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SAMEER DOSSANI: Let’s talk about the recently passed Iraqi oil law. It’s well known that the law was drafted in the U.S. and then consulted on by very few Iraqis all loyal to Prime Minister Noori al-Maliki, then finally pushed through the Iraqi parliament. This law paves the way for regionalization and privatization of Iraqi oil. What’s the U.S. economic agenda in Iraq and will it be able to carry that agenda out, given the disastrous nature of the occupation so far?
Noam Chomsky: It’s not very clear. What you said is correct. The law was not even seen by the Iraqi Parliament until it was finished, so it’s an inside job. Exactly what this entails is still kind of open. It allows for Production Sharing Agreements (PSAs) which have traditionally been a way of gouging the producer and ensuring that foreign corporations have control and make huge profits. It’s quite different from other contractual arrangements in the region–it’s what they used to have but they’ve since nationalized their oil production and countries set terms more in their own interest with the corporations that are moving in. This law is vague on that so it leaves it open.
As far as the U.S. economic interests I think we have to make a distinction. The primary interest, and that’s true throughout the Middle East, even in Saudi Arabia, the major energy producer, has always been control, not access, and not profit. Profit is a secondary interest and access is a tertiary interest.
So in the years when the U.S. was not using Middle East oil at all, [the U.S.] was the largest producer and the largest exporter, it still had the same policies. It wanted to control the sources of oil and the reasons are understood. In the mid-1940s, the State Department made it clear that the oil resources of the region, primarily then Saudi Arabia, were a stupendous source of strategic power which made the Middle East the most strategically important area of the world. They also added that its one of the greatest material prizes in world history. But the basic point is that it’s a source of strategic power, meaning that if you control the energy resources, then you can control the world, because the world needs the energy resources.
This was made explicit by George Kennan when he was one of the Middle East planners [in the U.S. State Department]. [He said that] control over Middle East oil will give us veto power over our rivals. He was specifically talking about Japan, in case Japan industrialized, it was devastated by the war still, we’ll have veto power as long we control the oil. And that’s been understood through the years. So in the early stages of the Iraq war [former U.S. National Security Advisor] Zbigniew Brzezinski, who’s one of the more astute of the planners–he was not terribly enthusiastic about the war–said that if the U.S. wins the war, which means that it succeeds in imposing a client regime in Iraq, then the U.S. will have critical leverage over its industrial rivals in Europe and Asia because it will have its hand on the spigot.
And that is also understood very well at the highest level of the administration. So a few months ago, Dick Cheney said that control over [oil] pipelines can be "tools for intimidation and [blackmail]". He was talking about control over pipelines in the hands of others, so if our enemies have it, it’s a tool of intimidation and coercion. But of course the same is true if it is in our hands. We’re not supposed to think that because we’re supposed to be noble, but the rest of the world certainly understands it. Yes, it’s a tool of intimidation and coercion, whether it’s the direction of pipelines or whether its control over the production or over the regimes in question, and control can take many forms.
So that’s the primary concern–control. A secondary concern is undoubtedly profit for U.S.-based corporations and British based corporations and several others of course. And yes [in the case of the Iraqi oil law] that’s a possibility. The Production Sharing Agreements and the other arrangements for long-term contracts at ridiculous rates, those are expected to be sources of immense profit as they have been in the past, so for example a couple of weeks ago Exxon-Mobil posted its profits for 2006 which are the highest for any corporation in U.S. history. That broke the record of the preceding year, which also happened to be Exxon-Mobil and the other energy corporations are doing just great–they have money pouring out of their ears. And the same with the corporations that link to them, like Haliburton, Bechtel and so on.
The material prize of oil production is not just from energy. It’s also from many other things. Take Saudi Arabia or the [United Arab] Emirates. They have huge constriction projects paid for by petro-dollars which recycle back to Bechtel and other major construction companies. A lot of it goes right back to U.S. military industry. So these are huge markets for U.S. military exports and the military industry in the United States is very closely linked to the high-tech economy generally. So it’s a sort of a cycle–high prices for oil, the petro-dollars pour back to the U.S. for major construction projects for high-tech industry, for development, for purchasing treasury securities which helps bolster the economy–it’s a major part of the economy and of course it’s not just the United States. Britain, France and others are trying very hard to sell them the same things and sometimes succeeding. There was a big bribery scandal in Britain recently because of efforts to bribe Saudi officials into buying jet aircraft and so on. So the basic idea of the energy system is that it should be under the control of loyal clients of the United States, and they’re allowed to enrich themselves, become super rich in fact, but the petro-dollars are basically to cycle back to the West, primarily the United States in various forms. So that’s a secondary concern.
A tertiary concern is access. That’s much less of a concern. One of the reasons is that the distribution systems are pretty much in the hands of big energy corporations anyway and once oil is on the high seas, it can go anywhere. So access is not considered a major problem. Political scientists, when they make fun of the idea that the U.S. invaded Iraq to gain its oil, they point out is that the U.S. can get Middle East oil in other ways so therefore that can’t be the reason. That’s true, but it’s irrelevant because the true issues are and always have been control and secondarily profit and in fact U.S. intelligence projections for the coming years have emphasized that while the U.S. should control Middle East energy for the traditional reasons, it should rely primarily on more stable Atlantic basin resources, namely West Africa and the Western hemisphere. They’re more secure, presumably and therefore we can use those, but we should control the Middle East oil because it is a stupendous source of strategic power.
SD: The difficulties surround the occupation Iraq has deflected the U.S.’s attention away from other parts of the world, including Latin America. Recently, Venezuelan President Hugo Chavez and others such as Rafael Correa of Ecuador, Evo Morales of Bolivia, have been talking about regional trade agreements such as ALBA and, in the case of Venezuela, aid packages that are supposedly designed to actually benefit local populations as opposed to transnational companies. Critics claim that these policies are a) unsustainable, because they depend on revenues from Venezuela’s oil wealth, and b) self serving for the government of Hugo Chavez. What is your response to these criticisms?
NC: It’s very odd criticism in the first place. Are U.S. aid programs sustainable? No, not if there’s a depression or even a recession. Furthermore, U.S. aid happens to be about the lowest relative to the economy of any advanced society so there isn’t much of it in the first place and it also can be withdrawn at any time and often is.
As for doing it for self interest, what do you think other countries provide aid for? They’re perfectly open about it. Sometimes, there’s something done for altruistic reasons maybe by Norway, but overwhelmingly, aid is openly presented as "in our interest", not just by the U.S. but by Britain and France and others. It is part of general strategic policies of controlling whatever part of the world you can. So, if in fact Venezuela’s doing it for that reason, that just says, "yeah, they’re just like us". So whatever that is, it’s not a criticism.
What are the reasons? Well, they’re complicated. First of all, there’s a background. For the first time in 500 years since the Spanish conquest Latin America–especially South America–is beginning to move towards some sort of integration. Actually it’s a dual type of integration. Part of it is international integration meaning the countries are becoming more integrated with one another. The traditional structure in LA has been that each of the countries is primarily oriented towards Western imperial powers. So [economies are oriented toward trade with] Spain, and in recent years mostly the United States, not with one another. That’s even true of the transportation systems. They’re designed for export of resources abroad and import of luxury goods for the rich within.
There’s a very clear contrast with East Asia. East Asia is resource poor, Latin America is resource rich. You would have expected Latin America to have rapid growth, not East Asia, but it didn’t. One of the reasons is that Latin America adhered very rigorously to the neo-liberal policies of the last 25 years, the IMF World Bank policies, and those are basically offshoots of the U.S. Treasury department. They adhered to the rules and they suffered severely–most of the population that is. The rich sectors did ok. East Asia just disregarded the rules and followed the same kinds of programs that the rich countries themselves, including the U.S., had followed to gain their wealth and power. So East Asia grew, but in addition to that, if you look at say imports and exports, Latin America exported raw materials, which is low income basically, and imported luxury goods for the wealthy. East Asia imported capital goods and moved up the ladder of industrial progress and ended up exporting high technology goods.
SD: What do you mean by "capital goods"?
NC: Machine tools, things that you can use for producing commodities, electronics, bio-technology and so on. I mean those are the high-value exports, not rice. I mean for the U.S., rice is such a low value export that agribusiness has to get about 40% of its profit from U.S. government subsidies, provided primarily since the Reagan administration, as part of their efforts to undermine markets–they love rhetoric about markets, but they greatly dislike the concept applied to us. And the terms of trade tend to decline for commodities, you know there’s variation, but they tend to decline for primary commodities as compared with high value goods like industrial exports. So [economists like to talk about] this notion called "comparative advantage", you should produce what you’re good at, but the way countries develop is by rejecting that principle and acting in order to shift their comparative advantage.
So let’s take the United States. 200 years ago the comparative advantage of the United States was exporting fish and fur, and maybe cotton, thanks to slavery. If the U.S. had followed the principles that are dictated to the poor countries, we’d be a sparsely populated, pretty poor country, exporting primary resources. Instead, the United States violated all of the rules–the rules of the economists and the neo-liberal principles. It imposed extremely high tariffs on imports from Britain, textiles at first, later steel and others, and it had the highest tariffs in the world, the highest protection in the world in the 19th century. As a result, it was able to shift its comparative advantage from primary resource exports to manufacturing, finally high-tech technology and so on, and that goes on right until today. Only the poor countries are supposed to follow the principles that economists dictate. In the United States there’s a state sector of the economy, which is the core of high-technology advanced production. That’s where computers come from, and the Internet, and lasers, and containers for trade; civilian aircraft are mostly an offshoot of the military industry, right now moving on to genetic engineering, bio-technology, pharmaceuticals, and so on. Research and development–which are the risky, costly parts of development–those costs are imposed on the public by funding through the state sector and development in the state sector. When there are profits to be made it’s handed over to private corporations and that’s the basic structure of the advanced economy.
That’s one reason why the U.S. simply can’t enter into the free trade agreement–it just doesn’t accept market systems internally. So going back to East Asia and Latin America, Latin America followed the rules and became impoverished; East Asia ignored the rules, and was able to grow and develop pretty much the way the rich countries had themselves. So one form of integration in Latin America is integration of the societies with one another, although the alternative is the more far-reaching version of this, but there are others. And the second form of integration is internal. Latin America at last is beginning to do something, not much, but something about the internal fracturing of the societies, which is extreme. Each of those societies is characterized by a very wealthy small elite, and a huge impoverished mass. There’s also a pretty close correlation to race. The wealthy elite tends to be the white, Europeanized part of the society; the huge impoverished mass tends to be the Mestizo, Indian, Black part of the society. Not a perfect correlation, but it’s very noticeable. And that’s beginning to be addressed, in large part as a result of the pressure of mass popular movements, which are very significant in Latin America now more than any other part of the world.
It’s in this context that the Venezuelan phenomenon surfaces. Venezuela is indeed now, under Chavez, using its oil wealth to accelerate these processes–both the international integration and the internal integration. It’s helped countries of the region free themselves from U.S. controls, exercised in part through the traditional threat of violence, which has been much weakened, and in part through economic controls. That’s why country after country is kicking out the IMF, restructuring their debts, or refusing to pay them, often with the specific help of Venezuela. In Argentina particularly, Venezuela bought about a third of the debt and enabled Argentina to "rid herself of the IMF" as the President [Nestor Kirchner] put it. The international integration is also proceeding, not just through Venezuela. It doesn’t get reported here because it’s sort of not the right story, but a lot of things are happening. So in early December for example, there was a meeting of all South American leaders in Cochabamba, Bolivia–which is right at the heart of Morales territory, Indian territory–and they proposed, they had constructive ideas and suggestions which could lead towards sort of a European Union type structure for South America.
The more extreme version of this, advanced version of it is ALBA, which you mentioned, the Venezuelan initiative, but there are others. MERCOSUR, which is a regional trade alliance is stumbling, but it exists. There are great barriers to integration, it’s not an easy matter to dismantle 500 years of history, either internally or regionally, but there are steps towards it, and Venezuela is playing a significant role in them. In the U.S. there’s kind of a new party line on this matter. The party line is that, OK, we admit the subcontinent is drifting to the Left, but there are good Leftists and bad Leftists, and we have to distinguish between them. The bad Leftists are Chavez, of course, Morales, and probably Correa, not certain yet, and Kirschner’s also one of the bad ones. The good Leftists are Lula in Brazil, García in Peru, they don’t know about Bachelet in Chile, and so on.
In order to maintain this propaganda line, it’s necessary to suppress quite a lot of facts. For example, the Cochabamba conference that I mentioned, or the fact that when Lula was reelected in last October, his first foreign trip and one of his first acts was to visit Caracas to support Chávez and his electoral campaign, and to dedicate a joint Venezuelan-Brazilian project, a major bridge over the Orinoco river, and to discuss some other projects. Well that doesn’t fit the story so, as far as I can tell, I don’t think it was reported anywhere in the United States–I didn’t check everything, but I couldn’t find it–and many other things like that. I mean with any kind of propaganda, there’s at least some thread of truth to it, but it’s much more complex than that. There’s a real will towards integration and popular pressure towards internal integration, which are very significant. It’s worth remembering that these are steps toward reversing a 500-year-old pattern, and among other things, it’s weakening the traditional measures of U.S. control over South America. So the kind of governments the U.S. is supporting now, including Lula, are the kinds of governments they might well have been overthrowing not many years ago.
SD: In Latin America, Venezuela is only one part of the general discontent that is driving governments away from the IMF. But in other parts of the world, notably Africa, the IMF and its neoliberal diktaats are as strong as ever, and the predictable result is that extreme poverty is still on the rise. Other countries — for example India — are not under this pressure but still are wildly pursuing neoliberal economic policies. What hope do you see for citizens and movements in these places? Are there lessons to be learned from the case of Latin America? How can we in the U.S. be supportive of struggles for economic justice in these places?
A lot depends on what we do. After all [the U.S. is] the most powerful country in the world and the richest country in the world and has enormous influence. These policies that you describe are not without reason called the Washington Consensus; that’s where they emanate from.
Sub-Saharan Africa and Latin America are the two areas of the world that most rigorously followed the neo-liberal principles, the orthodox principles of the Washington Consensus, and those are the two parts of the world that suffered most severely. And you’re right, in Sub-Saharan Africa it largely continues. They simply do not have the resources, the capacities, the countries are torn to shreds as a result of history of imperial conquest and devastation, and they’ve not been able to put themselves back together again. Their hopes for revival after the the formal end of colonialism were pretty much shattered by Western intervention. So for example, the murder of [Patrice]Lumumba in the Congo, which is the richest, and potentially the most powerful country of the region, and the installation of the corrupt and brutal murderer Mobuto [Sese Seko] not long after, I mean that set off a chain of catastrophes which is still devastating the area and no sign of resolution.
The French in their regions of Africa did the same. One gangster after another, the French backed state terrorism, and did all sorts of things. And pretty much the British, too, in their regions. So [many African countries] have a hideous legacy to overcome, and it’s very difficult, and they’re not getting much support from the outside. But we should be doing what we can to support authentic liberation struggles within the countries.
It’s too complicated to go into the history here, but it’s worth remembering many of the things that happened. So for example, when the Portuguese empire collapsed in the mid-70’s, the former Portuguese colonies had a chance, Angola, Mozambique, a couple other Portuguese colonies, might have moved towards some sort of independent development. But South Africa, with U.S. backing, would not allow it–remember that’s apartheid South Africa. So for example in Angola, South African troops backed by the United States just invaded to try to throw out the elected government, and again, with U.S. support, supported terrorist movements, the Savimbi movement, to try to undermine the government, and they would have succeeded had it not been for the fact that Cuba sent forces to support the government.
That led to hysteria in the United States. You had [the U.S. Ambassador to the United Nations] Daniel Moynihan saying ‘the Russians are trying to cut our lifeline, our oil supplies to the Middle East’, [Henry] Kissinger raving and so on, and it was all, believed to be or presented to be a Russian operation. In fact, we now know from excellent contemporary U.S. scholarship that it was a Cuban initiative–it was mainly Piero Gleijeses at Johns Hopkins University who’s going through the archival material and has done outstanding scholarship. What happened is that Cuba entered on its own initiative and very selflessly–they never took any credit for what they were doing, it’s still mostly unknown–but Cuban troops beat back the South African offensive, and not only did that prevent the re-conquest of Angola, but it also had extraordinary symbolic significance. Those Cuban troops were black, and that broke the kind of mythology of white conquest; it was the first time that black soldiers had defeated advanced white armies, South African with U.S. backing. And that was a very important, had a very important effect on all of Africa. For the South African whites it was a sign that their conquest was not permanent. And for blacks in South Africa and elsewhere in the region, it showed that you don’t have to subordinate yourself to white power.
That breaking of the hold of the mythology of [white] power is extremely significant, not just in this case. The same is true with many other cases, slavery, the women’s movement, all sorts of things. Just breaking the idea that you must subject yourself to overwhelming power, when that’s broken, a lot collapses with it. So that was a very important step towards the liberation of Africa, and Cuba deserves enormous respect for this, also for never taking credit for it, because they wanted the credit to be taken by the African countries themselves. It’s only now beginning to be known, and mostly only known in scholarly circles because you don’t get front page stories in the New York Times about topics like this. And then Angola fell into total catastrophe, mainly because of the depredations of the U.S.-backed terrorist forces, which were horrendous, and now it’s a horror story. Similar things were happening elsewhere. The United Nations commission on Africa estimated that in the former Portuguese colonies alone–Mozambique and Angola–about a million and a half people were killed by South African aggression backed by the Reagan administration, just during the Reagan years. That’s a pretty serious catastrophe. They also estimated about 60 billion dollars of damage, and the French and Algeria and their regions elsewhere were doing pretty much the same. It’s a hideous, ugly story, and sub-Saharan Africa has a long way to go to extricate itself from these centuries of destruction still continuing.
India is a complicated story; it has been independent since 1947. Before the British conquest back in the 18th century, India and China had been the commercial and industrial centers of the world. British conquest turned India into a poor, peasant society. [The British] built roads and infrastructure, but they were mostly for the benefit of the invaders, the export of goods and so on. There were hideous famines–Mike Davis has a wonderful book on this Victorian famines, huge famines that could have easily been prevented, right thru the British rule up to the very end in the 1940s. Since Indian independence, they resumed their growth and there were no more famines; it became a more or less governable society and was beginning to develop. In the 1980s, there was a significant increase in the rate of growth. In the 1990s, they instituted the so-called neo-liberal reforms on their own, I mean, that was not under IMF control, as you said, and since then there have been changes.
They’re very highly praised in the West–you know, the Thomas Friedman-style adulation of the new India–and in fact growth has increased, and a sector of the society has become much better off, has been raised from poverty. But remember that means a sector of the society; the large majority of the society is deeply impoverished, maybe even harmed by the neo-liberal policies, the same policies that are responsible for the marvelous labs in Hyderabad and Bangalore – which are indeed marvelous, I’ve seen them and they’re just like MIT – and there is increase in the wealth of that sector of society. Those same policies are undermining the large majority of the population, which is peasant-based. Also the government has withdrawn support for peasant agriculture, meaning cheap credits, irrigation, rural aid, assistance programs, and so on, and they’ve also kind of pressured the poor farmers to turn from subsistence crops to export crops–that’s the advice of economists generally.
Mexico, for example, under NAFTA was supposed to turn away from producing rice for the population and corn, turned away from that to, say, producing flowers for export to the United States with "more valued added". In some seminar somewhere that might look good, but in the real world it happens not to work for very simple reasons. Commodity prices tend to vary quite a lot, and if there’s like a natural disaster, say a hurricane or whatever, and you’re producing flowers, they might be wiped out that year, just like the citrus crop has been pretty much wiped out in California this year because of the cold spell. Well if you’re agribusiness, you can handle that. So wiping out the citrus crop in California may raise the price of oranges in the United States, but U.S. agribusiness is going to survive it just fine. However, poor farmers cannot, I mean a farmer can’t tell his children ‘don’t bother eating this year’ because cotton prices went down, or because a storm wiped out our flowers, and ‘maybe you’ll be able to eat the next year’, you can’t do that. So what you have to do is to try to get credit. Well with the government having withdrawn support for the vast majority of the population, you go to usurers, who charge you huge levels of interest, which you’re not going to be able to pay, so then you have to sell off the little plot of land you have, and pretty soon you can’t support your family at all, so you commit suicide.
And in fact the rate of peasant suicides has been rising [in India] about as fast as the adulation by Thomas Friedman for the marvels of the economy. The per capita grain intake for people in India has declined, the average has declined considerably, since the onset of the reforms. Manufacturing productivity has gone way up, manufacturing wages have gone way down. At the beginning of the so-called reforms, India was ranked around 124th or so in the UN development rankings, which measure infant mortality and so on. Since the reforms have been undertaken, it’s actually declined–the last time I looked I think it was 127th, it certainly hasn’t advanced.
Well, these are parts, I can go on, but these are the several aspects of the Indian development story. For some it’s been very good, and for others it’s been, at best, stagnation, at worst, a disaster. And remember, for huge parts of India, like say for women, life is kind of like under the Taliban. Careful studies of say [the Indian state of] Uttar Pradesh, which maybe has 160 million people, has found that they have about the lowest female to male ratio in the world and it’s not because of female infanticide, it’s because of the way women are treated, which would make the Taliban look pretty decent. And these are huge areas, and they’re not getting better, many are getting worse. The same is true in China, it’s harder to say about China, it’s a closed society, I don’t know the details, but it’s probably quite similar. India’s a more open society so there’s a lot of evidence.
Going back to Mexico and producing corn and beans, I mean, why is there a vast increase in illegal immigration from Mexico in recent years? It’s partly the predicted effects of NAFTA. If you flood, the worst is yet to happen but even the beginning of it, if you flood Mexico with U.S. agribusiness exports, which are highly subsidized–that’s how they get their profits–then Mexican farmers aren’t going to be able to compete. Then comes the economists’ theory, you know, turn from producing corn and beans and rice to producing flowers and [other] export crops, and you have the mode I described, and people can’t survive. So there’s a flight of people from the countryside to the cities where there are no jobs because Mexican businesses can’t compete with U.S. multinationals, which are given enormous advantages under the mislabeled trade agreements. And yes, you get a flight of population [across the border]. The price of tortillas, you know, the basic food for the poor, it’s gone out of sight, people can’t pay for it. If you’re growing your own food, you can manage, or if there’s a subsistence agriculture, yeah, you can kind of manage, but not when you abandon it.
Again, for parts of the population it’s been a benefit, so the number of billionaires has gone way up, just like in India. India now ranks very high internationally among the number of billionaires, but also for peasant suicides, and for severe malnutrition and so on. These countries, which are pretty rich, [are in some respects doing worse than] the poorest countries. GDP per capita in India is below Bolivia. That’s nothing to rave about, Bolivia is the poorest country in South America. These are several sides of the same policies.
Remember that when NAFTA was enacted in 1994, another policy was enacted. In 1994, Clinton militarized the border in Operation Gatekeeper. Now previously, that had been a pretty open border. The border, of course, was established by conquest, like most borders. And there were similar people on both sides, people who would cross the border to visit their friends and relatives and that sort of thing. Now the border was militarized in 1994. OK, maybe it’s a coincidence, more likely I think it’s because the Clinton administration understood that their glowing predictions [about the benefits of NAFTA] were for propaganda, and that the likelihood was that there would be effects in Mexico which would lead to substantial flight, immigration, joined by people fleeing the wreckage of Central America after Reagan’s terrorist wars there. And yes, now you have what they call an immigration crisis. These things are connected, you can’t look at them in isolation.
SAMEER DOSSANI is the Director of 50 Years Is Enough: U.S. Network for Global Economic Justice.
Noam Chomsky is emeritus professor of linguistics and philosophy at the Massachusetts Institute of Technology. His most recent books are Failed States: The Abuse of Power and the Assault on Democracy and Interventions, forthcoming from City Lights.