By Ameen Izzadeen
Economic warfare can be as deadly as nuclear warfare. It can kill thousands if not millions. A decade of economic sanctions imposed on Iraq prior to the United States’ invasion of that country in 2003 caused the deaths of some one million Iraqi people, half of them children. In Iran, Western sanctions kill thousands of patients because Iran cannot buy advanced medical equipment. In Cuba, US sanctions have stunted economic progress and as a result millions of people live in poverty.
The Encyclopaedia Britannica defines economic warfare as the use of, or the threat to use, economic means against a country to weaken its economy and thereby reduce its political and military power. “Economic warfare also includes the use of economic means to compel an adversary to change its policies or behaviour or to undermine its ability to conduct normal relations with other countries. Some common means of economic warfare are trade embargoes, boycotts, sanctions, tariff discrimination, freezing of capital assets, suspension of aid, prohibition of investment and other capital flows, and expropriation.”
A developed country also launches economic weapons in its armoury against a target country in the developing world to bring about a regime change. If a socialist or a hostile government is elected in a strategically, economically or politically important country, the Capitalist west fires its economic weapons, causing hardships to the people. The process continues until a pro-West capitalist government takes over or the rightwing elements in the military launch a coup.
This happened in the early 1970s in Chile. The South American nation had elected a Marxist leader, Salvador Allende, who nationalised American businesses and mining companies. In retaliation, the US did not send its marines. Instead it launched a series of economic measures leading up to a military coup. The then US President Richard Nixon vowed he would make the Chilean economy scream while his National Security Advisor Henry Kissinger swore that he would make the Chileans “cry from misery”.
What worked in Chile in the 1970s is being unleashed against a number of countries even today. Venezuela’s President Nicolas Maduro, for instance, says that his country’s economic woes are due to the US economic warfare. In Egypt, the West-led economic warfare is one of the factors that caused the downfall of the Brotherhood-led government. Even the suffering Palestinian people have not been spared. When Hamas won the assembly elections in 2006, the West withheld aid and punished the Palestinian people for electing a group it did not like.
John Perkins explains in detail another form of economic warfare in his best seller — Confessions of an Economic Hit Man. He says he was hired as an economic hit man to convince the political and financial leadership of underdeveloped countries to accept enormous development loans from institutions like the World Bank and USAID. Saddled with debts they could not hope to pay, those countries were forced to acquiesce to political pressure from the United States on a variety of issues. Perkins argues in his book that developing nations were effectively neutralised politically, had their wealth gaps driven wider and economies crippled in the long run.
If countries are allowed to prosper, their economic prosperity will allow them to exercise political freedom in world affairs, posing a challenge to the United States’ agenda to dominate the world and its determination to remain the number one world power. The capitalist West created the Ukrainian crisis to weaken Russia. The process has begun with economic sanctions that would make Russia economically weak and the Vladimir Putin presidency increasingly unpopular. Economic sanctions also heighten the propensity to corruption, allowing Western economic hit men to buy local politicians with money, sex and other gratifications. The combined effect of all these measures can lead to a regime change in Russia. In the ongoing economic war, Russia also has some economic weapons to hit back and has threatened to use them in retaliation. But at the moment, Russia appears to be exercising great caution because unlike in military warfare, outcomes of an economic war are hard to predict.
What about China? The capitalist West is not unmindful of China’s economic successes and its growing military power. The West’s economic warfare aimed at China appears to be subtle or secretive. With a US$ 3.3 trillion foreign reserve, China has surplus money to spend on research and development and take measures to catch up with the developed world, much to the chagrin of the West.
US President Barack Obama’s current visit to Asia has moved the cover slightly to expose the West’s economic warfare against China. Obama’s Asia trip that is taking him to Japan, South Korea, Malaysia and the Philippines appears to be China-focused and a part of Washington’s new containment policy — similar to the one that existed during the Cold War era against the Soviet Union. The visit is aimed at bolstering the United States’ military and economic role in the region, or, in other words, at strengthening its ‘Pivot-to-Asia’ policy which seeks to counterbalance China’s influence in the region.
Apart from military pacts, this policy envisages economic partnerships with countries in China’s neighbourhood – countries with which China has territorial disputes. The policy is fine-tuned to focus on the economy because China has, within ten years, from nowhere become the world’s second largest economy. According to International Monetary Fund projections, China is likely to overtake the US as the world’s number one economy by 2016. That is in two years’ time. Herein lies the urgency to rein in the rise of the red power.
As part of the strategy to check China, Obama’s Asia trip seeks to revive the Trans-Pacific Partnership involving 12 countries of the Asia Pacific region. The TPP, if set up, will reduce tariffs and other barriers to the markets of its member states — the United States, Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei. South Korea, the Philippines and Taiwan are also likely to join the grouping, which accounts for almost 40 per cent of the global economy.
Interestingly, there is no formal invitation to China from the US or other countries to join the grouping. Washington has, however, indicated that Beijing is welcome to join the TPP. But it attaches a rider to the informal invitation — China should adopt TPP rules which call for high standards with regard to labour and intellectual property laws. Needless to say, such rules will erode the comparative advantage China’s exports enjoy in the highly competitive global market. But questions also arise as to whether a country like Vietnam can adopt such tough standards and remain competitive in the global market.
China last year indicated that it might join the grouping on the basis of ‘equality and mutual benefit’. China is also keeping a close tab on the US economic moves, especially with regard to the TPP which has drawn much criticism even within the United States for the lack of transparency in the negotiation process.
The Obama administration claims that, just like the North America Free Trade Agreement (NAFTA), the TPP – described as the world’s biggest ever free trade deal — will also be beneficial to the US economy because it will create more jobs and give a boost to US exports. But critics, including a large number of Democrats in the Congress, say the TPP will kill US jobs. They may not support the TPP bill at least until the mid-term elections in November. The US agriculture sector has also expressed opposition to the TPP. That the Obama administration is pushing the deal despite growing domestic opposition underscores the strategic value it attaches to the TPP. The strategic value comes by way of opening up the US market to TPP countries and thereby reducing China’s share of the US market and its trade surplus with the US.
This is probably the economic equivalent of firing a cruise missile to China’s industrial heartland. It was no coincidence that the US bid to put the TPP on a fast track also comes along with assurances from President Obama to Japan — and indirectly to China’s other neighbours — that the US would come to their defence in the event of a military clash over disputed islands in the South China Sea and the East China Sea.
Obama during his visit to Japan told a newspaper that the disputed Senakaku/Diaoyu islands in the East China Sea were part of Japanese territory and therefore “fall within the scope” of a US-Japanese security treaty. This was the first time that an incumbent US President has openly declared military support to Japan in the dispute over the islands. The warning to China comes at a time the US is locking horns with Russia over the Ukrainian crisis which is dangerously moving closer to a military confrontation.
An angry China responded by saying “the US should respect the truth, not take any sides, be careful about its words and behaviour, and uphold peace and stability.”
Last year, when China declared an air defence zone over the disputed islands, the US flew its B-52 jets over the zone, risking a confrontation with China. However, the US did not repeat the provocation and the matter ended there.
Whether Obama’s visit would rivet firmly the United States’ ‘Pivot-to-Asia’ policy in the region depends not only on how China would respond to US economic and military measures but also on the behaviour of the nationalist government of Shinzo Abe in Japan, now that it has been emboldened by the US declaration of support.
(This article first appeared in the Daily Mirror, Sri Lanka)