Article Link. “South America’s Strategic Paradox” in MINGA.

Posted on February 23, 2024 by Pablo

The Latin American multidisciplinary journal MINGA just published my article on “South America’s Strategic Paradox.” I was surprised that they wanted to do so because they have a very clear left-leaning orientation and my article was pretty much a straight-forward geopolitical analysis. This was the article that an editor of the New Zealand International Review felt was too broad in scope to publish. Go figure. Judge for yourself (the article is in English, with translation pending).

Benign Strategic Nostalgia.

Posted on August 9, 2023 by Pablo

It has been interesting to observe reactions to the release of a cluster of national security-related documents by the NZ government last week. They include threat assessments and forecasts, defense capabilities and priorities, and areas requiring upgrades and reform, and much more. Among the issues being considered is one that I have discussed here before, the question of whether NZ, if it is invited to participate, should join “Pillar 2” of the AUKUS agreement between the US, UK and Australia on submarine and related high technology transfers. NZ is not part of the submarine (Pillar 1) component, where the US and UK will begin to rotate nuclear attack submarines through HMAS Sterling outside of Perth in a few years, then help Australia acquire and eventually build nuclear-propelled attack submarines based on US and UK models now in service. Given its non-nuclear status, NZ is not party to that aspect of the agreement although it will eventually benefit from AUKUS submarine patrols off of its Eastern seaboard and EEZ as well as from the improved signals intelligence collection streams these platforms provide to the 5 Eyes intelligence network that NZ is part of through the GCSB electronic intelligence agency.

Pillar 2 is about establishing local high technology defense industry hubs in Australian locations and perhaps NZ. These would focus on developing indigenous and shared quantum computing, cyber security, artificial intelligence and an assortment of signals and technical intelligence capabilities relevant but not limited to submarine warfare and intelligence collection and which could have trickle-down benefits for commercial and other non-military enterprises. These technologies may not be available from other countries, as they a are part of high security collaboration between close military allies. The Australian federal government has already apportioned billions of dollars to several states so that they can engage in Pillar 2-related industrial development, promising to create thousands of jobs and spin-off business opportunities by doing so. Although I do not see why Australian business interests and local governments would want to share the employment and the short-term as well as trickle-down profit benefits of the Pillar 2 pie with non-nuclear NZ, NZ authorities and businesses have expressed an interest in being included in the non-nuclear aspects of the deal.

That is where the reaction in NZ has gotten interesting. Although the specific details of any participation in Pillar 2 have yet to be announced (in fact, everything so far has consisted of vague declarations of interest on the part of the NZ Defense, Intelligence and Security Minister, Andrew Little), there has been a strong pushback from certain sectors of the foreign policy community, including Foreign Minister Nanaia Mahuta, former Prime Minister Helen Clark, and prominent academics such as Robert Patman. They all think that it is a bad idea, and while they offer a variety of reasons, their arguments against NZ participation in AUKUS Phase 2 appear to boil down to three beliefs: 1) trade dependence makes it dangerous to annoy the PRC because of the risk of economic retaliation (since AUKUS is clearly designed to counter Chinese military expansion and influence in the Southern Pacific and beyond); 2) there is moral equivalence between the PRC and US or the PRC is seen as a benign actor when compared to Western imperialists; 3) NZ must remain neutral when it comes to Great Power competition in order to remain “independent” in foreign affairs. All of these assumptions should be tested in any debate about NZ’s potential role in AUKUS Phase 2 (should it eventuate).

Until the specifics of any invitation for NZ to participate in Pillar 2 are outlined in detail, I remain agnostic on the proposition. I can see the benefits but also remain concerned that the nuclear propulsion component of Pillar 1 of the agreement is a violation of the 1997 Treat of Rarotonga that declares the South Pacific to be a nuclear free zone. Contrary to what some may think, the Treaty prohibits not only nuclear weapons but the presence of nuclear power and storage facilities on land as well. That means that AUKUS nuclear maintenance facilities, should they be constructed at HMAS Sterling, will likely be in violation of the Treaty. It appears that by basing the AUKUS subs on an island outside of Perth in Indian Ocean waters, the AUKUS signatories believe that they have circumvented that prohibition, but if one looks at the original maps that are attached to the Treaty declaration one will see that the coastal waters of Western Australia are in it. That means that practically speaking, AUKUS provides a precedent for the forward basing of other nuclear-powered naval vessels in the region, including from the PLAN (e.g. the PRC Navy, but others as well). That augers poorly for the Pacific remaining nuclear-free even if we acknowledge that nuclear submarines, including those that carry nuclear weapons, in all likelihood already transit Southern Pacific waters on a regular basis.

Although arguments by knowledgeable and reasonable people such as Patman are couched in neutral, objective language, there is also an internal political aspect to the discussion. Helen Clark was the PM when NZ signed the first Western bilateral Free Trade Agreement (FTA) with the PRC, which many NZ trade advocates consider to be the “gold standard” of NZ FTA’s. Clark has a personal stake in that agreement, which was expanded by her successor John Key, so she certainly does not want to see her government’s crowning foreign policy achievement undermined by subsequent Labour governments with different perceptions on international security affairs and the role of the PRC within it. Remember that Clark was very much on the Left of the Labour Party before pragmatic centralism pushed her rightwards once she became PM. Remember also that she eliminated the air combat wing entirely when her government renegaded on the purchase of second-hand F-16s from Pakistan that would have replaced the obsolescent A-4 Skyhawk squadron. At first her government starved the NZDF of resources and delayed replacement of ageing equipment (although it accepted delivery of the completely oversized purchase of 105 LAV wheeled armoured vehicles signed by the previous National government, which then were largely kept in storage, deployed in small numbers and/or damaged in accidents and in operations until recent on-sales to Chile. There are still a few dozen left, most surplus to requirements). In fact, in the early days of her stint as PM, she downplayed the need for robust military forces because, in her infamous words, NZ existed in a “benign strategic environment.” That was before 9/11.

Then things changed. After 9/11 the Clark government saw the opportunity to ingratiate itself to the US (after the freeze in security relations occasioned by the 1984 non-nuclear declaration that ended ANZUS) by offering support for the so-called “War on Terror.” Along with disgraced former SIS Director Richard Wood (now still feeding at the public trough as Chair of the NZ Environmental Management Risk Management Authority (ERMA). He is also Chair of the NZ/France Friendship Fund, a nice sinecure for a former ambassador to Paris and Algiers), Clark was front and centre in orchestrating the malicious framing and railroading of Algerian asylum seeker Ahmed Zaoui as an al-Qaeda linked terrorist. Although Zaoui was less dangerous to NZ that any number of Christchurch skinheads, he was imprisoned in a maximum security prison for several years until a team of dedicated advocacy lawyers proved his innocence, including that the SIS under Woods’s direction and at the Clark government’s behalf had lied and produced false evidence of his alleged crimes (the Vietnam “scouting” trip video being the most ludicrous of them). She also ordered the NZ intelligence community to focus its resources on the anti-jihadist crusade in Aotearoa and elsewhere (which may well have included NZSIS complicity in the US extraordinary rendition and black site operations against suspected al-Qaeda terrorists and supporters, the details of which remain suppressed), and to top things off attempted to use the newly-minted powers of the Terrorism Suppression Act (TSA) to arrest and jail the so-called Urewera 18 band of leftists and Maori sovereignty activists (charges were dropped against all but four defendants, and the remaining were convicted of minor weapons charges after years of costly litigation, as had been the case with Zaoui).

Terrorism became the foil for Clark’s turn to security toughness even if the jihadist threat, both before and after 9/11, has been more talk than walk (no Muslim has been involved in an ideologically-motivated violent attack in NZ before or after 9/11. The 2021 supermarket stabber was, as I have written before, a lonely and homesick mentally ill person with a blade fetish and no effective counselling support, not an ideologically committed extremist). Sensing the tenor of the times, Clark dropped her progressivism on both domestic and foreign policy issues and turned rightwards out of political expediency (remember her opposition to cannabis legalisation while in office? She now supports it), thereby setting the stage for a change in NZ’s security perspective and assessment of threats.

At the same time she was polishing her anti-jihadist bonafides on the back of an innocent man and settling scores with pesky activists, she authorised NZDF deployments to Afghanistan and Iraq (even while not formally supporting the US-led invasion of Iraq in 2003). Not all of those deployed, shall we say, were NZDF engineers, and those deployments turned into a longer-term engagement in both countries that did not end until the end of the 2010s/early 2020s. In the end both countries reverted to form once the NZDF vacated the premises, leaving as a result 10 dead soldiers, several more wounded, credible accusations of war crimes and a cost of millions of dollars.

The turn towards revitalising ties with Western security partners began with her government. Under her watch NZ negotiated the core of the bilateral Wellington and Washington Agreements on US-NZ defense cooperation (later signed into force by her successors). NZ also deepened its ties within the 5 Eyes signals-technical intelligence network involving Anglophone partners. That makes it pretty rich of her to now claim that NZ has become too ensnared in the 5 Eyes “vice” and has adopted too much of a Western-centric security perspective. In fact, it appears that beyond her obvious hypocrisy, Clark has returned in retirement to her lefty roots in order to burnish her tarnished progressive credentials with certain domestic and foreign audiences. But that does not make her right when it comes to NZ’s national security and contradicts her actions on the security front while in office.

Beyond her personal foibles, the Clark interjections in current NZ security debates is evidence that she clearly is out of the loop when it comes to current NZ intelligence and defence threat assessments, but more importantly, is more proof of a significant fracture within Labour Party circles (the domestic aspects concerning tax policy and other issues having already become public). For example, Foreign Minister Mahuta has been demoted within Cabinet and appears increasingly confined to ceremonial roles rather than substantive engagement with foreign policy formulation. Minister Little has clearly assumed a dominant role in foreign policy decision-making as well as in security affairs, having repeatedly stated that NZ “no longer operates in a benign strategic environment” in a pointed message for Clark to pull her head in (and to be sure, the rightward drift in Labour after Jacinda Ardern’s tenure as PM is palpable this election year).

He, of course, is objectively correct on that score. NZ has to adapt its strategic posture to the times, and these times are not those extant during Clark’s tenure as PM. She and like-minded others need to stop living in the past, clinging to outdated notions of foreign policy “independence,” and treating the PRC as a benign global actor. As I have written before, NZ operates with bounded autonomy in our foreign affairs, something that gives it flexibility but which does not allow it complete freedom of choice or action when it comes to things like Great Power competition. But for NZ to be flexible in light of existing constraints, it must clear-eyed about what is and what is not in its medium to long-term interests. That is because in these fluid transitional times re-shaping the increasingly multipolar global order, trade opportunism is just a short-term solution, especially when it runs counter to longer-term international security trends.

If I were to be charitable, I would simply say that Clark and her fellow travellers need to understand that the PRC of 2008, when the FTA was negotiated, no longer exists. Gone is the relative openness and transparency of the CCP regime led by Hu Jintao and in its wake has risen the repressive and expansionist regime led by Xi Jinping. Clark and others may wax nostalgic for a past where the PRC would adopt liberal internationalist principles when it comes to foreign affairs and join the community of nations as a democratising Great Power, but that sadly has not happened. Instead, Xi has consolidated his grip on power, increased authoritarian powers against civil society, moved to culturally extinguish restive minorities like the Uyghurs, and de facto annexed Hong Kong while sabre-rattling against Taiwan and usurping the maritime territory of its littoral neighbours around the South China Sea. All while expanding its military capabilities (including its nuclear arsenal) and conducting global political influence (United Front) and espionage campaigns that include large-scale as well as focused cyber intrusions, intimidation of diaspora populations and industrial-size patent and copyright theft. That in turn has reconfigured the threat environment in which NZ is situated. The recently released package of NZ security documents pointedly make reference to these facts, among other things.

Even if we agree that rising Great Powers like the PRC have to do what they have to do when it comes to expanding their power, and recognising that Western countries have done similar things and worse well up to the recent past, it is nevertheless clear that the PRC is not operating as good international partner on all fronts, and that its behaviour is very much inimical to the rules-based order that NZ professes to uphold in the international system. In fact, the PRC under President Xi explicitly rejects the premise of liberal internationalism citing, perhaps at least partially correctly, that the international institutional status quo was built by and for Western imperial and neo-imperial powers and their allies, not for the Global South.

In that light AUKUS may not be the solution to the changes in the South Pacific strategic landscape and in fact it might make things worse if it serves as a precedent for the erosion of its non-nuclear status and catalyst for further militarisation of the region. But resorting to knee-jerk objections based on a rosy vision of some ethereal past does not help advance the debate about where should NZ situate itself in the equation and what moral, ethical, and practical utility AUKUS rests upon, especially since as far as the AUKUS partners are concerned, it is a fait accompli whether NZ is involved or not.

In that light, assessments and arguments based on nostalgia for a benign strategic past where issue-linkage could be abandoned and trade and security could be decoupled now seems naive at best and foolhardy at worst. But then again, I do not have skin in the game when it comes to past foreign policy decisions that have, in a path-dependent way, led us to where we are today.

Media Link: “AVFA” on NZ-PRC trade and Prigozhin’s “pronouncement.”

Posted on July 7, 2023 by Pablo

In this week’s “A View from Afar” podcast Selwyn Manning and I decided to do a “near-far” sequence and look at the recent NZ trade mission to the PRC in broader context before turning our attention a discussion of what the Wagner Group incursion into Russia means in the short and medium terms. Short answer: Who knows? You can find the podcast here.

A word on post-neoliberalism.

Posted on April 19, 2022 by Pablo

I recently read a critique of the market-oriented economic theory known as “neoliberalism” and decided to add some of my thoughts about it in a series of short messages on a social media platform dedicated to providing an outlet for short messaging. I have decided to expand upon those messages and provide a slightly more fleshed out appraisal here.

“Neoliberalism” has gone from being a monetarist theory first mentioned in academic circles about the primacy of finance capital in the pyramid of global capitalism to a school of economic thought based on that theory, to a type of economic policy (via the Washington consensus) promoted by international financial institutions to national governments, to a broad public policy framework grounded in privatisation, low taxation and reduction of public services, to a social philosophy based on reified individualism and decontextualised notions of freedom of choice. Instilled in two generations over the last 35-40 years, it has redefined notions of citizenship, collective and individual rights and responsibilities (and the relationship between them) in liberal democracies, either long-standing or those that emerged from authoritarian rule in the period 1980-2000.

That was Milton Friedman’s ultimate goal: to replace societies of rent-seekers under public sector macro-managing welfare states with a society of self-interested maximizers of opportunities in an environment marked by a greatly reduced state presence and unfettered competition in all social (economic, cultural, political) markets. It may not have been full Ayn Rand in ideological genesis but the social philosophy behind neoliberalism owes a considerable debt to it.

What emerged instead was societies increasingly marked by survivalist alienation rooted in feral capitalism tied to authoritarian-minded (or simply authoritarian) neo-populist politics that pay lip service to but do not provide for the common good–and which do not adhere to the original neoliberal concept in theory or in practice. Survivalist alienation is (however inadvertently) encouraged and compounded by a number of pre- and post-modern identifications and beliefs, including racism, xenophobia, homophobia and social media enabled conspiracy theories regarding the nature of governance and the proper (“traditional” versus non-traditional) social order. This produces what might be called social atomisation, a pathology whereby individuals retreat from horizontal solidarity networks and organisations (like unions and volunteer service and community agencies) in order to improve their material, political and/or cultural lot at the expense of the collective interest. As two sides of neoliberal society, survivalist alienation and social atomisation go hand-in-hand because one is the product of the other.

That is the reality that right-wingers refuse to acknowledge and which the Left must address if it wants to serve the public good. The social malaise that infects NZ and many other formally cohesive democratic societies is more ideological than anything else. It therefore must be treated as such (as the root cause) rather than as a product of the symptoms that it displays (such as gun violence and other anti-social behaviours tied to pathologies of income inequality such as child poverty and homelessness).

As is now clear to most, neoliberalism is dead in any of the permutations mentioned above. And yet NZ is one of the few remaining democratic countries where it is still given any credence. Whether it be out of wilful blindness or cynical opportunism, business elites and their political marionettes continue to blather about the efficiencies of the market even after the Covid pandemic has cruelly exposed the deficiencies and inequalities of global capitalism constructed on such things as “just in time production” and “debt leveraged financing” (when it comes to business practices) and “race to the bottom” when it comes wages (from a labour market perspective).

I shall end this brief by starting at the beginning by way of an anecdote. As I was trying to explain “trickle down” economic theory to an undergraduate class in political economy, a student shouted from the back seats of the lecture hall “from where I sit, it sure sounds more like the “piss on us” theory.

I could not argue with that view then and I can’t argue with it now. Except today things are much worse because the purine taint is not limited to an economic theory that has run its course, but is pervasive in the fabric of post-neoliberal societies. Time for a deep clean.

PS: For those with the inclination, here is something I wrote two decades ago on roughly the same theme but with a different angle. Unfortunately it is paywalled but the first page is open and will allow readers a sense of where I was going with it.

Media Link: “A View from Afar” on NZ security strategy and the end of neoliberalism in South America.

Posted on June 11, 2021 by Pablo

I have not had much time to blog in recent weeks but continue the weekly series of podcasts with Selwyn Manning. This week we discussed efforts to develop a comprehensive national security strategy for New Zealand that goes beyond Defense White Papers and annual reports from various security agencies, then turned to recent elections in South America as an indicator that neoliberalism is well and truly dead as an economic policy approach and, perhaps more importantly, as a social theory. You can find the episode here.

Between appeasement and confrontation.

Posted on May 14, 2021 by Pablo

The worm has turned when it comes to the relationship between the People’s Republic of China (PRC) and the West. Something has happened to sour the relationship beyond repair, and the strains are not limited to US-PRC, Australian-PRC or UK-PRC bilateral relations. Other countries, notably in the EU and Southeast Asia and including traditional rival India, have replaced two decades of offering warmth and goodwill with increasingly frosty and suspicious attitudes towards the PRC. That seems to be due to a combination of PRC militarism and belligerence in places like the South China Sea, Hong Kong, Taiwan and the Line of Control in the Himalayas separating it from India, but also as a result of Chinese sharp power influence operations in liberal democracies, its coercive trade diplomacy, ongoing Chinese cyber espionage, cyber theft and cyber warfare campaigns launched against a swathe of countries (including New Zealand), its dollar and debt diplomacy in Africa and South America where debt for equity swaps are accompanied by the colonisation by Chinese labor of critical infrastructure sites in countries lacking the resources to undertake large scale projects like port modernisation or power generation, and the adoption of “wolf warrior” diplomacy where insults and bullying have become mainstays of PRC diplomatic discourse, particularly but not limited to the issue of human rights and adherence to international norms.

With regards to the latter, in some cases Chinese behaviour is so egregious, such as stationing hundreds of fishing boats outside the marine reserve surrounding the Galapagos Islands or off the southeastern and southwestern coasts of South America and Southern Africa, often using the cover of night to poach in the Exclusive Economic Zones (when not territorial waters) of various countries, that countries otherwise prone to welcome the PRC as an antidote to traditional US or colonial power dominance have started to review their positions with regards to it.

The faith once placed in incorporating the PRC as a good global citizen into the community of advanced nations by admitting it into international organisations such as the World Trade Organisation and giving it leadership roles in others like the World Health Organisation and various UN agencies has not yielded the results that were hoped for. Instead, the errors of so-called modernisation theorists of the 1950s were repeated: rather than encouraging Chinese democracy by exposing it to “Western” values and helping expand its middle class on the back of increased international trade opportunities and the corresponding rise in material opportunities associated with it–something that was thought would lead to a better appreciation by and reproduction of democratic values by those emerging middle classes who would grow to see democracy as the political equivalent of the “free” economic market–under Xi Jinping the PRC has become more authoritarian, more state capitalist, more territorially expansionist, more normatively untrustworthy and more militarily bellicose. Instead of a global good citizen, it is now increasingly seen in the West as a very large bully on the world stage.

This does not absolve the US and various colonial powers of their histories. But it points to the fact that the thirty year period of relative inter-state peace after the end of the Cold War is coming to its conclusion. What lies ahead is unknown but it is likely to be marked by conflict of one sort or another or a combination thereof. The strategic postures of the US, UK, France and Australia all now explicitly identify the PRC as the primary military “peer competitor” (i.e. the enemy) that they must prepare to fight. Even NZ’s defense posture has shifted from unconventional warfare scenarios against irregular non-state actors to involvement in interstate conflicts (although the focus on peacekeeping operations remains). Reflected in defense procurement programs over the next ten years, the shift in war planning is answered by Chinese redoubling of its efforts to expand its fleet and improve the sophistication and size of its land and air-based forces. It also has renewed its bilateral military ties with Russia and courted the alliance of a variety of strategically important authoritarians regimes such as Iran and Turkey. It seems that it is only a matter of time before either by miscalculation, misperception or misadventure it will be involved in an armed engagement with a Western or Western-backed adversary, at which point the escalatory and expansionist potential of such conflict is limited only by the threat of nuclear war.

This puts small states like NZ between a rock and hard place. The diplomatic pressure is being felt in Wellington and Nanaia Mahuta’s speech to the China and New Zealand Business Council reflected the attempts to massage the stresses now apparent in its relationship with the PRC. The question is whether NZ can continue to employ its “softly-softly” approach in the face of the Western turn against the PRC and the latter’s increasingly acerbic responses to criticism of its actions at home and abroad. There can be little doubt that at this juncture if push comes to shove NZ will side with the West as a matter of values and principle. It has signalled as much and, with its commitment to diversifying its trade relations outside of the bilateral ties with the PRC, is setting the pragmatic grounds for doing so even if the short term costs of any deterioration in the relationship with the PRC proves onerous and wide-spread throughout the economy. But so long as the quarrel between Great Powers is limited to podiums and pens, then NZ can hope to finesse the contradictions in its strategic posture.

The answer on how to do so may lay in thinking of NZ’s position in the face of the US/West-PRC rivalry as a strategic balancing act in which the fixed points are appeasement versus confrontation and the slackline between the two is cooperation. The key is to find an equilibrium point along that line given specific issues and changing circumstances. There is plenty of common ground for NZ to serve as a honest broker and fair interlocutor when it comes to PRC-West relations even as it reaffirms its commitment to Western liberal values. Pragmatism and principle will undoubtably factor into the centre of gravity upon which to balance NZ foreign policy in that regard. The goal is to be nimble when demonstrating a desire to cooperate on selected issues given the competing demands by trade and security partners to appease or confront each other. Sometimes the equilibrium point may be closer to the PRC position, sometimes it will tilt in favour of the Western stance. They key to success lies in refraining from entering into broadly binding agreements or commitments and to adopt an issue-by-issue, case by case approach that serves to insulate any particular bilateral decision from the larger geopolitical struggles surrounding it.

That may turn out to not be feasible if the contending Great states do not accept NZ’s “siloed” approach and will not be a permanent foreign policy solution given the apparent inevitability of a Great Power stand-off in the medium term future. But it provides a means of finding the optimal equilibrium point on the diplomatic slackline that is NZs transitional position vis a vis China and the West until the new multipolar world system is firmly established.

Facing facts.

Posted on April 24, 2021 by Pablo

The critical reaction of some conservative commentators and politicians about Nanaia Mahuta’s “Taniwha and Dragons” speech is focused on the double premise that NZ is “sucking up” to the PRC while it abandons its obligations to its 5 Eyes intelligence partners. Some have suggested that NZ is going to be kicked out of 5 Eyes because of its transgressions, and that the CCP is pulling the strings of the Labour government.

These views are unwarranted and seemingly born of partisan cynicism mixed with Sinophobia, racism and misogyny (because Mahuta is Maori and both Mahuta and PM Ardern are female and therefore singled out for specific types of derision and insult). Beyond the misinterpretations about what was contained in the speech, objections to Mahuta’s invocation of deities and mythological beasts misses the point. Metaphors are intrinsic to Pasifika identity (of which Maori are part) and serve to illustrate basic truths about the human condition, including those involved in international relations. As a wise friend said to me, imagine if a US Secretary of State was an indigenous person (such as Apache, Cherokee, Hopi, Mohican, Navaho, Sioux or Tohono O’odham). It is very possible that s/he would invoke ancestral myths in order to make a point on delicate foreign policy issues.

In any event, this post will clarify a few facts. First, on military and security issues covering the last two decades.

New Zealand has twin bilateral strategic and military agreements with the US, the first signed in 2010 (Wellington Declaration) and the second in 20012 (Washington Declaration). These committed the two countries to partnership in areas of mutual interest, particularly but not exclusively in the South Pacific. New Zealand sent troops to Afghanistan as part of the US-led and UN-mandated occupation after 9/11, a commitment that included NZSAS combat units as well as a Provincial Reconstruction Team (PRT) in Bamiyan Province that mixed humanitarian projects with infantry patrols. More than 3500 NZDF troops were deployed in Afghanistan, at a cost of ten lives and $300 million.

Similarly, NZ sent troops to Iraq after the US invasion, serving in Basra as combat engineers in the early phase of the occupation, then later as infantry trainers for Iraqi security forces at Camp Taji. More than 1000 NZDF personnel were involved in these deployments, to which can be aded the SAS operators who deployed to fight Saddam Hussein’s forces and then ISIS in Iraq and Syria after its emergence. There are a small number of NZDF personnel serving in various liaison roles in the region as well, to which can be added 26 NZDF serving as peacekeepers in on the Sinai Penninsula (there are slightly more than 200 NZDF personnel serving overseas at the moment). In all of these deployments the NZDF worked with and now serves closely with US, UK and Australian military units. The costs of these deployments are estimated to be well over $150 million.

The NZDF exercises regularly with US, Australian and other allied partners, including the US-led RimPac naval exercises and Australian-led bi- and multilateral air/land/sea exercises such as Talisman Saber. It regularly hosts contingents of allied troops for training in NZ and sends NZDF personnel for field as well as command and general staff training in the US, Australia and UK. RNZN frigates are being upgraded in Canada and have contributed to US-led freedom of navigation exercises in the South China Sea (against PRC maritime territory extension projects) and anti-piracy and international sanctions enforcement missions in the Persian Gulf. Among the equipment purchases undertaken during the last two decades, the NZDF has bought Light Armoured Vehicles, the infamous “LAVs” (or Strykers, as they are known in the US), Bushmaster armoured personnel carriers, C-130J “Hercules” transport aircraft, P-8 “Poseidon” anti-submarine warfare and maritime surveillance aircraft, Javelin anti-tank portable missiles and a range of other weapons from 5 Eyes defence contractors. In fact, the majority of the platforms and equipment used by the NZDF are 5 Eyes country in origin, and in return NZ suppliers (controversially) sell MFAT-approved weapons components to Australia, the US, UK , NATO members, regional partners and some unsavoury Western-leaning regimes in the Middle East.

After the estrangement caused by the dissolution of the ANZUS defence alliance as a result of NZ’s non-nuclear decision in the mid-1980s, a rapprochement with the US began in the aftermath of the 9/11 attacks. The 5th Labour government sought to capitalise on the moment and sent troops into Afghanistan and later Iraq using the cover of UN resolutions to deflect political attacks. That led to improved military-to-military relations between the US and NZ, something that has been deepened over the years by successive NZ governments. The intelligence relationship embodied in the Echelon/5 Eyes agreement was slightly curtailed but never ended even when ANZUS died, and gradually was restored as the main security partnership to which NZ was affiliated. Now the NZDF is considered a small but valued military and intelligence partner of the US and other 5 Eyes states, with the main complaints being (mostly from the Australians) that NZ does not spend enough on “defence’ (currently around 1.5 percent of GDP, up from 1.1 percent under the last National government, as opposed to 2.1 percent in Australia, up from 1.9 percent in 2019) or provide enough of its own strategic lift capability. The purchase of the C-130J’s will help on that score, and current plans are to replace the RNZAF 757 multirole aircraft in or around 2028.

The dispute over US warships visiting NZ because of the “neither confirm or deny” US policy regarding nuclear weapons on board in the face on NZ’s non-nuclear stance was put to rest when the Arleigh Burke-class destroyer USS Sampson (DDG-102) participated in the RNZN 75th anniversary celebrations in November 2016 after an agreement between the then National government and US Department of Defense on assurances that it was not carrying or using nukes as weapons or for propulsion. As if to prove the point of bilateral reconciliation, on the way to the celebrations in Auckland DDG-102 diverted to provide humanitarian support to Kaikura earthquake relief efforts after the tremor of November 14th (the week-long anniversary fleet review involving foreign naval vessels began on on November 17th). A Chinese PLAN warship also participated in the anniversary Fleet Review, so the message conveyed by the first official NZ port visit by a US warship in 30 years was made explicitly clear to the PRC.

The fact is this: the relations between NZ and its 5 Eyes partners in the broader field of military security is excellent, stable and ongoing. That will not change anytime soon.

As for intelligence gathering, NZ is a core part of the 5 Eyes signals intelligence collection and analysis network. Over the years it has moved into the field of military signals intelligence gathering as well as technical and electronic intelligence-gathering more broadly defined. More recently, in light of the emergence of non-state terrorism and cyber warfare/espionage threats, the role of 5 Eyes has been upgraded and expanded to counter them. To that end, in the last decade NZ has received multiple visits from high-ranking intelligence officials from its partners that have dovetailed with technological upgrades across the spectrum of technical and electronic signals intelligence gathering. This includes addressing issues that have commercial and diplomatic sensitivities attached to them, such as the NZ decision to not proceed with Huawei involvement in its 5G broadband rollout after high level consultations with its 5 Eyes partners. More recently, NZ has been integrated into latest generation space-based intelligence collection efforts while the focus of the network returns to more traditional inter-state espionage with great power rivals like China and Russia (we shall leave aside for the moment the benefits that the GCSB and NZDF receive from Rocket Lab launches of US military payloads but we can assume that they are significant).

As routine practice, NZSIS and GCSB officers rotate through the headquarters of 5 Eyes sister agencies for training and to serve as liaison agents. Officers from those agencies do the same in NZ, and signals engineers and technicians from 5 Eyes partners are stationed at the collection stations at Waihopa and Tangimoana. GCSB and SIS personnel also serve overseas alongside 5 Eyes employees in conflict zones like Afghanistan and Iraq. While less standardised then the regular rotations between headquarters, these type of deployments are ongoing.

5 Eyes also maintains a concentric ring of intelligence partners that include France, Germany, Japan, Israel, and Singapore. These first-tier partners in turn use their respective capabilities to direct tactical and strategic intelligence towards 5 Eyes, thereby serving as the intelligence version of a “force multiplier” in areas of common interest. One such area is the PRC, which is now a primary focus of Western intelligence agencies in and outside of the Anglophone world. This common threat perception and futures forecasting orientation is shared by the NZ intelligence community and is not going to change anytime soon unless the PRC changes its behaviour in significant ways.

For its part, the PRC has no such complex and sophisticated intelligence networks with which to avail itself. It has intelligence partners in North Korea, Russia, Iran and other small states, but nothing on the order of 5 Eyes. As a result, it is much more reliant on human intelligence collection than its rivals in the 5 Eyes, something that has become a source of concern for the 5 Eyes community and NZ in particular (as the supposed weak link in the network and because of its economic reliance on China, of which more below). While the PRC (and Russia, Israel and Iran, to name some others) are developing their cyber warfare and espionage capabilities, the fact is that the PRC continues to rely most heavily on old-fashioned covert espionage and influence operations as well as relatively low tech signals intercepts for most of its foreign intelligence gathering. If I read intelligence reports correctly, NZ’s counter-espionage and intelligence efforts are focused on this threat.

In a word: NZ is committed to the 5 Eyes and has a largely Western-centric world view when it comes to intelligence matters even when it professes foreign policy independence on a range of issues. That is accepted by its intelligence partners, so transmission (of intelligence) will continue uninterrupted. It is in this light that Mahuta’s comments about NZ’s reluctance to expand 5 Eyes original remit (as an intelligence network) into a diplomatic coalition must be understood. There are other avenues, multilateral and bilateral, public and private, through which diplomatic signaling and posturing can occur.

That brings up the issue of trade. Rather than “sucking up” to China, the foreign minister was doing the reverse–she was calling for increased economic distance from it. That is because New Zealand is now essentially trade dependent on the PRC. Approximately 30 percent of NZ’s trade is with China, with the value and percentage of trade between the two countries more than tripling since the signing of the bilateral Free Trade Agreement in 2008. In some export industries like logging and crayfish fisheries, more than 75 percent of all exports go to the PRC, while in others (dairy) the figure hovers around 40 percent. The top four types of export from NZ to the PRC are dairy, wood and meat products (primary goods), followed by travel services. To that can be added the international education industry (considered part of the export sector), where Chinese students represent 47 percent of total enrollees (and who are a suspected source of human intelligence gathering along with some PRC business visa holders).

In return, the PRC exports industrial machinery, electronics (cellphones and computers), textiles and plastics to NZ. China accounts for one in five dollars spent on NZ exports and the total amount of NZ exports to China more than doubles that of the next largest recipient (Australia) and is more than the total amount in value exported to the next five countries (Australia, US, Japan, UK and Indonesia) combined. Even with the emergence of the Covid pandemic, the trend of increased Chinese share of NZ’s export markets has continued to date and is expected to do so in the foreseeable future.

Although NZ has attempted to diversify its exports to China and elsewhere, it remains dependent on primary good production for the bulk of export revenues. This commodity concentration, especially when some of the demand for export commodities are for all intents and purposes monopolised by the Chinese market, makes the NZ economy particularly vulnerable to a loss of demand, blockages or supply chain bottlenecks involving these products. Although NZ generates surpluses from the balance of trade with the PRC, its reliance on highly elastic primary export commodities that are dependent on foreign income-led demand (say, for proteins and housing for a growing Chinese middle class) makes it a subordinate player in a global commodity chain dominated by value-added production. That exposes it to political-diplomatic as well as economic shocks not always tied to market competition. Given the reliance of the entire economy on primary good exports (which are destined mainly for Asia and within that region, the PRC), the negative flow-on effects of any disruption to the primary good export sector will have seriously damaging consequences for the entire NZ economy.

That is why the Foreign Minister spoke of diversifying NZ’s exports away from any single market. The only difference from previous governments is that the lip service paid to the “eggs in several baskets” trade mantra has now taken on urgency in light of the realities exposed by the pandemic within the larger geopolitical context.

Nothing that the Labour government has done since it assumed office has either increased subservience to China or distanced NZ from its “traditional” partners. In fact, the first Ardern government had an overtly pro-Western (and US) slant when coalition partners Winston Peters and Ron Mark of NZ First were Foreign Affairs and Defence ministers, respectively. Now that Labour governs alone and NZ First are out of parliament, it has reemphasised its Pacific small state multilateralist approach to international affairs, but without altering its specific approach to Great Power (US-PRC) competition.

The situation addressed by Mahuta’s speech is therefore as follows. NZ has not abandoned its security allies just because it refuses to accept the Trumpian premise that the 5 Eyes be used as a diplomatic blunt instrument rather than a discreet intelligence network (especially on the issue of human rights); and it is heavily dependent on China for its economic well-being, so needs to move away from that position of vulnerability by increasingly diversifying its trade partners as well as the nature of exports originating in Aotearoa. The issue is how to maintain present and future foreign policy independence given these factors.

With those facts in mind, the Taniwha and Dragon speech was neither an abandonment of allies or a genuflection to the Chinese. It was a diplomatic re-equilibration phrased in metaphorical and practical terms.

Principled, pragmatic or expedient.

Posted on April 11, 2021 by Pablo

For several decades under Labour and National-led governments New Zealand has claimed to have an independent (and sometimes autonomous) foreign policy. This foreign policy independence is said to be gained by having a “principled but pragmatic” approach to international relations: principled when possible, pragmatic when necessary. More recently NZ foreign policy has shifted from traditional diplomacy in which trade was a component part to a trade focused orientation to which all other aspects of diplomatic endeavour are subordinated. Seen as a marriage of belief in Ricardian notions of comparative (and now competitive) advantage with a pragmatic understanding that NZ is dependent on trade for its survival and prosperity, the “trade for trade’s sake” approach continues to reign supreme to this day.

It turns out that foreign policy pragmatism or principle may no longer obtain in certain instances, especially when trade is involved. Take the issue of NZ military-related exports. It has been revealed that NZ firms and (possibly) public agencies export everything from airplane parts to small arms, explosive ordinance, training simulators, muzzle flash suppressors, missile guidance systems and artillery range finders to 41 countries and territories. (The term “possibly” is used here because all of the NZ exporting entities are redacted in the export list made public by MFAT. While some private exporters can be broadly identified by the nature of the items sold, other special license categories make ambiguous the provenance of the equipment in question).

Most of these exports go to NATO members and other liberal democracies, while other recipients are regional partners like Singapore, Malaysia , Australia, Tonga and Indonesia. The bulk of what is exported is what might be considered to be on the soft rather than sharp end of the so-called “kill chain:” items that do not impart lethal force directly but which contribute to the accuracy and lethality of weapons systems that do.

None of this would be controversial if it were not for the fact that some of the recipient countries have checkered human rights records (like Indonesia) while others have outright dismal histories of authoritarianism and military criminality. That includes Saudi Arabia, the United Arab Emirates, Turkey, and the PRC. Saudi Arabia and the UAE lead a coalition of Sunni Arab states that have been credibly accused of committing war crimes and genocide against Houthi populations in Yemen. Saudi Arabia does not recognise the Universal Declaration of Human Rights (the UAE was not party to the UDHR vote) and along with the UAE does not recognise a number of human rights conventions involving women’s rights, labour rights, political and social rights. Malaysia, Singapore and Indonesia also are not party to the UDHR and while not as dismal as the Sunni oligarchies, have subpar records when it comes to adhering to international human rights norms and agreements. NZ exports military training material to the PRC, whose human rights history is known for all the wrong reasons. There are other dubious recipients but the issue is clear. In spite of claiming to be a champion and defender of human rights as a matter of principle, NZ exports military equipment to egregious violators of human rights both at home and abroad.

Some will argue that NATO members and other democracies like Australia also violate the laws of war and human rights in their own territories. There is merit to those arguments. But the difference between Australia, Canada, the UK and US and, say, Saudi Arabia and the UAE when it comes to military conduct in conflict theatres is that war crimes committed by the forces deployed by liberal democracies are exceptions to the rule and are punished (even if initially covered up) rather than systematically encouraged and later denied. Domestically, while systemic racism clearly exists throughout the liberal democratic world, it is no longer genocidal in nature even if in previous eras there was a significant element of that.

Conversely, places like the PRC systemically abuse human rights at home, deny individual and collective rights as a matter of course and treat ethnic and religious minorities as if they were foreign enemies. Turkey has grown increasingly authoritarian under President Erdogan, with its treatment of its Kurdish minority a particularly black mark on its record. The UAE and Saudi Arabia are known for their mistreatment of foreign workers, Shiia Muslims in particular but not exclusively. Jordan and Bahrain, other recipients of NZ strategic license exports, are Western allies but not known for their adherence to human rights conventions.

Even Israel, a supposed liberal democracy and a Western ally that is another recipient of NZ military-related exports, systematically violates the rights of Palestinians inside and outside of its recognised territorial limits, including targeting of civilian populations during times of conflict (in Gaza) and forcibly annexing Palestinian territory (in the West Bank) as part of an expansionist doctrine that seeks to eventually expel Palestinians from what they and Israelis consider to be their homelands. Within Israel, in spite of recent electoral gains by so-called “Arab” (Joint List) parties, Palestinians are more often seen and treated as a subversive fifth column rather than full citizens (Arabs make up around 20 percent of the Israeli population).

Most liberal democracies simply do not act this way. The West may be guilty of many things, particularly during the colonial era and Cold War, but even if flawed most liberal democracies at a minimum pay lip service to the rule of law based on civil liberties and human rights at home and abroad. A fair number of the recipients of NZ strategic exports in recent years make no such pretence.

None of this would matter if NZ had a realist approach to foreign policy that was completely pragmatic in orientation based on national self-interest. Matters of principle would not factor into foreign policy-making and trade relations. But that is not the case. Instead, NZ is a very vocal defender of small state and minority rights in the international community as an extension of its championing of international human rights, international norms and the rule of law. That makes trading with authoritarians somewhat hypocritical and exporting military equipment to murderous regimes downright reprehensible. Especially when done for a buck–that is, for the profit gain of NZ private firms.

To be clear, almost any hunting-related equipment can be converted for dual use military purposes. But there is much more to the NZ export list (released by MFAT to a couple of investigative reporters under OIA requests) than converted hunting equipment. It also is interesting that most of the redactions in the sanitised export list are justified on commercial sensitivity rather than national security grounds. If items were merely dual use conversions from hunting equipment, one would think that there are little commercial sensitivities involved given the global scope of the hunting industry. Nor are end users always identified on the list, which makes MFAT assurances that it knows what is ultimately being done with the exports somewhat disingenuous. Either it knows and does not want to say or it does not know even though it allowed the export license request for those items to be approved.

Consider this example. MFAT approved the sale of a general utility aircraft from a Hamilton-based aerospace company (now bankrupt) to a PRC-based aviation firm in spite of numerous concerns about the end use of that aircraft. A year or so after the sale went through the plane was photographed at an airshow wearing North Korean military livery, sparking an investigation into how international sanctions on North Korea were circumvented in the process (the sanctions violation was considered a first order offence given the military use of the aircraft). In the legal process that followed, which resulted in the conviction and fining of the Hamilton firm for violating the international sanctions regime and NZ strategic export requirements, MFAT admitted that it had no clue as to who the end user might be beyond the PRC firm that, incidentally, owned a half interest in the Hamilton company and controlled its board of directors. In other words, it took the exporter’s word as an article of faith and as a result contributed to an egregious violation of UN sanctions that NZ voted to support. Diplomatically speaking, that tarnished NZ’s reputation because neither principle or pragmatism, much less due diligence, was applied to the sale.

Even training equipment has to be considered in proper context. Artillery range finders used for training purposes (which MFAT claims was the case with Saudi Arabia) are being used to train artillery for war, not fun and games. Saudi artillery is regularly used in the Yemen civil war, so it a stretch to say that exporting equipment that trains troops to be more accurate with their artillery fire is not related to the Yemeni conflict. Likewise, even if small in terms of numbers and monetary value, exporting sidearms and squad weapons to human rights violators ignores the fact that they could be used against domestic populations and foreign civilians as well as foreign adversaries.

Again, none of this would be of concern if NZ did not proclaim itself to have an independent foreign policy based on principle as well as pragmatism. If it was a country powered by a military-industrial complex such as the US, it would all be in a day’s business to export military equipment to assorted nefarious regimes. But not so NZ, which has staked its international reputation on being an agent of honest virtue–a good global citizen, as it often says.

The truth is different. If NZ was truly independent it could resist the pressure to act as a cut-out or front for its allies’ military-related services (say, by not allowing the national airline to serve as a sub-contractor for the reconditioning of Saudi Navy gas turbines usually serviced by US Navy contractors). It could pick and choose about when to be principled and when to be pragmatic when it comes to military-related exports (say, by exporting to NATO or liberal democratic partners only). After all, although clearly lacking any basis in principle, it is really pragmatic for NZ to sell the Saudis and Emiratis military equipment when they are involved in industrial-strength war crimes in pursuit of a genocidal campaign in a neighbouring country? Will the diplomatic benefits of courting such states outweigh the costs of making its rank hypocrisy visible to the rest of the international community?

In a past life I was involved in the decision-making chain involved in US military sales and training, etc. to Latin American countries. The primary criteria for vetting military equipment and training requests was twofold: the nature of the equipment or training requested and the character of the political regime (government) making the request. If the equipment or training was too sensitive or excessively lethal and/or the regime doing the requesting was of dubious disposition, then the request was denied. If the decision was anything other than an outright “no” on the primary grounds, then other criteria was applied: state of trade and diplomatic relations with the requesting state, the geopolitical balance in the (sub) region in which that state was located, the possibility of a domino proliferation impact, the presence of other foreign weapons suppliers as substitutes for US exports, etc. Once all of this was factored in with input from the various elements of the inter-agency consultation process (involving the State Department, CIA, NSC, Treasury, Commerce and other federal agencies with a potential stake in the matter), sometimes after sounding out other countries in the region about their reactions, a recommendation was sent to the White House for approval/denial. If the White House approved the sale/mission, then the recommendation was sent to Congress for approval, something involving several committee votes and then a general vote in both Houses. The process was slow and circuitous but in the end it was comprehensive and transparent.

Although it is possible that there are similarly robust weapons exportation strategic license vetting protocols in place in NZ, that does not seem to be the case. MFAT appears to make the call, perhaps after consultation with DPMC and/or Cabinet. Parliament is not involved in the decision-making process. No public notification is made. In other words, the entire NZ strategic export licensing regime is opaque at best. You can read the official criteria here.

MFAT says that the vetting process is rigorous and that it knows exactly where NZ sourced military equipment winds up. Yet it has only denied one out of 254 special export license requests in the last three years (to the Saudis for mortar stands and fire control (observation tower) equipment, supposedly in response to the Khashoggi murder). If foreign policy principle were involved, one might expect that the approval rate would be somewhat lower for authoritarian-ruled countries. But if pragmatism and trade are the criteria in play, does it make sense to supply murderous regimes with any kill chain components? Or is the fact that the entire decision-making process for granting special export licenses is so opaque that MFAT and the suppliers thought that they would never be found out if it were not for the good work of a couple of intrepid reporters?

More than principle and pragmatism as guideposts for foreign policy, it seems that trade-promoting expediency is the new normal in NZ foreign affairs, something that continues under the Ardern government. But with expediency comes a loss of independence and autonomy as well, because among other reasons, states with their own agendas can use NZ’s trade zealotry as third party cover for transactions they themselves may be reluctant to admit publicly (even the US has suspended weapons sales to Saudi Arabia because of its behaviour in Yemen). Or authoritarians can hold non-military trade relations with NZ hostage to the provision of military equipment. Either way, that makes NZ a foreign policy tool of others rather than an honest broker in international relations and global good citizen.

Just like the fact that NZ’s “clean and green” image is more myth than reality, the foreign policy reality is that at least when it comes to trading in the paraphernalia of death, NZ is unprincipled, hardly pragmatic and dominated by logics of trade expediency rather than a commitment to the upholding international human rights. While it would be too much to expect a National-led government to put principle before trade expediency, that this continues to occur under a Labour-led government (in which the Prime Minister claims that she was unaware of the strategic export recipient list until asked about it by the media) is all the more outrageous given its constant repetition of the “independent, principled but pragmatic” foreign policy mantra.

If NZ is to regain a semblance of integrity in diplomatic circles, its foreign policy decision-making matrix must change away from trade obsessed expediency and towards the principled but pragmatic orientation that grants it the independence that it claims to have. Conversely, if it wants to put trade before everything else, then it might as well fess up and open up the country’s foreign policy to the highest bidder.

US capitalists as political saviours.

Posted on March 2, 2021 by Pablo

Having watched and read about the Conference of the Paranoid, Angry and just plain Crazy (CPAC), including the Orange Merkin’s return to the political centre stage, I am more convinced then ever that if US conservatism, and indeed the US itself, is to find its way back to some semblance of stability, it is US capitalists who will have to lead the charge. This may seem odd for a left-leaning blog to say, but the logic underlying the rescue lies in some structural imperatives and some non-structural pathologies.

As has been written before in these pages, the State and Society in the US and places like NZ are capitalist because they depend on a profit-driven system of capital accumulation and distribution for the welfare of capitalists and workers alike. Capitalists invest and pay wages out of profits, so both overall economic and specific wage growth depend on the continuation of the profit-investment cycle. Capitalists borrow from other capitalists in order to grow their businesses, which in turn help expand the web of opportunity (measured in employment and/or higher wages) for wage-earners down the productive chain. In other words, the material welfare of everyone depends on the investment decisions of capitalists.

This is the structural imperative: the State and Society are capitalist because of their material dependence on a system of private accumulation and economic decision-making. Even state capitalist systems abide by the immutable laws of the profit-investment cycle, but in the US (and NZ) the vast majority of decisions about accumulation and distribution ultimately rest with capitalists. So long as capitalists invest and workers produce so that profitability is sustained, current welfare and future growth is safeguarded.

In order to maintain this cycle and encourage capitalists to re-invest in the domestic economy, the State uses tax and social policy to sustain economic growth and otherwise frame the investment “climate” in ways conducive to investor confidence. The ways in which it can do so and the effectiveness of what it does is influenced, when not determined, by the political and social climate of the current moment and the outlook for the future. That is because above all, capitalists want two things in tandem: stability and certainty over time. Socio-economic and political stability lends certainty to the investment environment, which encourages regular rates of investment and return on which to make future decisions on investment and wage-setting. The more this becomes a self-perpetuating cycle, the more a capitalist nation-state grows and prospers, thereby reaffirming the utility of the economic model under specific political conditions.

That is the notion that lies at the heart of classic liberalism: the combination of market-driven economies and democratic political institutions is considered to be the most preferable (or least bad) political-economic model because it places (theoretically at least) a premium on private choice and individual freedom. Within parameters broadly set by a State led and managed by a political bureaucracy, capitalists chose where to invest and workers chose where to work given where investment flows. Or at least that is the general idea.

Here is where the superstructural problem starts for the US. Under Trump, the Republican Party has increasingly become untethered from its pro-business bias and devolved into a national-populist cult of personality. The events of January 6 and sociopathic displays at CPAC–displays not isolated to Trump himself–clearly demonstrate that conservatism in the US is no longer based on pro-market ideologies and an understanding of the structural dependence of the State and Society on Capital. Instead, it is now the fevered product of a hodgepodge of conspiracy theories, religious opportunism, racism, bigotry, prejudice and xenophobia, with many of these inimical to maintaining business growth. Trump is the poster-boy of this collective derangement but the GOP is awash in it far beyond him.

That is bad for business. The threat of irrational political leadership and the distinct and ongoing possibility of civil unrest, including irregular collective violence, undermines the stability-certainty cycle because there is a mutual or co-dependence between the political superstructure and the economic base. Political and social instability can and often does lead to economic instability, something that is bad for all concerned.

Under such conditions overall demand drops, many businesses slow production, workers are laid off and investors hedge, sell and take profits rather than make long-term investment plays. Shorter investment horizons add to market uncertainties, which in the US is compounded by the practices of “shorting” stocks (whereby anticipating further value losses the investor borrows stock and sells it at current market value in anticipation of buying it back a future lower price before the loan expiration date) and stock buy-backs (where companies use profits to buy stocks in the company in order to reduce the number of stocks freely available and thereby squeeze the stock price upwards).

Both of these are forms of speculation rather than productive investment and are a hallmark of the US financial markets. They have also attracted the attention of so-called mom and pop “retail” or “day” traders and semi-organised small investor groups whose goals are individual self-enrichment rather than contributing to industry profitability, job creation, technological innovation or overall economic growth. These speculative practices by small and large investors have a negative impact on investment, employment and wage stability, further undermining popular faith in the economic system and the political edifice that serves and protects it.

The combination of anarchic (and self-serving) financial market behaviour and increasingly anti-business fanaticism in Republican/conservative ranks (think of the constant attacks on the techno-oligarchy for de-platforming extremist speech on social media) has attracted the negative attention of credit rating agencies, where debates about lowering the US government credit rating from AAA (outstanding) to something else, previously unthinkable for the global reserve currency issuer, are now common practice. When combined with the possibility of labour conflicts and industrial slowdowns tied to civil unrest, the rise of deranged demagogic politics within the US political Right is a threat to, literally, business as usual.

It is said that, according to the invisible hand of the market, economic actors are self-interested maximisers of opportunity and that the sum result of their self-interested actions clears the market at the collective level. That may or may not be true. What is true is that the “market” involves political as well as purely economic factors and agents, and when political actors interfere with the the profitability of self-interested maximisers of economic opportunity, then measures must be taken to mitigate or overcome those political obstacles.

For US capitalists the problem is not one of class struggle but about class survival. It is not about class war but about self-preservation. The threat to their status comes not from the working classes radicalised by anti-capitalist ideologies but by self-professed capitalist supporters. Not all supporters of capitalism are capitalists themselves or understand the relationship between capital accumulation and distribution at a macro level, and many do not add value and wealth to society but in fact subtract value and wealth from it (be it in their rent-seeking microeconomic behaviours or other forms of myopic malfeasance). Moreover, US capitalist classes are variegated and often in conflict, with ascendent and descendent class fractions competing for political as well as economic dominance (think high tech versus industrial manufacturing elites).

Trump and his supporters represent a large but descendent segment of the capitalist class constellation, but they are not the only or the dominant faction and are a clear threat to the interests of other (ascendent) capitalist class factions (again, think of the techno-oligarchy). Not all corporate elites in the US favour Trump’s behind-the-wall, low skill, low education, industrial-era blue collar form of economic nationalism, and many see it as a simple wave to the past in the face of (and impediment to) an automated and transnationalised productive future. The political fight is consequently as much more or within the capitalist classes as it is between them and the working/subaltern classes and, however couched in the language of cultural conflict and competing value systems, that fight is microcosmically distilled in the struggles over the direction of the Republican Party.

Let me be clear. This does not mean that anti-Trump capitalist elites are good people or interested in the overall welfare of the nation. People like Jeff Bezos and Elon Musk are as much innovative exploiters of the many as they are creators of wealth and opportunity for some. The entire financial industry is populated by selfish people and greedy logics and is in desperate need of major reform (since the post 2008 crash reforms were cosmetic at best). But the necessity of the situation dictates that these type of people be seen as tactical allies in the fight against neo-fascism at a time when progressive forces do not have the strength to help stem the deterioration of the American Right. In other words, desperate times require desperate measures, and the appeal to anti-Trump capitalists is one such thing. Nothing more.

In some countries, the military serves as the saviour of economic elites under stress. In the US that possibility used to be dismissed as laughable but in recent years became a topic of discussion. Although it continues to be seen as a remote option, the ongoing viability of national-populist sentiment in the Republican Party and emergence of an insurrectionist movement within broader political Right circles keep alive the issue of external intervention in the discussion about how to rescue that side of the political system from itself.

This is why US capitalists have to ride to the rescue of the Republican Party. If they do not do so then others may have to, and it will not be revolutionary workers or the peasantry who will be the ones to step up. Inviting military intervention could be catastrophic to the Nation, assuming for a second that the US military would even consider such a move. Social movements will not have the clout to impress Republicans into reform and change away from what they have become. It is therefore up to capitalists to undertake the task.

The Republican rescue involves tough love. In order to save it, the GOP must be broken from the grasp of the national-populists, cultists, MAGA morons and conspiracy theorists. The best way to do so is with the threat or use of a specific type of capital strike. The corporate elite need to threaten the Republican Party with a complete withdrawal of political funding if Trump and his acolytes are not purged. If that threat is not heeded then the funding should be withdrawn, preferably before the next election cycle begins.

The insurance policy to what otherwise would seem to be a risky strategy is the Democratic Party and Biden administration. For all the talk of socialists and radical Leftists, capitalists know that their bread is buttered by the structural dependence of the State and Society on Capital, and Democrats clearly understand this fact. US capitalists may have a more restrained partner in Democrats and may need to concede more on issues of accumulation versus distribution when they are in power, but at least the Democrats are not led by an irresponsible and utterly self-serving myopic cabal that no longer seems to understand the bread/butter relationship.

One gets the feeling that some of this may already be going on. But to be effective the capitalist political strike against the Republican MAGA wing must be public and comprehensive in scope. Winks, nods and quiet backhanders will not suffice. The move has to be out in the open, at least among the economic and political elites.

If that does not happen or does not work to kick the MAGA morons to the curb, then the possibility of a real capital strike must be considered. It can come in the form of a Wall Street sell-off/downturn manipulated by interests most closely associated with the Republican Party or industry slow-downs in regions where Republican support is strongest (say, places where the fossil fuel industry is dominant). Consumer and advertiser boycotts of and slowdowns in supply chain servicing of privately held companies affiliated with Trump are additional forms of capitalist strike.

Needless to say, however sector-specific any economic downturn will be seen over the short-term as a rebuke of the Biden administration, but if quiet assurances are made as to the real intent of the ploy, then both the administration and the productive sectors involved will survive the moment. After all, the goal is to send a message to the Republican political establishment that business will no longer tolerate the national-populist threat to making money, not to kill off profit-making entirely.

In a weird way, this ploy should come naturally to Corporate America. They sell on the future of a Republican Party dominated by Trump and other national-populists and they buy (short term) on Democrats buttering their bread while they bet long term on non-MAGA Republicans restoring the GOP to its status as preferred political interlocutor. There is risk in this strategy but for the private sector, the US as a society, the political system as a whole and the Republican Party as a political institution, the rewards of embracing it will be well worth the challenge.

After all, capitalism is all about risk-taking under conditions of limited information involving structural and super-structural constraints, so the field is open for private opportunity-taking in the national interest.

Church, State and the weight of capitalism.

Posted on May 19, 2020 by Pablo

Arguments by religious folk that they are being discriminated against under the Level 2 pandemic restrictions in NZ, which limit church services to ten people or less when schools, restaurants, malls and other service outlets are allowed to host many more people under voluntary self-distancing protocols, got me to think about whether people understand the rationale behind the government approach as well as the role of religion in society and particularly in a liberal democracy such as NZ. I wrote a tweet outlining my general view and it elicited some contrary responses from people who are either religious and/or dislike the current government. I will not dwell on their responses but I will below string together in fuller scope my side of the discussion.

I began with the first tweet:

“Liberal democracies are secular regimes where church and state are separate and the state treats all religions neutrally and equally while having superordinate authority over material (as opposed to spiritual) issues, including public health. Churches need to respect that.” That began a back and forth with the contrary minded readers, which elicited the following responses from me:

“Stage (sic) 2 is based on opening up commerce, with some social restrictions still in place. Education is critical for commerce in several ways. Services are critical to economic well-being. Religion is a social construct based on belief that is not economically essential. Big diff.

In medicine, the environment, engineering, economics, threat assessment, even political forecasting, among so many other material things, science must and will trump belief. With CV-19 science must prevail over belief. There is nothing “illiberal” about the govt response.”

The last sentence came in response to a commentator’s remark that NZ is an illiberal democracy because of the restriction on religious gatherings, among other things. The author went on to speak of a difference in values between the government and people like him when it comes to family and society. I replied:

“A secular democratic regime can, should and most often does value families and society, and its social policies demonstrate this. The level 2 re-opening is business driven because NZ is a capitalist country, and everyone’s welfare depends on capitalist survival, not churches.

So long as the economic imperatives of a capitalist society remain a paramount concern of govt, then commercial concerns will supersede (much variegated) spiritual ones. Hence the pro-business incrementalism of the govt approach. They respond to structural necessity, not values.”

And that is the bottom line. NZ is a capitalist society. It is a capitalist society because the means of production are mostly in private hands and subject to market-oriented logics, because the relations in and of production reproduce the material hierarchy on which the economic system rests, because it is inserted in a global capitalist system of production, consumption and exchange, and because the social division of labour that emerges out of it reinforces the hierarchical relations between the ultimate producers of wealth and the owners of productive assets in NZ and elsewhere. Most of all, NZ is a capitalist society because the welfare of everyone directly or indirectly depends on the welfare and investment of capitalists–if they do not prosper, no one does.

Regular readers know the I am not a fan of laissez fare capitalism or the various market-driven experiments of the last forty years. Nor am I entirely pleased with how the current government defers to capitalist logics rather than fully embrace the entire policy spectrum involved in well-being budgeting. I am just saying: when it comes to the economic motor of NZ society, it is what it is.

NZ has just faced and continues to be threatened by a deadly global pandemic. The initial government response was a public health campaign marshalled on scientific grounds that was mitigated by an unprecedented economic relief package designed to help people weather the financial storm caused by the disruption of economic activity. Capitalists and workers were included in the relief measures. This response was vetted by a pandemic emergency response committee chaired by the Leader of the Opposition and communicated in daily press conferences by the Prime Minister and Director General of Health, along with other officials. That is far from being the makings of a totalitarian police state that a fair few believe it to be.

Once the lockdown/quarantine phase of the restrictions was lifted (after six weeks), the government announced that its level 3 and 2 approaches were designed to get businesses back to work. This employed a type of pragmatic incrementalism where restrictions on commercial activity were slowly lifted in piecemeal, sectorial and graduated fashion over what is now going on 3 weeks. The government explicitly stated that this was not a social opening and that pre-pandemic social activities that do not have a commercial orientation were very consciously excluded from the stage 3 and 2 re-opening measures.

That is why churches are not allowed to resume pre-pandemic activities, indulging religious services, in the measure that they did before March 23. Note that they can still host church services and other activities but that they must adhere to the “fewer than 10” rule when doing so. No one has restricted their freedom of worship. Only group size when worshipping has been limited, and that is because churches are not considered to be businesses.

If churches want to claim that they are a type of commercial enterprise, then they have reason to feel discriminated against and by all means should air their grievances along those lines. But that might open questions about their tax-free status, real estate holdings, tithing practices and other non-spiritual aspects of their mission. So it is unlikely that we will hear this argument aired in public or as a defence of a church’s right to host large gatherings for religious purposes.

In any case, the “blame” for not including churches in the Level 3 and 2 re-openings is not the fault of government values when it comes to family and society. If anything, blame comes simply from the fact that NZ is a capitalist nation and the bottom line is, well, the bottom line. Spirituality is fine but it does not pay the bills, unless of course it is of the “prosperity doctrine” persuasion where the Lord commands that we should enrich ourselves before all others.

Speaking of which: why the heck was that charlatan fraudster Brian Tamaki and his Destiny Church minions allowed to defy the level 2 restrictions without punitive sanction? Were the police worried about a confrontation with a large crowd? Even if that was the case, if the letter of the public health order cannot be enforced even with enabling legislation conferring extraordinary enforcement powers on the police, what is the point of having them? Or are exceptions to the rule made for bully-boy bigoted loudmouth xenophobic lumpenproletarians posing as preachers?

We might call that a type of reverse discrimination.

Kiwipolitico

Category Archives: Economy