International Affairs

2010

It seems as if all the problems noticed already in 2002 have come to full maturation in 2010. The fictitious amount of money being produced (or printed) leaves purchasing power even less reliable. Interestingly enough the market reacts like a drug addict with relief when China announces in view of the EURO taking a pounding in the wake of the state deficit crisis in Greece, but not only that the government will continue purchasing assets on European markets. As if a new kind of statemanship makes itself felt. Things are immediately stabilized as if this new global power has the means at hand to keep up economic growth and therefore prospects of making still more money. That hunger for money is relentless and financial analysts say no matter what governments do, they cannot off set the speculation with hedge fonds or with fictitious values. The negative betting can go endlessly and to such heights or sums that even the European Union as a whole would not be able to muster enough money to offset this trend. That is all the more astonishing as people consider the European Union to be the biggest economy in the world. Compared to China there are many more people in Europe who live in wealth or at least in semi wealthy situations. By contrast millions in China live still in extreme poverty.

There are always various ways to see things. Poverty has its own price. Often it comes in forms of social unrest and health but also other service costs go up e.g. for police forces. At the same time the quality of life makes no sense even if living in a smart house with swimming pool once it has become an object of thiefs and other forms of vandalisms. The extreme notion of one thing begetting another more extreme follow-up may not describe forms of modern social unrests, but if Maoists in India can derail one train and thereby kill and maim people at random through such a provoked accident, then the question has to be asked, if the chase of money has not made the world forget the value of human life?

If 2002 is taken as a measure, then the consequences of creative book keeping as exemplified by Enron back then continues in 2010. There prevails the suspicion that Greece entered the EURO zone only with the help of Goldman Sachs which ensured that certain deficits were not perceived and thus Greece managed to squeeze into the Euro zone.

Indeed, the crisis in 2010 is in part due to the Greek deficit which spilled over from 2009 to 2010. It was a long time coming but then it came with a speed which surprised many who did not think it is possible that the market could paint so much one country into the corner so that a bail-out by means of a joint effort of the IMF and the European Union was no longer avoidable. And still no one is sure if Greece can decrease the deficit in time to win further trust by all those involved in giving the country a chance to get back on track. And while this crisis has received a safety lid, there is Spain near collapse as is Portugal, Ireland, Italy and others who have their state budget no longer in control. Germany made the greatest deficit budget in its history and who knows how all payments can bring about a revitalization of 'normal economic activities'. It seems nothing is normal anymore as the ethical dimensions of conducting business have been left behind.

So looking back to 2002 can reveal a lot what is made evident in 2010. To recall 2002 came after 911 and much what took place was still before March 2003 when the war in Iraq was started with the lie Saddam Hussein had weapons of mass destruction. Powell made that testimony in front of a world audience when speaking to the Security Council before that fatal decision was made. He confessed later that he knew of not having any credible evidence to substantiate his claims even though he convinced due to his reputation the entire world that this man was speaking the truth. It was a world deceived by one single man, a black man, who worked still like a slave for his master, the white man Bush who as President was influenced by his mother to accept Powell as Secretary of State since that man was prepared to sacrifice himself for his country. Slavery may have been abolished in the United States yet in such a moment it lived on but only in another form and very much linked to what Ernst Bloch had termed as the slave language.

2002

Starting with the United States, international politics was changing as America assumed more and more ‘unilateral actions’ out of increased fear of still further threats. The shock of 911 went very deep.

Although Secretary of State Powell did everything to dismiss this sense of ‘unilateralism’, the international world encountered an obvious string of countless failures. It started with a reversal of policy towards North Korea, continued by questioning the validity of the Kyoto agreement on emissions to combat global warning and meant withdrawing support from the creation of an International Court out of fear American military personal could be charged and brought before such a court.

It put the term ‘international justice’ despite the trial of Milosevic into doubt.

As if America wished to define single handedly all terms in use solely to its own advantage without recognizing the need for compatible terms at international level. It meant a peace-seeking justice was not the key element defining international politics but something else. The American response to 911 was much more revenge and sought to impose again the death penalty as both punishment and deterrent. No one has equated this with seeking to execute this by means of waging war. It had already started as such in Afghanistan.

In view of those developments there was a need to return to some serious sharing of ‘theories’ about world governance and kinds of regulations to be accepted by all to ensure world peace. Otherwise, as demonstrated by the unresolved cases in trade and in particular after Bush started to protect American steel production, there was no way to overcome the tendency towards seeking unfair advantages at the cost of everyone else. Bush did it by means of a tax levy. It made claims of Free Trade sound especially absurd when this demand came from America. Yet all economies had to deal with globalization and its impact upon development. If not be handled with the necessary care and political attention to make everyone become responsible, then world governance will remain as evasive as ever.

Diplomacy instead of structural reform

Lepenies stated in an editorial comment for the Süddeutsche Zeitung in April that diplomats apply old-fashioned models and rely too much on individual actions without considering the fact that structures need to be changed, if any progress towards peace is to be made.

Joschka Fischer’s paper – to include Russia in a peace negotiation team – was discussed but formally not accepted by the EU ministers who are too much stuck in their own quests for some diplomatic success. They do not seem to realize that the global dynamics simply outdistance their pace of deliberations and abilities to respond in any substantial way. This reveals to what extent their activities is mostly symbolic. When real tests come, they simply fail or grow silent.

Michael D. Higgins said already in the light of the Kosovo bombing, that the diplomatic effort failed and hence we have a broken promise in relation to ‘never again war’. The promise was broken by allowing the military to dictate the terms. Everything else is made to appear to be impossible or unrealistic.

In Germany, there are some new developments. For example, in some debates the old diplomatic formula ‘no troop deployment – but financial payment’ is being questioned especially after deployment of German troops first in the Balkan, but then also in Afghanistan has caused historical debates and decisions. Chancellor Schröder overcame that hurdle by connecting that vote for the deployment of troops with a vote of non-confidence in his government. It had a severe impact upon especially the GREEN party made up originally by Pacifists, but who are by now a mute minority, if not completely out of the party’s mainstream by the time the next Federal elections shall come around on September 22, 2002.

Of interest with regards to the German debate is that the Süddeutsche warns in an article 16.4.2002 that normalization of foreign policy would go too far, if German troops are deployed with an international force to the Middle East. The paper states that the special German – Israel relationship is by far from being normal or rather it should not be treated as such in view of what happened during the Holocaust. The paper made reference to Adenauer’s real Politics in terms of ‘no troops – but we pay instead’. It has been the will of Germany to compensate the Jewish people for the atrocities committed by the Nazis.

Arabic States

Just prior to the start of the incursion, the Arabic states under the leadership of not Egypt but Saudi-Arabia met in Beirut to discuss and to decide upon a peace initiative undertaken by Abdullah, one of the most influential leaders in the regions. Later Abdullah was to take that notion of peace in the region to President Bush. It is, however, impossible to assess in a simple way the problems faced by all Arabic states and what is contingent or not on resolving the Palestinian question.

Europe

The European Parliament is being criticized for its one-sided declaration or recommendation of an economic embargo of goods coming from Israel, while the Süddeutsche Zeitung comments upon a European and in particular German population having grown silent in the light of the Middle East conflict.

United Nations

As understood already by those who support inside of Israel the policy of Sharon, that they condemn the United Nations for not being 150% behind Israel.

Once one-sided enemy pictures grip a large portion of the population, any honest brokerage and mediation will no longer be sufficient to bring about a peace agreement in the Middle East or elsewhere.

One example is the increase in criticism of UN envoy Terje Roed-Larsen for having been so outspoken after his visit to Jenin. They did not like that he took the initiative to speak with ambassadors and other political representatives ‘as if’, so the accusation of Israel, he was a minister of a government. It demonstrates how easily artificial barriers can be created so that people do not speak out of line nor name the truth of the matters. There are things in need of being dealt with not in how appropriate it may be or not for the government in power, but what in the name of the truth is needed, if any human communication is to be in place and people are to have a chance at a decent life in peace.

Creative accounting

Obviously ENRON knew what is a ‘kill’: when its executives had trapped its employees (pensions transferred into stocks and not able to sell them within a given period of time) and then they could make their move by selling off their shares. They realized such a gain that this placed everything else in its shadows. That includes ordinary profits and windfalls from speculations.

At the same time, everything in its wake was but one big financial collapse. The real dimension cannot be grasped. Coming after the 11^th of September, it set in terms of a single financial collapse equally a record in until then unheard off dimensions. Astonishing is that the political fall-out could be minimized. Both President Bush as well as Vice President Cheney appeared to survive this without any deep scratch despite close linkages to the executives of ENRON.

There prevailed two vital linkages: donations to the Republican Party and of having been consulted when the White House was formulating its new Energy Policy under the supervision of Cheney.

Here the extra kill means the exit strategy worked and since then, purchasing money, distribution of funds, normal functioning transactions of businesses have no longer the same meaning as before.

Involved in this business of accounting is the Anderson firm. Until that scandal broke its book-keeping services were still considered not only in America, but at a global scale – even the development agency of the City of Leipzig used this firm for its book-keeping - to be the seal of high reputation. Since the ENRON scandal broke, the firm has become associated with what runs under the method of ‘creative accounting’. Meant is by this balancing the books and making such financial reports that conflicts of interests are covered up, real share values inflated while substantial looses remain out of sight.

Loss of ‘financial morality’ is an entire story by itself, but there should not be forgotten that there is often a linkage between crisis in the financial markets and outbreaks of violence.

The loss of honesty or morality was something people noticed already when changes initiated by Margret Thatcher were taking place in the City of London. Here the once traditional financial transactions were based on having a good name. During the era of Thatcher and her will to break into the establishment new business people started moving in or else financial transactions moved out i.e. to Hong Kong.

The newcomers were above all eager to make it to the top. They did not hesitate to deploy new and much more aggressive, equally more risky methods. In terms of morality and the culture of making business work on reliable accounting principle, these new methods were not based on social trust and knowing the others for years. That meant evaluations when to give credits and when not to take risks as method to safeguard and to keep one’s good reputation were abandoned while the lending of money was exposed to many other kinds of pressure.

The lack of morality and honesty in the financial sector has surfaced repeatedly in England and elsewhere already during the Thatcher years. Since then there has been a development towards still more sophisticated methods of making possible write-off of looses, in order not to be forced into having to explain the vast discrepancies between sudden gains and looses.

Some of these gaps were closed, it should be noted, by ENRON donating not merely large amounts of money to politicians on both sides of the major parties in Congress, but also to Charity Organizations such as the ones under the patronage of Prince Charles.

Tax evasions belong to this category of write offs via charity organizations while underneath it the loss of morality is but a side effect of those who wish to stay if not in business, then at least in power. With it goes a kind of exclusivity in terms of treatments based on privileges and getting away with things.

Indeed, bad business practices start by everyone making declarations such as ‘one would be stupid to pay all these high taxes if you can make business possible without paying any taxes at all’. The payment of taxes can be avoided by having as many as possible off shore companies. All of them are involved in some kind of virtual network or another.

However, over speculation is only good as long as it works. The break-down of the New Economy has here yet to be understood as to what is possible, what not despite all of the virtual worlds being created by means of financial transactions via computer and Internet. To that belong also the kind of quality markets with people told they have needs of which they never heard of until then.

Certainly concrete transactions are still needed to back up the purchasing power of any currency. That power has to be linked finally to real resources and specific outcomes identifiable as products or availabilities of resources. But through these virtual worlds the real purchasing power was systematically undermined and marginalised through easy money.

Financing Terrorism

After the 11^th of September, financial transactions have been described as functioning like an invisible network. Here the press speaks a lot about Bin Laden and its group using a system whereby cash flows could not be traced so easily. It is suggested that they use other methods by which huge cash flows or transfers of money can be hidden from any formal authority. These have their beginning in how Islamic or Koran schools collect religious taxes and transfer them back home.

Of interest in this overall context of ‘dirty money’ being washed ashore in a mysterious manner somewhere else. It is connected to the continuous existence of these offshore companies. Crucial is to understand and to explain why America was against closing those tax havens the moment Bush came into power?

To recall, the OECD had made a strong recommendation in that direction, namely to close down these possibilities. The European Union had supported this move despite various objections made by some Member States, including Great Britain. Strangely enough the controversies are hardly reported about in the wake of recent events. It appears as if this topic is off the agenda for the time being.

Presumably all these issues would not have been ignored, if it had not been for the massive disruption caused by the 11^th of September event. Since then the fight against ‘Terrorism’ has taken on bizarre forms. On the one hand there was made public efforts to trace the cash flow of the terrorists; on the other hand, the very method deployed to fight them demanded much more secrecy. Keeping things from the public were now justified by not wishing to jeopardize the operation.

Exactly in this post September fall out period it was revealed that ENRON managed to combine offshore companies with a creative accounting method to hide financial short-comings, but also gains made from the tax authorities.

Over and again it was pointed out after the collapse that the entire empire was based on the creation of fake companies to allow for such devious cash flows, so that any skilled accountant would have difficulties of keeping track of all flows of payments. But due to the overall political climate, the problem with offshore companies was left unresolved. It follows that the question of massive tax evasions has equally not been answered either. The political challenges to such practices have yet to be articulated in the interest of an open society.

Counting the Dead, Wounded and Captured of the ‘enemy’

Once this model of accounting is adopted to count the dead, wounded or captured, it becomes clear why the situation presented is more confusing than clear to most people. There has to be added also another dimension. For people around the globe know quite well not all lives count in the same way i.e. one American soldier more than 100 innocent civilians killed during a bomb raid. Again there are other hidden dimensions involved in terms of what makes news and what calls for major responses by governments, including the US Administration.

One example can be given as to what took place during 2002. Attempts were made to establish who has been killed or else died by accident e.g. when a building collapsed in Jenin. Even if someone was killed by a collapsing building, the Israeli army was quick to point out that they had warned over megaphones the civilians that they must leave the area. Those who refused had to pay the consequences. They came under the suspicion of hiding terrorists or of even collaborating with them. As many commentators would say, the way the Israeli army defined the situation sooner or later everyone became identified with the terrorists.

For this reason the Washington Post came out on Thursday, April 25, 2002 with the advise to make a clearer “Mideast distinction” when it comes to fighting terrorists:

“The Israeli writer Amos Oz has observed that Israel is engaged in two separate campaigns against the Palestinians – a legitimate war against terrorism and an ‘unjust and futile’ bid for control of the West Bank and Gaza.” (“A Mideast Distinction” by Washington Post in: International Herald Tribune, April 25, 2002)

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