[OPE-L:7296] Chalmers Johnson on Kashmir conflict, dollar devaluation and global implosion

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri May 31 2002 - 15:48:46 EDT

In his Clash of Fundamentalisms New Left Review editor Tariq Ali 
cites Chalmers Johnson's work favorably; the political scientist 
Johnson was once famous at UC Berkeley for his course on 
counter-revolution of which he seemed to approve. He was reputed to 
have himself ripped down anti War posters during the Vietnam War. 
Now he has become a stinging critic of US foreign and foreign 
economic policy though from what seemed to me an implicitly  neo 
Listian mercantilist perspective. He is however fluent in Japanese 
and Mandarin (I believe).   He is a strange cat though massively 
all the best, r


The present threat of nuclear war between Pakistan and India is the direct
responsibility of irresponsible provocation by the Bush Administration.

Whatever were the remote and immediate causes of previous Indo-Pakistani
wars over Kashmir, the present nuclear threat must be laid at the door of
Washington, which did everything it could to provoke it and almost nothing
to prevent it. Plenty of warnings were available to abort the US policies
that would inevitably lead to the present impasse. The most visible of
these policies have been the overt political ones, but they also include
the as ever US economic policies that fail to alleviate but further deepen
the economic crisis in both Pakistan and India as part of the present
world economic crisis.

It was US pressure on Pakistani President Musharraf to become a puppet
instrument of US rhetorically ''anti-terrorist'' but real world
aggressively geo-political economic policy in Afghanistan and Central Asia
that defined and limited Musharraf's present options.  The Pakistani
president was obliged by the Bush administration to turn against and even
betray extreme and not so extreme Muslim elements in the American CIA's
client ISI Pakistani secret service and military as well as in the
socio-political [dis]order in general. That had to deepen the divide and
heighten the tension within the Pakistani socio-political/military
establishment and society in general.

As a result of that US policy, three possible but not mutually exclusive
short-run scenarios and their derivatives now present themselves in South

1A. Musharraf's political options are now reduced and confined to
continuing his anti-Muslim clamp-down AND giving at least the appearance
of NOT doing so excessively and especially NOT doing so at the behest of
the US and even less so of India.  That requires a now even more
pro-active stance and praxis regarding the ever present Kashmir issue.
Moreover, many Taliban and al-Qaeda activists that were previously
confined to Afghanistan have now been chased out by the US and spread
through Pakistan and probably Kashmir. That is the direct result of
irresponsible US policy.

1B. Reduced political room for maneuver in Pakistan in turn increases the
political bargaining power and its use by the Government of India. That
India is also a victim of economic crisis and has a Hindu nationalist and
fundamentalist BJP government in Delhi and an even more so state
government in Gujarat, which has responded by deliberately organizing the
recent anti-Muslim pogroms with over 1,000 victims, provides the
background. Moreover, recent electoral alliance and voter setbacks at home
now make patriotic diversions abroad more attractive for the BJP
government. A more aggressive Kashmir and anti-Pakistan policy in India
and a corresponding response by Pakistan is the immediate result - with
200,000 troops facing each other on the border, 2 million troops behind
them, and rattling the nuclear saber by both sides. That is the direct
result of US policy.

2A. President Musharraf is assassinated; the US looses its ''man in
Islamabad;'' Pakistan looses its present stabilizing force or symbol; and
blame is or is shifted onto Muslim ''fundamentalists.'' All Hell Breaks
Lose.  Although always possible, that is now more likely as a blowback
result of US policy.

2B. Supporters of Musharraf try to save the present STATE of affairs by
wholesale crack-down on Muslim nationalist/fundamentalists at home - with
even more aggressive anti-Indian policies abroad to buy off some of the
Muslim opposition at home. The already sufficiently dangerous situation
provoked by American irresponsibility becomes even more dangerous.

2C leads to 3. The Pakistani state is split down the middle, with the army
divided and most of ISI re-aligned against the pro-Musharraf forces, and
general socio-political caos. US policy is not the only, but now is a
primary cause of such developments.

3A.  Via scenario # 2, or even without it, the present regime is
overthrown and replaced by a more militant Muslim/nationalist one - with
nuclear arms at its disposal- that escalates the Indo-Pakistani conflict
still more -- if that is then still possible.  That would also embolden a
Hindu nationalist BJP government and its supporters in India still more to
go after its own Muslims who number more than those in all of Pakistan and
could be cast as its 5th column in India itself.  All that would be a
direct blowback result of US policy.

3B.  The United States implements already existing military exercises to
try to '' take out'' the Pakistani nukes, by destroying them or moving
them to China or Russia [or Kazakhstan or Uzbekistan]. That IS US policy,
but it may not work; and the political consequences may be too horrendous
to foresee. Moreover, the participation in this drama of Russia and China
are as yet unclear, except as 3C.

3C. Instead of only TWO nuclear states mobilized against each other in
South Asia, Eurasia then has FIVE of them actively involved in Eurasia,
since Pakistani ally China and Indian ally Russia could also mobilize, as
well as the US itself. Is that what US policy wants?  Or is it an only
''unintended'' but a certainly foreseeable blowback of irresponsible US
policy in Asia.

4.  Simultaneous sharpening of other political flash-points that are also
the direct result of unconscionable US policy is proceeding  certainly in
Israel-Palestine, will probably result in the replacement of the US puppet
regime in Saudi Arabia and maybe in Egypt, and the insanely aggressive  US
policy towards Iraq and other Arab states can only aggravate the world
political situation.  Instead of trying to reduce the sources of political
desperation or even taking the wind out of the socio-political support for
those who are already desperate, the US continues and aggravates the
policies that have already generated and are now escalating  terrorism
against its interests and citizens.  The possible repercussions to any and
all of these are incalculable, but ALL ARE THE DIRECT RESULT OF

#5. Aggravation of the present world economic crisis, now already visible
in all parts of the world, may still result in a fundamental change in the
world economic position and policy of the United States.  For the time
being, and ever since the mid 1980s when it changed from being the world's
biggest creditor to becoming its biggest debtor and especially during the
'boom' of the 1990s, the United States is till running a global PONZI
SCHEME, in which its liquidity and credit depends on the continued giant
vacuum cleaner absorbtion of new credit capital to service the ever
growing service, not to mention principal, of its accumulated past debts,
which now amount to almost double its GDP.  These debts are most
importantly to foreigners who have bought US treasury certificates from
Washington and invested in stocks , or worse their derivatives, in Wall
Street.  However, US corporate, household and consumer debt have also
continued to rise with so far no limit in sight except the always existing
and ever greater threat new capital will one day cease to flow into the
US, thus making it impossible to re-finance the old debt.  And of course,
they higher that Ponzi house of cards pyramid continues to be built up,
the greater its crash if and when it comes.  For then, the cessation of
capital inflow must generate a rapid flight capital outflow from the US,
as it did from other areas that had 'enjoyed' earlier speculative capital

The ONLY RESPONSE POSSIBLE will be to DEFAULT on much of the
debt owed across and within US borders - with disaterous
consequences all around.  But that can and would be done in
a variety of ways or combinations thereof: simple wipe out of stock
values, a sharp increase of printed or credit-created US dollars both to
meet demand for the same and to devalue the debt by inflating out of it.
Or the free-trade and open-market apostle that the US claims to be will
impose controls on capital outflow abroad and limitations on capital
transfers and the use of bank deposits at home- also following other
countries whom US policy has already forced into situations that gave them
no other choice, as now spectacularly so in Argentina.  All would result
in FALL IN THE US DOLLAR'S VALUE.  That would also spell the end of the US
role as the world's consumer of last resort.

Before a dollar confidence and supply crisis becomes that acute, a number
of possible measures could pave the way and result already in a decline of
the dollar, which then at any moment could turn into an abrupt fall.  All
of these eventualities should also be considered as potential political
economic blowbacks to recent and still current irresponsible US policy.
Among them are:
- Japan's banking crisis obliges Japanese to withdraw money invested in
the US and bring it home to shore up their exposed positions there
- China devalues, becomes still more competitive in the
world market, and forces other Asian producers into still more precarious
financial positions and corresponding defensive policies
- Europeans transfer their international currency reserves from the US
dollar into the Euro
- Others decide to do the same
- OPEC decides to re-price its oil exports in Euros instead of dollars, or
even in a basket of currencies including both or maybe even the Chinese yen,
- OPEC countries individually or collectively decide to place and keep
[some of] their earnings in Euros, especially if they are priced in
that currency, but even if they are not.But if the dollar exchange
becomes  costly, te rational thing to do will be to price out of the
dollar to begin with.
- Somebody/anybody gets upset at yet another outrageous US policy/praxis,
and out of fright or spite decides to try to put their money in a safer
haven than the US.  Depending on who does that when and how, it could
trigger a run on the 'US BANK'.

To appreciate the seriousness of any and all of these very possible
scenarios, it is important to realize that US economic 'strength' really
is based on a world wide Ponzi Scheme House of Cards whose essential
element is that the US can print US dollar world currency, and nobody else
can.  However, the opposite side of that dollar coin is that this dollar
supply and demand is the ONLY ECONOMIC STRENGTH THE US NOW HAS.  The
importance of US TNIs, industrial and agricultural productivity, high
tech, education and all pale in the shadow of the DOLLAR.  The other
pillar of US strength is the Pentagon, which claims already to be
encumbered by lack of dollars.  However, the deployment of Pentagon forces
abroad is dependent on having highly valued dollars abroad with which to
buy national currencies to defray local costs of bases, supplies,
deployments and other military expenses.  So the strength of the Pentagon
is in part dependent on the strength of the dollar - and vice versa [see
A.G. Frank we-page on 'US Economic Overstretch and Hegemonic political
military blowback?]. Their hand in hand decline, in the face of present
official [and popular?] hubris overconfidence, could spell incalculable
political costs at home and abroad.

Japan Policy Research Institute
2138 Via Tiempo
Cardiff, CA 92007 USA
Tel (760) 944-3950
Fax (760) 944-9022
Email: chaljohnson@mindspring.com, chaljohnson@jpri.org
Web: www.jpri.org

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