How Capitalist Central Banks Have Been Creating the Next Financial Crisis

Jack Rasmus

As central bankers, finance ministers, and government policy makers head off to their annual gathering at Jackson Hole, Wyoming, this August, 24-26, 2017, the key topic is whether the leading central banks in North America and Europe will continue to raise interest rates this year; another topic high on the agenda is when the three major central banks – the Federal Reserve, European Central Bank and Bank of England – might begin to sell off their combined $9.8 trillion dollar balance sheets that they accumulated since the 2008-09 banking crisis.

But the more fundamental question – little discussed by central bankers and academics alike – is what are the likely effects of further immediate rate hikes and/or commencement of central banks’ balance sheet reductions? The assumption is further rate hikes and sell-offs will have little negative impact on the real economy or financial markets. But will they? The effects of hikes and sell off will prove the opposite of what they predict.

Central banks in the US and Europe were grossly in error predicting in 2008 that massive liquidity injections and zero interest rates would re-stimulate their economies and return them to pre-crisis real GDP growth rates. They are now about to repeat a similar error, as they presume that raising those rates, and retracting excess liquidity by selling off balance sheets, will not have a significant negative impact on the real economy or financial markets.

Central banks’ balance sheets have been growing for almost nine years, driven by programs of zero-bound (ZIRP) interest rates and the introduction of firehose liquidity injections enabled by quantitative easing, QE, bond and other securities purchases.

After eight years, the official consensus among central bankers and government policy makers is that the 2008 shift to unlimited central bank liquidity and zero (or below) interest rates is now over. The front page business press and media lead story is that central banks are now about to embark collectively in a new direction – raising their benchmark rates and selling off their massive, bloated balance sheets. But don’t bet on it. They may find sooner, rather than later, that rates cannot be raised much higher and that balance sheets—now totaling $9.8 trillion for the US, UK and Europe alone—may not be reduced much, if at all, without provoking a further slowdown of their still chronically weak real economic recoveries, or without precipitating a serious contraction in equity, bond and other financial asset markets.

Globally, balance sheet totals are actually far greater than the $9.8 trillion accumulated to date by the big 3 central banks—the Fed, Bank of England, and European Central Bank. When other major central banks, like Switzerland’s, Sweden’s, Canada’s and others are added, it’s well more than $10 trillion. And then there’s the nearly $5 trillion balance sheet of the Bank of Japan and the more than $5 trillion of the People’s Bank of China. Worldwide, central banks’ balance sheets therefore exceed well over $20 trillion…with the total still growing.

It’s equally important to understand that the $20 trillion in central bank balance sheet debt essentially represents bad debt from banks, corporations, and private investors that was in effect transferred from their private balance sheets to the balance sheets of the central banks as a result of nine years of bailout via QE (quantitative easing), zero interest rate free money, and other policies of the central banks. The central banks bailed out the capitalist system in 2008-09 by shifting the bad debts to themselves. In the course of the last 9 years, the private system loaded itself up on still more debt than it had in 2007. Can the central banks, already bloated with $20 trillion bail out bankers and friends once again? That’s the question. Attempting to unload the $20 trillion to make room for the next bailout—as the central banks now propose to do—may result, however, in precipitating the next crisis. That’s the contradiction.

Attempting to sell off such massive balance sheet holdings will prove far more daunting than those central banks now anticipate. And their coordinated raising of interest rates risks precipitating another recession – given their fundamentally weak economies with chronic low bank lending, slowing investment, stagnating productivity, contracting public investment, and lack of real wage income gains. For the global economy has undergone a major structural change in recent decades that has been rendering central bank interest rate policies increasingly ineffective with regard to stimulating real investment and growth, while simultaneously contributing to further financial fragility as well.

The US Economy is Fragile and Weakening—Not Robust and Stable

All eyes are on the US central bank, the Fed, and what signals it gives at the Jackson Hole August 24-26 gathering, and the Fed’s subsequent policy committee in September. Will it continue to raise rates? Will it announce formally a schedule for balance sheet reduction in September? If the latter, will the announcement of sell-off be so minimal and token that it will generate a mere 0.25% hike in rates by year end 2018, as some pundits predict? Or will the psychological effects on investors – who have enjoyed eight years of record equity, bond, property, and derivatives asset price and thus extraordinary capital gains – consider the announcement as the signal to “cash in” and take their money and run, given the bubble levels already attained in equities, some bond markets, and real estate? And should the Fed continue to raise interest rates at a pace of 3 to 4 a year, what will be the impact on the US real economy?

Economic potholes are beginning to appear in a number of places. Bank lending to US business has declined sharply, now growing at only 2%; consumer loans for auto, mortgages and credit cards have halved over the past year; real investment and productivity have nearly collapsed; the so-called “Trump Bump” has dissipated; government investment has contracted below 2007 levels and infrastructure spending is still but a discussion envisioned for 2019 at the earliest, if at all; and job growth has been consistently low quality, resulting in wage stagnation or worse for the vast majority of the labor force.

In this unstable environment the Fed has nonetheless has announced plans to continue to raise interest rates and to begin selling off its balance sheet. The question is just how much and when? Consensus thinking at the Fed is that rates can continue rising 3 to 4 times a year at .25 basis points a crack through 2019 without serious negative effects. And that the Fed’s balance sheet can start selling off immediately in 2017, initially at a modest rate of $10 billion a month, accelerating further at a later date.

But these were the same central bankers who believed their QE and zero bound rate programs would return the US real economy to robust growth by 2010 but didn’t; who maintained the Fed’s massive liquidity injections would attain a 2% goods and services inflation rate, which it still hasn’t; who argued that once unemployment fell to 4.5% (in the US), wage growth and consumption would return to past trends and stimulate the economy, which has yet to occur; and who argued in 2008, also incorrectly, that Fed QE programs providing bankers virtually free money would stimulate bank lending and in turn real investment and growth. The Fed’s latest predictions could prove no more correct about the consequences of further rate hikes and balance sheet reductions than they were about QE, ZIRP, and all the rest for the past eight years.

It’s Not Your Grandpa’s Global Economy

To assume that selling off that magnitude of securities – even if slowly and over extended time – will not have an appreciable impact on nominal interest rates is the kind of assumption that resulted in previous predictive errors circa 2008 since the possible effects on investors’ psychological expectations of more rate hikes and balance sheet selling are completely unknown.

After eight years of treating symptoms and not the disease, the global financial system has become addicted to super-low rates and to continued central bank excess liquidity provisioning. What started in 2008 as a massive, somewhat coordinated central bank lender of last resort experiment – i.e. global bank bailout – has over the past eight years evolved into a more or less permanent subsidisation of the private banking and financial systems by central banks. The system has become addicted to free money. And like all addictions, the habit won’t be broken easily. That means central bankers’ plans to raise interest rates in the immediate months ahead will likely “hit a wall” well before the announced rate levels they are projecting. Plans to sell off balance sheets will almost certainly be limited to the US Fed for some time. The ECB and BOE – as well as Bank of Japan and others – will wait and see what the Fed does. The Fed will proceed at a snails pace that will represent little more than mere tokenism, and in the event of further slowing of real GDP growth, or US financial markets correcting in a major way, it will halt selling altogether. In short, there will be little Fed balance sheet reduction before the next recession, and a continued escalation of balance sheets by central banks globally. Central banks will enter the next recession with further bloated balance sheets.

After eight years of treating symptoms and not the disease, the global financial system has become addicted to super-low rates and to continued central bank excess liquidity provisioning.

The Fed is thus on the verge of another major disastrous monetary policy shift and experiment. It will be unable to raise interest rates as it has announced, by 3 to 4 times a year for the next two years. Nor will it be able to sell off much of its current balance sheet, since anything but token adjustments will accelerate rates even higher. In this writer’s opinion, the federal funds rate cannot be raised above 2%, or the 10 year Treasury yield much above 3%, without precipitating either a serious financial market correction or an abrupt slowing of real economic growth, or both.

What the eight years since the 2008-09 financial crash and great recession reveals is that the major central banks, led by the Fed, have painted themselves in a corner. The massive liquidity provided to their banking systems – engineered by zero rates and QEs – failed even to adequately bail out their banks. Today more than $10 trillion in non-performing bank loans still overhang the major economies, despite the more than $20 trillion added to their central bank balance sheets in just the past eight years.

The fundamental changes in the global economy and radical restructuring of financial, capital and labor markets have severely blunted central banks’ main monetary tool of interest rate management. Just as reduction of rates have little positive effect on stimulating real investment and economic growth, rising rates will have a greater negative impact than anticipated on investment and growth. The Fed and other central banks may soon discover this should they raise rates much faster and further or engage in more than token balance sheet reduction.

Central bankers at the Fed, the BOE and ECB will of course argue the contrary.

They will promise the economy can sustain further significant rate hikes and can commence selling its balance sheet without severe negative consequences. But these are the same people who in 2008 promised rapid and robust recovery from QE and ZIRP programs that didn’t happen. What happened was an unprecedented acceleration in financial asset markets as equity and bond prices surged for eight years, high end real estate prices rose to prior levels, derivatives boomed, gold and crypto-currencies escalated in value, and income inequality soared to record levels – all fueled by the massive $10 trillion central bank liquidity injections that drove interest rates to zero or below. And now they tell us they plan to raise those rates without serious negative effects. Anyone want to buy the Brooklyn bridge? I think they’re also trying to sell that as well.

The Tempest of American Power

Jason Hirthler

In Shakespeare’s late masterpiece, The Tempest, Antonio proposes murdering Alonso, the King of Naples, and seizing the throne. He remarks that he and his co-conspirator, Alonso’s son Sebastian, had been,

…cast again

(And by that destiny) to perform an act

Wherof what’s past is prologue; what’s to come,

In yours and my discharge.

(The Tempest 2.1.251-54)

That what is past is prologue is akin to saying that preceding events have set the stage or created the context for what is about to happen. The same idea aired by Antonio among his fellow conspirators in The Tempest is a surprisingly apt analogue for the imperial state, where the electoral options on offer are either imperialism or imperialism. Thus a Democratic administration is followed by a Republican administration and little changes in the deep, abiding imperial mission of the American empire. We discover that what Bush did was prologue for Obama’s presidency, and Obama’s for Trump’s. Despite the theatricality of the last year, and the disputed election of a risible carnival barker to the highest seat in the land, the march of the imperial corporate state moves ahead relatively unimpeded, building on the legacies of past leaders.

Yes, President Trump has occasionally delivered stirring glimpses of sanity during his turbulent tenure. He canceled the regime-change goal of the Syrian strategy. He canceled the CIA program to arm and train terrorists in Syria. He negotiated ceasefires with Vladimir Putin in Syria. These are positive steps and reflect the kind of anti-conflict mentality some people supported him for. And yet, he appears to have instructed or permitted the military to shift its focus to Iran and North Korea and Venezuela, and dangerously escalate the hostile overtures toward these nations. Sanctions are levied. Lindsay Graham has tabled the destruction of North Korea. John McCain has called for further arming Ukrainian fascists. Steve Mnuchin appeared waving a sheaf of sanctions aimed at “dictator” Nicolas Maduro of Venezuela. Congress is conflating anti-Zionism and anti-Semitism with a new anti-BDS bill. Israel is removing one illegal settlement housing 40 settler-occupier families and replacing it with a 2000-unit settlement. The UN condemns it with its customary edgeless complaints. The UNSC falls silent. In other words, most everything on the foreign policy front is business as usual.

Business As Usual: Syria

Look at what is happening in Syria. An all-new Kurdistan will be carved out of northern Syria. It will be led by a puppet regime that permits American military bases, indeed some eight bases have already been established in north Syria. This has been the plan all along. It was even recommended in the Yinon Plan from 1982, a Zionist blueprint for controlling the Middle East, and which has either informed or confirmed Washington’s divide-destroy-and-rule strategy ever since. Obama sent special forces into northern Syria to ensure the Kurdish YPG and so-called Free Syrian Army (FSA) would capture Raqqa before the Syrian Arab Army (SAA) did. John Kerry begged Moscow not to bomb al-Qaeda for similar reasons. The overarching objective: a not-so-Salafist principality on the edge of Syria and Iraq capable of a) weakening the secular Syrian state, b) running interference between Hezbollah and Iran, and c) launching destabilization activities and ultimately color revolutions in Iran and perhaps Russia beyond it.

The Kurds, of course, have been steadily romanticized as the perennially persecuted minority in the crucible of Middle East conflict. And now Washington has co-opted their desire for a state to insert itself into the vortex of Sunni-Shia confrontation. The YPG are supposedly the armed version of the PKK, the Kurdish organization in Turkey that is relentlessly at odds with Ankara. But the State Department considers the PKK a terrorist organization, and the YPG have been behaving like terrorists in northern Syria, to put it mildly, terrorizing Christians and seizing Arab territory to include in their blessed vision of holy Kurdistan. Not unlike the Zionist takeover of Palestine.

This was all predicated on the fine work of Barack Obama, who green lighted CIA and Pentagon plans to arm terrorists (euphemistically called ‘moderate rebels’), called for regime change in Damascus, injected special forces into the Syrian fire to guide the Islamist mercenaries, dropped tens of thousands of bombs across Syria and Iraq, and backed Saudi Arabia, Turkey, Britain, and other allies in various coordinated forms of destabilization.

Business As Usual: Venezuela

Look what’s happening in Venezuela. The economic chaos and street violence in Venezuela hasn’t been caused by President Rafael Maduro. Washington has dumped millions of dollars into the cesspool coffers of so-called opposition groups which, frustrated at the ballot box for most of this century, and being hostile to democracy in the first place (their 2002 and 2015 coup attempts both failed), have turned to violent insurgency to topple the popular Maduro government. The opposition have burned down one government building, bombed another. They have twice bombed federal police units. They have murdered Chavistas and lit them on fire. They have done everything in their power to provoke an authoritarian response from the government–anything that will further delegitimize the government, and generate a pretext for intervention. Both Mexico and Colombia have been recruited to help undermine Caracas, adding their own deeply dysfunctional signatures to a gruesome imperial intervention. Despite this, Donald Trump’s brooding Secretary of State Rex Tillerson, formerly Driller-in-Chief for Exxon, added some blathering nonsense to the fire, mumbling gravely about Maduro either leaving or “returning to the constitution.” An aide declared the OAS was a “coalition partner,” even though that organization’s charter prohibits interference of the kind the West is anxious to enact. Not to be outdone, CIA Chief Mike Pompeu contributed some seething drivel about being “hopeful there can be a transition in Venezuela” and his efforts in Mexico City and Bogota to co-opt those nations to back regime change.

Prevaricating think tanks like the Brookings Institute publish delusive arguments for using the Organization of American States to pressure Maduro out, then sweep in with a neoliberal loan package, which would doubtless contain all of the economic conditionalities desired by imperial finance, including increased foreign direct investment, heightened ownership caps for foreign capital, privatization of national assets at distressed prices with no consultation of the population. This last being a form of “accumulation by dispossession” that David Harvey calls a signal feature of neoliberal capitalism. All of the chaos, Brookings says, has been caused by Maduro and “his blind obsession for unlimited power.”

Is there support Washington’s argument that Maduro is a power-mad tyrant? It largely depends on what you think of the following actions: After the opposition took control of the National Assembly (NA) in 2015, a Maduro-leaning Supreme Tribunal of Justice (TSJ) removed three lawmakers on charges of voting irregularities, crucially preventing the opposition from assuming a supermajority. In 2016, the National Electoral Council (CNE) canceled a recall referendum against Nicolas Maduro after hundreds of thousands of signatures calling for the referendum were declared invalid by the CNE. In 2017, the TSJ later took over legislative powers from the NA (later restored) after NA refused to remove three assemblymen from Amazonas said the TSJ to have been fraudulently elected (vote-buying). Yet these representatives had been confirmed by the CNE, supposedly giving them parliamentary immunity. Maduro then called a Constituent Assembly vote by decree, rather than by referendum, as his predecessor Hugo Chavez had. The opposition boycotted the Constituent Assembly vote, ensuring those elected were mostly government supporters. The first act of the Constituent Assembly was to banish the Attorney General, who openly challenged Maduro.

In fact, whether Maduro hews to the constitution or not is little more than a sideshow for Washington. His actions must either be hysterically decried beneath the label of dictatorship, or obfuscated to justify the label of dictatorship. He’s a dictator no matter what he does. The West wants to unseat Maduro before the Venezuelan Constituent Assembly codifies social gains into the constitution. Maduro is the inheritor of a Bolivarian revolution that transformed  the nation under Hugo Chavez. Doubled economic growth. Doubled the caloric intake. Dramatically lowered severe poverty. Lowered unemployment. Reduced child malnutrition. Erased illiteracy. Drove grade school and higher education enrollment and graduation. Lifted incomes. And on and on. Even the World Bank concedes it. This frightens the crusty beltway puppet-masters because they forever fear the dread domino effect, when a successful social model spreads throughout the region. Thus Maduro must go.

The hostility toward Venezuela is also predicated on Barack Obama’s absurd declaration in 2015 that Venezuela is a grave threat to America’s national security. Obama’s view was built on George W. Bush’s efforts to overthrow Hugo Chavez in the early part of the century. Both men lavishly funded the National Endowment for Democracy (NED) established by Ronald Reagan as a Trojan Horse by which to covertly interfere in other countries.

Colonization and Causes

These are essentially class wars. Elite pit their pliant minions against the masses and their fledgling representative governments. And these class wars amount to little more than colonization by other means. We’re aren’t in a post-colonial era; colonization has just changed. The U.S. learned from British imperialism and has evolved its own arsenal of lighter-footprint templates for conquering the lands, leaders, and resources of target nations. There is tremendous continuity here, a kind of accretionary dynamic. Although straightforward wars of aggression are always ‘on the table,’ Washington sees the use of debt leverage, sanctions, NGO infiltration, opposition funding and electoral interference, drone assassinations, arming, training, and guiding proxy armies, and considerable air support as its preferred tactical suite for conquest and control. This keeps the ostensible footprint small and the plausible deniability large.

Colonization continues for two central reasons: the first reason is that there is bipartisan consensus for it–because both parties represent elite wealth, not ecumenical majorities. Popular opinion is not represented in Washington. George W. Bush perverted the political capital accrued from 9/11 to destroy half the Middle East, and it was Barack Obama who ensured we remained immersed in Iraq and Afghanistan. Obama who got the United States into Syria as well as Libya. One country is now a swamp of terrorist factionalism, the other a fractured state about to be partitioned. Likewise, the aggressive Republican action against Venezuela has received bipartisan support all along. Democrats and Republicans share objectives. They merely differ on tactics. Republicans still prefer boots on the ground and planting American flags in foreign soil. Very dramatic, old school, film-reel kind of imperialism. Democrats prefer covert action, the kind of shifty schemes engineered by Zbigniew Brzezinski that tend to destabilize through proxies, have the advantage of plausible deniability, and yet produce both chaos and blowback. Not that chaos is an unwanted result; it could be argued that it is our preference. Each administration builds on the work of the previous administration, regardless of the insignia on its lapel. For all in power, it is empire at all costs. That’s the bipartisan consensus.

The second reason colonization continues is because corporate media obscures it. The continued colonization of the planet is enabled by the colonization of the American mind. This is the ‘war before the war’ referenced by George Creel when he explained how he helped the Wilson administration turn Americans into a frothing mass hell-bent on sundering Hun conquests. The public must be conditioned to support the imperial project. The MSM functions as a rationalizing front organization for imperialism.

To this end, Democrat and Republican are relentlessly held up as examples of the wide spectrum of popular opinion we enjoy, rather than the narrow ideology a single war party. Their differences are proclaimed. We are led to believe that not only are we daily witness to a throaty, demotic debate on the issues of the day, but that the perspectives aired reflect the opinions of the average American. But they don’t (page 570 in particular). There’s nothing mainstream about the ‘mainstream’ media. The so-called mainstream expresses a fringe viewpoint. It relentlessly repeats the marginal POV of the one percent, the corporate profiteers for whom war is a boon and a blessing. This is how all propaganda functions–an obscure perspective is popularized through the capture of media channels. Not only are the viewsobscure, but they are consistently extreme. Only by co-opting massive communications firepower to make the case, as it were, can the ruling class convince the masses of a viewpoint that would never gain traction on its own merits.

The ‘mainstream’ stenographers write in calm, bloodless prose, the better to assure their readers that they are levelheaded, not fantasists who back one imperial usurpation after another. Their columns are tranquilizers that normalize the extremism of both the elite worldview and the imperial behavior of its foot soldiers. Then, when the true popular voice springs into the square to denounce the lies, he or she appears to onlookers as the real extremist, merely by virtue of his anger. And this is why Orwellian constructs blossom like an unkempt jungle in the mediascape. Democracy is tyranny. Voting is oppression. Marginal is mainstream.

And past is prologue, since what we have done before merely sets the stage for what we will do. The templates established by Carter and Brzezinski are taken up by Obama and Rice. Soros-funded schemes applied in Eastern Europe migrate to the tip of South America. There may be nothing new under the sun, but what’s new is the sun under which old things are given new life. Yesterday, Afghanistan. Today, Syria. Yesterday, Poland. Today, Venezuela. The final irony is perhaps that for those in the dystopian worlds of capital exploitation that lay beyond our borders, the opposite is often true–their future will not resemble their past. For many in Syria and Venezuela and Iraq and Libya, they may find themselves repeating an epigram scribbled on a wall in the war-torn Syrian town of Homs, “We were dreaming of the future, we’re now dreaming of the past.”

The Terrorism of Moral Indignation

Luciana Bohne

To be sure, the whole of Western culture is complicit, but what astounds is the complicity of what defines itself as left.  Notably, the complicity of those among the left’s comfortable and intellectual “tendencies,” usually called “liberals.”  But in general, a whole language has vanished from the Western left’s vocabulary: class struggle, international solidarity, peace among peoples, social justice, exploitation, poverty. They are so illiterate in left theory and experience that the call the ruling class’s booth on their faces, “the deep state.”  This today in the West is an amalgam (rather than a conscious political program) of a loose and dangerous left.  It dreams, if it dreams at all, of a revolution without struggle. The answer to that pietism is force.  Whole nations wiped off the face of the earth.

We now, on this loose left, trade in our critical faculties at the theatre of propaganda.  In return, the propaganda pounds, batters, and sequesters our emotions so that we end up identifying with the narrative of power. The narrative insists that the West has the Holy Grail. It insists that it has a messianic mission to improve the world by sharing the Grail’s liberal values. The old conceit of liberal humanism, thus, returns to occupy our psyche, and it’s the same liberal humanism that in the 19^th century enslaved the “lesser breeds” of the planet. Once again, we pick up the “white man’s burden” and his “civilizing mission” to lift up darkling  “junior Brothers” from “savagery” and “barbarism” into our magnificent, magnanimous, culturally superior self-image. Massacres, famines, epidemics, and genocides follow.

Who galvanizes the left today against imperialism as Fidel Castro did with his uncompromising demand at the United Nations General Assembly in 1966 that “the exploitation of poor countries by rich countries must stop”? “We hear a lot of talk about human rights,” he said in the 1970s, as Jimmy Carter’s White House launched the rhetoric of human rights, “but we have to talk about the rights of humanity.”

“The rights of humanity,” who remembers them? Chief among them the right to sovereignty, perhaps? The right to foreign non-interference? To living free of threats, sanctions, partition, dismemberment, balkanization, invasion, and occupation? To solving one’s own problems in one’s own country? To choosing one’s economic system? To refusing to become a protectorate of the Big Bully on the Potomac?

What happens when the “rights of humanity” are trampled? Since 1999, with Bill Clinton’s unauthorized war for secession of Kosovo from Yugoslavia (reduced to Serbia and Montenegro by then), unopposed and even cheered by progressive segments of the loose left,

“Like a cyclone, imperialism spins across the globe; militarism crushes people and sucks the blood like a vampire.”

These are not the words of a contemporary leftist. These are the words of German socialist Karl Liebnecht, co-founder with Rosa Luxemburg of the Spartacus League and the Communist Party of Germany, both murdered by the German social democrat state in 1919.  He was referring to WW I, which, alone among the social democrats in the parliament of 1914, he stood up to oppose.

We now, on the loose left, rally to the call of “human rights,” which are invariably being abused outside our national borders. You’d think we lived in the Promised Land, so convinced are we of the responsibility to protect “less fortunate” human beings abroad, who together with the injury of our sanctions and bombs have to endure the insult of our condescension.

We now, on the loose left, cannot see beyond the imbecility of our arrogance that we lack most of the rights said to be “human” by the Universal Declaration of Human Rights right here at home. A report from Human Rights Watch (HRW) summarizes the inability of our society to protect its most vulnerable members, which measure alone judges the vibrancy of a democracy:

“Many US laws and practices, particularly in the areas of criminal and juvenile justice, immigration, and national security, violate internationally recognized human rights. Often, those least able to defend their rights in court or through the political process—members of racial and ethnic minorities, immigrants, children, the poor, and prisoners—are the people most likely to suffer abuses.”

Our masters, who incarcerate at home 2.37 million people, the largest prison population in the world, “caused in part by mandatory minimum sentencing and excessively long sentences” (HRW) and detain twelve million people per year in county jails, raise our moral indignation against cherry-picked crusades for human rights abroad. They use this manufactured indignation as a license to attack and terrorize whole nations.

In Afghanistan, in 2001, we bombed to liberate women; we are still there, but we hear no more of the sorrow and the pity of women’s plight.  In Iraq, in 2003, we invaded to liberate Iraqis from the “dictator” Saddam Hussein, and one to two million Iraqis were liberated from their lives, millions more from their home and their country. Fallujah alone accuses—left more chemically poisoned than Hiroshima. In Syria, we claim to fight “to democratize” the country and at the same time the Isis cutthroats, but it took the legitimate Russian intervention to prevent a caliphate of cutthroats from ruling in Damascus.

In Yemen,

“In March [2015], a Saudi-led coalition of Arab states began a military campaign against the Houthis in Yemen. The US provided intelligence, logistical support, and personnel to the Saudi Arabian center planning airstrikes and coordinating activities, making US forces potentially jointly responsible for laws-of-war violations by coalition forces.” (HRW)

Most on the loose left ignored Obama’s crimes, among which the war in Yemen may rank as the most cynical, heartless, and inhuman. It even classifies as biological warfare, because bombing water treatment plants then leaving people to die of cholera epidemics cannot be called anything else. Meningitis cases are breaking out. Two UN aid flights to Sanaa are authorized to leave from Saudi Arabia every day for famine relief. Saudi Arabia is refusing fuel. No reason given, reports The Independent on 5 August. Saudi Arabia blockades the Yemen’s airspace. Yemen’s agony continues. No stirrings on the left.

So, too, they ignored Obama’s drone attacks on Yemen, Pakistan, and Somalia. So, too, they ignored this:

“The US restored full military assistance to Egypt in April [2015], despite a worsening human rights environment, lifting restrictions in place since the military takeover by President Abdel Fattah al-Sisi in 2013. Egypt resumed its position as the second-largest recipient of US military assistance, worth $1.3 billion annually, after Israel. In June, the US lifted its hold on military assistance to the Bahraini military despite an absence of meaningful reform, which was the original requirement for resuming the aid.” (HRW)

And this:

“In September [2015], Obama waived provisions of the Child Soldiers Prevention Act to allow four countries—the Democratic Republic of Congo, Nigeria, Somalia, and South Sudan—to continue to receive US military assistance, despite their continued use of child soldiers.” (HRW)

And this:

“Hundreds of thousands of children work on US farms. US law exempts child farmworkers from the minimum age and maximum hour requirements that protect other working children. Child farmworkers often work long hours and risk pesticide exposure, heat illness, and injuries. In 2015, the Environmental Protection Agency banned children under 18 from handling pesticides. Children who work on tobacco farms frequently suffer vomiting, headaches, and other symptoms consistent with acute nicotine poisoning.” (HRW)

The loose left now calls that grotesque excrescence in the White House a fascist, as if Trump had replaced an administration of enlightened humanitarians. They are calling for virtual presidenticide so that the rule of that enlightened international “vampire,” the Democratic Party, can be restored. But let me tell you: he’s only the last of the “fascists” in a long line since 1945. The loose left just hasn’t noticed because the loose left has no concept of class struggle. It has, therefore, no critical equipment to include imperialism—the war of the class of international imperialist on the class of colonial or semi-colonial peoples—in the catalogue of the crimes of fascism.

Our planners are not stupid. They know how to maintain their minority’s primacy by waging class war.  They not only exercise it on the “proletariat” at home but also across the map of the world.  In 1948, George Kennan, the architect of the policy of containment, which launched the Cold War, recommended inequality in international relations—that’s war by the imperialist class at the center against whole national peoples at the peripheries. Imperialism, therefore, is just another form of class war.

“We have about 50% of the world’s wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and daydreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world benefaction.”  (Memo by George Kennan, Head of the US State Department Policy Planning Staff. Written February 28, 1948, Declassified June 17, 1974)

By “we,” Kennan does not mean the 99% of Americans. He means the 1%. The foreign policy he recommends is class-vested and is kept secret, for practical reasons, from the rest of us for two decades. That’s because the resources to support this policy protecting the elite has to be extracted from the rest of us, and counted in losses to social welfare and progress. Class is a relation of power, in which one class determines the direction of the whole of society. This is one example.

Fascism has many faces, but the most constant is that of the supremacist delusion that the West is the carrier of “universal values” and that, as exclusive interpreter and custodian of these values, the West is obligated to act as watchdog of democracy and human rights throughout the globe.  In his inaugural address of January 1997, Bill Clinton assumed for the United States the planetary leadership of this humanitarian imperative:

“America stands alone as the world’s indispensable nation. . . . May God strengthen our hands for the good work ahead, and always, always bless our America.”

This is not universalism; this is ethnocentric hubris. This is the terrifying message of one nation “uber alles.” This is totalitarian dogma. This is a profession of democratic faith without the slightest credibility because it does not aim at democratizing international relations but at subjecting them to the discipline and image of the “indispensible nation.” This, in one word, is imperialism–fascism in action. Karl Liebnecht saw it clearly, one-hundred years ago:

“In capitalist history, invasion and class struggle are not opposites, as the official legend would have us believe, but one is the means and the expression of the other.”

Why can the loose left today not see it that way? Why does it abstract the concept of imperialism from the conduct of the Western political order, thus mutilating the totality of reality, especially the reality reserved to the peoples of colonial origins now being reinvaded, partitioned, looted, left to chaos? Why do they see a defense of “human rights” where others, especially the victims, see subjugation, neocolonialism, and imperialism? What blinds the moral vision of the left to the point of reserving the fascist brand to the crude jester, Trump, but denying it to the slick charmer Obama of the Drone-Kill-List, destroyer of Lybia and Syria, architect of regime change in Ukraine, advocate of war with Russia, harasser of China, enabler of Israel in its assault on Gaza, global spymaster, deporter-in-chief, most successful weapons salesman since 1945, including to that obscene abuser of human rights, autocratic Saudi Arabia?  This uneven distribution of the fascist brand insures that the next president will be another “fascist,” but more polished, “educated,” grinning confidently with sharp teeth from a shark’s mouth. Trump’s mouth pouts; the image does not inspire confidence.

It’s not that the evidence of the devastation by the “cyclone” or the “vampire sucking the blood” is lacking. Since Clinton assigned to the United States an “indispensible” role in the world, it has bloated its defense budget, embarked with allies and vassals on a war against a tactic (“terrorism”), covering up the war of re-colonization (Afghanistan, Iraq, Libya, Syria, Yemen, Somalia, Sudan, Mali, Chad), organized and led coups (Haiti, Honduras, Ukraine, Egypt, Venezuela), mounted “color revolutions” in the former republics of Eastern Europe, dispatched NATO to encircle Russia with aggressive missiles, threatened on a systematic basis North Korea, China, Russia, and Iran in violation of the UN Charter, bloodied the planet with countless uncounted corpses and blighted it with hordes of desperate refugees, blockaded and sanctioned whole countries at will, and virtually scrapped the edifice of  international law–which it had itself erected as a monument to liberal democracy after WW II– while claiming to be acting in defense of universal values. The country that imposed the strictest protectionist policies in the world in the 19^thcentury now recognizes no borders, no national sovereignty, no limits to its expansion.

What is to be done?

End imperialism. As long as imperialism and imperialist centers exist, so long there will be wars.  The politics of indignation; the campaigns for human rights do not oppose imperialism; they facilitate it.  One has to be either stupid or complicit if he cannot see that the US supports two states with the most egregious records of violations of human rights—Saudi Arabia and Israel—while demonizing the socially progressive government of Venezuela as a “dictatorship.”  One has to be either stupid or complicit to call for the removal of President Assad from Syria for being undemocratic, while installing a neo-fascist regime in Ukraine. One has to be either stupid or complicit to believe Iran is the sponsor of terror when all indications point to Saudi Arabia. And then there is Russia. There we risk thermonuclear war—the loss not just of human rights but the loss of life on the planet. We shall become death. That’s what we’re playing with when we consent to distributing human rights across the world to the sound of the crescendo of exploding bombs.

To begin the opposition to war and imperialism, we must start, at a minimum, with a demand to return to the cardinal principle in the Charter of the United Nations for the prevention of aggressive war by respecting the sovereignty of nations. No nation should claim “Responsibility to Protect” (R2P) if all nations are equal before international law. That responsibility rests with the UN Security Council, in the interest of peace among nations, which alone has the monopoly on authorizing war. We must, therefore, refuse to empower Western state terrorism through the melodrama and emotionalism of moral indignation. We must remember that Hitler invaded countries on the pretext of defense of “human rights” of German minorities. We must remember, too, that the Charter’s defense of sovereignty was written in response to Hitler’s violation of “human rights” in the name of “human rights.” That his policy broke the peace among nations and set the world on fire. That the whole trauma ended with two mushroom clouds in the sky.

To begin a serious opposition to imperialism and war, we must re-create a sound left—a principled left– and denounce those agents of the fake left who contribute to the escalation of Western military aggression under the banner of “human rights” or any other liberal claptrap such as identity politics, which pleads for “respect” from the state instead of claiming class power, or the power to contrast the state’s foreign and domestic policies:

“These pseudo-left figures and organizations function as what amount to specialized NGOs, acting, much like the National Endowment for Democracy and its constituent elements, as political fronts and facilitators for the CIA and US imperialism.”

A sound left must re-discover, behind the lies and distortions written by its enemies, the theories, the practices, the language, the history, the science, and the errors (most important) of the left’s once living cultures and societies—a left that changed the world.  This left must extend the hand of friendship to systems of states that continue to survive in a hostile capitalist world with a socialist perspective. We live in an age of counter-revolutionary reaction in the West. Soon, we’ll forget that we are human and that we can make our own history. Shouldn’t we re-educate ourselves to a conscious, informed, organized, purposeful left or shall we let Hitler have the last word and a posthumous victory? “The problem of how the future . . . can be secured,” he wrote in Mein Kampf about Germany,  “is the problem of how Marxism can be exterminated.”

Kenyan elections take place under threat of crackdown

Eddie Haywood

Results of polls for thousands of elective offices across Kenya are being announced this week amid threats of social unrest. Nearly every elected office in Kenya has been contested, with candidates for president, governors, the national assembly, women’s representatives, and senate and county assemblies.

The hotly contested election for president between incumbent Uhuru Kenyatta and challenger Raila Odinga has been marked by allegations of election fraud and an intensified police state atmosphere.

The Kenyatta government, citing the potential for violence, deployed 180,000 police around the country for the duration of the poll. Protests by Odinga supporters have erupted in many cities, most notably in Nairobi and Kisumu, home to significant layers of opposition to the ruling Kenyatta government.

Preliminary results released Wednesday by the Independent Electoral and Boundaries Commission (IEBC), the official body responsible for counting the vote, project Kenyatta the winner, with 54.3 percent of the vote, and Odinga receiving 44.7 percent, a margin of some 1.4 million votes, with 94 percent of the total vote counted. The final results are expected to be announced Friday.

Odinga has accused the Kenyatta government of election fraud, alleging that the election commission’s computer servers holding the vote tally have been hacked. In fact, the IEBC admits an attempted hack took place, but claims that it was unsuccessful and not a threat to the integrity of the election.

Former US Secretary of State John Kerry, heading the Carter Center’s observer team overseeing Kenya’s election, described the poll as credible, telling the media that while observers noted “minor variances”, there was nothing that would cause doubt over the poll’s integrity.

Overshadowing the election is last month’s murder of Chris Musando, a senior election official with the IEBC, the election body charged with counting the vote. The circumstance and those responsible for his death are as yet unknown, fueling a wave of suspicion in the population that the government was behind the killing. It has been reported that Musando’s body bore evidence he was beaten and tortured before killed.

A few days later, an unknown man attacked the home of Vice President William Ruto, in which a guard was wounded.

In the midst of these suspicious circumstances social anger has exploded, and protests have erupted across the country resulting in mass arrests and five killings by security forces. A real fear of a social explosion permeates the Kenyan ruling elite as evidenced in the deployment of the 180,000-strong security force at polling stations nationwide. The deployment of these repressive forces is widely perceived by the Kenyan population as blatant voter intimidation.

With a palpable sense of fear gripping the population over a possible government crackdown, many people stayed home the day of the poll. In many areas, streets were empty and shops closed. In the days preceding the poll, large numbers of Nairobi’s residents fled the city by bus to escape a possible crackdown.

The presidential contest was between two multi-millionaire candidates jockeying for power under conditions of entrenched official corruption and deteriorating living standards for the Kenyan masses.

Also hanging over the election is the widespread social anger gripping Kenya. The numerous strikes and protests rocking the country in the weeks and months leading up to the poll figure into the state of mind of the ruling class and their fear that Kenyan society is about to come apart at the seams.

While the Kenyan economy has boasted growth of roughly 5 percent annually over several recent years, the benefits have largely gone to the wealthiest layers of Kenyan society, leaving the majority of the Kenyan masses struggling to survive.

The mass of Kenyans live under conditions of social misery, confronting chronic unemployment, hunger and a lack of access to adequate health care and decent housing. Many Kenyans subsist in the informal economy, toiling as maids and scavengers, and other such enterprises for which the remuneration for many is only one dollar a day.

According to a poll released in July by Ipsos, 61 percent of Kenyans said they feel the country is heading in the wrong direction, and unemployment and inflation are their biggest concerns. Kenya’s workforce is growing by 2.5 percent every year, and it is expected that by 2025, vast numbers entering the workforce will not find employment.

In Kibera, the largest slum in Nairobi, small shop owner Nancy Obongo summed up the disaffection towards the political class felt by broad layers of the Kenyan population when she told the media, “I hope this ends quickly because we need to go back to work and feed our families. Elections are always bad news for us poor people. I have to pay bills and feed my children. I don’t care who wins.”

The poll also takes place in the context of Washington’s intensification of military operations in Kenya and the African continent as a whole. Kenya is carrying out a bloody war on behalf of Washington against the population of Somalia, with the official claim that it is fighting the Islamist militant group Al-Shabbab. In reality, the Kenyan army functions as a proxy for Washington’s imperialist aims for the Horn of Africa in securing the region, which is strategically vital in terms of the oil traffic flowing through the Red Sea and Gulf of Aden.

AFRICOM, the US military command for the African continent, has sharply increased its role and presence in Africa and Kenya in particular. The chief aim underlying this military intervention is to counter Beijing’s economic influence on the continent, which has grown rapidly over the last decade. Beijing’s One Belt, One Road economic initiative undertaken this year, in which Africa is to play a significant role, represents a threat to Washington’s economic and political dominance over the continent. Imperial strategists seek to neutralize this threat by the increased deployment of military might.

In the background of the elections are the forces pursuing a new “scramble for Africa” consisting of Western diplomats, banks, and corporations which have the aim of carving up the economic resources of Kenya for profit. In the final analysis, both the presidential candidates are vying to serve as the agent of this layer of parasites.

Emergency evacuation of four south London tower blocks

Paul Mitchell 

Hundreds of families in four 13-storey blocks in Ledbury estate in Peckham, south London, have been told by the local Labour-controlled Southwark Council to leave their homes.

Residents of the 242 flats have been sent letters saying they will have to “temporarily decant the blocks over the coming weeks and months” for emergency works. Council officials do not know when they will be able to return.

Ledbury estate towers blocks

The council said safety checks carried out following the Grenfell Tower fire indicate the blocks are at risk of collapse in the event of a gas explosion. Workman are now disconnecting the gas supply and residents are being given electric hotplates.

The council announced the evacuation following an investigation by engineering consultancy company Arup, which revealed that strengthening of the buildings “may not” have been carried out after the collapse as a result of a gas explosion at Ronan Point, a similarly constructed high-rise in east London, in 1968. Four people died and 17 were injured. The reinforcement of vulnerable buildings and the replacement of gas supplies by electricity were fundamental recommendations of the Griffiths Inquiry set up by Harold Wilson’s Labour Party government following the disaster.

The fact that 50 years after the disaster, Griffiths’ recommendations have been ignored at the Ledbury estate, and probably many more blocks around the country according to safety experts, is yet a further warning to those who put their faith in the Conservative government’s announced Grenfell Fire inquiry.

The May 6 1968 Ronan Point collapse

Southwark’s deputy leader and cabinet member for housing, Stephanie Cryan, blamed the failure to carry out Griffiths’ recommendations on the former Greater London Council, declaring, “We didn’t own the blocks when they were constructed at the end of the 1960s, but all the reports we found suggested the blocks were strengthened following the Ronan Point incident in 1968 to make them safe to include a gas supply.

“Arup’s structural investigations suggest this strengthening may not have occurred, and we have therefore turned off the gas until further investigations can be done.”

Southwark council’s Strategic Director for Housing & Modernisation, Gerri Scott, added, “Earlier today I heard from Arup, who regrettably informed us, based on their structural investigations, that the information we have regarding the history of the blocks may not be correct, and we have therefore taken the decision to turn off the gas supply to all Ledbury tower blocks immediately, and have asked Southern Gas Network to do so.”

Scott assured reporters that the council would offer residents £5,800 to help with moving costs, should they wish to find new accommodation. Some would be able to move into a new block of 80 flats “in the vicinity” of the Ledbury Estate, with others placed at the top of the housing waiting list. Those who don’t want to move will be offered the right to return to the refurbished Ledbury blocks, Scott added.

Workers disconnecting the gas supply on the Ledbury estate

The latest announcement is a volte face that demonstrates Labour is as guilty as the Tories of contempt for council residents.

Back in July, Ledbury residents, concerned by the tragedy at Grenfell Tower, were told at a council meeting that there were “no structural safety issues” relating to the cracks in their flats. However, at the meeting, building surveyor and fire safety expert Arnold Tarling revealed that flammable polystyrene inserted between concrete slabs and flues meant “a fire could travel up the building.”

There were gaps around cabling and gas pipes, Tarling explained, that were wide enough to fit his hand through, which “no amount of fire-stopping would be able to fill.”

Deputy leader Cryan criticised Tarling for springing the issues on the audience, saying that Southwark’s fire safety teams “are already carrying out” safety checks, although residents had not yet been told about them.

Cryan declared, “I have to be very clear that there are no surprises in any of the points made by Arnold Tarling, these are all matters we have been dealing with for some time, with advice from the best and most up-to-date sources of information. We will continue to investigate and carry out works if and when they are required. …We will keep our residents informed at every step.”

Following the announcement of the evacuation of residents from the towers, Tarling repeated to reporters, “As soon as I walked in and saw the gas supply, I knew it was all wrong … Southwark council did not listen to me, and you really have to question their competence.”

The sudden evacuation from the Ledbury estate after so many years raises questions over whether this has any connection with Southwark council’s social cleansing policies.

The estate is slap bang in the middle of the council’s “Old Kent Road Action Plan and Opportunity Area”—opportunity being the appropriate word for developers who have made millions from the council’s regeneration schemes.

Old Kent Road 'opportunity area' with Ledbury estate marked in yellow

Published in May 2016, the report points out that a whole swathe of Southwark, including the Ledbury estate, is the latest to be earmarked for “regeneration” by the Labour council. The plan, in explaining that the Old Kent Road is the last remaining undeveloped district in central London, just one mile from Tower Bridge, declares, “Over the next 20 years the opportunity area will be transformed, becoming increasingly part of central London… Located so close to central London, the area’s housing stock has become very popular and house prices have risen accordingly.”

Real estate company Savills has highlighted the problem of “high investment need estates” and “a legacy of poorly designed and built housing.” It has recommended “alternative options for poorly performing stock” and “the need to make difficult choices,” accompanied by “the prospect of leveraging in private sector investment.”

The council insists the Old Kent Road regeneration will provide 35 percent social housing. But its record shows that this is never achieved.

The notorious public-private partnership (PPP) redevelopment of the Heygate estate at Elephant and Castle, in cahoots with developers Lendlease, led to the replacement of 1,200 social homes with expensive private apartments. Only 82 social homes were replaced and just three of the original households have returned. Landlease made a profit of £113 million from the venture, while council leader Peter John’s claim the council would get “north of £100m” from it to build new housing, never materialised. It ended up with just £12 million.

Local campaign group “35percent.org” has campaigned to expose the council’s social cleansing policies. It has pointed out that the first major development along the Old Kent Road at the Bermondsey Works has used a “subject to viability” clause in a 19-storey, 158-unit scheme to provide just 10 affordable homes, none of which is social-rented. It has submitted 46 developments in a complaint to the Local Government Ombudsman in which affordable housing from private developments was not being delivered.

France boosts trade ties with Iran despite US sanction threats

Kumaran Ira

Despite ‎recently-imposed US sanctions on Iran, France is boosting trade ties with Tehran after Iran’s 2015 nuclear agreement to curb its uranium enrichment program. Since the nuclear deal, the French press has begun to call Iran an “El Dorado” for French auto, energy, and high-tech firms.

These deals point to sharp objective economic conflicts between the European Union (EU) and the United States, which underlie the growing strategic and military tensions between the two blocs. Washington has threatened to abandon the Iranian nuclear deal, undertaking a 90-day review of its policies toward Tehran. Two weeks ago, the US Congress overwhelmingly passed a bill targeting Russia, North Korea, and Iran, accusing Iran of terrorism and involvement in regional wars.

US sanctions are aimed not only at Iran but at other powers, including China and the EU, who are developing trade ties with Tehran. US sanctions on Moscow, Pyongyang and Tehran have been sharply criticised by European powers, and Germany and France have threatened to take retaliatory sanctions against the United States.

As Iran concludes multi-billion-dollar deals with European firms, including Germany’s Volkswagen and Italy’s Ferrovie dello Stato, French capital is moving aggressively into Iran. This includes France’s auto companies, which are desperate to boost sales amid the economic crisis in Europe.

On Monday, Iran and French car manufacturer Renault signed a €660 million deal to produce 150,000 cars a year. Renault aims to double its market share to 20 percent of the Iranian auto market by 2020. Iran produces about 1,350,000 vehicles a year and hopes to produce 3 million a year by 2025. With the new deal, Renault expects to add 150,000 vehicles a year to the Iranian market above its current capacity of 200,000 vehicles a year in Iran.

The Renault deals comes after another French carmaker, PSA Peugeot Citroën, which has 35 percent of the Iranian market, signed a deal last year to open a plant producing 200,000 vehicles annually. Peugeot was a major producer in Iran before sanctions were imposed. PSA only avoided a fall in overall global sales last year due to increased sales in Iran.

Last month, France’s Total and the China National Petroleum Corporation (CNPC) signed a 20-year, $4.9 billion contract with Iran’s Petropars to invest in the South Pars offshore gas field, which is split between Iranian and Qatari waters. With an initial $1 billion investment, Total will have a 50.1 percent stake; CNPC and Petropars will own 30 and 19.9 percent, respectively.

Total CEO Patrick Pouyanné called the occasion “historic” and encouraged other companies to invest in Iran. “We aren’t a political organisation, but I hope this agreement will encourage other companies to come to Iran because economic development is also a way of building peace,” he told AFP. “We are here to build bridges, not walls.”

Total is working to circumvent US sanctions, appointing a compliance officer to ensure that it is not targeted by Washington—as in 2014, when the US imposed a $9 billion fine on France’s largest bank, BNP-Paribas, for violating the embargo. Iran’s oil minister Bijan Namadar Zanganeh said Iran’s oil industry needs some $200 billion in investment over the next five years.

The calculations of Total, the oil company through which French imperialism has long transacted its neo-colonial policies in Africa, speak for those of European capital as a whole. They are not seeking to build peace, but to seize control of profits and markets which Iran’s theocratic regime prefers to offer to European firms rather than to a hostile American government. In particular, they are anticipating enormous profits to be made from the policies of economic liberalisation, austerity, and job cuts that President Hassan Rouhani is preparing against workers in Iran.

The European powers long enjoyed special access to Iranian markets, as Washington cut ties to the regime that emerged from the 1979 revolution against the CIA-backed Shah of Iran. Particularly after the Stalinist bureaucracy’s dissolution of the Soviet Union in 1991, US-EU rivalries surged in the Persian Gulf. France’s companies grabbed Iranian market share in the 1990s, while its diplomats argued that European influence in the Persian Gulf was necessary to build a “multi-polar” world. These tensions culminated in the illegal and unilateral US invasion of Iraq in 2003.

In 2006, however, Washington and the European powers jointly voted to impose sanctions against Iran over its uranium enrichment program, which Iran insisted was for peaceful purposes. Over the last decade, China has increasingly developed its trade with Iran, which joined the Chinese-led Asian Infrastructure Investment Bank (AIIB) and became a focus of China’s plans for a web of transport, energy and trade routes across Eurasia.

The US-backed UN sanctions slashed Franco-Iranian economic ties. Trade in 2014 amounted to only €514 million, compared with €4 billion in 2004. France’s market share in Iran fell from 7 percent to 1 percent.

Since the 2015 nuclear deal, European ruling circles are desperate to re-establish their presence in Iran, which has the world’s second-largest gas reserves and fourth-largest oil reserves, and an internal market of nearly 80 million people. The EU is likely to clash with Washington, should it seek to reimpose sanctions on Iran in the near future. After the nuclear deal was initially ratified, the European Council on Foreign Relations issued an analysis on August 26, 2015, headlined “Europe won’t bow to an anti-Iran-deal US Congress.”

It said, “Europeans are now looking beyond a nuclear-centric vision of Iran to focus on how they can use the opening up to engage Iranian President Hassan Rouhani’s administration. Both Iran and Europe are eager to reignite their once-prosperous trade relations, and Europeans would also like to work with Iran to more constructively de-escalate conflicts in the Middle East. This kind of progress can’t be easily undone, and if it is, European policy makers may blame Washington rather than Tehran for prematurely derailing an agreement that was given virtually global acceptance.”

Now, European businesses hope that the re-election of the pro-business Hassan Rouhani as Iran’s president will help their business interests. Tehran signed multiple contracts, worth up to €30 billion, just during Rouhani’s visit to France last year.

As Washington now threatens or actually imposes sanctions against Iran, Russia, China, and North Korea—which the Pentagon is preparing to target for military action—European corporations are coming into strategic conflict with their “allies” and rivals in the United States.