Growing inter-imperialist rivalry between the main blocks:
>From Guardian/Observer website, by influential editor of the Observer, and
former economics editor of the Guardian, Will Hutton:
Chris Burford
London
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Bananas to the US: Blair must join the EU bunch By Will Hutton Saturday March 06 1999 The Guardian
The last 48 hours must have been acutely sobering for Tony Blair. The US, which he has backed through thick and thin, has turned nasty. With the imposition of 100 per cent tariffs on cashmere exports to the US, 2,000 jobs in Scotland are threatened, only because Britain and the EU have tried – within the rules – to support the banana exports of some of the poorest countries in the world but in so doing have damaged US multinationals. It’s a harsh lesson that the US has no friends, just interests. And when it wants to assert them, it is uncompromising.
There has long been a fundamental ambiguity in Downing Street over Britain’s relationship with the US. Mr Blair is both for the European Union and for the US, and with his typical anxiety to be inclusive wants to have strong relationships with both. The trouble is that the US is a hegemonic imperial power impatient of Lilliputian constraints on what it wants. The EU, as a nascent, countervailing power but with a different set of interests, is necessarily likely to be on the receiving end of US impatience and bullying. Mr Blair will have to choose who his friends are.
But he does so as the US flexes its muscles over an apparently trivial issue, though it is one of tremendous symbolic importance in Washington. Chiquita Brands International has lavished political contributions on both Democrats and Republicans. It claims lost jobs and income as a result of reduced banana trade from its low-cost plantations in Central and South America. Pat Buchanan is pitching for the Republican nomination on the same Protect-US-Jobs ticket that he used effectively in 1996. The Democrats dare not be outflanked. The US trade deficit is ballooning above $300billion. The Washington view is that the EU is not taking its fair share of Asian exports, doing enough to stimulate its economy and disregarding US trade interests. Congress is livid; there are no votes in free trade. Hence the action.
That the Caribbean islands who would have their income decimated are chronically poor is beside the point. They are high-cost producers and must pay the price, say the US. The EU should protect its former colonies through aid and direct transfers rather than via a favourable trade regime. It’s a bogus argument. Bananas are the staple of these islands’ economies, providing as much as 60 per cent of their export earnings; a hyper free trade regime is to condemn them to absolute poverty. It’s a stand-off with little room for manoeuvre.
But this is only the most overt example of increasing US hawkishness over trade and finance, and even if there is eventual compromise, the root sources of the conflict will not disappear. For ever since the former US Commerce Secretary Ron Brown launched the trade ‘war’ room, in which the progress of every major foreign contract is monitored and everybody from the CIA to the President is enlisted to ensure the US company wins, the mistake has been to underestimate the ruthlessness with which the US pursues its own interests. The banana is but one of the trade issues – which include steel, GM food, beef raised on hormones – where the US will act unilaterally.
Clinton has built an institutional infrastructure – the Department of Commerce’s War Room, the National Economic Council and the President’s Financial Markets Committee – whose task is to deploy the US’s formidable post-Cold War power to assert US trade and financial interests. Tim Garten, a former senior Commerce Department official, described to the New York Times recently how the doctrine of ‘liberalisation’ and free markets are used to open up developing economies to American companies. In the early 1990s, if Fidelity was to sell mutual funds, Citibank checking accounts or American International insurance throughout Asia then there had to be wholesale and rapid financial deregulation. ‘I never went on a trip,’ Garten said, ‘when my brief didn’t include either advice or congratulations on liberalisation.’ Free trade when it suits US interests; fair trade and unilateral sanctions when it does not. As over bananas.
He now acknowledges over-arrogance. The result of financial deregulation was a credit boom along with an inflow of US hot money that was to be reversed the instant there was trouble; there was a turnround of more than $100 billion in capital flows to the five Asian tigers between 1996 and 1997. They have been left to pick up the pieces.
This is the prerogative of an imperial power. The US has no economic or political challenger. The succession of IMF bail-outs in Asia and Latin America, for example, have been informed by two overwhelming priorities; to allow an orderly withdrawal of dollar funds with minimal losses while forcing the countries concerned not to reverse their commitment to liberalisation, open capital markets and deregulation. Thus the IMF programme to Korea in December 1997 allowed a vast repatriation of funds to Wall Street otherwise impossible, while the programme in Brazil supported what all knew was an overvalued exchange rate which would ultimately have to be devalued. The Japanese fiercely opposed what they believed was a surrogate bail-out of Wall Street and were supported by the Europeans
but were over-ruled by the US. The Brazilian devaluation duly occurred this January, leaving Brazil with sky-high interest rates and an economy in a recessionary vortex – but by then its reserves had been spent financing the withdrawal of American funds at the higher exchange rate. Wall Street was safe.
The world needs an open, rule-based trading system policed by a supranational body, the World Trade Organisation, but it can only work if its procedures are respected by the world’s greatest economic power. The US is two-faced over trade, promoting free markets where it suits it and where it does not insisting upon the right to impose so-called ‘fair’ trade. Mr Blair and the EU cannot give into the bully over bananas, because it will be a precedent for more contentious issues ahead. They must use the WTO as it should be used, and in the long run build up the EU as a counterbalancing economic power so that it has some constraint on the US’s actions. Bananas has exposed the nature of Britain’s choice; there is no middle way between the US and the EU. Blair has learnt an important lesson. To protect our interests, the EU comes first.
Copyright Guardian Media Group plc.
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