A rising tide of social misery
Originally published on 16 July 2009

Contrary to Obama administration and media claims about the recession “easing,” millions of working people in America are losing their jobs, earnings and health care benefits at an accelerating pace.

While executives at Goldman Sachs, JPMorgan Chase and other financial giants prepare to pay themselves billions of dollars this year in salaries and bonuses, life has continued to become more and more difficult for a broad layer of the population.

The New York Times pointed out on Wednesday that in California and a number of other states, “one out of every five people who would like to be working full time is not now doing so.”

The official jobless rate of 9.5 percent excludes both those who have stopped looking for jobs because local conditions are so bleak and those obliged to accept part-time employment.

If these unemployed and underemployed were included, the real jobless rate in the country’s most populous state, California, for example, would be 20.3 percent, according to the Times. In Oregon it would be 23.5 percent, in Michigan and Rhode Island, 21.5 percent, and in South Carolina, 20.5 percent. The figure would be just below 20 percent in Tennessee, Nevada and a number of “states that have relied heavily on manufacturing and housing.”

Given that the Bureau of Labor Statistics’ national jobless rate is skewed, for political reasons, to minimize the actual conditions, various analysts step in and attempt to come up with a “real unemployment” number.

The Center for Labor Market Studies at Boston’s Northeastern University places the current jobless rate at 18.2 percent, higher than the official figure on the eve of World War II. John Williams of Shadow Government Statistics puts the “Alternative Unemployment” rate at 20.6 percent. Other analysts calculate
an “Effective Unemployment” figure of 18.7 percent. Whatever the precise number, the army of unemployed is large and swelling. A great many lives have already been devastated.

David Rosenberg, chief economist at the investment firm Gluskin Sheff in Toronto and former chief North American economist at Merrill Lynch, argues: “The official ranks of the unemployed have doubled during this recession to 14 million and if you take into account all forms of labour market slack, the unofficial number is bordering on 30 million, another record.”

The figures on job losses in the current slump are staggering. Since the start of the recession in December 2007 the US economy has lost a total of 6.5 million jobs. In fact, the economy presently has fewer jobs than it did in May 2000. The Economic Policy Institute points out that “the entire growth in jobs over the last nine years has been wiped out,” while the labor force has actually expanded by 12.5 million workers.

According to economist Rosenberg, “We have lost a record 9 million full-time jobs this [business] cycle, more than triple what is normal in the context
of a post-WWII recession, with over 2 million pushed onto part-time work.” He notes that three-quarters of those laid off over the past year were let go on a permanent, not a temporary basis, and that a record 53 percent of those currently out of work were displaced for good.

Rosenberg estimates that more than four million jobs in financial services, residential construction, durable goods manufacturing, wholesale-retail and leisure-hospitality “are not going to come back.” The destruction of millions of better-paying, full-time jobs has enormous implications for the living standards of working families.

Job openings in the US have dropped by 42 percent since the end of 2007, so that in June 2009 there were some six unemployed looking for every job. As a result, the percentage of the jobless out of work for more than six months increased by nearly 70 percent from June 2008 to June 2009 (17.1 to 29 percent).

Since employers, who can afford to pick and choose, are generally taking experience over youth, and workers over 55 are holding on to their jobs for dear life, the official unemployment rate for young people has jumped to 15.2 percent for 20-24 year olds (a 49 percent increase in 12 months!) and 24 percent for 16-19 year olds. For African-Americans 16 to 19, the jobless rate is currently 38 percent.

As serious as they are, the jobless figures are only part of the story. Public and private employers across the country are taking advantage of the recession to cut wages, hours (through “unpaid leave,” “furloughs” and other means) and benefits, impoverishing many of those still employed.

The average work week fell to 33 hours in June, the lowest since data was collected in 1964, and 48 minutes shorter than when the recession began. The combined decline in jobs and hours in June was the equivalent of a loss of some 800,000 jobs.

Business Week notes that “Cuts in pay and hours are rippling throughout the economy in businesses large and small and industries from mining to retail.” A survey commissioned by the Economist in June found 5 percent of respondents had already taken a furlough in 2009 and 13 percent had taken a pay cut.

Mortimer Zuckerman in the July 14 Wall Street Journal commented: “Full-time workers are being downgraded to part time as businesses slash labor costs to remain above water, and factories are operating at only 65% of capacity.” Average weekly earnings fell to $611.49 in June, from $613.34 in May.

The Bureau of Labor Statistics reported Wednesday that real average weekly earnings fell by 1.2 percent from May to June after seasonal adjustment. The drop resulted from a 0.3 percent decrease in average weekly hours and a 0.9 percent increase in the Consumer Price Index, driven by a sharp jump in gasoline prices.

Also on Wednesday, reports showed that industrial production declined in the US, for the eighth straight month. The industrial sector operated at 68 percent of its capacity in June, down from 68.2 percent in May, a new low in the 42 years since the data have been collected.

Meanwhile, eleven of the 17 Federal Reserve governors and regional bank presidents are predicting that unemployment will be 10 percent or higher in the final three months of 2009, and they expect the downturn, according to the Washington Post, “to be long-lasting.”

American workers are not only losing jobs and homes, they are also losing health care “at an alarming rate,” says a new report from Families USA. While the latest data from the Census Bureau indicated that 45.7 million Americans lacked health coverage in 2007, “economists believe the situation has only worsened in the intervening months as the economic downturn has taken its toll.” Experts predict an additional 6.9 million people in the US—a 15 percent increase—will lose their health coverage by the end of 2010.

Behind this health care disaster are the combined effects of rising costs, businesses slashing or eliminating coverage, and unemployment.

Noting that the rapid increase in joblessness means that the various states will probably “experience even greater losses ... than can be captured by our Key Findings,” Families USA estimates that between January 2008 and December 2010, 995,200 people in California, for example, will lose health coverage—or 6,380 per week. In Texas, which has the highest percentage of uninsured, some 866,000 residents will lose coverage by the end of next year.

In Florida, more than 3,500 people a week are losing coverage; in New York, nearly 2,500 people; in both Illinois and Georgia some 1,600 people; in New Jersey, 1,200, and in Michigan, a little more than 1,000 people each week.

In the US as a whole, the group estimates that 44,000 people are losing their health care every week.

On July 7 the American Bankers Association reported delinquencies on consumer debt rose to record levels, as customers had difficulty paying for everything from credit cards to automobiles. The percentage of borrowers at least 30 days late paying a balance is the highest since the association began keeping records in 1974.

ABA Chief Economist James Chessen stated bluntly, “The number one driver of delinquencies is job loss. When people lose their jobs, they can’t pay their bills. Delinquencies won’t improve until companies start hiring again.”

Public outrage at the present situation is growing. It is not uncommon to hear the rich, the “filthy” bankers, being denounced in work places and neighborhoods. Many workers—abandoned by the unions to their fate, lied to and cheated by the Democrats—have been stunned by the rapidity of the crisis. The Economist, a little nervously, refers to “The quiet Americans,” who are “proving stoical in the face of pay cuts and compulsory unpaid leave.” Later the magazine adds, “for the moment.”

Whatever the initial problems and hesitations of the population, the raging economic crisis will destabilize American political and social life, and radicalize vast numbers of people. It is inevitably creating the conditions for a showdown between working people, the vast majority, and the corporate aristocracy. Building an independent political movement of the working class based on a socialist and internationalist program to offer a progressive way out of the crisis is the most pressing task.
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Freedom and Democracy in mid-2009



Originally published on July 14, 2009 "Information Clearing House" -- June 2009 was marked by a number of significant events, including two elections in the Middle East: in Lebanon, then Iran. The events are significant, and the reactions to them, highly instructive.



The election in Lebanon was greeted with euphoria. New York Times columnist Thomas Friedman gushed that he is "a sucker for free and fair elections," so "it warms my heart to watch" what happened in Lebanon in an election that "was indeed free and fair Ñ not like the pretend election you are about to see in Iran, where only candidates approved by the Supreme Leader can run. No, in Lebanon it was the real deal, and the results were fascinating: President Barack Obama defeated President Mahmoud Ahmadinejad of Iran." Crucially, "a solid majority of all Lebanese -- Muslims, Christians and Druse -- voted for the March 14 coalition led by Saad Hariri," the US-backed candidate and son of the murdered ex-Prime Minister Rafik Hariri, so that "to the extent that anyone came out of this election with the moral authority to lead the next government, it was the coalition that wants Lebanon to be run by and for the Lebanese -- not for Iran, not for Syria and not for fighting Israel." We must give credit where it is due for this triumph of free elections (and of Washington): "Without George Bush standing up to the Syrians in 2005 -- and forcing them to get out of Lebanon after the Hariri killing -- this free election would not have happened. Mr. Bush helped create the space. Power matters. Mr. Obama helped stir the hope. Words also matter."



Two days later Friedman's views were echoed by Eliott Abrams, a senior fellow at the Council on Foreign relations, formerly a high official of the Reagan and Bush I administrations. Under the heading "Lebanon's Triumph, Iran's Travesty," Abrams compared these "twin tests of [US] efforts to spread democracy to the Muslim world." The lesson is clear: "What the United States should be promoting is not elections, but free elections, and the voting in Lebanon passed any realistic test. ... the majority of Lebanese have rejected Hezbollah's claim that it is not a terrorist group but a 'national resistance' ... The Lebanese had a chance to vote against Hezbollah, and took the opportunity."



Reactions were similar throughout the mainstream. There are, however, a few flies in the ointment.



The most prominent of them, apparently unreported in the US, is the actual vote. The Hezbollah-based March 8 coalition won handily, by approximately the same figure as Obama vs. McCain in November 2008, about 54% of the popular vote, according Ministry of Interior figures. Hence by the Friedman-Abrams argument, we should be lamenting Ahmadinejad's defeat of President Obama, and the "moral authority" won by Hezbollah, as "the majority of Lebanese ... took the opportunity" to reject the charges Abrams repeats from Washington propaganda.



Like others, Friedman and Abrams are referring to representatives in Parliament. These numbers are skewed by the confessional voting system, which sharply reduces the seats granted to the largest of the sects, the Shi'ites, who overwhelmingly back Hizbollah and its Amal ally. But as serious analysts have pointed out, the confessional ground rules undermine "free and fair elections" in even more significant ways than this. Assaf Kfoury observes that they leave no space for non-sectarian parties and erect a barrier to introducing socioeconomic policies and other real issues into the electoral system. They also open the door to "massive external interference," low voter turnout, and "vote-rigging and vote-buying," all features of the June election, even more so than before. Thus in Beirut, home of more than half the population, less than a fourth of eligible voters could vote without returning to their usually remote districts of origin. The effect is that migrant workers and the poorer classes are effectively disenfranchised in "a form of extreme gerrymandering, Lebanese style," favoring the privileged and pro-Western classes.



In Iran, the electoral results issued by the Interior Ministry lacked credibility both by the manner in which they were released and by the figures themselves. An enormous popular protest followed, brutally suppressed by the armed forces of the ruling clerics. Perhaps Ahmadinejad might have won a majority if votes had been fairly counted, but it appears that the rulers were unwilling to take that chance. From the streets, correspondent Reese Erlich, who has had considerable experience with popular uprisings and bitter repression in US domains, writes that "It's a genuine Iranian mass movement made up of students, workers, women, and middle class folks" -- and possibly much of the rural population. Eric Hooglund, a respected scholar who has studied rural Iran intensively, dismisses standard speculations about rural support for Ahmadinejad, describing "overwhelming" support for Mousavi in regions he has studied, and outrage over what the large majority there regard as a stolen election.



It is highly unlikely that the protest will damage the clerical-military regime in the short term, but as Erlich observes, it "is sowing the seeds for future struggles."



As in Lebanon, the electoral system itself violates basic rights. Candidates have to be approved by the ruling clerics, who can and do bar policies of which they disapprove. And though repression overall may not be as harsh as in the US-backed dictatorships of the region, it is ugly enough, and in June 2009, very visibly so.



One can argue that Iranian "guided democracy" has structural analogues in the US, where elections are largely bought, and candidates and programs are effectively "vetted" by concentrations of capital. A striking illustration is being played out right now. It is hardly controversial that the disastrous US health system is a high priority for the public, which, for a long time, has favored national health care, an option that has been kept off the agenda by private power. In a limited shift towards the public will, Congress is now debating whether to allow a public option to compete with insurers, a proposal with overwhelming popular support. The opposition, who regard themselves as free market advocates, charge that the proposal would be unfair to the private sector, which will be unable to compete with a more efficient public system. Though a bit odd, the argument is plausible. As economist Dean Baker points out, "We know that private insurers can't compete because we already had this experiment with the Medicare program. When private insurers had to compete on a level playing field with the traditional government-run plan they were almost driven from the market." Savings from a government program would be even greater if, as in other countries, the government were permitted to negotiate prices with pharmaceutical corporations, an option supported by 85% of the population but also not on the agenda. "Unless Congress creates a serious public plan," Baker writes, Americans "can expect to be hit with the largest tax increase in the history of the world -- all of it going into the pockets of the health care industry." That is a likely outcome, once again, in the American form of "guided democracy." And it is hardly the only example.



While our thoughts are turned to elections, we should not forget one recent authentically "free and fair" election in the Middle East region, in Palestine in January 2006, to which the US and its allies at once responded with harsh punishment for the population that voted "the wrong way." The pretexts offered were laughable, and the response caused scarcely a ripple on the flood of commentary on Washington's noble "efforts to spread democracy to the Muslim world," a feat that reveals impressive subordination to authority.



No less impressive is the readiness to agree that Israel is justified in imposing a harsh and destructive siege on Gaza, and attacking it with merciless violence using US equipment and diplomatic support, as it did last winter. There of course is a pretext: "the right to self-defense." The pretext has been almost universally accepted in the West, though Israeli actions are sometimes condemned as "disproportionate." The reaction is remarkable, because the pretext collapses on the most cursory inspection. The issue is the right TO USE FORCE in self-defense, and a state has that right only if it has exhausted peaceful means. In this case, Israel has simply refused to use the peaceful means that have readily available. All of this has been amply discussed elsewhere, and it should be unnecessary to review the simple facts once again.



Once again relying on the impunity it receives as a US client, Israel brought the month of June 2009 to a close by enforcing the siege with a brazen act of hijacking. On June 30, the Israeli navy hijacked the Free Gaza movement boat "Spirit of Humanity" -- in international waters, according to those aboard -- and forced it to the Israeli port of Ashdod. The boat had left from Cyprus, where the cargo was inspected: it consisted of medicines, reconstruction supplies, and toys. The human rights workers aboard included Nobel Laureate Mairead Maguire and former congresswoman Cynthia McKinney, who was sent to Ramleh prison in Israel -- apparently without a word from the Obama administration. The crime scarcely elicited a yawn -- with some justice, one might argue, since Israel has been hijacking boats travelling between Cyprus and Lebanon for decades, kidnapping and sometimes killing passengers or sending them in Israeli prisons without charge where they join thousands of others, in some cases held for many years as hostages. So why even bother to report this latest outrage by a rogue state and its patron, for whom law is a theme for 4th of July speeches and a weapon against enemies?



Israel's hijacking is a far more extreme crime than anything carried out by Somalis driven to piracy by poverty and despair, and destruction of their fishing grounds by robbery and dumping of toxic wastes -- not to speak of the destruction of their economy by a Bush counter-terror operation conceded to have been fraudulent, and a US-backed Ethiopian invasion. The Israeli hijacking is also in violation of a March 1988 international Convention on safety of maritime navigation to which the US is a party, hence required by the Convention to assist in enforcing it. Israel, however, is not a party -- which, of course, in no way mitigates the crime or the obligation to enforce the Convention against violators. Israel's failure to join is particularly interesting, since the Convention was partially inspired by the hijacking of the Achille Lauro in 1985. That crime ranks high in Israel and the West among terrorist atrocities -- unlike Israel's US-backed bombing of Tunis a week earlier, killing 75 people, as usual with no credible pretext, but again tolerated under the grant of impunity for the US and its clients.



Possibly Israel chose not to join the Convention because of its regular practice of hijacking boats in international waters at that time. Also worth investigating in connection with the June 2009 hijacking is that since 2000, after the discovery of apparently substantial reserves of natural gas in Gaza's territorial waters by British Gas, Israel has been steadily forcing Gazan fishing boats towards shore, often violently, ruining an industry vital to Gaza's survival. At the same time, Israel has been entering into negotiations with BG to obtain gas from these sources, thus stealing the meager resources of the population it is mercilessly crushing.



The Western hemisphere also witnessed an election-related crime at the month's end. A military coup in Honduras ousted President Manuel Zelaya and expelled him to Costa Rica. As observed by economist Mark Weisbrot, an experienced analyst of Latin American affairs, the social structure of the coup is "a recurrent story in Latin America," pitting "a reform president who is supported by labor unions and social organizations against a mafia-like, drug-ridden, corrupt political elite who is accustomed to choosing not only the Supreme Court and the Congress, but also the president."



Mainstream commentary described the coup as an unfortunate return to the bad days of decades ago. But that is mistaken. This is the third military coup in the past decade, all conforming to the "recurrent story." The first, in Venezuela in 2002, was supported by the Bush administration, which, however, backed down after sharp Latin American condemnation and restoration of the elected government by a popular uprising. The second, in Haiti in 2004, was carried out by Haiti's traditional torturers, France and the US. The elected President, Jean-Bertrand Aristide, was spirited to Central Africa and kept at a safe distance from Haiti by the master of the hemisphere.



What is novel in the Honduras coup is that the US has not lent it support. Rather, the US joined with the Organization of American States in opposing the coup, though with a more reserved condemnation than others, and with no any action, unlike the neighboring states and much of the rest of Latin America. Alone in the region, the US has not withdrawn its ambassador, as did France, Spain and Italy along with Latin American states.



It was reported that Washington had advance information about a possible coup, and tried to prevent it. It surpasses imagination that Washington did not have close knowledge of what was underway in Honduras, which is highly dependent on US aid, and whose military is armed, trained, and advised by Washington. Military relations have been particularly close since the 1980s, when Honduras was the base for Reagan's terrorist war against Nicaragua.



Whether this will play out as another chapter of the "recurrent story" remains to be seen, and will depend in no small measure on reactions within the United States.
 

Originally posted on 06 July, 2009
Award-winning investigative journalist and documentary filmmaker, John Pilger, joins us for a wide-ranging conversation on on Honduras, Iran, Gaza, the media, health care, and Obama's wars in Afghanistan and Pakistan. Pilger has has written close to a dozen books and made over 50 documentaries on a range of subjects including struggles around the world for a more just and peaceful society and against Western military and economic intervention.

 
 

Originally published on July 6, 2009

Editor: Emily Schwartz Greco

Foreign Policy In Focus

www.fpif.org

It's time for some straight talk on U.S. foreign policy as it relates to Africa. While Obama administration officials and the U.S. African Command (AFRICOM) representatives insist that U.S. foreign policy towards Africa isn't being militarized, the evidence seems to suggest otherwise. While Africans condemned U.S. military policy in Africa under the Bush administration, the Obama administration has not only mirrored Bush's approach, but has in fact enhanced it. President George W. Bush established Africa as a foreign policy priority in 2003, when he announced that 25% of oil imported to the United States should come from Africa. Like the Cold War, the Global War on Terror establishes a rationale for bolstering U.S. military presence and support in Africa. Yet official pronouncement of U.S. policy is routinely presented as if neither of these two developments occurred. Unfortunately, the more evasive we are about our intentions on the continent, the more we invite not only skepticism, but even resistance. A policy is militarized when military might is deemed the only effective way to accomplish its agenda. In a June statement on U.S. policy in Africa, U.S. Assistant Secretary for African Affairs Johnny Carson said the agenda of the Obama administration is as follows: promoting and strengthening democracy and the rule of law, preventing and mitigating conflicts, encouraging sustained economic development and long-term growth, and working with African countries to face both old and new global challenges. The agenda makes no reference to the recent FY2010 budget that doubles the size of AFRICOM's funds. Nor does it mention the doubling of financial support for counterterrorism projects throughout the continent — including increasing funds for weapons, military training, and education at a time when U.S. foreign aid money is stagnating. AFRICOM has been controversial on the continent since President Bush first announced it in February 2007. The Bush administration discussed several sites for its headquarters, but their failure to include African civil society in the discussion is widely regarded as a major mistake. Though the Western press barely reported it, the reaction on the continent was vociferous. Every country with the exception of Liberia rejected AFRICOM, and African civil society, where allowed to speak, has overwhelmingly characterized AFRICOM as a means to secure oil and nothing more. Officials in both the Bush and Obama administrations argue that a major objective of AFRICOM is to "professionalize" security forces in key countries across the continent. However, they don't attempt to address the impact of this on minority parties or whether the U.S. is effectively propping up "friendly" dictators. These are key questions that need answering if our agenda includes democracy and rule of law. Training and weapons programs and arms transfers for Equatorial Guinea, Chad, Ethiopia and even the beleaguered Transitional Federal Government in Somalia, clearly indicate that using the military to maintain influence in government in Africa remains the priority the foreign policy goal. Indeed, one of the counterterrorism projects that the Obama administration boosted considerably is the Counterterrorism Engagement Program, designed to "build political will at senior levels in partner nations for shared counterterrorism challenges."  The U.S. fascination with oil, the war on terrorism, and the military is further exemplified through the announcement that on July 12, Obama will visit Africa for the first time. The president has chosen Ghana as his only African destination this trip. The U.S. government itself states the purpose of the visit is "strengthening the U.S. relationship with one of our most trusted partners in sub-Saharan Africa, and to highlight the critical role that sound governance and civil society play in promoting lasting development." Indeed, Ghana's extraordinarily consistent economic growth pattern for the past seven years (registering a GDP expansion of 7.3% in 2008) offers the best evidence of the relationship between government accountability and economic development. On top of that, on January 3rd 2009, John Atta Mills defeated Nana Akufo-Addo by less than 1% in the Ghanaian presidential election. Most believe that the election was by and large free and fair, and the transition was for the most part peaceful. There is much to be proud of in Ghana, and the burgeoning success story there is most welcome. However, there are rumblings that the real reason the administration chose Ghana is two-fold: Ghana's discovery of oil in 2008, and perhaps more importantly, the geographically, economically, and politically strategic advantage of establishing AFRICOM's headquarters there. Could this be a litmus test for future democracy in Ghana? Could we begin providing substantial AFRICOM counterterrorism resources to build political will and promote U.S. interests instead of Ghanaian interests? It been done before. In fact, it was done in Ghana in 1966, when the CIA helped overthrow then-President Kwame Nkrumah. These questions arise because it would be hard for Africans not to conclude that security and energy concerns under the protection and guidance of AFRICOM are driving our foreign policy, as opposed to those articulated by Carson. If this isn't the case, then the United States is failing to make clear how dramatic increases in U.S. investment in weapons financing and military training for countries, regardless of their records on human rights or democracy, are ultimately going to help us achieve the agenda. Gerald LeMelle is a contributor to Foreign Policy In Focus and executive director of Africa Action.   Subscribe to World Beat FPIF's weekly ezine

Published by Foreign Policy In Focus (FPIF), a project of the Institute for Policy Studies (IPS, online at www.ips-dc.org). Copyright © 2009, Institute for Policy Studies. Recommended citation: Gerald LeMelle, "Straight Talk: Revealing the Real U.S. Africa-Policy," (Washington, DC: Foreign Policy In Focus, July 6, 2009). Web location: http://fpif.org/fpiftxt/6236 Production Information: Author(s): Gerald LeMelle Editor(s): Emily Schwartz Greco Production: Jen Doak

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Source URL = http://www.zmag.org/content/showarticle.cfm?SectionID=11&ItemID=12155

Originally published on February 19, 2007 By William Tabb



The close relation between war and natural
resources is of long standing. What else was colonial conquest about? Vast
estates held by the Dutch East India Company came under direct control of the Crown as did the lands conquered by the British East India Company. What was in demand in Europe dictated the commodities produced and the natural resources that were ripped from the earth. European violence set the terms on which resource extraction occurred. There was no free trade for mutual benefit based on comparative advantage. There were few constraints on the violence employed in the extraction of resources starting with the "shock and awe" of bombardments and fire storms of wars of conquest and followed by the pitiless subjugation of people of color. Having defeated the locals in battle the invaders suborned local elites and customs to extract resources from those they had conquered.

 

The form of the exploitative relationships with particular colonial and neocolonial overlords depended
in large measure on the local traditions and social structures the invaders
found. The Spanish used the Inca mita system of requisitioned labor for the
mines where the subjugated died by the thousands from brutality and, as in the
case of the vast silver mines of Potosi, by mercury poisoning. The crushed ore was mixed with mercury and trodden by the workers with their bare feet and then heated producing poisonous vapors. King Leopold murdered millions in the Congo employing slavery, terror, maiming, and mass killings because it was his view that "the colonies should be exploited, not by the operation of a market economy, but by state intervention and compulsory cultivation of cash crops to be sold to and distributed by the state at controlled prices."1

 

The Belgians ruled through Tutsi chiefs promoting them to a superior status over the Hutus and imposed compulsory cash crop demands through their Tutsi intermediaries. After independence Tutsi military dictators were left to rule. The animosities created provided the fear and hatred which led to genocide decades after independence. In the post-independence states without indigenous capitalism, but with only a comprador class, control of state revenues and natural resources were the major sources of wealth. After independence, control of the army and the power to coerce, following the colonial model, became the norm in many new nation states. In the struggles which broke out after independence and frequently under Cold War pressures it was often the most violent and ruthless elements willing to do whatever was necessary to gain control who came out on top -especially where there were easily exploitable resources to be appropriated and make those commanding them rich beyond imagining. The new nation's economy remained entwined with that of the former colonial power. More democratically inclined indigenous leaders could be coerced and assassinated. sponsored civil war and military coups could be employed to maintain access on favorable terms to resources.

 

Resource extraction in the contemporary era continues to spur extremes of violence and war. In a 1997 study Jeffrey Sachs and Andrew Warner examined the economic performance of ninety-five countries between 1970 and 1990.2 They found the higher a country's dependence on natural resource exports the slower their economic growth rate. Paul Collier and co-authors analyzed fifty-four large-scale civil wars that occurred between 1965 and 1999 and found that a higher ratio of primary commodity exports to GDP "significantly and substantially" increases the risk of conflict.3 High levels of oil dependence correlate especially strongly. Timber it turns out is also "technologically suited to rebel predation," as with the Khmer Rouge. Researchers find the phenomenon of "war booty futures" where outsiders back rebel groups in exchange for a future share of the takings -a prospect which features heavily in Richard K. Morgan's powerful dystopic novel Market Forces.

 

It should be pointed out that when we speak of wars in the last third of the twentieth century we are talking about civil wars. Between 1965 and 1999 if we look at those wars in which more than a thousand people were killed a year, there were seventy-three civil wars, almost all driven by greed to control resources -oil, diamonds, copper, cacao, coca, and even bananas. Collier and Anke Hoeffler find countries with one or two primary export resources have more than a one-in-five chance of civil war in any given year.4 In countries with no such dominant products there is a one in a hundred chance. In these civil wars more than 90 percent of casualties are civilians. At the start of the twentieth century war casualties were 90 percent soldiers. Such "traditional" wars are rare today. Resource wars with their devastating impacts on civilians have become the norm.

 

Indeed, the oil rich countries of Africa -Nigeria, Gabon, the Sudan, the Congo, Equatorial Africa, and Chad -have long histories of coups, military rule, and strongmen. Millions have died of hunger and disease as a result of wars over oil, diamonds, copper, and other resources as armed rebels steal, rape, and murder making life-generating economic activity difficult if not impossible. In the Congo, one of the resource richest countries on the planet, a half dozen countries have armies deployed and countless rebel groups have fought to control rich deposits of gold, diamonds, timber, copper, and valuable cobalt and coltan in what is often referred to as "Africa's First World War." Global Witness reports that despite being the fourth largest oil producer in Africa, Congo Brazzaville has overseas debt of $6.4 billion as a consequence of Elf Aquitaine, the former French state oil company's strategy of influence peddling and bribery.

 

In Angola, Joseph Savimbi, backed by foreign powers from the Cold war, amassed a reported $4 billion from diamonds, ivory, and other resources sold abroad in his decades of looting and brutality before he was killed. In Angola a million people died in the civil war, one child in five does not live to its fifth birthday, and 40 percent of Angola's population has been displaced. Almost none of the income from the state-owned oil company found its way to Angola but was instead diverted to overseas banks. It was the wholesale looting of Angola's oil revenues that fueled that country's vicious civil war.

 

Africa bleeds because of its abundant wealth. Charles Taylor privatized the resources of Liberia by selling rights to resources to foreign companies and pocketing the money. There is the case of Dafur in the oil rich Sudan. There is Nigeria, exceedingly rich in oil and corruption, where foreign aid is badly needed. The environment of the Niger Delta is being destroyed, and people are killed by army thugs protecting Shell oil. Equatorial Guinea is a criminalized state which receives half a billion in oil revenues. Because of this, it ranks sixth in the world in per capita income but third from the bottom in the UN's human development index table. a third of the population has been killed or driven into exile. The revenues of the Cameroon-Chad pipeline operated by Exxon-Mobile, with additional investment from ChevronTexaco, do not help the people of the area who remain among the poorest of the poor as the natural wealth of their land is looted.

 

Wherever there are resources to be plundered we find foreign companies ready to cooperate; often there is the World Bank to put a smiley face on these atrocities, claiming things would be worse if they did not supervise the corruption. The reality of
the bank's role however is quite different. Emil Salim, a former Indonesian environment minister who led the World bank Extractions Industries Review, has written, "The bank is a publicly supported institution whose mandate is poverty alleviation. Not only have the oil, gas and mining industries not helped the poorest developing countries, they have often made them worse off."5 That is from the man the World Bank chose to review its past practices. He points out that scores of academic assessments as well as the bank's own reports correlate corruption, civil war, and growing poverty with reliance on extractive industries, comparing unfavorably with the performance of more diversified economies.

 

While the cases I have mentioned focus on the relationship between resources and war in Africa, Salim's own country is also an example of this relationship. Indonesia can be seen as analogous to a nineteenth-century empire. The central government exploits the territories, especially those rich in resources, along lines similar to what was done by the Europeans. Jakarta conducts a dirty war in Aceh, its northern province rich in natural gas and rife with civilian killings and disappearances. The Indonesian state has waged a campaign of terror and near genocide in oil and natural gas rich East Timor. Exxon-Mobil is the largest long-term investor in Indonesia. The foreign owned gold and copper mines of Irian Jaya, where miners die while working or are killed by security forces and the environment is devastated making life difficult for the province's people, are an international scandal. In West Papua logging companies with close ties to the military have terrible reputations as well for using force against locals as they displace tribal people from their land and destroy the local ecosystem. The atrocities carried out by the military and the government in pursuit of revenues from their resources frequently require the cooperation of foreign transnationals and are supported by World Bank project aid.

 

Ted Koppel, writing in
the New York Times (February 24, 2006), responded to what he described as the Bush administration's "touchiness" about the charge that we are in Iraq because of oil by stating the obvious, though often unsaid, truth, "Now that's curious. Keeping oil flowing out of the Persian Gulf and through the Strait of Hormuz has been bedrock American foreign policy for more than half a century." Today control over the world's oil supply is at the forefront of Washington policy makers' thinking, even if the president and his team deny any such intent and talk publically of reducing dependence on Middle East oil by three-quarters of present levels, an absurdly impossible goal. Two-thirds of the oil in the world is in the Middle East, much of it under Iraq and Iran, the axis of oil, the current targets of the U.S. war on terrorism. Control of oil is integral to Washington's official goal of world domination, a goal stated this baldly in national security documents.

 

During the administration of the first President Bush, the Pentagon under then defense secretary Dick Cheney produced a strategy paper stating the mission of "convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests." The United States would defend their interests for them and so the policy was to "discourage them from challenging our leadership or seeking to overturn the established political and economic order."6 Control of the world is facilitated through control of essential resources. By controlling the world's energy, and in the presence of its overwhelming military superiority, the United States is potentially able to deny the lifeblood of any society and intimidate and coerce the world more effectively, a design going back easily to Henry Kissinger, and earlier to the emergence of U.S. global power at the end of the Second World War, but now carried to new heights by the neoconservatives.

 

Hegemony has always been a bipartisan consensus. With regard specifically to the Middle East we have the Carter Doctrine: "An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force." Since Carter created the Rapid Deployment Force with this intervention in mind the United States has moved to forward positioning, the establishment of a huge permanent military presence in the region, including a number of multi-billion dollar bases in Iraq, huge fortified cities with all the comforts of home, fast food places, video stores, and car rental agencies for the soldiers who garrison the empire along "the arc of instability." All of this takes place in territories which coincide with the parts of the Global South where oil is found. That the official rationale is now the war on terrorism in place of anticommunism is secondary to the continuation of the basic policy of world domination.

 

Michael Klare, author of Resource Wars and Blood for Oil, cites British defense secretary John Reid's warning that climate change "will make scarce resources, clean water, viable agricultural land even scarcer" and so "make the emergence of violent conflict more likely."7 In the United States, too, military planners and the CIA spin out scenarios of wars for desperately needed natural resources and the need to deal with the mass migrations of desperate people as entire societies disintegrate. Climate change, these forecasts suggest, will bring on new and even greater resource wars. The United States with its overwhelming advantage in all things military is likely to see saber rattling, shock, and awe as the best responses. "When you are a hammer, everything looks like a nail," seems the appropriate metaphor for the petro-political situation. Some Americans, afraid of not being able to heat their homes and fill the tanks of their gas guzzling cars, may unthinkingly offer support for new foreign adventures -but Iraq has shown such oil comes at a high cost in blood and treasure.

 

It seems it is not all
that easy to shock, awe, invade, and occupy countries. In the spring of 2006, 60 percent of Americans told the Gallup Poll that they did not think it worth going to war in Iraq and 74 percent disapproved of Bush's handling of gasoline prices. They saw neither victory nor an easy exit and they had become suspicious that higher energy prices seemed to accompany such adventurism. Some worried about the U.S. balance of payments and some even knew that energy costs equaled a third of the trade deficit. Before the war, Lawrence Lindsey, then Bush's senior economic adviser, suggested the war would cost $200 billion. He was sacked soon thereafter by an administration that insisted the war would cost $50–60 billion. Current estimates by Linda Bilmes and Joseph Stiglitz are in terms of trillions of
dollars.

 

The relationship of demand and supply of oil is complicated. It takes up to ten years and billions of dollars to get a new field into production. Refineries also take time to build and are hugely expensive. The present shortage of gasoline, often seen as a conspiracy by the oil giants, is in the main the result of rising demand especially from China and India, and supply shocks due to political events such as the U.S. invasion of
Iraq, and uncertainty over the Bush administration's intentions toward Iran and perhaps other producer states. When oil prices spiked in the 1970s the supply response was so great that the price of crude collapsed by 1986. In the 1990s demand growth was slow, no new fields were developed to increase production levels, and even so the price collapsed again in 1998–99. This is not to say that huge profits were not made by the Western oil companies as well as OPEC and the banks which recycled petro-dollars. Since then there has been little excess capacity -in 2005 the world's excess capacity was 2–3 percent. It had been 15 percent in 1986.

 

Those who would deny even the possibility of any conspiracy point out that the international oil companies have complete control over only 7–8 percent of global crude oil and access to perhaps 20 percent of reserves. They are therefore unlikely to have conspired to produce today's high energy prices. This is a cyclical industry and conjunctural events are responsible for most oil spikes. Events such as Vice President Cheney's remarks during a visit to Lithuania in the spring of 2006 when he criticized Russia for using oil and natural gas as "tools of intimidation and blackmail," and the intense negotiations to build pipelines for oil and natural gas from Kazakhstan, Azerbaijan, or Uzbekistan without going through Iran or Russia, serve to illustrate that global market shares for particular companies are not the most crucial factors in
understanding oil as a weapon.

 

It is analysis rather than an apology for Big Oil that tells us that the situation has changed since the end of the Second World War when the so-called seven Sisters dominated the world oil market. Today Exxon-Mobil produces less than 3 percent of world output and the seven largest oil companies control less than 5 percent of world reserves. This does not mean that Exxon-Mobil is not the world's most valuable and most profitable company nor that the oil giants do not benefit from high oil prices. They do however face more sophisticated national oil companies from China, India, Brazil, and elsewhere who compete for supply which is increasingly under the control of state-controlled producers. The seven largest national oil companies, like Kuwait Petroleum, Abu Dhabi National Oil, Algeria's Sonatrach, and the more familiar Saudi Aramco, hold at least half the world's proven resources and account for a quarter of current production.8 Like Venezuela's national oil company, which fuels Chavez's Bolivarian revolution, they have changed the distributional equation nationally as well as globally.

 

The days of unalloyed Anglo-American petroleum dominance are gone, and that is why the hegemonic state and its coalition partner, no-longer-so-great Britain, are using force to reassert dominance not through corporate control so much as state terror and coercion. While there can be no question that the national oil companies have changed the distribution of revenues from the grossly exploitative terms of pre–Second World War Anglo-American total dominance, the governments of the Middle East retain limited room to maneuver where the national interests of the United States and its thirst for oil are concerned. The long shadow of Washington darkens and dominates the politics of the region. Price-supply conditions have been set in the past by Saudi Arabia, which has acted to prevent problems for the advanced capitalist economies. It is less certain that they can continue to do so. It is surely in the interest of the hegemonic state and its British ally to gain greater purchase over supply conditions through regime change and closer working relations with new producers in the Caspian Basin and in Africa.

 

As to peak oil, predictions of the end of oil have been made often in the past and it is not clear that frightening scenarios will play out in the short run that some
suggest. There are complex issues of geology, technology, and prospective efficiency considerations. The accepted definition of proven reserves includes what is known and can be exploited economically with existing technology. Both
price and potential supply are conservatively estimated for this purpose, although some experts suggest that producers have a strong interest in overestimating their reserve position. Because OPEC quotas are based on proven reserves it is in the interest of members to greatly exaggerate their reserves so they can pump more. Such "political barrels" are estimated to be 44 percent of the total reserves OPEC claims. Russia's reserves are also uncertain but probably 30–40 percent lower than officially claimed.9 Some
countries have been extracting large amounts of crude but maintaining the same proven reserves figures. Companies too have incentive to exaggerate their reserves. In 2006 Shell had to admit it had overestimated its reserves by nearly a third and its stock price promptly fell. Finally it is also the case that for the past two decades the oil taken out of the ground has exceeded new discoveries.

 

However, since only a little over a third of oil in known fields can be recovered today, technological innovation can be expected to increase the proven reserve figure. Among the optimists, Leonardo Maugeri wrote in Foreign Affairs, "Put simply, the world will continue to have plenty of oil."10 In his view oil experts generally underestimate supply and overestimate demand. Like other optimists he believes China's demand for oil is due to extraordinary circumstances that may not last and that demand in much of the industrialized world appears to have reached its peak and faces long-term decline. That is one view. Others point out that between 1992 and 2002 world oil demand grew by 1.5 percent, by 1.9 percent in 2003, and by 3.7 percent in 2004, with China's demand increasing by 7.6 percent in 2003 and 15.8 percent in 2004. To say that it may not keep growing at this rate may be sensible, but it will surely keep growing and it will not be alone.

 

Even for those as optimistic as Maugeri, the question of who controls the oil cannot be irrelevant. The U.S. state through threat, intimidation, and violence wants its ham fist on the spigot, allowing it to blackmail other countries. U.S. imperialism has exerted control over the Global South through the World Bank, the IMF, and the WTO. During the Cold War it used the threat of communist Russia and China to keep Europe and
Japan under its "leadership." It is now attempting to use terrorism in the same way, not altogether successfully as it is turning out since its invasions and occupations of Afghanistan and Iraq have failed to produce stable governments. Its actions have produced more terrorists and alienated most of the world. Seeking control over oil for leverage does not seem a far fetched stratagem for the oil soaked Bush-Cheney administration.

 

The most effective resistance to this imperialist pattern now is coming from Latin America where Hugo Chávez has been repeatedly elected and won referenda because he has stood up to the United States and used his country's oil revenues to raise living standards of the poor of his nation. In April 2006, Petroleos de Venezuela increased its stake in major projects to 60 percent from 40 percent as well as increasing its royalty cut. In Bolivia Evo Morales nationalized the energy industry, causing the United States to express disapproval regarding Morales's "weak commitment to democracy" (echoing its charge against Chávez). However, Bolivia's first elected indigenous president, according to the leading polling organization in the country, enjoyed an 80 percent approval rating in the spring of 2006 while George W. Bush's approval rating was at 33 percent among his country's citizens. Like Chávez who had suffered at least one coup attempt, Morales has to confront a military whose officers, trained at the School of the Americas, are not, as the press delicately put it, "a natural ally of Mr. Morales." Such developments in Latin America and similar manifestations of petro-nationalism elsewhere along with the general decline in U.S. prestige and authority in the world have led Thomas Friedman to suggest we are now in the post-post-cold war era in which, "U.S. power is being checked from every corner."11 The major enemies of the United States somehow seemed to be oil producers, a group of countries that given the current high energy prices cannot be easily intimidated through economic sanctions or political pressure.

 

To cheerleaders for U.S. imperialism it is the ineptitude of the Bush-Cheney policies, not their goals, that receive criticism. The critique of anti-imperialists now includes a maturing ecological consciousness. Struggles over energy are being conceptualized more usefully in terms of the economic system as well as energy alternatives. Indeed there is growing awareness that the final resource war will likely be for the planet's survival. Currently, only 1.25 percent of China's population possesses a car. If car ownership in that country were to reach the U.S. level, and the forecasts are that in 2031 China will have a per capita income close to that of the United States in 2004, China would have a billion vehicles. If they all needed to run on gasoline there is simply not enough oil and of course the greenhouse gases produced would heat things up distressingly. One hopes for technological breakthroughs but the precautionary principle suggests some major changes are in order as global energy consumption presses on available supply. A system that privileges accumulation over sustainability, individualism over solidarity, cannot be accepted.

 

The scarcity of other resources may prove serious as well. For example, today one in four people on the planet do not have access to safe drinking water; 12 percent of the world's population consumes 86 percent of available fresh water. With global consumption of fresh water doubling in the next twenty years, there are all sorts of water war scenarios. Already five million people die a year from diseases related to contaminated water. China's rapid industrialization has been accompanied by water contamination affecting 300 million people, that is nearly a third of the population. Kofi Annan's Millennium Report tells us that if present trends continue two out of three people on the planet will live in countries considered to be "water stressed." The World Bank projects that 40 percent of the people living in the world of 2050 will face some form of water shortage. In Palestine, Israel's commandeering of scarce water is a major issue and on many other borders water conflicts are major occurrences.

 

The resource war against the environment will be better avoided when we stop counting consumption of nature as income, as a free good, while we deplete our natural capital, as Herman Daly and others have long suggested. The past rates of accumulation of capital which are now blithely projected forward were possible because of the unsustainable usage of natural resources. Mainstream economists have a great deal of responsibility for ignoring the distinction between natural capital and humanmade capital. Fortunately many world citizens take conservation and recycling seriously and consider a very different set of policies essential. They are ready to challenge the presumptions of a consumer society which has ignored the limits of the biosphere and resource base of our planet. How we respond to these resource pressures will determine what kind of society we shall have and what sort of planet ours will be.

 

The dramatic changes which will be required raise central issues regarding the logic of capitalism. Writing from prison in 1915 and facing the likely prospect of the First World War, Rosa Luxemburg in her Junius Pamphlet famously argued that humanity faced the choice between socialism or barbarism. "We stand today," she wrote, "between the awful proposition: either the triumph of imperialism and the destruction of all culture, and as in ancient Rome, depopulation, desolation, degeneration, a vast cemetery; or, the victory of socialism." The ecological crisis we face and the prospect of future resource wars make her warning all the more salient.

 

Notes

 

1.       Peter Duignan & Lewis H. Gann, The Rulers of Belgian Africa (Princeton, N.J.: Princeton University Press, 1979), 30; also see Adam Hochschild, King Leopold's Ghost (New York: Houghton Mifflin Company, 1998).

 

2.       Jeffrey D. Sachs & Andrew Warner,
"Fundamental Sources of Long-Run Growth," American Economics Review,
May 1997.  3.         See Paul Collier, "Natural Resources, Development and Conflict: Channels of causation and Policy Interventions," World Bank, April 28, 2003.

 

4. 4.Paul Collier & Anke Hoeffler, "Greed and grievance in civil war," Oxford Economic Papers, October 2004. 

 

5.       Extractive industries Review Secretariat,
http://www.eireview.org/eir/eirhome.nsf. 

 

6.       Patrick E. Tyler, "U.S. Strategy Plan Calls for Insuring No Rivals Develop; A One-Superpower World; Pentagon's Document Outlines Ways to Thwart Challenges to Primacy of America," New York Times, March 8, 1992. 

 

7.       Michael T. Klare, "The Coming
Resource Wars" March 7, 2006, http://TomPaine.com. 

 

8.       Valerie Marcel & John V. Mitchell, Oil Titans: National Oil Companies in the Middle East (London: Chatham House/Brookings, 2006). 

 

9.       Nicolas Sarkis, "Addicted to
crude," Le Monde Diplomatique, May 2006, 4. 

 

10.     Leonardo Maugeri, "Two Cheers for Expensive Oil," Foreign Affairs (March/April 2006), 155.  11.          Thomas L. Friedman, "The Post-Post-Cold War," New York Times, May 10, 2006.

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Originally published on March 27, 2009 "Counterpunch" --
Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy.



Why are the very worst offenders – Bank of America (now owner of the Countrywide crooks) and Citibank the largest buyers? As the worst abusers and packagers of CDOs, shouldn’t they be in the best position to see how worthless their junk mortgages are?



That turns out to be the key! Obviously, the government has failed to protect itself – deliberately, intentionally failed to do so – in order to let the banks pull off the following scam.



Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.



The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.



Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.



The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.



The free market at work, financial style.



Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached at mh@michael-hudson.com No Trackbacks

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Database State was written by Ross Anderson, Ian Brown, Terri Dowty, Philip Inglesant, William Heath and Angela Sasse from the Foundation for Information Policy Research that included some of Britain's foremost experts in information systems and human rights. The full report, Database State, is published by the Joseph Rowntree Reform Trust Ltd. It is available as a free download from www.jrrt.org.uk. We reproduce the executive summary of that report below.

In recent years, the Government has built or extended many central databases that hold information on every aspect of our lives, from health and education to welfare, law–enforcement and tax. This ‘Transformational Government’ programme was supposed to make public services better or cheaper, but it has been repeatedly challenged by controversies over effectiveness, privacy, legality and cost. Many question the consequences of giving increasing numbers of civil servants daily access to our personal information. Objections range from cost through efficiency to privacy. The emphasis on data capture, form-filling, mechanical assessment and profiling damages professional responsibility and alienates the citizen from the state. Over two-thirds of the population no longer trust the government with their personal data.

This report charts these databases, creating the most comprehensive map so far of what has become Britain’s Database State.

All of these systems had a rationale and purpose. But this report shows how, in too many cases, the public are neither served nor protected by the increasingly complex and intrusive holdings of personal information invading every aspect of our lives.

The report assesses 46 databases across the major government departments, and finds that: A quarter of the public-sector databases reviewed are almost certainly illegal under human rights or data protection law; they should be scrapped or substantially redesigned. More than half have significant problems with privacy or effectiveness and could fall foul of a legal challenge. Fewer than 15% of the public databases assessed in this report are effective, proportionate and necessary, with a proper legal basis for any privacy intrusions. Even so, some of them still have operational problems.

Britain is out of line with other developed countries, where records on sensitive matters like healthcare and social services are held locally. In Britain, data is increasingly centralised, and shared between health and social services, the police, schools, local government and the taxman. The benefits claimed for data sharing are often illusory. Sharing can harm the vulnerable, not least by leading to discrimination and stigmatisation.

The UK public sector spends over £16 billion a year on IT. Over £100 billion in spending is planned for the next five years, and even the Government cannot provide an accurate figure for cost of its ‘Transformational Government’ programme. Yet only about 30% of government IT projects succeed.

Database State. Executive Summary and Recommendations

 

The Database State – scrap it, fix it or keep it?

This report surveys the main government databases that keep information on all of us, or at least on a very substantial minority of us, and assesses them using a simple traffic-light system. Red means that a database is almost certainly illegal under human rights or data protection law and should be scrapped or substantially redesigned. The collection and sharing of sensitive personal data may be disproportionate, or done without our consent, or without a proper legal basis; or there may be other major privacy or operational problems. Most of these systems already have a high public profile. One of them (the National DNA Database) has been condemned by the European Court of Human Rights, and both the Conservative Party and Liberal Democrats have promised to scrap many of the others.

The red systems are:

 

• the National DNA Database, which holds DNA profiles for approximately 4 million individuals, over half a million of whom are innocent (they have not been convicted, reprimanded, given a final warning or cautioned, and have no proceedings pending against them) – including more than 39,000 children;
• the National Identity Register, which will store biographical information, biometric data and administrative data linked to the use of an ID card;
• ContactPoint, which is a national index of all children in England. It will hold biographical and contact information for each child and record their relationship with public services, including a note on whether any ‘sensitive service’ is working with the child;
• the NHS Detailed Care Record, which will hold GP and hospital records in remote servers controlled by the government, but to which many care providers can add their own comments, wikipedia-style, without proper control or accountability; and the Secondary Uses Service, which holds summaries of hospital and other treatment in a central system to support NHS administration and research;
• the electronicCommon Assessment Framework, which holds an assessment of a child’s welfare needs. It can include sensitive and subjective information, and is too widely disseminated; ONSET, which is a Home Office system that gathers information from many sources and seeks to predict which children will offend in the future;
• the DWP’s cross-departmental data sharingprogramme, which involves sharing large amounts of personal information with other government departments and the private sector;
• the Audit Commission’s National Fraud Initiative, which collects sensitive information from many different sources and under the Serious and Organised Crime Act 2007 is absolved from any breaches of confidentiality;
• the communications databaseand other aspects of the Interception Modernisation Programme, which will hold everyone’s communication traffic data such as itemised phone bills, email headers and mobile phone location history; and
• the Prüm Framework, which allows law enforcement information to be shared between EU Member States without proper data protection.

Amber means that a database has significant problems, and may be unlawful. Depending on the circumstances, it may need to be shrunk, or split, or individuals may have to be given a right to opt out. An incoming government should order an independent assessment of each system to identify and prioritise necessary changes.

There are 29 amber databases including:

• the NHS Summary Care Record, which will ‘initially’ hold information such as allergies and current prescriptions, although some in the Department of Health appear to want to develop it into a full electronic health record that will be available nationally. In Scotland, where the SCR project has been completed, there has already been an abuse case in which celebrities had their records accessed by a doctor who is now facing charges. The Prime Minister’s own medical records were reported compromised. There is some doubt about whether patients will be able to opt out effectively from this system, and if they cannot, it will be downgraded to red;
• the National Childhood Obesity Database, which is the largest of its kind in the world, containing the results of height and weight measurements taken from school pupils in Year 1 (age 5–6) and Year 6 (10–11) since 2005. This database is simply unnecessary;
• the National Pupil Database, which holds data on every pupil in a state-maintained school and on younger children in nurseries or childcare if their places are funded by the local authority, including: name; age; address; ethnicity; special educational needs information; ‘gifted and talented’ indicators; free school meal entitlement; whether the child is in care; mode of travel to school; behaviour and attendance data. It is planned to share this data with social workers, police and others;
• Automatic Number Plate Recognitionsystems, which are operated by multiple agencies - the Highways Agency, local authorities, police forces and private firms – and will read 50m plates covering 10m drivers each day;
• the Schengen Information System, a European police database that lists suspects, people to be denied entry to Europe, and people to be kept under surveillance. It is due to be replaced with an updated SIS-II which will also store biometric data such as fingerprints; and
• the Customer Information Systemof the Department for Work and Pensions which describes it as “one of the largest databases in Europe”. It makes 85 million records available to 80,000 DWP staff, 60,000 staff from other government departments, and 445 local authorities – whose staff are already abusing their access to it.

Green means that a database is broadly in line with the law. Its privacy intrusions (if any) have a proper legal basis and are proportionate and necessary in a democratic society. Some of these databases have operational problems, not least due to the recent cavalier attitude toward both privacy and operational security, but these could be fixed once transparency, accountability and proper risk management are restored.

Green databases include the police National Fingerprint Databaseand the TV Licensing database.

Six years into the Transformational Government programme, the number of green databases is now shockingly low. Of the 46 databases assessed in this report, only six are given a green light.

So what do we do?

Based on a comprehensive analysis of Britain’s database state, the report makes the following recommendations for how data should be collected, held and managed by government.

The databases that this report has rated as ‘Red’ should be scrapped or redesigned immediately. ‘Amber’ databases should be subject to an independent review to assess their privacy impact and any benefit to society they may have.

Sensitive personal information should normally only be collected and shared with the subject’s consent – and where practical people should opt in rather than opting out.

Government should compel the provision or sharing of sensitive personal data only for strictly defined purposes, and in almost all cases, sensitive data should be kept on local rather than national systems.

Individuals should be able to enforce their privacy in court on human-rights grounds without being liable for costs – the state has massive resources to contest cases while the individual does not. Citizens should have the right to access most public services anonymously. We have been moving from a world in which departments had to take a positive decision to collect data, to one where they have to take a positive decision not to. This needs to be challenged.

The report also makes a further set of recommendations on how government should go about developing and building IT systems more effectively in the future.

The procurement and development of new database systems should be subject to much greater public scrutiny and openness.

Civil servant recruitment and training should aim at selecting and developing those with the ability to manage complex systems.

The threshold for referring IT projects to complex OJEU procurement procedures should be raised to £10m from the current limit of only £130,000 – this will favour medium-sized systems rather than unmanageable large projects.

The government should make its Chief Information Officer a Permanent Secretary reporting to a senior cabinet minister.

There should never again be a government IT project – merely projects for business change that may be supported by IT. Computer companies must never again drive policy.

Database State was written by a team from the Foundation for Information Policy Research that included some of Britain's foremost experts in information systems and human rights. The full report, Database State, is published by the Joseph Rowntree Reform Trust Ltd. It is available as a free download from www.jrrt.org.uk

 

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Note: This is an extremely well balanced, well researched and a must read for those who are currently living in the media occupied USA.
End of note.

January 16, 2009