It was a relief to hear that the government of Sri Lanka was at last responding to mounting domestic and international criticism, and had begun releasing the Vanni IDPs. Perhaps the shocking report in the Sunday Times on 6 September about human trafficking at the internment camps was partly responsible. An exemplary piece of investigative journalism, it revealed that up to 20,000 IDPs had been ransomed by desperate relatives who were able and willing to pay lakhs of rupees to secure their release, and had left the camps. This exposes so-called ‘screening for Liberation Tigers of Tamil Eelam (LTTE) cadres’ for what it is: a cover for a lucrative flesh trade, carried out with the collusion of elements in the government and armed forces who get a cut out of it. It also explains why the camp authorities refused to release a one-year-old child to leave with its grandmother, in a case cited by V. Anandasangaree of the Tamil United Liberation Front: since an infant could hardly be suspected of being a dreaded LTTE terrorist, the reason was surely that a ransom had not been paid.

One would have to be naïve indeed to believe that those who have been ransomed are ‘innocent’ while those who remain are more likely to be LTTE cadres. On the contrary, anyone in the camps who had any value for the LTTE diaspora would certainly have escaped by now. Conversely, we can be sure that the unfortunate souls left rotting in these camps are of no interest to whatever remains of the LTTE. They are the victims, not perpetrators, of crimes. The UN too seems to have woken up to the fact that by funding these camps it is colluding, willy-nilly, in a crime against humanity – the denial of liberty and other fundamental human rights to a civilian population – and has made it clear that it cannot continue doing so much longer. UN Under Secretary General for Political Affairs Lynn Pascoe reiterated the demand that the Vanni IDPs should be granted freedom of movement during his recent visit.

While we welcome the government’s announcement that it is willing to release IDPs from the camps to relatives willing to house them, it is a matter of concern that even while President Rajapaksa was telling Mr Pascoe that the reason so few Internally displaced persons (IDPs) had been released to live with their relatives was because there were so few applications, the GA of Vavuniya was refusing to release IDPs to their relatives! This suggests that ransoms are still being demanded, and IDPs unable to pay them are not being released. The government’s condition that IDPs should be released only to relatives makes sense for unaccompanied children, but why can’t adults go and live in rented accommodation instead of staying with relatives if they so choose?

Furthermore, the whole farce of ‘screening’, which has been dragged on for more than four months, should be stopped. The best proof that the LTTE is no longer a threat in Sri Lanka is the release of top LTTE cadres Daya Master and George Master, who were with Prabakaran almost to the very end. Would the authorities have released them on bail if there were any danger from the LTTE? Hardly. If they can be released, why are lakhs of innocent civilians being detained? Did the President avoid the UN General Assembly because he was unable to answer this question?

Release should not be confused with resettlement. IDPs who wish to go and live outside the camps should be free to do so. Those who wish to remain in the camps until their original habitats are de-mined and reconstructed should be allowed to remain, but should be free to move in and out of the camps instead of being imprisoned in them as they are now, and free to leave permanently as and when they wish. The only condition attached should be that they inform the international and local agencies which are providing for them whenever they leave for good, to make it clear that there is no need to feed them any longer. The resources freed by their departure could be used to speed up de-mining and reconstruction in the war-devastated areas, and will undoubtedly improve conditions for those who choose to remain in the camps. The release of all the Vanni IDPs would end this shameful chapter in Sri Lanka’s history.

Resettlement

Pressure on the government to ensure speedy resettlement of all IDPs should also be kept up. This should include not only IDPs who fled the recent fighting but also those who were displaced earlier, including Muslims displaced in 1990. Citizens’ committees would need to be set up to deal with problems, such as those which occur where others are living in the homes of displaced people who wish to return. It will not be easy, but with goodwill, these problems can be resolved, and the sooner the better. All those who want to return to their original homes should be accommodated, if not in their original homes, at least in the neighbourhood, or in some other place of their choice. This is the only way to reverse the ethnic cleansing drives carried out by both the state and the LTTE, and rebuild integrated communities.

An unnecessary obstacle to resettlement is created by the government’s designation of some of the areas from which people have been displaced as ‘High Security Zones’ (HSZs), some of which double as ‘Special Economic Zones’(!). Earlier attempts to dismantle these were stalled by the argument that they were necessary so long as the LTTE had not been disarmed. Now that the LTTE has definitively been disarmed, they serve no justifiable purpose. The only way their persistence can be explained is as a form of ethnic cleansing, since in practically every case, the people displaced by them are Tamils and Muslims. A good example is Sampur in the East, where the inhabitants were driven out by shelling and are now being denied the right to return, while India colludes in this ethnic cleansing by undertaking to build a coal-fired power plant on their land. The process of resettlement cannot be regarded as complete until people displaced by HSZs have also been granted the right of return. But, some people argue, the LTTE is still a threat, and therefore we need to retain the HSZs, along with the Prevention of Terrorism Act (PTA) and Emergency provisions. Is this true?

Is the War Over? Or Was the President Lying?

Back in May, President Rajapaksa gave a speech in which he claimed that ‘our Motherland has been completely freed from the clutches of separatist terrorism’. He spoke of ‘the proud victory we have achieved today by defeating the world’s most ruthless terrorist organization’ and ‘the defeat of the LTTE and the breakdown of their armed strength’. There was no ambiguity about his words: he told us that the war was over, the LTTE defeated, their armed strength broken down. On this understanding, there were widespread celebrations, and the President gained enormous popularity.

There is no reason to suppose that the President was lying. Yet in August a senior government official was reported as saying that the LTTE was still capable of reorganising in Sri Lanka, and in September IGP Jayantha Wickramaratne reiterated that the threat of the Tamil Tigers is still alive in Sri Lanka, and they have not been completely defeated. On the face of it, these people were implying that the President was a liar when he said that Sri Lanka had been completely freed from separatist terrorism, and a fraud for claiming credit for the defeat of the LTTE. So why does the President tolerate such insults from his underlings?

The reason seems to be that the government is caught in the same trap of war-dependence which was the downfall of the LTTE. A war justifies repressive measures that would never be acceptable in peacetime, and the LTTE would have been unable to function without these. That is why it broke one ceasefire after another, let slip one opportunity after another to negotiate a just peace. But this had a disastrous effect on its support base. With all due respect to the soldiers who risked and lost their lives in the war, their courage alone would not have brought about the defeat of the LTTE. The Israeli armed forces are many times stronger than the Sri Lankan military, and the Palestinians’ arsenal is pathetic by comparison with that of the LTTE, yet the Palestinian resistance has survived for over sixty years. That is because it has the support of the people: precisely what the LTTE lost due to its dependence on war.

The last straw appears to have been the peace process which began in 2002. It ushered in an unprecedentedly long cessation of hostilities, and made it clearer than ever that the LTTE was incapable of handling peace. I was among those who criticised the 2002 CFA for allowing the LTTE a free hand to kill Tamil dissidents, conscript children and prepare for war, but in retrospect, I can see that it also served a positive purpose. Karuna’s defection was only the visible tip of a vast iceberg of discontent, as Tamil people who had hoped the LTTE would deliver them from fear, humiliation and violence realised that it offered them only more of the same. Their disillusionment and consequent withdrawal of support allowed the state to defeat the LTTE.

Now the Rajapaksa regime faces the same dilemma that Prabakaran faced earlier: if the war is over, how can it justify the measures that give absolute and unaccountable power to the state? So it has to invent an ‘LTTE threat’ in order to continue with policies that would be unacceptable in peacetime. But the Sinhalese people of Sri Lanka are not fools. They will realise, like the Tamil people before them, that this ‘threat’ is simply being concocted to justify disastrous economic and political choices. With all the fire and brimstone directed against foreign-funded NGOs, it is amusing to note that Sri Lanka now has a government that is dependent on foreign funding. The Ministry of Finance and Planning reported in August 2008 that the national debt stood at over 3 trillion rupees, with 1.39 trillion being foreign debt. The IMF loan eased the immediate problem, but at the cost of getting the country deeper in debt: in other words, it can repay its debts only by expanding them, placing an ever greater burden on the people. If the EU Generalised System of Preferences facility is lost, the economy will plunge even deeper in the red. In this context, detaining lakhs of civilians and expanding the armed forces constitute unnecessary and ruinous expenditures.

The social and political costs are equally huge. Horrific reports of police brutality, including the murder of two boys, Dhanushka Aponso and Dinesh Fernando, at Angulana and the abduction and torture of student Nipuna Ramanayake by SSP Vaas Gunawardene and other officers of the Colombo Crime Division, are reminiscent of the murders of the schoolboys of Embilipitiya in 1989-90, and result from the same conditions: rampant impunity for crimes committed by politicians in power, the state security forces and the police. This impunity, in turn, is fostered by the suspension of the rule of law resulting from the PTA and Emergency Regulations, which can only be justified by claiming that the LTTE is still a threat.

The only way to reverse the degradation of Sri Lanka’s economy and polity is to acknowledge that the war is over and take the appropriate measures: release all the Vanni IDPs immediately, slash military spending, dismantle the paramilitaries, redeploy demobilised soldiers to civilian reconstruction tasks, replace military and ex-military administrators with civilian ones, dismantle the HSZs, resettle all displaced civilians including those displaced by HSZs, repeal the PTA and Emergency Regulations, restore democratic rights, especially to freedom of expression, and release J.S. Tissainayagam and others incarcerated for exercising this right. The best way to ensure that Sri Lanka retains its EU GSP+ facility is to do the right thing, failing which, the government must take full responsibility for the loss of jobs and revenue.

The Fate of Internally Displaced People

Perhaps the most urgent issue is the fate of internally displaced people (IDPs), especially the Vanni civilians who were displaced in the last stages of the war. Reports of conditions in the camps where they have been interned vary; but the central issue is not the conditions under which they are being detained, but the very fact of their detention. Various spurious arguments justifying it have been put forward by the government and its supporters, none of which hold water. The fact that in many cases their homes have been destroyed and the areas from which they come have been land-mined by the Liberation Tigers of Tamil Eelam (LTTE) would certainly suggest that the government should offer them shelter until they can return safely, but that is very different from forcibly preventing them from leaving the camps, even if they have homes or relatives elsewhere. Indeed, one family has filed a fundamental rights petition before the Supreme Court, arguing that it is unconstitutional to detain them thus. The Supreme Court has allowed the reunification of this family within one of the camps, but the larger issue of the violation of fundamental rights still remains unaddressed.

Another argument is that LTTE cadres are hiding amongst the civilians, and therefore a process of screening needs to take place before they are released. This might have been plausible if there had been a steady stream of civilians being released as they were screened and cleared, but so far, only senior citizens have been released – that, too, after a court ruled that large numbers of elderly people were dying of dehydration and malnutrition. The plea by Tamil United Liberation Front (TULF) leader Anandasangaree on behalf of a one-year-old child whose release had been refused by the authorities makes nonsense of the security argument: are we really to believe that it takes more than two months to ascertain whether or not infants are LTTE cadres who pose a threat to security? A report by the International Center for Strategic Defense that inmates can secure their release by bribing the military authorities running the camps 1-3 lakh rupees makes the ‘security’ claim even more farcical, and suggests that these hapless people are being held for ransom – unless, indeed, the purpose is even more sinister.

In fact, while the last batch of displaced people has now been interned for over two months, earlier batches have been deprived of their liberty for much longer. If this situation continues, it will become a Crime against Humanity as defined by the International Criminal Court (ICC), since it involves ‘severe deprivation of physical liberty’ and ‘severe deprivation of fundamental rights’ of a civilian population. With each passing day, the government’s claim that the assault on the LTTE’s last bastion was launched in order to free the civilians held hostage there looks less plausible, and the allegation that the real purpose was to effect a transfer of population – also defined as a crime against humanity by the ICC – looks more likely. It is an irony that a government that has gone to great lengths to refute the charge of war crimes should open itself up to the more serious charge of crimes against humanity, this time requiring no investigations since they are being committed in front of the whole world! Foreign governments and aid agencies involved in providing for the Vanni IDPs are understandably getting anxious about continuing to contribute to the illegal detention of innocent civilians.

The immediate release of displaced persons who have been interned, and speedy resettlement of all displaced people, including the Muslims ethnically cleansed from the North by the LTTE in 1990, must be part of any post-war programme, and foreign governments and aid agencies should insist on these as conditions for assisting the government of Sri Lanka in relief, reconstruction and redevelopment. Access to the camps and registration by the ICRC and/or UN of all inmates, both of IDP camps and detention camps where LTTE cadres are being held, is also necessary, in views of reports that abductions and disappearances have been taking place.

Demilitarisation and Restoration of the Rule of Law

In the latter stages of the conflict, the military was doubled to around 200,000 personnel, and one would imagine that with the defeat of the LTTE and end of the war it would be halved to its original size, with the demobilised soldiers being re-employed in civilian tasks like the reconstruction that so urgently needs to be done. Instead, there have been proposals that it be expanded by another 100,000. This proposal should cause concern not just to minorities, but also to the majority of Sinhalese citizens, because against whom would this enormous military be used, now that the LTTE is no more? And who would pay for it? Since IMF loans normally do not have have political conditions, it is likely that the reason why a projected loan still has not been approved is the fear that an already heavily indebted government would not be able to pay it back if it embarks on such a huge military spending spree. If the cost of military expansion is borne by the public, which is expecting living conditions to improve with the end of the war, there is likely to be protest in the South. Perhaps that is the expectation.

The government speaks with two tongues when it talks about the LTTE. On one side, it claims that the LTTE has been completely defeated and the war is over: the huge popularity of President Rajapaksa is premised on this notion, as are the celebrations that accompanied the announcement. Yet government policies, including an increase in military spending and the continued incarceration of hundreds of thousands of displaced civilians, can only be justified on the assumption that the LTTE is still a potent threat. Again, paramilitaries kept by Tamil parties like the Eelam People’s Democratic Party (EPDP) were earlier justified by their need to defend themselves from LTTE assassins, but this excuse no longer holds. They should be disarmed immediately.

The LTTE’s war machine has been destroyed, and its leadership, including its supreme leader Prabakaran, killed; there is no chance that it can be revived in the near future. Desperate attempts by the pro-LTTE Tamil diaspora to foster the illusion that it is still alive have more to do with their claims on LTTE financial assets than with anything going on within Sri Lanka. The proposal for increased militarisation is based on a Sinhala nationalist view of the conflict, which sees it solely as a problem of terrorism and separatism. Why this terrorism and separatism arose is left unexplained, because the Sinhala nationalist narrative conveniently leaves out all the discrimination, persecution and violence directed at Tamils prior to the outbreak of the war; if the pogroms of 1983 are reluctantly admitted to have taken place, the official death toll resulting from them is cited: 300-400 as opposed to 2000-3000, which is the unofficial death toll. Hence, they argue, the way to prevent similar problems aising in the future is to militarise society even more, and keep in place the draconian Prevention of Terrorism Act (PTA) and Emergency Regulations, which allow state actors to violate human and democratic rights with impunity. The horrible paradox is that if the real precursors to the war are recognised, it becomes evident that violation of the human and democratic rights of Tamils and militarisation are precisely what led to it! In other words, what are seen as measures to avert future terrorism and separatism could become catalysts of these very problems.

Furthermore, the destruction of the rule of law wrought by decades of the PTA and Emergency Regulations affects all sections of society in all parts of the country. A bizarre example is the public boast by Labour Minister Mervyn Silva, already infamous for his assaults on mediapersons in the state TV channel Rupavahini, that he was responsible for the murder of journalist Lasantha Wickrematunga and the brutal assault on Poddala Jayantha, general secretary of the Sri Lanka Working Journalists’ Association. That a minister close to the president can preside over a mafia with such impunity speaks volumes about the lawlessness prevailing in Sri Lanka. The Asian Human Rights Commission reports that other ruling party politicians too run criminal gangs that terrorise the South, while the kidnapping of little girls for ransom in the East, and their subsequent murder, is blamed on one of the state-linked Tamil paramilitaries.

A particularly disturbing development is the branding of lawyers defending the publishers of the Sunday Leader in a case filed by the Defence Secretary as ‘traitors’ on the Defence Ministry website, a clear instigation of physical attacks on them by state-linked stormtroopers. One is reminded of the reign of terror in the late 1980s, when anyone who criticised the state was designated a JVP (Janatha Vimukthi Peramuna) member or supporter and therefore worthy of death, while lawyers who defended them were tortured and killed. Unless civil society in Sri Lanka wakes up to the danger and takes action to avert it, there is every likelihood that there could be a repetition of that nightmare.

Democratic Rights and the Executive Presidency

This brings us to the issue of freedom of expression, a sine qua non of democracy. The International Federation of Journalists has called on the government to ‘Stop the War on Journalists’, and this is surely an apt expression when the numerous cases of detention, imprisonment, assault, torture and murder of journalists are considered, while several others have been forced into exile in order to escape a similar fate. According to this professional organisation, Sri Lanka has long been considered one of the most dangerous countries in the world for journalists. This situation continues unabated even after the annihilation of the LTTE, which was also renowned for its denial of freedom of expression. The modus operandi of the state is in fact a mirror image of the LTTE’s crushing of dissent: those who disagree with the powers-that-be are in danger of being labelled ‘pro-LTTE’ and ‘traitors’, and thereafter subjected to arrest and detention, abduction and assault or murder by state-linked criminal gangs. This has been the fate even of people who have all along been vociferous in their criticisms of the LTTE!

It is worth pointing out that this is not just a denial of the right to freedom of expression of mediapersons, but also of the right to information of the public. As of now, the clampdown on freedom of expression is not yet complete, but if it progresses further, the public will be fed only the state’s version of what is happening in the country, and kept ignorant of developments detrimental to their own interests. The revival in June 2009 of the draconian 1973 Press Council Act, designed to protect government privilege rather than the public’s right to information, and opposed by Mahinda Rajapaksa himself while he was in the opposition, is one more step in this direction.

The use of the same criminal gangs against lawyers and opposition politicians undermines the independence of the judiciary and the right to free and fair elections. But these institutions are also undermined by the existence of the Executive Presidency. The absolute power held by this individual trumps the rights of everyone else, and makes a mockery of democracy. This is illustrated by the fate of the 17th Amendment. Passed during Chandrika Kumaratunga’s presidency in a rare moment of unanimity in 2001, the 17th Amendment to the Constitution attempts to curtail the power of the Executive President by appointing a Constitutional Council with representation from all parties in parliament, which in turn would select chairpersons and members to the Election Commission, Public Service Commission, National Police Commission, Human Rights Commission, Bribery and Corruption Commission, Finance Commission and Delimitation Commission; its approval was also mandatory for appointments to the offices of the Chief Justice and Judges of the Supreme Court, the President and Judges of the Court of Appeal, members of the Judicial Service Commission other than the chairperson, the Attorney-General, Auditor-General, Inspector-General of Police, Ombudsman and Secretary-General of Parliament. The aim was to ensure the independence of these institutions.

However, as the terms of these appointees came to an end during the presidency of Mahinda Rajapaksa, he started making appointments without consulting the Constitutional Council, which itself finally became defunct as the government failed to appoint a new one. This occurred despite a determined campaign by civil society organisations, spearheaded by the Organisation of Professional Associations. The consequences were disastrous for the justice system, human rights, the fight against organised crime, free and fair elections, and attempts to curb nepotism and corruption.

This whole sequence shows that any attempts to curtail the absolute power of the Executive President which depend on the concurrence of the individual in this position are pointless; neither democracy nor good governance can be ensured unless and until the post is abolished.

Equality and Democracy versus Ethnic Nationalism

The constitutional amendment that is most often cited as being crucial to a political solution of the ethnic conflict is the 13th Amendment, enacted in 1987 in the wake of the Indo-Lanka Accord. The provisions of this can be summed up as (a) granting parity of status to Tamil as an official language alongside Sinhala, and (b) granting devolution of power to Provincial Councils. The former, of course, was promised even prior to Independence: a long-overdue measure which could, if implemented, ensure a much greater degree of equality to Tamils. But it is the latter that is normally given more prominence.

At the time of the Accord, devolution was seen as satisfying the aspirations of the Tamil minority by granting Tamils a degree of self-government in the Tamil-majority Northeastern province which was created by the merger of the Northern and Eastern Provinces (now de-merged again). The arguments in favour of it need careful scrutiny, however. Do they suggest that Tamils in the North and East would have rights that Tamils in other parts of the country would not? Or that Sinhalese would have rights in the rest of the country which they would not have in the Northeast? What about Muslims and smaller minorities: lacking any territory, would they be deprived of self-determination?

The linking of territory to ethnicity, religion or language is always dangerous, and in Sri Lanka especially so. The fundamental argument of Sinhala nationalism is that the Sinhalese, as the majority in Sri Lanka as a whole, should have rights and privileges denied to people of other communities. Does the argument for devolution or self-determination implicitly accept this reasoning? For the LTTE, clearly, it did. For example, self-determination meant butchering Muslims in the East and ethnically cleansing them from the North. In the course of my interviews with internally displaced people in 1990, displaced Muslims told me their Tamil neighbours had wept when they were being evicted, but were unable to persuade the LTTE to allow them to stay. I came across three Tamil women in one Tamil camp whose Sinhalese husbands had been killed by the LTTE; they were petrified that their little bilingual children would say something in Sinhala and give themselves away. In a Sinhalese camp was a Sinhalese man who had managed to escape, who revealed, in hushed tones, that his wife, who was in the camp with him, was Tamil. In a country where people from different communities have lived in mixed neighbourhoods and mixed families from time immemorial, linking a particular community to a particular territory necessarily entails terrible violence, crimes against humanity, and the prohibition of genuine love and friendship, which recognise no communal barriers.

Territorialising rights suggests that rights are a zero-sum game: since the territory of Sri Lanka is finite, more of it for one community means less for another. This is why Sinhala extremists have been able to convince some moderates that recognising ‘minority rights’ means giving up part of what they legitimately see as their country. For Tamils, surely, it is the opposite: defining only the North and East as ‘traditional Tamil homelands’ entails giving up a large part of what they can legitimately claim as their country: the whole of Sri Lanka. So what is the solution?

Relentlessly insisting on equality, the bedrock of democracy, would disarm the Sinhala chauvinists, because it could be pointed out that the minorities are simply asking for equality before the law and equal protection of the law, equal rights and opportunities, and not demanding that anything be taken away from the Sinhalese. Sri Lanka does not have the same language problems as India, since there are only three national languages, Sinhala, Tamil and English. In India, children routinely learn three languages at school, and children in Sri Lanka could easily do the same; indeed, some have already begun to do so, and if the effort is continued and expanded, the next generation would not have the same linguistic problems as this one. In the meantime, it would be necessary to recruit Tamil-speaking people and interpreters to all government offices, police stations, courts, army outposts, and so on, so that parity for Tamil can be implemented properly. If all children could be educated in the medium of their choice and all citizens could communicate with the state in the national language of their choice, practice the religion of their choice in the way they choose or practice no religion if they so choose, and develop their culture individually and collectively in all parts of the island, there would be no need to make special provisions for Tamil-majority provinces.

Even the demand for devolution needs to be reframed as a demand for democratisation that brings government closer to all the people, not just minorities, apart from being made far stronger than the 13th Amendment, which has loopholes allowing the Centre to take back the devolved powers. Along with the demand for abolition of the Executive Presidency, and further devolution to smaller units, it would give all the people of Sri Lanka more control over their lives, instead of having their lives ruled by a remote power in Colombo that knows little and cares less about their needs. Admittedly, the history of Sri Lanka from Independence has been one of oppression of minorities, and while some wrongs have been righted (e.g., disenfranchisement of the plantation workers, discrimination against Tamil by law and constitution), new injustices have arisen, foremost among which is the denial of liberty to the Vanni IDPs. Therefore some mechanism to guard against such injustices would be advisable, and this can partly be achieved by giving minorities more power at the Centre through a Second Chamber.

However, the best safeguard for the equal rights of minorities would be the understanding throughout society that democracy is not a zero-sum game, but the very opposite. As Pastor Niemoller wrote in the poem quoted by Lasantha Wickrematunga in his last article, published posthumously, if we don’t stand up for others when they are under attack, then there will be no one to stand up for us when we are attcked. In other words, by defending democracy for others, one is defending democracy for oneself. All but the oppressors have an interest in maximising democracy, and solidarity between different sections of the oppressed (including women, workers and the rural poor, as well as minority communities) is essential if the struggle for it is to be won in Sri Lanka.

The LTTE and its supporters in the Tamil diaspora

For example, LTTE (Tamil Tigers) supporters among the Sri Lankan Tamil diaspora have been shouting themselves hoarse, demanding that the international community intervene to save Tamil civilians in the war zone from the government of Sri Lanka. They fail to mention important information conveyed by survivors who have escaped: that the LTTE forcibly kept civilians in the war zone, shooting them if they tried to escape; that it deliberately placed its heavy weaponry close to civilian installations and fired at government forces, thus using Tamil civilians as human shields; that it was conscripting up to five people from a family, including children as young as eleven years old, to work as slave labor and to be sent into combat; that it threatened to wipe out the families of these conscripts if they surrendered; and that many of the fatalities and loss of limbs of those trying to escape were the result of land mines laid by the LTTE.

Moreover, today’s predicament is the consequence of actions of the LTTE leadership over the past fifteen years. When Chandrika Kumaratunga came to power in 1994, the whole country was ready for a change in the constitution which would guarantee equal rights to minorities, and substantial devolution of power to the provinces that would have allowed the Tamil-speaking majority in the North-East a large degree of self-government. Neelan Thiruchelvam, an internationally renowned scholar and member of the Tamil United Liberation Front, played a critical role in authoring the political package. Instead of grasping the chance to redress Tamil grievances, the LTTE restarted the war after a brief ceasefire, and in 1999 assassinated Thiruchelvam.

The 2002 Ceasefire Agreement (CFA) offered another chance; despite the global ‘war on terror’, the LTTE enjoyed international legitimacy, and when its negotiator Anton Balasingham and government negotiator G.L. Pieris agreed to consider a federal solution, many thought the end of the war was in sight. But that chance too was thrown away by Prabakaran. In 2004, he proceeded to threaten his Eastern Commander Karuna with annihilation when the latter criticised his policies. Prabakaran failed to liquidate Karuna but massacred a large number of Eastern cadres, and the consequent defection of the LTTE’s Eastern forces played a key role in its defeat. The assassination of Foreign Minister Lakshman Kadirgamar in August 2005 – in effect, a declaration of war – resulted in rapidly waning international sympathy for the LTTE. Later that year, an LTTE-enforced boycott of the presidential elections in the area it controlled resulted in a victory for Mahinda Rajapakse. Then a series of LTTE attacks on the security forces resulted in a resumption of hostilities.

Every single one of these actions contributed to the current tragedy in the Vanni, but we did not see the pro-LTTE diaspora protesting against them. Given all the information about war crimes perpetrated by the LTTE and its major role in the carnage, one would expect the demonstrators, if they have genuine concern for the civilian victims of the war, to urge the LTTE to release all civilians and conscripts so that they can escape from the fighting. Instead, they have been flying the LTTE flag, while David Poopalapillai, spokesman of the Canadian Tamil Congress, alleged the UN was assisting in the genocide of Tamils when it accused the LTTE of holding Tamils against their will! In effect, LTTE supporters in the diaspora have been supporting the oppressors of Tamils, and thus contributing to the slaughter.

The Government and its supporters in the Sri Lankan Diaspora

The pro-government diaspora has been equally ghoulish. The government proclaims that it is (a) trying to free civilians held hostage by the LTTE, and (b) fighting a war against terrorists. The priority, clearly, is the latter, as suggested by Defence Secretary Gotabhaya Rajapakse’s preference for the Beslan model, in which the lives of hundreds of hostages (including children) were sacrificed in the interests of killing the terrorists. Stories told by escaped civilians suggest that this is indeed the model that is being followed by the government. They describe being bombarded with heavy artillery by government forces, leading to massive casualties; and the majority of these traumatised people have been imprisoned in internment camps where they are separated from loved ones, facilities are abysmal, and allegations that women have been raped and killed cannot be discounted in the absence of independent reports from the camps. All this confirms that the priority is a military victory over the LTTE, and the sacrifice of the lives, limbs, liberty and dignity of thousands of civilians is considered an acceptable price to pay. These allegations do not have the familiar ring of LTTE propaganda, and government attempts to portray them as such fall rather flat after its claim that there were only 70,000 civilians in the LTTE-controlled area was followed by the exodus of over 170,000 civilians from the very same area!

This is not to say that there have been no instances of humanitarianism on the part of armed force personnel; indeed, the army commander who gave his own food to famished refugees sounds much more humane than members of the pro-government diaspora who suggest that these hundreds of thousands of people are not really civilians at all, and the government would be justified in treating them as enemy combatants. Like LTTE supporters, apologists for the government fail to look back at actions of the current regime which contributed to this bloodbath. For example, all military experts agree that the loss of Karuna and his Eastern force was a key turning-point leading to the defeat of the LTTE. There would surely have been many more defections if the political solution worked out in the All Party Representative Committee (APRC) by Tissa Vitharana, mainly on the basis of the Majority Report of the Panel of Experts, had been accepted by the government in 2007. Only hard-core Prabakaran loyalists would have wanted to continue fighting for a totalitarian Tamil state if they had the option of freedom, equality and dignity in a united Sri Lanka. The political decimation of the LTTE would have shortened the war and saved many thousands of lives, including those of Sinhalese soldiers. But the President and the SLFP sabotaged the political process, making a bloody military showdown inevitable, while members of the Left who colluded with the Rajapakse regime in sabotaging the process also share responsibility for the carnage. Like Prabakaran, the Rajapakse regime has responded to criticism by killing its critics, as in the case of Lasantha Wickrematunge, and this has compromised its capacity to serve the interests of the democratic majority in Sri Lanka.

Foreign Actors

As for foreign actors, politicians of Tamil Nadu deserve special mention for their readiness to sacrifice the welfare of Sri Lankan Tamils in order to boost their electoral fortunes. Like members of the pro-LTTE diaspora, they never once used their political clout to deter the LTTE from carrying out even its most egregious human rights violations, such as the systematic annihilation of Tamil critics, forcible conscription of Tamil children, or attacks on Muslims. Nor did they urge the LTTE to take the various chances of peace with justice offered to it. Instead, they allowed the LTTE to wreck all such opportunities and behave in a dictatorial fashion which has earned it the hatred of Tamils forced to live under its jackboot. Today, they want to impose the LTTE’s fascist vision of Eelam on the people of Sri Lanka’s North and East, who have already been through such unspeakable suffering. Could there be any greater betrayal of the Tamils of Sri Lanka?

By comparison, the Congress Party comes through as having more sympathy for the suffering civilians, yet the fixation of its politicians on the 13th Amendment to the Constitution, introduced as a consequence of the Indo-Lanka Accord of 1987, betrays a disconnect from subsequent developments in Sri Lanka, not all of which have been negative. One of the many reasons why the 13th Amendment failed was that it did not devolve enough power to the North-East, which has a Tamil-speaking majority; it also left intact the dictatorial Executive Presidency. Since then, political packages worked on by Sinhalese, Tamil and Muslim experts have been crafted, and these offer more genuine devolution of power to the provinces as well as more democracy to all the people of Sri Lanka. Unless the government of India keeps abreast of political developments in Sri Lanka, it will not be able to play the positive role it could be playing.

The chorus of Western governments calling for a ceasefire suffers from their failure to make any suggestion whatsoever as to how a ceasefire could be used to extricate the civilians held hostage by the LTTE. During the 2002 ceasefire, the Norwegian mediators and Nordic Sri Lanka Monitoring Mission allowed the LTTE to tighten its hold on the populace in its power, kill off Tamil peacemakers, conscript children, and arm itself to the teeth, thus aiding the outbreak of Eelam War IV which is ending in such tragedy; and they did so with the full backing of other Western powers. If a human rights agreement with UN monitoring had been put in place at the beginning – and it could have been done with government consent, since the vast majority of human rights violations were being committed by the LTTE – the avalanche of war crimes when the fighting resumed would not have occurred. Yet Tamil dissidents pleading for such an agreement were ignored by the West, and regarded as ‘spoilers’ by the Norwegian government. Furthermore, if the ceasefire was to play a positive role, it should have been used to negotiate a political settlement, yet this was made impossible by the exclusion of representatives of Muslims, non-LTTE Tamils, and others from the negotiations. If a new ceasefire were to have the same effect, it would be worse than useless. And if Western governments had not discredited themselves by ignoring the LTTE’s blatant human rights violations during the previous ceasefire, they would have had more influence now.

Others too have contributed to the current disaster; among them: Ranil Wickremasinghe and the UNP, who sabotaged a political solution in 2000; some members of the Left who supported the LTTE’s struggle for Eelam in the name of ‘self-determination’ of Tamils (as though being deprived of freedom of expression, freedom of association and the right to vote, and having children torn from school and their parents to be turned into cannon fodder constitutes ‘self-determination’!); NGOs and Sinhalese liberals who turned a blind eye to the LTTE’s human rights violations during the 2002 peace process, itself premised on an affirmation of Tamil nationalism, regardless of warnings by Tamil dissidents that this would lead to a backlash of Sinhala nationalism and government violations of human rights; and, in general, all those who acquiesced in the LTTE’s totalitarianism and the downward slide into state totalitarianism.

The APRC crafted a viable political solution to the conflict in Sri Lanka two years ago. All those who wish to bring to an end the ongoing tragedy should be working not only for humane treatment of displaced civilians and their right to freedom of movement and to return to their original homes, but also for a political solution which has already been worked out in Sri Lanka, and would satisfy the democratic aspirations of citizens of all communities in all parts of the island.

There were demonstrations against the Israeli bombing by outraged protestors throughout the world as the Palestinian death toll climbed to more than 300 in three days, but Palestinians in Gaza felt that the international community were acting as mere spectators to the massacre. They were right. Protest demonstrations are not enough to stop a holocaust. Even less effective are sanctimonious statements by the UN and EU equating one Israeli life to more than a hundred Palestinian lives, which make the outright support for the massacre by George W. Bush almost attractive in its honesty. So what can we do?

Debunking Myths

The first necessity is to debunk myths that have successfully been used to vitiate all previous actions against Israel. Firstly, the myth that the founding of the Zionist state has anything to do with the Nazi genocide. In fact, the project was conceived decades before the Nazi holocaust, and was a straightforward colonial agenda in which European settlers would evict indigenous Third World people from their land and take it over. Gandhi saw this very clearly, which is why he refused to give the Zionists his support when they approached him, despite his sympathy for persecuted Jews.²

The second myth is that criticism of or opposition to the Zionist state of Israel constitutes anti-Semitism, and is an attack on all Jews. This is not true; indeed, Jews are among the most trenchant critics not only of Israeli atrocities, but also of the whole idea of a Zionist state. The notion that Judaism and Zionism are one and the same is shared by anti-Semites and Zionists; the former assume that all Jews are responsible for the crimes of the Zionists, while the latter assume that all condemnation of Zionist crimes constitutes an attack on Jews. These assumptions, equally reprehensible, are simply two sides of the same coin.

The third myth is that there was ever a possibility of a two-state solution. There were two models of settler-colonialism debated by the Zionists. One model, supported by very few, was the South African one, where the indigenous Palestinians, though evicted from their land and herded into Bantustans, would be allowed to remain in the country. The majority view was that the indigenous population should be eliminated, like the indigenous peoples of North America and Australia. To this end, massacres were carried out to terrorise the population into leaving, a process then known as ‘transfer of population’ and now as ‘ethnic cleansing’, and ever since the Nuremburg trials considered to be a crime against humanity.³ Both sides saw Israel as swallowing up the whole of Palestine, and one look at a map of Palestine/Israel today shows that this has now been achieved, with the Apartheid wall carving up the West Bank into ghettos, while the very fact that Israel could blockade the Gaza strip so effectively shows that it, too, is nothing more than a ghetto.

If Israel controls the non-contiguous borders, the coastal waters, the ground water and air space of the proposed ‘Palestinian state’, if the people of Gaza can be starved and bombed simply because they exercised their franchise to elect a government which the Israeli state did not approve of, there could be no clearer proof that Palestinian self-determination is not an option so long as the Zionist regime remains. The struggle, therefore, is not for a separate Palestinian state but, as in Apartheid South Africa, for one democratic state with equal rights for all in the whole of historical Palestine. This would solve the problem of the second-class status of Palestinian citizens of Israel, the need for self-determination for Palestinians in the territories occupied in 1967, and the right of return of Palestinian refugees, all without driving Israeli Jews out of the country. It is the only possible solution.⁴

The fourth myth is that Israel attacks Palestinians in self-defence. Take the most recent massacre, for example: it is claimed by Israel, and repeated by other politicians and the media, that it was Hamas which broke the ceasefire. Yet a careful scrutiny of ceasefire violations shows that once Hamas defeated Fatah and took control of the Gaza strip, violations from its side dropped almost to zero, until Israel broke the ceasefire by an air attack and ground invasion on November 4. Furthermore, throughout the ceasefire Israel implemented a siege and naval blockade of Gaza, defined as acts of war in international law. So it was Israel which broke the ceasefire in an act of aggression, and the legally elected Hamas government of Palestine which was acting in self-defence.⁵ This means that in international law, the murder of each one of the over 550 Palestinians killed in the most recent massacre, whether the vast majority of civilians or the small minority of guerrilla fighters, is a crime equivalent to the crime of killing one Israeli civilian.

Indeed, even before the December onslaught, it was clear that what Israel was doing in Gaza amounted to genocide according to the Genocide Convention (1948), reiterated in the Rome Charter of the International Criminal Court (2002), which includes: ‘(c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part.’⁶ The launching of rockets into Israel by Hamas was, like the Warsaw ghetto uprising of 1943, a response to impending extermination: a desperate bid for survival. The Zionists’ hostility to anyone standing up for the rights of Palestinians led them in 1948 to murder Count Folke Bernadotte, who had negotiated the release of tens of thousands of prisoners from German concentration camps and was subsequently appointed UN Security Council mediator in the Arab-Israeli conflict. More recently, their shameful abuse of Richard Falk, UNHRC Special Rapporteur on Occupied Palestine (himself an American Jew), who in December 2008 was denied entry, ill-treated and deported, suggests that only pragmatic considerations prevented them from assassinating him too.⁷

What Needs to be Done?

According to twenty-one human rights activists (including Jews) from South Africa visiting the West Bank in July 2008, the situation in Palestine/Israel was ‘worse, worse, worse than everything we endured. The level of the apartheid, the racism and the brutality, are worse than the worst period of apartheid;’ ‘What we went through was terrible, terrible, terrible – and yet there is no comparison. Here it is more terrible.’⁸ An international response at least as strong as the response to Apartheid South Africa therefore seems to be appropriate, and this is constituted by the Boycott, Divestment and Sanctions (BDS) campaign against Israel called for by Palestinian civil society groups on 9 July 2005, to be continued until the apartheid regime is replaced by a democratic one. This includes cultural, academic and sports boycotts, and a consumer boycott of Israeli goods (barcode starting with 729), as well as a boycott of companies investing in, sourcing from, or otherwise supporting Israel, and pressure on them to change their policies. It would also include pressure on governments to break off diplomatic, economic and military ties with Israel, pointing out that these constitute complicity with Israel’s crimes.⁹

There should be extra pressure on openly collaborationist regimes, like those of Mahmoud Abbas, Hosni Mubarak, and the Arab allies of Israel, which ought to be made to feel that their people will reject them unless they cease their complicity in Israeli crimes. Enormous pressure would also have to be brought to bear on the US, which assists Israel with billions of dollars annually as well as other forms of support. Given the indications that no change in US policy towards Palestine and Israel is planned by Barack Obama’s administration, the pressure should begin immediately, before his inauguration. And pressure from within the US should be augmented by international pressure.

The US economy is in deep crisis, with more than $ 10 trillion of national debt, and the only reason it can keep bankrolling Israel is that the US dollar is treated as world currency and oil sales are denominated in it, so the US has been getting more or less unlimited credit from the rest of the world. Russia and the Gulf Cooperation Council (GCC) countries must be pressurised into supporting the rights of Palestinians by immediately denominating their oil sales in euro, in preparation for moving to roubles in the case of Russia, and a common Gulf currency in the case of the GCC countries. Countries like China and Japan, with their massive US dollar reserves, should make the extension of further credit conditional on the US ceasing to fund Israel as well as the wars in Iraq and Afghanistan, and countries with smaller dollar reserves should shift their reserves to other currencies. Such a move is required not only by ethical considerations, but also by pragmatic ones: if the credit extended is used to rebuild the US economy, there is a chance that it might be returned, whereas if it is used to fund aggression against Palestine, Iraq and Afghanistan, it will never be returned. In this campaign, very little individual action is possible, and success would depend on putting collective pressure on governments to boycott the US dollar until the US ceases to engage in and support imperialist aggression. With very few exceptions, governments of the world are complicit in the atrocities being committed in Gaza, just as they were in the crushing of the Warsaw ghetto uprising,See Joseph Massad, ‘The Gaza Ghetto Uprising,’ Electronic Intifada, 4 January 2009. and strong public pressure would be needed to expose, condemn and end their complicity.

The myths enumerated above need to challenged in every forum, along with the more diffuse racism that constitutes their premise. We may disagree with the politics of Hamas, just as we may disagree with the politics of the British Labour Party, but it does not follow that we should condone the slaughter of all leaders and members of Hamas, their families, government employees, and random members of the Palestinian population which elected them to power, any more than we would condone the slaughter of all leaders and members of the Labour Party, their families, government employees, and random members of the British population which elected them to power. The fact that the US and EU cannot see this equivalence demonstrates that they are dominated by the same racism which allowed slavery to flourish and the indigenous peoples of North America and Australia to be exterminated. Where Black people are killing Black people, as in Rwanda, or White people are killing White people, as in Bosnia, there is a chance that the UN may take action, however weak and belated. But where White people are killing Third World peoples, as in Palestine, there is no hope that it will take any action unless citizens of the world put massive pressure on their governments to support a solution which can bring justice and peace to Palestine/Israel. It is good that there have been worldwide protests against the massacre of Palestinians in Gaza, but a ceasefire would be no better than putting a sticking plaster over a festering wound, which will only erupt again sooner or later. The wound cannot heal until the infection has been eliminated by replacing the Apartheid state with a democratic one, and long-term, concerted action is required to achieve that goal.

1. ‘Israeli minister warns of Palestinian ‘holocaust’, Guardian, 29 February 2008.
2. A.K.Ramakrishnan, ‘Mahatma Gandhi Rejected Zionism,’ The Wisdom Fund, 15 August 2001.
3. The debates as well as the methods by which the ethnic cleansing of Palestine was achieved are meticulously recorded in Ilan Pappe’s The Ethnic Cleansing of Palestine, Oneworld Publications, Oxford, 2007.
4. See the One Democratic State Group website.
5. ‘On Sderot and Ashkelon,’ Jews sans Frontiers, 30 December 2008.
6. For this argument see Ilan Pappe, ‘Genocide in Gaza, Ethnic Cleansing In the West Bank,’ Countercurrents, 28 January 2008.
7. Stephen Lendman, ‘Obama v. Richard Falk on Israel and Occupied Palestine,’ Countercurrents, 24 December 2008.
8. Gideon Levy, ‘Twilight Zone / “Worse than Apartheid”,’ Haaretz, 12 July 2008.
9. For details of the BDS campaign, see Global BDS Movement – Boycott, Divestment and Sanctions for Palestine. The website of the International Jewish Anti-Zionist Network (IJAN) also has suggestions for action, including signing a petition in support of UN General Assembly President Miguel D’Escoto Brockmann, who has spoken out to condemn Israeli apartheid and called for boycott, divestment and sanctions. Information about companies linked to Israel can also be found in the Boycott Apartheid Israel leaflet published by the Friends of Al Aqsa.

The credit system was relatively undeveloped in Marx’s time, and he would not have been familiar with hedge funds, mortgage-backed securities, collateralized debt obligations (CDOs), credit default swaps (CDSs), and all the other derivatives that are now part of the global financial system. However, he was familiar with generalized crises, and tried to explain financial turmoil in terms of what is now referred to as ‘the real economy’: i.e., a crisis in the accumulation of capital. In his view, such crises were inevitable in capitalism, because it is a system of production not for human need but for profit.

In Volume I of Capital, Marx divided capital into constant capital (machinery, raw materials, etc.), which transferred their value unchanged to the product, and variable capital, spent on labor-power. The latter, he argued, was the only creator of value greater than the value it possessed itself, i.e., of surplus value, and thus of profits. (He also referred to constant capital as ‘dead labor’ — objects that embodied past labor — and to variable capital as ‘living labor’, embodied in living workers.) He called the ratio between constant and variable capital the ‘organic composition of capital’. The competitive character of capitalism enhances the normal tendency in any society for the productivity of labor — i.e., the amount of means of production which one worker can handle — to grow, and under capitalism, this growth is reflected in an increase in the organic composition of capital. But, according to Marx in Volume 3 of Capital, the rate of profit — the ratio of surplus value to the total amount of capital, both constant and variable, required to produce it — would have a tendency to fall as the organic composition increases, because surplus value or profit is created only by living labor. Beyond a certain point, as Grossmann put it, there would be an underproduction of surplus value in relation to the amount of capital required for new investment, and this was what resulted in crises. People might be homeless while properties remained unsold, jobs would be lost while factories remained idle; businesses would go bankrupt and their assets would be taken over by others, leading to a centralization of capital.

In many ways, this resembles the scenario staring us in the face today, as more and more people recognize that this is not just a ‘financial crisis’ but also a crisis in the ‘real economy’. In Marx’s day, the crisis would end and the rate of profit would be restored only after a massive devaluation or destruction of capital, accompanied by large-scale unemployment and a fall in wages, had taken place. Do we have to go through all this?

Counteracting Tendencies and Other Mechanisms

While Marx thought that the tendency for the rate of profit to fall was inevitable, he also identified counteracting tendencies that could slow down or even halt or reverse this fall temporarily. Chief among these was foreign trade, which, by cheapening the supply of raw materials (oil, cotton, iron, etc.) would counteract the fall; similarly, foreign investments in countries where capitalism was less developed, the organic composition of capital was lower and the rate of profit consequently higher, would also boost the average rate of profit. Lenin took up this theme in his pamphlet on imperialism. Their argument suggests that globalization, which has vastly increased foreign trade as well as investment in developing countries, with their lower wage rates and lower overall organic composition of capital, should counteract a fall in the average rate of profit and prevent a crisis. Why has it not done so?

To answer this question, we have to look at possible causes of crisis that Marx examined less thoroughly than the tendency of the rate of profit to fall, or did not examine at all because they were not operative in his time. In Volume 2 of Capital, Marx draws up schemas for the social reproduction of capital, and they comprise only two departments of capital: one producing means of production, and the other producing means of consumption (goods and services) for workers. The products of both these departments re-enter production, either as infrastructure, machinery and raw materials, or as living labor working in production, and we could therefore refer to this as ‘socially useful production’. Although Marx looks only at capitalist production, it is worth pointing out here that even if it is the state that invests in electricity and railways or healthcare and education, and no profit is made on these investments, capitalism still benefits from them, because they provide it with cheaper and higher quality inputs.

But what about luxury production of items consumed by capitalists? These do not re-enter the process of production, and Marx opined that if there were to be a disproportionate diversion of resources into articles of this sort, the process of accumulation would suffer. Looked at another way, the surplus value is obviously not all re-invested; some part of it is used for capitalists’ consumption, and we could call the branch of capitalism producing these items Department III. The more surplus value is diverted into Department III, the less there will be for Departments I and II, resulting in a shortage of surplus value for accumulation.

Neoliberal policies result in this diversion. It has been pointed out by scholars like Jan Breman that it is a mistake to think that neoliberalism constitutes deregulation of the market; it is, rather, a regulation of the market in the interests of the owners of capital. The truth of this observation becomes obvious if we examine the issue of patents. From time immemorial, so-called ‘intellectual property’ was unregulated; the men and women who invented the wheel and agriculture made no money out of these inventions, despite the fact that all subsequent generations made use of them. It is only under capitalism that corporations rush to patent not only their own but also other people’s inventions and discoveries, so that, for example, pharmaceutical companies can make obscene profits by selling life-saving drugs at prices that condemn most patients who need them to death. This is an example of regulation in the interest of capitalist profits.

In other cases, regulations protecting workers and the public are abolished. From the 1980s onwards, an orgy of such deregulation took place, above all in the US, proceeding apace under all regimes, including the Clinton administration. For example, the Glass-Steagall Act, which was passed in 1933 amid the collapse of the banking system to segregate commercial banking (taking deposits and lending) from the much more risky business of investment banking (underwriting and selling stocks and bonds), and helped to halt the run on banks, was repealed in 1999. Alan Greenspan had been arguing for its repeal from 1987, and pursued the ‘securitization revolution’ vigorously under the Bush administration. This, as William Engdahl argues, is at the heart of the present financial crisis. By allowing the non-transparent spreading of risk — rather like sending bird-flu patients back home without telling them have got the virus — it allowed contagion to spread from infected to formerly healthy banks. And by allowing financial institutions to gamble with the money of non-gamblers, keeping the bulk of their winnings when they won but leaving the public with the bulk of their losses when they lost, it led to a much greater concentration of wealth in the hands of non-productive capitalists than ever before.

This is brought out graphically by the Oversight Committee’s hearings into the American International Group (AIG) bailout. In Chairman Waxman’s words:

There are obvious differences between Lehman and AIG. Lehman is an investment bank; AIG is an insurance company. Lehman fell because it placed highly leveraged bets in the subprime and real estate markets; AIG’s problems originate in complex derivatives called credit default swaps. But their stories are fundamentally the same. In each case, the companies and their executives grew rich by taking on excessive risk. In each case, the companies collapsed when these risks turned bad. And in each case, their executives are walking away with millions of dollars while taxpayers are stuck with billions of dollars in costs . . . Last month, the taxpayers bought out AIG in an $85 billion bailout. This was a direct result of the mistakes made by Mr. Cassano. Yet even today, he remains on the company payroll, receiving $1 million a month. The federal bailout occurred on September 16. Less than one week later, AIG held a week-long retreat for company executives at the exclusive St. Regis Resort in Monarch Beach, California . . . Invoices provided to the Committee show that AIG paid the resort over $440,000, including nearly $200,000 for rooms, over $150,000 for meals, and $23,000 in spa charges. Average Americans are suffering economically. They are losing their jobs, their homes, and their health insurance. Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.

No doubt the AIG executives provide employment to the hotel workers at the resorts they patronize, but this is at the cost of tens of thousands of jobs lost in industries engaged in socially useful production.

The Impact of Militarism

While Marx considered war to be detrimental to the working class, he did not see it as having a negative impact on capital. This is probably because in his day, war and militarism were needed to secure and keep colonies, which contributed to keeping up the rate of profit. Today, when global trade and investment are better carried out through negotiation than through military occupation, militarism is no longer a necessity for capitalism.

Luxemburg came close to suggesting that military production belongs in a third department, since it constitutes the production of neither means of production nor consumption goods and services. It is clear that military products do not re-enter production, and we could therefore put it, along with luxury production, in Department III. Subsequently, there was a debate among Marxists as to whether a ‘permanent arms economy’ stabilized capitalism, while a more mainstream belief in the positive contribution of ‘military Keynesianism’ gained ground.

It is true that in the short run, the market for military production guaranteed by the state can boost employment in a downturn, thus smoothing over business cycles. Yet, like luxury production, it does this by diverting resources from the production of means of production and consumption; executives of military production units and private security contractors like Blackwater may be minting money, but this money constitutes a deduction from socially useful production. Seymour Melman concluded that excessive military spending by the US decimated its manufacturing base, slowed economic growth and reduced employment. In the words of Chalmers Johnson, “Military industries crowd out the civilian economy and lead to severe economic weaknesses. Devotion to military Keynesianism is, in fact, a form of slow economic suicide.” This was reflected in the ballooning US national debt, more than $9 trillion by the end of 2007.

Large-scale military spending is a feature of many national budgets, but US expenditure on ‘national security’, according to Chalmers Johnson, amounts to over a trillion dollars per year: more than all other national defense budgets combined. Needless to say, none of the products of this expenditure return to production, so it is a massive drain on the economy. Worse still, the role of the US dollar as a world reserve currency means that huge dollar reserves of other countries — especially Asian countries, with China and Japan in the lead – are also funneled into US military expenditure. US ‘national security’, in other words, has been acting as a black hole sucking in surplus value from the whole world. The crisis, consequently, is a global one.

How Do We Get Out of It?

Some socialists have suggested that this is the end of capitalism, but the notion that the divided, confused and demoralized workers of the world are ready to take over and the run the world economy sounds highly unrealistic. To adapt a metaphor used by Marx, that would be like performing a Caesarian section to deliver a 16-week-old fetus: it simply would not survive. And until it develops sufficiently to be able to do so, we have to ensure the health of its capitalist mother. Fortunately, doing so in the current crisis does not involve sacrificing the interests of workers, since this crisis is caused not by a fall in the rate of profit but by excessive siphoning of surplus value into wasteful expenditure. What measures can we fight for through our civil society organizations?

A common and understandable response to the crisis is the call for protectionism and deglobalization, but this would remove the only countervailing factor sustaining the rate of profit, and worsen the crisis. Instead, multilateral agreements (rather than bilateral ones, where a stronger partner can bully the weaker one) should concentrate on establishing equitable terms on which international trade and investment can be conducted. It is neither realistic nor even desirable to abolish finance capital either; as Hilferding pointed out, it enables even people with small amounts of money to invest, and Marx himself saw it as a step towards social control over production. Currently, pension funds built on the savings of wage and salary earners are among the most important financial institutions, and could use their clout to ensure better regulation of financial markets. This might include banning predatory practices, ensuring maximum transparency, and much stronger regulation and oversight by public institutions whose personnel do not overlap in any way with the personnel of the financial institutions they are supposed to monitor. Progressive taxation would redirect production from exclusive resorts to socially useful products. Slightly different measures would have to be taken in different countries, depending on their specific circumstances; in Sri Lanka, for example, the political elite consumes a large chunk of the surplus, extracting more and more from the public through runaway inflation, and their power to do so should be curbed.

At the same time, there should be campaigns for defense budgets to be slashed; this would need to be accompanied by signing international treaties to ban the production of certain weapons (nuclear, chemical and biological weapons, land mines, etc.). Nationalist ideologies would need to be combated in all countries; in Sri Lanka, for example, politicians espousing Sinhala and Tamil nationalism, who drive a war that has devastated the economy, should be rejected decisively. The US, being the biggest military spender by far, would need the most sustained campaign to end its wars, dismantle its foreign bases, wind up covert operations and shrink its military-industrial complex; and until it has done so, other countries should refrain from accumulating foreign exchange reserves in US dollars, because that simply contributes to the destruction of the surplus value produced by their own hard-working people.

If these measures are taken, they would create massive funds for governments to invest in infrastructure (including water and energy conservation, flood prevention and renewable energy), and healthcare, education and child nutrition programs, thus increasing overall productivity and creating employment. Workers cooperatives should also be encouraged and assisted by the state. All this would reverse the fall in incomes and consumer demand. Social housing could help to eliminate homelessness. Many countries already have programs that could be expanded as well as adapted for other countries, such as the National Rural Employment Guarantee scheme in India , the bolsa familia in Brazil , the National Health Service in the UK , and workers’ cooperatives in several countries.

It is possible to get out of this recession without allowing it to become a depression if enough people press for decisive action along these lines. Eventually, another crisis will come along, of course: that is the nature of capitalism. But we can deal with that problem when we get to it!

References

Breman, Jan, 1995, “Labour, get lost: A Late-Capitalist Manifesto,” EPW, Vol.30 No.37, 16 September, pp.2294-2300.

Engdahl, F.William, 2008, “Financial Tsunami: The End of the World as We Knew It,” Global Research, 30 September.

Grossmann, Henryk, 1992, The Law of Accumulation and Breakdown of the Capitalist System, (tr. Jairus Banaji), Pluto Press, London.

Hilferding, Rudolph, 1981, Finance Capital – A Study of the Latest Phase of Capitalist Development, tr. Morris Watnick and Sam Gordon, Routledge and Kegan Paul, London.

Johnson, Chalmers, 2008, “Going Bankrupt: The US’s Greatest Threat,” Asia Times Online, 24 January.

Lenin, V.I., 1964, “Imperialism, the Highest Stage of Capitalism. A Popular Outline,” Collected Works Volume 22, Progress Publishers, Moscow , pp. 185-304.

Luxemburg, Rosa, 2003, The Accumulation of Capital (tr. Agnes Schwarzschild), Routledge, London.

Marx, Karl, 1976, Capital Volume 1 (tr. Ben Fowkes), Penguin Books, Harmondsworth

Marx, Karl, 1978, Capital Volume 2 (tr. David Fernbach), Penguin Books, Harmondsworth.

Marx, Karl, 1981, Capital Volume 3 (tr. David Fernbach), Penguin Books, Harmondsworth.

Melman, Seymour, 2001, After Capitalism: From Managerialism to Workplace Democracy, Alfred A Knopf, New York.

The Gavel, 2008, “Oversight Committee Holds Hearings on the Causes and Effects of the AIG Bailout,” 7 October.

When US President Bush declared in October 2007 that if Iran acquired the knowledge to produce nuclear weapons, we would be plunged into World War III, he was not joking or even exaggerating: he was making his intentions clear. In the same month, Vice-President Dick Cheney repeated the threat that the US would not ‘stand by’ as Iran allegedly pursued a nuclear weapons programme. If the present war in Afghanistan, Iraq and Palestine spreads to Iran, we will indeed have World War III. We have long had circumstantial evidence that the Bush regime was building up to an attack on Iran: the constant allegations (denied by Mohamed El Baradei, chief of the International Atomic Energy Agency [IAEA]) that it was pursuing a nuclear weapons programme, charges (denied by the Iraqi government) that it was sending arms and fighters into Iraq, a US military build-up clearly directed against Iran, the designation of the Islamic Revolutionary Guards Corps of Iran as a terrorist organisation and imposition of sweeping sanctions against Iran.² But it has now been revealed by two former high-ranking policy experts from the US National Security Council that war against Iran was planned all along, and nothing that Iran offered to do — including giving up its uranium enrichment programme — could have made a difference.³

If the Bush administration has decided to attack Iran militarily, is there any power on earth that can stop it if the people of the US are unable or unwilling to do so? The argument below is that if the USA’s ability to undertake imperial conquests depends on its obvious military supremacy, this in turn is ultimately based on the use of the US dollar as the world’s reserve currency. It is the dominance of the dollar that underpins US financial dominance as a whole as well as the apparently limitless spending power that allows it to keep hundreds of thousands of troops stationed all over the world. Destroy US dollar hegemony, and the “Empire” will collapse.

David Ludden’s article ‘America’s Invisible Empire’⁴ sums up the problem of the world’s most recent empire with remarkable clarity. Constituting itself at a time when decolonisation was well under way and other empires were disintegrating, US imperialism could never openly speak its name. Initially, it disguised itself as the defender of democracy against communism; when the Soviet Union ceased to exist, the pretext became the “war against terror”. National security and national interest were invoked as the rationale for global dominance.

Ludden’s description evokes the image of US citizens (and a few others) living in a Truman Show world, a bubble of illusion created by state deception and media complicity that prevents them from being aware of the reality of empire, although everyone outside can see it only too clearly. It sounds quite credible that ‘the empire will not be undone until its reality and costs become visible to Americans’ (p.4777). However, Ludden’s claim that ‘US taxpayers and voters pay the entire cost of the US empire’ (p.4776) is less credible. If that were true, many more Americans would see their empire and oppose it; the Democrats would have put up a principled opposition to the occupation of Iraq and threatened war against Iran, and the overwhelming majority of the US electorate would have supported them. But it is the rest of the world that has been paying for the US empire: that is why it is almost invisible within the US.

The history of dollar hegemony

The core advantage of the US economy, the source of its financial dominance, is the peculiar role of the US currency. It is because the dollar has been for decades the world’s reserve currency that the US is able to maintain its twin deficits (fiscal and trade) and depend on the world’s generosity. It needs capital inflows of almost $4 billion from the rest of the world every working day to keep up its level of spending.⁵ Its military superiority is one reason why it is unlikely ever to face an embargo, but more importantly, it has been able to live beyond its means because of US dollar hegemony.

The dollar mechanism has been described extensively elsewhere,⁶ this is merely a summary. The strength of the US economy after World War II enabled the US dollar, backed by gold, to become the world’s reserve currency. When the US abandoned the gold standard in 1971, the dollar remained supreme, and its position was further boosted in 1974 when the US came to an agreement with Saudi Arabia that the oil trade would be denominated in dollars.⁷ Most countries in the world import oil, and it made sense for them to accumulate dollars in order to guard against oil shocks. Third World countries had even more reason to hoard dollars so as to protect their fragile economies and currencies from sudden collapse. With everyone clamouring for dollars, all the US had to do was print fiat dollars and other countries would accept them in payment for their exports. These dollars then flowed back into the US to be invested in Treasury Bonds and similar instruments, offsetting the outflow. The International Monetary Fund (IMF) and World Bank, headquartered in Washington, reinforced dollar hegemony.

As a reserve currency fulfills world needs in addition to the functions of a domestic currency, the favoured country can build up debt for a protracted period on a scale that would wreck any other country’s currency. But this advantage is a double-edged sword.⁸ It allowed the US economy to decline unnoticed, its fiscal and trade deficits to climb steeply: by 2006 the US trade deficit had reached $763.6 billion, the current account deficit $850 billion, the gross national debt around $9 trillion. Globalization destroyed the US as a manufacturing nation; the outsourcing of services means that even this sector is gradually being shifted out of the US.⁸ Only its pre-eminence in the global financial services industry remains intact.⁹ And this is underpinned by US dollar hegemony.

Dollar hegemony is what concealed the costs of its empire, which were effectively being paid for by the rest of the world, from US citizens. Other countries were compelled to accept fiat dollars because they had no choice. It was the world’s only reserve currency.

A “currency” reason for the Iraq war

When the euro came into being, even then the choice was only a potential one, as the euro initially lost value, making it unattractively risky as a reserve currency. The first non-European countries that made a move in its direction did so for political rather than economic reasons. When Saddam Hussein switched to the euro in late 2000 and converted Iraq’s $10 billion reserve fund at the UN to euro, some analysts commented that this political gesture would have a heavy economic cost.¹⁰ But against all expectations, he actually made a profit when the euro staged a recovery.¹¹ Iran is another country which in 2002 converted more than half its foreign exchange reserves to euros.¹² Both Iraq and Iran being oil-producing countries, the impact of their shifting currency allegiances would be significant. By contrast, North Korea’s official shift to the euro for trade in December 2002¹³ was negligible from the standpoint of the world economy, yet it signified a trend that US imperialism had to stop at all costs. Suddenly George Bush’s diatribe against the ‘Axis of Evil’, which seemed so arbitrary and laughable at the time, doesn’t appear quite so funny. Add to this picture the fact that Hugo Chavez — against whom the US supported a coup in April 2002, and who continues to be under attack by the Bush regime — has taken a large part of Venezuela’s oil trade out of the orbit of the US dollar, and the economic compulsions driving US foreign policy become clearer. Military might alone does not seem to be a sufficient basis for sustaining an empire: economic power is crucial. And for the declining US economy, US dollar supremacy is essential for maintaining its economic clout.

Thus, there seems to be good reason to believe that the main purpose of the invasion of Iraq was to change the denomination of its oil sales back to dollars,¹⁴ especially given that one of the first actions of the US occupying forces was to do precisely that. But the action backfired badly. Anti-war protesters immediately began campaigns to boycott the dollar,¹⁵ and the campaign spread, with the call being taken up by the Boycott Bush campaign after the 2004 World Social Forum.¹⁶ Former Prime Minister of Malaysia Mahathir Mohamed took up the call in 2004 and again in 2006, arguing that Israel would not be able to oppress the Palestinians and Lebanese without the financial and military support of the US, which would be put under pressure by a dollar boycott.¹⁷ In December 2006, Iran announced it was going to shift the rest of its foreign exchange reserves from dollars to euro, using the euro for most of its oil deals, and in July 2007 asked the Japanese to pay for their oil in yen.¹⁸

Habit and inertia might have prevailed against these political initiatives to undermine the dollar as the world’s reserve currency, if continuing US belligerence and mismanagement of its economy had not helped to push the value of the dollar lower. As the dollar steadily lost value due to the massive US debt, George Soros pulled his money out of dollar assets, and other US investors followed suit.¹⁹ An article in China Daily on 28 September 2004 by Jiang Ruiping, the director of International Economics at the China Foreign Affairs University, pointed out that China was already losing due to the dollar slide and would lose even more if it crashed; he recommended moving out of dollars into euros and possibly also yen, as well as using its dollar reserves to stock up on oil.²⁰ In fact, only about 15 per cent of China’s additional foreign exchange reserves acquired in the first three quarters of 2004 were in US Treasury holdings, and OPEC countries reduced the dollar assets in their reserves from 75 to 60 per cent.²¹ In July 2005, the fixed exchange rate of the yuan to the dollar was abandoned, followed closely by the Malaysian ringgit, with both currencies being allowed to float in a tight band against a basket of foreign currencies.²² The Japanese government indicated it might diversify its reserves portfolio, and the Reserve Bank of India started buying euro-denominated securities.²³ In March 2005, the Bank for International Settlements in Basle announced that Asian central and commercial banks held only 67 per cent of their deposits in dollars in September 2004, compared with 81 per cent three years earlier; Indian banks were down from 68 to 43 per cent, while Chinese dollar holdings were down from 83 to 68 per cent, with the euro and yen being the most popular alternatives.²⁴ Holdings in more exotic currencies also grew rapidly, albeit from much lower levels: Chinese renminbi (yuan) by 530 per cent, Indonesian rupaiah by 283 per cent, Taiwanese dollars, Korean won and Indian rupees by 129,117 and 114 per cent respectively, presumably on the expectation that they would grow in importance.²⁵

By the end of 2005, euro-denominated securities had overtaken dollar-denominated ones as a medium for international investors.²⁶ In 2006, the Swedish central bank cut its dollar holdings from 37 per cent to 20 percent, the Russian central bank from around two-thirds to 40 per cent, while Italy switched a quarter of its foreign currency reserves from dollars to sterling; Russian President Vladimir Putin also called for a ruble-denominated oil and natural gas exchange in Russia.²⁷ The Gulf Cooperation Council (GCC), planning to launch a common currency in 2010, was thrown off-course when Kuwait abandoned the dollar peg in May 2007 in order not to continue importing inflation via a devaluing dollar; later, as the subprime mortgage crisis struck in the US, and the Federal Reserve cut interest rates by 0.5 per cent, Oman, Saudi Arabia and Bahrain did not cut their rates in unison, amidst reports that there was an ongoing debate on a more flexible alternative to the dollar peg in all six GCC countries.²⁸ Data released by the US Federal Reserve showed that between late July and early September 2007, foreign central banks reduced their holdings of US Treasury Bonds by $48 billion.²⁹ Meanwhile, plans to establish the Banco del Sur by seven Latin American countries (with others likely to join), in order to provide an alternative to US-dominated funds like the IMF, World Bank and Inter-American Development Bank,³⁰ would be an even greater threat to the dollar if they included the use of a regional currency. An interesting result of the dollar’s declining value is that while the rich turn to euro, the less wealthy, from Russia to the Maldives and Mexico to Vietnam, prefer their local currency to the dollar.³¹

It is easy to agree with Xu Jian, a vice-director of China’s Central Bank, that the dollar is ‘losing its status as the world currency,’³² especially when the same sentiment is expressed by American analysts.³³ What this means is that the US dollar is no longer the sole world currency; this position is now shared with other currencies. But it is still dominant, for a number of reasons. So long as the oil sales of most countries continue to be denominated in dollars, the US dollar will still be in demand; this could change, of course, if Russia were to launch its ruble-denominated oil and gas exchange. And countries like China and Japan, which between them hold trillions of dollars, would be unwilling to dump them because that would hit the value of their own reserves. Moreover, like other countries that rely heavily on the US market, they would prefer to keep their currencies low against the dollar, even though by November 2007 the yuan had appreciated by 11.6 per cent against the dollar since the peg was dropped, and the yen by 7.7 per cent since the beginning of the year.³⁴ On the other hand, building up dollar reserves would simply increase their losses as it declined. Other countries with smaller dollar reserves would also face the same dilemma.³⁵

The gradual decline in the value of the dollar that is occurring would have been the best option, if not for the urgency of the situation facing us. Millions have died in Iraq and Afghanistan as a result of the US-led occupations, and the carnage continues; meanwhile, the apartheid state of Israel, fully supported by the US, has occupied the whole of historical Palestine, herding the original inhabitants into ghettoes in the West Bank and one big ghetto in Gaza, and subjecting them to ethnic cleansing and daily killings.³⁶ If Iran is attacked, the conflict would become a nuclear war, at least in the sense that it would involve bombing Iran’s nuclear facilities; but it might also involve nuclear weapons. Apparently ‘The only thing standing in the way of a preemptive attack on Iran’s nuclear facilities is foot-dragging by the US military,’ but there is frightening evidence of attempts by the government to get around this resistance from the US military.³⁷ Several cruise missiles armed with nuclear warheads were secretly flown across the US in violation of all standard procedures on 29/30 August 2007, and several military personnel who might have known about the incident or been involved in it died under mysterious circumstances shortly before or after it, leading to speculation that the missing nukes incident was connected to US war plans against Iran.³⁸ It hardly needs to be pointed out that such a war, in which Russia and China might get involved, would be catastrophic, mainly for Iran and West Asia, but also for the rest of the world.

Among the side effects of US military aggression is the expansion of fundamentalist forces; the Taliban has not only made a come-back in Afghanistan, but is now spreading in Pakistan, while Al Qaeda, which had no presence in Iraq under Saddam Hussein’s rule, is now well entrenched there. Democracy in Iran has yet to recover fully from the US-inspired regime change in 1953, and it is likely that a US military attack will set it back by another half-century. But can such an attack be prevented?

What to do: non-violent economic non-cooperation

This brings us back to the dilemma posed by David Ludden. The costs of empire will become apparent to the US public only when they have to pay those costs, and this will happen only when (a) other nations stop colluding in its imperial adventures, and (b) the dollar loses its role as the world’s reserve currency.

For citizens of the world who are opposed to US imperialism, that suggests several possible courses of action. The ‘world’s second super-power’, world public opinion, made a hugely impressive showing prior to the invasion of Iraq, yet it failed to stop the invasion itself; stronger action is required. But the armed struggle taking place in Iraq is killing and maiming hundreds of thousands of Iraqis and thousands of Americans, most of them from poor families; surely this is not desirable. The alternative proposed here is non-violent non-cooperation with the imperial monster. For example:

1) We should put pressure on all other governments not to participate in the occupation of Iraq and Afghanistan, or any attack on Iran or sanctions against it, and/or vote out candidates who are colluding in this aggression and vote in alternatives. This will leave the burden of running their empire fairly and squarely on the shoulders of the US administration.

2) We should refuse to use the US dollar except within the US itself. Given the current weakness of the dollar, this could undermine its reserve currency role even if it is done on an individual basis. For example, large numbers of people from developing countries cross international borders every day, for work, business, tourism, pilgrimages or to visit relations; since their own currencies are not accepted internationally, they have to buy ‘hard’ currencies, and if they were to refuse to use the US dollar in this capacity, it would certainly make an impact. Economic actors like the fair trade movement should also shift to other currencies for their international trade. Both academics and activists should stop using dollar equivalents to measure incomes and GDP; for the moment, the euro can be used as a standard. Mass action of this sort played a major role in ending British rule in India and thus the British empire; employed on a much wider scale, it can help to end the US empire.

3) People in Third World countries should put pressure on their governments to shift foreign currency assets out of dollars, and to create regional currencies to strengthen regional commercial and economic ties. This would not only be a gesture of solidarity to the beleaguered peoples of Afghanistan, Iraq, Palestine, Iran and others oppressed or threatened by the US empire, but would also make good economic sense. The dollar is sliding, and developing countries which hold all or most of their foreign exchange reserves in dollars are losing money as it loses value. If it crashes, their reserves could be wiped out.

4) We should appeal to governments in oil-producing countries not to denominate their oil trade in US dollars. This does not necessarily involve a wholesale shift to the euro. Venezuela has concluded several barter deals with other Latin American countries including Cuba, giving them oil in exchange for goods and services,³⁹ and this is a pattern other oil-producing countries could consider; if a regional currency is established by the Banco del Sur, that too could be used for oil sales. Russia could denominate its oil sales in rubles, and the GCC countries in their new currency, which would enable the remittances of hundreds of thousands of migrant workers from South and Southeast Asia in Gulf countries to be used directly for oil imports. Barter deals which do not involve oil could also be concluded between developing countries.

5) World trading patterns would also need to change. If the dollar sinks drastically with world trade unchanged, many countries which now rely on exports to the US will be affected adversely by its inability to import their goods with a weakened dollar. A reorientation of trade away from the US would therefore be necessary. For example, plans to constitute the South Asia Free Trade Area as a regional bloc free of tariff and immigration barriers should be pursued at greater speed, and trade with other countries promoted at the same time. MERCOSUR in Latin America has the potential to develop into an institution similar to the European Union. China and Japan, the biggest creditors of the US, suffer most from the decline of the dollar, and would have to work out alternative trade patterns to safeguard their economies.

6) For many Third World countries, including India and China, expanding domestic mass markets would be an important component of any strategy. This would involve campaigning nationally and internationally for policies of employment creation, protection of workers’ rights, shorter working hours, and enforced payment of minimum wages that are adequate to support a decent standard of living. Such a redistribution of resources from militarism and wasteful consumption of the rich and powerful to productive consumption of working people would play a positive economic role, not only in Third World countries but also in Europe and North America.

7) In addition to these economic measures, ending US imperialism would require pressing for the development and implementation of international humanitarian law, international law and multilateral treaties (such as the Geneva Conventions, Rome Treaty of the International Criminal Court, Chemical Weapons Convention, Biological Weapons Convention, Comprehensive Test Ban Treaty, Land Mine Treaty, ILO Core Conventions, CEDAW and the Kyoto Protocol), and the strengthening and democratization of multilateral institutions (like the UN, ILO and WTO).

8) It must be emphasized that none of these actions are aimed at ordinary US citizens, a large and growing number of whom are opposed to US imperialism, and all of whom are affected adversely by it, whether they realize it or not. On the contrary, it is an open secret that the US Treasury and Federal Reserve are encouraging the decline of the dollar because it is seen as the best cure for the ailing US economy, since it slashes the foreign debt and makes American products more competitive.⁴⁰ A cheaper dollar would expand employment and increase the bargaining power of workers, enabling them to fight against the current policies of tax cuts for the rich, wage and welfare cuts for workers and the poor. Taxpayers would also regain power as their contributions to government spending increased in importance; the war could continue indefinitely so long as foreigners fund it, but once tax-payers are funding it, a tax strike could bring the troops home.

Even if all possible adjustments are made, there is no doubt that the decline and fall of the dollar as the sole world currency will cause pain, both within and outside the US. But the alternative is incomparably worse. The world order cannot much longer survive having a heavily armed rogue state on the rampage in violation of all international law and multilateral treaties. The world economy cannot afford to depend on the currency of a bankrupt nation with a colossal military budget. And the earth itself is put at risk by a country which devours massive quantities of fossil fuels and spews out greenhouse gases at a catastrophic rate.

US imperialism would not be able to pursue its destructive policies without the unlimited supply of blank cheques extended to it by the rest of the world, so it is the responsibility of the rest of the world to withdraw that source of funding. The beast has to be killed by attacking it at the point where it is most vulnerable. Meanwhile, if enough people in the US work to ensure that the next elections install a president and representatives who undertake to abandon the pursuit of Empire and instead seek to reintegrate the US into the international community as a law-abiding, fiscally-responsible, non-polluting member, the result will be a far safer and more stable global order, world economy and environment.

1. In this article I have incorporated sentences and paragraphs from the article I wrote with Marinella Correggia after the 2004 World Social Forum in Bombay, entitled ‘US Dollar Hegemony: the Soft Underbelly of Empire (and What Can Be Done to Use It!).
2. See Peter Symonds, ‘Stepped Up US Preparations for War Against Iran,’ 2 February 2007 and Abbas Edalat and Mehrnaz Shahabi, ‘Turning Truth on its Head,’ 29 October 2007.
3. John H.Richardson, ‘The Secret History of the Impending War With Iran that the White House Doesn’t Want You to Know,’ Esquire, 18 October 2007.
4. David Ludden, ‘America’s Invisible Empire,’ Economic and Political Weekly Vol.XXXIX No.44, Bombay, 30 October 2004, pp.4776-77.
5. C.Fred Bergsten, ‘The Current Account Deficit and the US Economy,’ Testimony before the Budget Committee of the United States Senate February 1, 2007.
6. See Henry C.K.Liu, ‘US dollar hegemony has got to go,’ Asia Times, 11 April 2002 and Rohini Hensman, ‘A Strategy to Stop the War, Economic and Political Weekly, Vol.38 No.16, 19 April 2003, pp.1556-1561.
7. David E.Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999.
8. Paul Craig Roberts, ‘The coming currency shock,’ Counterpunch, 16 November 2004.
9. Lawrence G.Franko, ‘US Competitiveness in the Global Financial Services Industry,’ October 2004.
10. See for example Charles Recknagel, ‘Iraq: Baghdad Moves to Euro,’ Radio Free Europe, 1 November 2000.
11. Faisal Islam, ‘Iraq nets handsome profit by dumping dollar for euro,’ The Observer, 16 February 2003.
12. ‘Forex Fund Shifting to Euro’, Iran Financial News, 25 August 2002.
13. Caroline Gluck, ‘North Korea embraces the euro,’ BBC News, 1 December 2002.
14. William Clarke in particular makes an impressive case, with a great deal of evidence, in his web-based essay ‘Revisited: The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’ (January 2004), which is a revised version, with addenda, of his original essay of January 2003. Many of the references in this article are taken from him. See also Gavin R.Putland, ‘The War to Save the US Dollar,’ 18 April 2003.
15. See Rohini Hensman, ‘Boycott the Dollar to Stop the War!’ 27 March 2003, and Dave Emory, ‘For the Record #407’ 21 April 2004, quoting Robert Block, ‘Some Muslims Advocate Dumping the Dollar for the Euro,’ Wall Street Journal, 15 April 2003: In Nigeria, anti-war demonstrators shouted “Euro yes! Dollar No!’
16. See www.boycottbush.org.
17. ‘Dr M Tells World to Use Dollar Weapon to Pressure Washington,’ 29 July 2006.
18. ‘Dollar dropped in Iran asset move,’ 18 December 2006, and ‘Iran demands Japan’s oil payments in yen, not US dollars,’ 14 July 2007.
19. Jennifer Hughes, ‘Dollar gets sinking feeling as investor confidence fades,’ Business Standard, 24-25 May 2003; ‘US appetite for foreign stock takes toll on $,’ Economic Times, 20 December 2004.
20. Gary North, ‘Asian doubts regarding the dollar’, 1 October 2004.
21. A.V.Rajwade, ‘Asia’s dollar dilemma,’ Business Standard, 20 December 2004.
22. Peter S.Goodman, ‘China ends fixed-rate currency,’ Washington Post, 22 July 2005; ‘Malaysia too ends dollar peg,’ Dawn, 22 July 2005.
23. ‘RBI may diversify into Chinese yuan,’ Economic Times, 12 March 2005.
24. Steve Johnson, ‘Asian banks cut exposure to dollar,’ Economic Times, 11 March 2005.
25. Gayatri Nayak, ‘Dragon raises its head in the forex market too,’ Economic Times, 28 March 2005.
26. Francis Cripps, John Eatwell and Alex Izurieta, ‘Financial Imbalances in the World Economy,’ Economic and Political Weekly, Vol.XL No.52, 24 December 2005, pp.5453-56.
27. Ambrose Evans-Pritchard, ‘Bank of Italy slashes dollar holdings in favour of UK pound,’ 3 August 2006; Julian D.W.Phillips, ‘Russian Rouble to attack the $ – Exchange Controls in the US?’ 16 May 2006.
28. ‘Gulf could unite to drop dollar peg,’ 31 October 2007.
29. Ambrose Evans-Pritchard, ‘Is China quietly dumping US Treasuries?’ 6 September 2007.
30. Jeb Blount, ‘South American Countries Agree to Found Banco Del Sur (Update6),’ 8 October 2007.
31. ‘Demising US dollar gives way to euro cash in Russia,’ Pravda, 17 February 2005; William Pesek, ‘Dollar’s Demise Can Be Seen Even in the Maldives,’ Bloomberg.com, 29 October, 2007.
32. Agnes Lovasz and Stanley White, ‘Dollar Slumps to Record on China’s Plans to Diversify Reserves,’ Bloomberg.com, 7 November 2007.
33. Paul Craig Roberts, ‘The End Is Near! – Gisele Bundchen Dumps Dollar,’ Countercurrents.org, 8 November 2007; Mike Whitney, ‘Plummeting Dollar, Credit Crunch…,’ Countercurrents.org, 15 September 2007.
34. Belinda Cao, ‘Yuan Heads for Biggest Weekly Advance Since July 2005,’ Bloomberg.com, 12 November 2007; Stanley White and David McIntire, ‘Yen Rises to 1 ½ Year High Against Dollar on Risk Reduction,’ Bloomberg.com, 12 November 2007.
35. See, for example, Mike Dolan, ‘Dollar fall will come at a price for all,’ 21 November 2004 and Ila Patnaik, ‘Day of the declining dollar – How should India be responding to this trend?’ Indian Express, 18 December 2004.
36. See Gideon Polya, ‘Two Million Iraq Deaths, Eight Million Bush Asian Holocaust Deaths and Media Holocaust Denial,’ Countercurrents.org, 7 October 2007.
37. Ray McGovern, ‘Attacking Iran for Israel?’ Consortiumnews.com, 1 November 2007.
38. Mahdi Darius Nazemroaya, ‘Missing Nukes: Treason of the Highest Order,’ Global Research, 29 October 2007.
39. Hazel Henderson, ‘Beyond Bush’s Unilateralism: Another Bi-polar World or a New Era of Win-Win?’ InterPress Service,June 2002.
40. ‘Dollars, Debt and the Trade Gap, Thoughts on the Dropping Dollar,’ Wall Street Journal Online, 19 December 2006.

The oldest of the three struggles is that of the Palestinian people against Zionism. While the indigenous Jews of Palestine lived in peace with their Muslim and Christian neighbours for centuries, the advent of European Zionism — a colonial enterprise promoted by the British Raj in the 19th century — ignited conflict by dispossessing Palestinian peasants of the land they were cultivating. During the British Mandate period after World War I, a nationalist Palestinian revolt was brutally crushed by the British, even as they encouraged the Zionist settlers. In 1938 Gandhi, despite his deep sympathy for persecuted Jews, saw quite clearly the colonial character of the enterprise being carried out ‘under the shadow of the British gun’. The Zionists quite cynically used anti-Semitism, the Nazi persecution of the Jews, and later the Holocaust, as a justification for their settler colonialism. Although they — like the European settlers in North America — waged a war for independence from the British, this did not change their colonial relationship with the indigenous people. The partition of Palestine, pushed through in the UN by the US in 1947, gave most of the land to the European settlers, but they were not content with that: Zionists declared their intention of colonising the whole of Palestine and parts of neighbouring countries, and many of the terrorist attacks subsequently carried out against the Palestinians were outside the area assigned to the Zionists. The establishment of the state of Israel in 1948 was accompanied by brutal ethnic cleansing directed against the indigenous Palestinians.

More recently, the occupation of the West bank and Gaza after the 1967 war, the division of the West Bank into a series of ghettoes by the apartheid wall, and the conversion of the Gaza strip into one big ghetto, has exposed the long-standing Zionist plan to wipe Palestine off the map. It is a model of settler colonialism falling somewhere between the South African model and the genocidal model of the European settlers in North America and Australia. As in Apartheid South Africa, discrimination against non-Jews is inscribed in Israeli law. But unlike the South African regime, the Israeli regime wishes to eliminate the non-Jewish indigenous population altogether. The methods often resemble Nazi policies: for example, mass murder like the massacre at Deir Yassin, herding people into ghettoes, depriving them of food, water, infrastructure, essential services and a livelihood, and the abhorrent Nazi policy of collective punishment. But the project is a colonial one, aimed at getting rid of Muslim and Christian Palestinians by massacres and population transfer, actions codified in international law as ‘crimes against humanity’ by the Nuremburg Charter and the International Criminal Court.

Palestine-Israel is de facto a single state now: Israel, by its actions, has ruled out any possibility of a two-state solution to the conflict, and indeed, such a solution would have been unjust, legitimising the expulsion of large numbers of Palestinians from their own land and discrimination against those who remain. The only meaningful struggle would be for a democratic, secular state of all the communities living in the whole of historical Palestine, with equal rights for all. Refugees, according to international law, would have the right to return if they wish to, and all Jewish immigrants, including settlers outside Israel, would have the right to stay, provided they abide by the democratic principle of equal rights for all, special privileges for none. The joint Palestinian/Israeli campaign for a one-state solution to the conflict has called on the international community to support them by a Boycott, Divestment and Sanctions campaign against Israel, similar to the campaign against Apartheid South Africa, to force it to democratise, and this is the least we can do to demonstrate our solidarity. A major weakness of this campaign, however, is that it fails to attack the source of Israel’s military, diplomatic and economic support, without which it would not even exist, much less be able to defy international law with such impunity, namely US imperialism.

On the other hand, the anti-war movement, while conscientiously publicising the British ORB poll suggesting that 1.2 million Iraqis have died violent deaths as a result of the US-led occupation, and many more — especially children — have died of malnutrition and disease, while reporting that the US-led NATO troops in Afghanistan are killing civilians and causing malnutrition, and exposing and opposing plans to attack Iran, seldom highlights the role of Israel, especially in instigating the attack on Iraq and now on Iran. There are occasional complaints that Israel influences US foreign policy to the detriment of US interests, or, conversely, that the US influences Israeli policy to the detriment of Israel’s interests, but the truth seems to be that the two are so intertwined that separating them is impossible. A rare occasion on which the close symbiotic relationship between the US and Israeli states was discussed was during the criminal Israeli attack on Lebanon in 2006; it was again suggested after the September 2007 Israeli air strike on Syria. Yet cooperation between the US and Israel seems to be standard practice rather than anything unusual.

What this suggests is that the anti-war movement needs to target Israel as much as the US, while the Palestine solidarity movement needs to target the US as much as Israel. In what way can the US be compelled to stop its aggression against Afghanistan, Iraq, and possibly Iran, and its total support for Israeli crimes against humanity in Palestine? As the bombs started falling on Iraq in 2003, I wrote and circulated an appeal entitled ‘Boycott the Dollar to Stop the War!’, arguing that although the military strength of the US was enormous, its economy was in a mess; with a massive gross national debt, the only reason it could finance its foreign wars and occupations was because of the inflow of over a billion dollars a day from countries accumulating foreign exchange reserves in dollars because it was the world’s sole reserve currency. The denomination of the oil trade in dollars made it additionally desirable. With the advent of the euro, however, there was the possibility of an alternative world currency; therefore individuals, institutions and countries opposed to the war on Iraq should refuse to accumulate dollars or use them outside the US, because these were activities that helped to finance US-Israeli aggression against Palestinians, Iraqis and Afghanis. After the World Social Forum meeting in 2004, the Boycott Bush Campaign adopted the dollar boycott as part of its strategy.

Four-and-a-half years later, the war has not stopped, but there is a significant reduction in the worldwide use of the US dollar as a reserve currency, and the value of the dollar has fallen. Campaigns to persuade governments to reduce their dollar holdings further could well be successful, since a falling dollar constitutes a loss for them. Pressure could also be put on oil-producing countries to denominate their oil sales in some currency other than the dollar. This does not necessarily mean denominating the oil trade in euro; in some cases, oil-producing countries could be asked to accept their own currency in payment for oil exports, and pay for imports, likewise, in their own currency. This would be a boon to South Asian countries, for example, who could then use remittances from migrant workers in Gulf countries and earnings from exports to these countries directly for their oil imports. In other cases, barter could be used, as Venezuela is already doing. A reorientation of trade away from the US would minimise the fallout of a reduction in US imports as the dollar falls. Campaigning for policies of employment creation, protection of workers’ rights, shorter working hours, social security and minimum wages that are adequate to support a decent standard of living will redistribute resources from destructive militarism to productive consumption of working people, and thus expand mass markets in all countries.

It must be emphasised that the purpose of these boycott campaigns against the US and Israel is to follow Gandhi’s principle of non-violent non-cooperation with injustice and oppression. It is not intended to harm wage-earners in either of these countries, although they will have to learn to do without the privileges that come from being beneficiaries of imperialism. It may be easier today (when imperialism is linked to neo-liberalism at home) than it was in the past (when imperialism was linked to social-democracy at home) for US workers to understand that their interest lies in solidarity with the Iraqi oil workers’ union resisting the US occupation and proposed oil law, and not in support for their own state’s occupation of Iraq and plans to rob it of its oil. It will be even easier when the full burden of the billions spent not only on US military forces and armaments, but also on hundreds of mercenary armies and corrupt contractors, falls on US taxpayers rather than being borne by the rest of the world. The people of Israel and the US have the greatest power to force their governments to stop the slaughter in Palestine, Afghanistan and Iraq and threat of more slaughter in Iran, by methods ranging from mass demonstrations and electing anti-war representatives to civil disobedience and a general strike.

What about the EU? Some leaders, like Blair and Sarkozy, have been fully supportive of the US-Israeli imperialist project, others less so. But there has not been any consistent opposition, even to the worst crimes; EU complicity in the horrifying slow-motion genocide being committed in Gaza is particularly disturbing. Given that the EU, unlike the US and Israel, at least pays lip-service to international law, it would be worth bombarding its leaders with reminders of the gross violations of international human rights and humanitarian law being committed by the US and Israel, and their own role as active or passive accomplices.

It is also necessary to resist the displacement of the goal of nuclear disarmament by that of non-proliferation. Anti-war groups have responded to statements by Bush and Sarkozy that a nuclear-armed Iran is ‘unacceptable’ by emphasising, quite correctly, the lack of any evidence whatsoever that Iran is developing nuclear weapons. But it has been left to campaigners for nuclear disarmament to point out the dishonesty involved in these denunciations of Iran, which make the unstated assumption that nuclear-armed Pakistan, India, Israel, China, Russia, Britain, France, and above all USA — the only state that has actually used these weapons of mass destruction — are acceptable. The anti-war and Palestine solidarity movements need to challenge this assumption most vigorously. We must highlight the hypocrisy of Bush and Sarkozy using the nuclear Non-Proliferation Treaty (NPT) against Iran, which has not violated it, when they themselves are violating Article VI of the NPT, in which parties to the treaty undertake to ‘pursue negotiations in good faith… on a treaty on general and complete disarmament under strict and effective international control’. Indeed, non-proliferation makes no logical or practical sense in the absence of nuclear disarmament. Logically, if these weapons are so evil that countries have to be barred from obtaining them, then those that already possess them should proceed to eliminate them; practically, so long as some countries have nuclear weapons, others will inevitably strive to acquire them, and some will succeed.

The NPT is a discriminatory treaty, in that it subjects non-nuclear weapon signatories to strict safeguards while nuclear weapons states are allowed to get away with a commitment to nuclear disarmament that there is no means of enforcing. Therefore, instead of the NPT we should emphasise the importance of universal ratification of the Comprehensive Test Ban Treaty (CTBT), which bans nuclear tests by all countries without discrimination, and the Fissile Material Cutoff Treaty (FMCT), which would ban the production of fissile material for nuclear weapons, and subject the nuclear weapons states to the verification procedures currently applicable only to non-nuclear weapons states. While not actually measures of nuclear disarmament, these treaties would prevent nuclear weapons states from expanding their arsenals and developing new weapons, pending the introduction of a new a treaty on total global nuclear disarmament, which would be the ultimate goal.

In conclusion: if we wish to stop the war in Palestine, Afghanistan and Iraq, and prevent it from spreading to Iran and other countries, we need to take the following measures:

   1. support the Palestinian-Israeli struggle for a single democratic state in historical Palestine by a campaign of boycott, divestment and sanctions against Israel;
   2. boycott the US dollar until it ceases to be a world currency, thereby refraining from contributing financially to the war;
   3. campaign for a ban on the production, stockpiling and use of all nuclear weapons, including Depleted Uranium weapons, as well as chemical and biological weapons, and weapons such as land mines and cluster bombs that target civilians;
   4. lobby the UN on all these issues: there is an earlier petition to the UN General Assembly that contains the e-mail addresses of UN Ambassadors and others;
   5. and finally, work for democracy in our own countries and oppose the threat or use of force by our own governments, since a democratic and peaceful world order can only be built out of democratic and peaceful constituents!