Sometimes I think all this Koran burning business and the uproar over the Romas in Europe, is whipped up deliberately by the corporate owned media to detract or distract us from something far more pernicious: the cancerous spread of unchecked neo-liberal economic policies.

My purpose is not to diminish the pure folly or a stated intention of such an act as the immolation of a “holy book,” or to try to mitigate the immorality of en masse deportations , but to focus on policies which lead to all kinds of fanaticism and extremism, when they are implemented ” stock, lock, and barrel”; namely, unrelenting neo-liberalism, which destroys the social fabric within states, increases poverty rates, fosters criminality and corruption and then eventually eviscerates the state structure itself. It’s nasty stuff.

The Czechs, French, Greeks man the barricades!

A Czech friend working in international development in Yemen, alerted me recently to the news of 6,000 public sector workers, who are to be sacked by the newly elected neo-liberal regime led by right leaning ODS (The Civic Democratic Party) prime minister Petr Nečas . (The youthful, Mr. Nečas is the ideological offspring or son of Dr. Frankenstein; a disciple of the current president and former “mad professor” of neoliberal dogmas, Vaclav Klaus.) He seems to be running amok. Like a slasher, he’s doing a “hatchet job” not only on the public sector domestically ; the planned spending cuts (to reduce the budget deficit) will hit Czechs living and working abroad too.

The small but relatively prosperous nation of ten million, which has been through 20 years of unprecedented in its size, scale and pace, “pro-market” reforms such as de-regularisation, massive privatisation, health system overhaul in the name of greater efficacy etc., plans also to shut down embassy and consular operations in many diplomatic missions abroad, including in Sanaa. Huge strikes or “walk-outs” are planned for next week (September 21st) which will likely paralyse the Czech capital, as they have this past month, places like Paris, Athens and the London tube.

If we look further to “emerging nations” and markets like South Africa, we see it’s faced with similar social-civil and labour strife. Due to what? This is caused by the same neo-liberal methods used in the richer states to dismantle what is left of the middle class and the so called’ “welfare state” on which they depend on for their well-being and future.

Returning to Europe, this month in France there have been huge public sector strikes to show the government, the workers’ ire with planned reforms to their pensions and threatening job security. In Greece, the government’s diktat (which recall the militaristic zeal of the juntas which ran the country in the 1970s…) to impose draconian budget cuts, freezing wages and raising taxes all to please foreign creditors proceeds apace.

The IMF and the EU act as enablers (in well-tailored suits) to make sure neo-liberal policies are enacted, and austerity measures enforced, to the last letter and no matter what the price to socio-economic stability. In the end, the average Greek (not the yacht owner who evades taxes, or the corrupt official “on the take”) to put it less than grandiloquently, gets to be royally shafted . Athens is doing everything possible to avoid defaulting on its debts re-payments like Argentina did in 2001.

However, calculated reasoning and reflective deductions, tells me, the country is likely to do just that: stop paying off its creditors by the end of this year. This, of course, would lead to a crisis in the Eurozone (Spain, Portugal etc.) But so then, so what? Will the earth stop spinning, or the sun not rise the morning after? Re-financing of the Greek debt under less brutish terms of re-payment, is better than plunging the country into third world like status, where the well-being of banks always triumphs over that of the workers’-pensioners’-taxpayers’. Re-structuring Greece’s debt payments is more humane and rational, than exacting more pain on the population or, yes, even, provoking perhaps a return to military rule. Greece, the last time I checked, is still in Europe, and not in sub- Saharan Africa. Hence, the IMF can’t do to the Greeks what it does to the Congolese or Zambians.

Welcome to the new world war: on the world’s middle-class population

The new reality in the post-2008 financial crash (or just two years after the demise of Lehman brothers) is not the so called “war on terror”. Albeit , that’s already scary enough, above all, those underwear explosives hidden in an African’s nickers on a passenger air-liner… But the most frightening prospect we already face, is the unrelenting and systematic attack on or against the middle class, which is now in full swing. The devastation from this almost messianic campaign to impoverish the middle-class strata of our societies , in my view, will have far greater implication for global security than any terrorist plot or any dormant “sleeper cell” will have or has had in the past.

The middle class is under siege by greedy banks, exploitative corporations who have out-sourced and shipped “decently paying jobs” to Hyderabad and or Guangzhou¹ and Shylock-like states, seeking to squeeze every last shilling out of the overburdened debt-ridden taxpayer to pay for the follies of “drunken bankers”. For their part, unionised workers in Europe, are seeing their wages stagnate or shrink. The ravages of chronic or prolonged unemployment, is another factor debilitating or crippling the “average wage earner” who fears for his or her job and their family’s welfare, while being mired in intractable debt.

If industrialised states continue to “vampirize” the middle- classes as they have until today, then the developed democracies world-wide will be destabilised, and media stunts by “off-keel” pastors will seem like mere light entertainment for the disgruntled somewhat distracted masses.

1. See “India shouldn’t even think of getting into low value manufacturing,” David Lee, The Economic Times, 03/09/10.

Another example of this policy schizophrenia or Jekyll-Hyde dichotomy is in mining. The very international industry often boasts of job creation in local communities wherever they operate abroad and benevolent actions. At home it also makes up a huge chunk of all registered companies on the Toronto and Vancouver stock exchanges. Many Canadians (whether they like it or not) depend on mining for their income in mutual funds and other investments. But there’s a slight flaw to this almost perfect picture. Mining is, environmentally speaking, anathema to the notion of “sustainable development.” There is also above all a high human cost, in terms of displacement of communities and corruption and bribery which undermines democracy in the third world.

Painful Extraction

Last week while the country was still reeling from the revelations of one of its top former ambassadors to Kabul, in another wing of parliament a rapt house of commons committee sat spellbound listening to testimonials and gory blood curdling tales of gang rapes in places like Papua New Guinea¹ and of the underworld-like intimidation of a former Argentinean minister.² There are so many egregious cases of corporate social irresponsibility and wanton plunder coming home to roost now in Ottawa, from far off places most Canadians haven’t even heard about. The accounts of corporate misdeeds, would take reams of reports maybe as high as the peace tower on Parliament Hill to mention them all. Some examples exist in remote “no go zones” like in central Africa,³ where the gains from “conflict mineral” finance endless civil wars. Or in Latin America where decades long ownership battles over huge untapped gold mines lead to international arbitration diplomatic tensions and all kinds of treachery.⁴ Or parts of the Far East such as the Philippines, where lawsuits against Canadian mining companies remain unresolved and drag on for years.⁵

The methodology of mining

These documented case studies reflect poorly of on the countries increasingly sullied and blood soaked international image and on its “good” corporate citizens as well.

Mining, in order to be profitable, must be done on the cheap and in places where labour laws and environmental standards are far below Canadian standards. The methods used to extract the earth’s wealth use toxic chemicals (arsenic, mercury, cyanide) and by means of “heap leaching”; a process which uses huge amount of chemically laced water which then separates the worthless mineral ore waste from the coveted precious gold or silver dug from the ground. As a result, tons of rock removed from an open pit mine site for instance, is then stored as “tailings” in toxic sludge-like sewers or cesspools to stagnate and seep into groundwater for eons. The poisons contaminate the land (above and below) for generations. These practises are, as the MP’s and mining executives, lobbyists listening to the litany of complaints from foreigners affected by mining, quite unpopular among local communities. When resistance is unremitting, then the companies (often in complicity with the local authorities) resort to more sinister methods to clear the land. They hire armed goons, and with the help of the “security forces,” they displace the “trouble makers” in order to make room for an open pit mine. Or worse, they contract hit men to do away with local mining activists opposed to their activities (“Anti Mining Activist Mariano Abarca Assassinated in Chiapas,” The Dominion, 28-11-09). Over the years, this gives both the Canadian-based mining operations and the host country, the quasi status of a pariah or rogue state in the rest of the developing world.

What can be done?

A private member’s bill baptized C-300, which was introduced by Toronto Liberal MP John McKay,⁶ seeks to tighten scrutiny of mining companies’ operations offshore. The bill, although unlikely to ever pass both houses of parliament, would create an ombudsman to examine the complaints for both Canadian citizens and foreigners regarding corporate mining maleficent. But more menacing to the mining operatives is it would cut of taxpayers’ funding for overseas mining ventures which the industry now enjoys by means of EDC (Export Development Canada) and the CPP (Canada Pension Plan).

This given the huge efforts by mining industry minions or lobbyists to bury the bill even before it gets a second reading in the house, seems to be a pie in the sky idea. But it is a first very small step in the right direction. No matter what the good intentions of corporate bosses seeking to assuage the concerns of nervous investors and pension fund holders maybe, or even those of bold men like John McKay, who wish to clean up the dirty industry, there is still this irksome notion: if the mining industry is not reigned in soon, then the evil Mr. Hyde may get the better of the good Dr. Jekyll and more mining horror stories will told on parliament hill to the discomfort of many in the future.

1. “MPs told of gang rapes at mine,” Toronto Star, 24-11-09.
2. “Mining companies threatened me: Ex Argentinean Minister,” Toronto Star, 24-11-09.
3. “Congolese Corporate responsibility,” Financial Post, 18-11-2009.
4. “The Saga which is Las Cristinas,” Selves and Others, 02-02-06.
5. “Appeals court reinstates Philippines pollution lawsuit against Barrick Gold, Placer Dome,” AP, 09-30-09.
6. For details of this bill listen to: “Discussion of Bill C-300 and Corporate Accountability.”

That is thanks to the cash handouts generously given out to them by the Goldman Sachs run administration in Washington. The Wall Street regime continues to make monetary policy over the heads of the electorate, devaluing the dollar purposely (in the name of ‘carry trade’ transactions) while bringing the erstwhile American economic powerhouse to its knees. An ailing economy, whose financial system has imploded like the twin towers, is now headed for an Argentinean style default and/or Weimar like hyper inflation. Casino not entrepreneurial capitalism still rules over us but the ideology is morally bankrupt. So gentlemen place your bets “rien n’est va plus” as the croupiers would say on Wall Street.

1989-2009: From the dislocation of Soviet Empire to today’s American decline

What brought down the Soviet Union was economic morass and industrial paralysis. Along with colonial adventurism in places like Angola and Afghanistan which drained the national treasury. A bloated bureaucracy and an inefficient gargantuan military industrial complex which also bled the federation’s resources. America today is in a symmetrical situation to the Soviet Union’s predicament in the late 1980s. Hence, 2009 maybe to the U.S what 1989 was to the late and somewhat great U.S.S.R. The U.S is entangled in two endless war of occupation one in the Middle East the other in central Asia.

These costly conflicts at a time of great economic distress which recalls the deprivations of the great depression era, have led to historic budget deficits. During the Bush neo con years ( the neocons being a ruthless clique driving foreign policy in the White House equivalent to the KGB apparatchiks who were influencing the Kremlin’s actions abroad) the federal government’s spent like there was no tomorrow and big government grew to monstrous proportions. Huge increases in the military spending added to this horrid fiscal nightmare. Barack Obama, the man of the moment or the “Gorbi” of our times, like the last Soviet leader, has inherited a huge mess which requires Herculean, if not superhuman capacity to clean up. And like the last leader of the Soviet empire, Obama enjoys huge popularity aboard, while being practically loathed, ridiculed and derided at home (especially on the radio airwaves). And now after the recent electoral gains of the Republicans in some key states, he’s wounded (perhaps fatally) politically.

Obama: The post modern “sun king” and absolutism American style

Obama’s pseudo or simulated “Glasnost” or the apparent policy of maximal publicity, openness, and transparency in the activities of all government institutions has led ironically to many Americans placing an absolute blind trust in the man who embodies “change”. There is an abdication of reason in the name of “yes we can”. A kind of collective hypnosis hangs over the nation. Meanwhile, there are some “hard core” pockets of dissent, made up of tea party patriots, who are denouncing his “socialist style” health care project. For its part, the zombie like mass media appears to be either asleep at the wheel to all this, or is willingly (in an insidious and complicit manner) allowing a Soviet style personality cult to take shape-mold the minds of millions and enthrall the masses.

The Obama Factor

The president’s inverted version of “perestroika” (that is the restructuring or retooling of the economy) has been fine tuned to meet the need of the oligarchs and corporate barons who support him and prompt him behind the curtains. Obama and his czar –commissars (and his adoring minions of PR spin operatives) have deftly in a brilliant slight of hand in one swift jest, effectively expropriating the entire financial and industrial sectors in America by means of massive taxpayer funded “bail outs”. These ploys have turned the essence of capitalism upside down, by rewarding cronyism and criminal behavior to the point where “crime pays” very handsomely indeed, and enables billionaires, fraudsters and financiers to obtain great gain almost without almost any pain or punishment. These perverse policies are likely to fail. In the end, Gorbachev’s policies although ostensibly well meaning, actually hastened the demise of the Soviet state. This later led to its fragmentation and disintegration of the communist superpower and its Eastern Empire. America’s current plight may lead to a similar outcome.

Obama’s movements were strictly confined to a limited area, unlike in Europe where he was able to stroll about in Strasbourg or walkabout almost gingerly in Prague. His 24-hour visit which began Thursday afternoon and ended Friday morning was limited to a Los Pinos (the Mexican White House) greetings ceremony complete with noisy schoolchildren waving flags of both nations, an overnight stay at the Inter Continental and a gala dinner in his honor (without his wife by his side) at the Archeological and History Museum. In attendance at the elaborate evening’s banquet were 100 guests, carefully selected by the American embassy. The select list comprised a Mexican who’s who of its most powerful business barons and members of this Latin American nation’s corporate elite including, the billionaire and international investor, Carlos Slim.

The U.S. president arrived into the city on Thursday afternoon, in his official limousine called affectionately “the beast,” a gleaming glamorous version of an armored personal carrier really. He brought along an almost imperial retinue of advisors and top government officials with him, among them: Jim Jones, national security advisor, Steven Chu, secretary of energy, Janet Napolitano from Homeland security, Larry Summers, the White House chief economic council; John O. Brenan, the deputy national security advisor, Daniel Restrepo, U.S. advisor on hemispheric affaires and finally Jeffrey Davidov, former U.S. envoy during the Vincente Fox presidency (2000-2006) and special advisor to the president for the summit of the Americas.

On his agenda with his Mexican counterpart, Felipe Calderon was of course, the issue of security related to the ongoing drug war and arms trafficking. Other just as pressing matters such climate change, its impact on both states, the demands of Mexican farmers to renegotiate NAFTA to make the treaty more equitable for them, and the ongoing immigration issue or the legalization of 12 million “Latinos” living and working illegally in the U.S was sidelined due to the border drug wars.

Why did Obama come to Mexico?

¿A que viene Obama? (Why did Obama come?) was the question asked the most in the Mexican media ahead of his visit it seemed. Obama’s first “working visit” to Mexico as president comes at a time when relations are severely strained between Washington and Mexico City. Issues like the flow of narcotics to the north and the back flow of high caliber weaponry which originates in the U.S, have frayed bilateral ties. In a historical context, Obama came almost 95 years after the notorious “Tampico affair” which led to the breakdown of diplomatic relations between the two neighboring states and prompted U.S. president Woodrow Wilson to dispatch a contingent of U.S. marines to seize and occupy the Mexican port of Vera Cruz on April 21st, 1914 during the upheavals of the Mexican revolution.

The port city was bombed twice by the U.S. Navy with large civil causalities being incurred on the Mexican side. In an article entitled a “Open letter to Barack Obama,” (La Jornada, 17-04-2009) which the U.S president is unlikely to have read, the columnist Gilerto Lopez y Rivas gives readers a historical refresher course which rings alarm bells now; chronicling the military interventions into Mexico by U.S troops when diplomacy simply failed to deliver the desired results.

In his provocative piece, he then questions the legitimacy of the Mexican presidency: “… you should know [Mr. president] that millions of Mexican consider Felipe Calderon a president who came to power by means of an electoral fraud with the support of the military and the complicity of leaders and governors of the Partido Revolucionario Institucional (The Institutional Revolutionary Party), which governed Mexico for over 70 years) … This governing group has brought the country into the current disaster and seeks to consummate a silent annexation with the United States.” Is such treasonous treachery really afoot or this exaggerated nationalist rhetoric? That’s hard to say, but one thing is for sure: the future of Felipe Calderon’s presidency seems to be tied to Obama’s actions or inactions when it comes to border security issue. The White House for its part has put all its chips on Calderon, betting he can vanquish the violent drug lords (with 1.4 billion in U.S assistance wreaking havoc in the country and spilling over into the U.S. This is a risky gambit.

Dr. Obama’s patient, President Calderon

As Miguel Angel Granados Chapa, one of Mexico’s most esteemed journalist and observers of the local political scene pointed out in his daily one man morning radio show last week, Obama’s visit to Mexico was like a quick check up, to assess and take the weakening pulse of his designated crusader against the drug villains, Felipe Calderon. Calderon is a man beleaguered by the increasing violence in his country. And his presidency is in trouble too. The legitimacy of electoral his victory in 2006 remains marred by unrelenting accusations of electoral fraud. Fifty percent of the Mexican voting public repudiated him in the July, 2006 elections. Furthermore, mid term congressional elections are coming again in July. And a very high abstention rate is anticipated this time around; this is hardly a rousing endorsement of the PAN (National Action party) party president.

For many Mexicans it seems Calderon not only “stole” the elections but he also has failed miserably to bring stability and security to his fellow citizens. He is losing “his” drug war. For this reason, Obama has come to prop up his foundering counterpart and try to rescue and extricate Washington’s man, from a perilous quandary. Yet great expectations, on both sides were dampened by harsh and sobering realities; the violent struggle among Mexican drug lords battling for control of the narcotics trade, compounded by a civil war like struggle between the well armed cartels and the federal armed forces who are supposed to put them out of business. But few experts expect this very lucrative trade to diminish any time soon. There’s just too much cash involved and corruption on both sides of the U.S.-Mexican border to curb or even control the two way “free trade” of narcotics and weapons.

A “new era” in the bilateral ties or a simulated change?

A “new era” in bilateral ties was hailed during Obama’s visit. But as Laura Carlsen, a specialist on Latin American affairs based in Mexico City puts it in her assessment of the visit: “President Obama’s visit to Mexico produced vague and contradictory statements, centered on worn-out strategies. Many people who had hoped for a new approach that would seek to redress the inequities of the binational relationship will find little in these declarations to pin their hopes on.” (Huffington Post, 17-04-2009)

In that sense, the visit was high flying in grandiloquent praise for Calderon from Obama and vise versa. It was also a bit of schmooze session in which the Mexican president had hoped some of Obama’s magic might rub off on him as well. Beyond the handshakes and back patting, few substantive measures were agreed upon to deal with the drug war. It looked as if the White Houses wanted to reassure skittish Americans that Mexico was now on the map and a top priority for the Obama administration.

Carlsen sees it as also reassuring the Mexican side: “These overtures no doubt served to decrease tensions between the two governments that built up following U.S. statements of the Mexico as a near ‘failed state’ that was losing a grip on its own territory to drug cartels, and a potential national security threat.” The snag in the U.S.-Mexican game plan she writes, could be that “by focusing the trip on the person of Calderon and seeking to bolster his leadership rating, Obama forgets that Calderon is a polemical president in a deeply divided nation as a result of both his rightwing policies and the doubts of legitimacy that hang over his presidency.”

Nevertheless, the White house strategists have tied outcome of the drug war to the fate of the Calderon presidency. Calderon for his part sees it differently: the ball is in the U.S court. Everything from limiting the flow of high-caliber arms into Mexico from the U.S. side to immigration (Obama promised Calderon to achieve sweeping migration reform, despite a hostile U.S. Congress and rising protectionism north of the border).

Hence, Obama’s patient is ill, and the U.S. knows it. But by rushing to his bedside, Obama hopes his near cult-like status and popularity abroad can magically cure what ills Calderon and his country. Besides the drug war, Calderon also has to deal with the impact of the global financial crisis which is hitting home hard which began north of the border. Recently he asked for a $ 47 billion USD credit line or loan from the IMF as a preventive measure or to bolster the wobbly pesos and offset potential speculative attacks against the historically wobbly currency.

Mr. Obama tear down this border wall!

Ronald Reagan on a visit to West Berlin at the Brandenburg Gate in 1987, implored his Soviet counterpart to break down barriers to end the call war. “Mr. Gorbachev tear down this wall!” He exclaimed to cheerful throngs of cold war weary, Germans divided for decades. Mexico and the U.S. may not be on the opposite sides of an ideological struggle today, but none the less there is an irony here. While Obama stood “shoulder to should” with his Mexican host and expounded on the close and neighborly ties and shared values of both nations, the U.S. Department of homeland security proceeded with the construction (613 miles so far) for the so-called “border fence” meant to deny Mexican migrants their chance to achieve the increasingly elusive “American dream.” The militarization of the border area continues apace, despite the flowery verbiage at the highest levels. Perhaps this huge fence can be interpreted as a “Mending wall,” the title of a poem by Robert Frost from which the adage “good fences make good neighbors” originated. But Mexican may not see it this way.

Obama previously came from a “borderless Europe.” Yet North America remains a divided continent in terns of borders and wealth and opportunity. The equal partnership looks more uneven than ever before. There is however, thankfully no more talk publicly of Mexico being the U.S.’ “backyard” but as Jesus Velasco Marquez summed up the state of the relationship: “The United States will not change the position by which Mexico must submit to [the U.S.] its strategy.” (La Cronica, 13-04-2009). A strategy whose success or failure, from now on it seems depends on the fate and future of Felipe Calderon.

However, the Czech and Poles fear such a move might leave them exposed to the Russians’ expansionist designs. Such thinking is perhaps delusional and paranoid. But when reviewing the region’s endless history of domination and repeated sinister betrayal (mostly by the West — Munich in 1938, Yalta in 1945), the central Europeans may have reasons to feel unease. But then this isn’t 1938, 1945, or even 1968. ‘New Europe,’ despite its recent tribulations, is firmly anchored and embedded within both the EU and the US-led NATO. The region’s fortunes are now tied, for better or worse, to those in Brussels; not in Moscow anymore.

Russia: The Key to Global Stability

For various reasons, which are becoming increasingly evident, and despite the diplomatic obfuscation deployed by Brussels and Washington, the West cannot afford to lose Russia.

Missile defense piled up, next to their border like some futurist ‘Maginot line risks alienating a key strategic partner. The West needs Russian help for a host of vital logistical, technical, and diplomatic reasons in dealing with so called rogue states. Those incubators and so called sponsors of ‘terrorism’ and drug trafficking, like Afghanistan, Iran and, to a lesser extent North Korea (for cooperation in nuclear weapons proliferation), without Russian pressure on them will only become more bold and unwieldy.

Obama’s new team knows this. They have made semi-successful attempts at resetting and recalibrating the bilateral relationship (such as this week’s aborted trade-off on Iran and the missiles); but Moscow doesn’t want to bargain when it has the upper hand.

Moreover, the doormat approach to Russia, under Bush I, Clinton, and Bush II, during the two decades since the implosion of the Soviet Union, has been the mainstay or leitmotif of the US approach to the former superpower, and has dismally backfired.

Russia, today, is the indispensable player, both in its backyard and beyond. The US missile defense plan (despite the benefits to General Dynamics, Raytheon and other US corporations on the Pentagon’s payroll) is just too high a price to pay for losing the Russians. Therefore, the West needs them on their side as never before since the end of the cold war.

Taking Notice of Russia

Russia’s comeback has taken the west by surprise. Throughout the 1990s, the cowed, beaten, and tamed bear which lost the cold war and the arms race to the other superpower, danced to the tune of free market ‘reforms’ while Western ‘democracies’ steadily encroached on its turf in the Baltic States, the Balkans (Serbia, Kosovo), central Asian republics, Afghanistan, and the Black Sea area (Georgia).

With the rise of a more self-assertive nation under what some call the ‘ruthless rule’ of Vladimir Putin, and funded by an energy bonanza or resource boom earlier in this decade, Russia has returned with a vengeance to the world stage. However, this is not to everyone’s liking.

Moscow proved its military savvy in Caucasia last August with its adroit and lightning counter-attack against Georgia’s bungled incursion into disputed territory. On a wider global scale, the Kremlin has strengthened ties with China by means of the ‘NATO of the east’ — the Shanghai Cooperation Council (SCC). And there is speculation that Iran might join eventually. Western pressure, such as threats of squeezing Tehran with further sanctions, may hasten such a possibility.

President Obama: Post Cold War Warrior or a Kissinger Realist Ready for Détente?

As for Osama’s speech next month in Prague, the much anticipated address will most likely disclose Washington’s real intentions regarding the missile defense scheme: that it was a dismally planned and misconceived Bush project aimed against Russia and was deliberately designed to further weaken the would-be rival. The new man in the White House will deal with Moscow differently, it is assumed — in a manner more attuned to Moscow’s legitimate security interests in the ‘New Europe” and in Eurasia.

Officially, and ostensibly, the plan seeks to install radar, and anti-missile interceptors, and even station US troops perhaps permanently in Poland and the Czech Republic to prevent attacks from states like Iran.

Russia is adamantly opposed to this unilateral move. It perceives it as an outright provocation, a hostile act, and inevitably a first step in restarting an arms race in the region, which could easily spiral out of control. Who can blame them?

But the veil of deception is becoming evermore transparent and fading fast. In Brussels, one of the US’s closest NATO allies and an old standing bulwark against Russia, Turkey, almost admitted that the ‘defense shield’ is meant to threaten Russia and not Iran, as is officially stated.

In an article which appeared in the Turkish English daily Today’s Zaman [“Turkish FM Babacan courts Russia, questions missile defense system”, March 6th, 2009], a newspaper closely affiliated with the governing AKP party, Turkey has questioned the wisdom of the defense deal in central Europe. Ankara believes “that it [the defense shield] appeared to be aimed at Russia and not Iran, as the United States insists.”

This position was clarified by the Turkish foreign minister Ali Babacan who, at a NATO foreign ministers meeting this week, expressed doubts about Washington’s assertions that the Polish missile/Czech radar duo is supposed to ward off an Iranian attack. “First we have to make clear who this project is aimed at. Who is the threat in mind when this system is built?” the top Turkish diplomat questioned.

He went on to say: “”If the target was really Iran, we would not have had the problems we have today between Russia and the United States … It means there are other aspects to the matter.” And those aspects he seems to be inferring are Russia’s outspoken objections to this plan, which could heighten tensions not only in central Europe but also in the Black Sea area. The minister’s remarks were meant, perhaps, to warn Washington not to proceed with the scheme. He added in a somewhat worrisome tone: “Whenever there is tension in ties with Russia, both sides of the tension lose. We believe threatening or being threatened should not be an element of relations. Every country may have security concerns, but they all must be resolved through discussion,” Babacan asserted.

Iran or Russia the Bad Guy?

Iran is supposed to be perceived as the antagonist here, and is cast as the bad guy. Yet it is Russia, as Turkish diplomacy clearly sees, that is being targeted by the missile scheme and not Iran. Furthermore, the fact is this whole plan has been initiated by the US and is, seemingly, part of an overall recontainment strategy against its erstwhile cold war rival. The counter spin coming out of Washington seeks to allay such ‘unfounded’ and ‘exaggerated’ fears. American officials argue (until they run out of oxygen, it seems) that the military inhalations are meant to dissuade an attack from states like Iran. This is flummery. Beyond the Iranian bogeyman smokescreen lies the ‘real deal’ and goal of the US and NATO backed plan — to further subjugate the former superpower which today is referred to as ‘re-emerging Russia’ while providing a big fillip to the American arms industry.

Yet not everybody is buying, it seems. As the Turkish foreign minister rightly puts it, “Policies that make Russia feel besieged are wrong.” Indeed they are mistaken, and so are the recklessly-conceived plans known as the Missile Defense Shield.

Michael Werbowski: How would you assess the past 20 years of transition in central Europe? Specifically in the Czech Republic? Has the two decades of economic reforms driven by the neo liberal dogma improved the lot of the average Czech citizen?

Karl Koecher: Obviously, you have in mind the transition in four countries – the Czech Republic, Slovakia, Hungary and Poland. In those four countries themselves the group is usually referred to not as “central European” – a category that does not quite fit all four and also has a historical context which could invite some misleading generalizations – but as the Visegrad Four (V4). The name comes from Visegrad, Hungary, where Hungary, Poland and then still existing Czechoslovakia declared their intention – so far largely unfulfilled – to cooperate in maters of European integration.

From among the four, the Czechs stand out as a nation having much less in common – economically as well historically – with the other three than they themselves have with one another. Their industrial economy has a tradition going back to the 19th century, and even during the communist era belonged to the strongest in the Soviet bloc. The Czechs also have had no fascist past of their own making – to the contrary, as the majority nation in pre-World-War II Czechoslovakia they were the champions of the only democratic government in the respective area, and their thoroughly secular political culture (70 per cent Czechs are avowed atheists) has been free, at least until very recently, of nationalistic extremism.

In view of that it might had been expected that the Czech transition to open society, free market economy and its integration into the European community would be a smooth ride in which the Czechs would come well ahead of the Visegrad Four. This, however, did not come to pass. The history of that transition is a history of liquidation of many, if not most, Czech flagship industries, such as the Poldi Steel Mills, the Skoda armament manufacture, and the near liquidation of many others, among them the Bohemian crystal production. The principal privatization campaign, began in 1991 according to the blueprints of Vaclav Klaus and his collaborators has led, due to the looting by the new owners, to the disappearance without a trace of assets totaling some 600 billion koruna – an amount about one and a half times the national budget expenses of the Czechoslovak Republic for 1991.

Interestingly, the disastrous privatization drive took place only in the Czech half of the country; the then already highly autonomous Slovak authorities eventually chose not to participate in it. The privatization of the banks let to further plunder, which the cost to the government alone in bailout packages of some 400 billion koruna (approx $ 2 Billion USD). And while there had been a change in the government – the social democrats replacing Klaus’ right-wing civic democrats – it had no effect on the looting of national assets; it went on under both, unabated and practically unpunished, partly because of judicial graft and partly because of the dismal inefficiency of the system of justice still staffed mostly by communist-era justices.

Nevertheless, Czech national economy was growing until recently at the fastest rate among the V4. However, that has been due largely to the activities of foreign investors attracted temporarily by the good skills of the Czech labor force and substantially lower wages than in the EU core countries. Right now, that economic growth is coming to a screeching halt with predictions of industrial growth for 2009 near or even below zero – a testimony to a promising potential shamelessly wasted.

The crucial question is, of course how could this have happened? The more so that it was not happening behind the public’s back – the mass media, regardless of their ideological preferences had been reporting on the transition woes by and large faithfully and in detail. Surely, there are numerous factors that have contributed to this state of affairs, but, in my opinion, one circumstance towers above all other from the very beginning of the transition process: the appearance of a new political elite which did not emerge from any standard political constituencies, but managed to avail itself of political power simply because of being at the right place at the right time, and then went on to make use of it in the service of its own particular interests.

This phenomenon of a leadership without a constituency has been particular only to Czechoslovakia. Poland entered the post-communist era with a leadership which has proven its leadership qualities in carrying out a mass-supported struggle with the pro-Soviet elements in the government, and in Hungary during the last years of the communist rule a reform-minded fraction of the communist party was enjoying considerable support of the public. The reason that the situation was so different in Czechoslovakia had been the paranoid fear of the ultra-conservative communist party top apparatus of a reform movement following in the footsteps of the Prague Spring, whose crushing by the Soviet invasion had been the foundation of their positions of power: they spared no effort to make sure that nobody who could challenge their positions would acquire any office or form a platform for channeling public dissent.

Consequently, when the end came, there simply had not been anybody with leadership qualities available to chart and safeguard the rules for a non-problematic transition. It can be, of course, argued that there had been Vaclav Havel and the Charter 77 group headed by him, as well as several protagonists of the Prague Spring, including its best known personality Alexander Dubcek. As for the idea that Charter 77 had been in the communist Czechoslovakia a political movement enjoying public support, and Vaclav Havel a dissident leader of any renown is but a myth The activities of Charter 77 consisted exclusively of declarative statements of dissent and petitions for observance of civil rights none of which represented any political program or even sparked any public protest actions, and went entirely unnoticed by the general public at home.

The myth of an influential movement and leadership in the struggle against communist rule is entirely due to the publicity which Charter 77 enjoyed in the Western media. As for the surviving protagonists of the Prague Spring, the twenty years in isolation from political life and unpreparedness for a merciless power struggle to fill the power vacuum made them easy victims of a joint effort to exclude them from public life by an alliance formed just for that purpose by the Vaclav Havel’s set and the newly emerging groups aspiring for political offices. For Vaclav Havel it meant becoming the country’s president instead of Alexander Dubcek, despite the fact that Havel was, unlike Dubcek, for the Czechs and Slovaks a virtually unknown.

His presidency, however, did not represent any genuine leadership and had no impact on the lot of the average citizen. The political force, which affected that lot were above all the neo liberals who in 1991, launched the privatization drive which played into the hands of the “robber barons”. Did the neoliberals improve the lot of the average man in the street? For most of the people their lot undoubtedly improved, though not for that many, only slightly more than half of the respondents in the opinion polls believe that they are better off now than they were at the end of the communist era. However, that improvement did not take place thanks to the efforts of the neo liberals, but despite them.

MW: There have been economic disturbances in Hungary and the Ukraine recently. Both countries requested an IMF bailout to keep their economies afloat. There have also been street protest in the Baltics and Bulgaria and other post communist states. What in your view are the sources of this popular unrest?

KK: Anger, naturally. At losing jobs, corrupt and mendacious government officials, rising criminality, etc. etc. The really interesting question, however, is why people in those countries feel that it makes sense to vent it publicly and collectively. For I strongly doubt that similar outbursts could take place also in the Czech Republic. Of course, the impact of the crisis has been so far much milder here, but even if matters got much worse, I do not believe that the Czechs would take to the streets and riot. How come? There can be, of course, only a highly speculative explanation, but in my opinion the reason lies in the long history of vain mass displays of collective unanimity embedded in the Czech collective memory: the futile manifestations at the time of the signing of the Munich agreement demanding armed defense against Nazi Germany, vain mass demonstration against the invading armies sent to crush the Prague Spring, and, not in the least, also the forlorn hopes for honorable government and socially just society of the Velvet Revolution. Sure, public ills make the Czechs angry like everybody else, but when they do, they sulk silently and in private.

MW: Was the Czech Slovak split a good thing for both states. Some say it was done deliberately to weaken what was once a much larger and functional federation which had more economic clout in the world that the two separate states have now?

KK: I myself am convinced that the split was in the best interest of both states. Although the Czech and Slovak languages are very similar and our lifestyles appear to be more or less the same, there is a marked difference between our social cultures – among other things, the Slovaks are, unlike the Czechs, passionately nationalistic, the Roman Catholic Church exercises a strong influence on their lives, and, as all young nations which have only recently asserted their self-determination have a much more alert public consciousness than the skeptical Czechs.

Their position as a minority nation in the former Czechoslovak Republic made them perpetually fear that the Czech were trying to dominate them, and the mutual coexistence had been far less than harmonious, before World War II as well as during the communist era,. After the fall of the latter, the common state became almost nonfunctional, especially after the establishment of a federal arrangement in which the Slovaks had a very strong degree of autonomy. Surely there were powers that were delighted by the fact that the split replaced an economically – and also politically, as far as international relations were concerned – a stronger entity by two weaker ones; the Federal Republic of Germany and Austria, or the Vatican, for instance, might well fit onto that category.

But even if there were outside forces actively supporting the Slovak separatists who finally pushed through the separation, all that they could do, in my opinion, was nothing more than to precipitate the split, which was inevitable, by a few years.

MW: Transparency International rated corruption on the level of Nigeria in the Czech Republic. Why has this blight become so pervasive in the country?

KK: In search of an explanation we have to go back to the last few years of the communist regime and its economic underworld providing services which the regime was not able to provide itself, in the first place viable hard currency exchange. The rigid, absurdly bureaucratized banking system could not satisfy the currency needs of the increasing numbers of tourists coming to the country from the West, nor provide the Czechoslovaks granted exist visas sufficient amounts of Western currency at market rates. So it silently tolerated currency black marketeers who did not have any problem to take care of both, and the currency black market swiftly expanded,
acquiring in the process more and more of the organized crime character, with a few big dealers amassing huge fortunes and enforcing their rules by violence; after the collapse of the regime they became the core of organized crime in the new post-communist state.

Having understandably no pro-communist sympathies, they welcomed the Velvet Revolution, and the rise of the new, funds, and contacts lacking leadership totally ignorant of government business which provided them with an opportunity of a lifetime – an opportunity to endear themselves to, and eventually corrupt, significant numbers of government officials, and to push through the appointments of their associates into selected positions. Thus the political establishment and organized crime became intertwined, corruption rampant, and since the corruption process has affected both major political parties, there is no remedy is in sight even the government changes: there are simply no political forces capable or willing to put and end to it.

MW: Many Czechs see the EU as a large invasive and authoritarian body. President Klaus has even compared it to the former Soviet Union. Why are Czechs so hostile to the EU in your view?

KK: Maybe many, but certainly not most, despite the forceful attempts of president Klaus and his political allies to brainwash the public. According to an about two weeks old opinion poll, Czech membership is perceived as a good thing by 46 per cent of the respondents, but that formulation can be misleading: the same poll established that over 40 percent of the respondents are, as far as Czech membership in the EU is concerned, undecided, and only 12 per cent see it as a bad thing. Which in my opinion means that altogether 86 per cent of the Czechs are not hostile to the EU? And 46 of outright supporters is not such a dismally small figure, and can easily change for the better with more EU funds being made available (which is in the offing).

After all, the European average of supporters of EU is only 7 points higher, 53 per cent. As for the Klaus-sponsored anti-EU crusade, I am convinced that the true reason behind it is a desire to avoid accountability on an international level for the spate of illicit business practices, judicial abuses and corruption benefiting certain particular interest groups.

MW: Will the Obama presidency change Czech- American relations? Might the new president renounce plans for an American funded Radar site in the country?

KK: I don’t think that the Obama presidency will mean any substantial changes in Czech American relations – the pro-American lobby here is guided by particular interests which will remain unaffected by the change in American administration, and the United States has no reason to reassess its relations with us, as the Czech government’s attitude toward the US is as servile as humanly possible. As for the America radar, I believe that it will never be built here. which is just as well, since at least two thirds of the population is opposed to it. In my opinion, the primary motive behind the plans to build it had been the now defunct desire to provide lucrative business deals to firms supporting President Bush. If the US still discusses the plan with the Russians, it is, in my opinion, only to negotiate the price for which it will be willing to formally bury it.

MW: What are the greatest challenges facing the Czech Republic during its EU presidency?

KK: Not to appear as incompetent parochial dummies, but I am afraid that this is a task well above the head of the current Czech government.

MW: Is there any nostalgia among Czechs for the old cold war days in the country, when people had far less freedom and consumer choices, yet life was more predictable and there was less social and economic stress as there is today?

KK: Yes, to some degree such a nostalgia does indeed exists as evidenced for instance by the fact that the Czech communist party is the third strongest party in the country – in the 2008 elections to the regional representations its candidates got 15 per cent of the vote. But that number comprises only those with pronounced nostalgic sentiments; the number of those feeling a less pronounced, but still definite nostalgia is probably higher. To make any reasonable estimate is, however, impossible; it is one of the questions that the polling agencies seem to be determined to avoid at any cost. A four- month old opinion poll asking the respondents whether they are satisfied with the direction in which the Czech society is moving, 30 per cent said that they are satisfied with it, 35 per cent were definitely dissatisfied, and the rest thought that there is no discernible direction in which the Czech society is moving. It may well be that a substantial part of those not happy with the course that the country is taking foster some sympathies for the old times.

I recall reading The Global Gamble by Peter Gowan in the late 1990s while doing my master’s dissertation in post-communist studies. The book almost seems prescient now because it had predicted all that has come about in the region. In hindsight, the stock phrases and slogans of “return to Europe” embodied by Lech Walesa and Vaclav Havel, which I heard back then, today seem so hackneyed, irrelevant, and hollow. But then they were once essential in order to sell the “new order” to the masses of central Europeans eager to join the West once again.

What Europe have they returned to? One that has virtually implemented, for two decades, an unsettling blend of unrelenting “shock therapy” mixed with neoliberalism with mixed results? It seems the transformation has created a “united Europe” that has “successfully” devised a corporate takeover of the entire region of the “other Europe” and in the process mothballed textile factories in Poznan, coalmines in Katowice, steel mills and armaments factories in Slovakia and shipyards in Gdansk, the city by the sea known as the birthplace of the “solidarity” movement.

The West introduced market capitalism immediately after the fall of the wall. Its main sales or pitchman was Jeffrey Sachs, a brilliant young Harvard professor who was practically anointed as the apostle or father of “shock therapy” in the form of the “new economic theory of the transition.” As Gowan describes it, “a western-directed plan for regional social engineering” to achieve a market economy. At the time, Sachs ran up against skepticism from some eminent thinkers, for example, Baron Ralf Gustav Darendorf.

Instead of imposing an economic model on central Europe, Darendorf, an “old school” German social democrat, argued that the cornerstone for fostering regional growth should be “respecting the existing tissue of social institutions” and strengthening social institutions through “the circulation of ideas and the building of consensus through debate, negotiations and compromise,” explains Gowan, who is professor of International Relations at London Metropolitan University. The legal state where the “rule of law” was supposed to reign has to be established by means of an “open society” or “civil society”; again slogans popularized by “movers and shakers” at the time, such as George Soros. The reality, however, was quite different. Sachs rejected Darendorf’s “open experimentation” in a free society. He feared it would lead the populace down the wrong road toward reform.

Another option for reforming centralized economics into examples of Western capitalism was offered by the eminent banker Alfred Herrhausen, who advocated a less radical and more “gradualist” introduction of “market capitalism” into Eastern and central Europe. The mainstay of this policy was to keep the old Soviet Union intact as an economic entity. This was considered heresy by the Americans and subsequently ruled out. This idea would have enabled the” target” region to maintain trade ties with its main and former export market in the East while at the same time moving new Europe generally or gradually toward free market capitalism in the West. Sachs believed this might also lead the flock dangerously astray.

The other plan, as Gowan points out in his book, was an American one that involved a huge restructuring of the EU’s own institutions and called for the dismantling of the common agricultural policy, or CAP, in order to open up Western European markets to central Europe ‘s agricultural exports. Or as Gowan mentioned in a recent interview, “It was to give the region a strong insertion into the markets of Western Europe.” However, Brussels was simply not ready to implement its own reforms. Basically, what Brussels told central Europeans in the early 1990′s, was “‘we’re not going to allow your exports in,’” Gowan said.

Another alternative was proposed by Jacques Attali, a top advisor to French President Francois Mitterrand and the founder of the European Bank for Reconstruction and Development. The bank was meant to be a model institution for regional development. Essentially, its role was meant to provide financing and private capital inflow to help build infrastructure, thereby creating employment locally while maintaining the new Europe ‘s industrial base more or less intact, which in turn would stimulate “home grown” growth. But this also ran against the vision of the shock therapists who sought to dismantle entire industries in the region to allow foreign multinationals to restructure and retake “redundant” factories bought out and run by EU companies in the “old” Europe.

“The fact of the matter is that there’s a huge impoverishment of a very large number of people” in the new Europe, Gowan says. “This fact is covered over by a discourse” that talks about success and failure and deliberately conceals “the terrible destruction of economic assets” that took place in the region, he adds.

Sachs’s economic model targeted the entire Eastern Europe. This model was in line with an Anglo American compact on how to transform the region. Its main experimental patient was Poland, where the economists’ “shock therapy” theories were parroted by officials from the International Monetary Fund, the World Bank, and the U.S. — all singing the virtues of Sachs’ policy.

The mantra was this: foreign direct investment (FDI) “creates jobs, enhances products, generates economic growth, and raises the standard of living. It brings new technologies, new management techniques, new markets, and better ways of doing business.” A full assault on domestic production was part of the main game plan. This occurred in all sectors of the post communist economies.

In the consumer goods sector, it was most visible. Polish after shave, Czech cologne, etc. suddenly began to disappear from shop shelves. According to Gowan, between 1989 and 1991, Hungary saw imports from Western European multinationals double. In Poland, the largest market in the region, they rose in the same period from 18.2 percent to 31.6 percent of total imports. This “crowded out” local producers and put them out of business. Gowan writes:

“The export bonanza was the result of more than export credits. It was strongly subsidized by Western governments through export credits and credit guarantees to their own exporting firms … these supports were presented as aid for the target countries of the export drive.”

During the 1990s, while the I.M.F. and the World Bank were demanding that central European governments remove subsidies to their agricultural sectors, the EU was flooding the region with heavily subsided farm products from its farmers. This nearly wiped out the Polish and Hungarian peasantry, which was relatively self-sufficient and profitable during the communist era. Due to these dumping policies, the largest opposition to further EU membership came from Polish farmers and their Hungarian colleagues. This “protest vote” was channeled into support for the “populists”, among them, Andrej Lepper of the nationalist “self-defense party” and his comrades in arms the “Polish peasant party.”

Furthermore, throughout the height of shock therapy of the early 1990′s, trade barriers were removed as advocated by the high priests of trade liberalization. The now discredited and nearly defunct World Trade Organization ordered massive dumping into the region, which resulted in Czech and Polish pork producers being inundated by highly subsided EU ham and bacon. These policies made central Europe ‘s agricultural sector “redundant,” according to Gowan. To make matters worse, in the early 1990′s, the EU imposed a virtual ban on all beef and cattle imports from the central European region due to an incidence of swine fever in Hungary.

In the wake of the euphoria associated with the bloodless “velvet revolution” I sat in a Prague beer cellar, or pivince, along with other reporters, diplomat-spies. In front of me was Vladimir Dlouhy, who is today an economic consultant for Goldman Sachs and for the ABB Corporation. Back then, the former Czechoslovak minister of trade was one of the key players in implementing “market friendly” reforms in the Czech-Slovak republic.

He explained to us the virtues and complexities of the government’s coupon or voucher privatizations. I listened intently to his incantation bewildered by all this. A few years on, the scheme was exposed for the sham it really was. It turned out for many Czechs who invested their savings in the coupon privatization that these grand schemes were elaborate swindles. Some background on this: as Gowan’s book points out, after the wall fell central Europe desperately needed access to Western capital. In order to get it, central Europe had to open up its market to foreign investors and raise and attract capital into the region.

As part of these “mercantilist” policies, the “holy trinity” of the W.B.-I.M.F.-EU “targeted” countries like Hungary, the Czech Republic, and Slovakia opened their whole industrial sectors to foreign investors and said to the EU “take what you want,” as Gowan puts it. These neoliberal policies, however, favored multinational corporations based in EU member states and were implemented with the help of a support system for Brussels-based big business lobbies at the expense of local industry. New Europe ‘s governments had to privatize much of their industry and sell it off to foreign interests as fast as possible. These stratagems were known as “coupon privatization.” Commenting on the differences of this scheme between these states, The Economist pointed out:

“Each country has gone its own way. The Czech Republic has concentrated on vouchers in order to move fast. Hungary has focused on sell-offs in hopes of encouraging efficient management, but this has gone badly wrong in places. Poland started with sell-offs, but found the process slow and is now moving to vouchers. Somehow, it all comes down to the same thing: because there is virtually no accumulated capital in private hands, the state ends up paying for most privatizations. Since it is all new, the rules are often imprecise or simply lacking altogether” (Nov. 18, 1995).

As the weekly newsmagazine mentions above, the privatization policies were rather opaque and mismanaged and often resulted in prized domestic assets such as energy, transportation, or manufacturing being sold off for huge profit to foreign interests. Naturally, the loin’s share of profits from these dubious transactions went to crooked government officials, former communist party wheelers, and other cronies running the privatization programs. This left local pensioners and “small investors” out in the cold with practically worthless state-issued coupons to cash in for a pittance of their original worth.

In addition, the process was rife with corruption and resulted in millions of Czechs, Poles, and Hungarians losing their savings invested in state-owned yet foreign-run companies. The Western concept of “corporate governance,” where management is supposed to accountable to the shareholders, was totally absent in the privatization process and seemed meaningless to the EU technocrats who oversaw the process. Much of this was revealed in extensive regional media coverage in the late 1990′s.

After the big heist of national assets by foreigners was over, in 2000, the World Bank, I.M.F. technocrats, and neoliberal ideologues came to Prague to behold and admire the decades of neoliberal policies that have since born mostly bitter fruits for the majority of new Europe ‘s populace. Yet back then, there were still no signs of imminent political earth tremors we see in Hungary today. So a “steady as she goes” approach was taken to further reforms and integration of the new Europe into the EU’s economic sphere of influence.

Following the recent disturbances in the Baltics and parts of the Balkans, which sent shivers down the spines of portfolio managers dealing in “emerging markets,” it has become apparent that the region suffers from a bad case of privatization fatigue and the side effects of unbridled speculative greed. The message is clear: 20 years after the fall of communism appetite for more reform has waned. In fact, the region has swallowed all it can take for now. The W.B.-I.M.F.-EU “holy trinity” has pushed central Europe to the brink of an Argentine-style collapse.