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Friday, August 09, 2024

 HARD TO BELIEVE, BUT TRUE...

Study: Flying keeps getting safer


Reflecting a “Moore’s Law of aviation,” commercial flight has become roughly twice as safe each decade since the 1960s; Covid-19 added a wrinkle, however



Massachusetts Institute of Technology





Many airline passengers naturally worry about flying. But on a worldwide basis, commercial air travel keeps getting safer, according to a new study by MIT researchers.  

The risk of a fatality from commercial air travel was 1 per every 13.7 million passenger boardings globally in the 2018-2022 period — a significant improvement from 1 per 7.9 million boardings in 2008-2017 and a far cry from the 1 per every 350,000 boardings that occurred in 1968-1977, the study finds.

“Aviation safety continues to get better,” says Arnold Barnett, an MIT professor and co-author of a new paper detailing the research results.

“You might think there is some irreducible risk level we can’t get below,” adds Barnett, a leading expert in air travel safety and operations. “And yet, the chance of dying during an air journey keeps dropping by about 7 percent annually, and continues to go down by a factor of two every decade.”

To be sure, there are no guarantees of continual improvement; some recent near-collisions on runways in the U.S. have gained headlines in the last year, making it clear that airline safety is always an ongoing task.

Additionally, the Covid-19 pandemic may have caused a sizable — though presumably temporary — new risk stemming from flying. The study analyzes this risk but quantifies it separately from the long-term safety trend, which is based on accidents and deliberate attacks on aviation.

Overall, Barnett compares these long-run gains in air safety to “Moore’s Law,” the observation that innovators keep finding ways to double the computing power of chips roughly every 18 months. In this case, commercial air travel has gotten roughly twice as safe in each decade dating to the late 1960s. 

“Here we have an aerial version of Moore’s Law,” says Barnett, who has helped refine air travel safety statistics for many years. 

In per-boarding terms, passengers are about 39 times safer than they were in the 1968-1977 period. 

The paper, “Airline safety: Still getting better?” appears in the August issue of the Journal of Air Transport Management. The authors are Barnett, who is the George Eastman Professor of Management Science at the MIT Sloan School of Management, and Jan Reig Torra MBA ’24, a former graduate student at MIT Sloan. 

Covid-19 impact

The separate, additional finding about the impact of Covid-19 focuses on cases spread by airline passengers during the pandemic. This is not part of the top-line data, which evaluates airline incidents during normal operations. Still, Barnett thought it would also be valuable to explore the special case of viral transmission during the pandemic.

The study estimates that from June 2020 through February 2021, before vaccines were widely available, there were about 1,200 deaths in the U.S. from Covid-19 associated, directly or indirectly, with its transmission on passenger planes. Most of those fatalities would have involved not passengers but people who got Covid-19 from others who had been infected during air travel. 

In addition, the study estimates that from March 2020 through December 2022, around 4,760 deaths around the globe were linked to the transmission of Covid-19 on airplanes. Those estimates are based on the best available data about transmission rates and daily death rates, and take account of the age distributions of air passengers during the pandemic. Perhaps surprisingly, older Americans do not seem to have flown less during the Covid-19 pandemic, even though their risks of death given infection were far higher than those of younger travelers.

“There’s no simple answer to this,” Barnett says. “But we worked to come up with realistic and conservative estimates, so that people can learn important lessons about what happened. I believe people should at least look at these numbers.” 

Improved overall safety

Overall, to study fatalities during normal airline operations, the researchers used data from the Flight Safety Foundation, the World Bank, and the International Air Transport Association. 

To evaluate air travel risks, experts have used a variety of metrics, including deaths per billion passenger miles, and fatal accidents per 100,000 flight hours. However, Barnett believes deaths per passenger boarding is the most “defensible” and understandable statistic, since it answers a simple question: If you have a boarding pass for a flight, what are your odds of dying? The statistic also includes incidents that might occur in airport terminals. 

Having previously developed this metric, Barnett has now updated his findings multiple times, developing a comprehensive picture of air safety over time:

Commercial air travel fatalities per passenger boarding
1968-1977: 1 per 350,000
1978-1987: 1 per 750,000
1988-1997: 1 per 1.3 million
1998-2007: 1 per 2.7 million
2007-2017: 1 per 7.9 million
2018-2022: 1 per 13.7 million

As Barnett’s numbers show, these gains are not incidental improvements, but instead constitute a long-term trend. While the new paper is focused more on empirical outcomes than finding an explanation for them, Barnett suggests there is a combination of factors at work. These include technological advances, such as collision avoidance systems in planes; extensive training; and rigorous work by organizations such as the U.S. Federal Aviation Agency and the National Transportation Safety Board.

However, there are disparities in air travel safety globally. The study divides the world into three tiers of countries, based on their commercial air safety records. For countries in the third tier, there were 36.5 times as many fatalities per passenger boarding in 2018-2022 than was the case in the top tier. Thus, it is safer to fly in some parts of the world than in others. 

The first tier of countries consists of the United States, the European Union countries, and other European states, including Montenegro, Norway, Switzerland, and the United Kingdom, as well as Australia, Canada, China, Israel, Japan, and New Zealand. 

The second group consists of Bahrain, Bosnia, Brazil, Brunei, Chile, Hong Kong (which has been distinct from mainland China in air safety regulations), India, Jordan, Kuwait, Malaysia, Mexico, the Philippines, Qatar, Singapore, South Africa, South Korea, Taiwan, Thailand, Turkey, and the United Arab Emirates. In each of those two groups of nations, the death risk per boarding over 2018-22 was about 1 per 80 million.

The third group then consists of every other country in the world. Within the top two groups, there were 153 passenger fatalities in the 2018-2022 period, and one major accident, a China Eastern Airlines crash in 2022 that killed 123 passengers. The 30 other fatalities beyond that in the top two tiers stemmed from six other air accidents. 

For countries in the third tier, air travel fatalities per boarding were also cut roughly in half during the 2018-2022 period, although, as Barnett noted, that can be interpreted in two ways: It is good they are improving as rapidly as the leading countries in air safety, but in theory, they might be able to apply lessons learned elsewhere and catch up even more quickly. 

“The remaining countries continue to improve by something like a factor of two, but they’re still behind the top two groups,” Barnett observes.

Overall, Barnett notes, notwithstanding Covid-19, and looking at accident avoidance, especially in countries with the lowest fatality rates, it is remarkable that air safety keeps getting better. Progress is never assured in this area; yet, the leading countries in air safety, including their government officials and airlines, keep finding ways to make flying safer.

“After decades of sharp improvements, it’s really hard to keep improving at the same rate. And yet they do,” Barnett concludes. 

###

Written by Peter Dizikes, MIT News

Paper: “Airline Safety: Still Getting Better?”

https://www.sciencedirect.com/science/article/pii/S0969699724001066?dgcid=author#appsec2

Wednesday, August 07, 2024

 

How Unelected Regulators Unleashed the Derivatives Monster and How It Might Be Tamed


It was not the highly visible acts of Congress but the seemingly mundane and often nontransparent actions of regulatory agencies that empowered the great transformation of the U.S. commercial banks from traditionally conservative deposit-taking and lending businesses into providers of wholesale financial risk management and intermediation services.

— Professor Saule Omarova, “The Quiet Metamorphosis, How Derivatives Changed the Business of  Banking” University of Miami Law Review, 2009

While the world is absorbed in the U.S. election drama, the derivatives time bomb continues to tick menacingly backstage. No one knows the actual size of the derivatives market, since a major portion of it is traded over-the-counter, hidden in off-balance-sheet special purpose vehicles. However, when Warren Buffet famously labeled derivatives “financial weapons of mass destruction” in 2002, its “notional value” was estimated at $56 trillion. Twenty years later, the Bank for International Settlements estimated that value at $610 trillion. And financial commentators have put it as high as $2.3 quadrillion or even $3.7 quadrillion, far exceeding  global GDP, which was about $100 trillion in 2022. A quadrillion is 1,000 trillion.

Most of this casino is run through the same banks that hold our deposits for safekeeping. Derivatives are sold as “insurance” against risk, but they actually add a heavy layer of risk because the market is so interconnected that any failure can have a domino effect. Most of the banks involved are also designated “too big to fail,” which means we the people will be bailing them out if they do fail.

Derivatives are considered so risky that the Bankruptcy Act of 2005 and the Uniform Commercial Code grant them (along with repo trades) “super-priority” in bankruptcy. That means if a bank goes bankrupt, derivative and repo claims are settled first, drawing from the same pool of liquidity that holds our deposits. (See David Rogers Webb’s The Great Taking and my earlier articles here and here.) A derivatives crisis could easily vacuum up that pool, leaving nothing for us as depositors — or for the “secured” creditors who are junior to derivative and repo claimants in bankruptcy, including state and local governments.

As detailed by Pam and Russ Martens, publisher and editor, respectively of Wall Street on Parade, as of December 31, 2023, Goldman Sachs Bank USA, JPMorgan Chase Bank N.A., Citigroup’s Citibank and Bank of America held a total of $168.26 trillion in derivatives out of a total of $192.46 trillion at all U.S. banks, savings associations and trust companies. That’s four banks holding 87 percent of all derivatives at all 4,587 federally-insured institutions then in the U.S.

In June 2024, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board jointly released their findings on the eight U.S. megabanks’ “living wills” – their resolution or wind-down plans in the event of bankruptcy. The Fed and FDIC faulted all of the four largest derivative banks on shortcomings in how they planned to wind down their derivatives.

How Banks Guarding Our Deposits Became the Biggest Gamblers in the Derivatives Casino

Banks are not just middlemen in the derivatives market. They are active players taking speculative positions. In this century, writes Professor Omarova, the largest U.S. commercial banks have emerged “as a new breed of financial super-intermediary—a wholesale dealer in financial risk, conducting a wide variety of capital markets and derivatives activities, trading physical commodities, and even marketing electricity.” She notes that the Federal Reserve has allowed several financial holding companies to purchase and sell physical commodities (including oil, natural gas, agricultural products and electricity) in the spot market to hedge their commodity derivative activities, and to take or make delivery of those commodities to settle the transactions.

It was not Congress that authorized that expansive definition of permitted banking activities. It was the Office of the Comptroller of the Currency (OCC), part of the “administrative deep state,” that permanent body of unelected regulators who carry on while politicians come and go. As Omarova explains:

Through seemingly routine and often nontransparent administrative actions, the OCC effectively enabled large U.S. commercial banks to transform themselves from the traditionally conservative deposit-taking and lending institutions, whose safety and soundness were guarded through statutory and regulatory restrictions on potentially risky activities, into a new breed of financial “super-intermediaries,” or wholesale dealers in pure financial risk. …

Moreover, some of the most influential of those decisions escaped public scrutiny because they were made in the subterranean world of administrative action invisible to the public, through agency interpretation and policy guidance.

The OCC’s authority to regulate banks dates back to the National Bank Act of 1863, which grants national banks general authority to engage in activities necessary to carry on the “business of banking,” including “such incidental powers as shall be necessary to carry on the business of banking.” The “business of banking” is not defined in the statute. Omarova writes:

Section 24 (Seventh) of the National Bank Act grants national banks the power to exercise all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes.

No mention is made of derivatives trading or dealing.

The powers of banks were further limited by Congress in the Glass-Steagall Act of 1933, which explicitly prohibited banks from dealing in corporate equity securities, and by other statutes passed thereafter. However, the portion of the Glass-Steagall Act separating depository from investment banking was reversed in the Commodity Futures Modernization Act in 2000. Omarova writes that this allowed the OCC to articulate “an overly expansive definition of the ‘business of banking’ as financial intermediation and dealing in financial risk, in all of its forms, and … this pattern of analysis allowed the OCC to expand the range of bank-permissible activities virtually without any statutory constraint.”

What Then Can Be Done?

The 2008 financial crisis is now acknowledged to have been largely a derivatives crisis. But massive efforts at financial reform in the following years have failed to fix the underlying problem. In a Forbes article titled “Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable,” Steve Denning writes:

Banks today are bigger and more opaque than ever, and they continue to trade in derivatives in many of the same ways they did before the crash, but on a larger scale and with precisely the same unknown risks.

Most of this derivative trading is conducted through the biggest banks. A commonly held assumption is that the real derivative risk is much smaller than the “notional amount” stated on the banks’ balance sheets, but Denning observes:

[A]s we learned in 2008, it is possible to lose a large portion of the “notional amount” of a derivatives trade if the bet goes terribly wrong, particularly if the bet is linked to other bets, resulting in losses by other organizations occurring at the same time. The ripple effects can be massive and unpredictable.

In 2008, governments had enough resources to avert total calamity. Today’s cash-​strapped governments are in no position to cope with another massive bailout.

He concludes:

Regulation and enforcement will only work if it is accompanied by a paradigm shift in the banking sector that changes the context in which banks operate and the way they are run, so that banks shift their goal from making money to adding value to stakeholders, particularly customers. This would require action from the legislature, the SEC, the stock market and the business schools, as well as of course the banks themselves.

A Paradigm Shift in “the Business of Banking”

In a September 2023 paper titled “Rebuilding Banking Law: Banks as Public Utilities,” Yale law professor Lev Menand and Vanderbilt law professor Morgan Ricks propose shifting the goal of banking so that chartered private banks are “not mere for-profit businesses; they have affirmative obligations to the public.” The authors observe that under the New Deal framework, which was rooted in the National Bank Act of 1864, banks were largely governed as public utilities. Charters were granted only where consistent with public convenience and need, and only chartered banks could expand the money supply by extending loans.

The Menand/Ricks proposal is quite detailed and includes much more than regulating derivatives, but on that specific issue they propose:

While member banks are permitted to enter into interest-rate swaps to hedge rate risk, they are not allowed to engage in derivatives dealing (intermediation or market making) or take directional bets in the derivatives markets. Derivatives dealing and speculation do not advance member banks’ monetary function. Apart from loan commitments, member banks would not be in the business of offering guarantees or other forms of insurance.

Would that mean the end of the derivatives casino? No – it would just be moved out of the banks charged with protecting our deposits:

The blueprint above says nothing about what activities can take place outside the member banking system. It says only that those activities can’t be financed with run-prone debt [meaning chiefly deposits]. In principle, we could imagine a very wide degree of latitude for non bank firms, subject of course to appropriate standards of disclosure, antifraud, and consumer and investor protection. So securities firms and other nonbanks might be given free rein to engage in structured finance, derivatives, proprietary trading, and so forth. But they would not be allowed to “fund short.”

By “funding short,” the authors mean basically “creating money,” for example, through repo trades in which short-term loans are rolled over and over. In their proposal, only chartered banks are delegated the power to create money as loans.

Expanding the Model

University of Southampton business school professor Richard Werner, who has written extensively on this subject, adds that banks should be required to concentrate their lending on productive ventures that create new goods and services and avoid inflating existing assets such as housing and corporate stock.

Speculative derivatives are a form of “financialization” – money making money without producing anything. The winners just take money from the losers. Gambling is not illegal under federal law, but the chips in the casino should not be our deposits or loans made with the backing of our deposits.

The Menand/Ricks proposal is for private banks, but banks can also be made “public utilities” through direct ownership by the government. The stellar model is the Bank of North Dakota, which does not speculate in derivatives, cannot go bankrupt, makes productive loans, and has been highly successful. (See earlier article here.) The public utility model could also include a national infrastructure bank, as proposed in H.R. 4052, which currently has 37 co-sponsors.

The “business of banking” can include making money for private shareholders and executives, but that business should be junior to the public interest, which would prevail when they conflict.

Unfortunately, only Congress can change the language of the controlling statute; and Congress has been motivated historically to make major changes in the banking system only in response to a Great Depression or Great Recession that exposes the fatal flaws in the existing system. With the reversal of “Chevron deference,” however, the OCC’s rules can now be challenged in court. A powerful citizen’s movement might be able to catalyze needed changes before the next Great Depression strikes.

A financialized economy is not sustainable and not competitive. The emphasis should be on investment in the real economy. That is the sort of paradigm shift that is necessary if the U.S. is to survive and prosper.

• This article was first posted as an original to ScheerPost.comFacebookTwitterReddit

Ellen Brown is an attorney, co-chair of the Public Banking Institute, and author of thirteen books including Web of DebtThe Public Bank Solution, and Banking on the People: Democratizing Money in the Digital Age. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 400+ blog articles are posted at EllenBrown.com. Read other articles by Ellen.

Saturday, August 03, 2024

West Africa: rivalry and division between leaders



Friday 2 August 2024, by Paul Martial


Within hours of each other, two summits of West African countries were held. The first, that of the Alliance of Sahel States, bringing together Mali, Burkina Faso and Niger, each led by military juntas; the second, that of the Economic Community of West African States (ECOWAS) bringing together the 13 other countries.

 





A new confederation

On Saturday 6 July 2024 in Niamey, the capital of Niger, the three Sahelian countries met to announce the creation of the Confederation of Sahel States. The aim is to strengthen their ties by forming a joint force to combat rebellions, particularly jihadist ones, and by adopting a mutual defence pact. Other measures have been adopted, such as the pooling of resources for agriculture, transport, energy and water. The introduction of a common currency was mentioned. There are also plans to set up an investment bank and a stabilisation fund. In addition, local languages are to be promoted in the national media.

Some observers point out that weaknesses do not add up to strength. The economic and security situation is deteriorating. The incessant power cuts in the capitals and inflation are far from being overcome. Recently, Bamako airport in Mali was paralysed for lack of fuel to refuel aircraft.

In all three countries, the jihadists are succeeding in carrying out deadly attacks against the armed forces, while the latter, with the participation of their Russian auxiliaries, are constantly committing acts of violence. In Takalote, for example, Malian soldiers and Russian mercenaries killed eight people. These were not Islamists, but members of the pro-government militia led by General El Hadj Ag Gamou, the current governor of the Kidal region. The Confederation summit ended with an official break with ECOWAS, which was deemed to be too close to the West, and France in particular.

A decried ECOWAS

In response to coups d’état, ECOWAS has illegally instituted an economic blockade and even envisaged military intervention in Niger. Some are talking about the risk of ECOWAS breaking up. Senegal’s brand new president has been tasked with trying to bring the three Sahelian countries that have seceded back into the fold. His sovereignist stance should help to renew the dialogue, even if success seems unlikely.

ECOWAS leaders are also facing the same problems, particularly on security issues, with jihadists increasingly intervening in coastal countries, particularly in Benin and Togo. The project for a joint armed force of around 5,000 men faces a major difficulty, that of funding, estimated at nearly 2.6 billion dollars. Finally, the President of Nigeria, Tinubu, has been re-elected to the presidency of ECOWAS, although he seems more concerned about his country’s catastrophic economic situation.

Pan-Africanism by and for the people

The Confederation and ECOWAS are instruments against the people. The former brings together coup plotters who intend to stay in power for ever. Their confederation was founded without any debate in their respective countries, all of which suffer human rights violations.

As for ECOWAS, it has never ceased to endorse electoral farces and other constitutional manoeuvres designed to keep presidents in power for life or to organise dynastic successions.

The implementation of a genuinely pan-Africanist policy cannot be done without the full and complete participation of the people, favouring respect for democratic rights, which is the antithesis of ECOWAS or the Confederation, since one is nothing more than a friendship of (mostly) badly elected presidents, the other a union of coup plotters.



The Rise Of The African Left

Bassirou Faye and PASTEF’s victory in Senegal in March marked the stunning, decade-long rise of a leftist party. As Africa’s Gen Z protest movements challenge the established order, can the feat be repeated elsewhere?

By Erick KabenderaAugust 3, 2024
Source: African Arguments
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In power: President Bassirou Faye’s stunning election victory at Senegal’s general elections in March 2024, makes his PASTEF the only overtly socialist party in power on the continent. Photo courtesy: Presidence de la Republique du Senegal.

The number of African countries falling under military rule in recent years has dominated debate about the uncertainty of the future of democracy on the continent, as is the case in other parts of the world. More recently, youth-led protests challenging the status quo on issues of the cost of living, corruption and the debt crisis are gaining popular appeal across the continent. Will this be a repeat of 1990 when street protests from Dakar to Mombasa agitating against autocracy and mismanagement ushered in poitical pluralism?

The burgeoning population of young people in many countries and the failure of existing governance structures to deliver public goods, services and jobs has, almost inevitably, created the conditions for alternative leadership and governance structures that promise to reshape African politics.

Previously fringe political actors have seized the momentum to mobilise the ordinary masses of people to challenge the elites who dominate both the political and economic spaces at the expense of most struggling people.

As neoliberal ideals took hold around the world, African countries, especially those with nascent democracies such as Senegal and Tanzania found themselves grappling with popular pressure for change and a rebirth of the ideals for which their independence was fought. For other countries like South Africa, economic inequality is the fuel of anti-establishment dissent.

The resurgence of left populist ideology in Africa has most prominently been championed by Senegal’s Bassirou Diomaye Fay, South Africa’s Julius Malema and Zitto Kabwe of Tanzania – the three founders of Africa’s youngest Marxist-Leninist parties.

In Senegal, African Patriots of Senegal for Work, Ethics and Fraternity (PASTEF), won a 54 percent mandate to govern the country during the landmark March 24, 2024 elections, defeating incumbent President Macky Sall’s fronted candidate, Amadou Ba.

For Malema’s Economic Freedom Fighters (EFF) party, while the May 2024 elections saw the party’s popularity drop by 1.5 per cent among South African voters, the subsequent formation of a Government of National Unity between the African National Congress (ANC) and the majority white-led Democratic Alliance, has given the firebrand politician a platform to reinvigorate the opposition party’s ideals.

And in Tanzania, Mr Kabwe is optimistic that ACT-Wazalendo party, founded in 2014, will turn the tables on Chama Cha Mapinduzi (CCM), the country’s ruling party – also its oldest – to win the 2025 General Election in Zanzibar, the semi-autonomous island of the Republic of Tanzania, where the opposition party has its strongest following. This year’s local government elections scheduled for October will signal the party’s likely performance in the main contest.

2014 was something of a watershed year. As the faux-optimism of the ‘Africa Rising’ moment faded into the long shadow of the global recession, a new generation of youthful activists was emerging. Amid the wave of global anti-capitalist protests triggered by the global recession, the establishment of these political parties in 2014 came with lofty ideals aimed at reshaping their countries’ political futures and championing a fresh pan-Africanist trajectory. They had a similar agenda regarding corruption, the nationalisation of natural resources, and in South Africa’s case, the expropriation of the land.

The mixed fortunes of current Senegal Prime Minister Ousmane Sonko’s ruling PASTEF on the one hand, and Julius Malema’s EFF opposition party on the other, have thrust Tanzania’s ACT-Wazalendo into the limelight of the pan-African left. As local government elections approach in October, and the General Election in 2025, whether the party emulates PASTEF to keep its founder’s vision alive, or takes a beating that will undermine its political influence in the long run, remains an open question.

While PASTEF is under pressure to deliver on the fundamental change it promised – they are focused on asserting Senegal’s sovereignty in economic, monetary, and agricultural matters, amid expectations of the Senegalese people for a reduction in the cost of living, job creation, and renegotiation of fishing agreements with the European Union – Malema is gearing up for a more strategic opposition role to recoup the losses his party suffered. Preoccupied with domestic concerns, voters appeared un-interested in his Borderless Africa campaign, which is likely to be further weakened by the entry into the government of the Democratic Alliance, accused by many South Africans of perpetuating apartheid-throwback white supremacy.

Party president, Julius Malema at the Economic Freedom Fighters 11th anniversary rally, 28 July 2024

With the rise of PASTEF, EFF, and ACT-Wazalendo, their respective founders gained continental prominence due to the major regional and world events that took place between 2008 and 2014. As the world reeled from the turbulence of the global financial crash, the Arab Spring, which precipitated the fall of Libyan President Muammar Gaddafi, the onset of the Syrian civil war and the democratic false dawns in Tunisia and Egypt, nascent movements south of the Sahara emerged in response to the crisis of the era and also to a longer democratic recession that stretched back to the 1990s.

While EFF emerged after Malema, a former ANC Youth League leader broke with the ruling ANC, ACT-Wazalendo’s founder, Zitto Kabwe, had been expelled from the main opposition party, Chadema. In contrast, Sonko emerged from among Senegal’s tax bureaucrats, primarily supported by the customs workers to establish an anti-establishment party movement.

In South Africa, the post-Thabo Mbeki period was characterised by a growing scepticism of Nelson Mandela’s political settlement with the apartheid regime, which ended white settler minority rule in 1994. Black people felt they had only attained political freedom but remained economically marginalised, leading to the fresh push to claim for economic benefits as well.

Malema’s EFF seized the opportunity to front for the restitution of African land that, the party argued, would guarantee the people economic freedom. Malema positioned himself as the champion of black economic empowerment, criticising the ANC’s reluctance to redistribute land from the white minority to the Black majority as a deliberate step to empower expectant Black South Africans. The EFF would also benefit from the anti-Jacob Zuma sentiments, as the ANC, subjected to the political consequences of grand corruption and state capture, suffered factional infighting, a plunge in its popularity, and economic hardships that ultimately led to its disastrous showing in the May 2024 elections.

People power: A PASTEF rally in 2018 in Dakar. In less than four years the party had captured 16 percent of total votes; five years later, it swept to victory. Photo courtesy: Union des Pan-Africanistes Senegalais (UPS).

In French-speaking West Africa, countries were advocating for currency sovereignty and an end to la FrançAfrique, the neo-colonial arrangement Paris has long employed in its relations with its former colonies. In Senegal, sentiments against the pre-independence CFA franc gained prominence as citizens railed against French imperialism. Sonko, a former tax collector with support from the tax workers’ unions, capitalised on the moment to build a narrative against the French whom he accused of exercising overriding power over the Senegalese economy.

For PASTEF, anti-France resource nationalism and anti-corruption were key factors in helping them win the presidency. The Senegalese and people in other parts of the continent await to see how the party would transform the country. Its performance will have a wider implication on whether the model can work and transform other African countries.

For Tanzania, 2014 marked the height of resource nationalism, with protests over the exploitation of natural resources in southern Tanzania that left several demonstrators dead by police bullets. The military was deployed to quell the deadly protests. In the following months, a $250 million electricity generation scandal led to a flurry of high-level resignations from the government. Mr Kabwe then positioned himself as the public face of the agitation, speaking against grand corruption in government, and championing the public’s interest in natural resources’ exploitation. When he was eventually expelled from Chadema, he carried the spirit to ACT-Wazalendo which he founded in 2014.

Trajectories

After South Africa’s 2014 elections, the EFF secured six percent of the total votes and 25 seats in the National Assembly to establish itself as the first pro-Black opposition party in the country. The party grew its influence in the 2019 elections, raising its share of the votes to 11 percent and the number of MPs to 44. Mr Malema has indicated that despite dropping in performance in the 2024 elections, mostly due to the disruption of the political terrain by former President Jacob Zuma’s new MK party, EFF would provide an effective counter-narrative against the Government of National Unity – it brings together the ANC and Democratic Alliance as the dominant parties in the GNU – to regroup and expand the party’s core base among Black voters.

Despite initially making itself available to coalition talks with the ANC, EFF recused itself from the GNU, which they termed an “elite pact”, in which the EFF interpreted the involvement of DA as contradicting EFF’s radical militant economic emancipation movement. In the short term, not being part of the GNU gives Malema a vantage point to continue as the voice of the Black masses who are looking for someone to hold the government to account and speak up about the poor state of the economy and deteriorating provision of social services. The EFF will likely gain from any potential disagreements and even the collapse of the GNU primarily due to opposing economic policies of the DA and ANC. Malema stands to further raise the EFF’s long-term standing by offering an alternative voice to the GNU’s untested administration and its policies.

In its first-ever election in 2015, Sonko’s party secured one parliamentary seat. In the following elections in 2019, Sonko garnered 16 percent of the total votes to build his momentum, followed by crafting a coalition called “United in Hope” in 2021 which was instrumental in helping the party win council elections in the 2022 polls, in addition to increasing its parliamentary tally to 56 of the 165 house seats.

In Tanzania, Kabwe’s party also secured only one seat in Parliament in the 2015 elections, a year after it was formed. But in a surprising turn of events, the top leadership of Zanzibar’s long-serving main opposition party, the Civic United Front (CUF), defected to ACT-Wazalendo in 2019, making the young party the largest in the Isles. In 2020, elections in Zanzibar were marred by massive rigging, which saw the party win only five seats in the Zanzibar House of Representatives and none in Mainland Tanzania. The party would later join the Government of National Unity (GNU) in Zanzibar in early 2021, making it the official opposition party.

Changing ideology as a vote-winning strategy?

ACT-Wazalendo founder, Zitto Kabwe at a rally in western Tanzania, June 2023. Started in 2014 as a left activist party, it has since drifted to the centre to accommodate Zanzibar’s Civic United Front. Photo courtesy: ACT-Wazalendo.

For ACT-Wazalendo, the shift from a party advocating for resource nationalism to one with a more liberal orientation, appears to have been a tactic to win over the CUF membership and become a political force, especially in Zanzibar. Unlike their colleagues on the mainland, the Isles has for long advocated market liberalism as a means to a thriving economy. They were opposed to policies such as resource nationalisation.

While Kabwe may have in the period raised the status of the party to become a partner in the GNU, the shift in its ideology will likely hurt its influence, as has been witnessed in mainland Tanzania where resource nationalism remains a strong political appeal. In the long term, ACT-Wazalendo risks suffering the same reputational damage as the ruling party.

The test for ACT-Wazalendo will soon be clear as the country embarks on campaigns for local government elections in October to be followed by the General Election a year later. How Kabwe and the governing coalition party’s leadership respond to concerns of corruption in government and other economic hardships facing Zanzibaris will determine the level of support and endorsement they get from the people.




Wednesday, July 24, 2024

 

Tempting Armageddon as a national strategic policy

Quos Deus vult perdere, prius dementat. “Whom the gods would destroy, they first make mad.”

If you want to get ahead in Washington, devise the most dangerous, reckless, merciless and destructive plan for US world domination. If it kills millions of people (especially if they are mostly women and children), you will be called a bold strategist. If tens of millions more become refugees, it will be even more impressive. If you find a way to use nuclear weapons that would otherwise be gathering dust, you will be hailed as brilliant. Such is the nature of proposals for dealing with Russia, China and Iran, not to mention smaller nations like Cuba, Syria, Yemen, Venezuela, North Korea, etc. Can a plan to decimate humanity and scorch the earth be far behind?

How did we get here? This is not the world that was envisioned in the years following the greatest war in history.

If you consider yourself a hammer, you seek nails, and this seems to be the nature of US foreign policy today. Nevertheless, when WWII ended in 1945, the US had no need to prove that it was by far the most powerful nation on the planet. Its undamaged industrial capacity accounted for nearly half the economy of an otherwise war-torn and devastated world, and its military was largely beyond challenge, having demonstrated the most powerful weapons the world had ever known, for better or worse.

That was bound to change as the world recovered, but even as the rebuilding progressed, it did so with loans from the US and US-dominated institutions like the World Bank and the International Monetary Fund, which added international finance as another pillar of US supremacy. The loans built markets for US production, while creating allies for its policies in the postwar period.

It wasn’t all rosy, of course. But the war and its immediate aftermath introduced greater distribution of wealth, both in the US and much of the world, than had hitherto been the case. Highly graduated income taxes – with rates greater than 90% on the highest incomes – not only funded the war effort, but also assured relative social security and prosperity for much of the working class in the postwar period. In addition, the GI Bill provided funds for college education, unemployment insurance and housing for millions of returning war veterans. Although a main purpose of the legislation may have been to avoid the scenes of armed repression against unemployed and homeless war veterans, as occurred with a much smaller number of veterans after WWI, it had the effect of ushering many of them into middle class status. Another factor was the introduction of employee childcare and health insurance benefits during the war, in order to entice women into the work force and make it possible for them to devote more of their time to war production. These benefits (especially health insurance) remained widespread and even increased after the war, contributing to higher living standards compared to the prewar era.

Internationally, wider distribution of wealth was seen as a means of deterring the spread of Soviet-style socialism by incorporating some of the social safety net features of the socialist system into a market economy that nevertheless preserved most of the power base in capitalist and oligarchical hands.

Unfortunately, many of the wealthy and powerful may have seen these developments as temporary measures to avoid potential social disorder, and a means of fattening the cattle before milking, shearing and/or butchering. One of the earliest rollbacks was the income tax structure, which saw a decades-long decline in taxation of corporations and the wealthy, as well as features in the tax code that allowed many of the wealthy to dodge income taxes altogether.

Similarly, savings and loan institutions, designed to serve the financial needs of the middle class, became a means to exploit them, thanks to changes in chartering rules engineered by the lobbyists of the wealthy to profit from speculative trade in mortgage securities. The most egregious consequence of this was the crash of 2008, resulting in the greatest transfer of wealth in US history to the top 1% (or even 0.1%) in such a short time. By then the neighborhood savings and loan was a memory, having been devoured by investment bankers to satisfy (unsuccessfully) their insatiable appetites.

In the international dimension, another important development was the uncoupling of the US dollar from the gold standard in 1971. This ended the Bretton Woods agreement of 1944, and made the untethered dollar the standard, rendering its value equivalent to whatever purchasing power it might possess at any given time, and placing the United States in unprecedented control of international exchange.

A further instrument of postwar power was NATO, an ostensibly voluntary defensive alliance of nonsocialist western European and North American nations, to which the socialist countries reacted with their own Warsaw Pact. Both were voluntary to roughly the same imaginary degree, and justified each other’s existence. But both were also a means for the great powers of the US and the USSR to dominate the other members of their respective alliances. The defensive function of these alliances became obsolete with the dissolution of both the Soviet Union and the Warsaw Pact in 1991. NATO then became an offensive alliance, functioning to preserve, enhance and expand US hegemony and domination in the face of its descent into internal dysfunction and external predation.

These transfers of wealth and power, both domestically and internationally took place even as US industrial and manufacturing power waned. This was due not only to competition from the expected postwar recovery of powers destroyed during the war (as well as newly rising ones), but also to the unmanaged voracious appetites of US speculators and venture capitalists, who replaced vaunted US industrial capacity with cheap foreign (“offshore”) sources. This eventually converted the US from a major production economy to a largely consumer one. It also helped to transfer middle and lower class wealth from the American masses to its upper echelons, as well-paying union and other full-time jobs were replaced by menial minimum wage and part-time ones, or by unemployment, welfare and homelessness. The service industries, construction, entertainment, finance, military, government and agriculture usually remained relatively stronger than industry and export, but less so than during the 1950s, and were increasingly funded by expansion of the national debt, rather than a strong economic base.

Of course, concentration of wealth is commensurate with concentration of power, and although the wealthy always have greater political power than the less wealthy, the transition to an increasingly oligarchical US society got a major boost in 2010 with the Supreme Court decision Citizens United v. Federal Election Commission, which granted corporations and other associations unprecedented power to use their vast financial resources to control the outcome of elections. It was a bellwether: despite the fact that Supreme Court justices are unelected officials, it is hard to imagine such a decision taking place a half century earlier (during the Warren Court, for example), when popular power in the US (though never as great as proclaimed) was perhaps at its peak, and which was reflected in the composition of the court and its decisions in that era. Citizens United gave corporations and well financed interest groups virtually unlimited control over US domestic and international policy.

The coalescing of these trends has resulted in a power structure and decision-making procedure (or lack thereof) that accounts for the astonishing headlong rush toward Armageddon described in the introductory paragraph of this article. The US is currently considered the only remaining superpower, but what is the basis of that power? It is not industrial or economic power, which the US abandoned for the sake of short-term profits in “offshore” manufacturing, as previously stated.

It is not even military power, much of which has been invested in extremely expensive air and sea forces that are now becoming obsolete, as second and third tier powers like Russia and Iran develop cheaper mass drone architecture, untouchable hypersonic missiles and electronic systems that make traditional weaponry less relevant. An extreme example of such irrelevance can be seen in the strategies of Hamas and its Palestinian allies, armed largely with low-tech self-developed weapons designed to exploit the vulnerabilities of massively armed Israeli forces laying waste to the Palestinian population and infrastructure above ground, while the resistance forces remain relatively invulnerable below ground, and able to attack effectively and indefinitely from their hundreds of miles of deep reinforced tunnels.

Similarly, the irrelevance and obsolescence of US arms became evident in the Ukraine war, as the US, and indeed all of NATO, proved themselves incapable of manufacturing more than a fraction of the artillery, shells and armored vehicles that Russia produces, with a military budget hardly more than a tenth that of the US, much less the combined NATO budget.

The US aim in the Ukraine war was and is ostensibly to defeat Russia. But it will consider the war a success even if (as seems certain) this objective fails. This is because the more immediate US goal is to assure and reinforce the subjugation of the western NATO countries, as well to expand to the rest of Europe. In effect, the Ukraine war solves the problem perceived by US policymakers that the dissolution of the USSR removed much of the justification for a defensive alliance which was no longer facing a threat of the sort against which it was created to defend.

But that question was apparently raised mainly if at all by academics at the time, not diplomats. Perhaps a partial explanation was inertia: why change what seemed to be keeping both peace and prosperity (for its members)? The US also found missions for NATO from the Balkans to 9/11 response to West Asia to Afghanistan and North Africa. But all of these paled in comparison to its previous function of deterring the Soviet Union. In order to justify the continued existence of NATO, a new, similar threat was needed, not merely “police actions”. This was manufactured by the US, starting with expansion of NATO to eastern Europe, in violation of its promises in 1991 to the leadership of the dissolving Soviet Politburo not to expand “an inch beyond the eastern border of [East] Germany.” Poland, Hungary and the Czech Republic joined in 1999. Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia in 2004. In 2009, Albania and Croatia also joined, followed by Montenegro in 2017 and North Macedonia in 2020. Finland joined in 2023 followed by Sweden in 2024.

The purpose of the expansion, while giving the appearance of relevance, was not so much to respond to a perceived threat as to manufacture one, and Russia was selected to be the threat, despite the fact that it had posed no apparent strategic threat to NATO for more than two decades after the end of the Soviet Union. It even discussed the possibility of joining the Alliance. But the US had other intentions. Without a credible common threat, NATO might cease to be a defensive military alliance, with the eventual possibility of defections by members that no longer saw a significant benefit to their otherwise exorbitant and oppressive membership. Furthermore, many western European nations were finding common interests with Russia, most notably the Nordstream pipelines providing cheap, plentiful and reliable Russian natural gas to the European economies.

Obviously, this was intolerable for the US and its plan to dominate all of western and eastern Europe combined. Russia soon understood that the expansion of NATO was intended as a strategic threat to Russia’s security. As successor of, and inheritor to, the Soviet nuclear arsenal and its delivery systems, Russia could not afford to have NATO nuclear strike systems sitting on its doorstep any more than the US could accept nuclear missiles in Cuba in 1962. The US therefore chose to threaten Russia’s existence through Ukraine.

Ukraine was the perfect weapon to prod the Bear. It was poor and corrupt, and it had a substantial racist and ultranationalist anti-Russian Nazi and Fascist minority, with origins dating to collaboration with Nazi Germany. These elements hated Ukraine’s large ethnically and linguistically Russian population, who had a strong traditional link with Russia and its history, including Ukrainian cities founded by Russia. With well-placed undercover money, arms and expert CIA covert manipulation, a small but violent uprising, a coup d’état and civil war might turn Ukraine into a security threat to Russia that could be used to seal NATO under US control.

Under the stewardship of Hillary Clinton’s handmaiden, Victoria Nuland, laden with $5 billion (actually, with unlimited funds), this is exactly what happened in 2013-14. The newly installed Ukrainian coup government promptly began the repression of its ethnically Russian population, which mounted a resistance movement to defend itself, as intended by the US/NATO covert operators. Over the next eight years, the US funded, armed and trained its Ukrainian puppet, all the while amplifying the repression against the ethnic Russians, whose resistance groups Russia supported with arms and training. Negotiated agreements in 2014 and 2015 (the Minsk accords) to end the fighting were only partially and temporarily effective, and as German Chancellor Angela Merkel admitted in an interview with Die Zeit in 2022, they were only an attempt to gain time [to strengthen the Ukrainian military until they were ready to take on Russia].

That time was February, 2022, when – on cue from its US puppeteers – Ukraine escalated its attacks on its Russian minority in Lugansk and Donetsk oblasts (provinces), instantly raising the daily casualty toll from dozens to hundreds. As intended, this prompted Russia to intervene directly with a “Special Military Operation”, ostensibly limited mainly to ending the massacres and defending the population that was under attack, but also to driving Ukraine to the negotiating table.

It worked. At the end of March, the two countries reached a ceasefire agreement at negotiations in Istanbul, under the auspices of the Turkish government. But this was not what the US had in mind, so British Prime Minister Boris Johnson was promptly dispatched to Istanbul, to remind the Ukrainians that puppets are controlled by the hands of their masters. From then on, the war escalated until it engaged more than a million armed combatants and resulted in more than a half million casualties. And in case some NATO member might be tempted to explore reconciliation with Russia, the US destroyed the Nordstream pipelines, breaking a major foundation of Russia’s peaceful economic bonds with the rest of Europe, and with them much of Europe’s heretofore economic success, on the assumption that weaker partners are more dependable than strong ones (and constitute weaker economic competition, as well).

The US thus became the undisputed hegemon of Europe by means of a conventional proxy war with Russia. But their original plan included the defeat of Russia, as well, both militarily and economically, the latter by means of sanctions that would deny markets and world trade to the Russian economy. This part of the plan was a miserable failure, as Russia found prosperity in new markets, and invested in an astonishingly productive, innovative and efficient strategic defense industry, mainly at its robust defense complex in the Ural mountains. No matter. War, destruction and wanton slaughter had nevertheless proven to be effective strategies for European domination, even without defeating Russia. In addition, the US had shown that, despite its industrial limitations, it could impose its will through proxies bought, trained and supplied with its most powerful weapon, which it had in unlimited supply: the mighty US dollar.

I therefore return to the question of the basis of US power. What enables a country with a declining industrial base and stagnating military production, a shrinking working and middle class and an expanding homeless population to expend vast sums of money to hire and arm proxy fighting forces, purchase and develop foreign political parties, overthrow governments, maintain a military budget that is the equal of the next nine countries combined, and an intelligence budget that is larger than the entire defense budget of every other country except China and Russia?

Part of the answer is that the US increases its national debt by whatever amount it wishes, usually paying low but reliable rates of interest, depending on the market for US Treasury notes. Currently, the debt is roughly $35 trillion, more than the annual US GDP. The only other time in history that debt has exceeded GDP was in WWII, which hints at profligate borrowing. But the US is not worried about the size of the debt or about finding takers for its IOUs. As mentioned earlier, the dollar was uncoupled from the value of gold in 1971. The untethered dollar is therefore the basis for most currencies in the world. As a result, the  entire world is heavily invested in the dollar and in maintaining its value, and will buy US Treasury notes as needed to assure that it remains stable and valuable. This enables the US to outspend all other countries to maintain and augment its power throughout the globe. Some have accused the US of treating this system of funding as “the goose that lays the golden egg”.

Others have accused it of coercing or “shaking down” other countries to participate in this financing scheme or face unpleasant consequences. The same accusation has sometimes been leveled with respect to the purchase of US “protection services” and expensive military hardware as part of the NATO member “contributions” that bring US installations and personnel to those countries, and to other US satellite countries around the globe.

The other major basis of US power is the use of unlimited dollar resources to visit extreme violence, death, war and destruction upon countries and societies that do not accept subordinate status, or even those who do, but whose destruction may be seen as a necessary object lesson to those who might otherwise step out of line. This is a commitment to use totally disproportionate force with little or no effort at diplomatic efforts to reach strategic goals. The Israelis call this the “Dahiyeh Doctrine”, in reference to turning entire suburbs (“dahiyeh” in Arabic) or cities and their populations into smoldering ruins for the sake of intimidation. In the case of Ukraine, the US/NATO, has raised the stakes in the destructiveness of the weapons being used against Russia, as well as the choice of increasingly deeper targets inside Russia, while refusing negotiated diplomatic solutions. Threats to use low yield nuclear weapons have also been suggested.

This is, in effect, the insanity ploy, “We are unreasonable and capable of anything. Do what we say or accept terrible consequences.” It is the Armageddon strategy, “We are willing to go to any lengths.” It is the strategy of those who think they are invincible, and who demand complete obedience from, and dominance of, potential rivals. It is the strategy of those who think that they can do whatever they want without serious consequence to themselves. The direct origin of this strategy is the Wolfowitz Doctrine, first issued by Under Secretary of Defense Paul Wolfowitz in 1992, and submitted to his superior, Defense Secretary Dick Cheney. The basis of the doctrine is that any potential rival to US power must be destroyed or reduced to size.

Cheney and Wolfowitz are part of the neoconservative political movement that began during the Vietnam war. It is a movement of warmongers and autocrats who believe that the control of US foreign policy must be kept in the hands of “experts” (themselves) and out of the hands of elected officials who don’t support them. The dissolution of the Soviet Union was in their eyes a vindication of their influence in the Reagan and George H.W. Bush administrations, and their “success” led to the founding of the short-lived Project for a New American Century think tank during the latter part of the Clinton presidency.

The Project for a New American Century in turn became a springboard for neocon saturation of the George W. Bush administration in the major foreign policy arms of the government – the cabinet, the National Security Agency, the State Department, the intelligence services, and eventually the military. Since then, neoconservative control has only broadened and deepened in the U.S. To a large extent they are the unelected cabal that run US foreign policy and related agencies, with support from the interests that profit from war and exploitation, including weapons manufacturers, petroleum and mineral companies, and, of course, the similarly-minded Israel Lobby.

It is in these circles that arrogance knows no bounds, that no risk is too great, and that no amount of death and destruction is inconceivable, because you are not invited to participate unless you consider yourself too intelligent and powerful to make a mistake, and because Armageddon can only happen if you will it so.Facebook

Paul Larudee is a retired academic and current administrator of a nonprofit human rights and humanitarian aid organization. Read other articles by Paul.