Imperialism in the nineties

by Diane Fieldes • Published 14 April 2020

While long on rhetoric, George Bush’s talk of a New World Order has been extremely short on details. According to Bush it consists of world in which aggression is deterred, and international disputes settled peacefully, with a revitalised role for the UN as the keeper of the peace. All this appears arrant nonsense after the Gulf War, the first major event of the New World Order. The UN’s role was to break the peace to the tune of 735,000 US-led troops going into the Gulf. The “international dispute” over Kuwait was settled not peacefully, but at the cost of hundreds of thousands of Iraqi lives.[1]

Thus Bush’s New World Order is in reality an attempt to reassess the post-World War II “old” world order that saw US hegemony assured. Yet the events surrounding the Gulf War do reflect real changes in the international balance of forces. In fact it is these changes which ensure that a re-run of the 1950s and 60s is not possible. Far from the end of the Cold War meaning that the world is a more stable and safer place, the pressure that led to the winding down of the rivalry between the US and the USS also contributes to a degree of instability not seen since the end of World War II.

Four factors are responsible for this instability. First, over the long post-war boom, the relationships between the major powers shifted. Both superpowers have declined, and other powerful economies, especially Japan and Germany, have developed. Secondly, within the Eastern bloc, more dramatic recasting of relationships and the end of Stalinism have created internal upheaval. Thirdly, by the late 1960s economic crisis had returned to both blocs. Low returns on investment, slow growth rates and unemployment were again a “normal” part of the functioning of the system. With the majority of the world economy now in recession, the stabilisation of the 1980s is over. The fourth factor in the instability plaguing the New World Order is the one that gives us cause for hope. It is the continuing resistance from the working class, and the oppressed nations, at whose expense these problems are supposed to be solved.

A premium on military power

Virtually every commentator on the end of the Cold War has noted the draining effect that huge military expenditure is now having on the economies of the US and USSR. Many then draw the conclusion that this will lead to a decline in military tensions. Even on the left, the widespread illusions in the UN, Middle East peace conferences and “negotiated settlements” show how many people accept that the existing order of things can provide a degree of stability.

On the contrary, the superpowers’ economic decline places a premium on military power. While it is true that their economic problems are due in part to the long-term effects of high levels of arms spending, that does not mean that the US and the USSR can solve their economic problems by giving up their military power. Despite the USSR’s rundown of its facilities at Cam Ranh Bay, or US attempts to shift the cost of its Philippines bases to countries like Japan and Taiwan, whose economic investment in the country is now larger than that of the US,2[2] there are real limits to this process. It is an old dilemma, one already faced by declining powers such as Britain. As Sir Henry Tizard, Britain’s chief science adviser between 1945 and 1952 put it: “We are a great nation, but if we continue to behave like a great power, we shall soon cease to be a great nation.”[3]

But as John Rees explains, the dilemma is an insoluble one:

To weaken the arms economy in the name of international competition is to run the risk of being pushed to the sidelines of great power politics and thus to risk the very economic weakness the state had hoped to avoid. But to maintain an arms industry is to risk further economic decline, which in turn threatens to undermine an effective arms industry.[4]

One way the superpowers can attempt to address the problem is by encouraging the new economic powers such as Japan and Germany to shoulder more of the burden of world arms spending, as they did at various points during the Gulf crisis. The US had already asked Japan to pay more of the cost of US troops stationed in Japan than the 40 percent it currently does.[5] The response has not been overwhelmingly enthusiastic. But in any case, there is also a pressure on the US in particular to move in the other direction – to make the most of a military superiority that hasn’t suffered anything like the decline of its economy.

For example, in December 1989 Secretary of State James Baker was talking about the “New Atlanticism” – US hegemony in Europe in partnership with Germany rather than the declining Britain. This was recognition of, but also an attempt to curb, the independent role that Germany was playing, particularly in relation to the East. But it did not make Germany more compliant. In fact, the successful negotiations between Kohl and Gorbachev about NATO membership for a united Germany caused an unprecedented display of US displeasure at the emerging prominence of Germany, an important change from the bipolarity of the Cold War.

In this situation, as absolute military superiority is increasingly the one decisive advantage that the superpowers have, the greater is the temptation to use it See, for example, the editorial advice in the Financial Review in May 1990, that just as the USSR had relied for decades on military strength, so the US “should see that America’s ability to offer flexible, mobile support to its allies in key strategic regions, such as those surrounding Australia, is of considerable weight in underlining its economic strength”.[6] That American leaders were thinking along these lines was clear well before the Gulf War. In February 1990 US Defense Secretary Dick Cheney threatened that US willingness to defend Japan militarily might be linked to progress in trade talks.[7]

But the war brought the issue to a head. It showed how far Japan and Germany have to go to be a match for the US militarily. Neither could sustain an operation like the US has in the Gulf.[8] By the end of the conflict, columnist Max Walsh was suggesting that the next cycle of US-Japan trade talks could see Japan’s role in the Gulf War emerge as the underlying theme.[9]

The way in which military strength could boost the US economy was clear also from the reconstruction contracts for Kuwait. Saud Nasir al-Sabah, Kuwaiti ambassador to the US, explained that: “The policy of lowest price or lowest bidder will not be followed… Our policy is not to forget our friends who stood with us in time of need”.[10] In recognition of the leading role that the US played in defending the Kuwaiti ruling class interests, 70-75 percent of the work is going to US corporations such as Bechtel Fluorcorp, Blount and Foster Wheeler. Few things could illustrate the intertwining of economic and military interests better than the $US46 million damage assessment contract signed by the Kuwaiti government-in-exile in early January with the US Army Corps of Engineers.[11]

The major military allies in the Gulf made it clear that they would not stand aside from conflicts in the less developed countries, especially where vital commodities like oil are concerned. The fact that the US imports only 10 percent of its oil, while Japan depends on external sources for at least 70 percent, only served to drive home the point about the importance of military power. So suggestions that the Gulf War represents the “contracting out” by countries like Japan of their defence needs to a poverty-stricken US[12] get the balance of forces completely wrong.

Other countries capable of playing a major military role also got a boost from the war. With Britain’s contribution to the allied war effort second only to that of the US, Bush rediscovered the “special relationship” with Britain that the “New Atlanticism” appeared to have eclipsed. After ten months when Shamir and Bush didn’t speak, Israel is also back in the good books (to the tune of an extra $US13 billion – this time for refraining from using its massive military power.

The war itself cast light on the continuing strengths and emerging weaknesses of the superpowers. The USSR had no choice, given its economic and internal political problems, but to acquiesce in the US war effort and get on with repressing the Baltic states. But it should not be forgotten that the USSR remains a military and economic superpower, with major influence on international relations, especially in Eastern Europe. As US Chief of Staff Colin Powell put it, the USSR remains the only country capable of destroying America in less than 30 minutes.[13] Gorbachev’s peace plan for the Gulf was an attempt to both expand the USSR’s influence in the Middle East, and to guarantee itself a place in the post-war negotiations. Assertions that “there is only one superpower in the world and the United States is it”[14] are therefore extremely misleading.

The US, while it could win the war, could not stop Iraq, one of its clients, from invading Kuwait. In order to launch the war, the US had to involve other countries. The UN resolutions were not only a convenient fig-leaf. They were also a recognition that unilateral military action was too dangerous and unilateral economic action was not possible. To defeat Iraq took 75 percent of the US’s tactical aircraft and 40 percent of its tanks. As The Economist put it, “some unipolar gunboat”![15]

What the New World Order will look like

It is the aftermath of the war which gives us a look at what the emerging New World Order will really be like. The immediate picture in the Middle Eastern region looks bleak. The “liberation” of Kuwait has meant the imposition of martial law by Bush’s “legitimate” royal government. Pogroms against Palestinians continue in Kuwait. US forces still occupy areas of Iraq. While Bush had expressed a desire to see Saddam Hussein toppled from power, it soon became clear that he did not want to see him overthrown by the masses of oppressed people within the country, whether Shi’ites or Kurds. On the contrary, the US and its allies wanted the ruling Ba’ath party to remain, as guarantor of stability and the “territorial integrity of Iraq”. Thus America provided no support to any of the rebellions, even though the CIA had apparently promised assistance to the Kurds through radio broadcasts. On the contrary, Hussein got the green light informally to slaughter his opponents, while the West mouthed moral condemnation in public.

When the US finally elected to set up “safe havens” inside Iraq, their goal was not to ensure the safety of the Kurds: this would have been achieved far more easily by prevailing on Turkey to open its borders. The real goal of this intervention, apart from sops to Western public opinion, was to further entrench the imperialist presence in the region – and in a flawlessly “humanitarian” guise.

On a world scale, none of the underlying economic problems have been solved. Recession remains the order of the day for most of the world’s economy, East and West. While the OECD June 1990 forecast put US growth at 2.5 percent for 1991, by December the prediction had gone down to 0.9 percent. Expectations that Japan and Germany would be the locomotives of the world economy have been undermined. A rapid and unexpectedly severe slowdown of the Japanese economy in the December quarter of 1990 has led to predictions of weaker growth or even recession for 1991.[16] The sudden appearance of a German trade deficit for the first time in ten years, Germany’s retreat from earlier plans for expansion into central and eastern Europe, and the spiralling costs of reunification, have all undermined hopes in Germany’s ability to provide much counterweight to recessionary pressures elsewhere. Rising interest rates in both Germany and Japan will also contribute to depressed conditions in the rest of the world economy. Even the capital required for Kuwaiti reconstruction is expected by some economists to add a quarter of a percentage point to world interest rates.

Neither have the imbalances between economic and military might amongst the major powers – the cause of the jockeying for position that characterises the “post-Cold War” world – been resolved. Not only did German foreign minister Hans-Dietrich Genscher endorse the USSR’s Gulf peace plan, he quickly went on to say that “the new world order can only come about if the Soviet Union plays an equal role in dealing with international issues”.[17] Shifting alignments continue to be the order of the day.

Further potential for instability lies in trade conflicts. According to one estimate, over half of world trade is subject to one form or other of government restriction.[18] There is also a growing potential for conflict not just between nations but also between trading blocs, such as the February 1991 plans for a North American free trade zone – a single market of $US6 trillion and 360 million people, versus Western Europe’s combined GDP of $US4.8 trillion and 326 million.[19]

Bush proclaimed immediately after the war finished that victory in the Gulf meant the end of the Vietnam Syndrome. In the sense that the US ruling class’s fears of military defeat and domestic upheaval if they engaged in overseas wars have been allayed, this is true. As a result, not only is the US encouraged in further military adventures, but imperialism everywhere is strengthened. The USSR is freer to deal With the rebellious nationalities. The US’s watchdog in the Middle East, Israel, announced its intention to deal more harshly with the Palestinians in the Occupied Territories within a day of the Gulf War ending.[20] In order to draw in Arab military support for the war, the US has tied itself even more closely to the brutal dictatorships that it props up in the region. By giving Syria a free hand in Lebanon, it has added what it once considered a “terrorist state” to the “frontline friends on the side of the allies”.[21] All of this undoubtedly means that our rulers have made the world a more dangerous place.

Contradictions of the US victory

However this is only one side of the story. Imperialism’s victory was a setback for our side in the class struggle internationally. But as became rapidly apparent, even the ruling class’s victories contain major problems for them. Indeed, within a few short weeks of his triumph, Bush was already on the back foot. His handling of the Kurdish revolt led to waves of cynicism and anger, even amongst those who had supported the war against Iraq. What had seemed a remarkably united US ruling class basking in the glory of victory was now openly bickering amongst itself. As well, the brutality of the restored Kuwaiti monarchy has undermined much of the US’s moral standing as the defender of self-determination for “poor little Kuwait”. With each passing week, the war looks grubbier and grubbier.

That the Vietnam Syndrome is far from totally buried is apparent from the fact that the great majority of the US military and political establishment were clearly terrified by the idea of sending troops to intervene in the revolt in Iraq. They saw it as a dangerous quagmire. It was they who constantly talked of the danger of “another Vietnam” to justify the failure to intervene. This is hardly the approach of a superpower that now feels confident to stamp its imprint on the world.

Furthermore, while military victory was possible this time, the US can still be beaten in the future. Various commentators have pointed to their military advantages – terrain which provided little cover, an enemy with poor air defences – that the US would not necessarily enjoy in any future war.[22] More important, however, is the way in which the pollical nature of the Iraqi regime – a brutal and corrupt ruling group, quite willing to the US’s dirty work in the Iran-Iraq war – contributed to its military collapse. The US cannot expect to find all its opponents with so little popular support amongst their own people. Taking on a genuine anti-imperialist movement would be quite a different matter.

Nor has the second aspect of the Vietnam Syndrome – the reluctance of the US population to wage war – been totally overcome. The brevity and low US casualties of the Gulf War were an advantage for the ruling class in restraining domestic opposition. But even so, the Newsweek poll of 1 March 1991 which asked “Does success in the Persian Gulf War make you feel the US should be more willing to use military force in the future to help solve international problems?” found 60 percent answered “no” to only 32 percent answering “yes”.[23]

We can see the same contradictory phenomenon at work if we look back to the apparent stability of much of the 1980s. Even though the world economy had its most sustained period of economic growth since the long post-war boom, imperialism remained unable to crush resistance. There were some important defeats for the working class, from the crushing of Solidarity in 1981 to the British miners’ strike in 1984-5. In Australia the level of industrial militancy declined dramatically under the Accord. But in most cases working class organisation remained intact, or was rebuilt The investment that took place could raise profitability in a generalised fashion, but not to sufficient levels to produce a boom of the order of the 1950s and 60s, partly because wages simply could not be driven down enough.[24]

Internationally, it took the US almost a decade to subdue Iran and Nicaragua. The rebels in Afghanistan, Eritrea and Tigre could not be subdued by the Russians or their clients. The resistance of the Palestinians continued, developing into the Intifada in late 1987.

Today, New World Order notwithstanding, the prospects for economic stability in the world system are considerably less than they were during the arms-fuelled boom of the 1980s. Militarism has been boosted by the American victory in the Gulf, and with it a degree of social peace fuelled by patriotism in the US. But the prospect of underlying social bitterness turning into action certainly remains. Bush’s Gallup Poll approval rose to 85 percent before the end of the war[25] and to 91 percent by its end. Yet within two weeks of the ceasefire it had already fallen back to 84 percent and continues to fall. It was only last October that Bush was faced with massive popular discontent over the budget crisis which saw him reneging on his “no new taxes” pledge, and making sure the rich were protected. A Cable News Network poll at the time revealed that four out of five Americans believe that politicians work for the benefit of the rich and big business. The increase in defensive trade union struggles at the end of 1990; particularly in New York City, showed the response that was possible.[26]

When the war euphoria wears off in the US, the reality of an economic system that sacks workers from hospitals and schools while running a defence budget four times the GNP of Iraq will remain. Even during the 1980s boom, living standards in the US were falling. Family home ownership went down by 2 percent. By every measure Americans aged 41 and younger can expect to be less well off than their parents were at the same age.[27] At the beginning of March this year, General Motors reported a quarterly loss of $US2.1 billion.[28] Almost a million jobs in manufacturing alone were lost in the US in 1990.[29] Unemployment reached 6.2 percent in January 1991.[30] The government bail-out of the savings and loans institutions will cost every American household at least $5,000.[31] The government is still borrowing nearly 6 percent of GNP to fund its budget. In such conditions, illusions of US omnipotence can be short-lived.[32]

In Australia, Hawke’s popularity as a “war-time leader” did not stand up to unemployment heading for the one million mark. As bank interest rates continue to squeeze working class homeowners, as financial institutions go to the wall, as overcrowding of universities becomes one of the ways the government keeps the dole figures down, there are plenty of causes for discontent. And as March and April’s renewed strikes by miners and massive anti-government demonstrations in the USSR show, resistance to the imperialist powers at home will continue.

The ruling classes of both Yugoslavia and Albania have come under attack by rebellious populations in the same brief period since the Gulf War ended. Sandra Bloodworth’s article in this issue explains the immense potential for revolt throughout the Arab world.


To make sense of this contradictory picture we need to go back to the exploitation and competitive accumulation that drive the capitalist system. Over seventy years ago Lenin and, more importantly, Bukharin, in their classic works on imperialism, analysed the effects of these drives on the way capitalism had developed.[33] They observed two simultaneous, yet apparently contradictory processes – internationalisation and statisation. On the one hand, the search for competitive advantage had led capitalism to become more and more internationalised, not only in terms of trade, but also in terms of world production. “Not economic self-sufficiency, but an intensification of international relations…such is the road of future evolution”.[34] Alongside this process went the concentration of production into a smaller number of larger firms, as more profitable concerns took over their rivals. On the other hand, even the most internationalised firm still depended on a national state to protect its operations from threats from its foreign competitors, or from those it exploited. In fact, corporate ties to the state would grow.

These processes continue to operate. One instance of internationalisation is the vast expansion of US direct investment overseas, from $US11 billion in 1950, to $US30 billion in 1960, to $US70 billion in 1970, to $US133 billion in 1976. In both Britain and the US the percentage of total assets held by the largest one hundred firms grew substantially over the twentieth century.[35]

The other tendency – increased dependence on the national state – is also evident, both in their direct intertwining, such as in the aerospace industry or military production in general, and in the role of the state in propping up inefficient sections of capital. This latter tendency became much more pronounced once the post-war boom of the 1950s and 60s began to falter. Governments of varying political hues saved sections of manufacturing (Chrysler in the US, Rolls-Royce in Britain) and financial capital (Continental Illinois, or the current savings and loan bail-out) from bankruptcy.

But Bukharin’s analysis was not merely an identification of these two trends. He also drew out the implications of their interaction. The tendency towards monopoly does not, in his view, represent a steady decline in competition, but rather its intensification. The concentration and centralisation of capital in the era of imperialism produces not an end to competition but a change in its form. The combination of internationalisation and a growing reliance on the national state, Lenin and Bukharin argued, would cause wars. In the modern world, economic competition between what they called “state capitalist trusts” would be supplemented and even replaced by military competition. In other words, the age of imperialism was marked by the competition between the major powers, each seeking to maintain and if possible expand its vital economic interests by the use of military as well as economic means. War was a necessary part of capitalism.

This analysis was not produced in a vacuum. Lenin in particular wrote his pamphlet on imperialism to attack Karl Kautsky’s theory of “ultra-imperialism” – the idea that the major powers would find it preferable to agree to exploit the world jointly rather than fight over its division. This idea bears some similarities to notions in 1989/90 about the end of the Cold War ushering in a new era of peace. Kautsky’s idea took something of a beating with the outbreak of World War I. Lenin’s essential point against Kautsky still holds. The entire world has been divided into spheres of influence, and any change has to be by redivision, which would inevitably mean conflict – either direct conflict between the great powers, or by regional wars which re-jig the relationship between the major powers by assertion of military strength. Kautsky’s idea of “the translation of cartellisation into foreign policy”[36] neglects the competitive pressures which lead to the break-up of cartels, and which at the level of states lead to trade and shooting wars.

It was these factors which in the early decades of this century led Germany and Japan to attempt to repartition the world in their favour. The clash with the existing division of the world by the other major powers led to two world wars. But these wars did not end the pressures to “partition und repartition the world”. These now emanated from the states that had defeated Germany and Japan in the war.[37]

The post-World War II world

The US and the USSR emerged from the war as the two most powerful states. Between them they carved up the world into spheres of influence. But the apparent harmony which reigned at the international conferences of 1943-45 did not signal some new era of peace. Instead, it reflected the crude calculation by each superpower that it was not strong enough to deny the other what it wanted.[38] It was the economic power of the Allies which underpinned their military victory and also made them capable of dominating the peace. But this economic power was unevenly distributed. The relative position of major powers such as Britain and France was weakened as a result of the war. Of the two superpowers which had emerged, the US was by far the stronger, accounting for over 44 percent of world industrial production in 1948 as compared to 6.3 percent for the USSR.[39]

US war production, far from damaging the civilian economy, had expanded it. In 1953, 69 percent of total production of the top six countries took place in the US.[40] It was on this economic superiority that US political domination of the Western bloc was founded. Its military dominance was affirmed in the post-war period with a series of overseas troop placements, bases and treaties, from Europe to the Pacific to the Middle East.

In the other camp, the USSR also stood head and shoulders above the rest of the bloc. While it was never an economic equal of the US, its military strength enabled it to play a similar pre-eminent role. Its military strength boosted its economic power within the Eastern bloc by the physical removal of East European plant and equipment and by the imposition of unequal trade terms on its satellites. This process, combined with massive state direction of all available resources towards economic growth, meant that by the 1950s the USSR had replaced Britain as the second economic power in the world. Relations between the superpowers were also affected. Their domination of their respective blocs set the bipolar pattern of political relations during the Cold War. In addition, the arms race set the pattern of economic growth in both camps.

The United Nations, on which so many of the hopes for a New World Order are pinned by both right and left, was also a product of the post-war carve-up of the world, which it was designed to enforce. At the 1944 Tehran Conference, Roosevelt proposed a controlling body for the UN with the somewhat too honest name “The Four Policemen”, to impose “peace”, by military means if necessary, on any nation threatening the post-war order.[41] To ensure the domination of the major imperialist powers, each of them had the right to veto any decision made by the UN. Cordell Hull, US Secretary of State in 1944, explained: “We should never forget that this veto power is chiefly for the benefit of the United States”. The USSR and Britain, the next largest imperialist powers, demanded the right of veto for similar reasons. Anthony Eden told the British House of Commons in May 1944 that “responsibility in any future world organisation must be related to power”.[42]

As the Republican Senatorial spokesman on foreign affairs, Arthur H. Vandenberg, confided to his diary in 1944:

The most striking thing about it is that it is so conservative from a nationalist standpoint. It is based virtually on a four-power alliance… This is anything but a wild-eyed internationalist dream of a world State.[43]

UN intervention in the Korean War of 1950-53 provided the first and still the most glaring example of its imperialist role. In the post-war carve-up of the globe, the USSR and the US had agreed to divide Korea at the 38th parallel (a line drawn, incidentally, by Dean Rusk, later to be US Secretary of State during the Vietnam War). In 1947 the UN called for all foreign troops to withdraw, leaving two puppet regimes. When war between them began, the two imperialist blocs backed their respective puppets.

This was the sort of situation where the veto would normally have rendered the UN impotent. But as Russia had vacated its seat on the Security Council in protest at the UN’s refusal to recognise the People’s Republic of China, the US was able to disguise itself (and a few of its allies like Australia) as the UN. The novelist Shirley Hazzard, a supporter of the “UN ideal”, commented:

It appeared that “UN action” could only take place on any scale if initiated, manned [sic] and equipped directly by one or more of the great powers…in short, something all too like what had hitherto been known as war.[44]

Just as in the Gulf, the UN retrospectively legitimised US aggression in Korea. General Douglas Macarthur, whose idea of peacekeeping was to nuke China, became the head of the UN forces. While his nuclear ambitions were thwarted, the UN forces did get to experiment with a new and hideous weapon – napalm. Thus, ultimately what the UN reflected was the military might of the major powers. Military power was linked to economic strength. But as the world economy grew in the post-war decades, the contradictions within this seemingly simple equation started to become apparent.

Despite the importance of arms spending in maintaining the dominance of the US and USSR, over time it was also a drain on the development of their economies. The years 1945-1970 were boom years, but the world economy boomed unevenly both within and between the blocs. Under the umbrella of US military might, Japan and to a lesser extent West Germany surged ahead economically. While the superpowers built up their weapons stocks and armed forces, their economic rivals built cars and TVs. The US share of world manufacturing production sank from over 50 percent in 1945 to 31 percent in 1980 and is now about 25 percent.[45]

The US still remains the world’s largest economy – at least twice the size of its nearest rival, the USSR. But it has undergone a serious decline vis-à-vis other economies. One indication of this is the “new Marshall Plan” of up to $US100 billion in aid being planned for Eastern Europe. Whereas at the time of the original Marshall Plan the US was the only power in a position to provide such aid (and to reap the political benefits), the funding for today’s exercise will be necessarily much more broadly based.[46]

Another way to see the shift in the economic balance of forces is by looking at the rise of West Germany and Japan. For example, in the period 1948-1962 the average annual rate of growth of output per capita for the US was 1.6 percent, for Britain 2.4 percent and for West Germany 6.8 percent.[47] In 1953 Japan was responsible for 3.6 percent of the top six countries’ production. By 1977 the figure had risen to 17.7 percent.[48] It is also now the world’s third largest military spender, with an annual arms budget of over $US60 billion.[49] But while Japan’s defence force may be well-funded, it is no match for the superpowers. It has no aircraft carriers, no long-range bombers, and its main fighter aircraft have a range of only 500 kilometres.[50] This is an indication of the unevenness of the competition that has developed between the major Western powers under the umbrella of the Cold War alliance.

Arrayed against each other are a range of disproportionate economic and military strengths. The economic realignments that have taken place are reflected in Japan’s bid to move from number five in the International Monetary Fund’s rankings to number two. Particularly in Germany, the lack of fit between the post-World War II political arrangements and current economic strength has put pressure on the existing arrangements. Germany has increasingly begun to take decisions without consulting the US or any of its NATO allies. The Governor of the Bank of France, Jacques de Larosier, attacked Germany for borrowing instead of raising taxes to pay for reunification, on the basis that this would adversely affect interest rates and hence growth for the rest of Europe. The shipments of food already made by Germany to the USSR virtually forced a decision from the other EC members to do the same, rather than see Germany act alone.

The clearest example of the changes occurring in the post-war political arrangements is the way in which the USSR accepted a united Germany remaining part of NATO. No progress was made on this question during the Gorbachev-Bush summit in Washington. Then during the June 1990 EC Summit Kohl made it clear that aid was a quid pro quo for Soviet acceptance of this. After a pre-Summit loan of $US4 billion, Kohl asked the USSR in return to “adopt a constructive approach to questions arising on the path to German unity – and this applies in particular to anchoring a future united Germany within NATO and the EC”.[51]

A further differentiation is occurring within both NATO and the Eastern bloc countries, as different ruling classes adopt the strategy they think best suits their situation, regardless of traditional alignments. So while Britain, France and Italy sent troops to the Gulf, Belgium refused to supply ammunition to Britain in the lead up to the war.[52] When the USSR informed Eastern Europe that all COMECON transactions would be in hard currency from 1 January 1991, only Hungary was in favour of the change.

Each major power attempts to use its strengths to gain advantage at the expense of the others. Economically, this is obvious in the form of tariffs, subsidies, and straight-out market competition. What has not been so obvious in the West in the post-World War II period is the way in which the dominant military powers can use force to improve their overall position. The Gulf War brought this to the fore. The way that Bush was able to stare Gorbachev down over the Gulf peace plan showed that as the paramount military power it was the US which would decide how the war would finish. Whereas a year ago US strategists looked for a series of global partnerships – the US and Japan, the US and Europe, led by a united Germany, and even, after the Washington summit, the US and the USSR – victory in the Gulf War has put a premium on military leadership.

Another result of the Cold War period which is now part of global instability is the creation of a number of regional powers armed (if not created) by one of the superpowers. Especially after the defeat in Vietnam made direct US military intervention such a risky business, countries such as Iran under the Shah and Egypt after Camp David were seen as useful watchdogs for imperialism. (Israel, of course, had always played this role.) Part of the competition between the US and the USSR involved attempts to gain strategic influence on this basis.

These regional powers are highly militarised. Sixty-five percent of all US Third World arms exports go to Israel, Egypt, Pakistan, Saudi Arabia and South Korea. As the Gulf War ended the White House informed Congress of the sale of $1.6 billion worth of arms to Egypt.[53] Yet at the same time this year’s US National Academy of Sciences report on arms export controls called for new controls to lessen the ability of such powers to wage war. While the buyers’ market for arms that has followed the end of the Cold War has exacerbated the problem, the growth of these regional powers was inherently destabilising. They could never be simply the puppets of their imperialist creators. The attractions of regional dominance through military means, especially as economic crisis curtailed the possibility of development and brought internal unrest, were a powerful encouragement to military solutions regardless of the superpowers’ wishes. Saddam Hussein’s invasion of Kuwait shows all of these factors at work.

Boom and bust

The other contradiction involved in the post-war boom was shown in the way the boom ended. In the US the connection between arms spending and the economic crisis which began in the late sixties was very clear. The costs of the Vietnam War – 10 percent of US GNP – did not reach the level of the Korean War. But decades of high arms spending had by that time sufficiently undermined the profitability of the US economy that the added strain of the war created the beginning of economic crisis.

Vietnam marked a turning point in another way as well. Not only did economic crisis return after the longest boom in capitalism’ s history, but it was accompanied by a wave of social struggles as students, women, and the working class itself fought to realise the expectations which the boom had created but which it was no longer able to meet. There was world-wide working class resistance to the effects of the crisis: a 10 million-strong general strike in France, sparked off by student struggles in May 1968, the British miners’ defeat of the Heath government, a workers’ revolution in Portugal which threw out its fascist regime, strikes against the Kerr coup in Australia in 1975, the formation of Solidarity in Poland in 1980.

If the burden of military expenditure weakened the US relative to Japan and West Germany, its effect on the USSR was even greater. Forced to compete with an economy twice its size, the USSR laboured under an even greater drain on its resources. About twice as great a proportion of its national product had to be spent on the arms race. The USSR’s rate of growth began to slow dramatically in the late 1960s. According to Gorbachev’s chief economic adviser, Abel Aganbegyan, growth slowed from 30 percent in 1966-1970 to zero in 1981-1985.[54] The changes associated with Gorbachev have not solved these economic problems. Last year’s annual US intelligence assessment of the economy of the USSR indicated a drop of 2.5 percent in oil output over the year, combined with a fall in coal production, zero growth in machinery output and increased imports of consumer goods.[55]

The more autarchic nature of the Eastern bloc state capitalisms compared to the West meant that the continued internationalisation of production created additional difficulties for them. Their growing problems were to do with losing the technological race. As advance on a world scale came increasingly to depend on a mobilisation of resources that transcended national boundaries, they lagged further behind So, for example, the USSR had begun to fall behind in the key sector of computers by the late 1960s.[56] The trend accelerated after the recessions of 1974-6 and 1980-2 gave a massive added impetus in the West and the Third World for competitive, multinational restructuring. Attempts to keep up with the most advanced technology internationally while sticking to a basically nationally-based economic system were doomed to failure. This led to more and more pressures for some form of integration into the world economy.

The technological lag had three important effects: the most advanced means of production could only be obtained by buying them from the West; it became increasingly difficult to sustain the burden of advanced weapons production; there was growing worker dissatisfaction over the cost and quality of consumer durables. Pressures from these sources underlay both economic “liberalisation” and reductions in arms spending in the Eastern bloc. Significantly, most of the Eastern European troop cuts were announced by the old regimes before the revolutions in Eastern Europe. Their motivations were economic, and not a result of the “end of the Cold War”. So, for instance, Romania, with no foreign debt, has made no cuts.[57] In similar vein, Hungary’s opening to the world market predated glasnost and perestroika by over a decade. .

The economic and military changes in the Eastern bloc gave rise to a wave of political upheavals which have been followed by continued instability. The USSR’s intractable economic problems, exacerbated by arms spending, have not been solved by the introduction of the market. There has been resistance from both major classes in the USSR – the state capitalist bureaucracy and the working class – to “reforms” that are against their interests. State capitalism in the East has been unable to either solve the economic inefficiencies that concern its rulers, nor provide a decent standard of living for the population at large. Instead, increased repression and the dropping of any veneer of liberalism has been Gorbachev’s response.

Economic activity dropped by more than a fifth across Eastern Europe as a whole last year, and by up to a third in Poland. Georg Krupp, the Deutsche Bank AG management board member responsible for eastern Germany, estimated one in three of the formerly state-owned conglomerates would fail, and that unemployment would reach 1.1 million.[58] With most world investment taking place between advanced economies, there seems little prospect for private Western investment (apart from asset stripping) in the economies of the East. This has in turn fuelled what is for socialists a particularly encouraging form of instability – the class struggle. From the rebirth of Polish Solidarity in 1988 to militancy in the East German car industry to Russian miners in 1989 and again this year, strikes have become a commonplace event in the East, and with them a growing awareness of the power of the working class. In 1989, for instance, total strike days in the USSR reached 8 million.[59] It is significant that Gorbachev’s ban on demonstrations is confined to those in working hours.[60]

Hundreds of thousands in what used to be East Germany have joined renewed protest marches, centred on Leipzig, about the failure of the market to provide anything but mass unemployment.[61] Anti-government demonstrations brought Belgrade to a halt during April, and in Albania, that bastion of Stalinism, mass protests forced the government to grant some democratic reforms.

Finally, and most central to the instability of the USSR at the moment, there are the national struggles. The Gulf War was conveniently timed for the rulers of the USSR. While it went on, they were able to intervene in Lithuania and Latvia, killing 18 people as they tried to reassert central control on the republics. Gorbachev’s attempt to get a vote of confidence for continued central control through the referendum of 17 March have not been successful, despite the overall “yes” vote. Six republics boycotted the referendum. Georgians, voting on 31 March, cast a massive vote (99.3 percent on preliminary results) to break away from the USSR.[62]

Does the end of the Cold War mean disarmament?

Even while the Gulf War was going on, Bush announced a further reduction in the US defence budget for 1992. Plans announced in early February took the first steps towards a smaller, more mobile force better able to respond to regional instability rather than superpower confrontation. The budget of $US295 billion laid the basis for a fall in arms spending over five years to 3.6 percent of GDP, compared to over 6 percent at the height of the Reagan arms boom.[63] It is this real change that inspires hope of anew era of disarmament and a reduced likelihood of armed conflict But as soon as you look at the nature of the superpower arms reductions that are taking place, the hope is revealed as a fantasy.

The first thing to remember is how huge the superpowers’ arsenals are. The US alone outweighs NATO plus Japan.[64] Moreover, even if the percentage of GNP devoted to arms declines, as long as the economy grows the actual number of weapons, tanks, warheads and so on can still increase. For example, if Bush’s budget cuts go ahead, the US defence budget will still be 19 percent bigger in 1995 than in 1980. This also explains how Japan, spending only a little over 1 percent of GNP on defence, can still have the world’s third-largest defence budget – $US60 billion.[65] Australia’s defence budget, by comparison, while accounting for 2.3 percent of GDP, still only totals $A8.3 billion.[66]

Secondly, neither the US nor the USSR are prepared to cut back areas they see as vital, especially their most advanced nuclear weapons. In fact, the various anti-ballistic missile treaties of the 1970s, or 1989’s Strategic Arms Reduction Treaty (START) negotiations are better seen as arms control, rather than arms limitation. They have cut the number of old weapons but allowed an increase in new weapons. For example, the START treaty cuts the superpowers’ ICBMs by 4,476 but increases the number of more accurate air-launched cruise missiles and short-range attack missiles by 2,990.[67] The in-principle agreement represented by START allows the USSR to modernise its remaining land-based SS-18 intercontinental missiles after cutting its arsenal by 50 percent.[68] The current hiatus in the START negotiations is due not only to the recent cooling in US/USSR relations, but also to their inability to agree on verification procedures. The US (which has an advantage in this area) refuses to include naval weapons in the negotiations. So the USSR has transferred three Army divisions to Naval Infantry. The competition between the two superpowers is certainly not over.[69]

Increasingly aware of their decline relative to other members of their own blocs, the superpowers have become somewhat less antagonistic towards each other and more concerned with other enemies. In March Carl Ford, a Deputy Assistant Secretary of Defense, cited the Gulf War as showing that in the post Cold War period, “regional issues contain the potential to become more volatile than superpower disputes”.[70] Some regional concerns which were prompted largely by superpower rivalry have become much less significant. Hence the recent efforts of the superpowers to reduce support for opposing sides in Afghanistan and EI Salvador, or last year’s pleas by US Secretary of State James Baker for the USSR to maintain economic aid to Nicaragua.[71] This is particularly bad news for the regimes in Vietnam, Cuba and Ethiopia, where much less aid will be forthcoming from the USSR. Similarly, Gorbachev’s refusal to underwrite Syria’s drive for military parity with Israel has prompted Assad to attempt to mend fences with the US (through Lebanese hostage deals, and more recently participation in the Gulf War).

The US is developing more multipurpose weapons for use against both the USSR and others. According to the Defence Planning Guidance (quoted in the International Herald Tribune on 14 February 1990), the US is looking to new conventional weapons used by a “worldwide contingency force, with more emphasis on airborne, air assault and light infantry” which is necessary “because regional instability, terrorism and drug trafficking present new challenges to the army”. We could easily insert Iraq, Libya and Panama as “examples” of these three phenomena.

The situation is somewhat different for the weaker superpower, the USSR. Its inability to maintain military domination of the Eastern bloc, let alone other regional powers, received symbolic expression in February’s dissolution of the Warsaw Pact. But neither this, nor the USSR’s failure to playa military role in the Gulf War, means that it has turned its back on military action. Rather, the economic constraints and the USSR’s internal problems have directed the restructured armed forces into more restricted areas of operation. When Gorbachev announced unilateral cuts of 500,000 troops – 10 percent of the army – at the UN in December 1988, he neglected to mention that 300,000 of them would find their way into the Interior Ministry and KGB forces currently being used for crackdowns inside the USSR.[72]

To sum up, the superpowers are using their supposed “disarmament” (which leaves 96 percent of their existing nuclear weapons intact) to restructure and redirect their arsenals-not to dismantle them. The 1990s do bring a somewhat changed world order. But the decline of the superpowers and the end of the Cold War have not brought stability or peace. On the contrary. Within the apparent stability of the Cold War “balance of terror” were developing all the economic and military tensions that are on open display today. World imperialism has not changed its spots. The apparent softening of the rivalries between the major players was dependent on two things-the predominance of two superpowers, neither of whom could push the other out, and the post-war economic boom. Both are well and truly things of the past

Meanwhile, the New World Order has already generated resistance: the worldwide movement against the Gulf war, strikes in Eastern Europe and the USSR, the British revolt against the poll tax are some indication of what the future holds. We may confidently hurl in the face of George Bush the defiant words of Rosa Luxemburg: your order is built on sand.

[1] Medical Association for Prevention of War press release, 12 February 1991. Reports in the German parliament estimated 300,000 casualties.

[2] Financial Review, 25 May 1990.

[3] Time, 18 March 1991.

[4] John Rees, “The new imperialism”, International Socialism 2:48, Autumn 1990, p84.

[5] ibid., p95.

[6] Financial Review, 9 May 1990.

[7] Rees, “The new imperialism”, p95.

[8] Former Japanese defence minister Koichi Kato recognised these implications: “With the end of the Cold War…people began to say that international financial power would replace military capability, and that this would be the era for Japan and Germany. But that kind of transition has been postponed at least for the coming 10 to 15 years”. (Newsweek, 7 March 1991.)

[9] Sydney Morning Herald, 26 February 1991.

[10] Financial Review, 7 March 1991.

[11] Financial Review, 13 February 1991.

[12] Financial Review, 6 February 1991.

[13] Economist, 23 February 1991.

[14] Newsweek, 5 March 1991.

[15] Economist, 9 March 1991.

[16] Financial Review, 21 March 1991.

[17] Newsweek, 5 March 1991.

[18] Pete Green, “The warring brothers”, Socialist Worker Review, January 1988.

[19] Financial Review, 7 December 1990 and 7 February 1991.

[20] Australian, 27 February 1991.

[21] Australian, 2-3 March 1991.

[22] Economist, 9 March 1991, Newsweek, 5 March 1991.

[23] Newsweek., 5 March 1991.

[24] Rick Kuhn and Tom O’Lincoln, “Profitability and economic crisis”, Journal of Australian Political Economy, 25, October 1989, pp.59-60.

[25] Financial Review, 25 February 1991.

[26] Sharon Smith, “Class struggle is back”, Socialist Worker Review, December 1990, p15.

[27] Australian, 2-3 March 1991.

[28] ibid.

[29] Financial Review, 10 December 1990.

[30] Financial Review, 12 February 1991.

[31] Financial Review, 14 June 1990.

[32] Economist, 9 March 1991.

[33] V.I. Lenin, “Imperialism: The Highest Stage of Capitalism”, in Selected Works, Vol. I, Progress Publishers, Moscow, 1970; N. Bukharin, Imperialism and World Economy, Merlin, London, 1972.

[34] Bukharin, Imperialism and World Economy, p148.

[35] Chris Harman, Explaining the Crisis, Bookmarks, London, 1984, pp138 and 108-109.

[36] Anthony Brewer, Marxist Theories of Imperialism : a Critical Survey, Routledge and Kegan Paul, London 1980, p123.

[37] Harman, Explaining the Crisis, p.85.

[38] ibid.

[39] Cited in David M. Gordon, “The Global Economy”, New Left Review, 168, March-April 1988, p32.

[40] Harman, Explaining the Crisis, p97.

[41] Gabriel Kolko, The Politics of War, Vintage, New York, 1968, p268.

[42] ibid., pp269-271.

[43] ibid., p270.

[44] Shirley Hazzard, Defeat of an Ideal: A Study of the Self-Destruction of the United Nations, Macmillan, London, 1973, p18.

[45] Paul Kennedy, The Rise and Fall of the Great Powers, Unwin Hyman, London, 1988, p432.

[46] Financial Review, 7 February 1991.

[47] Kennedy, The Rise and Fall of the Great Powers, p433.

[48] Harman, Explaining the Crisis, p97. Kennedy, p436, gives the following figures for Japan’s share of gross world product – 1960: 4.5 percent, 1980: 9.0 percent.

[49] Financial Review, 13 November 1990.

[50] ibid.

[51] Financial Review, 28 June 1990.

[52] Financial Review, 18 February 1991.

[53] Time, 18 March 1991.

[54] Abel Aganbegyan, The Challenge: Economics of Perestroika, Century Hutchinson, London, 1988, p2.

[55] Financial Review, 10 May 1990.

[56] Chris Harman, “The Storm Breaks”, International Socialism, 2:46, Spring 1990, pp49-50.

[57] Rees, “The new imperialism”, p74.

[58] Financial Review, 21 November and 4 December 1990.

[59] Mike Haynes, “Russia’s Oppositions”, Socialist Worker Review, March 1990.

[60] Financial Review, 11 April 1991.

[61] Financial Review, 25 March 1991.

[62] Financial Review, 2 April 1991.

[63] Financial Review, 12 February 1991.

[64] International Institute of Strategic Studies, Strategic Survey 1988-1989, London, 1989, p123.

[65] Rees, “The new imperialism”, pp65-66; Financial Review, 23 April and 13 November 1990.

[66] Financial Review, 7 June 1990.

[67] Rees, “The new imperialism”, p67.

[68] Financial Review, 25 May 1990.

[69] Financial Review, 18 March 1991.

[70] ibid.

[71] Financial Review, 26 July 1990.

[72] Rees, “The new imperialism”, p71.

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