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Disarming Trade

We've got to face the fact that the neoliberal economic model has been underwriting conflicts all over the planet.
 
 
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Just weeks after the attacks of September 11, U.S. Trade Representative Robert Zoellick dropped jaws at a WTO meeting in Qatar by announcing the U.S. would measure countries' commitment to the "War on Terror" by how well they complied with the trade rules he was pushing.

Just about everyone on either side of the trade debate remembers the moment. Most view it as an unfortunate aberration, a rhetorical strong-arm move made by the representative of a country still reeling from its wounds in the hope of getting a specific deal off the ground.

Tony Clarke, director of the NGO Polaris Institute and winner of this year's "alternative Nobel Prize," sees it as fitting into a larger pattern. Last week, he traveled from Ottawa to Hong Kong to shine light on the connection between the neoliberal ideology promoted at the just-concluded WTO Ministerial conference and the militarization of economies great and small.

"Unfortunately we live in a world today in which we seem to break things into little components, so we have people who are very much engaged in -- and are in an uproar over -- the invasion of Iraq and the continuing war," says Clarke. "Those things are very much related to the movements that exist now against corporate globalization or neoliberalism. We have to see these things together. The global economy -- and the expansion of the global economy -- are related to the expansion of militarization in the world."

Clarke is trying to highlight those linkages and build a bridge between the world's anti-war movements and the thousands of activists all over the planet who oppose the WTO's corporate project. "We need to start to build a common movement that responds to that joint reality," he says.

The most direct link between the two realities is the "security exemption" common to every trade deal. Whatever limits on governments' the deals contain don't cover defense spending. While the exemption is logical, it's also all-too-handy as a backdoor for governments to intervene in their economies. Some have called it " military Keynesianism."

"What the WTO does is, in effect, it reduces the capacity of governments and says that governments can't subsidize in this area or that area," says Clarke. "Whether it's agriculture or industrial production of one kind or another, the rules certainly restrict what governments can and cannot do. But with the security exemption clause the governments have free range to engage in the arms trade."

Although neo-classical economists claim that "free markets" rule, the fact remains that governments pour megabucks into military research and development, and that research is often spun off to the private sector. The Internet, your non-stick frying pans and the GPS locator in your car are all products of defense-driven research. The infamous Defense Advanced Research Agency -- DARPA -- is just one arm of a multi-billion dollar government R&D system in the United States.

Military spending can also be an important ingredient in regional development. Through the 1970s, before the age of the trade treaty, Canada subsidized businesses that relocated to poorer provinces as part of a regional development strategy. The United States has done the same with military spending since the 1950s, building military infrastructure in the formerly agricultural Southern states -- states that have lagged behind the North since the end of the Civil War.

In some developing countries the military leadership is itself heavily invested in the country's leading businesses. In Indonesia, for example, military-run corporations complicated the transition from dictatorship to democracy.

As the straightjacket tightens on governments' ability to do that kind of economic planning -- "planning" is a dirty, Communistic word in neoliberal economics -- the security exemption will play an increasingly important role in countries' development strategies. The military is already an important source of employment in some of the poorer countries. The Canadian model of regional development will grow increasingly "WTO-illegal," leaving only the American model of military industrialization available to policymakers.

Other links are less direct but equally troubling. There's ample evidence that even while market liberalization may bring aggregate economic growth, it also exacerbates inequality, displaces local production for imports and creates an environment in which it's increasingly easy for corporations from the wealthy states to exploit cheap labor in the global south. Human rights abuses have been well-documented in the factories of the "opportunity zones" and maquiladoras of the New Economy.

All of these processes breed resentment, sowing seeds that can result in extremism of one sort or another -- including terrorism -- and lead to violence, as well as violent reactions from security forces. We see this across the globe, from Nigeria to the Philippines to Colombia.

While it's popular to see many of today's violent conflicts as the result of ethnic or cultural strife, that usually obscures an economic component. Just one example is the civil war in the Congo that resulted in more deaths than any conflict since World War II. Analysts focus on the ethnic and transnational issues -- it's been called "Africa's World War" because so many neighboring states were involved -- and those issues certainly played a part. But the United Nations documented how the lucrative trade in diamonds, tin, lumber and cobalt-tantalum, a key component in cell-phones, is financing most of the combatants. According to the UN, transport planes from Kazakhstan ferry cobalt tantulum to the Ukraine, where it's shipped to German factories. The planes return laden with surplus weapons from Eastern Europe. Some of the rebel groups in Congo even set up corporate syndicates to exploit the natural resources in the areas they controlled.

Corporate globalization wedges open markets for foreign investment where the rule of law is weak, and democratic institutions are lacking. Those investments, in turn, require military protection. As Clarke has written:

Great empires of the past learned that their colonial holdings and trade routes needed to be protected by military power against local uprisings and competing empires. The September 11, 2001 terrorist attacks against the United States demonstrated that the global economy was vulnerable, and economic elites demanded governments provide military protection for the system. Today, the Pentagon is realigning its vast international network of bases along the frontiers of the global economy, such as in Central Asia. In places like Columbia, U.S. troops and weapons are being deployed where uprisings threaten corporate investments.

And it's not only our own investments that the American military protects; all the leading economies rely on the U.S. to play the role of global cop, and we do so with enthusiasm.

Global trade regimes also limit governments' ability to promote human rights and to punish repressive or aggressive regimes with trade sanctions (at least regimes that aren't just to the south of Florida).

The best-known example was when Nobel Prize-winning democracy activist Aung San Suu Kyi, jailed by Burma's vicious military junta called on the West to "use your freedom to protect ours" by boycotting companies that did business with the Burmese government. Massachusetts responded by passing a law that required the state to give preference to bidders that didn't do business with the military dictatorship. It wasn't a ban, it just gave preferential treatment.

The law was challenged in federal court in 1998 by the National Foreign Trade Council (NFTC), a group of some 550 multinationals and financial institutions that, according to Joshua Root, author of the "Ultimate Field Guide to the U.S. Economy," "accounts for 70 percent of U.S. non-agricultural exports and 70 percent of its private foreign investments." Root notes that the NFTC "had a vested interest in seeing the Burma Law overturned as it reaffirmed state governments' rights to practice selective purchasing. Furthermore, somewhere around 30 of the NFTC's council members had direct financial investments in Burma, including Unocal with its $1.2 billion oil pipeline."

Unocal was sued under the Alien Claim Torts Act for hiring Burmese state security forces to displace residents in the path of their pipeline. The military engaged in murder and rape, among other tactics, to get the job done.

The Massachusetts Burma law was overturned. Among the parties that filed amicus briefs in the case were the EU and ASEAN, both of whom also filed complaints at the WTO in 1997. In a letter sent to Governor William Weld and considered in the court's verdict, EU Ambassador Hugo Paeman wrote that the law was a breach of the U.S.' WTO commitments and might threaten "EU-U.S. bilateral relations."

The one American institution that sees the connection between neoliberal integration and armed conflict most clearly and is most forthright about it is the Department of Defense.

In a much-discussed and well-received presentation to the Heritage Foundation, Arthur Cebrowski, Director of the DOD's Office of Force Transformation until his retirement in January, laid out the theory that military planners should use a country's resistance to corporate-globalization as a proxy for whether that country is likely to be a threat to U.S. national security.

"If you are fighting globalization, if you reject the rules, if you reject connectivity, you are probably going to be of interest to the United States Department of Defense," Cebrowski said.

He sees the world as having natural flows between the core group of "functioning" countries and what defense planners now call the "non-integrating gap": "security" and aid flow from the core countries to those in the gap and terror and immigrants flow back.

Arthur Cebrowski and Tony Clarke agree on the premise that globalization and military action are tightly interwoven. Cebrowski, like many, believes that economic integration and foreign investment will eventually lift all boats and foster a more peaceful world - something that hasn't been supported by the data.

The alternative is grass-roots, bottom up globalization and an emphasis on creating rule sets that protect people just as the international financial institutions protect investors. Tony Clarke's message is that such a focus is not only a matter of development -- it's a prerequisite for a more peaceful world.

Joshua Holland is an AlterNet staff writer.