Showing posts sorted by relevance for query petrodollar. Sort by date Show all posts
Showing posts sorted by relevance for query petrodollar. Sort by date Show all posts

Friday 28 June 2019

Petrodollar Warfare: Understanding the US Obsession with Iran

First invasion of Iraq 1991

When the USA was planning its first invasion of Iraq, a young Kuwaiti nurse testified before Congress  describing Iraqi soldiers pulling infants out of their incubators and tossing them on the floor.  The "nurse" turned out to be a princess of the Kuwaiti royal family, and her testimony pure fiction. However, her story created the needed public support for the invasion.

Second invasion of Iraq 2003

As the USA was preparing its second invasion of Iraq, Colin Powell was tasked with presenting "irrefutable" evidence that Saddam Hussein was producing weapons of mass destruction.  Powell's presentation together with the totally fatuous belief, held by some Americans, that Hussein was responsible for 9/11 were sufficient to once again garner support for a war against Iraq.  As is well known at this point, the proclaimed purpose of the war was baseless--no WMDs or facilities were found.

USA preparing for war in Iran

As the USA once again prepares to go to war in the Middle East, this time against Iran, perhaps it's time to ask why.  What is the "real" reason the USA is about to invade Iran?  The answer is for the same reason the USA invaded Iraq:  petrodollars.  There are hundreds of sites on the internet which will give you a more detailed, sophisticated description and expert explanation of petrodollars than I will give you here.  As usual, I am shocked by my own ignorance.  However . . .

Petrodollars are basically another name for American dollars, but to understand the significance of this simple fact we need a primer on how money works.  Imagine you are looking at a house and the price is one million USD.  We always think in terms of what the house or the product or the service is worth in terms of money, but we rarely ask "What is $1,000,000 worth?"

Prior to the 1970s it was easy to say what one American dollar was worth, because the USA promised to maintain a stockpile of gold and every American dollar was backed up by that gold.  However in the early 70s the USA was no longer able to maintain a sufficient amount of gold to back up the amount of money they were spending on the Vietnam War.  Richard Nixon announced that the US dollar was no longer on the gold standard.

How the "gold standard" became the "petrodollar"

Keep in mind that money, the US dollar, for example, is physically just paper or pixels--pretty worthless.   The challenge for the USA was:  How do you make your money worth something when you don't have the gold or resources or anything else to back up the trillions and trillions of dollars you want to create and spend?   The answer is that the USA made a deal with the Royal Family of Saudi Arabia--the largest oil producing country in the world.  "We will buy your oil and provide you with military protection against any and all your enemies.  In return, you agree to only sell your oil for American dollars."  Eventually, all the OPEC countries signed on to the same deal.  Over time, virtually all oil transactions world-wide would come to be conducted using American dollars.

Why is an American dollar worth something even in China or Japan or Sweden or Australia?  Because you are going to need American dollars if you want to buy oil, and every industrialized country in the world needs oil (so far).  Oil remains the most valuable resource on the planet. From an American perspective this means you can print paper money and produce pixel dollars, endlessly running up deficits and debts, but you don't have to worry about your money losing its value because virtually every country in the world has a vested interest in maintaining the value of the US dollar because they have some and they need them to buy oil.

As William Clark puts it in Petrodollar Warfare, "No longer backed by gold, the dollar became backed by black gold."  The irony is, of course, that the American dollar isn't backed by American oil; it's backed by oil from other countries.  What happens if some countries and some oil producers decide that they want to start buying and selling oil in a currency other than American dollars?

Military defense of oil, the USD and the petrodollar seems inevitable

The USA is the largest debtor nation in the world.  The USA spends more on its defense and runs larger deficits than any other country in the world.  The economy of the USA (including the strength of its military) depends on oil, the US dollar, and the connection between these two.  If you are still wondering why the USA invaded Iraq in 2003, as Williams points out: "On September 24, 2000, Saddam Hussein emerged from a meeting of his government and proclaimed that Iraq would soon transition its oil export transactions to the euro currency."

Iran has also announced its intention to sell oil for Euros and other currencies--as has Venezuela.

Monday 24 February 2020

Do the Money Men Really Run the World?

Can't have a war without money

In Johnson's Life of London: The People Who Made the City that Made the World, Boris Johnson writes that NM Rothchild's "role in financing governments was so crucial that it was said that a war could not be begun without the consent of the Rothschilds."  It is an obvious fact of our time that the world runs on money.  No war can be declared, no university inaugurated, no church established, no hospital or bridge or building or monument built without money.  Nothing can be imported or exported, bought or sold without money.  Charities, volunteer organizations, political parties, families and individuals require money.  The health of your offspring and the attractiveness of your spouse will be affected by money.  It has never been more true than it is today:  if you want to understand the world, "follow the money."

Just because it's a conspiracy theory  . . .

The pursuit of this question led me to Henry Makow who, as it happens, was a friend of mine in graduate school.  Henry is a very smart guy.  In fact, he was a syndicated columnist and best-selling author at the age of eleven.  He has become, according to Tabetha Southey in the Globe and Mail, Canada's leading conspiracy theorist.  In Illuminati:  The Cult that Hijacked the World, Henry claims

The New World Order is a hydra-headed monster. The bankers work through many fronts such as Communism, Socialism, Liberalism, Feminism, Zionism, Neo conservatism and Freemasonry. Unknown to most members, these "progressive" movements are all secretly devoted to "world revolution" which is a euphemism for banker hegemony and Satanism.  

Should auld acquaintance be forgot?

Old acquaintances notwithstanding, Henry's rhetoric is obviously over the top and his claim that unnamed extant bankers are responsible for all the ism's Henry doesn't like is less than convincing.  Like all conspiracy theories, Illuminati is an eclectic cache of facts, observations and quotations.  The data isn't the question.  The question is how it is all woven together.  (As the linguist de Saussure observed, meaning [and therefore truth] does not reside in words or letters but in the spaces between words and letters--that is, how we connect one to another to create meaning.)

Conspiracy theory versus chaos theory

The world may obviously run on money, but "do money men run the world?" is a separate and different question.  We've been here before (see The Chaos Theory of International Trade):  the choice is between conspiracy theory and chaos theory.  Things happen.  Things that happen might even be predictable within a significant range of probabilities.  However, that Person X or Mr. Daddy-Big-Bucks banker made everything happen is a leap to another level of cause-and-effect determinism requiring another level of evidence.

How banks make money? (disambiguate "make")

However, the unrefuted fact is that the monetary system, which underpins the financial system and the economy, begins and ends with private banks.  Private banks (according to the Parliamentary web site I quoted extensively in Central Banks and the Bitcoin Experiment) create 80% of the money in Canada (and I surmise that this percentage is true for all money creation worldwide).  Private banks are legally empowered to create money out of nothing with a few clicks of a computer mouse.  So what?

So what!?

Do you or I have any reason to be concerned or care about how money is created and who is creating it?  This DW documentary offers a clear and succinct explanation of How the Rich Get Richer though  The Deluge of Money.  The general theme of the documentary is that the money-creation system which allows banks to exponentially create money is guaranteed to exacerbate wealth inequality.  As the economy is flooded with money, if you have a little bit of money, your money will lose value over time.  However, if you already have billions, you will be able to access billions more that the banks are creating at low-interest rates.  Risking little of your own billions, you will be able to buy real estate, businesses, factories and even billion-dollar companies.  The documentary offers specific examples but the common feature is that the money men aren't producing anything, they are simply making more money with these transactions in borrowed, bank-created money while degrading the condition of workers and the savings of the middle class.

To create money the government must sell a bond to a bank

The documentary follows a research project which demonstrates that most people, even some bankers, simply don't know where money comes from and how it is created.  Henry Makow quotes the inventor Thomas Edison who said "It is absurd to say our country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the people."

The paradox of money:  a private bank created the money, so why am I responsible?

Most people (myself included until recently) believe in the illusion that our national currency is created by the government.  It is worth stopping to take note that every time a bank creates money, those dollars or euros or pesos create a debt owed by the national government to whomever holds the currency and a promise to pay which is ultimately the responsibility of you and me, the citizens of that country.  There is a fledgling group in Switzerland, as revealed in How the Rich Get Richer, campaigning to prevent banks from being able to create money and advocating a system in which only the government can produce a national currency.

Who's in charge here?

Back to the question:  do the money men run the world?  For Henry Makow and advocates of the Zeitgeist movement the answer is beyond obvious that an unnamed they/them fronted by the world's central banks are running the world, and what we typically call "world affairs" (politics, business and religion) are but smoke and mirrors. Boris Johnson notes that successive kings of England had to borrow money from Dick Whittington, and when the British Government wanted to buy the Suez Canal they had to borrow the cash from Lionel Rothschild.  However, Johnson writes that "Today a young Rothschild can still make the headlines with a knock-out yacht-based party on the coast of the former Yugoslavia.  But no one needs his permission to go to war."

Perhaps.  But How the Rich Get Richer concludes with the observation that Brexit and the election of Donald Trump promise even less regulation of private banks and an even greater flood of unregulated, low-interest, private-bank-created money.


Two thoughts remained in my mind as I was writing this post.  I feared they were tangential to the question, but I have decided to include them as an afterword/afterthought.

It seems a predicable human tendency to always imagine that someone is in charge, a powerful someone is pulling the strings to make whatever happens in the world happen--the Wizard of Oz fallacy.   As I wrote this post, I kept thinking about a remarkable documentary I saw on CBC television in 1983.  Produced and directed by Allen King, it was promoted as an exposé on unemployment.  In fact, as an example of his proto-reality-show filming, King invited a number of unemployed participants to sit on a bleacher in front of a bank of television cameras.  The participants were given no instructions, and there was no script.  What emerged was a series of assumptions from the participants about the objective of the film, and vitriolic outbursts of blame and counter blame for whatever emotions the participants were feeling.  The show was entitled "Who's in Charge Here?"  Participants launched a court case to block the presentation of the production, but the injunction was not granted.

The second thought that kept coming to me was "Why am I writing about money again!?"  I started this blog, some years ago, thinking I know something about something (roughly university education).  However, over time it has evolved (or devolved) into a study of all the things I don't know--the things that make me wonder about the depths of my own ignorance, that provoke me to ask "How could I not know this?"  I'm not that modest, so I assume there must be a lot of people who don't know what I don't know.  Here is a list of my blog posts on money, just in case you want to follow the slow meandering process of my self-education on the subject:

When Should You Repay Your Student Loan? How about . . . Never!

How Did University Degrees Become Subprime Mortgages?

What Is Money?

Friday 25 March 2022

Foreign Policy Realism: Can an Agreement on Ukrainian Neutrality End the War?

The USA and NATO are to blame . . .

In his 2015 lecture at the University of Chicago, Professor John Mearsheimer argued that expanding NATO  to Russia's borders was a mistake.  In 2022, Mearsheimer has continued to reiterate his position that a neutral Ukraine serving as a bridge between Russia and Europe would serve everyone's best interests:  the Russians', the EU's, the USA's, the West's and especially and most importantly, the Ukranians'. As early as 1998, George Kennan, author of "The Long Telegram" and "architect of America's successful containment of the Soviet Union" also decried the reckless and ill-advised expansion of NATO to Russia's borders. The expansion of NATO was a mistake, they argued, for two basic reasons:  1) it would eventually goad Russia into a hostile response and 2) it offered a false promise of military intervention to new member states (the USA was highly unlikely to engage in a nuclear war with Russia in defence of Latvia, Lithuania or Estonia, for example, when they had no strategic or economic value for the Americans).  


The "Historical pattern" counterargument

In a New Yorker interview, Stephen Kotkin, a scholar of Russian history, declares:

In a Globe and Mail article entitled "To understand why Ukraine is under attack today, we need to look at Russia's actions over the last 70 years," Michael Ignatieff adopts a similar "historical pattern" argument.  Ignatieff writes:  "This story of four Eastern European capitals, all under attack from Russia, over the past 70 years makes nonsense of the claim that NATO expansion eastward caused this crisis." 


 Foreign Policy Realism

Perhaps because I have become so familiar with the aphorism which always accompanies financial advice--"Past performance is no guarantee of future results"--I find the "historical pattern" argument unconvincing.  Additionally, a close focus on Russia's historical pattern of behaviour tells, at best, only half the story.  Any attempt to analyze a global conflict would, logically, have to consider the American historical pattern of behaviour over the last 70 years:  a 20-year war in Afghanistan, two wars in Iraq, the war in Yugoslavia, bombings in Syria, targeted assignations throughout the Middle East, interventions in Granada, Panama, Chile, Nicaragua, etc, etc, all the way back to the Vietnam War. Imagining, on behalf of the Russians, that they had nothing to fear from the US expansion of NATO and that what is happening can be completely explained by Russian imperialism and nostalgia for the Soviet Union strikes me as willful blindness. 

Reading Ezra Klein's NYT interview with defence and foreign policy analyst Emma Ashford, I discovered that my thinking had a name:  "foreign policy realism."  As Klein explains:

Realism is a political framework that understands international relations as a contest between relatively rational states for power and security. It’s pretty structural in that way. It sees the actions and activities of states as quite predictable, given their role and needs in the international security hierarchy.

[ . . . .]  It wants to be structural, not personal or individualistic.

In this case, there’s a particular realist analysis that has caught a lot of people’s attention, which is John Mearsheimer’s model of the conflict.

Realism, Neo-classical realism, game theory and chaos theory

Emma Ashford is, according to Klein, "what’s called a neo-classical realist. She begins with a structural, state-based, power-based analysis of realism, but then opens it up to more influence from domestic politics — the psychology of individual leaders, the messiness of reality."  We've been here before in another context.  My post "The Market, the State and the Monkey in the Middle" highlighted economist Jean Tirol's "game theory" which, like neo-classical realism in strategic studies, proposed that the traditional models based on the assumption that all agents would act in rational self-interest were inadequate because they failed to take into account the cognitive bias and ideology of individuals.  I must also admit that I believe in "chaos theory" (see "The Chaos Theory of International Trade"), the idea that individual actions can unleash global consequences, as in the case of Gavrilo Principthe Bosnian teenager whose assassination of Archduke Ferdinand is said to have started World War I. 


The Danger of melodrama

In the current crisis, I retreat to realism because being rational and crediting our enemies with being rational is the only way to de-escalate and to avoid the worst possible of all catastrophes.  As I have reviewed Western media coverage of the war, I have noted the high frequency of images of desperate women and children.  The intent is to call upon our compassion and, of course, compassion is called for.  But compassion over time and with increased intensity can become simply passion, overwhelming emotions which have no real objective but create an irrational antagonism towards Russia, Russians and all things Russian.

I have long observed that a story "has legs" in Western media if it manages to copy the structure of melodrama:  strict moral justice,  a courageous hero, an evil villain, innocent victims,  suspense, and surprising happy ending--all the features which dominate our TV and film entertainment.  The word "melodrama" is synonymous with heightened emotions and derives from the practice of playing music during a character's speech to raise the emotional intensity.  An emotional response to the war in Ukraine is appropriate but the substitution of a melodramatic narrative for a clearheaded, rational awareness of what is going on is dangerous.

Consider Michael Ignatieff's recent article in the Globe and Mail ( O1, 06, 9 March 2022).  Ignatieff writes:

The Russians need to understand that if they stage a military incursion across the NATO border--Lenin's bayonet probing--they will be met by force, and if that fails to hold them, they will be met with nuclear weapons, at first tactical, and then as necessary, strategic, too.

As a Harvard University professor, Ignatieff was a supporter of George W. Bush's invasion of Iraq.  He was leader of the federal Liberal Party and, were it not for his impatience, forcing an early election that no one wanted, he might have become Prime Minister of Canada.  In case you missed the gist of his halting prose, he is advocating a nuclear war against the country which holds the largest stockpile of nuclear weapons on the planet.  


Claims of Putin's insanity make him more dangerous not less

Ashford, like Mearsheimer, is categorical that "Putin is a rational person [and] that he’s making rational decisions."  However, Ashford contends that Putin is being ill-advised because he is surrounded by sycophants determined to tell him what they think he wants to hear.  Western foreign policy and strategic analyses all too often prove to be pseudo-psychological speculations on Putin's innermost dreams, fears and ambitions.  Ruthless, autocratic and amoral as Putin might be, melodramatic depictions of him as an insane, evil villain, protagonist to courageous, heroic Zelensky, the movie star who became president of Ukraine in fiction before he became President of Ukraine in fact, move us in only one possible direction:  escalation, with the hope that the hero will save the day as he always does in the movies.  If Putin really is the mad megalomaniac we have been encouraged to believe he is, then we should be showing much greater fear of him than we have so far.


Are We the centre of the universe?

The Globe and Mail article entitled "UN General Assembly deals Russia overwhelming diplomatic defeat over Ukraine invasion" displayed this map:

Blue indicates the 141 countries which voted in favour of the resolution condemning the Russian invasion.  Red indicates the 5 countries which voted against the resolution.  Yellow and grey indicate the 35 countries which abstained and 12 which did not vote, respectively.  Considering, as a block, the 52 countries which failed to condemn the invasion, including China, India, Pakistan, Iran, Iraq, Kazakhstan and 17 African countries, a division of the globe between East and West begins to appear.


Noting this division reminded me of Peter Frankopan's The Silk Roads: A New History of the World. For me, the book was, in fact, a "new history of the world." Throughout my studies and my career as a professor, the world began in Greece, spread to Europe and the UK, and eventually crossed the Atlantic to the USA and Canada--there was barely anything else worth knowing about. Awareness of the East changes the entire world narrative that we call history. Western imaginings that the West is the centre of the world are not unlike that time before Galileo when we thought the Earth was the centre of the universe. Our imaginings are not easy to give up. When the Inquisition showed Galileo the instruments of torture he recanted his claims that the earth and planets revolved around the sun. It would take the Catholic Church 350 years to admit, in 1992, that Galileo was right all along while absolving the Inquisition of any blame for their justified, well-intentioned error.

We, in the West, imagine that "we are the world" at our peril.  Without paying much attention, our self-absorption has made enemies and forged alliances against us among countries that have been erstwhile enemies to one another:  Russia and China, India and Pakistan, China and India, Iraq and Iran.  For much of recorded history, the East (not the West), as Frankopan elaborates, has been the centre of wealth, progress, civilization and empires.  It is Western orientalist folly to imagine that the East can never rise again.

The USA sanctions China and Russia at the same time

In his 2015 lecture, Meirsheimer argued that the USA would need Russia, as an ally, to compete against the growing power and influence of China.  The opposite has, of course, been happening, as the USA practically forces Russia and China to ally with one another by imposing sanctions on both countries at the same time.  Only a few short weeks ago, the USA was accusing China of genocide and passed into law the Uyghur Forced Labor Act which, if Border Security Agents enforced the letter of the law, would ban virtually all imports from China. The Canada-United States-Mexico Agreement free trade agreement would compel Canada and Mexico to do the same. (See What if China Isn't Using Forced Labour?)

Joe Biden's recent State of the Union, which focused on Russia, Ukraine, and NATO adopted a distinctly different tone toward China.  In fact, China was only mentioned in the context in the new US infrastructure bill:

In tone, this State of the Union downgrades China from "evil empire" to one of many friendly competitors and Xi from an aggressive dictator to a "good ol' boy" confident.  

However, as reported in Politico, the more recent two-hour-long call between Xi and Biden indicated that the China-US relationship had turned "profoundly negative."  As reported in Politico:

 Russian Tanks versus a weaponized US dollar

Since President Biden has already signed into law a ban on the importation of goods from China, further sanctions would have to be the kind of weaponized financial sanctions that the USA has already imposed on Russia, Iran, Cuba, North Korea and Venezuela.  Weaponizing the USD (US dollar) against China has been much discussed in recent years. (See Analyzing the Discourse.) Canadians got a small taste of how that process functions when we were called upon to arrest the Huawei CFO on a charge of bank fraud for allegedly misleading HSBC about Huawei's financial transactions in Iran. The current American weaponization of the dollar against Russia is of such a scale that in addition to claims that it will destroy the Russian economy, it is raising questions about the survival of the USD as the highly privileged global reserve currency.

In "Ukraine and Dollar Weaponization," George Pearkes writes: "America has responded by threatening Russia with an unconventional weapon: the dollar. However, deploying the dollar may actually undermine its power, and hasten its departure from the US arsenal."  Discussions of how long the USD can remain the global reserve currency and what might happen as it declines have been around for a long time.  Historically, six countries--Portugal, Spain, France, Netherlands, Britain and now the USA--have held the coveted status of "global reserve currency" (i.e., being the country which produces the money that other countries must use for international trade).  On average, countries have maintained the privilege of being the global reserve currency for 94 years.  The USD has been the global reserve currency for 101 years.  Both the Chinese yuan and Bitcoin have been discussed as candidates to replace the USD as the dominant global reserve currency.


What Happens next?

To state the obvious, we have never been here before.  Many may predict but no one knows how these never-before-seen variables will play out.  For those who might have thought of the "weaponized dollar" as an esoteric myth, the current circumstances make plain that a weaponized dollar is a real-world strategy.  The question remains as to how strong and effective a weapon it is.  David Frum, in The Atlantic, claims that financial sanctions will cause the collapse of the Russian economy.  In the State of the Union, President Biden announced that 

Some commentators have pointed out that the sanctions and seizures might be largely symbolic.  Seized yachts, planes and apartments remain the property of the Russian oligarchs until such time as it can be proved in court that they are connected to criminal activity or support for the Ukrainian invasion.  Many of the Russian oligarchs are finding sanctuary in Israel which has shown muted support for Ukraine's Jewish president.


Of the states which have been the target of US financial sanctions:

Can an Agreement on Ukrainian Neutrality End the War?

In recent days, President Zelensky has announced that Ukraine will not join NATO.  Ezra Klein cites this fact as evidence that NATO expansion was not the cause of the invasion.  History has proven over and over again that wars are easier to start than to end. For those who embrace a melodramatic vision of the war in Ukraine, Zelensky's declaration might seem a setback for the hero and a victory for the villain, but it is also a step toward ending the war without escalating the destruction and bloodshed.  At least one of Putin's claimed justifications for the invasion has been removed.  We might ask why it took twenty days of warfare to get to this point.  Putin's other conditions, sovereignty over Crimea, which he has held since 2014 and is dominantly Russian in terms of ethnicity and language, and the lifting of sanctions, seem not unreasonable concessions compared to the risk of a nuclear war.  It might grate that we would be rewarding Putin's bad behaviour but this isn't kindergarten; it's the real world with lives at stake.


Interviewed on "Going Underground," John Bolton claimed that Putin's real interest in Ukraine is the eastern and southern provinces--sites of the Ukrainian civil war and ports on the Black Sea, respectively.  (I cannot link to the interview because internet access to Russia Today is now being blocked.)  The hard negotiations will likely centre on these territories. 

Russian forces overrunning Ukraine sites where the USA has established bio-weapons labs have sparked new areas of concern.  The claims of US bio-weapons labs in Ukraine have been broadly dismissed, but Glenn Greenwald offers a convincing argument that such facilities do exist even as US officials manage to deny their existence.  However unsavoury and unpalatable a negotiated peace might seem, it pales in comparison to the alternatives.  Consider: What would a Ukrainian victory look like?  What would a Russian victory look like?  In the end, there isn't much difference between the two:  everyone loses in a lengthy war of attrition--likely lasting longer than the major players will be alive--guaranteeing more destruction and loss of life, and the potential escalation and expansion of the war beyond any measurable limit. 


Saturday 10 April 2021

World War III: Will History Record that Jody Wilson-Raybould Was the Canadian Gavrilo Princip?

 "If I listened to John Bolton, we would have had world war six by now!"

                                                        Donald Trump, President of the USA

Homo Sapiens?  Are we?

When Yuval Noah Harari speculated in Sapiens:  A Brief History of Humankind, rather off-handedly, that the human species was unlikely to be around for another thousand years, I thought he was exaggerating.  These days, I'm not so sure.  One thousand years is beginning to sound optimistic.

The Doomsday Clock

In 2020, the Doomsday Clock moved to 100 seconds 'til midnight.  According to the "Thucydides trap" hypothesis, a war between China and the USA isn't just possible, it is statistically probable. When he first presented this hypothesis in 2015, Harvard professor Graham Allison argued that 

Managing this relationship [China/USA] without war will demand sustained attention, week by week, at the highest level in both countries. It will entail a depth of mutual understanding not seen since the Henry Kissinger-Zhou Enlai conversations in the 1970s. Most significantly, it will mean more radical changes in attitudes and actions, by leaders and publics alike, than anyone has yet imagined.

Since 2015, we have been moving rapidly in the opposite direction, with marked acceleration in 2021.  According to the 2021--Bulletin of the Atomic Scientists:

US and Russian nuclear modernization efforts continued to accelerate, and North Korea, China, India, and Pakistan pursued “improved” and larger nuclear forces. Some of these modernization programs are beginning to field weapons with dangerous enhancements, like Russia’s nuclear-tipped Avangard hypersonic glide vehicles, which are being installed on new SS-29 (Sarmat) missiles designed to replace 1980s-era intercontinental ballistic missiles (ICBMs). Russia continues to field battalions of intermediate-range, ground-launched, nuclear-armed missiles—missiles previously banned by the now-defunct Intermediate-range Nuclear Forces Treaty, from which the United States withdrew in 2019. China, which has historically relied on a small and constrained nuclear arsenal, is expanding its capabilities and deploying multiple, independently retargetable warheads on some of its ICBMs and will likely add more in the coming year.

The Triggers of war

The causes of war usually involve complicated gestalts which experts will spend generations attempting to untangle and explain. The causes of the Vietnam War are entangled with the vagueries and incoherence of an ideological Cold War which make them near impossible to fully understand even fifty years later.  However, in our high-school history classes, we Boomers were always instructed about the "triggers of war."  For example, the Spanish-American War was triggered by the sinking of the USS Maine.  "Remember the Maine" became the battle cry of the war; however, subsequent investigations concluded that the sinking of the Maine was likely an accident caused by an internal explosion onboard. (For more recent "triggers" see Petrodollar Warfare: Understanding the US Obsession with Iran

The most significant trigger of all time was a 19-year-old Bosnian-Serb named Gavrilo Princip, who assassinated Archduke Franz Ferdinand of Austria and his wife, Sophie, in Sarajevo on 28 June 1914, which led to World War I which, arguably, with the botched Treaty of Versailles, led to World War II.  I first alluded to Gavrilo Princip in 2018 in a post on "The Chaos Theory of International Trade." 

Imagine a high-school history class after World War III. There are a lot of "ifs" here: if there is a third world war, if the Species survives, and if History is still taught in high school.

A History of the future

My historical narrative begins with Richard Donoghue, a young army officer who joins JAG (Judge Advocate General's Corps), first as an attorney, then becomes a judge.  In 2011, he accepts a position as vice president and Chief Litigator for CA Technologies, one of the largest tech companies in the world (in the top 100 according to Bloomberg).  [CA needed a good lawyer.  In 2006, the chairman of the board was sentenced to 12 years in prison for fraud.]  January 2,  2018, Donoghue leaves CA to become US Attorney for the Eastern District of New York.  Eight months later (22 August 2018),  Donoghue issues a warrant for the arrest of Meng Wanzhou, CFO of Huawei and daughter of the company's founder

Why was Meng arrested?

Why? [Try explaining this to a class of high-school students!]  The charge is "bank fraud."  For most people, "bank fraud" means she stole money, but not in this case. According to the indictment, at a meeting in a tea-house in Hong Kong in 2013 she allegedly told an executive of HSBC (Hong Kong Shanghai Banking Corporation) that Huawei did not control a company called Skycom which was doing business in Iran in contravention of US sanctions.

Is she guilty?

Did she really say this?  Did she really fool HSBC into contravening US sanctions?  Who knows?  Does it really matter? HSBC had already been convicted of money laundering, including making investments in Iran, but Meng's "lying," saying or not saying, really has no bearing on the ultimate story.  There was no precedent for arresting a business executive for moving money in Iran, though many companies had been convicted and paid fines.  Meng was arrested because the USA, for political reasons, ideological reasons, business reasons, security reasons (choose the one which makes the most sense to you), was out to get Huawei.  Meng (and Canada), it has become evident, were collateral damage in the plan to undermine Huawei.  The sensible thing for Canada to do was just get out of the way, but it was up to the Minister of Justice, Jody Wilson-Raybould, to get us out of the way.

Meng was traveling the world as Huawei's leading sales-person but, apparently, Donoghue couldn't find a country willing to serve his warrant.  Then, on December 1, 2018, he asked the Canadian Minister of Justice, Jody Wilson-Raybould, in keeping with the Treaty on Extradition Between the Government of Canada and the Government of the United States of America and the Canadian Extradition Act to have Meng arrested, and she did.

Why arrest Meng in Canada?

Why did she accept to have Meng arrested?  [Try explaining this to a high-school class!]  Why would she accept to proceed with this unprecedented arrest which would have predictable and dire political consequences?  To most of the world, the arrest would appear arbitrary and illegal, Canada kowtowing to US hegemony--showing the Americans that Canada would ditch its trade deals with China if that's what the Trump White House wanted.  In truth, the Americans, that is, Donoghue did the minimum in asking Canada to serve the warrant.  Chances are they were surprised by how easy it was to get Canadian law enforcement onboard even to the point of "accidentally" contravening Meng's rights. Donoghue did the necessary,  specifying that the crime was "bank fraud," which was on the Treaty's list of extraditable offenses. And he went through the motions of a Grand Jury trial, which would have been a foregone conclusion.  

Is there any chance that the USA will keep a Chinese executive in prison?

Has anybody noticed how little the Americans have to say about the seriousness of Meng's crimes?  Clearly, the Americans are keeping their options open; allowing them to release Meng at a later date without much fanfare.  The last thing the Americans want is to have a major Chinese executive in a US jail, while they continue to do 100 to 150 billion dollars in trade every year with China.  Can you imagine a situation--with Meng in a US jail--where every American business executive who travels to China or any country where China holds influence would risk arrest and/or extradition? Meng's extradition to the USA allows only three possibilities:  1) she and/or Huawei will pay a fine proving that she should never have been extradited in the first place (the Extradition Act and the Treaty specify that the minimum requirement to justify extradition is one year of imprisonment), 2) an all-out Sino-American war or 3) she will be released (without prejudice) and some US Democrat will express media-wide surprise that Canada went along with the ill-conceived Republican plot (orchestrated by John Bolton and Richard Donoghue) to arrest her.

Richard Donoghue's conflict of interest

I originally speculated that there might be a financial pay-off for Donoghue from CA Technologies for slowing down a competitor--Huawei.  But CA Technologies was sold to Broadcom in 2018, so Donoghue's pay-off would probably have to come elsewhere. 

Donaghue was given the honour of announcing the conviction of El Chapo, head of the Sinaloa drug cartel, in 2019.  Of course, attorneys, NYPD, FBI, DEA, Homeland Security, etc, etc, had been working the case for 30 years, but Donaghue got the plum of announcing the conviction after little more than a year on the job.  Then he was promoted to special duties on the Ukraine file.  In public media, no-one seemed to know exactly what "Ukraine file" meant, but I interpreted he was assigned to getting the dirt on Hunter Biden. When William Barr resigned as Attorney general, Deputy Attorney General Rosen replaced him, and Donald Trump named Donoghue the new Deputy Attorney General.

Did Trump know?

Did Trump know the very day he was having a one-on-one meeting with Xi that Donoghue was having Meng arrested in Vancouver?  No.  Despite hedging in the Guardian interview, claiming he didn't know if Trump knew, John Bolten confirms in this book that he, as National Security Advisor, had been informed of Meng's arrest and decided not to tell President Trump.  Trump was incredulous when he found out and, according to Josh Rogin in Chaos under Heaven, complained that they had "arrested the Ivanka Trump of China."  

Why did Jody Wilson-Raybould arrest "the Ivanka Trump of China"?

Why did Jody Wilson-Raybould arrest "the Ivanka Trump of China"?  When Prime Minister Justin Trudeau was asked about the arrest:

“The appropriate authorities took the decisions in this case,” he told reporters. “We were advised by them with a few days’ notice that this was in the works but of course there was no engagement or involvement in the political level in this decision because we respect the independence of our judicial processes.”

If extradition isn't political, why was the Prime Minister informed in advance? Who were "the appropriate authorities"?  According to the Canadian Extradition Act, the only appropriate authority was the Minister of Justice, Jody Wilson-Raybould.  Who is "them" in the PM's statement?  Did the PM think that Richard Donoghue or the American DOJ was the appropriate authority to decide a Canadian extradition case?  As I've pointed out a dozen times and a dozen different ways, the claim that in Canadian extradition law, "there is no engagement or involvement in the political level in this decision" is completely wrong.  It is easy to disprove the claim of the independence of the judicial processes in extradition cases with a quick click on the Canadian Extradition Act and 15 minutes of reading.  I think we can forgive the PM for not knowing the Canadian Extradition Act just days after (and before) Meng's arrest.  But what about Jody Wilson-Raybould?  What about the "free" and "independent" Canadian media which has been repeating or ignoring this falsehood for over two years now?

Who makes extradition decisions?  The Minister? Or "officials"?

Eleven days after Meng's arrest, Jody Wilson-Raybould issued a statement, in lockstep with the PM's misinformation, saying that "The decision to seek a provisional arrest warrant from the court is made by Department of Justice officials without any political interference or direction." I believe that it may be common practice for "Department of Justice officials" to seek an arrest warrant without necessarily consulting the Minister of Justice, but this was obviously no typical extradition case.  Moreover, what the law (The Extradition Act) specifies is:

Since Jody Wilson-Raybould was both Minister of Justice and Attorney General, the law specifies that Jody Wilson-Raybould "may" (she could have ignored or refused the request)  authorize herself "to apply for a provisional arrest warrant."  Nowhere does it say that DOJ officials were supposed to make the decision and keep Jody Wilson-Raybould out of the loop.

Why would Jody Wilson-Raybould pass the buck to underlings?

Why would Jody Wilson-Raybould duck her responsibilities as Minister of Justice?  Well, there was the SNC Lavalin case.   [Try explaining this to high-school students!]  We've already been there, but the short version is that the PMO had been putting pressure on JWR to break the law and give SNC Lavalin a pass on its various bribery crimes.  JWR resisted and was on the verge of being demoted out of Justice for her resistance when Meng was arrested.  

The combination of the laws governing Remediation Agreements (a new, Liberal version of Deferred Prosecution Agreements) and those governing the Public Prosecutors Office made it impossible for JWR to do what the PMO was asking without breaking the law.  The Extradition Act is the exact opposite in terms of the Minister getting involved.  The Act makes it the Minister's responsibility to investigate and make a decision.  Would the public understand this difference?  Did politicians know the difference?  Both Trudeau and Freeland have been very public in denying this distinction and insisting that extradition is a judicial and not a political decision--despite the explicit wording of the Act and the Supreme Court's ruling to confirm that extradition is an "executive"; i.e., political decision.

When Allen Rock, former Minister of Justice, was on Power and Politics to present the argument that Meng should be released, Vassy Kapelos asked him if he had ever intervened in an extradition case.  He hadn't.  I was struck by his response but then it occurred to me:  politicians are politicians.  Politicians don't like to get publicly involved in extradition cases because there is nothing for a politician to gain.  No matter what decision they make, they will be criticized by one quarter or another.  For a politician, it's always better to leave the impression that an extradition was decided by anonymous officials.

We shouldn't be too surprised that JWR decided not to take the heat and opted for "bureaucracy as usual" despite the obvious that this case was not "as usual." Someone from the PMO should have pointed out her power according to the law: 

Since the PMO and JWR were already at odds (not speaking to each other?) over SNC Lavalin, we can imagine that in the end no-one said anything.

Now what?

The atomic scientists who manage the Doomsday Clock point out that 

Unchecked internet disinformation could have even more drastic consequences in a nuclear crisis, perhaps leading to a nuclear war that ends world civilization. Disinformation efforts across communications systems are at this moment undermining responses to climate change in many countries. The need for deep thinking and careful, effective action to counter the effects of internet-enabled disinformation has never been clearer.

Are we at war with China?

The general Canadian public could be forgiven for imagining that we are already at war with China.  China has been accused of genocide in terms usually reserved for the Holocaust.  The CCP (Chinese Communist Party) is being compared to the Third Reich and Xi Jinping to Hitler.  China is being accused of undermining Canadian sovereignty, intimidating Canadian citizens, taking over Canadian businesses, manipulating Canadian politicians, mistreating Canadian workers, arbitrarily imprisoning Canadians in China, infiltrating Canadian universities, cyber espionage, and stealing Canadian intellectual property.  What more do we need to know before going to war?

In addition to the rape, murder, sterilization, forced labour, and mass imprisonment of Uyghurs, China is overthrowing democracy in Hong Kong, threatening Taiwan, and illegally claiming sovereignty over the South China Sea.  The Chinese are using dystopian levels of surveillance of their own citizens, especially ethnic minorities. And the Chinese are responsible for the coronavirus which has spread around the world and killed millions.  What more do we need to know before going to war?

The Devil's advocate

Dare we consider a Chinese perspective and response?  Despite claims of "free speech" and "transparency," it has become common practice to denigrate and dismiss anyone who challenges the common Canadian discourse on China (and/or Meng). 

Here, at least, it is possible to play "devil's advocate." 

A response to terrorism?

There is no genocide taking place in Xinjiang.  Every neutral observer who has visited the region comes to this same conclusion.  China faced a terrorist threat in the region and, in comparison to the USA with its invasions in Iraq and Afghanistan killing a million Muslims, has responded with moderation and efficiency in dealing with religious extremism. As reported by  Colin Clarke and Paul Rexton Kan in “Uighur Foreign Fighters: An Underexamined Jihadist Challenge,” The International Centre for Counter-Terrorism – The Hague 8, no. 5 (2017):

Uighurs, specifically individuals of Turkic descent from China’s northwest province of Xinjiang, have become a noticeable part of the constellation of globally active jihadist terror groups. Uighur jihadists first came to the world’s attention when the United States and its allies invaded Afghanistan in 2001. While continuing their cooperation with the Taliban under the banner of the East Turkestan Islamic Movement (ETIM), Uighur jihadists have now spread to Southeast Asia and the Middle East. ETIM’s members are part of the Turkestan Islamic Party fighting with the Al-Qaeda umbrella group in Syria, but other Uighurs have joined IS in Syria and Iraq, and still others have joined local terror groups in Indonesia. 

China:  A multi-ethnic nation

China is home to twenty-six different ethnic groups.  While Western democracies have paid lip service to individual human rights as they practiced "systemic racism" and "white supremacy," over the last 30 years, China has raised 800 million of its citizens out of dire poverty--many from the ethnic minorities it is now being accused of mistreating.  As reported by the Brookings Institute, China's policies with regard to the Uyghur began in the 1990s, but only since China's economic power began to rival that of the USA have we heard any claim of genocide.

Hong Kong is part of China--not a distant island

Hong Kong is literally a stone's throw from the mainland and has always been part of China.  As a condition of losing the Opium Wars, whereby the British Empire forced China to accept imports of opium, China accepted that Hong Kong would remain a British colony for 99 years.  That period of 99 years expired in 1997 at which time China reclaimed sovereignty over Hong Kong while allowing it to operate as a distinct, autonomous region.  China was prepared to allow this situation to continue until demonstrations, protests, and riots broke out in Hong Kong.  Even after the demonstrators' demands were met and the new extradition act repealed, riots continued with demands for full, Western-style democracy.  China's allowing Hong Kong to, once again, become a Western colony is about as likely as the USA returning Texas to Mexico.  Logically, the continuing protests can only be understood as part of an American plan to destabilize the country and eventually overthrow the regime in Beijing.  The fact that Hong Kong media tycoon Jimmy Lai, a leader of the pro-democracy demonstrations, had frequent meetings with Secretary of State, Mike Pompeo, confirms this interpretation.

Security and surveillance

Yes, China uses CCTV to guard the security and safety of its citizens, just as is done in London, England, and in every major city in the world these days.  Chinese computer surveillance systems have been developed but they are nowhere near as widespread or invasive as the Anglo-American ECHELON system designed to intercept private and commercial communication all over the world, or the PRISM surveillance system used by the US National Security Agency to spy on US citizens as well as people around the world.  Chinese data collection is modest in comparison to that of American technology companies like Facebook and Google.

Education in Xinjiang

China believes that education is the key to equality.  As outlined in MA Rong's research on "The development of minority education and the practice of bilingual education in Xinjiang Uyghur Autonomous Region," Uyghurs, traditionally, have the highest birth rate in China but  . . .

The development of an education system started late in Xinjiang, where there were only 525 college graduates and 593 high school graduates in 1957 (Xinjiang Uyghur Autonomous Region Bureau of Statistics, 2006, p.519). In 2005, however, college enrollment reached 59 000,

And university enrollment of Uyghur both throughout China and abroad has continued to grow. 

Is Paid labour "forced labour"?

Uyghur workers are paid for their labour wherever they work.  On some occasions, they are required to work outside their home regions where their labour is needed but are paid wages that exceed what they would earn at home. Throughout its history, China has called upon its citizens and leaders of the Communist Party (including Xi Jinping) to work as manual labourers in the fields as a demonstration of equality, discipline, and solidarity.

The Arrest of two Canadians

There are only two possible explanations for China's arrest of Michael Kovrig and Michael Spavor and in both cases, Canada is to blame.  Either they are guilty of espionage (presumably on behalf of Canada) as the Chinese courts have alleged or, as is generally assumed in Western media, they have been imprisoned in retaliation for Canada's arrest of Meng--in which case Canada is guilty of having thrown the first punch.

Where's the truth?

Here's a Chinese joke I encountered on Quora.  A young Chinaman is at customs about to enter the USA.  The customs agent asks him, "Why are you entering the USA?"  The young man replies, "I'm here to study the new brainwashing techniques."  The agent responds angrily, "We don't have brainwashing in the USA, we're not like China!"  "Yes, yes, that's it," the young man answers, "that's what I'm here to study."

"The truth," it is commonly observed, "is always the first casualty of war."  In the claims and counter-claims about China, I don't know where the truth lies, but the more I investigate, the more I find the inflated and inflammatory rhetoric of Western mass media to be uncontextualized, weakly supported by evidence, and reckless.

The "Thucydides trap" denied

In Chaos Under Heaven, Josh Rogin claims that the "Thucydides trap" "theory doesn’t fit the US-China relationship." As Rogin rightly points out, there are many variables in the lead-up to war.  One weakness of the theory, according to Rogin, is that "it assumes that China's rise is inevitable."  In 2015, China's rise might have been an assumption, but in 2021 it seems an undeniable fact.  By what measure would it be possible to conclude that China has not risen to the level of a world power?

Rogin concludes: "The Thucydides Trap concept is interesting, but we shouldn’t base our strategy on it."  "Interesting" is what we academics say when we want to say nothing. Given that the subtitle of Rogin's monograph is  "the Battle for the 21st Century," what is the logic of claiming that as we concoct a strategy (for what?) we should not consider the possibility of a war?  No-one in their right mind wants a war and yet they keep happening.  The whole point of the Thucydides argument (as I've quoted above) is that it is possible to avoid a war.  We can reduce the risk of war by cooling down the rhetoric, by being empirical, logical, accurate, precise, transparent, well-informed, and measured--all the things that we are not doing and being now.  Simply denying any possibility of a war does not reduce the possibility of it happening.

How a hot war begins

I was ten when President Kennedy announced that Soviet ships bringing missiles to Cuba would result in a nuclear war.  In our town, we had a special siren to announce that nuclear bombs had been launched.  I vividly recall the day the siren sounded.  No, it wasn't a nuclear war, but some idiot thought we should test the system without bothering to inform ten-year-olds like me. Cuba is 103 miles from the USA.  Taiwan is 81 miles from China. While the USA continues to impose sanctions on Cuba; goods, services, and people move freely between Taiwan and China.  According to the Taiwanese government website: "Today, Taiwan is one of the biggest investors in China." However, China is ready to go to war to prevent a US-backed Taiwan from declaring independence.  At least one observer has pointed out that "A US War with China over Taiwan Would Be Foolish and Costly"--not to mention potentially nuclear and absurd because Taiwan and China seem to be getting along fine if not for US intervention.

Preparations for war

With relatively little notice being taken in Western media, both China and the USA are preparing for war.  The focus of preparations is the South China Sea.  In theory, the battle is between China and the Philippines over conflicting claims of territorial waters. The Philippines, like Taiwan, Hong Kong, Australia and Canada, is a pawn in the conflict between the USA and China.

Adm. Phil Davidson, commander of US forces in the Indo-Pacific, warned that Chinese military developments looked to him like a nation planning for a war.

Davidson added that he believed China would attempt to forcibly reunify Taiwan "in the next six years." To guard against this possibility, Davidson asked Congress to provide a whopping $27 billion in additional funding over the current defense budget.

Ships and chips

It seems a historical motif that wars begin with the sinking of ships.  The sinking of the USSS Maine started the Spanish-American War, the sinking of the Lusitania brought the USA into WWI.  The Gulf of Tonkin incident led to a US escalation of the war in Vietnam. Everyone knows about the Japanese "surprise" attack on Pearl Harbour, but do people know why the Japanese attacked?  It wasn't a surprise.  In fact, it was quite predictable.  The USA had imposed sanctions on Japan, blocking the supply of oil while Japan was at war with China.  The Japanese had to destroy the blockade or lose the war with China.  These days, the equivalent of oil is computer chips, and the USA is doing all it can to block the supply of computer chips to China.  Taiwan is the world's largest manufacturer of computer chips.  The government of Taiwan is happy to continue with its "unofficial" independence and its sales of computer chips to China.  The USA seems to be the one more interested in Taiwan's "official" independence and in cutting off the supply of Taiwanese chips to Chinese companies.

More ships, more triggers

The USA has been conducting naval war games in the South China Sea displaying increases in firepower over the last three years.  In 2021, the USA began simulating Air-Force war games over Taiwan.

As if arresting Meng weren't enough, in the midst of ongoing tensions, the Canadian navy warship, HMS Calgary, crossed the South China Sea because it was the shortest route between A and B, and to show whose side we're on.

With the US canceling the nuclear treaty, Iran has begun to process high-grade uranium once again.  In the face of US sanctions, Iran has formed a closer alliance with China.  As reported in Haaretz, just as new treaty negotiations were getting underway (without US participation), Israeli forces attacked an Iranian cargo ship which had been anchored in the Red Sea for years.

Why blame Jody Wilson-Raybould?

Why blame Jody Wilson-Raybould?  Because I believe in the theory of chaos.  Each of us is the potential trigger of a future that we could not possibly imagine.  And history isn't fair.  From 1949, when the Communist Party of China took control, until 1970, China was treated as a global pariah by Western powers.  In 1973, Pierre Eliot Trudeau was the first Canadian Prime Minister and one of the first Western heads of state to visit China.  From that period until 2017, Canada's trade and diplomatic relations with China grew and improved steadily under both Conservative and Liberal governments, until the government of PM Justin Trudeau faced increasing criticism for becoming too friendly with China.  The Canadian arrest of Meng Wanzhou, Dec. 1, 2018, was an abrupt about-face from the last 48 years of our relations with China.  History will also mark that date as the day Canada was given the opportunity for another Lester B. Pearson moment, the opportunity to prove that Canada could be an independent peace-maker.  History will mark the day, in contrast to what might have been, as the moment when the channels for dialogue and negotiations between China and the West were broken, and Canada played a key role in the break.

To continue my Gavrilo Princip analogy, Richard Donoghue supplied the gun, but Jody Wilson-Raybould pulled the trigger.  Or, at least, she stood down from her responsibility as Minister of Justice, and let anonymous officials of the DOJ take responsibility for pulling the trigger.  In consequence, we face the absurdity of government leaders in two countries saving face with their constituencies by keeping a Chinese under house arrest in Canada and two Canadians in prison in China, the minor inconvenience of declining trade and economies, and 300,000 Canadians living in China put at risk while Chinese living in Canada face Anti-Asian hate crimes.  If the unimaginable worst-case scenario, which I have imagined here, happens, the question which will be asked:  "How did the Canadian Minister of Justice  allow it to happen over something so petty and remote as the allegation of a Chinese executive telling a fib to a Chinese banker in China?"

A Glimmer of hope

The Canadian justice bureaucracy continues to grind on in acquiescence to Richard Donoghue's dictates, meaning Meng and the two Michaels will, unless justice and common sense intervene, likely remain under arrest for another ten years. Richard Donoghue was replaced as Deputy Attorney General on January 20, 2021.  Donoghue has since disappeared from my internet radar.  However, his replacement, John Carlin, offered a glimmer of hope in the opening of his first public statement:

Before I begin, I’d like to address an important issue: the reports of horrific attacks on Asian Americans across the country.  I want to be clear here: No one in America should fear violence because of who they are of what they believe.  Period.  These types of attacks have no place in our society.  We will not tolerate any form of domestic terrorism or hate-based violent extremism, and we are committed to putting a stop to it.

We in the West need to be smart in our dealings with the superpower China has become.  Gross vilification of China and, "trickle-down," ignorant, myopic antagonism toward anyone who in Western eyes looks Asian is the opposite of smart.  


"US Nuclear Fears Are Shifting From a Clear Russian Threat to a Murkier Chinese One"

Why Is the Vagina Masculine? And What’s the Alternative?

“Vagina” is masculine  I first came across this factoid thirty years ago in Daphne Marlatt’s novel Ana Historic .   It came up again more r...