Thursday, July 10, 2014

War drums beat louder against China as Japanese imperialism re-emerges

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Two significant shifts in geopolitics emerged from Japanese Prime Minister Shinzo Abe’s visit to Australia this week and his address to its national parliament.

The first is the escalation of pressure against China and the implicit threat that the three major imperialist powers in the region, the US, Japan and Australia, will undertake military action against it, as part of US imperialism’s anti-China “pivot” to Asia.

The second, and no less important development—independent of the US pivot—is the re-emergence on the world arena of Japanese imperialism, following the Abe government’s decision earlier this month to “reinterpret” the country’s constitution to allow Japan to take part in joint military action with its designated allies.

While his address to the Australian parliament was peppered with references to upholding “democracy,” “freedom” of the seas and international “rules”—all terms used by Washington to justify its military build-up against China—Abe’s speech contained only one direct reference to the US. It was very much a “coming out” event. Abe announced to the world that Japan was breaking from the shackles of the past, imposed by the post-war “pacifist” constitution that formally outlawed war, and was back on the global stage as an independent military power.

Even before Abe concluded his visit, the stepped-up push against China was revealed in an interview given by Australian Foreign Affairs Minister Julie Bishop to the Sydney Morning Herald. Bishop declared that it had been a “mistake” for previous governments to avoid criticising China because it “doesn’t respect weakness.” Reticence, she said, only caused confusion.

Bishop asserted that while the optimal situation was “deeper engagement” with China, Australia had to be “clear-eyed” about what could go wrong and “hope for the best but manage for the worst.”

Read in connection with her remarks on June 30 to an “Australian Leadership Forum”, held at the Australian National University in Canberra, it is clear that managing for “the worst” means preparing for war.

Delivering a keynote address to that gathering, Bishop pointed to the possibility of conflicts breaking out over the territorial disputes in the East and South China Seas—which involve China against Japan and the Philippines, both US allies. While insisting that she was not drawing “any direct parallels,” she recalled the consequences of the assassination of the Austrian Archduke Ferdinand in Sarajevo, which was the immediate trigger for the outbreak of World War I.

The constant refrain of the imperialist powers is that China’s rising economic power is leading to increased aggression by Beijing, threatening the “stability” of the region. In fact, the inflammation of tensions over long-running territorial disputes, some of which extend as far back as World War II, is a direct outcome of both the US pivot and the increasing assertiveness of Japan, which is most directly associated with Abe.

Abe spoke of a “special relationship” with Australia, couched in terms of a sporting analogy. Having deepened their economic ties, the two countries would “now join up in a scrum, just like rugby, to nurture our regional and the world order.”

Just as in a rugby scrum, where players link arms to push forward, Abe—independently of the United States—has called for an interlocking “diamond,” comprising Japan, the US, India and Australia. It would “safeguard the maritime commons,” stretching from the Indian Ocean to the western Pacific. The target is clearly China.

Abe advanced an earlier incarnation of the proposed alliance, dubbed the “Quad,” during his previous term as prime minister in 2007. It provoked furious opposition from China, which denounced it as an Asian version of NATO. The plan was abandoned in early 2008, after Australia, under Prime Minister Kevin Rudd, indicated it would not support the idea due to Chinese sensitivities.

The political landscape, however, has changed markedly in the past six years. In June 2010, Rudd was ousted in a parliamentary coup organised by forces in his Labor Party who were described by the US embassy as “protected sources.” Rudd’s removal opened the way for Australia’s alignment with Washington’s anti-China pivot under new Labor Prime Minister Julia Gillard.

In Japan, just weeks before the coup against Rudd, Japanese Prime Minister Yukio Hatoyama, who had expressed the need for Japan to orient to China, was ousted after a conflict with the US. His removal ultimately opened the way for the return of Abe, espousing a right-wing nationalist and increasingly militarist agenda.

The strenuous efforts by the political establishment, backed by their faithful servants in the corporate media, to portray Japan as defensively responding to Chinese “assertiveness” rip the present situation out of its antecedent historical development. From its very origin as a capitalist and imperialist power in the latter decades of the nineteenth century, Japan sought to dominate China, culminating in the brutal invasions of the 1930s.

There are immediate parallels with Germany, another late-developing capitalist power. Germany has now directly intervened in Ukraine, which it twice invaded in the twentieth century, helping to install an extreme right-wing puppet regime, amid a media campaign denouncing “Russian imperialism.”

In both Japan and Germany, as their ruling classes seek a more enhanced global role, efforts are being made in political, academic and media circles to whitewash their respective roles and crimes in World War II.

While the address to parliament was the centrepiece of Abe’s visit, his trip to Australia’s northwest—the heart of iron-ore mining and natural gas production—was integrally bound up with the underlying agenda of the Japanese-Australian “special relationship.”

Throughout its history, the Achilles heel of Japanese imperialism has proved to be its dependence on foreign sources of critical mineral and energy requirements. Acutely conscious of this fact, Abe is eager to secure guaranteed access to such resources as Japan seeks to establish itself as a major force on the global arena.

Far from creating a new period of peace and prosperity, much less the rule of law, the re-emergence of Japanese imperialism confronts the working class of Japan, Australia and the entire region with consequences potentially more catastrophic than the events of World War II. The development of a mass anti-war movement, interlocking the Japanese, Chinese, American and Australian working class, and workers throughout the Asia-Pacific region, is increasingly becoming the question of the hour.

How the War on Drugs and the War on Terror Merged Into One Disastrous War on All Americans

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It was 1971 when President Richard Nixon declared drug abuse “public enemy number one in the United States.” With those words, Nixon ushered in the “war on drugs,” the attempt to use law enforcement to jail drug users and halt the flow of illegal substances like marijuana and cocaine.

Thirty years later, another president, George W. Bush, declared war on another word: terrorism. But the war on drugs hadn’t ended yet. Instead of one failed war replacing another soon-to-be-failed war, both drugs and terrorism remain targets for law enforcement and military action that have resulted in the deaths of hundreds of thousands and have cost billions of dollars.

In fact, the war on terror and the war on drugs have merged to form a hydra-headed monster that rapaciously targets Americans, particularly communities of color. Tactics and legislation used to fight terrorism in the U.S. have been turned on drug users, with disastrous consequences measured in lives, limbs and cash. And money initially used to combat drugs has been spent on the war on terror. From the Patriot Act to the use of informants to surveillance, the wars on drugs and terror have melted into one another.

On Oct. 26, 2011, after remarkably little debate, President Bush signed the USA Patriot Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001) into law. Some elected officials admitted they hadn't read the entire legislation before voting on it. The Patriot Act was renewed in 2011 by President Barack Obama.

The purpose of the legislation [3]was “to deter and punish terrorist acts in the United States and around the world [and] to enhance law enforcement investigatory tools.” Buried in the act is a hint that the wars on terror and drugs were being paired. The Patriot Act appropriated $5 million to the Drug Enforcement Administration to train Turkish forces in anti-drug measures and to increase the apprehension of drugs in South and Central Asia.

Even more significant was Section 213 of the act, which legitimizes what are known as “sneak and peek warrants.” These warrants, approved by a judge, allow the police to enter into a home without notifying the suspect in that home for at least 30 days [4]—90 days if a judge is convinced the police need it. The 90-day extensions can be repeatedly re-authorized. Authorities are able to enter a home or office, rifle through private property and take photographs all without the suspect knowing, which is contrary to how normal warrants work. While “sneak and peek” authority was allowed in limited cases before the 2001 legislation, the Patriot Act has dramatically expanded its use. And the vast majority of cases where it's used had nothing to do with terrorism, despite the FBI's claim that the warrants are an “invaluable tool to fight terrorism.”

From October 2009 to September 2010, law enforcement agents executed sneak and peek warrants 3,970 times, according to numbers obtained by the American Civil Liberties Union. [4] Less than one percent of those cases had to do with terrorism. But 76 percent had to do with drugs. It was much the same story from 2006-2009, according to data compiled by New York magazine [5]. In that time period, 1,618 such warrants were issued for drugs. Only 15 were issued for terrorism-related cases, with 122 being issued for fraud.
In November 2009, Senator Russ Feingold (D-WI), questioned Department of Justice official David Kris about the Patriot Act being used to execute the war on drugs. The assistant attorney general’s response was telling [6]: “This authority here on the sneak-and-peek side, on the criminal side, is not meant for intelligence. It's for criminal cases. So I guess it's not surprising to me that it applies in drug cases.” Feingold responded by pointing out that the Patriot Act was sold as needed to fight terrorism, not “regular, run-of-the-mill criminal cases.”

In addition to the sneak and peek warrants that so concerned Feingold, the full-scale militarization of police in the U.S., accelerated by the war on terror has brought weapons used in war to the homes of suspected drug dealers as well as and innocent people. The ACLU’s recent report on police militarization [7] has shined a big spotlight on how the intersection of the wars on terror and drugs have brought destruction to many Americans.

The militarization of law enforcement began during President Reagan’s term in office. As journalist Radley Balko, who has tracked police militarization for years, pointed out last fall, [8] “the election of Ronald Reagan brought new funding, equipment, and a more active drug policing role for the paramilitary SWAT units popping up across the country.” But the war on terror has fueled the process.

As Balko notes, in 1994, the Pentagon authorized [9] the transfer of military equipment to police departments. Also that year, Congress passed a law to facilitate that type of transfer. Every year since then, with almost no debate, the Pentagon budget passed by Congress has included that provision.

Today, the same type of weapons being used in Iraq and Afghanistan to battle militants are being used in the streets of America. These weapons include machine guns, armored personnel carriers, aircraft, drones, night-vision equipment and mine-resistant ambush protected vehicles. And in the vast majority of cases, these military weapons are being turned on drug suspects. Furthering the militarization of police are Department of Homeland Security grants given to local police agencies, which use the cash to buy military-style equipment. At least $34 billion in such grants, given by an agency created because of 9/11, have been handed out to local police, according to the Center for Investigative Reporting. [10]

This infusion of cash, the ACLU’s report on militarization notes [7], has “led to even more police militarization and even greater military-law enforcement contact, and DHS grants have allowed police departments to stockpile specialized equipment in the name of anti-terror readiness.”

One facet of the ever-growing trend toward militarized police forces is the use of informants to figure out which houses to raid. The informants used in the vast majority of drug cases are typically people involved in the drug trade who have escaped a jail sentence—or had a sentence reduced—at the price of helping the police. But informants are not the most reliable of people. They have an incentive to tell the police about alleged crimes, even if their information is not accurate. Nevertheless, the use of informants has not let up in recent decades, even when the information has led to botched raids and the deaths of innocents. This reliance on informants, honed in the war on drugs, is now a major weapon in the war on terror.

Many of the domestic terrorism cases in the U.S. start with plots first egged on by informants, who are typically low-income Muslims who have their own legal troubles. Critics of the use of informants say that the cases these sting operations produce are entrapment of Muslims.

Take the case of Shamiur Rahman. In 2012, the 19-year-old Rahman, a Muslim,spoke out about his informant activities for the New York Police Department [11], whose Intelligence Division has created a massive spying apparatus targeting Muslims across the Northeast of the U.S. Rahman quit his job and said his activities as an informant were unconstitutional. His activities involved trying to bait Muslims into saying inflammatory things and taking pictures inside of mosques while collecting the names of innocent people who went to study groups on Islam. He sent that information to the NYPD. Rahman got involved with the police after being arrested repeatedly for minor marijuana charges. In exchange for cash and goodwill from the police, he informed on his community.

That’s not the only way the NYPD’s war on terror has been fueled by the war on drugs. In February 2012, Associated Press reporters Adam Goldman and Matt Apuzzo revealed that the White House was funding part of the NYPD’s spy program [12].

The millions of dollars funneled to the NYPD from the White House came from a grant program called High Intensity Drug Trafficking Area. Administered by White House Office of National Drug Control Policy, it was created for the war on drugs to give money to law enforcement to fight drug gangs. But since the Sept. 11, 2001 attacks, at least $135 million flowed to the NYPD for its spying on Muslims.

As the NYPD’s funding and informant model shows, it’s getting increasingly hard to differentiate the war on drugs from the war on terror. From the federal government to local law enforcement, money earmarked to fight terrorism is being turned on drug users, while cash that started out to combat drugs is being turned on Muslims. And both wars are eating away at Americans’ civil liberties.

[13] on How the War on Drugs and the War on Terror Merged Into One Disastrous War on All Americans

Twenty-First-Century Energy Wars

Global Conflicts Are Increasingly Fueled by the Desire for Oil and Natural Gas -- and the Funds They Generate

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Iraq, Syria, Nigeria, South Sudan, Ukraine, the East and South China Seas: wherever you look, the world is aflame with new or intensifying conflicts.  At first glance, these upheavals appear to be independent events, driven by their own unique and idiosyncratic circumstances.  But look more closely and they share several key characteristics -- notably, a witch’s brew of ethnic, religious, and national antagonisms that have been stirred to the boiling point by a fixation on energy.

In each of these conflicts, the fighting is driven in large part by the eruption of long-standing historic antagonisms among neighboring (often intermingled) tribes, sects, and peoples.  In Iraq and Syria, it is a clash among Sunnis, Shiites, Kurds, Turkmen, and others; in Nigeria, among Muslims, Christians, and assorted tribal groupings; in South Sudan, between the Dinka and Nuer; in Ukraine, between Ukrainian loyalists and Russian-speakers aligned with Moscow; in the East and South China Sea, among the Chinese, Japanese, Vietnamese, Filipinos, and others.  It would be easy to attribute all this to age-old hatreds, as suggested by many analysts; but while such hostilities do help drive these conflicts, they are fueled by a most modern impulse as well: the desire to control valuable oil and natural gas assets.  Make no mistake about it, these are twenty-first-century energy wars.

It should surprise no one that energy plays such a significant role in these conflicts.  Oil and gas are, after all, the world’s most important and valuable commodities and constitute a major source of income for the governments and corporations that control their production and distribution.  Indeed, the governments of Iraq, Nigeria, Russia, South Sudan, and Syria derive the great bulk of their revenues from oil sales, while the major energy firms (many state-owned) exercise immense power in these and the other countries involved.  Whoever controls these states, or the oil- and gas-producing areas within them, also controls the collection and allocation of crucial revenues.  Despite the patina of historical enmities, many of these conflicts, then, are really struggles for control over the principal source of national income.

Moreover, we live in an energy-centric world where control over oil and gas resources (and their means of delivery) translates into geopolitical clout for some and economic vulnerability for others.  Because so many countries are dependent on energy imports, nations with surpluses to export -- including Iraq, Nigeria, Russia, and South Sudan -- often exercise disproportionate influence on the world stage.  What happens in these countries sometimes matters as much to the rest of us as to the people living in them, and so the risk of external involvement in their conflicts -- whether in the form of direct intervention, arms transfers, the sending in of military advisers, or economic assistance -- is greater than almost anywhere else.

The struggle over energy resources has been a conspicuous factor in many recent conflicts, including the Iran-Iraq War of 1980-1988, the Gulf War of 1990-1991, and the Sudanese Civil War of 1983-2005.  On first glance, the fossil-fuel factor in the most recent outbreaks of tension and fighting may seem less evident.  But look more closely and you’ll see that each of these conflicts is, at heart, an energy war.

Iraq, Syria, and ISIS

The Islamic State of Iraq and Syria (ISIS), the Sunni extremist group that controls large chunks of western Syria and northern Iraq, is a well-armed militia intent on creating an Islamic caliphate in the areas it controls.  In some respects, it is a fanatical, sectarian religious organization, seeking to reproduce the pure, uncorrupted piety of the early Islamic era.  At the same time, it is engaged in a conventional nation-building project, seeking to create a fully functioning state with all its attributes.

As the United States learned to its dismay in Iraq and Afghanistan, nation-building is expensive: institutions must be created and financed, armies recruited and paid, weapons and fuel procured, and infrastructure maintained.  Without oil (or some other lucrative source of income), ISIS could never hope to accomplish its ambitious goals.  However, as it now occupies key oil-producing areas of Syria and oil-refining facilities in Iraq, it is in a unique position to do so.  Oil, then, is absolutely essential to the organization’s grand strategy.

Syria was never a major oil producer, but its prewar production of some 400,000 barrels per day did provide the regime of Bashar al-Assad with a major source of income.  Now, most of the country’s oil fields are under the control of rebel groups, including ISIS, the al-Qaeda-linked Nusra Front, and local Kurdish militias.  Although production from the fields has dropped significantly, enough is being extracted and sold through various clandestine channels to provide the rebels with income and operating funds.  “Syria is an oil country and has resources, but in the past they were all stolen by the regime,” said Abu Nizar, an anti-government activist.  “Now they are being stolen by those who are profiting from the revolution.”

At first, many rebel groups were involved in these extractive activities, but since January, when it assumed control of Raqqa, the capital of the province of that name, ISIS has been the dominant player in the oil fields.  In addition, it has seized fields in neighboring Deir al-Zour Province along the Iraq border.  Indeed, many of the U.S.-supplied weapons it acquired from the fleeing Iraqi army after its recent drive into Mosul and other northern Iraqi cities have been moved into Deir al-Zour to help in the organization’s campaign to take full control of the region.  In Iraq, ISIS is fighting to gain control over Iraq’s largest refinery at Baiji in the central part of the country.

It appears that ISIS sells oil from the fields it controls to shadowy middlemen who in turn arrange for its transport -- mostly by tanker trucks -- to buyers in Iraq, Syria, and Turkey.  These sales are said to provide the organization with the funds needed to pay its troops and acquire its vast stockpiles of arms and ammunition.  Many observers also claim that ISIS is selling oil to the Assad regime in return for immunity from government air strikes of the sort being launched against other rebel groups.  “Many locals in Raqqa accuse ISIS of collaborating with the Syrian regime,” a Kurdish journalist, Sirwan Kajjo, reported in early June.  “Locals say that while other rebel groups in Raqqa have been under attack by regime air strikes on a regular basis, ISIS headquarters have not once been attacked.”

However the present fighting in northern Iraq plays out, it is obvious that there, too, oil is a central factor.  ISIS seeks both to deny petroleum supplies and oil revenue to the Baghdad government and to bolster its own coffers, enhancing its capacity for nation-building and further military advances.  At the same time, the Kurds and various Sunni tribes -- some allied with ISIS -- want control over oil fields located in the areas under their control and a greater share of the nation’s oil wealth.

Ukraine, the Crimea, and Russia

The present crisis in Ukraine began in November 2013 when President Viktor Yanukovych repudiated an agreement for closer economic and political ties with the European Union (EU), opting instead for closer ties with Russia.  That act touched off fierce anti-government protests in Kiev and eventually led to Yanukovych’s flight from the capital.  With Moscow’s principal ally pushed from the scene and pro-EU forces in control of the capital, Russian President Vladimir Putin moved to seize control of the Crimea and foment a separatist drive in eastern Ukraine.  For both sides, the resulting struggle has been about political legitimacy and national identity -- but as in other recent conflicts, it has also been about energy.

Ukraine is not itself a significant energy producer.  It is, however, a major transit route for the delivery of Russian natural gas to Europe.  According to the U.S. Energy Information Administration (EIA), Europe obtained 30% of its gas from Russia in 2013 -- most of it from the state-controlled gas giant Gazprom -- and approximately half of this was transported by pipelines crossing Ukraine.  As a result, that country plays a critical role in the complex energy relationship between Europe and Russia, one that has proved incredibly lucrative for the shadowy elites and oligarchs who control the flow of gas, whille at the same time provoking intense controversy. Disputes over the price Ukraine pays for its own imports of Russian gas twice provoked a cutoff in deliveries by Gazprom, leading to diminished supplies in Europe as well.

Given this background, it is not surprising that a key objective of the “association agreement” between the EU and Ukraine that was repudiated by Yanukovych (and has now been signed by the new Ukrainian government) calls for the extension of EU energy rules to Ukraine’s energy system -- essentially eliminating the cozy deals between Ukrainian elites and Gazprom.  By entering into the agreement, EU officials claim, Ukraine will begin “a process of approximating its energy legislation to the EU norms and standards, thus facilitating internal market reforms.”

Russian leaders have many reasons to despise the association agreement.  For one thing, it will move Ukraine, a country on its border, into a closer political and economic embrace with the West.  Of special concern, however, are the provisions about energy, given Russia’s economic reliance on gas sales to Europe -- not to mention the threat they pose to the personal fortunes of well-connected Russian elites.  In late 2013 Yanukovych came under immense pressure from Vladimir Putin to turn his back on the EU and agree instead to an economic union with Russia and Belarus, an arrangement that would have protected the privileged status of elites in both countries.  However, by moving in this direction, Yanukovych put a bright spotlight on the crony politics that had long plagued Ukraine’s energy system, thereby triggering protests in Kiev’s Independence Square (the Maidan) -- that led to his downfall.

Once the protests began, a cascade of events led to the current standoff, with the Crimea in Russian hands, large parts of the east under the control of pro-Russian separatists, and the rump western areas moving ever closer to the EU.  In this ongoing struggle, identity politics has come to play a prominent role, with leaders on all sides appealing to national and ethnic loyalties.  Energy, nevertheless, remains a major factor in the equation.  Gazprom has repeatedly raised the price it charges Ukraine for its imports of natural gas, and on June 16th cut off its supply entirely, claiming non-payment for past deliveries.  A day later, an explosion damaged one of the main pipelines carrying Russian gas to Ukraine -- an event still being investigated.  Negotiations over the gas price remain a major issue in the ongoing negotiations between Ukraine’s newly elected president, Petro Poroshenko, and Vladimir Putin.

Energy also played a key role in Russia’s determination to take the Crimea by military means.  By annexing that region, Russia virtually doubled the offshore territory it controls in the Black Sea, which is thought to house billions of barrels of oil and vast reserves of natural gas.  Prior to the crisis, several Western oil firms, including ExxonMobil, were negotiating with Ukraine for access to those reserves.  Now, they will be negotiating with Moscow.  “It’s a big deal,” said Carol Saivetz, a Eurasian expert at MIT.  “It deprives Ukraine of the possibility of developing these resources and gives them to Russia.”

Nigeria and South Sudan

The conflicts in South Sudan and Nigeria are distinctive in many respects, yet both share a key common factor: widespread anger and distrust towards government officials who have become wealthy, corrupt, and autocratic thanks to access to abundant oil revenues.

In Nigeria, the insurgent group Boko Haram is fighting to overthrow the existing political system and establish a puritanical, Muslim-ruled state.  Although most Nigerians decry the group’s violent methods (including the kidnapping of hundreds of teenage girls from a state-run school), it has drawn strength from disgust in the poverty-stricken northern part of the country with the corruption-riddled central government in distant Abuja, the capital.

Nigeria is the largest oil producer in Africa, pumping out some 2.5 million barrels per day.  With oil selling at around $100 per barrel, this represents a potentially staggering source of wealth for the nation, even after the private companies involved in the day-to-day extractive operations take their share.  Were these revenues -- estimated in the tens of billions of dollars per year -- used to spur development and improve the lot of the population, Nigeria could be a great beacon of hope for Africa.  Instead, much of the money disappears into the pockets (and foreign bank accounts) of Nigeria’s well-connected elites.

In February, the governor of the Central Bank of Nigeria, Lamido Sanusi, told a parliamentary investigating committee that the state-owned Nigerian National Petroleum Corporation (NNPC) had failed to transfer some $20 billion in proceeds from oil sales to the national treasury, as required by law.  It had all evidently been diverted to private accounts.  “A substantial amount of money has gone,” he told the New York Times.  “I wasn’t just talking about numbers.  I showed it was a scam.”

For many Nigerians -- a majority of whom subsist on less than $2 per day -- the corruption in Abuja, when combined with the wanton brutality of the government’s security forces, is a source of abiding anger and resentment, generating recruits for insurgent groups like Boko Haram and winning them begrudging admiration.  “They know well the frustration that would drive someone to take up arms against the state,” said National Geographic reporter James Verini of people he interviewed in battle-scarred areas of northern Nigeria.  At this stage, the government has displayed zero capacity to overcome the insurgency, while its ineptitude and heavy-handed military tactics have only further alienated ordinary Nigerians.

The conflict in South Sudan has different roots, but shares a common link to energy.  Indeed, the very formation of South Sudan is a product of oil politics.  A civil war in Sudan that lasted from 1955 to 1972 only ended when the Muslim-dominated government in the north agreed to grant more autonomy to the peoples of the southern part of the country, largely practitioners of traditional African religions or Christianity.  However, when oil was discovered in the south, the rulers of northern Sudan repudiated many of their earlier promises and sought to gain control over the oil fields, sparking a second civil war, which lasted from 1983 to 2005.  An estimated two million people lost their lives in this round of fighting.  In the end, the south was granted full autonomy and the right to vote on secession.  Following a January 2011 referendum in which 98.8% of southerners voted to secede, the country became independent on that July 9th.

The new state had barely been established, however, when conflict with the north over its oil resumed.  While South Sudan has a plethora of oil, the only pipeline allowing the country to export its energy stretches across North Sudan to the Red Sea.  This ensured that the south would be dependent on the north for the major source of government revenues.  Furious at the loss of the fields, the northerners charged excessively high rates for transporting the oil, precipitating a cutoff in oil deliveries by the south and sporadic violence along the two countries’ still-disputed border.  Finally, in August 2012, the two sides agreed to a formula for sharing the wealth and the flow of oil resumed. Fighting has, however, continued in certain border areas controlled by the north but populated by groups linked to the south.

With the flow of oil income assured, the leader of South Sudan, President Salva Kiir, sought to consolidate his control over the country and all those oil revenues.  Claiming an imminent coup attempt by his rivals, led by Vice President Riek Machar, he disbanded his multiethnic government on July 24, 2013, and began arresting allies of Machar.  The resulting power struggle quickly turned into an ethnic civil war, with the kin of President Kiir, a Dinka, battling members of the Nuer group, of which Machar is a member.  Despite several attempts to negotiate a cease-fire, fighting has been under way since December, with thousands of people killed and hundreds of thousands forced to flee their homes.

As in Syria and Iraq, much of the fighting in South Sudan has centered around the vital oil fields, with both sides determined to control them and collect the revenues they generate.  As of March, while still under government control, the Paloch field in Upper Nile State was producinga> some 150,000 barrels a day, worth about $15 million to the government and participating oil companies.  The rebel forces, led by former Vice President Machar, are trying to seize those fields to deny this revenue to the government.  “The presence of forces loyal to Salva Kiir in Paloch, to buy more arms to kill our people... is not acceptable to us,” Machar said in April.  “We want to take control of the oil field.  It’s our oil.”  As of now, the field remains in government hands, with rebel forces reportedly making gains in the vicinity.

The South China Sea

In both the East China and South China seas, China and its neighbors claim assorted atolls and islands that sit astride vast undersea oil and gas reserves.  The waters of both have been the site of recurring naval clashes over the past few years, with the South China Sea recently grabbing the spotlight. 

An energy-rich offshoot of the western Pacific, that sea, long a focus of contention, is rimmed by China, Vietnam, the island of Borneo, and the Philippine Islands.  Tensions peaked in May when the Chinese deployed their largest deepwater drilling rig, the HD-981, in waters claimed by Vietnam.  Once in the drilling area, about 120 nautical miles off the coast of Vietnam, the Chinese surrounded the HD-981 with a large flotilla of navy and coast guard ships.  When Vietnamese coast guard vessels attempted to penetrate this defensive ring in an effort to drive off the rig, they were rammed by Chinese ships and pummeled by water cannon.  No lives have yet been lost in these encounters, but anti-Chinese rioting in Vietnam in response to the sea-borne encroachment left several dead and the clashes at sea are expected to continue for several months until the Chinese move the rig to another (possibly equally contested) location.

The riots and clashes sparked by the deployment of HD-981 have been driven in large part by nationalism and resentment over past humiliations.  The Chinese, insisting that various tiny islands in the South China Sea were once ruled by their country, still seek to overcome the territorial losses and humiliations they suffered at the hands the Western powers and Imperial Japan.  The Vietnamese, long accustomed to Chinese invasions, seek to protect what they view as their sovereign territory.  For common citizens in both countries, demonstrating resolve in the dispute is a matter of national pride.

But to view the Chinese drive in the South China Sea as a simple matter of nationalistic impulses would be a mistake.  The owner of HD-981, the China National Offshore Oil Company (CNOOC), has conducted extensive seismic testing in the disputed area and evidently believes there is a large reservoir of energy there.  “The South China Sea is estimated to have 23 billion tons to 30 billion tons of oil and 16 trillion cubic meters of natural gas, accounting for one-third of China's total oil and gas resources,” the Chinese news agency Xinhua noted.  Moreover, China announced in June that it was deploying a second drilling rig to the contested waters of the South China Sea, this time at the mouth of the Gulf of Tonkin. 

As the world’s biggest consumer of energy, China is desperate to acquire fresh fossil fuel supplies wherever it can.  Although its leaders are prepared to make increasingly large purchases of African, Russian, and Middle Eastern oil and gas to satisfy the nation’s growing energy requirements, they not surprisingly prefer to develop and exploit domestic supplies.  For them, the South China Sea is not a “foreign” source of energy but a Chinese one, and they appear determined to use whatever means necessary to secure it.  Because other countries, including Vietnam and the Philippines, also seek to exploit these oil and gas reserves, further clashes, at increasing levels of violence, seem almost inevitable.

No End to Fighting

As these conflicts and others like them suggest, fighting for control over key energy assets or the distribution of oil revenues is a critical factor in most contemporary warfare.  While ethnic and religious divisions may provide the political and ideological fuel for these battles, it is the potential for mammoth oil profits that keeps the struggles alive.  Without the promise of such resources, many of these conflicts would eventually die out for lack of funds to buy arms and pay troops.  So long as the oil keeps flowing, however, the belligerents have both the means and incentive to keep fighting.

In a fossil-fuel world, control over oil and gas reserves is an essential component of national power.  “Oil fuels more than automobiles and airplanes,” Robert Ebel of the Center for Strategic and International Studies told a State Department audience in 2002.  “Oil fuels military power, national treasuries, and international politics.”  Far more than an ordinary trade commodity, “it is a determinant of well being, of national security, and international power for those who possess this vital resource, and the converse for those who do not.”

If anything, that’s even truer today, and as energy wars expand, the truth of this will only become more evident.  Someday, perhaps, the development of renewable sources of energy may invalidate this dictum.  But in our present world, if you see a conflict developing, look for the energy.  It’ll be there somewhere on this fossil-fueled planet of ours.

Largely US Neoliberal Policies Causing Humanitarian Youth Crisis on US-Mexican Border

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It is worth debunking just two myths that have been generated in the mainstream media and anti-immigrant organizations about the alleged flood of young people from south of the border.

First of all, most reliable accounts indicate that approximately 75 percent of the youths reaching the US border with Mexico are from Central America, particularly Honduras, El Salvador and Guatemala. These young people risk a harrowing journey across the spine of Mexico, where they are shook down for money, sometimes kidnapped, sometimes shot by paramilitary groups or the police, and in general face a gauntlet of life-threatening obstacles as they attempt to traverse Mexico to reach the United States. (Often the journey involves riding on top of a notorious freight train that is seen as a source of income and slave labor to different thugs in Mexico.)

How serious a risk is the undertaking of being young and in flight? Consider that you see photos of young people with only one arm. Often that's from falling under the train that moves from south to north in Mexico, sometimes from being thrown off the top of the cars because they could not pay enough money to bandits shaking them down.

Two, according to a July American Immigration Council report, only one in three of the youths seeking safety in the United States are motivated by family reunification, despite the false drumbeat in the mainstream media that "loose" laws are allowing young people with family members in the United States to stay here. The much-hyped "crisis" is complicated, including the role that growing violence, gangs, organized crime, suppression of indigenous protests and conflicts over neoliberal exploitation of natural resources are playing in forcing young people to risk their lives by fleeing - for their lives - from their countries of origin.

There are other issues, such as one that will be the topic of a Truthout piece by reporter Dahr Jamail tomorrow: US foreign policy that forces upon poor Latin American nations GMO seeds produced by Monsanto and the devastating breakdown of subsistence farming hastened by the arrival of cheaper agricultural products from the United States. Meanwhile, all of this is being done in the name of free trade. US agricultural companies are actually setting up big agricultural farms in nations where a significant percentage of the country - and especially indigenous people - have depended upon subsistence farming. The result is the creation of marginalized populations who no longer can feed themselves, in part because the US is imposing US GMO seeds on them, which also increases the price of seeds to farmers. This creates a spiraling destruction of small-scale rural farming.

Needless to say, one cannot ignore the dystopian and heightened violence caused by the ongoing war on drugs. A couple of years ago, I wrote a 10-part series on the how failure of the war on drugs in Latin America and Mexico actually benefits the United States and the oligarchy. Yes, it leads to a collapse of civil society, but that benefits the ruling order. Why? Because the powerless and economic needy are in such fear for their lives that they do not have the ability to develop political alternatives to US hegemony working closely with neoliberal governments.

These and many other realities are the reason that children and teens are now running for their lives to the United States.

The crisis, one might argue, is largely made in the USA.

Home equity lines due for reset may be looming financial disaster

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Could the real estate market be heading for a new financial storm? Maybe.

Some mortgage and credit experts worry that billions of dollars of home equity credit lines that were extended a decade ago during the housing boom could be heading for big trouble soon, creating a new wave of defaults for banks and homeowners.

That's because these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory "resets" requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required.

But the difference between the interest-only and reset payments on these credit lines can be substantial — $500 to $600 or more per month in some cases. If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity.

According to federal financial regulators, about $30 billion in home equity lines dating to 2004 are due for resets next year, $53 billion the following year and a staggering $111 billion in 2018. Amy Crews Cutts, chief economist for Equifax, one of the three national credit bureaus, calls this a looming "wave of disaster" because large numbers of borrowers will be unable to handle the higher payments. This will force banks to either foreclose, refinance the borrower or modify their loans.

But refinancings often will not be possible, Cutts says, because the homeowners won't qualify under the tougher mortgage rules taking effect in January, or the combined first and second mortgages may exceed the value of the house. Complicating matters further, interest rates are likely to rise from their current low levels as the Federal Reserve tapers its purchases of Treasury and mortgage-backed securities. Higher base rates would make the payment shocks even worse. Plus, according to Cutts, many of the owners with high-balance credit lines already have low credit scores — legacies of the housing bust and recession — and have an elevated statistical risk of default after the reset.

Financial regulators, including the comptroller of the currency, are aware of the coming bulge in high-risk resets and have been urging the biggest banks to set aside extra reserves for possible losses. Last month, Citigroup said it was increasing reserves on its nearly $20 billion in home equity lines and acknowledged that the reset payment shocks for borrowers could be a major challenge.

Rating agency Fitch has also sounded the alarm, warning that banks face "increasing credit risk" in 2014 and beyond as borrowers who took advantage of easy terms and fast-rising home values during the boom now confront much tougher credit conditions and could default.

What does all this mean for homeowners with boom-era credit lines and hefty unpaid balances? Potentially a lot. Check your credit line documents to determine when you're scheduled for a reset. Consider contacting the bank that owns your note and asking for an estimate of what your post-reset payment could amount to at your current principal balance or what it would be if you paid off some of the principal.

Most important, be aware of your options. If you have adequate equity in the house but are strapped for monthly cash, talk to the bank about a possible refinancing or loan modification that could lessen the payment pain. Since banks are being pressured by regulators to deal with their potential equity loan issues in advance, you might be able to come up with a modification solution acceptable to both you and the bank.

If you are underwater on your mortgage — more than 1 out of 7 owners continues to owe more on the mortgage than the home is worth, according to realty data firm CoreLogic — and you can't afford the reset payment, the bank may not foreclose on you because there's no equity to recover. But the bank could sell your charged-off account to a debt collection firm or even pursue you for a deficiency judgment in states where that is permitted.

Any failure to pay, however, would be bad news for your credit scores, says Equifax's Cutts — a "big negative" on your credit files, a blot that could cause you problems for years.

Bottom line: If you're one of the many owners with a boom-time credit line facing a reset, don't wait for trouble to happen. Start mapping out your strategy well in advance.

A Potential Foreclosure Crisis Looms Over America

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Former Assistant Treasury Secretary Paul Craig Roberts wrote [3] on June 25th that real US GDP growth for the first quarter of 2014 was a negative 2.9%, off by 5.5% from the positive 2.6% predicted by economists. If the second quarter also shows a decline, the US will officially be in recession. That means not only fiscal policy (government deficit spending) but monetary policy (unprecedented quantitative easing) will have failed. The Federal Reserve is out of bullets.

Or is it? Perhaps it is just aiming at the wrong target.

The Fed’s massive quantitative easing program was ostensibly designed to lower mortgage interest rates, stimulating the economy. And rates have indeed been lowered – for banks. But the form of QE the Fed has engaged in [4] – creating money on a computer screen and trading it for assets on bank balance sheets – has not delivered money where it needs to go: into the pockets of consumers, who create the demand that drives productivity.

Some ways the Fed could get money into consumer pockets with QE, discussed in earlier articles, include very-low-interest loans for students [5] and very-low-interest loans to state and local governments [6]. Both options would stimulate demand. But the biggest brake on the economy remains the languishing housing market. The Fed has been buying up new issues of mortgage-backed securities so fast that it now owns 12% of the mortgage market; yet housing continues to sputter, largely because of the huge inventory of underwater mortgages.

According to Professor Robert Hockett [7], who originated a plan to tackle this problem using eminent domain, 40% of mortgages nationally are either underwater or nearly so, meaning more is owed on the home than it is worth. Seventy percent of homes that are deeply underwater wind up in default.

Worse, second mortgages are due for a reset. Over the next several years, principal payments will be added to interest-only payments on second mortgages taken out during the boom years. Many borrowers will be unable to afford the higher payments. The anticipated result is another disastrous wave of foreclosures [8].

The mortgage debt overhang was the result of financial deregulation and securitization, which created a massive housing bubble. When it inevitably burst, housing prices plummeted, but mortgages did not. The resources of the once-great middle class were then diverted from spending on consumer goods to trying to stay afloat in this sea of debt. Without demand, stores closed their doors and workers got laid off, in a vicious downward spiral.

The glut of underwater mortgages needs to be written down to match underlying assets, not just to help homeowners but to revive the economy. However, most of them cannot be written down, because they have been securitized (sold off to investors) in complicated trust arrangements that legally forbid renegotiation, even if all the parties could be found and brought to agreement.

Reviving the HOLC

The parties themselves cannot renegotiate, but the Fed could. The Fed is already voraciously buying up mortgage-backed securities. What it is not doing but could is to target underwater mortgages and renegotiate them after purchase, along the lines of the Home Owners’ Loan Corporation (HOLC) [9] created during the New Deal.

The HOLC was a government-sponsored corporation created in 1933 to revive the moribund housing market by refinancing home mortgages that were in default. To fund this rescue mission without burdening the taxpayers, the HOLC issued bonds that were sold on the open market. Although 20% of the mortgages it bought eventually defaulted, the rest were repaid, allowing the HOLC not only to rescue the home mortgage market but to turn a small profit for the government.

In 2012, Senator Jeff Merkley of Oregon proposed [10] the large-scale refinancing of underwater mortgages using an arrangement similar to the HOLC’s. Bonds would be issued on the private bond market, capitalizing on today’s very low US government cost of funds; then underwater mortgages would be bought with the proceeds.

For the bonds to be appealing to investors, however, they would need to be at 2-3% interest, the going rate for long-term federal bonds. This would leave little cushion to cover defaults and little reduction in rates for homeowners.

The Fed, on the other hand, would not have these limitations. If it were to purchase the underwater mortgages with QE, its cost of funds would be zero; and so would the risk of loss, since QE is generated with computer keys.

Finance attorney Bruce Cahan has another idea [11]. If the Fed is not inclined to renegotiate mortgages itself, it can provide very-low-interest seed money to capitalize state-owned banks, on the model of the Bank of North Dakota. These publicly-owned banks could then buy up mortgage pools secured by in-state real estate at a discount off the face amount outstanding, and refinance the mortgages at today’s low long-term interest rates.

The Eminent Domain Alternative

The Fed has the power (particularly if given a mandate from Congress), but so far it has not shown the will. Some cities and counties are therefore taking matters into their own hands.

Attracting growing interest is Professor Bob Hockett’s eminent domain plan, called a “Local Principal Reduction program.” As described by the Home Defenders League [12]:
The city works with private investors to acquire a set of the worst, hardest to fix underwater mortgages (especially “Private Label Securities” of PLS loans) and refinances them to restore home equity. If banks refuse to cooperate, cities may use their legal authority of eminent domain to buy the bad mortgages at fair market value and then reset them to current value.
This plan was initially pursued by San Bernardino County, California [13]. Then Richmond, California, took up the charge [14], led by its bold Green Party mayor Gayle McLaughlin. Now some councilmen have gotten on the bandwagon in New York City, a much larger turf that encroaches directly on Wall Street’s. At a news conference on June 25th [15], New York City Council members and housing advocacy groups called on the mayor to use the eminent domain option to help underwater homeowners in distressed areas.

The latest breaking news on this front involves the City of San Francisco, which will be voting on a resolution involving eminent domain on July 8th. The resolution states in part:
That it is the intention of the Board of Supervisors to explore joining with the City of Richmond in the formation of a Joint Powers Authority for the purpose of implementing Local Principal Reduction and potentially other housing preservation strategies . . . .
The MERS Trump Card

If the eminent domain plan fails, there is another way local governments might acquire troubled mortgages that need to be renegotiated. Seventy percent of all mortgages are now held in the name of a computer database called MERS (Mortgage Electronic Registration Systems). Many courts have held that MERS breaks the chain of title [13] to real property. Other courts have gone the other way, but they were usually dealing with cases brought by homeowners who were held not to have standing to bring the claim. Counties, on the other hand, have been directly injured by MERS and do have standing to sue, since the title-obscuring database has bilked them of billions of dollars in recording fees [16].

In a stunning defeat for MERS [17], on June 30, 2014, the US District Court for the Eastern District of Pennsylvania granted a declaratory judgment in favor of County Recorder Nancy J. Becker, in which MERS was required to come up with all the transfer records related to its putative Pennsylvania properties. The judgment stated:
Defendants are declared to be obligated to create and record written documents memorializing the transfers of debt/promissory notes which are secured by real estate mortgages in the Commonwealth of Pennsylvania for all such debt transfers past, present and future in the Office for the Recording of Deeds in the County where such property is situate.

IT IS STILL FURTHER ORDERED AND DECLARED that inasmuch as such debt/mortgage note transfers are conveyances within the meaning of Pennsylvania law, the failure to so document and record is violative of the Pennsylvania Recording Statute(s).
Memorializing all transfers past, present and future, probably cannot be done at this late date – at least not legitimately. The inevitable result will be fatal breaks in the chain of title to Pennsylvania real property. Where title cannot be proved, the property escheats (reverts) to the state by law.

Only 29% of US homes [18] are now owned free and clear, a record low. Of the remaining 71%, 70% are securitized through MERS. That means that class-action lawsuits by county recorders could potentially establish that title is defective to 50% of US homes (70% of 71%).

If banks, investors and federal officials want to avoid this sort of display of local power, they might think twice about turning down reasonable plans for solving the underwater mortgage crisis of the sort proposed by Senator Merkley, Professor Hockett and Attorney Cahan.