IPS Blog

No Peace Dividend? Not So Fast

This blog post originally appeared on The Hill’s Congress Blog.

Obama administration’s budget included a promissory note. It will take them a few more weeks to tell us what they plan to spend next year on the Afghan War. Their intention to bring that war to an end, though, is clear.

Nobel Prize winning economist Joseph Stiglitz and his Harvard colleague Linda Bilmes are predicting that this will produce “little in the way of a peace dividend for the U.S. economy once the fighting stops.” They base this bleak assessment on the kinds of meticulous calculations that anchored their 2008 book The Three Trillion Dollar War: on the huge sums we will and must be spending to care for wounded veterans, for example, and the money squandered when war support functions were massively and unnecessarily shifted to private contractors.

They are surely and unfortunately right that what we will save by ending these wars has already been “spent” on the future, baked-in costs of misguided decisions made during those wars. But that doesn’t mean that the prospect of a “peace dividend” is gone.

That’s because the ending of the wars is coinciding with a broader defense downsizing, propelled by the battle over the budget deficit. And the effects of automatic budget cuts known as “sequestration” on the Pentagon budget will actually produce a smaller downsizing than any of the previous postwar periods: smaller than after the Cold War, or the Vietnam War, or the Korean War.

There is more downsizing to do, therefore, on a military budget that, adjusted for inflation, climbed higher during the post-9-11 period than any budget since World War II. During this period the idea of making choices among military priorities was simply shelved. And this budget grew on top of the separate budget that has funded the post-9-11 wars. With an economy starved from lack of public investment, we need that peace dividend. Will we get one? You wouldn’t think so, from the looks of the administration’s Pentagon budget request this year, which fails even to stay within the limits set by sequestration.

Jeff Attaway/Flickr

Jeff Attaway/Flickr

But there’s better news in what the new Defense secretary has been saying. Chuck Hagel’s first major speech April 3 at the National Defense University referred to the “inevitable downturn in defense budgets.” He criticized past weapons spending programs that produced “systems that are vastly more expensive and technologically risky than what was promised or budgeted for.” Hagel has committed to a serious reexamination of his Department’s spending practices, a “Strategic Choices and Management Review,” that will actually tie our national security strategy to the budget available to pay for it.

It will identify actual priorities from among the long list of missions the Pentagon has claimed for itself in recent years. The last major Pentagon reorganization, he noted, came during the height of the Cold War, when “[c]ost and efficiency were not major considerations.” He promises that the new review will take seriously the proposition that “DoD is incentivized to ask for more and do more,” and work to change this budget-busting combination.

Will he succeed? No telling, as yet. The first Obama administration (and last Bush administration) Defense Secretary, Robert Gates, had some of the same intentions, most of them unrealized. But the post-sequester world is different. In this world we know it really is possible to shrink the Pentagon’s budget, despite the best efforts of the defense industry, its congressional allies, and much of the Pentagon staff itself to keep it climbing ever higher.

To get to a Pentagon budget that is sized for our new postwar world, the downsizing momentum needs to keep going. While the war budget declines, we need to make sure that the “regular” Pentagon budget comes down with it. This is where a peace dividend can be found. We can’t give up on that goal so easily.

Pemberton is a research fellow at the Institute for Policy Studies and co-author, with Lawrence Korb of the Center for American Progress, of the Unified Security Budget for the United States.

Domestic Attacks Like the Boston Marathon Bombing Add Insult to Injury

Along with those killed in the Boston Marathon bombing, the numbers tossed around of how many will lose limbs are in the dozens. It’s tragic enough when veterans return from foreign wars with limbs missing. But, as Iraqis, Afghans, not to mention Cambodians, know, limbs lost on one’s home soil only add insult to injury.

If the Boston Marathon bombing is the result of an attack by a nation’s own citizens, it reflects poorly on that nation’s security and its civil society. If it’s the result of an attack by foreign extremists, we’re enraged by the harm that comes to innocents and humiliated that our security has been breached. If 9/11 has any small favor to thank goodness for, it’s that the lethality of its component incidents left us without many walking wounded to inflame the wound and rub our face in the security failures.

Should the Boston Marathon bombing be the work of foreign extremists, much as I personally am enraged by thought of their supporters celebrating, we need to be on guard against hate crimes and refrain from profiling. Nor should we surrender to the fear that engulfed us after 9/11 and enact yet more layers of security and measures that further limit civil liberties. Whereas those responses are on the back end — the reactive and defensive — we need to respond with the leading edge: foreign policy.

Should the suspects prove to be from the Middle East, retaliatory drone strikes or JSOC attacks will only add fuel to the fire. Meanwhile, the immediate aftermath of a tragedy is no time to interject commentary that even hints at blaming the victim. But our first line of defense is acknowledging that U.S. policies — such as stationing forces on Arab soil, failing to pressure Israel to halt their oppression of Palestinians, invading Iraq invasion, and unleashing drone attacks on Afghanistan, Pakistan, Somalia and Yemen — stoke fires and create enemies.

Ultimately, our best defense is not a good offense: it’s keeping the number of people we need to defend ourselves against to a minimum.

Structural Adjustment: Former President Ben Ali’s Gift to Tunisia (Part One)

Cross-posted from the Colorado Progressive Jewish News.

Tunisia's Baguette Revolution, January 2011

Tunisia’s Baguette Revolution, January 2011

Faced with a deepening socio-economic crisis that has only intensified since the collapse of the Ben Ali government in January, 2011, it appears more than likely that Tunisia is about to enter into a major agreement with the International Monetary Fund (IMF) for a $1.7 billion loan. As is almost always the case, the loan is conditionally based upon Tunisia fulfilling what the IMF calls structural adjustment criteria, a part of which has already been implemented – eliminating the subsidies on fuel which has increased their cost.

All this is being done in the classic IMF fashion with as little public discussion as possible either with the Tunisian government – its Constituent Assembly – or with civil society, which have had no input whatsoever into the process. For an international organization that talks the talk about ‘transparency’. its long held traditions of secrecy, especially where it concerns granting sizable loans to semi-peripheral and peripheral countries, is much more the norm.

That said, in this new post-Ben Ali era, confused and directionless as it is economically and politically, one thing that the Tunisian people have won is their freedom of speech. As a result, alas (for IMF, Tunisian Central Bank and Finance Ministry bureacrats), it has been more difficult to hide the details and conditions for this loan than in the past. A growing number of Tunisia’s talented political and economic researchers have been able to break through the traditional wall of silence to unearth the details of the loan and press the Tunisian government to do what it really seems to want to avoid – engage in a public, wide-ranging discussion on the loan itself, and more basically, on the direction of the economy itself.

Many of the revelations about the loans have appeared in Arabic, French and English at the Tunisian alternative media website, Nawaat.org, which has broken key elements of the story to the Tunisian public, enough so that government has been pressed to publicly respond. It is precisely this kind of discussion which has been missing from the Tunisian public since the Ennahda-led government came to power in the October, 2011 elections.

During the Ben Ali years in power (1987-2011), Tunisia was often cited as an IMF poster-child, i.e., IMF structural adjustment might have caused ‘problems’ elsewhere – but in Tunisia, at least according to IMF publicity, it seemed to be working. This particular illusion was blown to bits so to speak by the emergence of the massive social movement that brought down the Ben Ali government. When the mask was ripped off, it turns out that not only had IMF structural adjustment policies not helped Tunisia, they were a major contributor to the country’s socio-economic crisis. IMF statistics on Tunisia were, if not entirely fabricated, way off.

The rosy picture the IMF painted of the Tunisian economy was more hype than truth. In fact the policies failed. How interesting and typical that within the IMF there has virtually been no self-criticism for how it contributed to Tunisia’s economic crisis, as if structural adjustment had nothing to do with Ben Ali’s collapse. Worse – the policies continue. The proposed loan follows closely in the footsteps of those that came before. There is no change in the country’s post-Ben Ali economic policies from those that existed prior to his downfall.

If this hypothesis is accurate and, from everything I can tell, it is, there are consequences. As the last uprising was essentially caused by Tunisia’s embracing of neoliberal economic policies and nothing, or precisely little, has changed. Another major crisis cannot be that far off. History strongly suggests the relationship between neoliberal economic policies and political repression ‘go together like a horse and carriage’ as the lines from an old song go.

Nor has Ben Ali’s extensive repressive apparatus been dismantled; it remains largely intact, for awhile in cryonic suspension, but now coming back to life again. Having tasted the wine of freedom and empowerment – the fruit of unprecedented peaceful mass protest – it is unlikely that the Tunisian people will wait this time another quarter century before taking measures into their own hands once again. I do not write these words as some kind of ‘threat’, simply from my reading of history.

In any case, what follows is the first part of a three- (or maybe four-) part series. This first part looks at the Tunisia’s initial uneasy relationship with the IMF in the 1980s, Bourguiba’s resistance to the policies, and Ben Ali’s embrace of structural adjustment. Part Two will examine the results of Ben Ali’s neoliberal policies on Tunisia (1987-2011) and Part Three will take a peek at the current proposal, well on its way to being implemented. RJP)

Tunisia’s Baguette Revolution

For ‘outsiders’ the photo seems admittedly a little odd: a man armed with a ‘baguette,’ [i] as if it were a machine gun and not simply baked flour, pointing it at a Tunisian security force down the street on Ave. Habib Bourguiba. But Tunisians of any age understand it. The photo is from early January 2011, just before a million person march on Tunis forced the five-star kleptomaniacs, Tunisian President Zine Ben Ali and his wife Leila Trabelsi, from power.

The foreign media, including here in the USA, suggested that Tunisia’s January 2011 uprising was a ‘Twitter’ or ‘Facebook’ Revolution, but it was much more basic than that – it was about bread and roses ­– about pervasive economic stagnation, high unemployment, low wages and seething repression. At the time, no one was talking about whether women should wear veils or bare their tits, or thought the uprising was about trashing marabouts and trade union headquarters, or desecrating Jewish cemeteries.

Taking their cue from the poor man[ii] facing down Ben Ali’s security apparatus, hundreds of Tunisians picked up their baguettes and took to the streets. Symbolizing the failure of the Ben Ali years, the baguette was also reminder of the Bread Riots of 1984 which shook the country to its foundations, leading to a full scale national revolt that very nearly brought down what was then the 18-year rule of the country’s first president, Habib Bourguiba.

Tunisia Caught in the Global Crisis of the 1980s

True, the 1984 Tunisian economy was in the doldrums, although the current fashion – to blame the slowdown on the Tunisian economic model of state capitalism, with its strong social contract – misses the point.[iii] The global economy had been in the doldrums for a decade hitting the commodity, low-end manufacturing sector in the semi-periphery and periphery with a special vengeance in the early 1980s. Tunisia was caught up in the storm. In particular, the European economy, had gone through a decade of recession and high unemployment which, in turn, had a profound impact on Tunisia, as so much of the Tunisian economy was geared towards exporting to Europe (France and Italy in particular) and welcoming European tourists.

In the early 1980s, Tunisia’s economic situation deteriorated, the state’s tax base shrank. With some hesitation, the Bourguiba government was pressured to do what so many other Third World countries had to do at the same time: go begging to the IMF or World Bank for a loan. This Bourguiba did, and the IMF, being accommodating, agreed to offer Tunisia a substantial loan. But there were conditions: the usual structural adjustment conditions which have done so much over the years to widen the gap between poor and rich countries, to undermine and destroy the economic potential of many of the Asian, African and Latin American countries that accepted the deal.

Bourguiba Agrees to End Bread Subsidies; the Nation Rises in Protest; Bourguiba Withdraws the Proposal

These conditions included cutting government spending, reducing or eliminating capital controls and protective tariffs, depreciating the dinar (Tunisia’s currency). Part of the deal necessitated the Tunisian government ending its subsidies on wheat and semolina (ingredients in bread). Caught in the vice, Bourguiba agreed.

The price of bread doubled overnight. The price increase triggered two weeks of angry nation-wide protest demonstrations. As they had done once before in 1981, the security forces and military – led by then Interior Minister, Zine Ben Ali – crushed the bread riots. When it was all over, more than 80 Tunisians lay dead, hundreds wounded. Having not yet slipped into approaching senility, Bourguiba had the presence of mind to reinstate the subsidies and fired the ministers responsible for encouraging the loan. The political situation stabilized, but the economic downward spiralm, caught in the global structural crisis, continued.

Such bread riots were not unique to Tunisia. They took place all over the Third World in the 1980s as the world’s poorer countries were forced to lift subsidies on food, medicine, and education, to freeze public sector wages and benefits in exchange for World Bank/IMF loans.

For the next three years, until he was overthrown by his interior minister, Bourguiba resisted lifting subsidies. But in 1986, Tunisia ran short on foreign exchange. The crisis was triggered by plunging oil revenues (down 40%), declining tourism receipts, and a serious drought which badly affected the agricultural sector. Bourguiba grudgingly agreed to an IMF loan that required lifting subsidies on bread. With the 1984 bread riots (and a 1978 union initiated national strike) in the back of his mind, Bourguiba permitted wages to simultaneously rise to compensate some for the higher bread prices. Again people took to the streets in protest, but not with the intensity of 1984. [iv]

Enter Zine Ben Ali: ‘Our Man In Tunis'; Start of the Tunisian-IMF Love Affair

The government survived the crisis, although it was the beginning of the end of Bourguiba. Bourguiba’s successes were based upon a strong state participation in the economy, free public education, democratization of the role of women, and subsidies for basic food stuffs and fuel. As the tax base of the state eroded and the state fiscal crisis deepened, the social contract that Bourguiba had committed to for thirty years weakened and with it, the social base of his government narrowed.

Increased repression, especially against the country’s growing Islamicist movement (which itself was able to take advantage of the growing economic crisis) only narrowed Bourguiba’s support base that much further. On November 7, 1978, Habib Bourguiba was removed from power in a ‘palace coup’ on November. There was very little protest. Bourguiba was unceremoniously pushed aside with his former interior minister, the same man who had crushed the 1984 bread riots, Zine Ben Ali, took the helm.

In a matter of weeks, the new government’s attitude towards the World Bank and International Monetary Fund shifted from hostility and suspicion to a warm embrace. Using an old basketball trick – faking to the left, while moving with the speed of light to the right. At the beginning of his rule, Ben Ali promised openness and democracy. He gave Tunisia a quarter of a century of IMF structural adjustment and an increasingly repressive government, much crueler and all-embracing than anything Bourguiba had constructed. He went far to deconstruct much of the social edifice that Bourguiba had tried to build and would have done more had he had the opportunity. When finally chased from power in 2011, he left a country economically and socially polarized, half of the economy in the hands of the two ruling families (the Ben Alis and the Trabelsis), a repressive apparatus of more than 200,000 in a country of ten million, and an enormous debt burden. As is virtually universally acknowledged, much of Tunisia’s economic and social decay of the Ben Ali years lays at the door step of the International Monetary Fund.

Even before consolidating his hold on power, as one of his first acts, Ben Ali gave Washington a call and opened negotiations with the IMF for exactly the kind of structural adjustment-based loan Bourguiba had resisted.

Thus wrote Canadian political scientist Michel Chossodovsky:

Barely a few months following Ben Ali’s installment as the country’s president, a major agreement was signed with the IMF. An agreement had also been reached with Brussels pertaining to the establishment of a free trade regime with the EU. A massive privatization program under the supervision of the IMF-World Bank was also launched. With hourly wages on the order of €.75 an hour, Tunisia had also become a cheap labor haven for the European Union.[v]

In retrospect, the implementation of Ben Ali’s economic program was a classic example of what later Naomi’s Klein would refer to as the ‘Shock Doctrine’ to the Tunisian realities. In the Ben Ali case, a political coup – that by the way included the promise of greater democracy – became the pretext for a far-reaching economic restructuring of the economy. It included classic structural adjustment themes: reducing the state sector in the economy, lifting subsidies, ‘loosening’ the social contract, weakening the country’s education and healthcare system, keeping wages low, lifting capital controls, privatization of state resources, etc., etc. – all the policies that have made IMF structural adjustment the antithesis of Third World development over the past thirty years. It all happened quickly before the Tunisian public understood the degree to which their lives were about to be changed.

It was not only that subsidies would be ended and much of the country’s state-owned economic structures be privatized, the country’s entire economic model that had existed since independence was dismantled in the process. The ‘old authoritarian’ economic model instituted by Bourguiba that included state involvement in the economy, a social contract that included subsidies on basic needs, free quality education and a somewhat protectionist approach to foreign investment and involvement in the country’s affairs, came unglued. In its place ‘a new authoritarian’ model based upon classic neoliberal economic principles was immediately and aggressively implemented before the Tunisian people could fathom what was going on.[vi]

________________________

[i] A ‘baguette’ – a French long, thin loaf of bread; although Tunisians use the same term, they have fashioned their baguettes a little differently than the French versions.

[ii] Hard to tell, but from the picture he certainly doesn’t look like a Tunisian billionaire or high-tech yuppie, just a ‘pauvre type’ …like so many others in Tunisia.

[iii] That model was about to be dismantled; the main work was done by Zine Ben Ali once he came to power

[iv] Anwar Alam. “Islam, Bread Riots and Democratic Reform in North Africa”

[v] Professor Michel Chossodovsky. “Tunisian and the IMF Diktats: How Micro-Economic Policy Triggers World Wide Poverty and Unemployment”

[vi] The terms ‘old’ and ‘new’ authoritarianism are taken from Stephen J. King’s work The New Authoritarianism in the Middle East and North Africa, Indiana Series in Middle East Studies: 2009

Links:

Tunisian Bloggers Refuse IMF Loan

Fakhfakh Says Tunisia Sees $1.8 Billion IMF Loan

Emphasis Added: The Foreign Policy Week in Pieces (4/12)

Mental Illness a Prerequisite to Run for Public Office

It’s unbelievable what people would do to be in power. I know: It happens everywhere. I can’t believe that normal people in their right mind would run for elected position. There has to be something wrong in their value system to go through what they have to go through. What I saw here was much worse: so much humiliation to run for office.
– Vihar Krastev

Escape From Ignorance and Chalga, John Feffer, Focal Points

No End to Atonement in Sight

Germany apparently remains eternally wounded, dependent upon the healing power of remembrance. Germans must live with their trauma and occasionally reopen the wound to prevent it from festering. … “History or, to be more precise, the history we Germans have repeatedly mucked up, is a clogged toilet. We flush and flush, but the shit keeps rising,” Günter Grass concluded in his 2002 novel “Crabwalk.”

‘Our Mothers, Our Fathers': Next-Generation WWII Atonement, Roman Leick, Spiegel Online

From Marijuana and Heroin in Vietnam to Anti-psychotic Drugs in Afghanistan

… there has been a giant, 682 percent increase in the number of psychoactive drugs — antipsychotics, sedatives, stimulants and mood stabilizers — prescribed to our troops between 2005 and 2011. … The data suggest that military doctors may prescribe psychoactive drugs for off-label use as sedatives, possibly so as to enable soldiers to function better in stressful combat situations.

Wars on Drugs, Richard A. Friedman, The New York Times

Iron Lady Surpasses Hitchens’s Record for Most Disrespectful Obituaries of a Brit

… when I was a child she was just a strict woman telling everyone off and selling everything off. I didn’t know what to think of this fearsome woman. … It always irks when rightwing folk demonstrate in a familial or exclusive setting the values that they deny in a broader social context. They’re happy to share big windfall bonuses with their cronies, they’ll stick up for deposed dictator chums when they’re down on their luck, they’ll find opportunities in business for people they care about. I hope I’m not being reductive but it seems Thatcher’s time in power was solely spent diminishing the resources of those who had least for the advancement of those who had most.

Russell Brand on Margaret Thatcher: ‘I always felt sorry for her children’, Russell Brand, The Guardian

Giving the C.I.A. Its Head in Pakistan

[American ambassador to Pakistan Cameron] Munter was reporting daily back to Washington about the negative impact of the armed-drone campaign and about how the C.I.A. seemed to be conducting a war in a vacuum, oblivious to the ramifications that the drone strikes were having on American relations with Pakistan’s government.

How a Single Spy Helped Turn Pakistan Against the United States, Mark Mazzetti, The New York Times

Robin Hood Tax, Not Corporate Greed, Should be Focus of Climate Finance Meetings, Say Activists

Robin Hood Tax Action, Washington DCIPS joined other members of the U.S. Robin Hood Tax campaign in Washington DC, where officials from the finance and climate ministries of select developed countries met to discuss how to mobilize private sector investment in developing countries to address climate change. Chanting, “Human need, not corporate greed! Robin Hood Tax now!” protesters dressed as polar bears, farmers, and bankers engaged with officials entering the meeting to urge them to support a Robin Hood Tax.

This demonstration drew attention to the fact that trillions of dollars of public money have been spent to bail out Wall Street while government officials pay short shrift to untapped and extremely promising innovative sources of public money like a Robin Hood Tax. In doing so, officials risk putting corporate profits over the needs of climate-impacted people.

Robin Hood Tax Action, Washington DC

Both the financial crisis and the recession have left a massive hole in public finances, threatening job creation, community services, and the ability to address climate change. While Wall Street has already bounced back, ordinary people are still trying to recover from problems caused by corporate abuse in the financial sector. The Robin Hood Tax calls for the institution of a small tax of less than half of one percent on Wall Street transactions in order to generate many billions of dollars each year toward crucial public goods and services, like healthcare, education, and helping the world’s poor confront the climate crisis.

VIEW RECENT ARTICLE ON CLIMATE FINANCE BY JANET REDMAN: http://www.fpif.org/articles/wall_streets_climate_finance_bonanza

Robin Hood Tax Action, Washington DC Robin Hood Tax Action, Washington DC Robin Hood Tax Action, Washington DC

To Wolfowitz, Iraq Was Just a Chance for the U.S. to Demonstrate Its Power

Andrew Bacevich’s Letter to Paul Wolfowitz at Harper’s has been generating significant attention. Bachevich reminds us that Wolfowitz was a protégé of nuclear strategist Albert Wohlstetter, who believed states should act to prevent war, not just react to aggression. At one point, Bacevich writes

So even conceding a hat tip to Albert Wohlstetter, the Bush Doctrine was largely your handiwork. The urgency of invading Iraq stemmed from the need to validate that doctrine before the window of opportunity closed. What made it necessary to act immediately was not Saddam’s purported WMD program. It was not his nearly nonexistent links to Al Qaeda. It was certainly not the way he abused his own people. No, what drove events was the imperative of claiming for the United States prerogatives allowed no other nation.

… to unshackle American power. Saddam Hussein’s demise would serve as an object lesson for all: Here’s what we can do. Here’s what we will do.

In other words … Iraq: the demonstrator model war.

For more on the relationship between Wolfowitz and Wohlstetter, read Anthony David’s 2007 American Prospect piece The Apprentice. Also, see what may be Wolfowitz’s last extensive interview in 2003 in Vanity Fair.

Wall Street’s Climate Finance Bonanza

Government officials from an elite group of developed countries meeting in Washington, D.C. at the invitation of U.S. climate envoy Todd Stern appear to be on the brink of instigating yet another corporate handout and big bank giveaway—this time in the name of fighting climate change.

Robin Hood Tax - photo courtesy of tcktcktck.orgIf it follows a recently leaked agenda, the meeting will focus on using capital markets to raise money for climate finance. The goal is to fill the void left by the United States and other developed nations that have failed to meet their legal obligations to deliver funding to poorer countries for climate programs.

In this corporate-oriented approach, countries would provide generous loan guarantees and export subsidies that sweeten investments for private firms and give them the chance to net big profits while leaving governments (and the taxpayers they represent) to cover the losses if investors’ bets don’t pay off. Wealthy countries would then be able to claim that they had moved billions of dollars of new climate investments.

Unfortunately, the projects best placed to benefit from large-scale private investment and market mechanisms—like mega-infrastructure projects and fossil fuel-powered ventures that hide behind a “low-carbon” label—are likely to be those that have fewest sustainable development benefits. In many cases, the funding will channel windfall profits to corporations that would have invested profitably even without these new channels of support.

The sad fact is that this has happened before. Nations spent five years negotiating the Kyoto Protocol—the only multilateral treaty to regulate emissions of greenhouse gasses and spell out binding targets for reducing climate pollution. But before the treaty was finalized in 1997, the United States led a push to replace the enforcement mechanism—a fine for missing reduction targets paid into a clean development fund—with a market mechanism meant to lower the cost of compliance for polluting companies. The accompanying clean development mechanism (CDM) was born so that companies in the industrialized world could purchase ultra-cheap carbon pollution credits from developing nations to offset their continued pollution at home.

In the end the United States pulled out of the Kyoto treaty. But by shifting a global regulatory regime into a market-based regime centered on enticing private-sector investment with promises of profitability, Washington left its mark.

A decade and half later, carbon markets have collapsed, developing countries are awash with carbon credits for which there is no demand, and the planet keeps getting warmer.

Meanwhile, the clean development mechanism has led to private sector investment in spurious projects like mega-hydropower dams and coal-fired power plants that have delivered little in the way of sustainable development outcomes—and in some cases have further harmed the environment and human health.

Passing the Buck

And now Washington is at it again, hijacking the debate about how to support the global transition to a low-carbon, climate-resilient economy—and keeping the public, the press, and even developing countries out of the conversation. They’re repeating the same tired story that rich governments are broke and thus have to call in the private sector to finance climate change solutions.

In today’s economy, mobilizing private finance means going to the capital markets to raise money. But relying on financial markets for funding to support renewable, clean energy or to resettle climate refugees would subordinate climate action to the speculative whims of bankers.

Americans have visceral reminders of the consequences of leaving decisions about critical needs to the market—the more than 1.6 million families locked out of their homes and the $2.5 trillion in taxpayer dollars handed over to bail out Wall Street and U.S. car companies are just two. Europeans can point to the recent bailout after the carbon bubble burst. If a global climate finance bubble were to burst, we wouldn’t just lose our houses; we might have lost our chance at averting catastrophic global warming.

Governments in the developed world shouldn’t pass the buck to the private sector. They must act now. They can start by cutting subsidies for fossil fuels, including for natural gas “fracking” in the United States, and set binding regulation for reducing climate change pollution. Then governments can adopt innovative ways to raise public money, like taxing pollution from shipping or financial transactions. Indeed, even a very low financial transactions tax would generate substantial revenue and deleverage capital markets.

And of course, if there is any hope of creating a new paradigm of climate-sound development, there will have to be a role for the private sector. But the micro, small, and medium enterprises of the developing world would be preferable partners to the multinational firms that have been responsible for sucking wealth and resources out of countries for decades, leaving pollution and poverty in their wake.

At some point—and for the sake of the future generations who will bear the results of our decisions, we hope it’s sooner rather than later—the government officials who place their bets on private finance will have to learn that putting corporate profits over the needs of climate-impacted people is a risk the rest of us are not willing to take.

Antonio Tricarico is director of the New Public Finance program of the Italian organization Re:Common based in Rome and a former economic correspondent at the Italian newspaper Il Manifesto.

Janet Redman is the co-director of the Sustainable Energy and Economy Network at the Institute for Policy Studies in Washington, DC.

Editorial support by Peter Certo and Oscar Reyes of the Institute for Policy Studies.

** This piece originally appeared in Foreign Policy In Focus

North Korea’s Withdrawal From Kaesong: Cutting Off Its Nose to Spite Its Face

KaesongNorth Korea’s bellicose rhetoric of late has certainly set the international community on edge—and nowhere more so than in the U.S. and South Korea, the primary targets of such threats.

Coming after a long-range missile test in December and an underground nuclear test in February which drew international condemnation and provoked a new round of tough sanctions from the U.N., North Korea’s escalating provocations have been toeing a very delicate line between theatre and reality.

Since the U.N.’s February sanctions—which largely targeted North Korea’s elite by further restricting luxury imports—North Korea has been particularly busy in provoking the international community: it has threatened the U.S. with a preemptive nuclear strike, nullified the 1953 Korean armistice, allegedly launched cyberattacks against South Korea, announced plans to restart its Yongbyon nuclear reactor, severed all of its communication lines with South Korea, and rather overtly moved mid-range missiles to its Eastern coast.

Of particular concern, North Korea—after turning away South Korean workers from the jointly-run Kaesong Industrial Complex only a few days before—has most recently announced that it is withdrawing its some 53,000 workers from the complex and will consider shutting down the operation entirely.

The Kaesong complex, a manufacturing zone just north of the Demilitarized Zone between North and South Korea, has been run jointly by both North and South Koreans since 2004. It provides the North with an estimated $90 million each year—from workers’ wages—which Pyongyang collects and instead pays workers with local money. Even though the state reaps most of the benefits of the complex, Kaesong still provides a vital source of income for impoverished North Korean workers: at least one in six of the inhabitants of the nearby city Kaesong work at the complex and depend upon such steady income. Kaesong is a boon for South Korea as well, since North Korean factory workers there earn “less than one-tenth” of the wage of average South Korean factory workers.

The stability of the Kaesong operation is considered to be a bellwether for the state of affairs between North and South Korea: as of now, it is something of a last remaining symbol of North and South Korean cooperation. North Korea’s current withdrawal is only a temporary suspension on the complex—something that has happened in the past when North and South Korean tensions have run high.

It would be an unprecedented move, however, if North Korea acts on its threats to permanently close the facility. And Kaesong’s closing would not only harm workers from both the North and South: it would signal, according to the Wall Street Journal, “a heightened risk of conflict since it’s a step North Korea has never taken before” to South Korea and its allies.

Leslie Garvey is a contributor to Foreign Policy in Focus and Focal Points.

This Week in OtherWords: April 10, 2013

This week in OtherWords, David Elliot highlights some of the hidden costs of the nation’s supersized military might and Raul A. Reyes applauds the Associated Press style book update that may herald the end of “illegal” people in the mainstream media. If you’re an editor still seeking Tax Day pieces to run over the weekend or next Monday, be sure to take another look at last week’s special edition and to check out Sam Pizzigati’s latest column.

OtherWords intern Alana Baum is nearing the end of her spring term with us. She has done an outstanding job from the moment she arrived. We are now seeking new interns who can join our team in 2013. Ideal candidates are progressive news junkies and wordsmiths who are either based in the Washington, D.C. region or close enough to commute once or twice a week for their first month. Information about what’s involved and how to apply can be found at the bottom our About page. Please help spread the word.

Here’s a clickable summary of our latest commentaries and a link to our new cartoon. If you haven’t already subscribed to our weekly newsletter, please do.

  1. On Tax Day, Consider the Hidden Costs of War / David Elliot
    The benefits Uncle Sam pays out to Vietnam veterans continue to rise.
  2. Nixing the I-Word / Raul A. Reyes
    The AP is improving the immigration debate by declaring that its reports will no longer refer to any human being as “illegal.”
  3. The Left and Right Agree: It’s Time to Break Up the Banks / Amy Dean
    It’s not a fringe idea anymore.
  4. Supremely Confused about Marriage Equality / Donald Kaul
    Expanding the franchise would make the institution stronger, not weaker.
  5. Shouldn’t We Base Our Tax Policy on More than Hunches? / Sam Pizzigati
    The latest economic evidence supports raising taxes on the richest Americans.
  6. Big Ag’s Legal Engineering / Jill Richardson
    Just because Monsanto has patents and lobbyists doesn’t mean that it should be allowed to wriggle out of our system’s checks and balances.
  7. Texan Turf War / Jim Hightower
    In the land of prickly pears and scrappy people, Dallas authorities are demanding that all homeowners plant “traditional” grass in their yards.
  8. Our Empire Addiction / William A. Collins
    Maintaining steady access to a bounty of natural resources is the major goal of this global control.
  9. Illegal Immigration / Khalil Bendib cartoon
    Illegal Immigration, an OtherWords cartoon by Khalil Bendib

    Illegal Immigration, an OtherWords cartoon by Khalil Bendib

Did the Israeli Prison System Claim Another Palestinian Victim?

Maisara Abu HamdiyehPrisoners in Israel’s Ramon Prison recently rose up in protest for fellow inmate Maisara Abu Hamdiyeh, who died of throat cancer on April 2. Attributing his death to a late diagnosis and improper medical treatment, protesters are also being heard throughout Gaza, Jerusalem, and the West Bank.

Hamdiyeh originally complained of throat pain in August of 2012 and in January was diagnosed with esophageal cancer. It is unclear what sort of medical treatment, if any, he had been receiving up until his death, and reports from each side vary. Palestinians claim medical negligence, while Israelis say that adequate medical treatment was provided.

Following the announcement of Hamdiyeh’s death, prison protests prompted Israeli guards to fire tear gas on inmates in their cells—who were only guilty of “banging on their cell doors and throwing objects around” according to the BBC. This appeared to backfire however, as six guards along with three inmates were sent to the prison clinic after the teargas was used.

In solidarity with prisoners, Palestinian citizens took to the streets in protest. In Hamdiyeh’s hometown of Hebron demonstrators threw rocks at Israeli soldiers, who retaliated by launching tear gas canisters and firing rubber-coated bullets into the crowd.

Maisara Abu Hamdiyeh is the second prisoner in as many months who has died in Israeli custody, after torture victim Arafat Jaradat. Israel continues to show blatant disregard in addressing basic needs of Palestinians in the prison system, significantly increasing tensions in this already polarized society.

Who will be the next victim of the Israeli prison system?

Renee Lott is an intern at Foreign Policy in Focus.

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