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By James Petras
One of the key distinctions between a capitalist and a non-capitalist (socialist, feudal, absolutist state) economy is the separation of state and private enterprise. In a capitalist state, economic enterprises are supposed to operate according to market principles, seeking to maximize profits and expand market shares. The state is supposed to act on behalf of capitalist enterprises, ensuring their protection and furthering their pursuit of profits and markets.
Recent history of foreign relations provides ample evidence that the reverse is true: private corporations, especially banks have been converted into adjuncts of the US state , serving as transmission belts of US military policy, by sacrificing markets, profits and opportunities for future economic growth. Another important reason for keeping US multinational corporations out of a country. Moreover, the state both in the US and Europe have seized billions in private investment funds and dispossessed their owners, in the process scuttling major financial transactions adversely affecting the biggest Western financial houses.
The dispossession of private capitalists and the harnessing of private firms to state policy have grown in scope and depth over the current decade, revealing the growing subordination of private capitalism to a militarist imperialist state. Sacrificing private profits and free markets to the edicts of state officials has been implemented via state coercion and severe sanctions against any transgressors.
How and why the world’s biggest propagandist of “free enterprise” and de-regulated capitalism has successfully converted major international financial and industrial enterprises into tools of foreign policy at enormous costs to their bottom line is yet an untold story. Given the enormity of the historical change in the relation between state and market, the shift in power has enormous consequences for peace, prosperity and freedom.
How the State Dominates “the Market”: The Historical Context
Beginning in the 1990’s under President Clinton and escalating under Bush and Obama, the US imperial state imposed economic sanctions first in Iraq and later on Iran and more recently on Libya. In effect the state dictated to its petroleum multi-nationals and biggest banks that they should sacrifice lucrative investment opportunities, ongoing profits and markets to serve imperial state interests. Billions of dollars were lost during the 1990’s, in the face of Iraq sanctions, forcing many US oil companies to engage clandestine “third party” intermediaries, to secure a reduced share of the petrol market. The imperial state imposed severe penalties – fines, jailing’s and exclusion from the US market – to any of the CEOs and private corporations that did not abide by the sanctions. Clearly the state was in command; the corporate ruling class became the executive committee of the imperial state.
The sanctions policy applied to the Middle East under Clinton was only the beginning; it was deepened and vastly expanded under Presidents Bush and Obama, especially after 2004.
The Levey Levy: How American Zionists Freeze Financial Profits
In 2004 a little noticed administrative add-on in the US Treasury Department took place that has had world historic significance: AIPAC (American Israel Public Affairs Committee) pressured Treasury to create the position of “Undersecretary for Terrorism and Financial Intelligence”. Equally important, under strong pressure from AIPAC, a zealous Zionist of immense energy, Stuart Levey was appointed to head the new agency.
Levey used all the administrative mechanisms in the Treasury, from threats of penalties, fines and ostracism, to friendly and hostile persuasion, to line up US federal and state public and private pension funds to sacrifice lucrative investments in targeted countries, most of whom, lo and behold, were adversaries of Israeli occupation of Palestine.
Even as Levey was imposing state constraints over the operations of private investors in the US, he organized his entire staff to police the financial world abroad. Levey and his Zionist allies in the so-called “Israel lobby” called on their Congressional cronies to approve sanction policies which not only affected US banks, manufacturers and construction companies but which penalized any European, Asian and Middle Eastern bank which had economic dealings with Iran and other countries on his list (Cuba, North Korea among others).
Levey extended the sanctions to cover firms and investors with even indirect economic ties to the US: his secret financial police located funds which passed from one private bank to another which had tangential links to US banks and Levey applied and secured hundreds of millions in fines against Swiss, Chinese (Macao) English and other banks. Effectively the US imperial state via its Undersecretary of Treasury, harnessed the entire world’s financial system to serve US and Israeli foreign policy. Levey is explicit about his role in creating a state within a state. “The US Treasury is the only Treasury in the world with a fully functioning intelligence office.” He might have added that the US Treasury is the only Treasury in the world which sacrifices the economic interests of its private investors and those of its allies in pursuit of the interests of a foreign power (Israel).
The Levey regime by leveraging ties with private US financial institutions and access to US markets, effectively controls the financial transactions and market operations of European, Asian and Middle Eastern private enterprises.
What appears as merely a relatively minor administrative post in Treasury has in fact created an administrative empire which has effectively converted private international banking and manufacturing corporations into instruments of US and Israeli policy.
In office Levey engineered the seizure of billions of dollars of overseas assets of private and public funds of adversaries. One of his last moves before leaving office (March 2011) was to seize $32 billion in Libyan funds using the pretext that the non-US bank to which the funds were entrusted invested in US Treasury notes.
Levey has clearly defined the new relation between private capital (the market) and the State: “Governments around the world (sic) see the power of these types of measures and the relevance of the private sector to the overall [imperial] effort and that is something that has changed in the last four or five years.” (Financial Times, March 10, 2011, pg. 5).
The “measures” that Levey refers to are the state sanctions and the coercion and penalties applied to the private sector to ensure their conformity with imperial and Israeli military interests at the expense of profits and markets.
The Visible Hand of the State
Levey and his Zionist colleagues have ensured that his “state within a State” will continue beyond his tenure in office. He was succeeded by David Cohen, his former law firm partner and promoter of the very same Israeli interests. Levey/Cohen have institutionalized and set in stone the mechanisms to further imperial state control over market operations .Cohen’s appointment ensures the continuation of the Zionist dynasty in the “State within the State”.
The biggest economic losers in the state centered “sanction” policies pursued by Treasury (read Levey/Cohen) have been the international banks, petroleum and gas companies and pension funds. The banks have lost access to investment funds and lucrative management fees; the petroleum companies have lost profits and access to oil fields. The military-industrial complex has lost arms sales. The agro-exporters have lost markets in food deficit oil producers. Who have been the “winners” – certainly not the Generals who are engaging in a third costly war when the sanctioners decided to escalate to the ‘military option’, once their sanctions policies failed to result in the overthrow of the Libyan regime.
On the surface the main ‘winners’ of sanction policies are their advocates in the White House, Congress, Treasury, the leaders of the two major parties and the ideologues and Islamaphobes in the mass media. And of course, the biggest winners of them all are Israel and their Zionist power configuration embedded in the key agencies of Treasury, the key committees in Congress, and their colleagues in the most influential Middle East posts in the State Department (James Steinberg, Mark Grossman, Dennis Ross, Jeffrey Feltman) and Treasury(Cohen)
If one asks the logical question why doesn’t Big Banking or Big Petroleum make a fight over policies prejudicing their economic interests and subjecting them to the harsh oversight of Levey/Cohen investigators in Treasury, the most reasonable assumption is that they are not willing to engage in a knockdown fight with three potent adversaries: the politically influential Zionists in the government who design, implement and enforce sanctions; their counterparts in the prestigious mass media who support their policies and the 300,000 active members of the 52 major American Jewish organizations who threaten to organize boycott campaigns. An implausible assumption is that the bankers and oil majors have become altruistic and patriotic and are willing to sacrifice billion dollar deals to serve our “national security” as defined by Levey/Cohen and their cohorts in AIPAC. When we speak of US ‘sanction policies’ or when we read of European bankers “following Washington’s lead” let’s be clear about what “state” within the US we are talking about and which agencies in Washington are ensuring that European banks follow “our” lead.
While we might not shed tears about an intrusive government curtailing the profit-making of Big Oil and Big Banks, or interfering with free market operations, let us not forget that “the state within the state” that dictates economic policy is not accountable to our citizens; moreover, if it dictates foreign economic policy to the multi-nationals surely it has no scruples in doing the same to ordinary Americans. Next on the AIPAC/Levey/Cohen agenda is a “request” by Israeli Prime Minister Netanyahu for an additional $20 billion dollars in “aid” to ensure Israel’s protection from the pro-democracy movements sweeping the Arab world and to finance a new batch of settlements in the West Bank.
Israel needs US aid like American taxpayers need a hole in their pockets. According to the latest study of billionaires published in the March 20 2011 of Forbes, Israel has more billionaires per capita than any country in the world.
- James Petras' most recent books are: What's Left in Latin America?, coauthored with Henry Veltmeyer (Ashgate Press, 2009), and Global Depression and Regional Wars (Clarity Press, 2009). He contributed this article to PalestineChronicle.com.
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