DEEPENING ECONOMIC CRISIS

GROWING SCRAMBLE FOR MARKETS

MILITARISATION AND GROWING CONTENTION

CRISIS PUSHES BURDEN ON TO THE BACKS OF BACKWARD COUNTRIES

WHAT THEN IS THE ANSWER

The world today is a boiling Cauldron. There is great disorder in every corner. Everyday, in every part of the earth thousands more are pushed to the brink — starvation, hunger, disease and desperation are to be seen even in the most developed countries. The situation appears hopeless for the multitudes; while the elite corner wealth on a scale unheard of in the annuls of capitalism. Never before in the history of capitalism have the contrasts been so extreme. Rage is therefore inevitable. Why, for example should the lakhs of starving humanity in India die a slow agonising death, when virtual mountains of grain are seen overflowing in all government godowns? Why should they remain silent spectators to a gory game where the winners and losers are pre-fixed?

In such a scenario anger, rage, revolt and revolution are not merely legitimate, they become a necessity for mere survival. Passivity and silence may be OK for the well-off, it means death for the poverty-stricken. Endless discourses on violence and non-violence may be a luxury to be enjoyed by the liberal intellectual, but for the poor there is need for a daily battle with the owners of wealth, merely to survive. And when this does not happen, it results in death by suicide, death by starvation and hunger. Such deaths in India, though passed off casually, have reached gigantic proportions; and are the direct result of a hopelessness that comes from an inability to fight injustice due to lack of effective organisation and an increasingly terroristic state apparatus.

And as the economic and political crisis deepens, to the devastation caused by poverty, is to be added the holocausts of war and state-terror. Iraq, Palestine and Afghanistan are only the first victims of the insatiable appetite of the voracious imperialist monster, particularly that of US imperialism. More victims are to come, unless of course resistance ties them to the present battlegrounds. Resistance and organised resistance alone are the only method to stop the onward march of these tyrants.

Nearly three years of a severe economic crisis of the entire imperialist world does not appear to be coming to an end in spite of the massive fiscal and monetary packages to pull the economy out of the dumps. The war in Iraq has no doubt, to some extent, increased the GDP rate in the US and caused a small boom in the US stock-exchange, but still, this largest economy in the world continues to be as sick as ever.

In this article, which should be seen as a follow up to earlier ones written in this magazine on the same subject in the course of the past two years, we show how the growing crisis is enhancing tensions between countries, particularly between the two major global players, the US and EU (and to some extent even Russia), leading to a renewed build-up of military stockpiles. The old dictum that "imperialism means war" looks exceedingly relevant even today. And imperialism in crisis means more fierce wars.

Except for Russia, which has been seeing some economic growth over the past few years, all the other major developed countries have been continuing into their third year of economic crisis, which began in March 2001. The forecast for GDP growth in the world’s developed countries in 2003 is a mere 1.7% (under 2.5% is treated as recession).(1) In September this year Argentina defaulted on its $3 billion debt repayment to the IMF — the biggest single missed payment in the IMF’s history. (2) According to the UN Labour Agency, the number of jobless worldwide has risen by 20 million over the past two years and hundreds of millions more are employed, but make so little money that they can barely survive. All the major economies of the developed countries continue in a state of atrophy, notwithstanding the huge packages to bail them out.

There is much media hype that at last the US economy, the major economic growth engine in the world, is now recovering and so the situation of depression the world over is on the verge of change. For this the 30% rise in the value of the stock market and the 2nd Quarter GDP growth rate of 2.4% is given as an example (though growth in the 1st Quarter was a mere 0.5%). Also consumer consumption has slightly grown. This is only the surface appearance, driven by two factors: (a) the largest run-up in government spending since the Vietnam War; in the second Quarter of this year government spending rose by an annualised 22% contributing roughly 1.5% of the 2.4% growth. (b) Massive pump-priming (infusion of funds) of the economy whereby the US has accumulated an additional $ 7 trillion debt in three years to expand the economy by $ 1 trillion, resulting in the lowest net national savings rate the US has recorded in recent history. Besides, in June 2003, the Fed cut the interest rate for the thirteenth time since the start of the economic turndown in 2001, bringing its lowest level in 45 years at 1%.(3)

Over the past three years the US’s economy has received the biggest monetary and fiscal stimulus in history. This has resulted in turning a budget surplus (1.4% of GDP in 2000) to a massive budget deficit of about $500 billion (4.6% of GDP) in the current year.(4) Not only this the Current Account Deficit (excess of imports over exports) has grown from 1% of GDP in 1997 to 5.1% of GDP in the current year — in other words, the trade gap grows at the rate of $1-2 billion per day. Even in this period of "growth" job-losses in the US have been sky-rocketing at about 5-7 lakhs per month, taking the unemployment rate to 6.4% of the total labour force.

The US economy has fallen to its worst hiring slump in 20 years. Since March 2001 two million jobs have been lost and one million have dropped out of the labour force. The US economy sent 1.4 million people into poverty last year. Overall 12.4% of the population (35 million people) live in poverty today. (5)

So, in spite of all the hype we find the US economy in a fragile condition, boosted by various artificial means — a new bubble which could burst at any time. Both the current account deficit and the budget deficits are around a huge $ 500 billion each.

The massive current account deficit can be met only due to the infusion of dollar funds from the reserves of various countries. It is these funds that help balance the deficit. If this dries up because of the low interest rates and lack of confidence in the dollar, the US will face a severe balance of payment crisis. In fact already the euro area, which was one of the main centres for US securities, have yielded place to Asia and Latin America. In the year 2000, the Euro area purchased 25% of the total foreign purchases of dollar-denominated assets; in 2002 this fell to a mere 5%. On the other hand Japan’s share increased from 9% to 17%, while that of East Asia and Latin America increased from 19% to 35%. In just the second quarter of 2003 Japan and China bought $39 billion and $27 billion respectively — this alone would fund 45% of the US’s 2nd Quarter current account deficit. It is then no wonder that Bush recently buckled under Chinese pressure on the issue of Taiwan. China accounts for a total of 11.3% of all foreign exchange reserves in the world, and if this were shifted to the euro area the US economy would face serious problems.

The huge tax cuts by the Bush administration (to boost consumer spending) and the gigantic leap in defence/homeland-security expenditure, have fuelled the spiralling budgetary deficit. This has created other problems. Consumer spending has created a boom in the housing market, creating yet another bubble which could burst any day. In addition, in the first six months of 2003 household debt has increased at its fastest pace in 17 years. For the last 40 years, up to 1997, America’s private sector was always a net saver (meaning that total income of households and firms was greater than their spending). But in the year 2000 private sector ‘savings’ was a net deficit of a huge 5% of GDP. In just one year the ratio of debt to household income grew from 102% in 2001 to 111% in 2002. (6)

In fact the entire US economy is seriously debt-ridden — the people are in debt, the corporations are in debt, the government is in debt, and even the States are in huge debts.

Till today the huge US economy is the chief motor of economic growth worldwide. It accounted for 60% of cumulative GDP growth since 1995. If this were to falter the entire world economy would head for a crash. For the last two-and-a-half years, not only is it faltering, it is going deeper and deeper into the morass. It is sick to the core and no amount of fiscal/monetary medicine has been able to cure it. It is hoping to get out of this crisis through wars of conquest, to seize the natural resources of other countries (as in Iraq and central Asia), and markets to boost its sluggish industrial growth.

In Europe, the growth rates of France and Germany have been faltering for the past three years. Italy, Canada and the UK are all showing sluggishness. Japan, after one of the longest recessions in living memory, is still in bad shape.

In the second quarter of 2003(April to June), the euro zone economies stagnated, hit by recession in two of its major economies — Germany and Italy. Germany’s economy contracted 0.2% in the 1st Quarter and 0.1% in the 2nd Quarter. Italy shrunk 0.1% in both Quarters. There was deepening recession in the Dutch economy, which shrunk 0.5% in the 2nd Quarter. Growth in the entire euro zone in the 2nd Quarter was a mere 0.4%. That is deep recession. (7) To help get out of this crisis the European Central Bank also trimmed interest rates in June 2003, to a record low of 2%.

Though Japan’s GDP grew at 2.6% in the 1st Quarter, its growth of nominal GDP continued to shrink. Japan’s GDP deflator (fall in prices) was as big as 3.3% from a year ago — the biggest decline of any rich country in over 50 years. Falling prices are particularly troublesome when Japan’s debts loom dangerously large. (8)

The Russian economy is set to grow by 6% in the current year, The recovery over the past few years is built primarily on the hike in world oil prices — oil exports are roughly half of Russia’s exports; and activity relating to oil comprises a fifth of Russia’s GDP. The economic devastation Russia suffered in the 1990s was even worse than WWII. During 1940-46, Soviet industrial production fell 24%. In 1990-99, the fall was 60%, while GDP fell 54% The crippling financial crisis of 1998 resulted in a debt default of $40 billion.(9) But since the last three years there has been some revival. Yet, its economic size is still small (equal to that of Belgium) compared to the three powerhouses of the US, Europe and Japan. But, this economic revival has resulted in greater political assertion internationally and even military muscle-flexing, particularly in its backyard — the CIS countries of the former Soviet Union. In this, the Putin era can be differentiated from the slavish Yeltsin era.

Besides these the only other major economy in the world is that of China, which has witnessed a consistent high growth rate after the restoration of capitalism in that country. It absorbs a massive amount of foreign capital each year — to the tune of $40 billion — and acts as a major source of production due to its excessively cheap labour. It also acts as a big market for commodities. It is also fast expanding its markets throughout south and south-east Asia. It uses its economic clout as a bargaining tool, but is playing, as yet, a low-key role in international affairs.

So, we see that overall in the three major economies of the world — the US, Europe and Japan — simultaneous recessions continues into their third year. These continuous recessionary conditions restrict the markets for commodities and thereby result in an intensification of the trade wars.

The debacle at Cancun is a reflection of the growing contention for markets, between the two major players, Europe and the US, and those aligned on either side of the battlefield. Since Cancun there has been little progress in the WTO negotiations. In fact it has been the reverse — the EU which had agreed to remove two of the four Singapore issues (investment and competition policy) from the agenda, now speaks of talks going ahead on all four. Soon after Cancun the US ridiculed the WTO, saying it will henceforth go for bilateral agreements. Also the EU had insisted that the WTO decision-making structure should be first overhauled before serious WTO negotiations can begin. Re-negotiations were fixed to start once again on Dec.15, 03, but, till date, there is no news of any progess.

Today, in fact protectionism is growing in all the major countries. In November 2003 the EU Executive approved a proposal to launch sanctions gradually on the US from March 2004. This is in lieu of a WTO ruling allowing the EU to impose penalties on up to $4 billion of US imports. The EU has warned the US to repeal the export tax breaks to avoid the sanctions being imposed. In this conflict the US was forced to retract on its recently imposed steel tariff.

The conflict between the two aerospace giants, Airbus and Boeing, has become so acute that, for the first time ever, top US aerospace and military figures boycotted the opening of the Paris Air Show in June 2003, a prestigious event held every two years. French Defence Minister said that the US was pursuing the "logic of an economic war".

In Latin America the US aim to envelope the entire continent in a trade agreement, FTAA, is facing serious problems with Cuba leading the opposition, drawing in countries like Venezuela and Brazil. In fact, Cuba went so far as to insist that the WSF be shifted back to Porto Alegre in 2005, to use it to lobby for opposition to FTAA. Meanwhile the US continues its attempts to destabilise the governments of Chavez in Venezuela and Castro in Cuba. The US again vetoed a resolution in the UN against the lifting of the embargo on Cuba. And this year, USAID has earmarked $1.602 million to create ‘independent’ NGOs in Cuba and $2.132 million to bring about "regime change" there.

Besides the trade wars, the conflict over Iraq was basically on who should control the rich natural resources. America seized the country and its rich oil-fields using its military might. It was not willing to share the spoils with its erstwhile allies. So the differences over the conduct of the war. Here all the lucrative contracts have gone to Bush cronies. Halliburton (formerly run by vice-president, Dick Cheney), which has cornered the bulk of the lucrative contracts, has already been able to turn a loss into a record second-quarter net income of $26 million.

In Afghanistan too the main aim was control of the rich oil and natural gas of Central Asia. Here oil deposits alone are valued at $ 3 trillion. In the course of the past five years US investment in the region has risen from nil to $20 billion. British Petroleum alone plans to invest $12 billion in the region (mostly Azerbaijan) in the course of the next eight years. A US mining company has grabbed the rich Uzbek gold mines. Already the US and British control 27% of the Caspian Sea oil and 40% of the natural gas. But, Russia’s recent new assertion is to be seen once again in this region. On the economic front it scored a major coup against the US with the signing of a mega-deal in April 2003 with Turkmenistan for the purchase of all its gas exports during the next 25 years. This deal effectively kills a US-backed alternative trans-Caspian route via the South Caucasus and Turkey to Europe; and also puts a big question mark over Washington’s plan to build a gas pipeline from Turkmenistan via Afghanistan to Pakistan. In addition, during Putin’s visit to London in early July 2003, the two sides signed a multi-billion-dollar deal to build a gas pipeline from Russia to Britain

But the main threat to dollar-domination now comes from the Euro. For the first time in the post WWII period a currency has risen to challenge the hegemony of the dollar. The value of the Euro has risen by 20% in the last year to reach a four-year high of $1.2 to the Euro. With ballooning current account deficits and budget deficit, the US these days is a less attractive place for investors to put money; and other countries, like Japan, scarcely look better. So Europe, by virtue of its stability and relatively sturdier public finances, has soaked up a lot of capital.

The shift towards the Euro is particularly noticeable in the global bond market, with many South-east Asian Muslim countries investing their foreign exchange reserves in Euros. Between 1995 to 1999, 53% of all corporate bonds were in dollars and only 20% in the 12 European currencies. In 2003 now 44% is in Euros to 48% in dollars. Central Banks are beginning to diversify their reserves to reduce dependence on the dollar.

And as the stagnation and crises in the economies continue the scramble for markets is bound to intensify. And, with this political and military contention will grow.

Militarisation of economies, growing contention and wars are all an inevitable part of the imperialist system. When in crisis this process gets magnified. The post cold-war collusion between the imperialist powers is giving way to rising contention, muscle-flexing and wars to seize markets and spheres of influence. The problem of the pacifist or the liberal is that they desire a war-free world without understanding the inner dynamics of the imperialist system that inevitably leads to the present state of affairs. The so-called war on terrorism is nothing but a war for control and domination. It is not a Bush ofrCheney that are the creators of the existing state of affairs; but on the contrary the existing state of affairs, with imperialism in crisis, that throws up the Bushes or Cheneys.

War, is after all, the continuation of politics by other means. And politics serves economic interests. Economic interests, political policy and wars are interwoven like a spiders web to entrap the unsuspecting civilian masses. One cannot exist without the other. And in a bourgeois system all follow the laws of the capitalism and imperialism. The liberal naively hopes to wish away the evils in the system, without understanding that they are an intrinsic part of it. One, for example, cannot do away with the greed of the capitalist, without doing away with capitalism itself; as, if capital does not grow, it must necessarily perish — swallowed up by a bigger player. Profit and more profit is the driving force of capitalism; its very essence. Its maximisation is in fact its success, whatever may be the foul means used to achieve it. So, to expect to reform it, as many an NGO may dream, is wishful thinking — an illusion that helps the status quo.

So, with this understanding let us look at the inner dynamics of the threatening war-situation hovering around the globe.

The prime mover for wars throughout the world is US imperialism — the number one enemy of all mankind. They have their presence throughout the globe and seek to extend and deepen their penetration everywhere.

America spends 4% of its GDP on defence, while Europe spends half of that. The defence budget has skyrocketed in the Bush era from $300 billion in 2000 to $ 400 billion in the current year. That is, the US alone will spend nearly half of the whole world’s military spending of $839 billion. If we add the funds expended for the Iraq war thus far (Dec. 2003), the US government spends more on the military sector than on education, employment, food aid, housing, pensions, public health and welfare combined. The US economy is highly militarised. In addition, US arms exports accounts for half of the world’s total. (10)

A full third of US engineers and scientists work for the DoD (Department of Defence) or else military contractors of the DoD. They are not only dependent on the DoD, but committed to it. Not only does the US government spend more on its DoD than anyone else on the planet, but also 75% of the government funds for research and development go to military projects (and so, to the scientists and engineers who work on arms). Furthermore, a million workers toil in just 10 of the largest arms firms. Not surprisingly, when the stock market crashed after 9/11, three companies posted huge gains. All were weapons makers: Raytheon (up 37%), Nothrup Grumman (up 21.2%) and Alliant Tech Systems (up 23.5%). These arms companies have made ceaseless profits for decades. (11)

In the early 1990s, the arms merchants of the US with the most muscle combined in a series of spectacular mergers to produce the three largest defence producers in the world: Lockheed Martin at $35 billion is followed by Boeing (which only recently swallowed McDonnell Douglas), and then Raytheon (which owns Hughes Aircraft and Texas Instruments). These three companies get gigantic subsidies from the US government: Lockheed gets $15 billion, Boeing $12 billion and Raytheon $6.3 billion. There are a large number of people within the Bush administration are linked to the military-industrial complex. They are: Dick Cheney’s wife once sat on the Lockheed board; Chief of Staff to Cheney, Lewis Libby, was a consultant with Northrup Grumman; Under Secretary for Defence, Dov Zakheim, worked for the defence firm, Systems Planning Corporation and advised Northrup Grumman; Under Secretary of Policy, Douglas Feith’s former law firm represented Northrup Grumman; Under-Secretary for Personnel, David Chu, presided over the Rand Corporation; Air Force secretary, James Roche, presided over Northrup Grumman; Air Force Assistant Secretary, Peter Teets, ran Lockheed Martin; and Deputy Secretary of State, Richard Armitage’s consulting firm, worked with Raytheon, Boeing, Haliburton and others.

Besides, the military employs 5.1 million and has the greatest worldwide reach. It is this military-industrial complex that dominates large parts of the US economy and politics. With its huge budgets it, in addition has thousands and thousands of people and companies dependent on it for their orders. It is a colossus, which survives on war and mass murder. Death and destruction is its source of profits.

In its contention with the US, France and Germany has been desperately seeking to build up a defence force independent of NATO, which the US has been vehemently opposing. Finally, in October 2003 an Accord was stuck on Defence, but only after Britain got the Four (Germany, France, Belgium and Luxemburg) to drop their demand for a EU Military Headquarters separate from NATO. In addition, US penetration into the European Defence industry retards independent growth of a potential rival: the Carlyle Group is buying the aerospace arm of the troubled Fiat; One Equity Partners, an investment fund, recently purchased the German naval shipyard, HDW; and Boeing is eyeing the British giant BAE (which has a one-fifth stake in Airbus).

Recently the EU’s attempts to tighten its unity by having a new Constitution collapsed due to sabotage by the pro-US forces of Britain, Spain and Poland. While Germany and France wanted power to be weighted according to population size, Spain and Poland opposed it. With the break-down of the Summit a Franco-German alliance is being threatened with a view to build a two-tier EU — those strongly united and the rest in a loose federation. The Franco-German Union proposes common armies, diplomatic corpse and the sharing of France’s UN seat in the UN Security Council.

In October 2003 Russia put forward a new defence policy, which vowed to use military force to uphold its strategic interests; and unveiled plans for and all-round defence build up. Buoyed with its economic recovery, Moscow said Russia is ready to use military force to defend its interests in the former Soviet states. The defence Minister said "Russia retains the right to preventive use of military strikes if faced with attempts to limit Russia’s access to regions that are essential for its survival, or those that are important to it from an economic or financial point of view". The threat of pre-emptive strikes sends a clear warning to the US to accept Russia’s dominant role in the CIS countries.

In September 2003 Russia opened an air base in Kyragyzstan. This is the first military base set up by Russia abroad after the collapse of the Soviet Union. This will provide air support to the collective rapid reaction force of the CSTO. The Collective Security Treaty Organisation comprises Russia, Kyrgyzstan, Tajikistan, Kazakhstan, as well as Belarus and Armenia. Russia has maintained a military presence in 10 out of the 12 CIS states and has now decided to boost these. It has decided also not to further cut its troops and keep it at its present level of 1.1 million.

Contention with the US in this region is bound to grow as the US has already entrenched itself there. In addition to US bases in Uzbekistan and Kyrgystan, the US is helping Kazakhstan set up a naval base on the Caspian Sea, close to the Russian border and seeking to lease 3 military bases in Tajikistan. It conducts regular war exercises with Kazakhstan, Uzbekistan and Kyrgyzstan, and has lunched officer-training programmes with Tajikistan and Kyrgyzstan. The US has signed a defence cooperation pact with Georgia and is helping Azerbaijan boost its naval power in its row with Iran in the sharing of the Caspian oil fields.

So, in the coming days tensions between Russia and the US in Central Asia and the Caucasus are bound to intensify.

The main victims of this growing contention are to be the backward countries of the world, which will be the immediate battleground for their power-play.

When the imperialists face a crisis they invariably seek to push the burden of the crisis onto the backs of the people of the backward countries. The policies of globalisation are just that. And with the downturn since 2001 this is becoming all the more intense.

With the crisis of overproduction getting all the more acute the scramble for markets becomes all the fiercer. A case in point was the 1997 S.E.Asian crisis, which was a classic example of how the TNCs battered the economies of these countries, only to take over their assets for a song. The same was the case a couple of years earlier with Latin America. The same too is a continuing, though more gradual process, pushed through by IMF/WB conditionalities and WTO stipulations.

Never before have inequalities reached such gigantic proportions. Today the 500 richest families own $1.54 trillion wealth — i.e. more than the combined income of three billion people.(12) The oil major ExxonMobil had profits (value added) equal to Pakistan’s GDP, at $62 billion (in the year 2000). The value-added of just the 10 largest TNCs was nearly equal to the GDP of India ($478 billion in 2000).

When the anti-globalisation movement seeks to look for a "better world" it must factor in the reality that what is taking place are cold-calculated steps by the big powers and not any spontaneous developments. In their frenzy to maximise profits they resort to the most ruthless and despicable means. After all let us not forget two world wars were fought for markets and profits. Today’s Bushes and Blairs are no less than the Hitlers and Mussolinis of earlier times. And the TNCs of today are no less than the big business houses that supported the fascists then. To present one example of the S.E.Asian ‘crisis’ shows how the international financiers smash economies and destroy their people’s livelihoods. S,E.Asia was followed by Turkey, then Brazil and the even more devastating attack on Argentina. Today Argentina is a totally destroyed country.

Take the S.E.Asian crisis. First they made these countries make their currencies convertible on current account, to allow the unhindered flow of dollars in and out of the country. The economies were simultaneously geared fully to imports/exports — to outsource materials using their cheap labour and to create a market for the finished products from the developed world. Having created such a warped economy they launched their financial attack in 1997, by overnight withdrawing all their foreign funds. This resulted in a run on their currencies resulting in a crash. With the resulting bankruptcies the TNCs marched in and bought over the companies and banks at throw-away prices. This was nothing short of a neo-colonial attack on these countries, little different from what Robert Clive did in colonial times.

Even their own mouthpiece, The Economist, (Feb.8, 2003) had this to say: "For much of the region, the crisis destroyed wealth on a massive scale and sent absolute poverty shooting up. In the banking system alone, corporate loans equivalent to around half of one year’s GDP went bad — a destruction of savings on a scale more usually associated with full scale war".

Since 1999 till today the TNCs have been systematically swallowing up industries, banks, mines, everything; that too at throw-away prices in the S.E.Asian countries. They have particularly concentrated on the huge South Korean giants. It was the Korean government that particularly pushed these companies and banks into the arms of the waiting foreign octopus. Immediately after the crisis KAMCO (Korean Asset Management Corporation) took over the bad loans of around $58 billion (30% of GDP) and these assets were slowly handed over to the merchant banks GE Capital, Morgan Stanley, Goldman Sachs, etc. The car giant, Daewoo, was taken over by General Motors. Korea’s biggest conglomerate, Hyundai, was being bought over by he US insurance giant, AIG. The US Newbridge Capital took over Korea First Bank. GoldmanSachs took over the bank Kookmin, through a $500 million investment. The IFC (International Finance Corporation, the private sector arm of the World Bank) not only put in $50 million into Hana Bank and $25 million into Long-Term Credit Bank, but also arranged a rigorous programme of technical assistance to help the government sell out to foreign bidders.

South Korea, Thailand and Indonesia all opened their doors to allow full foreign ownership of local banks. The world’s biggest and most powerful banks — HSBC, Citigroup, Deutsche and the like — swamped into the area, not willing to miss out on a chance of a lifetime. In Indonesia, its biggest retail bank, Bank Central Asia, was sold to an American private-equity firm, Farallon Capital Management. Next on the block is Indonesia’s biggest bank, Bank Mandira, followed by Bank Donamon. A similar process took place following the Latin American banking crisis of 1994-95 — here foreign banks raised their share of the local banking system from 6% to 22% in Mexico, and from 15% to 55% in Argentina.

While in these countries of Asia foreign capital (particularly US) have entered with speed to swallow up the entire economies, in other backward countries they enter more stealthily, step by stem. The entire policies of the WTO and the structural adjustments of the IMF/WB are geared to push economies into the arms of the imperialist octopus.

Take India for example, banks have been thrown open to the TNCs and the government has decided to reduce its stake even in public sector banks to just 33%. The process of take-over has begun with the recent capture of UTI Bank by the British multinational bank, HSBC. Through this step the HSBC will spread its tentacles far and wide as HSBC has just 34 branches to UTI Bank’s 220 branches. Simultaneously, the Centurion Bank has been taken over by sleazy overseas equity funds. In another article here we have already seen that while thousands are being pushed to starvation and death each day in India, big business is making crores and the country is being systematically handed over to the foreign powers and their TNCs. It is their political agents in India that are the prime movers of this sell-out. One of its chief agents in India is Chandrababu Naidu of AP. Yet, though the ASF was held in Hyderabad, and was purportedly organised against globalisation, they said not a word against this stooge.

While such is the case of Asia and Latin America, Africa is a lost continent. Totally marginalised in the globalistion pantheon. It is just being robbed of its natural wealth, with no concern for development, even of a basic kind. Its population is ravaged not only by hunger and starvation, but by internecine strife and now even HIV.

Such is the horrifying situation throughout the world, particularly in the backward countries. If the imperialist rampage is allowed to continue as it has been doing over the past decade there will be death and destruction on a scale unheard of before. Particularly given its serious crisis over the past three years its policies will become all the more ferocious. Like a mad rabid dog it will create havoc everywhere.

When one looks for solutions it must be based on realities and a scientific understanding of the situation. Let us then recap once again as to what is likely to be the immediate future for the worlds’ people.

First, the economic crisis is likely to deepen. This though will not be even, some will be more affected than others. Uneven development is a law of imperialism. Immediately this will necessarily result in: greater exploitation of the people throughout the world (even in the developed countries) in order to sustain profits; increasing and more intensified attacks on backward countries in order to enhance the imperialist loot — either indirectly through their agents in these countries or, where this is not possible, by wars of aggression; a greater scramble amongst the imperialist power for a shrinking market and for sources of raw materials — growing contention worldwide; and greater militarisation of economies, which promotes demand in a sluggish consumer market, and gives teeth to big capital’s ability to swallow others.

Second, the resulting impoverisation of the masses will be sought to be controlled or dissipated to allow the crisis-ridden exploitative loot to continue unhindered. This will require the twin weapons of fascism to crush discontent and diversion through social reform. The enormous suffering that this crisis will impose on the people will inevitably result in growing peoples’ anger and revolt. This will first and foremost sought to be pacified or diffused, utilising the services of the social-democrats and the NGOs. When not possible, the fascist arm of the state will enter — whipping up communal/racist demagogy and brutal repression. The fascist trends within the ruling classes are already visible all over the world, and has been particularly intensified after 9/11.

Third, of all the imperialist powers, it is US imperialism that will be the most dangerous and aggressive force on the earth and the number one enemy of the worlds’ people. It is today the main source of war and the most reactionary force stomping the world in its jack-boots. Wounded and injured by the economic crisis in its bloated economy, it will turn all the more ruthless, sparing no one who dares stand up to their dictates. It will not tolerate even the slightest dissent, let alone opposition. The Bush dictum, "those who are not with us, are against us" — will rule.

This is to be the bleak future before us. In such a scenario what then needs to be done?

First there is need to differentiate real friends (those sincerely opposing imperialism, or even aspects of it, from whichever angle) from real enemies (those who are fake or imperialist planted Trojan horses).

Second, there is need to unite all genuine anti-imperialist forces to build an organised strength in order to target imperialism and their lackeys, while exposing the fake elements. While utilising the growing dissentions within the imperialist camp, it is necessary to primarily rely on the genuine democrats.

Third, it must be understood that the imperialists and all their agents will never reform; unless they are hit they will not fall. So, primarily the task lies in awakening millions in each country of the world against the evils of imperialist globalisation and war, and organising them into militant battles against the enemy.

Fourth, as Iraq has shown, as the battle intensifies, guerrilla warfare, relying on the masses, is the most effective weapon against a monster armed with the most sophisticated weaponry. A people’s war is the only answer to the imperialist sponsored wars on the masses and against countries and nations.

Finally, it is a fusion of the peoples’ wars with the vast democratic upsurge of the masses of each country, which alone will be able to beat back the imperialist offensive in general, and US imperialist war-mongering in particular.

Let then all revolutionaries and democrats unite to build a strong force against the common enemy. Already the mass upsurges in the west are an indication of the peoples’ growing strength worldwide. In addition, the Maoist people’s wars in many countries like Nepal, Philippines, India, Turkey Peru, and elsewhere, act as a beacon light to a bright new future for humanity — a future without exploitation, without oppression, based on equality and respect for all. A fusion of these two forces at the international plane and locally will create a force so strong as to be invincible — that alone will send all reactionaries into flight and panic.

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