Capitalism and the Choice of War

Asia Times has published an interesting article on war and capitalism when to wage it, as in Iraq and when not to in regards to Ukraine (and Iran), which below are extracts.

“Globalization of capital and interdependence of world markets has reached a point where large-scale military clashes of the magnitude of World Wars I and II could lead to financial catastrophe for all. Not surprisingly, the network of transnational financial elites, who often elect politicians and run governments from behind the scenes, seem to be averse to another wholesale international war that could paralyze worldwide financial markets.

This explains why aggressions of late have often taken the form of "soft-power" interventions: color-coded revolutions, "democratic" coups d'etat, manufactured civil wars, economic sanctions, and the like. Of course, military option always lurks in the background to be employed when/if "soft-power" strategies of regime change fail or prove insufficient.

Even then, however, all efforts are made (by the major capitalist powers) to make such military interventions "controlled" or "manageable", that is, limited to local or national levels. While "controlled" wars tend to safeguard the fortunes of war profiteers and beneficiaries of military spending (mainly the military-security-industrial complex and major banks), they would not cause paralysis of international financial markets.

This also explains why major world powers such as China, Russia, India, and Brazil tend to shy away from standing up more robustly to the bullying policies of the United States. Wealthy oligarchic circles in these countries have more in common with their elite counterparts in the US and other core capitalist countries than their fellow countrymen at home. "Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves", points out Chrystia Freeland, global editor of Reuters, who travels with the elites to many parts of the world. It is therefore only logical to believe that a de facto alliance exists between members of this global "nation" of the super-rich.

The recent and ongoing crisis in Ukraine serves as a clear case of how transnational financial elites tend to avoid cataclysmic international wars of the scale of World War I or II in favor of controllable and often interclass wars by means of economic sanctions and other types of "soft-power" tactics. Tensions between Russia and Western powers ran so high that many observers warned of "the impending World War III". While those earlier tensions and the concomitant danger of major military clashes between the two sides still exist, they have subsided considerably. So, what changed all the earlier threats of wholesale sanctions and/or military actions against Russia to the somewhat diffused tensions and "diplomatic solutions" of today?

The answer, in a nutshell, is that the powerful economic interests vested in international finance, trade and investment (that is, the financial elites in Russia, Ukraine and the core capitalist countries) simply could not risk another uncontrollable world war. Surely, big banks and the influential military-security-industrial complexes tend to flourish on perpetual wars and international tensions. But they also tend to prefer "manageable" or "controllable" wars at the local or national levels (such those waged against Iraq or Libya, for example) to cataclysmic large scale wars on a regional or global level.

It is no secret that as Russia's economy has become increasingly intertwined with Western economies (largely due to economic power and behavior of its transnational oligarchs), it has also become increasingly vulnerable to global market fluctuations and threats of economic sanctions. This explains, to a large extent, President Putin's conciliatory gestures and accommodating policies to diffuse hostilities over Ukraine crisis diplomatically.

What is less known, however, is that Western economies too are vulnerable to sanctions from Russia, should Russia decide to retaliate. In fact, Russia has in its possession some powerful economic weapons with which to retaliate if necessary. Economic wounds from such reciprocal sanctions could be very painful to a number of European countries. Due to the interconnection of most economies and financial markets, tit-for-tat sanctions could significantly exacerbate the already fragile European and, indeed, world economy:

“Sanctions on Russian exports would greatly expose the EU. Europe imports 30% of its gas from the Russian state-owned company Gazprom. Russia is also Europe's biggest customer. The EU is, by far, Russia's leading trade partner and accounts for about 50% of all Russian exports and imports.
In 2014, EU-Russia overall trade stands at around 360 billion euros (US$491 billion) per year. Russia's total export to the EU, which is principally raw materials such as gas and oil, stands at around 230 billion euros, while Russia's imports from the EU amount to around 130 billion euros of mainly manufactured products as well as foodstuff. The EU is also the largest investor in the Russian economy and accounts for 75% of all foreign investments in Russia.”

“Russia could also retaliate against Western powers' policies and threats of freezing the assets of Russian individuals and companies by freezing the assets of Western companies and investors:
In case of Western economic sanctions, Russian lawmakers have announced that they would pass a bill to freeze the assets of European and American companies that operate in Russia. On the other side, more than 100 Russian businessmen and politicians are allegedly targeted by the EU for a freeze of their European assets.
Besides Alexey Miller, head of the state-owned Gazprom, the CEO of Rosneft, Igor Sechin, is also apparently on the sanction hit list. Rosneft is the largest listed oil company in the world and, as such, has partners worldwide, including in the West. For example, the US-based company Exxon-Mobil has a $500 million oil-exploration project with Rosneft in Siberia, and Exxon-Mobil is already in partnership with the Russian giant oil company to exploit Black Sea oil reserves.”

 Russia has at its disposal additional economic weapons to inflict damage to the US and European economies. For example, in reaction to threats to its assets being frozen by the US and its European allies, Russia liquidated (in late February and early March 2014) more than $100 billion of its holdings in US Treasury Bonds. Escalation of such reckless threats of freezing the assets of "unfriendly" governments could well involve China with disastrous consequences for the US dollar, as "China owns an estimated $1.3 trillion in US Treasury Bonds and is the number one investor amongst foreign governments".

This high degree of economic/financial interconnection explains why - with the backing of Washington and the nodding of Moscow - European diplomats from Berlin and Brussels rushed to Kiev, engineered the establishment of the so-called Round Table Discussions and paved the way for the bogus May 25 presidential election, thereby giving legitimacy to the regime of coup d'etat and averting the prospect of a mutually destructive escalation of economic sanctions and/or military actions. While powerful beneficiaries of war and military spending - major banks (as primary lenders to governments) and the military-security-industrial complex - thrive on war and international tensions, they nonetheless tend to prefer local, national, limited, or "manageable" wars to large scale regional or global wars that, in a cataclysmic fashion, could paralyze global markets altogether. This goes some way to explain why in pursuit of regime change in Iraq and Libya, for example, the United States and its allies relied on direct military action/occupation; whereas in cases like Ukraine and Iran they have (so far) avoided direct military intervention and relied, instead, on "soft-power" tactics and color-coded revolutions. This is largely because, for one thing, it is feared that war and military intervention in Ukraine or Iran may not be "controllable"; for another, there are large and sufficiently influential pro-Western financial elites in both Iran and Ukraine who could be relied upon in pursuit of reform and/or regime change from within, that is, without risking another catastrophic world war that could destroy the fortunes of the transnational capitalist class along with everything else.

 Interventionist powers have almost always been keen on the utility of the age-old divide and rule tactics. What is relatively new in the context of this discussion is that, in addition to older patterns of utilization of this tactic (which have often relied on divisive issues such as nationality, ethnicity, race, religion and the like), recent instances of the use of this scheme are increasingly relying on class divisions. The calculation seems to be that, when/if a country like Iran or Ukraine can be divided across the class lines, and alliances can be built with the wealthy oligarchs of the countries targeted for regime change, why embark on a wholesale military attack that could in an undiscriminating fashion hurt your own and your local allies' interests along with those of your foes. When economic sanctions along with alliances and collaborations with the economically powerful native oligarchs can be used to carry out "democratic coups d'etat or color-coded revolutions (often through bogus elections) why risk an indiscriminate military attack with uncertain and potentially catastrophic consequences.”

Full article can be read at this link 

SOYMB only wishes to add that sometimes governments miscalculate. The trade embargo placed on steel and oil exports to Japan by the United States in their rivalry over the China market was perhaps the main cause of the decision of Japan to go to war. Diplomacy walks a thin line between push and shove.