As militant groups spread across the Sahel, the West African nation of Niger went on a U.S.-backed military spending spree that totaled about US$1 billion between 2011 and 2019.
But almost a third of that money was funnelled into inflated international arms deals – seemingly designed to allow corrupt officials and brokers to siphon off government funds, according to a confidential government audit obtained by OCCRP that covers those eight years.
The Inspection Générale des Armées, an independent body that audits the armed forces, found problems with contracts amounting to over $320 million out of the $875 million in military spending it reviewed. The U.S. contributed almost $240 million to Niger’s military budget over the same period.
The Inspection Générale’s auditors said more than 76 billion West African francs had been lost to corruption, which is about $137 million at the current exchange rate. They discovered that much of the equipment sourced from international firms – including Russian, Ukrainian, and Chinese state-owned defense companies – was significantly overpriced, not actually delivered, or purchased without going through a competitive bidding process.
“The rigged bidding process, fake competition, and inflated pricing in these deals is astounding,” said Andrew Feinstein, a leading arms expert and author of “The Shadow World: Inside the Global Arms Trade.”
The Nigerien authorities are investigating the findings of the audit, which have caused a scandal in the country after some details were reported in the press earlier this year.
The country has become a key ally for the United States in fighting groups like Al-Qaeda in the Islamic Maghreb and the Islamic State West Africa Province, better known as Boko Haram.
The surge in spending over the last decade helped Niger become one of the most formidable military powers in the region. The country – one of the world’s poorest – bought arms ranging from attack helicopters and fighter jets to armored vehicles and automatic rifles.
In addition to cash it provided to Niger’s military, the U.S. spent $280 million building a massive air base near the ancient trading city of Agadez in the north of the country. The base, which reportedly costs $30 million a year to run, allows U.S. forces to launch drones for both surveillance and air strikes.
American forces are also training Nigerien soldiers and fighting alongside them. In 2017, four U.S. Special Forces officers were killed in an ambush in the country’s frontier with Mali and Burkina Faso, reportedly by fighters associated with the so-called Islamic State.
France and the European Union are also major donors to Niger’s military, which receives further aid through its membership in G5 Sahel, a regional joint military force. The audit report raises the possibility that some of the military aid ended up in the pockets of unscrupulous private individuals and corrupt government officials.
At the center of the network of corruption are two Nigerien businessmen who acted as intermediaries in the deals: the well-known arms dealer Aboubacar Hima, and Aboubacar Charfo, a construction contractor with no previous experience in the defense sector. Auditors allege that the two men rigged bids by using companies under their control to create the illusion of competition for contracts.
Their success points to the opportunities available to a small clique of well-connected insiders with close ties to Niger’s government.
“As far as the audit is concerned, I don’t think there’ll be any prosecutions,” said Hassane Diallo, head of Niger-based Centre d’Assistance Juridique et d’Action Citoyenne, an anti-corruption group.
“All the economic actors mentioned in the audit belong to the ruling party. They come from the same region as the president.”
Hima’s lawyer, Marc Le Bihan, declined to answer reporters’ questions and said that Hima wasn’t being prosecuted. Charfo and Niger’s defense ministry did not respond to requests for comment.
Through a handful of companies connected to him, Hima, who goes by the nicknames “Style Féroce” and “Petit Boubé,” handled at least three quarters of all the arms purchases scrutinized by the Inspection Générale. Together the deals were worth $240 million.
It is unclear exactly how Hima, the son of a civil servant at the Ministry of Agriculture, rose to such prominence in Niger’s political and business circles.
One key moment was likely his 2005 marriage to the daughter of former President Ibrahim Bare Maïnassara, who was killed in a 1999 coup. The marriage is likely to have brought him closer to Niger’s political establishment, since the party that Maïnassara once led now “supports the current regime,” according to Diallo.
In 2003, Hima set up Imprimerie du Plateau, a printing business that remains active today. By 2010 he had made the leap into the arms business in neighboring Nigeria, where he established companies that would play key roles in the deals auditors scrutinized in his home country.
Most of Hima’s deals were signed under a 2013 national security law that allowed for some of Niger’s defense spending to be carried out in direct negotiations with any company, rather than putting it to public tender. Niger scrapped that law in 2016, replacing it with one requiring a more transparent process. But by that point, much of the damage had been done.
Most of the sales identified in the audit had bypassed oversight bodies within the Ministry of Defense and the Ministry of Finance whose input was required under the 2013 law. The tenders also did not include key documentation, such as the prices offered by the various bidders.
In one deal facilitated by Hima in 2016, Niger’s Ministry of Defense bought two Mi-171Sh military transport and assault helicopters from Rosoboronexport, Russia’s state-owned defense company. The purchase, which also included maintenance and ammunition, cost Niger 55 million euros, or $54.8 million – an overpayment of about $19.7 million, according to the Inspection Générale. The auditors noted that the prices had been inflated by fraud and corruption.
Rosoboronexport relies on African governments for about 30 percent of its business. Because the state arms company is under U.S. and EU sanctions, it can’t openly receive payment for the deals in U.S. dollars or euros. As a result, the company’s transactions tend to avoid Western financial institutions, which are obligated to flag suspicious transactions to regulators.
In its contract with Niger’s government, Rosoboronexport asked for payments to be made into an account it held at VTB Bank, a Russian lender with majority state ownership. The account was held at the bank’s branch in Germany, which ranks as a top financial secrecy jurisdiction.
Rosoboronexport did not tell auditors who controlled that account.
“By using a VTB account in Germany, Rosoboronexport is trying to make the money flows from its arms deals as opaque as possible,” Feinstein said.
Nigerien auditors visited Moscow early this year in search of information about the helicopters and other purchases that had been facilitated by Hima on behalf of Niger’s defense ministry. But the auditors were left in the dark about the terms of the deals. Rosoboronexport refused to provide any information, telling the Nigerien government auditors that the agreements were “confidential.”
“[Rosoboronexport’s] failure to explain the pricing difference on this clandestine deal can only mean one thing: corruption,” Feinstein said. “The Russians clearly colluded with Nigerien officials to sell overpriced arms in a deal that was obviously illegal.”
Rosoboronexport declined to answer OCCRP’s emailed requests for comment. Reached by phone, a representative said: “If you are from the United States, we cannot help you with any answers via email.”
The audit report outlines a series of unorthodox – and in at least one case, blatantly illegal – machinations that allowed Hima to control much of Niger’s arms procurement process.
Through his political influence in the defense establishment, a company Hima had founded in neighboring Nigeria, TSI, gained power of attorney on behalf of the Ministry of Defense. This gave him the ability to approve weapons deals and issue end-user certificates, a type of document meant to ensure that weapons sold to one client are not passed on, or resold, to an unauthorized third party.
This was a clear violation of Niger’s laws, which state that end user certificates can be issued only by the government, according to Ara Marcen Naval, the head of defense and security advocacy for Transparency International.
The corruption of the end-user certificate system in Niger is particularly resonant given the country’s longtime role as an arms trafficking hub. This history dates to the Cold War, when the Soviet Union funneled arms into Niger before shipping them onward to its allies.
In the 1990s, when Liberia and Sierra Leone both plunged into civil war, the country again became a regional arms hub.
Niger was a key transit point for notorious Ukrainian arms dealer Leonid Minin in the 1990s. He sent weapons from his base in Sharjah in the United Arab Emirates to Charles Taylor, a warlord who was fighting the government in Liberia, where he later became president. Minin’s planes brought attack helicopters, anti-aircraft guns, missiles, and over a million rounds of ammunition to Niger before sending them on to Liberia.
The Russian arms dealer Viktor Bout also used Niger as a staging point to bring weapons into Liberia during its civil war. Known as the “Merchant of Death,” Bout is now in prison in the United States where he was convicted of supplying weapons to Colombian insurgents.
The power to issue certificates himself gave Hima the ability to steer government contracts to his own companies, like TSI, or to his partners. It also allowed him to limit the amount of oversight included in the deals’ terms, which removed a crucial safeguard that allows authorities to know who they are selling arms to.
Even before being granted power of attorney, Hima managed to issue Rosoboronexport an end-user certificate on behalf of Niger’s Ministry of Defense in 2018. Hima was on both ends of the deal: While he organized the purchase on behalf of the ministry, his company, TSI, acted as Rosoboronexport’s Niger representative. His company did not appear on the contract.
“The fact that TSI was allowed to represent Rosoboronexport – let alone Niger’s Ministry of Defence – makes this one of the most extreme examples of corruption in the arms trade that I’ve ever come across,” Feinstein said.
Hima used other shady techniques, too. For the helicopter deal and others, companies under his control submitted fake bids to create fictitious and unfair competition, auditors noted.
Another company linked to Hima, Nigeria-registered Brid A Defcon, won a $4.3 million contract to build a specialized hangar for Nigerien President Mahamadou Issoufou’s official plane. Two other companies that submitted bids for the contract — both controlled by Hima — echoed the names of well-known international manufacturers.
One was Motor Sich, which appeared to be an Algerian affiliate of the well-known Ukrainian engine manufacturer. The Ukraine-based Motor Sich told auditors that the company had not made any bids in the deal, said they had no connection to the Algerian entity, and denied any wrongdoing.
However, according to the audit report, it appears that the Algerian Motor Sich affiliate did win other tenders offered by Niger’s government, including a $11.5 million arms supply contract. Hima’s company, Brid A Defcon, acted as Motor Sich’s local agent in Niger in that deal as well.
The other company that submitted a bid for the helicopter deal was Aerodyne Technologies, which used the name of a defunct French aviation company. Though Aerodyne submitted its bid as a company based in the UAE, it appeared to actually be registered in Ukraine, according to the audit.
“As usual, Brid A Defcon has put the companies Motor Sich and Aerodyne Technologies in competition,” auditors noted.
Aerodyne opened emails from OCCRP but did not respond to questions. Brid a Defcon could not be reached for comment.
Among other problematic deals mentioned in the audit, Brid A Defcon also received $4.9 million to outfit the presidential plane with an anti-missile system that was incompatible with the aircraft.
Constructing Arms Deals
Sacks of cement and metal rods are piled on the ground next to a small building in Niamey, Niger’s capital. The compound, a one-story, dirt-colored concrete structure, is the unassuming headquarters of Etablissement Aboubacar Charfo, a construction company named after its owner.
Charfo had no prior experience in the defense sector, and there is no publicly available evidence of him winning any government contracts before President Mahamadou Issoufou came to power in 2011.
Charfo was known as an importer of bathroom tiles and building materials including cement, but he also managed to facilitate nearly $100 million worth of contracts for the government.
He appears to have gotten into the arms trading business through his contacts with the office of Issoufou. Both he and the president hail from the Tahoua Region, where Charfo is said to have strong ties to the ruling Nigerien Party for Democracy and Socialism.
According to publicly available audits of various government bodies carried out by the accounting firm Bureau d’Expertises Comptables in 2017 and 2018, Charfo received several contracts from the presidential administration. One of those was a 2017 contract to furnish the new headquarters of the Inspection Générale des Armées – the same authority that later produced the leaked audit which exposed his corrupt arms deals.
Charfo also received contracts from the president’s office to supply military equipment to the armed forces, including weapons and ammunition, night vision goggles, and a trailer for transporting tanks, according to Bureau d’Expertises Comptables auditors.
The subsequent Inspection Générale audit shows that cost inflation and corrupt practices by Etablissement Aboubacar Charfo and Agacha Technologies, another company linked to Charfo, cost the Ministry of Defense $24.7 million over what it would have paid with fair competition.
The auditors probed five contracts won by Charfo’s two companies between 2014 and 2018. These included a $40 million agreement to purchase armored personnel carriers manufactured by China’s state arms company, NORINCO. Auditors found Charfo had inflated the price, overcharging the government by $8.2 million.
In a 2017 deal, according to the Inspection Générale, Charfo’s Agacha Technologies won a $6.5 million contract to supply 30 buses to the Ministry of Defense. Over half of that total was lost to over-invoicing and wasteful spending, the auditors found.
They also discovered that, like Hima, Charfo manipulated the procurement process to create the impression that he was competing against rival companies.
In reality, the “competing” companies were either controlled directly by Charfo or linked to him. He and his associates benefited from “fake bids and the use of fake competition,” according to the audit.
“The winner of the contract was known in advance,” it read.
Charfo and Hima weren’t the only businesspeople who appeared to have gotten rich on Niger’s military spending spree by using shell companies to rig bids for arms deals. Several companies in Ukraine, the United Kingdom, and the Czech Republic also appeared to benefit.
The people behind these schemes remain unknown because some of the companies were registered in offshore jurisdictions that enable their owners to remain anonymous. Others were formed as UK limited liability partnerships, which are controlled by other companies, not individuals, and are not obligated to disclose their directors or owners.
At least one of the deals involving these offshore entities appears to have included built-in kickbacks.
In 2012, Ukraine’s state defense company, Ukrspecexport, won a contract to supply Niger with two second-hand SU-25 fighter jets built in 1984. Niger’s Ministry of Defense paid $12.5 million for both aircraft, including $1 million for insurance and delivery and $1.9 million for spare parts. The audit noted that the prices had been inflated and the additional cost of more than 350 spare parts appeared unnecessary and suspicious.
“Adding spare parts to arms contracts is a common technique to build in the cost of kickbacks,” Feinstein said.
The Ukrainian company denied that it made the deals with Niger.
“Ukrspecexport did not make such deliveries and does not have any information on the issues you are asking about,” a representative said in an email.
Despite Ukrspecexport’s denial, international arms trade data collected by the Stockholm International Peace Institute confirms that Niger ordered the two second-hand aircraft, and that they were delivered the following year.
The Nigerien auditors also discovered an addendum to the SU-25 contract that appeared to facilitate a bribe. It stipulated that Stretfield Development, a London-based shell company with unknown owners, was to receive a $2 million commission on the deal in a “maneuver” the auditors described as “collusive” and “contrary to regulations.” The contract specified that the fee would be funded by the Nigerien Ministry of Defense, but paid through another London-based shell company, Halltown Business, which was shut down shortly after the deal was completed.
Details of the suspicious sale did not come as a surprise to Daria Kaleniuk, the head of the Anticorruption Action Centre, a leading Ukrainian advocacy group.
“For many years, Ukrspecexport was known to be a very dodgy company which has a monopoly of trading weapons and army equipment abroad through secret sealed deals,” she said.
The address in London where Halltown was registered belonged to a company formation agent and was used by over 400 other companies. Among these were four firms that were part of the Azerbaijani Laundromat, a vast money-laundering operation that benefitted elites from that country and was previously reported by OCCRP. Following Halltown’s ownership trail led to a Panamanian company with two Ukrainian directors.
Niger also signed separate maintenance deals with a firm called EST Ukraine. The defense ministry agreed to pay the company $4.3 million for the upkeep of its MI-35s helicopter gunships and the second-hand SU-25 jets it had bought from Ukraine’s state defense company, which have yet to be delivered.
But EST Ukraine did not receive the payment. In fact, it was not even formally registered as a company. The company that received the payments — another Ukrainian firm called Espace Soft Trading Limited — was “not a party to the contract.”
That company, formed in 1998, is controlled by Yuri Ivanushchenko, once a member of the Ukrainian parliament and an ally of former president Viktor Yanukovych, who was ousted in a popular uprising in 2014. The auditors listed Ivanushchenko’s company as one of the beneficiaries of the rigged bidding.
“During Yanukovych’s presidency, his close associate Yuri Ivanushchenko was overseeing work of Ukrspecexport and had significant influence over its decisions,” Kaleniuk said.
As with many of the other deals, auditors found that the bids for these maintenance contracts had been rigged. In addition to EST Ukraine, several other foreign shell companies submitted bids, presumably in an effort to create the appearance of competition. One of these was the UAE-registered Aerodyne Technologies, under Aboubacar Hima’s control.
Both Aerodyne and the winning EST Ukraine were run by Gintautis Baraukas, an associate of Hima who appeared to run shell companies on his behalf. Little is known about Barauskas, who used a false nationality while operating a network of shell firms in the UAE.
“This gentleman is not Ukrainian, he is in fact Latvian … He is involved in several cases that served to extort large sums of money from the State of Niger,” the auditors wrote.
EST Ukraine did not respond to requests for comment.
The United Arab Emirates is a world-renowned tax haven and the emirate of Sharjah is particularly popular with arms dealers due to its lax financial regulations and opaque aircraft registry, which allows goods to be moved through the airport in relative obscurity. The emirate is home to a host of shell companies that appear to be used to launder the proceeds of arms deals.
Many of the companies the Nigerien audit names as fake bidders and bribe recipients are based in Sharjah, and all appear to be connected to Baraukas.
One suspicious transaction flagged by the auditors involved Sky Rotors, a company that received a payment worth more than 1.5 million euros ($1.7 million) from Ivanushchenko’s Espace.
In an emailed statement, Sky Rotors confirmed it has supplied aviation parts to Niger since 2012, and said the defense ministry still has not paid its bill in full.
“The possibility of applying… to an international arbitration court for enforced debt collection is being considered,” a representative said, calling Sky Rotors “the injured party.”
“Hima was recommended as a person who has proven himself in working with the state authorities of Niger and who can assist in the return of the debts,” the representative added.
A white marble mosque rises beside Hima’s palatial mansion. Nearby is an elaborate water feature with streams tumbling over rusty-brown rock. Frozen in sculpture, a family of elephants marches toward a whimsically curved swimming pool overlooking the Niger River.
Hima’s residence in Niger’s capital is an ostentatious display of wealth in a country that ranks dead last on the United Nations Development Index, which measures a nation’s well-being based on indicators like life expectancy and access to education.
Niger’s treasury is footing the bill for the country’s military spending, which has grown as a percentage of the country’s gross domestic product from less than 1 percent in 2009 to 2.5 percent in 2017, according to the World Bank.
Hima also owns three apartments in the Czech capital, Prague worth over $2 million in total. He acquired them in 2015, first shelling out $1.5 million for a penthouse in the Dock Marina, a luxurious residential complex on the Vltava River that allows residents to park their boats near the entrance. He purchased two more apartments in the development in the following months.
Hima’s business interests in Prague go beyond property. His now-defunct Nigerian company, Brid A Defcon, frequently partnered with a Czech-registered firm with a similar name, Defcon s.r.o, in 2009, according to the audit.
In 2017 and 2018, the Czech firm fulfilled a $33.6 million contract from Niger’s government to deliver 80 trucks manufactured by the Austrian firm Steyr. Supposedly bidding against Defcon s.r.o was the Algerian branch of Motor Sich. Brid A Defcon submitted the bid on behalf of Motor Sich, which it controlled, in an apparent attempt to show the process was competitive.
Motor Sich managers said it had never made such a bid, leading auditors to conclude that the company name had been “usurped.”
Such deals fueled Hima’s luxury lifestyle and made him the most conspicuous of Niger’s illicit arms traders, said Diallo, the anti-corruption specialist, adding that it was “no surprise” that he invested his profits abroad.
“Charfo has buildings in Niamey, but he and the others are less visible than [Hima],” he said.
Diallo said the corrupt arms deals “not only exposed a hidden financial cost to Niger — the poorest country in the world — but also show how Niger’s sovereignty was captured and exploited.”
Additional reporting by Nathalie Prevost in Paris, Marshall Van Valen in Abidjan, Pavla Holcova in Prague, Elena Loginova in Kyiv, and Juliet Atellah in Nairobi.
This article was first published by OCCRP.
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The Lion, the Gazelle and the Mountain: Migration Tales of the Cattle People
In Ateker lands, explanations about the root causes of migration are often elided, not talked about. Centuries since the young walked away from Karamoja, the migration of uninitiated young men is still a sore point.
The draining emotional stress of the last three years breaks up memory, bringing in hallucinatory waves the past as a refracted landscape. The depth of time grows deceptive so that the last weeks of March 2020 cave into a distant darkness, whereas events that happened before that, like the 2018 FIFA World Cup finals, seem more recent.
The pandemic broke up what I had thought would be a finalising of the then ten-year quest to understand the cultural and identity texture of the region’s migratory patterns. While I bemoaned the breakage, unbeknownst to me, the pandemic lockdown had, rather than interfere with the hard-earned and long-running project (self-funded), offered a very rare glimpse into the heart of the matter itself.
Dodging cattle rustlers’ bullets
I had since 2008 followed the migratory routes and fortunes of the Nilotic peoples of East Africa, and at the time of the lockdown, I had returned from the pastoralist societies straddling Uganda, South Sudan, and Kenya and was lining up a place for myself on a convoy to Kangaten, the capital of the Ethiopian Woreda of Nyangatom in the Omo region, on the northern shores of Lake Turkana.
The outbreak of the South Sudan civil war and the constant and armed cattle-rustling had stymied the travel. The civil war was not going to end any time soon, and cattle rustling was as ingrained into the culture of these pastoralist lands as a pancreas is to a stomach. You had then to ascertain where the civil war was and to study the seasonal rise and fall in the rustling calendar (there is such a thing) to know when and where to jump in and out.
Doing all of which seemed to have been for naught as the world’s lights went out in March 2020. You stood frozen to the spot, unable to go over that hill, driven early indoors to watch your mind fall to bits.
And yet that moment of global catastrophe was telling me, in reverse facsimile, the very story of what I had seen as a halted project. A global pandemic lockdown and migrations of the people are metanarratives on such a vast scale that like all metanarratives, are so big that even when they seem unrelated, leave no in-between spaces as small time factors do; they feed on and reflect on each other.
If the “migration of the peoples” is movement on a monumental scale, then a global lockdown is its polar opposite, immobility of a staggering momentousness. It goes without saying that the months of 2020-2021 had turned the globe into a laboratory to show us why human beings, like sand dunes and water, must be constantly on the move.
Stood still, human society, like decaying refuse left in one place too long, stagnates and begins to fester. The rapid depletion of food stores, collapse of economies, environmental meltdown, and the sudden and harsh tyrannical power structures enforcing the lockdown, would have been the chief factors behind the 15th and 16th century disintegration of the society some experts say had settled in roughly the present day location of Kotido in northeastern Uganda.
Christ over Lodwar
As if emphasising the faith of Christians, the last and enduring insight had come from climbing a big hill in Lodwar town to go have a look at the imitation Christ the Redeemer installed to look over Lodwar town, the capital of Turkana in northern Kenya. Under the outstretched arms of Christ, the breadth of Turkana (not its considerable length) can be seen from the haze over Lake Turkana to the East, to the wall of mountains to the West that separate Kenya from Uganda.
The aridity of the Turkana landscape is one that smites the senses, as a colonial-era explorer, the murderous, psychotic Hungarian Count Sámuel Teleki de Szék summed it up:
“I can’t imagine a landscape more barren, dried out and grim. At 1.22 pm (of March 17 1888) the Bassonarok appeared, an enormous lake of blue water dotted with some islands. The northern shores cannot be seen. At its southern end it must be about 20 kilometers wide. As far as the eye can see are barren and volcanic shores.”
The “Bassonarok” is what the Samburu—who pointed it out to Teleki so he could go and “discover” it—called the lake. Teleki promptly names it after his benefactor, the Austro-Hungarian crown prince, Rudolf, who had funded the expedition, as speculation had been that this was a possible source of the River Nile.
This “dried out and grim” landscape is where the migrating Turkana chose to make their home. Little visible in the land justifies this choice, for if migration is a search for the more conducive land as the common view will have it, then on first sight this does not appear to be the place.
If the “migration of the peoples” is movement on a monumental scale, then a global lockdown is its polar opposite, immobility of a staggering momentousness.
As the Turkana themselves will tell you, their ancestors came from across that wall of mountains, from present day Uganda. In contrast to Turkana, the Karamoja region is relatively better watered and drained, with the mix of sufficient pasture and absence of tsetse fly that favours animal husbandry. The often described route of this migration itself confounds the choice.
Whatever it was that was driving the Turkana away was not climate. When I started out on the quest, my aim had been a more general travel through the pastoralist lands of the region. A gargantuan and not well-advised choice given that up to 70 per cent of the Greater Horn of Africa is said to be pastoralist. You have to be a multi-state institution, rather than a self-funding peripatetic writer to undertake such a project.
The first foray out into Turkana lands in 2012 quickly forced me to draw a smaller plan, which still covered southeastern South Sudan, northeastern Uganda, northwestern Kenya and southwestern Ethiopia, a landmass bigger than many countries.
It took all of a decade to do, with some balance left uncleared.
Down the valley
In July 2012, I set off from Kitale on a recceing trip to size up the task, dropping down the escarpment and onto the floor of the Kenyan North Rift. At Kalem Ngorok, I happened to ask what the name of the place meant.
“Hornless cattle”, I was told.
From my formative years in boarding school in Teso in Uganda, I knew that Ngorok meant cattle. I had probably had an inkling of Kalem, but the connection that among the Luo-speaking Lango alem referred to hornless cattle, struck me like thunder out of a clear sky.
As I made my way back to Kitale, the premise upon which I had based the project started to fray and in the months that followed, grew confused, and what Kalem Ngorok had implanted in my mind would not go away.
As the Turkana themselves will tell you, their ancestors came from across that wall of mountains, from present day Uganda.
The pivot away from the original framing meant working out another. The ensuing search sent me scrounging through theology, culinary culture, language, naming systems, clan formation—all areas that yielded valuable knowledge but still did not adequately add up. Without a framework, information is just a pile of meaningless data. But frameworks are not useful just because they exist. The trick was finding one that went to the heart of the matter.
I did not find one; it found me. In the rain-soaked April of 2018, I was determined to make it to South Sudan. My target was Kapoeta, capital of the South Sudan state of Namorunyang. The route that I chose was via Turkana, seeing as it would also be my first time visiting Lodwar, hence bringing the insights that come from contiguity into the mix.
I had by then learnt that the collective terminology by which the pastoralist group I narrowed my quest down to was “Ateker”. But this grouping is too big to look at all at once, so I settled for those who the Ugandan politician, David Pulkol controversially refers to as “core Ateker”—the Karamojong of Uganda, the Turkana of Kenya, the Toposa of South Sudan and the Nyangatom of Ethiopia who oscillate problematically within their collective circle.
In Lodwar, in the shadow of the great gathering of the Ateker peoples in the Tobong Loree festival that brought many Ateker from the region together, conversations yielded a word, “Asapan”. It was to be the turning point.
I liked it for that clipped, exact phonetics of which the Ateker language overflows. I did not pay much attention to it nor think it was more important than the other words and constructions I was meeting. What I liked about it at the time was its cultural texture, describing as it did the male rite of passage from an uninitiated youth to a full man allowed to slaughter bulls. Among the cattle keepers, the bull is held in special, god-like status. There is a becoming complexity to this, for while in economic terms the cow is of greater value, exchanging for 13 goats where the bull will collect only 7 good grade goats, the bull is special for spiritual and cultural purposes. For insight, a young man will have a bull calf pointed out as his. Henceforth, the two grow up as what can only be described as spiritual twins. They will share a name. When a young warrior returns successfully from a battle or raid, he is expected during the celebration to decorate his bull. He is mentioned in reference to his bull. Should his bull have a red coat, he will be given the pet name Apaloreng, and if black, Apalokwang, etc. Stories are told of men going into terminal shock upon the death or abduction of their bulls, and in Kapoeta, I was told that a man whose bull had been rustled, and who followed its track, began to walk into the fire in which the bull was being roasted.
To loosen the tongue of an Ateker man, start a conversation about bulls. To not be thought man enough to slaughter a bull has profound spiritual and political implications. And in what will have a bearing in the central theme of this essay, a man who cannot slaughter a bull has no political influence, cannot talk in an assembly and is the last to eat and drink.
This aspect of Asapan—the rite of passage allowing a man to slaughter a bull—fascinated me all the way to Kapoeta. And yet, the velocity of the provisional framing I had created was still bearing me forth, hence, I was interested in finding words which, like Kalemngorok, would explain to me just how connected to my Lango these peoples of the arid cattle fields were.
The lion, ostrich and mountain sets
In Kapoeta I asked what Toposa meant. They said to me, “We were heading west during our migration”.
“West?” I asked and before they could respond, I said, that is what “To” means, right?
They nodded in agreement. So I said, in that case, “The Toposa word for East is Kide?”
They were struck silent that a man from Lango in northern Uganda, so far from home, would know this. There were others that left me disoriented. Those who will remember the news from yesteryears will recognise the name Fr. George King’a. He was a South Sudanese priest and politician who played important roles in both the united Sudan and in peeling the South off it. There is more to him. But by the time I got to Kapoeta, I had gotten into the habit of asking the meaning behind everything. And so in Kapoeta, sitting next to his grave and talking to his nephew, then Kapoeta MP, Hon. Emmanuel Epone Lolimo, told me that his uncle, Fr. King’a had been so named because he was born at the border point of Kapoeta and Riwoto.
Where I was myself born, the line separating one allotment from the other, is called “wang king’a”.
That was as far as the words and names were concerned. Sitting there, just listening to the people, the texture of their voices and mannerisms, I could have been in any place in Lango. I had never met such close relatives of Lango before.
It was another word, this time in English, that pushed me further to understand the connection between asapan and why the Turkana most likely left Karamoja and chose to live in the desert instead. One evening, in Kapoeta, at Lorika’s Hotel where I stayed, I was in a small group with the governor, Louis Lobong and three of his state’s ministers discussing Toposa society when I started to understand the significance of asapan.
When a young warrior returns successfully from a battle or raid, he is expected during the celebration to decorate his bull.
One of the ministers, Lorika himself, drew an organogram of age sets and explained to me what he called “promotion”. These age sets proceed by order of birth, by which men born in a certain period belong in a socio-political cluster with influence. These age sets, like the generation sets, are mostly named after animals or mountains, so there is the mountain set—Ngimoru, ostrich set—Nguwana, gazelle set—Ngigetei, lion set—Ngingatunyo, etc.
(The age sets go by different names among the numerous Ateker groups, and one incredible man I met in Lodwar, Boniface Korobe, has traced the lineages back to the 1730s or thereabouts, when the effective split with Jie began for Turkana.)
I then asked about the generation age-set.
The response to this simple question removed the scales from my eyes.
They explained that ever since the Toposa left Jie (who live in present day Kotido), they had lost the generation set system. In their explanation, the ancestors of the Toposa had left without the transfer of power that a retiring generation proffers to their sons. No longer standing in the darkness, a lot about the Ateker began to make sense. This “leaving”, as I was to understand it again and again, had not been made in good stead.
Becoming a full man at 70
Unravelling this would take me all of another year. How I undertook the project was to save enough money to last me a handful of weeks at a time. But before then, and when I returned to Moroto in Karamoja, the significance of asapan was no longer in doubt. I met an old man, John Napua who told me that he had received asapan at the age of 70, whereupon he felt like a full man. He was inducted into the Ngimoru generation set and wears the defining copper bracelet of his set. He did not have to tell me what that meant. A posse of young men, when I sat down with Napua in Naita Kwai, just outside Moroto town, circled him the same way that powerful politicians or bishops, are shadowed by aides.
There was a sad subtext to the story of Napua. During his childhood in the 1950s, his family had lost all their animals in one single raid. The further deaths of his sisters meant there would be no dowry to return animals to his family. They did not have boys in numbers and age enough to carry out compensatory, restocking raids. Napua and his family fell out of the structures of power. His father did not have the animals to fund his sons’ asapan when the time came. The one open option, albeit to an alternative, viable life, was to be sent to the colonial government schools. As a man who could read and write, and speak English, Napua found employment in the civil service. But it was not asapan and the distinction counted.
Lopiar, The Sweep
There was a further twist to this, and reconnects directly to the fate of the Ateker. The tragic 1980 famine that swept across much of Africa had a deleterious impact on the Ateker. In what is memorialised there as “Lopiar” —The Sweep, from the root verb Apiar, to sweep—it is estimated that the Ateker lands lost up to 21 per cent of their population. The sheer magnitude of this tragedy was in Uganda subsumed by the return of President Milton Obote to power, the elections of that year and the beginning of the Museveni rebellion.
What it meant was that the cholera outbreak and the death of cattle stock set Ateker societies back several generations. In Karamoja, there was no stock wealth to enable the expensive asapan ceremonies to be carried out. The impact was profound as Karamojong society was without effective government, albeit a traditional one. For the decades starting in 1980 till the 2010s, Karamoja nearly suffered the complete loss of generational age set linkages to ensure continuity of its political system.
A man who cannot slaughter a bull has no political influence, cannot talk in an assembly and is the last to eat and drink.
And yet that does not explain why Napua was initiated so late in life. That belongs to an age-old paradox and critique of gerontological systems generally, and may partly explain why so many branches of the Ateker family were forced to migrate and why some, like the Teso and Lango, were easy prey to absorption by other societies.
The age set system is simple to understand. Boys born within the range of say a five-year radius are considered members of the same age set. This means the rhythm of initiation is regular. But the generational set system is where the challenge lies. The generation set systems stump even scholars to unwind. The little I understood runs something like this: A generation refers to male issues of males of a similar generation, the entire progeny of an entire generation of fathers, by which the grandfathers are one generation, the fathers a second generation, sons a third and so on and so forth, each holding power in turns. That is about the simplest explanation. The complication lies in the peculiarity of pastoralist societies. Men can only marry when cattle are available, so Ateker men married comparatively late, often in their mid to late 20s and at times, in their early 30s. Then, they did not stop marrying, with the result that a first born son may be in his 50s when his own father sires a last born son, by which time he himself could well have sons in their late 20s. And those sons may well be fathers already. It is not uncommon that men will have uncles as young as their own grandsons. So the problems start.
As happened with Napua, the 50-year-old son belongs in the same generation as his 1-year-old step-brother. Assuming that the 50-year-old’s father had himself been the last born of his own father, the society is left with a generational range that can stretch up to 120 years. By this range, the 30-year old son is considered to be generationally junior to his 1-year old uncle. Political power is unlikely to come to the 30 year old. The oldest member of that generation could have died in the 1890s while in 2022, the youngest member is still alive. The 80-year old nephew would have died powerless in the 1980s.
It is a system that boggles the mind, or as Boniface Korobe, cultural researcher and official at the Turkana County Government office explained to me, it is a system that can only be explained to you; you may not necessarily understand it.
The result is political and psychological despair for men caught out in the middle generations. Picture Ateker men already in their 80s sitting waiting for their 10-year old uncles to age, assume political power and hand it over to them.
Migrating from political rigidities
In Ateker lands, explanations about the root causes of migration are often elided, not talked about directly because it is so personal and not without pain. Centuries since the young walked away from Karamoja, the migration of uninitiated young men is still a sore point. It is explained that it was these uninitiated young men—the Karachuna—who walked away with their old men’s grazing herds (lactating herds are kept closer to kraals to provide milk) and never returned. It is this sense of betrayal that the Karamojong still hold to this day, since the 1600s and 1700s, against the Lango, the Teso, the Turkana, the Toposa, the Nyangatom. What outsiders call cattle rustling boils down to calls for the migrants—seen as cow thieves, to bring those animals back, and the retaliation to regain them. But the order of who started it has since been lost in the back and forth grabbing of the herds.
Sitting there, just listening to the people, the texture of their voices and mannerisms, I could have been in any place in Lango.
As to why they left is a matter of analytical discourse and most explanations, including the one I am attempting here, are subject to strong challenges. But the gathering weight of pre-initiation men, who were coming of age, but were two to three generations waiting in line, and whose own elderly fathers were still taking young brides much to the chagrin of the very young men charged with maintaining them, would have rankled. To boot, it is this pre-initiation generation that are tasked with the equivalent of civil service duties, the generation set being political heads. With the imprimatur of asapan, and their hegemony in full force, the elders are that glittering circle of senatorial authority (senator deriving from the Latin word senilis, old—a senate literally meaning a council of elders), whose presence grants such magnificence at the Ateker Akiriket ceremonies. It is they that can slaughter bulls. They have first service rights. No crafted political decision is taken without their approval.
And yet, it is for the pre-initiation age set young men to carry these decisions out. Without formal power and uncertain about their place in the pecking order, the karachuna are often a troublesome lot; it is often they that you see in pictures or footage of Ateker men caught rustling livestock.
Away in the fields of 17th century Karamoja, and despairing at never gaining political power, why should they return to a life of tyrannical senators? It is a conjectural extrapolation. But it is one with very strong points to make. The glittering Akiriket ceremonies I described of Ateker hosts in full regalia of ostrich-plumed aworich headgear, with the authority of a generation in power, are sadly, meaningful mostly held in Karamoja.
When the young men migrated, the elders considered them lost—dead. In fact, it is believed that the word “Teso” may be translatable to “grave”, as the Karamojong considered their errant sons already dead to them. Such was the sense of betrayal felt back home. In a socio-political sense, the migrants were dead as the societies they founded were politically null and void. There was no one with respectable authority to call things to order. If they came upon a simpler political system such as the Lango when they encountered the Luo, kick-starting their politics meant adopting other people’s systems, in what amounted to a political reform. But at the price of losing language, gods, names and culture. To carry on without the generation with power at hand would be the equivalent of a ministry without a political head to approve decisions.
A further supporting factor to this argument of generation-system collapse is that those who left referred derisively to those they left behind as the elderly men in charge, hence the terminology, Karamojong—from the root noun emojong, the elderly. In Karamoja, the enlightened don’t want that name and prefer to be called Karatunga (the people).
In Turkana and Toposa, I was told that the generation system “ended so long ago” it is no longer possible to trace it. But even if it is traced back, the permission and blessing of the Jie, generally referred to as “our ancestors” by the Ateker diaspora, and who sit firmly in this knowledge in Kotido, would be needed for the generational age set to be reinstated, for as with church matters, only a consecrated bishop can consecrate a new bishop. Out of all proportions, the Turkana and Toposa still make entreaties for the Jie to do this.
The price for that, alas, is that the animals the young took be returned. Which is unacceptable.
Ateker in the post-independence state
Hence, in Turkana, as Boniface Korobe explained to me, there is asapan “lite”, no more than a marking of passage for boys and only marking the coming of age of age sets. There is little political force in it. It is the same in Toposa.
There is nothing untypical about this sad supply-end of migration. The European migration into “new worlds” was precipitated by dominative and frozen aristocratic systems, which after the collapse of the church in the Reformation, closed common lands and widened the wealth and power gaps between aristocrats and peasants. To boot, the collapse of what I am at times tempted to call the Ateker Empire corresponds to the period of general collapse of empires in Africa, whose roots trace back to antiquity. There is more to this story. As with new polities created by migrants fleeing ossified political systems, the Ateker in diaspora created what amounts to republics, to guard against age tyranny. Tragically, colonialists saw these societies as acephalous for not having the kinds of monarchies seen in the south. Tragic because the post-independence state carried on the cruel ignorance of colonialists in mistreating the Ateker.
The tragic 1980 famine that swept across much of Africa had a deleterious impact on the Ateker.
The price for this breakage has arisen in our own times to exact a terrible political price. In Karamoja, the 1989 famine stymied the rise to power of a new generation. This failure was marked by the lack of control of the 1990s and early 2000s when the karachuna, without powerful elders to command their obedience, and armed with the lately acquired AK47 (another story altogether), ran amok. The resulting raids and counter-raids destroyed Ateker society and were fought on the scale of civil wars. It was only in Karamoja, where the generation set system was salvaged from the ruins of the 1980 famine, that elders have managed to finally hold sway over the youth. The Museveni government takes credit for “pacifying” Karamoja, but it was the respected word of the elders—men like Napua—that convinced the youth to lay down their guns.
In comparison, there was no such voice in Turkana or Toposa to help Nairobi and Juba to disarm their pastoralists. Because these pose threats from Kenya and South Sudan, Karamoja began to re-arm.
Book Review: Power, Politics and the Law by Githu Muigai
Prof Githu Muigai book, whose full title is Power, Politics and Law: Dynamics of constitutional change in Kenya, 1887- 2022 delves into the history of constitutional change from the colonial era to the present day, and will be found helpful by those looking for an overview of the key developments in our constitutional history.
Kenyans are often chided for not being interested in their history, a claim that I find as reductive as it is insulting. There are many Kenyans who are interested in—and actually learn—our history, at least the one that has been presented to us. Even where we know that the history presented to us is curated to serve particular ends, we consume it and also attempt to read between the lines. Furthermore, history is not just what is written. There is a good tradition of oral history that helps us critique what has been presented to us in books.
That being said, it is delightful when Kenyan scholars and intellectuals set their sights on documenting various aspects of Kenyan history and offering it to us. In recent years, we have seen the publication of numerous memoirs by public figures that are, to varying degrees, helping us to catch glimpses of our history and of that part of our society that many of us do not have access to. These are useful and we need more of them; hopefully better written and more honest ones. However, we also need analytical texts that delve into particular topics in depth. Prof Githu Muigai’s book Power, Politics and Law: Dynamics of constitutional change in Kenya, 1887- 2022, published in 2022 by Kabarak University Press, is one such intervention.
Githu’s book presents a history of constitutional change from the colonial era to the present day. Overall, the book feels very much like a series of lectures that Prof Muigai would deliver to his Constitutional Law classes at the university. The core argument that he advances in the book, that constitution making is political, is a fairly straightforward one. Still, the book has important gems that are worth encountering. The book has a textbook feel, which is at once helpful and frustrating. It will no doubt be helpful for those looking for a consolidated overview of the key developments in our constitutional history. However, it will frustrate those who are looking for more depth into the political dynamics undergirding constitutional development, who Prof Muigai may argue are not his target audience. This notwithstanding, I have found the book useful and will certainly be referencing it in my writing because it documents things that we know but whose sources we may struggle to find and name.
The initial chapters of the book—especially chapters 2 and 3—kept me fully in their grip because they presented me with a history of Kenya that I have not encountered before, or that has not been presented to me in the systematic manner that Githu presents it. In my history classes both in primary school and secondary school, I learnt about Kenya’s colonial history from the Berlin conference of 1885 (the Partition of Africa), the entry of Imperial British East Africa (IBEA) company and the arrival of notable figures like Lord Delamere. We also learnt about the struggle for independence, the Lancaster Constitution and its mutilation in the post-independence years. In that sense, not much of what Githu presents here is new. Githu’s innovation—that I find incredibly helpful—is in drawing clear linkages between the various historical events that were presented to us as distinct and somewhat unrelated. He helps the reader to see the bigger picture.
Githu offers us some important historical insights that many readers will not have encountered. While the emergence of the Kenyan state is quite well known, the nuances of how the Imperial British East Africa (IBEA) company adopted and applied Indian Laws to Kenya are less well known. From Githu’s book, I learnt that the idea of dividing the territory into provinces and districts emanated from India. Additionally, Githu offers an interesting and nuanced historical analysis of the politics of European settlers in Kenya. We learn, for instance, that the settlers campaigned for Kenya to be made a colony in 1905 through their lobby group that was called The Colonists Association. Githu notes that their claims for Kenya to be made a colony were based on the idea that “a system of taxation without representation was unsatisfactory”. He also shows divisions between them as illustrated by the refusal of Lord Delamere, the leader of the settlers, to take up his appointment in the Legislative Council (Legco) in March 1913.
Githu’s innovation is in drawing clear linkages between the various historical events that were presented to us as distinct and somewhat unrelated. He helps the reader to see the bigger picture.
While I find the nuanced and complex picture of the settlers that Githu presents fascinating, it is also one of the sources of my frustration with the book, especially with respect to the treatment of Africans in the text. It is painfully obvious that Africans are completely absent from the early part of the book. As such, it appears as if the Kenyan state emerged in the complete absence of Africans. Assigning the same level of complexity to Africans as he does to the European settlers would have led Prof Muigai to note the collaboration and resistance of Africans to colonial rule. In fact, the first African to emerge in the book is Eliud Mathu (on page 72). We learn that he was a graduate of Balliol College at the University of Oxford who was nominated to the Legco in 1940s. This points to another challenge I have with the book: its focus on the elites. Notably, only the political elite and Western scholars are named in the main text of the book. Even where some Kenyan scholars are quoted directly and their contributions seem central to the argument being advanced in the text, Githu refers to them in generic terms, such as “student”, “scholar”, “historian”, with their names being relegated to the footnotes.
I need not go into his elaborate examination of pre-colonial constitutional change from 1945 to 1960, which he examines in Chapter 3, as this is probably well understood by anyone who is familiar with Kenyan colonial history. It is worth noting, however, that he presents a very useful overview of the various constitutions, from the Lyttleton Constitution to the Lennox-Boyd Constitution. He then proceeds, in Chapter 4, to examine the Lancaster conferences and the making of the Independence Constitution. Again, as these developments are widely presented in Kenya’s political history, it is not necessary to go into much detail here except to note how some of the conflicts between the political elite continue to resurface, albeit in varied forms, in present-day Kenya. One example here is on the structure of the executive representation. Here, Githu demonstrates that change has been a core part of our constitutional history because we have consistently postponed the most complex political questions that we face as a country.
Githu’s core argument is very adequately advanced in the latter part of the book (Chapters 5 to 8), where he examines constitutional change in post-colonial era. There are many gems here showing how elite conflicts were converted into constitutional questions, followed by constitutional amendments in some cases. Whenever the law was seen as an impediment to the exercise of power, it was changed. While society groups and foreign actors are completely absent in Githu’s analysis of the political and constitutional development of the 1960s to the 1980s, they emerge in a strong sense in the analysis of the period from the 1990s onwards. A divide that I find interesting here is between the mainstream churches, many of whose leaders stood against autocracy, and the evangelical churches that did not, saying that they were committed to “praying for the Government in obedience to the word of God and praying for those in authority”. This is an area that will require more scholarly engagement in the coming days especially given the ascendancy of evangelical Christianity in Kenya.
There are many gems here showing how elite conflicts were converted into constitutional questions, followed by constitutional amendments in some cases.
Githu also presents a good overview of the politics of expertise. He notes that the role of experts in the constitutional review process began with a consultancy offered by the Kenya Human Rights Commission (KHRC) to draft a model constitution. He then traces how “experts” came to increasingly occupy a central place in the drafting of the constitution that was eventually adopted by Kenyans in 2010. Here, it is curious that Githu fails to acknowledge that he was one of these “experts”. Even the reader who is not aware, going into the text, that Githu was a key actor in those processes will be made aware in the foreword by Prof Willy Mutunga, legal scholar and former Chief Justice, that Githu was a commissioner in the Constitution of Kenya Review Commission (2000-2005). Githu would later become Attorney General. This is a crucial omission. Honesty about his involvement in these processes would be crucial at this point because it would not only help the reader understand the lens through which Githu is presenting his analysis of the processes that he is involved in but also how his experiences shape how he interprets the past. It is important to acknowledge that, ultimately, there is no such thing as a neutral observer, let alone a neutral participant. This section of the book leaves the reader feeling that there is a wealth of insight that we have not been offered. Perhaps, this is reason enough for Githu to document his experiences elsewhere.
My key takeaways from the book are that inter-elite conflicts have been and will continue to be central to the making of constitutions in Kenya and that the core areas of conflict in Kenya are never fully resolved, meaning that they will keep resurfacing.
On the inter-elite conflicts, Githu adds to the existing commentary showing how our political leaders play an ongoing game of musical chairs (forming and leaving alliances constantly) and changing their policy positions guided by contingent political realignments. One may vehemently oppose a constitutional amendment today and become its most ardent defender tomorrow and vice-versa. There are so many examples of this phenomena that it is not necessary to present any here.
On the “never-quite-done” point, devolution presents a good example. It has been an issue from the pre-colonial days to the present day, and as Githu observes, is likely to continue being debated into the future. The structure of the national executive is another example whose continuity is best illustrated by the efforts of the Building Bridges Initiative (BBI) to re-establish the position of Prime Minister—by whatever name—and the appointment of Musalia Mudavadi to such a position (Prime Cabinet Secretary) by President Ruto recently.
Following his extensive historical survey of constitutional development in Kenya, I think that Githu aptly identifies the areas where efforts to review the 2010 constitution will emerge: devolution, senate, gender representation and the system of government, particularly as it relates to the structure of the executive. I would add that paying attention to the ascendancy of the evangelical movement, the issues on which the evangelical movement and the leadership of the current government campaigned against the 2010 constitution, such as abortion and Kadhi’s Courts, are likely to re-emerge.
Githu aptly identifies the areas where efforts to review the 2010 constitution will emerge.
In the end, Githu is optimistic about the 2010 constitution. He argues that “a rigid Constitutional amendment procedure, an active and vigilant citizenry, and the presence of activist judges in the Judiciary” will serve to anchor the resilience of the 2010 constitution. As such, he predicts that the fate that befell the Building Bridges Initiative (BBI) is likely to befall many of the reform efforts that are likely to emerge. I would like to agree with him. However, my reading of Kenyan politics, and given that none of the factors he notes are immutable, makes me more reticent about this outcome. To me, the resilience of the 2010 constitution remains to be seen; that is, if one is to say that it is the resilience of the constitution that matters more to the Kenyan people rather that its dynamism.
The Crisis of the US dollar: Lessons From the Meltdown in Britain
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
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.
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