A Bankrupt Empire

The US has clearly reached the point of imperial overreach. Military spending and debt servicing are cannibalising the US economy, the real basis of America's world power.

Eric S. Margolis 

President Barack Obama calls the $3.8 trillion budget he just sent to Congress a major step in restoring America's economic health. In fact, it's like giving a drug addict another potent dose of the narcotic to which he is addicted.
The drug is debt. More empires have fallen because of reckless finances than invasion. The latest example was the Soviet Union, which spent itself to ruin buying tanks. Washington's deficit (the difference between spending and income from taxes) will reach a staggering $1.6 trillion this year. The huge sum will be borrowed, mostly from China and Japan, which the US already owes $1.5 trillion. Debt service will cost $250 billion. By 2015 it will consume a third of total federal spending. To spend $1 trillion, one would have had to start spending $1 million daily soon after Rome was founded and continue for 2,738 years until today.
Obama's total military budget is nearly $1 trillion. This includes Pentagon spending of $ 880 billion. Add secret 'black programmes' (about $70b); military aid to foreign nations like Egypt, Israel and Pakistan; 225,000 military 'contractors' (mercenaries and workers); and veteran's costs. Add $75b (nearly 2.5 times France's total defense budget) for 16 intelligence agencies with 200,000 employees. The Afghanistan and Iraq wars ($1 trillion so far), will cost $200-250 billion more this year, including hidden and indirect expenses. Obama's Afghan 'surge' of 30,000 new troops will cost an additional $33 billion -- more than Germany's total defense budget. No wonder US defence stocks rose after Nobel Peace Laureate Barack Obama's 'austerity' budget.
Military and intelligence spending relentlessly increase as unemployment hovers at 9.7 per cent. Critics claim the real figure is closer to 20 per cent. America has become the Sick Man of the Western hemisphere, an economic cripple like the defunct Ottoman Empire that used to be called the Sick Man of Asia. The Pentagon now accounts for half of total world military spending. Add America's rich NATO allies and Japan, and the figure reaches 75 per cent.
China and Russia combined spend only a paltry 10 per cent of what the US spends on defence. There are 750 US military bases in 50 nations and 255,000 US military personnel stationed abroad, 116,000 in Europe, nearly 100,000 in Japan and South Korea.
US military spending gobbles up 19 per cent of federal spending and at least 44 per cent of tax revenues. During the Bush administration, the Iraq and Afghanistan wars - funded by borrowing - cost each American family over $25,000. Like President George Bush, Obama is paying for America's wars through supplemental authorisations - i.e. putting them on the nation's already maxed-out credit card. Future generations will be stuck with the bill. This is the height of public dishonesty. Both the president and congress share the blame. America's wars ought to be paid for through direct taxes, not bookkeeping fraud. If US taxpayers had to actually pay for the Afghan and Iraq wars, these conflicts would quickly end. America needs a fair, honest war tax that allows them to understand the true costs of their military operations around the globe.
The US has clearly reached the point of imperial overreach. Military spending and debt servicing are cannibalising the US economy, the real basis of America's world power. The US also increasingly resembles the dying British Empire in 1945, crushed by immense debts incurred to wage WWII. It is increasingly clear President Barack Obama is not in control of America's runaway military juggernaut. Sixty years ago, the great President Dwight Eisenhower warned Americans to beware of the military-industrial complex's growing power. Six decades later, partisans of permanent war and world domination have joined Wall Street's money lenders to put America under their power.
Increasing numbers of Americans are rightly outraged and fearful of runaway deficits. But most do not understand their political leaders are spending their nation into ruin through unnecessary foreign wars and a vainglorious attempt to control much of the globe - what neoconservatives call 'full spectrum dominance.' If Obama were really serious about restoring America's economic health, he would demand military spending be slashed, quickly end the Iraq and Afghan wars, and break up the nation's five giant banks. He certainly cannot continue running a world empire on borrowed money.

Eric Margolis is a veteran US journalist who reported from the Middle East and Asia for nearly two decades.

  Is Russia’s economic crisis over?

In recent months, Russia's government finally brought inflation down to 8 per cent. Sometimes this is presented as another milestone demonstrating that the crisis is near its end.

Irina Yasina 

Has Russia's economic crisis ended? That depends on who you ask. Ask Prime Minister Vladimir Putin, or any official of his United Russia Party, and you will be told: "Of course it is over."
They will even produce proof in the form of an unemployment rate that does not rise, unprecedented increases in pensions, and strong growth in construction and metalworking.
Of course, all these comparisons are made with how things stood last month rather than with the country's pre-crisis economic performance. Then there is another "miracle" that the government is starting to trumpet, one discovered in August 2009: an increase in Russia's population. Unfortunately, in no month before or since have births outpaced deaths.
Ask a member of the opposition whether the crisis has ended, and you will be told that it is only just beginning. Gazprom's production is falling at a dizzying pace; the country's single-industry "mono-towns" are dying.
There is truth in both views about the state of Russia's economy, but because the government controls all the major television channels, it is succeeding in enforcing its view of the situation. Indeed, the opposition has access only to a few newspapers and radio stations, leaving the Internet the sole remaining space of freedom in Russia. But there you can read very pessimistic estimates of the country's economic future. So the Kremlin blinds its citizens with rosy scenarios, while the Internet overdramatises reality.
The truth, it is clear, is somewhere in the middle. What is beyond dispute is that Russia's economic health depends on external factors. But, outside Russia, no responsible economists can even begin to say whether the crisis is truly over. They know that relatively calm markets do not mean that strong economic growth is around the corner.
Russia's economy is now hostage to potential global growth. It is clear why: the state budget depends almost totally on energy prices. Now that oil price has reached $80 per barrel, Russia's central bank can start buying foreign currency again. Gold and foreign currency reserves are increasing, implying appreciation of the ruble. But Russia's budget for 2010 is still headed for a serious deficit, owing to high spending.
The rapid income growth of the early Putin years is a thing of the past. While it persisted, expenditures swelled but were manageable - until, suddenly, energy prices collapsed. The Kremlin, devoted to its key fetish - Putin's approval ratings - proved completely unprepared to curtail public spending in the wake of falling state revenues. The budget deficit, unsurprisingly, ballooned.
The late Yegor Gaidar, Russia's first pro-reform prime minister, warned the government about the consequences of inflated oil prices, repeatedly arguing that excessive spending growth would undermine the political will for retrenchment when it became necessary. Gaidar died last year, his unheeded warnings having come true, proving once again that no man is ever a successful prophet in his own country.
In recent months, Russia's government finally brought inflation down to 8 per cent. Sometimes this is presented as another milestone demonstrating that the crisis is near its end. But that is wrong. Inflation fell as a result of the crisis, which reversed the direction of capital flows. Whereas inward investment reached $20 billion in 2008, capital outflows totalled $20 billion in 2009. The central bank buys less foreign currency, and thus issues fewer rubles, reducing inflation.
A far more inertial indicator is unemployment, which experts predict will grow in 2010. The problem is that Russian labour is less mobile than in the Europe and the United States. Russians prefer lower wages - or simply waiting with no wages at all - to moving in search of a new job.
The situation at carmaker AUTOVaz is a striking example. Last year, output fell to 300,000 cars, from 800,000 in 2008. Such a dramatic fall in sales would normally require massive layoffs or lower wages. Yet, of the company's 102,000 employees, only 27 favoured layoffs. As a result, wages were cut by half. The state, which is seeking to rescue the domestic automobile industry, allocated to the firm more credits through state-owned banks.
But how long can such a situation last? One day, it will no longer be possible to disguise unemployment through shorter working weeks, forced leaves of absence, and decreases in wages. When that happens - and there is a strong probability that it will happen next year - the crisis will only just be beginning for Russia.
All over the world - in the US, Europe and China - stimulus programmes have paid off, as expected. But it is not yet certain whether the engine of the global economy will be able to run without additional liquidity, possibly undermining fiscal stability worldwide. Elsewhere, that will become clear in the first half of 2010; in Russia, signs of recovery, if they appear at all, will lag well behind the rest of the world.

The writer is an analyst at the Institute of Transitional Economy, a weekly economic commentator for RIA Novosti, and a representative of the Open Russia Foundation.

  Torture destroys humanity

We deceive ourselves if we pretend that torturing others does not also affect our own decency. It does not make us more secure

 Walter Rodgers   

They live invisibly among the US population, 41,000 in the Washington area, half a million in the country as a whole. They are survivors of horrific political torture. Unless they open their shirts, you detect few visible scars. "The mark of torture is more inside than out," says "Elena," a woman from Gabon who uses a wheelchair.
(Because everyone interviewed has living relatives in their native lands, all names have been changed at their request.)
Americans with no experience deceive themselves about torture. A friend told me that when the US tortured people it was somehow more humane.
But talk to torture victims at the annual gathering of the Torture Abolition and Survivors Support Coalition (TASSC) and they tell you that torture, whatever its guise, is always immoral.
In the early 1980s, Miguel was held prisoner for four years by the Marcos regime in the Philippines. "Torture is always wrong," he says. "It uses terrorism to try to destroy terrorism. The torturer becomes the terrorist. You think you establish order by breaking the law."
Torture breaks people as well as the law. Yvette from Cameroon speaks slowly, vacantly, and without focus. One of the TASSC directors acknowledged that "her mind has yet to heal."
Yvette was tortured for belonging to a human-rights defence group in Cameroon. Police were seeking information on political dissidents. "I was beaten continuously," she says. "They slapped my face and head for three days. I don't know how long I was unconscious." When Yvette regained consciousness, she was unable to walk for a week, her legs having been beaten with police batons.
"I think the pain will never stop," she says. "I still shake when I hear police sirens."
"Even in Washington, DC?" I ask.
"Yes. I feel like they're after me again."
Perpetrators of torture share a common rationale: national security. "They tell you torture keeps your families safe and secure," says Miguel.
What about the Israeli argument - that torture can thwart a suicide bomber, or the American version: "What if ... terrorists planted a suitcase-sized nuclear bomb in New York City?"
Alternatives
I put that question to torture survivors. One asked, "Why torture anyone? Wouldn't you be better off finding an imam ... to sit with the prisoner and let him persuade a suspect it's morally wrong to take innocent lives?"
Of the dozen survivors I interviewed, people from Asia, Africa, and the Middle East, each said torture doesn't work. In 2008, Mary from Uganda was beaten, gang raped, and terrorised in prison. Her crime? Being a member of the opposition party. "When they torture you, two things happen," she says. "First they make you crazy. Next, you believe you're going to die, so there's no point in confessing."
Given the harshness of the interrogation techniques his administration authorised, former president George W. Bush was disingenuous when he insisted in 2006 that the US doesn't torture. He should first have consulted his father, a former CIA director, about the effectiveness of torturing an enemy.
An Ethiopian named Thomas spoke to that. "Instead of breaking you, it [torture] hardens you," he says.
Fortunate torture survivors sometimes get asylum in the US. By word of mouth, they learn of TASSC. Officials Miguel and Daoud, both torture survivors, shepherd the newcomers, finding them psychiatric help and shelter. In group counselling, perhaps the most difficult question they deal with is, "Why did this happen to me?"
A 2006 survey showed that a third of the world supports some degree of torture to combat terrorism. Yet we deceive ourselves pretending it does not also destroy our own decency and humanity. Support for torture was highest in Israel, at 43 per cent; it was 36 per cent in America. The fallacy of torture is the notion that terrorising others makes us more secure.

Walter Rodgers, a former senior international correspondent for CNN, writes a biweekly column for the Christian Science Monitor's print weekly edition.