Flipping the corruption myth

Corruption is by far not the main factor behind persisting poverty in the Global South.

Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules

Transparency International recently published their latest annual Corruption Perceptions Index (CPI), laid out in an eye-catching map of the world with the least corrupt nations coded in happy yellow and the most corrupt nations smeared in stigmatising red. The CPI defines corruption as "the misuse of public power for private benefit", and draws its data from 12 different institutions including the World Bank, Freedom House, and the World Economic Forum.

When I first saw this map I was struck by the fact that most of the yellow areas happen to be rich Western countries, including the United States and the United Kingdom, whereas red covers almost the entirety of the global South, with countries like South Sudan, Afghanistan, and Somalia daubed especially dark.

This geographical division fits squarely with mainstream views, which see corruption as the scourge of the developing world (cue cliche images of dictators in Africa and bribery in India). But is this storyline accurate?

Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this "evil phenomenon" is "most destructive" in the global South, where it is a "key element in economic underperformance and a major obstacle to poverty alleviation and development".

There's only one problem with this theory: It's just not true.

Corruption, superpower style

According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That's a lot of money. But it's an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mispricing.

This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world's total private wealth.

This is a massive - indeed, fundamental - cause of poverty in the developing world, yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations.

With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?

The question is all the more baffling given that the City is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.

To be fair, this kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires.

Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of "free speech".

The poverty factor

The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.

The tax haven system is not the only culprit. We know that the global financial crisis of 2008 was precipitated by systemic corruption among public officials in the US who were intimately tied to the interests of Wall Street firms. In addition to shifting trillions of dollars from public coffers into private pockets through bailouts, the crisis wiped out a huge chunk of the global economy and had a devastating effect on developing countries when demand for exports dried up, causing massive waves of unemployment.

A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.

With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?

The question is all the more baffling given that the City is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.

To be fair, this kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires.

Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of "free speech".

The poverty factor

The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.

The tax haven system is not the only culprit. We know that the global financial crisis of 2008 was precipitated by systemic corruption among public officials in the US who were intimately tied to the interests of Wall Street firms. In addition to shifting trillions of dollars from public coffers into private pockets through bailouts, the crisis wiped out a huge chunk of the global economy and had a devastating effect on developing countries when demand for exports dried up, causing massive waves of unemployment.

A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.

But this is just the tip of the iceberg. If we really want to understand how corruption drives poverty in developing countries, we need to start by looking at the institutions that control the global economy, such as the IMF, the World Bank and the World Trade Organisation.

During the 1980s and 1990s, the policies that these institutions foisted on the Global South, following the Washington Consensus, caused per capita income growth rates to collapse by almost 50 percent. Economist Robert Pollin has estimated that during this period developing countries lost around $480bn per year in potential GDP. It would be difficult to overstate the human devastation that these numbers represent. Yet Western corporations have benefitted tremendously from this process, gaining access to new markets, cheaper labour and raw materials, and fresh avenues for capital flight.

These international institutions masquerade as mechanisms for public governance, but they are deeply anti-democratic; this is why they can get away with imposing policies that so directly violate public interest. Voting power in the IMF and World Bank is apportioned so that developing countries - the vast majority of the world's population - together hold less than 50 percent of the vote, while the US Treasury wields de facto veto power. The leaders of these institutions are not elected, but appointed by the US and Europe, with not a few military bosses and Wall Street executives among them.

Joseph Stiglitz, former chief economist of the World Bank, has publicly denounced these institutions as among the least transparent he has ever encountered. They also suffer from a shocking lack of accountability, as they enjoy special "sovereign immunity" status that protects them against public lawsuit when their policies fail, regardless of how much harm they cause.

Shifting the blame

If these patterns of governance were true of any given nation in the global South, the West would cry corruption. Yet such corruption is normalised in the command centres of the global economy, perpetuating poverty in the developing world while Transparency International directs our attention elsewhere.

Even if we do decide to focus on localised corruption in developing countries, we have to accept that it does not exist in a geopolitical vacuum. Many of history's most famous dictators - like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak - were supported by a steady flow of Western aid. Today, not a few of the world's most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia - three of the darkest states on the CPI map.

This raises an interesting question: Which is more corrupt, the petty dictatorship or the superpower that installs it? Unfortunately, the UN Convention conveniently ignores these dynamics, and the CPI map leads us to believe, incorrectly, that each country's corruption is neatly bounded by national borders.

Corruption is a major driver of poverty, to be sure. But if we are to be serious about tackling this problem, the CPI map will not be much help. The biggest cause of poverty in developing countries is not localised bribery and theft, but the corruption that is endemic to the global governance system, the tax haven network, and the banking sectors of New York and London. It's time to flip the corruption myth on its head and start demanding transparency where it counts.

Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules.

Follow him on Twitter: @jasonhickel

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

Source: Al Jazeera

SOUTH AFRICA TO RATIFY INTERNATIONAL SOCIO-ECONOMIC RIGHTS COVENANT

South African Human Rights Groups welcome Cabinet’s approval of South Africa’s ratification of the United Nations International Covenant on Economic, Social and Cultural Rights (ICESCR)

Almost eighteen years after the South African government signed the ICESCR, Cabinet has approved that South Africa will ratify the ICESCR. This important decision to ratify, which means that the ICESCR will be legally binding, was included in a statement issued yesterday on Cabinet’s ordinary meeting held in Pretoria on 10 October 2012. The Cabinet statement describes how the ICESCR is a “key international treaty which seeks to encourage State Parties to address challenges of inequality, unemployment and poverty, which are critical to the strategic goals of governments.”

The ICESCR, together with the International Covenant on Civil and Political Rights (ICCPR) and the Universal Declaration on Human Rights, constitutes the International Bill of Rights. The ICESCR has been ratifed by over 160 states since it was adopted in 1966, 48 of which are African states and 11 of which are member states of SADC. South Africa ratified the ICCPR in 1998, and its current ratification of the ICESCR will unambiguously signal its commitment to be legally bound by the full range of human rights recognised under international law. In its statement, Cabinet indicates that the recommendation to ratify the ICESCR will be tabled in Parliament for ratification in line with Section 231(2) of the South African Constitution.

Civil society organisations have been calling for many years for the South African government to ratify the ICESCR (and its Optional Protocol, which creates an individual complaints mechanism). The Community Law Centre (CLC), Socio-Economic Rights Institute of SA (SERI), Black Sash, People’s Health Movement South Africa, National Welfare Forum, Global Call to Action against Poverty South Africa (GCAP-SA) and the Studies in Poverty and Inequality Institute (SPII) see this as a great opportunity to ensure that South Africa’s jurisprudence on socio-economic rights develops in harmony with the normative standards set by the leading international treaty on these rights.

According to Jackie Dugard, executive director at the Socio-Economic Rights Institute of SA (SERI), “although this is a momentous and long-awaited decision, South Africa has for a while subscribed to the norms and standards contained in the ICESCR as it has ratified the African Charter on Human and People’s Rights of 1981, which echoes many of the socio-economic rights contained in the ICESCR. It has also included justiciable socio-economic rights in the Bill of Rights in the South African Constitution.

Prof Lilian Chenwi, associate professor at the Wits School of Law, states that “given the role played by the international community and international human rights law in the struggle against apartheid, ratification of the ICESCR will fulfil South Africa’s express desire ‘to take its rightful place as a sovereign state in the family of nations’, which is recognised in the Preamble to its Constitution.”
Rajesh Latchman, of the National Welfare Forum, states: “This move to ratify the ICESCR is an important step towards creating a harmonious roadmap for the realisation of socio-economic rights for all in SA, and it is about time too.”

While ratification of the ICESCR is significant, the ICESCR Ratification Campaign Driver Group encourages South Africa to also ratify the Optional Protocol to the ICESCR (OP-CESCR).

The Optional Protocol is an extra treaty that promotes a culture of accountability around the ICESCR, empowering vulnerable and marginalised groups to lodge individual complaints at the international level regarding violations of their socio-economic rights. The Optional Protocol is yet to come into force, as it requires 10 states to ratify it and, at present, only 8 states have done so.

It is hoped that the South African government will table the recommendation to ratify the ICESCR before Parliament and submit its accession instrument the United Nations without any further delay, and also ratify the Optional Protocol to concretise South Africa’s commitment to human rights and to bring this important international human rights instrument to life.

Issued by the ICESCR Ratification Campaign Driver Group which comprises:

Black Sash
Community Law Centre (CLC), University of the Western Cape
Global Call to Action against Poverty South Africa (GCAP-SA)
National Welfare Forum
People’s Health Movement South Africa
Socio-Economic Rights Institute of SA (SERI)
Studies in Poverty and Inequality Institute (SPII)
For additional information, contact:

Lilian Chenwi, associate professor, Wits School of Law: 072 172 6346 / lilian.chenwi@wits.ac.za
Jackie Dugard, executive director of SERI: 084 240 6187 / jackie@seri-sa.org
Rajesh Latchman, coordinator of the National Welfare Forum: 083 443 0227 / rajesh@nwf.org.za

What Land and Housing Rights Reveal About a Country’s Commitment to Open Society

Homeowners in Moscow’s Rechnik district likely did not expect to wake up to bulldozers on the morning of January 21, 2010. Thrown out of their homes by armed police, families could only watch as their houses were demolished. Under the direction of Moscow’s then-mayor, Yuri Luzhkov, famous—or infamous—for his embrace of fast-paced, high-priced development, municipal authorities decided to invalidate land permits issued during the Soviet era and reject residents’ de facto titles to what has since become valuable land and to the houses they had built on it. Had they built illegally? What is the state’s responsibility to citizens in this process? What, if any, were the underlying interests at stake in this demonstration of force? With similar situations played out all over the globe, state actions to take away people’s land or expel them from their homes tell us volumes about a government’s commitment to transparency, democracy, and other elements of good governance; they lay bare the true human rights record of a place.


The Open Society Foundations’ Human Rights Data Initiative, a joint project of the Human Rights and Governance Program and the Information Program, has begun a year-long study of housing and property expropriations. The study will track how the issue is connected to a range of internationally recognized human rights, and explore how human rights and accountability organizations approach the problem of the abuse of states’ claim to eminent domain. Though states are empowered to use eminent domain for the public good, abuse of this authority is widespread. What we’ve found is that violations of the “positive right” to housing are only one part of the issue. The process of state infringement on land ownership illuminates a host of other problems, including the state’s failure to uphold the rule of law, provide equal protection to all citizens, tackle corruption, and engage in economic development that is respectful of ethnic minorities and the urban poor. Invariably we also find citizens shut out of decisions regarding their surroundings, the shape of their city, and preservation of its cultural heritage. Land and housing policy is a revelator that tells us about the reality and depth of commitment to open society values in a given country.

In a broad survey of the work of the Open Society Foundations, we’ve seen that the threat to where they live is many people’s first encounter with the potential harm of predatory state interests. Human rights and transparency organizations report incidences with alarming frequency: Azeri families living in central Baku find themselves stripped of their property and forced from their homes to make way for a glittering stadium for the Eurovision Song Contest. In Equatorial Guinea, where a small ruling clique of families reaps huge profits while over 60 percent survive on less than $1 per day, citizens were evicted with inadequate or nonexistent compensation in the name of an “urban renewal” and public utility development, that has given birth to hotels, offices and luxury housing that few will ever access. Similar dubious state claims to promoting “public good” were raised in the case of Roma settlements on municipal land in Bulgaria. Tolerated by the state for decades, communities found themselves threatened with eviction when the land was privatized without offer of alternative housing. That case was finally settled at the European Court of Human Rights in a decision that cited state responsibility to assess the necessity of the action, as well as the effects of interference an eviction will have on the right to private and family life as deciding factors against the government of Bulgaria.  Activists in Brazil have documented the effect of evictions on an estimated thirty thousand people in the run-up to the “mega events” of the World Cup 2014 and 2016 Olympic Games in Rio—mass evictions carried out without sufficient compensation, forewarning, or community consultation. In many of these cases, when citizens raised their voices through the channels of protest open to them, they were answered by the state with resistance, violence, and restriction of their liberties.

If forcible removal is one end of the spectrum of violations, at the other, state bureaucratic policies can be less blatant but just as insidious. Though bureaucratic reform toward openness in land policy can be a good thing, when states institute open records and land-ownership reform to counteract corruption in legal titling of land, the process can be turned on its head. Take India, for example, where individuals began taking advantage of records opened in an effort to help the rural poor take out loans or apply for government benefits.  Because they had better technical skills and access to information, wealthier residents could create what open data expert Michael Gurstein called “unequal contests around land titles,” exploiting mistakes and gaps to their own advantage. In Georgia, the buying and selling of land has been drastically simplified in the past several years, including through the establishment of electronic land records—a major step forward in limiting corruption—but curious exceptions to the speed and ease of that process have appeared when such slowdowns are in the state interest, and when dozens of citizens at a time “donate” their land in a valuable tourist zone to the state.

Land and housing rights excite communities in ways that many other rights issues do not. Housing procedures are often the most widely felt of the harms done by a chaotic or captured state, where high-level corrupt political and economic exchange between government and a small number of firms is pervasive. The combination of abusive practice and non-transparent procedures can create citizen outrage, and introduce them to their fundamental rights and the challenges and exhilaration of citizen action. As acts of state policy, evictions and eminent domain can affect large numbers of citizens from different classes and social strata, and all of them experience the lack of rule of law, and the need for information and the right to free expression to pull the levers of citizen governance.

The issue also marries disparate communities and inspires conversations about history and preservation, rights and due process, economic growth and the tangibles and intangibles of livability, livelihood, and public good. Expropriation of land and housing filters through many of the key issues of the Open Society Foundations—from corruption and poor governance, to lack of access to information, use and abuse of force, lack of independence of the judiciary, and intolerance of dissent. Open Society Foundations’ own work to mitigate the impacts of the national foreclosure crisis on low-income communities and communities of color in the U.S. highlights how the lack of transparent and accountable financial markets can lead to widespread displacement and wealth-stripping among vulnerable populations.

State policies on housing and the use of eminent domain not only energize individuals, but can also have a galvanizing effect on civil society organizations. NGOs focused on a key population are often motivated by housing and property dilemmas to develop full-context arguments on human rights, development, transparency, and citizen access to decision-making. In doing so, these organizations find new partners and new channels for activism, policy work and redress of abusive practices. At the same time, they face new challenges. Given the large amounts of money at stake, documenting procurement contracts and development deals can be very dangerous and difficult.

And finally, the expansion of access to information and technology enrich the potential for development to be conducted in ways that reflect open society values. As instruments of development, international financial institutions and technology can affect the direction of state policy on questions of housing and land. International financial institutions already exert a good deal of influence over the direction of development projects that they sponsor. Because of their leverage, IFI can either be a springboard for state abuse or a catalyst for a more transparent and equitable approach, negotiating rights-respecting plans and ensuring an open process. Technology can be used to increase efficiency and fairness by bringing game-changing data to light, or obscure processes and privilege those who already have access to knowledge and broadband.

As the Human Rights Data Initiative examines this theme, we are focusing on three key questions:

1.  What is the shape of the use and abuse of eminent domain and other tools of the state with respect to property? What is it used for, whom does it affect, and how?
2. In projects where citizens, organizations, or other interests have successfully countered a demonstrably bad decision in this space, what has been the deciding factor: did access to more data tip the scales? Did evocative documentary photographs motivate new actors? Was it sharp statistical analysis, or targeted campaigning?
3. How can campaigners leverage this issue to engage with citizens on open information and governance, and effect better policymaking around development?

The World Urban Forum 6, which will be held in Naples this September, will focus attention on how rapid urbanization threatens to exacerbate global inequalities and explore what institutions will be necessary to build cities that are both prosperous and inclusive.  The Forum will provide an ideal opportunity to explore some of the issues of housing stability and human rights raised here. While profound economic and population changes sweep the globe, states exert the tools of governance to promote development and economic growth. Civil and political liberties can get set aside in the push toward development, but a human rights approach does not need to be in fundamental contradiction with progress and modernization.

How can we do this better? We need more data: as the Lincoln Institute of Land Policy points out, governments do not produce systematic information on the use of eminent domain, and legal research does not tell us about other dimensions of this government practice. We need to help transparency and human rights organizations to work together to ensure that people’s civil and political rights are protected during the process of urban development, with particular attention to the rights essential to expression of dissent and participation in decision making processes. And we need to know from international lenders and experts what the key elements of development planning are that can preserve people’s human rights, and insist on their inclusion in negotiated agreements regarding sponsored economic development projects. It will be essential for lenders to share that information with civil society groups and bring such groups into the process as allies. States must seek to make honest transactions between public need, livelihood, and individual rights, and this transaction should be observed for the opportunity it represents to scratch the surface of commitments to civil and political liberties.

Source: Open Society Foundations

Poverty now a crisis in the first world: Motlanthe

The adverse impact of capitalism on social and economic growth requires a mind shift in socialism, Deputy President Kgalema Motlanthe said today.

"The global crisis of capitalism and imperialism, which is negatively affecting growth, widening social inequality, increasing levels of poverty and worsening [un]employment figures, needs a sharpened, radical shift in the approach the Socialist International takes," he said in Cape Town.

Speaking at the opening of the 24th Congress of the Socialist International (SI), he said debates had to focus on the reform of the organisation. Poverty was no longer just a problem for developing nations, but also now becoming a crisis in the first world. "Therefore this leaves us with no choice but to review, analyse and rethink the impact of the global economic crisis on society and the toiling masses of the world." He said there were various concerns sociality parties needed to confront. These included a need to strive for conflict resolution, while securing conditions of development.

Motlanthe's sentiments were echoed by the SI's president and former Greek prime minister George Papandreou. Innovative and alternative solutions were needed in a changing world, he said. "This human ingenuity needs to be accompanied by political and democratic will to make these changes... That will, my friends, has been lacking in Europe and around the world."

Papandreou defended the SI's existence, saying leftist parties were important to achieve, among others, peace, justice, good governance, equality, growth and employment for all. He warned against attributing blame for the global economic crisis. "We point fingers at each other rather than reach out our hands and lift each other up."

Papandreou lamented the fact that immigrants were being held responsible for the economic troubles in several countries. He said international co-ordination was needed now more than ever. "We've seen this spectacular rise in nationalism over the years, and at the same time we've noticed a terrifying rise in racism, prejudice."

Source: Times Live

Debt traps, the silent killers of the SA's vulnerable

Banks are under pressure, and with the housing market pretty much dead, they’re looking at new consumer markets for some of their highest-interest credit products. They’re finding these markets among South Africa’s poor, who are being charged the maximum interest rates allowed on unsecured loans. And if the banks won’t lend money there’s always a stokvel or neighbour who’ll help by giving out loans with interest rates that are just as punishing. By MANDY DE WAAL.

“Baby, I am so sorry. I owe many people some money and I don’t have that kind of cash to pay them.” Those are among the final words written by 22-year-old Happiness Mbedzi shortly before she killed herself in Diepsloot, the sprawling informal settlement north of Johannesburg. In the suicide note Mbedzi left behind for her partner, Ephraim Mudau, she listed all the people she owed funds to, alongside the amount of money outstanding. The total came to R3,320.

Just before the weekend, Mbedzi borrowed money to go to the local store in Diepsloot to buy rat poison. A couple who were walking their dogs and going to fetch firewood found her body later that same day, laying face down in the township’s extension 13. The suicide note was found next to Mbedzi’s body, together with the telephone numbers of her next of kin.

A relative said the day before she died people had come looking for Mbedzi to get money she owed them. “Debt is a big problem because we have such a huge unemployment rate in Diepsloot,” said Golden Mtika, a journalist for Daily Sun who broke the news of Mbedzi’s suicide.

“In most cases, you will find young women selling their bodies to be prostitutes, while the young men resort to criminal activities,” said Mtika, adding that he has never heard of people in Diepsloot going for debt counselling or getting help with dealing with indebtedness.

“The counselling of people in Diepsloot is unusual. I have never come across anyone who has been to an institute for counselling for any kind of problem, particularly not for money problems. There is nowhere people can turn to for help if they are indebted,” the journalist said.

This, despite the fact that South Africans owe some R1.3-trillion in consumer debt, according to Rajeen Devpruth, manager of statistics at the National Credit Regulator. Devpruth said the figure included all outstanding debt balances including mortgages, vehicle finance and unsecured loans.

More than 9% of the amount owed are unsecured personal loans, said Devpruth, who added that people who earn more than R15,000 are granted 93% of the rand value of the mortgages on the market. “Mortgages go to high income earners while unsecured personal loans are mostly taken out by people who earn from zero to R15,000.”

Devpruth said the global housing market is dead, so credit providers are looking to other markets to make their money. By giving all these unsecured loans, credit providers are pricing for risk. Offering loans to vulnerable people means banks have to build the cost of potential losses into their products. Last year some R84-billion worth of unsecured loans were issued to consumers.

Stephen Logan, a credit law expert and authority on the National Credit Act, said because of extreme credit demand an increasing number of credit providers are getting into unsecured lending. “The large banks didn’t play in unsecured lending before; this was primarily the domain of African Bank and Capitec,” he said.

“The margins in unsecured personal lending are huge, while the margins in banking products like credit cards, overdrafts, home loans and even asset-based finance like car finance have much smaller margins and consequently less profit,” Logan added.

Unsecured loans can bear a marginal, or top, rate of 31% annually as stipulated by the National Credit Act, and credit providers supplement this income by selling credit life insurance to consumers even on smallish loans.

“There’s been a huge boom in unsecured lending, and currently between 8% and 9% of total credit is in unsecured lending which is massive compared to years ago when it was 2% or 3%. Most credit providers lend at the top rate, while half of all credit active consumers, or about 47%, are credit impaired,” he said.

“But what consumers aren’t usually aware of is that a significant amount of money goes into the cost of the loan. Unfortunately consumers mostly look at the cost of the instalment or repayment, and not the entire cost of credit and generally don’t shop around for credit. But the fundamental problem is that the rate is so very high. It is not a sustainable or affordable rate, and people who borrow money at this rate don’t understand that this cost of borrowing isn’t sustainable,” Logan cautioned.

“What people don’t know is that they are borrowing at a rate that easily gets them into a debt spiral. As soon as you borrow at those kinds of costs you undermine your affordability and ability to pay back,” he said, adding that if people had financial education they would understand the massive margins banks are making on these types of loans.

“Once you add the initiation costs of these loans and life insurance, the effective or real interest rate is a lot closer to 40%. How is that supposed to offer meaningful help to vulnerable people? The banks’ argument is that these loans are used to build up assets, but what class of asset can give you a return of 31% or more? There is no asset class in South Africa that grows at this level, so these loans just eat away at whatever wealth one has and impoverishes people,” said Logan, who added that the banks are the only winners in this scenario.

In places like Diepsloot, where two thirds of the youth are unemployed, an unsecured loan for as little as R250 at Absa could seem like a good idea for cash-strapped residents who need to make ends meet. But steep interest rates make it virtually impossible for vulnerable people to pay back these loans. Other options are to borrow funds from a stokvel or a neighbour, but these come with interest rates that are just as punishing as those from banks.

Then there’s the problem that often people who are caught in a debt spiral, like Mbedzi, don’t know where or how to get help. “If I had told u the truth, u were going to be angry with me—so I decided to kill myself,” Mbedzi wrote in her suicide note before saying she didn’t know of anyone who could help her with her debt problem.

While it may be seen as a really good business to be in right now, unsecured lending at unsustainable rates could prove to be a perpetual engine for a new apartheid to split this country: the indebted many vs the moneyed few. Can South Africa really afford it? DM

Source: Daily Maverick

Spiking grain prices raise specter of global food crisis

Global food prices rose 6.2 percent in July, the United Nations’ Food and Agriculture Organization reported Thursday. The FAO said it released its Food Price Index ahead of its regular publication schedule as a warning against the impact of such price rises.

The index, which calculates the cost of a basket of food commodities, overall averaged 213 points in July, up 12 points from June. In February 2011, the height of the Arab Spring, the overall index peaked at 238. The index has remained above the average 2008 level for more than a year and is now trending toward an all-time high.

Grain prices have driven the overall rise. The US corn crop is in a state of disaster, with more than half of all US acreage listed in poor or very poor condition due to a record-breaking drought. Under a parallel drought, Russia downgraded its wheat crop by several million tons on Wednesday.

The FAO cereal index averaged 260 points in July, up 17 percent over the month. Most of the increase is attributable to a 23 percent rise in corn prices over the month and a similar, 19 percent surge in wheat prices. The cereal index is only 14 points below the all-time high of 274 points in April 2008.

The FAO registered a 12 percent rise in sugar prices in July, triggered by unseasonably wet weather in Brazil, the world’s largest exporter of cane sugar. Oils rose 2 percent, primarily on tighter supply outlooks and record prices for soybeans.

Price indexes for meats and dairy remained relatively unchanged for the month, although the protracted drought in the US rangeland has distressed many ranchers, who will be compelled to liquidate their herds. The US Department of Agriculture projects US consumer price inflation for meat, poultry, and dairy in the next few months as a result. Internationally, the higher cost of animal feed will ripple through livestock producers. This process may sharply affect Asia, where demand for meat is growing, but nations have smaller domestic stockpiles.

International food organization Oxfam warned in response to the FAO report that “millions of the world’s poorest will face devastation” from the increases. “This is not some gentle monthly wake-up call—it’s the same global alarm that’s been screaming at us since 2008,” Oxfam spokesman Colin Roche stated. “These figures prove that the world’s food system cannot cope on crumbling foundations. The combination of rising prices and expected low reserves means the world is facing a double danger.”

One billion people suffer from hunger worldwide. Hundreds of millions more who live in poverty are vulnerable to food inflation because they spend half or more of their incomes on staple goods. Food price shocks in 2008—driven by a confluence of weather disasters, protectionist measures, and speculators jumping ship from the financial market into commodities—produced food protests across more than 30 countries.

“There is a potential for a situation to develop like we had back in 2007-08,” FAO economist and grain analyst Abdolreza Abbassian told Reuters Thursday. “There is an expectation that this time around we will not pursue bad policies and intervene in the market by restrictions, and if that doesn’t happen we will not see such a serious situation as 2007/08. But if those policies get repeated, anything is possible.”

While economists and aid organizations have issued progressively dire warnings over the consequences of another food crisis, the underlying factors—extreme weather, a disjointed food distribution system, the possibility of export bans, and above all, rampant speculation—are more exacerbated than ever.

Indeed, commodities investors have rallied on the raft of bad news, making price shocks inevitable. Traders on the Chicago Board of Trade, banking on the USDA to issue a dire outlook on Friday, sent corn prices soaring Thursday morning to $8.265 per bushel, two cents below the all-time record set in July.

Major banks and hedge funds in particular have played a role in the rally. As Bloomberg News noted, “crops are the best-performing commodities this year, and Goldman Sachs Group Inc., Macquarie Group Ltd. and Credit Suisse Group AG say the trend will continue.”

One Chicago trader commented to Reuters that Goldman Sachs was leading the betting on a USDA corn yield downgrade and predicting $9 corn and $20 soybeans by November. “The Goldman roll started Tuesday, you have that going on and the report is tomorrow. Everyone is expecting the corn number to be pretty friendly.”

Jaime Miralles of investment firm Intl FC Stone Europe said that “a firm $9 corn sentiment remains as rationing is and will be required.” Other speculators anticipate $10 per bushel corn prices in the coming months.

“I think general price firmness is being seen in ahead of the USDA report because the market is increasingly realising how horrible conditions are for U.S. corn,” Rabobank analyst Erin FitzPatrick commented. “There is pre-positioning ahead of the report as people are expecting more cuts in US harvest forecasts. Despite recent rain in the US, a lot of the damage has already been done to corn.”

Farmers and agricultural economists estimate that corn yield in much of the Corn Belt will be far lower than the USDA’s already downgraded estimate of 146 bushels per acre. Some areas may yield 100 bushels per acre or less, knocking the national corn crop back to levels not seen in decades.

The US Drought Monitor reported that for the week ending August 7, fully 80 percent of the contiguous US is experiencing drought. “Every day we go without significant rain is tightening the noose,” said meteorologist Mark Svoboda, who authored the latest Monitor report. In Iowa, the largest corn producing state, the area suffering from extreme drought more than doubled in size. As of August 7, nearly 70 percent of the state was under the most severe category of drought. Over 81 percent of Illinois and fully 94 percent of Missouri is in “at least extreme drought.”

The USDA estimates that inventories of corn, wheat, soybeans, and rice will be reduced to 2008 levels next year. Wheat inventories are projected to contract 7.5 percent.

Wheat production in Russia, the fourth largest exporter, is set to fall by 20 percent this year. The Australian wheat crop, stunted by repeated frosts and poor weather, may yield 40 percent less than initial projections. India’s agricultural region suffered a monsoon season providing 22 percent less rainfall than average, resulting in a 7.8 million ton loss in the global rice crop. The FAO also reduced rice production forecasts for Cambodia, Taiwan, North and South Korea, and Nepal.

Source: World Socialist Web Site

An African Perspective

The world financial crisis that hit the world in 2007 has now become a systemic global economic crisis that affects socially, economically and politically, all the countries and regions differently depending on their level of development and grade of insertion in the world economy.

Over the last decade Africa has gone through major breakthroughs in terms of economic growth, poverty reduction and access to basic social services, but in spite of that, 36.2% of the its population lives on less than one dollar per day. The current economic crisis has evidenced that this progress to date could be washed away and that much needs to be done to achieve the Millennium Development Goals in the region.

In their response to the economic crisis, African governments, along with international organizations, will have to address the challenges resulting from the current economic crisis in conjunction with finding solutions to other critical issues Africa has been severely hit by, e.g. poverty, food security, global warming, human rights and peace-building, whose management will be crucial in strengthening democratic values, good governance and human development.

In line with this, Members of the Club of Madrid, Members of the Africa Progress Panel and other prominent experts and decision-makers, gathered on November 3, 2009 in Accra, Ghana to discuss the political impact of the crisis from an African perspective and to formulate practical recommendations to the political institutions and policy-makers in charge of responding to the political challenges arising from the crisis, at a global, regional and national level. This report offers a summary of the key points and recommendations that were raised at the meeting as input to the Club of Madrid’s annual conference on the topic in November, 2009 in Madrid.

Source: Club de Madrid

President Jacob Verwoerd's lame excuses for textbook scandal

It is not difficult to deliver a schoolbook to a child who wants one. President Jacob Zuma’s lame excuses are, sadly as we say, merely typical of an administration that has in all respects lost its way.

HOW sad it was to hear President Jacob Zuma , in an interview with Radio 702 host Redi Thlabi, insist that the Limpopo textbook scandal is the fault of the architect of apartheid, Hendrik Verwoerd.

As if it were Verwoerd, not Zuma’s educational trust, who took money from Edusolutions in return for contracts to distribute school textbooks. As if it were Verwoerd, not Zuma’s administration, who dumped textbooks in a river, not once but at least twice, instead of delivering them to the African children waiting for them.

It was Verwoerd, not Zuma’s lax controls, who caused municipalities to misspend R11bn last year and Verwoerd, not Zuma’s allies in the Free State, who promised to cover exposed toilets in the province last year and still have not.

It is Verwoerd who drives a truckload of helpless passengers into the face of an oncoming train, killing all of them, and it is Verwoerd who dreams restlessly of the poor while he contemplates the purchase of a billion-rand personal jetliner.

Of course, we know what Mr Zuma means. Apartheid did great damage. But that does not mean we should be impressed with Mr Zuma now. The job, we thought, of a democratic government in South Africa was to improve on the ills of apartheid, not to embed them.

In the course of an hour-long interview with an excellent Ms Thlabi, the head of state did not once take responsibility for a single problem the country faces — not corruption, not crime, not the lack of education. In his own mind he is fixing all of these things, not making them worse.

Faced with myopia on this grand scale, ordinary South Africans have little choice but to put their heads down and do whatever job is at hand to the best of their ability, hoping our current political ordeal passes. It is probably too late, though, for this generation of schoolchildren in at least Limpopo and the Eastern Cape. They are largely lost.

The only people who could do more than the rest of us will be the delegates at the ANC’s leadership contest in Mangaung in December. They will be asked directly whether they want Verwoerd to continue running the country or to relieve Mr Zuma of the burdens of high office. The choice, to us, is easy.

It is not difficult to deliver a schoolbook to a child who wants one. Mr Zuma’s lame excuses are, sadly as we say, merely typical of an administration that has in all respects lost its way.

Source: Business Day

Only a Transformed ANC can Lead South Africa to Prosperity

South Africa faces the pressing problems of unemployment, poverty, material inequality, failing education and health systems, and a sluggish economy. Consequently, there was some anticipation regarding the policy choices that would emerge from the recent African National Congress (ANC) 4th National Policy Conference, held from 26 to 29 June. Although ANC Secretary General Gwede Mantashe claimed that there were ‘robust’ and ‘candid’ discussions, it still remains unclear where the ANC is taking the country on key policy matters such as state intervention in the economy, fixing the education system and land reform. It is also questionable whether there were indeed open and frank discussions about the current ANC leadership. From proceedings at the policy conference it is clear that at this juncture the ANC is unable to provide the kind of inclusive and cohesive leadership urgently required to solve the country’s main challenges.

Scenario planning expert Clem Sunter, writing in his News24 online column of 7 June, says that the most economically successful countries have had periods of ‘inclusive leadership’ where the head of the country has managed to bring together disparate groups to work together towards the greater good. Unfortunately, the current ANC leadership continues to fail in this regard. The issue of nationalisation, which has for some time hindered foreign and domestic investment, is an example. Political analyst Steven Friedman, writing in the Business Day of 11 July, argues that the ‘ANC alliance includes both left-wingers who distrust business and racial nationalists who want to shift more assets from white to black hands’. Both sides ‘have an interest in restricting property rights’, he says. The ANC leadership is well aware of the various positions within the party concerning the issue of nationalisation and its task is to bring together opposing interest groups and work out a compromise that will address some of these concerns and build investor confidence. Improved confidence would give impetus to prospective and current investors to commit more to the South African economy and fuel economic growth.

To some extent it appears as though the policy conference resulted in some level of compromise between the different perspectives. In his closing address at the conference President Jacob Zuma said, ‘With regards to minerals, there was a broad consensus that minerals belong to the people as a whole and should be governed by the democratic developmental state in the interests of all South Africans. Mining should have a developmental impact and promote job creation. The state should also capture an equitable share of mineral resource rents and deploy them in the interests of long-term economic growth, development and transformation.’ This statement, however, seemed to be interpreted differently by different groups in the ANC. For example, the ANC Youth League, which has called for the wholesale nationalisation of mines without paying compensation, said in a statement, ‘We welcome … the resolution for the nationalisation of mines and other strategic sectors of the economy.’ However, this was disputed by National Executive member Enoch Godongwana, who said that the ANC had decided ‘not to pursue the nationalisation of mines’.

Interestingly, there seemed to be no consideration of the National Planning Commission’s (NPC) recommendations. Established by the Presidency, the NPC consists of 26 of some of the country’s brightest minds, who after a substantial period of consultation with people working in different sectors of society, diagnosed the causes of South Africa’s key problems and identified practical solutions. A key part of the problem facing the ANC appears to be that its top figures have failed to rise above their personal ambition for senior leadership positions. Consequently, the dynamics of the policy conference are framed by the leadership contest taking place in the run-up to the ANC National Conference in December. Seemingly, the key factor driving the contesting factions is the access it provides individuals and factions to state resources. Policy issues then become a proxy for leadership contestation. It therefore often matters more who supports certain policy positions than what the contents of those policies are.

The ANC should consider a system where members compete for positions in a transparent manner guided by a clear set of rules. This would enable delegates to select leaders based on their performance in the party and in government. Further, a political system based on the recommendations of the Frederik van Zyl Slabbert Commission on Electoral Reform, named after the late opposition politician, could be considered. The commission recommended a system geared towards the direct election of political leaders, which could ensure that the leaders are more responsible to the electorate than to factions in the party.

A step towards addressing some of the challenges the ANC faces would be for the party to urgently consider the recommendations of the 2010 National General Council, reiterated in the Organisational Renewal Discussion document. These state that:

• It is critical for the party to have a resilient, courageous, principled and decisive leadership.
• The rejuvenation of the ANC will require a committed and conscious cadre.
• An active civil society and a mobilised population are essential for the renewal of the party.

The first recommendation is conceivable only if the current ANC leadership is able to look beyond narrow factional interests and realises the importance of acting in the interest of all South Africans, with a focus on the poor. Entrenched factionalism, as noted in the Organisational Renewal Discussion document, is detrimental to the greater good. Currently, it is clear that there are two factions: those who support the current President and status quo and those who seem to be clamouring for a new dispensation led by Deputy President Motlanthe. A courageous and decisive leadership would have opened up the debate on how to structure the issue of succession and initiated the development of a set of rules to guide the debate on the selection of the new leadership. Further, a principled and decisive leadership would have led the way in terms of concerns such as corruption. It would have stated publicly that those who are tainted by allegations of corruption cannot be allowed to lead the party and the country until such allegations are transparently and fairly investigated. Beyond the usual rhetoric, the present leadership has clearly been unsuccessful in decisively acting on corruption in the upper echelons of government.

The practice of cadre deployment has continued to have negative ramifications for government service delivery, as recently argued by the Human Sciences Research Council (HSRC). It is crucial that the ANC leadership leads the way in transforming the organisation into a modern political party that deploys people based on merit, skill and commitment to serving the country, rather than their allegiance to certain organisational factions.

The ruling party has to urgently grasp the fact that a robust civil society, a free media and independent judiciary are critical for an active and mobilised general population that can contribute to strengthening the country. It is therefore discouraging when leading ANC figures actively stifle crucial components of our democracy. Recently the Minister of Water and Environmental Affairs, Edna Molewa, made the absurd statement that there was a ‘war against the state’ because human rights organisations took the government to court for failing to provide adequate drinking water to poor communities. Nelson Mandela’s treason trial lawyer George Bizos warned on 17 July that our politicians do not accept the media’s role and rightly stated, ‘We cannot allow politicians to reduce us to praise singers.’ Instead of seeking to undermine the foundations of our democracy, the ruling party’s leadership has to actively engage all citizens of the country.

Bringing together the range of stakeholders in South Africa to solve the country’s challenges, such as those pertaining to the economy and to education, will provide a foundation that will drive the country into a new era in governance. In addition, such a path has the capability to ignite institutional transformation that will contribute to reviving the country’s sluggish economy. Indeed, all South Africans deserve the dignified and prosperous life aspired to in the constitution and the ANC leadership has a duty to facilitate this.

Source: ISS

International Positions on Maid’s Cries Cast Light on Child Labor in India

The girl’s screams were brittle and desperate. Neighbors in the suburban housing complex looked up and saw a child crying for help from an upstairs balcony. She was 13 and worked as a maid for a couple who had gone on vacation to Thailand. They had left her locked inside their apartment.

After a firefighter rescued her, the girl described a life akin to slavery, child welfare officials said. Her uncle had sold her to a job placement agency, which sold her to the couple, both doctors. The girl was paid nothing. She said the couple barely fed her and beat her if her work did not meet expectations. She said they used closed-circuit cameras to make certain she did not take extra food.

In India, reported to have more child laborers than any other country in the world, child labor and trafficking are often considered symptoms of poverty: desperately poor families sell their children for work, and some end up as prostitutes or manual laborers. But the case last week of the 13-year-old maid is a reminder that the exploitation of children is also a symptom of India’s rising wealth, as the country’s growing middle class has created a surging demand for domestic workers, jobs often filled by children.

The Indian news media, usually a bullhorn for middle-class interests, ran outraged front-page articles. But the case was hardly unique. Last week, an 11-year-old Nepalese girl, working as a servant, said that her employer had beaten her with a rolling pin, according to the police. Indian law offers limited safeguards and limited enforcement to protect such children, and public attitudes are usually permissive in a society where even in the lowest rungs of the middle class, families often have at least one live-in servant.

“There is a huge, huge demand,” said Ravi Kant, a lawyer with Shakti Vahini, a nonprofit group that combats child trafficking. “The demand is so huge that the government is tending toward regulation rather than saying our children should not work but should be in school.”

The International Labor Organization has found that India has 12.6 million laborers between the ages of 5 and 14, with roughly 20 percent working as domestic help. Other groups place the figure at 45 million or higher. Unicef has said India has more child laborers than any other country in the world. Many of these children come from India’s poorest states, either through shadowy job placement agencies or by kidnapping. In 2011, more than 32,000 children were reported missing in India, according to government crime statistics.

Mala Bhandari, who runs Childline, a government hot line for child workers, said India’s urbanization and the rise of two-income families were driving demand for domestic help. Children are cheaper and more pliant than adults; Ms. Bhandari said a family might pay a child servant only $40 a month, less than half the wage commonly paid to an adult, if such servants are paid at all.

Indian law deems anyone younger than 18 a minor. But the Juvenile Justice Act of 2000 also creates a loophole: Children between 14 and 18 are allowed to work a maximum of six hours a day in nonhazardous work. Children younger than 14 are prohibited from working as servants, a statute that is widely flouted. Employers are required to provide daily education and document the child’s daily break hours, though most families ignore such requirements because enforcement is largely nil.

“What happens within the four walls of a home, nobody knows,” said Ms. Bhandari, who contended that while abuse was not the norm, it was not rare.

Domestic work employs millions of people in India, most of them adults. India’s rich often have a retinue of servants, drivers and other helpers. Mukesh Ambani, the billionaire industrialist, reportedly has several hundred domestic workers in his skyscraper residence in Mumbai, the country’s financial capital, with some of his servants trained by one of India’s elite hotels. Some Indian families living abroad also take a servant; last month, an Indian maid in New York won a $1.5 million judgment against an Indian diplomat and her husband for abusive treatment.

Societal attitudes toward servants are often shaped by ingrained mores about caste and class. Many servants, especially children, come from poor families among the lower Hindu castes or tribal groups, often from poor states like Jharkhand, Chhattisgarh and West Bengal.

Santosh Desai, a columnist for The Times of India, the country’s largest-circulation English-language newspaper, warned in February that India’s upper and middle class were growing flabby and indolent through their dependence on cheap household help, and that they also wrongly held “an implicit belief in possessing an intrinsic superiority, an assumed right to lord it over someone lesser.”

“As a child nobody dreams of growing up one day and driving somebody else’s children to school or washing their clothes,” he wrote.

The middle-class families in the housing complex where the 13-year-old girl worked, in the suburb of Dwarka, professed shock over her treatment. Originally from Jharkhand, the girl is now being cared for at a government-run shelter for women. After she was rescued, she was interviewed by counselors with Shakti Vahini, the nonprofit group. They said she told them she had also been required to clean the couple’s medical clinic. They said she also told them of other abuses: On some occasions, the couple reviewed footage from the cameras in the apartment and beat her if they found behavior that displeased them. She said she was provided with two chapatis, pieces of flat bread, as her daily meal. Earlier in the week, the police said they had not yet been able to confirm the presence of cameras in the apartment.

Raj Mangal Prasad, a children’s welfare official in New Delhi, said the government was not staffed to carry out raids to look for illegal servants. But if it were, Mr. Prasad estimated, several thousand cases would probably be discovered throughout the capital. He estimated that one household out of 20 employed an under-age servant. “It’s plain for everyone to see,” he said.

The girl’s employers, identified by the police as Dr. Sanjay Verma and Dr. Sumita Verma, were arrested Wednesday after their return to India and remanded to police custody. The police have filed preliminary charges of violations of the Juvenile Justice Act, the Child Labor Prohibition and Regulation Act and other violations of the criminal code. Their lawyer denied the charges at a bail hearing. But Mr. Kant, the lawyer with Shakti Vahini, said the courts rarely issued harsh judgments in cases involving the rights of domestic help.

“There is a general feeling that we need these people,” Mr. Kant said. “Cases aren’t taken so seriously. There is no fear of the law.” 

Source: New York Times

Minister: Land grabs 'out of touch with reality'

The idea of claiming land without compensation is "out of touch with reality", Land Reform Minister Gugile Nkwinti said on Friday. "Land grabs are not an option, there is no policy like that. By doing so you will have to change the Constitution," he said. "It is an option that is completely out of touch with reality."

Nkwinti was briefing reporters in Boksburg on the East Rand after a meeting on the progress of the land reform green paper. His deputy Lechesa Tsenoli, said six groups had brought feedback on what had emerged from different aspects of the green paper. "These timelines are a key thing. We need to devise new timeframes to bring forward those projects that were meant to be done at a later stage," Tsenoli said. "We must take stock of where we are at and in mid-March complete and merge with consolidated reports -- then be able to brief Cabinet."

He said the issue of land reform needed to be dealt with "sensitively". "For some it is an issue of life and death. For the state, doing it speedily will prevent that," he said. "The right thing to do is to establish policy and legislation to redistribute land in a fair manner."

He said several groups did not accept the historical statistic that 87% of the land was white owned. "They said that we must commission professors to research the statistics."

Source: Mail & Guardian

For the common good: Old struggles in a new style

Most of the people who made their way to the Rondebosch Common in Cape Town last Friday to protest against issues such as unemployment and poverty hailed from working-class areas like Mitchells Plain and Manenburg. But 18-year-old Daniel Corder came from just up the road. Corder, who matriculated from Westerford High School last year, said he wanted to make the point that not all residents of the well-off suburb were necessarily unsympathetic to the issues that protestors were raising. "I don't suffer the problems they're experiencing. I live in the area that they are campaigning in and enjoy the privileges that they are disgusted by, but I still stand with them in solidarity," he said.

Corder's decision resulted in his spending almost 10 hours in jail after being arrested with 39 other protesters. Even so, he described the day as a "real learning experience" and said it inspired him to further his aspirations to become a lawyer. "I'd like to be someone like those who helped us at the prison on Friday night -- one who serves the public interest," Corder said. He said he felt particularly strongly about the actions of the policemen deployed to the common. "Some acted well, some actions were questionable, but many, far too many, acted reprehensibly. I was greatly angered and disturbed by their treatment of the protesters. "In the face of peaceful, non-destructive protest, many of them acted violently and cruelly. Arms were twisted to near breaking point purposefully, women were pushed to the ground by huge male officers clad in riot gear and many, including myself, were grabbed and pushed around by four or five officers. Many protesters suffered grievous bodily harm," Corder said.

Images and stories of Corder and other protesters being carried away, by police have featured prominently in the local media. But activist Mazibuko Jara, who is a Democratic Left Front national committee member, said questions about whether the incident was likely to have a positive mobilising effect on social movements in the country might be simplistic. "The killing of Andries Tatane has not necessarily galvanised people in the Free State into a mass protest movement. More important is the momentum of ordinary people's struggles. Are corruption, poor spending, failed promises, pro-capitalist policies and increasing attacks on constitutional rights giving a trigger and momentum to social protest and mobilisation? That's the crucial question," he said.

Lubna Nadvi, a professor in the school of politics at the University of KwaZulu-Natal, said the left appeared to be a "very fractured space" at present. "There is no real momentum to pose a challenge to the government and big business and workers' power, which usually was the form of mass mobilisation the left resorted to, does not seem to have the potency needed to bring about much-needed reform," Nadvi said.

According to Steven Friedman, director of the Centre for the Study of Democracy at the University of Johannesburg, organisational strategies constitute a fundamental problem. "One of the main ­problems that social movements in South Africa face is that poor people are very difficult to organise because they don't have resources, they don't have self-confidence and spend most of their time trying to survive. "One of the mistakes made by some social movements is that they suffer from naive organisational strategies, believing that if people are poor they'll automatically rally around them, which isn't true."

But activist Mario Wanza, one of the main organisers of the Rondebosch Common protest, said the majority of the 2000 people who signed up were "working-class coloureds". Wanza said organisations such as Proudly Manenburg -- which he chairs -- were driven by the values of the United Democratic Front. "We've turned to an old way of organising in memory of the UDF, whose values are driving all of us. We're using the same principles of uniting organisations, building a broad front and having a common programme of action."

Jara, however, said the UDF had operated within a specific context. "It was a specific organisation at a specific time in our history. We need many more UDFs and TACs [Treatment Action Campaign] relevant to our times -- on housing, water, retrenchments et cetera ­- in order to challenge anti-poor policies and also demonstrate what a pro-poor alternative could look like."

Friedman agreed that some of the tactics used by social movements in the post-apartheid era mirrored those adopted by the UDF, but pointed out that the present context was a significantly different one. "It's correct to say many of the tactics and even names, like the Soweto Electricity Crisis Committee, used by social movements in this phase are derived from the fight against apartheid. That is there, but it's a different context. To say that ­people needed to fight for dignity under apartheid is pretty self-evident, but once apartheid ended things became more complicated."

Nadvi argued that issues such as unemployment, homelessness, HIV/Aids and poverty constituted a ­common enemy around which social movements could unite. She was unsure, however, whether a South African version of the global Occupy movement, which had been inspired by the uprisings in the Middle East, would be the answer. "I don't think the Occupy movement has that kind of potential, because so far it seems to be largely driven by a middle-class group of activists who are politically conscientised," she said. "Other formations that have come before, such as the Anti-Privatisation Forum, Landless People's Movement, Treatment Action Campaign and Social Movements Indaba, have had more of a grassroots flavour and were more closely in line with what the UDF was trying to achieve. "I think that some of these movements have been working consistently to try to mobilise to address these issues. They have a history and a presence in the post-apartheid context that the Occupy movement doesn't have."

Perhaps this presence could be strengthened by newcomers to the movement like Corder, who uses the access he has to the internet to mobilise and inform people about protest action. "We must support the disadvantaged. We must campaign and seek equality for all, as opposed to sitting happily with the lucky lives we were born into -- a birth lottery of sorts. "But we must not take over the struggles and superimpose ourselves on the movements. We must support but not lead, not be poster boys et cetera, because then it takes away from the people, their struggles and feelings, their fight. We, as the privileged, have skills and resources that we can use to help. But we must lend support, not lead."

Source: Mail & Guardian

Hold off with the schadenfreugasms

"[Tuesday’s] events remind us that we do not live in an ordinary or normal country. We live in a country where some people (politicians and the old business elite among them) eat sushi from the bodies of semi-naked models; are protected by bodyguards and high walls from the young men and women who have no money, no jobs and little to lose; a country where some people travel across the world in first class and throw lavish parties, while the majority of South Africans languish in poverty and do not have the life chances to make meaningful decisions about their own lives."

Source: Constitutionally Speaking

South Africa: Truth and Reconciliation

ECONOMIC FREEDOM IN OUR LIFETIME: Can we have a proper debate this time?

Joel Netshitenzhe

As the delegates of the ANC Youth League rose from their 24th Congress, the slogan of 'economic freedom in our lifetime' on their lips, the "lost generation" seemed to be returning the favour of generational stereotyping. We, the older lot in society, bemused by a misshapen movement taking root in spite of our apprehensions, had by some quirk of fate become the "bewildered generation". Mesmerised by the antics of individuals, irritated by the seeming immaturity of it all, and bedazzled by the media focus on palace politics, the historic nature of the moment seemed to escape us.

In its January 8th Statement this year, the ANC asserts: "Political emancipation without economic transformation is meaningless. That is why we have to commit ourselves to economic freedom in our lifetime, and the ANC must continue to be in the forefront of that transformation."

What indeed is "economic freedom" and how can it be attained? Is there a common and coherent storyline across society on the final destination and how to reach it?

This historical moment calls for serious societal debate. Imploring the ANC leadership to put its foot down and suppress the debate will not put the genie back in the bottle. Launching ideological missiles about who is more Left and the vanguard of workers, or speculating whether this campaign is a proxy for ANC palace politics, will not smother the appeal of a sentiment.

It is no accident that this issue emerges in this stark form 17 years after the attainment of democracy. Having obliged Kwame Nkrumah's injunction to "seek ye first the political kingdom", economic liberation is an issue that post-liberation states on the continent and elsewhere had to come back to.

The efforts sometimes resulted in welcome success. In many other situations, failure by society honestly and rationally to engage the issue, poor policy choices on the part of leaders, and a brittle and corrupt state produced disastrous results. On the extreme, predatory elites used so-called economic liberation policies such as nationalisation, indigenisation, price controls and tariff barriers for self-enrichment.

It should be expected that youth in our country would be at the forefront of the economic freedom campaign. Just on access to economic opportunities: the employment ratio among 15 - 24 year olds is 13.2% compared to 40% in Asia and Latin America. 48.2% of those available to work in the 20 - 24 age cohort are jobless. 86% of unemployed youths have not gone beyond Grade 12; and two-thirds of these have never worked. This not only has major macro-social implications including crime and youth mortality as well as socio-political stability especially at local level. It is patently unsustainable.

It can be argued that this problem affects many countries. Besides the youth of the Arab Spring, there is concern in Japan about the so-called freeters (freelance arbeiters), mileuristas in Spain and the UK's NEETS (not in education, employment or training). This is what Peter Coy of Bloomberg Business Week describes as "the common element [of] failure - not just of young people to find a place in society, but of society itself to harness the energy, intelligence, and enthusiasm of the next generation".

The irony which is not irrelevant to our own discourse on economic freedom is that in Spain, for instance, the youth's "May 15 movement" of massive demonstrations has led to the recent defeat of the Socialist Party in regional and local elections. According to the Financial Times (17 June 2011), the right-wing Popular Party is expected to win the next general election. And so, counter-intuitively, socio-economic difficulties result in the rise of the right-wing, as the Left is unable to pose and mobilise around alternatives to the status quo. Under such circumstances, phenomena such as Louis Bonaparte's lumpen proletariat in 19th century France, the Tea Party extremists currently in the United States and the Green Bombers across the Limpopo river can gain prominence.

While there may be structural causes to youth marginalisation in many countries, a major contributor to the current problem is the global economic crisis.

South Africa differs in the sheer size of the problem, the low education and skills levels, the very high levels of inequality and the historical and racial dimensions to the phenomenon of youth unemployment. In our situation it is systemic, manifesting even during high growth periods. As the National Planning Commission (NPC) points out in its Diagnostic Overview, the central problem in our country is that too few people are involved in economic activity.

If the slogan, "economic freedom in our lifetime" has to have any meaning, it should aim at addressing this fundamental challenge. The root causes of the problem, the NPC argues, relate among others to the structure of the economy, the quality of education, poorly located and inadequate infrastructure, a resource-intensive path dependency, and spatial economic and settlement patterns.

A growth story line

South Africa needs a growth storyline that addresses these issues and clearly describes:

* how we can use the infrastructure programme not only to crowd in the private sector, but also to build supplier industries that will absorb more labour;
* the competitive advantages that we need to forge, to be able to manufacture many of the mass market goods that we currently import;
* a strategy fully to take advantage of our massive mineral endowments to exploit the commodities super-cycle and more critically to build a mature industrial cluster around these endowments;
* how we can take advantage of these and other endowments and potential to build a green economy that is more than just cost-neutral; and
* a clear strategy to take advantage of the high economic growth rates on the continent through regional integration and the pooling of sovereignty.

We should build "an economy in which cutting edge technology, labour-absorbing industrial development, a thriving small business and co-operative sector, utilisation of information and communication technologies and efficient forms of production and management all combine to ensure national prosperity" (2007 ANC Strategy and Tactics document). This will ensure that we escape the middle income country syndrome - where countries reach a level of development and then stagnate, unable to break out because of path dependency and sheer inertia.

However, the immediate challenge of unemployment, particularly among the youth, cannot wait until high growth over some 5 years starts to have qualitative impact. By then, the ticking time-bomb may have gone off. As such, specific programmes to address this deficit need to be pursued. Besides the public works programme, this should include measures such as massive artisanship training, learnerships, a school-to-work transition programme, job transition through the state and so on.

At the same time, programmes to address asset poverty including housing and land reform need to be intensified. And the approach to BEE should also focus on community trusts for youth and women as well as employee share ownership schemes. With regard to land, policy and planning should take account of the reasons why measures such as the audit of state land, the Communal Land Rights Act, the Land Use Management Bill, revival of collapsed agricultural schemes and other support programmes in rural areas are taking so long fully to materialise.
It is this kind of methodology, firstly, to identify the objective, and then the processes and mechanisms required to achieve it, that should inform the approach of the 'economic freedom movement'.

Source: ANC Umrabulo

Tension rising in Middle East: Could Israel attack Iran and why?

On August 21 the Bushehr nuclear power plant was officially launched. This marked a new stage in Iran's disputed nuclear programme. In the days preceding this event, former US ambassador to the UN, John Bolton, was quoted around the world as saying: "Israel has days to strike Bushehr" and further "diplomatically" hinted, “If Israel was right to destroy the Osiraq reactor [Iraqi nuclear reactor bombed by Israel in 1981], is it right to allow this one to continue? You can’t have it both ways.”

Shortly after American/Israeli Jeffry Goldberg – one of the most influential journalists on matters of Israel – wrote an article in The Atlantic called "The Point of No Return". In his article he also highlights the unavailability of an Israeli strike against Iran.

Amidst the so called Middle-East "peace negotiations" – a pathetic and hopeless attempt to divide the Palestinian territories between different rulers and their stooges – tension is rising in the Middle East. We are living in a period of great instability on a global level. In the Middle East this is especially reflected in the inability of US imperialism to be able to control the situation.

Out of this crisis Iran is presently emerging as a more powerful player in the Middle East. At the same time Israel is feeling pressure both strategically in the region but also to an increasing degree from its masses who have started to become numb to the hysterical military propaganda. Contradictions are building up in the Middle East and sooner or later they will have to be solved in one way or another. One thing is clear, the turbulence and instability seen hitherto is nothing compared with what is being prepared for the future.

Destruction of "equilibrium" in the Middle East

In 2003 US president George Bush started the war in Iraq. A hopelessly short-sighted adventure, that was supposed to put an end to “terrorism”, “restore democracy” and consolidate and manifest the domination of US imperialism in the region and globally. Instead, what the war in Iraq managed was to further destabilise the whole region bringing with it nothing but further misery for the downtrodden masses. The US army immediately revealed itself to be nothing but an occupation force, swiftly alienating the mass of the population. At the same time the offensive displayed the limits of US imperialism.

The War in Iraq could never have been won. Simply to maintain a most fragile “stability” the Americans needed the help of Iran and Syria who have considerable influence in the country. At the same time the once powerful Iraqi military apparatus, the only counterweight to the Iranian army, has been completely shattered.

With the dismantling of Saddam’s army, a vacuum was opened not only within Iraq itself but in the whole of the Middle East. In 2006 the 1.5m-strong armed forces of Iran were described, by General John Abizaid, chief of the US Central Command, to be "the most powerful military force in the region, except for the United States of America, [and Israel]". This situation poses a serious imbalance of forces in the Middle East, an imbalance that is acquiring a logic of its own.

But now Iraq itself is beyond its control. Huge sectarian rifts have opened up and are widening. The withdrawal of US combat forces in August has further increased this instability, but the US did not have any other options. The presence of US forces in Iraq was draining the US treasury of more than 2 billion dollars a week. In a crisis situation with millions losing their jobs in the US, this drain enormously increased the general alienation of US workers and youth to the war. There was no way any government could endure such an immense drain of resources for so long, neither from a political nor an economic point of view. (However, although “combat forces” have been withdrawn, some 50,000 US troops still remain in Iraq and are planned to stay until the end of 2011 to “advise” Iraqi forces and “protect” US interests.)

But to withdraw fully the US needs the cooperation of Iran (and Syria) who control important militia forces in Iraq and who through these could cause great chaos and instability. On top of this Iran has also displayed several times how it could even use regular Iranian ground forces to intervene in Iraq. Last December Iranian troops temporarily occupied well No 4 at the al Fakkah oil field, about 320km south-east of Baghdad. Although the troops withdrew shortly after the occupation – they only withdrew from the well, but remain on official Iraqi soil to this day – they met no resistance either from US or Iraqi troops. Also in the north there have been several incidents of Iranian troops moving into Iraqi soil ("in chase of terrorists") without Iraqi officials being able to seriously challenge their actions, because through its involvement in Iraqi politics and with its control over important sectarian armed forces Iran could create further chaos and instability. Herein lies the dilemma of the US.

Apart from its influence in Iraq, other factors are also acting as an insurance policy against an attack for Iran. Firstly Iran through the Qods forces of the IRGC controls many groups internationally that could put pressure on the US and its allies through terrorist actions and open warfare. The most important are the Hezbollah forces in Lebanon who control vast areas of that small but strategically important country. They have the capability of striking inside Israel, a close ally of the US and also hitherto a (if not the) dominant force in the Middle East.

Last but not least Iran has a large influence in the Persian Gulf and could, potentially, temporarily block the strait of Hormuz where more than 40% of the world’s crude oil has to pass in order to reach the world markets. Such an action, even for a short period, would have a very negative effect on the world economy that is already in a fragile state. Stratfor – the US-based strategic intelligence institute – claims that even in a best case scenario it would take at least one month to remove such a block. Besides bringing the world economy to its knees, such a block would also be a big threat against all the Gulf states, many of whom have already been severely hurt by the world economic crisis, and who all depend heavily on oil sales.

Before the US invaded Iraq the Iraqi army was acting as a counterweight to Iran and a guarantee against the threats that Iran posed, but now with the disintegration of Iraqi society the counterweight is hard to see.

The nuclear programme

It is in this context that Iran's nuclear programme acquires even more significance. For years Iran have been finalising the first phases of its nuclear facilities. Despite Ahmadinejad’s denials of the fact, it is clear to all that Iran's nuclear programme is not solely for civilian use. It would be probable and wise for the regime not to choose to completely finish this process, but to leave the project at an almost finished stage like in Japan and thus using all the strategic benefits and concessions of nuclear armament without paying the high price of protecting the bomb from hostile elements.

The history of nuclear weapons has shown that, besides allowing their owners to force concessions out of their neighbours, they also drastically complicate an attack on the nations who own them. As well as reducing the chance of other countries meddling and trying to dictate their internal affairs. The fact that the US has not yet been able to challenge the weak and rotten state apparatus in South Korea is partly a proof of this.

Of course, all the US cries against a nuclear Iran are purely hysterical and hypocritical in nature. For years Israel has used the strategic advantages of nuclear weapons to bully many Middle Eastern countries without any complaints from the US. Until now Israel has had the only nuclear arsenal in the region, but if Iran were to change the nuclear balance of forces the whole situation in the Middle East would further tilt to Iran's favour. It would weaken Israeli imperialism and strengthen Iran's position.

In this sense the opening of the Bushehr nuclear reactor on 21 August was a big provocation to Israel (and indirectly to all the countries of the Middle East and the US who is further threatened to lose influence and domination over these.)

Bruce Riedel, a senior fellow in the Saban Center for Middle East Policy at the Brookings Institution, and a former CIA man with considerable diplomatic experience, recently put it like this:

“Israel now faces the biggest-ever challenge to its monopoly on the bomb in the Middle East from Iran. For Israel, Tehran is a dangerous opponent, close and threatening. There is a virtually unanimous consensus in Israel that Iran cannot be allowed to acquire nuclear weapons. From left to right, Israelis see an existential threat to their very survival. Current Prime Minister Benjamin Netanyahu argued at the Brookings Institution’s Saban Forum in Jerusalem in 2007 that Iran is a “crazy,” even suicidal, state that will be prepared to sacrifice millions of its own citizens in a nuclear exchange with Israel.

“Though other Israeli leaders are more cautious, even they are strongly determined to keep Israel’s monopoly on nuclear weapons. Ephraim Sneh, former deputy defense minister and a much-decorated retired general in the Israel Defense Forces (IDF), notes that ‘the most salient strategic threat to Israel’s existence is Iran.’ They fear Israel’s strategic room for maneuver in the region would be constrained by an Iranian nuclear deterrent. The success of Hezbollah and Hamas in the last few years has only added to Israeli concern. (The National Interest - August 24, 2010)

The Iranian dilemma

It is clear that as far as the general balance of power goes in the Middle East Iran has emerged strengthened. But the Iranian regime is not in full control of this process. The regime is actually forced to be more aggressive in foreign politics as it attempts to regain a social base by diverting the attention of the masses towards an external enemy and thus uniting the many factions within the state.The provocations of Messrs Ahmadinejad and others also flow from a strong necessity.

From Lebanon Hezbollah is always poking at Israel. In early August Lt-Col Harariof of the Israeli army was killed during a small episode of gun-fighting on the border between Lebanon and Israel.

The question of Iran is explosive. At the same time in recent years the Ahmadinejad regime has increasingly tried to spread influence in the Middle East and the African continent. Last year, former parliament speaker Ali Akbar Nateq Nori said, that Bahrain was Iran’s 14th province. A statement that displays the ambitions and also the influence of the regime in regard to Bahrain, one of the leading financial centres of the Middle East.

Last year Mr Ahmadinejad visited mainly Christian Kenya, being joyously welcomed in the port of Mombasa, on the Muslim-inhabited coast. He struck a deal to export 4million tonnes of crude oil to Kenya a year, to open direct flights between Tehran and Nairobi, the two capitals, and to grant scholarships for study in Iran. Wherever Iran has embassies it also sets up cultural centres. Iran has also been trying to use its oil to get into Uganda. Zimbabwe’s president, Robert Mugabe, has also been courted, along with sub-Saharan Africa’s diplomatic and economic giant, South Africa. South Africa has been one of Iran’s doughtiest supporters at the UN, abstaining on a resolution to condemn Iran’s human rights violations and arguing against further embargoes and sanctions over Iran’s nuclear plans.

Of course the amount of “aid” that Iran gives Africa – and the amount of influence it consequently has – is still small compared with the sums Americans and Europeans give out, let alone China. But the important fact lies in the constant attacks against the political and economic influence of other countries, including Israel – especially in an economic situation where the markets all over the world have shrunk and where room for economic manoeuvrability is narrowing.

As a side note we should remember that, as a result of Iran’s African activity, Israel has been trying to push its way back into the continent. In September Israel’s foreign minister, Avigdor Lieberman, made Israel’s first high level mission to Africa for decades, visiting Ethiopia, Ghana, Kenya, Nigeria and Uganda. Countering Iran’s influence was plainly one reason behind the trip.

On top of this there are of course the constant verbal and demagogic attacks of Ahmadinejad against Israel. These acts are indeed seen as a threat by the monstrous military state apparatus of Israeli that has based its legitimacy increasingly on its ability to crush the smallest obstacles with brute military force.

But the question is also as to whether the Ahmadinejad regime has any other choice. The revolutionary situation that opened up last year between the elections and Ashura has destabilised the regime which is now increasingly splitting. Although the splits between the reformists and hardliners are still present, the most important splits at present are opening up within the camp of the hardliners.

There is not one day that goes by without new splits and contradictions surfacing within this faction. The monstrous bureaucratic machine is devouring itself from within with factional infighting and corridor "back-stabbing". There is only one thing that these factions within the faction can agree upon, and that is the need for unity, as any serious crack in the higher echelons may give more room for the mass struggle to develop. But in the current situation a lasting unity within the regime is not possible. At the same time no faction or layer is strong enough to consolidate its power. Centrifugal forces are ripping the whole fabric of the apparatus apart. In this context Ahmadinejad’s demagogic (and hypocritical) so called anti-imperialism is a powerful tool, used to divert the attention of the masses, creating/preserving a social base and pushing for unity within his own ranks. Especially in a situation where war is on the agenda it could become an even more powerful tool.

This situation is also the source of a massive drain of support from key layers that used to back the regime but who are now beginning to move into opposition. This is perfectly exemplified with the latest strike in the Bazaar and the continuing defections of diplomats.

At the same time there are the economic factors pushing the regime. The Iranian economy is under enormous pressure. Although trustworthy figures are almost impossible to find, it is clear to everyone that the Iranian economy is in a deep crisis. The claims by the administration, that Iran has miraculously become self-sufficient in any major industry, should at best be seen as a joke.

Iran is not close to being self-sufficient. According to Professor at Northeastern University, U.S, Kamran Dadkhah, Iran needs investments worth $46.5 billion to build new refineries and increase production of oil products. So far, Iran has invested $8.2 billion in this sector within the fourth development programme. Over $6.3 billion is required to maintain and expand existing production. Over $2.1 billion has been invested. Of course Dadkhah could be exaggerating in order to serve other interests, but his estimates are still more accurate than the claims that Iran does not need to import gasoline.

The present character of the world economic crisis more than anything reveals how interconnected all economies are and how deep the international division of labour has developed within capitalism. The tax hikes and attacks on state subsidised basic consumer goods in the last years are signs of this contraction in the economy.

The regime is increasingly running out of options. It has to go on the offensive, either against its own people or beyond its borders. The crisis and the sanctions are having a big impact on the Iranian economy and Iran is forced to turn outwards in search of markets and supplies where possible. And even when it finds these, in China for instance, it will have to pay more for the same commodities and services.

The regime does not have a united line or a plan for the situation. There are some parts of the regime that pull towards accommodation with US imperialism while others argue that they should search for new markets. This conflict is not just between the “reformist” and the “hardline” factions, but also within both these factions. This was clearly displayed a month ago when the administration tried to open up negotiations with the US and Khamenei attacked them saying there would be no negotiations.

The Israeli dilemma

At the same time tensions are also rising within Israel. For years the question of growing poverty and misery has been leading to internal tensions. The Israeli elite have used the question of Palestine as a big diversion and to some extent this has worked. But the result has been that, 1) the state and military apparatus have placed their legitimacy on the might of their military and 2) sections of the masses are becoming numb to the constant warmongering.

Israel was created, supposedly, to provide a safe haven for Jews. The ideology of the state is Zionism, which attempts to bind together all Jews living in Israel across class lines. The state has justified its existence on the grounds that it is the sole protector of the people of Israel. On this basis the regime has demanded loyalty and has been able to suppress internal criticism. In this respect Iran’s nuclear programme is a great provocation, especially after the humiliating defeat in Lebanon in 2006 and the failure to destroy Hamas with the massive military campaign in Gaza in 2008.

In 2009 Israel had military expenditure to the tune of $14.3 billion. That is 7% of GDP - a ratio that is even higher than that of the US and fifth globally. On top of this massive drain of resources the country has been in an almost constant state of war mobilisation and two monstrous wars have been waged with no victory, leaving only a massive trail of blood behind it.

Especially the lack of any real victory is playing a big role. It is no secret to anyone that Hamas and Hezbollah have not come out of these wars weakened, on the contrary. In fact, increasingly, Israel is forced to lift the economic blockade on Gaza in order to offset the activities that go on through the smuggling tunnels between Gaza and Egypt.

Also the constant provocations of Ahmadinejad are playing a very undermining role – especially for the powerful military establishment. The Israeli masses have started to become tired of this caste that cannot succeed in any of its own aims and aspirations, let alone help the masses succeed in theirs. Although this process is still at an embryonic state it is nonetheless significant and, most importantly, it is narrowing the room for the regime to manoeuvre. The class divide is widening and class struggle will take a sharper character in the future.

In a March poll, published in The Times, Israelis were asked to name the "most urgent problem" facing Israel. Just 8% of Israeli Jews cited the conflict with the Palestinians, putting it fifth behind education, crime, national security and poverty.

According to the OECD, poverty in Israel is more widespread than in any other OECD country. Almost one in five people in Israel live in poverty – i.e. in a household with income less than half of the national average. A number of factors are behind this, but one of the most important is that many people in Israel don’t have jobs: about 40% of people of working age have no jobs, compared to about 33% in OECD countries. 23% of all elderly are currently living below the poverty line and according to Haaretz, at the end of 2008, in Jerusalem, 48 percent of Jewish and 74 percent of non-Jewish children where defined as poor.

Also, according to a special report on healthcare spending published by the Central Bureau of Statistics, the burden of family spending on healthcare has increased sharply in the last 10 years, while government investment pulled back. From 2000 to 2009, a family's average outlay on healthcare shot up from NIS 339 a month to NIS 633.

These figures are even more striking – especially in the eyes of dissatisfied Israelis – when they are compared to economic growth which is now at 4.1% (almost at the 4.7% level of the pre-crisis period).

The pressures flowing from this polarisation of society are also increasingly being reflected as tensions at the top. Although still small, serious divisions are taking shape within the ruling circles of Israel, within Mossad, the Knesset and even within the government.

Avigdor Lieberman (Minister of Foreign Affairs) and his populist and right-wing nationalist Yisrael Beiteinu party are heavily openly promoting an aggressive non-conciliatory policy towards Palestine – that is, to use brute force to beat the people of Palestine into submission – and Ehud Barak (Minister of Defence) from the Labour Party, reflecting the interests of the US, is supporting the opposite policy of "dialogue" – that is, to strike a deal with Fatah and maybe even Hamas to beat the people of Palestine into submission for them. This conflict has been the source of some trouble for Prime Minister Binyamin Netanyahu, who has had to balance to a certain degree between the two parties. Splits and divisions like these have a tendency to undermine the legitimacy and authority of a government.

Saudi Arabia and the Gulf

But it is not only the Israeli regime that is facing new trouble. George Friedman from Stratfor writes the following:

“The country most concerned about Iran is not Israel, but Saudi Arabia. The Saudis recall the result of the last strategic imbalance in the region, when Iraq, following its armistice with Iran, proceeded to invade Kuwait, opening the possibility that its next intention was to seize the northeastern oil fields of Saudi Arabia. In that case, the United States intervened. Given that the United States is now withdrawing from Iraq, intervention following withdrawal would be politically difficult unless the threat to the United States was clear. More important, the Iranians might not give the Saudis the present Saddam Hussein gave them by seizing Kuwait and then halting. They might continue. They certainly have the military capacity to try.

“In a real sense, the Iranians would not have to execute such a military operation in order to gain the benefits. The simple imbalance of forces would compel the Saudis and others in the Persian Gulf to seek a political accommodation with the Iranians. Strategic domination of the Persian Gulf does not necessarily require military occupation — as the Americans have abundantly demonstrated over the past 40 years. It merely requires the ability to carry out those operations."

Although Stratfor has a tendency to overestimate pure military capacity, i.e. amount of arms, men etc., as opposed to internal economic, social and political contradictions, there are certainly many truths in the above lines.

The position of Saudi Arabia and the Gulf countries has become more precarious since the fall of Saddam. Subsequently an unheard of arms race has started in the Gulf. Military expenditure is rising exponentially. Of the top 12 countries in the world using the largest percentages of their GDP on military spending, 8 are in the Middle East (and most of those around the Gulf).

In the last few weeks the US has initiated an arms deal worth $60 billion. This is the largest US arms deal ever. The Israeli government, which has often sought to block arms transactions with Arab states in the past (and just recently objected to a new Russian sale of cruise missiles to Syria), has yet to utter a peep of protest.

The situation is the same in the Gulf countries where US arms sales have escalated.US defence sales to the Gulf region more than doubled, from $US19 billion in 2001-04 to $US40 billion in 2005-08. There is no reason to think that this process has weakened since 2008.

The pressure on all these states is mounting, both economically and socially. Since the beginning of the economic crisis these countries have been in a very weak situation spilling over into the beginnings of political crisis. The room for concessions to external players is very little. In August for instance there was an, albeit small, demonstration of 200 against unemployment in Riyadh, Saudi Arabia – a very significant development in this country, considering the lack of genuine democratic rights, and also a reflection of the rising unemployment, that is estimated to be around 20% of the native population.
Could there be an attack against Iran?

From all the above we can see that tensions are rising across the Middle East. The balance of power is shifting in Iran’s direction, but the other regimes in the region cannot simply accept this growing strength of Iran. It is clear that the contradictions must be solved at some point; it is in this context that a layer within the US and Israeli elite is contemplating an attack. Again George Friedman from Stratfor writes:

“...an Israeli strike against Iran without U.S. involvement difficult to imagine....(...)[there are] three counters [to an attack against Iran]. One [is] Hezbollah, which is the least potent of the three from the American perspective. The other two are Iraq and Hormuz. If the Iraqis were able to form a government that boxed in pro-Iranian factions in a manner similar to how Hezbollah is being tentatively contained, then the second Iranian counter would be weakened. That would ‘just’ leave the major issue — Hormuz.

“The problem with Hormuz is that the United States cannot tolerate any risk there. The only way to control that risk is to destroy Iranian naval capability before airstrikes on nuclear targets take place. Since many of the Iranian mine layers would be small boats, this would mean an extensive air campaign and special operations forces raids against Iranian ports designed to destroy anything that could lay mines, along with any and all potential mine-storage facilities, anti-ship missile emplacements, submarines and aircraft. Put simply, any piece of infrastructure within a few miles of any port would need to be eliminated. The risk to Hormuz cannot be eliminated after the attack on nuclear sites. It must be eliminated before an attack on the nuclear sites. And the damage must be overwhelming. (...)

“This opening gambit would necessarily attack Iran’s command-and-control, air-defense and offensive air capabilities as well as maritime capabilities. This would sequence with an attack on the nuclear capabilities and could be extended into a prolonged air campaign targeting Iran’s ground forces.

“Far from the less-than-rewarding task of counterinsurgency in Afghanistan, going after Iran would be the kind of war the United States excels at fighting. No conventional land invasion, no boots-on-the-ground occupation, just a very thorough bombing campaign."

Added to all the above is the fact that US and Israeli interests do not always overlap.

At present the Obama administration would like to avoid war with Iran, as it needs the Iranian regime on board to help maintain some semblance of stability in Iraq. However, when the chips are down it is Israel that is the most reliable ally of US imperialism in the region and therefore the US could be forced to engage in a mission backing the Israeli generals or, at the very least, tacitly allow Israel to act. Especially if the Israelis chose to attack, leaving the Hormuz strait vulnerable, the US could be forced to support the attack so as to clear the threat to the strait. The point is that the Zionist regime follows its own interests that are based on the situation in Israel and not always on what Washington dictates. For the Israeli regime it is a matter of protecting the legitimacy and strategic position of the regime, while for the US administration it is a matter of protecting US interests, especially in Iraq, by attempting to stabilize the region as a whole, which means lowering the level of armed conflict.

Apart from these revealing considerations there have also been reports of Saudi Arabia having conducted tests to stand down its air defences to enable Israeli jets to make a bombing raid on Iran’s nuclear facilities. But no matter how and by whom such an attack would be carried out, it should be noted that this is not a new method in the Middle East. In 1981 Israel made a surprise air strike that destroyed an Iraqi nuclear reactor under construction in Osirak. Also in 2007 Israel conducted an airstrike on an allegedly secret nuclear installation in Syria.

But an attack is not the only topic on the agenda for US imperialism. The strategists of capital are actually split when it comes to the question as to how to approach Iran. One camp argues that an attack is inevitable, and that preparations should be made immediately. The other camp argues that Iran's new position should be accepted, but that it should be held in check by massively arming Israel (even with the US strengthening Israel’s nuclear arsenal) and the Gulf nations.

The truth is that both camps are right and wrong at the same time. The tensions between the rulers of the Middle East are rising to an unheard of level. At some point one of the players will have to make a move that could spin off into some kind of military confrontation. Especially the trigger-happy Israeli military establishment could be pressured to act – an act that would bring with it catastrophic consequences for the world economy and even more for the masses of the Middle East.

But from this the Iranian regime would probably even recuperate militarily quite fast. In this sense it is not even clear that an attack would be successful from the point of view of any party, but could still happen since none of the regimes can afford to show weakness or back down.

At the same time it is clear that the balance of power has shifted and that Iran - in any state - will play a more prominent role in the future of the Middle East. But to think that such a future is going to be stable, or just more stable than now is utopian. The present massive arms race in the region speaks for itself.
Effects of an attack on the revolutionary process in Iran

Although the mass movement in Iran has presently receded, the regime is still fragile. It has lost huge layers of support. This is in fact the main reason for its constant splitting. An attack from the US or Israel would be seen by the masses as an act to beat the country into submission to US and Israeli imperialism – thus it would cut through the developments that started last year. In this sense the regime would utilise the situation to regain control of the country and maybe even settle some scores.

But this development would only be temporary. Wars tend to bring to the fore all the contradictions that have built up in society. Iran would be no exception. After an initial period of withdrawal the mass movement would come to the fore once more and the deterioration of the regime would increase once more.

In the 1980s Khomeini used the war against Iraq to streamline the regime and to consolidate its power by physically destroying all opposition, but the situation is very different today. Besides the fact that the character of a hypothetical war today would be different in all manners, there is another factor. In the 1980s mass opposition was fragmented and the mass movement was on the ebb. Today the core who led the mass movement, with all its flaws, weaknesses and disorganisation, is the only undivided force in the country and, contrary to the regime, they have not received any decisive blows.

Besides this, the regime is hopelessly tangled up in a thousand wrangling cliques and factions, with a chronic and unsolvable deadlock that is presently dragging down the whole apparatus and that is not going to go away.

A consolidation of reaction in Iran would only become real after a long historical process with a series of decisive defeats for the masses. The regime could try to use a war to inflict such a defeat, but it is far from certain that it would succeed in the present conditions. Lenin explained that war – after an initial period with disorientation of the masses and the spread of patriotism etc, – at a later stage could become a powerful impulse for revolutionary explosions. Such development would not be unlikely in Iran.

The future only brings more instability

The fact is that American, Israeli, Saudi and Iranian strategists – as well as the many do-gooders – can think from here until eternity of a solution to bring “peace and stability” to the Middle East, but none of their “solutions” will do anything but add to and deepen the already existing instability. As long as the laws of capitalism govern the Middle East, no lasting peace can be reached.

For the rulers of the region this may even be tolerable. Maybe their faces, titles and headwear might change from time to time, but in general they will continue with their luxurious lifestyles as parasites leeching off the masses. But for the masses the situation will only become worse, as they will have to pay for the adventures of their rulers - if they accept at all that this is their destiny!

Unfortunately for the elite there is no evidence that this is the case. Already now most the regimes are hanging by a thread. For years the rulers have used questions of nationality and religion to confuse the masses and keep them in check, but the situation is changing. The fault lines are increasingly transcending national and religious lines and mass movements are taking shape everywhere acquiring a clearer class character.

Of course there is the movement in Iran, that has only temporarily receded, but it is clear that it will resurface on a higher level sooner or later. But also in other countries the class struggle is becoming sharper. In Turkey we saw the impressive struggle of the Tekel factory workers that managed to put immense pressure on the government. In Saudi Arabia as we also noted earlier there is growing discontent – with significant cracks in a hitherto very polished surface. In the West Bank the PFLP have bowed to immense pressure from below and have had to withdraw from the executive of the ruling PLO because of their deals with US and Israeli imperialism. And even in Israel, at some stage, we will see mass opposition to the regime that is exhausting its options to buy social peace with the pretext of "national security."

The most important situation, besides Iran, is developing in Egypt, one of the key countries in the region from the point of view of the class struggle. In the absence of genuine national mass organisations, Mohammad Elbaradei, former head of the International Atomic Energy Agency and now outsider in the corridors of the Egyptian power struggle, is striving to become a focal point in opposition to the Mubarak regime and gain some kind of momentum, promoting a boycott of the parliamentary elections on a democratic programme aimed at the workers and poor. With all probability he has started something that he will not be able to control in the future.

All these developments will deepen and seriously affect each other in the next period. If Israel or the US attacks Iran it would correctly be seen by the masses as yet another imperialist attempt to beat the Middle East into submission. This would only further enrage the masses that are fed up with US imperialism and their stooges. It would be a further impulse for the masses to cease being used as pawns in the Middle East and enter the game as players. Once this happens no one will be able to resist and all the pathetic manoeuvres and corridor deals of the rotten regimes will be swept away.

The masses of the Middle East have shown time and time again that they are willing to rise and sacrifice everything to break loose from the shackles of capitalism and its never ending horrors. The only solutions to their miseries are to be found in a socialist society where the resources of the region are controlled by the workers and poor. Until that day comes, peace will only be a superficial and volatile concept.

The main problem is not the strength of capitalism, nor the willingness to struggle and sacrifice of the workers and poor. The main problem is the lack of a mass revolutionary leadership, based on the ideas of Marxism. A leadership that is rooted not in the narrow circles of the "left", but that is firmly tied to the mass of workers and poor in all neighbourhoods from Tehran to Cairo and that takes its starting point from the realities that exist on the ground.

The forces of revolutionary Marxism are still too weak to play this role, but there has never been a better time for building our forces than now. All the contradictions of the system are becoming obvious to all with the masses in a state of turmoil. But in order to reap during the revolutionary events of the future we must sow now. We must build a strong nucleus that is able to intervene in the mass movements of the future and give them direction. If we succeed – and we most certainly will – there will be plenty of opportunities to win over the masses and provide that leadership that is required if we are to sweep away the rotten regimes in the region and with them the whole rotten system of capitalism. This would then be replaced with a Socialist Federation of the Middle East where the resources of the region would be used by its peoples to develop society to unprecedented levels and out of the dead end of capitalist wars and savagery.

Source: In defence of Marxism: the website of the International Marxist Tendency
Written by Hamid Alizadeh Wednesday, 01 December 2010