Pirates in Crisis
By Israel Shamir
(A lecture on Economics delivered at
Rhodes Forum on October 9, 2011)
The crisis peaking in Britain is of a
Caribbean-sea-pirate type: long time no trophies, while
lifestyle has to be maintained. Neoliberal policies have
undermined the toughest folk on earth, hard-working,
prudent, obedient, stiff-upper-lipped red-faced Brits,
the people who managed India, burned down the White
House and withstood Hitler. Their backbone – Yorkshire
miners and Sheffield steel workers – was broken by their
Golders Green grocer-at-large, a.k.a. the Iron Lady. She
folded down the industries, and turned the Isles into a
Tortuga-like pirate paradise, a place for financiers to
relax, unwind and plan their raids.
England has become the most godless
society in the world. Buses with the logo “There is no
God” cruise London. In the Globe theatre, Mysteries are
staged, purported to be revivals of Tony Harrison’s 1977
production based on medieval British plays but, in
direct opposition to the previous production and to the
old original, it is overtly anti-Christian. Instead of
the Jewish high priest and his coterie, the evil guys
are … Christian priests in full dress. The Holy Virgin
is presented as a young coloured tart in a short dress.
Not a single voice of protest has sounded in England.
But you can be sure that if director Deborah Bruce had
put rabbis back into the place of the priests, we'd have
never heard the end of it.
England is home to al Fayed and
Abramovich and to millions of immigrants imported to
service them. The English provided financial services,
ran security companies, charged a lot for education. The
country went upmarket, and lost its productive base,
just as the tulip-adoring Dutch did in 17th
century. Now, if they do not rob, they have nothing to
live off of. They need to fleece foreigners just to make
Now they are being hit by a Crisis of
Confidence. Not only do ordinary people feel they have
been cheated once too many, but the powerful and rich
outsiders share the feeling, which is particularly
strong in Russia and other post-Soviet states, in the
oil-producing states, in countries with national
industries. This feeling has been translated into
Hugo Chavez has
demanded his physical gold back;
Vladimir Putin has
declared his candidacy for the post of President;
Minister Alexei Kudrin, the main proponent of Russian
Sovereign Wealth Fund, has been fired.
Russia has decided to
dramatically increase military spending; this is fallout
from the Libya War.
The fate of Qaddafi hovers like
worrying Hamlet’s father’s spirit over many presidential
and managerial desks. The Libyan leader amassed quite a
fortune, some for himself and his family, some for his
nation, placed it in various banks, funds and shelters,
and it turns out that instead of greenbacks he could
have amassed so many beautiful reddish maple leaves with
greater satisfaction and safety. With a wave of their
hands, the US and its allies froze the assets and later
stole them. Some assets were given to arbitrarily chosen
a.k.a. “Benghazi rebels”, some
were used to pay for the
dog food that was airlifted to Tripoli to feed
people made destitute by the NATO strikes.
This was the biggest robbery of a
sovereign state ever, and the biggest robbery of private
fortunes as well. And it taught many nasty and greedy
people a lesson in Gospel truth: Do not lay up for
yourselves treasures on earth, where thieves break in
and steal. These people thought that they could find a
safe refuge from despotic rulers, rebellious masses and
ordinary robbers by placing their wealth in the
safekeeping of the Swiss gnomes or some other civilised
environment. Now they've learned that electronic money
in Cayman Islands is no safer than the folded 20-dollar
bills under your mattress. What a shock!
Why does this cause a crisis? The
corrupt officials and wealthy tycoons of the outer
world, that is, outside of the US and Western Europe,
are the powerful secret weapon of capitalism. When
capitalism was on the verge of collapse, this doomsday
weapon was used, the tables were turned upon socialism,
and the USSR collapsed. Its wealth was stolen by these
men and women, and delivered to the Western banks, to
power another twenty years of luxury for bankers.
Since then, the officials and tycoons
have functioned like bees, busily collecting the sweet
sweat of the ordinary citizens’ brow. They siphon their
takings into overseas banks - beehives, thinking it is
safe. The West has encouraged them to think this way.
They have spread rumours that Putin and Lukashenko have
put away billions into Western banks for a rainy day.
Their media have told stories of oligarchs who were able
to escape to their riches when they fell from grace.
Many silly and corrupt officials and greedy businessmen
believed it and kept collecting honey.
This honey collection is the
best-guarded secret of capitalist superiority. It is
based of human weakness. Drug mafias do the same: they
produce and sell drugs and extract money to keep in the
banks. This works instead of savings, and even better.
When economists bewail low rate of savings in the US,
they forget to count savings executed via drug cartels.
This was one of the reasons of the US ten years stay in
Afghanistan: the drugs fuel banking system.
Privatisation is another great tool:
the privatised properties feed so many derivatives
produced by the bankers. The privatisers need the banks,
and to the banks they take their profits. In the
post-soviet space, the officials charge their commission
in the form of bribes, and these moneys also go to the
Thus, the corrupt officials,
businessmen and drug barons perform an important
function for the world financial system: the Western
bankers did not have to go to remote Russian town or
Indian village to squeeze a few roubles or rupees from a
worker. The bees bring honey to the beehive.
With the robbery of Libya, even the
silliest and most corrupt official in Russia or
Kazakhstan has discovered what bees painfully learn,
too. When beehives are full of honey,
the beekeeper smokes the bees away and collects the
product. The bees may have planned to use it for their
retirement or for home improvement, but they sadly
discover that humans have other plans for their honey.
The first wave of Crisis 2008 was the beginning of a
smoking-out operation; the Libya campaign is the second
stage showing what can be done to crisis-resistant bees.
Given the total information superiority of the Masters
of Discourse, such robbery can be justified at any time.
Russian wealthy men suspected they couldn’t just salt
away a billon and run to Bahamas. I have heard about the
men who tried: when they came to collect, they were told
that their visa had expired, that they would have to
produce proof it was honestly earned, or that it was
gone for some good reason.
Two countries catered to the runaways: Britain and
Israel. The Jewish billionaires who run to Israel were
duly fleeced by the Jewish state. Nevzlin had to
contribute half of his wealth to some doubtful Israeli
enterprises; Gaydamak was ruined almost to the point of
bankruptcy. Gusinsky was run from jail to jail and was
ripped off by established Israeli families. Britain
provides refuge for the runaway oligarchs and shields
them from criminal investigation. It fleeces them well:
the fabulous billions of Boris Berezovsky were shrunk
down to a few million. But the rest still hoped that
they would be allowed to keep some of their illegal
gains in the comfort of the West if they abide by
Washington’s orders. Now this hope, too, is fading away.
The bees do not deliver honey anymore. There are more
ways of getting honey. The Western banks and states
promoted their loans and they allowed the recipient
politicians to steal the loans,
as Perkins has
explained. But now this method is less popular, as
the odds of successfully stashing stolen goods have gone
down considerably. Much hated in the West Vladimir
Putin, the past and future president of Russia, paid off
all Russia’s debts at first occasion, while another
hated “dictator”, Lukashenko, also refused IMF loans.
Then, there are the
sovereign wealth funds. The oil-producing countries
usually keep a big part of their earnings in the US and
the UK. These funds are held hostage to the good
behaviour of the producer. Iran lost its funds after
embracing an Islamic regime. Some Russians consider it a
form of tribute their country pays to their vanquisher
in the Cold War. They even connect Breivik’s attack to
Norway’s plan to repatriate its SWF, a plan that is
anathema to the US. There is no practical reason for
Russia to keep its money invested in US funds for very
low interest while Russian industries pay high interest
on such borrowed money. And as we know, these funds may
be frozen or seized any moment. They can also disappear
as a result of imprudent investment as once happened to
Swedish and Norwegian pension funds.
For 11 years, Alexei Kudrin was
finance minister of the Russian Federation. He was the
most vocal and influential proponent of the US-held
funds among Russian officials, and he was duly applauded
as a prudent and excellent financier. A few days ago he
expressed his dissatisfaction with President Medvedev’s
plan to increase military spending dramatically. He was
sacked right away. This was quite a shock for the man
who considered himself a cut above; it was a shock for
The Wikileaks cables reveal that
Kudrin was considered by the US Embassy the “most
transparent and realistic senior GOR interlocutor on
economic issues. He has also been the most
forward-leaning in seeking economic cooperation with the
U.S. and other western countries”. Among Russian
officials, some find him "irritating" and accuse him of
treason, say the cables. Kudrin supported a soft line in
foreign policy and opposed the line represented by
Putin’s Munich speech. At the peak of the 2008 crisis,
he gave money to the banks and completely stopped
government spending for six months. Incidentally, Kudrin
was never charged with huge fraud and theft of so-called
Kuwait and Algeria Debts Affairs, though his deputy has
spent a few months in jail. This neo-liberal,
monetarist, pro-western figure at the key position was
lost to the West within a few weeks of the fall of
Tripoli. And that bodes ill for the western
beneficiaries of the Russian SWF, whether it is
repatriated or allowed to wither.
This is the reason for the crisis.
Even the bad guys have lost confidence in the system.
The collapse of the USSR postponed the crisis that was
long overdue. So much wealth was taken out of the
dismembered chunk of the USSR! The successor-countries
were robbed, and their robbed goods used to subsidise a
better life of the West. The bankers and financiers got
used to living well while controlling the streams of
cash and assets. But they forgot an important rule of
beekeepers: leave some honey in the hive, otherwise the
bees will not bring more product. They ripped off too
much, from too many people, and now the people have lost
whatever confidence they had in the system.
Edited by Ken Freeland