve had the opportunity to view politics and economics from a different lens, one far removed from warm-and-fuzzy claims about the “European dream” or the utopian vision of “open borders” and “freedom of movement.” Greece is a country which has been ravaged by EU and IMF-imposed austerity, its economy and domestic production decimated by EU rules and regulations such as the common agricultural policy, and a country which has been inundated with far more migrants than it could realistically absorb, even during more prosperous economic times.

Indeed, the hypocrisy has been astounding. Greece and the Greek people have been blamed for being “racist” and “xenophobic” to migrants that have entered the country simply due to its geographical location and as a result of wars and conflicts which other countries have fuelled. Greece has been accused of “living beyond its means” when its welfare state was never as well-developed or generous as those of Northern Europe and where average incomes have perpetually lagged behind most countries of Northern and Western Europe. The Greek governments of the post-junta period were accused (correctly) of being corrupt, but the EU openly supports those same political parties (New Democracy, PASOK, and the current governing coalition of SYRIZA and the Independent Greeks, which are home to many ex-PASOK and ex-New Democracy MPs) due to their unabashed pro-EU, pro-Eurozone stance. Greece is accused of not producing anything, when it is during the years of EU and Eurozone membership that Greece’s domestic industry and agricultural production were decimated, as Greece’s market was flooded with German imports and Brussels bureaucrats told Greek farmers what to grow, what not to grow, and where they could or could not export their produce.

On a visit to EU and NATO headquarters in 2013 as part of an official academic program, the contempt  with which Brussels technocrats viewed Greece and the other countries of the “European south” could barely be contained. We were told that Mario Monti—Italy’s prime minister at the time, who was not elected but instead appointed at the behest of the EU—was the “best thing that ever happened for Italy.” We were told that Mussolini “got the job done.” We were told, in these exact words, that the reasons for the European financial crisis were “Bad design. Bad luck. Bad decisions. Greece.” Or as EU trade commissioner Cecilia Malmström is alleged to have said she “does not receive her mandate from the European people,” and as Dutch finance minister and Eurogroup head Jeroen Dijsselbloem said more recently, the people of southern Europe blew their cash on women and booze and are therefore not deserving of help. Such is democracy and solidarity in the Nobel Prize-winning EU.

Therefore, when the referendum result in favour of “Brexit” prevailed in Britain, I was overjoyed. The European Union that I had seen, lived, and experienced was undemocratic, authoritarian, and brutal. In Greece, however, a historical inferiority complex vis-à-vis the “west” fostered an attitude of learned helplessness and dependence on the EU, without which Greece could supposedly not survive. Hence, it was refreshing to see voters in another EU member-state stand up to Brussels.

This, however, was not the prevalent view in the European or North American news media, which reacted in contempt, horror, and disgust at the referendum result. In the United States, snarky late-night television comedians, pandering to the supposedly “progressive” and “hipster” crowd, joined the news media’s chorus in describing the Brexit referendum result as the product of racism and xenophobia. No mention about austerity, about incomes and pensions that had been slashed in half in Greece, of previously middle class households unable to heat their homes and burning whatever they could find instead. The EU was, and continues to be, widely described as a “force for peace,” its open borders touted as a sign of “progress.” On her recent visit to Washington, German Chancellor Angela Merkel, one of Europe’s harshest pro-austerity hard liners, was referred to by the pro-Hillary, pro-globalist Politico as “the leader of the free world.” Unabashedly displaying its globalist world view, the popular feminist website Jezebel previously referred to Merkel as the “last pillar of liberal democracy in Europe.”

For those keeping score, websites like Politico and Jezebel are touting the European Union, and the chancellor of Europe’s strongest economy, Germany, as the last bastions of democracy and freedom not just in Europe, but worldwide. The same Germany which has inflexibly insisted on the continued, harsh imposition of inhuman austerity measures in Greece and the other countries of the European South, measures which have been found, repeatedly, to violate the basic human rights of the citizens of Greece and other countries. All the while, Germany has benefited handsomely from an economic point of view—both from the returns it is receiving on the loans it has imposed on Greece and from the brain drain of the European south, with many educated young people from Southern Europe finding their way to Germany. The same Germany whose finance minister Wolfgang Schäuble, who apparently is also the finance minister of Greece and Spain and Portugal and Italy, has said “[e]lections change nothing. There are rules.” This is same Germany that has remained completely inflexible on the issue of Greece’s debt, and this is the same Germany who we are told is the “leader of the free world.”

So Germany has been whitewashed and thrust into the role of world leader of peace, justice, freedom, and democracy by the same global media empire which openly and unabashedly supported Hillary Clinton in the U.S. presidential elections and insisted, ad nauseam, that she would easily defeat Donald Trump. The United States, of course, can no longer fulfil the role of so-called “leader of the free world,” in the eyes of the media, because the “fascist Russian agent” Trump is president instead of the honourable Secretary Clinton, who once cackled on TV, “we came, we saw, he died.” Oh, but I forgot, when it’s your guy or gal fighting wars and killing sovereign leaders overseas, it’s okay. That must explain why the “antiwar” movement went extinct right around the time that Barack “hope and change” Obama became president. That must also explain why George W. Bush, whose administration invaded Afghanistan and Iraq on false pretences, has, just like Merkel, been whitewashed, as evidenced by his recent appearance on “Ellen” which we were told would make us “warm up” to him. After all, he purportedly hates Trump and Putin—therefore he must not be that bad of a guy!

Similarly, when Obama deported record numbers of illegal immigrants from the United States, when he bailed out banks responsible for the economic collapse of 2007-2008 and refused to prosecute even one of banker but instead prosecuted whistleblowers, when he waged seven wars and dropped over 20,000 bombs from drones and failed to shutter the detention camp at Guantanamo Bay, he too was whitewashed. Indeed, he was awarded the Nobel Peace Prize and gets to dine with celebrity social justice warriors such as Bono, whilst receiving star treatment wherever he goes. When he referred to the “57 states” of the U.S., just like when representative Maxine Waters referred to Putin’s invasion of “Korea,” the media gave a free pass—no “Bowling Green” treatment for them!

For those with their eyes open all these years, it is easy to realise that not only were the U.S. and international media subservient and compliant during the eight years of the Obama administration, but they also never hit the Bush administration nearly as hard as they hit Trump. At best, Bush’s “bushisms” served as late night TV comedy fodder, downplaying their seriousness. I clearly remember the same media in lockstep with the Bush administration on the Afghanistan and Iraq war marches, while voices who dared to oppose these invasions were canned in short order, even by the purportedly “liberal” MSNBC. Remember Phil Donahue? Me either.

At that time, not only was there a (supposed) “antiwar movement,” but there were also many activists decrying the media’s hawkish slant and the concentration of media outlets in the hands of a few huge corporations. Just like the “antiwar movement,” those voices of dissent against the “corporate media” have shut up now. With the media attacking Trump 24/7, fearmongering non-stop over the “Russian menace” and the “tyrant” Vladimir Putin—whom we are told rivals only Trump in his resemblance to Hitler—and with anyone who dares to support Brexit or the elimination of “free trade” agreements such as TPP and TTIP which would place multinational corporations above any domestic law denounced as a “fascist” and “racist” and “xenophobe,” the very same ex-activists have become the biggest shills and cheerleaders for the very same corporate media which they once loudly decried. 

Take Brexit as a case in point. Those who chose to take back the sovereignty of their country and to speak out against the unelected supranational German-dominated behemoth in Brussels have been branded as “racists” and “nationalists” and “xenophobes.” These are the “scarlet letters” of today’s “progressive” and globalist age. No one cares that many of these voters are not racist, but are very much concerned about the fact that they do not have jobs or are unable to support themselves and their families with their current dead-end employment, that the economy and infrastructure of their country is crumbling, and that there is additional downward pressure being placed on their wages and on the social state through the importation of cheap, “flexible” labor from countries who have been torn apart as a result of western-imposed war and conflict, such as in Syria. Countries that are, in other words, war-torn and impoverished with the support of the very same people who are clamouring for “open borders” and who are, without a hint of irony, branding their opponents as “racists” and “xenophobes.” Because that’s what it’s all about: foster crisis, force people to flee, and use their desperation to pit them against the poorer classes in your society, to drive wages down and profits up. That’s what the whole idea behind “open borders” and “refugees welcome” and creating the conditions which lead to refugees and the brain drain is all about, in case you haven’t realised it.

There are protests, of course. Protests in favour of uprooting populations, creating migrants and refugees, providing them special privileges and decimating the working class and the middle class some more. Protests in favour of the austerity-driven Eurozone and EU. Protests which sprung up like magic the moment Donald Trump became president, when for the past eight years, there was hardly any protest against austerity in Europe, or war and drone strikes in the Middle East, or the record numbers of deportations under Obama’s watch. We’re supposed to believe that tens of thousands of protesters in all corners of the United States, for instance, were able to obtain pink hats in short order and were able to coordinate and to “send a message” to Trump—before he even entered the Oval Office.

Here, it is important to remember that there are three components to every protest: what is being protested against, what is being advocated for as an alternative, and who is organising the protest (and what their ulterior motives may be). It’s no coincidence, therefore, that antiwar protests during the eight years of Obama’s reign barely registered a blip on the radar—and were thoroughly ignored by the mass media—but protests during the two months of Trump’s presidency have enjoyed abundant and positive media coverage. To share an example from Greece, rallies that were organised in the lead up to the country’s July 2015 referendum on accepting an EU-proposed austerity package and which were in favour of a “no” vote drew hundreds of thousands of people, despite having only a few days’ notice of the referendum. Following the referendum, when the “no” vote which prevailed was thoroughly betrayed by the SYRIZA-led coalition government, participation at protests against this betrayal numbered a few hundred people, tops. The reasons should be obvious to anybody with their eyes open. And to add to this, the “leftist” SYRIZA government gets a pass, its betrayal excused away as the result of being “blackmailed” by the EU. In the same breath, SYRIZA’s globalist apologists then tell us that Greece must remain in the EU “at all costs” and what a great, noble thing the EU’s “open borders” and “free movement of peoples” is, and how Greece will collapse and die if it leaves the euro. Political schizophrenia at its finest.

If you’re protesting something because you wish to return to the previous status quo, where you turned a blind eye to everything you now claim to be protesting, then you are disingenuous and hypocritical (at best). One should also never forget to also ask, where’s the money and logistical support and the perfectly crafted slogans and hashtags and the massive amounts of pink hats coming from. Answer that and you also answer what is actually being advocated and who is organising these protests.

Personally, I’ll never forget the disappearance of the “antiwar” movement after Obama was elected, the support of Democrats and many alleged “progressives” for the bombing and destruction of Serbia and the dismantling of the Balkans (under the watch of Bill Clinton), their blind support of the grossly undemocratic EU and the despicable branding of anyone opposed to it as a “racist” and “xenophobe,” and the silence when “hope and change” was bailing out major banks while ordinary people of all colours were losing their homes and 20,000 bombs were being dropped across seven wars that were being waged. All of this while the media and while most “activist” groups remained silent. Now suddenly Trump is the problem?

Anyone who truly is concerned about human rights, instead of blindly parroting the “open borders” and “refugees welcome” agenda, should ask themselves why there are refugees in the first place, and who started and who is perpetuating the conflict that is forcing them to flee. And anyone who is truly concerned about democracy should ask themselves if majorities of people in several countries suddenly became fascists overnight, or if there are other, legitimate reasons why they do not support “free trade” or “open borders” or supranational institutional behemoths such as the EU.

To be clear, this isn’t an endorsement of Donald Trump. But it also is not an endorsement of the McCarthyite witch hunt, the media hysteria and scaremongering against Russia, or their pro-Hillary and pro-Obama and pro-EU propaganda. Moreover, it is not an endorsement of the incumbent establishment. What more evidence is needed to see that there’s no such thing as Democrats and Republicans, for instance? There’s an incumbent neoliberal establishment, defended by the corporate mass media and its “presstitutes,” by the military-industrial complex, and by elite billionaires, and there are those who stand in its way, or who are perceived as standing in its way. 

Which side are you on?

Mar 222017
 

By James Graham, 99GetSmart

France-image

The presidential race got serious at last. The first televised encounter took place a few nights ago, March 20, 2017 when the Big Five Political Lizards met up for the first of three debates.

You didn’t hear about it? What country is it? A small Caribbean island or one of those quiet socialist experiments one hardly ever talks about – Ecuador, Norway? Is Denmark voting? Holland had a primary, didn’t they? So which is it and who’s running?

It’s that bastion of liberal values, the country Americans yearn for when they need a saving dose of liberté, equalité, fraternité. The one that has been in a state of emergency for almost a year. France, indeed.

And what the interested viewer saw the other night, depending on their point of view, was either a well-moderated debate or a ghastly spectacle, a masquerade. Myself, I confess to regarding it as yet another circuit in a demolition derby where one character after another self-destructs in public. Who’s next, I wonder? The 2017 election is without precedent in the Fifth Republic, one in which “Populist Fascism” is within a bank shot of the Palais Elysée.

How did France get here? And is France really so different from anywhere else? After all, if Marine Le Pen of the National Front wins France will have its very own Trump, with the added frisson of an elderly sadist, Holocaust-denier banging around the halls of the presidential palace. (That would be Jean-Marie Le Pen, Marine’s father, the founder of the Front. )

The current President, Hollande, announced in early December that he wouldn’t be a candidate for a second term. Not exactly a shock, even if it was unprecendented. But, fait accompli, his approval ratings hovering just slightly above Artic zero, what choice did he have? A living embodiment of the Peter Principle, the man who famously pledged to take on the finance sector delivered little more than gay marriage and a tell-all memoir before he left office. And yes, expanded snooping, an unending State of Emergency, involvement in Syria and… An excellent paddleboat captain, as Jean-Luc Mélenchon observed five years ago.

After his defeat in 2012 at Hollande’s hands and his announcement that he was now a private citizen, Nicholas Sarkozy formed Les Républicains from the shell of the old center-right UPM, and he did it, let it be observed, while keeping a steady stream of prosecutors and investigators off his trail. He’s a feverish, frisky sort and he gets himself in trouble, whether it be over money from Libya or L’Oreal. Les Républicains were to be his comeback vehicle in their November primaries but a funny thing happened on the way to the coronation: the employees decided they were sick of their hyper-active Boss. The annointed was then supposed to be Alain Juppé, the reasonable, grandfatherly Mayor of Bordeaux – but surprise again, François Fillon, one of Sarko’s henchmen, a man on the Paris merry-go-round for decades, pulled an upset. Austerity for all, he beamed, as if the medicine hadn’t already killed the patient elsewhere. A self-proclaimed Thatcherite with a Welsh wife named Penelope, he had the faithful cheering for what he was going to do to them, cutting here and slashing there. The man is a gift from the gods to those with a satiric bent. He looks a bit and sounds even more like our own Dick from Yorba Linda, full of snarlng, self-pity under pressure.

In mid-January, the Socialists held their primary. No hope in sight. How do you win an election with a dead dog tied around your waist? Prime Minister Manuel Valls, Hollande’s enforcer, a guy who looks like he wakes up covered in sweat, was supposed to win that one, too. The prize went instead to Benoit Hamon, a man in and out of the Hollande government twice (Economy, Education), a young Socialist (49 years old) with the dubious conviction that Socialists should project ideas other than career advancement. The Party faithful presumably couldn’t take any more business as usual but until his rally two days ago in Paris, Hamon was invisible, and he still is after the first debate.

(To watch Hamon’s rally at Bercy on Sunday was excruciating. How do you waltz with that dead dog? He had to say something about finance, he had to attack them, throttle them, repudiate them… what else are bankers and neo-cons good for at a Socialist rally? But there it was lurking in everyone’s minds, Hollande’s famous comment about his invisible enemy “finance” when he kicked off his campaign five years ago. Hamon had to say essentially the same thing but not use the same words, not invoke Hollande, not trip up, not leave himself open to charges of using bankers to get elected… Did a single soul believe what he said?)

And then came those merry days in late January, when the weekly Canard Enchainée broke the story that Mr. Austerity Fillon was in fact Mr. Largesse as far as family was concerned. No-show jobs for his reticient wife, legal assignments for his two children who had yet to pass the bar, it all came spilling out day after day in gorgeous detail. Dubbed Penelopegate, it opened a window on the Way Things Are and gave the French something to laugh about. Mr. Probity called it calumny, he called it misogyny, he called it all sorts of things but it wouldn’t go away, and the amounts kept climbing. Fillon is now officially under investigation, which means he will be charged. The question is when. Can one govern France from jail? Once touted as the safe bet to beat Le Pen, his latest speeches have been positively deranged, invoking Jeanne d’Arc and Jean Moulin, both of whom died agonizing deaths for their convictions. Fillon has not only destroyed Les Républicains and much of the right, he has made a national issue of the genteel practice of no-show jobs. He refuses to quit. Is that Presidential or isn’t it?

Meanwhile that eternal hothead, serial quitter of parties, the candidate with the sharpest tongue, Jean-Luc Mélenchon, is running on his own self-created France Insoumise. (Impossible to translate, it sounds like the party zone at a libertine club; Rebellious France will do.) Mélenchon, whom I’ve watched shove a journalist against the bar, is hard left in the jargon of papers like the Guardian. A candidate who had a far bigger rally in Paris on Saturday than Hamon did on Sunday with the whole Socialist apparatus behind him, it’ll be a surprise if Mélenchon gets more than 10 or 11% of the vote in the first round in late April. Still, never a dull moment around Jean-Luc.

A quick reading of Mélenchon’s manifesto (l’Avenir en Comun) makes it clear that he is even more of a dreamer than the nostalgic Le Pen. On matters specific to France he is astute and engaging but… the book is a lefty wish list of things that will never happen, written with a wand. Not that that sort of effort isn’t necessary from time to time but… As regards the EU, you wonder what he was doing in Strasbourg. He sees France acting independently to enact audacious changes in the script, without a hint as to how he will gain the support of 26 other EU members, also known as Countries That Aren’t France. “Europe is dead,” he announces. The problem, if that’s what it is, is that Mélenchon has ideas, some great, some mad, and while you can separate them out, few have a chance. France produced a great figure like Juarès on the back of labor and civil organizing. Who supports Mélenchon? The younger, disaffected, urban intellectual work force, who attend his rallies in numbers but are so presumably overcome with existential despair they can’t show up to vote for the man.

Ah well, bring on the Tin-Tin Brigade! Mélenchon even plans a space station on the Moon, to be shared with the Russians. It’ll probably be a paradise. Book me a ticket when it’s up, Jean-Luc. But pass the vodka now.

(Being patient and having borne with me this far, you are entitled to blurt out something like, “I don’t understand! Do you mean France of the Revolution, of ’68? Where is France’s equivalent of Podemos or Syriza or the Green-Left coalition in Holland… or anything?” Unfortunately, there’s no answer for that. Only groans in the dark….)

That leaves the winners for last, the two candidates leading in the polls: Emmanuel Macron, former minister of the Economy in the Hollande government (2014-2016), the handsome, charismatic fellow who at the head of his En Marche party is the new centrist hope to beat Le Pen. He has a program, a website, money, a ingratiating manner. How exactly does he intend to govern should he be elected, as a charming Third Way financial insider-political outsider? Legislative elections are in June and En Marche intends to run candidates fielded on-line. Seriously? He’ll be starting from zero, even fewer reps than the FN. He’s leading in the polls now and if he wins it will be a nail in the coffin of parties of all stripes. The whole thing feels like a gauzy fantasy.

Marine Le Pen is under investigation at the European Parliament for détournement of funds but as her father taught her long ago, it’s nothing to be ashamed of. (It’s known as the Farage Two-Step: take the money and then… stand there as if you bloody hell haven’t done a damn thing out of the ordinary.) The Front National is untouchable anyway: their entire existence is a scandal, an outrageous family opera that pretends to be about politics and is instead an anachronistic vision of France that stretches as far back as Algeria… and Vichy… and don’t ask. Industrial policy? Don’t ask. Marine wasted the debate getting excised over burkinis, a Moslem approximation of what proper ladies wore to the beach 100 years ago. Jews, Papa’s bete noire, are already fleeing to Israel in record numbers. There’s a good chance she’ll blow her Golden Opportunity when everyone else is in disarray.

But maybe not.

Of Le Pen and Macron there will be plenty to say as the campaign grinds on. Hopefully we can find some humor in it. France employs the antiquated first-past-post system with two rounds of voting, eleven current candidates winnowed down to two for the final on May 7. (You can check under the hood here.)

And yet “Macron surges among undecideds…” Let’s forget about parties and polls. Yesterday’s news. The Socialists look finished after Hollande and Les Republicains after Sarko and Fillon. Empty shells, hollowed out by money, avarice, lifeless ideologies. Is there a future for parties in living-breathing democracies, even the half-strangled ones? Maybe the left-right schism is over, too. Both Mélenchon and Le Pen want to drag France out of the Europe, Melenchon out of NATO, Le Pen out of the EU. Some sort of realignment awaits, some sort of opening for new energies must come about…

The early money on the horses says Macron over Le Pen but a whole slew of things can happen between now and the finish line. It feels like we’re in some species of Eternal Return, repeating things over and over without knowing it, sleepwalking towards an Apocalypse where the ponies collapse from exhaustion, panting for water. Or like the Bukowski novel where the losers always pick the wrong horses and the two factotums make off with the loot…

So, I say it’s Le Pen and not Macron. How so?

I get around a little and I meet people who’ve probably never been polled in their entire lives but who vote. Farmers, carpenters, some educated, some not. Macron with his bright and shiny future, his financial investments in this and that, his neither left nor right, Hamon with his universal income… it doesn’t touch them. They don’t believe it. Even after the first debate, they still don’t know who Macron is except a young guy in a sharp suit. Of the EU, on which everyone is dependent, they see an organization that refuses to adjust. Do they want closed borders, zero immigration and the old currency, le sacré franc, as Le Pen insists? Not one person has said as much to me but that, too, is not the issue. The issue is what they will do in early May when faced with More of the Same or Throw Them Out, and whether they decide, like a gambler down to his last desperate throw, to take the risk of a far-right candidate they don’t trust but who will administer a shock to the system. Either that or they don’t vote at all, which ends up being the same thing.

Trump will likely have an effect. As he inevitably stumbles and proves how impossible it is for a clueless autocrat to govern, his model will look less and less savoury. From the point of view of France, it’s question of when. It’s a short season. May comes soon.

Change the optics a bit and the question posed above returns: where’s the alternate current in France? Smaller countries (either land size or population), less encumbered by a domineering colonial past, seem to go in one direction (Canada, Denmark, Spain, Scotland, parts of central Europe, Latin America) while the Old Giants, the UK, Russia, China, the U.S. seem “doomed and determined” to adopt a schlerotic, oligarchic model. Which camp for France?

I realize that my form of polling and rampant speculation is unofficial, untabulated, anecdotal, probably inadmissable. But it’s as good as “Pretty Boy Macron up 3% this week, vows to woo London financiers to Paris.”

On verra, France.

Mar 192017
 

By James Petras99GetSmart

web-192

Introduction

Over thirty year ago a savvy Colombian peasant leader told me, “Whenever I read the word ‘peace accords’ I hear the government sharpening its knives”.

In recent times, ‘peace accords’ (PAs) have become a common refrain across the world. In almost every region or country, which are in the midst of war or invasion, the prospects of negotiating ‘peace accords’ have been raised. In many cases, PA’s were signed and yet did not succeed in ending murder and mayhem at the hands of their US-backed interlocutors.

We will briefly review several past and present peace negotiations and ‘peace accords’ to understand the dynamics of the ‘peace process’ and the subsequent results.

The Peace Process

There are several ongoing negotiations today, purportedly designed to secure peace accords. These include discussions between (1) the Kiev-based US-NATO-backed junta in the west and the eastern ‘Donbas’ leadership opposed to the coup and NATO; (2) the Saudi US-NATO-armed terrorists in Syria and the Syrian government and its Russian, Iranian and Hezbollah allies; (3) the US-backed Israeli colonial regime and the Palestinian independence forces in the West Bank and Gaza; and (4) the US-backed Colombian regime of President Santos and the Colombian Revolutionary Armed Forces (FARC).

There are also several other peace negotiations taking place, many of which have not received public attention.

Past and Present Outcomes of Peace Accords

Over the past quarter century several PAs were signed – all of which led to the virtual surrender of armed anti-imperialist protagonists and popular mass movements.

The Central-American PA’s, involving Salvador and Guatemala, led to the unilateral disarmament of the resistance movement, the consolidation of oligarchical control over the economy, the growth and proliferation of narco-gangs and unfettered government-sponsored death squads. As a consequence, internal terror escalated. Resistance leaders secured the vote, entered Congress as politicians, and, in the case of El Salvador, were elected to high office. Inequalities remained the same or worsened, and murders matched or exceeded the numbers recorded during the pre-Peace Accord period. Massive numbers of immigrants, often of internal refugees fleeing gang violence, entered the US illegally. The US consolidated its military bases and operations in Central America while the population continued to suffer.

The Israeli-Palestinian peace negotiations did not lead to any accord. Instead ‘negotiations’ became a thin cover for increasing annexation of Palestinian land to construct racists ‘Jews-Only’ enclaves, resulting in the illegal settlement of over half a million Jewish settlers. The US-backed the entire farcical peace process, financing the corrupt Palestinian vassal-leaders and providing unconditional diplomatic, military and political support to Israel.

US-Soviet Union: Peace Accord

The Reagan/Bush-Gorbachev ‘peace accords’ were supposed to end the Cold War and secure global peace. Instead the US and the EU established military bases and client regimes/allies throughout Eastern Europe, the Baltic and Balkans, pillaged the national assets and took over their denationalized economies. US-based elites dominated the vassal Yeltsin regime and virtually stripped Russia of its resources and wealth. In alliance with gangster-oligarchs, they plundered the economy.

The post-Soviet Yeltsin regime ran  elections, promoted  multiple parties and presided over a desolate, isolated and increasingly surrounded  nation – at least until Vladimir Putin was elected to ‘decolonize’ the State apparatus and partially reconstruct the economy and society.

Ukraine Peace Negotiations

In 2014 a US-sponsored violent coup brought together fascists, oligarchs, generals and pro-EU supporters seizing control of Kiev and the western part of Ukraine. The pro-democracy Eastern regions of the Donbas and Crimean Peninsula organized resistance to the putsch regime. Crimea voted overwhelmingly to re-unite Russia. The industrial centers in Eastern Ukraine (Donbas) formed popular militias to resist the armed forces and neo-Nazi paramilitaries of the US backed-junta. After a few years of mayhem and stalemate, a ‘negotiation process’ unfolded despite which the Kiev regime continued to attack the east. The tentative ‘peace settlement” became the basis for the ‘Minsk agreement’, brokered by France, Russia and Germany, where the Kiev junta envisioned a disarming of the resistance movement, re-occupation of the Donbas and Crimea and eventual destruction of the cultural, political, economic and military autonomy of the ethnic Russian East Ukraine. As a result, the “Minsk Agreement” has been little more than a failed ploy to secure surrender. Meanwhile, the Kiev junta’s massive pillage of the nation’s economy has turned Ukraine into a failed state with 2.5 million fleeing to Russia and many thousands emigrating to the West to dig potatoes in Poland, or enter the brothels of London and Tel Aviv. The remaining unemployed youth are left to sell their services to Kiev’s paramilitary fascist shock troops.

Colombia: Peace Accord or Graveyard?

Any celebration of the Colombian FARC – President Santos’ ‘Peace Accord’ would be premature if we examine its past incarnations and present experience.

Over the past four decades, Colombian oligarchical regimes, backed by the military, death squads and Washington have invoked innumerable ‘peace commissions’, inaugurated negotiations with the Colombian Revolutionary Armed Forces (FARC) and proceeded to both break off negotiations and relaunch full-scale wars using ‘peace accords’ as a pretext to decimate and demoralize political activists.

In 1984, then-President Belisario Betancur signed a peace accord with the FARC, known as the ‘Uribe Agreement’. Under this agreement, thousands of FARC activists and supporters demobilized, formed the Patriotic Union (UP), a legal electoral party, and participated in elections. In the 1986 Colombian elections, the UP candidates were elected as Senators, Congress people, mayors and city council members, and their Presidential candidate gained over 20% of the national vote. Over the next 4 years, from 1986-1989, over 5,000 UP leaders, elected officials and Presidential candidates were assassinated in a campaign of nationwide terror. Scores of thousands of peasants, oil workers, miners and plantation laborers were murdered, tortured and driven into exile. Paramilitary death squads and landlord-backed private armies, allied with the Colombian Armed Forces, assassinated thousands of union leaders, workers and their families members. The Colombian military’s ‘paramilitary strategy’ against non-combatants and villagers was developed in the 1960’s by US Army General William Yarborough, Commandant, US Army Special Warfare Center and ‘Father of the Green Beret’ Special Forces.

Within five years of its formation, the Patriotic Union no longer existed: Its surviving members had fled or gone into hiding.

In 1990, newly-elected President Cesar Gaviria proclaimed new peace negotiations with the FARC. Within months of his proclamation, the president ordered the bombing of the ‘Green House’, where the FARC leaders and negotiating team were being lodged. Fortunately, they had fled before the treacherous attack.

President Andrés Pastrana (1998-2001) called for new peace negotiations with the FARC to be held ‘in a demilitarized zone’. Peace talks began in the jungle region of El Caguan in November 1998. President Pastrana had made numerous pledges, concessions and reforms with the FARC and social activists, but, at the same time he had signed a ten-year multi-billion dollar military aid agreement with US President Clinton, known as ‘Plan Colombia’. This practice of ‘double-dealing’ culminated with the Colombian Armed Forces launching a ‘scorched earth policy’ against the ‘demilitarized zones’ under the newly elected (and death-squad linked) President Alvaro Uribe Velez. Over the next eight years, President Uribe drove nearly four million Colombian peasants into internal exile. With the multi-billion dollar funding from Washington, Uribe was able to double the size of the Colombian Armed Forces to over 350,000 troops, incorporating members of the death squads into the military. He also oversaw the formation of new paramilitary armies. By 2010 the FARC had declined from eighteen thousand to under ten thousand fighters – with hundreds of thousands of civilian casualties and millions rendered homeless.

In 2010 Uribe’s former Minister of Defense, Juan Manual Santos was elected President. By 2012 Santos initiated another “peace process” with the FARC, which was signed by the end of 2016. Under the new ‘Peace Accord’, signed in Cuba, hundreds of officers implicated in torture, assassinations and forced relocation of peasants were given immunity from prosecution while FARC guerillas were to face trial. The government promised land reform and the right to return for displaced farmers and their families. However, when peasants returned to claim their land they were driven away or even killed.

FARC leaders agreed to demobilize and disarm unilaterally by June 2017. The military and their paramilitary allies would retain their arms and gain total control over previous FARC- liberated zones.

President Santos ensured that the ‘Peace Accord’ would include a series of Presidential Decrees – privatizing the country’s mineral and oil resources and converting small family farms to commercial plantations. Demobilized peasant-rebels were offered plots of infertile marginal lands, without government support or funding for roads, tools, seed and fertilizer or even schools and housing, necessary for the transition. While some FARC leaders secured seats in Congress and the freedom to run in elections unmolested, the young rank and file FARC fighters and peasants were left without many alternatives but to join paramilitary or ‘narco’ gangs.

In summary, the historical record demonstrates that a series of Colombian presidents and  regimes have systematically violated all peace agreements and accords, assassinated the rebel signees and retained elite control over the economy and labor force. Before his election, the current President Santos presided over the most deadly decade when he was Uribe’s Defense Minister.

For brokering the peace of the graveyard for scores of thousands of Colombian peasants and activists, President Santos was awarded the Nobel Peace Prize.

In Havana, FARC leaders and negotiators were praised by Cuban President Raul Castro, President Obama, Venezuelan President Maduro and the vast majority of ‘progressives’ and rightists in North and South America and Europe.

Colombia’s bloody history, including the widespread murder of Colombian civil rights activists and peasant leaders, has continued even as the documents finalizing the Peace Accords were being signed. During the first month of 2017, five human right activists were murdered by death squads – linked to the oligarchy and military. In 2015, while the FARC was negotiating over several clauses in the agreement, over 122 peasant and human rights activists were murdered by paramilitary groups who continued to operate freely in areas controlled by Santos’ army. The mass media propaganda mills continue to repeat the lie that ‘200,000 people were killed by the guerillas (FARC) and the government’ when the vast majority of the killings were committed by the government and its allied death squads; a calumny, which guerilla leaders fail to challenge. Prominent Jesuit researcher Javier Giraldo has provided a detailed factual account documenting that over three quarters of the killings were committed by the Army and paramilitary.

We are asked to believe presidential regimes that have murdered and continue to murder over 150,000 Colombian workers, peasants, indigenous leaders and professionals are suddenly transformed into justice-loving partners in peace. During the first three months of this year, activists, sympathetic to the peace agreement with the FARC, continue to be targeted and killed by supposedly demobilized paramilitary murderers.

Social movement leaders report rising political violence by military forces and their allies. Even peace monitors and the UN Human Rights Office admit that state and paramilitary violence are destroying any structure that President Santos could hope to implement the reforms. As the FARC withdraws from regions under popular control, peasants seeking land reform are targeted by private armies. The Santos regime is more concerned with protecting the massive land grabs by big mining consortiums.

As the killing of FARC supporters and human rights activists multiply, as President Santos and Washington look to take advantage of a disarmed and demobilized guerilla army, the ‘historic peace accord’ becomes a great deceit designed to expand imperial power.

Conclusion: Epitaph for Peace Accords

Time and again throughout the world, imperial-brokered peace negotiations and accords have served only one goal: to disarm, demobilize, defeat and demoralize resistance fighters and their allies.

‘Peace Accords’, as we know them, have served to rearm and regroup US-backed forces following tactical setbacks of the guerrilla struggle. ‘PA’s are encouraged to divide the opposition (‘salami tactics’) and facilitate conquest. The rhetoric of ‘peace’ as in ‘peace negotiations’ are terms which actually mean ‘unilateral disarmament’ of the resistance fighters, the surrender of territory and the abandonment of civilian sympathizers. The so-called ‘war zones’, which contain fertile lands and valuable mineral reserves are ‘pacified’ by being absorbed by the ‘peace loving’ regime. This serves their privatization programs and promote  the  pillage of the ‘developmental state’. Negotiated peace settlements are overseen by US officials, who praise and laud the rebel leaders while they sign agreements to be implemented by US vassal regimes . . . The latter will ensure the rejection of any realignment of foreign policy and any structural socio-economic changes.

Some peace accords may allow former guerilla leaders to compete and in some cases win elections as marginal representatives, while their mass base is decimated.

In most cases, during the peace process, and especially after signing ‘peace accords’, social organizations and movements and their supporters among the peasantry and working class, as well as human rights activists, end up being targeted by the military and  para-military death-squads operating around government military bases.

Often, the international allies of resistance movements have encouraged them to negotiate PAs, in order to demonstrate to the US that ‘they are responsible’ — hoping to secure improved diplomatic and trade relations. Needless to say, ‘responsible negotiations’ will merely strengthen imperial resolve to press for further concessions, and encourage military aggression and new conquests.

Just ‘peace accords’ are based on mutual disarmament, recognition of territorial autonomy and the authority of local insurgent administration over agreed upon land reforms, retaining mineral rights and military-public security.

PA’s should be the first step in the political agendas, implemented under the control of independent rebel military and civil monitors.

The disastrous outcome of unilateral disarmament is due to the non-implementation of progressive, independent foreign policy and structural changes.

Past and present peace negotiations, based on the recognition of the sovereignty of an independent state linked to mass movements, have always ended in the US breaking the agreements. True ‘peace accords’ contradict the imperial goal of conquering via the negotiating table what could not be won through war.