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IRAQ:
The Nemesis of Imperialism

by
Frederic F. Clairmont

CITIZENS INTERNATIONAL

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 Published by
Citizens International
22 Taylor Road
11600 Pulau Pinang
Malaysia

2005

Printed by
Jutaprint
2, Solok Sungai Pinang 3
Sungai Pinang
11600 Pulau Pinang
Malaysia

ISBN 983-3302-04-1

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 IRAQ:
The Nemesis of Imperialism

Frederic F. Clairmont

“The colonial invasion of Iraq and the ugliest of lies of the lie
machine that propagated and justified these barbarous acts
will forever remain among the greatest and unpardonable
crimes against humanity.” – Jose Luis Zapatero, Prime Minister
of Spain

A
vastly shrunken, unrepentant and dishonourable Tony
Blair has scraped to power in the shallowest of victories.
But in so doing, he has once again been subjected to
the obloquy of his people, and been exposed to the world,
in the words of one Labour backbencher, as “one of the most
ignominious political swindlers of all time.” These are the
strongest of words that can be used to delineate a squalid
political opportunist who shoved his nation into the cruellest
of wars on grounds that were criminally false.

George W Bush, his co-conspirator, had also won an election,

if it is worthy of being called that, at a price tag of $4bn. A
woefully corrupt administration battered by the advancing
tide of national liberation in Iraq is also floundering in a
military quagmire joined to one of the biggest fiscal and
external payments crises – the notorious twin deficits – that
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have ever afflicted the nation. This will be subsequently
analyzed.

There is yet a third actor that was ‘elected’, or rather selected

by the colonial occupation. The raison d’etre of this puppet
regime in Iraq is not the pursuit of democracy, as its creators
contend, but, as a servant of foreign rule, to execute the
orders of the occupation that shows no signs of tailing off.
Its freedom of manoeuvre is non-existent as it is incarcerated
within the confines of the Green Zone located in the epicentre
of Baghdad, a razor-wired sandbagged purgatory from
which its quislings cannot leave, save under heavily guarded
convoys which almost invariably come under merciless
onslaught by the resistance. Their life expectancy is of short
duration for all must be aware that, as a servant class, they
are dependent on a white alien colonial master whose major
project has never wavered: the conquest of the country’s
energy resources.

A point trenchantly noted by Labour MP Michael Meacher,

former UK environment minister. “The reason they attacked
Iraq is nothing to do with weapons of mass destruction; it
was nothing to do with democracy in Iraq; it was nothing to
do with the human rights abuses of Saddam Hussein. It was
principally, totally and comprehensively to do with oil. This
was about assuming control over the Middle East and over
Iraq, the [world’s] second largest producer …. The connection
is 100%. It is absolutely overwhelming.”1

It’s no accident that the colonial administration has shovelled

a US stooge and convicted big-time racketeer such as Ahmad

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Chalabi (a US citizen) into the job of deputy prime minister.
Like the Shah of Iran, the quisling class realizes that when push
comes to shove, their presence in the imperialist heartlands
is unwanted. The smell of death pervades Baghdad. Winning
“the hearts and minds” of the victims of colonial repression
was once upon a time the invaders’ expressed goal. In the
aftermath of Bush’s declaration of victory more than two years
ago, the colonial occupiers have killed and wounded more
than 165,000, and to that number must be superimposed
the widespread hunger, malnutrition and such pandemics
as tuberculosis and malaria. The days of sickly moralizing
are over.

The occupiers and the common soldiery, caught in the

grip of irreversible demoralization and drug addiction, are
aware that the endgame is fast approaching. The military
and civilian militarists inhabit the same mental universe of
despair. In 1998, Madeleine Albright, then US Secretary of
State, proclaimed: “We are the indispensable nation.” Precisely
the same vile creature who, when asked about the half-a-
million Iraqi children whose lives were obliterated by the
application of the sanctions regime, callously riposted: “We
think the price is worth it.” When dealing with sub-human
species, a verdict of that order demands neither contrition
nor justification.

The war grinds on but Bush and his ghostwriters have not
lost their capacity to stuff mechanisms in their brains to
tell them that the horrors are not horrible. The refrain is
comforting in its simplicity: the enemy is on the run and
victory is just around the corner. But the resistance fighters

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in the national liberation movement with whom I spoke
perceive reality through different prisms. On his part, in his
fire-and-brimstone second inaugural address, Bush conjured
up the image of “lighting a fire in the minds of men” and how
“one day this untamed fire of freedom will reach the darkest
corners of our world.” Whether this cant exalted his acolytes
or sent shivers down the spines of the custodians of “the
outposts of tyranny” I can’t say. What this untutored man
didn’t say, or didn’t know, however, was that his hacks had
plagiarized the imagery from the words of a fire-spouting
nihilist in Dostoevsky’s novel, The Possessed.

The ruling caste oligarchy is living in a world of their

perverted imaginings. Like her master, US Secretary of State
Condoleezza Rice declares, “America and the free world
are once again engaged in a long-term struggle against an
ideology of hatred and tyranny and terror and hopelessness.
We stand with oppressed people on every continent and
we cannot rest until every person living in a fear society
has finally won their freedom. And we must confront these
challenges with the same vision and the same courage and
the same boldness that dominated our post-war period.”
There is no point in sticking her nose into the blood and
gore of the millions in the Third World who were victims
of US genocide since 1945. By the canons of this accursed
logic these holocausts were perpetrated under the cover of
human rights.

She is blind and, as the mouthpiece of her class, she is unable

to face the historical record. Her drivelling, however, is more
than a political utterance. It’s a barefaced blueprint for global

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conquest. Indeed, why not start with the “reconstruction”
needs of colonized Iraq, where reconstruction money has
ended up in the pockets of venal politicians and foreign
corporations? When the Los Angeles Times reported that all
of Bechtel’s allegedly rebuilt water plants had broken down,
it was in fact pinpointing a truth that straddled the entire
spectrum of the so-called reconstruction.

The “outposts of tyranny”, and that’s only for starters, are six
countries.2 Plans have been galvanized to create the Office
of the Coordinator for Reconstruction and Stabilization
located within the State Department and headed by who
Bush calls “one of the liberators” of the Ukraine, Carlos Pascual.
The war in Iraq has not yet ended but plans are afoot to
blueprint “post-conflict” situations for 25 countries to create
“democratic and market-friendly societies”. The hackneyed
claim is pedestrian. In short, imperialism is rooted in the
hegemony of neoliberalism: privatization, deregulation,
uninhibited capital flows. It was David Lloyd George in the
thirties who quipped: “Scratch a Tory and you’ll always find
a Fascist.” At this moment one doesn’t need to scratch a
neo-conservative to grasp the anatomy of American fascism
in its crudest expression. Wendell Wilkie, the US statesman,
summarized this neatly on the eve of the Second World War
when he warned that “if and when Fascism comes to America
it will come under the name of democracy.” For many, this is
a truth that has come to pass.

Meanwhile, the gulf between delusion and reality is daily

becoming more marked. The occupied territories have ceased
to be under the control of the occupiers. Daily life has become

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a deadly lottery. “I would definitely say that Baghdad is enemy
territory,” said Colonel Lanza, a member of the first cavalry
division responsible for patrolling a wide area of Baghdad
with a population of l.3 million. True not only of Baghdad but
of that huge country, almost the size of California.

T
he city of Fallujah will remain forever enshrined in the
pantheon of national liberation struggles. A once
beautiful and model city, the size of Geneva (320,000),
has been reduced to rubble. Hospitals, places of worship,
schools, infirmaries and social centres were obliterated.
Dozens of individuals bled to death because medical
personnel had been forcibly removed from the city. Apache
helicopters, fighter-bombers, napalm, tanks, artillery
and depleted uranium ammunition were flung against
a defenceless people. The US was the only country that
did not ratify the 1980 convention that banned the use
of napalm, a deadly cocktail of polystyrene and jet fuel.
Battling this armada was a resistance with only small arms
and mortars. They were faced with the military elite of the
colonial expeditionary force: the US Marines, the Black Watch,
Ukrainian and Polish mercenaries and others. A city defended
by a handful of resistance fighters who finally were not
defeated or captured but vanished across the Tigris.

The carnage was indiscriminate, galvanized under the

codename of Operation Phantom Fury in November 2004.
Its objective was to wipe out the resistance, once dubbed
terrorists, dead-enders, Saddamite dregs, etc. but now more
courteously but inaccurately re-baptized as insurgents. There
were no reporters except those scribblers who were labelled

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by the occupant as “embedded” journalists. The description
itself reveals the debasement to which the occupation had
sunk. Conspicuously absent were Arab journalists and of
course Al Jazeera, whose activities were long proscribed.

What the occupants or rather some of their more enlightened

elements grasped was that the freedom struggle sprung from
the entrails of the oppressed. This was pithily summarized
by Captain Peter McCulloch of the Black Watch: “The enemy
is everywhere and nowhere. I see children, women and
old men; the young men have vanished. But we know as
the fighting has shown that we are the hated enemy. The
children and the women are no longer afraid. One young
girl in simple English said to me: ‘If I were older and strong
enough I would kill you.’ This was no casual remark for I knew
she would not have batted an eyelid in executing that oath.
How often have we been taunted by young boys and above
all girls? Their pet word is ‘scum’, which hits the bullseye.” In
short, the occupants have ceased to be the object of fear. The
predators have become the object of predation. This marks
a profound psychological shift for it is the bellwether of the
declining fortunes of empire.

The resistance after Fallujah has gone from strength to

strength and their numbers, now estimated by one Pentagon
source at around 200,000, include men, women and children
of all ages and all ideological persuasions.

The military repression was matched by the grimmest of

torture regimes, not seen since the darkest days of the
US occupation of Vietnam. The architects of these crimes,

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whose tentacles ramified into the highest echelons of the
military and political decision-makers, got off scot-free, as to
be expected, while the lower echelons that butchered and
tortured – at least some of them – were scapegoated. This is
how the New York Times put it: “The abuses at Abu Ghraib,
which seemed mind-boggling at the time, turned out to
be symptomatic of the torture, abuse and institutionalized
injustice that have permeated the Bush administration’s
operations in its so-called war against terror. Euphemisms
like rendition, coercive interrogation, sleep adjustment and
waterboarding are now widely understood.”3 The torture
chambers erected during and after the battle for Fallujah and
at Abu Ghraib were test benches of new techniques, as were
those in the concentration camp of Guantanamo.

It was not difficult to surmise the Arab reaction to the carnage

in Fallujah. A 30-year-old US-educated Saudi articulated the
wrath of millions of Arabs and others too as reported in the
Financial Times: “For us the US dream is now a nightmare. We
see what is happening in Iraq on our television screens. The
Americans are killing men, women and children. The Arab
world cannot forget that appalling picture of a worshipper
killed in cold blood in a mosque in Fallujah by a US soldier.
If you preach and practise violence all you get in return is
violence.”

The testimony of Staff Sergeant James Massey before the

Canadian Refugee Status Commission described how he and
his fellow Marines shot and killed more than 30 unarmed
men, women and children, including an Iraqi boy who got
out of his car with his hands up. “We fired at a cyclic rate

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of 500 bullets per vehicle.” “What the Marines were doing
was committing murder.” The repetitive tide of these killer-
confessions has now tragically become banalized. Another
soldier from the 82nd Airborne Division told the Canadian
Commission: “We were told to consider all Arabs as potential
terrorists … and we were stimulated to encourage an attitude
of hatred that gets your blood boiling.”

Recourse to such “blood-boiling” techniques is part of

the warp and woof of imperial exterminism unmasked so
gruesomely in My Lai in 1968. Crimes that were spawned by
the same breed of men. Regarding one of the dozens of such
unpardonable crimes, one conscience-stricken Marine wrote
to his senator, Charles McManus (Republican-Maryland), of
having “heard my men describe with excitement and pleasure
the killing of a young woman with a 50-calibre machine gun,
detailing how they laughed when the woman was knocked
30 feet by the impact. To many Americans, Vietnamese
have long ceased to be people.” In sum, the 347 victims,
mostly women and children, massacred at My Lai were not
“people”. In the idiom of the Nazi ideology they were simply
Untermenschen.

Billions of dollars are now going down the drain in a

desperate last-ditch effort to use “reconstruction” money to
recruit Iraqis to fight Iraqis. A perfunctory look at the daily
television broadcasts reveals the utter bankruptcy of such a
strategy. There is in fact nothing new in this most archaic of
colonial blueprints. General Lattre de Tassigny, commander
of the French Expeditionary Force, had gloated in 1948: “We
shall use Vietnamese to kill Vietnamese.” On 30 April 1975,

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the date that signalled the grand finale of the 30-year-old
colonial genocide in Vietnam, the imbecility of de Tassigny’s
concoction was once again exposed for what it had always
been. The belief that augmenting the numbers of killers
would stem the tide of resistance was smashed. (See the
author’s Dien Bien Phu: A Personal Memoir.)

The stirring words of the victor of Dien Bien Phu, the

legendary Vo Nguyen Giap, to then US Defence Secretary
Robert McNamara are of supreme relevance in compre-
hending the scope of the debacle in Iraq:

“McNamara and his advisers have raised the

number of invaders to around half a million.
What are the consequences? They have vastly
deployed chemical defoliants and other terrible
engines of mass destruction. Certainly, they
will increase the numbers of deaths and impose
additional appalling sufferings on our people. It
will not, however, loosen the grip of our fighters
for freedom. It will enhance it. In the end, our
resistance fighters will triumph.”

Historical parallels are meant to give us a deeper understanding

of the flow of historical forces. There are, however, no carbon
copies in history and this is no less valid for Iraq and Vietnam.
While the dissimilarities are many, of central significance
is that both represent the striving of enslaved colonial
peoples for freedom. The message on the Internet of one of
the leaders of the Iraqi resistance and a veteran of Fallujah
captures the poignancy of the moment with unsurpassable

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power and pathos:

“Over two million innocents died waiting for the

light at the end of a tunnel. It is our duty, as well
as our right, to beat back the occupation whose
nations will be held morally accountable. We did
not cross the oceans to occupy Britain and the
United States. And we are not responsible for
9/11. These are only a few of the horrid lies that
these criminals brandish to cover their true plans
for the pillage of our country’s energy resources.
We thank all those including those in Britain, the
USA and elsewhere who took to the streets to
protest against the war. We do not require arms
or fighters. We have plenty. We are asking you
to form a worldwide front against war, against
sanctions. The enemy is on the run. They have no
place to hide. Like rats, they are being driven into
a corner. They are in fear of the resistance fighters
at every moment of their lives. They can neither
see nor predict. We can now choose when, whom,
where and how to strike. In much the same way
as our ancestors harnessed the first sparks of
civilization, we shall now proceed to redefine the
word ‘conquest’. At present, we are writing a new
chapter in the arts of urban and rural resistance
warfare.”

This noblest of manifestos, I am convinced, is an imperishable

document and will remain one of the most solemn
declarations of human rights that have ever been framed. It is

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the highest affirmation of human freedom. Its quintessential
message is that its faith is anchored in the conviction that the
liquidation of imperialism is a primordial precondition for the
realization of freedom that transcends Iraq.

I
n the following pages, we shall examine how the US
imperial machine is being battered by its own weighty
contradictions and policies. The Himalayan costs of
its war machine, like the nation’s external accounts, have
gone berserk. The $420bn military budget for 2006 has
risen steadily. A number that excludes an additional $89bn
approved by Congress for the pursuit of the Afghan-Iraqi war.
And, obviously, it does not include the astronomical sums for
the 15 spy organizations now corralled under the command of
the empire’s new super-spymaster, John Negroponte, second
viceroy of Iraq. Seen in another grotesque perspective, the
US is shelling out more than the combined arms outlays of
the next 17 countries, unparalleled in the annals of military
history. The “weaponization of space” has begun. According
to Jane’s Defence Industry, the US will spend in 2006 on
defence as much as the rest of the world combined.

The scale of the insanity is boundless, as disclosed in the

Pentagon’s project for “the unbeatable robotic army”. The
Pentagon intends to invest tens of billions of dollars in the
creation of fully automated armed forces with the seemingly
innocuous title “Future Combat System”, which doesn’t
include military expenditures in the occupied countries of
the Middle East. It’s the fattest military contract in American
history. The rationale of this drive is to reinforce its global

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conquests. The marketing show has been launched. In the
words of one of its promoters: “Let me remind you that these
robots don’t get hungry,” waxes General Gordon Johnson of
the Joint Force Command. “They are not afraid. They do not
forget their orders. They don’t care if the guy next to them
has just been shot. They are far cheaper. And, yes, they do a
better job than humans.” This peddler of imperial rectitude
reminds us that these robots born of nanotechnology – the
science of very small structures – may move like humans or
hummingbirds, tractors or tanks, cockroaches or crickets.

The costs of the arms build-up will drive the Defence

Department’s budget to $530bn in 2010. The military debacle
of the US colonial expeditionary force and their string of
satraps in Iraq is inextricably correlated to imperialism’s
febrile financial and productive structures: soaring debt
at all levels, too much money chasing too few profitable
investment outlets, overproduction and excess capacity. It is
an irreversible systemic crisis of capital accumulation that can
no longer be swept under the rug of denial by sanctimonious
mantras of official claims and their echoes in their servile
mediatic lie machine.

The starting point of this brief analysis is the US balance of

payments, specifically the US current account deficit (CAD),
which is the gap between what the nation spends and what it
produces or, in more technical jargon, the combined balances
on trade in goods and services, income and net unilateral
current transfers. It is but one significant facet of the torments
of imperialism. The current account (see graph on page 16),
now veering out of control, has been in the red for more than

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two decades, with the single exception of 1990. Stemming
from the maulings of unstoppable deficits, the empire has
been metamorphosed from a once-robust net international
investor in the 1970s into the world’s biggest debtor. These
chronic deficits have to be financed by net foreign purchases
of US stocks and securities, foreign investment and by
borrowing on international financial markets.

The extent of US indebtedness to the rest of the world is seen

in its net international investment position (NIIP) (see table
on page 17). This has rocketed from _$320bn (1995) and is
slated to scale _$3.7 trillion by the end of 2005, or a compound

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growth rate of 28%. What is no less unmanageable is the US
total debt financing requirements, which stood at $827bn
in 20044 and which have grown yearly at a compound rate
of over 50%. With real short-term interest rates hovering
around zero but set to rise, the honeymoon days of dirt-cheap
borrowing are drawing to a close. What is now ominous is
that the world’s central banks are now offloading for the first
time since September 2002 a part of the mountain of their
dollar reserve accumulation. In the very short run this trickle
has all the potential of turning into a flood.

International Investment Positions

of Selected OECD Countries, 2003
(Percent of GDP)

Assets Liabilities Net Position

United States 76 102 -26

Canada 80 99 -19
Italy 104 109 -6
United Kingdom 355 357 -2
France 189 182 7
Germany 154 147 7
Japan 82 45 37
Switzerland 519 379 140

Computed from International Monetary Fund data.

The imperial economy is floundering in a turbulent ocean of

debt, living off borrowed time and parasitically off foreign
borrowed money, markedly so in the case of Asian central
banks. The term “mendicancy” aptly depicts its grasping
addiction to foreign handouts. Outstanding national public
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debt at end-March 2005 was $7.7 trillion, slightly more than
two-thirds of GDP, soaring on an average of $2.3bn daily since
30 September 2004. More than $600bn than last year. In the
1990s, $2.8 trillion of new debt was created that dwarfed the
national debt prior to 1990. A further $l.6bn was piled on in
2002-2004. Per capita federal government debt is running at
around $25,000. According to US Treasury data, that indicates
that a family of four is strapped with over $100,000 of federal
debt, inseparable from the ever-expanding black hole of
the twin deficits and the never-ending state of apoplectic
indebtedness.

What we are witnessing is a lethal spiral of the external

deficit that’s gone bonkers, with devastating geo-political
and economic implications, as the CAD advances relentlessly
day by day, week by week, month by month to stand at
more than 6% of GDP, up briskly from 4.3% one year ago.
The voraciously debt-addicted empire needs $2.9bn every
working day to plug this hole. In just the first three months
of 2005, the average annualized trade deficit was $33bn
higher than the corresponding period of 2004. Excluding oil
prices the deterioration is striking. One devastating number
alone encapsulates its dilemma: imports outpace exports
by 60%, which means that US exports must grow 60%
faster than US imports just to keep the trade deficit stable.
There’s no stratagem that the caste oligarchy can deploy to
wiggle out of this stranglehold. Particularly at this strategic
juncture when capitalism’s manufacturing base, the once-
legendary Smokestack America, is quivering at its industrial
and financial roots. Over the 35-year time frame 1970-2005,
factory employment plunged from 33% to less than 14%

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today. Nor can currency manipulation and the greenback’s
hyper-devaluation redress the CAD.

How this works out in the ongoing war for the imperialist
division and conquest of world market shares is grasped in
the illuminating case history of DaimlerChrysler’s project
(together with its Chinese joint venture partners) to produce
subcompact cars for the US and Europe. Its executive director
is ecstatic about the lush pickings of the beckoning El Dorado
when he gloats, “China has a big, big, big advantage as far
as labour costs are concerned.” The word “big” could be
bellowed a thousand times because the comparative labour
cost ratios speak for themselves. Wages and benefits cost
DaimlerChrysler 38 euros in Germany (1:25) an hour, 28 in
the US (1:19), 4.5 in Brazil (1:3) and 1.5 in China. Lower labour
costs are just part of the story: what’s dazzling and often
glossed over is China’s productivity strides due to the drastic
reduction in its labour manufacturing unit costs.

As we have stressed ad nauseam, it’s a totally bogus

proposition, in the light of a stricken dollar and the rocketing
budget and external payments deficits, to label the United
States the world’s paramount economic power, save in a very
constricted macroeconomic sense.

The deficits are bankrolled by foreign central banks that

are recycling their swelling foreign exchange reserves into
dollar-denominated assets. The game is coming to an end.
Their goal is clear: to accept sub-par returns to enhance their
currency’s competitiveness and sustain their export drives.
With a near-zero personal savings rate and an unprecedented

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shortfall of national savings, the US current account deficit is a
huge suction pump for drawing in foreign capital. The capital
providers that are saving the skin of American capitalism
emanate overwhelmingly (apart from Japan) from the savings
of Third World countries. Indeed, the US is appropriating four-
fifths of our planet’s savings.

What has cushioned the debt’s impact is that interest rates

in real terms, until quite recently, hovered around zero.
The federal funds rate is 2.7%, which is less than the yearly
increase of the Consumer Price Index (3.1%). The real federal
funds interest rate is, however, now slowly clambering above
the zero threshold after residing for more than three years in
negative territory. These rising interest rates must inevitably
boost US internal costs as well as impact on external costs.

Here is a nation that flaunts its moral rectitude in and out

of season but, as universally recognized, it’s the beneficiary
of inflows of foreign cash from poor countries. This is a form
of economic aid on a scale the world has never seen. The
Marshall Plan (which was repaid with interest) was a one-
shot trifling sum compared to the sheer non-stop magnitude
of these gigantic capital inflows. Without these injections
of financial muscle, American capitalism would be subject
to a meltdown of horrendous scale. Because of the dollar’s
erosion, the purchasing power of these foreign-owned assets
is also shrinking. That’s the big contrast with the halcyon age
of imperialism from the 1890s to 1914, when the imperial
powers basked in surpluses.

These capital inflows are not only propping up the US economy

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but also providing it with the wherewithal to finance its war
machine and pursue its ceaseless imperial aggrandizement.
The current huge money inflows funding the CAD cannot be
a thing of fixity though (see graph). It raises the spectre of US
default that could be branded the balance of financial terror
that will involve catastrophic consequences for both the
impecunious debtor and its lenders. To argue, as many have
done, that the economy is on a perilous and unsustainable
course is to trivialize the depth and scale of capitalism’s crises.
Rather, it would be more accurate to contend that it is well
on the road to financial bankruptcy, for which there is no exit
strategy on the horizon.

According to the findings of Nouriel Roubini of New York

Net Capital Inflows1

Source: US Treasury Department

1
Official net purchases of US Securities. Based on 3-month averages

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University, for the last two years about three-quarters of the
US fiscal deficit were financed mostly by China and Asian
central banks; the entire (100%) fiscal deficit was funded
from abroad; and four-fifths of the CAD were bankrolled by
Asian central banks, with China a prime activist. A rupture of
these financial flows would lead to the dollar’s implosion, a
collapse of real estate prices, and a vast speedup of household
and corporate bankruptcies. This will be tantamount to a
socio-economic upheaval whose global reach has not been
experienced since the Great Depression of the thirties, and
whose potential carnage could be even more apocalyptic
due to the size, growth and inter-relatedness of international
capitalism since the Depression.

Although the trade-weighted dollar dived by 20% in real

terms since 2002, it proved unable to dent the deficit (see
graph). The rocketing twin deficits moved in concert with
rising debt levels. The US external deficit stands at $670bn,
which means that US households, capitalists, and the public
sector on net have to fork out $670bn on international capital
markets. By normal accounting procedures, a negative
balance in the current account must be matched by a positive
balance in the capital account. US imperialism is a bleeding
sore: from $120bn in 1996 to $414bn in 2000 to $670bn in
2005 with no signs of flagging. American forecaster Brad
Seltzer audaciously predicts that the CAD will be propelled
to a hitherto unimaginable $850-$900bn by end-2005. If this
comes to pass, it would, in my view, be a leap into the abyss
from which there is no return.

There are no precedents of any country running deficits

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for more than four to five years. By this standard, the US
borrowing binge and its deficit should have fizzled out a
long time ago. Such was not to be, however. US imperialism
is able to achieve this tour de force of barefaced global
manipulation of financial markets because the dollar, as
the monetary fist of the empire’s power, is still the world’s
reserve currency, although decreasingly so, buttressed by
a totally unaccountable monopoly on printing greenbacks
with impunity.

For how long foreigners will continue to pump their money

into the black hole remains problematical. Foreign holdings
of US Treasury bonds for example, as a percentage of total
debt, have jumped from a trifling 4.3% in 1952 to 52% in
2005, more than a 10-fold increase. This rabid addiction to
foreign handouts was matched by an attendant fall in the
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US net asset position.

Net foreign borrowing equals the excess of US capital

investment over the combined savings of households,
capitalists and the public sector. Hence the CAD equals
the excess of investment over saving. The CAD is a direct
outgrowth of a fall in net national US saving, which is now
plunging to zero. Hit by rising interest rates, stagnant real
wages and record levels of overall household debt, American
households, on average, are crushed with an aggregate
household debt of $10.6 trillion or 90% of GDP, one-fifth
larger since the mid-nineties. And thus the income-strapped,
saving-short, overly indebted, asset-addicted American
consumer is on the ropes. It is precisely for this reason that
the credit and housing bubbles are poised to burst.

We can get a clearer focus of its operations when we realize

that American households, on average, possess nearly
eight major bankcards or 17 including store and gas cards.
Buffeted by the acquisitiveness of a capitalist society, the
consumer is an asset-addicted spending machine driven
to operate on the principle of “buy now pay later”. Rising
debt and falling savings have fuelled domestic demand and
consumption growth that continues to outstrip GDP growth
and gains in real disposable income. Homeowners have
used mortgage refinancing to dig themselves deeper and
deeper into debt. It could well be that the biggest bubble in
American history is now unfolding, with the most portentous
of consequences.

Is this not emblematic of a country grovelling in skid row on

25
borrowed money? Foreign goods are plugging the shortfall.
The households being financed by both the equity and
housing bubbles have made this possible. According to the
US Commerce Department, households have piled on record
unsustainable debt loads, obtaining their purchasing power
from the equity and housing bubble made possible by an
accommodating monetary policy. It is this which has driven
the rise in US consumption from around the historic 65% to
71% of GDP over the last two decades.

W
ithin the citadel of empire there reigns a deep-seated
malaise that at times borders on a sense of dread.
Bedevilled by conflicting interests, a ruling caste
oligarchy is never homogeneous. As the empire’s crisis
symptoms become more glaring, leading inexorably to its
eventual krach, there are voices to be heard proclaiming that
the day of reckoning is at hand. Warren Buffett (and he is not
alone), the second richest man in the world according to the
tally of Forbes magazine and dubbed in Wall Street “the king
of the money bags”, proclaims his dire warnings.

As one of the world’s leading corporate moguls, with tens of

billions embedded in dozens of the world’s Top 200 corporate
behemoths, he’s aware of the implacable logic, complexity
and crookedness of the corporate and national economic
balance sheets. His critique is, in effect, an admonition to
the ruling caste oligarchy, of which he is the pillar of pillars,
that the nation is being shoved to the wall. The major thrust
of his argument is that “should we continue to run CADs
comparable to those now prevailing, the net ownership of the
US by other countries and their citizens a decade from now

26
will amount to roughly $11 trillion. And, if foreign investors
were to earn only 5% on that net holding, we would need
to send a net of $.55 trillion of goods and services abroad
every year merely to service the US investments then held
by foreigners…Therefore our US ‘family’ would then be
delivering 3% of its annual output to the rest of the world
simply as tribute to the overindulgences of the past.” No
fight here.

The point that Buffett makes is at once pedestrian and

straightforward: “Large and persistent CADs as time passes
and as claims against us grow, means that we own less and
less of what we produce. In effect the rest of the world enjoys
an ever-growing royalty on American output. Here we are
like a ‘family’ that overspends its income. As time passes, the
‘family’ finds that it is working more and more for the ‘finance
company’ and less for itself.”

In his folksy moralizing, the Oracle of Omaha has captured

one of the fundamentals of a crisis-ridden capitalist order that
can be likened to a drunk staggering from one lamppost to
another. I shan’t contest his arithmetic and his unrealistic time
frame of a decade, but what strikes us is the anguish he brings
to bear on the empire’s wobbly financial structure. From his
vantage point at the pinnacle of the ruling class, he is ideally
positioned to mock Bush’s nostrum of an “ownership society”
and asserts, without tongue in cheek, that the mounting level
of indebtedness and fiscal debauchery is tearing at the guts
of the American economy, which should be more fittingly
branded as a “sharecroppers society”.
Departing from Buffett’s metaphorical depiction, Paul

27
Krugman of Princeton University, and a New York Times
columnist, opts for the harsher turn of phrase: “a debt
peonage” social order. The debate, however, goes beyond
the choice of metaphor; of central importance is that major
segments of the ruling caste and their media ventriloquist
dummies are aware that American capitalism is heading at
a breakneck tempo towards the inevitable krach. A process
that is visible in the absence of faith in the economic system
by many Americans. Two-thirds of Americans polled by
Gallup say that the economy is only “fair” or “poor”. And only
33% believe the economy is improving, while 60% think it’s
getting worse.

Inequalities are not a cause of the crisis, but symptomatic

of the workings of capital accumulation and the propertied
class relations on which it is based. Over the past three years
profits burgeoned at an annual rate of 14.5% after inflation,
the fastest growth since World War 2. Need we be astonished?
Berkshire Hathaway’s CEO Buffett once again: “Tax breaks for
corporations (and their investors, particularly large ones) are
a major part of the administration’s initiatives. If class warfare
is being waged in America, my class is clearly winning.” It
certainly is. Executive pay is rising sharply, about 300 times
that of average workers.5 The number of US unionists has
plummeted from 27.3% in 1973 to 11.6% of the workforce
at present.

Noam Chomsky has underscored this truth in a scintillating

synthesis: “There is a very simple principle that goes a long
way towards explaining decisions of the Bush administration.
If some policy is beneficial to wealth, privilege and power,

28
it should be promoted. If some policy is beneficial to the
large majority of the population but of no particular concern
(or even marginally costly) to wealth, privilege and power,
it should be undermined.” A truth extendable not merely
to the loathsome ruling caste, but which exemplifies the
exploitative political, economic and social mechanisms that
have been the drivewheels of American capitalism since its
parturition in the 18th century.

The class struggle has not been consigned to the trashcans of

history. Over the past three years, wage and salary incomes
grew less than in any other post-war recovery – less than a
tenth as fast as profits. Wages have stagnated or decreased
for the entire working class. Wage income has been partially
buoyed up by the classical method of extending the length
of the working day far beyond those prevailing in all other
leading capitalist countries. This is coupled with a further
squeezing of real incomes by labour-saving rationalization
measures. In short, it is the same old story: squeezing the
worker to produce more and more for less and less wage
outlays.

Department of Labour statistics indicate working-class

families have seen little progress over the past three decades.
Adjusted for inflation, median family income doubled
between 1947 and 1973 in the period known as the “golden
age of capitalism.” But this rose just 22% from 1973 to
2003, and that too was due to wives entering the paid labour
force and longer working hours. It was not due to a rise in
wages. As the New York Times notes: “Economic security is a
thing of the past. Year-to-year fluctuations in working-class
incomes are far larger than they were a generation ago.
29
All it takes is a bit of bad luck in employment or health to
plunge a family that seems solidly middle-class into poverty.”6
Meanwhile, the rich and the super-rich are getting still richer:
since 1973 the average income of the top 1% of Americans
has doubled, and that of the top 0.1% has tripled.

As the costs of imperial crimes surge in the colonies and the

wretched inequalities and impoverishment engendered by
the unrestrained profit-driven Moloch bite into the flesh of
an increasingly enfeebled non-unionized world of labour,
the trajectory of empire and its works promises to become
even more grisly.

I
n sum: The decline and fall of empires, as Edward Gibbon
said, is never imputable to a single cause but to a
concatenation of inter-related strands. A statement that is
no less true when applied to the ongoing implosion of the
world’s first mega-terrorist empire. Indubitably historians
will come to regard the colonial invasion of Iraq as one of
the tilting points in the debacle of empire. It conforms to the
central doctrine of Hegel’s philosophy of history: “Out of the
actions of men comes something quite different from what
they intend and directly know and will.” A point that bears
analogy with Hitler’s greatest crime with its self-destructive
reverberations: the assault on the Soviet Union. None could
have foreseen what Egyptian novelist Hosni El Shazli baptized
the miracle of the Arab resistance movement in Iraq.

None also could have envisaged the isolation of the empire

in just two short years after ‘victory’ had been proclaimed.
Bush stands alone, a desperate and forlorn figure. The taunt

30
of a triumphant George Galloway to Blair that “all the people
you have killed have come back to haunt you” will not go
away. It is tantamount to an indictment that is not merely
true of Bush’s most trusted jackal but applicable also to the
wider assortment of his fellow colonial killers that spuriously
advertised themselves as a “coalition of the willing”. They, too,
are jumping the moribund ship of empire. It is therefore only
a matter of time before the perpetrators of these mass crimes
against humanity are brought before a war crimes tribunal.

The struggle for the national liberation of Iraq has meant that
the empire has proved unable to stem the Promethean tide
of change not only in the Middle East but elsewhere. The
planned military invasions in Cuba and Venezuela, thanks
to Iraq, will remain deactivated projects in the Pentagon’s
archives. The opening of a second front in the very traditional
colonial backyards of imperialism has been stymied. These
countries that are battling for their national sovereignty
will not crumble in the manner of El Salvador or Nicaragua,
Guatemala or Chile. The resistance fighters in Iraq have also
massively contributed to nullifying the project of invasion
and annihilation of Iran and North Korea. No less crucial is
that the upshot of the military cataclysm in Iraq has destroyed
the blueprint for the creation of Greater Israel, a super Zionist
state, and aborted the wholesale appropriation of the region’s
prodigious energy resources.

The colonial pillage of Iraq has also exposed the soft

economic underbelly of an American imperialism that is
battling for its own survival, living off borrowed time and
borrowed money. What the imperial genocide in Iraq has

31
unmasked is the extent to which it is a giant with feet of clay,
with its shrinking uncompetitive industries and thrashing in
a storm-tossed ocean of debt. The cruellest cut of all is that it
has neither a military exit strategy nor a national economic
survival strategy.

For the bulk of humanity there is a positive thrust to all

this. Imperialism’s debacle on the military, ideological and
economic fronts has opened the floodgates to the sweeping
expansion of other anti-imperialist fronts. In this perception
of things, the onslaughts of the resistance fighters in Iraq
have provided the catalyst for the unravelling of the imperial
gulag.

1
Aljazeera.net, 21 May 2005. Speaking on 20 May on the sidelines of the
fourth International Workshop on Oil and Gas Depletion in Lisbon.
2
Cuba, Burma, Belarus, North Korea, Iran and Zimbabwe.
3
New York Times, 28 April 2005.
4
This is the aggregate of the CAD, portfolio equity and net foreign
direct investment. This is the estimate of the Bank for International
Settlements.
5
Financial Times, 4 May 2005.
6
New York Times, 10 June 2005.

*
I would like to thank Lim Jee Yuan and Lean Ka-Min for their assistance
in the preparation of this paper.

32
 Also by the same author published by Citizens International

T
his hard-hitting brochure based on extensive research is a
complement to his earlier work on The Crumbling of Empire
that examined the implications of debt that permeates
every niche of American capitalism. It is the author’s central
thesis that the horrendous war crimes committed against a
defenceless nation will prove to be one of the crucial phases in
the debacle of imperialism. The author pungently points out that
never perhaps in the history of any conquest was the reversal
of fortune so swift. The tremors of fear and chaos are shaking
the US caste oligarchy which has never been more isolated than
at present. One of the author’s major contributions is to have
unraveled the nexus between the role of the United Nations and
its agent Sergio de Mello and US imperialism in the occupation
of Iraq. The plans of conquest have gone awry as he concludes
due to the sustained struggle of the Iraqi resistance movement
which has become an anti-imperialist catalyst of Promethean
force throughout the region and beyond.

33