{"id":82510,"date":"2016-11-07T12:00:42","date_gmt":"2016-11-07T12:00:42","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=82510"},"modified":"2016-11-06T14:43:39","modified_gmt":"2016-11-06T14:43:39","slug":"wall-street-and-the-pentagon-pre-mature-political-and-military-ejaculations","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2016\/11\/wall-street-and-the-pentagon-pre-mature-political-and-military-ejaculations\/","title":{"rendered":"Wall Street and the Pentagon: Pre-mature Political and Military Ejaculations"},"content":{"rendered":"

\"james-petras\"<\/a>2 Nov 2016 – Wall Street and the Pentagon greeted the onset of 2016 as a \u2018banner year\u2019, a glorious turning point in the quest for malleable regimes willing to sell-off the most lucrative economic resources, to sign off on onerous new debt to Wall Street and to grant use of their strategic military bases to the Pentagon.<\/em><\/p>\n

Brazil and Argentina, the most powerful and richest countries in South America and the Philippines, Washington\u2019s most strategic military platform in Southeast Asia, were the objects of intense US political operations in the run-up to 2016.<\/p>\n

In each instance, Wall Street and the Pentagon secured smashing successes leading to premature ejaculations over the \u2018new golden era\u2019 of financial pillage and unfettered military adventures. Unfortunately, the early ecstasy has turned to agony: Wall Street made easy entries and even faster departures once the \u2018honeymoon\u2019 gave way to reality. The political procurers persecuted center-left incumbents but, were soon to have their turn facing prosecution. The political prostitutes, who had decreed the sale of sovereignty, were replaced by nationalists who would turn the bordello back into a sovereign nation state.<\/p>\n

This essay outlines the rapid rise and dramatic demise of these erstwhile \u2018progeny\u2019 of Wall Street and the Pentagon in Argentina and Brazil, and then reviews Washington\u2019s shock and awe as the newly elected Philippines President Rodrigo Duterte embraced new ties with China while proclaiming, \u2018We are no one\u2019s \u2018tuta\u2019 (puppy dog)!\u2019<\/p>\n

Argentina and Brazil: Grandiose Schemes and Crapulous Outcomes<\/strong><\/p>\n

The international financial press was ecstatic over the election of President Mauricio Macri in Argentina and the appointment of former Wall Street bankers to his cabinet. They celebrated the ouster of the \u2018evil populists\u2019, accusing them of inflating economic results, reneging on debt obligations and discouraging foreign lenders and investors. Under the Macri regime all market obstacles were to be removed and all the bankers trembled with anticipation at the \u2018good times\u2019 to come.<\/p>\n

After taking office in December 2015, President Macri unleashed the \u2018animal instincts\u2019 of the market and the carrion birds flocked in. US \u2018vulture funds\u2019 scooped up and demanded payment for on old Argentine debt \u2018valued\u2019 at $3.5 billion – constituting a 1,000% return on their initial investment. A devaluation of the peso of 50% tripled inflation and drove down wages by 20%.<\/p>\n

Firing over 200,000 public sector employees, slapping 400% price increases on utilities and transport, driving small and medium size firms into bankruptcy and enraged consumers into the streets ended the honeymoon with the Argentine electorate quite abruptly. This initial massive dose of free enterprise \u2018medicine\u2019 was prescribed by the local and Wall Street bankers and investors who had promised a new golden era for capitalism!<\/p>\n

Now that he had banished the \u2018populists\u2019, Macri was free to tap into the international financial markets. Argentina raised $16.5 billion from a bond sale taken up by the big bankers and speculators, mostly from Wall Street, who were eager to cash in on the high rates in the belief that there was no risk with their champion President Macri at the helm. Wall Street based its giddy predictions on a mere three-month experience with Mauricio!<\/p>\n

But then\u2026 some of the hedge fund managers began to raise questions about the viability of Mauricio Macri\u2019s presidency. Instead of reducing the fiscal deficit, Macri began to increase public spending to offset mass discontent over his triple digit increases in utility fees and transportation, the mass layoffs in the public sector and the slashing of pension funds.<\/p>\n

The major banks had counted on the abrupt devaluation of the currency to invest in the export sector, but instead they were confronted with a sudden 11% appreciation of the peso and a skyrocketing inflation of 40% leading to high interest rates. As a result, the economy fell even deeper in recession exceeding minus 3% for the year.<\/p>\n

While most Wall Street bankers still retain some faith in the Macri regime, they are not willing to fork-over the kind of cash that might allow this increasingly unpopular regime to survive. What keep Wall Street on board the sinking ship are the political and ideological commitments rather than any objective assessment of their prot\u00e9g\u00e9e\u2019s dismal economic performance. Wall Street counts on free market bankers appointed to the ministries, the massive purge of social services (health and education) personnel and the lucrative bond sales to cover the burgeoning deficit. They hope the vast increase in profits resulting from increased utility fees and the sharp cuts in salaries, pensions and subsidies will ultimately lead them into the promised land.<\/p>\n

Wall Street has expressed dismay over Macri\u2019s failure to stimulate growth – in fact GDP is falling. Furthermore, their \u2018golden boy\u2019 failed to attract productive investments. Instead thousands of Argentine small and medium businesses have \u2018gone under\u2019 as consumer spending tanked and extortionate tariffs were slapped on vital public utilities and transport – devastating profits. Inflation has undermined the purchasing power of the vast majority of households. Wall Street speculators, concentrating on fixed-rate peso denominated debt, are at risk of losing their shirts.<\/p>\n

In other words, the administration\u2019s \u2018free enterprise\u2019 regime is based largely on attracting foreign loans, plundering the national treasury, firing tens of thousands of public sector workers and slashing spending on social services and business-friendly subsidies. Macri has yet to generate any large-scale investment in new innovative productive sectors, which might sustain long-term growth.<\/p>\n

Already facing growing discontent and a general strike of private and public sector workers, the \u2018bankers\u2019 regime\u2019 lacks the political links with the trade unions to neutralize the growing opposition.<\/p>\n

To hold back the growing tidal wave of discontent, President Macri had to betray his overseas investors by boosting fiscal spending, which has had little or no impact on the national economy.<\/p>\n

Wall Street\u2019s hopes that President Mauricio Macri would inaugurate a \u2018golden era\u2019 of free market capitalism lasted less than a year and is turning into a real fiasco. Rising foreign debt, economic depression and class warfare ensures Macri\u2019s rapid demise.<\/p>\n

Brazil: Wall Street\u2019s Three Month \u2018Whirl-Wind\u2019 Honeymoon<\/strong><\/p>\n

Most of the current elected members of the Brazilian Congress, Senate and the recently-installed (rather than elected) President, as well as his cabinet, are in trouble: The hero, Michael Temer and his argonauts, chosen by Wall Street to privatize the Brazilian economy and usher in another \u2018golden dawn\u2019 for finance capital, now all face criminal changes, arrest and long prison sentences for money laundering, bribery, fraud, tax evasion and corruption.<\/p>\n

In less than four months, the entire political edifice constructed to impeach the elected President Dilma Rousseff and then de-nationalize key sectors of the economy, is shaking. So much for the financial press\u2019s proclamation of a new era of \u201cbusiness friendly\u201d policies in Brazilia.<\/p>\n

The pundits, politicians, journalists and editors, who prematurely celebrated the appointment of Michael Temer to the Presidency by legislative coup, now have to face a new reality. The key to understanding the rapid collapse of the New Right project in Brazil lies in the growing \u2018rap sheets\u2019 of the very same politicians who engineered the ouster of Rousseff.<\/p>\n

Eduardo Cunha, the ex-president of the Congress in Brasilia, used his influence to ensure the super majority of Congressional votes for the impeachment. Cunha was godfather to ensuring the appointment of Michael Temer as interim president.<\/p>\n

Cunha\u2019s influence and control over the Congress was based on his wide network of bribes and corruption involving over a hundred members of congress, including the newly anointed President Temer.<\/p>\n

Once Cunha secured the ouster of Rousseff, the Brazilian elite washed their collective hands of the \u2018fixer\u2019, overwhelmed by the stench of his corruption. In September 2016, Cunha was suspended from Congress and lost his immunity. One month later, he was arrested on over a dozen charges, including fraud and tax evasion. It was public knowledge that Cunha had squirreled away a \u2018tidy nest\u2019 of over $70 million in Swiss banks.<\/p>\n

Cunha directed (extorted) public and private firms to finance the campaigns of many of his political colleagues. He had intervened to secure bribes for President Temer, his foreign minister and even the next presidential hopeful, Jose Serra. One of the most powerful representatives of the new regime, Moreira Franco, Grand Wizard of the Privatization Program, was \u2018in hock\u2019 to Cunha.<\/p>\n

As all this has come to light, Cunha has been negotiating a plea bargain with the prosecutor and judges in return for his \u2019singing\u2019 a few arias. He is facing over a hundred years in jail; his wife and daughter face trial; Eduardo Cunha is prepared to talk and finger political leaders to save his own neck. Most knowledgeable observers and judicial experts fully expect Cunha to bring down the Temer Administration with him and devastate the leadership of Temer\u2019s Brazilian Democratic Movement Party, as well as ex-president Fernando Henrique Cardoso\u2019s Brazilian Social Democratic Party.<\/p>\n

The Brazilian elite, Wall Street bankers and their mass media propagandists, who wrote and directed the impeachment plot scenario are now discredited and bereft of political front men. Their expectations of a new \u2018golden era of free market capitalism\u2019 in Brazil has turned into a political mad scramble with every politico and corporate leader desperate to save his own skin and illicit fortune by denouncing each other.<\/p>\n

With the demise of the \u2018Brazilian takeover\u2019, Wall Street and Washington are bereft of key markets and allies in Latin America.<\/p>\n

The Philippines: The Duterte turn from the US to China<\/strong><\/p>\n

In April 2014, Washington \u2019secured\u2019 an agreement granting access to five strategic military bases in the Philippines critical to its \u2018pivot to target\u2019 China. Under the outgoing President \u2018Noynoy\u2019 Aquino, Jr. the Pentagon believed it had an \u2018iron-clad\u2019 agreement to organize the Philippines as its satrap and military springboard throughout Southeast Asia. Washington even prodded the Aquino government to bring its Spratly Island dispute with China before the obscure Permanent Court of Arbitration in the Hague. Washington anticipated using the Court\u2019s \u2018favorable\u2019 ruling as a pretext to confront the Chinese.<\/p>\n

All this has changed with the June 2016 ascent to the Presidency of Rodrigo Duterte: In only four months, all Washington\u2019s imperial designs had been swept off the table. By October 21, 2016 President Duterte announced he would end military exercises with Washington because they threatened Philippine sovereignty and made his country vulnerable to a military confrontation with China. He promised to end sea patrols of disputed waters that the US uses to harass China in the South China Sea.<\/p>\n

In advance of the Philippines President\u2019s meeting with China, he had already declared that he would not press the Dutch-based ruling over the South China Sea island dispute against Beijing but rely on diplomacy and compromise. During the China meeting President Duterte declared that the two countries would engage in a constructive dialogue to resolve the Spratly Islands as well as other outstanding issues. The \u2018agreement\u2019 over US access to bases in the Philippines was put in doubt as the President declared \u201ca separation from the US\u201d and promised long-term, large scale economic and investment ties with China. Undergirding the Philippines pivot to China were 13 trade and investment agreements worth more than $20 billion, covering financing of infrastructure, transport, social projects, tourism, industry and agriculture.<\/p>\n

The military base agreement, signed by the notoriously servile ex-President Aquino without Congressional approval, was review by the Philippine Supreme Court and can be revoked by the new President Duterte by decree.<\/p>\n

Inside of four months, the US strategy of armed encirclement and intervention against China has been dealt a major blow. The newly emerging China-Philippines linkage strikes a fatal blow to Washington\u2019s overtly militarist \u2018pivot\u2019 against China.<\/p>\n

Conclusion<\/strong><\/p>\n

2016 opened with great fanfare: The defeat of the two major center-left governments (Argentina and Brazil) and the advent of hard-right US-backed regimes would inaugurate a \u2018golden era of free market capitalism\u2019. This promised to usher in a prolonged period of profit and pillage by rolling back \u2018populist\u2019 reforms and creating a bankers paradise. In Southeast Asia, US officials and pundits would proclaim another \u2018golden era\u2019, this time of rampant militarism, encircling and provoking China on its vital sea lanes, and operating from five strategic military bases obtained through a Philippine Presidential decree by an unpopular and recently replaced puppet, \u2018Noynoy\u2019 Aquino, Jr.<\/p>\n

These dreams of \u2018golden eras\u2019 lasted a few months before objective reality intruded.<\/p>\n

By the autumn of 2016 the rightist regimes had been replaced in the Manila by a colorful ardent nationalist, while the \u2018banker boys\u2019 in Brasilia faced prison, and the \u2018Golden Boys\u2019 of Buenos Aires were mired in deep crisis. The notion of an easy Rightist restoration was based on several profound misunderstandings:<\/p>\n

    \n
  1. The belief that the reversal of social reforms and denial of popular demands would smoothly give way to an explosion of foreign financing and investment was shattered when private bond purchases profited the financial sector but did not bring in large-scale productive investment. Devaluation of the currency was followed by skyrocketing inflation, which led to fiscal deficits and the loss of business confidence.<\/li>\n
  2. Washington\u2019s promotion of \u2018corruption investigations\u2019 started with prosecuting democratically elected center-left politicians and ended up with the arrest of Wall Street\u2019s own prot\u00e9g\u00e9s encompassing the entire right-wing political class and decimating the \u2018Golden\u2019 regimes.<\/li>\n
  3. The belief that long-term hegemonic relations, based on client regimes in Asia, could resist the attraction of signing trade and investment agreements with the rising Chinese mega-economy, while sacrificing vital economic development, and relegating their masses to more stagnation and unemployment, collapsed with the massive electoral of nationalist Rodrigo Duterte as President of the Philippines.<\/li>\n<\/ol>\n

    In fact, these and other political assessments among the decision makers in Washington and on Wall Street were proven wrong leading to a strategic retreat of the empire in both Latin America and Asia. The policy failures were not merely \u2018mistakes\u2019 but the inevitable results of changing structural conditions embedded in a declining empire.<\/p>\n

    These decisions were based on a calculus of power, rooted in class and national relations that may have held true two decades ago. At the dawn of the new millennium the US still dominated Asia and China was not yet an economic alternative for its neighbors eager for investment. Washington could and did dictate policy in Southeast Asia.<\/p>\n

    Twenty years ago, the US had the economic leverage to sustain the neoliberal policies of the Washington Consensus throughout Latin America.<\/p>\n

    Today the US continues to pursue policies based on anachronistic power relations, seeming to ignore the fact that China is now a world power and a viable economic trade and investment alternative successfully competing for markets and influence in Asia. Washington is failing to compete in that marketplace and, therefore, can no longer rely on docile client state.<\/p>\n

    Washington cannot effectively control and direct large-scale capital flows to shore-up its newly installed rightist regimes in Argentina and Brazil as they crumble under their own corruption and incompetence. Meanwhile the world is watching a domestic US economy, mired in stagnation with its own political elites torn by corruption and scandals at the highest level, and staging the most bizarre presidential campaign in its history. Corruption has become the mode of governing under conditions of deregulation and rule by political warlords. Political allegiance to the empire and open doors to foreign pillage do not attract capital when those making political decisions are facing prison and the business \u2018doormen\u2019 are busy stuffing their suitcases with cash and making a mad-dash for the airports!<\/p>\n

    For Wall Street and the Pentagon, Latin America and Asia are lost opportunities – betrayals to be mourned at the officers clubs and exclusive Manhattan restaurants. For the people in mass social movements these are emerging opportunities for struggle and change.<\/p>\n

    The strenuous US effort to rebuild its empire in Latin America and Southeast Asia has suffered a rapid succession of blows. Washington can still seize power but it lacks the talent and the favorable conditions to hold it.<\/p>\n

    The vision of a Brazilian state, build on the edifice of the privatized oil giant, Petrobras, and the political incarceration of its left adversaries, with foreign capital attracted and seduced by political procurers, pimps and prostitutes, has ended in a debacle.<\/p>\n

    In this vacuum, it will be up to the new governments and peoples\u2019 movements to seize the opportunity to advance their struggles and explore political and economic alternatives. The aborted rightist power grab inadvertently has done the peoples\u2019 movements a great favor by exposing and ousting the corrupt and compromised center-left regimes opening the door for a genuine anti-imperialist transformation.<\/p>\n

    _____________________________________<\/p>\n

    James Petras is a Bartle Professor (Emeritus) of Sociology at Binghamton University, New York. He is the author of more than 62 books published in 29 languages, and over 600 articles in professional journals. He has a long history of commitment to social justice, working in particular with the Brazilian Landless Workers Movement for 11 years. In 1973-76 he was a member of the Bertrand Russell Tribunal on Repression in Latin America. He writes a monthly column for the Mexican newspaper, <\/em>La Jornada<\/em>, and previously, for the Spanish daily, <\/em>El Mundo<\/em>. He received his B.A. from Boston University and Ph.D. from the University of California at Berkeley.<\/em><\/p>\n

    Go to Original \u2013 petras.lahaine.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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