Mark Weisbrot’s blog on economic and political trends in a multipolar world.
- Written by Mark Weisbrot
Today is a good day to salute another, newly christened Nobel laureate who stood up to the war machine, telling the “Masters of War” that he could “see through [their] masks”; that “even Jesus would never forgive what you do.” (Song below.)
The song was released in 1963, when the antiwar movement in the US was still very small. But millions would hear it, and along with other songs that he wrote and recorded, it would undoubtedly contribute to that movement and its consciousness.
Probably it won’t get a lot of play in the stories about Dylan winning the Nobel Prize. At the moment, the level of media brainwashing on these issues is rather high, with 80 percent of voters in a recent survey saying they thought terrorism was “very important” to their 2016 vote — second only to the economy, at 84 percent. Since you are much more likely to get killed by lightning than die at the hands of a terrorist, it is no exaggeration to say that the mass media has managed to create a literally delusional reality for millions of Americans.
- Written by Mark Weisbrot
In an interview with journalist Abby Martin, President Rafael Correa of Ecuador said that Latin America would be better off if Trump won the US presidential election in November. He was relatively gracious and diplomatic about it, praising Hillary Clinton for her positive attributes, and ended by saying that for the sake of the US and the world, he hoped that she would win. But Correa, who has done a great job in improving the lives of his compatriots and carrying out progressive reforms during his presidency, is highly educated and intelligent. He has learned much from the region’s experience with the Bush and Obama administrations. So it is worth taking his claim seriously, because it says some important things about US policy in Latin America.
The basic idea is that the US is going to play a terrible role in Latin America no matter who is president, so it is better for Latin Americans to have a US president who is widely disliked, like George W. Bush was, than someone who is charming and mediagenic like President Obama. In the short run, it is hard to counter this claim. In fact, it is quite possible that the region would have been better off if John McCain (2008) or Mitt Romney (2012) had defeated Barack Obama, and Obama is in general less hawkish than Hillary on foreign policy. The Obama administration’s policies in Latin America were no better than those of George W. Bush. The administration helped consolidate the military coup in Honduras, and did the same for the parliamentary coup in Paraguay.
They sent an OAS mission that recommended arbitrarily overturning the results of Haiti’s 2010 first round presidential election and then threatened the Haitian government with a cut-off of post-earthquake humanitarian aid if they did not accept the foreigners’ new choice of election results. Most recently, they have tried to force Haitians to accept the results of October’s fraudulent election, even after an independent election audit commission revealed massive irregularities and recommended new elections.
In March 2016 President Obama traveled to Argentina to heap praise on the recently elected right-wing president there, and the administration reversed its policy of blocking international loans to the country under the prior, left president Cristina Kirchner. Many more examples of real or attempted harm of left governments could be cited. On the positive side of the ledger, there is one item: Obama’s opening to Cuba. This is a historically significant policy change that would likely not have been done by a Republican president, but it is still part of a continued strategy of regime change by other means.
There are historical and structural reasons for the ugly continuity of US policy in Latin America, and the shameful lack of debate over it either within the government or in the media. Perhaps most importantly, it has few electoral consequences, even when Washington alienates almost all of the region’s governments, as it did with the military coups in Honduras and Venezuela.
So Correa is probably right, at least in the short run. But I would argue that in the long run, even Latin America would be worse off with a Trump presidency. That is because the two parties here do not have the same political constituencies, and the base of the Democratic Party is sufficiently different that it will continue to push overall US foreign policy in a better direction. This was more evident for Latin America in the 1980s, when President Ronald Reagan’s sponsorship of mass killings and atrocities in Central America caused so much opposition here that Congress cut off funding for the war in Nicaragua. (The Reagan administration then resorted to illegal funding; hence the Iran-Contra scandal). On this fight, Congress was divided along partisan lines, with Democrats against US funding for illegal wars and assassinations.
A recent example of these potential differences can be seen in the letter sent last week to US Secretary of State John Kerry by 43 Congressional Democrats, including some of the party’s leadership in the House and members close to President Obama. The letter states:
We write to express our deep concern regarding recent developments in Brazil that we believe threaten that country’s democratic institutions. We urge you to exercise the utmost caution in your dealings with Brazil’s interim authorities and to refrain from statements or actions that might be interpreted as supportive of the impeachment campaign launched against President Dilma Rousseff.
Our government should express strong concern regarding the circumstances surrounding the impeachment process and call for the protection of constitutional democracy and the rule of law in Brazil.
The Obama administration is officially neutral on the impeachment, or “coup” as many Brazilians call it, but there is evidence that they are supporting it. A member of the House Foreign Affairs Committee told me recently that it was “pretty clear” that the Administration was in favor of Dilma’s impeachment.
It is very unusual, perhaps unprecedented, for dozens of Democratic members of Congress to push back against a Democratic administration on policy towards a country as large and important as Brazil. But the only major US news outlet that reported on the letter was the Los Angeles Times.
The major media is another structural reason for the appalling continuity and lack of debate over US foreign policy in Latin America.
- Written by Mark Weisbrot
An immense effort was made to remove Bill Clinton from the presidency in the late 1990s, culminating in the first impeachment trial of a US president in 131 years. Intimate details of his affair with Monica Lewinsky, about which Clinton was accused of lying under oath, were probed and published by the far-right prosecutor Ken Starr. This let loose a flood of jokes and salacious fodder for the tabloids. At one point it seemed as if the question of perjury might hinge on what constitutes “sexual relations”; whereupon the editor of the Journal of the American Medical Association decided to publish an article based on survey data showing that 59 percent of college students did not consider oral sex as having “had sex.” He was promptly fired, after 17 years at the helm of the prestigious medical journal — although some maintained that his overseers were taking advantage of the political situation to get rid of someone who had also published articles favoring universal, single payer health care and other things not dear to the hearts of the AMA.
The current attempt to remove President Dilma Rousseff of Brazil bears many resemblances to the Clinton impeachment episode. It is led by a group of politicians who seek to overturn the results of national elections and steer the nation in a different, right-wing direction; and the elected president has not committed an impeachable offense. Missing, of course, is the sex scandal — and the charges are so unsexy that most people don’t even know what the president is being impeached for, and it’s not that easy to figure it out.
Most importantly, a crime is missing; even Bill Clinton’s enemies could at least come up with the alleged crimes of perjury and obstruction of justice. But Dilma Rousseff’s impeachers have no such criminal violation to even allege. This was the conclusion last week of the federal prosecutor, Ivan Claudio Marx, who was assigned to investigate the offenses for which Dilma is about to stand trial in Brazil’s Senate. He determined that Dilma did not break the law in her handling of the public budget. The impeachment centers around her decision to delay payments to the state banks, which allowed the government to maintain the appearance of staying within a targeted fiscal balance in its accounts. Marx determined that this was not a crime, because it was not a “credit transaction” that would require congressional approval.
- Written by Mark Weisbrot
Some press reports on the crisis in Brazil seem to imply that the removal of President Dilma Rousseff, re-elected in 2014 for a four-year term, is a done deal. Of course the interim government is acting as though they are the product of some huge electoral victory, even though the elected president is merely suspended pending her upcoming impeachment trial in the Senate. Beginning with a cabinet of all rich, white males, in a country where more than half identify as Afro-Brazilian or mixed race descent, they have tried to create the impression that they are the new government that will rule at least until there are new presidential elections in 2018. But the chances that they will be gone before September are increasing every day.
First there were the series of scandals, which have so far resulted in the resignation of three ministers, and revealed that the main impetus behind the impeachment of Dilma was to protect corrupt, pro-impeachment politicians from further investigation. Then last week the speaker of Brazil’s House of Representatives had to resign from his position because of corruption that reportedly netted him more than $40 million, including millions in Swiss bank accounts. (He has not resigned from his seat in Congress, despite an order from the Supreme Court to do so in order to stand trial. Members of Congress have immunity from normal prosecution and can only be tried by the Supreme Court; this is one of the unfortunate structural reasons why a majority of legislators are under investigation for a range of crimes).
But the most encouraging, and widely underreported development has been the formation of a bloc within the Senate that is against the impeachment. The Senate vote on May 12 suspended the president, and she is expected to be put on trial in mid-August. In order to permanently remove her from office, the Senate will have to vote for conviction by a two-thirds majority. That means the pro-impeachment forces will need 54 of the 81 senators.
But according to one of Brazil’s most well-known and respected journalists, Paulo Henrique Amorim, there is now a bloc of 36 Senators who have committed to vote against impeachment, with some of the Senators making this conditional on a referendum to decide whether to have early presidential elections. Some supporters of Dilma and her Workers’ Party (PT) are against this proviso, since Dilma was elected for a four year term and they think that she should serve it out without further interruption, as according to the constitution. However, Dilma herself is willing to accept the referendum. This group of 36 Senators (G-36) is 8 more than enough to defeat the impeachment effort.
Although Brazil is not getting a lot of international attention at the moment, that will change when the Rio Olympics begin on August 5. The machinations of the pro-impeachment forces, and their corruption, will not look pretty under the spotlight of the international media. It is quite possible that the G-36 will grow, and solidify, and the Senate will vote to acquit Dilma. This would only make sense, since she is not accused of any crime that could be successfully prosecuted in a court of law.
- Written by Mark Weisbrot
A struggle over the proposed Trans-Pacific Partnership Agreement (TPP) is taking place within the 187-member Democratic Party platform committee as they gather in Orlando to hammer out the details of the previously approved draft. As I wrote yesterday here, the fight has potential implications for the presidential race, because it is Hillary’s delegates who are trying to prevent the platform from having a position against the TPP. This could give Donald Trump more of an opening to argue that Hillary doesn’t really oppose the TPP, and potentially win over some swing voters for whom this is an important issue.
Meanwhile, a source who is familiar with the situation has stated that President Obama told Democratic Party Platform Committee Members that if the platform explicitly opposed the TPP, he would not “go all in” for Hillary's campaign. This could explain part of Hillary’s reported “whip operation” to get her delegates to block the anti-TPP statement from the platform.
On the other hand, most press reports have attributed too much of the responsibility to Obama for this potential outcome, and for the actual outcome of the platform draft committee’s 10–5 vote on June 24, rejecting the anti-TPP language. (The five Sanders representatives voted in favor of the anti-TPP plank, and Bernie is continuing the fight, possibly to the convention floor if it fails again in Orlando). First of all, Hillary does not answer to Obama, and neither do her delegates — and many of them have more reason to care about pleasing the next president than the current one. Also, for the above reasons, Hillary could be taking more electoral risk by thwarting the will of the primary voters and the Party by keeping this out of the platform, than by annoying Obama by allowing it in. After all, it would be very unusual for him not to campaign for her; he does not want a President Trump any more than any other Democrat does; and the presidential race will also affect the outcome of Congressional elections.
There is also a lot of reporting that emphasizes how Democratic delegates, including members of Congress, don’t want to deny President Obama something that is important to his legacy. This is also something of an exaggeration. Most importantly, what kind of legacy is the TPP? Is Bill Clinton proud today of having rammed NAFTA through Congress, with a majority of Democratic Representatives voting against it? If he was, Hillary would be campaigning on it instead of running away from both that agreement and the TPP. And this latest agreement is pretty much guaranteed to be worse than NAFTA, given the number of countries and the rapid multiplication of lawsuits in recent years, by corporations seeking damages from governments under these agreements. If it passes, it will look much worse in the future than it does now, like George W. Bush’s legacy of the Iraq War. Better for those delegates who care about Obama’s legacy to protect it by blocking this agreement.
Finally, an interesting development this week: Senator Elizabeth Warren, a potential running mate for Hillary, released a powerful 5-minute video urging people to stop the TPP. The timing of this video, just before the current platform fight, is not coincidental. It is reminiscent of her famous New York Times op-ed just before the Iowa primary vote, which did not endorse Bernie, but was widely seen in political circles as boosting him with convincing arguments about the power of the chief executive to get things done in the face of an opposition Congress. Warren knows that the TPP and the issues it raises are going to be an important political battleground long after this presidential election, and she wants to be on the right side of history. Because she just might have a shot at being the next president after the one that is elected in November.
- Written by Mark Weisbrot
In his Friday column in the New York Times, David Brooks floats several large-sounding numbers to pretend that the proposed Trans-Pacific Partnership (TPP) agreement promises big gains for Americans. However, as Dean Baker points out, these are so grossly misleading as to be worthless. For example, the $131 billion in gains that he cites take so long to be realized that we are talking about the TPP making the US as rich on January 1, 2030 as it would otherwise be in mid-March of that year. And if we take into account that the agreement will have negative distributional effects, such as increasing the price of prescription drugs, it would be more accurate to say that most Americans will suffer a net loss in their income as a result of the TPP.
Brooks appears for all practical purposes to be innumerate, and numbers in his columns, especially with regard to economic issues, appear mostly as ornamentation rather than as a means of describing quantitative relationships in the world. However it is worth looking at his overall argument: for Brooks, Trump is spearheading a “Coming Political Realignment,” which less clumsy politicians may bring to fruition even after his likely failure. That alignment involves a new debate between open versus closed, “open borders, free trade, cosmopolitan culture and global intervention” versus “closed borders, trade barriers, local and nationalistic culture and an America First foreign policy.”
But what Brooks fails to notice is that the media, together with the policy makers that it mostly supports, has done vastly more than Donald Trump or any politician to frame the debate in this way. In fact, even Donald Trump’s capture of the Republican nomination would have been very unlikely without the estimated $2 billion of free publicity that they slathered on him. Bernie Sanders offered a much more sensible “political realignment” that moved millions of Americans, one in which the battle was joined on one side by mega-corporations and banks, Wall Street and corrupted politicians, polluters, tax-evaders and outsourcers, and the other by a majority who had been deprived of their fair share of the country’s growing income. He received a small fraction of the coverage granted to Trump.
The major media, in which Brooks is a quintessential and widely followed pundit, reinforces the movement towards this “coming realignment” every day. Almost all the words and concepts of Brooks’ description are something of a farce. “Free trade” is a relatively minor component of the corporate power grab that is labeled as the TPP. “Global intervention” is about unnecessary wars in which thousands of Americans lose their lives and hundreds of thousands more are wounded so that our leaders can preserve a dying empire. The “cosmopolitanism” and “openness” of the elite that supports American foreign policy is every bit as racist, and in the rest of the world often more violently so, as the Trumpism that wants to build walls and ban Muslim immigrants.
Brooks has correctly identified a political trend that is currently growing in the US and Europe. But it is only because the major media have turned the world upside-down that Trump, Brooks, and right-wing leaders in the UK and Europe have any chance of framing these great political divides as a grotesque caricature of their reality.
- Written by Mark Weisbrot
A few years ago a British Member of Parliament, who had been there for 13 years, took me on a tour of the building, complete with a history lecture to go with the paintings and engravings there. Our conversation turned to foreign policy, and the MP (whose name I won’t mention here), smiled knowingly and said, “You want to know what the Foreign Office is going to do? Just call the State Department.”
Today there is a lovely front page article in the New York Times which makes the same point, sharing some views that “no American diplomat would utter in public for fear of offending other members of the European Union.” As is generally the case with political developments in Europe, the real concern in Washington is all about power:
No country shares Washington’s worldview quite the way Britain does, they say; it has long been the United States’ most willing security ally, most effective intelligence partner and greatest enthusiast of the free-trade mantras that have been a keystone of America’s internationalist approach. And few nations were as willing to put a thumb as firmly on the scales of European debates in ways that benefit the United States.
So, while most people to the left of center are mourning Brexit — for more progressive reasons, such as the right-wing, xenophobic leadership that led the movement to leave the EU — let’s look on the bright side for a moment.
For those of us who care about the little things, like the New Cold War with Russia and the increased risk of nuclear war, the probability of these and other disasters may have receded a bit with Brexit. Germany was divided, with strong opposition from the business community, on the sanctions against Russia when they were imposed. The NYT article notes that:
… American officials were shocked recently when Germany’s foreign minister, Frank-Walter Steinmeier, warned that recent NATO exercises to deter Russia from thinking about destabilizing Poland and the Baltic members of the military alliance amounted to “saber-rattling and warmongering.”
Tony Blair was George W. Bush’s main ally in the Iraq War and without him it may never have happened. And as President Obama has noted, “ISIL is direct outgrowth of al Qaeda in Iraq, which grew out of our invasion…”
Which, together with US policy in Syria, Libya, and the Middle East generally, has given us the refugee crisis that helped drive the Brexit vote.
Back in 2014, some EU leaders expressed concern about US-backed attempts to topple the elected government of Ukraine, worried about the possibility of setting off a civil war there. The State Department official in charge of the situation was Victoria Nuland, a hard-line neoconservative who remains today the Assistant Secretary of State for European and Eurasian Affairs. Her response was leaked in a recorded telephone conversation: “Fuck the EU.”
Nuland, a Hillary protégé, could again play an important foreign policy role in a Hillary Clinton administration.
UK voters may have decided to follow Nuland’s advice for other reasons, but a European Union without the UK would be somewhat less likely to support reckless US military adventurism and other foreign policy disasters. Now there’s a silver lining.
- Written by Mark Weisbrot
I have argued for years, and in my last post on this blog, that a big part of the story we have seen in Europe over the past eight years is a result of social engineering. This has involved a major offensive by the European authorities, taking advantage of an economic crisis, to transform Europe into a different kind of society, with a smaller social safety net, lower median wages, and — whether intended or not — increasing inequality as a result.
In recent weeks France has faced strikes and protests as the battle has come to their terrain, over a new, sweeping labor law. Among other provisions, the law would weaken workers' protections regarding overtime pay, the length of the work week, and job security. But most damaging of all are the provisions that would structurally weaken unions and undermine their bargaining power. These would push collective bargaining away from the sectoral level, and toward the level of individual companies, thus making it more difficult for unions to establish industry standards for wages, hours, and working conditions.
Such structural “reforms” have been promoted by the European authorities (including the IMF) for years, and the ostensible rationale is to reduce unemployment. Economist Thomas Piketty succinctly sums up the major flaw in that argument:
In the labor law you find the same mixture of lack of preparation and cynicism. If unemployment hasn't stopped climbing since 2008, with an additional 1.5 million unemployed workers (and 2.1 million category A jobseekers in mid 2008, 2.8 million in mid 2012, 3.5 million in mid 2016) it's not because the [current] labor law has suddenly become more rigid. It's because France and the eurozone have provoked, through excessive austerity, an absurd slowdown of activity from 2011 to 2013, contrary to the U.S. and to the rest of the world, thereby transforming the financial crisis that came from the other side of the Atlantic into an interminable European recession.
In a recent discussion (video at 46 minutes), economist Yanis Varoufakis, who was Finance Minister of Greece until last July, recounts a conversation that he had with his German counterpart Wolfgang Schäuble. It was at the height of the conflict between Greece and the European authorities last summer:
I had many interesting conversations with the Finance Minister of Germany, Dr. Wolfgang Schäuble. At some point, when I showed him this ultimatum, and I said to him… “Would you sign this? Just, let’s take off our hats as Finance Ministers for a moment. I’ve been in politics for five months. You’ve been in politics for 40 years. You keep barking in my ear that I should sign it. Stop telling me what to do. As human beings, you know that my people, now, are suffering a Great Depression. We have children at school that faint as a result of malnutrition. Can you just do me the favor and advise me on what to do? Don’t tell me what to do. As somebody with 40 years, a Europeanist, somebody who comes from a democratic country, just Wolfgang to Yanis, not Finance Minister to Finance Minister.”
And to his credit, he looked out of the window for a while. .. and he turned around and he said, “As a patriot I wouldn’t.” Of course the next question was, “so why are you forcing me to do it?” He said, “Don’t you understand?! I did this in the Baltics, in Portugal, in Ireland, you know, we have discipline to look after. And I want to take the Troika to Paris.”
The Troika has arrived.
- Written by Mark Weisbrot
Paul Krugman posted an interesting note a few weeks ago that deserves a lot more attention. He shows this graph of real GDP per working age adult for the U.S. and Europe, and notes that the U.S. and European recoveries from the great recession were similar at first by this measure (that is, adjusting for population growth):
But then the U.S. keeps recovering while Europe slides into a second recession. Why? Krugman explains:
What was happening in 2011-2012? Europe was doing a lot of austerity. But so, actually, was the U.S., between the expiration of stimulus and cutbacks at the state and local level. The big difference was monetary: the ECB’s utterly wrong-headed interest rate hikes in 2011, and its refusal to do its job as lender of last resort as the debt crisis turned into a liquidity panic, even as the Fed was pursuing aggressive easing.
This is all true but I think it is important to remember what the European Central Bank (ECB) was doing when the “debt crisis turned into a liquidity panic.” The ECB, together with its partners in the European Commission and the International Monetary Fund (IMF), was using and prolonging the financial crisis in the eurozone in order to force the more vulnerable governments (i.e. Greece, Spain, Portugal, Ireland, Italy) to adopt policies that their electorates would never vote for. Among these were cutting government employment and social spending (including health care and pensions), labor market “reforms” that reduced the bargaining power of unions, reducing employment protections, and other unpopular measures that could be expected to redistribute income upward and reduce the living standards of the majority.
In my book, Failed: What the Experts Got Wrong About the Global Economy, I examine some of the details of this process by which the European authorities repeatedly sent the eurozone to what looked like the brink of financial meltdown in order to achieve this leverage. The authorities’ political agenda was amply documented in dozens of IMF Article IV papers with EU countries during the crisis years. (These are papers that result from regular IMF consultations with governments; the recommendations that are recorded represent a sort of elite consensus including finance ministries and IMF economists).
This recent history is very important, because the monetary policy that Krugman rightly blames for Europe’s additional two years of recession was more than policy mistakes or dogma, it was an essential component of a very deliberate attempt to transform Europe into a different kind of society.
We know this from the IMF papers and also from the fact, which Krugman alludes to, that ECB President Mario Draghi put an end to the financial crisis with just three words: in July 2012 the ECB would do “whatever it takes” to preserve the euro. After that, the yields on 10-year bonds for Spain and Italy — the too-big-to-fail debtors whose solvency was necessary to avoid financial catastrophe — fell sharply, and continued to fall and stay low for years. Of course the ECB could have done this at any time (Draghi himself had been at the helm of the Central Bank for eight months in July 2012).
Krugman correctly notes that the ECB’s stance in 2011–12 may have created “enduring weakness” in the Eurozone, which we still see today. But it would be good for the world to know just what the European authorities were trying to do when they created this mess.
- Written by Mark Weisbrot
The U.S. and one of its principal allies, OAS (Organization of American States) Secretary General Luís Almagro, suffered an unambiguous defeat this week at the OAS, when Almagro’s attempt to use the hemispheric organization against Venezuela was rejected unanimously by the hemisphere. Almagro had used — a number of governments thought “abused” — his authority as Secretary General to convene the Permanent Council of the OAS in order to invoke the “Democratic Charter” of the OAS against Venezuela. The Charter allows the OAS to intervene when there is an “unconstitutional alteration of the constitutional regime that seriously impairs the democratic order in a member state.”
With the exception of the right-wing government of Paraguay — itself installed in a 2012 coup that the U.S. used the OAS to help consolidate — there were no takers. The Permanent Council instead issued a statement that had, in sharp contrast to Almagro’s efforts, a friendly tone; it included “support for the initiative of the former presidents of Spain, the Dominican Republic, and Panama to reopen an effective dialogue between the government and the opposition.” The international media was gracious enough not to notice that Almagro had suffered a crushing defeat.
Almagro and President Maduro of Venezuela had exchanged some harsh words, with Almagro saying to Maduro that “You, Nicolás Maduro, betray the political ethics with your lies,” and “You betray your people.”
But more importantly, since it has evaporated down the U.S. media’s “memory hole,” Almagro was part of a vigorous international campaign to de-legitmize the congressional elections in Venezuela last December. Whatever one thinks of Almagro or his motives, it is important to recall that he turned out to be objectively very wrong about those elections. He had insisted that without observers from the OAS (who have a sketchy track record in elections where the U.S. has an interest), the government would cheat; but in fact, the opposition won a large majority and there was no argument about the vote tally.
Needless to say, it is pretty obvious that Almagro’s current effort, like the last one, is a purely political offensive against Venezuela; it has nothing to do with democracy within the country. The deep irony of ignoring Brazil’s unfolding coup d’etat, which really is an “unconstitutional alteration of the constitutional regime that seriously impairs the democratic order,” was undoubtedly impressive to member governments. But really the effort to invoke the Democratic Charter against Venezuela’s democratically elected government never had a chance in 21st century Latin America; it was just a public relations stunt to support the Venezuelan opposition’s (and U.S.) current efforts at regime change in Venezuela.
To his credit, Almagro on April 15 wrote a well-argued letter denouncing the impeachment process underway in Brazil. Since then, there have been leaked conversations supporting Dilma’s position that right-wing Brazilian politicians, collaborating with the Brazilian media and judiciary, had launched the impeachment in order to protect themselves from the corruption investigation launched by Dilma’s government. Two ministers of the interim government have resigned in the face of this new evidence, and the interim government has suffered a considerable loss in international credibility. At this point it is not clear if they will even get the two-thirds majority that they need in the Brazilian Senate in order to oust the elected president.
But Almagro, who could use his bully pulpit in the media to support defenders of democracy in Brazil, has been silent about these recent developments. He has shifted his focus (combined with extreme rhetoric) towards Venezuela. It is possible that the Big Boyz in Washington informed him that his April 15 letter on Brazil was off message. The U.S., after all, funds most of the OAS budget and typically has disproportionate influence on the bureaucracy there. We will see what happens.
- Written by Mark Weisbrot
The International Monetary Fund (IMF) has gotten some attention in the past week for the publication of an unusual article in its quarterly magazine, Finance and Development. The article's title, “Neoliberalism: Oversold?” itself is a shocker, since the institution has been the most influential proponent of neoliberalism in the world for more than four decades. It's kind of like an op-ed from Donald Trump titled, “Insulting Your Opponents: Oversold?”
From the authors (Jonathan D. Ostry, Prakash Loungani, and Davide Furceri):
[T]here are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity,” which is shorthand for policies to reduce fiscal deficits and debt levels. An assessment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:
• The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.
• The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.
• Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.
But the overall failure of the neoliberal agenda has been evident since the turn of the century, for anyone who cared to look at the data. The authors note: “There has been a strong and widespread global trend toward neoliberalism since the 1980s …” So, if an experiment has been conducted in scores of countries over a twenty-year period, why not look and see how the average country has done as compared with, e.g., the previous twenty-year period?
- Written by Mark Weisbrot
It is clear that the executive branch of the U.S. government favors the coup underway in Brazil, even though they have been careful to avoid any explicit endorsement of it. Exhibit A was the meeting between Tom Shannon, the 3rd ranking U.S. State Department official and the one who is almost certainly in charge of handling this situation, with Senator Aloysio Nunes, one of the leaders of the impeachment in the Brazilian Senate, on April 20. By holding this meeting just three days after the Brazilian lower house voted to impeach President Dilma Rousseff, Shannon was sending a signal to governments and diplomats throughout the region and the world that Washington is more than ok with the impeachment. Nunes returned the favor this week by leading an effort (he is chair of the Brazilian Senate Foreign Relations Committee) to suspend Venezuela from Mercosur, the South American trade bloc.
There is a lot at stake here for the major U.S. foreign policy institutions, which include the 17 intelligence agencies, State Department, Pentagon, White House National Security Council, and foreign policy committees of the Senate and House. An enormous geopolitical shift took place over the past 15 years, in which the Latin American left went from governing zero countries to a majority of the region. For various historical reasons, the left in Latin America tends to favor national independence and international solidarity, and is therefore less willing to go along with U.S. foreign policy. I remember the first time I saw Lula Da Silva. It was in Porto Alegre, Brazil, in 2002. He was speaking to a crowd at the World Social Forum, and standing under a huge banner that said “Say No to Imperialist War in Iraq.”
Lula is a good diplomat, and he maintained a good personal relationship with George W. Bush during their overlapping presidencies. But he changed the foreign policy of Brazil, and contributed to the regional development of an independent foreign policy. In 2005 at Mar del Plata, Argentina, the left governments buried the U.S.-sponsored “Free Trade Area of the Americas,” thus putting an end to the American dream of a hemispheric commercial agreement based on rules designed in Washington. Brazil under the Workers’ Party also strongly backed Venezuela against U.S. attempts to isolate, destabilize, and even topple its government. Lula’s first foreign trip after his re-election in 2006 was to Venezuela, where he supported President Hugo Chávez in his own re-election campaign. The Workers’ Party(PT) government also supported regional efforts to overturn the U.S.-backed military coup in Honduras, and successfully opposed the expansion of U.S. access to military bases in Colombia in 2009. And many in the U.S. foreign policy establishment (including then Secretary of State Hillary Clinton) did not appreciate the Brazilian government’s role in helping to arrange a nuclear fuel swap arrangement to settle the dispute with Iran in 2010, despite the fact that it was actually done at Washington’s suggestion.
Washington’s Cold War never ended in Latin America, and now they see their opportunity for “rollback.” Brazil is a big prize, as is evidenced by the new foreign minister in the interim government. He is José Serra, who ran unsuccessfully for president against first Lula (2002) and Dilma (2010), and is expected to use his current position — if this government survives — as a springboard for a third shot at the presidency.
In his 2010 presidential campaign, Serra went to unusual lengths to demonstrate his loyalty to Washington. He accused the Bolivian government of Evo Morales of being an accomplice to drug traffickers and attacked Lula’s government for its attempts to resolve the nuclear standoff with Iran. He also criticized them for joining the rest of the region in refusing to recognize the post-coup Honduran government, and campaigned against Venezuela as well.
This is the kind of guy that Washington wants, very badly, in charge of Brazil’s foreign policy. Although corporations are obviously a big player in U.S. foreign policy, and they literally do much of the writing of commercial agreements like NAFTA and the TPP, the number one guiding principle in Washington’s foreign policy apparatus is not short-term profit but power. The biggest decision-makers, all the way up to the White House, care first and foremost about getting other countries to line up with U.S. foreign policy. They did not support the consolidation of the Honduran military coup because Honduran President Mel Zelaya raised the minimum wage, but because he headed a vulnerable left government that was part of the same broad alliance that included Brazil under the PT. These governments all supported each other, and they changed the norms of the region so that even non-left governments like Colombia under Juan Manuel Santos mostly went along with the others.
That is what Washington wants to change right now, and there is much excitement in This Town about the prospects for “a new regional order,” which is really the old regional order of the 20th century. It won’t succeed — even by their own measures of success — any more than George W. Bush succeeded in his vision of reshaping the Middle East by invading Iraq. But they could help facilitate a lot of damage trying.
- Written by Mark Weisbrot
Transcripts of a recorded conversation between then Senator Romero Jucá, and former oil industry executive Sergio Machado indicate that what many people suspected about the impeachment of Brazilian President Dilma Rousseff is true: some of the most corrupt and powerful politicians in Brazil are using impeachment as a means of protecting themselves and their power. It is of course deeply ironic: Dilma, who is not accused of any corruption, is being impeached by corrupt members of Congress whose power is threatened by the unprecedented capacity that she gave to prosecutors and the judiciary to go after corruption.
The revelations were best summed up by the Intercept on May 23:
“For months, supporters of Brazil’s democracy have made two arguments about the attempt to remove the country’s democratically elected president: (1) the core purpose of Dilma’s impeachment is not to stop corruption or punish lawbreaking, but rather the exact opposite: to protect the actual thieves by empowering them with Dilma’s exit, thus enabling them to kill the Car Wash investigation; and (2) the impeachment advocates (led by the country’s oligarchical media) have zero interest in clean government, but only in seizing power that they could never obtain democratically, in order to impose a right-wing, oligarch-serving agenda that the Brazilian population would never accept…
[The transcripts] are proof: proof that the prime forces behind the removal of the president understood that taking her out was the only way to save themselves and shield their own extreme corruption from accountability; proof that Brazil’s military, its dominant media outlets, and its Supreme Court were colluding in secret to ensure the removal of the democratically elected president; proof that the perpetrators of impeachment viewed Dilma’s continued presence in Brasilia as the guarantor that the Car Wash investigations would continue; proof that this had nothing to do with preserving Brazilian democracy and everything to do with destroying it.”
This could be a game-changer for a government of already very questionable legitimacy, whose standing in the international media has fallen considerably since the embarrassment of the impeachment circus that took place in the Brazilian Congress on April 17. However, Jucá, who was appointed planning minister under the interim government, resigned; and as of today, it is noteworthy that international media seems to have moved on rather quickly from these revelations.
It is important to remember that Dilma’s removal from office is not a done deal, despite the fact that the interim government is acting as though they had just won a presidential election. The Senate voted to impeach her — that is, to put her on trial in the Senate — by a vote of 55-21. This is just one vote more than the two-thirds majority that will be needed to convict her and remove her from office. So, if there is a net change of two Senate votes away from impeachment after the trial, she will remain president. There are millions of people mobilizing against the impeachment and polling has indicated that only 2 percent of Brazilians would vote for interim president Michel Temer. If this were the U.S., e.g. as in the attempted impeachment of Bill Clinton – which is not a bad analogy since a right-wing opposition was trying to impeach him without an impeachable offense — one would expect the elected President to prevail. However, the political system in Brazil is structurally much more corrupt, and legislators are much less accountable to their constituents, as compared with the (however oligarchic) United States. Real political reform, in addition to serious economic policy changes, is a dire necessity for Brazil, once democracy is restored.
In the meantime, international public opinion will have some impact on the interim government’s struggle for legitimacy, and perhaps even on the impeachment vote. Since the U.S. government has a major influence on the international media — more on reporting from Latin America than on other regions — the U.S. position and diplomacy will matter. Although Washington has operated quietly through “dog-whistle diplomacy,” there is little doubt that the U.S. foreign policy establishment and “national security state” currently favors the ouster of the PT government and the installation of a right-wing government that has pledged to change its foreign and commercial policy to coincide more with Washington’s own plans for the region and the world.
- Written by Mark Weisbrot
The New York Times reported last week that Argentina's former President Cristina Fernández de Kirchner was indicted “on charges of manipulating the nation’s Central Bank during the final months of her administration.” Reading the article, however, as well as other media coverage, and even the 147-page court document, it is tough to figure out what actual violation of law is alleged here — either committed by Kirchner or her finance minister, Axel Kicillof, or her central bank president, Alejandro Vanoli, who are also charged. There is no allegation that any of them profited or received kickbacks from any transaction. Nor are there allegations that others connected with the defendants profited, or that there was any corruption involved. In other words, there is no crime here, and it seems very likely that the indictments will be thrown out by a higher court.
Many central banks intervene in foreign currency markets in order to influence the value of the country’s currency. In this case, the Argentine Central Bank intervened by selling futures contracts (in pesos) between September and November of last year. According to press reports, the average exchange rate for these contracts was 10.6 pesos per dollar. The official exchange rate during this time was about 9.5. On December 10, 2015, the right-wing presidential candidate Mauricio Macri, of the opposition coalition Cambiemos (Let’s Change), became president and soon lifted currency controls; the peso fell from 9.8 to 13.9 and is currently at about that value after falling further and recovering some. On this basis, the court accuses Kirchner et al of a crime, because the government would lose money — although in pesos, not dollars — in paying off the contracts before June.
- Written by Mark Weisbrot
In a recent article aptly titled, “The Global Growth Funk,” Nouriel Roubini does what he does best: makes the case that the global economy is going to hell in a handbasket, and there is little that can be done about it. This is how he earned the nickname “Dr. Doom.” There is much to agree and disagree with in his analysis. But I think there is some overreach here, and some overdeterminism.
One of these is a technical point, but it’s important. Roubini writes:
Moreover, a protracted cyclical slump can lead to lower trend growth. Economists call this “hysteresis”: Long-term unemployment erodes workers’ skills and human capital; and, because innovation is embedded in new capital goods, low investment leads to permanently lower productivity growth.
This is true, and it is one of the most tragic results of the European authorities’ forced austerity and unnecessary prolongation of financial crisis (from 2010 through most of 2012). This is what gave Spain the 20 percent unemployment and 45 percent youth unemployment that it still has today, and even worse unemployment for Greece. Because of very bad policy choices, driven in large part by a political agenda, Europe has an unemployment rate today that is twice the level of the United States.
But as for “permanently lower productivity growth,” there is still a question of how much lower and how permanent? The IMF forecasts that Spain will have unemployment of 16.4 percent in 2019; at the same time, the Fund estimates that Spain will be above its potential GDP in 2019. This means that Spain will have reached “full employment” with more than 16 percent of its labor force unemployed. Similarly, the IMF projects Greece to have unemployment of 18.9 percent in 2020; but the economy will be running at just 1.2 percent below its potential GDP.
- Written by Mark Weisbrot
One of the great accomplishments of Bernie Sanders’ campaign has been getting his opponent, Hillary Clinton, to adopt his positions on so many important issues. Hillary Clinton recently had this to say:
Because whether you support Senator Sanders or you support me, there is much more that unites us than divides us. We all agree that wages are too low and inequality is too high, that Wall Street can never again be allowed to threaten Main Street, and we should expand Social Security, not cut or privatize it. We Democrats agree that college should be affordable to all, and student debt shouldn’t hold anyone back. We Democrats agree that every single American should and must have quality, affordable healthcare. We agree that our next president must keep our country safe, keep our troops out of another costly ground war in the Middle East.
I was waiting for her to say something about when "I was a young boy growing up in Brooklyn," as in the Saturday Night Live skit where she morphs into Bernie.
The parts about expanding Social Security and keeping our troops out of another costly ground war in the Middle East are particularly noteworthy; it seems unlikely that she would have made these statements without Bernie in the race. That is probably why even the New York Times editorial board, who endorsed Hillary, wrote immediately after the New York primary that Bernie should stay in the race until the end. It is more than just a candidate that will come out of this race, especially in a contest that has mobilized a mass movement of millions of people. And so it is far from over.
Of course candidates’ promises often prove ephemeral. But we can already see how the race is boxing Hillary in: on Friday, the Oregon Fair Trade Campaign released a written response from her saying that she opposed Congress voting to approve the TPP in the lame duck session following the November election. This would be the TPP proponents’ best shot, and so this is a pretty important development. So, too, would a Democratic Party vote at the convention against the TPP, which is now possible due to Bernie’s large number of delegates and Hillary’s increasingly acting like her opposition is serious this time, despite her track record.
The defeat of the TPP would be a historic achievement for the United States and the world (more on that later). So this, too, is how history is made, from campaigns powered by small donors and grassroots activism — not only, as so many pundits are telling us, by political leaders funded by the country’s richest people; leaders who are so often ready to compromise before they even put up a fight.