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by Mark Major

Film Review: ‘Blood and Oil’

Michael T. Klare’s Blood and Oil. A film by the Media Education Foundation, 2008; 52 mins. Written by Michael T. Klare, Jeremy Earp, and Scott Morris. Directed by Jeremy Earp.

Middle Eastern oil resources have long been considered “a stupendous source of strategic power” by the United States, evidenced by a State Department memo from August 1945. According to progressive energy analyst Michael Klare in the new documentary Blood and Oil, the same oil resources are also a “source of weakness” for the US. Based on Michael Klare’s book of the same name, Blood and Oil examines the relationship between oil and US foreign policy. Serving as the film’s commentator, Klare sheds light on the importance of access and control of oil in presidential doctrines from FDR through the Bush administration. He argues that the control of the world’s energy resources has been foundational to US foreign policy since World War II. Blood and Oil demonstrates how US foreign policy and energy policy are essentially intertwined.

Since 1860, the US has been the leading consumer of petroleum. Despite being a mere 5% of the world’s population, the US oil-based economy consumes 25% of the world’s oil, approximately 20 million barrels per day. Well into the 1960s, the US was largely self-sufficient producing 80-90% of its own oil. However, US reliance on imported oil has drastically grown during the last two decades and, according to the Department of Energy, the US is expected to import 70% of its oil by 2025.

This energy and foreign policy was the product of FDR during World War II. The film shows archival footage of a February 14, 1945 meeting between President Roosevelt and King Ibn Saud. Klare highlights the blatant contradiction of Roosevelt meeting with a man who exemplified the values that the US was fighting against at the time. The meeting solidified the pact of US protection and development of the Kingdom for oil. Klare argues that the modern Saudi military is largely the creation of the US, supplying the Kingdom with weaponry, advisers, and technology. This also highlights how America’s calls for democratization ring terribly hollow as its longest and most steadfast ally in the Middle East is a feudal monarchy.

Across the Middle East, Klare reveals the different mechanisms and policies presidents use to retain America’s hegemonic status in the region. Most presidents’ foreign policies are informed by what Klare calls a “strategy of maximum extraction.” This strategy requires compliant and reliable regimes providing the US with continued access to oil. In other words, Middle East governments are run by those who will ensure that Washington’s objectives are met, regardless of their seeming commitment to democracy.

Africa is given prospective coverage in the film. Given its increasing dependence on imported oil, Klare contends that Africa is of “growing importance” to US geostrategic interests. The documentary implies that colonial renewal is underway, especially in oil-rich parts of Africa. AFRICOM – an African command post created by the Bush administration in February 2007 – is an indication of this development. In addition, China is developing an equally militarized foreign policy to counter US influence in the region.

Despite its political relevancy to US foreign policy, this documentary has limitations. The most troubling limitation of Blood and Oil is that Israel receives absolutely no discussion nor does Klare discuss the leverage the US gains over Middle Eastern regimes by withdrawing material and ideological support from Israel’s brutal occupation of Palestinian territories. The film also does not examine the beneficiaries of US oil policy, as it leaves out the role of corporations. The analytical focus is also a bit tenuous. The first half of the film examines presidential doctrines while the second half deals more with recent foreign policy endeavors. Furthermore, too much emphasis is placed on the Saudis at the beginning of the film which makes other significant players like Iran hard to understand in historical context. Also, the connections between Saudi Arabia and other regimes in the region are not concrete. Finally, the film is weak on prescriptions for dealing with the criminal and hazardous nature of US foreign policy.

Klare warns that if the US fails to adopt a different policy direction, then the 21st century is on course to be “very bloody and dangerous and painful.” Considering the recent historic (and exhaustive) presidential election in the US, Klare’s assertion makes it virtually impossible to ignore the foreign policy problems facing the Obama administration. Despite the analytical shortcomings of this film, Blood and Oil makes a compelling case that needs to be confronted and the Obama administration must make this issue central to their agenda. This is all the more imperative considering the remaining world’s oil production comes from politically sordid and unstable regions with two-thirds of world oil reserves being in five Middle Eastern countries. While it remains to be seen, the prospects do not look promising, considering all of the establishment foreign policy hawks that have been tapped to be part of the new administration. At least in the realm of foreign policy, Obama’s campaign declarations for “change” are unfortunately leaning closer and closer to platitudes than new paradigms.

Rather than viewing it as a definitive statement, Blood and Oil should be approached as a way to start a much needed dialogue on some of the problematic characteristics and consequences of US policy.

From The Geopolitics of Petroleum ACAS Blog Series

by Roy Licklider

Reader’s Guide: Crude Democracy

Reader’s Guide: ‘Crude Democracy: Natural Resource Wealth and Political Regimes‘ by Thad Dunning (Cambridge University Press, 2009)

I apologize for recommending this book to you since it isn’t really on our topic of the impact of oil on American foreign policy (this is, of course, what comes of recommending books that you haven’t read). Nonetheless, since it is an important book I thought I would prepare a fairly short summary of the major points and allow those of you who want to dig deeper to do so on your own.

The central argument of the book is that resource revenues (including but not limited to oil) can support as well as undermine democracy. This, of course, runs directly contrary to the current accepted wisdom of the resource curse, that countries with substantial resources can generate sufficient rents to function as states, often including substantial payoffs to well-connected individuals, without having to get their populations to agree to pay taxes to support them; such efforts would presumably have involved some sort of accountability to the population, leading to democracy.

The central metaphor of the book is a game-theoretic model of elites and masses in a democracy, where elites have to decide whether the benefits of a successful coup are more than the costs and risks involved; the question is how those payoffs change if the state generates significant resource rents. He argues that such rents, on the one hand, generate direct pressures supporting the coup (increased wealth of the state makes it a more attractive target, and masses cannot plausibly commit themselves not to increase future taxes on the elites), and on the other hand generate indirect pressures against coups (the rents make it easier for the government to give benefits for the masses without raising taxes on elites and less likely that masses will feel impelled to tax the elites in the future). He contends, not that this balance always tips one way or the other, but that it varies systematically, depending on certain conditional factors. In particular he theorizes that the democratic effects will be stronger in states which are less economically dependent on the resource (reducing the value of capturing the state and allowing the elites to derive income from other sources) and those which have high inequality (sic) in the non-resource economy (since resource rents can reduce the costs of redistribution for the elites). He then suggests that these conditions are more likely to be found in certain Latin American countries than those of Africa, for example.

The remainder of the book is devoted to testing these notions. Chapter two expands the theoretical argument. Chapter three develops two game-theoretic models from the theory. The first centers on when elites in a democratic state with resource rents will find the risks of staging a coup attractive while the second considers how elites in an authoritarian state with resource rents are likely to respond to the threat of revolutionary change. Chapter four uses cross-national time-series statistics to test the theories. Dunning finds that inequality does indeed predict democracy both globally and within Latin America (“the most unequal region in the world”). He also shows that different operationalizations of the key concepts and adding various control variables do not have much impact on the relationship.

Chapters five and six are devoted to studies of cases where the theory predicts the democratic effects will be strong: Venezuela, Chile, Bolivia, Ecuador, and Botswana. Here Dunning looks, not at the outcome (which he already knows), but for the mechanisms which have been predicted in the theory. For example, the theory predicts that domestic conflict over redistribution should increase as rents decline and decrease as rents increase.
Dunning argues that in Venezuela the rents from oil reduced the incentives for the elites to oppose democracy, not because they gained directly from the oil, but because those rents nearly eliminated any pressure for redistribution of wealth from the elites; the drop in oil prices in the 1980s, however, put the democratic government under increasing pressure. He also argues that the increase in oil prices explains why there has been so little opposition to Chavez’ regime, which he contends has not in fact done much in the way of actual redistribution since the social programs have been funded by oil.

In the case of Chile, Dunning argues that the decline in prices for nitrates in the late 1920s explains the upsurge of internal conflict there. The 1973 coup is a challenge to the theory since copper prices were fairly high; he makes an interesting counterfactual argument that without resource rents the conflict would actually have been more intense. In Bolivia the effects are not felt until the form of ownership changes: because the tin mines were originally owned by a small elite, the revenues did not flow as rent to the state but instead to these individuals. Thus the elites were fiercely opposed to any redistribution of wealth. He argues that after Bolivia nationalized the mines in 1952, rents from tin and later oil helped stabilize democracy there. However, the regional nature of Bolivia has increasingly made oil resources a basis for internal conflict.

In Ecuador Dunning argues that the 1972 coup, which occurred just as oil production was increasing rapidly, was carried out in order to avoid redistribution; however, he contends that Ecuador redemocratized later in the decade, using oil rents for social programs. He also notes the problems of basing democracy on oil, citing the price drops in 1986 with subsequent cutbacks in social programs and considerable unrest until prices rose again a few years later. Botswana is an African case where the resource is diamonds. Dunning notes that the interest in cattle ranching, the main alternative industry, is highly concentrated in the hands of elite members and that they have used income from the diamond mines to support social programs.

Dunning concludes this analysis by arguing that there are crude democracies just as there are crude autocracies, that the differences between them are systematic rather than random, and that therefore we should be able to make reasonable predictions about the kind of political systems most likely to emerge in particular areas. He also discusses a number of cases which present challenges to his theory, including the Soviet Union and Indonesia, and perhaps Iraq. This is, I think, one of the most important challenges to the easy generalizations of the “resource curse” literature that I have yet seen.

Prepared by Roy Licklider for Geopolitics of Petroleum Faculty Cluster, Rutgers University, spring 2009

From The Geopolitics of Petroleum ACAS Blog Series

by Angus Kress Gillespie

Comment (1)

‘Syriana’ as a Teaching Tool

In the fall semester of 2008, Professor Meredeth Turshen of Rutgers University secured a small grant to sponsor the “Geopolitics of Petroleum Faculty Cluster.” A small group of interested faculty and graduate students settled on a study group format with the idea that we would invite the authors of the books we had decided to read to meet with us. It was decided that our study would focus on the intersection of US foreign policy and energy policy, with the possibility of working toward a set of policy recommendations for the incoming federal government administration. We proceeded in this fashion throughout the fall semester—reading relevant books and meeting in a small group with the authors.

To kick off the spring semester and to stimulate interest in our work, we departed from that format. Instead, we began the new semester with a screening of the film “Syriana,” starring George Clooney. Since I was already familiar with the film from my own undergraduate courses, I volunteered to introduce the film and to lead a follow-up discussion. I believe that this film is a valuable teaching tool. Not because it is historically accurate. It is after all a fictional film. But it successfully dramatizes many of the underlying issues of oil and public policy. The screening took place on February 7, 2009, at the Edward J. Bloustein Auditorium in New Brunswick, New Jersey. In order to avoid spoilers, I kept the introduction to the film very brief.

The audience for this screening was somewhat larger than our usual small core of readers, and it was made up mainly of faculty and graduate students. Although this audience was more sophisticated than the regular undergraduate audience, they still had many of the same problems in understanding the film. It is simply very confusing for anyone on first viewing. There are multiple characters and multiple plot lines. The setting jumps rapidly from Tehran to Geneva and to Langley, Virginia. The film goes back and forth from an unnamed country in the Persian Gulf to stateside locations such as Princeton, New Jersey, and Hondo, Texas. Following the plot is challenging and difficult. Many viewers are left with the reaction, “What happened?”

To my way of thinking, the confusion engendered by the film creates a teachable moment. Many Hollywood films are so straightforward that there is little justification for including them in the college curriculum. But this one is so complex as to be a puzzle, an interesting challenge. By the same token, it creates a real opportunity for the discussion leader to serve a real need, to help the students figure out the puzzle. As a discussion leader, I cannot claim any special brilliance or insight. What gives me the edge is the simple fact of watching the film several times. Each time I watch the film, it becomes a bit clearer. On multiple viewing, there are many “Aha!” moments.

In preparing my post-screening remarks, I relied heavily on readily available resources on the internet. One of the best, of course, is the Movie Review Query Engine (www.MRQE.com), a large online database for movie reviews founded in 1993 by Stewart Clamen. The site aggregates reviews associated with particular movies. It is comprehensive and easy to use. Even more helpful in this particular case was the information from Film Education (www.filmeducation.org), a non-profit founded by the UK film industry to promote the use of film in schools and colleges.

I found the “Syriana Study Guide” provided by Film Education to be an invaluable resource. The Study Guide begins by pointing out that “Syriana is a demanding film, requiring some background knowledge.” It then goes on to provide that background knowledge. For example, we are told that a quarter of the world’s oil is consumed in the USA and that US consumes 30 billion barrels of crude a year but produces only four billion barrels from its own fields. Yet the US population is only 5% of the world’s total population. We also learn that Syriana is a term “used by Washington think tanks to describe a democratic, Western-leaning, business-friendly Middle East most suited to US commercial and political interests.”

The Study Guide goes on to provide thumbnail character sketches of some of the major characters. One of the great strengths of the film is that one cannot simply sort the characters into good guys and bad guys. These are three-dimensional characters, each with individual strengths and weaknesses. The Study Guide then goes on to suggest that the discussion leader summarize for students the four main plot strands, specifically: 1) the progress of the Connex-Killeen merger, 2) the hope of a new beginning in the Middle East following Prince Nasir’s bid for power, 3) the power struggles that surround Bennett Holiday at his Washington-based law firm Sloan Whiting, and 4) the slow recruitment of Wasim Khan to the cause of Islamic terrorism. The challenge for the teacher, of course, to show students how these strands all fit together.

In the question and answer session that followed my post-screening prepared remarks, the first few minutes were spent in clearing up questions of the plot structure.

But then the discussion evolved where audience members offered up their own insights.

The group was small enough that everyone had a chance to talk and be heard by the others. Little by little, we all tried to make sense of the film. The experience reaffirmed the value of talking and listening. Good films make for good discussions.

From The Geopolitics of Petroleum ACAS Blog Series

by Constantine Caffentzis

“Everything Must Change So That Everything Can Remain the Same”: Reflections on Obama’s Energy Plan

Is President Obama’s oil/energy policy going to be different from the Bush Administration’s? My immediate answer to this prophetic question will be philosophical: a firm “No” and a more hesitant “Yes.” The reason for this ambivalence is simple: the failure of the Bush Administration to radically change the oil industry in its neoliberal image has made a transition from an oil based energy regime inevitable and the Obama Administration is responding to this inevitability. Consequently, we are in the midst of an epochal shift so that an assessment of the political forces and debates of the past have to be revised and held with some circumspection.

Before I examine both sides of this answer, we should be clear as to the two oil/energy policies being discussed.

The Bush policy paradigm’s premise is all too familiar: the “real” energy crisis has nothing to do with the natural limits on energy resources, but is due to the constraints on energy production imposed by government regulation and the OPEC cartel. Once energy production is liberalized and the corrupt, dictatorial and terrorist-friendly OPEC cartel is dissolved by US-backed coups (Venezuela) and invasions (Iraq and Iran), according to the Bush folk, the free market can finally impose realistic prices on the energy commodities (which ought to be about half of the present ones), and stimulate the production of adequate supplies and a new round of spectacular growth of profits and wages.

Obama’s oil/energy policy during the campaign and after his election has the following equally familiar premise, he presented on Jan. 27, 2009: “I will reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs…America’s dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism.” In the long-term this policy includes: a “clean tech” Venture Capital Plan; Cap and Trade; Clean Coal Technology development; Stricter automobile gas-mileage standards; cautious support for nuclear power electricity generation.

The energy policy he outlined in his budget proposal is supportive of a peculiar “national security” autarky (especially when it comes from an almost mythical pro-globalization figure like Obama). Its logic is implicitly something like this: if the US were not so dependent on foreign oil, there would be less need for US troops to be sent to foreign territories to defend the US’s access to energy resources. Obama treats oil in a mercantile way, the vital stuff of any contemporary economy (a little like the way gold was conceptualized in 16th and 17th centuries), long after mercantilism has been definitely abandoned as a viable political economy. In effect, he is calling for an autarkic import-substitution policy for oil while he is leading the main force for anti-autarkic globalization throughout the planet.

A Firm “No”

Obama’s paradigm is problematic since it poses the key question of oil policy as a matter of “dependency” and not as the consequence of the present system of commodity production. It does not recognize that: oil is a basic commodity; the oil industry is devoted to making money profits; the US government is essentially involved in guaranteeing the functioning of the world market and the profitability of the oil industry (not access to the hydrocarbon stuff itself); and energy politics involves classes in conflict (and not only competing corporations and conflicting nation states). In brief, it leaves out the central player of contemporary life: workers, their demands and struggles. Somehow, when it comes to writing the history of petroleum, capitalism, working class, and class conflict are frequently forgotten in a way that never happens with oil’s earthy hydrocarbon cousin, coal. Once we put profitability and working class conflict into the oil story, the plausibility of the National Security paradigm lessens, since the US military will be called upon to defend the profitability of international oil companies against the demands of workers around the world, even if the US did not import one drop of oil.

There will be wars fought by US troops aplenty in the years to come, if the US government tries to continue to play for the oil industry in particular and for capitalism in general the 21st century equivalent of the 19th century British Empire. For what started out in the 19th century as a tragedy, will be repeated in the 21st, not as farce, but as catastrophe. At the same time, it is not possible for the US government to “retreat” from its role, without jeopardizing the capitalist project itself. Obama and his Administration show no interest in leading an effort to abandon this imperialist, market-policing role as his efforts in Afghanistan, Iraq and Pakistan as well as his carte blanche to Israel in its bombing of Gaza initially indicate.

Thus the supporters of the National Security paradigm for oil policy like Obama are offering up a questionable connection between energy import-substitution and the path of imperialism. As logicians would say, energy dependence might be a sufficient condition of imperialist oil politics, but it is not a necessary one. This is Obama’s dilemma then: he cannot reject the central role of the US in the control of the world market’s basic commodity, at the same, the inter- and intra-class conflict in the oil producing countries is making the US’s hegemonic role impossible to sustain. Therefore, Obama’s oil policy will be quite similar to Bush’s.

A Hesitant “Yes”

Up until now my argument has been purely negative, i.e., though Obama’s oil policy and Bush’s are radically different rhetorically, they will have much in common in practice. Obama’s goal of “energy independence” will not affect the military interventions generated by the efforts to control oil production and accumulate oil profits throughout the world. These interventions will intensify as the capitalist crisis matures and as the short-term, spot market price fluctuates wildly from the long-term price, and geological, political and economic factors create an almost apocalyptic social tension.

I do see, however, that there is a major difference between Bush and Obama. The former was a status quo petroleum president while the latter is an energy-transition president, i.e., Obama (like Roosevelt in the 1930s and Carter in the 1970s) is in charge of a capitalist energy transition similar to the successful one that substituted oil/natural gas for coal in many places throughout the productive system in the 1930s and 1940s and the unsuccessful one that failed to substitute coal, solar power and nuclear power for oil/gas in the US of the 1970s. We are at the moment similar to the time when capital began to recognize that coal miners were so well organized that they could threaten the whole machine of accumulation (an experience felt in the British General Strike of 1926 and the coal mining struggle in the US of the 1930s that led to the triumph of the CIO) and had to be put on the defensive by the launching of a new energy foundation to capitalist production, and when Carter despaired of putting the struggle of the oil producing proletariat (especially in Iran) back in the bottle.

In the face of the failure of the Bush Administration’s attempt to impose a neoliberal regime on the oil producing countries, the Obama Administration must now lead a partial exit from the oil industry. It will not be total, of course. After all, the transition from coal to oil was far from total and, if anything, there is now more coal mined than ever before while the transition from renewable energy (wind, water, forests) in the late 18th century to coal was also far from total. Indeed, this is not the first time that capitalist crisis coincides with energy transition, as a glance at the previous transitions in the 1930s and 1970s indicate. It will be useful to reflect on these former transitions to assess the differences between Bush’s and Obama’s oil policies. The different phases of the transition from oil to alternative sources include: (1) repressing the expectations of the oil producing working class for reparations of a century of expropriation, (2) supporting financially/legally/militarily the alternative energy “winners”; (3) verifying the compatibility of the energy provided with the productive system; (4) blocking any revolutionary, anti-capitalist turn in the transition.

In reflecting on these phases, I note that they offer the kind of challenges that were largely irrelevant to the Bush Administration, since it was resolutely fighting the very premise of a transition: the power of the inter- and intra-class forces that were undermining the neoliberal regime. Consequently, they will provide a rich soil for discussion, debate and planning in this period. But the interests of the world market and the oil/energy companies will be paramount in the deployment of US military power–it also applies to my “Hesitant ‘Yes’” side as well, though less directly, since the ultimate purpose of the Obama administration is (pace Rush Limbaugh) to preserve the capitalist system in very perilous times. It just so happens, however, that the “everything” that must change is more extensive than had ever been thought before.

The first element in the transition is to recognize that there will be interclass resistance to the transition from those who stand to lose. Of course, most the oil capitalists will be able to transfer their capital easily to the new areas of profitability, although they will be concerned about the value of the remaining oil “banked” in the ground. This transition has been theorized, feared and prepared for by Third World (especially Saudi Arabian) capitalists ever since the first oil crisis of the 1970s. But what is to be done with respect to the oil producing proletariat? After all, the “down side” of Hubbert’s Curve, in a sense, could be seen as a potential payback for a century of exploitation, forced displacements and enclosures in the oil regions.

The capitalist class as a whole is unwilling to pay reparations to the peoples in the oil-producing areas whose land and life has been so ill-used. Oil capital’s resistance to reparations is suggested by its horror, for example, of paying the Venezuelan state oil taxes and rents that will go into buying back land that had been expropriated from campesinos decades ago and giving it to their campesino children or grandchildren. Capital wants to be able to control the vast transfer of surplus value that is being envisioned in these discussions of transition, and without a neoliberal solution it is not clear that it can. Moreover, will the working class be a docile echo to capital’s concerns? After all, shouldn’t reparations be paid to the people of the Middle East, Indonesia, Mexico, Venezuela, Nigeria and countless other sites of petroleum extraction-based pollution? Will they simply stand still and watch their only hope for the return of stolen wealth snuffed out?

We should recognize as far as phase (2) is concerned that alternative energies have been given an irenic cast by decades of “alternativist” rhetoric contrasting blood-soaked hydrocarbons and apocalypse-threatening nuclear power. But if we remember back to the period when capitalism was operating under a renewable energy regime in the 16th through most of the 18th century, we should recognize that this was hardly an era of international peace and love. The genocide of the indigenous Americans, the African slave trade and the enclosures of the European peasantry occurred with the use of alternative renewable energy! The view that a non-hydrocarbon future operated under a capitalist form of production will be dramatically less polemic is questionable. (We saw an example of this kind of conflict of interest in the protests of Mexican city dwellers over the price of corn grown by Iowa farmers that was being sold for biofuel instead of for “homofuel”!)

As for phase (3), we should remember that an energy source is not equally capable of generating surplus value (the ultimate end of the use of energy in capitalism). Oil is a highly flexible form of fuel that has a wide variety of chemical by-products and mixes with a certain type of proletariat. Solar, wind, water and tide energy will not immediately fit into the present productive apparatus to generate the same level of surplus. The transition will ignite a tremendous struggle in the production and reproduction process; for inevitably workers are going to be expected to “fit into” the productive apparatus whatever it is.

Finally, (4) presents the nub of the issue before us: will this transition be organized on a capitalist basis or will the double crisis opened up on the levels of energy production and general social reproduction mark the beginning of another mode of production? Obama’s energy policy is premised on the first alternative. There are, however, many reasons calling for the negation of this premise that leads to “everything remaining the same.” Consequently, we should be investigating with all our energy and ardor the other alternative. Join us.

Previously Presented at the Geopolitics of Oil Colloquium, Rutgers University, March 4, 2009.

From The Geopolitics of Petroleum ACAS Blog Series

Apr 28, 2009

by Khadija Sharife

South Africa: Political Liberation, Economic Capitulation

Its that time of year again: shiny posters pasted to lampposts (beckoning people toward the light?); politicians pole dancing for votes, faces (and hands) scrubbed clean of deception; the largely uninformed and inactive flesh-and-blood electorate prying open ‘magic-voting-button’ boxes to retrieve dusty, moth bitten cloaks of idealism, stapled with old newspaper cuttings and dented dreams (its a little banged up, but now is your time!).

But the duct tape is coming loose; the dream, unraveling – and this, far from the madding crowd – those swept up in the heady sensationalised narrative of the Mbeki-Zuma drama, fatally reducing the inherited and endorsed economic legacy of apartheid (and often contradictory internal dynamics) to a leadership clash between two pack leaders vying for the alpha or first male’s throne (seated atop the same system, so does it really make a difference?).

Yet, if the alpha male is prepared to banish or eliminate any serious contender, it would more correct to say that Mbeki – who refused to directly challenge the decision to oust him, did not fit the profile, attempting instead to protect the ANC-led government from Zuma’s alleged threats of disclosure: that the deliberately bankrupted ANC-national-movement turned political-party’ allegedly accepted payments from the rigged arms deal as a collective, in order to finance the reality of a political liberation, as well as the 1999 elections. That same year saw the government breaking under the weight of apartheid-era debts that had ballooned to more than R376 billion, despite having auctioned dozens of state-owned firms to service part of the debt.

This debt, along with corporate blanket amnesty, symbolises the economic capitulation that facilitated our political liberation. Of course, it all goes back to the secret preconditions (or ‘historic compromises’ in Mbeki’s own words) that defined the nature and limitations of our emancipation, and the role of our government whose economic policies were described by the UNDP described as ‘no different’ from that of apartheid….

In 1988, Sanlam’s Fred Du Plessis, one of Botha’s top corporate economic advisors, advocated for economic reform to stave off the revolution via the creation of a divisive political buffer: a black middle class. This was an underlying objective taken one step further via Black Economic Empowerment (BEE) move to carve out a small owning elite. ‘I will speak only to the question of the challenge of the formation of a black capitalist class,’ said Mbeki. ‘This is and must be an important part of the deracialisation of the ownership of productive property in our country.’

This type of selective deracialisation feeds into the broader system of the global apartheid, deliberately suppressing the socio-economic reality of the ‘free market’ through a small manufactured and preserved class of kneepad-people – a token economic tribe conveniently used to batter calls for development, useful too for absorbing and reducing the impact of shocks each time the body takes a hit. (Initiatives such as NEPAD are there for instruction after all).

But apartheid was reduced to a state of pigmentocracy, and the illusion of liberation depends on the perceived legitimacy of black authoritative power – preferably political, preferably limited.

This may be because the same corporate heavyweights that were instrumental in defining the contours of apartheids such as Anglo-American’s Harry Oppenheimer were the first in line to alter and adjust the ANC’s Reconstruction and Development Programme (RDP); Oppenheimer’s Brenthurst Group fingered Trevor Manuel for the OK as finance minister in March 1996. In late 1995, plans were made to dump the latter in favor of the Growth, Employment and Redistribution (GEAR) programme, formulated by a team of economists who worked under the watchful eye of the World Bank and IMF. GEAR was characterised by its similarity to the Washington Consensus, ranging from trade liberalisation to financial deregulation, mass privatisation, reprioritizing state expenditure related to education, water and waste sanitation, electrification and other crucial areas. Despite the fact that South Africa lost over R70 billion in tax cuts during the first decade, the burden of corporate tax has been shifted to bracket the middle and low-income groups.

The new liberation government also agreed to follow in the footsteps of the apartheid regime by ratifying the GATT-sledgehammer (later WTO) and accepting the IMF’s Christmas gift (December 1993) – an $850 million loan, preconditioned by the prevailing structural adjustment orthodoxy.
GEAR was unveiled in mid-June 1996; at the launch Mbeki would whisper ‘just call me a Thatcherite’ directly into the ear of the market. Mandela stated, ‘I confess that even the ANC learned of GEAR far too late, when it was already complete.’ Madiba magic was a crucial factor in legitimising these policies to the nation; he would later describe the feeling of retirement as similar to that of leaving prison a second time.

The walls of these negotiated prisons were constructed as early as 1985, when the stock market crashed and the South African government imposed a standstill on $13 of the $23.5 billion in outstanding foreign debt. The South African economy had been on the decline since the 1970s.

Though foreign banking corporations did their utmost to sustain (and resuscitate) the economy (e.g. in 1985, 260 banks rescheduled outstanding loans on easy terms, in addition to the 400% increase in loans, and would continue doing so as late as 1990) the Rand Lords were getting jittery. Foreign corporations did not support the apartheid regime because they were racist. Their reasoning – business as usual – has been successfully applied to regimes from Burma, Angola, Sudan and Nigeria.
Mbeki – an economist trained in Thatcher’s own land – may or may not have believed in the religion of neoliberal market fundamentalism (read: protectionism for ‘first worlds’ combined with the structural exploitation of ‘third worlds’), but he seized the opportunity to directly negotiate with the kings of capital – much to Botha’s dismay. The only foreign power willing to extend a lifeline to the national movement – the Soviet Union, agreed to withhold arms and financial support ‘to foment a revolution in South Africa’ according to the terms of the 1986 Reykjavik Summit negotiated by Gorbachev and Reagan. The former, it may be said, supported the ANC as a means of legitimising their Soviet expansionist brand in third world countries, while the latter, the architect of ‘constructive engagement’, was a pillar bolstering the apartheid regime’s power.

Perhaps Mbeki caught wind of the Soviet Union’s adultery prior to the September 1985 meeting – (often called corporate safaris) hosted by Zambian President Kenneth Kaunda at the Mfuwe Game Lodge, attended by then-Anglo American Chairman Gavin Relly as well as several business magazines. The home of Anglo’s Zambian manager would serve as the neutral base for further meetings between Mbeki and the corporations. Anglo’s support was vital to the success of this approach; during the late 1980s the company employed more than 250 000 miners and was renowned as a central pillar of apartheid. By 1994, Anglo was one of five companies controlling more than 85% of the JSE. Prime Minister Verwoerd described Anglo’s power by saying, ‘With all that monetary power, and with his powerful machine which is spread all over the country, he can – if he so chooses, exercise an enormous influence against the government and the state.’

Oliver Tambo, the rudder of the ANC, backed Mbeki’s approach and would testify in 1986 on behalf of the ANC, before the Foreign Affairs Committee in London that they did not intend to destroy the economic system, but merely to reform it. . Tambo’s stroke would see Mbeki rise within the movement as the new controlling agent.

His support was crucial to the legitimacy of Mbeki’s stance (a pact with the devil Sir, but one that won our political freedom at great cost). The reductionism of the ANC from a national movement (still experienced via the ANC culture so intimately intertwined with our fabric of our society), to an almost unilaterally designed pro-trickle down political party in the early 1990s is not a situation many of us ANC supporters understood in time.

Sadly, South Africa’s socio-economic condition is not unique, and remains one more local snapshot of the global economy….

The bizarre concept of measuring economic ‘growth’ – delinked from development, through specialised tools such as GDP – the scorecard for overall economic activity marginalizes the most pressing and crucial needs of ‘third world’ economies – development.

Though Mbeki recognised that the ‘automatic so-called trickle down effect’ was a myth, he proceeded to devise a structural disconnect between cause and effect stating, ‘The task we face is to …implement a strategy to intervene in the ‘third world economy’ and not assume that the interventions we make with regard to the ‘first world economy’ are necessarily relevant to the former.’

But neither economy exists in isolation: rather, government intervention related to the ‘first world economy directly undermines the rights-based system negating the concept of an active democracy, save for the corporate electorate.

Despite obsolete specialised tools such as GDP informing us of a growing economy, the reality of the trickle-down system appears to have been designed (forgive my rudeness) for urinals only (drip drip drip) from a sickly body with a cosmetically enhanced face. GDP is extremely useful for its specific purpose – quantitative economic weight. But it does not inform us to where, when and how wealth is being made and distributed, the quality of such wealth, externalized factors and the long and short term repercussions.

One solution swirling around the dysfunctional brown pile in my head is that the role of government must be redefined, moving away from the false premise of government as ‘owners’ of natural resources, toward government as the managers via democratised public-asset portfolios (as opposed to privatised or nationalized portfolios).

The free market, dissociated from its source – the ecology, operates in a fantasy-land; corporations plunder finite resources, and exhausting potentially sustainable resources. The health of the ecology is entirely divorced from the health of the ‘economy’ – despite the latter being a ‘reality’ that is totally dependent on the former.

This could change if the value of natural ‘capital’ was recognised as a primary source of wealth, and integrated with traditional forms of capital (financial, produced, intangible). However, if we do not simultaneously recognise the legal innate rights of the ecology to health and restorative justice, the consequence of integrating natural capital will result in commoditizing natural resources, and marginalising the value of intact ecosystem services – discarded as of no real economic worth (e.g. the intact value of a hectare of mangrove in Thailand is $1000, in contrast to the $200 when converted into aquaculture or cash crops).

It has been well documented that the revenues derived from corporate exploitation of finite resources, constitute a pittance of real wealth when compared to the costs of pollution, the loss of ecosystem services and sustainable exploitation. Growth must thus be contextualized – secondary to development – and the concept of wealth redefined.

The only other option available to us is the golden stream of ‘number one’ grazing our bald spots, with politicians telling is to thank god that ‘number two’ – best symbolised by flying plastic toilets in other parts of Africa, is not our fate.

Polls reveal that the Zuma-led ANC has won elections by close to two-thirds majority of an estimated 15 million voters. The Democratic Alliance – the official ‘opposition’ – raked in 16% of the vote while the new-born Congress of the People (COPE) held 7.5%. DA leader Helen Zille spent the final days jetting around the country waging an almost hysterical ‘Stop Zuma’ campaign, alleging that Zuma is a ‘one-man constitution-wrecking machine’.

Yet at the end of the day, it makes little difference which captain steers the ANC vehicle if the policies of the now global economic apartheid regime constitute the bricks (spray painted in all the beautiful colors of the rainbow nation)

It is the system that needs to be interrogated by the media, not the personality.

Apr 07, 2009

by Khadija Sharife

The nuclear chain of command: South Africa and the Bomb

In his essay, ‘You and the Atom Bomb’, a direct reference to the nuclear arms of the ‘Cold War’ – the conflict between the Soviet Union and the Western powers, George Orwell writes,’ Unable to conquer one another, they are likely to continue ruling the world between them.’

What role did apartheid South Africa play in this ideological end-game?

South Africa’s uranium deposits, described in a report authored by geologist RA Cooper in 1923, and later researchers employed by the US’s Manhattan Project, revealed that the Witwatersrand gold mines possessed, at that time, possibly the largest low grade deposits in the world. Uranium was mined by SA for the US and UK, raking in a revenue of R1 billion from 1952-1960, at least one component underpinning the support of the US in the context of the Cold War.

Uranium – a highly strategic resource, effectively prevented three-fifths of the Security Council (France, US and UK) from instituting a mandatory oil embargo on the apartheid regime, a move that would have crushed the energy and oil-starved government. Though it was claimed that enrichment was for energy purposes only, by 1989, there were six weapons of mass destruction, containing 55 kgs of 90% enriched uranium – weapon’s grade, with a seventh on the way. The apartheid regime’s nuclear programme, designed to blow enemies – including the recently emancipated, ‘unfriendly’ regimes of Angola and Mozambique, off the face of the earth.

The crash of the Berlin Wall – stripping the apartheid government of the primary pretext sustaining apartheid – and implicit US support, would see Prime Minister de Klerk dismantling the regime’s nuclear programme, employing Dr Wynand Mouton, then-rector of the University of the Free State and retired nuclear physicist, to destroy the body of evidence related to the nuclear programme.

No amnesty was required for the estimated 1000 specialists involved in the industry.

The Nuclear 1000

Come freedom in 1994, Trevor Manuel, head of the ANC’s Economic Department would vow never again to ‘issues as critical as the nuclear programme…confined to experts in dark, smoke filled rooms.’ Never again, he promised, would the militarised culture of secrecy informing both the apartheid regime and the global nuclear industry be subject to closed door negotiations. Yet the mandate of the Truth and Reconciliation Committee never included the ‘nuclear 1000’, nor were they asked to seek amnesty.

According to Dr David Fig, author of Uranium Road, just a few months shy of Manuel’s never again statement, a group composed of the apartheid-era’s nuclear scientists, formed a company called IST, proposing a design now known as the Pebble Bed Modular Reactor (PBMR), capable of generating 165 MW per unit. Though pebble bed technology has already failed in Germany (the patent holders), and is not on the agenda of ‘developed’ countries, the South African government has heavily invested public funds. The technology was aggressively backed by high level persons such as former Minister of Public Enterprises Alec Erwin.

The initial budget estimated at R365 million, has now increased to an incredible R20 billion allocated to the project. ‘This cost is only for erecting the pilot (demonstration) plant and does include operating, commercialising or decommissioning it. Cost overruns are normal for the nuclear industry; the true cost is often the multiple value of the original,’ said Fig.

Already, R2 billion has been spent on research and development with no transparent accounting of how public money was spent, nor any set date for the completion of the pilot plant, though experts have put a date ranging from 2011 – 2016. National energy provider Eskom has signed a letter of intent agreeing to purchase 24 units, therefore making production viable.

Energy too cheap to meter?

Jaco Kriek, CEO of the PBMR Company, when asked by Carte Blanche as to whether purchasers had signed the dotted line, he responded, ‘No, we haven’t signed, purely because we cannot actually get into discussions with too many customers. So the two customers we are looking at the moment are Eskom and the US department of energy.’

However, Eskom’s various preconditions render such a possibility as unlikely.

‘If Eskom’s wants to wriggle out of it, they can. The letter of understanding is not binding, but is instead hedged by many preconditions including one which states that the reactors must be the cheapest technology at the time. The nuclear industry will not be supplying much energy – maybe 5% or double that, and it seems that pebble beds have been downgraded as they are running into credit problems, amongst others,’ said Fig.

Presently, two nuclear reactors at Koeberg (Dutch for ‘Cow Mountain’) opened for business in 1984-1985 provides some 38% of energy in the Western Cape and 5% of national energy; each unit produces 900 MW (1MW is 1 million kilowatts kW). Both reactors are midlife and will have to be decommissioned within the next two decades. The PBMR Company lists Westinghouse, a US nuclear energy corporation (and an Obama backer – coinciding with Obama’s recent push toward nuclear), the Industrial Development Corporation (IDC), Eskom and the SA government as backer and shareholders. Westinghouse holds 15% of the shares only.

A spokesperson for the PBMR Company stated to The Times, ‘(It) gives us the capacity to go from a Third World to First World country, in that we are leading the way in nuclear technology.’

Since Chernobyl, developed countries in such as Germany and the Netherlands have scrapped nuclear reactor development; no developed country entertains the pebble bed model.

Koeberg’s reactors – relying on highly specialised personnel, has experienced several ‘accidents’ including misplaced bolts that had to be purchased from France with a lull of several months while the businesses, households and industry in the Western Cape experienced prolonged blackouts.

‘Aside from the fact that no solution has been found concerning radioactive waste which lasts for hundreds of thousands of years, in South Africa, we simply lack the skill to maintain the technology, let alone handle the situation if anything goes wrong.’

The technology renders us dependent on foreign corporations and skills, with mass pollution and little in the way of ‘cheap’ energy, job creation, and decentralization. In 2007, the Department of Minerals and Energy’s nuclear policy document advocated the creation of a specialised nuclear police force, similar to that of the apartheid-era’s culture of secrecy.

The DME has largely marginalised stakeholder participation and the concerns of civil society, workers and communities, regarding radioactivity, cost, potential risks and the closed door negotiations taking place at cabinet level only. Cumulatively, there 53 highly contaminated radioactive sites in SA.

The push toward nuclear energy has been rationalized by alleged lack of carbon emissions, – South Africa maintains a higher per capita emissions rate than the US, and recent energy shortages causing rolling blackouts nation-wide, at a time when SA continued selling energy to foreign corporations.

But though nuclear power stations do not emit carbon, the carbon intensive process including milling, mining, reprocessing, construction, and disposal of lethal carcinogenic radioactive waste generated from the core of the reactor including plutonium, with extensive half-lives, many of them over 100 000 years.

According to environmental consultant Muna Lakhani, ‘For the externalities relating to the PBMR, one must add fuel enrichment (an energy-intensive process), emissions–not only daily nuclear radiation, but also daily emissions such as strontium and cesium.

‘Decommissioning must also be accounted for (often more than the original cost-the UK decommissioning bill has rocketed to $116bn) and the very real problem of how to contain radiation for hundreds of thousands of years–no safe solution has been found.’

In 2004, British nuclear expert Professor Steve Thomas, one of 15 nuclear specialists retained by the government to author a 2002 report on the feasibility of PBMR’s stated that the government should immediately pull out as the design had never been built successfully, is ten times the original, ten years behind schedule, with little in the way of electrification.

Dark, smoke filled rooms

According to Fig, ‘The head of the National Nuclear Regulator is a revolving door guy – he previously worked for the PBMR Company; he has yet to come out with a strong public statement about the incident. The NNR is terribly weak and under budgeted.’

In light of this, is nuclear energy democratic, subject to public influence or confined to the dark rooms Manuel spoke of?

‘The drafting of both the Nuclear Energy Act and National Nuclear Regulation Act was formulated by officials in the DME, who primarily consulted only cabinet and the Chamber of Mines.

Has the government endorsed the inherited nuclear legacy?

‘Globally, the industry operates in a culture of secrecy. The PBMR’s will use 10% or less enriched uranium, not weapons-grade. But we are now moving back to the way in which issues like nuclear were handled in the apartheid. It is anti-democratic.

”Were (the atomic bomb) cheap to manufacture…like a bicycle, it might, on the other hand, have meant the end of national sovereignty and of the highly-centralised police state,’ said Orwell.’

The Party Line

Where do various parties stand on PBMR technology?

Democratic Alliance: The DA would not disqualify any energy generating source from long-term integrated energy planning. Having said that we have grown increasingly sceptical of a new nuclear build in South Africa and do not believe it is desirable for the foreseeable future. Our primary focus is on improving energy efficiency and promoting a massive uptake of renewable energy.The DA does not support further state support for the PBMR – PBMR Pty Ltd must find private investors to cover any further investment.

Independent Democrats: The ID is opposed to Eskom’s current proposal to expand the use of nuclear energy in South Africa. We believe that nuclear energy is not an appropriate choice for South Africa for a number of reasons. Firstly it is too expensive and will end up increasing South Africa’s foreign debt and its balance of payments deficit.

The major beneficiaries will be foreign companies like Areva or Westinghouse and very few local jobs will be created as a result. In terms of the PBMR, the ID has been the only party that has consistently been objecting to the billions of rands that have continued to pour into this highly suspect project.

The ID firmly believes that this money could have been more effectively utilized in building a Concentrated Solar Power plant which would have already been up and running now as opposed to the PBMR which is constantly being delayed and subjected to redesigns.

Inkatha Freedom Party: The development of the PBMR has lacked transparency, been handled with incompetence and huge waste of money way beyond expected or budgeted costs. While the IFP has accepted the possibility of nuclear energy as an alternative to polluting coal fired power, we are concerned at the absence of safe methods for disposing of nuclear waste from the PBMR.

Prognostic costing has revealed that the cost of developing nuclear power coal power and concentrate solar thermal power stations, on megawatt parity, will be much the same by the year 2015. Therefore the IFP strongly supports investment in CSTP since our county has one of the ideal climates for such technology and with a reasonable REFIT (renewable energy feed in tariff) could be one of the foremost developers of the technology in the future.

A version of this article appeared in Muslim Views (April).

Mar 25, 2009

by Sabella Ogbobode Abidde