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Venezuela Agonistes.

datePosted on 16:04, September 12th, 2018 by Pablo

There are two things remarkable about coverage of the Venezuelan crisis. The first is the silence of the Left in the face of it. This includes the champions of the so-called Latin American “Pink Tide” who saw in the Boliviarian Revolution an alternate developmental model that along with the left leaning regimes in Argentina, Bolivia, Brazil, Chile, Ecuador and Nicaragua offered hope for a new socialist bulwark in the Western Hemisphere that, unlike the Castro regime in Cuba, was both socialist and democratic. Or at least, that was the thought in the early 2000s. Now, rather than offer robust critiques of what went wrong, those champions have gone quiet, perhaps hugging small comfort pets against their Che Guevara t-shirts while muttering into their pillows something about the sulphuric impact of “neo-imperialism” and globalised corporate control.

The second remarkable aspect of the coverage of Venezuela is the continued misrepresentation by conservative (and even mainstream media) commentators that Venezuela demonstrates (yet again) the failures of socialism in practice. Allow me to address this fallacy.

Before I do so let’s briefly note what is clearly an organic crisis of the Venezuelan state (seen, in Gramscian terms, as economy+civil society+political society).  Regardless of external factors and interference (such as oil prices, Cuban security assistance and US government hostility) and the disloyal nature of most of the traditional opposition to the Boliviarian Movement, the crisis has at its core the incompetence and corruption of the Maduro government. The seeds for the decline were sown by Hugo Chavez himself with his prolifigate spending and cult of personality, but the bitter fruit of criminality, cronyism, patronage, partisanism and despotic maladministration ripened, then rotted under Maduro.

This not entirely surprising because in truth the Boliviarian experiment was always more populist than socialist. Socialism is not just about downwards redistribution of income and expansion of public goods and services via the use of tax revenues.  It is not just about progressive tax reform to make the rich pay their fair share. It is not just about nationalising privately held productive assets or at least strategic economic assets. It not about state ownership of the means of production. And it definitely does not involve a self-appointed authoritarian revolutionary “vanguard” telling everyone what their best interests are, what to do in pursuit of those interests, and concentrating power in a small partisan elite in order to compel others do so.

Instead, socialism involves equality in and of production, to include worker control of decision-making on everything from occupational health and safety to production levels to distribution and reinvestment of profit. Socialism involves decentralisation and local autonomy in political decision-making, to include about the distribution of public goods, social investment and economic development. It involves not just matters of production, particularly with respect to control of productive assets, but also of decision-making behaviour within production and the attendant social relations linked to it. Socialism has cooperatives as a basic unit of social integration; national populism has paramilitary militias and neighbourhood political snitches.

There is more to socialism than what I have outlined, but the point should be pretty clear: socialism is about devolving power to the people, not concentrating it in the hands of a central government. Even if a transition period is needed after bourgeois rule, the move to socialism involves expansion of the number of decisional sites that determine the material, cultural and political fortunes of the average citizen. To do so requires dismantling of a capitalist state apparatus, which is characterised by top down managerial control of public and private policy decision-making, and its replacement with a socialist state in which policy decisions ultimately rest in the hands of immediate stakeholders and are conveyed upwards into national-level platforms. The transition between the two–from a capitalist state to a socialist state–is the hard part of any change from liberal to social democracy (even more so than in violent social revolutions where the destruction of the capitalist state runs in parallel with the elimination of capitalism and its elites), and in Venezuela’s case it was never done. Both Chavez and Maduro have relied on a capitalist state to implement and enforce their populist, and increasingly authoritarian mode of governance.

Rather than socialist and democratic, the Boliviarian revolution is a left-leaning national populist regime using a state capitalist project and corporatist forms of interest group intermediation marshalled along partisan lines in order to redistribute wealth via partisan patronage networks to its support base and to its leaders. It has uncoupled wealth redistribution from productivity and, for all the achievements in education and health made under Chavez, those gains were lost once prices for the single export commodity it relies on (oil) fell and the revenues from oil experts shrunk. Corruption and incompetence, coupled with private capital flight and the exodus of the managerial class (mostly to Florida), accelerated the downward spiral, and now Venezuela is for all purposes a failed state. Inflation is stratospheric, food scarcity is rife, there are shortages of essential medical supplies, power and potable water, petrol supplies (?!) are increasingly spotty, unemployment, under-employment and crime are at all-time highs (the murder rate is 85 per 100,100 population, one of the highest in the world). Violent street protests have become the norm, and spot curfews and other coercive and legal curtailments on freedom of movement and speech are now the most widely used tools with which the Maduro regime handles dissent. For a purportedly Leftist regime, there is no worse indictment than that.

That Chavez, Maduro and their supporters refer to the Boliviarian regime as “socialist” is offered as proof  by some that it is, and that is it is therefore socialism that has failed. That is hopelessly naive. “Socialism” is the label that the Boliviarians have cloaked themselves in because they know that given its history, “populism” is not in fact very popular in Latin America. In its own way the US is finding out why that is so, but the important point to note is that there is nothing genuinely socialist about they way the Boliviarians behave.

The current reality is that the Boliviarian regime has descended from a left-leaning national populist form into an Scotch-addled kleptocracy (Venezuelans have one of the highest per capita intakes of Scotch in the world, and in recent years the regime has taken to hoarding supplies of it). In the measure that it is besieged by its own weaknesses and the rising opposition of the popular base that it ostensibly serves, it increasingly relies on coercion and criminality for its sustenance. Military and government involvement in the narcotics trade, the presence of Cuban intelligence in and out of the armed forces and security apparatus, covert links to states such as Syria and North Korea, the presence of operatives of extra-regional non-state actors such as Hezbollah in government circles–all of these factors suggest that Venezuela’s national interests are no longer foremost in the minds of the Boliviarian elite.

This has not been lost on the population, and the last year has seen over 1.5 million Venezuelans emigrate. This is on a par with Syrian and Rohinga refugee flows and amount to more than 4 million Venezuelans now living outside their motherland (with most leaving after 1999 when Chavez was first elected). The refugee crisis has impacted the relations between Venezuela, Colombia and Brazil, with their borders heavily militarised and safe passage corridors opened for migrants to proceed to countries such as Ecuador and Peru. The extent of the Venezuelan refugee crisis is now regional in nature.

Not surprisingly, there have been some moves against the Maduro regime from within the armed forces. This have failed due to basic incompetence of the plotters and the fact that the Venezuelan military is stocked with Boliviarian sycophants buttressed by Cuban intelligence agents who spend more time looking for moles and dissidents than they do improving national intelligence collection capabilities per se. The combat readiness of the Venezuelan military has been replaced by proficiency in crowd control, and the High Command is staffed by flag ranked officers who have more good conduct medals and Boliviarian revolutionary awards than they do insignia demonstrating operational proficiency in any kinetic endeavour. May the goddess help the Venezuelan armed forces should they ever pick a fight with the battle hardened Colombian military or the well-disciplined Brazilians.

For a military coup to happen, there need to be vertical and horizontal cleavages within the military and push and pull factors compelling it to act. Vertical cleavages are those between officers and the enlisted corps, including rivalries between flag, field and company ranked officers, Non Commissioned Officers (NCOs) and the enlisted soldiers they command. Horizontal cleavages are this between armed services–Army, Navy, Air Force, national gendarme, border patrol, interior ministry secret police, etc–and within those services (say, between armour and infantry in the land forces, or surface fleet and submariners in the Navy).

The Boliviarians and their Cuban advisors have been very good at purging non-loyalists from the officer corps. Their control over NCOs and enlisted personnel is a bit more tenuous, as evidenced by recent attempts to kill Maduro using a drone and an earlier helicopter attack on military installations. But the big cleavages needed to form a coup-making nucleus simply do not exist in the measure that is required, even if the push and pull factors are clearly present. The push factors are those internal to the military that compels it to act, for institutional reasons, against the government (such as loss of discipline, corruption, lack of effective military leadership etc. that erode the ability of the armed forces to discharge their basic defence functions against foreign counterparts ). The pull factors are the external societal conditions, to include family ties of military personnel and civilian elite pleading for the restoration of social order, that draw the uniformed corps towards intervention. So the coup “equation” is just half complete: the motives for intervention are present but the organisational or institutional conditions as of yet are not.

Not that a military coup is a panacea for Venezuela. It could well make things worse. Perhaps this is where a bit of good news has emerged. It turns out that the US was approached by military coup plotters for support and turned down the request. This, in spite of Donald Trump’s public statements about US military intervention against the Maduro regime. It seems that, even if not for all the right reasons, seasoned diplomats understood the downside of agreeing to the request and cooler heads prevailed.

It is praiseworthy that the US, or at least its foreign policy decision-makers, understand that Venezuelans need to be the sole owners of their collective destiny. This destiny might or might not include the reactionary wishful thinkers in the self-exiled community that has made Weston, Florida, a mini-Caracas (and whom have joined with the ageing Cuban exiles to form an anti-communist mafia that fund-raises in “dark” ways). Whether they join or not, the key to resolving the Venezuelan crisis involves providing Maduro and his entourage with a safe passage out of government and an incremental and negotiated restoration of the productive apparatus to a mix of interests of different political persuasions under an agreed upon caretaker regime. This will be a difficult process even with military tutelage and arbitration since the military itself will have to be reformed.

However, since the Boliviarian Revolution was never socialist and the capitalist state remains intact even if decrepit, the foundations for a rejuvenated economy are present. Likewise, many of the social gains made by the lower classes under the Boliviarians have taken enough social root so as to be non-removable if violence is to be avoided. So the foundational compromise underpinning the new democratic regime  seems to involve an exchange whereby a return to private ownership of some aspects of the Venezuelan economy under broader market steerage is traded for ongoing state control of strategic assets and the extension of social guarantees involving health, education, housing and welfare. The tax regime will need reforming and the art of tax evasion by the wealthy will need to be curtailed for this to happen, so it is unsure if the majority in the opposition will accept anything other than the status quo ante the emergence of the Boliviarians.

If we remember the sclerosis of Venezuelan democracy before Chavez appeared on the scene, where the two major parties–Accion Democratic and COPEI–alternated power in a concertative arrangement where elites siphoned off the country’s wealth while buying off popular consent with oil revenue-derived subsides of public goods and services, then we can understand why the back to the future scenario will not work. It will take a sincere effort by fair-minded people on both sides, Boliviarians and Opposition, to recognise that the experiment is over and the country needs a new course that is not a repeat of the past, be it recent or distant.

And there is where I will leave with a note of optimism. Unlike many Latin American countries, Venezuela has a historical precedent of reaching consensus–or at least elite agreement–on the characteristics and contours of a new political system. The 1958 “Pacto de Punto Fijo” (roughly translated as the Full Stop Pact) defined the features of the new democratic regime after years of unstable oligarchical and often violent rule. It led to the power alternation agreement between AD and COPEI under conditions of electoral competition and state control of the oil sector in which agreed upon parameters for public revenue expenditures were respected. While it deteriorated into a lighter version of the current cabal of thieves, it lasted for forty years and only fell because it did not recognise, because of its institutional myopia, the social forces that lay at the root of the Chavez phenomenon and emergence of the Boliviarian movement.

In other words, Venezuela needs a new foundational Pact the provides peaceful exit and entrance strategies to the Boliviarians and their inevitable successors. Otherwise there will be blood whether the imperialists get involved or not.

Unearthing the mole.

datePosted on 14:12, September 7th, 2018 by Pablo

The issue of who wrote the anonymous “Resistance” op ed in the NY Times (about Oval Office insiders working to thwart and buffer Executive policy-making from Trump’s impulses and excesses) has dominated the media cycle in the US since its publication. Coming on the heels of the publication of excerpts from Bob Woodward’s book Fear, which chronicles the dysfunction of the Trump White House, the search is on for the “senior official” mole. The text has been carefully parsed in order to detect grammatical patterns that could identify the author. Attention has focused on the word “lodestar” in the essay, a word that has been used repeatedly by Vice President Mike Pence in public speeches but which has not been used by other senior Trump administration officials. Focus is also on the phrase “anti-trade,” which suggests to some that someone involved in economic policy making is the author. Others have pointed to phrases in the text said to be used by other senior officials, either as proof that they wrote it or as a cover and deflection from their real identity.

Since my opinion is about as good as anyone else’s when it comes to speculating about the author, and since I have not seen this particular angle covered as of yet, let me offer the following possibility:

The op ed is a joint effort by mainstream Republican insiders now serving in the White House. It was released with at least the tacit knowledge of the Republican congressional leaders, Paul Ryan and Mitch McConnell, and it has been done as a way of terminally undermining Trump in the run up to the November 2018 mid term elections. The reason is that the authors and GOP leadership may well believe that they are headed to a landslide loss in November if they continue to ride Trump’s coattails. For them, it is not so much the possibility of Trump being impeached that is a primary concern (if the Democrats regain a majority in the House he certainly will be impeached), but of the disruption to their legislative agenda if they lose control of Congress. Should they lose the House and even more so if they lose the Senate as well, the GOP will be dead in the water when it comes to advancing its policy agenda. And although the economy is strong, they know that Trump’s disapproval ratings are at record levels and his divisiveness is corrosive to the national well-being, something that has prompted a rise in youth and ethnic minority political involvement and a shift to the Left in Democratic congressional primaries at the same time that cleavages between mainstream and populist Republicans in their primaries grow larger. None of this augers well for Republican electoral chances on November 6.

By the tone and language of the op ed, the authors are mainstream “traditional” Republicans, not Tea Party adherents, economic nationalists like Steve Bannon or alt-Right freaks like Stephen Miller. They clearly exhibit insider knowledge of beltway politics and congressional dynamics.  The language used in the essay suggests that the two retired generals that are senior administration officials–Chief of Staff John Kelly and Defense Secretary Jim Mattis–are not centrally involved even if phrases attributed to them appeared in the text (although they may have been aware of the drafting process).

Pence could be  involved as an author. As Vice President he stands to gain much if Trump resigns, and as a former congressman before becoming Indiana Governor, he has close ties to the GOP Congressional caucuses. But Jeff Sessions could also be involved in the drafting of the op ed. A former Senator and current Attorney General who has been the subject of relentless attacks by Trump for recusing himself from the Mueller investigation into Russian involvement with the Trump presidential campaign, Sessions shares the views outlined in the Times piece. He  has ties to Congress that go back decades and he has a motive for revenge. Kelly Ann Conway is another likely conspirator. Married to a long-standing GOP operative who despises Trump and herself a long-time Republican strategist, she has the worldview presented in the op ed and the connections to the “steady state” that is said to be running things in the pursuit of stability and consistency under the nose of the irrational fool in charge.

So my take is this. Regardless of who exactly are involved, no one individual in the White House would have the courage to write the Resistance essay alone. But a group of mainstream Republican senior officials stuck with an incompetent, ignorant, narcissistic sociopath as leader of their own party as well as president, one who could well be leading them to a historic defeat that could in turn irretrievably fracture the Party, might well have decided to put their heads together and come up with a plan to undermine Trump in order to force his ouster via resignation. They will not come forth and give their names because to do so would allow Trump to regain some initiative by firing them.  Remaining anonymous and in the shadows so close to the Oval Office has and will send Trump into a witch hunting frenzy that, given his obsessive personality, will dominate every aspect of his routine. And in the measure that he obsesses about leakers and scurries to rallies in order to seek comfort and solace far from the isolation he feels in Washington, the more nothing else will get done when it comes to Executive policy-making. Along with the ongoing vendettas, feuds, insults and scandals that are the daily circus that is Trump’s “crazyland” (as General Kelly purportedly referred to it), that makes it easier for Republican candidates to abandon him in all but the most die hard pro-Trump districts. Since those districts alone cannot keep a GOP House majority, it is in contestable districts where the GOP choice to ride his coattails or jump ship is starkest. The Resistance op ed is a signal to them as to which way to go.

So, as others have already pointed out, there is a slow moving coup at play here. It is not coming from the armed forces and/or Democratic Party. It is coming from within the Republican Party in an effort to save itself from the cancer that is Trump. The questions are whether the Resistance coup will succeed and whether it will be enough to save the Republicans from what they have become.

Bonus media link: Mitch Harris and I talk about the Resistance essay and more during our latest radio conversation.

Recognising Penny.

datePosted on 14:26, September 6th, 2018 by Pablo

Activist and former Auckland mayoral candidate Penny Bright is in the last stages of her last battle in this physical realm, and I thought that I would share a few words in recognition of her. She represents an old breed of citizen activist in the sense that she was not so much an ideological diehard championing a party line as she was a person who took personal grievance and turned it into political action. She was neither a “soft” or “hard” leftist but instead a progressive who understood the leeway and limits of direct action in a liberal democracy. He causes were “glocal” in that she focused on things both global and local in nature, and there was rarely a good demo or protest that she would pass on. In that sense she was “organic” and grassroots in essence: self-taught and from the streets rather than the product of elite institutions protected by a comfortable position.

I know that there are millennial activists who have a dim view of Penny, arguing that she was mean to some of them and bullying in her personal ways. I tend to think of her as more headstrong and determined than bullying, and while I cannot speak for the young’uns experience with her I can say that in her dealings with me she came across as principled and steeled by the courage of her convictions. Not that I agreed with (most of ) her views on particular matters and in fact some of her causes had a tin foil hat aspect to them in my view, but I respect the fact that she put herself out there in defence of them. Her high beams were on all of the time in a country where most would opt for dimmers.

She may not have vanquished the windmills that she tilted at or moved the mountains that stood in her way. But she did get under the skin of officialdom and the retrogrades that populate the blogging Right, and that is a good sign as far as I am concerned. She fought hard, lost more than she won and yet persisted. Were it that we all could say the same when it comes to living true to our ideals.

So as Penny prepares for her next chapter may I simply say that I respect her for who she is, I recognise her actions on behalf of others, I appreciate the influence she has had when contesting the official narrative and I am grateful for her contributions to the commonweal. It may not be immediately apparent but her legacy has left its impression far beyond the immediacies of the actions that she was involved with.

Hasta la victoria siempre, compañera!

So a National MP and assorted right-wingers believe that Chelsea Manning should not be allowed to speak in NZ because she is a [insert unpleasant adjectives and nouns here]. Many of those who vociferously demanded that a Canadian white supremacist tag team be allowed to use publicly funded facilities to spew their venom in NZ have gone silent about Manning. To their credit, some of that motley “free speech coalition” think she should be allowed in, so at least they have the virtue of being consistent.

What is interesting is that those who want Manning banned from entering NZ appear to be using a false equivalence. They believe that people who, at little personal cost, encourage racial divisions and promote xenophobia are comparable to people who, at great personal cost, divulge abuses of power and authority in and out of war zones. In their minds both types of speech are basically the same: offensive to some, welcome by others. If racists are to be silenced, then so should dissidents be.

That is simply nonsense. There is no equivalence of any sort between racist xenophobes and people of conscience.

I am not entirely comfortable with what Manning did in releasing classified materials to Wikileaks. I am uncomfortable because Wikileaks has moved from being an objective whistleblowing outfit to a tool of authoritarian forces seeking to undermine Western democracies, and because she had outlets within and outside her military chain of command that she could have gone to in order to raise alarms about improper conduct that she was familiar with (which is why she could not avail herself of the whistleblower protections available to civilians). In any event she was tried, convicted and sentenced for unauthorised disclosure of classified material to unauthorised outlets and had that sentence commuted by President Obama. She is now a free US citizen with no restrictions on her rights to vote, work, travel or speak. In fact, she even ran in the Democratic primary for a Maryland Senate seat (although she lost in a landslide to establishment politicians).

The Canadian racists have suffered no indignities other than cancellation of speaking events and ridicule. Sponsored by Rightist promoters with little legitimate institutional backing, they nevertheless whinge about their treatment and ask that suckers donate money to them in order to cover their expenses. Manning accepts what has happened to her and uses her experience to talk publicly about abuses of authority and the dangers of confronting powerful institutions. Her talks are sponsored by civic organisations and academic institutions.

It is interesting that the National MP who wants Manning banned from NZ, Michael Woodhouse, not only maintained that the racists should have been given a NZ forum, but also appears to have more than Manning on his mind. After all, the Opposition Leader is currently mired in a slow burning fiasco over his travel expenses that threatens to undermine his position. It is widely believed that the leaks about his expenses came from within the National caucus and rumours of plotting and scheming against him are rife. Not surprisingly, Simon Bridges is desperately trying to find a way to put a lid on the affair and move on to anything else. Now Woodhouse drops the call for banning Manning into the mix. Bridges has to respond by either supporting or repudiating his Immigration spokesperson’s demand, a complication that he does not need and a no-win proposition whichever way he chooses to go.

Bridges and Woodhouse may believe that the proposal to ban Manning is worth floating because it is a good diversion that will allow Bridges to reassert control over his caucus while cementing support from National’s conservative base. But, because he defended their right to speak in NZ, it also gives the impression that Bridges would prefer to have foreign racists rather than whistleblowers address audiences in this country. Or perhaps Woodhouse was being mischievous rather than helpful in raising the issue, something that poses more questions about Bridge’s hold on the National Leadership. Whatever the motivations at play, Bridges stands to lose more than he gains from Woodhouse’s gambit.

In the end this is just another beat-up. Unlike the Canadian racists, Manning poses no threat to NZ’s social harmony. She is not coming to test the boundaries of free speech. The idea that her US convictions disqualify her apriori is nonsense given her public role and the fact that what she was convicted for did, in fact, serve the public interest even if it discomfited the authorities that she was exposing (and who took their judicial revenge upon her).  So if foreign racists without prior convictions (that I know of) can come to NZ to preach division (and I did support their right to speak so long as no taxpayer money was used to host them and they provided their own security), then it seems to me that it is only fair that a whistleblower convicted for doing so can come to speak about the dangers of unbridled and unchecked authority under the same rules.

All she needs is a visa and a private venue, something that the racists ultimately were not able to secure.

Then again, perhaps the false equivalence is just a ploy and the beat-up is not just on Manning.

Debunking business “confidence.”

datePosted on 13:02, August 11th, 2018 by Pablo

One of the more suspect metrics used to evaluate a government’s economic program is so-called “business confidence.” The premise behind surveys of “business confidence” is that business is the motor force of capitalist economies and business leaders are the most accurate readers of their health. Business confidence in the state of economic affairs is therefore considered an accurate weathervane on prospects for growth and prosperity. The trouble is that the premise is false as well as one-sided.

That is because “business confidence” is a political rather than an economic indicator given by one collective actor in the process of production. In other words, politics frames the way in which economic policy is made and, given that, political context is what gives business “confidence” in economic policy. It simply reflects the attitude of capitalists towards different governments and their approaches to economic matters. This means that there is an inherent bias in any survey of “business confidence,” to wit, business confidence is always higher under right-leaning governments and lower under left-leaning governments, particularly during the early days of a government’s tenure when policy changes and legislative reform are being enacted.

Although business confidence may wax and wane under both government types, the starting point is always lower for left-leaning governments. Left-leaning governments are believed by capitalists to be interested in strengthening worker’s position in production at the expense of employers. Worse yet from a capitalist perspective, left-leaning governments also seek to alter the social relations of production via so-called social engineering projects that empower the working and disadvantaged classes at the expense of entrepreneurs. Business consequently sees the assumption of office by left-leaning governments as a zero-sum game: capitalists lose in the measure that workers gain (for example, by strengthening rights to organise and collectively bargain and pushing tax-funded redistribution schemes).

Conversely, the presumption is that under right-leaning governments business will gain at worker’s expense (say, via deregulation of  collective labour rights and health and safety standards). That is more a measure of expectation than confidence: business expects right-leaning governments to be favourable to their interests because they assume (often rightly so) that left-leaning governments will not be. The reverse is true for workers: they expect less of right-leaning governments than left-leaning ones. The issue for both sides is one of expectations being met. Confidence in government or the lack thereof derives from that.

Savvy business people will cloak their comments about confidence by citing larger macroeconomic factors such as interest rates, fiscal deficits, trade balances, currency market fluctuations, commodity booms and busts, taxation, skill shortages, foreign disruptions such as Brexit, etc. Although these clearly play a backdrop role, the relative confidence of business is often grounded in more mundane things. Consider New Zealand.

In the current NZ moment, business confidence is said to be low. Why is that? ? If the comments of the head of the NZ Employers and Manufacturers Association are anything to go by, not much. In televised remarks made a few days ago, the EMA boss said that the domestic violence leave and longer tea break legislation was an undue burden on businesses’ bottom lines. Think of that: granting short-term paid leave to employees who are the victims of domestic violence and giving workers slightly longer tea breaks somehow is injurious to business confidence. Apparently the notion of worker morale and welfare does not enter into the EMA equation, and therefore it is, in its own eyes, right for it to have less confidence in a government that seeks to address those issues.

The same goes for business complaints about minimum or living wage increases, paid parental leave, the right to organise and strike etc. None of these necessarily interfere with a company’s productivity or profitability.  What they do is make it harder to exploit the inherent vulnerability of workers in the labour process and/or degrade health, safety and environmental standards, thereby diminishing manager and ownership’s ability to secure gross material advantages as a result.

It is hard to believe that issues such as these are the real concerns that erode business confidence in the current government. In reality, business was always going to claim to be less confident once the Labour-led coalition formed a government, with that lack of confidence accentuated once labour market reform measures began to be implemented. It is quite possible that announcing a lack of business confidence in the Labour-led government’s policies is a capitalist way of punishing the coalition for its election victory. Nothing short of complete upholding of National-era labor laws and regulations would have kept business confidence stable, and even then uncertainty about future changes under the Labour-led coalition would likely have seen a drop in business confidence in anticipation of those changes. Here again, the issue is more about expectations than confidence per se.

In that light, the notion of “business confidence” being an indicator of anything other than capitalist hostility to or distrust of left-leaning governments is silly. A fairer measure would be to survey capitalist “expectations” of governments and compare business surveys with those measuring worker expectations. After all, workers are those who actually produce things and provide services, so even if they are not consulted in investment decisions and long-term planning, they are the (increasingly discardable,) human material upon which such (increasingly political) considerations are made. So their expectations are a necessary part of any honest discussion of “confidence” in government policy.

In other words, expectations are the basis upon which sectorial confidence is secured, and if expectations are negative or low, then confidence will follow accordingly.

It is likely that workers have a reverse image perception to business in that regard: they expect more benefits for workers from left-leaning governments than from right-leaning governments. Recent strike activity by public sector unions demonstrates a willingness of those workers to up the ante when dealing with a left-leaning government in a measure not seen under the previous right-leaning crowd. They simply expect more of the Labour-led coalition.

The true measure of confidence in a government is in the relationship between business and labour expectations. Matching up the expectations of business and workers allows determination of the relative confidence each group has in government. A tilt either way will lead to more or less confidence on the part of one or the other. It is in the balance between the satisfaction of expectations where the compromise on sectorial confidence is found.

It would be interesting to see what areas of common concern and agreement emerge from surveys of business and labour leaders. This could provide grounds for cooperative approaches to policy solutions involving those issue-areas.

All of which is to say that the confidence of those who ultimately produce wealth in society is as important as that of those who manage and own productive assets. This confidence is based on their respective expectations of government set against the economic backdrop of the moment. Only by comparing the two can an accurate picture be drawn of how productive groups view the performance of governments on matters of economic import.

Anything short of that is misleading and biased in favour of capital. But then again, perhaps that is the point of business confidence surveys as they are presented today.

An authoritarian nut in a democratic shell.

datePosted on 16:51, July 31st, 2018 by Pablo

At the turn of the 21st century I was teaching an upper division undergraduate  course titled “Comparative Regime Transitions” in which I explored the four “waves” of democratisation that had occurred since the early 1970s in Southern Europe, Latin America, Eastern Europe and East Asia. I noted that I had also witnessed the rise of concurrent waves of new-form authoritarianism during that rough world time time frame in which old types of despotic leadership were replaced by bureaucratic authoritarians from the Left and Right in response to the crises of oligarchic, populist and weak democratic regimes. These varied from the military nationalists of the Arab world to the revolutionary regimes of Cuba, Iran and Nicaragua and the military junta led-regimes of the Southern Cone of South America, the Philippines, South Korea and Turkey. I also pointed out that, for a variety of reasons, authoritarianism was the more natural political fit for many societies organised along hierarchical lines drawn on gender, class, race, religious or ethnic differences.

My point in doing so was to remind students that contrary to the belief of those like Francis Fukuyama who claimed that the emergence of electoral (if not liberal) democracy as a seemingly global trend in the late 1980s and early 1990s signalled the “End of History” where the political and economic combination of democratic regimes and capitalist production triumphed over all others (particularly authoritarian capitalism and socialism), human history was dialectical rather than linear. There is no simple progression towards a (preferred) end state and the possibility of reversal is always latent in the move from one political-economic form to another. In this I was channeling my view that Hegelian dialectics, rather than dialectical materialism or any number of property and individual-centric “liberal” theories, best explained the superstructural dynamics inherent in political regime change. They are grounded in but not reducible to changes in production and the social division of labour attendant to it, which means that they have a pattern of historical development all of their own.

This belief comes to mind when I think of today’s widely lamented condition of globalised democratic decline and decay. In both the developed and developing world new and old democracies alike are crumbling from within, beset by a nasty combination of corruption, power-grabbing, institutional sclerosis, gerrymandering, electoral manipulation, economic inefficiency and income disparity, racial and ethnic conflict, migration pressures, youth alienation, crime, judicial bias, incompetence or indifference, poverty and assorted other social ills. This has prompted a return to authoritarianism under electoral guise; that is, in its newest version, the turn to despotism occurs under conditions of electoral rule and is instigated from within the institutional edifice of ostensibly democratic governments in response to what is claimed to be the crisis of civil society.

Here is context in order to explain.

In the 1980s a considerable body of academic writing was focused on the demise of authoritarian regimes and the restoration, resurrection or return of democratic forms of governance throughout the world. This followed on earlier academic work that focused on the causes of democratic breakdown. I was lucky to have been mentored by several of the leading figures in that discussion, and through them was exposed to the work of other intellects who together with my mentors formed what came to be known as the first generation of “transitologists,” i.e. people who studied the fluid dynamics of regimes in processes of decline or rise rather than the durable features of stable regimes. As it turns out, regardless of the specific ideology of the regime in question, authoritarians tend to fall for broadly the same reasons having to do with the nature of their rule over time. Likewise, democracies rise and fall due more to general institutional failures than whether they are right or left-leaning in nature.

(For those interested in the dynamics of authoritarian and democratic transition and who may think that recent writing on the subject is all that there is, I commend the companion four part volumes that started the whole transitology industry: The Breakdown of Democratic Regimes, Johns Hopkins, 1978 and Transitions from Authoritarian Rule, Johns Hopkins, 1986).

Into the mix came the person of Juan Linz. A Spanish born sociologist at Yale and one of the editors of The Breakdown of Democratic Regimes, Linz was more than professionally concerned about dictatorship and democracy. He had seen both in his homeland and worked hard to understand why democracies could fail from within rather than be overthrown from without. As it turns out, just like the reasons for a coup d’état, there are “push” and “pull” factors in democratic decline. The pull factors are those that come from outside the government of the day, be it a disloyal opposition, military plotting, rising civil unrest, business sabotage, irredentist or separatist strife, economic downturns, etc. These should normally be handled by the government through the institutional process into order to reach mutual satisfactory, or at least second best social outcomes: not everyone gets everything that they want but most get some of what they want. When the institutional process fails to meet expectations and achieve those solutions, the external pull to replace those in power gowns stronger if not irresistible.

Linz understood this but also knew that absent an armed insurrection or military interruption, pull factors alone could not bring down a democracy. He consequently focused on the push factors that impelled democratic governments to turn towards authoritarianism as a response to crisis. His concern was on more than the individual whims of megalomaniac presidents and political cabals intent of holding on to power. Instead, it was on deficiencies in institutional design that left some types of democracy more prone to authoritarianism than others.

He outlined a number of factors in his considerable body of work but pinpointed two, one general and one specific, that made some democracies more susceptible to the “authoritarian temptation” than others: presidential systems and the use of Executive decrees. Basically, there are two types of democratic government, presidential systems and parliamentary systems. The latter are dominated by parties that form governments based on the percentage of votes received and the ability to attract coalition partners. The government is led by a Prime Minister who is the leader of the dominant or majority power of any given coalition, but parliament remains a strong check and balance on what the government can do when it comes to policy-making. In contrast, presidential systems, also known as Executive-dominant systems, are those in which the chief executive of the nation–the president–is elected separately from the legislature (parliament or Congress). Here the Executive branch has much more power and authority to enact policy free from the checks imposed by the legislature, to the point that it is the “first amongst equals” when it comes to the three branches of democratic governance.

For Linz presidential systems have a built-in bias towards ruling without the advice and consent of the legislature or judicial review. That is where the more specific design flaw comes into play. Executive decrees or orders are designed to by-pass the legislature in order to provide efficient and decisive policy-implementation in times of crisis or emergency. Normally a president would not make use of such prerogatives if the national condition was stable and peaceful and indeed in most instances that is a case. But take a president confronted with the pull factors mentioned above and/or one who wishes to perpetuate him/herself in office, impose a specific agenda against the will of the people and its elected representatives, or in others ways benefit or take advantage of executive privilege for personal, private or political gain, then the authoritarian temptation becomes authoritarian practice.

This is the phenomena that we are seeing now. It is not just that right-wing national populists are being elected into office and using demagogic language and behaviour to advance their goals. It is not just elected post-revolutionaries like Daniel Ortega and Nicolas Maduro who have turned on their people when these take to the streets in protest against incompetence, corruption and wide-spread scarcity. It is their use of executive powers that is turning their governments into authoritarian vehicles. Donald Trump is a variant on this theme, where executive orders and decrees are used by everyone from Rodrigo Dutarte to Recap Erdogan to Maurico Macri and are championed by leading political contenders such as rightwing extremist Jair Bolsonaro in Brazil (who openly supports Dutarte’s approach to crime and waxes nostalgic about the days of military rule). In all instances these political leaders have advocated for or turned to the use of executive decrees and orders to impose unpopular or anti-democratic policies.

The situation is made worse when the powers of the presidency are defined more by custom and tradition than by law. Nowhere has that been more evident than in the Trump presidency, where time-honoured practices and norms have been repeatedly trampled by the vulgarian in the Oval Office because, as it turns out, there is nothing in law that prevents him from doing so. Presidential practice in the US, as it turns out, is about as much grounded in law as is the interior decoration of the White House because most of it is informal and therefore dependent on the president’s disposition when it comes to adherence to informal norms and customs.

Be that as it may, time and time again, using the pretext of fighting crime, restoring order or handling some other type of national emergency, executives in presidential systems have resorted to decrees and orders to accomplish their ends. And now, in a spectacle that Linz perhaps fortunately did not live to see, we have parliamentary majorities giving extraordinary powers to prime ministers in order to do the same thing. Witness Hungarian Prime Minister Victor Orban and his xenophobic policies or Polish Prime Minister Mateusz Morawiecki’s assaults on judicial independence, which come after their parties gained large coalition majorities that allow them to push through laws in spite of popular opposition or the strictures of decency and fair play.

The key point is that Linz’s bottom line is correct: the combination of a constitutionally strong executive and decree or order-making powers accorded to it is an authoritarian nut in a democratic shell. Short of changing to a parliamentary system with multiple party representation in government, the best immediate solution to the authoritarian temptation inherent in presidential systems is to strip presidents of decree or order-making privileges except in cases of dire national emergency (with what constitutes a dire national emergency spelled out in a constitutional or legal amendment). While this may not prevent the abuse of majorities in parliamentary systems to ram-rod legislation under “urgency,” it can weaken the temptation to go full authoritarian when the law does not explicitly prohibit doing so because it might cause a parliamentary revolt or conscience votes of no-confidence within the ruling coalition.

It is doubtful that any president will abolish the decree or order-making privileges. History has shown that even the most fair minded incumbents tend to leave Executive decree-making powers on the books “just in case.” One only need think of how Barack Obama used Executive Orders to muzzle leakers and whistleblowers to understand that the authoritarian  temptation is powerful even in the best of cases. So the solution has to be found elsewhere, in legislative reform and judicial review that constrain or eliminate the decree-making powers of the Executive.

Even with the cases noted, parliamentary systems are the best safeguards against the authoritarian temptation, something that can be reinforced by eliminating first-past-the-post variants and requiring supermajorities (say, two thirds) to pass legislation under urgency or emergency. A number of parliamentary regimes have in place just such mechanisms but others, including New Zealand, to my knowledge do not. In addition, in parliamentary systems where custom and practice rather than law governs much of what Prime Ministers and their cabinets do (for example, when it comes to national security), the need to increase parliament’s check and balance (if not veto) power is all the more necessary. Getting rid of simple majorities both for government formation and legislation passage is a step in that direction.

When we look at the problems of contemporary democracy, it is not enough to focus on the external or pull factors that cause or facilitate democratic decline–social media manipulation, corporate influence, rank partisanship etc. All of these are necessary but not sufficient conditions for the breakdown of democracy. What is sufficient is an inherent institutional disposition towards authoritarianism, something that the combination of presidentialism and executive decree-making authority all but assures.

Word: It is time to re-read Juan Linz and craft our remedies accordingly.

Unions, Parties and the decision to strike.

datePosted on 20:12, July 9th, 2018 by Pablo

For the bulk of my academic career I worked on issues of regime change and interest group intermediation, with a particular interest in Latin America. I wrote a couple of books (one co-authored) about state-labour relations in several South American countries and a fair number of articles that included discussion of how labour engaged in collective action under different regime types. The comparative study of state-labour relations remains an abiding interest of mine.

One of the axioms of comparative democratic labour relations is that unions will engage in more cooperative labour relations strategies and therefore strike less under Left governments than they will under Right governments. The presumption is that since Left governments are working class based or supported, and because they are sympathetic to working class concerns in their policy platforms, there is less incentive for unions to take strong collective action against them, particularly with respect to strikes and  other forms of labour service withdrawal. This is especially so because such direct action could undermine the Left government in question and leave it vulnerable at the next election.

Because unions presumably prefer to have Left governments over Right governments in office, resorting to labour service withdrawals would be a counterproductive union political strategy over the medium term even if economically productive over the short term. That is true of public sector strikes in particular (since strikes, even when focused on economic issues, are inherently political when they involve the state as employer), but private sector strikes are also seen as electorally injurious to Left governments (after all, if a Left government cannot “control” unions then what is the point of having them?).

In terms of so-called political strikes as well as economic strikes, Labour governments are generally thought to offer a better prospect for labour peace.

Conversely, unions supposedly dislike Right governments and therefore engage in more confrontational approaches to labour relations, particularly if there perceive that there has been a rollback of union legal and economic gains under those or previous Right governments. Both economically and politically, unions have reason to adopt more militant strategies under Right governments.

The subtleties embedded in this dichotomy are found in the strategies of public sector versus private sector unions against a backdrop of relative union density and the legal frameworks governing wage-setting. This assumes that union leaders and members share the same ideological orientation and that union leaders accurately transmit the material demands of the rank and file during negotiations with the State and employers (i.e. the principal/agent relationship is tight and coordinated). At that point employer characteristics at the level of the firm as well as productive sector come into play, set against a backdrop of relative business sectorial organisation (both as producers and employers) and the labour relations framework operative at the time. A collective action and strategic interaction is framed by macroeconomic conditions and government budgets, with sectorial growth and Treasury surpluses being determinants of the latitude for negotiation in any particular instance.

For the last three decades all of this occurs in the context of the globalisation of production, consumption and exchange under market-oriented macroeconomic policies developed and implemented by public sector technocrats that seek to outsource public sector service provision and downsize the legal authority and managerial and regulatory functions of the State as part of government mandated, market-oriented ideological agendas.

In the era of market-oriented economic reform, changes in labour relations’ legal frameworks have tended to favour employers and business associations over labour unions under both Left and Right democratic governments, with the degree of favouritism seen in the approaches towards collective bargaining adopted by each. Overall, although Left governments have mitigated much market-oriented labour reform while Right governments have sought to accentuate and exploit them in order to weaken the labour movement and atomise working class representation and collective strength, the trend has seen a weakening of union power across the democratic capitalist world as measured in union density, membership numbers and the collective rights and legal authority governing working class representation in production. This has been acutely felt in the private sector where individual worker rights and contracts predominate over collective rights and representation. With their relative collective strength, public sector unions remain as the diminished core of most contemporary labour movements in capitalist democracies.

A key factor in determining the propensity to strike is wage-setting institutions. Generally speaking, the more centralised the bargaining nexus and more monopolistic the bargaining agents doing the negotiating, the more likely that unions will prosper in their demands without having to resort to strikes. In contrast, the more decentralised the bargaining forum and the more disparate the bargaining agents, the more likely it is that employers will have the upper hand in bilateral negotiations with employees, thereby increasing the possibility of strikes. For example, tripartite (labour, state, capital) wage boards governing wage negotiations in specific economic sectors tend to push compromises that trade incremental wage gains for productivity, job security and reinvestment guarantees. Conversely, enterprise level bargaining between employers and various employee bargaining agents tends to fix or depress wage bills in exchange for non-wage guarantees. In New Zealand collective bargaining is more closely based on the latter model rather than the former and yet overall strike levels have remained low.

The way in which the union movement is incorporated and inserted in the political system matters in this regard. The form of initial incorporation (that is, the way in which unions are initially integrated into the national political system), may be more of historical rather than practical import for well-established unions created in the previous century and whose insertion in the political system today was consolidated some time ago. But initial incorporation matters much to recently organised contemporary unions without long political histories. That is because the terms of their political incorporation and subsequent political insertion in the political system are still being determined and sometimes disputed, including by older or more established unions as well as the State and employers. These may not echo or even resemble the conflicts surrounding initial labour incorporation and political insertion in the past, but they nevertheless condition the way these newer collective agents are allowed to exercise economic and political representation in the present context.

There are three main forms of labour political insertion. In some liberal democracies organised labour is inserted in the political system in Left party dominant fashion, e.g., the party dominates the union in both leadership selection as well as member political affiliation. In other liberal democracies unions dominate or control the party, with union representatives holding key Party positions down to grassroots organising and regularly running for office. In still others unions are independent of Left political parties although nominally sympathetic to them, with union leaders and members displaying a broader range of party affiliations than under the first two types. In illiberal democracies so-called “yellow” unions (factory or business unions and “professional associations”) exist that are independent or affiliate with Right parties. In the main these are not considered to be authentic representatives of working class collective interests because they are created by or at the behest of employers in lieu of them.

This brings up the subject at hand. There currently is the possibility of nurses, public servants and teacher’s strikes in the next few weeks. Conservative commentators have claimed that this is to take advantage of the Labour-led coalition’s “weakness” and to seize the moment of opportunity provided by Labour’s unwillingness to confront the unions in question. That runs against the conventional wisdom about Left governments and unions. So the question is: why are the nurses, public sector and post-primary teacher’s unions threatening to strike?

One answer may lie in that all of these collective agents are public sector unions that are independent of the Labour Party and its coalition partners. Membership density is high but the sociological demographic in each is changing, with younger members being more ethnically diverse and less identified with the traditional class structures of the industrial era (since those under 30 are of the post-industrial, post-modern age). This may have led to a rejigging of agent/principal relations within the respective unions that might make them more prone to challenge the labour relations orthodoxies of the past, to include being more cooperative when Left governments are in power.

Another answer may lie in the fact that Labour, for all of its “progressive” policy pronouncements and initiatives, still clings to market-driven logics of production that, even when cushioned along the margins, reinforce the collective bargaining dominance of capitalists. Seen in labour legislation and the role of national labour administration as an interlocutor between labour and capital, this includes cost-cutting managerial rationales in the public sector, where modern Taylorist principles have been borrowed from the private sector and applied to public sector service provision.

That bureaucratic orientation could be partially due to the fact that most Labour leaders are career politicians with few backgrounds “grounded” in the realities of working class activism, and/or because the party’s focus has recently concentrated more on identity rather than class politics. This has caused Labour to accept market logics in principle and market-oriented solutions to employment relations in fact. The NZ Labour Party is less a working class party than a coalition of post-industrial causes joined by antipathy to conservative (read: Anglo-Saxon Christian capitalist heterosexual and patriarchal) mores. Seeing the situation in this light could well disincline nurses, teachers and bureaucrats from continuing to toe the “cooperative” line, especially if the union demographic traits outlined above prove to be correct.

It is worth noting that the long-established unions affiliated with the Labour Party have not uttered a peep about strikes, to include not offering solidarity with the nurses and teachers. Newly created unions like UNITE in the private sector have engaged in strikes regularly against private employers under the previous Right government and are supportive of the action. But in general the union movement in New Zealand has remained out of the conflict between the State (as manager and employer via the civil service, DHBs and Education Ministry) and the nurses, bureaucrats and teachers unions.

Another question is why did these unions (or most others, for that matter) not strike regularly when the National government was in office? Was it a matter of contracts being in force? Or was it the limits placed on strike action both legally and practically? On the face of it, it seems odd that civil servants, nurses, teachers and other productive groups would wait to strike until Labour was in office if they were out of contract towards the end of the National government. Did they think that striking in an election year would lessen Labour’s chances of winning a plurality and forming a government or, put more appropriately, strengthen National’s arguments that they needed to continue to hold a tight reign on labour market dynamics less the economy lose momentum? This is true for private sector unions but particularly so in the case of public sector unions. Or are the conservative commentators correct and non-Left party affiliated public sector unions simply more willing to exploit Labour’s perceived “weakness” on collective bargaining matters?

If so, then the Labour-led coalition has a problem that is more political than economic.

I am still working through the logics at play because I do not know the internal dynamics of the unions in question nor the Labour-led government’s strategy for handling the strike threat. But if any readers would like to join the discussion and illuminate me on the details of each position, that would be welcome.

A return to the banality of evil.

datePosted on 13:17, June 20th, 2018 by Pablo

When Hannah Arendt wrote about the “banality of evil” in Nazi Germany, she was referring not to the leaders but to the thousands of bureaucrats, soldiers, civil servants, cops, tax collectors and everyday citizens who went along with the Nazi project or simply said that they were “following orders,” “doing their jobs” or being “good citizens.” The Nuremberg trails put paid to those excuses.

Today in the US we have a variant on the theme. It may not quite be holocaust in size, but the forced separation of children from undocumented parents in order to use them as pawns in Drumpf/GOP attempts to extract Democrat concessions on immigration reform (pay for the wall, etc.) is abhorrent nevertheless. And while attention rightfully is focused on Drumpf and his minions, my question is this: who are the people who are enforcing this wretched policy? These are the people who take the evil abstract of forced family separation and turn it into executable action via bureaucratic procedures and regulations (e.g. wearing of surgical gloves when handling detainees, using female agents to process women, providing water and x amount of calories via solid food at regular intervals, etc.). Who are the border patrol, local law enforcement and homeland security agents and private contractors who are doing the actual separation and detention of children in cages? Are they doing this because they agree with Drumpf, are racists themselves or are just plain psychopathic? Or are they going to tell us that they are only following orders and doing their jobs?

Until we make those carrying out this atrocity as personally responsible as Drumpf, Sessions,, we will continue to see the steady undermining of the moral foundations of the Republic. Make no mistake about it: these enforcers of the morally reprehensible are neighbours, friends, family members and church goers who go about their lives as if all was normal. And that is exactly what Arendt was describing. It is the banality of such evil that eventually makes it normal.

Less NZ readers think that it cannot happen here, just hark back to the Police invasion of Nicky Hager’s privacy in search for the elusive “Rawshark” source. You may recall that I wrote a post about how the cops used Customs, Immigration and airline companies to obtain the personal data of thousands of passengers who flew on certain dates between Auckland and a foreign country where the Police suspected Rawshark was vacationing. None of this was done under warrant, but instead, just as in the case the banks that gave up Hager’s financial records so readily, they did so willingly upon request. All of those involved will defend their actions as cooperating with the Police but in fact they were under no obligation to do so without a warrant. But they did.

We now learn that a private security firm has a hand in glove relationship with NZ public agencies in spying on people who pose no threat to national security, and that in fact the private security firm may have business steered to it by a NZ intelligence agency in spite of the obvious–or at least appearance of–conflict of interest. Here as well we have a case of people just doing as they are told without consideration of the ethics or morality about what they are being told to do, some in pursuit of profit and some for reasons known only to them. They are following orders, doing their jobs, chasing leads and tip-offs without consideration of the fact that what may be legally permissible (or at least not outlawed) may not be morally or ethically proper.

These, in sum, are Kiwi examples of evil gone banal. And there are bound to be others, so perhaps the abomination that it is the Drumpf policy of separating undocumented asylum-seeking families at the southern US border should serve as a reminder to New Zealanders as to the depths to which a nation can plunge if it allows that evil banality to become the new normal.

Pick your poison.

datePosted on 13:37, June 12th, 2018 by Pablo

Two decades ago New Zealand uncoupled the security and trade strands in its foreign policy. The decision stemmed from the removal of New Zealand’s preferential trade status with the UK in the early 1970s and the fallout to the embrace of a non-nuclear status in 1985, which led to the dissolution of the Australia-New Zealand-US military alliance (ANZUS). With the end of the Cold War, New Zealand foreign policy elites decided that one of the cornerstones of foreign policy in the tight bipolar world that dominated international affairs from 1945 to 1990, issue linkage between security allies who trade preferentially with each other, no longer applied to the conduct of its international relations and that placing the trade and security “eggs “of foreign policy in different baskets better ensured independence and autonomy in international affairs.

Over the next twenty years New Zealand shifted its trade orientation to non-traditional partners in Asia, Latin America and the Middle East while slowly re-establishing its security ties with its traditional Anglophone allies. The latter trend was accentuated after 9/11 but did not slow the pursuit of preferential trade agreements with new markets, China in particular. In fact, New Zealand signed the first bilateral free trade agreement (FTA) between a Western democracy and the PRC in 2008, and within a few short years China has become New Zealand’s second largest trading partner (after Australia), supplanting both the EU and the US in that regard.

In parallel, New Zealand joined the US-led “war on terror” (sic) by deploying troops to Afghanistan from 2001 to the present (now in a diminished role), Iraq 2003-2013 and Iraq and Syria from 2015 to the present. It signed the bilateral Wellington (2010) and and Washington (2012) Declarations that made it a first tier defense partner of the US, and it has strengthened its intelligence ties with the Anglophone partners in the 5 Eyes signals intelligence network as well as upgraded liaison relations between its human intelligence agency, the Security Intelligence Service (SIS) and Western counterparts such as ASIO (Australia), the CIA (US), DGSE (France) and others.

The trouble with the “eggs in different baskets” approach is that it assumes that a balance of power can be maintained and ignores the possibility of conflict between major trade and security partners. The guiding principle of issue linkage was that security and trade partners trusted and did not conflict with each other. Conflict was limited to between alliance systems. Uncoupling of security and trade linkages consequently raises the possibility of conflict between competing security and trade partners, something that makes the delinked stance more akin to straddling a barbed wire fence while standing on ice blocks than balancing between competing interests.

The situation is made worse for small states trying to remain neutral between competing great powers. That situation, described by Thucydides in the History of the Peloponnesian Wars when recounting the siege of Melos and its attempts to skirt the conflict between Athens and Sparta,occurs when a small state is forced to choose between two great power rivals. Although the Spartans accepted its neutrality, Melos refused Athenian demands to swear fealty and as a result was starved, invaded, ransacked, its men killed and its women and children taken prisoner.

Mutatis mutandis, this is increasingly likely to be the dilemma posed to New Zealand as a resulted of its bifurcated foreign policy. China and the US are on a collision course across a range of strategic issues, including security and trade, as the jockey for dominance in the Western Pacific. Chinese militarisation of artificial islands in the South China Sea and its claims to sovereignty over that entire water space (and territories claimed by five neighboring states), coupled with its aggressive use of “checkbook diplomacy” to win friends in and influence the foreign policies of Pacific Island nations, added to its rapid naval expansion and power projection into the blue waters of the Western Pacific have been met with a US “pivot to Asia” and a shifting of US military assets to the Pacific theater. The Chinese have tied their military expansionism in part to the “One Belt One Road” trade initiative that seeks to extend China’s trade influence across continents (combining the old land-based Silk Road routes with a Maritime Silk Road linking Southern China and East Africa with ports in between). It also has a naval strategy—the “chain of pearls” strategy– premised on moving beyond defence of what it considers to be its inshore seas (such as the South and East Asian Seas) and into the Indian and Pacific oceans where it can self-guarantee maritime security in its sea lanes of communication.

Under Donald Trump’s presidency the US has retrenched economically, abandoning free trade pacts such as the Transpacific Partnership in favor of an economic nationalist strategy premised on protective tariffs and bilateral trade agreements. It has turned its back on much of the rules-based liberal world order crafted over the past sixty years in favor of a unilateralist diplomatic approach heavily grounded in aggressive military re-assertion in contested areas. It has also abandoned issue-linkage between trade and security with ertswhile allies except to use “national security” as an excuse to gut extant trade pacts (as the most recent G7 fiasco demonstrates).

The combination of economic nationalism and military-led diplomacy raises the possibility of open conflict with power contenders disinclined to bend to US demands. More broadly, the transition from the Cold War to the unipolar world in which the US was undisputed hegemon has now been followed by the rise of a contentious multipolar order in which rising and re-assertive powers contest US leadership in world affairs, China and Russia especially. Since conflict serves as a systems regulator during transitional international moments and because old alliance systems are under siege and new “power blocs” are being created, the likelihood that conflict will break out between ascendent and descendent powers as they jockey for supremacy in the new world order has increased markedly.

The jostling for position has many manifestations. One of them is the contest for influence in non-aligned and uncommitted states. Because of its bifurcated foreign policy New Zealand is seen as one such state by China, and recent controversies about PRC “influence operations” in Aotearoa parallel similar debates about the extent of Chinese “soft” subversion in the political and economic systems of Australia, Canada and several African and Latin American states. In fact, there is enough backlash throughout the Five Eyes network about PRC use of front organizations and other “magical weapons” (including corrupt inducements to key actors) so as to have it rated as a threat as grave over the long-term as espionage and other intelligence collection activities conducted by the Chinese. They are seen as more pernicious than Western influence activities such as educational and cultural exchanges, etc. because they are more directly focused on influencing political and economic outcomes in ways favorable to the PRC and are designed to support (and are in fact closely linked to) the authoritarian policies of the Chinese Communist Party at home and abroad.

The result is a growing ideological battle between the PRC and New Zealand’s Western allies, particularly the US and Australia, over the future direction of the country. On the one hand, the Chinese presence in New Zealand has been materially beneficial. But that has come with strings attached that are believed to compromise the integrity of New Zealand institutions. For its their part, New Zealand’s Anglophone orientation has not paid similar material dividends in recent times even though it gives it a seat at the table in security meetings with its traditional partners. And although Western influence in New Zealand has been benign due to shared values and cultural norms, the record of the the US when confronting democracies that stray from their preferred political and economic approaches demonstrates that there is a dark side to their influence as well (one only need think of US subversion of the Whitlam government in Australia and record in Latin America to get a sense of this).

New Zealand consequently finds itself caught on the horns of an impending dilemma: if push comes to shove between China and the US, which side should it choose? Even if the great power conflict is economic and diplomatic rather than military, it will be forced to choose within the next decade or so because New Zealand is too deeply tied to both countries to play the balancing game once the great power rivalry erupts into open conflict. The question is therefore not a matter of if but of when and for/against who?

There will be significant costs to whatever choice is made. Should New Zealand choose China (as a rising great power), it will lose the security umbrella and suffer the diplomatic wrath of its most traditional and closest international partners. The consequences will be felt in a loss of trade and diplomatic ostracism, but most acutely in security relations with other Western democracies. The Five Eyes listening posts in New Zealand will be dismantled and all of the highly sensitive equipment, to say nothing of archived records and stored data, will be removed under duress. This could well cause a revolt within the New Zealand intelligence community given its Anglophone orientation and when coupled with “dark” influence operations could prompt civil unrest amongst those disinclined to cast their lot with the Chinese. It could even prompt covert and overt hostile responses from the jilted partners, who will likely discontinue military relations with New Zealand, including sale and supply of equipment. There will be a moment of national crisis.

Should New Zealand opt to side with the US and its security allies in any future conflict with China, it will suffer serious economic losses as a result of Chinese retaliation. This has already been presaged by the Chinese response to New Zealand’s support for the International Court of Arbitration’s ruling in favor of the Philippines in its dispute with China over island-building in contested waters, where New Zealand goods were held up in port and CCP-controlled media editorials warned New Zealand over the consequences of siding against China in future disputes.

Given that the New Zealand economy is highly dependent on agricultural and other primary good exports to China as well as tourism and students from it, the economic costs of losing the Chinese market will not be balanced by increasing trade elsewhere or recruiting tourists and students from other countries. That includes trade with the European Union with or without Great Britain, particularly if New Zealand persists in negotiating a bilateral FTA with Russia in the face of EU sanctions against it. No other export market can compensate for the loss of China, and since New Zealand does not have enough value-added exports or a domestic service sector that can take up the slack, and because its tourism and foreign student markets have been framed around preferential treatment for Chinese (e.g. via special visa schemes), it is bound to suffer a severe economic downturn should its choice go against the PRC.

The PRC will also use its deeply embedded influence assets to sow discord within the Chinese expat community and within the power circles that it has penetrated. That could add to the general unrest caused by the turn away from such an economic powerhouse and benefactor. It will undoubtably use diplomatic as well as economic and perhaps even covert and overt hostile means to punish New Zealand and hurt its interests (say, by abandoning fishery and other conservation schemes in the South Pacific and using naval assets to protect its commercial fleet from foreign law enforcement). This list of retaliatory measures is long and the means by which they are delivered powerful.

So what could precipitate the forced choice? Consider the following scenarios which, if not exhaustive or immediate, are definitely within the realm of the plausible:

1. China continues to demand that New Zealand renounce its participation in the multinational naval conducting freedom of navigation and safe passage exercises in the disputed waters of the South China Sea. When New Zealand refuses to do so and send a ship on patrol just outside the 12 mile territorial limit claimed by the Chinese around, say, the Spratly Islands, the Chinese respond by suspending all agricultural imports from New Zealand for six months. New Zealand exporters go crazy over the loss of income and the government is pressured to give in to the Chinese demand; or, the government refuses to give in to the demand and a subsequent patrol by a New Zealand frigate is hit by an anti-ship missile fired from the Spratlys**. Several sailors are killed and the ship is crippled and towed into Chinese claimed waters and held until apologies are given for its “intrusion” and “provocation.” What then?

2. The Chinese announce the signing of a forward basing agreement with Fiji in which a deep water berthing complex, a 14,000 foot runway and facilities for a division’s worth of troops will be constructed near Suva. Soon after that the Russians announce that they have made a deal with the Chinese to rotate expeditionary forces through the base for tropical warfare training. Australia, France, the UK and US denounce the move as unacceptable. What does New Zealand do?

3. Australia and the US announce the uncovering of a Chinese espionage ring in the South Pacific. It includes several Chinese individuals, including dual nationals, in New Zealand. These are diplomats, students, business people and front agencies engaged in both intelligence gathering and subversive activities that extend into the Beehive and security bureaucracies. The allies call for the closure of Chinese diplomatic facilities and the expulsion of diplomats identified in the sweep and the arrest of those without diplomatic immunity on spying charges, including the possibility of their extradition to the US because of attempts to penetrate the Five Eyes listening posts and other sensitive sites in which the US has a presence. How does New Zealand respond?

4. The US imposes redoubled tariffs on New Zealand exports because it refuses to raise its defense spending to 2 percent of GDP and permit US pharmaceutical and IT companies to extend the lifetime of monopoly patents and proprietary intellectual property rights in New Zealand. It demands New Zealand take a more adversarial stance against China in regional and international fora and reinforces its position by restricting intelligence flows and military-to-military contacts within 5 Eyes and between the two countries, including a cut off of US Air Force resupply flights to NZ Antarctic bases from Christchurch.

Strategic planners in Wellington may not like to ponder these unpalatable scenarios and the unpleasant consequences that a forced choice entails regardless of the nature of the decision. But given the way great power rivalries are playing our at present, they need to consider the possibility that the time will come when the “eggs in different baskets” approach is proven detrimental to the national well-being and a choice between great power poisons has to be considered.

** Less readers think this scenario far-fetched, be aware that it would demonstrate Chinese resolve to defend its self-proclaimed territories knowing that New Zealand’s larger security partners will not risk war over an attack on the “weakest link,” in the multinational naval coalition, especially given New Zealand’s seeming reluctance to denounce Chinese norm violations in the region. That will force a diplomatic resolution, which itself is a victory for the PRC.

Cherry picking on Chinese influence.

datePosted on 11:32, May 29th, 2018 by Pablo

Concern about Chinese influence operations in Western democracies has increased over the last few years, including here in NZ. The concern stems from the fact that, although not espionage or intelligence gathering per se, such operations–which involve money spent on individuals and organisations, establishment of pro-China fronts and media outlets, and placement of individuals linked to or controlled by the Chinese Communist Party in positions of corporate and political importance–corrupt Western democratic systems and undermine the political, social and economic values that underpin them.

The impact of Chinese influence operations has been the subject of considerable discussion in Australia, to the point that politicians have been forced to resign because of undisclosed ties to Chinese interests and intelligence agencies have advised against doing business with certain Chinese-backed agencies. As usual, the NZ political class and corporate media were slow to react to pointed warnings that similar activities were happening here (people may remember my essay on a Chinese fifth column from a few years ago). It was not until Canterbury University academic Anne Marie Brady published an essay last year on so-called Chinese “magic weapons” that the extent of Chinese influence in the local political and corporate worlds was revealed and became a matter of public interest.

It is significant that Brady’s work was first published in the US for a think tank focused on Chinese international affairs, and her first public exposure happened in Australia at a parliamentary committee hearing. That is because, unlike the US and Australia, NZ politicians are not particularly interested in digging into the nature and extent of Chinese influence on the party system and government policy. This, in spite of the “outing” of a former Chinese military intelligence instructor and academic as a National MP and the presence of well-heeled Chinese amongst the donor ranks of both National and Labour, the close association of operatives from both parties with Chinese interests, and the placement of well-known and influential NZers such as Don Brash and Jenny Shipley in comfortable sinecures on Chinese linked boards, trusts and companies.

As I have written before, there is enough to this pattern of behaviour to warrant scrutiny from NZ intelligence agencies and the police. But we also need to put Chinese influence operations in perspective. How are the Chinese any different than the Indians or Polynesian groups when it comes to infiltrating political parties, other than the amount of money available to them? How are these influence operations substantially different than those of other governments such as the US, which funds an array of scholarships, visitor programs, parliamentary delegation junkets and the like? How are Chinese backing of friendship and solidarity groups different than those backed by other foreign governments? How is Chinese corporate fund raising, “fact-finding” and conference travel and other ear-bending efforts any different than the lobbying of corporations, business associations, advocacy groups, etc.?

The answer seems to be that the Chinese are authoritarian, have lots of money to spend on making friends and influencing people and do so in a clearly transactional fashion, much as they do via their chequebook policy in the South Pacific. The implication is that they engage in corrupt practices when necessary and will not adhere to the strictures of democratic governance other than as lip service when it comes to pursuing their interests. Since NZ is, in essence, just another Pacific Island nation, why should this come as a surprise? In fact, the more interesting issue is why, fully knowing that the Chinese are using influence operations for purposes of State that go beyond international friendship or business ties, do so many prominent New Zealanders accept their money and/or positions on front organisations? Is the problem not so much what the Chinese do as as a rising great power trying to enlarge its sphere of influence as it is the willingness of so-called honourable Kiwis to prostitute themselves for the Chinese cause?

Last week the beat up on Chinese influence in NZ took a strange twist. At a US-China Economic and Security Review Commission (USCESRC) hearing, an ex-CIA analyst said that the Chinese had penetrated the “political core” of the country and that in light of that the US should reconsider keeping NZ in the Five Eyes signals intelligence sharing network.

The absurdity of these remarks needs to be deconstructed, not only for what was said but for what was not said. Let it also be noted that although nominally a bipartisan agency of the US Congress, the USCESRC has increasingly become a China-bashing forum, something that has been accentuated under the leadership of Senate Majority Leader Mitch McConnell (who oversees Commission appointments) and President Trump. This also matters because the witnesses called to testify before USCESRC are often cherry picked for their views on matters of US-China relations.

In his case the ex-CIA analyst rightly pointed out that, in contrast to the US and Australia, the NZ political elite were blasé about the extent of Chinese influence in local politics. But he took a step too far, downplaying the record of the previous National government and criticising the new Labour government for casting a blind eye on pernicious Chinese influence within its ranks (the only mention of National was a reference to the Jian Yang case). He then jumped the shark by recommending that the US and other 5 Eyes partners reconsider NZ’s membership in the signals intelligence sharing partnership.

Let’s be very clear: for the previous nine years National was in power, the deepening of Chinese influence was abided, if not encouraged by a Key government obsessed with trade ties and filling the coffers of its agrarian export voting base. It was National that ignored the early warnings of Chinese machinations in the political system and corporate networks, and it was Chinese money that flowed most copiously to National and its candidates. It is not an exaggeration to say that Chinese interests prefer National over Labour and have and continue to reward National for its obsequiousness when it comes to promoting policies friendly to Chinese economic interests. In fact, it is National that had a Minister, in the person of Judith Collins, attempt to use her position and manipulate the NZ ambassador to China into pushing her husband’s dodgy Chinese-backed business.

All political parties protest that they strictly adhere to campaign finance law and on paper they clearly do. But the whiff of dark money, dirty politics and other forms of unacknowledged influence trading has long clung to National in a measure not shared with its opponents. Put succinctly, contrary to what the the ex CIA analyst intimated, the influence of Chinese interests has been strongest when National is in government. And it is not just the Chinese who have availed themselves of the favourable climate operative during National’s tenure.

Not that National is solely to blame when it comes to trading favours. Labour clearly has consorted with some unsavoury Chinese donors and it remains to be seen if it will be any different than National now that it is out of the wilderness and back into government. But if foreign penetration of the “political core” is such a concern, it is surprising that no serious mention has made either at home or abroad of Winston Peters’ ties to Russia via the horse industry and beyond. In fact, when one looks at Peters’s links to an assortment of industries and interests, it is not just foreigners who appear to have an inside track on his thinking. Even so, the notion of a “political core” being compromised assumes that a whole array of constituent groups, from unions to manufacturers to iwi, are in the pockets of the Chinese no matter who is in government. Perhaps they are, but if so, I have not heard about it.

Labour may have the likes of Raymond Ho in its ranks and some dubious Chinese businessmen among its supporters, but it comes nowhere close to National when it comes to sucking up to the Chinese. That is why Jian Yang is still an MP, and that is why we will never hear a peep from the Tories about the dark side of Chinese influence operations. For its part, Labour would be well-advised to see the writing on the wall now that the issue of Chinese “soft” subversion has become a focal point for Western democracies. After all, Chinese influence operations that work to subvert basic value structures do so against a backdrop of aggressive Chinese cyber attacks and intelligence gathering in the countries in which influence operations are most prominent, NZ included.

But that is also why the recommendation that NZ be excluded from 5 Eyes is ridiculous. First, because for all of the talk about counter-terrorism, the bulk of counter-intelligence efforts by NZ (through the SIS and GCSB) and its 5 Eyes partners are directed at state actors, China in particular. Even if the NZ political elite were totally compromised by the Chinese, the security bureaucracies would insulate their operations from political interference and would likely work with the Police to demonstrate when and where politicians were acting on behalf of Chinese rather than NZ interests. It is the NZ intelligence community (NZIC), more than anyone else, who know the full extent of Chinese activities in the country, and the NZ intelligence community is fully ensconced in Anglo-centric democratic intelligence networks. It is therefore not likely that the NZIC would overlook the type of Chinese influence operations that result in capture of NZ’s “political core.”

Secondly, getting thrown out of 5 Eyes is not simply a matter of being told to take one’s toys and go home. The equipment at the listening posts at Waihopai and Tangimoana and at GCSB headquarters in Wellington is acutely sensitive and there are numerous citizens of partner countries working at those installations. Dismantling and removing equipment, files, archives and other sensitive material from such facilities will be time consuming, diplomatically fraught and operationally vulnerable, especially when it is well known that the Chinese, foremost amongst others, are extremely interested in them.  Institutional history, to include linkages with 5 Eyes partners and broader security networks, would have to be purged in order to avoid it falling into adversary hands. So getting kicked out of 5 Eyes involves much more than a rebuke, and, given NZ’s taskings within the 5 Eyes network, it is precisely the Chinese who will benefit the most from the expulsion.

If the US and other 5 Eyes partners are as worried about NZ being compromised by the Chinese as the ex-CIA analyst suggests that they are, a message of concern would have been sent to the NZ government in at least three ways: via diplomatic communications from the US embassy (which undoubtably has sent reports back to the State Department about the prevalence and impact of Chinese influence operations and intelligence gathering in NZ); by a diminishing of intelligence feeds from those partners in an obvious fashion; and by direct communication between the intelligence chiefs involved. This could well have been the purpose of the visit by the US Director of Intelligence to NZ a few weeks ago and if so, the gravity of the concerns have now been made clear to the Ardern government. However, the PM as well as the Opposition leader have both said that nothing has been brought to their attention that causes them to believe that NZ’s political system has been compromised by Chinese agents.

Given my antipathy towards authoritarians, I hold no particular affection for the PRC. But I do recognise that it does so as a maturing great power and accept that its behaviour is not going to change any time soon unless action is taken to circumscribe its activities in the West–a problem for societies founded on notions of freedom of association, movement and speech (including of opinion and the press). Because these rights are seen as Achilles Heels to be exploited by authoritarian rivals such as China and Russia, it should be expected that they will continue to be used as avenues of exploitation by them (as has been well demonstrated in the US).

What I deplore the most, though, is attacks on left-leaning governments (such as they are) like the current Labour government in NZ for supposedly going soft on Chinese influence pandering when in fact it has been right-leaning governments, not only in NZ but elsewhere, that have most assiduously courted Chinese investment and better diplomatic ties in spite of the PRC’s authoritarian character and dubious record when it comes to human rights and adherence to international conventions. For the NZ media to pick up and bang this hammer when it is part of an orchestrated attack on the Chinese by the US doing so for geopolitical reasons of its own demonstrates how shallow and uncritical reporting has become in Aotearoa. The issue is serious, which is precisely why it should not be subject to partisan manipulation or, ironically, pressure from allied states.

So yes, NZ has a problem with Chinese influence operations on its soil, particularly the willingness of NZers to serve Chinese interests for a handful of coin. But no, it is not just the fault of Labour and no, it is not as bad as has been alleged by the ex-CIA analyst. Nor is what the Chinese do in terms of influence mongering that dissimilar to what many other entities do when pushing their message in the NZ political system.  So let us take better notice of the phenomenon and address it for what it is without succumbing to the apocalyptic diatribes of people whose concern about Chinese influence operations has  less to do with the particularities of NZ and more to do with the broader strategic competition that sees China on the rise and the US in decline.

BONUS LISTEN: Here is an interview done on RNZ by the ex CIA analyst in question. Readers can form their own opinions as to whether he sounds like an authoritative and credible source for the claims he has made:

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