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What Will Robert Zoellick Break Next?

by PATRICK BOND

There are two theories about Robert Zoellick, and they’ll be tested next month by a World Bank vote on a massive South African coal-fired generator loan.

The 57-year old Bank president is a nerdy man who served as number two at the Bush State Department and then in 2007 replaced the disgraced, nepotistic Paul Wolfowitz. One theory is that Zoellick is brilliant and effective. The other – which I’ll defend – is that nearly everything he touches, he breaks.

In one corner, writing in CounterPunch in 2005, is US foreign policy analyst Tom Barry: “At first glance, Zoellick could be mistaken for an ideologue, as an evangelist for free trade and a member of the neoconservative vanguard. But when his political trajectory is more closely observed, Zoellick is better understood as a can-do member of the Republican foreign policy elite – a diplomat who always keeps his eye on the prize, namely the interests of Corporate America and U.S. global hegemony.”

Ideologically, the man stood hand in hand with Cheney, Rumsfeld, Perle, Wolfowitz, Bolton, Negroponte and the other maniacs, admits Barry: “Zoellick was perhaps the first Bush associate to introduce the concept of evil into the construct of Bush’s radical overhaul of US grand strategy. A year before Bush was inaugurated, Zoellick wrote: ‘A modern Republican foreign policy recognizes that there is still evil in the world – people who hate America and the ideas for which it stands.’”

This, the argument continues, is merely banal Washington rhetoric. It should not distract us from Zoellick’s deeper capacity to reproduce and restructure imperial power. As Central American activist Toni Solo put it in CounterPunch in 2003, “Zoellick is neither blind nor crazy. He simply has no interest in the massive human cost, whether in the United States or abroad, of his lucrative global evangelical mission on behalf of corporate monopoly capitalism.”

The other theory is more skeptical of Zoellick’s efficacy, concluding that he’s not particularly good at what he does. Indeed, Zoellick is mainly of interest because he represents a global trend of Empire in crisis since the Millennium, featuring at least three self-immolating traits which he brings to next month’s climate showdown at the Bank.

First is the ideological fusion of neoconservatism and neoliberalism that Zoellick shares with his predecessor Wolfowitz. Both strains are bankrupt, by any reasonable accounting. Representing the former, Zoellick was at the outset a proud member of the Project for a New American Century, and as early as January 1998 he went on record that Iraq should be illegally overthrown.

As for the latter ideology, ‘Washington Consensus’ dogma, Zoellick and IMF managing director Dominique Strauss-Kahn had to spend 2009 beating a hasty retreat from the austerity-oriented economics their institutions intrinsically favor, so as to maintain global effective demand with crony-Keynesianism during capitalist crisis.

Second is Zoellick’s inability to cut global-scale deals required to manage the US Empire’s smooth dismantling. This we already witnessed in the World Trade Organisation’s (WTO’s) demise, on his 2001-05 watch as the US Trade Representative. Zoellick’s bumbling was on display at the Cancun ministerial summit in 2003, in disputes with the European Union over the US genetic engineering fetish, and in his insistence upon bilateral and regional alternatives to multilateralism, which has generated durable anti-Washington economic sentiment across Latin America.

Next, as one of the most senior Bush Administration officials in 2005-06, Zoellick achieved practically nothing, aside from further wreckage of the US image abroad. And as Bank president, appointed after Wolfowitz’s fall by Bush (in what is likely the last unilateral imposition of a US petro-militarist in this role), Zoellick’s efforts during the 2008-09 G20 deliberations on the world economy and at the December 2009 UN Copenhagen climate summit were equally unsuccessful.

Actually, dating to the 1996 Montreal Protocol banning chlorofluorocarbons, there have been approximately zero global-scale deals that affirmatively solve major world problems. Thanks to Zoellick and his brothers, US Empire-in-decline is just not conceding the resources and power required to fix trade, finance, climate, migration, military, public health, multilateral governance, and similar global-scale crises.

An example is the international carbon market, founded by then US vice-president Al Gore in 1997 at Kyoto through tricking the world into thinking Washington would sign the Protocol if US firms were given permission to keep polluting at planet-threatening rates, through offsetting their emissions with trades and ‘Clean Development Mechanism’ (CDM) investments.

Zoellick’s World Bank strongly promotes carbon markets, even though they contain so much corruption, speculation and stupidity that the carbon price crashed from a high of €33/tonne in mid-2008 to €13 after Copenhagen, and on two European markets all the way down to €1.50 after yet more fraud scandals last week.

Third, at a more profound level, is Zoellick’s tendency to deal with economic and ecological crises by shifting and stalling them, while stealing from those least able to defend.

(As a theoretical aside for political-economy fundis, what I call the shifting-stalling-stealing strategy is at the heart of the problem, and can be summed up in David Harvey’s phrase: ‘accumulation by dispossession’. This stage arrives when capital exhausts the options it usually has to address crises – such as 1973-75, 1980-82, 1989-92, 1997-2001 and 2007-09, with more to come – through traditional means: work speed-up [absolute surplus value], replacing workers with machines [relative surplus value], shifting the problems around geographically [the ‘spatial fix’], and building up vast debt and blowing speculative bubbles so as to stall crises until later [the ‘temporal fix’]. At this stage, capital needs to also loot the non-capitalist spheres of society and nature through extra-economic, imperialist techniques, the way Rosa Luxemburg described stealing so well a century ago in The Accumulation of Capital and Naomi Klein has updated in Shock Doctrine.)

To shift-stall-steal in a three-piece suit, Zoellick’s neocon-neolib worldview gives excellent cover, yet only up to a point, which we now appear to be reaching. That point comes sooner than later in part because the institutions needed to keep the game in play are cracking up.

To illustrate, Fannie Mae, Enron, Alliance Capital and Goldman Sachs were all crucial US imperial banksters, instrumental in generating the fictitious capital in real estate, energy and other sectors which proved so important to the Clinton-Bush era’s internal displacement and eventual amplification of crises. Goldman continues in this role today.

The first suffered Zoellick as its mid-1990s executive vice president, following his several-years stint as a senior aide in James Baker’s Treasury (at one point Deputy Assistant Secretary for Financial Institutions Policy), just prior to the 1988-90 Savings&Loan crisis, itself a function of the financial-deregulatory era that gave us mortgage-backed securities. By the middle of the last decade, Fannie Mae was so far in the red due to subprime lending through those securities, that a massive state bailout was needed.

(And speaking of Baker, Zoellick served as his main assistant in the notorious December 2000 presidential vote recount in Florida, so destructive of those last vestiges of US democracy, thanks to the open racism and right-wing bullying of Zoellick’s thugs.)

The second firm, which cracked in 2002, boasted Zoellick as a senior political and economic advisor in 1999. Records are not available as to how implicated Zoellick was in Enron’s electricity gambles, so painful to Californians and investors. However, as Board member of the third firm, Alliance, Zoellick was party to late 1990s oversight of Alliance Capital’s investments in Enron which led to multiple fraud lawsuits and vast losses for Alliance’s clients, including the state of Florida.

The fourth bank, Goldman Sachs, which Zoellick served as a leading international official in 2006-07, has done well only through illegal, immoral deals and crony-capitalist bailouts linking Bush and Obama econocrats. In the process, Goldman Sachs has come to enjoy an unprecedented amount of popular brand awareness in the US and Europe, albeit not particularly favorable.

What gives any observer hope from Zoellick’s c.v. is its pure, consistent, world-class geopolitical, economic, environmental and diplomatic self-destructiveness. He is so bad, he has zero credibility among sensible people.

Moreover, if the World Bank joins FannieMae, Enron, Alliance Capital, Goldman’s reputation, the WTO, Bushite foreign/military policy (not to mention a million Iraqis and thousands of US soldiers), and other notches on Zoellick’s belt, future generations may be spared the implications simply because he will utterly foul his own nest.

This process will become glaringly evident as early as April 8, when Zoellick attempts to sell his Board’s Executive Directors an incompetent, corrupt, underdevelopmental, eco-disastrous loan to a corrupt regime, the African National Congress (ANC). It will add 5% to the foreign debt, which has soared since 2006 due to outflow of capital and amongst the world’s highest current account deficits.

Winnie Madikizela-Mandela, the ex-wife of our first post-apartheid president, Nelson Mandela, last week revealed to an Italian journalist (whether on or off record is in dispute) how the ANC leadership sold out to white business elites.

The current South African president, Jacob Zuma, pressured the country’s national prosecutor to drop scores of corruption charges against him just days before last year’s election. (That must have really impressed Zoellick, whose institution issued a new Africa Development Indicators report last week, ironically entitled ‘Silent and lethal: How quiet corruption undermines Africa’s development efforts.’ The new coal loan should be Case Study #1, but instead the Bank mainly blames teachers and doctors for slacking off.)

Such context clarifies why the ANC continued the apartheid-era gift of the world’s cheapest electricity to the world’s biggest mining/metals companies, such as Anglo American Corporation (formerly based in Johannesburg, now London) and BHP Billiton (also ex-SA, now Melbourne). This multibillion dollar gift is anticipated to continue in coming years when Zoellick’s proposed $3.75 billion World Bank loan helps the Pretoria government build the world’s fourth largest coal-fired power plant, leaving the apartheid deals intact.

Corruption is rife, with a reported $700 million scheduled to flow into ANC coffers from Hitachi, for its successful tender on a multi-billion dollar contract to build boilers for the $18 billion Medupi plant (boilermaking is not a typical ANC staffer’s speciality but everyone can learn new trades).

The borrower, a parastatal corporation called Eskom, began raising prices to retail consumers by more than triple the inflation rate in 2008. From 2007 to 2012, the price of a month’s normal electricity use in an ‘average township household’ is anticipated to rise 127% in real terms, according to Eskom. These price increases will have an extreme adverse impact, leading to massive disconnections (and illegal reconnections, hence electrocutions) of poor households.

Ironically, World Bank staff insist that the proposed Eskom loan will have a ‘developmental’ impact. An international coalition of more than 200 groups led by 65 red-green organizations in South Africa, vigorously object, and protests are mounting. Many recall the Bank’s last loans to Eskom, from 1951-67, when zero black South Africans received electricity, which was reserved for white business and households.

The World Bank is in an untenable position. Zoellick is soon to issue a new Bank energy policy and he is also campaigning to take on additional responsibilities for channeling finance related to climate change. The proposed Eskom loan should disqualify the World Bank from any further role in climate-related activities.

In advance of the Bank’s $180 billion recapitalization bid at the April 24-25 Spring Meetings, critics are ready to take even more vigorous action against the bank itself. This could include revival of the ‘World Bank Boycott’ which cost the institution support from many major bondholders over the past decade (including the world’s largest pension fund, the cities of San Francisco and Cambridge, the Calvert Group and many university, labor and church endowment funds).

Back to our opening question: is Zoellick clever or a pompous self-saboteur? From this angle he appears anxious, as ever, to defend the shortest-term of Empire’s interests, and once again, in the process break a great deal more.

PATRICK BOND, director of the Centre for Civil Society in Durban, is doing talks on climate politics on the US West and East coasts in early April; see http://www.ukzn.ac.za/ccs for details.

 

WORDS THAT STICK

Patrick Bond has a joint appointment in political economy at the Wits University School of Governance in Johannesburg, alongside directing the University of KwaZulu-Natal Centre for Civil Society in Durban. His latest book is BRICS: An Anti-Capitalist Critique (co-edited with Ana Garcia), published by Pluto (London), Haymarket (Chicago), Jacana (Joburg) and Aakar (Delhi).

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