The Economic Value of Treating Workers Humanely

From today’s NYT ‘Taking Note” Blog by Carol Giacomo:

There has been so much regression on democracy and human rights in Myanmar recently that many people, this editorial page included, have suggested the United States must consider reinstating broad sanctions.

On Thursday, however, there was a positive step forward – an agreement between the two countries to work together to strengthen labor rights and improve labor conditions in Myanmar.

The new initiative, which is backed by the International Labor Organization, was announced in Yangon during a visit by Mike Froman, the United States Trade Representative.

It will involve American and Myanmar officials, other interested governments, businesses, workers and labor groups such as the ILO in developing a multi-year strategy on reforming Myanmar’s labor laws. The intent is also to help the country and its people develop the skills and the systems needed to ensure reforms are consistent with international standards and that they are put into effect.

For instance, Myanmar has recently allowed the formation of labor unions and there are now more than 1,000 of them. But given that the country was ruled by a military junta until 2011, there is little understanding of how workers, government officials and employers should interact or even how to set a minimum wage. The new initiative is expected to address that.

The agreement suggests that Myanmar officials, eager to draw foreign investment into their country, and foreign businesses, eager for a new market, see an economic value in treating workers humanely and respectfully.

It seems no coincidence that the initiative was unveiled at the same time as a $480 million solar power project, financed in part by American investors, that is expected to provide Myanmar with up to 12 percent of its power.

In a statement, Gap Inc., one of the American companies taking part in the initiative, said that “as the first American retailer to begin sourcing from Myanmar, we understand that we have a responsibility to ensure that our vendors provide a safe, healthy and fair workplace for workers.”

If Myanmar’s government, still heavily influenced by the military, is serious about this new commitment, it could be an important turning point. But in recent months there has been more backsliding than forward movement in Myanmar’s transition to a democratic society. So skepticism is warranted.

And even if this initiative bears fruit, the country still faces many serious challenges given the human rights abuses against the Rohinga, a Muslim minority group; the efforts to close off elections to opposition candidates; and attacks on press freedoms. Re-imposing sanctions must remain an option.

Greece votes to stick with euro zone

After months of political turmoil, a slim majority of Greek citizens voted for the center-right New Democracy Party in a signal that Greece will stick with the euro zone in spite of widespread opposition to financial austerity policies imposed by the EU in the face of uncontrollable debt.

World markets reacted cautiously but favorably to the news, which turned the tables in the wake of last month’s vote in which a sizeable majority of Greeks voted for the left Socialist Party, which promised to roll back austerity policies and press the EU for better repayment terms for loans. Investors appeared cautious about the news, in part, because of the volatility of the Greek situation. A large and vocal portion of the population blames the economic catastrophe on the financial collapse globally and political corruption locally, leading to massive ongoing protests and violent clashes with police in that country.

However, in mixed news Spain announced over the weekend that its borrowing costs have already exceeded its ability to pay back loans, in spite of the widespread and harsh austerity measures imposed there. Along with that country, Italy similarly appears to be on the edge of bankruptcy as its borrowing costs soar and credit rating slides. Although EU officials claim the euro zone will maintain its integrity, increasing doubts about the ability and willingness of countries like Germany and France to extend large lines of credit indefinitely to countries with terrible records for keeping balanced budgets, collecting taxes, and living within their means.

At the G20 meetings this week in Mexico world leaders are expected to encourage EU leaders to act quickly and develop a comprehensive plan for bringing its debt under control and paving the way for a more stable financial framework. Otherwise, mounting debt and the potential bankruptcy of some of the world’s largest economies threatens to not only to frustrate an economic turnaround globally, but may plunge them—and the rest of the world—back into recession.

Stocks rally on move by central banks, but the rally won’t last long

In a sign that the U.S. and European Union are serious about resolving the ongoing debt crisis in the euro zone, the central banks of five countries, including the European Central Bank, the Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank, announced a plan to infuse banks across the E.U. with fresh capital. The move comes in an effort to assure financial markets that the debt crisis is being taken seriously and policies are being developed to resolve it.

The announcement comes on the heels of global financial markets being battered in the last two weeks as investor confidence has withered in the face of the ongoing debt crisis, as well as the inability of governments to take swift action to alleviate it. The move by the central banks is supposed to reduce the cost of a program under which banks in foreign countries can borrow money from their own central banks by about 40 percent, with much of the money coming from the Federal Reserve Bank in the U.S. This is supposed to infuse banks with fresh capital and shore up their liquidity in the hopes that they will begin lending again.

The news led to today’s rally on Wall Street, one of the biggest yet, with the three main indexes rising 4 percent or more, representing the largest gain since March 2009. Stock markets across followed favorably with exchanges in London, Paris, Berlin, and Euro Stoxx rising from 3 to 5 percent.

However, the rally will be short lived, as they have proven to be in the past. Although investor confidence depends heavily on the perception that governments are taking strong action to deal with avalanche of debt arising from a slowing global economy and shrinking tax revenues, the underlying reality is that the fundamentals of the global economy are not sound. There is too much money controlled by two few private actors, particularly large hedge funds and other investment banks, that can be moved around too quickly, thanks in large part to financial deregulation and advanced communications technology. Moreover, there is too little democratic accountability, particularly in the U.S., which has deregulated banks, insurance carriers, and other financial institutions to the point where the fraud and theft of “complex financial instruments” are legal grey areas.

Plagued by serious unemployment both the U.S. and E.U. cannot jump-start their economies even if the debt crisis is resolved favorably. Assume banks achieve stability and return some of their liquidity to businesses and consumers in the form of loans. Very few companies will enact aggressive expansion strategies that require hiring new workers, and banks will not lend to consumers without jobs. Thus, even if the debt crisis is resolved, there is no guarantee that the labor market will improve, leaving governments in the lurch as revenues from taxes remain stagnant and requiring them to make further cuts in entitlement programs that exist to help citizens beset by difficult financial times.

This catch-22 is not lost on investors, who more than once in the last few years, have rallied markets on some slim piece of good news like the announcement made today by central banks, only to have their hopes dashed the next day by a slim piece of bad news, for example, that jobless claims are up. The surge in markets today is therefore not “good” news in the sense that it does not guarantee that the so-called “jobless recovery” is actually underway.

Syrian security forces fire on protests

The widespread discontent with governments throughout the Middle East and North Africa continues, as troops in Yemen, Bahrain, and now Syria use lethal force against its citizens in an effort to stop the organization of dissent that has toppled governments in Tunisia, Egypt, and Libya.

Get used to seeing this map, too. The Middle East is undergoing a prolonged titantic shift as democratic protests topple governments after years of repression and stagnation.

The use of lethal force has become the fulcrum on which U.S. diplomacy and military intervention turns, and in an interesting development about  the brute fact that events are moving too quickly for our comfortable categories to keep up with, the U.S. is dropping the ball. Once again, U.S. intelligence, and therefore policies of diplomacy and military intervention, are lagging in ways that reveal deep inconsistencies about the way we define self-interest and sovereignty in relation to ourselves and in relation to other peoples and states. Our assumptions about the Muslim world and its people, and our willful ignorance of the diversity of economic, social, and political dynamics in different countries, have literally exploded in the last two months as the Middle East experiences a sudden seismic shift in a direction that, like it or not, we cannot ultimately control.

Two questions. Why are we continuing to support some dictatorships in countries that either collaborate with us in the war on terror, or provide us with oil, or both? The governments in both Bahrain and Yemen have been firing on protests and using violent suppression to stop protesters from regrouping, but the U.S. ignores the pleas of those people while barely condemning the actions of their governments with strong language. Yet in the case of Libya the situation apparently warrants military action? Perhaps the economies of scale warrant the change in policy, if the systematic use of indiscriminate military force against civilian populations changes the equation.

How many countries will the U.S. have to intervene in before there is stability? The scene is worrisome in the Middle East because as governments topple and fragile democracies are formed, there is an explicit conservative element of religious fundamentalism (not unlike the religious-right in this country) that will fill that void and use the state for its own puritanical and tyrannical ends, and this would be a dangerous turn for our war on terror. The more there is instability, the more imperatives arise for military intervention, and the more military intervention, the more resistance to U.S. military presence will grow throughout the Middle East. The U.S. position in the Middle East is growing weaker, and expanding the use of force is probably to make its position even worse off in the long run, unless our policies of engagement in this region are reformed from the ground up.

Permanent crises, disaster capitalism, and kanji

The earthquake that leveled much of northern Japan on March 11 and the tsunami that followed, stresses the fragility of humanity despite modern technology. In the aftermath of a 9.0 earthquake such technology turns out not only to be a blessing as resources and aid workers can and did mobilize quickly to help the Japanese people, it also turns out to be a liability. What started out as a natural disaster has quickly turned into a manmade disaster. Several of Japan’s nuclear power plants are severely damaged and are in danger of melting down, a scenario that makes Russia’s Chernobyl incident in 1986 pale by comparison.

"But surely you agree we can do without Mother Nature?" —Monty Burns

Although information filters such as government and media blur the picture of events in Japan, it appears that the scale of the crisis might have peaked, and that a full-blown meltdown will not occur now that power has been restored. After lacking power for several days many of the reactors cores reached dangerous levels of heat without turbines to keep them cooled in large tanks of heavy water. Radiation levels in the power plants reached dangerous proportions within 24 hours, and in a fine example of Japanese kanji 50 workers at Fukushima remained behind to try and contain radiation. Soon radiation levels in surround areas reached dangerous levels, and evacuations commenced. Now there are dangerous levels of radiation and radioactive iodine showing up in food sources and the water supply. With millions of Japanese living in the streets, in tents or temporary shelters, and in the rubble of their homes, the refugee crisis alone is daunting without worrying about further consequences of long-term radiation exposure for the environment and the Japanese people.

A global conversation immediately has ensued about the safety of nuclear power even though this question has been debated since nuclear energy was first harnessed for commercial purposes. There are different positions in this debate, ranging from abolitionists of all forms of nuclear power (including weapons) to policy makers who want more use of it as part of a long-term strategy to rid human beings completely from dependence on non-renewable resources. The Japanese nuclear crisis is forcing some reconsideration of assumptions in this debate because the relationship between nuclear power our environmental concerns turns out to run in the other direction as well. In addition to being concerned about the environmental costs of nuclear power, which is not by any means an environmentally neutral form of energy conversion, we now have to be concerned about the nuclear costs of environmental imbalances.

Like BP’s Gulf oil spill in 2010, the over-compensation of technology in environmentally challenging geographies poses questions about the hubris of our technological intervention in Mother Nature. If the nuclear crisis in Japan is averted with little lasting radiation, it will be a testament to Japanese intelligence, will, and kanji. The conversation must not stop there, however. We must fit this disaster into another larger conversation about technology capabilities and environmental imbalances. In the context of Hurricane Katrina, the Gulf oil spill, and the current nuclear crisis in Japan, perhaps it is time to start asking whether our roles in these disasters can be averted in the future by taking more responsibility for our technological intervention in Mother Nature.

The fact that Japan is presently struggling with another nuclear crisis—one the U.S. made during WWII with its decision to drop atomic bombs on Hiroshima and Nagasaki, the other by its own making with a push from Mother Nature—shows that learning the hard lessons by correcting for past mistakes remains elusive in spite of our amazing technological prowess. For some strange reason, this has been a particularly hard lesson to learn for global capitalism and its apologists.

UN moves against Qaddafi regime

Developments in the Libyan conflict moved quickly last week as the United Nations Security Council voted to impose a “no-fly zone” over Libya in order to help rebel forces there, who have had several setbacks at Kaddafi’s loyalist forces and mercenaries have driven them from previously kept rebel strongholds in the eastern part of that country.

President Obama announced that an international coalition led by France, UK, and America would impose the “no-fly zone” as well as target Kaddafi military forces that are targeting civilians. France and the UK took the lead on Saturday by immediately bombing military targets in Libya, including anti-aircraft missile sites and radar installations. In addition, U.S. military warships launched Tomahawk missiles at similar targets.

In less than 10 years now the U.S. has engaged in its third military action in the Middle East, raising questions about the coherence of its piecemeal response to ongoing crises in various Muslim countries as well as its long term strategy for promoting peaceful transitions to democratic regimes. For example, many people are asking why the U.S. is intervening in Libya but not in Bahrain or Yemen where authoritarian regimes have cracked down on pro-reform demonstrators and hundreds of protesters have been killed by military and police forces. On Sunday, demonstrators seethed with rage in Manama, Bahrain as the government  tore down the giant tower in Pearl Square, which had become the central battleground, and effective symbol, for protesters demanding democratic reforms.

The problem with asymmetries in U.S. foreign policy in the region was highlighted on Saturday as Defense Secretary Robert Gates announced that imposing a “no-fly zone” in Libya amounted to a war because it would require destroying key military targets, radar, and airfields. He also was skeptical of the usefulness of “no-fly zones,” but claimed that this would be the only limited the step the U.S. would take at this time, warning that no ground troops would be sent in to support the rebel forces. Gates stressed this was a conflict for the Libyans to solve, and that imposing a “no-fly zone” is to protect the mass murder of innocent civilians by loyalist forces of Kaddafi.

The situation in Libya is growing tense. Many fear that if Kaddafi is not deposed soon, the struggle will turn into a long and bloody one for control of different regions of Libya, exacerbating long and deep tribal and clan divisions. The best hope is that the international coalition provide support and aid to the rebel coalition in an effort to defeat Kaddafi’s loyalist forces before bloody civil war becomes a permanent part of Libyans’ lives.

Middle East protests revive democratic spirit

In the wake of the Jasmine Revolution in Tunisia, the nearly peaceful overthrow of Egypt’s President Mubarak, and now Libya’s brutal crackdown on opposition protests, hundreds of thousands of protesters have turned out in the streets of major cities across the Middle East from Iran and Iraq to Yemen and Bahrain. Opposition leaders and religious figures are calling everywhere for people to demand more accountability from their governments, and the democratic consequences will be far reaching for years to come.

Thousands of protesters choked Pearl Square on Friday in Bahrain's capital.

Many Arab governments including monarchies in these oil-rich but desperately poor states are now calculating whether to engage the opposition in an effort to bring economic and political reform to the region, or whether to hold onto power with all the desperation and violence that has marked the upending of Col. Muammar Qaddafi’s regime in Libya. The country continued descending into chaos as opposition forces, now well-organized, have armed themselves, taken much of eastern Libya, and are marching on the capital Tripoli, where Qaddafi has hired hundreds of mercenaries from nearby Chad and other countries to do much of his fighting. The scene in Libya is sure to get more bloody as the opposition works to unseat the Libyan dictator, who has come under international condemnation for using tanks and planes to kill hundreds of his own people.

In Bahrain, where an earlier crackdown by government forces cleared Pearl Square in that countries capital city Manama, and led to the deaths of dozens of protesters, there is a renewed effort by the country’s Shiite majority to push the Sunni minority out of power. Thousands of protesters throng in Pearl Square, setting up camps, staging demonstrations, and calling for the removal of the country’s long-entrenched monarchy.

In Iraq, America’s difficult democratic experiment is now suffering from “shock and awe” as thousands of protesters there poured into the streets demanding more reform, an end to corruption, and a withdrawal of U.S. military presence. Despite calls by the government for people not to take to the streets, and a security ban on vehicles in the streets, thousands of people are protesting in Iraq’s major cities, and there is information coming in that government troops and police have fired on crowds, killing some protesters.

Libyan dictator escalates violence against civilians

Falling like dominos...

The cycle of violence in the Middle East escalates daily as democratic protesters confront dictators and authoritarian regimes demanding reform. In Libya, the situation is getting especially ugly as the world’s longest-reigning dictator, Col. Muammar el-Qaddafi, promises never to bow out of the conflict in spite of hundreds of people who have been killed in recent violence and thousands who are demanding he leave. The cycle is starkest where military forces and police fire on mourners marching in funeral processions honoring the dead, creating more funerals, more marches, and more anger.

Yesterday the son of Qaddafi, Seif al-Islam el-Qaddafi, went on public television to inform Libyans that there would be no concessions and that they would never cede power, setting up a conflict that will surely cripple the nation and inevitably lead to the downfall of this regime. He also warned of civil war and occupation, and defiantly said that the regime would fight until the last man.

“Libya is made up of tribes and clans and loyalties,” Qaddafi claimed. “There will be civil war.” He also warned, “The West and Europe and the United States will not accept the establishment of an Islamic emirate in Libya.”

The people of Libya are angry, and the more the dictatorship turns its guns on them the more of them will turn out into the streets demanding change, the more will be shot, the more people will march in funeral processions, the more people will be shot. This cycle of violence and the stubborn insistence of the regime will lead to an all out insurgency, revolution, and possibly civil war. This is the ultimate price that must be paid for political transformation in countries that are deeply authoritarian and long overdue for substantive change.

Bahrain protests turn violent

The effects of the successful democratic protests in Tunisia and Egypt have inspired thousands, perhaps millions, of ordinary Muslims to turn out the streets in an effort to draw attention to the authoritarian and often brutal regimes under which they live. Protesters in North Africa and the throughout the Persian Gulf are demanding political reform and elections in an inspiring show of solidarity against oppression. This is good news.

The bad news is this. People in countries like Iran, Bahrain, and Yemen face entrenched governments desperate to hold onto power, governments armed with U.S. made weapons once used to prop up governments against Islamic fundamentalism now  used to beat and murder peaceful protesters. How did the U.S. become complicit in the deaths of foreign nationals seeking democratic reform? Easy. The enemy of my enemy is my friend has long been the hallmark of American foreign policy. The U.S. government in its insistence that it is protecting the national security of its people has armed one dictator to depose another, and now those arms are being used to suppress the swell of democracy that is growing throughout the Middle East.

American foreign policy has proceeded on such short-sighted terms before. In Egypt the U.S. propped up the sham Presidency of Mubarak with arms and foreign aid that would later be used (responsibly, thanks to the patience and professionalism of the Egyptian military) against the democratic protesters. This also happened in Iraq and Tunisia and many other places where the mantra “the enemy of my enemy is my friend” amounts to a schizophrenic interpretation of who are enemies and friends actually are.

Now the people of Bahrain who want political reform and elections are paying the price for our foreign policy schizophrenia. American citizens must be embarrassed that its government purports to promote democracy around the world, even while its tax-funded, American-made weapons are now being used to suppress the spirit of democracy with deadly force.

Egyptian protests topple dictatorship

The world’s major news wires are now reporting that Egyptian President Hasni Mubarak has stepped down. The announcement was made in a speech by Vice President Omar Suleiman. Mubarak ceded power to the military, most of whose officers have been trained in the U.S., and which as recently as yesterday announced it would protect the security of the country until political elections are held in the next several months.

Congratulations to the people of Egypt, who are proving once again that the human spirit cannot be shackled!