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GEORGIA UNDER FIRE:WHAT REALLY CAUSED THE CONFLICT IN OSSETIA? PAGE 8
SARKOZY BURIES DE GAULLE, BUT HISTORY HAS MOVED ON
France returns to
the Nato fold
PETER KLASSEN – ‘Dry risers’ (1977)
Nationalise the banks
The ills besetting the financial system are currently devouring the global economy on which it relies. When one bank collapses another buys it, ensuring that the state will have to rescue it because it is now too big to fail. All of a sudden, with a knife to their throats, taxpayers everywhere are paying thousands of billions of dollars to bail out the biggest financial institutions. No one knows how many toxic assets are still concealed in their innards or how much more will have to be paid to buy up the rising mountain of tainted loans – a clear consequence of financial deregulation.
Once upon a time, it seems bankers had a nice easy life. They subscribed to the US “3-6-3” principle: borrow at 3%, lend at 6% and off for a round of golf at 3 o’clock. It did not take a regiment of mathematicians armed with econometric models to master this simple exercise. Then in the 1980s, everything changed. Diversification, risk-taking, opening up and removing barriers: these were the new watchwords. In 1933 the Glass-Seagall Act was passed prohibiting US banks from dealing on the stock exchange. Such old-fashioned New Deal nonsense was abolished in the euphoria of the new economics. Modernity beckoned and banks no longer depended on the confidence of their savers.
Most of them rushed to invest in new products: “derivatives” consisting of packages of loans they themselves once “securitised”. The bankers themselves hardly know what is going on (a 150page handbook would sometimes be needed for this sort of exercise) though they appreciated the cash all this innovation generated for them. Lending more and more, in the dark and with less and less equity, was certainly taking a chance. But these were the days of bubbles, endless expansion, financial pyramids and astronomical salaries, all encouraging a policy of more of the same (1).
At the end of 2007, some banks lent up to 30 times the amount they held in their vaults. Insurance companies like American International Group
(AIG) stood by, covering this daring exhibition of tightrope walking.
But one day, the rope gave way. Some debtors, ruined and unable to borrow any more, stopped repaying their loans. The banks were in a weak position: if a tiny fraction of the loans they had agreed could not be repaid, they too would be bankrupt – and their insurers with them. With house prices in free fall, economic activity grinding to a halt, unemployment soaring, how are the financial institutions to recover? The answer is: the state will take care of them, the same state which has too often let some genius shuttling between banks take the helm.
It is time for the state to address the problem. In any case, the financial sector can no longer look to private shareholders for its salvation: they only spring to life when the government announces a fresh injection of funds. Nationalising the banks – anathema only yesterday when everyone (even the French socialists) was in favour of financial deregulation – is now such an obvious move and the disaster it would prevent so imminent that Republican members of Congress are recommending it in the US, and neo-liberal magazines like The Economist are, regretfully, advocating the same line (2).
It seems, however, that as soon as the banks have been redeemed with taxpayers’ money, they will be returned to their shareholders. In short, put the house in order and then give it back to the people who looted it. Why? Nationalised banking systems have funded decades of expansion. What have private banks done of similar value?
TRANSLATED BY BARBARA WILSON
(1) In 2008 Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stearns awarded their employees $20bn in bonuses after losing $26bn and calling on the state to rescue them. At Goldman Sachs, every employee received an average of $362,000, including salary, The Wall Street Journal, New York, 20 March 2009. (2) Editorial, “In knots over nationalisation”, The Economist, 28 February 2009.
INSIDE THIS ISSUE
Land of rising debt: how the credit crunch is affecting Japan page 2 Kashmir: is a solution just possibly in sight? page 3 Europe’s energy dilemma page 4 Marx on Marx: archbishop calls for a more moral kind of capitalism page 5
Sugarcane ‘greenwash’ sidelines real issues for workers in Brazil page 6 Training day: France’s war games page 10 Vincent Bolloré: the myth of the ethical entrepreneur page 12 Morocco’s women pay the price of a flawed agricultural policy page 14
France rejoined Nato to mark the alliance’s 60th birthday summit at Strasbourg on 3-4 April. Critics say the gesture doesn’t help Europe’s feeble military capabilities, that Nato has been sidelined by the US and
that France has lost its independent negotiator status
BY PHILIPPE LEYMARIE
At the Nato headquarters, a huge, sombre 1960s complex in the northeast Brussels suburb of Evere, the loudspeaker system suddenly spits out the words “Anthrax alert!” All exits are closed, a security cordon raised, a decontamination tent installed. Firemen in NRBC gear (anti-nuclear, radiological, biological and chemical warfare) busy themselves. For the second time in a matter of weeks a suspicious package has been sent to an agent. Staff seem unconcerned: nothing interrupts the flux of soldiers and civilians, a Babel of 40 nations, along endless corridors and passages. Automatic doors swallow badges – green for the “national experts” from Nato’s member countries, yellow for the representatives of “partner” nations.
Ordinary visitors must be accompanied. You are told to keep your bag close to your body because the doors have sensors that might count objects as multiple entries with the resulting alarms. Car parks and other public spaces are in the “controlled” zone; the “reserved” zone is for meetings and partnercountry missions; Nato member state delegations, along with the international secretariat and the military top brass, work in a “secure” zone.
In these Brussels buildings to which Nato withdrew after being expelled from Paris in 1966, the idea of France, the former “unruly ally” (1), returning to the heart of military command excites interest, even enthusiasm. “Nato is the special object of France’s passion,” claims Jean-François Bureau who, before becoming deputy secretary-general heading Nato’s public advocacy division and the highest-ranking French official, worked in Paris for both left- and rightwing governments as defence ministry spokesman.
Once the free world’s armed glove, serving the interests of the US superpower, Nato should have been disbanded with the demise of the Warsaw Pact and the Soviet Union, recalls Paul Quilès, the former French defence minister (a Socialist). But the Americans and their allies preferred to keep it, assigning other tasks and broadening its spheres of operation. The fight against terrorism is, according to Jaap de Hoop Scheffer, the Dutch-born current secretary-general, “the greatest threat weighing on the alliance”. The Atlantic pact’s new missions have made it a “go anywhere” organisation.
“In Afghanistan the alliance faces new kinds of conflict which offer a real challenge,” says Bureau.
Philippe Leymarie is a journalist
The Taliban, tribal issues, the state of the provinces, elections, assassination attempts, the Afghan army and police, and drug issues are all part of the alliance’s principal military commitment – also the one which seems most controlled by the American godfather (3).
On his inauguration as US president, Barack Obama ordered a strategic review of the Afghan dossier, giving the impression that he wanted to make it “his” war while announcing a partial retreat of US forces from Iraq. The new role of Nato in this changing scenario, announced on 27 March, is mainly one of training (4).
Making France’s full and final commitment to the alliance in his closing remarks to a conference at the Ecole militaire on 11 March, French president Nicolas Sarkozy declared: “I don’t believe that the role of a major responsible power like France is to be halfway between everyone else, since that means France is nowhere.” He suggested that France’s decision to “resume her full role in Nato” bolstered national independence.
A wish to turn the page? Was the head of state, with this and other public statements, trying to relaunch Paris on the international scene in the midst of a financial and social crisis? Or was it the more considered and ideological step of Sarkozy the “American”, resolutely pro-liberal, wishing to turn the page on Gaullist doctrines he had never truly accepted?
In 1958 de Gaulle rejected point blank US Secretary of State John Foster Dulles’s proposal to deploy a regional defence system with intermediaterange missiles and tactical nuclear weapons, which European countries were asked to house on their territories. France, de Gaulle announced, would only accept American nuclear weapons on its soil if the host nation had complete control; otherwise it would invest in its own nuclear deterrent. He proposed a “third way” to those who disliked American hegemony but feared alignment with the Soviet Union. Then, in 1966, he took France out of Nato’s integrated military command structure and closed Nato’s offices and bases around the country.
Sarkozy’s reversal has been handled very carefully by Nato’s top brass, for fear of derailing the return of the prodigal son. The importance of France’s “special” case is played down. “France decided to
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