Frederic F. Clairmont
Published by Citizens International
22 Taylor Road, 11600
Pulau Pinang, Malaysia
“The colonial invasion of Iraq and
the ugliest of lies of the lie machine that propagated and justified these barbarous acts will forever remain among the greatest
and unpardonable crimes against humanity.”
– Jose Luis Zapatero, Prime Minister of Spain -
A vastly shrunken, unrepentant
and dishonourable Tony Blair has scraped to power in the shallowest of victories. But in so doing, he has once again been
subjected to the obloquy of his people, and been exposed to the world, in the words of one Labour backbencher, as “one
of the most ignominious political swindlers of all time.” These are the strongest of words that can be used to delineate
a squalid political opportunist who shoved his nation into the cruellest of wars on grounds that were criminally false.
George W Bush, his co-conspirator, had also won an election
if it is worthy of being called that, at a price tag of $4bn. A woefully corrupt administration battered by the advancing
tide of national liberation in Iraq is also floundering in a military quagmire joined to one of the biggest fiscal and external
payments crises – the notorious twin deficits – that have ever afflicted the nation. This will be subsequently
There is yet a third actor that was ‘elected’, or
rather selected by the colonial occupation. The raison d’Ítre of this puppet regime in Iraq is not the pursuit of democracy,
as its creators contend, but, as a servant of foreign rule, to execute the orders of the occupation that shows no signs of
tailing off. Its freedom of manoeuvre is non-existent as it is incarcerated within the confines of the Green Zone located
in the epicentre of Baghdad, a razor-wired sandbagged purgatory from which its quislings cannot leave, save under heavily
guarded convoys which almost invariably come under merciless onslaught by the resistance. Their life expectancy is of short
duration for all must be aware that, as a servant class, they are dependent on a white alien colonial master whose major project
has never wavered: the conquest of the country’s energy resources.
A point trenchantly noted by Labour MP Michael Meacher, former
UK environment minister. “The reason they attacked Iraq is nothing to do with weapons of mass destruction; it was nothing
to do with democracy in Iraq; it was nothing to do with the human rights abuses of Saddam Hussein. It was principally, totally
and comprehensively to do with oil. This was about assuming control over the Middle East and over Iraq, the [world’s]
second largest producer …. The connection is 100%. It is absolutely overwhelming.”
It’s no accident that the colonial administration has
shovelled a US stooge and convicted big-time racketeer such as Ahmad Chalabi (a US citizen) into the job of deputy prime minister.
Like the Shah of Iran, the quisling class realizes that when push comes to shove, their presence in the imperialist heartlands
is unwanted. The smell of death pervades Baghdad. Winning “the hearts and minds” of the victims of colonial repression
was once upon a time the invaders’ expressed goal. In the aftermath of Bush’s declaration of victory more than
two years ago, the colonial occupiers have killed and wounded more than 165,000, and to that number must be superimposed the
widespread hunger, malnutrition and such pandemics as tuberculosis and malaria. The days of sickly moralizing are over.
The occupiers and the common soldiery, caught in the grip of
irreversible demoralization and drug addiction, are aware that the endgame is fast approaching. The military and civilian
militarists inhabit the same mental universe of despair. In 1998, Madeleine Albright, then US Secretary of State, proclaimed:
“We are the indispensable nation.” Precisely the same vile creature who, when asked about the half-amillion Iraqi
children whose lives were obliterated by the application of the sanctions regime, callously riposted: “We think the
price is worth it.” When dealing with sub-human species, a verdict of that order demands neither contrition nor justification.
The war grinds on but Bush and his ghostwriters have not lost
their capacity to stuff mechanisms in their brains to tell them that the horrors are not horrible. The refrain is comforting
in its simplicity: the enemy is on the run and victory is just around the corner. But the resistance fighters in the national
liberation movement with whom I spoke perceive reality through different prisms. On his part, in his fire-and-brimstone second
inaugural address, Bush conjured up the image of “lighting a fire in the minds of men” and how “one day
this untamed fire of freedom will reach the darkest corners of our world.” Whether this cant exalted his acolytes or
sent shivers down the spines of the custodians of “the outposts of tyranny” I can’t say. What this untutored
man didn’t say, or didn’t know, however, was that his hacks had plagiarized the imagery from the words of a fire-spouting
nihilist in Dostoevsky’s novel, The Possessed.
The ruling caste oligarchy is living in a world of their perverted
imaginings. Like her master, US Secretary of State Condoleezza Rice declares, “America and the free world are once again
engaged in a long-term struggle against an ideology of hatred and tyranny and terror and hopelessness. We stand with oppressed
people on every continent and we cannot rest until every person living in a fear society has finally won their freedom. And
we must confront these challenges with the same vision and the same courage and the same boldness that dominated our post-war
period.” There is no point in sticking her nose into the blood and gore of the millions in the Third World who were
victims of US genocide since 1945. By the canons of this accursed logic these holocausts were perpetrated under the cover
of human rights.
She is blind and, as the mouthpiece of her class, she is unable
to face the historical record. Her drivelling, however, is more than a political utterance. It’s a barefaced blueprint
for global conquest. Indeed, why not start with the “reconstruction” needs of colonized Iraq, where reconstruction
money has ended up in the pockets of venal politicians and foreign corporations? When the Los Angeles Times reported that
all of Bechtel’s allegedly rebuilt water plants had broken down, it was in fact pinpointing a truth that straddled the
entire spectrum of the so-called reconstruction.
The “outposts of tyranny”, and that’s only
for starters, are six countries. Plans have been galvanized to create the Office of the Coordinator for
Reconstruction and Stabilization located within the State Department and headed by who Bush calls “one of the liberators”
of the Ukraine, Carlos Pascual. The war in Iraq has not yet ended but plans are afoot to blueprint “post-conflict”
situations for 25 countries to create “democratic and market-friendly societies”. The hackneyed claim is pedestrian.
In short, imperialism is rooted in the hegemony of neoliberalism: privatization, deregulation, uninhibited capital flows.
It was David Lloyd George in the thirties who quipped: “Scratch a Tory and you’ll always find a Fascist.”
At this moment one doesn’t need to scratch a neo-conservative to grasp the anatomy of American fascism in its crudest
expression. Wendell Wilkie, the US statesman, summarized this neatly on the eve of the Second World War when he warned that
“if and when Fascism comes to America it will come under the name of democracy.” For many, this is a truth that
has come to pass.
Meanwhile, the gulf between delusion and reality is daily becoming
more marked. The occupied territories have ceased to be under the control of the occupiers. Daily life has become a deadly
lottery. “I would definitely say that Baghdad is enemy territory,” said Colonel Lanza, a member of the first cavalry
division responsible for patrolling a wide area of Baghdad with a population of l.3 million. True not only of Baghdad but
of that huge country, almost the size of California.
The city of Fallujah will
remain forever enshrined in the pantheon of national liberation struggles. A once beautiful and model city, the size of Geneva
(320,000), has been reduced to rubble. Hospitals, places of worship, schools, infirmaries and social centres were obliterated.
Dozens of individuals bled to death because medical personnel had been forcibly removed from the city. Apache helicopters,
fighter-bombers, napalm, tanks, artillery and depleted uranium ammunition were flung against a defenceless people. The US
was the only country that did not ratify the 1980 convention that banned the use of napalm, a deadly cocktail of polystyrene
and jet fuel. Battling this armada was a resistance with only small arms and mortars. They were faced with the military elite
of the colonial expeditionary force: the US Marines, the Black Watch, Ukrainian and Polish mercenaries and others. A city
defended by a handful of resistance fighters who finally were not defeated or captured but vanished across the Tigris.
The carnage was indiscriminate, galvanized under the codename
of Operation Phantom Fury in November 2004. Its objective was to wipe out the resistance, once dubbed terrorists, dead-enders,
Saddamite dregs, etc. but now more courteously but inaccurately re-baptized as insurgents. There were no reporters except
those scribblers who were labelled by the occupant as “embedded” journalists. The description itself reveals the
debasement to which the occupation had sunk. Conspicuously absent were Arab journalists and of course Al Jazeera, whose activities
were long proscribed.
What the occupants or rather some of their more enlightened
elements grasped was that the freedom struggle sprung from the entrails of the oppressed. This was pithily summarized by Captain
Peter McCulloch of the Black Watch: “The enemy is everywhere and nowhere. I see children, women and old men; the young
men have vanished. But we know as the fighting has shown that we are the hated enemy. The children and the women are no longer
afraid. One young girl in simple English said to me: ‘If I were older and strong enough I would kill you.’ This
was no casual remark for I knew she would not have batted an eyelid in executing that oath. How often have we been taunted
by young boys and above all girls? Their pet word is ‘scum’, which hits the bullseye.” In short, the occupants
have ceased to be the object of fear. The predators have become the object of predation. This marks a profound psychological
shift for it is the bellwether of the declining fortunes of empire.
The resistance after Fallujah has gone from strength to strength
and their numbers, now estimated by one Pentagon source at around 200,000, include men, women and children of all ages and
all ideological persuasions.
The military repression was matched by the grimmest of torture
regimes, not seen since the darkest days of the US occupation of Vietnam. The architects of these crimes,whose tentacles ramified
into the highest echelons of the military and political decision-makers, got off scot-free, as to be expected, while the lower
echelons that butchered and tortured – at least some of them – were scapegoated. This is how the New York Times
put it: “The abuses at Abu Ghraib, which seemed mind-boggling at the time, turned out to be symptomatic of the torture,
abuse and institutionalized injustice that have permeated the Bush administration’s operations in its so-called war
against terror. Euphemisms like rendition, coercive interrogation, sleep adjustment and waterboarding are now widely understood.”
The torture chambers erected during and after the battle for Fallujah and at Abu Ghraib were test benches of new techniques,
as were those in the concentration camp of Guantanamo.
It was not difficult to surmise the Arab reaction to the carnage
in Fallujah. A 30-year-old US-educated Saudi articulated the wrath of millions of Arabs and others too as reported in the
Financial Times: “For us the US dream is now a nightmare. We see what is happening in Iraq on our television screens.
The Americans are killing men, women and children. The Arab world cannot forget that appalling picture of a worshipper killed
in cold blood in a mosque in Fallujah by a US soldier. If you preach and practise violence all you get in return is violence.”
The testimony of Staff Sergeant James Massey before the Canadian
Refugee Status Commission described how he and his fellow Marines shot and killed more than 30 unarmed men, women and children,
including an Iraqi boy who got out of his car with his hands up. “We fired at a cyclic rate of 500 bullets per vehicle.”
“What the Marines were doing was committing murder.” The repetitive tide of these killerconfessions has now tragically
become banalized. Another soldier from the 82nd Airborne Division told the Canadian Commission: “We were told to consider
all Arabs as potential terrorists … and we were stimulated to encourage an attitude of hatred that gets your blood boiling.”
Recourse to such “blood-boiling” techniques is part
of the warp and woof of imperial exterminism unmasked so gruesomely in My Lai in 1968. Crimes that were spawned by the same
breed of men. Regarding one of the dozens of such unpardonable crimes, one conscience-stricken Marine wrote to his senator,
Charles McManus (Republican-Maryland), of having “heard my men describe with excitement and pleasure the killing of
a young woman with a 50-calibre machine gun, detailing how they laughed when the woman was knocked 30 feet by the impact.
To many Americans, Vietnamese have long ceased to be people.” In sum, the 347 victims, mostly women and children, massacred
at My Lai were not “people”. In the idiom of the Nazi ideology they were simply Untermenschen.
Billions of dollars are now going down the drain in a desperate
last-ditch effort to use “reconstruction” money to recruit Iraqis to fight Iraqis. A perfunctory look at the daily
television broadcasts reveals the utter bankruptcy of such a strategy. There is in fact nothing new in this most archaic of
colonial blueprints. General Lattre de Tassigny, commander of the French Expeditionary Force, had gloated in 1948: “We
shall use Vietnamese to kill Vietnamese.” On 30 April 1975, the date that signalled the grand finale of the 30-year-old
colonial genocide in Vietnam, the imbecility of de Tassigny’s concoction was once again exposed for what it had always
been. The belief that augmenting the numbers of killers would stem the tide of resistance was smashed. (See the author’s
Dien Bien Phu: A Personal Memoir.)
The stirring words of the victor of Dien Bien Phu, the legendary
Vo Nguyen Giap, to then US Defence Secretary Robert McNamara are of supreme relevance in comprehending the scope of the debacle
“McNamara and his advisers have raised the number of invaders
to around half a million. What are the consequences? They have vastly deployed chemical defoliants and other terrible engines
of mass destruction. Certainly, they will increase the numbers of deaths and impose additional appalling sufferings on our
people. It will not, however, loosen the grip of our fighters for freedom. It will enhance it. In the end, our resistance
fighters will triumph.”
Historical parallels are meant to give us a deeper understanding
of the flow of historical forces. There are, however, no carbon copies in history and this is no less valid for Iraq and Vietnam.
While the dissimilarities are many, of central significance is that both represent the striving of enslaved colonial peoples
for freedom. The message on the Internet of one of the leaders of the Iraqi resistance and a veteran of Fallujah captures
the poignancy of the moment with unsurpassable power and pathos:
“Over two million innocents died waiting for the
light at the end of a tunnel. It is our duty, as well as our right, to beat back the occupation whose nations will be held
morally accountable. We did not cross the oceans to occupy Britain and the United States. And we are not responsible for 9/11.
These are only a few of the horrid lies that these criminals brandish to cover their true plans for the pillage of our country’s
energy resources. We thank all those including those in Britain, the USA and elsewhere who took to the streets to protest
against the war. We do not require arms or fighters. We have plenty. We are asking you to form a worldwide front against war,
against sanctions. The enemy is on the run. They have no place to hide. Like rats, they are being driven into a corner. They
are in fear of the resistance fighters at every moment of their lives. They can neither see nor predict. We can now choose
when, whom, where and how to strike. In much the same way as our ancestors harnessed the first sparks of civilization, we
shall now proceed to redefine the word ‘conquest’. At present, we are writing a new chapter in the arts of urban
and rural resistance warfare.”
This noblest of manifestos, I am convinced, is an imperishable
document and will remain one of the most solemn declarations of human rights that have ever been framed. It is the highest
affirmation of human freedom. Its quintessential message is that its faith is anchored in the conviction that the liquidation
of imperialism is a primordial precondition for the realization of freedom that transcends Iraq.
In the following
pages, we shall examine how the US imperial machine is being battered by its own weighty contradictions and policies. The
Himalayan costs of its war machine, like the nation’s external accounts, have gone berserk. The $420bn military budget
for 2006 has risen steadily. A number that excludes an additional $89bn approved by Congress for the pursuit of the Afghan-Iraqi
war. And, obviously, it does not include the astronomical sums for the 15 spy organizations now corralled under the command
of the empire’s new super-spymaster, John Negroponte, second viceroy of Iraq. Seen in another grotesque perspective,
the US is shelling out more than the combined arms outlays of the next 17 countries, unparalleled in the annals of military
history. The “weaponization of space” has begun. According to Jane’s Defence Industry, the US will spend
in 2006 on defence as much as the rest of the world combined.
The scale of the insanity is boundless, as disclosed
in the Pentagon’s project for “the unbeatable robotic army”. The Pentagon intends to invest tens of billions
of dollars in the creation of fully automated armed forces with the seemingly innocuous title “Future Combat System”,
which doesn’t include military expenditures in the occupied countries of the Middle East. It’s the fattest military
contract in American history. The rationale of this drive is to reinforce its global conquests. The marketing show has been
launched. In the words of one of its promoters: “Let me remind you that these robots don’t get hungry,”
waxes General Gordon Johnson of the Joint Force Command. “They are not afraid. They do not forget their orders. They
don’t care if the guy next to them has just been shot. They are far cheaper. And, yes, they do a better job than humans.”
This peddler of imperial rectitude reminds us that these robots born of nanotechnology – the science of very small structures
– may move like humans or hummingbirds, tractors or tanks, cockroaches or crickets.
The costs of the arms build-up will drive the Defence
Department’s budget to $530bn in 2010. The military debacle of the US colonial expeditionary force and their string
of satraps in Iraq is inextricably correlated to imperialism’s febrile financial and productive structures: soaring
debt at all levels, too much money chasing too few profitable investment outlets, overproduction and excess capacity. It is
an irreversible systemic crisis of capital accumulation that can no longer be swept under the rug of denial by sanctimonious
mantras of official claims and their echoes in their servile mediatic lie machine.
The starting point of this brief analysis is the US
balance of payments, specifically the US current account deficit (CAD), which is the gap between what the nation spends and
what it produces or, in more technical jargon, the combined balances on trade in goods and services, income and net unilateral
current transfers. It is but one significant facet of the torments of imperialism. The current account (see graph below),
now veering out of control, has been in the red for more than two decades, with the single exception of 1990. Stemming from
the maulings of unstoppable deficits, the empire has been metamorphosed from a once-robust net international investor in the
1970s into the world’s biggest debtor. These chronic deficits have to be financed by net foreign purchases of US stocks
and securities, foreign investment and by borrowing on international financial markets.
The extent of US indebtedness to the rest of the world is seen in its net international investment position (NIIP). This
has rocketed from -$320bn (1995) and is slated to scale -$3.7 trillion by the end of 2005, or a compound growth rate of 28%.
What is no less unmanageable is the US total debt financing requirements, which stood at $827bn in 2004
and which have grown yearly at a compound rate of over 50%. With real short-term interest rates hovering around zero but set
to rise, the honeymoon days of dirt-cheap borrowing are drawing to a close. What is now ominous is that the world’s
central banks are now offloading for the first time since September 2002 a part of the mountain of their dollar reserve accumulation.
In the very short run this trickle has all the potential of turning into a flood.
International Investment Positions
of Selected OECD Countries, 2003
(Percent of GDP)
Computed from International Monetary Fund data.
The imperial economy is floundering in a turbulent ocean of debt, living off borrowed time and parasitically off foreign
borrowed money, markedly so in the case of Asian central banks. The term “mendicancy” aptly depicts its grasping
addiction to foreign handouts. Outstanding national public debt at end-March 2005 was $7.7 trillion, slightly more than two-thirds
of GDP, soaring on an average of $2.3bn daily since 30 September 2004. More than $600bn than last year. In the 1990s, $2.8
trillion of new debt was created that dwarfed the national debt prior to 1990. A further $l.6bn was piled on in 2002-2004.
Per capita federal government debt is running at around $25,000. According to US Treasury data, that indicates that a family
of four is strapped with over $100,000 of federal debt, inseparable from the ever-expanding black hole of the twin deficits
and the neverending state of apoplectic indebtedness.
What we are witnessing is a lethal spiral of the external deficit that’s gone bonkers, with devastating geo-political
and economic implications, as the CAD advances relentlessly day by day, week by week, month by month to stand at more than
6% of GDP, up briskly from 4.3% one year ago. The voraciously debt-addicted empire needs $2.9bn every working day to plug
this hole. In just the first three months of 2005, the average annualized trade deficit was $33bn higher than the corresponding
period of 2004. Excluding oil prices the deterioration is striking. One devastating number alone encapsulates its dilemma:
imports outpace exports by 60%, which means that US exports must grow 60% faster than US imports just to keep the trade deficit
stable. There’s no stratagem that the caste oligarchy can deploy to wiggle out of this stranglehold. Particularly at
this strategic juncture when capitalism’s manufacturing base, the oncelegendary Smokestack America, is quivering at
its industrial and financial roots. Over the 35-year time frame 1970-2005, factory employment plunged from 33% to less than
14% today. Nor can currency manipulation and the greenback’s hyper-devaluation redress the CAD.
How this works out in the ongoing war for the imperialist division and conquest of world market shares is grasped
in the illuminating case history of DaimlerChrysler’s project (together with its Chinese joint venture partners) to
produce subcompact cars for the US and Europe. Its executive director is ecstatic about the lush pickings of the beckoning
El Dorado when he gloats, “China has a big, big, big advantage as far as labour costs are concerned.” The word
“big” could be bellowed a thousand times because the comparative labour cost ratios speak for themselves. Wages
and benefits cost DaimlerChrysler 38 euros in Germany (1:25) an hour, 28 in the US (1:19), 4.5 in Brazil (1:3) and 1.5 in
China. Lower labour costs are just part of the story: what’s dazzling and often glossed over is China’s productivity
strides due to the drastic reduction in its labour manufacturing unit costs.
As we have stressed ad nauseam, it’s a totally bogus proposition, in the light of a stricken dollar and the
rocketing budget and external payments deficits, to label the United States the world’s paramount economic power, save
in a very constricted macroeconomic sense.
The deficits are bankrolled by foreign central banks that are recycling their swelling foreign exchange reserves
into dollar-denominated assets. The game is coming to an end. Their goal is clear: to accept sub-par returns to enhance their
currency’s competitiveness and sustain their export drives. With a near-zero personal savings rate and an unprecedented
shortfall of national savings, the US current account deficit is a huge suction pump for drawing in foreign capital. The capital
providers that are saving the skin of American capitalism emanate overwhelmingly (apart from Japan) from the savings of Third
World countries. Indeed, the US is appropriating four- fifths of our planet’s savings.
What has cushioned the debt’s impact is that interest rates in real terms, until quite recently, hovered around
zero. The federal funds rate is 2.7%, which is less than the yearly increase of the Consumer Price Index (3.1%). The real
federal funds interest rate is, however, now slowly clambering above the zero threshold after residing for more than three
years in negative territory. These rising interest rates must inevitably boost US internal costs as well as impact on external
Here is a nation that flaunts its moral rectitude in and out of season but, as universally recognized, it’s the
beneficiary of inflows of foreign cash from poor countries. This is a form of economic aid on a scale the world has never
seen. The Marshall Plan (which was repaid with interest) was a oneshot trifling sum compared to the sheer non-stop magnitude
of these gigantic capital inflows. Without these injections of financial muscle, American capitalism would be subject to a
meltdown of horrendous scale. Because of the dollar’s erosion, the purchasing power of these foreign- wned assets is
also shrinking. That’s the big contrast with the halcyon age of imperialism from the 1890s to 1914, when the imperial
powers basked in surpluses.
These capital inflows are not only propping up the US economy but also providing it with the wherewithal to finance its
war machine and pursue its ceaseless imperial aggrandizement. The current huge money inflows funding the CAD cannot be a thing
of fixity though (see graph). It raises the spectre of US default that could be branded the balance of financial terror that
will involve catastrophic consequences for both the impecunious debtor and its lenders. To argue, as many have done, that
the economy is on a perilous and unsustainable course is to trivialize the depth and scale of capitalism’s crises. Rather,
it would be more accurate to contend that it is well on the road to financial bankruptcy, for which there is no exit strategy
on the horizon.
Net Capital Inflows
(Official net purchases of US Securities. Based
on 3-month averages)
Source: US Treasury Department
According to the findings of Nouriel Roubini of New York University, for the last two years about three-quarters
of the US fiscal deficit were financed mostly by China and Asian central banks; the entire (100%) fiscal deficit was funded
from abroad; and four-fifths of the CAD were bankrolled by Asian central banks, with China a prime activist. A rupture of
these financial flows would lead to the dollar’s implosion, a collapse of real estate prices, and a vast speedup of
household and corporate bankruptcies. This will be tantamount to a socio-economic upheaval whose global reach has not been
experienced since the Great Depression of the thirties, and whose potential carnage could be even more apocalyptic due to
the size, growth and inter-relatedness of international capitalism since the Depression.
Although the trade-weighted dollar dived by 20% in real terms since 2002, it proved unable to dent the deficit
(see graph). The rocketing twin deficits moved in concert with rising debt levels. The US external deficit stands at $670bn,
which means that US households, capitalists, and the public sector on net have to fork out $670bn on international capital
markets. By normal accounting procedures, a negative balance in the current account must be matched by a positive balance
in the capital account. US imperialism is a bleeding sore: from $120bn in 1996 to $414bn in 2000 to $670bn in 2005 with no
signs of flagging. American forecaster Brad Seltzer audaciously predicts that the CAD will be propelled to a hitherto unimaginable
$850-$900bn by end-2005. If this comes to pass, it would, in my view, be a leap into the abyss from which there is no return.
There are no precedents of any country running deficits for more than four to five years. By this standard, the US borrowing
binge and its deficit should have fizzled out a long time ago. Such was not to be, however. US imperialism is able to achieve
this tour de force of barefaced global manipulation of financial markets because the dollar, as the monetary fist of the empire’s
power, is still the world’s reserve currency, although decreasingly so, buttressed by a totally unaccountable monopoly
on printing greenbacks with impunity.
For how long foreigners will continue to pump their money into the black hole remains problematical. Foreign holdings
of US Treasury bonds for example, as a percentage of total debt, have jumped from a trifling 4.3% in 1952 to 52% in 2005,
more than a 10-fold increase. This rabid addiction to foreign handouts was matched by an attendant fall in the US net asset
Net foreign borrowing equals the excess of US capital investment over the combined savings of households, capitalists
and the public sector. Hence the CAD equals the excess of investment over saving. The CAD is a direct outgrowth of a fall
in net national US saving, which is now plunging to zero. Hit by rising interest rates, stagnant real wages and record levels
of overall household debt, American households, on average, are crushed with an aggregate household debt of $10.6 trillion
or 90% of GDP, one-fifth larger since the mid-nineties. And thus the income-strapped, saving-short, overly indebted, asset-addicted
American consumer is on the ropes. It is precisely for this reason that the credit and housing bubbles are poised to burst.
We can get a clearer focus of its operations when we realize that American households, on average, possess nearly eight
major bankcards or 17 including store and gas cards. Buffeted by the acquisitiveness of a capitalist society, the consumer
is an asset-addicted spending machine driven to operate on the principle of “buy now pay later”. Rising debt and
falling savings have fuelled domestic demand and consumption growth that continues to outstrip GDP growth and gains in real
disposable income. Homeowners have used mortgage refinancing to dig themselves deeper and deeper into debt. It could well
be that the biggest bubble in American history is now unfolding, with the most portentous of consequences.
Is this not emblematic of a country grovelling in skid row on borrowed money? Foreign goods are plugging the shortfall.
The households being financed by both the equity and housing bubbles have made this possible. According to the US Commerce
Department, households have piled on record unsustainable debt loads, obtaining their purchasing power from the equity and
housing bubble made possible by an accommodating monetary policy. It is this which has driven the rise in US consumption from
around the historic 65% to 71% of GDP over the last two decades.
Within the citadel of empire there reigns a deep-seated malaise that at times
borders on a sense of dread. Bedevilled by conflicting interests, a ruling caste oligarchy is never homogeneous. As the empire’s
crisis symptoms become more glaring, leading inexorably to its eventual krach, there are voices to be heard proclaiming that
the day of reckoning is at hand. Warren Buffett (and he is not alone), the second richest man in the world according to the
tally of Forbes magazine and dubbed in Wall Street “the king of the money bags”, proclaims his dire warnings.
As one of the world’s leading corporate moguls, with tens of billions embedded in dozens of the world’s Top
200 corporate behemoths, he’s aware of the implacable logic, complexity and crookedness of the corporate and national
economic balance sheets. His critique is, in effect, an admonition to the ruling caste oligarchy, of which he is the pillar
of pillars, that the nation is being shoved to the wall. The major thrust of his argument is that “should we continue
to run CADs comparable to those now prevailing, the net ownership of the US by other countries and their citizens a decade
from now will amount to roughly $11 trillion. And, if foreign investors were to earn only 5% on that net holding, we would
need to send a net of $.55 trillion of goods and services abroad every year merely to service the US investments then held
by foreigners…Therefore our US ‘family’ would then be delivering 3% of its annual output to the rest of
the world simply as tribute to the overindulgences of the past.” No fight here.
The point that Buffett makes is at once pedestrian and straightforward: “Large and persistent CADs as time passes
and as claims against us grow, means that we own less and less of what we produce. In effect the rest of the world enjoys
an ever-growing royalty on American output. Here we are like a ‘family’ that overspends its income. As time passes,
the ‘family’ finds that it is working more and more for the ‘finance company’ and less for itself.”
In his folksy moralizing, the Oracle of Omaha has captured one of the fundamentals of a crisis-ridden capitalist order
that can be likened to a drunk staggering from one lamppost to another. I shan’t contest his arithmetic and his unrealistic
time frame of a decade, but what strikes us is the anguish he brings to bear on the empire’s wobbly financial structure.
From his vantage point at the pinnacle of the ruling class, he is ideally positioned to mock Bush’s nostrum of an “ownership
society” and asserts, without tongue in cheek, that the mounting level of indebtedness and fiscal debauchery is tearing
at the guts of the American economy, which should be more fittingly branded as a “sharecroppers society”.
Departing from Buffett’s metaphorical depiction, Paul Krugman of Princeton University, and a New York Times columnist,
opts for the harsher turn of phrase: “a debt peonage” social order. The debate, however, goes beyond the choice
of metaphor; of central importance is that major segments of the ruling caste and their media ventriloquist dummies are aware
that American capitalism is heading at a breakneck tempo towards the inevitable krach. A process that is visible in the absence
of faith in the economic system by many Americans. Two-thirds of Americans polled by Gallup say that the economy is only “fair”
or “poor”. And only 33% believe the economy is improving, while 60% think it’s getting worse.
Inequalities are not a cause of the crisis, but symptomatic of the workings of capital accumulation and the propertied
class relations on which it is based. Over the past three years profits burgeoned at an annual rate of 14.5% after inflation,
the fastest growth since World War 2. Need we be astonished? Berkshire Hathaway’s CEO Buffett once again: “Tax
breaks for corporations (and their investors, particularly large ones) are a major part of the administration’s initiatives.
If class warfare is being waged in America, my class is clearly winning.” It certainly is. Executive pay is rising sharply,
about 300 times that of average workers. The number of US unionists has plummeted from 27.3% in 1973 to
11.6% of the workforce at present.
Noam Chomsky has underscored this truth in a scintillating synthesis: “There is a very simple principle that goes
a long way towards explaining decisions of the Bush administration. If some policy is beneficial to wealth, privilege and
power, it should be promoted. If some policy is beneficial to the large majority of the population but of no particular concern
(or even marginally costly) to wealth, privilege and power, it should be undermined.” A truth extendable not merely
to the loathsome ruling caste, but which exemplifies the exploitative political, economic and social mechanisms that have
been the drivewheels of American capitalism since its parturition in the 18th century.
The class struggle has not been consigned to the trashcans of history. Over the past three years, wage and salary incomes
grew less than in any other post-war recovery – less than a tenth as fast as profits. Wages have stagnated or decreased
for the entire working class. Wage income has been partially buoyed up by the classical method of extending the length of
the working day far beyond those prevailing in all other leading capitalist countries. This is coupled with a further squeezing
of real incomes by labour-saving rationalization measures. In short, it is the same old story: squeezing the worker to produce
more and more for less and less wage outlays.
Department of Labour statistics indicate working-class families have seen little progress over the past three decades.
Adjusted for inflation, median family income doubled between 1947 and 1973 in the period known as the “golden age of
capitalism.” But this rose just 22% from 1973 to 2003, and that too was due to wives entering the paid labour force
and longer working hours. It was not due to a rise in wages. As the New York Times notes: “Economic security is a thing
of the past. Year-to-year fluctuations in working-class incomes are far larger than they were a generation ago. All it takes
is a bit of bad luck in employment or health to plunge a family that seems solidly middle-class into poverty.”
Meanwhile, the rich and the super-rich are getting still richer: since 1973 the average income of the top 1% of Americans
has doubled, and that of the top 0.1% has tripled.
As the costs of imperial crimes surge in the colonies and the wretched inequalities and impoverishment engendered by
the unrestrained profit-driven Moloch bite into the flesh of an increasingly enfeebled non-unionized world of labour, the
trajectory of empire and its works promises to become even more grisly.
In sum: The decline and fall of empires, as Edward Gibbon said, is never imputable
to a single cause but to a concatenation of inter-related strands. A statement that is no less true when applied to the ongoing
implosion of the world’s first mega-terrorist empire. Indubitably historians will come to regard the colonial invasion
of Iraq as one of the tilting points in the debacle of empire. It conforms to the central doctrine of Hegel’s philosophy
of history: “Out of the actions of men comes something quite different from what they intend and directly know and will.”
A point that bears analogy with Hitler’s greatest crime with its self-destructive reverberations: the assault on the
Soviet Union. None could have foreseen what Egyptian novelist Hosni El Shazli baptized the miracle of the Arab resistance
movement in Iraq.
None also could have envisaged the isolation of the empire in just two short years after ‘victory’ had
been proclaimed. Bush stands alone, a desperate and forlorn figure. The taunt of a triumphant George Galloway to Blair that
“all the people you have killed have come back to haunt you” will not go away. It is tantamount to an indictment
that is not merely true of Bush’s most trusted jackal but applicable also to the wider assortment of his fellow colonial
killers that spuriously advertised themselves as a “coalition of the willing”. They, too, are jumping the moribund
ship of empire. It is therefore only a matter of time before the perpetrators of these mass crimes against humanity are brought
before a war crimes tribunal.
The struggle for the national liberation of Iraq has meant that the empire has proved unable to stem the Promethean
tide of change not only in the Middle East but elsewhere. The planned military invasions in Cuba and Venezuela, thanks to
Iraq, will remain deactivated projects in the Pentagon’s archives. The opening of a second front in the very traditional
colonial backyards of imperialism has been stymied. These countries that are battling for their national sovereignty will
not crumble in the manner of El Salvador or Nicaragua, Guatemala or Chile. The resistance fighters in Iraq have also massively
contributed to nullifying the project of invasion and annihilation of Iran and North Korea. No less crucial is that the upshot
of the military cataclysm in Iraq has destroyed the blueprint for the creation of Greater Israel, a super Zionist state, and
aborted the wholesale appropriation of the region’s prodigious energy resources.
The colonial pillage of Iraq has also exposed the soft economic underbelly of an American imperialism that is battling
for its own survival, living off borrowed time and borrowed money. What the imperial genocide in Iraq has unmasked is the
extent to which it is a giant with feet of clay, with its shrinking uncompetitive industries and thrashing in a storm-tossed
ocean of debt. The cruellest cut of all is that it has neither a military exit strategy nor a national economic survival strategy.
For the bulk of humanity there is a positive thrust to all this. Imperialism’s debacle on the military, ideological
and economic fronts has opened the floodgates to the sweeping expansion of other anti-imperialist fronts. In this perception
of things, the onslaughts of the resistance fighters in Iraq have provided the catalyst for the unravelling of the imperial
 Aljazeera.net, 21 May 2005. Speaking on 20 May on the sidelines of the fourth International
Workshop on Oil and Gas Depletion in Lisbon.
 Cuba, Burma, Belarus, North Korea, Iran and Zimbabwe.
New York Times, 28 April 2005.
 This is the aggregate of the CAD, portfolio equity and
net foreign direct investment. This is the estimate of the Bank for International Settlements.
Financial Times, 4 May 2005.
 New York Times, 10 June 2005.
* I would like to thank Lim Jee Yuan and Lean Ka-Min for their assistance
in the preparation of this paper.
Also by the same author published by Citizens International
This hard-hitting brochure based on extensive research is a complement
to his earlier work on The Crumbling of Empire that examined the implications of debt that permeates every niche of American
capitalism. It is the author’s central thesis that the horrendous war crimes committed against a defenceless nation
will prove to be one of the crucial phases in the debacle of imperialism. The author pungently points out that never perhaps
in the history of any conquest was the reversal of fortune so swift. The tremors of fear and chaos are shaking the US caste
oligarchy which has never been more isolated than at present. One of the author’s major contributions is to have unraveled
the nexus between the role of the United Nations and its agent Sergio de Mello and US imperialism in the occupation of Iraq.
The plans of conquest have gone awry as he concludes due to the sustained struggle of the Iraqi resistance movement which
has become an anti-imperialist catalyst of Promethean force throughout the region and beyond.