Sunday, January 24, 2010


By Philippa
Updated August 2, 2011

What are perspectives from international relations theories that we can apply to the devastating 2010 earthquake in Haiti?
Haiti is a model of a country which has been impacted by colonialism and postcolonialism. Realist Thomas Weiss writes about Somalia in the 19th century period of colonization: "CONSUMER GOODS WERE INTRODUCED INTO THE LOCAL MARKET, WITH ACCOMPANYING MONETIZATION AND OTHER CHANGES IN THE ECONOMY" (Weiss, 2005, p. 58). This happened to Haiti in the mid 1990s, when the International Monetary Fund loaned money to Haiti with strings: it had to accept low cost food imports, which in turn, led to the collapse of its agricultural economy. Allowing US imports of rice, part of the conditions of Structural Adjustment Loans (SALs) devastated local rice production. As student Robert Pampel (INTL 5400, Summer 2011) points out, an oil embargo imposed by the US and UN on Haiti after the first ouster of President Aristide, caused Haitians to turn to forests for fuel, which eroded the soil and caused flooding. A US-aid program to replace the indigenous Creole pig, considered to be diseased, turned disastrous. Rural farmers fled to the impoverished cities, where housing constructions were not built to be earthquake proof.

As Robert Pampel points out, SAPs do not work in a country that lacks governmental infrastructure: "SAPs were enforced on countries with little consideration for their infrastructure and ability to implement structural adjustments. This is one reason why middle-income developing countries like Brazil and Thailand had success implementing SAPs, while many lower-income developing countries with little to no infrastructure struggled."

NGOs in Haiti are tasked to act as state substitutes, but while some have proved very useful in food distribution, trash goes unpicked up, roads are not repaired, and a disaster response program is not institutionalized.

The liberal view is stated here:" RESCUING OTHERS WILL ALWAYS BE ONEROUS, BUT IF WE DENY THE MORAL DUTY AND LEGAL RIGHT TO DO SO, WE DENY NOT ONLY THE CENTRALITY OF JUSTICE IN POLITICAL AFFAIRS, BUT ALSO THE COMMON HUMANITY THAT BINDS US ALL (Teson in Holzgrefe and Keohane, p. 129). The cry from Haiti has been answered by billions of people around the world, including a massive relief effort led by the US government. There was no forced intervention, no violation of national sovereignty, in the strict legal sense.

But Haiti was already dependent on outside powers, as the realist Weiss points out was the case of Somalia during the 1990s. In the case of Somalia, according to Weiss, "MILITARY, ECONOMIC, AND FOOD AID PERPETUATED A POLITICAL SYSTEM THAT WAS NOT SELF-SUSTAINING, NOR DID IT FULFILL THE BASIC REQUIREMENTS OF A SOVEREIGN GOVERNMENT (Weiss, 2005, p. 59).

The anti-imperialist Bricmont asks us to imagine "A WORLD IN WHICH CONGO, CUBA, VIETNAM, BRAZIL, CHILE, IRAQ, AND MANY OTHER COUNTRIES WOULD HAVE BEEN ABLE TO DEVELOP WITHOUT CONSTANT INTERFERENCE FROM THE WEST" (Bricmont, 2006, p.38). But now, China and Russia are shaping the economies of the poorer countries around the world. Here is a review of how I see Great Power rivalries in the Caribbean:

Before the Haitian earthquake struck, global power tensions in this part of the world had been escalating.

The western hemisphere (slice the earth in half length-ways and Haiti and the Americas are on the western side) is dubbed the US’s backyard. But N American policymakers fear their traditional influence is waning. US foreign policymakers are concerned with drug and terrorist sanctions in the area, as well as strategic resources – such as oil.
US oil imports from the Caribbean account for 15% of total oil imports to the US.
Russia and China have both recently staked a claim in the Caribbean.
In July 2009, Russia and Cuba signed a deal to jointly explore crude oil reserves off the Cuban coast. A meeting in Moscow in January 2009 renewed the pact, which had collapsed after the Cold War. While no mention was made of a military alliance, agreements were signed to cooperate in agriculture, manufacturing, science and tourism. In December 2009, a contingent of Russia’s North Sea Fleet docked in Havana after conducting exercises with Venezuela’s navy.
In September 2009, China sent Chairman of the Standing Committee of the National People's Congress (NPC) Wu Banggou to the Bahamas with 150 Chinese officials and business leaders. A number of economic deals were signed, including a multimillion dollar loan to help build a highway to Nassau’s international airport. This marked another step in the normalization of diplomatic relations between China and the Bahamas since1997.
Iran is another player. In 2008, St Vincent and the Grenadines established diplomatic relations with the Islamic Republic of Iran and secured a commitment to assist in the construction of the US$200 million international airport. On January 21, 2010, the President of Guyana, Bharrat Jagdeo, arrived in Tehran to renew ties with the Islamic world.
Half a year earlier, on May 1, 2009, Secretary of State Hillary Clinton laid bare US concerns, saying that “the Obama Administration is working to improve deteriorating US relations with a number of Latin American nations to counter growing Iranian, Chinese and Russian influence in the Western Hemisphere” (Associated Press, May 1, 2009). The Obama presidency however has welcomed China's bid to become an observer at the Organization of American States and a donor member of the Inter-American Development Bank. This is in line with a long term US policy of both collaborating with, and remaining wary of , ‘competitor peer’ major powers.
At a meeting of the Shanghai Cooperation Organization the following month, Brazil, Russia, India and China - or BRIC as the fast-growing countries are collectively coined - held their first summit. The BRIC leaders called for a ‘multipolar world order’, which in diplomatic language constitutes a challenge to US global dominance.
US’ wariness of BRIC is illustrated by policies on the military front. Washington is building its potential for nuclear and non-nuclear strikes in Latin America and the Caribbean. The US Southern Command’s 4th Fleet was recently reconstituted and patrols up and down the Latin American coastline. Part of its mission is humanitarian – dealing with hurricanes, for example. The other part of the mission has to do with national strategy. Forty percent of US trade and fifty percent of US oil imports come from this area.
Latin America leaders, however, are turning down requests for a US armed presence. For example, President Rafael Correa has asked US troops to leave their base in the port of Manta in Ecuador.
One principal reason for resistance against US military presence is the Treaty for the Prohibition of Nuclear Weapons in Latin America (also known as the Treaty of Tlatelolco) which came into force in 1969. It obligates Latin American parties not to acquire or possess nuclear weapons, nor to permit the storage or deployment of nuclear weapons on their territories by other countries.
Back in Haiti, the people still urgently need help; the death toll was past 300,000.
Let us hope Haiti’s needs inspire global cooperation, not competition.

Bricmont, Jean, Humanitarian Imperialism, Using Human Rights to Sell War, New York: Monthly Review Press, 2006.
Teson, Ferdinando in Holzgrefe, JL Ed and Keohane, Robert, Humanitarian Intervention, Ethical, Legal and Political Dilemmas, Cambridge University Press, 2003
Weiss, Thomas G, Military-Civilian Interactions, Humanitarian Crisis and the Responsibility to Protect, Lanham, MD: Rowman and Littlefield, 2005.

Friday, January 22, 2010

Legitimizing Usury, the Rise of Capitalism and Sharia Banking


In the New Testament, Jesus chased the money lenders out of the temple. Shylock, a money lender in Shakespeare's Merchant of Venice was reviled by his fellow citizens. Anti-semitism arose probably as the result of laws that only allowed Jews to be moneylenders in Europe. "Miser", "hoarding wealth" and other terms denoted the negative meaning of capital accumulation.

Today, of course, the accumulation of vast riches is applauded, as can be seen by the 'stardom' of such businessmen as Donald Trump. The legitimizing of usury in Europe by Christian religious leaders helped to develop the economic model of capitalism. How? Without bank loans, there can be no investment. Without interest on debt, there can be no bank loans. Bank loans and debt are crucial to continuing investments. Also, the stocks and shares developed in the 17th Century had one very important component: the forgiveness of debts made by investors. Yes, that’s right. Although we hold poor countries to the fire for debt repayment, if you invest in a company and it fails, you are not liable for debt. This frees capital to invest elsewhere.

Today, many capitalist countries are in fact debtor nations. I like to say we live in ‘debtism’ not capitalism because capital=profit minus debt.

I recommend the book The Web of Debt.

A student wrote on the topic of Sharia banking for her final paper in a previous semester. Here is an excerpt. Capital letters indicate referenced information (not blogged here.)

Marie-Josee Herard
December 19, 2009


This is a founding principle that has shaped Islamic banking. The first ever Islamic savings bank was modeled on “profit sharing” which WAS STARTED IN THE EGYPTIAN TOWN OF MIT GHAMR IN 1963 . The Muslim Brotherhood founder Hassan al-Banna’s goal was TO PENETRATE THE WESTERN FINANCE SYSTEM, CORRUPTING IT FROM WITHIN IN HOPES OF CREATING A PARALLEL SYSTEM TO RE-ESTABLISH A GLOBAL ISLAMIC EMPIRE GOVERNED BY ISLAMIC LAW (SHARIA).

Islamic banking policy states that money should be used productively and investment activities should be dealt with in partnerships so that risks and rewards are shared by creditor and debtor alike. Also, according to sharia, excess capital (i.e. profits) ought to be put back into the community in the form of zakat (alms). This includes stocks, real estate investments, insurances, and currency swaps that are sharia-compliant (called sukuks). There are limits, though; SHARIA LAW PROHIBIT INVESTING IN CERTAIN INDUSTRIES OR PRODUCTS, INCLUDING ALCOHOL, TOBACCO, PORK, AND PORNOGRAPHY. THE QUR’AN ALSO FORBIDS USURY (as aforementioned), SO FINANCIAL TRANSACTIONS ARE STRUCTURED TO RELY ON INCOME IN THE FORM OF RENTS OR PROFITS FROM THE LOAN, TECHNICALLY NOT INTEREST. SUKUKS … ARE A TYPE OF ISLAMIC BOND BACKED BY OWNERSHIP OF A TANGIBLE ASSET THAT PRODUCES A FINANCIAL RESULT. Another popular instrument is the murabaha, ESSENTIALLY COST-PLUS FINANCING, WHICH INVOLVES THE SALE AND REPURCHASE OF A COMMODITY TO FUND A LOAN . Scholars must review banking products and cases to make sure that they adhere to the Qur’an. BUT DEFINITIONS OF WHAT IS ACCEPTABLE CAN VARY GREATLY, NOT ONLY FROM REGION TO REGION BUT FROM BANK TO BANK… AS EACH BANK HAS ITS OWN BOARD OF SCHOLARS .

After initial success in the late 1970s and 1980s, which was largely fueled by oil revenues, Islamic banking suffered serious setbacks. There were failures in Islamic banking integration in such countries as Egypt, Iran, Sudan, and Pakistan, and several banks went bankrupt after having over-leveraged their funds, which coincidentally violated the sharia tenet of avoiding excessive risk-taking. So new products were developed and banks branched out; that’s when sukuks came into the picture, among others. But since then, some have estimated that the SECTOR HAS EXPANDED AT A BRISK PACE OF BETWEEN 15% AND 25% ANNUALLY IN THE PAST DECADE… in fact, THERE ARE CURRENTLY (as of 2006) 250 ISLAMIC MUTUAL FUNDS WITH $300BN WORTH OF ASSETS UNDER MANAGEMENT AND 300 IFIs HOLDING OVER $250BN DEPOSITS…FURTHERMORE, $200BN IN ASSETS ARE MANAGED BY DEDICATED MUSLIM “WINDOWS” OR SUBSIDIARIES OF CONVENTIONAL BANKS .