Some might think it strange for a country founded on a proposition of equality to send so much aid to regimes that are doing everything they can to disfigure it. Of course, slipping on one’s Orwellian eye wear, it makes perfect sense. Freedom is Slavery, not just in Oceania. And that is the proper perspective in which to digest the perversity of market incentives in three specific areas: foreign aid, defense contractor stocks, and—that bête noire of peace—the stock price of oil companies. Some interesting correlations exist between these three sectors and the prevalence of civil, regional and international conflict, and the state repression and rights violations that both precede (Afghanistan), accompany (Serbia), and follow (Egypt) these conflicts.
Fistfuls of Foreign Military Aid
First, there’s a well-documented correlation between U.S. military aid and the repression and abuse of human rights. To my knowledge, studies date from the early eighties, when Lars Schoultz at the University of North Carolina looked at some strange corollaries in Latin America. Later, Edward Herman and Noam Chomsky found that aid increased to countries as their human rights protections deteriorated, but also that aid rose as market changes were implemented, often those that are called for by the IMF and World Bank, such as removing restrictions on capital flow and foreign investment and ownership, and weakening labor protections. All of these market fixes tend to privilege foreign capital.
Though not as crude as naked repression of the kind doled out by your garden-variety tyrant, market mandates serve a similar purpose—the erosion of citizen power, hemorrhaged to a corporate power elite. Such structural adjustment programs (SAPs), or austerity measures, choose a euphemism to your liking, are intended to produce a “favorable investment climate,” for foreign multinationals. This generates stronger cross-border ties between corporations and states, and fraying solidarities between workers within and across nations. Recent studies have shown similar correlations in the Plan Colombia initiative, and more broadly across numerous other countries.
We’re witnessing it happening right now with the recent passage of Trade Promotion Authority (TPA) after a petulant President Obama harangued Congress into collapsing its resistance. The TPA will help the president push through the Trans-Pacific Partnership, the Trans-Atlantic Trade & Investment Partnership, and the Trade In Services Agreement, all of which diminish sovereign powers and intensify corporate control over the levers of democratic choice. Future attempts to create labor protections, implement environmental policy, shield workers from harm, or otherwise curtail exploitation will themselves be curtailed by the threat—and actuality—of corporate suits against the state. Populations that try to protect themselves from harm will be punished with a fine paid with their own tax dollars. Thus the very purpose of taxes will collapse, rendering the state itself a meaningless construct that services interests other than its own.
Since catching flack for the onerous lending conditions inflicted on defenseless populations, the IMF (emergency loans) and World Bank (long-term development loans) have made noise about better adapting their lending regimes to local conditions. This is just more rhetorical fog behind which to continue programs that have been exposed for their moral bankruptcy. In fact, rather than reduce harsh conditionalities in the face of steep criticisms, the IMF did what extremist ideologues always do—retrench. Eurodad—the European network on debt and development—found that in recent years the IMF has increased its lending demands, adding almost six new structural conditions per loan. Both the IMF and World Bank are funded by member nations and by private lenders, fundamentally the same clan of profiteers that benefit from U.S. foreign aid.
We’re seeing this now in the Greek showdown with the European Central Bank, European Commission, and the IMF, infamously known as “the troika.” The troika is loath to climb down from its righteous rhetoric and implacable insistence that Greece pay its international bankers, regardless of the damage done to Greek youth, its poor, and its elderly. Syriza staged a brave campaign to renegotiate the terms of its debt, but its desire to stay within the Eurozone deprived it of its own real leverage—the threat of leaving the euro and destabilizing the entire Eurozone as potential defaults lined up like dominos along the periphery of the EU.
Pools of Black Gold
The second correlation is between the oil multinational’s return on equity and energy wars. A recently updated study by Jonathan Nitzan and Shimshon Bichler found that major oil companies—the “petro-core” in their lexicon—were generally in a state of “de-cumulation” of capital when resource wars began. Once conflicts started, the petro-core beat the Fortune 500 average in “differential capital accumulation” by a wide margin. The point here is that there is a perverse advantage to conflict for the politically influential energy sector. After all, who is culling Iraqi oil from the ground these days? Well, BP and its Chinese partner China National Petroleum Company (CNPC), Exxon Mobil Corporation, Shell, Chevron, and so on. Naturally, the U.S. State Department closely advised the Iraqi government on the contracts, and even helped draw them up in what the New York Times called, “a rare prize to the industry.”
In itself, perhaps, securing an exploratory contract with the Iraqi government is not quintessentially evil. But the profit incentives that encourage influence peddling—and influence purchasing—on Capital Hill are insidious, and can easily led directly to energy conflicts that reignite petro-core profitability. Perhaps our political class is still beholden to the comforting maxim that “What was good for Ford was good for America,” as phrased by Henry Ford. How times change. Now what’s good for shareholders is good for Ford, but what’s good for America—bothersome ideas like environmental protections, worker safety legislation, domestic manufacturing jobs, and the like—is usually bad for shareholders, not to mention Ford. This was best articulated a couple of years ago by former Exxon CEO Lee Raymond, who bluntly reminded an interviewer, “I’m not a U.S. company, and I don’t make decisions based on what’s good for the U.S.”
Guns and Bullets
A third correlation occurs, rather obviously, between defense contractor stock prices and resource wars. Conflicts in Syria, Ukraine, and Iraq have sent defense contractor stocks soaring. Bloomberg reported last fall that the top four Pentagon contractor stock prices, “…rose 19 percent this year through yesterday, outstripping the 2.2 percent gain for the Standard & Poor’s 500 Industrials Index.” Several leading contractors set all-time records. You’ll sometimes find dispassionate market advisors explaining, quite correctly, why defense industry stocks are superb investments, citing placid euphemisms like, “sector resilience” and “forward transparency.” This is not to mention the utter dependency of our imperial war machine on the taxpayer-funded arms production of these firms.
The Totem Pole of Washington Priorities
It isn’t that President Barack Obama despises human rights. It’s just that, in the hierarchy of American policy priorities, human rights don’t crack the top ten. They lag far behind more important concerns such as control over natural resource extraction and distribution, which often requires suppression of popular dissent. Human rights also trail the “threat procurement industry” which must produce new threats to justify the production and sale of more weapons, ostensibly to protect the rights of those that find themselves in the crosshairs of an imaginary enemy.
Obama is pinioned by forces far larger than himself, and must choose to defy the power of money and influence, or become a servant of that power and, in exchange, be granted a pedestal in the pantheon of imperial greats. There is little point reminding anyone how swiftly he resolved this Gordian knot after occupying the White House. But the larger point is that Obama’s dilemma is hardly unique. Every candidate sworn into higher office faces it. Yet this is perfectly natural in a hyper-capitalist economy unrestrained by concepts of social welfare, unbothered by ballot boxes, and undisciplined by prudent regulatory structures. In Washington, capital rules. This means the government will relentlessly pursue “full spectrum dominance” in the geopolitical spectrum, and seek “favorable investment climates” in every territory it tramples along the way. The former serves the latter.
Former U.S. Ambassador to the Soviet Union, George Kennan, wrote in 1948 that, as regarded Asia, “We should cease to talk about vague…objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.” There seem to be few maxims of power more thoroughly internalized by U.S. leaders than Kennan’s prophetic prescription for hegemony. In the end, the maintenance and expansion of American power requires oil to fuel our military, guns to make good on our threats, and the suppression of all alternatives to U.S. rule, particularly when they come from those who would govern themselves.