The state of the Empire: 2006

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Wed, 11 Jan 2006 18:16:28 -0800 (PST)

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The state of the Empire: 2006

 

 

 

 

http://www.rebelion.org/noticia.php?id=25346

 

 

The state of the Empire: 2006

James Petras, Rebelión

 

 

 

The most difficult prediction for the year 2006 is the direction and

trajectory of the US economy. In 2005 the US economy defied all the

known tenets of economic theory: In the face of record high trade

deficits, monstrous budget deficits, a failed war and major political

scandals involving presidential aides, the dollar strengthened against

the Euro and the Yen, the economy grew at 3.4% and all the major

investment houses had record profits. It seems the US economy defied

the laws of gravity, floating above the political turmoil and

structural vulnerabilities. But the point of 'prophesy' is not to

specify the day and hour of sharp decline and recession but to

identify the deep structural vulnerabilities and the possible trigger

events, which could detonate a crises.

 

The US economy will continue to diverge in a double sense. The

financial sector will expand overseas, especially the major investment

houses like Goldman Sachs, JP Morgan, Citibank while the manufacturing

sector led by the 'Big Three' automobile sector will decline even

further, with a good chance that General Motors will go into

bankruptcy. The US multi-nationals will expand on a world scale,

buying into major banks and industries, especially in China, extending

the economic reach of the empire, while the domestic economy will

suffer as the housing and real estate speculative bubble collapses,

high energy prices undermine export competitiveness, resulting in

sharp decline in consumer spending. The US empire will increasingly

become identified with its economic giants as its failed wars will

lead to a withdrawal of combat troops and a reliance on airpower,

sepoy military forces, economic sanctions and accommodating to social

liberal regimes.

 

The domestic social crisis will deepen as overseas profit

opportunities expand. In 2006, over 90% of US workers will be paying

for their costly individual health and pension plans or, if they

cannot pay, they will lose coverage. Precarious work contracts are the

norm for all but a small sector of public employees. Real inflation

(including increased health, education, energy and pension costs) will

rise to about two times the consumer price index and contribute to the

further decline in actual living standards. The bursting of the

housing bubble will reduce the " paper value " of homeowners by half and

force many who are heavily indebted into bankruptcy. Nevertheless, as

happened in recent decades (after the Savings and Loan, Dotcom, Enron

and other speculative failures), while millions of small speculators

and investors in real estate will lose billions of dollars, their

discontent will not find any political expression. The greater the

inequalities in income, property and wealth between the financial and

imperial economic elites, on the one hand, and the domestic wage and

salaried classes, on the other, the lower the level of organized

political and social opposition. In 2006 the US will become the

developed country with the greatest inequalities, with the most

sustained decline in living standards and the nation least able to

organize a defense of social rights – let alone an alternative -

against the empire-centered model of capitalist accumulation. In a

word, the domestic crisis of living standards will finance further

economic empire building rather than challenge it.

 

US global expansion is sustainable because of fundamental changes

taking place in India, China, Indo-China and the oil kingdoms of the

Middle East. These countries have lowered many barriers to foreign

investment, joint ventures and even majority ownership of high growth

industries, banks and energy sources. US , European and Japanese MNCs

and banks will accelerate their entry beyond initial beachheads and

move across all sectors of the economy, with greater depth: 2006 will

mark China's transition from " national capitalist " to a model of

imperial and national led capitalist growth.

 

The US will continue to substitute an air war for a ground war in

Iraq: For every 10,000 troops withdrawn, there will be hundreds of

added air attacks. The US policy toward Iraq is a classic case of

" rule or ruin " of Biblical proportions. Since the US or its puppet

regimes cannot rule, Washington's policy is to regress the country

into an " Afghanistan " of warring clerical and ethnic warlords and

tribal chieftains based on min-fiefdoms. The debate over a new war

against Iran is still not resolved because of the deep divisions in

Washington, Israeli military threats and the Federal spy trial of 2

leaders of the major pro-Israel lobby (AIPAC – American Israel Public

Affairs Committee). Washington can be expected to push for Security

Council economic sanctions, which will likely fail because of a

China/Russia veto. Subsequently it is likely, especially if Netanyahu

is elected Prime Minister, that Israel will attack Iranian

experimental nuclear energy sites, with the complicity of their

partners in the White House and Congress. Israeli aggression will

likely unleash a series of proxy wars in Lebanon, Iraq (including

" Kurdish " Iraq) and beyond, leading to an escalation of US casualties

and weakening Washington's client regimes (Saudi Arabia, Jordan, Egypt

etc) Petrol prices will skyrocket beyond the $100 dollar a barrel if

the Straits of Hormuz are blocked by the Iranians. If the Israeli

attack leads to a subsequent world economic recession, the economic

shock may neutralize the influence of Zionists in policy circles in

Europe and perhaps, even in the United States.

 

While there are many contingencies leading to a world economic

recession and an anti-Israeli backlash, it is prudent to ponder the

worst. While Israeli military extremism can undermine any reduction in

the US military forces in the Middle East, the weakening of the

pro-Israeli lobbies could allow Washington to rely on its support of a

proxy Iraqi and Kurdish military and police force.

 

It is highly unlikely that the US-trained Iraqi military and police

will hold up against the insurgents and mass opposition. Very probably

the military will fragment and disintegrate and the pro-US political

officials will flee the devastated and pillaged country, emptying the

treasury on their way back to the US and Europe. A likely outcome will

be a heterogeneous clerical-nationalist regime on a wartime footing

faced with an Israeli-backed Kurdish ministate intent on secession and

ethnic cleansing of non-Kurds.

 

In Washington, Congress and both political parties will be further

discredited as Jack Abramoff, a self-confessed lobbyist-swindler will

implicate dozens of Congress members, party leaders and government

officials in an enormous bribery scandal. The trial and prosecution of

Congressional leaders, especially Republican heads of Congress, may

prevent any new regressive and repressive legislation from being

enacted, but may spur the President to engage in an overseas military

adventure(bombing Iran) to paper over the crisis.

 

On the other hand, another failed military intervention by the White

House in the context of a discredited Congress led by felonious Party

leaders could ignite a grass roots movement for impeachment.

 

A weakened US military, the decline of orthodox neo-liberal clients,

and failed diplomatic initiatives in regional forums, is forcing the

US toward " accommodating " center-left politicians in Latin America.

Washington's greater flexibility will find expression in the

continuing good working relations with the Presidents of Brazil,

Uruguay, Argentina and probably Bolivia. The State Department's

hostility toward Venezuela's President Chavez will be tempered by its

loss of internal levers of power, and the close working relations

between the US and Venezuelan oil companies. The US will likely not

intervene in the elections in Colombia, Chile, Mexico or Brazil,

because each of the major candidates are well within the US

neo-liberal orbit.

 

The improbable outcome in Peru, where a 'nationalist' former military

officer close to Chavez is a major contender, will likely result in

heavy backing for the conservative candidate. Washington will probably

engage in some rear-guard 'dirty tricks' in the Venezuelan

Presidential elections, knowing in advance that Chavez is likely to

win by a substantial majority.

 

In other words, Washington will lose its automatic voting majority in

Latin America and be forced to shelve some of its most blatant

attempts to impose economic dominion,. Nevertheless none of its

strategic military bases, extensive financial and resource holdings

and lucrative debt payments will be threatened by the election of

'center-left' Presidents. The major caveat to this potential

'co-habitation' outcome is a successful popular uprising if the

center-left fails: In that case Washington will likely intervene with

local proxies, detonating regional opposition.

 

In summary, 2006 will certainly be an extremely volatile and uncertain

year for the Empire. The military defeats, internal crises , a big

decline in the dollar and a general weakening of domestic economic

fundamentals are juxtaposed to growing overseas economic expansion,

high rates of financial profits, extremely weak internal opposition

and accommodating elites in Asia and South America. The greatest

threat to empire building is not domestic nor in the competitive

marketplace but in the pending war against Iran – either a US or

Israeli attack could set in motion a series of severe economic

political and military shocks which would radically change all

previous predictions and outcomes regarding the state of the Empire

for 2006.

 

The second big shock in the making is the growing popular revolt

against the monstrous inequalities and horrendous working conditions

imposed by the Chinese ruling class in alliance with foreign capital.

A further shock could emerge beyond 2006 if and when the current

commodity boom collapses and undermines the export strategy of the

center-left regimes in Latin and Central America,.In that context it

is likely that there will be a new wave of extra-parliamentary,

anti-imperialist movements that could send tremors throughout the Empire.

 

January 5, 2006