Category Archives: UK

New Zealand goes it alone.

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The New Zealand Labour government’s refusal to join international collective action against Russia over the nerve agent attack in the UK on former spy Sergei Skripal is perplexing. The 27-nation solidarity coalition expelling Russian diplomats and intelligence officers from their soil includes all of New Zealand’s major security partners as well as important trade counterparts. New Zealand is a member of the 5 Eyes signals intelligence collection and sharing network including Australia, Canada, the UK and the US, so it has better knowledge than most as to what evidence the UK has to indicate that Vladimir Putin’s regime ordered the hit on Skripal. New Zealand is an extra-regional NATO and EU associate, and like the majority of the members of the coalition, it is a democracy. New Zealand fashions itself as a good international citizen and honest broker in international affairs, so it seems odd that it would not join its closest diplomatic interlocutors in what is largely a symbolic gesture of repudiation of Russian misbehavior abroad.

The decision was made all the more quixotic by Prime Minister Jacinda Ardern’s claim that there are “no undeclared Russian intelligence operatives” in New Zealand and hence there was no need to expel anyone. She claimed to have assurances from the Ministry of Foreign Affairs and Trade (MFAT) that was the case, even though MFAT has no counter-intelligence function nor the ability to ascertain who is and who is not a Russian intelligence officer, declared or undeclared (that is the job of the Security Intelligence Service (SIS)). She later changed her story to saying that her advice did in fact come from the SIS, but without acknowledging her original misstatement (which happened during a RNZ interview so is recorded for posterity). Her repeated comments that if there were such spies in New Zealand they would be expelled produced derisive headlines around the globe but more importantly, raised questions about her competence when handling security matters.

Discussion in New Zealand about the issue has been muddled by the PM’s remarks. The minor aspect of the story is about whether there are Russian intelligence operatives in NZ and whether they should be expelled. The answers to that are “yes” and “possibly.” “Possibly” depends on the answer to the major aspect of the story: the reasons why NZ decided not to join the so-called “expulsion coalition.” I shall focus on the latter but suffice it to say that all of the 150 Russian personnel expelled by the coalition hold diplomatic passports so by definition are not working undercover as spies without diplomatic immunity. Nor were all of those expelled intelligence officers working under official cover (i.e. with diplomatic immunity).

The detour into what constitutes an “undeclared intelligence agent” was unnecessary and unhelpful in clarifying the reasons behind NZ’s decision to reject the UK request to join it in repudiating the Russian assassination attempt. That reasoning continues to remain unclear at present. Claiming that the decision to not adhere to the collective expulsion action is because there was no one who met the definition of “undeclared intelligence agents” operating in New Zealand is a diversion from the underlying rationale because it puts the focus on the instrumentalities of response rather than the reasons for it.

So why has New Zealand chosen to isolate, or perhaps better said, alienate itself from its traditional allies and major security partners? To be sure, members of the coalition have their own histories of foreign skullduggery and intrigue, to include extrajudicial killings abroad. Moreover, diplomacy is often no more than hypocrisy masquerading as self-righteousness standing in defense of principle. Perhaps the Labour government wants to give the lie to the posturing of its most important allies.

Even so, pragmatic assessments usually inform foreign policy decisions, particularly those involving choosing sides in international disputes. That is particularly true for small states when confronted with the demands of quarreling powers to take a position in favour of one side or the other. This “Melian Dilemma” is an unavoidable part of being small in a world dominated by competing great powers, so Lilliputians such as New Zealand usually think long and hard before taking an unpopular stand—particularly amongst its friends.

New Zealand’s decision not to participate in the solidarity coalition was made in the face of a direct request from the May government and in spite of the fact that the collective action is largely symbolic. Although Russian intelligence operations will be adversely affected in places like the UK, US and Germany, many of those being expelled are “normal” diplomats who can be recalled at some future date. So the downside to joining the coalition would seem relatively small even with Russian threats of retaliation, and the upside in terms of being seen to be a good diplomatic partner that supports international norms could well outweigh whatever the Russians can respond with.

Perhaps there lies the explanation. New Zealand’s foreign policy in recent years has been trade obsessed and speculation has it that members of the foreign policy establishment see the possibility of advancing a bilateral free trade agreement (FTA) with Russia in the vacuum left by the trade sanctions levied on it in the wake of the Ukrainian invasion and annexation of Crimea. New Zealand and Russia opened talks on trade before the sanctions were imposed, then suspended them afterwards. Official advice from the foreign ministry is that violating the sanctions regime to try to exploit a possible window of opportunity vis a vis Russia is counterproductive at best.

But talk in Wellington is that some in the Labour-led government are keen to resume negotiations, so taking a contrary stance on response to the nerve agent assassination attempt is a means of currying favour with Putin at a time when other competitors are not. Given that Foreign Minister Winston Peters has questioned claims that Russia was involved in the shoot-down of the Malaysian airliner over the Ukraine, or that it interfered in US and European elections, and has refused to name Russia as the perpetrator of the attempted Skripal hit, what once seemed to be an unhinged rationale for resuming bilateral trade negotiations is now being given credence.

It is also possible that Labour is attempting to stake out its “independent and autonomous” foreign policy credentials after nine years of the previous government’s rapprochement with the US and the other Five Eyes partners. Given the animosity felt towards Donald Trump (and to a lesser extent Teresa May) amongst Labour supporters as well as those of its coalition partners (New Zealand First and the Green Party), this is a way of playing David versus Goliath(s) for domestic audiences.

New Zealand could also be signalling the international community. After all, over 140 nations did not sign up to the collective action, including major trading partners in Asia and the Middle East. No Pacific Island nation (other than those represented by France, the UK and US) signed on to the deal. So in terms of demonstrating its sovereign resolve to remain out of great power conflicts when and where possible, this Labour government may be channeling the spirit of independence championed by David Lange during the 1985 nuclear showdown.

And yet, pragmatic assessment of the situation would advise the Labour-led government to address the short and long term costs and benefits of alienating its most important foreign partners by refusing to join in the symbolic repudiation of Russia. By any objective measure, to include the possibility of securing bilateral trade with Putin’s regime, the costs of doing so will clearly outweigh the benefits even if it does not interfere with the daily business of intelligence sharing and military cooperation with the Five Eyes and other security partners.

On the other hand, virtue signalling its independence may garner New Zealand some favor with those outside of the “exclusion coalition” as well as domestic audiences. The play is both short and long-term in nature, with the question being will a short term move of this sort translate into longer term benefits or losses.

In the diplomatic world the shadow of the future hangs heavily over present decision-making. Sequels are uncertain and memories are elephantine in nature. The consequences of being shortsightedly contrarian are determined not by the contrarian but by those refused support on a matter of international consequence and foreign policy alignment. On the other hand, standing up to great power partners may risk the wrath of those slighted but win broader appeal among those in the global community who are averse to the machinations of the mighty.

With that in mind the question remains: what exactly were the reasons for this move and what does the New Zealand Labour government expect to gain from its contrarian (even if principled)  stance?

A shorter version of this post appears in The Guardian on line, March 28, 2018.

Still think it is all about postmodern identity?

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Long term readers may recall something I wrote a few years ago about the issue of Left praxis and the need for a class line above all other strategic perspectives. That post was done in part because of the prevalence of identity politics and other post-modern forms of association within the NZ Left (such as certain “polyamorous” factions present in local progressive circles). This focus on non-class based forms of identification has been eloquently defended at some length by my colleague Lew here at KP, so there is merit in it, at least in some instances.

However, I believe that a major contributing factor to the decline of the Left as an ideological force and political alternative to currently dominant market-supportive ideologies and parties is the turn away from a class line, be it by the 3rd Way Labourites that NZ Labour emulates or the NZ Green Party with its election campaign emphasis on youthful (primarily female Pakeha) candidates over policy substance (which has completed the turn away from “watermelon” politics where class was at the core of its environmental philosophy and grassroots demographic and towards a business-friendly largely urban metrosexual orientation). The fact that many on the Left welcomed the victory of Emmanuel Macron, an investment banker, over Marine Le Pen, a neo-fascist, in France and failed to understand Donald Trump’s populist appeal to white American working class and lumpenproletarians (a sin I was guilty of) demonstrates the intellectual and practical vacuum at the core of what passes for modern progressive politics in some parts of the world, Aetoroa in particular.

It puzzles me that even in the face of Bernie Sanders’ remarkable primary campaign in the 2016 US presidential election and UK Labour’s rise under Jeremy Corbyn’s leadership in the UK snap elections of a fortnight ago, that many in the US, UK and NZ Left still cling to the (false consciousness) notion that centrist policies and identity politics are the way to play the game. The truth is that centrist politics have bottomed out under the polarising conditions produced by Alt-Right provocations and disinformation and the futility of the Left trying to successfully play a “soft” version of the market-oriented election game. The corporate and media Right have been quicker to realise this and seized the opportunity to deepen neoliberal era policies of economic deregulation and public sector cost-cutting by adding to it the politics of cultural conflict, immigration control and other methods by which the underlying bases of class conflict are downplayed in order to harvest the political fruits of cross-class uncertainty and fear.

The effect of three decades of market-driven ideological socialisation and post 9/11 politics of fear has been to prompt vulnerable sectors of liberal democratic societies to revert to primal and centrifugal forms of identification–race, religion, ethnicity, culture, nationality–all of which divert attention from the commonality of wage labour class subservience and its increased precariousness under the rule of a predatory type of post-industrial capitalism. Clearly non-class forms of identification need to be factored into any  discussion of praxis in a given socio-economic and political context, but adding non-class identification into the mix as the main focus of progressive struggles only serves to further dilute the solidarity bonds created by the one commonality workers have in the social division of labour of contemporary advanced capitalism.

And yet, in the face of this much of the Left appears to be suffering a form of post-modern paralysis where it is unwilling or unable to recognise that the advances made on superstructural issues like gender and LBGTI rights have their genesis in (but are not reducible to) the class driven struggles of the industrial and post-industrial eras, many of which persist to this day.

With that in mind, rather than prattle on as an old white male former academic, I defer to a genuine organic intellectual of the Left. The context is the aftermath to the Grenfell Tower fire in London:

https://www.facebook.com/thedeepleft/videos/649061075299366/?pnref=story

History will not Absolve You!*

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“You may pronounce us guilty a thousand times, but the Goddess who presides over the Eternal Court of History will, with a smile, tear in pieces the charge of the Public Prosecutor and the verdict of this court. For she acquits us.” 

In the wake of the Chilcot Report, which made it clear that the decision to go to war in Iraq was made on the basis of “faulty” (which is a polite way of saying manufactured) information and that war was not the last option but pretty much the first from the get go comes as a damning indictment of Tony Blair and the then government’s decision to go to war.

Blair himself has been unrepentant but I have never expected Poodle Blair to ever admit fault but I was surprised by the harsh tones of the report as I had expected it to be a whitewash of history. So once in a while I am pleasantly surprised and I don’t think the issue is going to go away in the UK any time soon, if anything the report’s findings will be fuel for the fire of not just the relatives of the dead but the soldiers who came back scarred both mentally and physically.

Blair of course has stuck with the tired and spineless line that issues with the intel or otherwise removing Saddam (and all the other blunders that Iraq turned into) was the right course of action, history will judge him.

Even at the time the intel was saying the case was bad, even before the war it was turning into a snow job of biblical proportions as the war drums were being beat. I clearly remember the Christchurch Press screaming headlines about Saddam and the need for his removal while my co-workers at the time regurgitated the same blather the media was feeding them right on cue. If I had ever needed a functional example of manufactured consent here it was alive and in my face (telling me Saddam had nukes and it could happen in NZ). It was the same gibberish as the first Gulf War but now with 50% more neo-con BS.

Forgetting that Saddam had previously had been a friend of the West, had been given arms and intel by them when he was fighting Iran (who could possibly forget the photo of Saddam and Donald Rumsfeld shaking hands at a meeting some time in the mid 1980’s) it was still a dud argument but when ever has the truth ever gotten in the way of a good war.

Meanwhile in New Zealand, John Key comes out in support of Blair and the war (here) and has refused to accept that he is on the “wrong side of history” under the similar argument of “well we made the decision on the basis of the information we had at the time so hindsight is a wonderful thing but you gotta make omelets”.

Really? O’rilly? Exsqueeze me? Baking soda? What is this BS? Aheenaheenaheena!*

John Key, the son of an Austrian Jewish refugee mother and an English father who fought in the Spanish Civil War (I can only assume on the republican side given his nationality) and World War II. If anyone should have been raised with a sound and emphatic understanding of the horrors of fascism and war it should have been him.

So I can only assume that this hollow man has forgotten his background and where he has come from and what his parents went through in making such a shameful statement. In fact the more I think about it the more the hideous levels of irony shines through like vomit on a stained glass window.

It’s very easy for a man, a leader of a nation, to send men off to war when it’s done from the comfort of his office, thousands of miles away from the fighting. It’s even easier for a man sitting in an office a thousand miles away, to support such a grotesque decision when there is no consequence for him in slavish obedience to foolish rhetoric and evil lies.

My Great Grandfather fought in the First World War, my Grandfather in the Second, my father in middle east in the 60s, I have friends from my military days who did time in Iraq as contractors and I have attended more Anzac day parades and the functions after at RSAs than I can remember (possibly due to the hefty quantities of Navy Rum on offer at the time) and at no point can I recall hearing any of those individuals expressing support for any decision to go to war.

War may have been necessary as a final action (as many in the case of WW2 have made), but it was the final resort of those who would fight if they had to but wished to avoid it if at all possible; not the first choice of greedy little men who will never actually face the guns or have to worry about a loved one dying in some bloody conflict.

To be fair I have heard many stories about the adventures had during war time (especially my Grandfathers escapades in Egypt and Libya as a dispatch rider in WW2 and my fathers time dodging bullets as a UN Peacekeeper) but these were always in context that the war itself was a monstrous affair from which the horrors of the conflict was never far away from the Boys Own adventure moments which they recalled.

More pertinently of those I know who went and made some “easy money” in Iraq (as one of my mates describes his $100,000 plus a year, US, tax free contract doing security on convoys from Basra to Baghdad) one refused to re-up for a second tour, despite the increased pay and bonuses on offer and the second bailed less than six months into the second citing scenes that made my hair stand on end (he decided to get out after he got covered in the brains of the driver on the truck he was riding on due to some high caliber round punching though the trucks windshield, and the drivers head). None of them described Iraq in less than horrific terms.***

So I have issues when John Key boldly asserts that he will be on the right side of history in regards to the Iraq War, big issues.

It does explain why things like the housing crisis, homelessness and the general misery that successive National Governments have inflicted on New Zealand do not even register on his compassionate radar. If sending people off to die for no real purpose is not going to faze him then being the man responsible for maintaining the current and ongoing misery of the neo-liberal market state probably has absolutely no emotional or emphatic resonance in the cold depth of his reptilian brain.

Perhaps he would feel different if his wannabe DJ, playboy son, decided to enlist and get sent off on some dodgy neo-colonial war for no real reason but $$$ or his faux artist daughter was the victim of some terrorist attack in a European capital as a flow on effect of the disruption caused by that war, I hope he would feel different but I cannot say for sure.

And while I was never a fan of Helen Clark I respected her decision to keep NZ out of the conflict, I even understood her decision to scrap the combat air arm of the Air Force. As someone with a strong military background (and a lifelong interest in all things military) I can still be pragmatic enough to see the logic for her decisions and the reasons for staying out of what has been fairly labelled an unjust war.

No Iraq War, probably no ISIS/Daesh, possibly no Syrian War, possibly a lot less bloodshed in the Middle East, definitely no Imperial AmeriKa running amok, possibly even no Donald Trump/Hilary Clinton monster on our political horizon. The possibilities are endless.

Oh and for those wondering about the quote at the start of this post. Its from Hitlers trial in 1924 after he tried to take over Bavaria in the Beer Hall Putsch.

*-title courtesy of Fidel castro

**- Statements of disbelief courtesy of The Internet,Waynes World , Generation Ecch and De La Soul

***- For those interested try googling for videos of US convoys doing the run from Basra to Baghdad and back and see how much you would like that job despite the salary

I Wanna Be Dirty: James Shaw and Greens

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* Its Not Easy Being Green/Bein’ Green.

Blog Link: NZ embassies used for signals intelligence gathering.

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Some years ago I ran afoul of the 5th Labour government because I speculated in public that some of our diplomatic personnel and embassies might double up as intelligence collectors. This was in reference to the Zaoui case and the role played by then SIS Director Richard Woods, who had been ambassador to France and Algeria at the time Zaoui went into exile in France from Algeria. Woods claimed that he had never heard of Zaoui until the latter arrived seeking refuge in New Zealand, and that he had never been to Algeria during his entire time as ambassador to that country. I found that a bit hard to believe on both counts and wondered aloud if, to maximise efficiencies given small budgets and manpower, Woods and others worked a bit beyond their official credentials.

The fact that embassies serve as intelligence collection points is not surprising or controversial. After all, it is not all about diplomatic receptions and garden parties. Nor should it have been entirely surprising that the possibility existed that some NZ diplomats held “official cover” as intelligence agents. That is, they were credentialed to a specific diplomatic post, held diplomatic passports and immunity based on those credentials, but were tasked to do more than what their credentials specified (for example, a trade or diplomatic attache working as a liaison with dissident or opposition groups or serving as a handler for a foreign official leaking official secrets). Rather than scandalous, this is a common albeit unmentioned aspect of human intelligence gathering and my assumption was and is that NZ is no different in that regard.

Prime Minister Helen Clark erupted with fury at my comments, saying that I was unworthy of my (then) academic job. I received a scathing letter from the then State Services Commissioner saying that I put New Zealand diplomats in danger. Most interestingly, I received a phone call at home from someone who claimed to be with the then External Assessments Bureau (now National Assessments Bureau) repeating the claim that I was putting lives in danger and suggesting that I should desist from further speculation along those lines (although he never refuted my speculation when I asked him if I was wrong).

Given that background, it was not surprising but a wee bit heartening to read that the Snowden leaks show that NZ embassies are used by the Five Eyes network as tactical signals intelligence collection points. That is, the embassies contain dedicated GCSB units that engage in signals gathering using focused means. This is different and more localised targeting than the type of signals collection done by 5 eyes stations such as Waihopai.

There is much more to come, but for a good brief and link to the original article on this particular subject, have a wander over to No Right Turn.

Should NZ renounce lethal drones?

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The Diplosphere event on lethal drones held in Wellington last week was a good opportunity to hear different views on the subject. The majority consensus was that legal, moral and practical questions delegitimate their use, although one defended them and I noted, among other things, that they are just one aspect of the increased robotization of modern battlefields, are only efficient against soft targets and are seen as cost effective when compared to manned aircraft.

At the end of my remarks I proposed that we debate the idea that New Zealand unilaterally renounce the use of lethal drones in any circumstance, foreign and domestic. I noted that the NZDF and other security agencies would oppose such a move, as would our security allies. I posited that if implemented, such a stance would be akin to the non-nuclear declaration of 1985 and would reaffirm New Zealand’s independent and autonomous foreign policy.

Alternatively, New Zealand could propose to make the South Pacific a lethal drone-free zone, similar to the regional nuclear free zone declared by the 1985 Treaty of Rarotonga. I noted again that countries like Australia and Chile would oppose the move (both have drone fleets and do not discount using them in anger), but that many of the Pacific Island states would likely welcome the idea.

Either declaration would in no way impact negatively on the use of non-lethal drones, whose utility is obvious. It would also leave open to interpretation whether NZ based intelligence could be used in drawing up targeting lists for foreign lethal drone strikes, a subject currently in the public eye as a result of claims that the GCSB does exactly that in places like Yemen. The PM says he is comfortable with the intelligence-sharing arrangement as well as the legitimacy of drone strikes, and added that similar intelligence was provided for ISAF drone strikes in Afghanistan (where the US and the UK deploy lethal drones on behalf of ISAF).

His confidence notwithstanding, many Kiwis are opposed to any cooperation with lethal drone programs, so the debate could be expanded to include indirect NZ involvement with them.

I think this is a debate well worth having. I realize that the security community will want to keep all options open and be very opposed to ceding any tactical advantage in future conflicts, and that extending the ban to indirect cooperation would have a negative influence on NZ’s diplomatic and military-intelligence relations with its security partners.

I am cognizant that it may be a hard thing to actually do given the balance of political power currently extant in NZ and the hurdles needed to implement it should the proposition be accepted. One of the other panelists dismissed the idea of unilateral renunciation as simply impractical and said that the proper forum in which to advance it was the UN (cue Tui ad here).

Some may say that is silly to debate something that does not exist. New Zealand does not deploy lethal drones. However, UAVs are already present in NZ skies, both in civilian and military applications. This includes geological surveys and volcanic research, on the civilian side, and battlefield (tactical) surveillance in the guise of the NZDF Kahui Hawk now deployed by the army. The military continues its research and development of UAV prototypes (early R&D worked off of Israeli models), and agencies as varied as the Police, Customs and the Navy have expressed interest in their possibilities. Since non-lethal UAV platforms can be modified into lethal platforms at relatively low cost, it seems prudent to have the debate before rather than after their entry into service.

I am aware that the revulsion voiced by many against the lethal use of unmanned aerial vehicles might as well be shared with all manned combat aircraft since the effects of their deployment ultimately are the same–they deal in death from the sky. Given that commonality, the preferential concern with one and not the other appears more emotional than rational, perhaps responding to idealized notions of chivalry in war. That is another reason why the subject should be debated at length.

Such a debate, say, in the build up to a referendum on the matter, would allow proponents and opponents to lay out their best arguments for and against, and permit the public to judge the merits of each via the ballot box. That will remove any ambiguity about how Kiwis feel about this particular mode of killing.

UPDATE: Idiot Savant at No Right Turn has kindly supported the proposition. Lets hope that others will join the campaign.

 

Spot the difference

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Prime Minister John Key has released a statement expressing condolences at the death of Baroness Margaret Thatcher:

The Government is today paying its respects to the family, friends and colleagues of former British Prime Minister Margaret Thatcher who passed away overnight.

“Baroness Thatcher was a passionate and formidable politician who loved her country. She was a strong and decisive leader with unwavering principles. She was Britain’s first and only female Prime Minister.

“We join with political leaders around the world in remembering Margaret Thatcher’s service to the people of Britain and her significant impact on the global political environment,” said Mr Key.

Labour leader David Shearer has also issued a statement:

Labour leader David Shearer has paid tribute to former British Prime Minister Lady Margaret Thatcher, who has passed away aged 87.
“This is an enormously sad time for her family. My thoughts are with them, and the people of Britain, at this time.”
Mr Shearer says he admired Lady Thatcher as fiercely determined leader, who stood up for what she believed in.
“Lady Thatcher will be remembered as a strong and determined leader.”
During her time as Prime Minister, from 1979 until 1990, she faced some real challenges – from the conflict in the Falklands to tremendous economic changes,” says Mr Shearer.
“She has left a strong and permanent legacy in Britain. Lady Thatcher believed passionately in what she was doing, and she will be missed by many.”
Mr Shearer says he had met Lady Thatcher once in Britain, prior to his entering politics.
“I met Lady Thatcher only briefly, and I remember being somewhat in awe of her, as such a well-recognised, well-known world leader.

(Both statements slightly edited.)

L

Which Way, Huawei? (With postscript).

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All internet architecture has the potential for use as a Signals Intelligence Intercept platform (SIGINT). Data mining already occurs at the mid-range of  IT frameworks, such as when Facebook collects personal information on users for consumer research (or more nefarious) purposes. Cell phones have GPS trackers, which requires software. The range of data-mining already at play in the commercial field is extensive. It therefore should come has no surprise that States also have an interest in data-mining, but for military, diplomatic and intelligence purposes.

If mid-level IT platforms such as FB and numerous other private agents can data-mine extensively with or without the consent of those whose personal information is being accessed, then it stands to reason that providing the basic support infrastructure for IT operations gives the provider even more opportunities at such. In a liberal market environment there are standards of conduct and protocols developed to restrict the unfettered access to private information. But what happens when a state capitalist enterprise is the provider of basic IT infrastructure?

In market capitalist systems the state serves the interests of capitalists by framing the legal and governance frameworks so as to encourage competition on an ostensibly level regulatory playing field. In state capitalist systems capitalists serve the interests of the state above and beyond their particular commercial interests. This is seen in European fascism, Latin American national populism, and in Asian developmentalism such as that of Singapore.

Huawei is the product of a state capitalist system. It was founded by and is led by former PRC intelligence officers. Although Huawei claims to be 100 percent employed owned, that is true only because the one-party authoritarian regime than rules China continues to maintain that it is Communist, which means that all employees are owners. Huawei has been designated as one of the seven national economic treasures that are considered to be essential strategic assets for Chinese power projection, and as such are subject to the strategic dictates of the ruling party. All of this is well known, and having independent local Huawei operators fronted by non-Chinese managers cannot disguise that fact, particularly when all of the components and associated hardware are engineered and made in the PRC.

The US and Australia have decided to bar Huawei from providing IT technologies to strategically important sectors of their IT markets. The US specifically excludes Huawei from any defense or security related contracts, and for that reason Symantec decided to sell its interest in Huawei USA. The Australians feel that their National Broadband Network (NBN) is too precious an asset to be opened to Huawei. They say they have their reasons, and that those reasons have to do with national security.

NZ has just signed off on several broadband infrastructure contracts with Huawei. The question is whether those responsible for the decision were aware of the US and Australian position and if so, why they choose to ignore it. The UK and Canada have allowed Huawei civilian IT contracts, which is important because they are part of the Echelon SIGINT and TECHINT network that binds the “5 eyes” parties together (along with the US, Australia and NZ). In the UK Huawei was awarded contracts for civilian IT, but that was followed by the government communications security agency running an extensive and costly forensics accounting of Huawei systems in order to ensure its cyber security, and even then cannot guarantee that the system is safe as far as covert “backdoor” entryways are concerned. This had something to do with the Australian decision.

95 percent of attempted probes into US corporate and security IT systems originate in the PRC. In the PRC all internet access is tightly controlled and monitored. Huawei is a leading provider of the IT systems used in the PRC, to include the firewalls used to censor foreign content and the tracking devices used to monitor internal dissent. Although all of this is circumstantial, this is the non-classified reason why US security agencies have decided that the company serves as a SIGINT front for the PRC. Add to that concerns about Huawei activities in foreign SIGINT gathering, and what you have is a reason to ban it from competing for security related contracts.

Of course, this could all be a corporate driven plot to preserve market share in the face of superior Chinese efficiency. Or, it could be racism. Or it could be part of the Trilateral Commission efforts to extend its world hegemony. I am agnostic on the exact reasons, but whatever they are, I sure do hope that someone in the National government was briefed by the GCSB and/or SIS on what they were. After all, as full intelligence partners with the US and Australia, one would think that these agencies would have received some of the classified details of why the US and OZ have their doubts about Huawei, and that these agencies would have dutifully reported to at least the Minister for Security and Intelligence, John Key, on the nature of these concerns.

Mind you, if the concerns about cyber espionage are true, I do not fault the PRC a bit for doing so. As an emerging great power with global economic interest and no intelligence sharing network such as Echelon on which to rely (unless one thinks that intelligence sharing with North Korea and Burma is a good counterpart to Western intelligence networks), then the PRC must–and I do mean MUST–develop its own human, signal and technical intelligence capabilities in the measure that its global interests grow. That is just the way the game is played in international security affairs.

The major sea lanes of communication between Latin American and Australasian primary good and raw material suppliers and the Chinese mainland pass through the South Pacific. It would therefore be remiss of the PRC not to seek to ensure the security of these vital channels, and one part of doing so is to have a better intelligence “grip” on what goes on in the countries through and in which they are situated. To put it in Brooklyn-ese: they gotta do what they gotta do because no one else is gonna do it for them.

That is why it would be helpful to hear a “please explain” response from Mr. Key on the matter.

Postscript: It turns out that as early as 2008 the concerns of NZ intelligence partners about Huawei were discussed in US embassy cables from Canberra (which were sent to the US embassy in Wellington, among other places). In 2010 the SIS and GCSB informed him that they could not guarantee that the broadband infrastructure would not be compromised if Huawei was awarded the UFB contract. For reasons as of yet unexplained, he choose to ignore the warnings. As it also turns out, India and South Korea have banned Huawei from critical IT infrastructure projects. Thus it seems that concerns about Huawei are not just a Western plot born of anti-Chinese xenophobia and a desire to protect market share for western businesses, but part of a wider conspiracy amongst China-haters of all stripes. Mr Key, however, is not one of those, and his meetings with Huawei executives at the 2010 Shanghai Expo is proof of that. (Note to readers: all of this has been discussed in the NZ mainstream media the past week, and the 2008 embassy cables were published by Wikileaks).

Servitor Imperialism.

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Although the golden age of imperialism is long past, the early 21st century has seen a resurgence or perhaps a new form of imperialism in the guise of US-led expeditionary wars to “bring democracy” to rogue or failed states. Besides the wars of occupation waged in Iraq and Afghanistan, the not so covert intervention in Libya and ongoing US military activities in places like Somalia, the Sudan, Colombia, the Philippines and Nigeria suggests that far from being an outmoded concept, the notion of neo-imperialist supremacy is alive and well.

A lesser known aspect of imperialism is the role of servitor imperialists. Servitor imperialist were the colonial troops that deployed and fought for their imperial master. The Scots, Welsh, Australians and New Zealanders all played the servitor role for the British Empire, fighting and dying in places like Gallipoli where none of their core national interests were at risk. Unlike mercenaries, these servitor troops fought out of loyalty to the Crown rather than for money. Today the Gurkhas continue to do the same.

Other former great powers such as the French, Spanish and Portuguese also drew troops from their colonies as they attempted to hold on to their global possessions, albeit with mixed success.

In the 20th century the great wars can be seen as existential threats to the way of life of the servitor former colonies and colonial possessions. The Korean conflict and Vietnam war were less so, but the argument was made the global communism was an existential threat to Western capitalist societies and their allies in the developing world. So the servitor troops stumped up in them as well.

Today, it seems that the role of Imperial hegemon is played by the US, but the twist is that its servitor forces are drawn from allied militaries with UN backing and retain relative command autonomy in the field. Australia and New Zealand again are playing their historic role in fighting in conflicts which, if one removes the idea that the conflicts are about eliminating global terrorism, have little to do with their core national interests (and truth be told, while terrorism is a nasty tactic in an unconventional warfare strategy, it poses no existential threat to any but the most fragile of states, so using the threat of global terrorism as an excuse to join foreign conflicts is a bit of a stretch). Here too, the deployment of servitor imperialist troops is done out of allegiance rather than money: Australia and New Zealand perceive that there is an alliance obligation to help the US in its military adventures, one that may or may not be rewarded not so much in kind (as neither OZ and NZ face physical threats to their territorial integrity) but in other areas of bilateral endeavor such as trade or diplomatic negotiations more central to the servitor’s concerns such as climate change or arms control.

In this era the term “imperialism” is fraught. But just because it has become a dirty word in some circles does not mean that it does not exist, or that the practice of playing servitor imperialists to other great powers is not ongoing. What has changed is the guise in which servitor imperialism occurs, with less Imperial ordering and more multinational cover given to the actions of less powerful countries who send troops to fight in the conflicts instigated by their Great Power allies. It as if there is a cultural disposition in some former colonies to want to serve the Master even if there is no longer a colonial leash tying them together.

Thus, for purposes of definition (there is a good body of scholarly literature on the subject), servitor imperialism is a situation where the natives and descendants of subjugated or colonized nations and sub-national political communities pledge fealty and serve in the wars of their Imperial masters even though no core interest of their homeland is at stake or in jeopardy. In the modern servitor neo-imperialist version, former colonies or subjugated nations send their citizens to fight in wars of the new Imperial hegemon when no core interest is at stake. The difference between this syndrome and a proper military alliance is that in the latter there is a common recognized existential threat that militarily binds countries together, whereas the servitor imperialist approach sees benefit in joining non-essential foreign conflicts instigated and prosecuted by neo-imperialist powers for reasons of their own and without regard to the core interests of the servitors. The syndrome is rooted in a cultural disposition to “serve” the master, whether it be old or new. Leninists might say that is playing the role of useful fool in international security affairs, but whatever the case the syndrome appears alive and well in some parts of the world.

I reflect on this because I have noticed a lot of pro-British chicken hawk rhetoric in rightwing NZ blogs about the current tensions with Argentina over the Malvinas/Falklands islands. For those unaware of the issue, in April we will reach the 30th anniversary of the 6 week war between the UK and Argentina over the islands. Although most Argentines have no interest in renewing hostilities and the Argentine military has made no moves to suggest a desire to retake the islands by force, right-wing Nationalists within Argentina have stepped up their bellicose rhetoric. Even thought the Argentine Right fringe is small, it has influence in some political circles, including with the governing Peronist Party. That has forced the government of Cristina Fernandez de Kirchner and some provincial authorities (since Argentina is a federal republic) to attempt to placate that part of the electorate with public and diplomatic complaints about the ongoing UK military presence in the archipelago (since the UK controls the South Georgia islands, also re-taken in the 1982 war). For its part the UK media has jumped on tits own Nationalist bandwagon, seeing such things as the Crown Prince’s search and rescue deployment to the Falklands as a reaffirmation of the glory days of Pax Britannica.

Truth be told, although Argentina was ceded the Malvinas after its independence from Spain in 1810 (as Spain had control of them until then), the British presence extends back to the 1830s when the few Argentine whalers and sealers resident on the islands were forced  off and the territory proclaimed British. British settlers have had a continuous presence since then and their descendants (now into their eighth generation) consider themselves British subjects. Since possession is 9/10th of the law and the “kelpers” as they are called consider themselves to be part of the UK, it is extremely unlikely that the islands will ever be returned to Argentina.

Argentines know this and except for the Right fringe, accept the verdict of history. In fact, the reason for Argentina’s continued diplomatic protestations about the Malvinas/Falklands is that there are vast oil and natural gas deposits in the seabed around the islands, as well as the fisheries in adjacent waters. Now that technology allows for the exploitation of these resources, Argentines want part of that action. Extending Argentine territorial claims out to the islands (600 nautical miles off shore) allows the Federal Government  to negotiate the commercial aspects of these potentially lucrative resource deposits, and for that to occur Argentina needs diplomatic backing for its claims. Needless to say, the UK has no intention of allowing that to happen.

Thus, while the kelpers are clearly disposed to play the role of servitor imperialists for the UK, it is a bit odd to read all the bluster and anti-Argentine rantings coming out of certain NZ rightwing circles. It is as if they retain their servitor attitudes long after the Empire has faded, something that, with a slight change in orientation, the National government appears to hold as well.

 

Really too big to fail.

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Market responses to the US debt crisis and financial downgrade have been like king tides as of late, and inevitably speculation centers on the possibility of a “double dip” global recession (this speculation is more than rhetorical. Gold and other precious metal prices have spiked overt the last three weeks as investors flee the stock, bond, commodity and currency markets). There is much talk, some fearful and some hopeful, of a global meltdown of epic proportions. The argument goes that downgrading the US credit rating devalues US Treasury bonds and the dollar, which slows US private investment at home and abroad, decreases domestic consumption, increases unemployment and generally prolongs the recession begun in 2008. This ripples negatively across the globe given the interconnectivity of commodity chains and the central role of the US in them. Be it on the Left or the Right, the belief in state bankruptcy is taken as an article of faith.

The reality is different. What is happening is a fiscal crisis of the Western State rooted in a cyclic crisis of capitalism. Arguments about the blown-out US public debt obscure the fact that it is the result of the same conditions that produced the 2008 recession and which are at root the cause of the next one. For the last thirty years the ‘bubble” of private debt was replicated by the US Government, in the last decade under the strain of simultaneously fighting two prolonged low intensity conflicts. In Europe public debt was in part procured in order to compensate for private debt (via the provision of subsidized entitlements). Capital was lent on looser and looser terms as interest payment calculations came to rival returns on productive investment as the dominant macroeconomic logic. The market in financial derivatives boomed, then busted, bringing with it a crisis in small scale property ownership at the same time that major manufacturers were being bailed out by the US government.

There is a difference, however, between the private sector and the State when it comes to fiscal crises. The analogy between States and firms is overdrawn. Firms go bankrupt; States do not. States may default on loans and suffer the indignities of downgrading by financial institutions, but they do not go out of business. The reason is simple. States  with a presence in the global economy may fail but they do not cease to exist.

Modern states are political entities with other measures of power beyond economic resources, are rooted in historical and cultural ties within more or less fixed borders, have distinct political systems and political regimes that govern them, and are therefore sheltered from the hard realities that beset wayward market agents in a globalised system of production, service and exchange. More importantly with regard to the social and political relations of production, the modern nation-state supercedes the market at any specific moment even while being generally subject to its rhythms and dictates. It is, after all, a capitalist type of state that is not reducible to the productive apparatus.

Imagine even if the US defaulted on its current obligations. Its credit rating would fall further in parallel with the value of its currency, but how long will that last? Even if the US fails its financial obligations, it would be the markets that push for a debt restructuring favourable to it.  As the core of the global economy, the US is simply too big to fail because its financial collapse would reverberate widely and deeply through the world. In fact, with the exception of undeveloped failed states and microstates with minimal economic resources to promote, virtually all modern states can survive a fiscal crisis and default.

 Take Argentina, which in 2000 defaulted on its foreign loans, uncoupled its currency from the US dollar and then renegotiated the terms of its obligations. Since most of the outstanding balance was interest rather than principal, foreign creditors were eventually forced to settle on terms favourable to the Argentines (about 60 cents on the dollar lent). The weakened Argentine peso stimulated commodity exports and attracted foreign investment in resources and primary goods. In spite of endemic corruption, political interference and a multitude of market inefficiencies, over the last five years Argentina has averaged growth rates in excess of six percent and attracted the highest levels of foreign investment ever even while maintaining a large public deficit.

 Greece, the poster child of all that is supposedly wrong with governments and societies that do not couple entitlements with production, is another such case. What would happen if Greece defaulted on its recently rescheduled loans? Will it cease to be? what it could do is drop out of the Eurozone, replace the Euro with the much less expensive drachma, and print money to fund its domestic obligations. Somee foreign investors may flee, but local capitalists will continue to engage the domestic market, people will continue to consume, albeit at lower rates with regards to imported goods, tourists will still flock to see the historical sites and visit the islands, and the country will continue to exist. In fact, should it be successful at restructuring its economy on more internally-focused terms out from under the straitjacket of Eurozone obligations (say, by making its tax collection system more rational and efficient), it could serve as a model for the other “PIGS” nations—Portugal, Ireland and Spain—as well as Italy.

It was Northern European, mostly German capital, directly and channeled through the European Central Bank, which sought to recycle in the European periphery the super-profits accrued during the last two decades of derivative market expansion. These are the creditors who took the risk in the PIGS and who now demand debt repayment schedules rooted in austerity measures and privatization programs. They are also the beneficiaries of a strong Euro, unlike the weaker Southern European economies now under siege. Should debtor countries in Europe decide to reconfigure their economies around a devalued national currency a la Argentina, the European Union will be finished as a currency regulator. Here the sub-regional ripple or contagion effect makes each of the PIGS too big to fail, something that is magnified in the case of the US. Loss of credit rating and a high debt to GDP ratio, in others words, does not translate into State bankruptcy.

 The larger point is that states can default but they cannot be bankrupted because they are not solely economic agents but instead sovereign political actors with interests that transcend a financial bottom line. They can be upgraded and downgraded as financial risks, but even if investment falls and inflation rises, they will not disappear. Think of Brazil and Argentina in the late 1980s when inflation ran at over 1000 percent per year. Did they disappear? Did all foreign investment dry up? Did local markets crash?

Truth be told, capitalism, led by finance capital, was on overheated overdrive for the two decades before 2008, only slowing down briefly after events such as 9/11, even when objective conditions advised against the maintenance of the macroeconomic policies private agents used to calculate the speed of their returns. Western States emulated private agent logics, whereas Asian banks and sovereign wealth funds  were less keen to adopt derivatives-led financial approaches backed by increasingly unsecured loans (although some of that did creep into Asian markets as regional economies attracted Western investment).

Here is where global networks come in. Rather than wage war on States with economies in default, other States that are debt free or less indebted work to cover their investments, and those of their private agents, in the debtor States. This means that even if private agents in the debtor States fail as a result of their market excesses or miscalculation, and State treasuries do n not have enough reserves to cover their debts, States remain open for business, perhaps even on more favourable terms depending on the nature of sovereign debt restructuring agreements (public debt for equity swaps are one measure that can improve State efficiencies as a result of restructuring). Inefficient producers are expelled from the market; inefficient States muddle along.

The entire Western capitalist combine was due for a retrenchment given the downward slope it has been on since spending, both public and private, exceeded productive output in material goods and services. So long as money could be made off of lending money and risks were passed on to increasingly lower-level actors, early 21st century capitalism saw States tax and spend without coherent productive purpose (which mirrored the approach of the financial markets). This was a good political calculation but not a sound economic grounding for future productive growth within current capitalist parameters. Thus the turn towards private sector retrenchment in 2008, with public sector retrenchment now following.

We hear about the demise of various States because they can no longer afford to repay what they have borrowed in order to maintain whatever it is that is considered precious to national identity and political stability–public goods and entitlements in Europe, a war machine in the US. Retrenching Western States may not be able to provide these services in the measure they used to, but thy remain (however diminished) as linchpins of an international system that has its origins in the Treaty of Westphalia rather than Bretton Woods or the Washington Consensus. States are the ties that bind that global system of exchange, and Western States continue to have a central role in it even as the system moves towards increased multipolarity.

Markets and politicians alike need to be cognizant of this fact, because as Keynes pointed out, it is political conditions, not economic conditions, that are the best guarantors of long-term investment. Rather than the economic particularities of a given investment climate at a specific moment in time, political stability offers better conditions for secure future private return. A stable national polity is the best guarantee of profit even if the public books are not balanced. That is the political cost for the social peace that is the basis for economic stability.

Ironically, it was the short-term focus of the macroeconomic logics that propelled the “bubble” that led first to the financial crisis of 2008 and now to the current conditions of political impasse and social instability in many liberal democracies. That is where the convergence of the fiscal crisis of the Western State and the cyclic crisis of capitalism can lead to liberal democratic State failure: when it produces a crisis of legitimacy of the political elite, often confused with regime crisis, that once rooted in and superimposed on the economic downturn and social unrest constitutes an organic crisis of the State. The UK evidences these type of pre-conditions.

Rather than demand zero-sum tax cuts and a diminished State role in guaranteeing the social relations of production,  the priority of the market during a State fiscal crisis should be to to express confidence in the State because delegitimisation of the latter is an absolute guarantee of disasterous market consequences for the private actors involved with them in the event that they are overthrown or fragment. That is where market ideologues have failed in their basic obligation: to help foster the political and socio-economic conditions in which stable rates of private return are generated. Instead, they are exacerbating the crisis with their jitters, demands and panic trading. This will not lead to an organic crisis in most liberal democratic states (which will muddle along), but it could produce legitimacy crises in newly democratic states or those with significant social cleavages. Even then the prospect of State, as opposed to regime or private sector failure, is unlikely.

All of which is to say that when it comes to the fiscal crises of modern Western States, this too shall pass.