• "God invented war so Americans could learn geography" -- Mark Twain.

Monday, March 18, 2013

March 15th - A Date to Remember

15 March 2013 will go down in history as the date the Nation State ceased to exist; for it was on that date that the IMF (International Monetary Fund) and the Eurozone finance ministers imposed a direct capitation on ordinary saving accounts in Cypriot Banks. 

The story is simple.  The Government of Cyprus applied for a € 10 billion bailout loan from Eurozone banks.  As with any loan, the banks wanted collateral.  Large reserves of natural gas have been found in Cypriot territorial waters and the Government of Cyprus pledged one third of the income-stream from gas to secure the loans.  The banks were not interested.  They insisted on an immediate and direct one-time "tax" on all deposits held in Cypriot banks.  The Government caved. Under the plan, savings accounts under  € 100,000 are to be debited three percent and savings over that amount will be debited 12.5 percent.  The seizure went into effect overnight with accounts and withdrawals being frozen in the required amounts.

Reaction around the world was swift, stunned and critical.  Conservative comment decried the blow to investor confidence. Left-liberal comment lamented the blow to pensioners and working class depositors.  All agreed that what had taken place was state-sanctioned robbery.

State-sanctioned?  Barely.  The Government of Cyprus has ceased to exist except as an enforcer for the shadowy godfathers of international finance.  Tony-the-Greek would be a better name for the erstwhile sovereign state.

In truth, the loss of sovereign control is nothing very new.  As far back as 1994, Le Monde Diplomatique warned that nation states were loosing control over their economies and were being reduced to mere agencies which could do little more than react to international corporate behemoths. (See Une Capitalisme Hors de Control -Les Chantiers de la Démolition Sociale par Serge Halimi Le Monde Diplomatique (July 1994).)  But there is always a point at which a change in degree results in a change of kind.  That point was reached last Friday.

Under the nation-state system, the collective assets, energies and enterprise of a people are represented by a government which is the official embodiment of national sovereignty.   Of course, there has never been any question that foreign banks and foreign governments could exercise indirect control over a nation's domestic policies.  The entire premise of the IMF is that it can make loans on such terms and conditions which will indirectly require the government to adjust its monetary, economic and social policies  -- usually to the detriment of ordinary people.  But even when governments were "doing the IMF's bidding," they retained sovereign control. 

An example of retained control was Argentina's 2005 repudiation of its international debt.  Argentina was being rolled (literally) by the IMF and the U.S. Treasury which had got the country into a cycle of debt refinance at higher and higher interest rates with each come-around of the carousel.  Finally, President Kirchner blew the whistle on the scam and offered the banks their choice between two high-and-tight haircuts.  (Amusing Account of the Incident)  [1]

In actual fact, Argentina did not "repudiate" its debt so much as it renegotiated its loans on terms which allowed it to implement domestic economic policies which stimulated growth and were more favourable to the country's overall welfare.  It had acted in parens patriae  -- as parent for the nation, doing its best vis a vis outsiders for its own people.

In short, there is a formalistic but nonetheless important difference between a government which raises taxes, diminishes benefits or otherwise adjusts policies in order to obtain and/or repay a loan and a government which becomes a mere transparency for takings by foreign entities who, under but the thinnest of tissues, reach directly into citizens' pockets to rifle change.  In the former case, a government itself is the borrower and its treasury is the collateral. It  still retains ultimate control over its own house, even if that control is influenced from outside.  In the latter case, the nation no longer  controls natural or corporate persons within its operating system,  rather global corporations use subsidiary states as mere user-interfaces for their direct plunder and control of citizens.  That is why the German newspaper, Handelsblatt, wrote that "Cyprus sets a precedent."  The precedent is that national governments no longer count. 

The year 2013 will be as significant as 476 A.D. when the last western Roman Emperor was replaced by the Goth chieftain, Odoacer.  For 100 years, the western half of the Roman Empire had been ruled, in actual fact, by various Barbarian chieftains, acting in the name of the Roman Emperor. The "abdication" of Romulus Augustulus, did not substantially change anything.  But the cat was out of the bag and it could no longer be said that the empire called "Rome" existed.  Consciousness had been forever altered.

Day by day, governments around the world are increasingly like the later Roman emperors, tending chickens in their palace gardens and stupidly putting their ring to whatever is placed before their noses by the real rulers of the world. Last week, even the pretence of sovereignty was dispensed with.  It is a matter of short time before national sovereignty becomes a distant memory at which point it will be impossible to commit treason.


[1] http://noelmaurer.typepad.com/aab/2008/05/the-barber-of-b.html