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Moment or Movement.

datePosted on 20:09, August 25th, 2016 by Pablo

Barring some disaster, Hillary Clinton will win the US presidential election in November. That poses an interesting question for the US Left, because the defensive support for her offered by Sanders supporters and other progressives in the face of the Trump alternative can only be considered to be more than a short-term tactical ploy if her administration adopts progressive policies. Otherwise it is, as many have accused, continuation of politics as usual or Obama 2.0. This is, of course, at the heart of the negotiations between the Sanders camp and Clinton’s people at the DNC policy platform meetings, and it remains to be seen if the Clintonites will make good on their promises.

That brings up the perennial problem for political activists: how to turn a moment into a movement. US commentators are already using the phrase with regard to the Sanders primary run and the impact it will have on a future Clinton presidency. Some think that he has run his course, that status quo Democratic policies will prevail, and that the forces that his campaign galvanised will either go mainstream or dissipate into another pool of apathy and disenchantment. Others believe that to the contrary, the Sanders campaign has stirred new life into the American Left and that his campaign legacy will have an impact on how Clinton approaches the Oval Office.

It is a tough one to call. It is clear that Clinton needs to cater to Sander’s supporters in order to win the election. She cannot dismiss them before November 8 but could in theory do so afterwards, especially if the Democrats regain control of the Senate (they only need to win four seats) and make inroads into the Republican House majority (the Democrats would need a turnover of more than thirty seats to regain control of the lower chamber). The situation is made worse for progressives if Clinton wins by a landslide (anything over seven points) because she can point to a “mandate” that does not include them. That will be also be the case if political nihilists on the Left opt to “blow up the system” by voting for Trump or minor party candidates in large numbers. The latter will tighten the race unnecessarily (in Clinton’s eyes) and will, should she win, see her turn her back on the post-modern New Left wing of her party (I use the term “New Left” not in the sense of the 1960s Left but in the sense that post-modern progressives in the US are not in their majority affiliated with unions or other traditional organisational sources of Democratic electoral power). After all, she can say that they turned on her and she still won because the US political centre preferred her over Trump. She can feel justified in believing that she does not need the New Left to govern and therefore should not push policy initiatives at their behest.

Assuming a Clinton victory, the ideal situation for US progressives is twofold: most of Sanders’ supporters and others on the Left opt to vote for Clinton and she wins by a relatively close margin (say, between 3-5 points); and vote for Democratic candidates in key congressional districts knowing that a progressive presidential agenda needs congressional support in order to become law. That requires voter education (on the whys and hows of linking down-ballot choices to the presidential race and how executive-legislative relations can impact decisions with long-term consequences such as Supreme Court nominations) as well as mobilisation in favour of the progressive policies adopted by the DNC at the platform negotiations (and perhaps more).

In that preferred scenario, because Clinton will understand that she absolutely required a groundswell of New Left voters to win a close race, it will be harder to abandon them once victory is achieved. Even more so, it will be virtually impossible to renege on the progressive agenda if key wins by Democrats in Congressional races were owed to the participation of New Left voters.

So the Bernie “moment” in the primaries also has to become a dual proposition in the general election and post-election phases of the campaign if it is to become a movement. The New Left need to continue to mobilise in support of Clinton during the weeks leading up to November 8 and they need to continue to pressure her administration, both directly and through the elected Congressional candidates who needed their support to win, after she assumes the presidency and the 115th US Congress is convened in January 2017.

In other words, the transformation of the Sanders moment into a New Left movement requires one other “M:” momentum. That momentum has to be sustained through November and into the next administration and congressional term if the moment is to become a movement.

That is where some dark clouds arise on the Clinton electoral horizon, and they are not caused by Trump. In the purported interest of “balance” (regardless of the outright campaigning on his behalf by conservative media outlets), mainstream news organisations are delving into her emails while Secretary of State, into her relationship with Clinton Foundation donors while in office, into why she does not hold press conferences (which is patently self-serving on the news agencies part) and even into spurious conspiracy theories about her health. These investigative efforts go beyond reporting on official FBI investigations of Clinton’s use of a private email server during her tenure as SecState and in spite of the fact that none of her activities while in office have been linked to any policy decision or personal favour offered on her part. For reasons known only to Julian Assange and his comrades, Wikileaks has targeted her communications and those of the DNC, both independently as well as in cooperation with Russian-based hackers, while neglecting to do so with those of Trump and the RNC.

Any one of these lines of inquiry have the potential to divert attention and resources away from her policy agenda and could even derail her campaign if found to contain seriously negative substance (nothing of which has been found so far in spite of the best efforts of the Trump campaign and its media lackeys). So the onus is on Clinton to re-energise her support base in the face of these dishonest and scurrilous attacks and to re-focus on the policies that she will bring to the Oval Office and share with her Congressional colleagues. That is where the New Left vote is vitally important. Just as Trump has his core base in middle aged white working class lower educated people, Clinton has a core base in urban professionals. But both of them need to expand their appeal outside of those cores, and it is the New Left that Clinton needs to court most assiduously. That gives the New Left leverage on her and they need to know how to judiciously take advantage of it.

To be sure, the GOP is working to separate the New Left from Clinton. It may not get the attention that trying to divorce Trump from down-ballot GOP candidates has received from the RNC, but Republicans clearly want the Sanders crowd to alienate from Clinton whether or not they vote for another candidate like Jill Stein (Green). For the GOP, getting the New Left to stay at home rather than vote is just as important as getting them to adopt the nihilist approach of voting for spoilers.

This is made interesting by the fact that Libertarian presidential candidate Gary Johnson is polling at around 10-12 percent and has received financial backing from erstwhile big GOP donors, while Jill Stein is polling around 5 percent. Usually third party candidates barely receive 10 percent of the vote in a US general election, so the fact that these candidates could receive 15  percent or more changes the dynamics of the presidential race quite dramatically. That reinforces the need for Clinton to get out the New Left vote on her behalf in significant numbers, something that will allow her to build momentum in the run up to election day and which in turn means that she must accept the fact that the Bernie moment has become a progressive movement. This will annoy her backers on Wall Street and corporate America, but they also can see the dangers of having a populist demagogue with Tea Bagger tendencies occupying the White House. For them as well as many on the New Left, she is the lesser evil.

It will be interesting to see how things play out over the next 9 weeks. Two things are certain: every vote will count this time around and what is now a moment of opportunity can only be transformed into a sustainable movement if the New Left puts, however reluctantly or sceptically, its collective weight behind the Clinton campaign in order to build the momentum of progressive change beyond election day.

Let’s hope that I am not wishful thinking.

Autumn of the Patriarch.

datePosted on 14:00, August 21st, 2016 by Pablo

Fidel Castro celebrated his 90th birthday a few days ago. During the public celebration of his milestone he sat in a specialised wheel chair between his brother Raul and Nicolas Maduro, president of Venezuela. He is physically frail but his mind is still sharp, as evidenced in a (rather self-serving) editorial he wrote in which he praised his revolution and denounced US president Obama and the thawing of relations between the US and Cuba (which his brother, now president of Cuba after Fidel’s abdication due to illness, helped engineer). As part of the month long celebrations of his birth, he is being gifted a 90 meter long cigar, a world record for “puros” of any type. Bill Clinton should be so lucky.

Yet, I felt sadness and some pity at watching Fidel in his autumn years. Like Garcia Marquez’s Colonel, he is a man of the past wrapped in memories of what could have been. A man who once was an icon of the Latin American Left, worthy successor to Jose Marti, comrade-in-arms of Che Guevara, patron of the Angolan and Mozambiquian revolutions, inspiration to insurrectionists world-wide, cunning adversary of the US for over five decades and arguably the best poker player the world after he bluffed the US into thinking that he would rather be incinerated rather than relent to US demands during the Cuban Missile Crisis (the USSR eventually agreed to withdraw its missiles from Cuba over Castro’s objections in exchange for a US withdrawal of surface to surface missile batteries in Turkey).

But rather than the imposing physical specimen that towered over so many of his emulators both in height and intellect and who attracted the attention of the rich, famous and powerful during his heyday, here sat a stooped, gaunt, hollow faced elder with visible hand tremors and a certifiable fool sitting on his left side. In fact, if Fidel represented the best hopes and aspirations of a previous generation of revolutionaries, Nicolas Maduro represents the terminal decline of the contemporary “Pink Tide” of elected neo-socialists that emerged during the 2000s and who, with few exceptions like the Frente Amplio governments of Uruguay, have been proven to be no less authoritarian, no less corrupt, and equally if not more incompetent than their capitalist predecessors. In some cases, these Pink Tide regimes were not so much socialist as they were kleptocratic, populist-corporatist or sold-out to the corporate interests they ostensibly opposed. And like Fidel, they have fallen on hard times.

Other than Maduro, no foreign leaders of note attended Fidel’s birthday party (even the Sandinista government of Nicaragua, a country in which many Cubans spilled blood in the overthrow of Somoza and defense of the Sandinista Revolution, did not send a high level delegation). The rich and powerful were absent. In a sense, Fidel’s decline mirrors the struggles of the Cuban Revolution after the USSR withdrew its economic support for it. More tellingly, it symbolises the squandered opportunity of the Pink Tide.

The emergence of elected Left regimes in Latin America during the 2000s was a moment of great hope for progressives in the hemisphere. It followed a wave of so-called neoliberal, market-friendly economic reforms undertaken by a variety of right and populist regimes such as those of Menem in Argentina and Fujimori in Peru during the previous decades. As the negative consequences of neoliberalism began to impact on basic social indicators such as income inequality and child poverty, and could no longer be hidden by creative accounting and statistical manipulation, a window of ideological opportunity opened for the Latin American Left. They were the earliest and fiercest critics of the so-called “Washington Consensus” behind the adoption of neo-liberal reforms.  They were the academics, activists, organisers and politicians who marshalled protests, demonstrations and other forms of passive and active resistance to the implementation of market-driven edicts. They were the outlets through which the dislocating effects and social impact of the “more market” approaches were highlighted. And they had one more thing: structural opportunity in the form of a global commodities boom.

With the rise of China as an economic powerhouse in competition and/or concert with other established and new powers (e.g. the US, India), the late 1990s and early 2000s saw the demand for commodities–primary goods, raw materials and especially minerals, metals and fossil fuels–skyrocket. As prices soared on the back of increased demand previously unexploited regions became the subjects of concerted interest by Chinese and other investors. What already existed in terms of commodities–oil in Venezuela and Ecuador, natural gas and oil in Brazil, copper in Chile, even soy, maize and beef in Argentina and Uruguay–saw redoubled investment in extractive export industries. A boom time ensued.

At the turn of the century Argentina, Brazil, Bolivia, Chile, Ecuador, Nicaragua, Uruguay and Venezuela elected or re-elected neo-socialist governments (El Salvador, Honduras, Paraguay and Peru did as well but their tenures were short-lived). Every one of these countries benefited from the commodities boom. The question was not so much how to generate public money surpluses but in what measure and how to make use of them. But, just like Soviet subsidies gave Fidel’s Cuba an unnatural sense of comfort and inflated standard of living, the commodities boom was a temporary boost rather than a long term panacea for the region’s problems, depending on what was done with the surpluses generated by the golden moment.

With the exceptions of Chile and Uruguay, pretty much everywhere else the preferred combination was public spending on popular projects mixed with epic corruption, graft and theft. To be sure, health, education, welfare and housing services improved in the early years of these regimes and social indicators improved relative to the neo-liberal baselines. Income redistribution downwards was accomplished via generous benefits packages provided to the lower classes. Public services such as transport, electricity and gas were heavily subsidised by the State. So were basic food staples. Public works schemes generated employment. But after a while the money provided for such projects began to run out as the demand for commodities stabilised and prices began to drop.

Worse yet, what most of these regimes did not do was invest constructively in long-term productive capacity and infrastructure. Instead, they threw money at popular short term projects and grandiose schemes such as building sports arenas and stadiums. They pushed increased export commodity dependency rather than diversification of the productive apparatus. In parallel, they siphoned off millions in public funds to friends, cronies and family of government officials, when not to themselves. The combination was one of immediate gain (for them and their supporters) at the expense of long-term sustainability, and now those chickens have come home to roost.

In places like Argentina under Cristina Fernandez de Kichner, corruption was elevated to an art form (in a country where it was already a highly developed practice). In places like Brazil and Ecuador corruption was an integral part of the public-private nexus in construction and fossil fuel exploration. But it is in Venezuela where the full depths of the decline are seen. Even before Hugo Chavez died, his “revolution” had turned into a feeding trough for the Boliviarian elites. Billions of dollars were provided to creating anti-imperialist alliances such as ALBA, the anti-capitalist trading bloc that was supposed  to counter MERCOSUR and which never got off the ground. Billions in subsidised oil was sent to Cuba to prop up the Castro regime as a form of anti-US solidarity. After Chavez died, under Maduro, Venezuela has become an economic basket case where shortages of basic staples and power outages are the norm and where both government services and private industry have nearly ground to a halt (in a country with one of the world’s largest oil reserves). In Venezuela and elsewhere there was a conspicuous lack of foresight or public planning. Few sovereign wealth funds were created to save during times of plenty for the inevitable lean times that come with the boom and bust cycles of the commodities trade. Once the lean times came, the response of the neo-socialist Left was to blame anyone but themselves and to grab as much of the dwindling public reserves for their own benefit.

In some cases, the actions of disloyal oppositions and foreign powers hastened the authoritarian response and increased self-enrichment of Leftist leaders. This was very much true in Venezuela. In other cases the sheer weight of historical patterns of political patronage and private nepotism wore down the resolve of Left politicians to resist the temptation to do things “as usual.” That was and is the case of Brazil. In Chile the strength of the military-business network has impeded anything but incremental reform by the most determined Left governments. In some cases (Bolivia and Ecuador) long tenures in power slowly insulated Left governments from the masses and allowed for the development of cultures of impunity in which public officials were no longer responsive to the commonweal and instead focused on maintaining themselves in power. In virtually all cases, again with the exceptions of Chile and Uruguay, public officials treated national treasuries as individual and collective ATMs.

In some countries Left governments have been electorally replaced by Right ones (Argentina and Peru). In Brazil the Left PT government has crumbled under the weight of corruption scandals and succumbed to what amounted to a constitutional coup carried out by no less corrupt right-wingers. In several others such as Bolivia, Ecuador, Nicaragua and Venezuela, the Left continues to rule, however sclerotically and increasingly autocratically. In Chile the Concertacion government of Michelle Bachelet that preceded and replaced the one-term Right government of Sebastian Pinera is more establishment-friendly centrist than anything else (because it has to be in order to keep the coup plotters at bay). Only in Uruguay has the Left, in the form of the Frente Amplio governments of Tabare Vazquez and Jose Mujica, been true to its socialist and democratic principles.

This is just an broad overview. The extent of mismanagement, incompetence, ineptitude and outright criminality undertaken by the neo-socialist Left when governing in Latin American during the last decade and a half has been astounding. The hard truth is that the Latin American Left had its golden windows of opportunity in the 2000s and with some notable exceptions squandered it all.

In a sense, that is a fate they share with Fidel. Had he passed from the scene in the 80s or even 90s he would still be revered in many progressive circles. But he has lingered too long, well after the contradictions and frailty of his revolution have been exposed. In fact, an entire generation of Cubans have been raised in the “special times” of austerity and deprivation that have marked the last 25 years of Communist rule in Cuba and which has forced his brother to open the national economy and seek rapprochement with the US. This has made that generation much less committed to revolutionary ideals and much more committed to materially improving themselves. As an old friend said to me upon returning from Cuba: “Ideology goes out the window when you are hungry.”

Worse yet, it now appears true that Fidel was less a committed revolutionary as he was a Cuban nationalist who used the context of the Cold War to bolster his rule and burnish his credentials as a committed internationalist. Mutatis mutandis, that is a trait shared by many neo-socialists of the Pink Tide: they were and are socialists more in name than in deed, and are more interested in enshrining their rule than in truly re-making their countries into viable socialist (or social democratic) societies in which political power is exercised by the people for the people. Revolutionary rhetoric is no substitute for revolutionary praxis and is a poor cover for political and economic mismanagement.

I say this with much regret. One never expects the Latin American Right (or pretty much any Right) to do anything other than enrich themselves and their cronies. But one certainly expects that self-professed socialists will behave differently, especially more fairly and less venally, when in power. Many people, myself included, wanted to believe in the promise of the Pink Tide just as we previously wanted to believe in the transformational impact of the Cuban Revolution. And yet, like the neo-liberals before them, the majority of Pink Tide neo-socialists have been exposed as charlatans, thieves and frauds.

On those grounds Fidel has one thing over them. He may not have accomplished all of the things that he promised that he would, and his “revolution” may have been much less than he promised and more dependent than he admits, but at least he has remained true to himself in his declining years. That cannot be said for the likes of the Boliviarians and their erstwhile regional comrades.

That is why I felt sadness when I watched his birthday celebrations. In the autumn of his life, el Comandante is condemned to the unique solitude that goes with being the last of his kind.

PS: Looks like I am not the only one who thinks that the Pink Tide failed to deliver on its promise (although this author puts a more positive and hopeful spin on things).

The failed coup was Turkish democracy’s last stand.

datePosted on 08:24, July 20th, 2016 by Pablo

I have observed with bemusement some of the commentary (including here at KP) that views the failed coup in Turkey as a “victory for democracy.”  As someone who has lived through several coups in Latin America and who has academically studied, professionally written, and worked in developing policy for the US government on issues of comparative civil-military relations (including how to address coups), and who has written at length on the differences between coups d’etat, putsches, revolts and revolutions in the Middle East and elsewhere (some of it here on KP), I find it hard to believe that otherwise sensible commentators (with a notable exception) would think that anything good can come of the coup’s failure. This was not a simple matter of Turkish good guys versus bad guys, and the sequels to the violence will not be pleasant but will be long-lasting.

In any event, this week the Herald editorial board wrote favourably of the outcome in Turkey. My colleague Kate Nicholls (a comparative politics scholar) and I were disappointed by it and penned a response. It looks like the Herald will not publish the critique, so here it is:

As students of comparative civil-military relations, we were surprised to read the Herald’s July 19 editorial “Coup’s failure hopeful sign for democracy.” Unlike the Herald’s editors we see no positives resulting from the aborted coup. Instead we foresee the death throes of a painstakingly crafted secular, albeit imperfect, democracy, that was the crowning achievement of Kemal Atuturk and which has been under siege since the election of former Istanbul mayor Recep Erdogan to the Prime Ministry in 2003 and Presidency in 2014.

The cornerstones of the Kemalist vision of Turkish democracy were an apolitical professional military, an independent secular judiciary, and a multiparty electoral system characterized by a separation of powers and a system of checks and balances between the executive and legislative branches.  Granted, Ataturk’s nationalism, which bound the country together in the wake of the collapse of the Ottoman Empire, often worked to stifle free speech and repress ethnic minorities, notably the Kurds. Turkish democracy has also always been “guarded”, meaning that the military has on occasion acted as unelected veto-player. Yet since the rise of Erdogan to power 16 years ago, things have gotten incrementally but steadily worse.

Since he assumed office, Erdogan has undermined the judiciary by appointing ideological cronies and firing or arresting independent minded jurists; sacked hundreds of senior military officers and replaced them with loyalists; introduced mandatory Islamic Studies into military curricula; censored, banned and/or arrested non-supplicant media outlets and reporters; rigged electoral rules favour of his own party; and instituted constitutional amendments designed to perpetrate his rule and re-impose Sharia precepts on public institutions (something not seen since the days of the Ottomans). He has enriched himself and his friends by using public construction projects as sources of political patronage and illicit gain. All in all, he has destroyed the promise of a moderate democratic Islamism that brought him to power in the first place. Using populist methods to reaffirm his electoral popularity with the rural and urban poor, Erdogan has been steadily eroding Turkish democracy from within.

Erdogan has also proven himself to be diplomatically incompetent. From a position of stability as the regional power in the Levant, under his guidance Turkey now finds itself at war with adversaries on two borders, estranged from the US, Russia, Egypt and Israel as well as the Gulf Arab states, at odds with Europe over a host of political and economic issues, and confronted by a rising tide of domestic terrorism. His tenure has been ruinous for Turkish aspirations for European Union membership and Turkey’s increasingly unfavorable international reputation was cemented by its loss to New Zealand and Spain in the 2014 elections for a UN Security Council temporary seat for the 2015-17 term.

Erdogan has blamed the coup attempt on the self-exiled cleric Fethullah Gulen, whose power base is to be found amongst the more educated and liberal sectors of Turkish society and whose brand of Islam appears more compatible with the older secular nationalist vision. Whether Gulen was really behind the coup attempt remains to be seen, but there are reasons to suspect the President’s version of the coup’s origins, not least that the plot was very poorly planned and doomed to failure from the outset. For example, the plotters did not grab Erdogan or take over media outlets before announcing the takeover; did not move to censor social media in order to deny Erdogan and his loyalists an alternative communications platform; did not have more than a brigade’s worth of infantry troops (mostly conscripts) trying to control the entire country; and did not have enough armour or aviation on their side to impose emergency rule. As with many failed coups it was led by junior rather than senior officers, although that is because the senior ranks are full of Erdogan loyalists. One thing about modern day coups is that those leading them have a wealth of history to learn from, learning that does not seem to be much in evidence here in spite of Turkey’s history with previous coups and the examples provided by a host of countries elsewhere.

When it comes to the future of Turkish democracy, whether the coup was instigated from Pennsylvania or just a bit closer to the President’s own office is in many ways irrelevant. Erdogan is already using the events of the past week to further purge the military of secularist factions with the arrest of at least 6000 military personnel (including 130 officers), and has broadened the retaliatory sweep by suspending 8000 police officers, 15,000 public educators and 3000 members of the judiciary (all of whom are suspected of being opposed to his Islamicisation project for the Turkish state). He has moved to reintroduce the death penalty—a move which both appeals to baser populist tendencies and will be yet another setback in Turkey’s fifty-year long negotiation over accession to the European Union. None of this is supportive of democracy.

One of the major consequences of all this will be the reconfiguration of the Turkish military as a praetorian guard rather than professional organization. Based on Roman Imperial Guards, praetorian militaries are those that are heavily politicized, intervene in national politics, engage in domestic repression and serve the government of the day rather than the commonweal. Professional militaries, in contrast, are apolitical and non-partisan, focused on external defense and serve the nation as a whole regardless of who is in government.

What prompts a military to move from professional to a praetorian posture is a combination of push (internal) and pull (external) factors. The former include horizontal (between armed services) and vertical (between ranks) cleavages as well as resistance to government interference in military affairs. The latter include government corruption, stalemate, mishandling of security matters or inability to manage threats to national security, civil society pleading for intervention and loss of business confidence.

All of these factors were at play in Turkey’s latest coup. Nearly 300 people died in inter-service clashes. Erdogan loyalists swarmed under-manned and lightly armed soldiers in the streets of Ankara and Istanbul. Seeing that, civilian coup supporters stayed at home. Cynics will note that, in spite of its apparent near-success and the intense violence directed at loyalist-controlled security agencies and parliament, the nature of the undertaking suggested not so much a well-planned and militarily precise operation in defense of democracy as it did an opportunistic manipulation of discontent within military ranks in order to justify a purge of the discontented.

Whether the coup was done as a last ditch defense of the Kemalist democratic legacy or not, the outcome is now clear: Turkey has veered hard towards outright dictatorship with Erdogan as the primary beneficiary. The President’s announcement that he will now “clean all state institutions of the virus” that led to the coup is an ominous sign of things to come.

PS: The Herald was kind enough to publish a short version of the original essay on July 21, 2016.

Media Link: The US election circus.

datePosted on 11:09, July 16th, 2016 by Pablo

I have just returned to NZ after a month traveling in the US. While there I spent a fair bit of time talking with political friends and former colleagues, and it has been refreshing to see that there are plenty of people who see the situation for what it is rather than succumb to the uncritical and conservative media-induced notion that Donald Trump represents a genuine alternative to the political status quo and a real hope for positive change.

Now that he has chosen a troglodyte conservative white male governor from one of the most reactionary states as his Vice Presidential running mate, the die has been cast for one of the most remarkable acts of party self-destruction in modern times. That will become apparent over the next few days as the Republican convention unfolds in Cleveland. Expect riots both inside and outside the convention arena, and with less than a handful of significant senior national level Republicans and at least four (other) Trumps on the speakers list, this could be one of the best inbred political dog and pony shows ever seen. Let the fireworks begin!

I shall write more on the US elections between now and November (when the general election is held). For the moment here is a NZ radio interview I did while in the US that covers some recent developments.

Defensive voting and split tickets.

datePosted on 14:31, May 3rd, 2016 by Pablo

As part of the ongoing effort to clarify some aspects of the US elections this year, this post focuses on two tactics: defensive voting and ticket splitting. Some readers may already be familiar with both concepts, but for those who are not, here is brief outline of what they involve.

Defensive Voting.

Defensive voting is the act of voting against someone by casting a ballot for their opponent not out of loyalty or agreement with the position of the opponent, but out of fear of the possibility of the disliked candidate winning. This may be due to a number of reasons but is usually based on a lesser evil approach: In order to prevent a greater evil from occurring in the form of a detestable candidate being elected, voters choose whatever alternative candidate is available who stands a chance of preventing the “bad guy” from prevailing. The idea is simply to prevent an unpalatable candidate from electoral victory even if the alternative is not entirely palatable either. There may be variations on this approach, such as voting for a clearly marginal candidate in order to help sideline a legitimate opponent, but the basic premise for such tactical voting is prevention, blocking or denial, not support, affirmation or promotion.

This is another reason why the US presidential race is so interesting. Polls show that Donald Trump and Hillary Clinton are the most detested front-running candidates in US presidential history. Ted Cruz is equally loathed across the political spectrum. That means that more than the vote of their supporters, what will decide the outcome in November is who has the largest defensive voter turnout against them. A micro version of this scenario will play out at both major party conventions, since the “anyone but Trump” Republican factions and the Bernie Sanders supporters in the Democratic Party will, at least initially, vote against the front runners as much because of their dislike of them as out of support for their own candidates.

Depending on what happens at the conventions, in November it is entirely possible that some if not many Republican voters will vote for Clinton (should she win the nomination) or an independent candidate rather than Trump. Likewise, Sander’s supporters, if he does not win the nomination and receives no policy concessions in the Clinton platform, could well turn to a third party candidate such as that of the US Green Party. That could seriously tighten the race and perhaps even lead to a Trump victory, which from the standpoint of many progressives would simply help sharpen the contradictions in the US political system and lay the foundations for more significant change down the road (I refuse to use the term “revolutionary” because unlike Sanders and his supporters I have a full understanding of what social revolutions entail, and that does not include participating in deeply institutionalised electoral processes).

If the presidential race comes down to Clinton versus Trump or Cruz, then the deciding factor will be who has the most votes cast against them rather than for them. Given the intensity of negative feelings towards all of this motley crew, it could lead to a record turnout on both sides of the political divide and give previously non-committed Independent voters, particularly those who were not able to vote in closed primaries, a decisive role in the election.

Ticket splitting.

Those familiar with MMP understand this concept well. The  “split ticks” versus “two ticks” phenomenon is simple to grasp: you can either vote for a party and a candidate from that party in a general election (giving “two ticks” to the party vote and that party’s candidate from your electoral district), or you can split your party vote from your member vote (say, by voting for Labour in the party vote and a Green candidate in the member vote).

This type of voting is unusual in the US. Political parties tend to discourage so-called vote splitting because in most elections whole slates are presented as a ticket by the party to voters, for offices ranging from president to the local dog catcher. Even though voters, in practice, do split their votes among national, state and local offices, at the national level the US electoral system largely operates in binary, either/or fashion. That makes it a rare day when parties urge their supporters to split their national-level votes.

This year that day has come. Some in the GOP leadership are floating the idea that, should Trump win the party nomination, people should split their votes in the presidential race from their votes “down ticket,” that is, for other elective offices. The GOP has very real reason to be concerned that a Trump defeat could trickle down through the Senate, House of Representatives, Governorships and even important mayoral races. With that in mind, they are asking their supporters to vote Republican down ticket even if they do not vote for Trump (and in fact many in the GOP are urging voters to vote for anyone but Trump). As mentioned in my previous post, a shift in six Senate seats restores a Democratic majority to it. In the House the shift will have to be much larger but even one that decreases the Republican majority close to or below the 2/3 mark needed for passage of legislation can be devastating for GOP prospects during the next congressional term. With several prominent Republican politicians tainted by their endorsement of Trump (such as New Jersey governor Chris Christie), the chances of his dragging the entire party down with him are considered to be very possible. Thus the open calls for vote splitting on the part of some in the Republican leadership.

On the Democratic side there is less interest in vote splitting although Sander’s supporters are urging him to run as an independent if he loses the Democratic nomination for president. Should he do so, then his supporters will engage in vote splitting as well, voting for him rather than Clinton but voting for Democratic candidates down ticket. That will be what tightens the presidential race, as barring unforeseen circumstances Sanders can only act as a spoiler in the campaign for the White House. This is the most likely reason why the Clinton camp will be inclined to offer him significant policy concessions at the convention, which not only will mollify his supporters but also could help increase their defensive vote against Trump.

The Outlook.

Of course, in no small part because she is a female in a country that still has issues when it comes to gender and higher office, Clinton may have more defensive votes cast against her than those cast against Trump or Cruz. In that case the stage will be set for the mother of all federal government meltdowns once either Republican candidate assumes office, since whoever it is will very possibly be fighting Congressional Republicans as well as the Democrats from his perch in the Oval Office, to say nothing of many state an local authorities. But given those who have been scapegoated by Trump and Cruz’s neo-medieval social outlook, framed against the demographics of the country, the more likely scenario is that defensive minded voters turn out in droves, many of them splitting their tickets on the conservative side,  and Clinton rides to victory, perhaps in a landslide.

In the meantime, let’s get back to our popcorn and beverages and watch the circus/trainwreaks primaries continue to unfold.

The Week That Will Be?

datePosted on 08:09, May 2nd, 2016 by E.A.

I see from NZ Newswire that Labour, NZ First and the Greens are gearing up to go after John Key and National this week over various Panama Papers related issues.

This in interesting for a few reasons.

The first is that this will be a good test of how well the Teflon on Key is still working on such sensitive issues (given his own ultra wealthy background and somewhat dodgy actions by sending his lawyer into bat for the trust business in NZ) and second if this will be a coordinated action against Key and National or individual shots by each party.

Personally I think the Greens will give the best in this situation as Labour and NZ First seem less willing to really go for the jugular as opposed to the other two (possibly due to their own compromising financial circumstances) but I will be back on Friday to see how it went.

This is also a golden opportunity for Labour to make some hay while the sun shines as there is fodder for all in what the Panama Papers have revealed, what they may reveal and NZs connection in all of this.

If they have any brains they will spend the week running non-stop interference on the government with the other two parties playing spoiler on the side.

Of course NZ First and the Greens will also be seeking to get into the spotlight so again if this is coordinated then there should be enough to go round, if not expect a little bit more chaos than normal but also some one upsmanship as each seeks to get in the blows ahead of the other.

Over the last few months National have definitely started looking like they have a case of third-term-itis as the blunders and attitude is starting to become a constant and the media seem to be running nothing but negative articles about them.

Of course NZ Newswire may have jumped the gun and lead me astray and nothing will happen this week but I will be back here on Friday to see how things went.

I Wanna Be Dirty: James Shaw and Greens

datePosted on 10:50, April 29th, 2016 by E.A.

I write this only partially tongue in cheek and my original title was going to be a reference to a Kermit the Frog song*

A final piece of the puzzle fell into place this week with the announcement in the paper that Andrew Campbell, the Green party chief of staff, was leaving to allow “some fresh ideas and new legs” to take over in his role.

The funny thing was that he had been in the job less than a year after replacing Ken Spagnolo, the previous chief of staff for over eight years, in a direct move by co-leader James Shaw, to bring in new blood and ideas in preparation for the expected 2017 election (and probably clear the decks of any not down with Shaw’s new business friendly approach to the environment).

But that comment flies in the face of co-leader Metiria Turei’s statement about Andrew wanting to leave after the 2014 election but agreeing to stay on to help Shaw settle into the role. Has James settled in yet? If so why is Campbell the third senior party staffer to leave in short order? Coms and Policy Director David Cormack (a person some believe to be the actual brains behind the Greens) and Chief Press Secretary Leah Haines both immediately preceded him.

Personality conflicts in politics are not new and party staff generally know not to contradict the leader but when key staff are either removed (as in the case of Spagnolo) or leaving in droves (as with the other three) it takes more than claims of “coincidence” to assuage the growing feeling that something is not right in the good ship Green.

The obvious cause is new male co-leader James Shaw himself, who with his corporate background with HSBC (the money launderers bank of choice) and PriceWaterhouseCoopers (an organisation with so many scandals attached to its name I will not relate them here but encourage any who are interested to have a dig themselves) seems an extremely unusual choice for a party whose charter explicitly states “unlimited material growth is impossible” in two of its four articles.

Shaw won the co-leadership showdown in mid-2015 when Russell Norman moved off to greener pastures (pun intended) to work for Greenpeace NZ. An impressive feat for a first term MP and one, at least in my mind, had shades of the Brash Coup run on National in the 2000’s about it.

Shaw himself is pro-market and believes that it can be reformed to be sustainable, which is a laudable sentiment for a member of the young Nats but not in a party like the Greens. These kind of ideas, Shaw’s background and the recent statements from the party about doing and end run around Labour to work with National on some issues show that the Greens of the past may soon be replaced by the “Greens” of the future.

But perhaps it’s just my paranoia that I see all of these things as being connected, perhaps it’s just me, but somehow I don’t think so as various other in the blog sphere have also noted these changes and the fact that it warranted mention in the mainstream media leads me to think that we are on the cusp of a major change in the Greens.

In my previous “analyses” of Labour, National and NZ First I focused mostly on the failings of the past to illustrate the potential/possible issues in the future but in the case of the Greens I can’t do that.

The Greens currently stand alone in NZ politics as being an actual party of virtue in a parliament full of corruption, incompetence, nepotism and just plain criminality. They are a party which has a genuine political agenda which it has been willing to stand up for, which is why almost every other party in parliament hates them and why several sections of government keep their eye on them.

If any political party has ever been under watch by the SIS; monitored by the GCSB, infiltrated by the SIG, loathed by the Police and hated by Labour it’s the Greens. It’s a party which grew from the Values party in 1972, lived through the tumultuous years of the Alliance in the 90s before going it alone in the 2000s. This is a party that has explicitly argued for the removal of the Security Services as they currently are and our exit from the Five Eyes agreement as well as being an active and persistent thorn in the side of any government which doesn’t prioritize the environment or fails the social contract (Gareth Hughes blistering rebuttal to John Key’s recent parliament commencement speech is a fine example of this).

The Greens are a party which has taken the moral high ground from Labour in the wake of the leadership squabbles after Helen Clark departed (although some say Labour just gave it up when they started the reforms of 1984) and has wielded it ever since, using it like a magic cloak to deflect any criticisms.

And there have been criticisms aplenty over the years from the usual pat dismissals by politicians of their policy or position (often with no actual substance to back up why they don’t agree with them) to the all but outright taunts of being “governmental virgins” to the “bloody hippie tree hugger” comments which spew forth from many regular Kiwis when asked about the Green party or their policies. And that’s not even discussing the hate Labour has for the Greens.

If John Key could have all dissenting views in parliament rounded up and shipped off to a re-education “resort” the Greens would certainly be on that list but it would be “just business, nothing personal” to him. And, with only a small sprinkling of fantasy dust could one imagine members of the Greens and National meeting for a beer in Pickwicks after a “hard day” in the debating chamber. One could not imagine such a picture between the Greens and Labour no matter how much magic dust was going round.

If Labour could have all Greens rounded up it would not be “re-education” that they would receive but low altitude skydiving lessons from Air Force helicopters sans parachute out over Cook Straight at night, if it is business with National its personal with Labour.

The Greens owe a large part of their vote base to disgruntled Labour voters and Labour knows it. Labour has treated the Greens like vassals from the earliest days and given their position on the political spectrum expected them to back Labour no matter what (which is why the Greens extension of the hand of friendship to National, even on minor issues has further enraged Labour and provided a pragmatic, but also very dangerous, way to cut through the Gordian knot of being to the left of looser Labour on the political spectrum.

Worse still, the Greens are almost certainly going to gain at the polls as the 2017 election approaches (current polls have them riding high along with NZ First while Labour sags to 26% and National slips closer to 40%) and have proven to have no concern about exposing Labours (and specifically Helen Clark’s) hypocrisy (as its widely believed that they were responsible for the leaks that led to Seeds of Distrust; Nicky Hagar’s expose of Labours cover up of GE contamination in NZ) to get votes.

So in dissecting the Green party at this current time it’s not the past to which I am concerned but the future and to put it simply it looks like the Greens are about to (take a deep breath and say it with me) compromise. In daily use compromise is not a bad term but in politics it almost always means abandoning your principles to reach a short term expediency at the cost of both your long term supporters and policy goals.

For parties like National and Labour compromise (also known as sitting on the fence, seeing which way the wind blows and “flip flopping”) is easy as both have no morals and long since abandoned their core principles in pursuit of power for individual party members and rabid accommodation of whatever orthodoxy is being touted at the time but for the Greens this will not be so easy.

To begin with the Greens capture of the moral high ground is a strategic part of their appeal. They can take positions and advocate issues which would get other parties in hot water; lambaste the government of the day and catch the wind of popular but politically problematic issues (like the TPPA) only because they have this high ground, without it they would be another fringe party which would get whipped senseless with their own past faults and misdeeds if they dared to speak out. Truly they are the hand which can cast the first stone.

Another is that while Shaw himself may be a champagne environmentalist (the 21st century equivalent of Labours champagne socialists) many of the core rank and file are not. Every new voter to the Greens that is merely running from the nitwit antics in Labour will run straight back if either Labour shapes up and flies right (geddit?) or the “sustainable” future Shaw is presenting doesn’t allow people to continue to live their lives under the economic and social model they are accustomed to (for example if rising sea levels did actually require we give up driving cars and banning dairy farms). The core supporters of the greens will likely support the policy measures which reflect the party’s charter but angry voters seeking revenge on Labour or National by voting Green will not.

So the Greens are now at a crucial juncture and with the 2017 election approaching its clear that the Green brain trust has decided get into the game and dispense of the one thing that holds them back which is (pardon my French) governmental virginity. By taking the sandals off, combing the dreadlocks out and with a nice suit or sweater/skinny jeans combo from Hallensteins the Greens will be ready to go to the 2017 Ball and get their cherry popped by that nice Jewish boy from Christchurch or any other potential suitor (perhaps even giving a second chance to that boy next door after his previous sweaty fumbling’s and cloddish behavior).

But there are a few problems with this scenario and Shaw would do well to heed the lessons of history when it comes to playing with fire. The fate of the Lib Dems in the UK, the Maori Party and NZ First should serve as warnings to any minor party leader willing to put short term expediency ahead of long term progress.

Of the three the fate of the Lib Dems is probably the more pertinent. They spent 20 years building up a respectable position in UK politics, under a FPPs system no less, getting 20% of the vote and seats in the house only to piss it all away when in 2010 they supported the Tories in a hung parliament and began to abandon their core principles (as well as break a few key election promises). The voters, predictably, did not like this new direction and the party was slaughtered at the polls in 2015.

In retrospect it probably looked like a bad move to the Lib Dems, but only in retrospect. To everyone else it was clear from the get go that it was a bone headed move and a clear sell out.

Closer to home Winston Peters brainless stunt in 1996 (discussed in my earlier post) and the Maori Parties deal with the devil in 2008 saw both suffer for letting their leadership sell out the voters for a seat at the cabinet table.

It would be unfair though to pin all the blame on Shaw though. He was elected through the Greens relatively fair leadership selection process (one not as convoluted as Labours or as secretive as Nationals) so it appears that he is not the only Champagne environmentalist in the Greens and perhaps many in the party itself want to stop being the wallflower of NZ politics and run naked through the streets singing “Touch-A-Touch-A-Touch-A-Touch Me!”

If this is the case then James Shaw and Metiria Turei are the Brad and Janet of NZ politics while Key is Frank N Furter (with possibly Winston as Riff Raff, Andrew Little as Dr Scott and yours truly as the Narrator). I will leave you to fill in the rest of the cast roles as you see fit.

But the puzzle I referred to at the start of this post has not yet been solved but I think the picture is becoming clearer. If we discount the “coincidence” argument in favour of a more holistic approach we see that new leadership with new ideas, mass changes in key staff and indications of attempts to exit the political corner that the Greens have painted themselves into shows a party on the cusp of a major political shift, a party that is smelling the winds of change and planning to take full advantage of them.

The dangers of this course of action are not always clear and while I personally don’t subscribe to the following rumors (at least not yet) I feel they are worth mention here just to add some zest to an otherwise dull analysis and to indicate just how problematic the issue is.

They are: a) Shaw is a corporate Trojan horse (ala Don Brash in both the National and ACT coups); b) Shaw is an agent provocateur in the pay of the security services (not so astounding once you realize that it’s a known fact that the security services have had paid informants in environmental groups since the 90s; or  c) the Greens have a serious case of political blue balls and are now prepared to do anything (and I mean “anything”) to get into power (this one could be answered a lot easier if we knew who exactly is funding the Greens, not something I have had time to do yet but if anyone wants to let me know I would be grateful).

But at the end of the day the Greens are still a party which is currently fighting the good fight and with an entirely justified moral stance and matching policy prescriptions. When you match up any doubts about the party with the generally disgusting and loathsome behavior of the rest of the rabble in parliament a few potential worries about their direction pale into significance. Only time will tell if it stays that way.

* Its Not Easy Being Green/Bein’ Green.

I was invited by the nice folk at sustainnews.co.nz to contribute a short essay related to sustainable economics from my perspective as a geopolitical and strategic analysis consultant. The essay wound up  making the connection between political risk and sustainable enterprise, and more importantly, the relationship between sustainable enterprise and democracy. You are welcome to view it here.

Fiji’s strategic pivot.

datePosted on 15:13, January 27th, 2016 by Pablo

Last week Fiji took delivery of a shipment of Russian weapons that were “donated” by Russia pursuant to a bilateral Memorandum of Understanding (MOU) signed in February 2015. The Fijians say that the weapons are needed by Fijian peacekeepers in places like the Middle East because what they currently have in their inventory is obsolete. The shipment includes small arms (squad) weapons, two trucks, tear gas, other non-lethal munitions and possibly one or more helicopters. The shipment will formally be unveiled in February in front of a Russian delegation that will include military trainers who will remain in Fiji to instruct Fijian military personnel in their proper usage.

Fijian opposition figures believe that the shipment is illegal because it was not approved by Parliament and that it could be used against domestic opponents of the current, military-backed government. Let me briefly outline the issues.

The shipment is perfectly legal as it is not part of a Treaty that needs parliamentary ratification. Plus, it is a “donation” of military aid so it does not need parliamentary approval.

The opposition is correct to be concerned about the “dual use” potential of the weapons. Squad weapons, tear gas and non-lethal munitions can be used in peacekeeping but can also be used as instruments of crowd control at home. Given the Fijian Military Forces history, that is a very real possibility.

The arms shipment could trigger an arms race with Tonga, which also has a military and is a rival of Fiji. The Tongans are not likely to view the shipment kindly even if it does not specifically include naval equipment. Squad weapons can and are used by navies as a matter of routine, and the introduction of military helicopters into a regional rivalry is bound to cause alarm in the Kingdom.

Although Fijian military inventories may well be obsolete (meaning Vietnam era US weapons), most UN peacekeeping missions are armed by the UN using NATO-standard equipment. That includes small arms and troop carriers used in “blue helmet” operations.  Thus the claim that the Russian arms are needed for peacekeeping is debatable at best.

The MOU with Russia also outlines military educational exchanges. These follow on a similar program with the Chinese military (PLA). The Chinese also have funded and undertaken numerous infrastructure projects such as port dredging and road building that have a parallel “dual use” potential: they can be used for civilian and military purposes alike.

Given the above, it is reasonable to speculate that the Chinese and/or Russians may receive forward basing rights in Fiji in the not to distant future. Under the “Looking North” policy Fiji has clearly pivoted away from its traditional Western patrons (Australia, NZ and the US) and towards others that are less concerned about the status of Fijian democracy (such as it is, and it is not very much). Given these weapons transfers plus bilateral military education and training exercises with China and Russia, the path is cleared for the two countries to use Fiji as a means of projecting (especially maritime) power in the South Pacific. The Chinese are already doing so, with Chinese naval ships doing regular ports of call in Suva. After years of neglect, the Russian Pacific fleet has resumed long-range patrols. So the stage is set for a deepening of military ties with a basing agreement for one or both.

The Chinese and Russians are enjoying some of their best bilateral relations in decades. It is therefore possible that they may be working in coordinated, cooperative or complementary fashion when it comes to their overtures to the Fijians. Both seek tourism opportunities as well as preferential access to fisheries in and around Fijian territorial waters, so their non-military interests converge in that regard, which may limit the regional competition between them.

It is clear that post-election Fiji has moved from a “guarded” democracy in which the military acts as a check on civilian government to a soft authoritarian regime in which the executive branch supersedes and subordinates the legislature and judiciary with military connivance. Instead of going from a “hard” dictatorship to a “hard” democracy, Fiji has moved  from a “hard” dictatorship to a “soft” one (for those who know Spanish and the regime transitions literature, the move was from a “dictadura” to a “dictablanda” rather than to a “democradura”).

Some of this is by constitutional design (since the military bureaucratic regime dictated the current constitution prior to the 2014 elections), while other aspects of the slide back towards dictatorship are de facto rather than de jure (such as the speakers’ order to reduce the amount of days parliament can sit. The speaker is a member of the ruling party yet holds a position that is supposed to be apolitical). Then there are the strict restrictions on press freedom and freedom of political participation to consider. Attacks on the Methodist Church, arrests of civil society activists and claims of coup plotting by expats and local associates contribute to concerns about the state of governmental affairs. Add to that the fact that the first Police Commissioner after the election resigned after military interference in his investigation of police officers implicated in torture, and then was replaced by a military officer (against constitutional guarantees of police and military independence) while the policemen were given military commissions (which insulated them from prosecution thanks to provisions in the 2014 constitution), and one gets the sense that Fiji is now a democracy in name only.

None of this bothers the Russians or the Chinese, both of whom resisted the imposition of sanctions on Fiji after the 2006 coup (to include vetoing UN Security Council resolutions barring Fiji from peacekeeping operations).

All in all, the outlook is two-fold, with one trend a continuation and the other one new. Fiji is once again becoming authoritarian in governance, this time under electoral guise and a facade of constitutionalism. In parallel it has decisively turned away from the West when it comes to its diplomatic and military alignments. This turn is a direct result of the failed sanctions regime imposed on Fiji after the 2006 coup, which was too porous and too shallow to have the impact on Fiji that was hoped for at the time of imposition. The result is a greatly diminished diplomatic influence and leverage on the part of Australia, New Zealand and (to a lesser extent) the US and the rise of China, India and Russia as Fiji’s major diplomatic interlocutors. Factor in Fiji’s disdain for the Pacific Island Forum (PIF) and its continued attempt to fashion the Melanesian Spearhead Group (MSG) as a counter to it, and the makings of a regional transitional moment are clear.

The sum result of this is that the strategic balance in the South Pacific is clearly in flux. Given the US “pivot” to Asia and the reassertion of its security ties with Australia and New Zealand, that is bound to result in increased diplomatic tensions and gamesmanship in the Western Pacific in the years to come.

Loansharking Greece and odious debt.

datePosted on 10:57, July 7th, 2015 by Pablo

I do not purport to be an economist nor would I ever want to be. Theirs is a world of implicit assumptions and pseudoscience that only a brave few have challenged from within. However, theirs is also a discipline that in theory and practice can shape the fate of millions, which is why I pay more than casual attention to them. Thus it is that I came to ponder the financial situation in Greece, a place that I lived in in 2010 at the start of its downward slope towards the current moment (my wife has researched and written on matters of Greek political economy and I have an interest in Greek civil-military relations, so our stay was mutually beneficial). Here is my non-expert view of things.

When lenders charge interest on principal loaned, they prefer to have the interest paid rather than the principal. This loan repayment rationale, which is true for states, firms and individuals, keeps the debtor beholden to the lender so long as the principal remains unpaid. Over time, the interest accrued can well exceed the amount lent, which is perfectly fine from the lenders point of view but keeps the debtor permanently saddled in a cycle of interest payment unless the debtor earns additional income (revenue) that can be directed towards paying down the principal. Short of a lottery win, a pay raise or new sources of revenue, debtors on relatively fixed incomes are locked into the cycle of debt.

Greece is in that situation. Until 2008 it was servicing the interest payments on its debt to international lenders (mostly the European Central Bank, various national banks and private investors). Then the international financial crisis of 2008-09 hit, which had nothing to do with Greece per se but which drove up interest rates. With a stagnant economy and flat tax revenues, Greece quickly found itself unable to make interest payments and, in a dramatic revelation, announced in 2010 that it had been systematically underestimating its fiscal deficit in order to maintain interest payments on its debt at a sustainable rate. At that point many private investors dumped their Greek debt holdings and the IMF assumed a significant portion of them as well as some of that accrued by European public banks.

The Greeks were subsequently offered two “bailout” loans that allowed them to continue to pay the interest on their debt, which together with the principal now amounts to nearly 250 billion Euros. With interest set at approximately 4 percent annually, the figure is set to reach the half trillion euro mark in a few years. Even if interest rates were capped at zero, it is estimated that it would take Greece 81 years to repay the amount currently owed.

There are several questions arising from the Greek debt. Why, since the interest paid is now more than the principal borrowed, does not the ECB and IMF put a cap on the debt? Why did investors continue to offer loans to Greece when it turned out that the Greeks were fiddling the books, and that neither the principal or the repayment loans ever trickled down to the general public in terms of public goods and services? Why does it expect the Greek population to pay via austerity for the risky borrowing of Greek elites and the even riskier lending of European banks?

Asking the Greek people to shoulder the burden of austerity–in a country with 30 percent general unemployment and 50 percent unemployment for those under 30, with a massive brain drain of educated professionals, porous borders and deep cuts to public sector salaries, pensions and basic services–is akin to forcing the children of crack addicts to starve and swab floors in order to pay for the rehab treatment of their parents. And the outcome is just as uncertain.

Let’s look at it this way. Capitalism is about assuming risk for higher reward. In the financial world, the riskier the investment the higher the interest paid on it. And just like quick finance and pawn shops are located in poor rather than rich neighbourhoods, high interest bonds are issued on “risky” countries with poor credit ratings and histories of financial instability. For “courageous” investors riding the line between high interest and junk bonds, the rewards for so-called bailouts are great. But the downside of a default is that they will have to wear losses, just as many ill-advised investors have to.

Greece is one such high risk place and those who lent to it knew this from the beginning.

With that in mind is is easy to see that the behaviour of the “troika” (the European Commission, European Central Bank and IMF) can be (and has been) likened to loansharking and needs to be treated as such. When people seek debt relief from loansharks, banks or credit card providers, they arrange to repay a capped sum and a payment schedule is established. The alternative is bankruptcy, which leaves the creditor with nothing. Although suboptimal from the lender’s point of view, the capped payment alternative is better than nothing.

When it comes to states, the decision to cap debt is a political decision, not a financial one. That is because the stability of states is more important than the returns on risky investment, especially when ample returns have already been received, many creditors are no longer at risk and demands for future returns put state stability at peril. In the case of Greece there is a twist, in that the referendum on whether to accept austerity was the first political iteration in a multi-step process. Now that the Greeks have refused more austerity, it is the turn of the EC to make a political decision of its own.

Let’s be clear: this is not a Greek crisis; it is a crisis of European finance capital. The demand for more Greek austerity is not about servicing the debt but about humiliation, punishment and deterrence of others who might dare to do the same.

The people who should seek answers are those who invested in the agencies that undertook the high risk lending strategies that have brought us to this moment. The people who are responsible for the crisis are not average Greeks but suits sitting in fancy offices in Athens, Brussels, Frankfurt and London. They are the ones who took the risk on Greece and they are the ones who need to be held to account.

This does not absolve Greeks from their own mistakes. Certainly the culture of entitlement and the pervasive corruption in Greek society needs to be addressed. But here again, this was well known to foreign creditors at the time they lent money to Greece, and for all the everyday petty corruption in Greece involving phantom war veterans and people faking disabilities, it is the Greek political-economic elite who elevated institutional corruption to an art form. Syriza proposes to confront them as well as the lower-level scams but in order to do so it must show that it can negotiate a debt payment agreement that puts the interests of average Greeks first.

There is a way out of the imbroglio that can leave Greece in the EU without undergoing more austerity punishment. In international law there is a concept known as “odious debt.” Odious debts are those that are incurred by governments that do not go to their stated purposes or are ill-gotten from the onset. Under international law, odious debts are the responsibility of the incurring parties and are not the responsibility of their successors. As such, they do not have to be serviced by others if the responsible parties cannot be made to pay.

One can argue that the debt incurred by pre-Syriza governments from 1999-2008 fall into the odious debt category and should be forgiven as such. If anything the political parties in government during the time the debts were incurred can be sued for repayment (these being the Panhellenic Socialist Party (PASOK) and New Democracy (ND)). Whatever happens, it is clear that Greece has not seen the purported benefits of the loans incurred by previous governments (to include the now abandoned or derelict Olympic facilities) but it has paid more than its fair share of interest on them. By any reasonable measure the remaining debt is now odious.

In the end this is a cautionary tale with minor and major sub-plots. The minor plot is about sustainable debt and the limits of debt relief. The major plot is about the perils of political union. The EU needs to understand that how it addresses the minor plot will determine the conclusion of the major one.

Bonus read: Although I do not agree with some of his observations, Brian Easton has a nice short piece on the Greek situation here.

 

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