what's left

Looking Out for Western Business and Investor Rights: Why the West Approves Military Interventions to Topple One Arab Government and Prop Up Another

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By Stephen Gowans

In a previous article I pointed to three factors to explain the West’s decision to intervene militarily in Libya to prevent the government there from putting down an armed rebellion while it tacitly approves the Gulf Cooperation Council’s military intervention in Bahrain to put down a peaceful rebellion there. The double-standard, I argued, reflects dramatic differences between Libya and Bahrain in their relationship with the United States and its dominant investor and corporate class.

Bahrain is the home of the US Fifth Fleet, has long-standing warm relations with Washington, and strongly caters to Western corporate and investor interests. Since the Khalifa regime supports US corporate profit-making and military interests, and a new regime might not do the same to the same degree, Washington is prepared to allow Saudi and other GCC troops and tanks to assist Bahraini authorities in violently quelling a peaceful rebellion.

Libya, I pointed out, doesn’t provide bases for the US or other Western militaries, hasn’t had long-standing warm relations with Washington, and isn’t particularly accommodating of Western corporate and investor interests. From a neo-colonialist standpoint, Western powers could do better in Libya.

Some readers objected, arguing that in recent years Libya has sought to open itself to Western corporations and investors and has struck a number of deals with Western oil companies. It cannot be concluded, they continued, that the West’s decision to intervene military in Libya was motivated by Western profit-making considerations, for Libya is already catering to Western business interests.

To be sure, Libya has opened itself to the West, but doing deals with Western corporations is not the same as engineering a wholesale subordination of domestic interests to those of foreign bankers and corporations — typically, what corporate-and investor-oriented Western governments look for in Third World “partners”. For the wealthy scouring the globe for investment opportunities and corporations seeking export markets, an opening door in Libya doesn’t necessarily mean that Libya’s business climate is fully conducive to maximizing profits. That Libya allows some Western corporations to operate in the country doesn’t guarantee that investments are safe from expropriation, that performance requirements aren’t imposed on foreign investments, that repatriation of profits isn’t controlled, that taxes aren’t high, or that there is a commitment to labor market “flexibility.” In short, the Kaddafi government may, in recent years, have sought to expand Western access to investment opportunities in Libya, but that alone doesn’t mean that the conditions of access were regarded by corporations and investors as being as desirable as they could be, or as desirable, for example, as those provided by the government of Bahrain, or as desirable as those a future government might provide.

The Heritage Foundation provides a guide to how accommodating countries are to the profit-making interests of US corporations and investors. Every year the foundation publishes an Index of Economic Freedom, which ranks countries on how open they are to exports and foreign investment, how low their taxes are, how committed they are to protecting property rights, and so on; in short, how strongly a country favors foreign businesses and investors over its own people. Significantly, governments that are perennially targets of US government regime change efforts rank at or near the bottom of the index. This year’s list identifies the following 10 countries as the least economically free (i.e., least accommodating to foreign businesses), in order, from worst to slightly better:

• North Korea
• Zimbabwe
• Cuba
• Eritrea
• Venezuela
• Myanmar
• Libya
• Democratic Republic of Congo
• Iran
• Timor-Leste

Seven of the bottom 10 (North Korea, Zimbabwe, Cuba, Venezuela, Myanmar, Libya and Iran) are the targets of open regime change operations by the United States and its allies, carried out ostensibly because the targeted countries are not protecting human rights, threaten regional stability, or in the case of Libya, because the government is said to be attacking its own people. That these countries happen to be considered the least accommodating of foreign business profit-making points to an ulterior motive on the part of Western governments to bring about regime change, and to use human rights and humanitarian rhetoric as a cover for pursuing the economic interests of Western corporate and investor elites.

Significantly, not one country in the top 10 is a target of Western regime change efforts. If regime change were linked to human rights concerns and not unfavorable investment and export conditions, we might expect to find regime change targets scattered throughout the rankings, rather than bunched up at the bottom. One counter-explanation is that economically free countries tend to respect human rights, which is why the worst offenders on both counts are found at the bottom of the list. However, this couldn’t possibly be true, for the United States, which has an atrocious human rights record (Guantanamo, Abu Ghraib, torture and rendition of prisoners, arrest and detention without charge, extrajudicial assassination, weakening of Miranda rights, spying on its own citizens, restrictions on travel to Cuba, and so on) ranks as the 9th freest country in the world in economic terms, while Saudi Arabia, the least free country in terms of political and civil liberties and perhaps the most contemptuous of human rights, ranks in the top half.

Bahrain, as it turns out, is ranked number 10 of 179 countries on the Heritage Foundation list, next to the United States. Regionally, Bahrain is top ranked in North Africa and West Asia, while Libya, ranked 173 over all countries, falls dead last in regional rankings. Bahrain’s higher ranking is based on an array of government policies aimed to please foreign businesses. Property ownership is secure and expropriation is unlikely, whereas in Libya foreign companies are vulnerable to expropriation. Bahrain welcomes foreign investment and allows new businesses to be 100 percent foreign owned and controlled, while Libya screens foreign investment, imposes performance requirements on foreign investors that domestic investors are not required to meet, and demands that Libyans have a 35 percent stake in foreign companies that operate in the country. And while Bahrain imposes no restrictions on repatriation of profits, Libya does.

On trade, Bahrain imposes few restrictions on imports, while Libya maintains a variety of tariff and non-tariff barriers to help local firms develop. With the exception of oil companies, businesses that operate in Bahrain pay no corporate tax, while businesses in Libya are subject to a tax rate as high as 40 percent. Personal income tax is extremely low in Bahrain, but can reach as high as 90 percent in Libya. And while Bahrain provides businesses maximum flexibility in dealing with employees, even allowing them to pay desperation-level wages, Libya provides protection for workers on pay and working conditions.

In short, the Bahraini monarchy runs a foreign-investment- and import-friendly regime, while Libya’s economic policies favor local investors and businesses and provide some protections for labor. A government that was more like Bahrain’s, and less like Kaddafi’s, would unquestionably be congenial to foreign business interests.

Some readers contend that Western military intervention in Libya is aimed at preventing the slaughter of Libyan civilians. But a stronger case can be made that Western military intervention is aimed at regime change, and that far from protecting civilians, NATO bombing is only setting the stage for a prolonged civil war by weakening loyalist forces and thereby allowing the rebels to contest for power.

There are a number of reasons why the NATO operation in Libya can be seen as a regime change effort, on top of the motivation of replacing the current government with one more congenial to Western profit-making interests, discussed above.

First, the decision of the French government to recognize the rebel opposition as the legitimate government was a declaration that France, at least, is manoeuvring to install a new government in Libya. (1) Indeed, both France and Britain have acknowledged that they are seeking the ouster of Kaddafi. (2)

Second, US secretary of state Hilary Clinton said “Kaddafi’s ouster was the ultimate goal of the UN resolution” (3) and while US president Barack Obama denied this, he did say that the military “campaign will likely continue as long as Libyan leader Moammar Gadhafi is in power.” (4) If the intervention’s goal is to protect civilians and not install a new government, how can the aims of France and Britain and the comments of Clinton and Obama be reconciled?

Third, Washington hopes that sanctions “combined with NATO air power, will be enough to turn the tide militarily.” While the UN Security Council resolution authorizes the use of military means to protect civilians, it doesn’t authorize the use of military means to aid rebel forces. Yet newspapers on March 23, 2011 were full of stories on how fresh airstrikes were allowing rebel forces to recover lost ground. For example, The Wall Street Journal commented that,

“The hope for the West is that a continuation of military pressure on Col. Gadhafi’s forces, even at somewhat lower levels in coming days, combined with continued forward movement by the rebels, will be enough to make the Libyan army either buckle or turn on the Libyan leader. That would produce the outcome the West hopes for – the removal of Col. Gadhafi.” (5)

Meanwhile, the New York Times reported that “the airstrikes have lifted the rebels back from the brink of defeat in the eastern city of Benghazi and enabled them to rush west along the coast past their farthest gains of the previous peak weeks ago.” (6)

It is clear that the intention of the military intervention, which was authorized when the rebels’ defeat by loyalist forces was imminent, was to weaken the government side to allow the rebels to rally and seize the momentum. This hardly favors a quick resolution of the conflict. The conflict could go on for some time, perhaps taking more lives than would have been lost had the UN sent a fact-finding mission in return for a cease-fire, or had loyalist forces successfully put down the uprising weeks ago. The potential for the conflict to drag on, fuelled by the aid NATO provides the rebels through its airstrikes, was acknowledged by US secretary of defense Robert Gates. The Pentagon boss said “he couldn’t be sure NATO would have finished its mission by year-end.” (7)

The idea, then, that the UN Security Council authorized military intervention to protect civilians has no substance. Furthermore, the idea that the intervention is protecting civilians, whether that is the real intention of the intervention or not, seems unlikely, since the outcome so far has been to create the conditions for a protracted civil war – one moreover, that will be worsened by civilian deaths caused by NATO bombing on behalf of rebel forces.

If the rebel forces prevail and extend their control to all of Libya, or eventually settle for partition of the country, we can expect the economic policies of the future government to be closer to those of Bahrain, and therefore closer to the profit-making interests of Western corporations and investors. In this sense, the UN Security Council, and the military operation it authorizes, can be seen as investments in making Libya a more attractive place to do business in.

Finally, it might be pointed out, as Johnstone has (8), that the Gaddafi government has invested a considerable part of its oil revenues in sub-Saharan Africa, contrary to the usual practice among Arab oil states of shipping the proceeds of their oil sales to New York investment banks, the London Stock Exchange, and US arms manufacturers. These practices are more conducive to Western business interests than Gaddafi’s investments in Africa, and might be expected to become the standard practice in Libya if the rebel movement succeeds in ousting the current government.

1. Diana Johnstone, “Why are they making war on Libya?” Counterpunch, March 24, 2011.
2. Jay Solomon and Carol E. Lee, “Obama bets on limited engagement”, The Wall Street Journal, March 24, 2011.
3. Keith Johnson, Yaroslav Trofimov and Sam Dagher, “Allies rally against Gadhafi”, The Wall Street Journal, March 19, 2011.
4. Nathan Hodge, Sam Dagher, Stephen Fidler and Stacy Meichtry, “Allies strain to mend split”, The Wall Street Journal, March 23, 2011.
5. Sam Dagher and Stephen Fiddler, “Fresh airstrikes aid rebels” The Wall Street Journal, March 28, 2011.
6. David D. Kirkpatrick and Kareem Fahim, “Libyan rebels march toward Qaddafi stronghold”, The New York Times, March 27, 2011.
7. Sam Dagher and Stephen Fiddler, “Fresh airstrikes aid rebels” The Wall Street Journal, March 28, 2011.
8. Diana Johnstone, “Why are they making war on Libya?” Counterpunch, March 24, 2011.

Written by what's left

March 28, 2011 at 10:39 pm

9 Responses

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  1. An excellent article. It really slays the lingering pseudo-argument put forward by some that Gaddafi is fair game for the so-called revolutionaries because, betraying his anti-imperialist past, he’s long since handed the country to the west.

    La Lutte Continue

    March 29, 2011 at 1:23 pm

    • It hardly slays the argument (in fact, it reinforces it): Gaddafi was well on the road towards orienting his country’s economy more towards that of the global market, even if it hadn’t reached such epic proportions as in Bahrain and other pro-market despotisms.

      I wouldn’t have used such a doctrinaire conservative NGO as the Heritage Foundation to measure how “capitalist” Libya has become (they put Canada ahead of the US for “economic freedom”, yet we still have somewhat more of a welfare state than the US, not to mention our taxes being somewhat higher; it’s probably because we have one province with a flat income tax rate and conservatives close to having a majority); it’s like asking Grover Norquist to comment on how successful he thinks socialism is in the US.

      Todd

      March 30, 2011 at 3:12 am

      • Todd,

        You say “Gaddafi was well on the road towards orienting his country’s economy more towards that of the global market, even if it hadn’t reached such epic proportions as in Bahrain and other pro-market despotisms.” That it hasn’t reached such epic proportions–indeed, hasn’t come anywhere close–is precisely the point. Your argument is like saying, The Soviets traded with the Western world, and even though their trade was nowhere near as extensive as Japan’s was, the reality that they were trading with the West is evidence that they were moving their economy toward the world market. A country’s trade with other countries or its opening itself to foreign investment does not make it a “pro-market despotism”. It becomes one when it imposes no conditions on investment, allowing an outside power to exploit it economically, or opens its doors to all imports, when doing so would condemn it to perpetual underdevelopment. The evidence is that while Libya trades with Western countries and has opened its doors to Western investment that it imposed conditions that pushed Libyan interests further to the fore than foreign corporations and investors would have liked, and contrary to the norm in many places, including Bahrain.

        Second, you say you wouldn’t have used the Heritage Foundation to measure how ‘capitalist’ Libya has become. Well, laying aside for the moment the reality that Gaddafi’s Libya has always been capitalist, what would you have used? Your reference to the Heritage Foundation as a doctrinaire conservative NGO hardly impugns the soundness of its analyses of the degree to which countries cater to the profit-making interests of doctrinaire conservatives in the United States. Indeed, that the corporate officers and investors who fund the Heritage Foundation and exercise enormous influence in Washington think that Libya hasn’t gone anywhere far enough to accommodate their interests is precisely the point.

        Third, the index, as a barometer of what powerful forces in the United States perceive to be the case, matters far more than what really is the case, but let’s suppose that the objective conditions are more important than the subjective ones. And let’s suppose further that you’re right, and that the US should take Canada’s 6th place ranking out of 179 countries on the foundation’s index, and Canada should move to 9th place, currently held by the United States. Would the conclusions about Libya change in any meaningful way? No. We would still conclude that there is hardly any difference between the United States and Canada (3 ranking spots out of 179 is miniscule); that 10th place Bahrain is similar to these two countries in the degree to which it is judged to accommodate the profit-making interests of Western corporations and investors; and that the three are very different from the 173rd ranked Libya. Your attempt to impugn the credibility of the Heritage Foundation index by quibbling about the relative rankings of the US and Canada remind me of a fat man, embarrassed that his bathroom scales have revealed how heavy he is, tossing them away because they have a margin of error (and he never liked the manufacturer anyway). Well, his scales might be off by a pound or two, but that hardly turns a fat man into a thin man. The relevant point is that Canada, Hong Kong, Bahrain and other countries which will never be the targets of regime change operations score at the top of the Heritage Foundation index, and Libya scores at the bottom, along with such other regime change targets as North Korea, Cuba, Venezuela, Iran and Zimbabwe.

        Also, to clarify: The foundation’s index of economic freedom is not a measure of how “capitalist” a country is, but how open it is to exploitation by the economic elite of other countries. Some capitalist countries do struggle against foreign exploitation. Pursuit of independent development is not a monopoly of socialist and communist countries. Don’t mistake the index as a measure of how capitalist a country is, or believe that just because a country is capitalist, that corporations and investors in other countries are pleased with its trade and investment policies.

        Finally, you have taken in recent weeks to branding other commenters as “trolls” who ought to “crawl back into their holes” – provocations I’ve edited out of your recent comments. This, on top of the reality that you seem to agree with very little that is written on this blog, raises the very real possibility that it is you who is the troll, and not those you accuse. If you continue to post needlessly provocative comments, you can expect that they will be blocked.

        Steve

        gowans

        March 30, 2011 at 2:57 pm

  2. Yes, that’s absolutely definitive. I have been devoting probably too much attention to the question of whether the new regime will adopt an Islamist coloration. I suppose I am obsessed by the (historically verifiable but often obscured) fact that the US/UK consistently favours Islamist governments, because they are so reliably right-wing.

    niqnaq

    March 30, 2011 at 4:38 am

  3. It is disciplined analyses of this thoughtfulness and quality which so frequently make What’s Left such a delight to visit. Needless to say, the White House, State Department and Pentagon MSM press corps stenographers will always be “too busy” to explore the possibilities in backstories of such topical relevance.

    Neil M

    March 30, 2011 at 5:57 am

  4. They’re back. Having spent the past 10 years pretending to be anti-war – describing the attack on Iraq as ‘criminal’ and the war in Afghanistan as ‘a trifle ill-judged’ – the liberal and left-wing set that originally invented the idea of ‘humanitarian warfare’ in the 1990s are once more at the forefront of public debate. They’ve cast off the anti-imperialist garb that they temporarily donned to make their disappointment with Blair and their snobbish disdain for Bush appear principled, to reveal that, underneath, there lurk the same old laptop bombardiers keen to visit their moralistic fury upon some wayward nation. This time they have Libya in their sights.
    http://www.informationclearinghouse.info/article27807.htm

    brian

    April 2, 2011 at 1:08 am

  5. Timor Leste probably earned its slightly better rating in the Heritage list due to its inability to thwart Australia’s collusion with Indonesia to re-draw East Timor’s territorial boundaries in order to place the lion’s share of its Timor Sea petro-resources beyond its Indo/Aus-recognised territory.

    Wikipedia’s East Timor entry briefly articulates Australia’s clumsy rejection of the relevance of two international bodies with authority to rule on territorial disputes and maritime law in matters referred to them.

    This policy gambit has yielded mixed blessings for Australia. It preserved, for the time being, the deal struck with Indonesia to minimise East Timor’s share of the royalties from exploitation of its petro resources but severely damaged the relationship with the government of East Timor. An unintended consequence of unilateralism emerged in 2010 when East Timor formalised its rejection of an Australian offer to supply unarmed patrol boats (mainly to co-opt East Timor into Australia’s border-protection/refugee policy) by accepting a Chinese offer to supply two armed patrol boats to protect its fisheries. The newspaper article linked below hints at Australia’s embarrassment over Timor’s unexpected expression of patrol boat independence.

    http://www.smh.com.au/world/relations-strained-as-east-timor-buys-chinese-navy-boats-20100606-xn5y.html

    Neil M

    April 13, 2011 at 6:01 am

    • Hi Neil.I wonder what the Americans said to the Indonesias when plans were being hatched for the Australian government to occupy East Timor.Indonesia basically left without protest let alone a fight.Do you have any info as to the 3 way talks that would have gone on between Australia,USA and Indonesia?A penny for your thoughts..

      mark hayward

      April 25, 2011 at 6:03 am

      • Good question, Mark. Apart from being mildly surprised at how quickly the Indonesians withdrew it’s something I didn’t think much about at the time. However, according to Wiki, the intervention had the blessing of the UN – and Indonesia. Up until the outbreak of the pro-Indon militia violence which inspired the intervention Indonesia’s subjugation of Timor was just a dirty little secret in which Australia had a long and shameful history of complicity.

        My recollection is that there was growing public condemnation of the decision by successive Australian governments to turn their/our back on the Timorese – led with increasing outrage by WWII veterans. The vets believed that they, and thus Australia, owed the Timorese a considerable debt of blood for the sacrifices they made to protect Australian troops during the Japanese occupation.

        One imagines that the Americans would have had words with Indonesia but the potentially damaging publicity was probably a bigger factor. I was in Indonesia on business in the late 1980s (oblivious to Timor’s plight) and their (official) pursuit of a reduced-corruption business environment was already oozing along.

        Neil M

        May 24, 2011 at 2:04 pm


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