Part I of a two part essay. Find Part II here.

"Oil Wars and World Orders New and Old"

Aufheben

Introduction

The American-led interventions in Bosnia and Kosovo during the 1990s were
presented as 'humanitarian wars'. With the widespread, if not always universal,
support of the 'international (bourgeois) community', the liberal apologists for
such wars were able to claim that they were being waged to uphold the universal
norms of the 'civilised world' that now overrode the old principles of national
sovereignty. The conflicting material interests underlying these military
adventures were far from apparent.

In stark contrast, it was hard to disguise the fact that the invasion of Iraq
was primarily motivated by a drive to reassert American power, and in particular
its control over the world's oil supplies. In the face of naked American
imperialism, which was determined to take Iraqi oil by force, the 'international
(bourgeois) community' was openly split between those who sought to oppose the
US and those who favoured a policy of appeasement.

As a consequence, the fashionable talk about 'globalisation', of the
emergence of a unified 'transnational bourgeoisie', of an all embracing yet
amorphous 'Empire', and of the terminal decline of the nation state has been
shoved to one side. The need to understand the geo-politics of the current epoch
of capitalism in terms of imperialism and the relation between nation states and
'national capitals' has reasserted itself.

We do not propose to enter into a detailed discussion here concerning
theories of globalisation and imperialism. However, it is necessary to make a
few preliminary points and observations.

Recognising the continuing importance of imperialism and the nation state
does not mean that we return to the classical theories of capitalist imperialism
associated with Lenin, Bukharin and Luxemburg. Neither does it mean that we
accept the anti-imperialist conclusions that have often been drawn from these
classical theories of imperialism, which would lead us to 'critically defend'
the 'weaker' capitalist states against the 'stronger'. Whatever their merits,
and whatever their errors, these theories belong to a past era of capitalism.
However, rejecting 'globalisation' theories does not mean that we deny that
there has in recent decades been, in some sense, a tendency towards the
'globalisation' of capitalism that has redefined and reformed the relation of
the state to capital.

Of course, it is true that since the second world war the growth in
international trade has consistently outpaced the growth in world production. As
a consequence, international trade has become increasingly important. However,
after the collapse in world trade that came with the break down in the
gold-standard in the 1920s and the world slump in the 1930s, the level of world
trade was at a low point. Indeed, it has only been in the last few years that
world trade as a proportion of the total world production has reached the levels
that had existed on the eve of the first world war.

Of course, it is also true that the scale of production in many industries
has gone beyond the limits of European sized national economies. Production of
many complex manufactured commodities (e.g. cars) are spread across national
frontiers and such commodities are produced for more than one national market.
But it is only in a relatively few industries that the production and
realisation of surplus-value has reached a global scale. At most the 'industrial
circuits of capital' are confined to distinct continental blocs. Even in a
relatively open economy such as the UK more than two thirds of output is for the
domestic market and more than half of what is exported remains within the
European Union.

Since the 1970s the development of world money-markets has given rise to what
we have termed global finance capital. Vast flows of largely fictitious capital,
which dwarf the value of international trade, now swoosh around the world. This
growth of global finance capital undoubtedly has led to growing interconnections
amongst the world's bourgeoisie and ruling classes as the ownership of surplus
value and the direction of its capitalisation have become increasingly
internationalised. Nevertheless the ownership and control of most major
transnational corporations are concentrated in one country. Furthermore, despite
the emergence of supra-national organisations of 'global governance', the nation
state remains the principal centre for the political organisation of capital
necessary for the mediation of class conflict and for the securing the social
and economic conditions for capital accumulation. Thus, despite the
'globalisation of capital', we can still talk about various national
bourgeoises, organised around particular nation states, with their own
distinctive interests and policies.

Any understanding of the current geo-politics of world capitalism must
therefore be in terms of the relations between nation states determined by the
underlying tension between the globalisation of finance capital and the far more
limited internationalisation of the production and realisation of surplus-value.

The fall of the Eastern Bloc and the 'New World Order'

The fall of the Berlin Wall in 1988 opened up the prospect of a unified
global capitalism. The capitalist counter offensive, which had sought to
outflank and break up the entrenched positions of the working class in the core
western capitalist economies, now found itself with far more room for manoeuvre.
With the end of the cold war there was no longer any overriding military or
ideological constraints to the full implementation of the neo-liberal policies
that had been pioneered by Thatcher and Reagan. With the 'end of history' and
the triumph of liberalism and 'free market' capitalism, all national economies
had no option but to compete in the new 'global markets'.

In the core capitalist countries of the West, particularly in Western Europe,
the 'modernising' factions of the bourgeoisie, armed with the 'free market'
triumphalism that accompanied the break up of the Eastern Bloc and the demise of
'actually existing socialism, could now press with fresh vigour for the rolling
back of the social democratic post-war settlements and the rigidities and
restrictions these placed on the competitiveness and profitability of
capital.

In the periphery, the end of the cold war meant that there was no longer any
need, on the part of western capitalism, to tolerate the various forms of
state-led 'national economic development' that had served to bolster 'third
world' states against the 'threat of Communism'. No longer able to play the two
superpowers off against each other, the ruling classes of the periphery had
little option but to allow themselves become mere local agents of international
capital - opening up their nations assets to the plunder of transnational
corporations and predations of the western bankers in return for a share in the
spoils.

However, the prospect of a unified global capitalist utopia, in which an
increasingly transnational bourgeoisie would be free to make a profit how and
where it liked, assisted by compliant nation states eager to attract capital
investment, was tempered by the very real danger of the disintegration of global
capitalism. From the end of the Second World War the common and overriding
'threat of Communism' had served to contain rivalries amongst the western
imperialist powers. During the long cold war each nation state in the West had
been prepared to compromise their immediate interests in order to maintain
western unity. With the fall of the eastern Bloc this was no longer the case.

Following the German and Japanese economic miracles of the 1960s there had
been a distinct tendency for the break up of western capitalism into three
distinct economic blocs centred around the USA, Germany and Japan. However,
despite the economic integration of Western Europe within the European Union,
this tendency had always been held in check by the common military threat posed
by the USSR. With the collapse of the Warsaw Pact and Comecon, the way was open
for Eastern Europe to be integrated into a German centred European Union, which
would displace the US as the world's largest market and which would also provide
German industry with a cheap but highly trained workforce. In Asia the
increasing volumes of Japanese foreign investment, which had greatly increased
since the rise of the Yen in second half of the 1980s, could be seen as further
evidence of the consolidation of an Asian Bloc around Japan.

However, the only state power with the global reach capable of securing a new
global order against 'rogue states' and popular resistance to the destabilising
effects of an unrestrained 'global capitalism' was that of the USA. Yet, with
the fall of the USSR, there re-emerged powerful isolationist tendencies within
the US bourgeoisie that were reluctant for the USA to take up the burden of
'world policeman'.

The re-emergence of isolationism and the end of the cold war

The USA's rapid industrialisation in the late nineteenth century had been
made possible by the insularity of its economy from the dominance of British
manufacturing in the world market. Sheltered by its distance from Britain and
protected by high tariff barriers, America's continental-wide economy had
provided ample room, and a plentiful supply of raw materials, necessary for the
development of the modern large scale capitalist industry of the age.

Against the calls for free trade, and the gold standard, and hence
integration into the world market, advocated by the political establishment and
bankers of the East Coast then represented by the Democratic Party, large
sections of the American industrial bourgeoisie had allied themselves with
petit-bourgeois producers and small farmers of the West to form a strong
tradition of Populist isolationism in US politics. Even in the 1920s and 30s,
when the US had become the most advanced capitalist economy in the world, and
had little to fear from free trade and foreign competition, isolationism
remained a potent political force. Isolationism was able to overcome the
attempts to develop the more liberal and active foreign policy pursued by
President Woodrow Wilson, which had led to the USA's intervention in World War I
and which had culminated in America's leading role in the formation of the
League of Nations.

It was only after World War II that this isolationist tradition was submerged
as the American bourgeoisie were mobilised against the 'world-wide threat of
Communism'. Even then isolationist tendencies were not entirely eliminated.
During the period of detente in the 1970s many European leaders had
feared isolationist tendencies in America would lead to the US disengagement
from Europe. With the decline and fall of the USSR the way was open for a
resurgence of US isolationism.

Of course, the economy of the USA in the late 1980s was very different from
what it had been 50 years earlier. The growth of world trade and international
capital flows, dominated by mostly American banks and multinationals, in the
decades following the World War II had meant that the accumulation of American
capital was far more interdependent with capital accumulation elsewhere in the
world than it had been during the inter-war years. With investments of American
capital across the western world, the US state could not so easily disentangle
itself from its commitments as the sole world super-power. Nevertheless, faced
with the huge costs of maintaining the global reach of US military and
geo-political dominance, a substantial coalition could be built around the
demand for the minimization of the US foreign policy involvement beyond North
and South America.[1]

The arguments of this isolationist tendency within the American bourgeoisie
were fortified by the perilous state of the US economy at the end of the 1980s.
Although Reagan's acceleration of the arms race can be seen to have played an
important part in the downfall of the 'Evil Empire', it had also placed the USA
in severe economic difficulties. The huge growth in military expenditure,
coupled with Reagan's policy of tax cuts for the rich, had opened up a big hole
in the Government finances. To finance its growing budget deficits the Reagan
government had borrowed vast sums on the financial markets pushing up American
interest rates. This had led to a substantial rise in the exchange rate of the
Dollar. Faced with both rising interests rates and a highly overvalued Dollar,
large swathes of American industry found itself unable to compete with the flood
of imports from the 'newly industrialising economies' of East Asia. As a
consequence of this flood of imports, America's trade deficit with the rest of
the world soared.

It is true that by the end 1980s concerted efforts by the world's leading
central banks and strenuous efforts on the part of the US administration had
gone some way towards unwinding the gross imbalances generated by the
Reaganomics of the early 1980s. But with the financial crisis of 1987 and the
subsequent slide into recession there appeared little prospect that such
attempts to substantially reduce the huge trade and budget deficits could be
sustained.

For many bourgeois commentators, America's economic problems were symptoms of
its underlying economic decline that had become apparent since the late 1960s.
Far from reversing America's relative decline as a world power, as they had
originally been intended to do, Reagan's economic policies had appeared to have
greatly accelerated it. Whereas at the beginning of the 1980s the US had still
remained the world's largest net creditor, by the end of the decade it had
become the world's largest net debtor. It seemed that American manufacturing
industry was increasingly unable to compete with 'lean production' methods of
Japan, and the cheap and compliant labour of East Asia. Furthermore, America's
attempt to follow the historical example of Britain, by prolonging its economic
hegemony by shifting away from the production of surplus-value in industrial
production to the interception of the surplus-value produced elsewhere by means
of its dominance of international finance, looked like being short lived. The
Japanese banks and financial institutions, bloated as it subsequently turned out
by the unsustainable asset bubble of the late 1980s, now loomed large and
threatened to invade American capital's last place of refuge.

Hence, for the pessimists amongst the American bourgeoisie, it seemed that at
the very moment of its triumph over its great adversary, the USSR, America had
entered the beginning of its demise as the world's economic super-power.
America, like all previous empires, it seemed, was destined to decline, weighed
down by the sheer military cost of maintaining its imperialist ambitions. At the
end of the 1980s, it did not seem to many that the 21st century would be a 'new
American century'. The future seemed to belong to the land of the rising Sun.

Multilateralism and the New World Order

At first sight it might seem that the fall of the USSR should have allowed
the American state to assume the role of the sole global super-power at the same
time as gaining a huge peace dividend. With the fall of the USSR, America's
military might dwarfed that of all the other major military powers put together.
There would seemed to have been plenty of scope for cutting military expenditure
without impairing America's ability to 'police' any new world order. Of course,
there were powerful interests amongst the American military-industrial complex
opposed to large scale cuts in weapon spending, but perhaps a more important
obstacle to such cuts was the remaining legacy of the working class offensive of
the 1960s and 1970s - the 'Vietnam syndrome'.

The American bourgeoisie has long been reluctant to send their sons (and now
their daughters) to war. They have preferred to leave not only the rank and file
but also much of the officer corps of the American armed forces to be drawn
predominantly from the working class - and in doing so had provided an important
escape route and career path out of the urban ghettoes. This has been possible
because American imperialism was not built on colonialism or prolonged military
occupation of foreign lands. Indeed, through much of the century America had
sought to break up the old colonial empires of the European imperial powers.
Instead, the US has depended on its economic supremacy, covert operations and
proxy forces to maintain its on hold its 'empire' and advance its foreign
interests.

As a consequence, the American army, in contrast to that of Britain and
France, has not been used to export social relations into its dependencies. Nor
has the American Army had much practice dealing with the problem of maintaining
morale of soldiers stationed in far away places fighting people for interests
very remote from their own.

However, the problems for the American military of being involved in a
prolonged conflict in adverse conditions in foreign lands during a period of
heighten class conflict at home, became all too clear with the Vietnam War. For
the American bourgeoisie the defeat in Vietnam, which was to a significant
extent caused by the insubordination of the American armed forces, was a
humiliation. For the front line junior office who experienced the fragging,
mutiny and collapse in morale at first hand, it was traumatic. By the late 1980s
this generation of junior officers were graduating into positions of high
command giving rise to a general aversion amongst the American military to risky
or prolonged military engagements.[2]

The overriding concern of the American military in their strategic and
tactical planning, which emerged at the end of the Cold War, has been to avoid
both large numbers of casualties and long term military commitments by ensuring
the use of overwhelming force.[3] To achieve this objective, military planning
has depended on increasing massively the firepower available to each soldier, a
preference for air war over ground war and the automation of weapons of war in
order to keep military personnel out of the firing range. Yet increasing the
'organic composition of destruction' in this way has meant ever more
sophisticated and thus costly weaponry. To avoid the risk of casualties, the
reliance on the soldier and his rifle has been replaced by aircraft and 'smart
bombs'. As a consequence, the costs of maintaining US military supremacy have
escalated.

If the US was to act as global policeman in the post-cold war era, it seemed
necessary that the American armed forces would require the capability of
intervening anywhere in the world against 'failed' or 'rogue states'. But this
meant that the high costs of matching the Russians in conventional and nuclear
forces would now be replaced by the huge costs of the rapid deployment of
overwhelming force anywhere in the world.

Thus, although there were many amongst the American bourgeoisie whose mouths
watered at the prospect of a new unified global capitalism under the aegis of an
all powerful American state, there were many who feared that an
interventionalist foreign policy would be far too expensive. For the industrial
capitalist with large amounts of capital sunk in plant and equipment in America,
or with a largely American market; or for those in the ruling and middle classes
fearful that the cuts in social provision of the Reagan years would lead to
increasing social discontent, a more isolationist foreign policy seemed a more
preferable option.

However, there was one trump card that could be used against proponents of
isolationism - that card was the American economy's dependence on oil. With the
depletion of oil reserves in the Americas, the US faced the prospect of
increasing reliance on the one of the most volatile and militarised regions of
the world - the Middle East. It was around this issue of oil that Bush Snr
sought to resolve the dilemma between an expensive interventionism and a cheap
isolationism by adopting a policy of multilateralism with his 'New World Order'.
And it is therefore no surprise that Bush Snr's 'New World Order' was both
proclaimed and consummated with the Second Gulf War of 1991 - a war fought by
American, British and French forces, but paid for by Japan, Germany and Saudi
Arabia.

From the first to the second Gulf War

The Iranian Counter-Revolution the early 1980s had dramatically altered the
situation in the middle east and particularly the all important oil rich gulf
states for America and the West. The long established pro-western Shah had been
replaced by a pan-Islamic theocracy committed to spreading its version of
anti-western Islamism across the middle east and beyond. The rift between the
USA and Saudi Arabia, which had arisen over Israel and the oil blockade of 1973,
had largely been overcome by 1979 and the internal conflicts between the
traditionalist and the modernising middle classes had been mitigated by the
greatly enhanced oil revenues. However, despite being well equipped, Saudi
Arabia's army was generally regarded as being ineffective, leaving the country
vulnerable to hostile neighbours. Furthermore, while the internal tensions were
to some extent contained by the growth in oil revenues, they remained a threat
to the long term stability of the Saudi regime.

The third major power in the Gulf was Iraq. The US had backed the Ba'athists
in the 1960s in order to prevent the Iraqi Communist Party from taking power.
However, once the Ba'athists had consolidated power, they began to adopt a
policy of state-led national development that followed the nationalisation of
the oil industry in 1971. As a result the Ba'ath government in the 1970s gained
the support of the Iraqi Communist Party, which still remained the largest party
in the country, and increasingly became aligned with the USSR. Hence, following
the Iranian Revolution, of the three major powers in the Gulf, two were avowedly
hostile to the West and one, Saudi Arabia, while pro-western, was potentially
unstable.

However, there was little to unite the pan-Islamic regime of Iran with the
pan-Arab modernising regime in Iraq. On coming to power Saddam Hussein took the
opportunity of Iran's disarray following its revolution to launch an attack
ostensibly in order to regain territory that had been lost earlier in the decade
to the Shah. This was to lead to the first Gulf War of 1981-88, which was to
last for eight years and leave an estimated one million dead.

The US took the opportunity of backing the 'lesser evil' of Saddam Hussein in
a war that served to contain both Iran and Iraq. Crucially it also served to
reduce the supply of both Iraqi and Iranian oil on to the world market at a time
when the oil shortage of the 1970s had given way to the oil glut of the 1980s,
which threatened to lead to a collapse in the price that would wipe out the
American high cost oil industry. Indeed, for the US it became advantageous to
prolong the war, and as the Iran-contra scandal revealed, the Americans were
quite prepared to supply arms to both sides.

For Saddam Hussein the war provided a perfect means to consolidate his newly
established position as leader both within the potentially factious Ba'athist
party and within the country as a whole. The imperatives of war allowed Saddam
Hussein to ruthlessly crush both opposition within his own Ba'athist Party and
to destroy the organisation of the Communist Party that had by now become
completely compromised by its support for the regime and its commitment to
nationalism. With the mobilisation for war Saddam Hussein was able to militarise
society by bringing a vast proportion of the working class under direct military
discipline. Trade Unions and other organisations of 'civil society', which had
been dominated by the Iraqi Communist Party, were integrated within the
party-state.

However, after Iraq's early successes, the war became bogged down. Opposition
to the regime manifested itself in the form of mass desertions, particularly in
those areas like Kurdistan that were distant from Baghdad. With falling army
morale the tide of war began to turn against Iraq and Saddam Hussein became
increasingly reliant on the support of the US. In order to repulse repeated
offensives by the Iranian army Saddam Hussein resorted to chemical and
biological weapons, importing the necessary materials from the West, and the US
had no objections, not only against Iranian forces but also against Iraq's own
deserters.

In the face of mass desertions and mutinies within the Iraqi army it was
clear that even with the use of chemical and biological weapons and US military
intelligence Iraq could not withstand Iranian assaults in the long term. In 1988
the US intervened by bring warships into the Gulf in order to 'protect
international shipping' and effectively destroyed the Iranian navy. This was
sufficient to bring an exhausted Iran to the negotiating table.

After eight years of war both Iran and Iraq were left economically exhausted.
Both countries were weighed down with debts and were left with a largely
dilapidated oil industry. The situation was particularly acute for Iraq, which
had run up vast debts with Saudi Arabia and other Gulf states, which had been
more than willing to lend money to Iraq as a means to prevent the spread of the
Iranian Revolution to their own populations.

The state-party patronage system, which served to keep Saddam Hussein in
power, had come to depend on the nationalised oil industry and the state control
over its revenues. Therefore there was little scope for cutting a deal with the
western oil companies, which would have involved relinquishing a certain amount
of ownership and control in return for foreign investment to finance the
reconstruction of Iraq's oil industry. Yet, saddled with debts and impoverished
after eight years of war, the Iraqi state lacked the capital necessary for the
reconstruction of its oil industry. Unable to expand production, its only hope
to increase its oil revenue was for a rise in the price of oil. However, by 1988
the problem of the oil glut had become particularly acute.

The OPEC countries, led by Saudi Arabia, had sought to shore up the oil price
by establishing production quotas for each member state. Yet, while it was in
the interest of each state that all the other states abided by their quotas,
there was always the temptation for each state to claim exceptional
circumstances and produce more than their prescribed quota. Saudi Arabia as the
largest producer, and in its role as the leader of the Arab world, had taken on
the burden of compensating for the excess production of oil by other OPEC
countries by restricting its own production. However, by the late 1980s its own
pressing social and economic crisis was making the Saudi Arabian Government
increasingly reluctant to sacrifice its own oil revenues for the sake of
maintaining high oil prices on behalf of the rest of OPEC. Instead Saudi Arabia
adopted a policy of allowing the oil price to fall sharply as a means of forcing
the rest of OPEC to comply with agreed oil production quotas or face the
consequence of a complete collapse in the price of oil. As a result the price of
oil at one point dropped below $10 a barrel - a fall in part due to the
increased production of oil from Iraq and Iran following the end of the war.

In such circumstance a confrontation with Kuwait offered an enticing prospect
for the Iraqi regime. Within the Arab world Kuwait was widely blamed for
undermining OPEC. Here was a country with a small population, which was cheating
on its oil quotas, not in order to deal with serious social and economic
problems, but merely to enrich an already bloated and decadent ruling elite. A
confrontation with Kuwait could be presented as a blow struck for the Arab world
as a whole, enhancing Saddam Hussein's prestige both at home and throughout the
'Arab nation'.

Furthermore, important oil fields straddled the Kuwaiti-Iraqi border. By
increasing production from these oil fields, while Iraq was still recovering
from the war and unable to expand its own production, Kuwait was in effect
pumping out, and thereby stealing, 'Iraqi oil'. A diplomatic confrontation with
Kuwait, backed up the willingness to use Iraq's overwhelming military force,
would at the very least force Kuwait restrict its oil production and even allow
Iraq to redraw its borders around these disputed oil fields.

Kuwait was militarily weak and diplomatically isolated in the Arab world. The
only constraint on Iraq was the likely reaction of the US. However, Saddam
Hussein had good reasons to expect the USA to keep out of any confrontation with
Kuwait. Firstly, the US could be expected to be not too pleased with Kuwait for
undermining OPEC's efforts to shore up the price of oil, which after all
threatened economic viability of America's own oil industry. Secondly, Iraq had
proved itself a useful ally in containing Iran and could at least expect the US
to allow it some 'reward' for the sacrifices it had made during eight years of
war.

As a consequence, in the Spring of 1990 Iraq re-opened long standing border
disputes with Kuwait, and backed up this up by amassing troops on the
Iraqi-Kuwaiti border. Indeed, the US did seem to turn a blind eye to Iraq
belligerent attitude to Kuwait. In a meeting with Saddam Hussein the US
ambassador, April Glaspie, was later reported as indicating that the US had no
interest in border disputes between Iraq and Kuwait and as late as July Bush
Snr. opposed moves by the US congress to take action against Iraq for its
aggressive attitude towards Kuwait.[4]

Emboldened by the American's relaxed attitude Saddam Hussein made what seems
to be a last minute decision to go for the complete annexation of Kuwait. On the
3rd of August 1990 the world woke up to find Saddam Hussein in control of 20% of
the world's oil reserves and with little to stop him from attacking Saudi Arabia
and taking another 20%. While the US, and indeed the rest of the Arab world, had
been prepared to turn a blind eye to Saddam Hussein sabre rattling against
Kuwait and would have even countenanced a limited military incursion to impose a
de facto redrawing of the Iraqi-Kuwaiti border, a full-scale invasion was
another matter.

No doubt Saddam Hussein had banked on the fact that the US would be reluctant
to carry out the huge and unprecedented military operation that would be
necessary to evict Iraqi forces already established in Kuwait. However, in doing
so Saddam Hussein had failed to take account of the impact on US foreign policy
of the rapidly changing situation at a global level. By the Summer of 1990 it
had become clear that the USSR was rapidly disintegrating and could no longer
act as a world power. As we have already pointed out, the alarm over Iraq's
invasion provided the perfect opportunity to mobilise the American and Western
bourgeoisie around a multilateralist interventionalist policy that was to be
enshrined in Bush Snr's New World Order.

The second Gulf War (1991) and
its aftermath

After months of preparations the coalition forces took no chances in
operation 'Desert Storm'. With total air supremacy the coalition forces began
with a six weeks bombing campaign. The Iraqi army positions were carpet-bombed
while the country's infrastructure - roads, sewage plants, electricity power
stations etc. - was systematically destroyed. An estimated 100,000-200,000 Iraqi
troops were slaughtered and tens of thousands of civilians died either directly
in the bombing or through the spread of diseases due to lack of clean water.

With morale destroyed by six weeks of incessant bombing the advance of
coalition ground forces met with little resistance. Iraqi army conscripts
deserted en masse at the first opportunity and uprisings broke out in the
Kurdish north and in the south of Iraq. Saddam Hussein's regime was on the point
of collapse.

However, facing the prospect of either allowing the disintegration of Iraq,
which could only be to Iran's advantage, or else committing itself to a full
scale occupation of Iraq, which would involve putting down the uprisings, the US
decided to pull back. The invasion of Iraq was halted and every effort was made
to shore up the Iraqi regime. Fearing that deserting Iraqi conscripts would join
up with the uprisings in the South the USAF and RAF directed to bomb them as
they fled the front-lines, leading to the infamous 'massacre on the road to
Basra'. In terms of the cease fire agreed with Saddam Hussein, all Iraqi
aircraft were grounded except the helicopters necessary to put down insurgents.
The coalition forces then stood by while Saddam Hussein loyal republican guards
ruthlessly crushed the uprisings. As the recent uncovering of mass graves
testify, thousands of insurgents in the south were executed, while in the North
thousands more died of cold and hunger after fleeing into the mountains on the
Turkish border.

It was only in May, weeks after the end of the war, that the 'no fly zones'
were introduced to protect the 'Kurds in the North and Shiites in the South'. By
then the insurrections, which had taken on a distinctly proletarian character,
had been crushed, allowing the US and Britain to promote a nationalist and
religious opposition the Saddam Hussein.[5]

For the Western powers as a whole, it was now clear that Saddam Hussein had
proved to be an unpredictable leader who, if left unchecked, could act to
destabilise the middle east and threaten the security of the world's oil
supplies. Having kept Saddam Hussein in power the question arose as to how to
contain him without impairing his ability to act as a counter-weight to
neighbouring Iran.

The answer offered by the US, backed by Britain, was to impose economic
sanctions on the pretext that Iraq possessed unauthorised weapons of mass
destruction. Iraq would still be able to maintain its army and conventional
weapons but punitive sanctions would be imposed until it could be verified by UN
inspectors that all 'weapons of mass destruction' were destroyed. It was argued
that under such pressure either Saddam Hussein would be brought to heel or else
he would be eventually replaced by a more amenable leader of Iraq. Hence
eventually Iraq could be 'readmitted into the international (bourgeois)
community'.

Of course, for the US and Britain sanctions had the additional advantage of
keeping Iraqi oil off the world market. Not only was Iraq forbidden to export
oil without UN authorisation, it was unable to import the spare parts necessary
to maintain oil production.

By repeatedly insisting on moving the goal posts concerning the weapons
inspections the US was able to prolong sanctions throughout most of the 1990s.
However, the policy of using sanctions to contain Iraq depended on support of
the other great powers and a commitment on the part of the US to
mutlilateralism. By the end of the 1990s this was coming into question.

The limits of multilateralism

Fears that the fall of the USSR would lead both to the break up of the
western world into competing trade blocs and to the decline of the USA were to
prove a little premature. In Japan the financial bubble of the 1980s burst,
exposing the underlying weakness of Japanese capital. Weighed down by enormous
'non-performing' debts the Japanese economy entered a prolonged period of
stagnation from which it has yet to recover. In Europe the brief boom that
followed German re-unification in the early 1990s was to be followed by nearly a
decade of slow growth. In contrast, the US in the 1990s was able to reassert
itself as the central pole of global capital accumulation.

By the mid-1990s it had become clear that the Reaganomics of the early 1980s
had assisted a major restructuring of the American economy. The over-valued
dollar and high interest rates had hastened the shift away from the long
established manufacturing industries of the North and East, as these industries
were forced either to rationalise or relocate outside the US. At the same time
the huge military expenditure acted as substantial subsidy for the research and
development necessary to establish the new information and communication
technologies (ICTs) that were to become decisive in 1990s.

This restructuring of US capital necessarily involved a decisive defeat of
the American working class. The highly paid and organised car workers of Detroit
faced compliance with the new 'flexible' working practices demanded by 'lean
production', or the relocation of their jobs to Mexico or South Korea. The 'new
economy' required highly skilled and educated computer programmers and software
engineers - although often on short term contracts - but it also could depend on
cheap, often illegal, immigrant labour from across the Mexican border to
undertake the growing profusion of McJobs. Cuts in welfare, continued well into
the 1990s under Clinton, increased the competition on those in work from the
industrial reserve army of unemployed. As a result, American capital was able to
hold down wages and ensure that it had a flexible and compliant workforce.

With greater 'labour flexibility' American capital could take full advantage
of the 'just in time' production, computerised stock control and total quality
control methods, which had been made possible by the new information
technologies, and that served to raise the rate of profit by speeding up the
turnover of capital. At the same time, American capital succeeded in making
American workers work more hours for the same pay increasing absolute production
of surplus value, and with this the rate of profit As a result, after nearly
twenty years of decline, the profitability of US capital had begun to steadily
increase from the mid-1980s.

This revival of the profitability of American capital served to sustain the
large inflows of money-capital into the U.S. that had originally arisen to
finance the huge budget deficits of the Reagan years. But increasingly these
inflows were not so much concerned with appropriating the interest payments made
on government debt issued to bridge the Federal Government's budget deficit, but
to buy a share in the rising profitability of American capital. By the late
1990s the inflows of money-capital were more than enough to finance the chronic
trade deficit that had arisen from the decimation of US manufacturing industry
under Reagan, leaving a substantial 'investment surplus'. This 'investment
surplus' was channelled through the sophisticated and well-connected American
financial system to take advantage of the opportunities offered by the newly
emerging market economies of Asia, Eastern Europe and South America.

As a result, the strong revival of the profitability of American capital,
particularly relative to its main competitors, served to reassert the USA's
position as the central pole of world capital accumulation. For the newly
'unified bourgeoisie' across the globe, the US was were the money was to be
made. Its expanding domestic markets provided opportunities for manufacturers
across the world to sell their products. Its sophisticated and well-connected
financial system, protected by the US state, offered good returns for the
world's investors and speculators. The control, if not the ownership, of the
capital of the world was being increasingly concentrated in the USA and Wall
Street.

The emergence of a unified global capitalism centred on the USA provided the
basis that was necessary to sustain New World Order, which had been proclaimed
by Bush Snr at the onset of the Second Gulf War of 1991. In this new order, the
old multilateral organisations of the Cold War - the United Nations, NATO, The
World Bank, IMF - had been revamped, and together with newly established ones
such as the World Trade Organisation, were to act as nodes in a new rules based
system of global governance. This new rules-based system served to contain the
imperialist rivalries of the great powers and ensure 'a level playing field' for
competing capitals of different national affiliations. The various multilateral
organisations served both to enforce these rules and to act as forums through
which global policies could be formulated and implemented to address common
economic and political problems that faced the world's bourgeoisie as a whole.

The US was to play the leading role in the New World Order. As the first
among equals, and the main source of funds for these multilateral organisations
of global governance, the US had a determining influence in the drawing up of
the international rules. The US, of course, was obliged to abide by these rules,
and often was obliged pursue its foreign policy objectives through lengthy
diplomacy and negotiations with the multilateral organisations. However, in
return the other great powers were obliged to share the military and economic
burdens required in defending and extending global capitalism, particularly
against those 'rogue states' that still refused to accept the wonders of
neo-liberalism.

However, by the late 1990s the New World Order and the US's multilateral
foreign policy began to reach its limits.

The crisis of
multilateralism

For Bush Snr, the New World Order had emerged as a means to resolve the
central dilemma of American foreign policy in the post-Cold War era. How was the
USA to police the world without incurring unsustainable military costs? The
answer, as we have seen, was that in return for consultation and a commitment to
commonly agreed rules the other great economic and military powers would share
the burden of maintaining the conditions necessary for capital accumulation
across the world.

At first the reassertion of the US as the central pole of global capital
accumulation had served to sustain the New World Order. The recovery of the
American economy from the recession of the early 1990s dragged the rest of the
world developed economies behind it. As the US became the main centre for
investment and speculative opportunities large swathes of the bourgeoisie in
both Europe and in the periphery developed interests in the US economy and
sought to emulate its success by advocating neo-liberal policies at home. This
pro-American orientation of large parts of the bourgeoisie outside the USA meant
that the US state could act, in concert with the international organisations of
'global governance, as the prime representative of the interests of the newly
emerging 'global bourgeoisie'.

However, this very economic resurgence of the US also served to give added
weight to the disadvantages of a multilatralist foreign policy for the American
bourgeoisie.

Firstly, by the end of the 1990s there were growing concerns among sections
of the American bourgeoisie that the Europeans were becoming increasingly adept
at tying America down through a series of international treaties that threatened
to seriously damage US economic superiority. From the Kyoto agreement on global
warming, which required large cuts in carbon emissions from the USA, through the
restrictions Europe imposed on bio-technology with its opposition to GM foods,
to various trade disputes, European capital could seen to be taking advantage of
America's compliance with the rules of international diplomacy.

Secondly, while America delivered its side of the bargain, the other great
powers, particularly those in Europe, were failing to deliver their side. Europe
proved both unable to develop a common and coherent foreign policy, and
unwilling to increase its spending on defence. As a result, Europe as a whole
was unable to take up its full share of the military and diplomatic burden of
policing the world.

At first, the failure of the European Union to formulate a common foreign
policy had its advantages for the US. It meant that the European Union was
unable to influence the transition of the former Eastern bloc from state
capitalism. Proposals that the transition of former Eastern bloc countries
should be towards some model of 'social market capitalism' did not last much
beyond the fall of the Berlin Wall. Instead the policies of 'short sharp shock',
of rapid deregulation and privatisation, much favoured by US and global
financial capital, were placed at the top of the agenda. The only question
allowed was how short and how sharp these shock policies should be in the
varying economies concerned. Of course, these 'shock therapies' tended to last
much longer than expected and led to disastrous results for the majority of
people in the former Eastern bloc. However, they also created a new pro-American
and neo-liberal orientated bourgeoisie in these countries, as wealth became
concentrated in the hands of a few - forming the basis of what was to become the
'new Europe' of Rumsfeld.

But the European Union's failure to develop a common European foreign policy,
due to the continued rivalries between its great powers, also meant that it was
unable to take up it role in defending the New World Order. This became evident
in the case of the disintegration of Yugoslavia. It was rivalries between the
European powers that had precipitated the war between Croatia and Serbia and
then to the Bosnian war in the first place; and it was these rivalries that
blocked the European Union's attempts to intervene and impose a solution. As a
result, the US had been obliged, rather reluctantly, to intervene and commit its
own troops to impose its peace. For many in the American bourgeoisie, the
example of Yugoslavia showed all too well that their fractious and gutless
European brothers were incapable of even policing their own back-yard let alone
aiding America in its global responsibilities.

The financial crisis the broke out in Asia in 1987-8 punctured the appetite
of American capital for investments in 'newly emerging market economies'. Japan
remained locked in chronic stagnation and the European bourgeoisie had made
little headway in pushing back its entrenched working class. The 'investment
surplus' that had flooded into the 'newly emerging economies' now turned to the
US itself, creating the beginnings of what was to become the Dot.Com boom.
Amidst the euphoria that surround the so-called new weightless economy that
could defy all the previously known economic laws of gravity, it could appear
that the US had little need of the rest of the world. America was were the
profits and action was and the rest of the world would either have to keep up or
go the wall.

The general tenor of the growing criticisms of the established
multilateralist American foreign policy, with its now almost regular commitment
to Clintonite 'humanitarian wars', was decidedly isolationist. However, amongst
the growing opposition to the orthodox American foreign policy, there emerged a
distinct strand of more far sighted and outward looking strategic thinkers who
were to become known as the neo-conservatives.

For the neo-conservatives, America could not ignore the rest of the world -
it had to dominate the rest of the world or else be eventually dominated by some
other power in the world. But if the USA was to maintain its global hegemony in
the long term it could not simply rely on its current economic superiority. On
the contrary, it had to assert its political and military power in order to
shape the world in its own interests. America needed to secure the supply of
strategic commodities into the future, it needed to prise open the economies of
central Asia that still remained impervious to American capital, and it had to
nip potential military and economic rivals in the bud.[6]

However, to pursue such an aggressive foreign policy had two important
implications, as the neo-conservatives were well aware. Firstly, on a diplomatic
level, an aggressive pursuit of American interests across the globe would
inevitably come into conflict with the interests of its 'allies'. The US would
therefore have to throw off the encumbrances and entanglements of the
multilateralism that had evolved out of the Cold War under Bush Snr and Bill
Clinton.

Secondly, the neo-conservatives recognised that there had to be a major
re-think of military strategy. Against the orthodox military thinking of the
generals, which stressed the need for overwhelming force, the neo-conservatives
called for the deployment of smaller more flexible forces using more selective
'smart' weapons. Not only would the deployment of smaller forces be far more
rapid, but they would be far cheaper. As a result the costs of 'policing of the
world' could be substantially reduced.

However, as the neo-conservatives were well aware, the deployment of smaller
forces would also carry far more risk of high casualties if things went wrong.
If their new military strategy was to work the ghost of Vietnam that still
haunted the American bourgeoisie and the American high command had to be
exorcised. After all, insubordination verging on mutiny against the Vietnam war
had come at a high point in working class struggles in the US - now that the
American working class had been more or less pacified fears that military
involvement would lead to 'another Vietnam' remained little more than a spectre.

Although the neo-conservatives that were to rally around the Plan for A
New American Century were well organised and held influential positions,
they remained a largely marginal position. With the election of Bush Jnr the
neo-conservatives captured important positions. However, in the first few months
US policy appeared to be taking a more isolationist direction, rather than that
of an aggressive unilateralism advocated by the neo-conservatives. But once
again it was oil that trumped the isolationist case. With the explosion of the
Twin Towers impressed once again the importance of the Middle East to the US
economy and 'way of life'. And the neo-conservative agenda became the order of
the day.

Go to Part II.