Wednesday, 6 January 2016

Risks, Possibilities and Stagnation: An exclusive extract from "North Korea: State of Paranoia"

Following what appears to be the detonation of DPRK's first hydrogen bomb, below is an exclusive extract from Paul French's North Korea: State of Paranoia addressing the tense stand-off between DPRK, China and the United States. Does the future of the Korean peninsula lie in engagement, or war?

Risks, Possibilities and Stagnation

In 2003 Kim Jong-il celebrated his sixty-first birthday with the usual display on state television of fireworks and images of an adoring citizenry. Fifty years after the death of Stalin, a form of Stalinism continued to exist in the upper half of the Korean peninsula and despite economic collapse, famine and a mass of predictions seemed relatively stable. The economy was down but not out, thanks to aid supplies and the people’s seeming acceptance of their reduced circumstances. The military, though perhaps suffering from shortages and deprivation, was still able to lob a missile into the Sea of Japan on the day South Korea’s newly elected president was taking his official oath and being sworn in.
 Eight years later, in August 2011, Kim Jong-il was dead and the predictions of regime collapse intensified. By December of that year his 28 year old son, Kim Jong-un, a man the world new next to nothing concrete about assumed the office of Supreme Leader of the Democratic People’s Republic of North Korea. The story continues. Economic collapse remains, famine haunts the land and missiles still get lobbed into the Sea of Japan.

Today, the people of North Korea are among the most desperately poor, hungry and economically deprived on earth. The serious danger of an entire society collapsing persists. If this happens then the consequences for the entire peninsula will be devastating, both for North Korea’s impoverished citizens and for South Korea, which would be left to pick up the pieces. The current vogue for ‘regime change’, first strikes and active anti-proliferation measures featuring ‘boots on the ground’ strategies would do little other than kill North Koreans and create a humanitarian, financial and political crisis for East Asia – all the sooner as South Korea nurses a fragile economic recovery, Japan remains mired in recession, and China needs all its considerable resources to overcome the hurdles thrown up by its continuing reform.

The relationship and interaction between the DPRK and the US will continue to be crucial. American policy towards the peninsula has almost always been one of reaction and not anticipation, of last-minute compromise between the military and State Department, and rarely subject to deeper consideration. As John Swenson-Wright has noted, the White House still lacks a clear strategy for dealing with Pyongyang. America now finds itself on the horns of a dilemma and at a time of growing involvement globally. American sabre-rattling may have the effect of mobilising support for the regime at home, and give it a legitimacy it may have been losing. Containing North Korea militarily is costly. Since 1994 US analysts have spoken of a ‘red line’, or the trigger-point beyond which the US feels it will have no alternative but to exercise some form of military action against Pyongyang.

Military action against Pyongyang would result in a disaster whatever way it was planned or executed. With Seoul just thirty-seven miles south of the DMZ, it makes no military sense. The South Korean capital city of 10 million people lies within the range of the DPRK’s formidable batteries of artillery and missiles. North Korean jets can reach the city within several minutes of takeoff. North Korea certainly has the ability to inflict massive damage on the ROK in any military conflict, but it also knows it would be destroyed if it attacked. The North’s porcupine strategy, or Masada complex, is designed to ensure that in any conflict a US victory would be at the highest human cost possible and thus politically unacceptable in Washington. According to Pentagon estimates, a conflict on the peninsula would lead to at least 52,000 American and 490,000 South Korean casualties within the first ninety days. Former CIA chief James Woolsey has argued that 4,000 daily air strikes over a period of thirty to sixty days would be required to demolish North Korea’s nuclear programme as the US believes it exists, and to blunt its capacity to retaliate. Additionally, the Pentagon’s public war plan for Korea estimates that the DPRK has 12,000 artillery pieces, including 500 long-range weapons, located largely in close proximity to the DMZ in deep mountain bunkers. This artillery is thought to be capable of firing ‘several thousand’ shells per hour towards South Korea. Even with improvements in intelligence, weapons technology and missile accuracy, not to mention the previous Bush administration’s declared willingness to use nuclear weapons, any strike is seen as a risky and potentially disastrous operation both militarily and politically.

Engagement, however, carries its own risks. Wendy Sherman, an adviser to Madeleine Albright and a special adviser to Clinton on North Korea, described the dilemma well:

I have no illusions about Kim … he is a leader who has left his people with no freedom, no choices, no food, no future. People are executed. There are labor camps. But the decision we have to make is whether to try to deal with him to open the country so that the people of North Korea do have freedom, do have choices, do have food. Do I think it would be preferable to not deal with him? Yes, but the consequences are horrible, so you have to deal with him.

The North Korean leadership remains seemingly divorced from reality – Kim Jong-un appears to have inspired confidence in no one. Lack of knowledge filtering up to the leadership leads at best to mistakes, and at worst to outright stupidity. Flunkeyism (sadaejuui) is identified as the opposite of Juche and is theoretically objected to. However, the reality of the situation in Pyongyang is that by the late 1970s Kim Il-sung was surrounded by a politburo of largely aged, poorly educated, ex-guerrilla generals who showed blind obedience rather than offering advice and alternatives. Kim Jong-il saw many of the older generation pass away, but he subsequently cultivated an elite that has little interest in letting him know the reality. Kim Jong-il was not the crazy and irrational dictator much of the tabloid press sought to portray him as; nor was he necessarily ‘the hawk of hawks’, yet he may not have had a truly rounded grasp of the situation. As one journalist noted, ‘The real issue isn’t whether Kim is crazy enough to amass a nuclear arsenal but whether he is crazy enough to dispossess himself of his one bargaining chip. Time will tell but it appears that Kim Jong-un has no new sources of information above and beyond those available to his father.

Time is running out for North Korea. Another crop failure could occur at any time, aid is dwindling, allies are virtually non-existent, the risk of serious disease outbreaks is high. Pyongyang lacks the assets that China had when it began its reform process. China had no shortages and was not obliged to rely on foreign aid. It had a wealth of domestic entrepreneurial traditions and resources, as well as the invaluable ‘bamboo network’ of overseas Chinese capital, know-how and contacts. The DPRK’s economic reforms of 2002 did not show us how socialism with North Korean characteristics would look; they simply showed how a government had panicked in the face of a collapsing economy.

Which economics textbooks Kim Jong-il and his planners back in 2002 read we can never know, but it is plausible to suggest that the Chinese economist Chen Yun numbers among them. Chen was an advocate of Soviet-style planning in China in the 1970s, but in the early 1980s moved towards a more modified version of the USSR’s blueprint – what Chen called a birdcage economy, where the bird is the economy, the cage is the central plan and the size of the cage is the market:

One cannot hold a bird tightly in one’s hand without killing it. It must be allowed to fly, but only within its cage. Without its cage, it would fly away and become lost. Of course, the cage must be of appropriate dimensions.… That is to say, one may readjust the size of the cage … but regulation of economic activity by the market must not entail abandonment of the orientation provided by the plan.
This notion seems to be where the economic planners and ideologues of Pyongyang have been heading, with cages like Sinuiju, Rajin-Sonbong, and adjustments to the state pricing mechanism and other limited economic reforms such as Kim3’s New Economic Movement. Chen, like his latter-day colleagues in Pyongyang, retained his faith in the plan and in the subordination of agriculture to industry. He, like Pyongyang, believed that central allocation was preferable to the market as it allowed for control and the eradication of market inefficiencies as well as supplying full employment.

 Chen’s arguments for a slightly modified Soviet system in China didn’t win out. Deng Xiaoping, Hu Yaobang and Zhao Ziyang were looking not to Moscow but to Hungary and Yugoslavia, which seemed to offer less rigid forms of socialist economics. Deng, Hu and Zhao also made a simple comparison and asked, who fared better economically? Was it market-driven South Korea, or plan-driven North Korea? Was it market-driven West Germany or plan-driven East Germany? Eventually they looked at economies such as Singapore, Taiwan, South Korea and, of course, the Asian economic giant, Japan.

It was clear that Kim Jong-il knew he needed to do something about his shredded economy. Yet he was not ready to admit, as Deng did in 1984, that ‘a little capitalism isn’t necessarily harmful’. He was not ready because meaningful steps towards the market require decentralisation and the granting of greater personal freedom. As Philip Bowring has observed, ‘the North wants change without regime change.’ This mindset does not appear to have significantly changed with Kim2’s passing. While the command economy remains dominant, the overall trend, despite possible blips, will be downwards. The official New Year Message from Pyongyang invariably states that the DPRK flag ‘is adorned with great victories and no defeats’. This may be the case militarily. The real defeat, though, for the party-state in North Korea, has been the economy.

North Korea: State of Paranoia by Paul French is out now for £9.99/$14.95

Tuesday, 13 October 2015

Competition: win signed copies of Nawal El Saadawi classics!

This month we are very proud to release beautiful new editions of classic works by Nawal El Saadawi, one of the most influential novelists and feminists from the Arab world.

Follow these links for more information on Woman at Point Zero, The Hidden Face of Eve, and God Dies by the Nile and Other Novels.

We've got signed copies of the new editions, PLUS a DVD copy of The Free Voice of Egypt, the new documentary on Nawal El Saadawi, to give away.

FIRST PRIZE: A signed copy of all three books, plus a copy of the DVD.

RUNNER-UP PRIZE FOR TWO PEOPLE: A signed copy of all three books

To enter, just answer this question correctly:

What was the name of the Ancient Egyptian Goddess of Health, Marriage and Wisdom?

Email your answer by 19 October to:

We will pick winners at random.

Watch a trailer for The Free Voice of Egypt here:

Monday, 12 October 2015

The Many Faces of Apartheid: Ilan Pappé

This extract is from the introduction to Israel and South Africa: The Many Faces of Apartheid, edited by Ilan Pappé and published this month by Zed Books.

In recent years, a common item in the Palestine solidarity campaign in the West has been the ‘Israel Apartheid Week’, which was often organised by students on campuses in Europe and the United States.

This activity was one of many reflecting a wish to compare the reality of present-day Israel with that which existed in Apartheid South Africa. Activists all over the world felt that the analogy was not only valid but also inspirational for the continued struggle for peace and liberation in Palestine.

However, such a comparison is not only an item on the agenda of activists or critical academics; it has been attempted by some unexpected people and organisations. Quite a few high-ranking Israeli politicians and generals referred occasionally to the analogy. A recent book by Sasha Polakow-Suransky about Israel’s ties with the apartheid regime registers these references quite pedantically and systematically.

A typical example is one made by the former Israeli Chief of the General Staff, Rafael Eytan, in front of a student convention at Tel Aviv University:

Blacks in South Africa want to gain control over the white minority just like Arabs here want to gain control over us. And we too, like the white minority in South Africa, must act to prevent them from taking us over.

The acknowledged similarity is probably one of the main impulses behind Israel’s long-lasting support for the regime even at the time when Western governments began to shun it. This odd behaviour did not escape Nelson Mandela when he was finally liberated from Robben Island. When an Israeli of South African origin wrote to him, shortly after his release from prison, saying that he was a ‘latter day Moses who was about to reach the Promised Land’ (this was before the elections that brought Mandela to power as president of South Africa), Mandela replied: ‘South Africa will never forget the support of the state of Israel to the Apartheid regime’.

Ilan Pappe
This book is also interested in such an analogy and comparison, but it is, of course, motivated by different impulses from those pushing Israeli leaders into the hands of the apartheid regime. It is moved by the same sense of duty that led academics, activists and generally interested people in the Israeli–Palestinian conflict to refer to South Africa as a favourite point of compassion and inspiration. What unites all those engaged in such a comparison – be it professional, journalistic or popular – is that they all accept the validity of such an exercise. What is missing, we felt, was a more thorough examination of this comparison.

One of the reasons why, academically, this comparison was late in coming is the strong opposition to it in the pro-Israeli Western academia – and, of course, among the Israeli research community.

In fact, most Israeli scholars and politicians are still enraged, even if they belong to the ‘Peace Camp’, by any such comparison. This is not surprising: even a slight or indirect implication of Israel as an apartheid state has far-reaching implications for the international legitimacy of the Jewish state.
And yet even a cursory knowledge of Israeli policies and practices on the one hand, and familiarity with the definition in the international law of apartheid on the other, begs at least a serious consideration for the validity of such an analogy.

The International Convention on the Suppression and Punishment of the Crime of Apartheid, adopted by the UN General Assembly in November 1973, regards apartheid as ‘a crime against humanity’ and a violation of international law. Apartheid means ‘similar policies and practices of racial segregation and discrimination as practised in southern Africa’. Such policies are criminal as they are ‘committed for the purpose of establishing and maintaining domination by one racial group of persons over any other racial group of persons and systematically oppressing them’.

Despite strong pressure from Israel and its friends not to use the language of apartheid about the Palestine situation, it does seem that worldwide, especially in the wake of Jimmy Carter’s clear reference to Israeli policy in the Occupied Territories as an apartheid regime, the need for such a comparison is deemed not only legitimate but even helpful.

This volume wishes to launch a professional and academic discussion less about the validity of the comparison, which this editor takes for granted, but more about the similarities and dissimilarities of the two case studies. This is just the beginning of this comparative search and therefore this volume is not a comprehensive project – for this to happen one needs more than one collection and a longer and sustained academic effort.


Ilan Pappé is Professor of History at the University of Exeter, co-director of the Exeter Centre for Ethno-Political Studies, director of the Palestine Studies Centre at the University of Exeter

Friday, 25 September 2015

Imogen Tyler recommends...

Imogen Tyler is a senior lecturer in Sociology and co-director of the Centre for Gender and Women's Studies at Lancaster University.
She specializes in the area of marginal social identities, a topic which brings together research on asylum and migration, borders, sexual politics, motherhood, race and ethnicity, disability, social class and poverty. Her work focuses on representation and mediation and the relationship between social theory and activism. 
Other recent publications include a special issue of Feminist Review (with C. Gatrell) on the theme of 'Birth', a special issue of Studies in the Maternal (with T. Jensen) on the theme of 'Austerity Parenting', a special issue of Citizenship Studies on the theme of `Immigrant Protest` (2013) and a book (with K. Marciniak), Immigrant Protest: Politics, Aesthetics, and Everyday Dissent (SUNY, forthcoming). 

Imogen is also the author of Revolting Subjects: Social Abjection and Resistance in Neoliberal Britain (Zed Books), she shares her favourite from our list below.

We still have much to learn from the Nigerian sociologist Ifi Amadiume, and classics such as Male Daughters, Female Husbands: Gender andSex in an African Society (1987). In this book, now almost 30 years old, Amadiume blows apart colonial and racist myths about the place of women in African societies and, in so doing, radically challenges a number of foundational assumptions about sex/gender, patriarchy and capitalism. 

Male Daughters, Female Husbands is a historically grounded ethnographic study of the Igbo community in South Eastern Nigeria which details, among many other things, the ways in which (wealthy) women in pre-colonial Igbo communities were able to assume the role of "female husbands" and "male daughters," exercising considerable social power. Amadiume argues that the “matrifocality” of these pre-colonial societies poses a fundamental challenge both to Eurocentric accounts of African history and society and to white western feminist “saviour mentalities”. Amadiume details how the violent oppression of women in Africa underpins the enclosure of the commons, and the inexorable spread of colonial power: A patriarchal-capitalist logic which, as Silvia Federici has detailed, also underpins European modernity. 
Male Daughters, Female Husbands exposure of how particularly oppressive forms of European-style gender inequality and where imported into Africa is an essential resource for understanding neo-colonial political economies today. We need these histories to understand the chaos and inequality of the political present, and the ways in which a political rhetoric of freedom and equality continue to be perversely used to export inequality today. As Amadiume continues to remind us, "the need to support the cause of feminism and social justice in Africa has never been stronger than it is under the present condition of chronic neo-colonialism."

Imogen Tyler is a Professor of Sociology at Lancaster University and is author of Revolting Subjects: Social Abjection and Resistance in Neoliberal Britain (Zed, 2013).

Back to Uni Reading List: Politics

It's time to radicalise your bookshelf with our recent titles in Politics.

We Kill Because We Can: From Soldiering to Assassination in the Drone Age by Laurie Calhoun
Welcome to the Drone Age. Where self defense has become naked aggression. Where courage has become cowardice. Where black ops have become standard operating procedure. 
In this remarkable and often shocking book, Laurie Calhoun dissects the moral, psychological and cultural impact of remote-control killing in the Twenty-First Century. How can a mafia hitman be likened to a drone operator conducting a targeted killing? What difference, if any, is there between the Trayvon Martin case and the drone killing of a teen in Yemen? We Kill Because We Can takes a scalpel to the dark heart of Western foreign policy in order to answer these and many other disturbing questions.

The Racket: A Rogue Reporter vs. the Masters of the Universe by Matt Kennard
While working at the Financial Times, investigative journalist Matt Kennard uncovered a scam - a deception and rip-off of immense proportions.
From slanging matches with Henry Kissinger to afternoon coffees with the man who captured Che Guevara, Kennard’s unbridled access over four years to the crème de la crème of the global elite left him with only one conclusion. The world as we know it is run by a squad of cigar-smoking men with big guns, big cash and a reach much too close to home.
But, through encounters with high-profile opponents of the racket, such as Thom Yorke, Damon Albarn, Gael García Bernal and others, Kennard shows that human decency remains. Now it’s time for the world’s citizens to also uncover the racket.

First Measures of the Coming Insurrection by Eric Hazan and Kamo
We have witnessed a beginning, the birth of a new age of revolt and upheaval. In North Africa and the Middle East it took the people a matter of days to topple what were supposedly entrenched regimes. Now, to the west, multiple crises are etching away at a ‘democratic consensus’ that has, since the 1970s, plagued and suppressed any sparks of revolutionary potential. It is time to prepare for the coming insurrection.
In this bold and beautifully written book, Eric Hazan and Kamo provide a short account of what is to be done in the aftermath of a regime’s demise: how to prevent any power from restoring itself and how to reorganize society without a central authority and according to the people’s needs. They argue that neither a leadership reshuffle, in the guise of constitutional progress, nor a transition period between a capitalist social order and a communist horizon will do.

Decolonizing Solidarity: Dilemmas and Directions for Supporters of Indigenous Struggles by Clare Land
In this highly original and much-needed book, Clare Land interrogates the often fraught endeavors of activists from colonial backgrounds seeking to be politically supportive of Indigenous struggles. Blending key theoretical and practical questions, Land argues that the predominant impulses which drive middle-class settler activists to support Indigenous people cannot lead to successful alliances and meaningful social change unless they are significantly transformed through a process of both public political action and critical self-reflection. 
Based on a wealth of in-depth, original research, and focusing in particular on Australia, where - despite strident challenges - the vestiges of British law and cultural power have restrained the nation's emergence out of colonizing dynamics, Decolonizing Solidarity provides a vital resource for those involved in Indigenous activism and scholarship.

More Politics here.

Paul French recommends...

Paul French is a leading expert on North Korea and is a widely published analyst and commentator on Asia.  His previous books include A History of North Korea, Carl Crow - A Tough Old China Hand: The Life, Times, and Adventures of an American in Shanghai, and Through the Looking Glass: China's Foreign Journalists from Opium Wars to Mao.

Paul was awarded the 2013 Edgar for best fact crime for his international best-seller Midnight in Peking.

Most recently, he has just released the new edition of North Korea: State of Paranoia for Zed Books. 

We asked Paul about his favourite Zed Book, below is his response.

When you edit a series of books you love every one of them.  But the publishing Gods being what they are, some books just don't get the attention they deserve - perhaps they're too ahead of the curve?  I really believe Gabriel Lafitte's Spoiling Tibet: China and Resource Nationalism on the Roof of the World was one such book.  So I'm grabbing this opportunity to talk about it again - it's still amazingly prescient and an in-depth study of something that affects us all - the spoilation of Tiber and the dislocation of its traditional communities to mine rare earths - the chemical elements found in every smart phone and laptop as well as, perhaps ironically, most clean energy, health care and environmental technology.

This year is the 50th anniversary of the Chinese occupation of Tibet.  Beijing chose to celebrate this occupation by holding a large parade in the Tibetan capital Lhasa featuring largely marching Chinese soldiers to underline the occupation of the territory Beijing calls an "autonomous region".  Spoiling Tibet talks about a very different place; a place where Beijing's 12th Five-Year Plan, from 2011 to 2015, has led to massive investment in copper, gold, silver, chromium and lithium mining in the region, with devastating environmental and social outcomes.  These "outcomes" include destruction of traditional nomadic pastoral lands, spoliation of air, water and earth, forced relocation, Chinese occupation of Tibetan ancestral lands and vast profits extracted from Tibetan earth and made by Chinese state companies controlled by the Communist Party.

Your laptop, e-reader, smart phone likely contain rare earths extracted from Tibet's sacred mountains.  The profits from these mining operations goes to support the continued harsh Chinese repressive state apparatus in Tibet.  Yet it remains a little known and talked about issue.  Gabriel's book describes the process and the consequences in detail and so deserves to be read at a time when Tibetans are fighting to save their physical environment as well as their religious landscape from destruction.

Paul French is the series editor for Zed Books Asian Arguments and tweets on @chinarhyming 

Back to Uni Reading List: Economics

As part of our 'Back To Uni half-price sale' this week, we've put together a few reading lists of our highlights over the last year if you just can't pick (we know, you want them all).

We're kicking off with Economics (because Yanis).

The Global Minotaur:America, Europe and the Future of the Global Economy by Yanis Varoufakis

Yanis Varoufakis, former finance minister of Greece and the 'emerging rock-star of Europe's anti-austerity uprising', explodes the myth that financialisation, ineffectual regulation of banks, greed and globalization were the root causes of both the Eurozone crisis and the global economic crisis. Rather, they are symptoms of a much deeper malaise which can be traced all the way back to the Great Crash of 1929, then on through to the 1970s: the time when a Global Minotaur was born.
An essential account of the socio-economic events and hidden histories that have shaped the world as we now know it.

Change Everything: Creating an Economy for the Common Good by Christian Felber

Is it possible for businesses to have a bottom line that is not profit and endless growth, but human dignity, justice, sustainability and democracy? Or an alternative economic model that is untainted by the greed and crises of current financial systems?
Christian Felber says it is. Moreover, in Change Everything he shows us how. The Economy for the Common Good is not just an idea, but has already become a broad international movement with thousands of people, hundreds of companies, and dozens of communities and organizations participating, developing and implementing it. This is a remarkable blueprint for change that will profoundly influence debates on reshaping our economy for the future.

Co-operatives in a Post-Growth Era: Creating Co-operative Economics by Sonja Novkovic and Tom Webb (eds)

For the past three decades, neoclassical doctrine has dominated economic theory and policy. The balance of power has shifted to protect private interests, resulting in unprecedented damage to the environment and society, with no solution in sight as more austerity and less government continues to be posited as the answer to the oncoming waves of crisis.
It doesn't have to be this way. Featuring a remarkable roster of internationally renowned critical thinkers, Co-operatives in a Post-Growth Era presents a feasible alternative for a more environmentally sustainable and equitable economic system - specifically, the co-operative business model.

More of our Economics titles here.

Thursday, 10 September 2015

Nawal El Saadawi events in London

We are very excited to be welcoming Nawal El Saadawi to London in October to mark the release of beautiful new editions of her classic works Woman at Point Zero, The Hidden Face of Eve and God Dies by the Nile and other Novels.

Described by the Financial Times as 'The most influential feminist thinker in the Arab world over the past half-century', Nawal El Saadawi is the author of over 50 books and short stories. She was imprisoned in the 1980s by Egyptian president Anwar Sadat after publishing a feminist magazine and fled Egypt in 1988 after receiving threats from conservative Islamists. She returned to Cairo in 1996 and took part in the 2011 Egyptian revolution.

Vidisha Biswas, sales director at Zed Books, says: “These beautifully redesigned classics are a celebration of our biggest selling author Nawal El Saadawi, one of the leading feminists of her generation who has braved prison, exile and death threats in her fight against female oppression. These titles will shock, move, inform and inspire readerships old and new.”

We hope you can join us at one of the events which Nawal is doing in London in October, please follow the links below for more details:


Friday, 4 September 2015

Richard Falk - Playing Three Dimensional Chess in the Middle East

Kurdish PKK fighters are the most effective fighting force against ISIS

The terrifying forward march of ISIS is currently being resisted most effectively by Kurdish leftist fighters in the PKK. 

However, these PKK fighters are facing increasing attacks and repression from the Turkish government, who seem to view them as more than an enemy than ISIS itself. 

What is going on? In this blog post, Richard Falk - world renowned expert on international law and author of Chaos and Counterrevolution: After the Arab Spring, provides an illuminating guide to the complex situation.


Three dimensional chess, played on multiple boards, is an immense challenge because of its great complexity. There are so many variations and combinations as to make it impossible to develop guidance for players seeking improvement.

And so it seems in the Middle East. The complexity is overwhelming the players producing a continuous series of adjustments that seem to juggle the identity of friends and enemies with little rhyme or reason.

Take the recent alignment of Turkey and the United States with the announced goal of battling ISIS. At the same time, Turkey has greatly escalated its effort to limit, if not destroy, its Kurdish adversaries at home and in Syria. What makes this unfolding situation particularly puzzling is that the Kurdish armed groups, including the Turkish Workers Party (PKK) and its Syrian offshoot, the Democratic Union Party (PYD), have proved the most successful forces combatting ISIS in recent months.

Breakdown of negotiations between the PKK and the Turkish government

From Ankara’s perspective there is logic to the seeming irrationality of stepping up the fight against the strongest enemy of your main enemy. Ever since the Iraqi Kurds established their state within a state in northern Iraq and the Syrian Kurds seemed within reach of their goal of establishing Rojava (or Syrian Kurdistan), the Turkish Kurdish movement, led by PKK, has evidently had second thoughts about negotiating with the Turkish government an end to their struggle for rights and autonomy. This Kurdish rethinking was heightened after the Turkish elections of June 7th failed to give the governing AKP the electoral majority it needed to form a government while the Kurdish party, HDP, with presumed links to the PKK, gained more than 10% of the vote, and with it, 80 seats in the Turkish Parliament.

In this atmosphere of political uncertainty the Turkish government faced a mounting internal security threat. Between June 7 and July 24, there were over 281 violent attacks carried out in Turkey by PKK operatives, including several lethal assaults on police and military personnel. In retaliation the Turkish armed forces launched air attacks against PKK positions in Qandil Mountain in northern Iraq. In the midst of this upsurge of violence the PKK on July 11 unilaterally ended the two-year ceasefire with the government. President Erdogan speaking for Turkey responded by terminating the  reconciliation process that in recent years had been seeking an end to the conflict by diplomatic compromise.

Protesters in Gezi Park 

Impact of Gezi Park protests

The Turkish government since 2004 has made it a controversial centerpiece of its program to find ways to end the 30 year conflict with the Kurds responsible for the loss of an estimated 40,000 lives. Progress was made so long as the AKP was in secure control of the Turkish governing process, but as its hold on power weakened after the Gezi Park demonstrations in 2013, high-level corruption scandals, and the open break with the Gulen Movement, the PKK seemed to reevaluate its options.

Additional factors push against internal peace in Turkey. The Kurdish militants in the Qandil base areas apparently reacted to two developments: first, the political success of Kurdish armed struggle in Iraq and Syria; secondly, a concern that the rewards of the reconciliation process would be reaped by Kurdish politicians and business people who took no risks to advance the national movement in Turkey, while the PKK fighters enduring decades of hardship and risk would not be benefitted by a negotiated political solution.

If these were not complications enough, there are other critical issues involved, perhaps, most of all, the Turkish preoccupation with toppling the regime in Damascus of Bashir al-Assad. It is relevant to recall that before 2011, and the Arab Spring, when Turkish regional diplomacy was capturing the imagination by its call for ‘zero problems with neighbors,’ it was Assad’s Syria that served as the poster child of the policy. Earlier tensions were dissolved, friendship at the leadership levels of both countries was exhibited, and Syria and Turkey overnight reconciled their differences.

The Arab Spring

Then came the Arab Spring, and when it hit Syria shortly after the successful uprisings in Tunisia and Egypt, the Damascus government responded with fury against initially peaceful demonstrators. Turkey, along with the UN, tried for months to coax the Assad leadership into meeting the demands of the Syrian people by instituting democratic reforms. Assad seemed to agree, but no power-sharing steps were taken. Instead there was a spread of insurgent activity, and an intensification of violence by the government, including the indiscriminate bombing of Syrian cities and towns. The bodies piled up and tens of thousand refugees streamed across the Turkish border, creating a major humanitarian challenge.

Against this background, Turkey increasingly sided with the rebel forces.  Istanbul becoming the center of operations for anti-Assad political activity of the Friends of Syria ( a loose coalition put together by the United States and Turkey). Various forms of military assistance were channeled to the Free Syrian Army and other rebel forces in Syria by Turkey. Early in the conflict Ankara believed that the balance of forces had shifted against Assad, and that the Syrian regime would collapse in a few weeks. It was mistakenly supposed that Syria, like Libya, would be easy prey to a popular uprising, forgetting that the Damascus government had loyal support from a series of important Syrian minorities as well as from large segment of the urban business world.

The Turkish leadership was deeply criticized by its internal opponents for dragging the country into the Syrian maelstrom. The secular opposition, centered in the CHP party, accused the Erdogan leadership of pursuing a dangerous course of action throughout the region, including Syria, by backing an Islamic centered opposition. It seemed increasingly clear that the al Nusra Front the core of opposition to Assad was linked to al Qaeda. In this mix, ISIS came along to mount an even bigger challenge to Damascus. It is not surprising that given these developments the Turkish leadership was initially reluctant to confront ISIS, the biggest threat to their biggest enemy! And still wobbles on the tightrope that stretches between opposing Assad and fighting PKK and ISIS.

All of the above makes clear that playing the diplomatic version of three dimensional chess in the Middle East is not a game for beginners. And yet  beginners are dominating play with horrible consequences for the affected peoples.


For more on the PKK see also Paul White's The PKK: Coming Down from the Mountains


Wednesday, 26 August 2015

Yanis Varoufakis on China: Between the West's Bankruptocracy and the East's fragile strength

In this extract from The Global Minotaur: America, Europe and the Future of the Global Economy, Yanis Varoufakis looks at the underlying weaknesses of the Chinese economy, its deep and complex connections with the rest of the global economy and the policy dilemmas it will face in the future. 

China soars, then plunges into angst 

On 4th December 2010, Wikileaks posted an official cable relating a conversation (circa 28th March 2009) between US Secretary of State Hillary Clinton and Australian Prime Minister Kevin Rudd. In it we read: The Secretary also noted the challenges posed by China's economic rise, asking, "How do you deal toughly with your banker?" The reader may, understandably, protest a startling omission in this book: While promising to speak to the future of the world economy, there has been almost no mention of China. Undoubtedly, the swashbuckling reemergence of what was, historically, one of the world's leading powers is the big story of our times. Its bearing upon the future will be as significant as that of the United States during the 20th century. Of this I have no doubt.

Nevertheless, neither the nature of China's rise nor its future impact can be understood without a good grasp of the world as shaped by the Global Minotaur. For, come to think of it, the Soaring Dragon not only grew up in an environment shaped by the Global Minotaur but must also mature in an unstable world occasioned by the latter's demise. Deng Xiao Ping's new course for China was modelled on Japan and the South East Asian tigers. The organising principle behind the Chinese plan for growth was that of a dual economy in which special economic zones would punctuate China with small Singapores or Hong Kongs, islands of intense capitalist activity in a sea of unlimited labour power. Meanwhile, the centre would direct investment (very much along the lines of the Japanese model) but  would also negotiate technology transfers and foreign direct investment directly with Western and Japanese multinational corporations.

China's global positioning

As for China's global positioning, it would resemble that of South East Asia, in seeking sources of demand for its export-led growth from the United States and Europe. It can be safely suggested that China owes its élan to the Global Minotaur. American, European and Japanese multinationals played a crucial role in setting up shop in China and using its low costs in order to export to the rest of the world, especially to the United States. At the same time, cheap Chinese imports into the United States has helped Wal-Mart style American companies to squeeze prices to unbelievably low levels, helping in the drive to minimise US inflation, a key requirement (as we saw in Chapter 4) for the continuing capital flows into the United States that kept the Minotaur happy and joyous. As China was learning the ropes, becoming one of the Minotaur's favourite feeders, its leaders became keen observers of US policies that had the potential to affect China's growth path. In particular, they learned important lessons from the 1985 Plaza Accord which, as we saw, condemned Japan to an untenable position, and from the 1998 South East Asia crisis that was caused by America's successful bid to rid the tigers of financial regulation and expose their financial markets to the vagaries of Wall Street, the City and the European banks.

A widely accepted current hypothesis is that, because of these experiences, the Chinese are resisting America's asphyxiating pressures to revalue the Chinese currency (the Remnibi, or RMB). Seemingly, following the Crash of 2008, the United States are pushing hard for an RMB re-valuation for the same reasons they pushed the Japanese in the 1980s to sign the Plaza Accord. The conventional view here is that the US government, in its haste to do something about the low level of demand in its domestic market, is trying to do what all governments do in a recessionary climate: To drum up demand from abroad, usually by devaluing their currency (or, equivalently, by enticing foreigners to re-value theirs). Once more, I do not thing that the standard explanation is the whole story. While American firms whose base is predominantly in the United States are pushing for an appreciation of the RMB, for the reasons stated above, it is not at all clear that the heralded currency wars between China and the United States are of the traditional type just put forward.

There are two reasons for remaining sceptical on this issue: First, it is not at all clear that US policy makers have accepted that the Global Minotaur is finished; that the strategy of expanding, or at least not shrinking, the US twin deficits must be abandoned. Secondly, some of the largest, best endowed and most dynamic American corporations would be hit hard if the RMB were to re-value. For they are already producing a great deal of their output within China, before exporting it to the rest of the world. An RMB appreciation would cut into their profit margins. Every iPad, each HP computer, even American cars (many of which use Chinese manufactured parts) will have to increase in price. Indeed, while the American government is lobbying with Beijing to re-value the RMB, countless Western multinationals are threatening China to withdraw (and resettle in India or even Africa) if the RMB is allowed to rise significantly against the US dollar.

China's impact on Latin America

Besides the US-Chinese nexus, China's startling growth made an indelible mark on the rest of the developing nations. Some were devastated by the competition but others were liberated from a relationship of dependence on the West and its multinational corporations. Mexico was among the first group of countries to have suffered from China's rise. Because it had chosen to invest much energy into becoming a low-wage manufacturer on the periphery of the United States (and a member of the US-Canada-Mexico free trade zone known as NAFTA), China's emergence was a nightmare for Mexican manufacturers. However, it was a godsend for countries ranging from Australia (which in effect put its vast mineral resources at the disposal of Chinese firms) to Argentina and from Brazil to Angola (which in 2007 received more funding, as direct investment mainly into its oil industry, than the IMF had leant to the whole world). Latin America is possibly the one continent that was changed forever by China's emergence into the Global Minotaur's major feeder. Argentina and Brazil turned their fields into production units supplying 1.3 billion Chinese consumers with foodstuff, and also dug up their soil in search of minerals that would feed China's hungry factories. Cheap Chinese labour and China's market access to the West (courtesy of World Trade Organisation membership) is allowing Chinese manufacturers to undercut their Mexican and other Latin American competitors in the manufacture of low value-added sectors such as shoes, toys and textiles.

This two-pronged effect causes Latin America to de-industrialise and return to the status of a primary goods producer. These developments have a global reach. For if Brazil and Argentina turn their eyes toward Asia, as they already have started doing, they may abandon their long term struggle to break into the food markets of the United States and Europe, from which they have been barred by severe protectionist measures in favour of American, German and French farmers. Already, Latin America's shifting trade patterns are affecting the orientation of a region which was, until very recently, thought of as the United States' backyard. Latin America's governments choose not to resist their countries' transformation into China's primary goods producers. They may not like deindustrialisation much but it is a far cry from the prospect of another crisis like that of 1998-2002 and another visit from an IMF seeking to exact more pounds of flesh from their people. Returning to Secretary Clinton's remark at this section's beginning, it is clear what she meant by referring to China as America's banker. As we see in the graph below, the United States has, since 2000, shifted its reliance for financing its budget deficit from Europe and Japan to China.

US - China currency wars

But what exactly was Mrs Clinton referring to when she hinted at "dealing toughly" with China? Did she mean, yet again, pressurising Beijing to revalue its currency? And was the reason the stated purpose of limiting the US trade deficit with China? Possibly. However, an even more pressing reason is to preserve the profits of US multinationals which, since the 1980s, had set up production facilities in countries like Mexico and Brazil, and which are now under threat from severe Chinese competition. In a Australian Broadcasting Company (ABC) radio interview, Mexican economist Rogelio de la O stated in 2009: "Even strong companies that are subsidiaries of international firms are very, very 18 America's bankers The graph below looks at four distinct years and decomposes the ownership of US assets (public and private) by non-US government or government controlled financial institutions. It is clear that after 2003 America's old protégés, Europe and Japan, are fading as its financial supporters. The Chinese state is, meanwhile, pushing its contribution through the roof. In this sense, the Minotaur's recent travails have posed a serious threat to the US assets that China already owns. Increase in US assets (in $ billion) owned by foreign state institutions America's conundrum in the face of stupendous Chinese growth is that the Crash of 2008 stopped the Minotaur from quickmarching the Chinese to its tune. Up until then, the Chinese depended upon the Minotaur for their trade surpluses and were, thus, forced to reinvest them in the United States, either by buying US government debt or in the private sector.

Death of the Global Minotaur

With the Minotaur no longer capable of absorbing increasing quantities of Chinese goods, at a rate similar to the pre-2008 period (especially now that China has shifted production to high-tech, big item products like superfast railways), China does not automatically need to send all of its capital to New York. This leaves China with only one reason for investing hugely in US assets: the fact that it has already invested hugely in... US assets and does not want to see its people's accumulated hard labour lose much of its worth were the United States to be hit by a public debt crisis. At the same time, and despite its public proclamations, the United States' government does not have the backing of a large segment of American corporations to pursue a Plazatype agreement that would see the RMB slide against the dollar.

Unable to expand its deficits, like it did when the Minotaur was exploding with youthful energy, and lacking the clout to do to China what it had done to Japan in 1985, the United States is finding it hard to decide how to deal with China. discouraged at the way their volumes have fallen and their margins have been totally squeezed. The China effect is kind of overwhelming."  China too, unable to secure sufficient demand for its industries in the absence of a roaring Minotaur, is in a bind and has ended up responding in surprising ways. For instance, Brazil's Central Bank revealed that, while in 2009 China's foreign direct investment in the Latin American country was only $300 million, in 2010 it rose to $17 billion. Why? What was China up to? As everyone knows, for a while now, Brazil, Argentina etc. were being enriched by the Dragon's purchases of iron ore, soya beans, oil, meat etc.

But, when the Global Minotaur perished in 2008, and these economies continued to grow on the back of their primary exports to China, their currencies shot up in relation to the dollar. Consider three immediate effects of these developments: First, Latin American high growth rates attracted a new carry trade, this time from the United States whose growth rate and interest rates hovered around zero, thus motivating a capital flight away from America. Secondly, new Chinese industrial imports rushed into Brazil and Argentina as their local prices were falling, in view of the local currencies strengthening vis-à-vis the dollar (and, by pegged association, the RMB). Thirdly, to perpetuate this cycle, China increased its investments in Latin America. Now, this third development is of some significance. Up until recently, China would invest in Africa and elsewhere in projects the ultimate purpose of which was to secure raw materials for its domestic industries.

With these new investments into countries like Brazil, China seems to be pursuing a new strategy: That of creating something like its own Global Plan! Of directing part of its outbound capital flows to countries other than the United States in an effort to stimulate, there, in those foreign places, demand for Chinese goods. The broader significance of China's relation to the rest of the emerging nations comes in the form of clues on how China will seek to address the gaping hole left in the overall demand for its exports by the Minotaur's 2008 misfortune. What is clear is that China, the United States and the rest of the emerging nations will, from now on, engage in a triangular game of chicken. With no dominant party in sight, and no clear objectives for any of them, the prospects of a new, efficient (formal or informal) Global Surplus Recycling Mechanism seem slim and distant. Which means that the Minotaur's legacy is a rather bleak one for the world economy.

Epilogue: Between the West's Bankruptocracy and the East's fragile strength

Judging by the mood in the centres of power, that which we used to call the Third World is having a good crisis. The 'emerging economies' are growing at the expense of Europe and the United States, the two loci of long-established capitalism which, regrettably, have spawned a new socio-economic 'system': Bankruptocracy. The Global Minotaur's 2008 moment has raised the prospect of a worldwide realignment. And yet, the Minotaur is still in the room, threatening to wreak havoc. Wounded it may be, perhaps mortally, but its imprint is still all over our world. When it was hurt, and Wall Street's near-collapse sapped its energy, America's abandoned protégés failed to rise to the occasion. 20 Europe entered a crisis of its own device which is endangering sixty years of European integration. South East Asia found itself more dependent than before on a powerful neighbour, even if this time it is not Japan but China. Japan itself, which had its own recession well before the Minotaur's infirmity, seems to have made its peace with stagnation. Of all the major non-US economic powerhouses, only China is dynamic enough to pretend to the Minotaur's sceptre. But China knows it cannot yet perform that illustrious role, unable to create demand even for its own output. Its most recent efforts to create its own Global Plan, in particular in relation to Latin America, stirred up tensions with its potential protégés (e.g. Brazil), reminding us that America's own Global Plan only came to pass with minimal resistance because, at the time of its design and implementation, the rest of the world laid in ruins. Some think that China only needs to bide its time, certain that in its fullness it will prevail.

The Chinese leadership is less sure. They understand intimately the scarcity of total demand in the post-Minotaur world. They know that Germany, Japan and China are all fully reliant for their very survival on maintaining aggressive, expanding surpluses. But this also requires someone to absorb those surpluses as deficits. That someone used to be the Global Minotaur. Now, it is gone and nothing seems likely to replace it. To buy time, the Chinese government is stimulating its growing economy and keeps it shielded from currency revaluations, in the hope that vibrant growth can continue. But they see the omens. And they are not good. On the one hand, China's consumption-toGDP ratio is falling; a sure sign that the domestic market cannot generate enough demand for China's gigantic factories. On the other hand, their fiscal injections are causing real estate bubbles. If these are unchecked, they may burst and thus cause a catastrophic domestic unwinding. But how do you deflate a bubble without choking off growth? That was the multi-trillion dollar question that Alan Greenspan failed to answer. It is not clear that the Chinese leadership have an answer either.