Trans-Pacific Partnership says if a corporation claims it’s true, it must be true

Corporations are elevated to the same status as national governments under “free trade” agreements, but if the Trans-Pacific Partnership is approved, corporations will be elevated above governments. New language inserted into the text of the TPP declares that, in certain circumstances, arbitrators hearing a suit by a corporation must assume the corporation’s claim is true.

We know this thanks to WikiLeaks, which has published another section of the TPP, the investment chapter that spells out the enforcement mechanism — the muscle — that will codify corporate dominance over democratic processes and governments. There is this tidbit, found within Article II.22 (“conduct of the arbitration”), which specifies what an arbitration panel is to do if a government objects that a complaint brought by a corporation does not qualify for a hearing:

“In deciding an objection under this paragraph, the tribunal shall assume to be true the claimant’s factual allegations in support of any claim in the notice of arbitration (or any amendment thereof).”

Thus, there is no basis on which a government can block the most frivolous of claims. TPP apologists might object that only a “technical” issue is being addressed in the above passage. But given the context, it is not a large step to go from a presumption that a corporation’s argument is true on its face for eligibility to be heard to presumptions in the hearing itself. The corporate lawyers who double as the arbitrators in the secret, unappealable tribunals in which cases are adjudicated under “free trade” agreements have interpreted the text of past agreements to strike down safety, health and environmental laws, and that “investors” should be guaranteed the highest possible profit. These are rulings that governments obligate themselves to carry out.

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

All the elements of agreements like the North American Free Trade Agreement and the many bilateral “free trade” agreements that mandate arbitration in secret, unappealable tribunals are in the Trans-Pacific Partnership. In fact, TPP mandates the same arbitration body, the International Centre for Settlement of Investor Disputes — an arm of the World Bank. ICSID is no friend of regulation.

No limitations on eligibility to sue for ‘lost profits’

Who will be eligible to sue under TPP? No, not the governments that wish to sign the agreement. Only “investors” are eligible to sue. There is no limitation on who or what is an “investor” — any person or entity that has “an expectation of gain or profit” in any form of participation in any enterprise, holds any financial instrument, possess any intellectual property right or has a “tangible or intangible” right in any “movable or immovable property,” even liens, is qualified to sue. Any decision, regulation or law by any level of government can be challenged, regardless of the democratic procedures used to promulgate it.

The real-world effect is that any corporate entity can move to overturn any government action, simply on the basis that its “right” to the maximum possible profit, regardless of cost to a community, has been “breached.”

Worse still, the expansive language of the TPP means that even more corporations will be eligible to sue governments, a Public Citizen analysis of the leaked investment chapter reports:

“Existing ISDS-enforced agreements of … developed TPP countries have been almost exclusively with developing countries whose firms have few investments in the developed nations. However, the enactment of the leaked chapter would dramatically expand each TPP government’s ISDS liability. The TPP would newly empower about 9,000 foreign-owned firms in the United States to launch ISDS cases against the U.S. government, while empowering more than 18,000 additional U.S.-owned firms to launch ISDS cases against other signatory governments.”

Corporations not based in a TPP country but which operate in a TPP country, even when they have no real investment in a TPP country, will be eligible to sue. (The “ISDS” in the above passage refers to “investor-state dispute settlement,” the technical term used to refer to rules that mandate the use of the secret arbitration bodies.) Additionally, previous language that purported to provide support for health, safety and environmental rules is missing from the latest text, according to Public Citizen.

That does not mean that the boilerplate language in past “free trade” deals concerning health, safety and the environment has any meaning. The most recent ruling on a complaint brought under the North American Free Trade Agreement, handed down on March 17, put Canada and the province of Nova Scotia on the hook for a minimum of C$300 million because a U.S. concrete company was denied a permit to turn an environmentally sensitive beach into a quarry.

Health and environment laws swept away

The list of decisions (which become precedents for future disputes) under NAFTA alone is infamous. Here is a sampling:

  • Ethyl Corporation sued Canada for $250 million because of a ban on a gasoline additive known as MMT, a chemical long believed to be dangerous to health. Ethyl claimed the Canadian ban was an “expropriation” of its “investment” and a violation of the principal of “equal treatment” of foreign capital even though had a Canadian producer of MMT existed, it would have been subject to the same standard. Canada settled to avoid a total defeat, paying Ethyl a smaller amount and reversing its ban.
  • A U.S. company, Metalclad, sued Mexico because a city government refused to grant it a permit for a waste dump (similarly denied to a Mexican company that previously wanted to use the site). Mexico lost, and had to grant the permit despite the environmental dangers and pay $15.6 million to Metalclad.
  • Another U.S. company, S.D. Myers, sued Canada because of a ban on the transportation of PCBs that conformed with both a Canada-United States and a multi-lateral environmental treaty. A tribunal ordered Canada to pay $5.6 million and reverse the ban, negating the two environmental treaties and ignoring the fact that PCBs are known carcinogens banned since 1979 in the U.S. The tribunal ruled that, when formulating an environmental rule, a government “is obliged to adopt the alternative that is most consistent with open trade.” So much for democracy!

In another infamous case, the tobacco company Philip Morris moved some of its assets to Hong Kong so it could declare itself a Hong Kong company eligible to sue Australia under the Australia-Hong Kong bilateral investment treaty, which, unlike some Australian trade pacts, allows corporations to sue one or the other government. Philip Morris seeks to overturn Australia’s rules limiting tobacco advertising and packaging, enacted in the interests of public health, which were found to be legal by Australia’s supreme court, the High Court. (This case is still pending.)

That case is shocking enough in itself, but there is an extra twist — the lawyer for Philip Morris, David A.R. Williams, is one of the judges appointed by New Zealand to the arbitration body hearing the case, ICSID. That is far from an isolated case as many ICSID judges are lawyers who specialize in representing multi-national corporations in front of these arbitration bodies. In another example, a judge ruled in favor of Vivendi Universal against Argentina in a failed water-privatization scheme, and her ruling was allowed to stand even though the judge served on the board of a bank that was a major investor in Vivendi. The TPP is completely silent on conflicts of interest. The leaked TPP chapter reveals for the first time that ICSID would hear disputes brought under TPP.

You won’t be able to buy local anymore

Those corporate lawyers, and especially the multi-national capital they represent, have had their wish lists brought to life in the leaked TPP text. No capital controls of any kind are allowed, “buy local” rules would be prohibited, “investors” can sue for large damages even when their claim has been covered by insurance, and the arbitration body hearing a case should apply “customary international law.”

That last item may sound bland, but in practice it means that rulings declaring reasonable laws and regulations to be illegal impediments to corporate profits are precedents that must be followed. Consider, for example, a London Court of International Arbitration panel, ruling in July 2005 for a unit of the Occidental Petroleum Corp. in a case heard under the U.S.-Ecuador bilateral investment treaty, which declared that any change in business conditions constitutes a violation of “investor rights.” If such a ruling is accepted as precedent, any attempt at regulation is at risk of being ruled an illegal “expropriation” of future profits.

The TPP, along with the Transatlantic Trade and Investment Partnership and the Trade In Services Agreement, are not done deals. The TPP is much closer to the conclusion of negotiations than the others, but can be stopped. Grassroots opposition across the 12 countries currently engaged in TPP talks continues. Militant opposition is critical in all countries, but perhaps the single most important factor at the moment is what the U.S. Congress will do.

Reports consistently say that several governments will not commit themselves to passing TPP until the U.S. Congress passes what it is commonly called “fast-track authority.” Officially known as “trade promotion authority,” fast-track is a method of sneaking unpopular bills into law. Under fast-track, Congress has a limited time to debate a bill and can not make amendments or change so much as a comma, only vote yes or no. The Obama administration is pushing hard for Congress to re-authorize fast-track because that is the only way the TPP, which can not stand the light of day, can be passed into law.

Because of opposition from most Democrats and some tea party Republicans, fast-track passage is not assured. The introduction of fast-track into the Senate depends on a Democrat from Oregon, Ron Wyden, who is being heavily pressured by his constituents not to introduce a fast-track bill he has been negotiating with a conservative Republican from Utah, Orrin Hatch. One of several groups pressuring Senator Wyden, the Oregon Fair Trade Campaign, has rented a recreational vehicle to shadow him across the state.

Where ever you are, voicing your opposition to the TPP to your elected officials, and joining a local or national group in opposition, is critical. The U.S. government is pushing the hardest, and attempting to insert the most draconian rules, to cement the control of U.S.-based multi-national corporations over the world’s resources and markets, and the other governments are willing to throw overboard what sovereignty remains to them so that their multi-national corporations get a slice of the pie.

Allowing the TPP to pass means nothing less than an end to democracy and a world where corporate power and money becomes more dominant than ever, where corporate profits are codified in law to be above all other human concerns.

The art of becoming human

About 180,000 people enlist in the United States military each year, many of whom will come home with physical injuries or psychological damage. Recruits are trained to kill, taught to de-humanize others, to participate in torture, but are expected to forget upon returning to civilian life.

That 22 veterans commit suicide per day is a grim reminder not only of the harsh demands of military life but that the Pentagon effectively throws away its veterans after using them. The U.S. government is quick to start wars, but although political leaders endlessly make speeches extolling the sacrifices of veterans, it doesn’t necessarily follow up those sentiments, packaged for public consumption, with required assistance.

Veterans themselves are using art to begin the process of working their way through their psychological injuries in a program known as “Combat Paper.” In an interesting twist on the idea of beating swords into plowshares, the Combat Paper program converts veterans’ uniforms into paper, which is then used as a canvas for art works focusing on their military experiences. Deconstructed fibers of uniforms are beaten into pulp using paper-making equipment; sheets of paper are pulled from the pulp and dried to create the paper.

“No One Can Change The Animal I’ve Become,” silkscreen, by Jesse Violante

“No One Can Change The Animal I’ve Become,” silkscreen, by Jesse Violante

Drew Cameron, one of the initiators of Combat Paper Project, writes of the concept:

“The story of the fiber, the blood, sweat and tears, the months of hardship and brutal violence are held within those old uniforms. The uniforms often become inhabitants of closets or boxes in the attic. Reshaping that association of subordination, of warfare and service, into something collective and beautiful is our inspiration.”

The results are dramatic, as I found while viewing an exhibit at the Art 101 gallery in New York City’s Williamsburg neighborhood. Take, for example, Jesse Violante’s silkscreen, “No One Can Change The Animal I’ve Become.” The title sentence is written in bloody red letters above a scene of soldiers in an exposed forward position, lying prone with weapons ready. The image is stark, depicting only the most immediate surroundings, representing the lack of vision on the part of officials who see war as a first option and the fog of uncertainty as experienced by the solider in the field reduced to a scramble for survival.

Wounds that can be seen and those not seen

There are those whose injuries are obvious, such as Tomas Young, whose struggles were shown in full intensity in the documentary Body of War. In the letter he wrote to George W. Bush and Dick Cheney when his death was impending, he put into words his agony:

“Your cowardice and selfishness were established decades ago. You were not willing to risk yourselves for our nation but you sent hundreds of thousands of young men and women to be sacrificed in a senseless war with no more thought than it takes to put out the garbage. I have, like many other disabled veterans, come to realize that our mental and physical [disabilities and] wounds are of no interest to you, perhaps of no interest to any politician. We were used. We were betrayed. And we have been abandoned.”

And there are those whose injuries are not so immediately obvious. Let’s hear from a couple of them. Kelly Dougherty, who helped to found Iraq Veterans Against the War after serving as a medic and as military police, said she appreciates having a space to “talk about my feelings of shame for participating in a violent occupation.” She writes:

“When I returned from Iraq ten years ago, some of my most vivid memories were of pointing my rifle at men and boys while my fellow soldiers burned semi trucks of food and fuel, and of watching the raw grief of a family finding that their young son had been run over and killed by a military convoy.

I remember being frustrated with military commanders that seemed more concerned with decorations and awards than with the safety of their troops, and of finding out that there never were any weapons of mass destruction. I was angry and frustrated and couldn’t relate to my fellow veterans who voiced with pride their feelings that they were defending freedom and democracy. I also couldn’t relate to civilians who would label me a hero, but didn’t seem interested in actually listening to my story.”

Garett Reppenhagen, also a member of Iraq Veterans Against the War, wrote on the group’s Web site about how the resistance he received at Veterans Administration meetings when he tried to speak of his experiences, the illegality of the Iraq occupation and the lies of the Bush II/Cheney administration that started the war.  “The ‘you know you aren’t allowed to go there’ look,” as he puts it:

“I can’t bring up the child that exploded because she unknowingly carried a bomb in her school bag and how her foot landed next to me on the other side of the Humvee. I can’t talk about how we murdered off duty Iraqi Army guys working on the side as deputy governor body guards because they looked like insurgents. I can’t talk about blowing the head off an old man changing his tire because he might have been planting a roadside bomb. I can’t talk about those things without talking about why we did it.”

Fairy tales become nightmares

Why was it done? United States military spending amounts to a trillion dollars a year, more than every other country combined. The invasion and occupation of Iraq was intended to create a tabula rasa in Iraq, with its economy cracked wide open for U.S.-based multinational corporations to exploit at will, a neoliberal fantasy that extended well beyond the more obvious attempt at controlling Iraq’s oil. Overthrowing governments through destabilization campaigns, outright invasions and financial dictations through institutions like the World Bank and the International Monetary Fund have long been the response of the U.S. to any country that dares to use its resources to benefit its own population rather than further corporate profits.

And the fairy tales of emancipating women from Muslim fundamentalists? We need only ask, then, why the U.S. funded and armed the Afghan militants who overthrew their Soviet-aligned government for the crime of educating girls. Or why the U.S. government stands by Saudi Arabia and other ultra-repressive governments. Those Afghan militants became the Taliban and al-Qaida, and spawned the Islamic State. More interference in other countries begets more resistance, more extreme groups feeding on destruction and anger.

What does it say about our humanity when ever more men and women are asked to bear such burdens, pay such high prices for an empire that enriches the 1 percent and impoverishes working people, including the communities from which these soldiers come from. What does it say about our humanity when the countries that are invaded are reduced to rubble and suffer casualties in the millions, and this is cheered on like a video game?

"These Colors Run Everywhere," spray paint, by Eli Wright

“These Colors Run Everywhere,” spray paint, by Eli Wright

All the more thought-provoking are the art works of the Combat Paper Project. Another work, “Cry For Help” by Eli Wright, is of a man screaming and a phone held by a skeletal hand and arm. Barbed wire is stretched over the top. How well would we hold on to our humanity had we been on patrol? If we were at risk of being killed at any time by such a patrol?

A second exhibit by Mr. Wright is “These Colors Run Everywhere,” a more minimalist work that shows reds, whites and blues dripping down the canvas, a rain falling upon an urban landscape reduced to a shadowy background that could be interpreted as symbolic of the lack of knowledge of the places that the U.S. invades and of the societies that invasions destroy. It is also a wry twisting of a common slogan used as a defensive mantra into a doctrine of offense and invasion, the actual practice of that slogan.

I assuredly do not speak for, could not speak for, these artists. Perhaps you would have different, maybe very different, interpretations. The movie American Sniper, glorifying a racist murderer and thus symbolizing the dehumanizing tendencies of those who beat their breasts while screaming “We’re number one!” when the death toll climbs higher, has taken in tens of millions of dollars. Vastly less money will change hands as a result of the Combat Paper artworks. But what price should be paid for our humanity?

Combat Paper is on display at Art 101 until April 5.

Canada targets tar sands critics in new criminalization of dissent

Canada’s Harper régime has invented the new crime of being a member of an “anti-Canadian petroleum movement,” and equating such a stance with terrorism. Evidently believing it is in danger of losing the fight against pipeline projects intended to speed up Alberta tar sands production, its response is to place environmentalists under surveillance.

A secret report prepared by the Royal Canadian Mounted Police, the country’s national police agency, claims that public activism against the problems caused by oil and gas extraction is a growing and violent threat to Canada’s national security. The report goes so far as to challenge the very idea that human activity is causing global warming or that global warming is even a problem. At least 97 percent of environmental scientists agree that human activity is causing global warming. The basis on which a police force can declare otherwise is surely not clear.

The Alberta tar sands (photo by Howl Arts Collective, Montréal)

The Alberta tar sands (photo by Howl Arts Collective, Montréal)

Whether police officials truly believe they understand the global climate better than scientists who are expert in the field or are merely providing “intelligence” [sic] that the government of Prime Minister Stephen Harper wants to hear, I will leave to others more familiar than I with the Royal Canadian Mounted Police. Regardless, the RCMP report, leaked to Greenpeace, makes for amusing reading. For example:

“[T]here is an apparent growing international anti-Canadian petroleum movement. In their literature, representatives of the movement claim climate change is now the most serious global environmental threat, and that climate change is a direct consequence of elevated anthropogenic greenhouse gases which, reportedly, are directly linked to the continued use of fossil fuels.” [page 5]

And whom might the police rely on for that statement? No, not those pesky scientists who refuse to say what is demanded of them by oil and gas companies and the right-wing governments who love them. Instead, the RCMP quotes the Canadian Association of Petroleum Producers, cites a poll commissioned by a foundation connected to the oil industry, and a columnist at the Toronto Sun, a hard-right tabloid in the Murdoch mold. The Sun columnist, as quoted in the police report, said “environmental radicals” seek “to undermine the development of Canada’s oilsands — an insignificant contributor to global greenhouse gas emissions.”

Actual experts in the field would disagree. A Scientific America analysis that quotes several climate scientists reports that if all the bitumen in the Alberta tar sands were burned, 240 billion metric tons of carbon would be added to the atmosphere. The total amount of carbon that has been thrown into atmosphere by humanity in all of history is estimated at 588 billion tons.

Are going to believe the police or your lying eyes?

The Globe and Mail of Toronto quoted a Royal Canadian Mounted Police spokesman denying any intention of spying on peaceful protestors:

“There is no focus on environmental groups, but rather on the broader criminal threats to Canada’s critical infrastructure. The RCMP does not monitor any environmental protest group. Its mandate is to investigate individuals involved in criminality.”

But the newspaper’s report noted that the spokesman “would not comment on the tone” of the report, which even The Globe and Mail, a leading establishment publication, found difficult to accept as it earlier in the article noted the RCMP report’s “highly charged language.” Moreover, Canadian human rights organizations filed complaints earlier in February over spying on opponents of the proposed Northern Gateway pipeline, a project intended to move tar sands oil from Alberta to a port in northern British Columbia, passing through hundreds of miles of environmentally sensitive lands.

Environmentalists and Indigenous peoples have been subjected to spying by the RCMP and the Canadian Security Intelligence Service, according to a complaint filed by the British Columbia Civil Liberties Association. The association is also opposing a new measure, the Anti-terrorism Act 2015, or Bill C-51, intended to “dramatically expand the powers of Canada’s national security agencies.” The association reports:

“Bill C-51 makes massive changes to many aspects of Canada’s spying and security system. Any one of the changes – making it easier to lock people up without charge; criminalizing expression; vastly expanding the powers of Canada’s spies; gutting privacy protections – is significant, raises constitutional questions, and must be the subject of serious debate. Lumping them all together into one bill, and proposing to speed that bill through Parliament, virtually guarantees that democratic debate on these proposed measures will be insufficient.”

Such speed is consistent with the Harper government’s attitude toward activists. A previous environment minister, Peter Kent, called parliamentary opponents of tar sands “treacherous” and had a long history of dismantling every regulation he could. The current environment minister, Leona Aglukkaq, while less inclined to frontal attacks, nonetheless also doubts climate change.

From smoking is good for you to the weather is just fine

Global-warming denialism is well-funded, with oil and gas companies often the heaviest contributors to “think tanks” that specialize in doubting scientific evidence on behalf of their corporate benefactors. An excellent roundup of these deniers, written by physics professor John W. Farley for the May 2012 edition of Monthly Review, noted that Exxon Mobil Corporation, the Koch brothers and other special interests have spent tens of millions of dollars.

One of these corporate-funded “think tanks” is the Heartland Institute, which began life as a Big Tobacco outfit issuing reports denying links between smoking and cancer. Another global-warming denial outfit, The George C. Marshall Institute, originated as lobby group for Ronald Reagan’s crackpot Strategic Defense Initiative, more commonly known as the “Star Wars” program. Another was the now-defunct Global Climate Coalition, which included major oil companies, the U.S. Chamber of Commerce and automobile manufacturers; it actually operated from the offices of the National Association of Manufacturing.

A scientist who is often trotted out by global-warming deniers is Wei-Hock (“Willie”) Soon, who was recently revealed to have taken more than $1.2 million from the fossil-fuel industry. The New York Times reports that at least 11 papers Dr. Soon has published since 2008 omitted disclosures of this funding and at least eight violate the ethical guidelines of the journals that published him. The Times reports:

“[D]ocuments show that Dr. Soon, in correspondence with his corporate funders, described many of his scientific papers as “deliverables” that he completed in exchange for their money. He used the same term to describe testimony he prepared for Congress.”

The world is facing an environmental catastrophe as it is; increasing production from the Alberta tar sands will only hasten it. The capacity of railroads to ship oil is reaching its limit (and in itself is dangerous as a recent flurry of crashes demonstrate). Thus pipelines are critical for tar sands expansion. Not only the Keystone XL pipeline across the United States, but the Northern Gateway and other proposed pipelines that would cross Canada to eastern ports. U.S. President Barack Obama’s February 24 veto of a congressional bill designed to force Keystone construction by no means puts that issue to rest; the State Department’s inaccurate claim that the pipeline would not add to global warming and falsehoods that tens of thousands of jobs would result remain an official document.

Opposition to the Keystone XL pipelines has not slackened and strong resistance continues against the Northern Gateway, which would not only send oil through sensitive mountains and forests, but would require ocean tankers to travel more than 100 kilometers just to reach the Pacific Ocean from the pipeline terminus in northern British Columbia. From there, the oil would be shipped to Asia. First Nations peoples, who have the right to block projects from crossing their lands, are leading that fight, and vow physical resistance.

TransCanada Corporation, the same company that wants to build Keystone XL to the Gulf of Mexico, is also proposing an Energy East pipeline that would carry tar sands oil to terminals in Québec City and St. John, New Brunswick. This project, if it comes to fruition, would alone produce the same amount of carbon each year as seven million new cars on Canada’s roads, according to 350.org. Some of this project would use existing natural gas lines; these are not designed for oil, a heavier substance, elevating the risk of ruptures.

The RCMP reports asserts that “extremists pose a realistic criminal threat to Canada’s petroleum industry.” Advocating for clean air and water is a crime? The fight against one of these pipelines must be a fight against them all; increased oil profits surely won’t be compensation for drowned cities and farmlands turned to dust bowls.

Our world is awful, yes, but it isn’t fascism — yet

The term “fascism” gets tossed around much too casually. I am not speaking here of right-wing political illiterates who call a centrist like Barack Obama a “socialist” one day and a “fascist” the next. I am referring to people on the Left who ought to know better.

If we call anybody on the Right a “fascist” or use the word as an all-purpose pejorative, we fail to understand the real thing, and that is to our collective peril. Yes, economic conditions in the present era of global neoliberalism, of the corporate race to the bottom abetted at every turn by the world’s governments, of wars actual and threatened necessary to maintain the global capitalist system, are harsh. But a sham “formal democracy” and an outright fascist state are two very different things.

At its most basic level, fascism is a dictatorship established through and maintained with terror on behalf of big business. It has a social base, which provides the support and the terror squads, but which is badly misled since the fascist dictatorship operates decisively against the interest of its social base. Militarism, extreme nationalism, the creation of enemies and scapegoats, and, perhaps the most critical component, a rabid propaganda that intentionally raises panic and hate while disguising its true nature and intentions under the cover of a phony populism, are among the necessary elements.

Despite national differences that result in major differences in the appearances of fascism, the class nature is consistent. Big business is invariably the supporter of fascism, no matter what a fascist movement’s rhetoric contains, and is invariably the beneficiary.

Mural paintings in honor of  Jecar Neghme of Chile's MIR in the place where he was killed by the Pinochet government. (Credit: Ciberprofe)

Mural paintings in honor of Jecar Neghme of Chile’s MIR in the place where he was killed by the Pinochet government. (Credit: Ciberprofe)

Instituting a fascist dictatorship is no easy decision even for the biggest industrialists, bankers and landowners who might salivate over the potential profits. For even if it is intended to benefit them, these big businessmen are giving up some of their own freedom since they will not directly control the dictatorship; it is a dictatorship for them, not by them. A few of this class will oppose the institution of a fascist dictatorship, some will be ambivalent and perhaps a few were squeamish about the Nazis’ virulent anti-Semitism.

It is only under certain conditions that business elites resort to fascism — some form of democratic government, under which citizens “consent” to the ruling structure, is the preferred form and much easier to maintain. Working people beginning to withdraw their consent — beginning to seriously challenge the economic status quo — is one “crisis” that can bring on fascism. An inability to maintain or expand profits, as can occur during a steep decline in the “business cycle,” or a structural crisis, is another such “crisis.”

Massive corporate subsidies and the funding of gigantic projects, such as military buildups and monumental buildings, are used to combat stagnating or declining profits. If the crisis is severe enough, the level of subsidies and projects required can be achieved only against the will of working people, for it is from them that the necessary money will come, in the form of reduced wages and benefits, increased working hours and the speeding-up and intensification of their work. Fascism overcomes resistance through force.

Exploiting middle class anxieties

But, no matter how powerful they are, numerically these big capitalists are a minuscule portion of the population. How to create popular support for a movement that would ban unions, turn working people into helpless cattle, regiment all spheres of life, destroy all freedom, mercilessly destroy several groups of society, reduce the standard of living of those who still had jobs and inevitably lead to war? This is not an appealing program.

The Nazis, for example, skillfully appealed to German middle class fears of economic dislocation, the increasing numbers of unemployed blue-collar workers, the threat of being swallowed by big business and political instability (although the Nazis were the most responsible for the last of those four), creating the social base needed by the economic elite to bring its movement to power. A movement that was as anathema to the middle class as it was to the lower economic ranks, although its middle class supporters were blind to that reality as the Nazis simultaneously appealed to its grudges against societal elites.

Leon Trotsky, the sharpest observer and analyst of fascism of his time, exposed at the time the false facade of the Nazis. The party’s full name was the National Socialist German Worker’s Party, a name intentionally chosen to fool the middle and lower classes. Capitalism was discredited in Germany, so the Nazi leadership let a populist socialist-sounding program be put forth, and Hitler himself thundered against bankers, albeit generally as part of his anti-Semitic rants.

Many storm troopers believed the party’s rhetoric, even as Hitler was saying very different things to his corporate benefactors and the storm troopers were being used to burn union offices and beat and kill the workers who presumably were the victims of the bankers the storm troopers’ leaders were fulminating against. In a vivid 1932 essay, Trotsky wrote:

“In National Socialism, everything is as contradictory and as chaotic as in a nightmare. Hitler’s party calls itself socialist, yet it leads a terroristic struggle against all socialist organizations. It calls itself a worker’s party, yet its ranks include all classes except the proletariat. It hurls lightning bolts at the heads of capitalists, yet is supported by them. … The whole world has collapsed inside the heads of the petit bourgeoisie, which has completely lost its equilibrium. This class is screaming so clamorously out of despair, fear and bitterness that it is itself deafened and loses sense of its words and gestures.”

A fascist régime can not take root without a social base. Although we are accustomed to seeing storm troopers or their equivalent as coming from the depths of society, the middle class largely supplies that base, as was the case in countries as different as 1930s Germany and 1970s Chile. The historian Isaac Deutscher, in the third volume of his Trotsky biography, The Prophet Outcast, captured the mood of German shopkeepers and other middle class people who came to ruin during the Weimar Republic:

“The Kleinbürger normally resented his social position: he looked up with envy and hatred at big business, to which he so often hopelessly succumbed in competition; and he looked down upon the workers, jealous of their capacity for political and trade union organization and for collective self-defense. … At big business the small man shook his fists as if he were a socialist; against the worker he shrilled his bourgeois respectability, his horror of class struggle, his rabid nationalist pride, and his detestation of Marxist internationalism. This political neurosis of impoverished millions gave [Nazism] its force and impetus.”

Great for profits, awful for workers

It is important to remember, however, that fascist dictators like Hitler and Mussolini were appointed to power, not elected. It is true that the Nazis came in first place in Germany’s July 1931 vote, although with just 37 percent of the vote. The Nazis’ showing in another vote three months later declined to 33 percent and totaled two million less than the combined vote for the Social Democrats and Communists. The traditional nationalist conservative parties decided to “use” Hitler in the belief that they could control him; that the Nazis were in such a position was due to the massive money they received from Germany’s bankers, industrialists and large landowners. A representative of those landowners, Marshal Paul von Hindenburg, was president and appointed Hitler chancellor. It took Hitler only three months to consolidate his power.

Mussolini, too, was appointed prime minister by King Vittorio Emmanuel and received heavy support from Italy’s capitalists. What did they — and capitalists in Spain, Chile and Argentina — receive for their investment in fascist movements?

  • In Germany, corporate profits more than doubled in five years, while from Hitler’s ascension to power on January 30, 1933, to the summer of 1935, wages dropped 25 to 40 percent. In 1935, a “labor passport” was instituted in which the employer wrote reports on the holder. The employer could confiscate the passport at will, without which employment could not be taken, effectively making it impossible to change jobs. In 1938, it was formally made illegal for a worker to change jobs.
  • In Italy, from 1926 to 1934, industrial wages were reduced at least 40 to 50 percent, while agricultural wages were reduced 50 to 70 percent. Unemployment meant the specter of starvation, and as a further whip to keep wages down, children were regularly used in agricultural and factory work as substitutes for fired adults. From 1935, many factory employees were placed under direct military discipline; missing more than five days of work was a penalty subject to nine years’ imprisonment. All workers had to carry a “labor passport.”
  • In Francisco Franco’s Spain, real wages in 1949 were 50 percent of those in 1936. Rationing lasted until 1952; the rations alone were insufficient to maintain human existence. The historian Paul Preston, author of two books that closely examine Franco and his regime, quoted Hitler aide Heinrich Himmler as calling the Franco regime “more brutal in its treatment of the Spanish working class than was the Third Reich in its dealings with German workers.”
  • In Augusto Pinochet’s Chile, the majority of workers earned less in 1989 than in 1973 (after adjusting for inflation). Labor’s share of the national income declined from 52 percent in 1970 to 31 percent in 1989. The minimum wage dropped almost by half during the 1980s, and by the end of that decade, Chile’s poverty rate reached 41 percent and the percentage of Chileans without adequate housing was 40 percent, up from 27 percent in 1972. One-third of the country’s workforce was unemployed by 1983.
  • In Argentina, the main union federation was abolished, strikes outlawed, prices raised, wages tightly controlled and social programs cut. As a result, real wages fell by 50 percent within a year. Tariffs were reduced deeply, leaving the country wide open to imports and foreign speculation, causing considerable local industry to shut. For the period 1978 to 1983, Argentina’s foreign debt increased to $43 billion from $8 billion, while the share of wages in national income fell to 22 percent from 43 percent.

It was not inevitable then, it is not inevitable today

Although there were differences among these régimes due to national characteristics, and the ratio of armed street gangs and storm troopers versus direct repression by the military varied considerably, organized extreme violence, up to and including massacres, is the common thread. This mass violence is what the world’s capitalists are prepared to do if their rule is threatened, or even if their profits are in serious jeopardy.

Violence is certainly not absent from the conduct of formally democratic capitalist governments but there is a large difference between that and what is meted out by fascist régimes, at least internally. We lose our understanding of what fascism would mean in everyday life, and erode our ability to combat the tendencies from which it derives, if we obliterate these differences.

The German Communist Party pretended not to know the difference in the early 1930s, preferring to concentrate its attacks on the Social Democrats rather than the Nazis under the inane idea that the Social Democratic-run Weimar Republic was already “objectively fascist” and that the Nazis would not make much difference. The Communists very swiftly found out otherwise, becoming the first to be rounded up. In the years after World War I, the Social Democrats helped the German military and traditional right-wing parties suppress not only Communists but workers’ revolts in general — not excepting their own social base — thereby paving the road for Hitler.

On top of those blunders, the Communists and Social Democrats had their own militias, which could have countered the Nazi storm troopers, but were never put into action. It was not ordained that Hitler would come to power, or that other fascist régimes would do so. Chile’s Left was highly organized, for example.

History does not repeat itself neatly, but the wide differences among the five examples cited underscore that the threat of fascism exists in any and all capitalist countries. That does not mean that fascism is inevitable, although if capitalist economies continue in a generally downward spiral, some capitalists will undoubtedly begin thinking of it as a last-ditch effort to maintain profits despite the bad ending such régimes invariably meet. It can’t be denied that some of the pieces of fascism are in existence — including militarized police forces and ubiquitous spying agencies.

A better world, one designed to fulfill human need rather than private profits, not only is necessary for human salvation, it is the only way to put an end to the risk of turns to the authoritarian Right, in nationalist, fascist or other forms. That can only arise from organized social movements, confident in themselves and linking hands across borders. May the new year accelerate the process.

New development banks unlikely to threaten World Bank

Forecasts that new development banks sponsored by the largest developing countries are destined to erode the economic dominance of the United States are quite premature, but it is nonetheless no contradiction that the global hegemon has vigorously sought to stop them. More than a little hypocrisy is at work here.

The newly created Chinese-led Asian Infrastructure Investment Bank has drawn much more of Washington’s ire than has the BRICS New Development Bank formed by the five “BRICS” countries of China, Russia, India, China and South Africa. The U.S. government has leaned heavily on Australia and other countries sufficiently firmly that Canberra has declined to join the Asian Infrastructure Investment Bank despite its initial interest, nor have Indonesia and South Korea.

Although the infrastructure bank is to be capitalized with US$100 billion, it would be ridiculous to say that the World Bank or International Monetary Fund will be put out of business. It will not necessarily go much beyond complementing the existing Asian Development Bank, a regional multi-lateral institution controlled by the U.S. and Japan. And even the World Bank says Asia will require trillions of dollars to build its infrastructure in coming years that it and existing institutions can’t supply.

Protest at the World Bank. (Photo by "Jenene from Chinatown," New York City)

Protest at the World Bank. (Photo by “Jenene from Chinatown,” New York City)

The politics of imperialism are at work here. The very idea that a country outside the control of the U.S. dares to set up an institution outside the control of the U.S. is an example that Washington, as the ultimate enforcer of multi-national corporations’ prerogatives, is determined to stamp out.

In a front-page article, The New York Times reported:

“American officials have lobbied against the [infrastructure] bank with unexpected determination and engaged in a vigorous campaign to persuade important allies to shun the project, according to senior United States officials and representatives of other governments involved.”

And what excuse does the U.S. government give for its opposition? Officially, the Obama administration is not talking, but, quoting a “senior official” granted anonymity, the Times reports:

“A senior Obama administration official said the Treasury Department had concluded that the new bank would fail to meet environmental standards, procurement requirements and other safeguards adopted by the World Bank and the Asian Development Bank, including protections intended to prevent the forced removal of vulnerable populations from their lands. … ‘How would the Asian Infrastructure Investment Bank be structured so that it doesn’t undercut the standards with a race to the bottom?’ asked the senior official.”

Has the Obama administration, or, more accurately, the government apparatus that has steered U.S. policy on behalf of corporate interests for generations, suddenly grown a conscience? Quite unlikely. The World Bank and International Monetary Fund, as well as regional banks such as the Asian Development Bank, have been under U.S. suzerainty since their founding. Does the World Bank really uphold development ideals? The record firmly says otherwise.

The World Bank’s record of destruction

The World Development Movement, a coalition of local campaign groups in Britain, reports that the World Bank has provided more than US$6.7 billion in grants to projects that are destructive to the environment and undermine human rights, a total likely conservative. To cite merely three of the many examples, the World Bank:

  • Loaned an energy company in India more than $550 million to finance the construction of two coal-fired power plants. Local people, excluded from discussions, were beaten, their homes bulldozed and complain of reduced food security and deteriorating health as a result of the power stations.
  • An Indonesian dam, made possible by the World Bank’s $156 million loan, resulted in the forcible evictions of some 24,000 villagers, who were subject to a campaign of violence and intimidation.
  • In Laos, a hydropower project made possible by World Bank guarantees displaced at least 6,000 Indigenous people and disrupted the livelihoods of around 120,000 people living downstream of the dam who can no longer depend on the rivers for fish, drinking water and agriculture.

A study of World Bank policies, Foreclosing the Future by environmental lawyer Bruce Rich, found that:

“Drawing on Bank studies, project evaluations and sectoral reviews, it is shown that the World Bank still suffers from a pervasive ‘loan approval culture’ driven by a perverse incentive system that pressures staff and managers to make large loans to governments and corporations without adequate attention to environmental, governance and social issues. In 2013, Bank Staff who highlight social risks and seek to slow down project processing still risk ‘career suicide.’ … [The bank] has continued to binge on enormous loans to oil and gas extraction, coal-fired power stations and large-scale mining generating environmental damage, forest loss and massive carbon emissions.”

A study prepared by the Institute for Policy Studies and four other organizations found that World Bank lending for coal, oil and gas was $3 billion in 2008 — a sixfold increase from 2004. In the same year, only $476 million went toward renewable energy sources.

It could be pointed out that China’s industrialization has had serious environmental consequences, and that Chinese money was critical to the building of the Three Gorges Dam, the construction of which led to the forced removal of at least 1.3 million people. True enough, but Canadian, French, German, Swiss, Swedish and Brazilian capital were also necessary to build the dam. The World Bank also provided loans associated with Three Gorges and provided experts during the project’s planning stages.

Despite the pressure from Washington, 21 countries signed up to be founding members of China’s Asian Infrastructure Investment Bank, including India, Singapore and the Philippines.

BRICS bank expected to bow to the logic of capital

China’s new bank was formed three months after the BRICS New Development Bank. The BRICS bank will be more modest, with a goal of US$100 billion capitalization, spread equally among the five countries. In a July 2014 communiqué, the five countries said their bank will have the “purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies.” They also pledged to organize a “BRICS Contingent Reserve Arrangement” to “help countries forestall short-term liquidity pressures” resulting from foreign-exchange or debt markets.

Although this bank is intended as a gesture of independence from the U.S.-dominated world financial system, and will use some combination of the BRICS currencies, detaching from the world system is not a simple matter of setting up new institutions. A New Delhi economics professor, C.P. Chandrasekhar, sees the bank being limited in what it can potentially do. Writing on Naked Capitalism, he said:

“However, the new development bank is fundamentally not detached from the global financial system. Being a bank, even if a specialised one, it must ensure its own commercial viability. And it must do so when a large part of the resources it lends would be mobilised from the market. … [W]anting to be seen as respectful of the sovereign interests of borrowing countries, the [New Development Bank] would be careful not to frame its lending rules in ways that threaten the policy sovereignty of borrowing countries. If the countries that approach the institution are pursuing neoliberal strategies, there may be clear limits in terms of what the new development bank itself can achieve.”

Professor Chandrasekhar concludes:

“The decision of the BRICS to set up mini-versions of the World Bank and the IMF seems to be more a symbolic declaration of resentment at the failure of the US and its European allies to give emerging countries a greater say in the operations of the Bretton Woods institutions. … The desire to redress the obvious inequities in the global financial system seems far less important.”

If it is a safe haven, it is not going away

That, for at least the near future, U.S. hegemony is not threatened received fresh confirmation during October’s week-long decline in the world’s stock markets — money from around the world quickly poured into U.S. treasuries as a safe haven. From a capitalist standpoint, doing so is entirely rational: If the U.S. government unravels, the entire global capitalist system disintegrates.

Although predictions of the U.S. eventually being dethroned will one day come true — every empire has an expiration date — that such a dethronement is imminent is wishful thinking. This is not to say that U.S. power is not eroding, but there is no conceivable replacement for the U.S. at the center of the world capitalist system. The U.S. spends about as much money on its military as every other country on Earth combined and the dollar remains the world’s reserve currency; that the world continues to buy U.S. debt as a safe haven enables the U.S. to continue to run up deficits and finance its military.

There is no military remotely in a position to become the global enforcer of capital, nor any currency that could replace the dollar at the present time. The euro is not a candidate because the eurozone is too fractured and unstable; the renminbi is not fully convertible. According to the Bank of International Settlements, the U.S. dollar was involved in 87 percent of the world’s foreign-exchange transactions in April 2013, while the euro was involved in 33 percent and the renminbi in 2 percent.

The U.S. needs China to buy its debt but China needs the U.S. as an export destination; Chinese growth continues to be dependent on unsustainable levels of investment rather than internal consumption, a situation difficult to adjust because production is moved to China to take advantage of its low sweatshop wages. A contradiction on the other side of the Pacific is that U.S. foreign policy treats China as a capitalist competitor that must be contained at the same time that U.S.-based multi-national corporations are instrumental in transferring production to China.

A change in the global hegemon from the U.S. to another country or bloc, leaving the capitalist system intact, provides no salvation, no more than did the early 20th century’s transfer from Britain. Another world is possible only with an entirely new economic system. Otherwise, the subaltern will remain subaltern, be they nation or people.

Reversing global warming will take far more than asking polluters to stop

Four hundred thousand took the streets of New York City on September 21, and, regardless of our critiques of the event and the groups organizing it, that is a memorable feat. But: What will it mean?

With no disrespect to the logistical work, the hardship of travel and all the rest of the organizing work carried on over several months, a demonstration is the easy part of a movement. The hard part is sustaining the many layers of strategic work necessary to prevail against vastly more powerful entities and having the courage to directly challenge the system.

A march of protestors literally miles long can’t help but earn attention, but without much follow-up work, it will mean little, exhilarating as it was to be among so many. The next day’s “Flood Wall Street” civil disobedience, in which hundreds of people blocked a major Financial District street for several hours, is a hopeful step. If the energy unleashed in Monday’s flood is replicated in all the places from which people traveled to the September 21 demonstrations that took place around the world, then perhaps that could be the day we some day look back to as the start of a successful struggle to save the planet.

People's Climate March, New York (photo by South Bend Voice)

People’s Climate March, New York (photo by South Bend Voice)

South Africans struggling to dismantle apartheid through long decades and the civil rights activists of the 1960s in the Southern U.S. literally put their bodies and lives on the line. And yet, as inhumane as the local elites were in protecting their privileges, the global order was not targeted. Tackling global warming seriously directly challenges business as usual around the world.

Reversing global warming and living in harmony with our environment and all the living beings who share the planet with us humans means nothing less than putting an end to capitalism. The industrialists and financiers who dominate the world, and the governments that serve them, show no indication they will do anything other than throw all the violence they can summon to keep their system in place and themselves at the top of the pyramid.

Demonstrations, in themselves, change nothing: They don’t touch the system and threaten no one in power. Demonstrations do signal popular anger, activate people by showing others that there are millions who think similarly (no, you are not crazy because you don’t believe the lies the corporate media feeds you), and serve as an invaluable organizing tool. An unused tool does nothing. A tool used properly multiplies force.

Will we use the tool — will we go back to our communities and construct the organizations that will find a path to a better world? That possibility is why we all had to march, despite the critiques put forth by thoughtful activists beforehand.

They say cringe, we say fight back

These critiques bring to mind the debates over the anti-war marches on the eve of the Bush II/Cheney administration’s invasion of Iraq, when activists in the U.S. were frustrated by United For Peace and Justice’s watered-down demands and transparent attempts to steer the anti-war movement into the Democratic Party and ultimately into the presidential campaign of pro-war candidate John Kerry. The counter-argument then was for Left activists to show up anyway and raise more radical demands and bring forth more fundamental analyses.

Similar critiques were heard about September 21’s People’s Climate March, which was so watered down that it had no demands. For example, a detailed critique by Global Justice for Animals and the Environment reported that grassroots organizers were “shot down” in planning meetings when they tried to link global warming with economic issues:

“The point of the meeting, they were told, was to focus on how to bring people to the march, not to set an agenda for it. Grassroots organizers were thus being called upon to do work for an event controlled by others. This raised alarm bells for me from the outset. It’s an all too common problem for NGO staff to treat grassroots organizers as their unpaid employees. Coming in and telling us ‘we set the [nonexistent] agenda; you should do the legwork’ is insulting and disrespectful of our time, priorities, and insights.”

At some point, an undifferentiated “big tent” devolves into a marketing opportunity for those most responsible for global warming. The Global Justice critique concludes:

“Another world IS possible, but we will not find it on a literal and metaphorical march to nowhere with fossil fuel burning energy companies, cynical greenwash fronts for big food multinationals, and green Apartheid apologists.”

I had no reason to disagree with that assessment. Nonetheless, why stay home? Better to show up, ignore the organizers and make far more serious critiques and raise far more serious demands at the march. (Which the authors of that critique indeed did do.) It’s not every day that one can see hundreds, perhaps thousands, of signs denouncing capitalism. And although even the route of the march came under criticism, it snaked through heavily trafficked areas of Midtown Manhattan. Going past Times Square alone, untold thousands of tourists — including people from across the United States, who most need that message put in front of them — saw it.

The corporate media won’t do our work for us

A sign that the march was too big for the corporate media to ignore was that the local newspapers actually ran articles about it. But New York City’s tabloids in particular were true to form, with the Daily News headlining its story “Thousands of protesters, including Leonardo DiCaprio, Mark Ruffalo, join People’s Climate March.” Alas, the article mostly consisted of breathless celebrity sitings, with only one actual activist quoted.

That was one more activist than could be found in The New York Post’s content-free article. The Post’s headline also referred to “thousands” and its article consisted entirely of celebrity mentions. But lest we think Rupert Murdoch’s minions are losing their extremist edge by uncharacteristically deigning to cover (however superficially) a demonstration not organized by the tea party, it ran an accompanying story headlined “Climate change skeptics call out marchers’ ‘hypocrisies.’ ” We’ll pause here while you enjoy a laugh.

Given the dearth of television coverage, the organizers’ goal of attracting media attention didn’t materialize in any meaningful way. And if there had been a flurry of television coverage, the corporate media would have moved on after one day with no follow-up. Organizing a march simply to generate media attention is a dead end strategy.

So despite the march-organizing NGOs’ faith in the Democratic Party and wish to avoid offending their corporate donors, there is not going to be a faction of the establishment suddenly open to confronting the issue of global warming. “Green capitalism” is an illusion — a system based on infinite growth on a finite planet, that grants a few vast rewards while shifting the costs to everyone else, is the problem and not the solution.

Organizing and struggle is the route to reversing global warming, not asking those who profit from destruction to please stop doing so.

“Justice” for a billionaire, none for the state he ripped off

There has been much cheering across the corporate media about the Permanent Court of Arbitration in The Hague ordering the Russian government to pay more than US$51 billion as compensation for confiscating the assets of Yukos, yet silence concerning the original theft of the company by Mikhail Khodorkovsky.

The basis of the decision by the arbitration court was that the assets of Yukos, seized for alleged non-payment of taxes, were sold for US$9 billion, well below the estimated value of the company. Conveniently left out of this picture is that Mr. Khodorkovsky purchased the assets for $159 million seven years earlier in a rigged process that he controlled. He did so as one of seven oligarchs who bought deeply unpopular former President Boris Yeltsin a second term and were handed control of the country’s vast natural resources as a reward.

This is a story that can not be separated from the fall of the Soviet Union and the looting of its assets, with a handful of newly minted oligarchs, mostly former black marketeers who became bankers, coming to control post-Soviet Russia’s economy. Estimates of the size of the assets that came to be owned by the seven biggest oligarchs (Mr. Khodorkovsky was one of them) in the late 1990s range up to one-half of the Russian economy. This at the same time that the Russian economy shrank by 45 percent and an estimated 74 million Russians lived in poverty according to the World Bank; two million had been in poverty in 1989.

Siberian mountain formation (photo by Irina Kazanskaya)

Siberian mountain formation (photo by Irina Kazanskaya)

An important factor in the failure of Mikhail Gorbachev’s perestroika was that working people saw the reforms as coming at their expense. A 1987 reform loosened job protections in exchange for enterprise councils that were to have given workers a voice in management, but the councils were largely ineffective or co-opted by managements. The law had also been intended to eliminate labor shortages. It didn’t, and a 1990 reform was stealthily passed to reduce employment and eliminate the ability of working people to defend themselves. Enterprises would now have private owners with the right to impose management and ownership shares could be sold.

Exhaustion from years of struggle also were a factor in the lack of organized resistance to the elements of capitalism that were introduced in the last years of perestroika and to the shock therapy that was imposed on Russia at the start of 1992, days after the formal dissolution of the Soviet Union and the assumption of uncontested power by President Yeltsin. Shock therapy wiped out Russians’ savings through hyperinflation and state enterprises were sold at fire-sale prices, or sometimes simply taken.

Connections allowed him to set up businesses

Mr. Khodorkovsky used his connections as an official within the Communist Youth League to found a company that imported and resold computers and other goods at huge profits and engaged in currency speculation. The proceeds were used to buy companies on the cheap and found a bank. His bank, Menatep, earned large fees by providing credit when it was in scarce supply during the post-Soviet collapse.

When President Yeltsin was up for re-election in 1996, he faced a daunting challenge as his popularity rating was well below 10 percent — tens of millions of Russians had been plunged into poverty and the economy had contracted for several years in succession. The president admitted in his memoirs that he was about to cancel the election. But he was presented with a plan by the seven oligarchs, the scheme that became known as “loans for shares.”

These seven oligarchs offered President Yeltsin a bargain: In lieu of paying taxes, they would make loans to the government so it could meet its expenses, such as actually paying its employees. In return, the government would give the oligarchs collateral in the form of shares of the big natural-resources enterprises that were soon to be privatized. (Other state enterprises had been quickly privatized upon the implementation of shock therapy.)

If the loans were repaid, the bankers would give the shares back. If not, the oligarchs would hold auctions to sell the collateral. The government had no ability to pay back these loans, but President Yeltsin issued a decree sealing the deal in August 1995.

The oligarchs used their own banks to conduct the subsequent auctions, and, through a mix of rigged terms and conveniently closed airports, won them all at prices that were small fractions of the enterprises’ reasonable market value. These enterprises represented Russia’s enormous reserves of oil, nickel, aluminum and gold, and a minority share in the dominant gas company, Gazprom.

These seven oligarchs all became billionaires through the “loans for shares” scam. The oligarchs, who owned almost the entire Russia mass media, spent 33 times the legal limit on the election and provided 800 times more television coverage of President Yeltsin than was provided to his opponents.

Mr. Khodorkovsky’s bank, Menatep, was put in charge of the auction of Yukos. It avoided competitive bidding, enabling his holding company to buy it for $159 million, only $9 million above the starting price. As long as Boris Yeltsin was president, the oligarchs could steal all they wanted. Nor did Western authorities complain about this; President Yeltsin’s bombardment and illegal disbanding of the Russian Parliament in 1993, resulting in more than 500 deaths, was celebrated as a democratic triumph. Indeed, the World Bank’s chief economist for Russia declared, “I’ve never had so much fun in my life.”

Corporate lawyers as arbitrators

The Permanent Court of Arbitration that handed down the $51 billion judgment is one of the international tribunals that hear investor-state disputes behind closed doors. As is customary with these bodies, the arbitrators are corporate lawyers appointed by governments.

In the Yukos case, each side could choose one of the three panelists who hear the case. The deciding panelist was Yves Fortier, a former chair of one of Canada’s biggest corporate law firms and of Alcan Inc., a mining company since bought by Rio Tinto, and a director of several other companies.

I see no sense in denying that politics were behind Mr. Khodorkovsky’s prison sentence and his loss of Yukos. But there can be no dispute that politics and shady dealing earned him his fortune in the first place. The gangster capitalism in which he excelled in the 1990s, cheered on by the West, was without mercy. Are there going to be outpourings of sympathy for the tens of millions of Russians immiserated so that the country’s Khodorkovskys could become billionaires? I think we already know the answer.