Citizens of the Global South need to organize at all levels to abort the threat of neo fascism internationally. These societies will have to organize to defend living standards, save the environment and build effective finance and trading blocks to stop the transfer of the costs of the financial crisis onto the backs and shoulders of the peoples of the Global South. The accelerated push for the de dollarization of the international financial system will intensify the push of US militarists and prop up neo fascist forces.
Where are we now?
The political and economic implosions in Europe in the midst of the global meltdown of capital has tremendous implications for all peoples of the world, but especially for peoples of the Global South. Within the countries of Africa there are military interventions, increased hunger, massive displacements of youth, instability for poor farmers and workers along with a reckless outflow of capital generated by the supine African political class. In most of Asia, the working peoples are seeking defensive measures to ensure that global capital does not intensify the pain of the people. Especially in the ASEAN states, the presence of alternative bases for financial and trading relations ensure that finance capital does not have full sway over all sections of society.
The COVID -19 pandemic has alerted peoples in all parts of the world to struggle for universal health care and to control the big pharmaceutical industries. Within the Americas, it is in the region of Latin America where there is now a vigorous social movement to challenge the local forces that represent the International Monetary Fund and finance capital. From Bolivia to Chile and from Colombia to Peru, the mass of the peoples has resorted to electoral struggles to oppose the local representatives of foreign capital. These electoral victories provided some political space for Cuba and Venezuela.
Within the USA, the ruling Democratic Party controls all three branches the political system: the Presidency, the Senate, and the House of Representatives, but they have been too compromised to stand up to finance capital, the barons of Wall Street and big Pharma. With the frustrations of the working people bubbling over, the conservative sections of the political class have resorted to nativism and the crudest forms of white supremacist mobilization to divide the over 160 million employed in the country. The traditional trade union formations have been unable to build a coherent organizational platform to address the needs of a diverse workforce. After four decades of the deindustrialization of the society, with capital shifting jobs to cheaper labor markets, the traditional working class hubs in the midwestern states have succumbed to the appeals of those who are demanding to Make America Great Again (MAGA). The strategy of mobilizing collective ignorance and illiteracy about the realities of the global economy ensures that even so-called economists and pundits are naive about global shifts. Dependence on the narrow band of information coming from their English counterparts reinforce a false sense of the global balance of forces. In this narrow frame, the so called ‘special relationship’ represents another blinder from grasping the dynamic forces at work globally, and especially in Europe. The challenges posed by the war in Ukraine and by the move to neo fascism are whether the entire planet will be engulfed in the unforeseen circumstances of the weaponization of everything.
All over Europe, the political and economic disasters have been exacerbated by the intensification of militarism in the Ukraine front. This Russian invasion of Ukraine emanated from the unresolved contradictions that precipitated two imperialist wars starting in 1914. This current war has brought to the surface the full implications of the fragility of the US political system as de dollarization accelerates around the world. Citizens in all continents are confronted with the deep effects of runaway profiteering by the billionaire class, escalating food and energy costs, inflation, extreme climate catastrophes, insecurities and deteriorating economic conditions for all but the super-rich. In the absence of the tools available to the Federal Reserve in North America, the European political managers have increased interest rates to the point where many homeowners cannot afford to pay their mortgages. Many small businesspersons are finding it difficult to survive. Workers are threatening to carry out industrial actions to defend their standard of living.
The United States energy czars are demanding that the Europeans pay four times the price for natural gas so that the Europeans can disconnect their energy supplies from Russia. So far, the Germans have been able to offer a 200 billion Euro subsidy to the German people for the coming winter, but most of Europe are sacrificing their societies to please the militarists in the United States. In the midst of these economic pressures, it is the white racists and neo fascists who are reaping the political benefits. One has seen this trend already in Italy and Sweden where the neo fascists are coming to dominate the political spaces. In France, the neo–Fascist National Party are now the top political force in the country. The political strength of the extreme right in the USA forced President Biden to warn the society of ‘the threat of a rising fascistic movement to the stability of the republic, which is to say that undercurrents, or elements of fascistic politics in America have steadily grown more extreme in recent decades, particularly in recent years under Trump’s presidency.”
It is in the British Isles where the delusions of Global Britain are manifest in the circus variety performance with the political ups and downs of the ruling conservative party. After succumbing to the xenophobic appeals of the push to leave the European Union (Brexit), the British workers are now faced with a political and economic class who have no interest in seeking to lessen the pain of the working people. The ascension of the multi-millionaire Rishi Sunak to be the Prime Minister is being celebrated as the advent of diversity with a nonwhite as the Prime Minister, but Sunak is openly contemptuous of working people. His utterances have been consistent with his social class, with the added naivete of one who have been cut off from the reality of working people all of his short life. The British media welcomed his becoming the third Prime Minister in four months saying, “Ultra rich, young and the first person of colour to become UK prime minister, Rishi Sunak will also make history as the first practising Hindu to lead the country.” Sunak once boasted that he had changed Labour party policies “which shoved all the funding into deprived urban areas” so that funding could go to wealthy towns instead.
This is the current imperial strategy to shift resources from the poor to the rich. As the dominant imperial power for centuries, Britain had been the master at covering up genocidal policies and criminal acts of plunder. The Global Reparations movement has brought out these crimes to the point where even insiders such as Ferdinand Mount have written on the “The Tears of the Rajas.” Rishi Sunak is not about to call on Britain to account for the crimes of the British East India Company.
For four centuries, Britain had presented itself as a bastion of the rule of law, fair play and the stability of the financial and political system. This exaggerated representation of British capital had been challenged by the anti-colonial forces in Asia, Africa, and the Caribbean. After the Suez debacle of 1956, the British rulers had been able to attach themselves to the US dollar in a ‘special relationship’ which meant that Britain would be junior partners in halting self-determination projects globally. In this 2022 moment, even that ‘special relationship’ is being tested as the IMF and the US ruling classes are seeking to punish the British for not carrying out the necessary propaganda work to ensure that now dead Liz Truss and Kwasi Kwarteng subsidies to capital were properly marketed by the right-wing media. The now disgraced Liz Truss and her Chancellor of the Exchequer, Kwasi Kwarteng attempted to force the subsidies for the capitalists in a mini budget after the funeral ceremonies of Queen Elizabeth II. The plan, presented by Kwarteng on September 23, promised huge tax cuts and increased borrowing. Kwarteng’s proposed mini budget included a plan to scrap the highest rate of income tax to 40% from 45%, which was later abandoned after public anger. A removal of the cap on bankers’ bonuses also deep fury amid a cost-of-living crisis hitting British families. It quickly plunged the value of the pound and government bonds over fears that it would further juice inflation at a time when prices are already rising at their fastest rate in about 40 years. That prompted the Bank of England to warn of a serious risk to UK financial stability and announce three separate interventions to calm a bond market meltdown that put some UK pension funds on the brink of default.
The objection of the IMF and the money markets was not that billions of dollars were to be handed out to the corporations and the super-rich. It was that they were not funded by cutting spending but by an increase in government debt to the tune of close to 70billion pounds.
The current implosion of the ruling elements in Britain is now opening the eyes of working peoples in other parts of the globe. Because the British represented themselves as global players, the effects of the political crisis in Britain have global implications. It is now important to have a short review of the new tensions that have arisen for the pound and the dollar in the face of the current global crisis of capitalism,
Bring back Thatcherism in the 21st century
After the decolonization struggles of the sixties and the failure to roll back the forces of national independence, the bankers of North America and Europe popularized the ideas of Milton Friedman that capital should be given free rein to the point of rolling back the social gains of health, education, pensions, and social security of social democratic capitalism. Friedrich Hayek and Milton Friedman were two economists from the period of World War II who opposed Keynesian economics. These economists were rescued by the conservative political wave of Reaganism and Thatcherism at the end of the seventies when most of the countries of the world were calling for a New International Economic Order (NIEO). By1971, the refrain of Friedman was that sole responsibility of a company is to its shareholders, the mantra of shareholder value and the relentless pursuit of profits must be the raison d’être of capital. This was the ideological legitimation to conceal the big push for the US dollar to recover and for the United States to launch a campaign of the military management of the international system.
The story of Thatcherism and Margaret Thatcher is now well known by citizens who oppose hyena type capitalism. Her party in 1979 enthusiastically agreed to this deal of the military management of the system with the City of London and the financial sector of Britain acting as the back stop for the forms of illicit financial activities that could not pass the eyes of the tame US Congressional Committees. The Thatcherite years of so called ‘growth, growth’ economic agenda was pushed through on the basis of the massive repression of the British working class, most vividly expressed in the crushing of the mine workers union. Finance capital cheered on both sides of the Atlantic as the banks and financial houses with Goldman Sachs in the lead went on a vigorous campaign to roll back social democracy all over Europe.
Despite the Friedman doctrine that the state should leave economic outcomes to the market, after four years of the Reagan Administration, the US was faced with a large budget deficit and high interest rates. The twin problems of budget deficit and high interest rates had fueled a relentless climb in the dollar, opening a huge gap in the trade balance. The state did not stay out of the marketplace. In September 1985, the Reagan Administration forced the Germans and Japanese buy yen and marks to reduce the value of the dollar. (The Plaza Accord, 30 Years Later | NBER) When the Germans and the Japanese attempted to protest by calling on the US to be fiscally responsible and cut their budget deficit, Reagan quipped that the sacrifices of Germany and Japan were needed because the US had troops on their soil protecting them from communism.
The folly of the Wall Street strategy of feeding greed and speculation was brought out in the open in the big stock market crash of the US in October 1987. In response to the crash—at more than 22 percent, one of the largest one-day fall in history—then chair of the US Federal Reserve, Alan Greenspan, committed the Federal Reserve to supply the stock market with all the liquidity it needed. This policy of the Federal Reserve was to become a permanent component of US militarism as the US understood that every major financial crisis led to the strengthening of the US dollar. Hence since 1987, this Greenspan Guarantee to the financial market became official policy. This was policy that whenever the speculative activities of Wall Street produced a crisis, the Fed would be on hand to bail it out and provide more money with which to finance new levels of speculation. This was the Fed’s response to every financial storm in the 1990s and into the first years of the new century. This promise was to be restated after the 2008 financial meltdown when the US came up with the policy of Quantitative Easing (QE) where the federal Reserve of the US bought up treasury bonds and mortgage-backed securities, which was basically printing dollars.
After the October 1987 crash which reverberated around the world, the German French alliance had deepened in the face of the dollar becoming a fiat currency. The removal of the gold backing for the US dollar in August 1971 had induced the, then, French president Charles De Gaulle to rail against the Exorbitant Privilege of the Dollar. France and Germany were going to align to challenge the Exorbitant privilege by the expansion of German capital in Europe, the deepening of French imperial exploitation of Africa.
The push for deeper European financial and monetary integration accelerated with the Treaty of Maastricht that laid the legal architecture for the emergence of the European Union. The Union was established after the enlargement of the German base for accumulation across Southern Europe spread to Eastern Europe after the fall of the Soviet Union. Today the EU embraces 27 states across Europe. After the Reagan bullying of the Plaza accords, both former President Valery Giscard d ‘Estaing of France and Chancellor Helmut Schmidt of Germany mooted the idea of the European Monetary System (EMS) but this idea was pushed through after the German unification in 1990 culminating with the arrival of the Euro to contest the dollar as the dominant global currency. Chancellor Helmut Kohl of Germany had taken the diplomatic offensive to unite Germany and immediately took the offensive to engage with the new emerging capitalist forces of China and the ASEAN countries. Years earlier, Chancellor Schmidt and President Giscard d’Estaing encouraged joint French-German aerospace and arms production, as well as joint nuclear reactor development: inaugurated regular EU summits that took Europe’s political direction away under the thumb of the US military. Later the German Chancellors, Kohl and Merkel sought to extend the independence of Europe by building closer relations with Russia with massive German investments in Russia.
The solidarity of western capital behind Anglo American finance capital had held as long as there was a challenge to the capitalist mode of production. Once the Soviet Union imploded in 1991, the solidarity had evaporated, and the European capitalists led by France and Germany embarked on establishing an alternative to the dollar hegemony. The Germans and the French started discussing creating their own military alliance (PESCO) to distance Europe from the domination of the North Atlantic Treaty Organization (NATO). The Permanent Structured Cooperation (PESCO) was the Franco German Initiative to pave the way for the creation of a European army. The plan was for the European army to back up the European currency.
Deepening of the Capitalist Crisis in the 21st Century.
The dawn of the 21st century saw the expansion of US military adventures in Afghanistan, Iraq, Libya, Syria and in Africa. Britain had joined with the USA as junior partners in these military escapades with NATO becoming the military force to prop up the financialization of energy markets. By the start of the Iraq war, German and French leaders were outspoken against this brand of overt militarization. German Finance Capital was seeking room to enforce its own brand of neo liberalism to roll back social democratic gains and to strengthen the German banking system with the context European Central Bank as the backbone of the Euro system.
European capitalists in all parts of that continent could not escape the contagion from the 2007/8 financial crisis. The underlying instability generated by the recklessness of the Wall Street bankers had brought the western financial system close to disaster with the collapse of Lehman Brothers in 2008. In that crisis, the Greenspan Guarantee was to be implemented via the Obama administration and under the stewardship of Ben Bernanke. For that period of crisis management, Bernanke was in 2022 awarded the Nobel Prize for Economics.
The Federal reserve spent more than $4tn in its various rounds of bond buying. Most defenders of the money managers have produced reams of papers to convince the world that the first round of printing money was a success – it was big enough, and lasted long enough, for in the eyes of the opinion makers, this printing of money had prevented a more dire economic situation. These opinion makers drowned out the calls for the nationalizing of the banks and to make the financial sector accountable to elected officials who were not dependent on Wall Street. The Fed increased its holdings of government debt from around $800 billion to about $4 trillion, leading to the creation of a mountain of debt and fictitious capital, reflected in the rise of Wall Street to record highs after reaching its nadir in March 2009. By the time of the COVID -19 pandemic ten years later, this impulse of printing dollars had gone out of control. After perfunctory meetings of the G20 in 2010, the Federal Reserve of the US alone more than doubled its holdings of financial assets, almost overnight, from $4 trillion to nearly $9 trillion, and became the guarantor for all forms of debt, government and corporate. The total amount injected into the financial system by central banks is estimated to be around $13 trillion.
For a moment after the 2008/9 Wall Street Meltdown became global, the social movements for peace and social justice expanded all over the world with electoral victories for progressive forces in Brazil. In the USA, the alliance between the peace, environmentalists and anti-capitalist forces had merged in the Occupy movement. This briefly galvanized people, but the forces of darkness organized the extremists (epitomized by the Tea Party) while the Obama administration doubled down to support Wall Street. A massive offensive against the Occupy movement was sustained internationally by the assault on the last vestiges of social democracy in Europe. Austerity measures at the economic level provided the economic background for the drastic social expenditures on health, housing, education, and pensions. Many of the surviving social democratic alliances crumbled in Europe. The Eurozone crisis deepened in the absence of the ability of the Europeans to fully unleash Quantitative Easing. By 2015, the Bernanke forces allowed the Japanese and the Europeans to implement their own Quantitative Easing, but by then the US had to resort to the weaponization of finance to coerce countries such as China, Venezuela, Iran and Russia to abide to the dictates of Wall Street.
Effects of printing Money
The weaponization of finance by the USA had rippling effects across the planet. The Iranian and Cuban economies demonstrated that despite tremendous hardships, Third World societies could navigate the weaponization of the dollar. In Asia, the ASEAN countries refined the Chiang Mai Initiative (CMI) to be beefed up as the Chiang Mai Initiative Multilateralization (CMIM), a single pooled reserve scheme to protect the ASEAN countries from the bullying of the IMF. According to McKinsey, Asia is on track to contribute more than 50 percent of global GDP by 2040 and to drive 40 percent of the world’s consumption. Asia’s share of global capital flows now stands at 23 percent, compared to 13 percent just a decade ago. Quiet as it is being kept, it is the countries of the ASEAN states and the RCEP that are the most aggressive in the current push for de dollarization. Singapore is positioning itself as the hub for new and innovative digital transactions outside of the sphere of the dollar.
China and Russia began to experiment with the establishment of Brazil, Russia, India, China and South Africa (BRICS) bank. Russia took the lead within BRICS to call for ending the dominance of Wall Street and the dollar as the dominant reserve currency. After the collapse of the centrally planned system of the USSR in 1991, there had grown a class of Russian billionaires, but the political class was still nationalist and did not seek to become a client state of the USA. This nationalism within Russia placed the leadership on a collision course with the barons of Wall Street and their gendarme represented by NATO. The provocations generated by the plans to expand NATO right up the borders with Russia in Ukraine precipitated a new war which is still unfolding.
Within Latin America and the Caribbean, the Community of Latin American and Caribbean States called CELAC rallied to short circuit the military and economic push to remove the Venezuelan government. Inside Brazil, Lula has been campaigning for the creation of a Latin American currency capable of overcoming the region’s dependence on the dollar.
Despite the nationalist responses in CELAC, BRICS and the ASEAN societies, global capital was immeasurable strengthened in relation to the mass of the peoples of the planet. The Fitch Ratings-London-21 October 2022 noted that,
“The Federal Reserve continues to act aggressively on interest rates, pushing the US dollar to historically high levels against several Fitch20 currencies. Given that other central banks are also tightening in response to rising inflation, government bond yields are rising to levels not seen in years.”………… “Many Fitch20 currencies including the euro, the Japanese yen, the British pound, the Australian dollar, the Canadian dollar, the Chinese yuan and many other emerging market currencies have lost ground against the US dollar.”
If convertible currencies have lost ground, Fitch and the financial rating agencies have not begun to compute the impact of the Global South. Raising rates draws capital toward the US economy and away from emerging markets. As capital inflows push up the dollar’s value, capital outflows pull down emerging-economy currencies, which makes it much harder for governments and companies to service their US-denominated debt. The global poor are hit especially hard by food and energy costs, because those commodities are priced in dollars on the world market. US and EU sanctions on Russia are also ruining economies around the world by creating acute scarcity of key commodities and supercharging
Transferring wealth from Poor to Rich
If Rishi Sunak boasted that he steered resources from poorer communities to richer communities in Britain, he is now a key partner for his former employers Goldman Sachs to steer resources from the poor in the world to the rich countries. The neo liberal policies of the past 35 years facilitated the transfer of wealth into the hands of a global corporate and financial oligarchy. Despite the scandals of the LIBOR corruption among bankers, the British accomplices of Wall Street still seek to be global players giving offshore cover to billionaires.
Data published by Forbes in April showed that in 2020 alone the collective wealth of the world’s billionaires increased by 60 percent from $8 trillion to $13.1 trillion, described by the magazine as “the greatest acceleration of wealth in human history.” According to Institute for Policy Studies analysis of Forbes data, the combined wealth of all U.S. billionaires increased by $2.071 trillion (70.3 percent) between March 18, 2020 and Ocobter 15, 2021, from approximately $2.947 trillion to $5.019 trillion. Of the more than 700 U.S. billionaires, the richest five (Jeff Bezos, Bill Gates, Mark Zuckerberg, Larry Page, and Elon Musk) saw an 123 percent increase in their combined wealth during this period, from $349 billion to $779 billion.
Thomas Piketty in seeking to grasp the impact of Capital in the 21st century had focused on inequality, but Income inequality was only one indicator of the inbuilt relations of finance capital, the front line shock troop for modern imperialism. Piketty had excluded the military component of the expansion of capital and modern imperialism. Michael Hudson succinctly outlined three ways in which the flooding of dollars through debt leverage and QE supports the US military.: (1) the surplus dollars pouring into the rest of the world for yet further financial speculation and corporate takeovers; (2) the fact that central banks are obliged to recycle these dollar inflows to buy U.S. Treasury bonds to finance the federal U.S. budget deficit; and most important (but most suppressed in the U.S. media, (3) the military character of the U.S. payments deficit and the domestic federal budget deficit. He continued, “Strange as it may seem and irrational as it would be in a more logical system of world diplomacy the “dollar glut” is what finances America’s global military build-up. It forces foreign central banks to bear the costs of America’s expanding military empire effective “taxation without representation.” Keeping international reserves in “dollars” means recycling their dollar inflows to buy U.S. Treasury bills U.S. government debt issued largely to finance the military.”
One limitation of Hudson’s analysis is that he has not sufficiently grasped the impact on Africa since he wrote the ‘Sieve of Gold’ over fifty years ago.
It is in Africa where the intensification of exploitation was manifest in militarism, massive flights of capital, instability, and general looting. Britain and France had orchestrated the destruction of Libya in order to shore up the European economies with the massive foreign currency reserves of Libya. European workers were suborned to the destructive activities by finance capital by raising the twin bogey of terrorism and the massive immigrant flow to Europe. European workers were not informed of the collaboration of the states of the Gulf Cooperation Council in stoking instability in Africa. The US military strengthened its military operations all across Africa with the US military actually training coup plotters in Guinea when the working people wanted to organize the workers to fight for better conditions. The Pentagon stoked the fires of war and destruction in the Indian Ocean and West Asia area by deploying former top generals to manage warfare in places such as Yemen as consultants.
The military management of the international system received a major setback for US capital with the military defeat of the US military in Afghanistan, Iraq and Syria. With every military setback overseas, militarism and white supremacy surged in the USA with the billionaire class bankrolling MAGA. Six billionaires stood out from among the billionaire class in supporting the extreme nativism of the MAGA forces. Peter Thiel, Stephen Schwarzman, and Ken Griffin, Steve Wynn, Mike Lindell and Patrick Byrne represented one faction of Global Capital that had the Fox organization of Rupert Murdoch to amplify the neo fascist ideas of the MAGA elements. As the COVID 19 deaths and suffering escalated around the world in 2020, the Federal Reserve government handed Larry Fink of Blackrock the authority to manage its massive corporate debt purchase program in response to the Covid-19 crisis. Larry Fink (of Blackrock private equity) and Stephen Schwarzman (of Blackstone private equity) were ring leaders for the Donald Trump Strategic and Policy Forum. Once the COVID 19 pandemic exploded on the world, Fink and Blackrock were handed the responsibility to manage the US $4.5 trillion corporate slush-fund. Millions died from this pandemic while Wall Street and the corporate media silenced those sections of the globe who were calling for universal health care and for reigning in the power of the billionaires.
Like the Occupy movement of 2010, the Black Lives Matter movement erupted as a social force to oppose militarism and white supremacy. But by the middle of the COVID -Pandemic and the launch of the war in Ukraine there was a convergence of interests between the MAGA forces and those in the Democratic party who were beholden to Wall Street.
From Crisis to Crisis: COVID 19, war and neo fascism.
From the economic downturn of 2001 through the financial meltdown of Wall Street to the Euro zone Crisis to Brexit and the War in Ukraine, economic polarization and political repression in Europe went hand in glove. The climate crisis demanded state intervention and international cooperation, but with every climate calamity, the right-wing media doubled down to oppose closer international cooperation to turn a new leaf in economic management. British Capital had been a weak link in the chain of imperial domination since the Suez crisis of 1956. Britain held grudgingly to its position as an offshore base for speculative capital basing a lot of illicit financial flows in Britain or in colonial outposts such as the Turks and Caicos Islands in the Caribbean. In the face of the strength of German capital in Europe, those elements of British capitalism that wanted to be free of German domination in Europe orchestrated the exit of Britain from the European Union. The British Economy had been stagnating throughout the 20 year period after 2001, with the economy of India overtaking the economy of Britain by 2022. At the time of the Brexit vote in 2016 the British economy was 90 per cent the size of Germany’s. Now in 2022 it is less than 70 per cent. For the British ruling class a return to the era of Rule Britannia was to be the basis for the recovery of British capital. This was based on a false understanding of the new multi polar realities of Global capital.
The ruling Conservative alliance in Britain had mobilized the British workers against European workers and divided the British workers with racism and jingoism. Boris Johnson as the right-wing puppet master had imploded in 2022 leading to a change in political leadership. However, this change in leadership did not evince any change in the supine role being played by the British military in Ukraine. When the Russian army invaded Ukraine in February 2022, the British were the leading cheerleaders for supporting the militaristic forces in Europe and opposing negotiations. Germany and France had been negotiating with Russia over the outstanding issues between Russian and Ukraine since the breakup of the USSR in 1991. Among the outstanding issues that had been discussed at Minsk 1 & 2 were the future of Crimea, the future of the Russian speaking areas of Ukraine, the expansion of NATO and the brazenness of the neo fascist forces. These issues can only be resolved by diplomatic interventions and not by war.
The USA was willing to push the war to the last Ukrainian and to force the working peoples of Europe to subsidize the war. It was in the escalating cost of food, energy and basic necessities where a new political leadership was necessary. But the baggage of the neo liberal ideas of Thatcherism prevented any kind of serious alternatives to austerity measures. Boris Johnson was forced to resign in July and by September a new leader appeared in the person of Liz Truss. Two days afterTruss was formally appointed prime minister the very aged, 96 year old Queen Elizabeth II decided to exit the scene. This exit robbed the ruling elements in the City of London one distraction that could divert them from the intense social crisis.
But the crisis would not go away, high prices for energy, food and the high interest rates fell on the backs and the shoulders of the British workers.
The political and economic crisis in Britain deepened by the day with the absence of clear thinking on how to curb the greed of the capitalist class. US capital is now isolated, even if it seems to be riding out this moment with the rise in the value of the US dollar. In many respects, Ukraine War represents one front in the multi-dimensional struggle to save the US dollar as the currency of world trade. The German and European dependence on Russia for energy had to be undermined because the possibilities of the Euro replacing the dollar as the currency of energy transactions in Europe was real.
The Ukraine War speeds de dollarization
Temporarily, collective Western sanctions has seized all the foreign exchange reserves of the Central Bank of Russia that were held in the West. The US led campaign against Russia is inspiring states all over the world to develop alternative financial and monetary platforms, systems and nerve centers beyond the direct control of Washington. In 2014, the Central Bank of Russia has already created its own messaging System for Transfer of Financial Messages (SPFS) to replace the SWIFT system dominated by the dollar and the EURO. The SWIFT system- Society for Worldwide Interbank Financial Telecommunication, is technically a Belgian cooperative society created in 1973 and providing services related to the execution of financial transactions and payments between banks worldwide. Up to February 2022, this SWIFT messaging service successfully linked 11,000 banks and institutions in more than 200 countries, cushioning the dominance of the US dollar and its subaltern the Euro in polite competition.
With the SWIFT system drawn into the financial and trade wars, Russian banks have deepened their relations with Chinese state banks in order to build a substitute for SWIFT. With the System for Transfer of Financial Messages (SPFS) in place since 2014, the Russian leadership is now working with China to connect to China’s Cross-Border Interbank Payment System (CIPS). CIPS is a Chinese alternative to SWIFT which processes payments in Chinese Yuan. The Russian leaders have stated that they are in no rush to refine this new payment system. If the SWIFT system has served the dollar since 1973, Russia can slowly develop this new system with China. In the words of one financial leader in Russia,
“We proceed from the need for a gradual transition from SWIFT to financial information transfer mechanisms protected from external pressure, for which we are actively developing the System for Transfer of Financial Messages (SPFS) of the Bank of Russia. This is a forced, but completely natural decision in an environment where Russian banks and their clients regularly encounter problems with routine international payments.” ..
The weaponization of finance has reinforced the determination of the BRICS countries to bypass and even challenge both the status of the US dollar as the hegemonic reserve currency and the transnational financial arteries organically linked to its circuits through vehicles such as gold and other hard assets with intrinsic value. Both Iran and Saudi Arabia have applied to be members of BRICS while the leaders of Saudi Arabia have explicitly signaled a new alliance with Russia and China away from the US dollar. China and Saudi Arabia are negotiating oil being sold to China in Yuan. China is Saudi Arabia’s largest customer purchasing about 2 million barrels per day. The U.S. only purchases about 500,000 per day. Allowing China to purchase its oil in Yuan would reduce Dollar oil transactions by around 20% daily. Saudi Arabia, Iran, Turkey and Qatar and are all queuing to become members of the Shanghai Cooperation Organisation (SCO).The SCO is a military alliance which comprises of eight members (China, India, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Pakistan and Uzbekistan ) Formed as a security alliance to counter the advance of NATO ,at the September summit of the SCO, the leaders of the SCO agreed on to take steps to increase the use of national currencies in trade between their countries. The group – – said “interested SCO member states” had agreed a “roadmap for the gradual increase in the share of national currencies in mutual settlements”, and called for an expansion of the practice.
As one Venezuelan news outlet commented,
“the message now is plain enough – if even a prominent G20 state can have its reserves cancelled at a flick of the switch, then, for those who still hold ‘reserves’ in New York, take them elsewhere whilst the going is good! And if you need to keep something of value in reserve against a rainy day, buy and hold gold.”
There is now a major push in all parts of the world to hoard gold in the face of the lessons of the sanctions against Iran, Venezuela and Russia. Buying and hoarding gold means intensified militarization in Africa with Russia aligning with France, Saudi Arabia and the Emirates in the Sudan and West Africa. The full extent of the Ukrainian conflagration exposes the interconnections between military, finance, cyber, economic and psychological warfare. The current war in Ukraine has set in motion a chain of events that will lead to unintended consequences for all of humanity.
Mobilizing oppressed peoples internationally against neo fascism and war
The interconnecting crises have pointed to the need for an alternate social system. Movements for social justice have emerged in all parts of the planet, but at this moment there is no central organizing strategy among these forces. The environmental justice and movements for reparative justice and healing from racial capitalism have seized the intellectual, moral and political leadership embracing peoples from all parts of the world. Thus far the traditional ‘left’ forces in Europe and North America have remained outside of the struggles for reparative justice. Even those inside the environmental justice movements have not seen the logical alliance between the struggles for environmental justice and reparative justice. It is inside Latin America where the alliances between indigenous peoples and African descendants have shifted the political balance where the reparations question is now front and center of the political agenda.
In one country where this alliance is most manifest, Colombian President, Gustav Petro, in his remarks to the General Assembly of the UN last month, stated: “The US is Ruining Economies Around the World” The new Colombian political leadership has pledged to demilitarize public life in Colombia and to strengthen the political place of African descendants and indigenous peoples.
The peoples of Chile, Brazil are also faced with the challenges of protecting property and privilege or dismantling centuries of militarism and oppression. These societies are faced with the stark choices between elaborating the rights of citizens or entrenching the traditions of neo fascist elements from the Pinochet era. Brazilian right wing forces are seeking to bring back the kind of repression and murder that came with the military dictatorship in Brazil, April 1964 to March 1985. The coup d’état by the Brazilian Armed Forces, with support from the United States government, against President João Goulart was a blow to all oppressed in the world. We are now on the threshold of whether the US will support anther right wing political destruction in Brazil. Lula has brought new energy to repair the militaristic traditions that Bolsonaro wants to revive.
German capitalists have some experience in managing a reparative platform while strengthening German capital. From Willy Brandt’s apology in Poland, to the apologies for the Holocaust and the apologies for the genocide in Namibia, the German intelligentsia have been able to massage the reparative claims by mobilizing the kind of reparations enterprise which would strengthen global capital as in the case of the reparations paid to the state of Israel and the descendants ofthose who perished in the Holocaust. White supremacists in North America are totally opposed to any opening of admission of crimes committed in the period of racial capitalism to the present. The Make America Great Again movement is instead calling on peoples of European descent to celebrate the crimes of genocide, enslavement, and colonialism.
Already in Europe the economic disruptions unleashed by rising energy prices has generated the new energies for right wing populism with pressures inside Europe to reassess the strategic pertinence of sanctions against Moscow. Serbia and Hungary have already broken ranks with the NATO sanctions. The big challenge is that the beneficiary of this war situation is the neo fascists. The neo fascists are forcing the progressive forces to combine their efforts to oppose war and neo fascism. Within the Global South, the client states of the US empire are threatened by massive resistance. Even the allies of US imperialism in West Asia are seeking room for maneuver outside the hegemony of the dollar. The decision of the Saudi Arabians to index their sale of oil to China in the Chinese currency (the Yuan) has only exacerbated their differences with the USA over the current energy prices. That the nominal leader of Saudi Arabia has chosen an alliance with Russia spoke volumes to the political tensions among militarists.
The combined opposition of the BRICS societies, RCEP, CELAC, Gulf Cooperation Council and France with Germany (supporters of the Euro) point to the increased isolation of the United States. As the weaponization of the dollar deepens, there is the alternative demand for a new international monetary system. All over the world the economic disruptions unleashed by rising energy prices, health pandemics, IMF calls for the devaluation of the return to workers and militarism has generated the new energies for progressive forces. It is in Europe where the baggage of racial capitalism holds back the ability of the left to build a new internationalist political program. Into this vacuum the right has stepped in with right wing populism. This populism is a double edged sword, because some sections of the people may pressure their leaders to reassess the strategic pertinence of sanctions against Moscow. Serbia and Hungary have already broken ranks. The big challenge is that the beneficiary this war situation are the neo fascists.
The progressive forces in Europe and North America must join with the Global Social Justice Movements and embrace the global call for a New International Economic Order. The challenge of the left is to understand the outline of the alternative social project and translate this into practical day to day programs so that wherever one lives and works one should not succumb to despair and pessimism.
This article was first published on Counter Punch.