British state suffers setbacks in its war on migrants

Fight Racism! Fight Imperialism! 240 August/September 2014

Since passing the Immigration Act in May, state attacks on migrants have suffered a number of significant setbacks. Although limited, they demonstrate that resistance is possible.

In June the Home Office launched Operation Centurion, a high-profile campaign of immigration raids on businesses and homes. Documents leaked to the Anti-Raids Network exposed Home Office claims that the operation was ‘intelligence-led’ as nothing more than racial profiling: targets included ‘Vietnamese nail bars in the Manchester area’, Nigerian security guards in Sussex, and phone stalls in the North of Ireland. Networks of activists across Britain and the North of Ireland mobilised to warn as many as possible of those being targeted, and to inform people of their rights. Reports suggest the operation resulted in only 20 arrests, and the Home Office was unable to claim it as a victory.

Read more...

Imperialists responsible for South Sudan collapse

Fight Racism! Fight Imperialism! 240 August/September 2014

In July 2014, South Sudan’s elites ‘celebrated’ the third anniversary of the world’s newest nation. However, a civil war that began last December has displaced 1.5 million people (a third are children) out of a total population of over 9 million; a predicted famine as early as August 2014 looms which could affect 4 million people; nearly 400,000 refugees have fled to neighbouring countries; the UN states that 5 million people desperately need humanitarian assistance. There exists a scarcity of basic goods, hyperinflation, outbreaks of preventable diseases such as cholera, mass hunger and homelessness. Several of South Sudan’s largest towns are deserted with homes, churches, medical facilities (patients shot in their beds, wards burned down) and even UN bases attacked, looted or destroyed. There is nothing in this catastrophe for the majority of South Sudanese people to ‘celebrate’.

South Sudan seceded from Sudan in 2011, with Britain and the US orchestrating events from behind the scenes, as part of their balkanisation strategy for regime change in Sudan. The imperialists unwisely plan to divide Sudan into north, south and west (Darfur). Britain plans a long-term military presence in South Sudan which BP estimates holds sub-Saharan Africa’s third biggest oil reserves. The imperialists fear being squeezed out of opportunities for exploitation in the region and intended that South Sudan would be another client state in an East African reactionary bloc with Uganda, Kenya and Rwanda, geared up to help imperialism exploit strategic resources to the exclusion of China.

South Sudan’s crude oil production (98% of government revenue) is predicted to fall to 100,000 bpd (from 350,000 bpd in 2011) in a decade; production has already halved due to fighting. Additionally, problems which preceded independence persist with no solution in sight: since South Sudan gained autonomy from Sudan in 2005, there have been brutal clashes between the army (SPLA) and various militia groups (backed by powerful but sidelined military elites), as well as brutal violence between various ethnic communities, resulting in large-scale displacement and thousands of civilian deaths ignored by the ‘free press’. A third of oil revenues from 2005-2011 were embezzled. These crimes have never been satisfactorily investigated, nor have perpetrators been held to account by the South Sudanese authorities. Imperialist interests meant that these issues, and unresolved disputes with Sudan (border demarcation, oil-wealth sharing and the disputed Abyei region) were ignored in the rush for ‘independence’.

In January and May, the imperialists forced president Salva Kiir and his erstwhile deputy Riek Machar on pain of arrest to sign phony ceasefire or peace agreements (ignored by both sides), to maintain a facade of control rather than looking to solve chronic, deep-seated problems. Seemingly interminable ethnic strife, a divided army, poor socio-economic prospects (almost half the 2013/14 budget was used to pay back bank loans), and the loss of life means South Sudan is considered a failed state.

The imperialists’ plans are in tatters – Sudan has lost 80% of its oil and been forced to develop its agrarian economy. They hoped Sudan would collapse following the south’s secession; this hasn’t happened. Rather, with established infrastructure and an understanding of its internal politics, Sudan may now be South Sudan’s only hope. South Sudan’s corrupt elite and the imperialists are responsible for the country’s near collapse. Britain and the US used people’s genuine desires for freedom from poverty and oppression to balkanise the country. It’s time Britain and the US stopped interfering in the two Sudans’ internal affairs.

Charles Chinweizu

First World War - Ominous portents for today/ FRFI 240 Aug/Sep 2014

Fight Racism! Fight Imperialism! 240 August/September 2014

One hundred years ago, Austria declared war on Serbia on 28 July 1914. The following day the British Grand Fleet sailed to war stations in the North Sea. The slide to war was rapid; Russia mobilised its armed forces on 31 July, Germany and France mobilised on 1 August. Britain declared war on 4 August. The first imperialist world war had been long in preparation. Over 70 million military combatants fought. Leading the Allies were Britain, France, Russia, Italy, Japan, Serbia and, from 1917, the United States. Against them were the Central Powers including Germany, Austria-Hungary, the Ottoman Empire and Bulgaria. Nearly ten million combatants were killed, 21 million wounded and eight million went missing. Barbarism, the age of mass murder, was upon us. The same forces that drove humanity into the conflagration of 1914-18 drove us into the Second World War and impel humanity towards Armageddon today. Trevor Rayne reports.

The First World War introduced tank, submarine and air warfare and widespread use of chemical weapons. It elevated the importance of oil supplies. The Turkish genocide of some 1.5 million Armenians was a precursor to the Nazi holocaust of the Jewish people. Theatres of war included the Western Front (Belgium, north eastern France, Alsace-Lorraine), the Eastern Front from the Baltic to the Black Sea, the Middle East, Africa, Asia and the Pacific. This was a war between the major capitalist powers to redivide the world. Amidst the carnage, the 1916 Easter Rising in Ireland stood out and the 1917 Bolshevik Revolution was launched in Russia. As Lenin explained, imperialism ushers in an era of wars and revolutions. The threat of revolution accompanied the German delegation when it signed the armistice on the 11 November 1918.

Partitioning the world

In 1899 British colonial possessions covered 11.6m square miles with 345 million people, a fifth of the world’s population. The division of the world between the major capitalist powers had been achieved by 1900, but it had been done on the relative strengths of European powers in the mid-19th century, when British capitalism was unrivalled. This no longer corresponded to the realities of the early 20th century with Germany and the US ascendant. Between 1870 and1874 British iron and steel production was triple that of the US and Germany, but by 1913 both US and German outputs were greater than Britain’s. British industry was in relative decline compared to the US and Germany. From 1900 to 1914 Germany’s share of trade rose at the expense of Britain in the Balkans, South America, the Ottoman Empire and even in the British Empire itself.

British capitalism depended upon overseas markets for its goods and investments. ‘In 1913 Britain was the only nation whose economic interests were global and the only one whose status as a great power rested upon world-wide commitments.’1 Between 1909 and 1911 65% of British exports went outside Europe and 55% of imports came from outside Europe. The proportion for German exports was 25%. The basis of the strength of the British ruling class was also its vulnerability – it felt challenged by German industry’s encroachment.

By 1900 total British investment abroad was £2bn, yielding an annual income of £100m, compared to a British GDP of £1.85bn. By 1914 both capital invested abroad and income had doubled. Interest on these investments, paid mainly in food and raw materials, far exceeded the profit derived from foreign trade in goods. Export of capital as loans and investments was linked directly to territorial expansion. ‘Britain became, to an ever-increasing extent, a parasitic usurer state and the interests of the bondholders became the determining factor in her foreign politics.’2

Britain’s predominant global position before 1914 depended on trade, overseas investments and the role of the City of London in world finances. These required British naval supremacy. In 1889 the British government adopted the Two Power Standard; to maintain a navy of greater strength than the combined forces of the next two largest naval powers. In 1883 ‘the number of British battleships almost equalled the total of all the other powers combined (38 to 40); by 1897 this comfortable ratio had shrivelled away (62 to 96).’3 German naval construction accelerated from before 1900. The British ruling class saw the growth of the German fleet as a threat – the greatest threat since Napoleon a century before. They were determined to prevent any single power dominating Europe. The Daily Mail encouraged an invasion scare, helping to boost the naval budget and prepare people psychologically for war.

Lenin and imperialism

Building on the work of Marx and Engels and the later Marxists Hilferding and Bukharin, Bolshevik leader Lenin analysed the tendency of capitalism towards monopoly, overseas investment and war: imperialism. A series of economic crises between 1870 and 1900 resulted in the concentration of capital and fusion of large scale industry and banking capital to create monopoly capital. These monopolies dominated economic life and generated a financial oligarchy commanding power in capitalist societies. The export of capital, distinct from the export of commodities, became particularly important as capital searched for profitable outlets for investment. International monopoly combines divided up the world. As different combinations of monopolies competed, so they would redivide the world. This process drove the world towards war.4

Lenin’s analysis was conducted against that of the leading Marxist of his time, the German Karl Kautsky, who believed that militarism and keeping the colonies was becoming too costly for capitalism and that a peaceful division of world was possible in an ‘ultra-imperialism’ – an alliance of imperialists. These conflicting analyses had profound consequences for the working classes of Europe and Russia. Any expansion of German capital abroad could only be at the expense of British imperialism; conflict was inevitable. At the war’s outset Kautsky claimed that Germany was fighting a defensive war against Tsarist Russia.

Two days before the start of war, Labour Party leaders Keir Hardie and Arthur Henderson, addressing crowds in Trafalgar Square, called for opposition to the war. By the end of August the Labour Party and TUC called for an end to ‘all existing disputes’ with the bosses; a manifesto issued by Labour’s leadership proclaimed that a German victory ‘would mean the death of democracy in Europe’.5 Of all the European socialist parties only the Bolsheviks and Serbian revolutionaries carried on a struggle against war on anti-imperialist lines. Elsewhere, revolutionary opposition was limited to Rosa Luxemburg and Karl Liebknecht in Germany, James Connolly in Ireland, John Maclean in Scotland and Sylvia Pankhurst in England.

A tangle of secret treaties

Confronted with growing German power, Britain established strategic agreements. Germany planned to build a Berlin to Baghdad railway via Serbia and Constantinople (Istanbul). This would threaten Russian access to the Mediterranean from Crimea and the Black Sea and its influence in Persia (Iran) and could challenge British rule in India. The Anglo-Russian entente was signed in 1907. Also in 1907, Britain and Russia agreed to divide Persia into three parts to keep Germany out. As early as 1905 Britain secretly agreed to militarily support France; this was unknown even to some members of the cabinet. There followed an equally secret Naval Agreement, whereby the French fleet would concentrate on the Mediterranean and the Royal Navy on the North Sea.

The globe was entangled in a series of treaties between the major powers: France accepted Britain’s hegemony in Egypt and in return Britain accepted French predominance in Morocco; Germany reorganised the Turkish army; France would not allow Russia to fight alone if attacked and Britain pledged to defend northeast France in the event of war. The assassination of Austria-Hungary’s Archduke Ferdinand by the Serbian nationalist Gavrilo Princip on 28 June 1914 took place in a conjunction of alliances between major powers and their proxies that swiftly configured into world war.

Slaughter

The horrors of the three years of siege warfare on the Western Front claimed almost a fifth of French men of military service age. Britain lost half a million men under 30 years and 800,000 in all. A quarter of Oxford and Cambridge students under 25 who joined the British Army were killed. The Battle of Verdun, February-July 1916, pitched two million people against each other, producing one million casualties. The Battle of the Somme in 1916 cost 420,000 British dead; 60,000 on the first day – wave after wave of futile attempts to break through enemy lines in battle after unsuccessful battle.

On the Eastern Front the closure of the Baltic and Black Sea prevented Britain from supplying significant war materials to Russia. The key was seen as the Turkish Dardanelles; if they could be captured by the Allies, Turkey could be forced out of the war and arms sent to Russia in exchange for wheat from Ukraine. Allied troops, including many Australians, New Zealanders and Indians, landed at Gallipoli on 25 April 1915. They held on to territory for months but the Turkish forces were too strong for them. The Russian Tsarist government refused to cooperate with the Allies, wanting to occupy Constantinople itself, suspicious that a victorious Britain would take the city. 252,000 Allied troops were killed and wounded; Turkey suffered similar losses.

In the Atlantic, submarine warfare claimed a growing toll on shipping. In January 1917 368,000 tons of shipping were lost and in February Germany announced that all shipping, neutral or not, could be attacked without warning. This provided the official reason for the US entering the war. More importantly, the US had advanced massive credits to the Allies and if Germany won those debts would not be repaid. The US declared war on 6 April 1917. By mid-1918 300,000 US troops were arriving at the Western Front each month.

The spoils of war

In the Middle East the Allies promised sovereignty to win the Arab peoples to their side against the Ottomans. Unbeknownst to the Arabs until the victorious Bolsheviks revealed the documents, Britain and France had signed the secret 1916 Sykes-Picot agreement, with Tsarist Russian assent, which proposed dividing up the Ottoman Empire’s Arab provinces between British and French spheres of influence with Russia to get Constantinople, the Turkish straits and the Armenian vilayets. Borders were imposed on the Middle East without reference to the wishes of its people. A century later we are seeing them dissolved in blood.

In November 1917 the British Foreign Secretary issued the Balfour Declaration, ‘His Majesty’s government view with favour the establishment in Palestine of a national home for the Jewish people…’ Among British considerations was the desire to win support from Zionists in the US and Germany and to keep Russia in the war; some leading Bolsheviks were Jewish. The Balfour Declaration was incorporated into the 1920 Treaty of Sevres with the Ottoman Empire (which promised the Kurds a state, a promise soon broken) and the British Mandate for Palestine. The Zionist monster of Israel was conceived in London.

The Bolshevik Revolution

Following the overthrow of the Tsar in February 1917 thousands of Russian soldiers left the Eastern Front for home. With their slogans ‘Bread, Peace, Land’ and ‘All power to the Soviets’ the Bolsheviks grew from a few thousand members in March 1917 to a quarter of a million by the summer. With the October Revolution, the Bolsheviks in government appealed to all powers for peace without annexations or indemnities. This was hidden from the European masses. The Bolsheviks negotiated a separate peace with Germany at Brest-Litovsk in March 1918.

The Bolshevik Revolution inspired desertions from the French army and a general strike of over a million workers in Germany in January 1918. In early November 1918 sailors at Kiel refused to sail and set up soviets in German ports. They dispatched representatives across Germany. Liebknecht was leading a growing resistance in Berlin. The Kaiser abdicated on 9 November. The armistice was signed at 11am on 11 November 1918.

It would take another world war for Britain to be replaced by the US as the dominant capitalist power and for the issues that provoked the First World War to be temporarily resolved. In the decades that followed, as the imperialists pursued their interests, the Soviet Union was to play a vital role in defeating fascism and defending the possibility of progress.    

1. PJ Cain and AG Hopkins, British Imperialism reviewed by D Yaffe, FRFI 114, August/September 1993.

2. AL Morton, A People’s History of England.

3. P Kennedy, The Rise and Fall of British Naval Mastery.

4. VI Lenin, Imperialism the Highest Stage of Capitalism.

5. R Clough, Labour: A party fit for imperialism

BRICS summit creates New Development Bank, challenges US and EU economic domination

At the 6th BRICS summit held on 15-16 July 2014 in Fortaleza, Brazil, the BRICS countries (Brazil, Russia, India, China and South Africa) announced the creation of a New Development Bank and multilateral reserve fund. This is a direct alternative to the dominance of the International Monetary Fund (IMF) and World Bank and represents a significant challenge to the US and EU. The new bank gives countries like Cuba, Venezuela, Ecuador and Bolivia, which are explicitly building and working towards socialism, access to trade, credit and investment without having to accept the dictates of US and EU imperialism.

Read more...

British imperialism – investing in hunger /FRFI! 239 Jun/Jul 2014

Fight Racism! Fight Imperialism! 239 June/July 2014

On 22 April 2014 the Economist Intelligence Unit issued grim news: food security has fallen in almost 70% of countries since the beginning of the year, as the global price of grains, sugar and other farm commodities rose at their fastest pace in 18 months. Food prices have doubled on average since 2000 and keep some 842.3 million people – 12% of the world’s population – in a state of perpetual undernourishment. Misery for the many is good business for the few, and the prospect of easy money is encouraging a new wave of land grabs by British companies, with the enthusiastic support of Britain’s Department for International Development (DfID).

Conquering ‘the last frontier’

Containing more than half the world’s uncultivated but agriculturally suitable land, the World Bank described Africa as ‘the last frontier in global food and agricultural markets’. It has become a target for international land grabs, with at least 56m hectares of land snapped up by foreign investors since 2001 – an area almost the size of Kenya. Britain, as the fourth largest investor in African land, is leading in the process, leasing over 1.2m hectares in 16 African countries – the result of no fewer than 47 deals between British companies and foreign states since 2000. These figures, recording only publicised deals involving units of land above 200 hectares, understate Britain’s role in a notoriously secretive business; nor do they account for British investments in deals spearheaded by non-British investors, such as the palm oil plantations in Liberia acquired by the Malaysian conglomerate Sime Darby. Vast tracts of land are removed from African farmers and placed in the hands of British profiteers; in Sierra Leone, where almost one in three people is undernourished, at least 1.1m hectares of farmland have been converted into cash crop plantations controlled by foreign investors – over half of whom are British.

These investors have a firm ally in the British state, providing extensive political and financial support for agricultural projects in Africa. Between 2008 and 2011 Britain provided £7m in support for the Alliance for Green Revolution in Africa (AGRA), an initiative established by the Rockefeller and Bill and Melinda Gates foundations, seeking to integrate African farmers into global input supply chains by encouraging the use of high-yield fertilisers, pesticides and hybrid seeds produced by multinationals like DuPont and Monsanto. These inputs, which must be purchased annually, are financed by loans whose repayment depends on regular – and unsustainable – high yields; farmers are made reliant on monopoly suppliers and trapped in debt. The implications were summarised by Zitto Kabwe, chairman of the Tanzanian Parliament’s Public Accounts Committee, ‘By introducing this market, [small] farmers will have to depend on imported seeds... It will be like colonialism. Farmers will not be able to farm until they import, linking farmers to [the] vulnerability of international prices. Big companies will benefit. We should not allow that’.

Britain has provided £600m to the G8 New Alliance for Food Security and Nutrition, a ten-year partnership uniting G8 countries, African governments, the World Bank and multinational corporations behind investments of at least $3bn in selected African countries. To receive investments African governments must reform their policies on trade, land, seed and agrochemical market regulation to serve foreign capital; Ethiopia has accordingly committed to remove regulations forcing foreign investors to acquire business licences; Tanzania pledges to remove trade rules protecting local peasant farmers. African countries are also encouraged to ring-fence land for foreign investment; Malawi has pledged some 200,000 hectares of prime land by 2015, while Ghana aims to make 10,000 hectares available.

British state and corporate collaboration is blatant. In November 2013 International Development Secretary Justine Greening visited Tanzania with representatives from British firms – including Unilever, Diageo and SAB Miller – to discuss plans to ‘accelerate’ private agricultural investments. The collusion runs far deeper, with state funds indirectly channelled into British companies via the DfID, which has supported a Kenyan tea project benefiting Lipton and a barley-substitution project in Cameroon supporting Diageo. The Department is promoting land grabs in Tanzania via a £38m grant to the Big Results Now project, offering 350,000 hectares of land for commercial sugar cane and rice production to foreign investors; in Ethiopia it has pledged £795m to the World Bank’s Protection of Basic Services programme, financing the authorities involved in violently displacing 260,000 people occupying 375,000 hectares of land earmarked for foreign agri-business plantations in the Lower Omo Valley.

Resisting the robber barons

African governments have been keen to collaborate with British land-grabbers, but thousands displaced by them have not given up without a fight. In 2012 the British company Equatorial Palm Oil (EPO) expanded its plantations onto 200,000 hectares occupied by 7,000 members of the Jogbahn clan in Liberia. The clan was not consulted nor did it consent to this; responding to their refusal to leave the land, EPO security officers and the elite Liberian Police Support Unit were drafted in to assault and arrest clan members. The resistance did not stop, forcing President Ellen Johnson Sirleaf to intervene saying that EPO could not claim the land – an impressive feat in a country where more than 50% of land has been handed over to corporations. However, EPO is still preparing to clear the land.

Blaming the poor

Fuelling Britain’s rush for African land are expectations of growing profits stimulated by rising prices of agricultural outputs, principally food and biofuels – business profits will grow, driving more African farmers and peasants into poverty and hunger. Into this world of increasing hunger the British ruling class re-invokes the spectre of Parson Malthus. In July 2013 Penguin Books published 10 Billion, a doom-mongering paperback by Dr Stephen Emmott, ex-scientific adviser to the British Chancellor, predicting chaos as food supplies dwindle alongside a growing population; it became a bestseller, although rebuked by several scientists for poor research and misrepresented evidence. His words were echoed by Sir David Attenborough, who argued that the Ethiopian famine was caused by ‘too many people for a too little piece of land’. This is as ridiculous as it is racist; the world already produces enough food to feed 12 billion people – almost 1.7 times current global population. Yet, as prices soar, food remains out of the hands of the poorest: between 1991 and 2011 food production in sub-Saharan Africa grew by almost 20%, yet the number of undernourished people grew by 40%. The problem is not demographic, but economic, and demands a political solution – an end to the imperialist profiteers.

Jack Edwards

The collapse of CAR and South Sudan

Fight Racism! Fight Imperialism! 237 February/March 2014

Continued instability in the Middle East and the putative threat from emerging powers have forced imperialism to increase its military presence in Africa, to ensure control of a continent rich in strategic raw materials. Britain’s Chief of the Defence Staff, General Sir Nicholas Houghton, says that after Afghanistan emphasis will ‘certainly’ shift to ‘conflict prevention in Africa’. France’s Finance Minister, Pierre Moscovici, said that ‘French companies...must go on the offensive and fight’ the presence of China. France remains a major player in economic and military terms, with recent interventions in several African states, as CHARLES CHINWEIZU reports.

Read more...

When corporations rule the world

Fight Racism! Fight Imperialism! 237 February/March 2014

Multinational corporations intend to enforce their will as law. Sovereign states and democratically elected legislatures will be little more than empty phrases if the US-European Union Transatlantic Trade and Investment Partnership (TTIP), and the Trans-Pacific Partnership (TPP) between the US and 11 other countries, are brought into force. These partnerships are vehicles through which multinational companies will remove health and safety protection, end environmental safeguards, abolish legislation providing minimum conditions for labour, scrap food safety laws, abandon efforts to slow climate change, stop campaigns against fracking and forbid attempts to rescue the National Health Service from the predations of private companies – indeed, sweep away any barrier to the unfettered pursuit of maximum profits. If you are unaware of these proposed partnerships that is deliberate because it is intended that the public remains ignorant until they are signed. TREVOR RAYNE reports.

Read more...

Economic recovery on rotten foundations

Fight Racism! Fight Imperialism! 237 February/March 2014

Immediately after the preliminary growth figures for the last quarter of 2013 had been released, Tory Chancellor George Osborne smugly announced that ‘our long-term plan is delivering a brighter economic future.’ The British economy grew 1.9% in 2013, the fastest rate since 2007. The Tories were jubilant, impervious to the Labour Party’s fake concerns about a cost of living crisis hitting the vast majority of workers throughout the country. All the main political parties are steadfastly committed to neo-liberal austerity programmes to slash public spending and cut the public sector deficit. They differ only in the opportunist slant they give to their reactionary policies. DAVID YAFFE reports.

Read more...

Global economic recovery falters / FRFI 236 Dec 2013/Jan 2014

Fight Racism! Fight Imperialism! 236 December 2013/January 2014

Much as politicians try to put an optimistic gloss on the economic recovery from what is now called the Great Recession of 2007-08, they come up against the harsh reality of faltering growth and chronically weak demand, despite near zero interest rates in the dominant capitalist countries. This was driven home by none other than Larry Summers, former top economic adviser to US President Obama, in a speech to the IMF annual research conference on 8 November. There he spoke of the possibility of ‘secular stagnation’ in the major capitalist countries, a near permanent low growth deflationary crisis similar to that which Japan endured during the 1990s. David Yaffe reports.

Read more...

China Enter the dragon / FRFI 236 Dec 2013/Jan 2014

Fight Racism! Fight Imperialism! 236 December 2013/January 2014

In October 2013 the Chancellor George Osborne announced that two Chinese state-owned companies would take a 30-40% stake in the £16bn Hinkley Point nuclear power plant to be built in Somerset by France’s EDF. Osborne also said that the British government would make it easier for Chinese banks to operate in the City of London by reducing their capital requirements. US financiers accused Britain of seeking to attract Chinese banks by recklessly removing regulations. To emphasise the welcome being extended to China, visa procedures for Chinese tourists wishing to visit Europe will be simplified. The City and the British government intend to benefit from China’s increasing international presence. Trevor Rayne reports.

Overseas investments

Foreign Direct Investment* (FDI) is a small part of the international flow of capital, however, the stock of Britain’s FDI in 2012 was $1.8 trillion (exceeding that of any other European Union country), that of the US was $5.2 trillion. China’s stock was $0.51 trillion – about half that of the Netherlands. In 2010 the stock of FDI in China was twice that of the stock of Chinese investments abroad. The UK’s flow of FDI overseas in 2006-2011 was $710bn, while that of China combined with Hong Kong was $684bn. The British stock of FDI in the US in 2010 was $497.5bn, but that of China was just $11.6bn. British assets held in the US exceed those of any other country by over $240bn. However, Chinese investment in the US is accelerating with over $12bn invested in the first nine months of 2013, three quarters of this originating from private firms. While China’s overseas investments lag behind those of the US and Britain; the City of London can see change is coming: in 2012 China’s FDI flow reached $87.8bn, making China one of the world’s three biggest overseas investors, behind the US and Japan, but ahead of Britain with $71.4bn.

Africa

‘Africa is China’s success story. Where the Americans bring drones, the Chinese build roads, bridges and dams. What the Chinese want is resources, especially fossil fuels. NATO’s bombing of Libya drove out 30,000 Chinese oil industry workers. More than jihadism or Iran, China is now Washington’s obsession in Africa and beyond. This is a “policy” known as the “pivot to Asia”, whose threat of world war may be as great as any in the modern era.’

John Pilger, Counterpunch, 11-13 October 2013.

Figures provided by AidData state that Chinese official and unofficial investment projects in Africa were worth $260bn between 2000 and 2011. In 2011 China invested some $34.8bn in African projects; this was 43.5% of total FDI in Africa for that year. In 2010 British FDI in Africa was £7.8bn. British companies made a net negative investment in Africa in 2011, withdrawing money. Chinese capital is competing successfully with that of Europe and the US in Africa.

China set up the China–Africa Development Fund and the China–Africa Economic and Trade Cooperation Zone, encouraging Chinese businesses to set up in Africa. Africa has 54 sovereign states and China has invested in 50 of them. China finances more infrastructure projects in Africa than the World Bank. Chinese funded factories have been set up in Ethiopia, Egypt and Nigeria. China’s biggest bank, the Industrial and Commercial Bank of China (ICBC), has joined with Standard Chartered of South Africa to build a coal-fired power station in Botswana.

Given US and European rivalry with China for access to resources in Africa, there are critics of China’s role from within the African bourgeoisie. The governor of the Central Bank of Nigeria, Lamido Sanusi, wrote, ‘So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a new form of imperialism ... China is no longer a fellow under-developed economy – it is the world’s second-biggest, capable of the same forms of exploitation as the west. It is a significant contributor to Africa’s deindustrialisation and underdevelopment...’ (Financial Times, 12 March 2013).

With the US and former European colonial powers currently fighting to control Africa’s territory and resources, deploying their military forces and marshalling local armies, the governor’s comment is misleading. Imperialism is characterised not just by investment abroad but by the use of military force to control territories, populations, resources and markets. British armed forces have intervened in Africa on over 30 separate occasions since the end of the Second World War, the most recent interventions being in Libya, Somalia and Mali. China has not committed its armed forces to battle in Africa, although it did send peacekeeping forces to the UN mission to Darfur.

China’s policy of ‘non-intervention’ in the politics of other countries, not imposing conditions other than commercial ones, in exchange for loans and investments, has provided competition forcing US and European multinational corporations to offer better terms. An Angolan government minister explained, ‘Our relations with China not only allowed us to obtain loans, but most importantly it forced the West to treat us with more respect and in a less patronising way. For that we are grateful.’

Banking

China provides more subsidised loans to Africa than the World Bank. The ICBC is currently working in partnership with Standard Bank of South Africa on over 60 projects in Africa. In 2007 the ICBC bought up 20% of Standard Bank of South Africa and has increased its holding. In 2013, of the world’s ten biggest banks, measured by market value, four are Chinese.

In July 2012 Bank of China director Xiao Gang said, ‘There is good reason to believe that the Chinese economy has reached a point where its status as the biggest country will lead it to become the biggest in outbound direct investment. This new model not only requires Chinese enterprises to expand their global businesses, but also China’s banking sector to accelerate its internationalisation.’ That month the ICBC bought the Bank of East Asia US branch; the first time a Chinese financial institution took control of any US bank. ICBC took over AIG Finance (Hong Kong). ICBC has opened branches in the Middle East, including in Saudi Arabia and Kuwait. It bought Indonesia’s Bank of Halam in 2006. Between 2002 and 2011 Chinese banks completed 38 merger and acquisition deals worth a total of $20.4bn. Standard & Poor’s estimate that Chinese banks currently use just 10% of their assets in overseas operations; they have considerable potential to ‘internationalise’ and threaten their US and British rivals.

The China Exim Bank offers loans in exchange for Chinese access to African resources. An example of a ‘resource for infrastructure swap’ was the Democratic Republic of the Congo’s (DRC) agreement in 2008 to Chinese construction of cobalt and copper mines along with railways, roads, schools, clinics, hospitals and two new universities. The total value reached $6bn, about half the DRC’s GDP; in return China can extract 12m tons of copper and cobalt over 25 years. China has overtaken France to become the second largest lender to Kenya after Japan. Kenya’s debt to China rose by 50% to $750m to the year ended June 2013. Kenya’s debt to Britain, the US, Netherlands and Italy remained at less than $100m each. Chinese loans are offered at favourable rates over long repayment periods.

Oil and gas

In 2012, of the world’s 25 biggest oil and gas companies measured by output, two are British and Anglo-Dutch (BP and Shell) and two are Chinese. China buys almost half its oil from the Middle East and about a third from Africa. China is Iran’s biggest oil customer and is set to become Iraq’s in 2014. Chinese oil imports from Saudi Arabia almost match those of the US. China has overtaken the US as the world’s biggest oil importer and consequently it is vulnerable to oil price rises and to US and European closure of its fuel supplies – the imperialist aggression in the Middle East and scramble for Africa threatens China. Will China be forced to become more politically involved with the Middle East oil producers to protect its supplies?

Up until 2011 China imported oil from Angola, Sudan, DRC, Equatorial Guinea, Nigeria, Gabon, Algeria, Chad and Libya. Prior to the overthrow of the Gaddafi-led state in Libya, China invested over $20bn in the country. 75 Chinese companies employed over 30,000 staff working on 50 projects including oil services, road and railway construction and house building. China imported 150,000 barrels of oil a day from Libya, one tenth of Libya’s oil exports. These investments and oil supplies have been ended by the US, British and French-led war on the Libyan government and people. Will China see this as a portent of what is to come?

Currency

Chancellor Osborne said that 62% of Chinese renminbi payments outside of China and Hong Kong take place in London; much of this is conducted through the British HSBC and Standard Chartered banks. The renminbi is not a rival to the US dollar. According to the IMF, 62% of all central bank reserves are held in US dollars. The dollar remains the world’s dominant currency, confirming the US role as the world’s leading power. When the US government delayed agreement on a budget in October 2013 the Chinese Xin-Hua news agency called for ‘building a de-Americanised world’, challenging the US dollar’s role. China accounts for 10.4% of the world’s merchandise exports and 9.4% of its imports compared with the US’s 8% of world exports and 12.3% of imports. However, only 10% of Chinese companies’ imports and exports are settled in renminbi. The renminbi accounts for 1.49% of foreign exchange deals, compared to the US dollar 40.1%.

For the renminbi to compete with the US dollar internationally would require China to liberalise its capital controls so that Chinese businesses can invest abroad whenever they like. This may follow from decisions taken by the recent Third Plenary Session of the 18th Chinese Communist Party Central Committee. As Mark Carney, Governor of the Bank of England, anticipated, ‘Helping the internationalisation of the renminbi is a global good, consistent with London’s historic role.’

Investing in Britain

Chancellor Osborne’s and Mayor of London Boris Johnson’s trip to China in October was intended to draw Chinese investment to Britain, rather than to other European countries. Chinese investment in Europe has almost doubled in recent years but still accounts for less than 1% of the €3 trillion stock of foreign investment. This is changing fast. ‘Beijing wants to create multinational companies as part of a shift from basic manufacturing to sophisticated, higher margin sectors that will underpin a broader strategy of reshaping the economy towards smooth, more sustainable growth.’ (Jonathan Fenby, Financial Times, 19-20 October 2013). Along with the proposed investment in Hinkley Point, the China Investment Corporation has bought a share of Thames Water and Heathrow airport, Chinese business has invested in BT’s infrastructure, bought the Lloyds building in the City, a business district for development at Manchester airport, MG Rover, black cab maker Manganese Bronze, and Chinese businesses have deals to develop London’s South Bank and the Albert Dock in London’s docklands.

Since 2005 China has invested $17.8bn in Britain but $58bn in Australia. British trade with China amounts to $63bn, with a British deficit of $30bn, while Germany/China trade amounts to $200bn. By kowtowing to China’s banks and easing regulations for them to operate in the City, the government is desperate to preserve the City’s international financial status and to take a larger share of Chinese overseas investments and markets.

A future issue of FRFI will examine the military consequences of the US ‘pivot to Asia’ and growing tensions between Japan and China.

*Foreign Direct Investment (FDI) refers to investment made to acquire a lasting interest in enterprises operating outside the economy of the investor, in order to gain an effective voice in the management of the enterprise. Typical forms of investment are equity capital (shares), reinvestment of earnings and long and short-term loans. An equity stake of 10% or more of ordinary shares or voting power is considered the threshold for control of assets. FDI can be an investment in agriculture, industry or finance, including banks.