What Makes the United States Richer than its G7 Partners? Imperialism, not Lower Taxes

September 17, 2021

By Stephen Gowans

The Harvard economics professor, N. Gregory Mankiw, who served as chairman of the Council of Economic Advisers to the US president from 2003 to 2005, points to lower GDPs per capita in Western Europe to warn against US Americans emulating Western Europe’s welfare states. The higher taxes that Western Europeans pay for robust social supports, he cautions, undermine incentives to work, leading to lower incomes. “Europeans work less than [US] Americans because they face higher taxes to finance a more generous social safety net,” Mankiw argues.

While it’s true that the United States’ G7 partners are less affluent in GDP per capita terms, to what extent is this due to higher taxes versus the United States’ ability to shape the international economic order to suit the interests of US investors and businesses at the expense of its G7 partners?

US politicians endlessly point to the post-World War II economic order, of which Washington was the chief architect, as the key to US prosperity. For example, in 2017, John McCain, a major figure in the US foreign policy establishment, remarked: “We are the chief architect and defender of an international order governed by rules derived from our political and economic values. We have grown vastly wealthier and more powerful under those rules.” McCain warned that challenges to the US-created order threatened US prosperity.

Today, McCain’s “rules” are variously referred to as “the rules of the road,” the “rules-based international order,” and “international rules and norms.” What they refer to are US-created rules that make the United States “vastly wealthier and more powerful”—indeed, vastly wealthier and more powerful than even its G7 allies.

In an important article he wrote for the March/April 2020 edition of Foreign Affairs–the journal of the influential Wall Street-funded and directed policy formulation group, the Council on Foreign Relations–soon-to-be president Joe Biden noted that for the last 70 years, the United States has “played a leading role in writing the rules, forging the agreements, and animating the institutions that guide relations among nations.”

As McCain acknowledged, Washington constructed the rules to serve US economic interests.

US military might and economic leverage have allowed Washington to define the rules and enforce them. Our “ability to project power [is inter alia] the basis of how we … advance U.S. interests,” declared the Chairman of the Joint Chiefs of Staff in 2017.

Washington’s obsession with “the rules,” who writes them, and who benefits from them, lies at the heart of US hegemonism, but also US hostility to China. China, and other powers such as Russia, North Korea, and Iran, which Washington denounce as revisionist, want to revise the rules of the road that put the United States ahead of all other countries, politically, militarily, and economically. These countries, along with others, have formalized their opposition to a global order based on US rules and US supremacy by founding The Group of Friends in Defense of the Charter of the United Nations, an 18-nation alliance that promotes an international order based on international law and the equality of nations.

“Who writes the rules that govern trade? … The United States, not China, should be leading that effort,” insists Biden.

Until the end of World War II, Washington’s G7 partners, Germany, Japan, Italy, France, the UK, and Canada, were independent competitors of the United States, each seeking to carve up the world into their own spheres of trade, investment, and economic advantage. (Canada, as part of the British Commonwealth, followed London’s lead.)

The postwar international order, authored by the newly emergent hegemonic power, the United States, integrated the defeated Axis powers, along with the weakened French and British Empires, into an international order, defined by Washington, informed by Wall Street’s values, and aimed at promoting corporate USA’s prosperity.  

To ensure its former imperial rivals would now accommodate, rather than compete with, US economic interests in a new US-defined world order, the United States occupied militarily Germany, Japan, Italy, and the UK. For almost 80 years, the United States has maintained a robust military presence in each of these countries. Why? In 2002, in an interview with United Press International, Alexander Haig, former Supreme Commander of NATO and US Secretary of State in the Reagan administration, explained.  

Q — Why is the United States still stationing 70,000 troops in Germany?

A — A lot of good reasons for that. This presence is the basis for our influence in the European region and for the cooperation of allied nations…. A lot of people forget it is also the bona fide of our economic success. The presence of U.S. troops keeps European markets open to us. If those troops weren’t there, those markets would probably be more difficult to access.

Q — I didn’t forget. I just didn’t know that if the United States didn’t maintain 70,000 troops in Germany, European markets might be closed to American goods and services.

A — On occasion, even with our presence, we have confronted protectionism in a number of industries, such as automotive and aerospace. 

In other words, the markets of former imperial rivals were integrated into the US market, and the glue that bound them to the United States, and continues to bind them–as The New York Times’ columnist Thomas Friedman once put it–is “the hidden fist” of “the United States Army, Air Force, Navy and Marine Corps.”

Washington would also integrate its former European imperial competitors into NATO, placing their militaries under formal US command, and thereby taking future inter-imperialist military rivalry off the table. At the same time, NATO allows Washington to exploit the fettered militaries of its former rivals as force multipliers in the pursuit of specifically US goals in the US-defined international realm.

After the war, Washington imposed a pacifist constitution on Japan, the United States’ main rival for domination of East Asia and the Pacific, effectively emasculating the country militarily, and ensuring it would not contest US primacy in the region. Washington is now pressuring Japan to lift the pacifist restrictions the United States itself imposed on Tokyo, in order to gear up for war on “revisionist” China, under US direction.

Additionally, the US military controlled, and continues to control, the world’s trade routes, and hence its former rivals’ access to markets and raw materials. “If you have a global economy, I think you need a global navy to look after that economy,” said U.S. Pacific Fleet Commander Admiral Scott Swift. The global navy is none other than the US Navy. Author Gregg Easterbrook notes that “the US Navy is ‘the police force of nearly all blue water.” … It “has made the oceans … safer for commerce.” Specifically, US commerce.

Importantly, Washington keeps its hand on the Middle East oil spigot. Germany, France, Japan, and Italy are highly dependent on oil from West Asia. With Washington able to close the spigot at will, Western Europe and Japan have few options but to accept what Hugo Chavez called “the international dictatorship of the United States empire.”

Hence, the United States’ G7 partners emerged from the war as US vassals. Within the globe-girding US empire, they were assigned roles as junior partners—that is, subordinate components of the US imperium. Their economic interests would be junior and inferior to those of Wall Street and corporate USA.

Mankiw’s analysis is risibly superficial. The idea that taxation undermines incentives to work rests on the notion that effort is proportional to its return. Taxes reduce the return on effort and therefore discourage work. If this is true, the opposite is also true: the greater the return, the greater the effort. By this logic, Mankiw ought to advocate a robust increase in the minimum wage, reasoning that the more money people are able to make, the more likely they are to want to work. But he’s not. Instead, Mankiw’s prescriptions invariably favor employers over workers. The wealthy should not be burdened by high taxes. Governments ought to raise revenue through consumption taxes: those that hit low-income families the hardest and the wealthy the least. In invariably promoting the interests of capital, Mankiw illustrates why Karl Marx described economists of the Harvard professor’s color as “hired prize fighters” of the bourgeoisie, not “disinterested inquirers,” whose only concern was “whether this theorem or that was … useful to capital or harmful.”

Moreover, Mankiw divorces his analysis from the surrounding conditions and events. History, politics, the imbalance in political and military power between the United States and Western Europe, do not enter his field of vision. Notwithstanding Mankiw, the disparity in per capita income between the United States and its G7 partners can be explained by Washington building a post-WWII international order to privilege US economic actors at the expense of its defeated and weakened imperial rivals. In other words, the outcome of the three decades-long, 1914-1945, inter-imperialist struggle, was the emergence of a US leviathan—one that reordered the world to put, not business on top, but US business on top, with the consequence that US GDP per capita would top that of its former competitors.  

Had Germany prevailed in the struggle, and had it subsequently integrated the United States into a German-led global economic order, German GDP per capita would almost certainly be greater than that of the United States, for the simple reason that German-authored rules would favor German businesses. Likewise, had Japan prevailed, the Japanese, not US Americans, would enjoy the higher GDP per capita.

This is not to say that the rivalry has come to an end. It hasn’t. That the G7 countries continue to compete among themselves for markets and investment opportunities can be seen in Germany forging a stronger trading relationship with Beijing than Washington favors; in rivalry between the EU and the United States in connection with Airbus and Boeing; in Germany and France flirting with strategic autonomy for Europe; and between the United States and France in arms sales. These are but a few examples. Even so, while competition persists, in does so within bounds defined by Washington, enforced by its ability to control its rivals’ access to markets and raw materials.     

It is not, then, Western Europe’s welfare states, and the support they receive from higher taxes, that account for why Washington’s G7 partners are poorer. Instead, the lower GDPs per capita of the United States’ former imperial rivals can be explained as the outcome of their losing the inter-imperialist struggle of the first half of the twentieth century. Emerging victorious and strengthened from the thirty-year-war, the United States used its military and economic clout to impose a global economic order on its former rivals—an order which puts corporate USA first, and relegates its G7 partners to junior positions, provides them junior access to profit-making opportunities, and leaves them with junior incomes.    

As an anti-pandemic tool, vaccines have turned out to be more mirage than oasis

August 26, 2021

Stephen Gowans

For various reasons, the United States has a predilection for tackling problems with techno-solutions that offer profit-making opportunities to private industry. In the realm of pandemics, the preferred solution is vaccines.

Consistent with this bias, vaccines were offered as the “exit strategy” from the pandemic. In November, Anthony Fauci, referring to vaccines, announced that “The calvary is coming.”

With more than half of year of experience with vaccines, it’s clear that immunizations are not an oasis, but are more a mirage.

I’ve gathered below figures from Our World in Data for eight countries. Four of the countries—China, New Zealand, Australia, and South Korea—have pursued elimination strategies to drive infection rates to zero through public health and social measures. The other four—the USA, Israel, UK, and Canada—have invested heavily in vaccines, treating inoculations as an escape route from lockdowns, masking, and other public health measures.

All countries examined here have seen the number of deaths per million increase over the same period last year, despite Fauci’s promised arrival of the vaccine cavalry. (China and New Zealand, are exceptions. Deaths per million in these two countries have remained at zero.)

Of the eight countries, the United States has the highest number of deaths per million, up 19 percent over this time last year, though half the population is fully vaccinated. The calvary has arrived, and more people are dying.

New Zealand, South Korea, and Australia, which have pursued a Covid elimination strategy based on public health and social measures,  have comparatively low numbers of deaths per million, and at the same time, comparatively low levels of vaccination—half that or less of the US rate, and many times less than the rates for Canada, the UK, and Israel. Even so, their deaths per million are much lower than those of the highly vaccinated countries.

China, which is peerless in pandemic control, has pursued a zero-Covid strategy along with a robust vaccination campaign.

The comparative experience of the eight countries is consistent with the view of the World Health Organization that vaccines alone cannot bring the pandemic to an end, and that public health and social measures—specifically, test, trace, isolate, and support—are also required. 

Israel is a case in point. It replaced public health and social measures with a vigorous vaccination program. Eight of 10 Israeli adults have received two shots of Pfizer’s vaccine, and more than half the country’s seniors have received three. Despite this, Israel has a high rate of Covid-19 deaths, exceeded only by the United States of the eight countries considered here. The rate is almost double what it was last year at this time, when there were no vaccines.

The preferred explanation of the fact that more people are dying, despite the arrival of Fauci’s cavalry, is that the delta variant has become dominant and it is more contagious that its predecessors. An alternative explanation is that when you lift public health and social measures, more people get sick and die.

The idea that vaccines can be a replacement for public health and social measures is false. Countries that are relying on vaccination programs in place of programs of test, trace, isolate, and support, are faring poorly in minimizing deaths, while countries that emphasize these measures are doing well, regardless of their level of vaccination.

These data suggest, then, that the effects of vaccine programs in the project of ending the pandemic may be secondary to the more significant effect of public health and social measures.

Cuba and Vietnam, two countries that held infections to low levels for many months by pursuing elimination strategies, are now experiencing high numbers of deaths per million, after relaxing pandemic control measures. Both countries had zero deaths per million last year at this time. Today, their numbers exceed that of the United States:

  • Cuba, 7.14
  • Vietnam, 3.71

Cuba is fighting back with domestically produced vaccines, to little avail. Deaths have remained stubbornly high through August.

Based on the analysis above, it’s doubtful that Cuba will be able to bring its outbreak under control without returning to the robust public health and social measures that previously served it well. Whether this option is feasible, in light of the country’s economic challenges and Washington’s continued and escalating program of economic aggression and sponsored subversion, is an open question.

The analysis similarly suggests that Vietnam’s return to its previous outstanding record of pandemic control (total deaths per million to July 1 were less than one versus 1,829 for the United States) will require a return to the methods that had previously made Vietnam a world leader in pandemic control

US companies, which rely on Vietnam as a low-wage manufacturing center to produce consumer electronics, exercise equipment, apparel, and foot wear for Western markets, are concerned that the Vietnamese government will shutter factories in an effort to bring the outbreak under control, disrupting supply chains.

So far, this hasn’t happened. Instead of closing factories, the government has asked workers to quarantine at their places of work. This way, community transmission of the virus can be managed, without disrupting production.

True to the US cultural bias for techno-solutions, US companies have pressed the White House to accelerate its distribution of vaccines to the southeast Asian country, proposing that Vietnam emulate the United States’ failed vaccine strategy in preference to the country’s previous highly successful public health measures-based elimination strategy.

Shipping more vaccine doses to Vietnam will do little good.

First, vaccines, as we’ve seen, cannot do the job alone.

Second, even if they could, the number of doses the administration is sending is too small to make any difference. Washington has added one million Pfizer doses to the six million it has already sent, a trifle considering that Vietnam has a population of 100 million.  

For months, scientists and public health officials have warned that vaccines are not a silver bullet.

  • “There’s no fairy-tale ending where we wake up and there’s a vaccine that’s 100% effective and a 100% of people around the world can get it and take it and Covid’s gone.” Dale Fisher,  National University of Singapore.
  • “Vaccines alone won’t stop community transmission.” Mariangela Simao, WHO assistant director-general.
  • Vaccines “are not magic solutions.” Peter Hotez, Baylor College of Medicine.
  • “There’s been an attitude in some quarters that a vaccine is our automatic savior. They’re really important, but they’re not a silver bullet.” Simon Clarke, University of Reading.
  • “Vaccines alone will not be the silver bullet that will allow us to return to normal life.” Emer Cooke, Executive Director, The European Medicines Agency’s.
  • “Anyone who says that vaccines alone can end the pandemic is wrong.” Martin McKee, London School of Hygiene and Tropical Medicine.
  • “The vaccinations were supposed to solve everything. We now understand that the vaccines are not enough.” Nadav Davidovitch, member of Israel’s Covid-19 advisory panel.

The WHO director-general, Dr. Tedros, explained earlier this month that, “There is no silver bullet at the moment and there might never be. For now stopping outbreaks comes down to the basics of public health and disease control; testing, isolating and treating patients and tracing and quarantining their contacts.”

In other words, vaccines are not an oasis. Indeed, in ending the pandemic, they appear to be of much less importance than the public health and social measures that China, New Zealand, and a few other countries have demonstrated actually work.

The COVID-19 Crisis is The Result of the Death Drive of Capitalism

August 25, 2021

In this episode of By Any Means Necessary, hosts Sean Blackmon and Jacquie Luqman are joined by Stephen Gowans, author of “Traitors, Patriots, and Empires: The Story of Korea’s Fight for Freedom,” to discuss how capitalism drives vaccine inequality in the world, how pharmaceutical companies are putting the pursuit of profit over the needs of humanity, and how rich countries neglected public health measures to mitigate the pandemic and pursued a disastrous strategy focused on vaccines.

The Moral Scandal of Vaccine Inequality Has a Name: Capitalism

August 18, 2021

Stephen Gowans

In a new editorial the British Medical Journal thunders against the monopolization of life-saving vaccines by rich countries, calling it a “moral scandal” and “crime against humanity.” Vaccine makers and “their political allies” are flayed for turning a “blind eye” “towards the innumerable deaths in disadvantaged nations” caused by their refusal to share vaccine technology with poor countries, while at the same time presenting themselves as the greatest servants of humanity. What they are really doing, the editorial fumes, is “making a killing”, both figuratively (in massive profits) and literally (in preventable deaths.)

According to the BMJ:

“Vaccine preventable deaths and illness are occurring across Africa, Asia, and Latin America at an unprecedented speed and scale” because there is an artificial shortage of vaccines, and what vaccine doses are available are being sold to the highest bidders—the rich countries.

“Contrary to claims, it is possible to make enough vaccines for the world” by sharing vaccine know-how, making vaccine technologies open source, and allowing any company, anywhere in the world, private or public, to produce vaccine doses.

“Let us be clear what is causing these deaths,” the BMJ fulminates: “a free market, profit driven enterprise based on patent and intellectual property protection, combined with a lack of political will.”

In other words, capitalism. The editorial doesn’t use the C-word, but if the argument is followed to its logical end, capitalism is the inevitable destination.

Deaths and illness are occurring in low-income countries which could be prevented if vaccine manufacturers shared their technology with poor countries and allowed them to produce the vaccines themselves.

Only one percent of people in low income countries are fully vaccinated, according to Our World in Data, while over 50 percent of the residents of rich countries have received two vaccine doses (and in some countries three. About one million residents of the United States have received three vaccine doses while health care workers, the elderly, and infirm in the world’s poorest countries have yet to receive even one.)

The disparity is due to two causes:

The rich countries’ pharmaceutical companies have exclusive rights to mRNA and viral vector vaccine technologies. Backed by their governments, they refuse to make the technology open source. If they did, spare manufacturing capacity could be engaged, and the supply of vaccines boosted, allowing a quicker roll out of doses around the world, but foregone profits for the vaccine oligopoly.

As the BMJ points out, the “world’s 30 richest nations—those able to pay high vaccine prices—have cleared the world’s shelves of doses through advanced purchase orders.”

  • Canada purchased enough doses to vaccinate its citizens five times over.
  • The United Kingdom secured enough doses for four times its population.
  • The United States has stockpiled 100 million doses.
  • Some high-income countries are administering, or planning to administer, vaccine boosters, absent evidence they’re needed, while at the same time destroying unused, expired, doses. Meanwhile, less than six percent of Africans have received even a single dose.

The real international community—over 100 countries—has proposed a temporary waiver on intellectual property protection of Covid-19 vaccine technologies. This would expand the supply of doses and expedite the roll out of vaccines to poor countries. On top of saving lives and reducing illness, a faster roll out would reduce the chances of new variants emerging that might evade current vaccines.

However, these developments, while a caress for humanity, would be a blow to pharmaceutical companies and the wealthy investors who back them. A supply shortage allows the companies to sell vaccines at monopoly prices with the attendant advantage of huge profits. Vaccine-makers argue that large margins are necessary to recover their research and development costs, but the vaccine technologies to which they have exclusive rights were produced in publicly-funded university and government labs. The truth of the matter is the companies seek large margins to do what capitalist enterprises are systemically compelled and legally obliged to do: generate profits to the highest level possible. Suffice to say, sharing technology with other manufacturers, means sharing market share. Any pharmaceutical company CEO who agreed to this repudiation of corporate responsibility would be quickly dismissed and replaced by another person whose moral qualms (if they have any) do not interfere with the pursuit of hard-headed business imperatives; namely, exploiting employees, despoiling customers, and paying out healthy dividends to the only people who matter in the calculus of capitalism: shareholders.

As for the dangers of new variants emerging, this can hardly be unwelcome to vaccine-makers. New variants, especially those that achieve “vaccine-escape”, present the pleasing prospect for vaccine company shareholders of a guaranteed future demand for new vaccines and therefore an unceasing stream of revenue stretching far into the future—the holy grail of capitalist pharmaceuticals. The prospect may be a nightmare for humanity, but it’s a pharmaceutical company CEO’s wet dream.    

Oxfam, the BMJ notes, accuses the G20 rich nations of putting the interests of pharmaceutical companies and their investors ahead of ending the pandemic. The journal adds that “Vaccine manufacturers and many rich countries are working tirelessly to block waiver discussions at the World Trade Organization”, while at the same time, the WTO drags it heels. Quelle surprise. Whose interests do vaccine manufacturers, the governments of rich countries, and the WTO represent? Not those of poor countries.

The BMJ’s moral indignation is understandable and warranted, but its failure to take its analysis far enough to confront the systemic roots of the problem leads to recommendations that leave much to be desired. While the BMJ can’t bring itself to mention the C-word, it is capitalism, its incentives, and its power to dominate the political process, that impedes the protection of public health and undermines the solution to the pandemic, not the moral or intellectual failures of business people and political leaders.

Unfortunately, while the BMJ’s diagnosis is sound, its treatment plan—the liberal use of moral suasion aimed at pharmaceutical company investors and politicians—is next to useless.  Capitalism, an amoral system, does not respond to moral appeals.

The BMJ urges vaccine company workers and shareholders to speak out.

But shareholders, who, as the BMJ acknowledges, are “making a killing”, are not going to vociferate against a system that bestows generous financial rewards upon them. Employees who protest will likely lose their jobs; that should be deterrent enough to their speaking out. 

Leaders of rich nations are exhorted to pressure vaccine companies to share their technology.

But leaders of rich countries are not morally neutral parties, hovering dispassionately above the fray, disconnected from capitalist class politics or the pharmaceutical industry. It was these very same leaders who transferred to select firms the right to exploit commercially, publicly funded vaccine technologies, as it has been their practice to do with countless other innovations churned out of public labs (the internet, GPS, AI, to name but a few.) The architects of the system are not likely to be its grave diggers, or even agents of its temporary suspension.

Moreover, the leaders of the richest country, the United States, are interlocked with the pharmaceutical industry. Its interests are their interests. Moncef Slaoui, who oversaw the US effort to develop Covid-19 vaccines and therapeutics, held executive posts for many years at the pharmaceutical giant GlaxoSmithKline, a company in which he held $10 million in stocks. He was also a member of the Moderna board and had $12.4 million in stock holdings in that company. On top of these pharma-connections, he was a partner in Medicxi, a venture capital firm that specializes in biotech investments. Alex M. Azar II, his boss, worked for three years as president of Eli Lilly’s subsidiary in the United States.

As for the Biden administration, it has numerous direct and indirect connections to the pharmaceutical industry, and to Pfizer in particular. As Lee Fang has reported in The Intercept:

  • Eric Lander, the White House science adviser, holds up to $1 million in shares of BioNTech, Pfizer’s vaccine partner. Lander has recently proposed a pandemic preparedness plan which pivots mainly on providing public funding to vaccine-makers to stockpile vaccines for use against potential pandemic pathogens.
  • Susan Rice, Biden’s domestic policy adviser, holds up to $5 million in shares of vaccine-maker Johnson & Johnson and up to $50,000 in shares of Pfizer.
  • Anita Dunn, who until recently was Biden’s senior advisor, is managing partner at the consulting firm she co-founded, SKDK, which does public relations and advertising work for Pfizer.

Pfizer is a top client of Albright Stonebridge Group, a consulting firm founded by former Secretary of State Madeleine Albright.  ASG counts among its former employees a number of high-level Biden administration figures, including:

  • Linda Thomas-Greenfield, US ambassador to the United Nations.
  • Jeffrey DeLaurentis, Thomas-Greenfield’s deputy.
  • Victoria Nuland, Undersecretary of State for Political Affairs.
  • Wendy Sherman, Deputy Secretary of State.
  • Uzra Zeya, Under Secretary of State for Civilian Security, Democracy, and Human Rights of the United States.
  • Molly Montgomery,  Deputy Assistant Secretary in the Bureau of European and Eurasian Affairs
  • Philip Gordon, Vice President Kamala Harris’s national security adviser.

People who spend their careers working with or for pharmaceutical interests, and have financial stakes in pharmaceutical firms, can be expected to share the pharmaceutical industry’s point of view. This is the point of view of capitalist industry–that profits are the summum bonum. No one occupies a significant position in a capitalist state without an unswerving commitment to capitalist values. Except under the most extraordinary circumstances, capitalist governments will not pressure private enterprises to negate their obligations to their shareholders in order to prevent the illness and deaths of penniless foreigners who live in what a US president once infamously called—and rich countries treat as—“shithole countries.”

The BMJ fails to recognize that the interests of pharmaceutical company investors and those of the poor countries are irreconcilably opposed. There is an assumed common interest between these two parties, namely, the end of the pandemic. Yet, while the end of the pandemic would certainly benefit the poor, both in poor and rich countries, it would not benefit the vaccine oligopoly. Restricted vaccine supply and the monopoly pricing it allows, the opportunity to provide vaccines to a vast global market, and the prospect of an ongoing stream of revenue in vaccine boosters and vaccines for new variants, are manna for the pharmaceutical industry. For rich countries—those that produce vaccines or have purchased more doses than they need—the current state of affairs offers them leverage over the have-not countries; the have-not countries are dependent on the rich counties for access to vaccines, helping to ensure their continued pliability and openness to exploitation by the rich countries.

Clearly, a temporary waiver of patent rights would harm pharmaceutical company profits and deny rich countries their leverage, and therefore, it is naïve to expect pharmaceutical companies and interlocked political elites to voluntarily submit to demands that they sacrifice their interests for the good of the bulk of humanity. The whole idea of capitalism as an exploitative system is that the bulk of humanity exists as a means to the profit-making ends of a microscopic minority of billionaires. Profits, not people. To be sure, the Biden administration has withdrawn its objection to a temporary suspension of patent rights, but this may be a concession of little consequence. Germany and other rich countries continue to fight the proposal strenuously, and the WTO is slow-rolling the issue. If and when the waiver is approved, the damage it can do to vaccine oligopoly profits will be severely limited.

There is another reason for capitalist industry to oppose a temporary waiver. The lifting of patent rights would acknowledge what no capitalist proponent wishes to acknowledge, namely, that capitalism, or at least its intellectual property protection provisions, can produce suboptimal, even harmful, outcomes for the welfare of the majority of the world’s population. The capitalist zeitgeist holds, in contrast, that capitalism is philanthropic, a blessing for humanity. Once it is established that a pillar of modern-day capitalism is harmful for public health, it becomes easier to make the case that the system of wealth accumulation in the hands of a miniscule elite of billionaires and their servants is harmful in other ways as well—for example, in anthropogenic global warming and the promotion of war. Might calls be made for the suspension, or worse, elimination of capitalism as a danger to humanity? In other words, the notion that patent rights ought to be suspended even temporarily is equivalent to the idea embedded in the Communist slogan, “people, not profit”—to wit, that the explicit aim of capitalism is to produce profits for a minority, not to enlarge and protect the interests of the majority of the planet’s inhabitants. It doesn’t take a genius to see that a people-centered system is, from the point of view of the bulk of humanity, preferable to one whose sole aim is to satisfy the wealth accumulation imperative of a tiny elite of uncrowned monarchs. Arguing that the intellectual property rights this minority has conferred upon itself need to be suspended in the interests of the rest us, is a potential opening for a system-challenging  discussion. The BMJ editorial has provided that opening. It’s up to the rest of us to carry it forward.

Capitalism makes a suboptimal form of public welfare the possible, but never necessary, incidental outcome of profit-making. Optimal public welfare based on the elimination of the exploitation of humans by humans, and not profits, needs to become the sole organizing principal of society. The development of Covid-19 vaccines was made possible by public planning and spending. The leaders of rich countries recognized that capitalism was not up to the task of developing new vaccines. The costs were prohibitive and the risks just as great. Investors will not to risk their capital on an enterprise with a high probability of failure. Thus, a kind of socialism was pressed into service, under the rubric of Operation Warp Speed, to develop vaccines and therapeutics, in which the public assumed the risk. However, this was a socialism harnessed to capitalist requisites. Once the vaccines were developed, they were licensed exclusively to a  vaccine-making oligopoly. The costs and risks were socialized; the benefits privatized. But rather than privatizing the fruits of socialized innovation, vaccine technology could have been socialized and produced for need, not profit. The disincentives to sharing vaccine technologies would have been few, if any, under a system of production for need.

Under the same system, the question of how to address the pandemic would not have been biased, from the start, in favor of a techno-fix that amounted to an attractive vaccine and therapeutics business opportunity, rather than in favor of public health and social measures, which China and Vietnam demonstrated are sufficient to eliminate community transmission of the virus and which the WHO has repeatedly endorsed as a proven method of pandemic control. It now appears that vaccines may be incapable of preventing transmission of the virus; it is now obvious that the vaccine strategy—based on the notion that vaccines are the exit ramp from the pandemic—is clearly incapable of rescuing humanity from the pandemic. The end of the pandemic lies, as the director of the WHO, Tedros Adhanom Ghebreyesus announced on August 4, in “a comprehensive approach of vaccines in combination with proven public health and social measures that we know work” (emphasis added.) As the WHO has also pointed out, had rich countries acted quickly and decisively to implement public health and social measures in February and March 2020, the pandemic would have been averted. The rich countries failed to abort the pandemic in embryo, but in allowing a crisis to be born, created many lucrative business opportunities. 

The route to a system based on need, not profit, does not follow along the path of moral suasion and speaking truth to power. No matter how much they’re pressured, wolves will never act as sheep. Too often it is believed that any action, no matter how unlikely to bear fruit, is better than no action, but that’s doubtful. Actions which address symptoms (IP protections), and not causes (the capitalist interests IP protections serve), bring only temporary relief at best, and usually not even that. Actions which demand capitalists ignore the imperatives of capitalism to act as socialists—as if socialism is achievable within a capitalist framework—are quixotic. Pointless actions may be worse than useless if they foster illusions about where the problem lies and therefore what the possible solutions are.

To be sure, capitalist pharmacy is a moral scandal and crime against humanity, and not only in its production, pricing, and distribution of coronavirus vaccines, but in its operations from alpha to omega. A system designed to yield profit, not to protect and promote health, routinely produces suboptimal human health outcomes, if not outright harm. This is a virtual axiom. Recognizing that the problem is production for profit, carried out by private enterprises, organized by markets, and under the political control of governments dominated by plutocrats, is the first step on the road to a solution.  Another step is recognizing the promise inherent in the alternative: production for use organized by a consciously prepared plan, carried out by publicly owned enterprises, and under the political control of governments guided by democratic, not profit-making, concerns. In this kind of system resides any hope humanity has for solving its most daunting problems: the pandemic, climate change, the threat of terminal war, and the unnecessary poverty of most of humanity.

Vaccine Imperialism

In this segment of By Any Means Necessary, hosts Sean Blackmon and Jacquie Luqman are joined by Stephen Gowans, author of “Traitors, Patriots, and Empires: The Story of Korea’s Fight for Freedom,” to discuss vaccine imperialism and the WHO’s ask that rich countries halt booster dose programs, how capitalism slows the production of vaccines and allows more variants of COVID-19 to develop, and the United States’ use of the pandemic as an opportunity to plunder poor countries and further its violence around the world.

https://t.co/HA0AWAxYXo?amp=1

Weaponizing Covid-19: How Washington is Using the Pandemic to Help Destabilize Cuba

July 14, 2021

Stephen Gowans

What follows is based on my reading of Cuban president Miguel Diaz-Canel Bermudez’s analysis of the causes of the recent protests in Cuba, plus data from Our World in Data, showing a sharp rise in Covid-19 cases on the island since June 22.

Cubans are facing shortages of critical goods. This is happening at a time Covid-19 cases are sharply climbing.

The pandemic has severely reduced Cuba’s access to its main sources of foreign currency:

  • Tourism
  • Visits of expatriate Cubans

The reduction in foreign currency has restricted Cuba’s ability to buy foreign goods:

  • Food
  • Drugs
  • Raw materials
  • Spare parts

At the same time, fuel imports have been reduced.

Only about 20 percent of the population has been vaccinated. The low level of vaccination is attributable to two factors:

  • Cuba had to develop its own vaccines because it couldn’t afford to buy them from foreign suppliers, most of whom wouldn’t sell them to Cuba anyway.
  • Cuba doesn’t have the capability of producing doses in sufficient quantity to vaccinate the whole population at once. Vaccinating everyone will take time.

To Cuba’s existing economic difficulties, created by Washington’s ongoing attempts to strangle the country economically, are added these new pandemic-related problems. As a consequence, dissatisfaction has increased.

To exploit the growing difficulties, Washington is running a vigorous campaign to portray:

  • The Cuban government as the inept architect of Cubans’ growing misery, and
  • The US as a solicitous neighbor keen to rescue Cubans from the incompetence of their government.

While Washington professes solicitude about the health of Cubans, it presides over its own system of private health care which privileges the rich at the expense of the poor. Its concern for the welfare of Cubans [to say nothing of its concern for the welfare of its own citizens] is insincere. [Plus, Washington has shown gross incompetence in protecting the health of its own citizens against the dangers of Covid-19, posting cumulative deaths per million over 13 times greater than Cuba.]

Some Cubans who are committed to the revolution, but are dissatisfied by the critical goods shortages, participated in the protests. The government is willing to discuss potential solutions with them, so long as they recognize and understand the real causes of the problems Cuba faces.

I’ll add the following to the Cuban president’s analysis.

South Africa offers a similar concurrent case of a political distemper precipitated by pressures produced by a worsening pandemic.

The pandemic has had two main effects in both countries:

  • Increased misery on top of already existing misery. (High unemployment and inequality in South Africa and US-sanctions-created privations in Cuba.)
  • A growing health hazard.

There are, however, important differences between the two countries.

  • South Africa’s political distemper is more severe, marked by rioting and looting.
  • South Africa has not been under a six-decades-long blockade (although its long-running regime of neo-liberal economics has probably had comparable effects for all but privileged South Africans.)
  • Washington isn’t trying to take advantage of the miseries produced by the pandemic to destabilize Pretoria.

Despite these differences, protests in Cuba and South Africa, and political upheavals in Colombia, Brazil, and Peru, are traceable, in part, to the destabilizing force of the pandemic.  

The failure of governments of the right to manage the economic pressures and public health hazards of the pandemic will provide political opportunities for parties of the left to mobilize those whose circumstances have worsened, so long as they offer credible solutions to pandemic-induced problems.

At the same time, the pandemic’s inherent power to destabilize will add to existing US efforts to disrupt and weaken governments that refuse to be brought under US control and influence. (This opportunity, however, is absent in the cases of China and Vietnam, both of which have exhibited peerless competence in managing the public health and economic effects of the pandemic.)

Are the protests in Cuba a struggle between democracy and authoritarianism?

July 13, 2021

Stephen Gowans

Readers of The Wall Street Journal might come to the conclusion that an uprising has erupted in Cuba against ‘authoritarianism’ and the Cuban Communist Party.

But a careful reading of the newspaper paints a more nuanced picture.

There is, according to the Journal, “a pattern of simmering tensions across swaths of the developing world, where people are largely unvaccinated, governments are unable to afford sustained stimulus measures and economies are falling further behind and struggling to rebound from last year’s record contraction.”

In South Africa, for example, the government has “deployed its army … to help quell violent protests” after “hundreds of angry residents ransacked shops and malls, torched cars and blocked major roads.” The police have “arrested nearly 500” protestors.

“At the end of March, 33% of South Africans were unemployed, a figure that rises to 43% when discouraged job seekers are included.” A “record wave of Covid-19 infections across the country….has overwhelmed hospitals and led to shortages of oxygen.”

In another part of the developing world, Cuba, simmering tensions have also spilled over into protests. There, hundreds of “Cubans took to the streets … protesting a lack of food and a shortage of Covid-19 vaccines.” Cubans are registering “their opposition to the economic fallout from Covid-19 … widespread shortages of food and medicine, and numerous daily blackouts from failing electric power.”

Unrest in Cuba matches unrest in South Africa, part of the simmering tension in the global south. The roots are the same.

Yet, despite Cuba’s pandemic-induced economic travails and consequent political distemper fitting a pattern across the global south—exacerbated in Cuba’s case by six decades of US economic strangulation—The Wall Street Journal cast “Cuba’s unrest” as framing the “world’s big struggle: dictators vs. democracies.”

Columnist Gerald F. Seib used the occasion of the Cuban protests to rail against authoritarian regimes, among which he includes Cuba’s government, despite the reality that Cuba has elections and assemblies. But in the US view, an electoral system is not truly democratic unless it bears a close resemblance to the United States’ own plural elite model, one of multiple parties representing the interests of business elites, which periodically vie for the votes of an electorate whose interests are largely ignored.

Bernie Sanders recently referred to the US system as one that doesn’t respond to the needs of the people. Sanders told New York Times’ columnist Maureen Dowd, ‘It’s absolutely imperative if democracy is to survive that we do everything that we can to say, ‘Yes, we hear your pain and we are going to respond to your needs.’’’

The obvious question for Sanders is: how can a system that doesn’t respond to the people’s needs be called a democracy? And how can responding democratically save democracy. If responding to the people’s needs is a new initiative, then democracy is already dead. More accurately, in the US case, it has yet to be born.

Sanders would have hewed closer to the truth had he said, “It’s absolutely imperative if democracy is to be created for the first time that we not only do everything that we can to say, ‘Yes, we hear your pain and we are going to respond to your needs’ but that we also actually respond to their needs.”

Seib opens his storehouse of demons, condemning them for the crime of autocracy on the basis of how long they’ve been in power: Ayatollah Ali Khamenei (32 years); Vladimir Putin (22); Xi Jinping (9). Harvard political scientist Graham Allison calls Xi’s government a “responsive authoritarianism”—which seems to be another of way of saying it’s the democracy that Bernie Sanders says the unresponsive US plural elite system is not.

This “seems a boom time for autocrats,” Seib writes. “Yet the seething unhappiness in Cuba, Venezuela, Iran and Hong Kong [but not South Africa, Haiti, Colombia, Brazil, and Lebanon] raises the question of how long the authoritarian run can last?”

Apparently, for quite some time, if the autocrats are US allies. The Hashemite monarchy of Jordan’s “U.S.-Backed King”, as the Journal describes him—and aptly, too, considering that US taxpayers pay him more than $1.5 billion yearly—has lasted 75 years. The Khalifa family, which allows the US Fifth Fleet to use Bahrain as its home base, has ruled over the Persian Gulf country for 255 years. The House of Saud, which rules US best friend Saudi Arabia, has clung to power with US assistance for more than three-quarters of a century. And we mustn’t forget Abdel Fatah el-Sissi, Egypt’s military ruler, whom Donald Trump once called his favorite dictator. Like the authoritarian government of Jordan’s autocrat King Abdullah, the government of autocrat President el-Sissi, also receives more than $1 billion yearly from an appreciative United States, for services rendered.

In US propaganda, autocrats are not condemned as autocrats so long as they render services to the beneficiaries of the US plural elite system, i.e., Wall Street, while governments that don’t genuflect to US plural elite needs, and choose instead to respond to their own citizens’ needs, are labelled autocrats, whether they are or not.

Owing to the US campaign of strangling the Cuban economy—a campaign now in its seventh decade—Cubans have lived with a lower standard of living than their socialist economy is capable of producing (which is the point of Washington blockading the island.)

Cuba has, nevertheless, done remarkably well in the face of US-imposed adversity. In 2019, the country’s GDP per capita was $9,100 (current $US), according to the World Bank, not far off China’s $10,217. Of course, neither country is anywhere near US GDP per capita, but, having been looted by great powers, they have steep hills to climb. US sanctions, and now the pandemic—which has slashed tourism by nearly 90 percent—makes the climb all the more difficult for Cuba.

“The truth is that if one wanted to help Cuba, the first thing that should be done is to suspend the blockade of Cuba,” Mexico’s president, Andrés Manuel López Obrador, told reporters on Monday. “That would be a truly humanitarian gesture.”

 Unfortunately, neither Wall Street nor the capitalist system at whose center it lies, are humanitarian.

The US War to Destroy China’s Crown Jewel and Secure US Cyber Supremacy

July 6, 2021

Stephen Gowans

When then US president Donald Trump said he would call off US efforts to extradite from Canada Huawei CFO Meng Wanzhou to face bank fraud-related sanctions-evasion charges in exchange for trade concessions from China, he effectively admitted to a political kidnapping. The reality that normal US practice is to fine companies that violate US sanctions, not arrest their officers, strengthened the contention that Washington was conspiring with Canada to abduct Meng for political gain.

The Meng case has become the most high-profile aspect of a US campaign to cripple the Chinese tech champion Huawei. But it is also one of the least consequential elements of a multi-layered operation. Since 2010, Washington has spied on Huawei, declared it a national security threat whose equipment must be banned from telecom networks, starved it of US technology, harassed its employees to gather information to use in law suits against the company, and has even gone so far as to pay Huawei’s potential customers to buy from its competitors instead.

The impetus of the campaign is multidimensional and mutually reinforcing. Washington is trying to block China from achieving success in emerging tech industries. Huawei, a global telecom powerhouse, is seen by Beijing as a key player in China’s industrial strategy, a jewel in the country’s crown. Crippling the company could slow China’s technological ascent, condemn China indefinitely to low-wage manufacturing, and ultimately allow US investors, rather than Chinese enterprises, to reap the bounty of tomorrow’s industries.

Moreover, telecom networks are an important part of the infrastructure the NSA and its counterparts in the Five Eyes signal intelligence alliance—Britain, Canada, Australia, and New Zealand—use to gather political and business intelligence, and conduct cyberattacks, around the world. As the preferred network supplier, Huawei was on track to blanket the world’s telecom networks with its gear. This was hardly an auspicious prospect for the US intelligence community. As a Chinese company, Huawei is far less likely to cooperate with US intelligence than equipment manufacturers based in countries under US influence. The latter can be expected to accede to Washington’s demands to comply with US intelligence community requests for cooperation; not so Huawei.

In 2019, Huawei was the world’s largest telecom equipment manufacturer. It had 180,000 employees and the largest R&D budget of any tech company in China. [1] Over 40 percent of its employees worked in research and development. The company was held privately, with an ownership stake divided among 81,000 employees. [2] Renowned for the quality of its gear and the attractiveness of its prices, Huawei was at the forefront of the next-generation 5G networks. [3]

As a global leader capable of outcompeting its US-allied rivals, Huawei was vitally important to Beijing’s industrial strategy. Indeed, so important was the company to Beijing, that Wall Street Journal reporters Bob Davis and Lingling Wei called the company China’s “crown jewel.” [4]

But to Washington, Huawei was a threat. Referring to 5G, US telecom experts prepared a paper for the White House warning that “For the first time in modern history, the United States has not been the leader in an emerging wave of critical technology.” [5]

Huawei’s US competitors were seen as too small to compete with the Chinese firm. [6] As for Huawei’s main competitors, Nokia, Ericsson, and Samsung, Washington and London worried that the Chinese tech company was so attractive to the world’s telecom providers that it would drive its rivals out of the 5G business. [7]

In 2010, the NSA secretly broke into Huawei’s computers, looking for evidence that the company was covertly controlled by the Chinese military, and that the company’s CEO and founder, Ren Zhengfei—he had once served in the People’s Liberation Army Engineering Corps.—retained an active role in the Chinese military. The NSA was unable to confirm its suspicions. [8]  All the same, two years later, Congress declared Huawei a national security threat, effectively shutting it out of the US market. [9]

A half a decade later, with Huawei defying Congress’s efforts to slow its rise, US National Security Advisor John Bolton decided to step up the war on Huawei. [10] Washington plotted to insert “the federal government deep into the private sector to stiffen global competition against Chinese telecom giant”. [11] Senator Tom Cotton,  author of an attack plan to “roll back Chinese power”, [12] tweeted: “@Huawei 5G, RIP.” [13]

One of the first salvos in the Bolton-initiated operation was to formalize the exclusion of Huawei from the US market. US president Donald Trump signed an executive order prohibiting US companies from doing business with China’s crown jewel. [14]

Next, Washington pressured its allies to declare Huawei’s network equipment a potential instrument of Chinese espionage. At its July, 2018 meeting in Halifax, the US-led eavesdropping network, the Five Eyes, announced it would work to ban Huawei 5G equipment from the core of its telecom networks. [15]

Other US allies were pressured to follow suit. Washington designated foreign telecom providers that shunned Huawei as ‘clean telcos’, and implied that those that did business with Huawei were US national security threats to be dealt with accordingly. [16] Frightened of US reprisals, telecom providers turned cool to the Chinese gear provider.  

US pressure to eschew Huawei was seen by foreign telecom providers as a dishonest ploy to gain leverage in trade negotiations with Beijing, rather than an effort to address legitimate national security concerns. The view was reinforced by Washington’s failure to produce evidence showing Huawei was engaged in espionage or that its equipment could be used by Beijing to eavesdrop on Western governments and businesses.

Some US allies questioned “whether America’s campaign [was] really about national security or if it [was] aimed at preventing China from gaining a competitive edge.” [17] Executives at Canada’s first and third largest telecom providers complained that they were being asked to rip Huawei gear out of their networks to satisfy US trade ambitions and to allay US fears of losing its coveted place as a global technology leader. [18]

While trade ambitions and a desire to reply to China’s challenge to US global technology leadership were playing roles in Washington’s campaign to cripple Huawei, so too was another motivation: Controlling the world’s telecom networks to allow the United States to maintain its dominant role in espionage and cyberwarfare.

When the NSA penetrated Huawei’s computers in 2010, it had two goals: First, to find out whether Huawei was an espionage threat; and second, to look for a backdoor into the company’s network equipment. “Many of our targets communicate over Huawei-produced products,” a N.S.A. document leaked by Edward Snowden said. “We want to make sure that we know how to exploit these products,” in order to “gain access to networks of interest” around the world. According to the New York Times, the NSA’s goal was “to exploit Huawei’s technology so that when the company sold equipment to other countries — including both allies and nations that avoid buying American products — the N.S.A. could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations.” [19]

Washington argued that as a Chinese company, Huawei is obligated to comply with any request from Beijing to use its equipment as a vehicle for spying and cyberattacks. But Washington’s real concern may have been, not that Huawei was a potential tool of Chinese espionage and cyberwarfare, but that it would be an unwilling tool of US espionage and cyberaggression. In contrast, Nokia, Ericsson, and Samsung, as companies based in US satellite countries, would be far easier to recruit, either knowingly or unwittingly, as instruments of NSA eavesdropping and US cyberoperations. From Washington’s perspective, the ideal intelligence scenario would be one in which the guts of a country’s network are provided by manufacturers under US influence. Since Washington has no sway over Huawei, it is undesirable as a provider of equipment to the world’s networks. From the vantage point of US intelligence, Huawei needs to be crippled and blocked so that ductile US-allied manufacturers—Washington’s ‘security’ partners—can take its place.

In order to promote Huawei’s rivals, Washington is paying network equipment buyers to use Nokia, Ericsson, and Samsung. Acting through the U.S. International Development Finance Corp, Washington offers “financial incentives and other enticements to countries willing to shun Chinese-made telecom gear.” [20] For example, the DFC has provided a $500 million loan to a consortium of telecom companies led by the UK’s Vodaphone to build a mobile network in Ethiopia. A condition of the loan is that it cannot be used to purchase Huawei equipment. [21] Meanwhile, Congress is expected to pass legislation that will allow Eastern European countries to use US aid to build cellular networks, so long as they use Huawei rivals. [22] In effect, Washington is paying countries not to use the Chinese supplier.

The DFC was created by Congress in 2018 to compete with China’s One Belt, One Road initiative. While its  main goal is to invest in US companies, the corporation is willing to support non-US firms, if doing so hurts Huawei, and pushes NSA-compliant manufacturers to the fore . “We’re not out to play defense,” DFC head Adam Boehler told the Wall Street Journal. “We’re out to play offense.” [23]

On top of promoting Huawei’s competitors, Washington has sought to degrade the company’s products, by denying it access to the US technology it needs. In 2019, Washington banned the export of US-made chips to Huawei, and additionally blocked Huawei’s access to chips made anywhere in the world with US equipment. The aim, according to the Wall Street Journal’s editorial board, is to decouple “computer technology supply chains from China” and Huawei. [24]

Washington has also mounted a campaign of harassment against the company. According to Huawei, US officials have instructed US “law enforcement to threaten, menace, coerce, entice and incite both current and former Huawei employees”. [25] US prosecutors have brought charges of racketeering conspiracy and conspiring to steal trade secrets against Huawei and its partners. [26] FBI agents have visited the homes of Huawei employees to pressure them to disclose information that could be used against the company in US courts. [27]

The most high-profile case of harassment has been the arrest of Huawei CFO Meng Wanzhou by Canadian officials at Washington’s request. Meng, the daughter of Huawei CEO, Ren Zhengfei, awaits a Canadian decision on her extradition to the United States. US prosecutors allege that Meng helped Huawei circumvent US sanctions on Iran by lying to banks.

On the surface, the case has a number of curious features.

First, the alleged crime appears to have little to do with the United States. Meng’s putative misdeeds occurred in Hong Kong; one of the alleged victims, HSBC, is a British bank; and the accused is a Chinese national. [28] The US connection is the alleged evasion of US sanctions on Iran, but US law does not apply to Chinese nationals or Chinese enterprises outside US jurisdiction.

Second, Washington’s standard practice is to punish corporations that violate its sanctions laws, not arrest company executives. The economist Jeffrey Sachs produced a long list of US and international banks that have paid fines to the US government for sanctions violations. None of their executives were arrested or charged with crimes. [29] Recently, the software giant SAP paid $8 million in fines for selling software to Iran. Not only were company executives spared arrest, the company wasn’t even prosecuted. Instead, it was let off with a promise to improve its compliance. [30] As Canadian political operative Eddie Goldenberg has argued, the arrest of Meng is not a criminal matter. Instead, it lies in “the realm of geopolitics. That is why Ms. Meng was personally targeted when the normal U.S. practice in similar matters is to charge the corporation, not the individual.” [31]

Third, while the Canadian government has presented the Meng affair as a purely criminal matter, when he was US president, Donald Trump told Reuters that he would intervene in her case if by doing so he could secure a better trade deal with China, suggesting Meng had been arrested as a bargaining chip. [32]

US prosecutors argue that the Huawei CFO committed bank fraud by misleading Huawei’s banks in order to evade US sanctions on Iran. The extradition case hinges on the question of whether bank fraud is a crime in both the United States and Canada. Under Canadian law, Meng cannot be extradited for an act that is not recognized as a crime in Canada.

Meng’s lawyers have argued that, notwithstanding US claims, the case pivots on sanctions-evasion, with bank fraud as a red herring. [33] “It is a fiction to contend that the United States has any general interest in policing private dealings between a foreign bank and a foreign citizen on the other side of the world. However, it is the case that the United States has a global interest in enforcing its sanctions policy. Sanctions drive this case.” [34]

Meng’s lawyers have also argued that if the Huawei CFO had misled the banks—a point they do not concede—the banks would have suffered no harm in Canada, since Ottawa has no extra-territorial sanctions which would prohibit Huawei from selling equipment to Iran, and therefore would have no reason to penalize the banks for their actions. The critical point is that deception is not fraud unless harm befalls the deceived party and a benefit redounds to the party practicing the deception. Since the banks would have suffered no harm in Canada, and neither would Huawei have obtained any gain, the necessary condition for extradition of dual criminality—that the actions of the accused constitute a crime in both Canada and the United States—has not been met. [35]

In March, Canadian officials indicated that there was a “strong possibility” that the US Justice Department would drop its extradition request if Huawei admitted guilt and agreed to pay a substantial fine. [36] Huawei CEO Ren Zhengfei rejected the offer out of hand. His daughter, he said, had “committed no crime,” adding that “the U.S. is the side that should plead guilty.” [37]

While US prosecutors and the Canadian government argue that the Meng case is non-political, and purely criminal, the United States’ top business newspaper, The Wall Street Journal, thinks otherwise. “We might prefer that prosecution of its chief financial officer, Meng Wanzhou … were over something other than violating U.S. sanctions on Iran,” opined editorial writer Holman W. Jenkins, Jr. “But the U.S. is nonetheless positioning itself to destroy China’s shiniest success story.” [38]

If the US operation succeeds, not only will the world’s telecom networks be dominated by US-allied equipment manufacturers, but the United States will have secured its position as the world’s top cyberwarfare and cyberespionage threat, with the power to spy on governments and businesses, and carry out offensive cyberoperations, virtually anywhere in the world.

1 Dan Strumpf, Min Jung Kim and Yifan Wang, “How Huawei took over the world,” The Wall Street Journal, December 25, 2018

2 Ibid

3 Stephen Fidler and Max Colchester, “U.K. to Ban Huawei From Its 5G Networks Amid China-U.S. Tensions,” The Wall Street Journal, July 14, 2020

4 Bob Davis and Lingling Wei, Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War, Harper Business, 2020, p. 26

5 Editorial Board, “Huawei and the U.S.-China Tech War,” The Wall Street Journal, June 9, 2020

6 Ibid

7 Bojan Pancevski and Sara Germano, “In rebuke to US, Germany considers letting Huawei in,” The Wall Street Journal, February 19, 2019

8 Matthew Dalton, “Spy charges put Huawei’s European ambitions in jeopardy,” The Wall Street Journal, January 14, 2019

9 Ibid

10 Bob Davis and Lingling Wei, Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War, Harper Business, 2020, p. 25

11 Drew FitzGerald, Sarah Krouse, “White House Considers Broad Federal Intervention to Secure 5G Future,” The Wall Street Journal, June 25, 2020.

12 Gerald F. Seib, “Tom Cotton Has a China Coronavirus Attack Plan,” The Wall Street Journal, May 11, 2020

13 Bob Davis and Lingling Wei, Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War, Harper Business, 2020, p. 27

14 Parmy Olson, “US would rethink intelligence ties if allies use Huawei technology,” The Wall Street Journal, April 29, 2019

15 Matthew Dalton, “Spy charges put Huawei’s European ambitions in jeopardy,” The Wall Street Journal, January 14, 2019

16 Stephen Fidler and Max Colchester, “U.K. to Ban Huawei From Its 5G Networks Amid China-U.S. Tensions,” The Wall Street Journal, July 14, 2020

17 Matthew Dalton, “Spy charges put Huawei’s European ambitions in jeopardy,” The Wall Street Journal, January 14, 2019

18 Christine Dobby, “Bell, Telus warn of 5G delays, higher costs if Ottawa joins peers in banning Huawei,” The Globe and Mail, December 21, 2018

19 David E. Sanger and Nicole Perlroth, “N.S.A. Breached Chinese Servers Seen as Security Threat,” The New York Times, March 22, 2014

20 Stu Woo and Drew Hinshaw, “U.S. Fight Against Chinese 5G Efforts Shifts From Threats to Incentives,” The Wall Street Journal, June 14, 2021

21 Alexandra Wexler and Stu Woo, “U.S. Fund Set Up to Counter China’s Influence Backs Covid-19 Vaccine Maker in Africa,” The Wall Street Journal, June 30, 2021

22 Stu Woo and Drew Hinshaw, “U.S. Fight Against Chinese 5G Efforts Shifts From Threats to Incentives,” The Wall Street Journal, June 14, 2021

23 Editorial Board, “Huawei and the U.S.-China Tech War,” The Wall Street Journal, June 9, 2020

24 Ibid

25 William Mauldin and Chao Deng, “US-China talks stuck in rut over Huawei,” The Wall Street Journal, July 17, 2019

26 , Jacquie McNish, Aruna Viswanatha, Jonathan Cheng and Dan Strumpf, “U.S. in Talks With Huawei Finance Chief Meng Wanzhou About Resolving Criminal Charges,” The Wall Street Journal, Dec. 4, 2020

27 William Mauldin and Chao Deng, “US-China talks stuck in rut over Huawei,” The Wall Street Journal, July 17, 2019

28 K J Noh, “Why Canada must release Meng Wanzhou,” Asia Times, October 30, 2020

29 Jeffrey D. Sachs, “The U.S., not China, is the real threat to international rule of law,” The Globe and Mail, December 12, 2018

30 Aruna Viswanatha, “SAP Admits Iran Sanction Violations to Justice Department,” The Wall Street Journal, April 29, 2021

31 Eddie Goldenberg, “Want to bring the Michaels home? Send Meng Wanzhou back to China,” The Globe and Mail, January 16, 2020

32 Bob Davis and Lingling Wei, “China moves to address US economic concerns,” The Wall Street Journal, December 11, 2018

33 Sean Fine, Andrea Woo, and Xiao Xu, “Fraud allegations are a façade, lawyers for Meng Wanzhou argue at extradition hearing,” The Globe and Mail, January 20, 2020

34 Ibid

35 Dan Bilefsky, “Huawei executive goes to court, fighting extradition to US,” The New York Times, January 19, 2020

36 Robert Fife and Steven Chase, “Canada held secret U.S. talks in bid to free Kovrig, Spavor jailed in China,” The Globe and Mail, June 7, 2021  

37 Robert Fife, Steven Chase, and Nathan Vanderklippe, “Meng Wanzhou in talks with U.S. Justice Department to allow her to return to China, The Globe and Mail, December 3, 2020

38 Holman W. Jenkins, Jr., “U.S. Can Destroy Huawei, Part Two,” The Wall Street Journal, January 29, 2019

Rev Left Radio, Korea’s Struggle for Freedom

Stephen Gowans joins Breht of Rev Left Radio to talk about his book “Patriots, Traitors, and Empires: The Story of Korea’s Struggle for Freedom“.

They discuss the history of Korea, Japanese colonial occupation of Korea, WW2 and the Cold War, The Korean War, Kim Il-Sung and guerrilla warfare, South Korea as an American puppet state, the Soviet Union and Mao’s China, American propaganda against the DPRK, the prospects for a unified Korea, and much more! 

Listen to episode.