Wednesday, March 23, 2022

Unchecked Power of Senior Bankers Is Exposed by China Crackdown

CRIMINAL CAPITALI$M WITH CHINESE CHARACTERISTICS

(Bloomberg) -- Bribery. Kickbacks. Cover-ups. For one week in January, Chinese state television devoted its prime-time slot to a series that detailed high-profile financial crimes by some of country’s most senior bankers. 

There was the former head of China’s largest policy bank, who accepted bribes to approve a $4.8 billion credit line to a conglomerate that failed shortly after. Another state-owned bank executive used carefully structured shadow firms to receive 10 million yuan in kickbacks for approving real-estate loans of more than 4 billion yuan to a single developer.

The multipart broadcast was framed as a celebration of Beijing’s long-running anti-corruption campaign, part of President Xi Jinping’s overall attempts to stabilize the economy ahead of a meeting that’s expected to award him a third term in office. But it also revealed how senior bankers have been allowed to operate with few checks and even less accountability, and connected their actions with massive credit defaults and other market instability.

The recent investigation into 25 entities marks the first systematic review of the financial sector since 2015, and last month, when it concluded, the nation’s top disciplinary watchdog sharply criticized financial institutions and regulators for prominent corruption and insufficient risk monitoring – problems it said were “common.” 

More than 20 finance industry officials have been punished or probed since the investigation began; over the past few years, lax governance has contributed to estimated losses of hundreds of billions of yuan.  

Without intervention, China’s financial sector could become “a runaway elephant in a china shop,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. “Deep down, people still lack this awareness that essentially, corporate governance serves to cut the risk of decision making, by checking and balancing all parties.”

Listed firms are required to implement modern corporate governance structures, but China’s standards are often lower than those in developed markets. In the U.S., for example, independent directors make up about 80% of the board, on average. Most Chinese companies only meet the minimum requirement of one-third independent directors, a “lack of oversight that ultimately allows for poor operational and financial controls,” said Rob Du Boff, a Bloomberg Intelligence analyst specializes in ESG.

The collapse of China Huarong Asset Management Co. is one of the best-known cases where traditional governance mechanisms failed. Former chairman Lai Xiaomin was also the head of the internal party committee and the company’s legal representative. The company’s party discipline chief reported to him. “It was difficult for him to supervise me, to be honest,” Lai said in 2020. 

Without any meaningful oversight, Lai drove Huarong to aggressive expansion. Eventually, the firm posted a record loss that led to a $6.6 billion state-orchestrated bailout, and Lai was executed for bribery and other crimes.

But there have also been smaller examples. Hu Huaibang, the former chairman of China Development Bank, took some 85.5 million yuan in bribes over a decade through 2019. In exchange, he facilitated loans that included $4.8 billion to the now failed conglomerate CEFC China Energy Co., even though China had called for the policy bank to cut its exposure to such commercial projects.

His motivation was basic: “As a senior executive in the finance sector, you get to make contact with people with relatively high classes and they own private jets and everything,” he said in the state-sponsored docuseries. “That’s when I felt the unfairness and became weak-minded and slipped into the abyss.”

Senior leaders at Chinese financial institutions, especially state-owned ones, hold official government titles and earn government-limited salaries. The chairmen of China’s largest state-owned banks each earn about $120,000 a year – less than 1% of what their U.S. counterparts made in 2020. 

The former governor of China Citic Bank Corp., Sun Deshun, often neglected the bank’s internal credit approval board and intervened directly to facilitate loans for developers in exchange for bribes. Investigators found he used more than a dozen shadow firms, managed by his two surrogates, for bribes disguised as financial products and equity investments.

In early 2020, the banking regulator levied a 22 million yuan fine on Citic Bank for 19 violations, of which 13 were linked to the property sector. Later that year, Sun was expelled from the Communist Party, arrested for alleged bribery among other violations, and prosecuted.

But regulators were also susceptible. A former deputy chairman of China’s banking regulator, Cai Esheng, used his personal influence to facilitate loans and projects in exchange for cash, banquets, travel and other gifts. 

In the case of Baoshang Bank Co., at least five officials including the former head of the Inner Mongolian banking watchdog took hundreds of millions of yuan in bribes to make way for its “wild expansion and illegal operations” that eventually led to its collapse and China’s first bank seizure in more than 20 years. 

These kinds of investigations are common across sectors in China, where the government intends them to both deter bad behavior and reassure investors, said Oliver Rui, a professor of finance at China Europe International Business School in Shanghai. 

“It takes some time to fully develop governance mechanisms,” he said. “The current systems in the U.S. were also built gradually. I like to say -- in Chinese terms -- let the bullet fly for a while.” 

Meanwhile, officials have introduced measures designed to prevent future corruption. Last year, authorities issued guidelines targeting bribers and have pledged to step up internal controls to keep regulators in line. The government has also strengthened Communist Party control over management decisions at state-owned banks. The central bank and the banking and securities regulators have vowed to correct their wrongdoings and to enhance financial regulation. 

The prime-time series and the high-profile media coverage of the latest anti-corruption efforts may also offer a wake-up call. “A lot of people working at the institutions don’t even truly understand corporate governance, let alone retail investors,” Chanson & Co.’s Shen said.

©2022 Bloomberg L.P.


Evergrande Investors Left Baffled by $2.1

Billion in Seized Cash

(Bloomberg) -- Investors in China Evergrande Group are still in the dark over just how $2.1 billion of deposits at its property-services unit came to be used as security for pledge guarantees and seized by banks. 

In a call with investors late Tuesday, the developer’s officials reiterated comments from earlier filings that they were investigating the matter without sharing fresh details, according to people who attended and asked not to be identified. The third-party pledge guarantee wipes out most of Evergrande Property Services Group Ltd.’s cash holdings. 

“It’s peculiar because investors expect Evergrande management should be aware of where the cash went rather than instead setting up an investigation committee to find out,” said Bloomberg Intelligence analyst Andrew Chan. 

While the 13.4 billion yuan ($2.1 billion) in seized cash is small in the context of the broader restructuring, it raises questions over the reliability of the financial accounts of the services unit “if the group plans to sell it at a good price to achieve maximum recovery for creditors,” Chan said.

Representatives for Evergrande didn’t immediately respond to a request for comment about the call.

Evergrande creditors are keeping a close eye on the beleaguered developer as it embarks on a debt restructuring that’s likely to be among China’s largest and most complex. Worries over transparency have surfaced repeatedly as Chinese developers struggle to cope with a credit crunch that’s swept the sector as Beijing clamps down on excessive borrowing. 

©2022 Bloomberg L.P.


Tencent Share Buyback Speculation Grows After Alibaba, Xiaomi

(Bloomberg) -- Share buybacks are emerging as the hottest trend among Chinese tech giants and industry leader Tencent Holdings Ltd. may be the next to jump on the bandwagon.

The online gaming giant climbed as much as 3.1% in Hong Kong on Wednesday, just before it’s expected to announce its slowest profit growth ever. Investors are betting that the company will follow in the footsteps of Alibaba Group Holding Ltd. and Xiaomi Corp., which both announced massive buybacks after their earnings, with the moves fueling a rally in their shares. 

The improving sentiment in tech stocks reflects broader hopes that China’s crackdown on the sector is coming to an end after the government pledged greater support for the economy and capital markets. But, a recovery remains dependent on concrete action from the authorities, and Morgan Stanley’s equity strategists warn that it’s too early to be optimistic.

“Alibaba and Xiaomi have probably kick-started shareholders’ focus on buybacks after a horrendous performance in share prices in the last year,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “Tougher restrictions on investing in other firms, coupled with a strong balance sheet and good cash flow should motivate Tencent to do a share buyback like the others.”

An 18% surge in Alibaba’s stock since Tuesday indicates that share buybacks have become a more rewarding strategy for Chinese tech giants, after valuations slumped to near record lows and regulatory fears eased. Still, the scale of repurchases is small compared to megacaps in the U.S., which have bought back more than $20 billion worth of stock in each of the recent quarters. 

“In consideration of cash usage, shareholder returns may now become a priority over something, say like the M&A back in the past,” said Vey-Sern Ling, senior analyst at Union Bancaire Privee.

Tencent boosted its dividend payout, including offering JD.Com Inc. shares, in order to lure investors. But, those moves have failed to reverse a downtrend in its stock. This year, Tencent overtook Alibaba to become the biggest loser in China’s tech rout after it shed about $450 billion in market value since last February. 

Tencent certainly has the financial resources for a buyback. The company held about $40 billion in cash and short-term instruments on its balance sheet at the end of September, a figure that may well have increased when it reports the December quarter results.

The company’s business is under pressure with revenue growth projected to fall to its slowest pace on record when it reports earnings later Wednesday. Tencent’s games business has been handicapped by Beijing’s freeze on new titles, while its online advertising business is expected to have contracted for the first time on record in the fourth quarter.

Still, many analysts see opportunity in a buyback after Tencent plunged during Beijing’s crackdown, at one point shedding more than $500 billion in market value. Even after their recent rally, the shares trade at about 16 times earnings compared with Baidu Inc.’s 32 times and Twitter Inc.’s multiple of more than 100.

(Adds background in last three paragraphs)

©2022 Bloomberg L.P.

California Enacts Law to Remove Out-of-Pocket Abortion Costs

(Bloomberg) -- California Governor Gavin Newsom signed legislation Tuesday to eliminate out-of-pocket expenses for abortions, making the procedure more accessible as a growing number of states tighten similar laws. 

Called the Abortion Accessibility Act, the legislation will stop health insurers from imposing co-pays and deductibles for abortions, making California one of six states that require coverage of such services, according to a statement from Newsom’s office.

The Democratic governor said he’s taking an opposing approach to the states that “attempt to move us backwards,” adding that the law will bring “equitable, affordable access to abortion services.”

Last year, Texas Governor Greg Abbott signed legislation that banned abortion after a fetal heartbeat is detected, which can occur as early as six weeks. Under the law, individuals can sue doctors, clinic workers and others who help a woman end an unwanted pregnancy past the cutoff date. Texas and some other states have also sought to restrict medication-induced abortions.

Earlier in the day, abortion rights emerged as an issue at the confirmation hearing for Ketanji Brown Jackson, who told the Senate Judiciary Committee considering her nomination to the Supreme Court that Roe v. Wade is settled law on abortion rights. 

The comment was in response to a question from California Senator Dianne Feinstein as the court considers overturning the landmark Roe v. Wade decision and letting states outlaw abortion.

A group of more than 40 abortion providers and advocacy organizations have recommended the Golden state expand its ability to provide services to out-of-state residents if Roe v. Wade is overturned.

US Sending Soviet-Made Air Defense Systems to Ukraine: Report


SA-8 air defense system. Image: Vasily Maximov/AFP/Getty Images

 MARCH 22, 2022

The US is sending “secretly acquired” Soviet-made short-range air defense equipment to Ukraine to help it protect against Russian air attacks, The Wall Street Journal revealed.

The outlet added that the US acquired the systems decades ago to examine their technology and train American forces on them, citing an unnamed American official. The Pentagon has declined to comment on the reported development.

According to the outlet, the SA-8 — Russian name 9K33 Osa — is one of the Soviet-made systems being sent to Ukraine.

The mobile SA-8 has a range of 30 kilometers (19 miles) and a top speed of 80 kilometers (50 miles) per hour on land and 8 kilometers (5 miles) per hour on the water.
US Arms Package

The SA-8 will be an upgrade on the already supplied Stinger air-defense missile system to the country that can take down helicopters and low flying aircraft at an altitude of up to 4.8 kilometers (3 miles).

The development comes a week after US President Joe Biden announced a $1 billion security package to assist Ukraine, including “800 Stinger anti-aircraft systems, 9,000 anti-tank weapons, 7,000 light weapons, and 20 million rounds of ammunition.” The arms aid package also includes 100 Switchblade drones.

Biden added that the US would help the country acquire “additional longer-range anti-aircraft systems.”

The Soviet-made systems would be easier to handle for the Ukrainian forces due to their familiarity with such systems. The Ukrainian military already possesses some of the Soviet-made air defense systems such as the S-300. The outlet, however, ruled out sending the S-300 to the besieged country.
To Establish de Facto ‘No-Fly Zone’

The fresh infusion of air defense systems to Ukraine is reportedly geared towards helping the country establish a de facto “no-fly zone” over its airspace.

Ukrainian President Volodymyr Zelensky has repeatedly requested a no-fly zone only to be rebuffed by the US and NATO, fearing that it might pit them directly against the Russians.

The US has also not decided yet on Slovakia’s proposal of sending its S-300 to Ukraine if Washington provides a replacement.

Meanwhile, Biden will attend a NATO summit this week in Brussels to discuss “ongoing deterrence and defense efforts” for Ukraine.

 

With Biden’s Support, Saudi Arabia Escalates Its War of Aggression in Yemen

The US-backed war on Yemen started seven years ago this week, and after all this time US policy is practically unchanged. The coalition bombing campaign has picked up again in recent months with 700 airstrikes in February alone, and according to the Yemen Data Project the bombing has been more intense during this period than at any point since 2018. 1,500 civilians have been killed or wounded in these attacks. Despite being far more destructive and killing many more people, including 91 people in a migrant detention center, these airstrikes have received no criticism from the US.

Instead of withholding military assistance from Saudi Arabia and the United Arab Emirates (UAE) as it should have done, the Biden administration has been rushing more jets, ships, and air defense interceptors to the governments that have been brutalizing the people of Yemen directly and through their armed proxies. The US also backed a one-sided UN Security Council resolution that named the Houthis as a terrorist group while ignoring the many atrocities committed by the coalition governments and their proxies. While the US condemns aggression in Ukraine, it continues to support it in Yemen.

Yemen’s humanitarian crisis continues to worsen because far too little has been done to halt the slide towards catastrophe. The UN has warned again that famine is spreading in the country. According to their estimate, there will be 161,000 people in famine conditions this year, and that figure is five times larger than it has been in the past. The World Food Program’s David Beasley commented on the projection, "These harrowing figures confirm that we are on a countdown to catastrophe in Yemen and we are almost out of time to avoid it."

Two days after he said that, the UN aid drive for Yemen came up with a paltry $1.3 billion in donations, far short of the $4.27 billion that they were requesting. Saudi Arabia and the UAE have donated to these drives in the past to distract from their responsibility for the crisis, but this year they gave nothing. Yemen desperately needs more resources to stave off the worst-case scenario of widespread starvation, but more than that it needs an urgent effort to halt the fighting and lift the blockade. Even when there were no other major crises in the world, Yemen’s plight was badly neglected, and now it is being almost completely ignored.

To make matters worse, the war in Ukraine threatens to drive food prices much higher. In countries where tens of millions are already severely food insecure, including Yemen and Afghanistan, the effects of food shortages and rising global food prices will hit hardest. Yemen and Afghanistan were already facing some of the worst man-made famines before this because of economic warfare being waged against them, and this makes mass starvation even more likely.

Saudi Arabia and the UAE assume that they can extract more support from the US on account of higher energy prices, and the Biden administration has given them every reason to think that this will work. The US put no real pressure on either government over the last year, and Biden has signaled to these clients that he will give them practically anything they want. As usual, letting client states get away with murder just encourages them to make more demands and complain that they are being abandoned if they are not immediately satisfied. This is what comes of Biden’s so-called "back to basics" approach to the region, where the US remains deeply complicit in the crimes of its clients without using any of its leverage to get cooperation from them.

The war on Yemen is undoubtedly a war of aggression, but because it is waged by US client states with US backing it is not widely condemned in the same way as Russia’s illegal invasion of Ukraine. The only real difference between the two is that the Saudi coalition dresses up their aggression by claiming to be seeking to restore a deposed dictator as president, but that is a pitiful fig leaf for an unprovoked attack on a neighboring country. It certainly cannot justify the many thousands of airstrikes that have battered Yemen’s cities and villages and killed and injured tens of thousands of civilians. The people of Yemen have borne the brunt of the war for seven years, and they have done so mostly without the rest of the world paying them much attention.

The US has a special responsibility to bring this conflict to an end because our government has done so much to fuel and enable it, and time is of the essence in averting a major famine that this US-supported war is creating. The Biden administration has proven that it isn’t going to make more than a token effort on its own. It falls to the public and members of Congress to insist that the US use all the leverage that it has with these states to put a stop to this indefensible war.

Daniel Larison is a contributing editor and weekly columnist for Antiwar.com and maintains his own site at Eunomia. He is former senior editor at The American Conservative. He has been published in the New York Times Book Review, Dallas Morning News, World Politics Review, Politico Magazine, Orthodox Life, Front Porch Republic, The American Scene, and Culture11, and was a columnist for The Week. He holds a PhD in history from the University of Chicago, and resides in Lancaster, PA. Follow him on Twitter.

Peace or Punishment in Ukraine? US Should Seek To End the Conflict

The Russo-Ukrainian war continues. Moscow’s progress is slow, with its ability to maintain its offensive uncertain. Russia’s forces look inadequate to conquer and occupy the entire country.

However, the surprisingly effective Ukrainian resistance is but a negative achievement, limiting the casualties inflicted and damage wreaked. With millions of refugees in flight, major cities occupied or surrounded, territory captured, and life disrupted, the Ukrainian people are suffering greatly despite their relative success.

Of course, the conflict remains early. Decisive outcomes are still possible. The Russian armed forces might regroup, harness their great firepower, and manage a large-scale breakthrough. On the other hand, inadequate replacements, poor logistics, and deteriorating morale might enfeeble Russian units, inflating desertions and losses and forcing withdrawal.

However, as long as Moscow’s forces outnumber and out-muscle those of Kyiv, though without the significant margin normally necessary for rapid offensive operations, a deadlock or ponderous Russian advance looks more likely. With a conflict that seems ever more purposeless, both sides will lose the longer the fighting continues. The only solution is an end to combat and negotiated settlement.

Both sides should make such an outcome their top priority. Although the temptation might be to go for broke, the price of failure would be great.

For instance, a stalemate or even slow-motion Russian advance threatens more than failure for Moscow. Irregular resistance is likely to rise over time, bleeding Russia’s armed forces. Much of Moscow’s effective forces have been committed, logistics will remain difficult, a continuing stream of casualties will create discontent at home, and harsh Western sanctions will inhibit military resupply. Even victory isn’t likely to seem like one to the long-suffering Russian people. President Vladimir Putin’s own political future might grow uncertain: his regime, like that of Romania’s Nicolae Ceausescu, looks solid today, but his chief lieutenants might eventually fear going down with him.

Ukraine is no less at risk. A slow and intermittent Russian advance would leave a sizable and increasing amount of territory occupied, several major cities threatened by bombardment and with capture, economy and society disrupted, millions of people displaced, dependence on other nations for military and financial support, and persistent possibility of battlefield defeat. Moscow could effectively disable the Ukrainian state without fully occupying the country. The remainder would be but a shadow of its former self.

Kyiv’s hope to use insurgent attacks to break Moscow’s will to fight might ultimately succeed, but at horrific cost. Afghanistan went through nearly a half century of foreign invasion, domestic insurgency, and civil war. The chief victims were the Afghan people. Ukraine does not want to suffer through a similar experience, with a distant, difficult recovery ahead.

Moreover, the longer the conflict runs, the greater the damage that will be inflicted and the more difficult it will be to settle without a definitive result. Anger, bitterness, and hatred will only increase, encouraging both sides to demand more out of the conflict.

Nor will extended combat radicalize only the combatants. Even more likely will those involved vicariously press for a decisive outcome. Indeed, allied involvement was driven by an unusual degree by public outrage, social media, and raw emotion. People who pay no attention to brutal aggression and mass killing backed by the West, such as Yemen, are organizing boycotts of Russian athletes, conductors, singers, goods, and music. These fair-weather foreign policy enthusiasts might be more likely to demand punishment than peace. Bankrupt Moscow, oust Putin, arrest war criminals, and reorder Russia.

Strategist Tanner Greer warned that "The maximalist language emanating from some Western capitals is a natural, if unwise, response to this sort of atrocity." Exhibiting precisely this characteristic is David Rothkopf, variously government official, journalist, and academic, who tweeted: "To those who have called for an ‘off-ramp’ for Putin, I have just one question. Don’t you feel ashamed of yourselves?" It would be better to ask that question of policymakers who recklessly expanded NATO and shamelessly lied to Kyiv about bringing it into the alliance, doing so much to cause today’s war. And who today cheer on Ukrainians from a safe distance, watching them die and their country suffer.

Although Kyiv has gloried in its ability rally much of the global community to its side, it should remember the clear limits to the West’s commitment. The US and its allies spent 14 years promising Ukraine membership in NATO, but never delivered. This refusal to make a deal with Moscow encouraged Ukraine to stand firm. Now Ukrainians are paying a high price for a war that was preventable. Kyiv should beware a reprise, with Western opposition to a deal that could deliver peace, stability, and reconstruction. The allies appear perfectly prepared to spend months or even years applauding as Ukraine suffers through conflict and division.

American and European support for peace is critical. Russia might refuse to end the war unless the allies agree to lift sanctions. The latter might see doing so as allowing Moscow to profit from unprovoked aggression. Although this would be deeply dissatisfying to many, it also would be the best policy – for Ukrainians in the first instance, as well as the rest of us.

Warned Greer: "Refusal to settle on the part of the Ukrainians or their Western backers will likely lead the Russians to commit to the permanent occupation of the territory they’ve taken. This is the most probable outcome of any policy predicated on inflexible Western ultimatums. In this scenario, sanctions would stay in place for decades. A new iron curtain would fall across Europe, separating Belarus, Russia and occupied Ukraine from the West."

The costs and risks of the West from this course would also be significant. The US and allies would need to provide long-term military and economic support for Ukraine. The global economic impact of a permanent sanctions regime would only increase. So long as the Ukrainian conflict burns it could expand, intentionally or inadvertently, to the US and NATO. A desperate Russia could turn the conflict nuclear. We tried punishing the defeated in World War I, and it turned out very badly. Creating a new Cold War and Iron Curtain would mean a much more dangerous European security environment. Pressure would increase on the US to revert to a garrison state to fortify both Europe and Asia.

Ukrainians need the war to stop. So do the Russians. The earlier combat is halted the better the chance to negotiate a reasonable settlement. Both sides will have to give. Moscow still has legitimate security needs which, if left unsatisfied, could trigger a future conflict. Afterward Russia should be welcomed back into polite company. Sanctions hurt the West as well as Moscow. Moreover, punishing the Russian people for the crimes of their rulers risks inflaming nationalism and pushing them closer to their government. There is better hope for a post-Putin era if Russo-Western contacts are revived.

Although Russia is directly responsible for its invasion of Ukraine, Washington, and Europe bear significant blame for the current conflict. After the Soviet Union collapsed the West gloried in Russian weakness and ruthlessly dismissed its security interests. The West also misled Ukraine into thinking that it would find NATO at the end of the rainbow. The result is now a bitter conventional war in Europe, with manifold global ramifications. Those dying on both sides are doing so in part because of US recklessness and hubris.

It is in the interests of all parties to halt the conflict. Kyiv and Moscow will need to compromise. Washington and its allies should use their considerable clout to push peace. Much depends on the outcome. For once American policymakers should insist that failure is not an option when it comes to restoring peace rather than making war.

Doug Bandow is a Senior Fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is author of Foreign Follies: America’s New Global Empire.

Antiwar.com

Children Pay the Price of American Sanctions

With Russia’s invasion of Ukraine, calls have rung out from every corner of the U.S. foreign policy establishment for measures to be taken in retaliation against Russia’s aggression. The initial response made by the United States was little surprise to anyone: the announcement of sanctions against Russia. In the modern age, sanctions have become the go-to tool to use against rogue states who find themselves on the wrong end of the American-led geopolitical world order. Hit their country with sanctions, and then hope that the economic pain forces them to reconsider their course of action. That’ll show em!

Sanctions are, more than anything else at this point, a mindless knee-jerk reaction. They have become so commonplace that questions surrounding their efficiency or morality aren’t even asked, much less answered. It is taken as a given that in all geopolitical crises, the United States must do something. War is messy, but sanctions are easy and cheap! They don’t require any active effort, they make a strong statement, and looks good on the news. After all, we can’t just sit back and do nothing!

Despite this popular perception, sanctions have massive repercussions on the lives of ordinary people that just so happen to be living under the "wrong government". In theory, they are aimed at governments. In practice, they always end up hitting the people. When countries are cut off from international trade, they lose access to imports of goods they are dependent upon. This leads to shortages, high prices, recessions, and an abundance of difficult choices for the domestic population. These economic disturbances are not just a mild inconvenience, but malicious and destructive to all aspects of their lives.

A few case studies can sharply illustrate the real and tangible impact of sanctions:

Cuba

Ever since Cuba’s Communist revolution in 1959, the relationship between it and the United States has been tumultuous, to say the least. When the US backed Batista government was overthrown, the prospect of a communist country just miles off the coast of the US mainland during the spooked many US lawmakers. The result was the 1961 Foreign Assistance Act, which forbid any form of assistance to communist countries and imposed a total embargo on Cuba.

Because of plentiful assistance from the Soviet Union, Cuba’s economy was able to withstand the economic pressure from the US for several decades, experiencing roughly 2% growth per year. However, when the Soviet bloc collapsed, so too did Cuba’s economy. The American Journal of Public Health found that post-1989 the value of Cuba’s imports, which its economy was heavily dependent upon, decreased from $8 billion to $1.7 billion. To make matters worse, the US embargo was tightened in Cuban Democracy Act of 1992 through further restrictions on other nation’s trade with Cuba.

The first several years of the 1990s were turbulent for the Cuban economy. In a 2001 study by the US Trade Commission, they found that by 1994, Cuba’s real GDP had dropped by 40% from 1989, and agricultural production had decreased by 54%. The aforementioned American Journal of Public Health recorded that during the 1980s, half of all protein and calories for human consumption were imported into the country. From 1989 to 1993, imports of these foodstuffs declined by half. As a consequence, protein and caloric availability dropped by 25% and 18% respectively. Much of the imports coming into Cuba that were lost were medical and health related. The loss of these goods led directly to an increase in mortality in the Cuban population aged 65 and older by 15%. Cases of tuberculosis in the population increased threefold, deaths to infection and parasites increased by 67%, and deaths due to influence increased by 77%.

Through a series of reforms and moderation of communist economic policies, Cuba’s economy managed to recover by the end of the decade. Even so, the country remains relatively poor. It boasts a GDP per capita of $9,099, roughly one-seventh of the United States. The Biden administration is yet to lift any major sanctions from Cuba, signaling no change from the last 60 years of economic pressure on the country. For the foreseeable future, the US will continue to keep its thumb on Cuba.

Iraq

During the same period that Cuba was experiencing the worst of its economic woes, another country on the wrong end of the United States’ ire was also suffering under onerous sanctions: Iraq. When Saddam Hussein invaded Kuwait in 1990, the United States led a coalition into Kuwait against the Iraqi army in what would come to be known as First Gulf War, or Operation Desert Storm. The Iraqi army was soundly defeated, Kuwait was liberated, and it all looked good on camera to boot. After the war, heavy sanctions were placed on Iraq with the hope of regime change against Hussein to remove him for good.

During the war, the country of Iraq itself had been subject to US air attacks, which crippled the civilian infrastructure within the economy. In a report from The New England Journal of Medicine, only two of the Iraq’s twenty electricity-generation plants were still operational by the end of the war. This lack of electricity had a spiraling effect on the rest of the country. Water purification plants, which required electricity to operate, ground to a halt. Sewage systems throughout the country were also paralyzed. Much of this damage was irreparable, and what could be repaired would take months and years.

The damage done to Iraq, in addition to the burdensome sanctions levied against the country, led directly into a humanitarian crisis. The World Health Organization, or WHO, conducted a study in 1996 which contained horrifying revelations as to the conditions on the ground within the country. Food shortages were rampant, with the country only receiving 25% of the needed red meat and poultry, 40% of cereals, 10% of fish, and 10% of sugar. Overall availability of calories decreased by 65%. They designated the diet of the Iraqi general population as being "semi-starvation".

This lack of sufficient nutrition greatly impacted health and well-being, especially in children. The WHO cites internal research done in 1995 that found 28% of children in Baghdad had stunted growth, 29% were underweight, and 12 were wasting. Given that these were the conditions in the capital city, we can surmise the situation was even more dire in the outside provinces. In total, the mortality rate for children increased sixfold over the pre-war period. Diseases, such as Typhoid, Cholera, and Malaria, were all at epidemic proportions, diseases to which children were particularly vulnerable.

Nobody is quite sure how many people were killed as a result of the sanctions. An infamous report from the UN in 1995 claimed that 500,000 children had been killed, which led to an even-more infamous moment in a "60 Minutes" interview, but this number has been called into question. The number of children killed is still certainly somewhere in the hundreds of thousands, with a conservative estimate being around 300,000 children killed.

US sanctions on Iraq persisted until the invasion of the country in 2003, at which point the Iraqi people had to endure eight long years of conflict and civil war that had been foisted upon their country. It was only several years after the American withdrawal in 2011 that ISIS invaded and occupied parts of Northern Iraq, which required several more years of war to expel them fully from the country. Only now, decades later, Iraq has the chance to begin to rebuild after decades of turmoil and despair.

Venezuela

In 1998, Hugo Chavez was elected as the president of Venezuela on a nationalist and socialist platform. In the following years, he implemented a litany of economic and political reforms with the goals of redistributing wealth, alleviating poverty, and nationalizing many areas of industry. The first sanctions placed by the United States on the country was in 2006, under the pretense of a failure to comply with the US’ anti-terrorism efforts. These first sanctions were relatively minor, but would be far from the last imposed upon the country.

Venezuela’s economy was and is largely based off of exporting oil. As long as the price of oil was relatively high, the government had plenty of money for its social programs. However, beginning in mid-2014 the price of oil began to decline, which led to an economic crisis. As Venezuela’s economy crashed, sanctions upon the country ramped up. In 2014, Congress passed the "Venezuela Defense of Human Rights and Society Act of 2014", which levied sanctions on specific individuals within the Maduro government. The Trump administration took a very hard line towards Venezuela, casting new rounds of sanctions in 2017, twice in 2018, 2019, and 2020.

The combination of Venezuela’s collapsing economy and sanctions pushed the country into economic freefall. One of the most visible symptoms has been hyperinflation, which has thoroughly destroyed the value of the Bolivar. As of this writing (March 2022), one US Dollar is worth over 428,000 Bolivars. In 2014, one Dollar was equal to roughly 6 Bolivars. The worst year of inflation was 2018, where inflation was over 65,000% annually.

The crisis is far more widespread than just in the monetary realm, however. GDP per capita has plummeted by 87% over the decade from 2011-2021. Venezuela relies heavily on imported food products, with roughly 75% of its foodstuffs being imported into the country. The available of these goods has dropped precipitously, as imports into the country had dropped by 82% over 2010-2020. This has all resulted in massive shortages of essential goods for the Venezuelan people. The Food Security Information Network (FSIN) reports that one-third of the population was food insecure, meaning they were unable to meet their caloric needs on their own. 60% were moderately food secure, meaning they could afford food as long as they went without other basic necessities. The rise in prices for goods was also accompanied by a drop in incomes: 37% responded to a FSIN survey stating that they had lost all of their income in the economic collapse, and 51% had lost a portion of their income.

The health of the Venezuelan people has diminished greatly in conjunction with the economic crisis. A study conducted by three Venezuelan universities that found an overall 31% increase in total mortality from 2017 to 2018 alone. Essential medicines were available at only 15% of the required stocks. Children have been greatly affected as well, with a UN study finding that 22% of children under five are experiencing stunted growth.

Venezuela’s economy as continued to decline year-after-year, and is showing no signs of halting its impoverishing decline. The Biden administration has shown no signs of easing any of the sanctions placed by the Trump regime, indicating that little chance for respite for the Venezuelan people. The principal question at this juncture is how long the collapse can continue, and how much more suffering the Venezuelan people can endure.

Conclusions

While only a small sampling, these instances show the consequences that sanctions bring. While not often seen, acknowledged, or felt by the imposers, they hurt and affect real people. Even if they aren’t intended to hurt innocent civilians, their effects are clear, regardless of the stated intentions. Will Russia suffer the same dismal fate as Cuba, Venezuela, or Iraq? Likely not, but a squeeze upon the Russian people will be felt all the same. Sanctions are often thought of as merely an ordinary and insignificant piece in the game of foreign-policy. On the contrary, sanctions are a form of war; specifically, economic war. Every war has sacrifice, and in an economic war it will be the people, not the government, soldiers, or oligarchs, who will ultimately pay the price.

J.W. Rich is an economics student in Charlotte, North Carolina. His interests are in economic theory and the history of economic thought. His work can be found on his blog at thejwrich.medium.com.

Antiwar.com

 

Social Media Giants Allow Hate Speech Against Russia but Silence Israel’s Critics

Silicon Valley's decision to allow anti-Russia threats reveals it as little more than a propaganda arm of the West

 Posted on

Silicon Valley has rammed through a series of changes over the past few days at dizzying speed, making explicit what should already have been obvious: Social media firms have rapidly become little more than propaganda arms of the United States and its allies.

That role has been increasingly difficult to conceal as western politicians and traditional media outlets have whipped up anti-Russia hysteria over the past three weeks, following Russia’s invasion of Ukraine.

The most blatant change was a sharp about-turn by Facebook in its policy on hate speech and incitement. Leaked emails to content moderators seen last week by Reuters indicated that Meta, the rebranded company behind Facebook, Instagram and WhatsApp, would allow threats of violence against Russians and death threats directed at Russian President Vladimir Putin on its platforms.

Such threats were, according to the guidance, permitted among users in much of eastern Europe and Russia. But whatever the official position, Meta’s new policy is likely to have a wider impact, given how widespread anti-Russia sentiment has become in the West.

In what was presented as a “clarification” this week, Meta’s president of global affairs, Nick Clegg, a former UK party leader, said calls to assassinate Putin or “violence against Russians in general” would not be condoned. He appeared to narrow calls for violence more specifically to the Russian state and its conscript soldiers in Ukraine.

For years, social media firms have highlighted the importance of cracking down on hate speech and incitement. It was the justification for an unprecedented decision by tech giants to ban Donald Trump from their platforms in early 2021, even though he was a sitting US president.

Now the policy against hate speech and incitement is being watered down for one group only. An exemption for calls for violence towards Russians is likely to further fuel an already tangible Russophobic atmosphere, where even renowned, long-dead cultural icons such as Tchaikovsky and Dostoyevsky are being shunned.

In a related, equally stark policy change, Meta announced it would overturn an existing ban on praise for the Azov Battalion, the most prominent of several Ukrainian neo-Nazi paramilitary groups absorbed into the Ukrainian National Guard. Ultra-nationalists, the Azov fighters have been accused of directing violence at Ukraine’s ethnic Russian community.

Double standards

Silicon Valley’s rank hypocrisy in allowing hate speech against Russia and Russians is particularly evident when compared with the special protections put in place by tech firms to block criticism of Israel and Israelis.

If Meta’s new policy for Ukraine were to be applied impartially, would Palestinians then be allowed to promote violence against Israel and against Israeli soldiers that have been occupying and besieging them for decades?

Unlike Russia’s invasion of Ukraine, which is three weeks old, Israel has been violently occupying and besieging Palestinians in Gaza, the West Bank and East Jerusalem for more than half a century. Israel has also been committing war crimes by transferring hundreds of thousands of its Jewish citizens into territory belonging to Palestinians, in an effort to colonize their land and ethnically cleanse them.

Israel’s blockade of Gaza for the past 15 years has entailed putting its two million inhabitants on a “starvation diet” and repeatedly bombing the tiny enclave “back to the Stone Age“, including attacks on schools and hospitals.

Palestinians and their supporters have every reason to condemn Israel and its leaders as passionately and vehemently as Ukrainians and their supporters are denouncing Putin and Russia for the current invasion. So why does one group have the right to incite violence and hatred, while the other doesn’t?

In practice, Israel has long been shielded by an array of restrictions for social media users. Posts risk being deleted if they fall foul of rules against fake news, disinformation, offensive content, bullying, support for terrorism, hate speech and incitement. But supposed violations often appear unrelated to matters of truth or falsehood, or right or wrong – and instead accord with Israel’s status as a valued client state of the US.

Hate speech rules

The only meaningful difference between the two cases – aside from the fact that one set of abuses has been going on far longer – is that Israel’s crimes are largely supported by the western political and media establishments.

Calling for violence against Putin and Russians aids western foreign policy, which has been goading Moscow by expanding NATO to Russia’s doorstep for more than two decades. By contrast, calls for violence in the context of Israel risk highlighting the West’s long-running complicity in Israel’s crimes.

But the tech giants’ hypocrisy is even more glaring. It is not just that threats against Israelis or Israeli leaders – unlike those against Russians – incur an instant ban from any platform on which they are posted. The truth is that, in the case of Israel and Palestine, simple criticism of Israel – or even pride in being a Palestinian – can lead to a suspension or deletion.

Take the decision in 2020 by Instagram to remove a post by model Bella Hadid. All she had done was show a photo of her father’s US passport listing his birthplace as Palestine. Her comment stated: “I am proud to be Palestinian.”

Instagram, however, claimed the post violated “community guidelines on harassment or bullying” and regulations on “hate speech”. After Hadid kicked up a storm, Instagram backed down.

But aside from famous models, the very people who have helped spur Meta’s profits, ordinary users are likely to find a far less sympathetic ear. Silicon Valley’s hostility towards expressions of support for Palestinians was particularly stark last May, when Israel bombed Gaza for 11 days.

Hundreds of Palestinians were de-platformed by Facebook, Instagram and Twitter when they criticized the bombardment or the ongoing evictions of Palestinian families from their homes in Jerusalem’s Sheikh Jarrah neighborhood, a flashpoint for Palestinian protests. Among those suspended by Instagram was Mona al-Kurd, a prominent Palestinian activist who has campaigned against the evictions. Facebook also took down a post by a Palestinian American, Alia Taqieddin, advertising a solidarity march for Palestine in Seattle.

Meanwhile, Instagram removed posts about al-Aqsa Mosque, a sacred site in Jerusalem for Palestinians and Muslims, which Israel has been encircling with Jewish settlers for decades. After the mosque became a center for protests in May, the tech company mistakenly flagged it as a terrorist organization.

Climate of censorship

More than 30 human rights groups protested the wave of suspensions last May, describing them as an intensification of an existing climate of censorship faced by Palestinians.

That view was echoed by the New York-based Human Rights Watch (HRW) last October: “Facebook has suppressed content posted by Palestinians and their supporters speaking out about human rights issues in Israel and Palestine,” it observed.

HRW cited an example of Instagram removing as “hate speech” a photograph of a building captioned simply: “This is a photo of my family’s building before it was struck by Israeli missiles on Saturday May 15, 2021. We have three apartments in this building.” The accounts of Palestinian news agencies and journalists have also been repeatedly shut down.

None of this is surprising. Silicon Valley firms, including Meta, have been openly forging ties to Israel for many years. Meta’s oversight board includes Emi Palmor, who helped to establish a cyber unit in Israel’s justice ministry that has been accused by human rights groups of muzzling online dissent by Palestinians.

Silicon Valley firms appear to have accepted Israeli claims that denunciations of Israel’s crimes against Palestinians amount to hate speech or incitement. Back in 2016, Israel’s justice ministry reported that Facebook and Google were “complying with up to 95 percent of Israeli requests to delete content” – almost all of it Palestinian.

Perhaps unsurprisingly, surveys suggest that most Palestinians are fearful of expressing their political views on social media. By contrast, according to 7amleh, a Palestinian social media monitoring site, Israeli Jews are responsible for posting racist or inciting material roughly every minute, but action is rarely taken against them.

Vilified as antisemites

The seeming premise for this exaggerated sensitivity by social media firms towards criticism of Israel has been the fear that, because Israel claims to represent all Jews in the world, expressions of hatred towards it might feed antisemitism.

Western political and media establishments have been complicit in reinforcing this wrongheaded assumption. They have been only too willing to echo Israeli officials in conflating Israel – a highly militarized, occupying state – with the Jewish people. Paradoxically, anti-racists trying to clarify the distinction between Israel and Jews, such as former Labour leader Jeremy Corbyn, have been falsely vilified as antisemites.

But if there is a genuine fear that indulging anti-Israel sentiment will lead to a wider hatred towards Jews, why is there not a similar fear that stoking anti-Russia sentiment will lead to hatred and violence towards Russians?

If Israel’s conscript soldiers are not a suitable target of calls for violence for being in the occupied territories, why should Russian conscript soldiers not also be protected from hate speech?

The Russophobia being indulged by Meta simply reinforces these double standards in public discourse. If it is wrong to urge a boycott of Israel for its crimes, why is it suddenly acceptable to call for something far worse – collective punishment – for Russians, as US Secretary of State Anthony Blinken did this month in demanding the Russian people “suffer the consequences of their leaders’ choices”.

Over the past eight years, many thousands of ethnic Russians have died in what amounts to a civil war in Ukraine’s Donbas region – one of the triggers, if Putin is to be believed, for Russia’s invasion. Now Meta appears to be encouraging more of the very Russophobia that feeds the current confrontation.

There are also substantial and visible Russian expat communities in western countries, including the US and UK. That has been underscored by the sudden surge in antipathy towards – and sanctions on – Russian oligarchs, such as Roman Abramovich, the high-profile owner of Chelsea Football Club.

Meta was approached for a comment, but it had not responded to these criticisms by the time of publication.

Tools of power

The tech giants are not simply following commercial imperatives. They are making deeply ideological decisions that dependably accord with western state interests. They are communication monopolies that enjoy this status precisely because they are in bed with western governments.

The connection was impossible to miss when the European Union decided to ban two Russian broadcasters, RT and Sputnik, this month. Facebook, Twitter, YouTube and TikTok immediately de-platformed the Russian stations.

When Putin has suppressed criticism of his policies in Russia, he has rightly been accused of authoritarianism. But western publics have been largely blind to Silicon Valley’s own authoritarianism on behalf of the US and its allies.

The reality is that the silencing of dissent and the amplification of hatred have been contracted out to social media firms. That provides western states with an alibi when they crush – at arm’s length – some kinds of political speech and promote other kinds.

Google announced, for example, that in response to the invasion of Ukraine, it would change its algorithms to ensure sites critical of western actions would be hard to find on searches.

But the truth is that Google long ago manipulated its algorithms to favor what it terms “authoritative” sources, meaning traditional media of the kind that rarely hosts reporting or commentary that strays from the most superficial criticism of western foreign policy. More critical sources are usually hidden so far down Google rankings that only the most dedicated researchers are likely to find them.

The skewed algorithms have protected western allies from proper scrutiny, whether it be Israel oppressing Palestinians, or Saudi Arabia bombing Yemen. Those same algorithms are now doing the dirty work of stoking anti-Russia sentiment.

Google had not responded to these criticisms by the time of publication.

As a consequence, western publics have been plunged into the fog of war, denied access to Russian voices and exposed chiefly to the most sympathetic accounts of Ukraine’s actions. Critics of western policy now face an array of restrictions on talking about the biggest events shaping our lives.

In the coming weeks and months, western governments will make life-and-death decisions – ones that could yet lead to nuclear confrontation. But their publics will have little idea where events are heading, or why.

Jonathan Cook won the Martha Gellhorn Special Prize for Journalism. His latest books are Israel and the Clash of Civilizations: Iraq, Iran and the Plan to Remake the Middle East (Pluto Press) and Disappearing Palestine: Israel’s Experiments in Human Despair (Zed Books). His website is www.jonathan-cook.net. This originally appeared in the Middle East Eye.

Author: Jonathan Cook

Jonathan Cook is a writer and journalist based in Nazareth, Israel. His latest books are Israel and the Clash of Civilizations: Iraq, Iran, and the Plan to Remake the Middle East (Pluto Press) and Disappearing Palestine: Israel's Experiments in Human Despair (Zed Books). Visit his Web site

Antiwar.com

Russians destroy Chernobyl laboratory


This file photograph taken on December 8, 2020 shows a general view of Chernobyl nuclear power plant. (AFP)

The Associated Press
Published: 23 March ,2022

Russian military forces have destroyed a new laboratory at the Chernobyl nuclear power plant that among other things works to improve management of radioactive waste, the Ukrainian state agency responsible for the Chernobyl exclusion zone said Tuesday.

The Russian military seized the decommissioned plant at the beginning of the war. The exclusion zone is the contaminated area around the plant, site of the world’s worst nuclear meltdown in 1986.

The state agency said the laboratory, built at a cost of 6 million euros with support from the European Commission, opened in 2015.

The laboratory contained “highly active samples and samples of radionuclides that are now in the hands of the enemy, which we hope will harm itself and not the civilized world,” the agency said in its statement.

Radionuclides are unstable atoms of chemical elements that release radiation..

In another worrying development, Ukraine’s nuclear regulatory agency said Monday that radiation monitors around the plant had stopped working.

Russia destroys Chernobyl labs, as forest fires raise fear of 'radiation release' from nuclear plant

200 tonnes of fuel remain at the bottom of the crippled reactor and is unprotected

Web Desk Updated: March 23, 2022
Chernobyl nuclear power plant | AFP

The Ukrainian national agency responsible for control of the Chernobyl Exclusion Zone—site of the world's worst nuclear meltdown in 1986—stated that Russian military forces have destroyed a new laboratory that works to improve management of radioactive waste. "The laboratory contained highly active samples and samples of radionuclides that are now in the hands of the enemy, which we hope will harm itself and not the civilised world," the agency said in a statement. The Russian military had seized the decommissioned plant at the beginning of the war.

Amid the fighting, forest fires had sprung up all over the vicinity of Chernobyl, with Ukraine's natural resources minister stating that they have been extinguished to a large extent. The fires have raised concern about the possible release of radiation from the plant, where a 1986 explosion and fire sent radioactive emissions across large parts of Europe. The problem was that, as Guardian reported, 200 tonnes of fuel remain at the bottom of the crippled reactor and is relatively unprotected. Experts have raised concern that fierce fighting in the area could damage the reactor further and cause radioactive material to escape—in 2020, a forest fire near the reactor caused radiation levels to spike to 16 times above normal.

The Ukrainian regulatory agency had also said that radiation monitors around the Chernobyl plant have stopped working. In a statement Monday, the agency also said there are no longer firefighters available in the region to protect forests tainted by decades of radioactivity as the weather warms. According to the statement, the combination of risks could mean a significant deterioration of the ability to control the spread of radiation not just in Ukraine but beyond the country's borders in weeks and months to come. Management of the Chernobyl plant said Sunday that 50 staff members who had been working nonstop since the Russian takeover have been rotated out and replaced.