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News & analysis from Proletarian Internationalist Notes—news, reviews and analysis from a global perspective

The global anti-American economic struggle: Iran and China address trade and investment obstacles

Iran and China are illustrating diplomatic struggle on economic and other issues. Despite a likely global decrease in confidence in U.S. leadership, the world is still struggling under U.$. hegemony.

Diplomatic struggle can include not inviting the amerikans to peace talks. There seems to be confusion in the media about this, but: ““Iran, Russia and Turkey, as the initiators of the upcoming Syria peace talks in Kazakhstan, have not invited the US to participate at the meeting due to “Iran’s opposition to the US presence”, [Supreme National Security Council secretary Ali] Shamkhani said on Wednesday.”(1) In any case, Iran is saying the amerikans shouldn’t show up. This is sounding like a theme after the trilateral Syria talks in Moscow in December and earlier this month. Last month, China, Pakistan and Russia held another trilateral meeting on Afghanistan.

Far away in Switzerland, Iran’s foreign minister discussed potential Iranian-Saudi cooperation in the context of Bahrain, Syria, Yemen, and elsewhere, according to Iranian Press TV.(2)

According to Iran’s official IRNA news agency, the Hajj situation with Saudi Arabia is clearly improving.(3)

Even if Iranian-Saudi cooperation continues to be limited, a signal has been sent: the world’s countries need to work with each other and isolate the amerikans. At the time of this writing, the u.$. entity still hasn’t recognized the State of Palestine. The persistent flattery of Obama is ridiculous and outrageous.

Iran sanctions

Also in Davos, Foreign Minister Javad Zarif and EU foreign affairs & security chief Federica Mogherini discussed the Iran nuclear agreement, which is commercially important to both Iran and the EU.(4)

Iranian Financial Tribune discussed the EU’s lifting of some sanctions. “State news agency IRNA attached special importance to the delisting of OPIC, stressing that the move will ease the attraction of foreign finance for major oil and gas development projects by the company.”(5)

Iranian and Arab media earlier this month were discussing violations and potential violations of the Iran nuclear program/sanctions agreement by the united $tates.(6) As u.$. president, Obama signed Iran, Korea, Syria and Venezuela sanctions extensions and new sanctions. Obama recently allowed the Iran Sanctions Act to be renewed, which will allow Trump to impose certain sanctions particularly if the u.$. withdraws from the JCPOA nuclear deal.

Iranian leaders have said Great $atan is enemy #1. But, Javad Zarif said in Davos that Iran is open to economic relations with the united $tates.(7) Iran earlier this month suggested it could absorb tens of billions of “dollars” equivalent in foreign investment in a variety of industries.(8)

Individual companies involved in arms production, like Boeing is, still have a perverse interest in Middle East conflicts. But right now Boeing and bankers have reasons to worry about u.$. policy and can be distinguished from the u.$. government or amerika as a whole. Hopefully, the reactionary u.$. workers’ interest in exports can help Iran at least with avoiding a reversion to pre-JCPOA sanctions. Though they (like other u.$. economic groupings) don’t have a tendency to support genuine socialism even with Trump heading to the Oval Office, amerikan manufacturing workers and engineers have contradictory interests like other amerikans do.

Like various countries, China has been supporting commitment to the JCPOA.(9) Despite the JCPOA, there are still u.$.-caused financial and economic difficulties in a variety of areas. Iran is still having difficulty attracting trade and investment deals because of u.$. sanctions and threats.

China President Xi Jinping Davos address

Of course the big news from Davos in terms of speeches is President Xi’s keynote.(10)

One might think Maoists such as yours truly would have nothing positive to say about a Chinese speech that refers to “opening-up” favorably nine times and lauds so-called reform. However, the year is 2016 and it has been decades since the counterrevolution in China. All countries today are capitalist, and some of the most important questions right now are about how to relate to the united $tates. Globally, protectionism has different forms, some of which favor economic relations with the u.$. and disfavor economic relations with non-amerikans, including both First World and Third World countries. For example, some Europeans doubting the merits of European unity are exhibiting a preference for the united $tates.

Xi discussed the development of both global free trade and regional free trade agreements. The u.$. has used various pretexts to oppose free trade. It is undeniable that the u.$. gets in the way of trade, investment, and loans, where northern Korea, Venezuela, Syria, Iran (still), Cuba (still) and others are concerned. Does that make Obama (still president for a few more hours at the time of this writing) some kind of revolutionary – somehow unlike Trump? No.

Xi said “global growth” more than ten times and “growth” more than sixty times. Economic growth can exist together with exploitation and class stratification – both domestic and international – and does so in China. By Xi’s own admission, it is a fact (with competing explanations) “growing material wealth and advances in science and technology” have coincided with “widening income gap” and a widening gap between “the South and the North.” It is true both that socialism offers superior growth potential, and that revolution sometimes requires prolonged sacrifice on a large scale. It is hard to argue against promoting global growth, though, when u.$.-caused problems are hampering growth. There is generally too much emphasis on living standard increases in the short term, but larger living standard increases are still possible in the long term under capitalism and require what might be temporarily painful changes in relations with the united $tates. Acknowledging this is a matter of recognizing an economic basis for broad unity against u.$. imperialism.

As the amerikan-caused difficulties and u.$. dominance disappear, socialism will become more attractive to more people partly because crisis will continue to exist. Right now, there are too many ways for the bourgeoisie in the Third World and other countries to blame the amerikans – ways that are in fact legitimate.

That doesn’t mean independent proletarian thought and action/pressure isn’t necessary. The bourgeoisie in all countries is prone to wavering in opposition to the amerikans. The proletariat has a long-run perspective that supports firm anti-amerikanism. Socialist revolution will continue to stall until major progress is made against u.$. hegemony. Many of those who would disagree with that conclusion don’t fully understand developments in imperialism, exploitation and class structure since World War II and the 1970s. They are prone to getting caught up in (u.$.) Democratic, liberal and CIA projects even while being aware of u.$. worker privilege. Those now focusing on straight white male worker privilege (after many years of defending u.$. white workers) are potentially even worse.

This writer didn’t fail to notice recently republished old anti-Stalin anti-Soviet remarks on Ayatollah Khamenei’s website.(11) Both China and Iran have a history of drawing from applicable parts of Western thought, and Ayatollah Khamenei referred to “seek knowledge even if it is in China,” but Khamenei found it necessary to criticize the October Revolution strongly. Of course this writer has some disagreement there, but it is hard to object when so many people professing to be atheist, secular or Marxist have severe problems and even fake “Maoists” in the u.$. and some alleged Maoists in the Third World have contributed to a climate for war against Islamic countries. Some continue to undermine anti-amerikanism. It is also true Iranians accurately perceive there is still more mileage to get out of capitalism by opposing the amerikans. Of course capitalism has long outlived its usefulness in general, but u.$. hegemony can be targeted and needs to be dealt with. It is hard to blame Iranians for not focusing on problems of capitalism and neocolonialism in general when they are still dealing with u.$. sanctions and their consequences.

Xi didn’t mention the united $tates by name though the Chinese president discussed figures in u.$. dollar terms. But it is difficult for global growth to happen at a higher rate and with more stability when the united $tates continues to dominate and exploit to the degree it does. Most of the exploitation takes place in unequal exchange (wage-related) in trade, and other hidden transfers; First World protectionism is indeed based on a false premise (though the alternative isn’t just “win-win”) as First World workers largely benefit as exploiters from international trade. President Xi didn’t mention “exports” at all, or “wages” (only “living standards” as in “their living standards are not yet high”) probably to make observers in trade-deficit countries more comfortable, but both exports and imports are relevant to international exploitation of Chinese workers by amerikans including amerikan workers. The strong dollar is of course involved, though Xi said, “China has no intention to boost its trade competitiveness by devaluing the RMB [as if this didn’t help amerikans in certain contexts], still less will it launch a currency war.” Obviously, strengthening the yuan is a part of supporting the yuan’s potential as a reserve currency.

Xi said “the global economy is the big ocean that you cannot escape from,” which suggests China might as well be capitalist openly if unequal-exchange neocolonialism is unavoidable. In reality, China’s “opening-up” favored the united $tates unnecessarily though it occurred under pressure and happened because of a combination of both external and internal factors.

The Chinese president claimed “the fundamental issue plaguing the global economy is the lack of driving force for growth.” In the present writer’s opinion, the fundamental issue plaguing the global economy involves maintaining and equalizing growth rates of integrated economies while the u.$., a huge First World country, continues to rank at or near the top in terms of GDP per capita and productivity. This involves the exploitive and parasitic aspects of u.$. imperialism and the degree (quantitative aspect) of u.$. international exploitation.

To the extent that lack of driving force and unequal benefit from innovation are an issue, it seems foreign investment deficiencies specifically would be related to that. It’s not just government supporting or not supporting innovation and the so-called free market, and removing local impediments to innovation, that is relevant. Xi contrasted protectionism with “investment liberalization and facilitation” and stated, “Since it launched reform and opening-up, China has attracted over 1.7 trillion US dollars of foreign investment and made over 1.2 trillion US dollars of direct outbound investment, making huge contribution to global economic development.” Xi also stated, “In the coming five years, China is expected to . . . attract 600 billion US dollars of foreign investment and make 750 billion US dollars of outbound investment.” In other words, China will have a huge net capital outflow despite being more integrated in the world economy than it was in the 1980s. In addition, net-exporter China still benefits from its foreign investment in other countries less than many First World countries benefit from their foreign investment.

Contrary to the notion that China just devalues its currency or allows it to depreciate, China has recently had to stem the yuan’s depreciation against the dollar to slow capital outflow. Xi’s positive portrayal of China’s big net capital outflow, as benefiting both amerikans implicitly and the world, strikes this writer as being ridiculous in various ways. Chinese capital flight has been in the news lately, prominently. Apparently, Xi really was speaking to First World nationalists, not bankers, economists and investors who know better. Not that u.$. workers with bad financial habits would care about this specifically, but whom is the president kidding?

Iran was supposedly going to get some amerikan airliners at a discount. Also, foreign investment and so-called aid (loans) played an important role in international exploitation in the past and continue to play an important role. Debt forgiveness without unfavorable terms benefits people in the Third World. (Debt forgiveness sometimes comes with strings attached and is in any case not done disinterestedly by amerikans.) But, most international exploitation that takes place in the world today occurs through various transfers in trade that can be distinguished from foreign investment profit and debt payments. In this context, it has become more necessary to pay attention to capital flow, as a potential area of problems, in a way that has not been traditionally emphasized by some.

Xi talked about global governance and transparency. There has been some relevant discussion of tax havens in the context of global inequality. It is undeniable that many people used the Panama Papers leak to portray non-amerikan bourgeoisie as especially corrupt, criminal, or exploitive of their own country’s people. There had to be a struggle over that in media, to correct public opinion. Apart from that, the idea of using a transnational organization to police Third World capitalists has neo-colonial implications as others have discussed. Doing that in a way that doesn’t undermine anti-amerikanism would be complicated. That said, one of the problems with the use of offshore bank accounts and shell companies (other than to circumvent sanctions and First World trade barriers) is precisely a capital outflow problem contributing to investment dearth and eventually international living standard inequality.

Foreign loans, other inbound investment, and trade, are all involved in neocolonialism. Yet, after nations in the Third World have already decided to seek expanded economic relations with imperialist countries, it is possible to worsen international exploitation by aggravating financial, investment and even trade difficulties. A Third World country could come under pressure to accept economic agreements with less-favorable terms. Third World countries don’t need to whore themselves out, more than they may already be doing, by accepting higher economic and political costs of borrowing, trading, and domestic development. Although, if the u.$. entity makes things more difficult, with or without getting First World countries to cooperate, that may drive a turn toward non-amerikans as favored investment and trading partners.

The united $tates’ December wage growth has been in the news, and minimum wage increases have passed in several u.$. States while there is still no global minimum wage. One thing Xi didn’t discuss specifically was relative changes in wage growth rates. The u.$. nominal wage growth rate has been increasing since around 2012, according to an HSBC report.(12) Though higher, the Chinese nominal growth rate has been decreasing since 2011. The eurozone nominal wage growth rate has also generally decreased since 2011, the year in which the debt crisis peaked or was unfolding rapidly in several European countries. Asia-Pacific and Latin American nominal wage growth rates have also decreased since 2011 or 2012. In 2016, the UK real wage growth rate was higher than the eurozone and u.$. real wage growth rates, but the UK rate is projected to fall below the eurozone and u.$. rates in the middle of 2017. So in the middle of 2017, the u.$. real wage growth rate, which was higher than the eurozone rate in 2015 and 2016, would begin to be higher than the UK rate.

The European nominal and real wage growth rate decreases are relevant to European worker support for protectionism. The united $nakes lies at the heart of this. Most European workers are exploiters of Third World workers like amerikans are, and developments in Europe illustrate why it is that First World workers play a vanguard role in fascism and oppressor nation nationalism at this time. Hopefully, though, more Europeans will both reject extreme nationalism and see the sense in looking outside the united $tates for global leadership. ◊

See:

• “Iran FM says no contacts with incoming US administration so far,” 2017 January 18. https://www.tasnimnews.com/en/news/2017/01/18/1300614/iran-fm-says-no-contacts-with-incoming-us-administration-so-far

• “EU contacts Trump on JCPOA,” 2017 January 19. https://financialtribune.com/articles/national/57739/eu-contacts-trump-on-jcpoa

• “Economic slowdown and productivity: where class struggle meets crisis,” 2016 August. https://github.com/pinotes/pinotes.github.io/blob/master/_posts/2016-08-17-news-economic-slowdown-productivity.md

• “U.S. economic outlook improves; structural basis of crisis continues to develop,” 2017 January. https://github.com/pinotes/pinotes.github.io/blob/master/_posts/2017-01-08-news-Jan2017-US-economic-outlook.md

Notes:

1. “No invitation for US to attend Astana talks: Iran’s Shamkhani,” 2017 January 18. https://www.tasnimnews.com/en/news/2017/01/18/1300319/no-invitation-for-us-to-attend-astana-talks-iran-s-shamkhani

2. “Iran-Saudi cooperation possible if Riyadh sees realities on ground: Zarif,” 2017 January 18. http://www.presstv.ir/Detail/2017/01/18/506735/Iran-Sauid-Arabia-Zarif-Astana-talks-Davos-Syria

3. “Iran replies to S. Arabia invitation letter,” 2017 January 17. http://www.irna.ir/en/news/82391231/

4. Iran’s Zarif, EU’s Mogherini discuss JCPOA, Syria in Davos,” 2017 January 18. https://www.tasnimnews.com/en/news/2017/01/18/1300628/iran-s-zarif-eu-s-mogherini-discuss-jcpoa-syria-in-davos

“Mogherini: EU against renegotiating Iran’s nuclear deal,” 2017 January 19. http://www.irna.ir/en/News/82393663/

5. “Iranian entities delisted from EU sanction,” 2017 January 19. https://financialtribune.com/articles/energy/57744/iranian-entities-delisted-from-eu-sanctions

6. “Iran not to tolerate JCPOA breaches by a certain country: Araqchi,” 2017 January 9. https://www.tasnimnews.com/en/news/2017/01/09/1292726/iran-not-to-tolerate-jcpoa-breaches-by-a-certain-country-araqchi

“JCPOA implementation commission to discuss ISA extension in Vienna,” 2017 January 10. http://www.presstv.ir/Detail/2017/01/10/505589/Iran-JCPOA-Joint-Commission-Vienna-Iran-Sanctions-Act-US

“Trump to be surprised if ditches Iran nuclear deal: Zarif,” 2017 January 19. http://www.presstv.ir/Detail/2017/01/19/506894/Iran-US-Mohammad-Javad-Zarif

“Iran warns violation of JCPOA intolerable under any excuse,” 2017 January 9. http://www.kuna.net.kw/ArticleDetails.aspx?id=2585231&language=en

7. “Iran open to business ties with US,” 2017 January 19. https://financialtribune.com/articles/national/57774/iran-open-to-business-ties-with-us

8. “Iran capable of absorbing $20bn foreign investment,” 2017 January 7. http://www8.irna.ir/en/News/82377925/

9. “China urges all parties to stay committed to JCPOA,” 2017 January 18. http://www.irna.ir/en/News/82391903/

10. “Jointly shoulder responsibility of our times, promote global growth,” 2017 January 17. http://news.xinhuanet.com/english/2017-01/18/c_135991184.htm

11. “What was the anti-Stalin book Ayatollah Khamenei commented on?” 2017 January 14. http://english.khamenei.ir/news/4563/What-was-the-anti-Stalin-book-Ayatollah-Khamenei-commented-on

“Leader’s speech to students,” 2011 August 10. http://english.khamenei.ir/news/1506/Leader-s-Speech-to-Students

12. “Global economics : great expectations, many limitations.” https://www.research.hsbc.com/R/24/7DlDTPG