James Petras

Introduction

President Obama’s greatest foreign policy successes are found in the reports of the mass media. His greatest failures go unreported, but are of great consequence. A survey of the major foreign policy priorities of the White House reveals a continuous series of major setbacks, which call into question the principal objectives and methods pursued by the Obama regime.

These are in order of importance:

1. Washington’s attempt to push for a joint economic stimulus program among the 20 biggest economies at the G-20 meeting in April 2009;
2. Calls for a major military commitment from NATO to increase the number of combat troops in conflict zones in Afghanistan and Pakistan to complement the additional 21,000 US troop buildup (Financial Times April 12, 2009 p.7);
3. Plans to forge closer political and diplomatic relations among the countries of the Americas based on the pursuit of a common agenda, including the continued exclusion of Cuba and isolation of Venezuela, Bolivia and Ecuador (La Jornada (Mex. D.F.) April 20, 2009);
4. Weakening, isolating and pressuring Iran through a mixture of diplomatic gestures and tightening economic sanctions to surrender its nuclear energy program (Financial Times, April 16/17, 2009 p. 7);
5. The application of pressure on North Korea to suspend its satellite and missile testing program in addition to dismantling its nuclear weapons program. (Financial Times, April 13, 2009 p.4);
6. Securing an agreement between Israel and the Palestinian Authority for a ‘two state solution’, in which Israel agrees to end and dismantle its illegal settlements in exchange for recognition of Israel as a ‘Jewish State’ (Financial Times, April 13, 2009, p.5);
7. Pressuring the government of Pakistan to increase its military role in attacking the autonomous Northwest provinces and territories along the Pakistan-Afghan border in support of the US war against Islamic resistance movements, especially among the Pashtun people (over 40 million strong), in both Afghanistan and Pakistan (FT April 23, 2009 p.3); and
8. Securing a stable pro-US regime in Iraq capable of remaining in power after a withdrawal of the majority of US occupation troops (FT April 8, 2009).

What is striking about Obama’s objectives is the continuities with the previous administration of GW Bush, even as the mass media proclaims ‘significant changes’. (American Conservative April 14, 2009)

Policy Continuities: Failures of Stimulus Proposals at the April 2009 G20 Summit

Like his predecessor Bush, Obama’s first economic priority is to pour trillions of borrowed dollars into the financial system as opposed to directing state resources toward reviving popular demand, reconstructing the manufacturing sector, creating a universal health system and directly employing the 5 million workers unemployed in the last year. Obama’s economic regime is totally dominated by Wall Street bankers and completely devoid of any representatives from labor, manufacturing and the health sector (FT April 2, 2009 p11). In essence, Obama has reinforced and deepened the ‘finance-centered’ model of capitalist development, which demands that the G20 countries follow financial stimulus plans – ignoring job creation through the financing of public investments focused on manufacturing. For Obama, ‘economic stimulus’ means reconstructing the power of finance capital, even if it means running hung budget deficits, which undermine other public investments. The ‘theory’ justifying the finance-centered focus is based on the belief that the US world empire is built on the recovery of the supremacy of finance capital – to which the industrial powers should submit (FT April 15, 2009, p.9). The conflicts at the G20 summit and the ultimate failure of Obama to secure support for his so-called ‘stimulus’ proposal was that he was promoting a financial centered ‘stimulus’ while the rest of the economic powers – with the exception of the UK – were concerned with ‘stimulating’ manufacturing, employment and commodity exports (FT April 2, 2009 p.4). The pressures of labor and manufacturers in Europe – especially in Germany and France – have far more weight in shaping economic policy than in the United States (FT March 26, 2009 p. 1).

The incompatibility of the finance-dominated regime of Obama and European, Asian and Latin American regimes reflect the latter’s more economically diversified ruling class, has led to the White House failure to secure a ‘coordinated’ stimulus policy.

Summit of the Americas: Isolation and Divergences

Conflicts of interest prevented Washington from securing any favorable economic agreements at the ‘Summit of the Americas’ Conference in April. The breakdown of the US finance-centered empire and its negative impact on all of the countries of the Americas undermined Obama’s efforts for reassert US hegemonic leadership (see Economic Commission for Latin America – Report to Summit April 17-19, 2009). The White House already knew the futility of any effort to revive a regional free trade agreement. Worse still, Washington’s argument for the advantages of ‘globalization’ were seriously undermined by Obama’s promotion of ‘financial protectionism’ in which US subsidiary banks in Latin America were directed to channel their financial resources back to the home office, drying up financing and credit for Latin American exporters. In other words, under the stress of the economic depression, ‘globalization’ led to the reverse flow of financial resources out of Latin America, prejudicing US influence and leverage while increasing regional ties and economic nationalism among the Latin American countries.

The result was that the Obama regime’s financial-centered empire had nothing to offer and everything to lose in any deep diagnosis of the impact of the recession/depression. The While House had nothing to offer in the way of expanding markets, capital flows or in stimulating productive investments to create employment. In these dire circumstances, the Obama regime preferred vacuous platitudes and systematic evasions of the most pressing economic issues in order to create the illusion of ‘good feeling’ among the participants (La Jornada April 20 2009). Rather than ‘project power’ in the hemisphere, Washington was reduced to reiterating bankrupt policies justifying the Cuban embargo in splendid isolation (La Jornada April 17, 2009).

The decline of US power based on its crisis-ridden finance centered empire is evident in its inability to sustain its traditional client rulers or to destabilize adversarial presidents. Even as the Summit was transpiring, in Bolivia a group of armed mercenaries, contracted by US backed economic elites in the separatist province of Santa Cruz to overthrow the Morales regime, were captured or killed by the Bolivian military (La Jornada April 20 2009). After three years of US financing and deep involvement with regional elites engaged in political and economic warfare against Evo Morales, and after suffering several electoral defeats, Washington and its regional allies could only muster a tawdry hotel shoot-out between Eastern European contract hit-men and the Bolivian army, ending in ignominious defeat.

The political weakness of the Obama regime is even more evident in the major electoral defeats it has suffered in Ecuador, where President Correa was re-elected with over 52% of the vote – a 22% margin over the nearest pro-Washington candidate, Lucio Gutierrez (La Jornada April 27, 2009). In Nicaragua, Bolivia, Venezuela, El Salvador and Honduras, the electorate voted decisively for left and center-left candidates, defeating right-wing US-supported candidates. The only exception was Panama where a right-wing millionaire was elected in May 2009. Though few of the center-left regimes pursue economic-nationalist policies, they do exercise a degree of independence in their foreign and domestic policies, especially with regard to relations with Venezuela and Cuba, trade, investment, state intervention and opposition to the dictates of the IMF.

Moreover the financial collapse in the US and the accompanying economic depression has led to a major crisis and conflict between North and South American with profound long-term consequences. The implosion of cross-border lending resulting in US (and European) banks returning capital to their domestic markets is depressing regional and world finance for the foreseeable future (Financial Times April 30, 2009 p. 7). Wall Streets’ financial crash has dealt a strategic blow to financial ‘globalization’ (imperialism). Between April-December 2008 US financial institutions ‘repatriated’ $750 billion dollars from their overseas subsidiaries. Foreign holdings of US banks are shrinking as a share of their total balance sheets – especially hitting Latin American regimes dependent on US capital flows. US investors in Latin America, unable to secure credit, have curtailed their overseas activity. The process of ‘de-capitalization’ of Latin America has accelerated with US and European ‘state-intervention’ of banks, which has led to ‘financial protectionism’ where the ‘state’ banks push for domestic lending at the expense of foreign operations (Financial Times April 30, 2009 p7). This especially harms countries like Brazil, Mexico and Argentina, where repatriating US (and Spanish) financial institutions own a significant percentage of the domestic banks. The withdrawal of capital to the imperial states, financial protectionism and the decline of US official financing means that Obama’s ‘recovery plan’ is based on the de-capitalization of Latin America and the drying up of credit for exporter/importers, exacerbating the recession. The policy implications are readily visible: Obama has few economic assets to pressure Latin America and many liabilities to address. Given the low priority assigned to Latin Americca in the current crisis, Washington must rely on local elites, which have been weakened economically by Wall Street and the IMF’s declining presence and are now more dependent on state intervention to confront the drop in export market demand. Obama’s economic priorities and financial protectionist policies go directly against any ‘harmonization of interest’ and strengthen nationalist, regionalist and statist political and economic policies and governments in Latin America. The ‘historic movements’ in opposite directions between the US and Latin America are exacerbated by Obama’s commitment to military-centered empire building. While Latin America’s civilian regimes are desperately looking for new markets, credits and investments to buttress their declining capitalist system and forestall domestic social challenges from below, Obama projects the US empire through militarism. Obama’s failed policies in Latin America are the result of structural relations dependent on financial markets (and their breakdown) and global militarism. Over time the diverging composition of regimes and socio-economic policies will become more acute as the recession deepens into a major depression in Latin America. One consequence of this divergence can be seen in the increasing trade between Latin America and the Arab countries, which has tripled since 2005 (Al Jazeera March 31, 2009).

The most striking indicator of the United States’ declining economic presence and political influence in Latin America is found in the trade figures of Brazil, Latin America’s biggest and most industrialized country. In April 2009, total trade between Brazil amounted to $3.2 billion dollars, while its trade with the US was $2.8 billion (Telegraph (UK) May 10, 2009). This was the second straight month that China surpassed the US as Brazil’s biggest trading partner, ending 80 years of US primacy. Just as the US pours hundreds of billions of dollars into military-driven empire building, China has steadily pursued its overseas economic empire via billion dollar trade and joint investment agreements with Brazil in oil, gas, iron ore, soya and cellulose. China has already displaced the US as Chile’s primary trading partner, and is increasing its share of trade with Venezuela, Bolivia, Ecuador and Argentina – and even with staunchly US clients, like Colombia, Peru and Mexico.

As regional wars and economic depression cause the US to retreat from Latin America, the region’s ruling classes look to Asia, especially China, to meet their trade and investment requirements.

Sooner rather than later, issues of superior economic production and growth trump pure military power in shaping the hierarchy of nations in the world economy. This process of an upwardly mobile economic power displacing a crisis-ridden world military power as the chief interlocutor is now being played out in Latin America. While the transition may have begun well over a decade before his administration, the policies of President Obama are accelerating the shift in Latin America away from US dominance.

NATO Conference: Obama’s Military Escalation in Search of Allies

On April 4, 2009 Obama attended the NATO Conference in Strasbourg in order to push for allied support for expanding the war in South Asia. South Asia, and especially the Afghan-Pakistani (Af-Pak) border regions, has become the centerpiece of Obama’s foreign policy. This is the area where the US is most vulnerable to strategic military and political losses and where he has had the most difficulty winning material and man-power support from the NATO allies. From the first day in office, Obama has emphasized the ‘strategic’ importance of winning the war in Afghanistan, reversing the advances of the Taliban and other resistance fighters and establishing a stable pro-Washington client regime in Kabul. To that end, Obama has announced a massive escalation of combat troop deployment (over 21,000) to Afghanistan, an additional $80 billion dollars in funding to the already $750 billion dollars allocated for the Pentagon, and has pursued an aggressive epolicy of pressuring European and Asian allies for substantial addition of combat troops and financial aid. At the April NATO conference, Obama’s proposals were bluntly rejected (Financial Times April 2, 2009 p7). The principle allies agreed to send 5,000 additional troops in temporary and non-combat roles, including 3,000 to ‘monitor’ elections in August 2009 and then to withdraw; two thousand to act as trainers and ‘advisers’ in non-conflict-ridden surroundings (Financial Times April 8, 2009 p.2). What Obama fails to recognize is that the NATO countries do not consider Afghanistan an area of strategic importance to European security. They do not see the forces engaged as a threat to their safety; they do not see the prospect for a quick, low-cost victory. They do not relish following Obama’s proposed to extend the war into Pakistan – thus multiplying resistance to his plans. They do not want to alienate the vast majority of their own population and destabilize their own power.

European and most Asian allies are not willing to pour scarce resources and military personnel into a losing war, in a non-strategic region at a time of deepening economic recession. Obama on the other hand, following Bush and various other predecessors, and embedded in military-driven empire building, talks diplomacy while vigorously pursuing wars of conquest. His attempts to elevate the local conflict into a threat to world security based on the presence of a tiny number of Al Queda fighters in the mountains of the Hindu Kush, is hardly convincing. Obama’s failure to recognize that the Taliban and other groups have access to vast contiguous and porous borders with ethnic, clan and religious allies capable of sustaining prolonged guerrilla warfare, leads him to extend the frontiers of warfare and escalate the number of US troops. The expansion of the war in turn multiplies enemies and armed recruits. In Pakistan, this creates a wider swath of armed political opposition, which undermines Obama’s client in Islamabad (Financial Times May 6, 2009 p.1; see also Gareth Porter, “Errant Drone Attacks Spur Militants in Pakistan IPS April 16, 2009). Under strong pressure from the White House, Pakistan launched a major military campaign in the Swat region causing the mass flight of 2 million refugees and failing to defeat the Taliban.

Pouring billions of dollars into a prolonged colonial war with little possible economic gain at a time when GDP is declining by 6% and exports by 30% demonstrates the continued centrality of military-driven empire building and Obama’s role as ‘willing executioner’ (BBC News April 2, 2009).

The divergence between Europe/NATO and the US/Obama is structurally rooted in their conflicting visions of world power: The former emphasize financing their economies to recover and expand exports versus the latter, which operates under the delusion that prolonged colonial wars in remote regions of the world are essential for the ‘stability’ of world capitalism. Obama’s failure to secure NATO support for the Af/Pak expansion underlines his complete political and military isolation in one of the primary areas of his administration’s policy goals. This means that the US will shoulder the entire cost of a war in Afghanistan, which has spilled over into Pakistan, and bear worldwide condemnation as thousands of civilian casualties mount and millions of refugees flee the air and ground wars (BBC News May 7, 2009).

Iran: The Zionist Presence and Lost Opportunities

Obama’s stated policy approach to Iran was to ‘turn a new page’, open negotiations without prior conditions in order to secure an agreement to end Iran’s alleged nuclear weapons program, and its alleged support for ‘terrorist’ organizations, namely Hamas and Hezbollah. In addition, Obama hopes to secure co-operation in the US war in Afghanistan as well as propping up the Maliki client regime in Iraq (Financial Times March 6, 2009 p. 5).

From the very start, Obama’s policy got off on the wrong foot. He appointed two of the most pro-Israel and virulent enemies of Iran to key posts in Treasury and the State Department. Stuart Levey was reappointed as Under Secretary for Terrorism and Financial Intelligence in the Treasury Department and Dennis Ross (often called ‘Israel’s Lawyer’) has been appointed the State Department’s point-man on Iran. Stuart Levey has led a world-wide crusade of intimidation and coercion against any business, bank or oil company that has any economic dealings with Iran. Ross, who left an Israeli government-funded think tank to take up his new position in the Obama Administration, endorsed a document in late 2008 supporting the ‘military option’ against Iran. Ross and Levey are hardly likely to ‘open a new page’ in US Iranian relations. More to the point, they fit in with a bellicose policy advocating greater confrontation and increasing the likelihood of a new US-Middle East war.

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