The China Model: Obama On Libya

commentary posted 2011-04-21 - last updated 2016-02-06
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In his prepared speech (March 28) Obama used noble words to justify the bombing of Libya, with much talk of freedom and human rights. But, in an impromptu reply given in a March 11 press briefing, he spoke more openly about the economic mission of the attack - using the notorious language of the WTO/World Bank: "opening up" to the "global economy", and citing China and India as models.

The Globalization Gospel, According To Obama

In his March 28 prepared speech, Obama used noble words to justify the bombing of Libya, with much talk of freedom and human rights. But which US military aggression has not been blessed with a high moral objective? The massacre of indigenous peoples and animals was celebrated as Manifest Destiny. The slaughter of thousands in the Philippines and other imperial ventures was glorified as The White Man's Burden. Millions in Southeast Asia were killed to save them from the evils of Communism. In the same year that he ordered the bombardment of Libya, Reagan hailed the US-funded Contra forces in Nicaragua, that waged a systematic campaign of terror and gross human rights abuses against civilians, as "the true freedom fighters". American Exceptionalism, the claim that the US is God's gift to the planet (politically, the Chosen System), demands that the US bring its light to the world - with constant slaughter along the way. Now we have "freedom and democracy" as the slogan du jour of the American Brand (along with its neofascist spinoffs). As the poet Roy Lisker noted: in the free marketplace, freedom is the most marketable commodity.

But, in an impromptu reply given in a March 11 press briefing (transcript ), Obama spoke more openly about the economic mission of the attack – preaching the gospel of globalization:

There's no reason why countries in the Middle East shouldn't have the same kind of growth rates that you're seeing in China and India. What's preventing it is the fact that for many decades you've seen a lack of opening up that allows you to take advantage of the global economy... we should be on the side of those who want to seize this opportunity.


That this statement could be made precisely when the global economy is teetering on the brink of collapse, yet not be punctuated by a single flying shoe (at least verbally, if not physically), is an indication of the great success of the US system of press self-censorship.

India's growth cannot be attributed to its opening to the global economy because India's role in the global economy, while growing, is still miniscule. Economists acknowledge that India's growth is due not to exports nor foreign investment, but to policy changes that are fuelling increased domestic consumption. So what we actually hear in Obama's brief remarks is the discredited Washington Consensus, still lusting for a freer free-market orgy, bowing in praise of the Beijing Consensus that opened China to the global economy for unfettered exploitation of local labor: the preferred sweatshop of the world. And, at the same time, commiting US military might in Libya to open up a competing sweatshop -  because competition drives wages down, and profits up. More military might makes more markets, meaning more money: that's change we can believe in.

Opening up to the global economy?

What does opening up to the global economy mean? It means a country  restructures financial markets and the banking sector to attract a greater flow of international capital, by reducing obstructions to that flow. That, in turn, means increased volatility, as large amounts of international capital can also flow out. Which means when reckless investment strategies bring on a sneeze in capital-rich economies, the newly-opened economy gets pneumonia. First there was the Mexican debt crisis of 1994, which led to a $50B IMF bailout and its punishing austerity program. Then the Asian currency crisis of 1997-8 and its $140B bailout (and an austerity program that the IMF now admits worsened the crisis). And now the ongoing 2008 global credit crisis has led to over $300B in IMF/EU bailouts – and rising resistance to austerity. Clearly, “The Global Economy” is a broken system running ever more wildly out of control. Yet while international migration and travel (i.e., movement of people) is viewed as a threat to be monitored, controlled, and tightly restricted, economists preach as Gospel Truth that “capital knows no borders” - even though the damage to economies and societies from capital flight vastly outweighs any costs of illegal immigration or terrorism. Contrary to the dogma of market fundamentalists, China has weathered these storms in the global economy not by openness, but by insulating itself with its trillion-dollar stash in international reserves, and by strict regulation on currency flow.

Obama's unprepared message was simple: amongst the Middle East crowd (i.e., Libya) demanding a better life, are forces who would take advantage of the changing times, in order to restructure the economies to better suit international investors. US and NATO military might is there to support the opportunist forces in their march towards the China Model.

China's economic “reform” retains authoritarian rule, while using the power of state enterprises to control the “free” market. In his How I See the ‘China Model , Yang Jisheng (杨继绳) calls the combination of a superstructure of unchecked power, and an economic base of unmanaged capital flow a “market economy driven by power”, or a “power market economy”. Power moves capital and, at the same time, power is itself a commodity to be bought and sold within a closed nexus between industry and the state. Consequently, widespread social and economic disparity, along with lack of social mobility, is the norm in China today according to Yang. This is leading to rising social discontent that is being expressed as “mass incidents”, mostly involving workers or farmers defending their rights. Yang states:

Mass incidents [in China] have increased every year since the mid-1990s. In 1993, there were 8,700, in 1999 there were 32,000, in 2000 there were 50,000, in 2003 there were 58,000, in 2004 there was a dramatic leap to 74,000, in 2005 there were 86,000, in 2006 there were 90,000, in 2008 there were 100,000...As instability has emerged in society, the government has put its energies into “stability preservation” (维稳), [essentially the mobilizing of vast police contingents to deal with petitioners and others with social grievances]. Spending on public safety in China went up 16 percent in 2009, with total expenditures reaching 514 billion yuan, surpassing the national defense budget, about 2.6 times total expenditures on health and medical care, and approaching total spending on social security and employment..The government has spent all of this money, not on resolving the social problems at the root of instability, but rather in preventing ordinary Chinese from reaching Beijing to plead their cases for restitution.

But if Obama's vision for the Middle East is simply that of the China Model - authoritarian rule controlling a market open to the free flow of global capital – then there was no need for regime change in Libya: that is precisely what the current regime has been establishing since 2003. While the Libyan opposition's economic policies are still unknown, it is easy to determine current regime's openess to the global economy. Simply consult the torchbearer of global capitalism: the US State Dept., renown for unmuted criticism of the Qadhafi regime. Its report, 2010 Investment Climate Statement - Libya, falls a bit short of a scathing attack:

In recent years, Libya has taken a number of steps to encourage foreign direct investment…Libya enacted numerous laws and regulations intended to improve the Libyan business climate and increase its attractiveness to foreign investment. This effort has been modestly successful; foreign companies are returning to do business, and Libya has been able to draw substantial interest from foreign investors, particularly since the lifting of UN sanctions in 2003.

That's not likely to scare off investors. It certainly hasn't scared away foreign banks:

Libya's banking system is dominated by four banks, which are owned in full or in the majority by the Libyan Central Bank…These banks constitute almost ninety percent of Libya's banking sector assets...and two of them (Wahda Bank and Sahara Bank), were recently privatized. France's BNP Paribas acquired 19% of Libya's Sahara Bank in July 2007, and took operational control of the bank. The deal also included an option allowing BNP Paribas to purchase additional shares of up to 51% of Sahara's capital over the next three to five years…The Arab Bank of Jordan bid on a 19% share of Wahda Bank, with the option to increase their ownership to 51% in three to five years.

That means majority ownership of half of the 4 banks that control nearly 90% of Libya's banking assets were being transferred from the Libyan Central Bank to banks from France and Jordan. That's foreign occupation at the most pivotal level.

Clearly, the Libyan state has been racing down that well-worn path laid down by corporate globalization - and the "revolutionary" regime has been hit by the well-known pitfalls that are the cost of doing business in today's ultra-privatized world:

The government began a program of privatizations of 360 state-owned enterprises in 2004, a process that is ongoing…Unemployment is a major policy concern for the Libyan government, particularly in light of an expected increase in the pace of privatization, which would inevitably release large numbers of state-salaried employees into the market.

At the same time that the Libyan government was axing state employees, it was proudly welcoming workers from US corporations: see the WikiLeak of the 2007 State Dept. cable entitled "U.S. COMPANIES WIN $2 BILLION WORTH OF INFRASTRUCTURE CONTRACTS AS REWARD FOR POLITICAL RELATIONSHIP".

Note that State Dept. glee in this free flow of Libyan capital into US pockets was not at all diminished by the deplorable status of human rights in Libya, even though that too was duly reported by the State Dept.  

Qadhafi may now be wondering where he went wrong. It is time for Rev. Obama to console him with the wisdom revealed in the movie “Animal House”: You fucked up: you trusted us!