The Cards Are on the Table

Barak used the Oslo summit to lay his cards on table. They were fully consistent with a number of non-negotiable principles, or ‘red lines’ in the local term, which he had banded about since being elected. Barak’s red lines determine that 1) ‘Greater’ Jerusalem – will remain in its entirety under exclusive Israeli sovereignty; 2) Israel will establish three settlement blocs in the West Bank in wherein almost all the settlements will remain under Israeli sovereignty; 3) Israel will not only refuse to return to the June 1967 borders: it will demand some fifty per cent of the West bank territory for settlement blocks and security zones. 4) Israel will not discuss the repatriation of a single Palestinian refugee, though it is willing to participate, along with other countries in a possible international effort for the settlement of the refugees, including possible settlement in the area under Palestinian control. 5) Israel will express a willingness to recognize a Palestinian state conditional upon a number of essential restrictions. Among these: a) the Palestinians must sign on to a final and irrevocable agreement based on the above stipulations, 1-4; b) the state be limited in its arms level and it ability to sign accords with third parties.
He Means It
Barak tends to believe that the Palestinians will have to accept such a deal, since they do not have any alternative. The bitter pill of capitulation on the major Palestinian demands will be sugar coated by international recognition of a sovereign state. Since the international community has embraced Barak as a peacemaker, he believes that it will accept his interpretation of what it takes to end the conflict. Barak will move to convince the international community that Israeli public opinion and internal politics simply cannot countenance any concessions beyond his ‘red lines’ and that any attempt to go beyond them would be tantamount to political suicide for any Israeli leader. Barak sees the final status negotiations as the means to work out the details and the implementation of his policy along the above mentioned red lines.. The peace forces in the country have sensed for quite a while that Mr Barak is not actually a genuine alternative to his predecessor. However, Barak was shrewd enough to couple the introduction of his non-negotiable ‘red lines’ policy with some flexibility on slight incremental steps such as the re-negotiation of the Wye Accord, a very modest prisoner release and the partial opening of the safe passage route from Gaza to the West. Thus, people of good will can see some evidence of progress and still hope for the best. Moreover, many who know that, given Barak’s policies, peace is impossible, would like to convince themselves that Barak’s ‘red lines’ are just an opening position on the eve of some hard bargaining.
Theoretically, this is possible, but it is highly unlikely. Should Barak begin to seriously negotiate issues which he has declared non-negotiable, he will open himself to charges of deceit. This kind of deception would be grist for the mill of the right and its political vanguard among the settlers would have a field day denouncing Barak’s capitulation. They will be able to quote copious statements by him as to why it would be dangerous to do anything like making the concessions that are necessary for peace.. It is much more reasonable to assume that if he was serious about negotiating real solutions instead of imposing his policies, he would find a way to prepare the public, the overwhelming majority of which would support him. The evidence suggests that he believes that he can impose a settlement. And if not, there is an increasing amount of indicators that he is preparing for the possible collapse of the talks. Thus, if and when the talks fail, he wishes to hide behind the need to honor this so-called “national consensus” for which he bears major responsibility. Thus, with his famous, or should we say infamous red lines, Barak has converted an authentic consensus for peace and concessions which emerged after the May 1999 elections into what purports to a consensus for obstinate intransigence and the collapse of the peace process.

Passing Thoughts on Citigroup’s Coming to Town

Citigroup, the world’s biggest financial complex (3,400 branches in 100 countries and 165,000 employees) held a reception in Tel Aviv last week (Ha’aretz, November 1,1999) in order to announce their decision to open a branch in Tel Aviv. All the pillars of the local financial community, including Frenkel and the heads of the big local banks were out in full force to greet the newcomers.
Be Nice and Smile Even if it Hurts
Small fish do not usually welcome sharks into their small pond. However, there are many local financial wizards and business people who go by the theory that our local economy will somehow profit by the appearance of this giant Wall Street firm in the neighborhood. The hope is that if the big guys are interested in our turf, maybe there is more gold under it than we had assumed. Moreover, even if some of the local people were unhappy about the possibility that Citigroup will scoop up some of their clients, they were not going to show it or anger Citigroup by turning down the invitation to celebrate the occasion.
Citigroup’s New Boss
In an unrelated development, Citigroup made the international news last week announcing that it has a brand new boss, former U.S. Treasury Secretary, Robert Rubin, who was appointed on October 27, 1999 as a member of the firm’s three person directorate. The appointment followed Rubin’s decision a short while ago to leave Federal “service.” The U.S. economy did quite well under Rubin, so no one demanded a “cooling off” period. What could be more natural than the return of Rubin, former head of Goldman Sachs, to another central spot in the US financial oligarchy: From Wall Street to Washington D.C. and back to Wall Street. Our sense of logic and harmony are served by such smooth rotations.
Elegant Cattle Show
Just a small note on Rubin’s past activity will help to demonstrate how precisely the superb balance between money and politics is maintained. In February 1999, the International Herald Tribune ran a series analyzing the immediate background for the devastating crisis that ripped through Asia, Russia, Brazil and other countries from 1997 onwards. The crisis, which involved immense suffering for hundreds of millions of people, could not have happened were it not for ‘vulnerabilities’ fostered by Clinton-Rubin sponsored changes in the workings of international finance.
Our story returns to the beginning of the decade, when Bob and Bill first met.These were the circumstances.

“They were serious men, prosperous and pinstriped and they derided ‘he politics of class warfare’ as they conducted a job interview with a young governor from Arkansas. It was a steak dinner…in New York in June 1991 and the top Democratic executives on Wall Street were ….in one of a series of meetings with presidential aspirants in what an organizer called ‘an elegant cattle show.’”
“They were questioning a man with a meager salary but a silver tongue and this was another show in which Bill Clinton charmed his way forward to a blue ribbon……Aides describe that evening as an important step in the business education of Clinton, who came to repeat and amplify the themes, especially the need to move away from protectionism and push for more open markets in Asia and all over the world. It was the first time that Clinton met Rubin, from Goldman Sachs & Co. and the two men ..eventually forged a close partnership that has left an enormous imprint on the global economy. Clinton and Rubin took the American passion for free trade and carried it further to press for freer movement of capital…” (IHT, February 16, 1999)
Life has its ups and downs. Clinton will soon be out of a job. Bob Rubin is doing better. He has a new one. And his business will even have a branch in Tel Aviv.

Where To China

Certainly, one of the greatest difficulties in disseminating and teaching revolutionary ideas is the commonly held belief that modern revolution has failed. The fall of the Communist regime in the former Soviet Union and the retreat by China from socialist principles are deemed conclusive proof that socialism is a failure, that and it cannot work as it is opposed to human nature. This thesis appears to be supported by the tremendous gap in living standards between the leading capitalist countries and those of Russia and China.
These are potent images and can only be countered by a rigorous examination of the historical record. This examination demands that we separate between two highly interrelated spheres of social reality – politics and economics. Socialist theory posited the advantages of a planned economy based on the social ownership of the main means of production. It is the author’s thesis, that despite the difficulties involved in the establishment of a new set of social relationships, socialism did prove itself in the tremendous advancement of the economies of the countries which did choose the socialist path. Furthermore, it is the writer’s deepest belief that socialist advantages and gains fell victim to objective obstacles and subjective errors of a political nature.
Naturally enough, as the two fields of social activity – economics and politics - are always highly interrelated, it is no simple matter to untwine and separate their specific role in any concrete situation. The writer is aware that the attempt to separate and distinguish between these two elements poses serious methodological difficulties. One way to make this distinction is to analyze the fate of bourgeois revolutions. Is it correct to say that the French revolution failed when Napoleon destroyed the political foundations of bourgeois freedoms and democracy? It could be argued that the that the fall of French democracy did not eliminate the developing capitalism relations of production. Yes, but capitalism did not need the protection of an organized, militant socialist state.
It has already been argued that specific circumstances hurt and curtailed the ability of socialism to grown and develop. The oft quoted example is the siege imposed on the young Soviet Union by the West after the October Revolution. This example is helpful in a narrow sense, but misleading in a more basic analysis. Even if there were no immediate dangers involved in the intervention, the blockade and the siege, the political realities both in the USSR and in the international arena dictated essential elements of policy. The concrete historical experience of socialist revolution has been that society was forced to allocate huge portions of the societal funds to sections and projects dictated by political realities. One can continue to argue regarding the necessity of this or that specific policy, this or that specific political response to pressures, but one can state with a great degree of certainty that no socialist country ever came near to enjoying the fruits of its socialist advance. Many of those fruits, which were the most concrete evidence of the vitality and the capacity of the socialist system, were diverted to non-economic projects connected to political needs, both real and imaginary.

For Example
Yuri P. tells of gigantic defense expenses incurred by the Chinese when Mao decided to set up a “third line” of defense. The Chinese (or Mao or both), in the sixties, became convinced that they would have to fight a new war against the United States of the USSR, or both. They also were certain that in order to continue fighting after their enemies would pierce two main lines of their defense, survival depended on the establishment of a gigantic, complete military industrial complex in inaccessible parts of the country. One cannot even begin to imagine the resources diverted to this project or scheme. Those resources were created by China’s socialist system, despite its primitive foundations and then skinned off the considerable surplus. This is just one of the many examples where the advantages of socialist system of production were utilized – or even sacrificed – in order to serve political needs.
This is not to argue that the two areas – the economic and the political can or should be separated in the strategic thinking of the political leadership. The close linkage between the two elements is almost inevitable. However, there is every reason to make an analytical distinction between the two elements in order to expose and contradict the crass propaganda to the effect that socialism was a failure in the USSR and China. Socialism and socialist construction, on the contrary, proved their economic efficacy, by every rational criterion.
Success and Failure
We all have an understandable tendency to categorize complex questions in a way that will allow us to answer them simply. This is especially true regarding the highly complex and complicated question of the success or failure of the 20th century’s socialist experiment. It is true that the Soviet Union crumbled under the pressures of unsolved problems and it is true that the Chinese people are trying a rather unorthodox, even dangerous policy to avoid harsh reality. But these important and valid points are insufficient for answering the larger question of success and failure. The historical record and the immensity of the question and the problems it involves are so complex as to defy a simple yes or no answer to the question of failure or success.
There were two major efforts in this century to build a society designed to begin the march beyond slave labor and production for profit. Both established functioning societies that promised economic and social progress to the majority of their populace. Socialism eliminated starvation, gave land to the peasants, established universal elementary education, made enormous dents in illiteracy, made gigantic strides in public health and made a basic contribution to the modernization of production. At the very same time, in the same breath, it must be said that neither the USSR or China were close to ensuring the kind of standard of living that was enjoyed by enormous sections of society in the advanced capitalist societies.
The most reasonable explanation for the retreat from socialism in the USSR and in China stems from the economic impact of the unequal distribution of power and control. Bureaucratization and the need to build and then depend on technocratic sections of the economy created a new middle class. This class, though highly rewarded in comparative terms by society for their special talents, had more and more opportunity to sense its relative deprivation vis a vis their colleagues in the West. This class was vested with disproportionate influence and was especially adept at presenting problems and challenges in a manner that would ensure its own interests. The accession to pivotal possessions of power by the industrial bureaucracy and the technocratic strata was always camouflaged as a new stage in the liberalization of the system and a more elastic approach to economic and social life.
For a long time, the new middle class aspired to a Western standard of living.These aspirations were intensified when political conditions and sharp improvements in transportation and communication enabled the socialist middle classes to rub shoulders with their counterparts in the West. The psychological implications are obvious. I am a high ranking engineer in a socialist economy but I do not have my own car, my own private home in the suburbs, two vacations per annum abroad and many other perks that make life and the rigors of responsibility that much easier. If I live in a society with intensive ideological and educational inputs, these, when adopted, may serve to compensate for some of the gap. But with more and more normalcy, in an atmosphere where labor is exerted wholly or mainly in exchange for material compensation, the socialist middle class begins to chafe under the yoke. A society that cannot promise it adequate compensation for its skills appears more and more illogical and in dire need of reform or even replacement. The fact that these skills were purchased with the blood and the sweat of the laboring masses and enhanced by the socialist educational system is only of momentary interest. You will have quite a hard time convincing a Soviet or Chinese surgeon or the manager of a gigantic economic production trust that he or she does not deserve the same – or at the least comparable – remuneration, enjoyed by his or her colleague in Frankfort or San Francisco.
There are, of course, many additional conditions and circumstances which facilitate the retreat from socialism. Many of these, are by their very nature, highly specific and develop from the maturation of different contradictions. These include difficulties and even catastrophes stemming from bad policies. Here, I have found it necessary to concentrate on the social basis for capitalist restoration, because without this basis, it is doubtful whether the restoration tendencies could have matured and succeeded. Naturally enough, the path to capitalist restoration is paved with slogans on a return to multi-party parliamentary democracy, respect for human and political rights and other characteristics common to advanced capitalist countries. These conditions, as is well known, never existed in pre-socialist Russia or China. But, it is almost a commonplace to note that bourgeois promises and bourgeois realities are quite a different matter.




Paradoxically, it might emerge that the great historical vindication of socialism will be the sad fate of the Soviet peoples after the victory of capitalism in the former Soviet Union. The facts and the figures on the rape and the pillage of Soviet society and the socialist economy are there for everyone to see. As a matter of fact, the massive deterioration in living standards for the overwhelming majority of the Soviet people is not even being debated in the West. The current discussion centers on why capitalism has failed. The received wisdom back then on the eve of restoration was that capitalism, being the only really natural system, would simply grow and prosper by virtue of the elimination of all sorts of artificial, socialist restraints. Give the people a chance to work for themselves and make money and all the rest would fall into place. In the midst of the devastation, the misery, the falling mortality age Western experts have changed their tune. It appears that “human nature” in the former Soviet Union did not achieve the desired aim, because there is a problem of culture and the Russian culture doesn’t seem to take to the spirit of free enterprise. Free competition was suppose to be sufficient to free human nature, but after this didn’t work, it may take a bit of time until the Russians are acculturized to the spirit of capitalism.
China versus Russia – In Search of the Chinese Yeltsin
One does not have to be an acute observer to discern that society in the former USSR is in a state of disintegration, and that present day Russia just does not function. China, on the other hand, with its unique experiment of building socialism based on foreign capital and local private enterprise, with all its contradictions, is a dynamic, functioning society. I must stress openly at this point that I am pessimistic about the present Chinese path and fear that it might well auger a dangerous return to unrestricted capitalism. However, there are important indications that this is not inevitable and that the Chinese leadership may change course and move back in the direction of socialism.
The continued existence of a strong central leadership in all of China and the pivotal political role of the Communist Party are essential prerequisites for maintaining the socialist option in China. The “advice” of Wall Street Journal in its special issue devoted to the 50th Year celebration of the Chinese revolution is most revealing. Speaking for many representatives of capital in the West, the WSJ stresses that economic reform is not enough. It must be backed by political reforms. The problem that the WSJ and its allies have in this respect is that their program has been adopted and implemented in the former Soviet Union. There, economic reform- the reintroduction of the private ownership of the means of production – was combined with political reform: the reintroduction of the parliamentary pluralistic party system and the disappearance of any meaningful central control over a variety of national and ethnic entities. It is the considered opinion of the WSJ, and those it represents, that China will not enjoy the full benefits of modern capitalism and large scale investment, until the Communist Party will relinquish its political monopoly and each ethnic grouping, nationality, or region will be able to cut its own deal with international capital.

This is indeed a program designed to prostrate China economically and politically and put it at the mercy of international capital, which would love to add a defenseless, truncated 1,200,000 million people to the open markets of globalized capital. The warning signals coming out of the former Soviet Union are sufficient to warn the Chinese leadership that their many “new friends” among the scions of international business are bringing to China with their investments a political program for the murder (or perhaps suicide) of Chinese socialism.
Why the Present Chinese Path Appears Attractive
In China today, one cannot fail to be impressed by innumerable signs of construction, electronification, and the massive introduction of state of the art industry and technology. China is building and the hustle and bustle is felt all over the place.This burst of activity is attributed by all to the reformist line initiated by the Communist Party in 1987. The essence of this line is that China does not have the elementary economic prerequisites for building socialism and must develop its economy through the controlled introduction of capitalist relations of production.This would suggest that progress must be measured in decades and demanded infinite patience. However, as this line unfolds, we encounter a wholesale retreat from the gains made by socialism and the continuous rendering of the bonds of social solidarity. Unemployment is rife and trade unions are banned in projects financed by foreign capital. Health and education begin commodities and must be purchased and paid for on the market. And worst of all, the party has retreated from active intervention in the life of the village, where three-quarter of the Chinese people still dwell.
Why does capitalism seem to be working in China. The basic reason is that the Chinese people have made, through the implementation of the advantages of the socialist system, gigantic investments in social and human capital. These investments and a very important, though primitive infrastructure have made China a godsend for foreign capital. There is an almost inexhaustible reserve of skilled and highly professional labor which can be used for development at about 10% of what similar labor would cost in the advanced capitalist world. Subsides from the Chinese government (from the wealth of the Chinese people) promise free (valuable) real estate, tax breaks, immunity from laws on unfair labor practices and ecological considerations – and there is the avid and groveling attitude of the regime that tends to treat every venture capitalist as the messiah himself. The point is that it is going to be harder and harder to recognize the dangers emanating from social forces which want to go the whole way, back to a complete and total capitalism.
In this respect, the most problematic element of Chinese policy is to avoid the complexities of collective control in the village. The advantage is clear in that privatization of land and the liberation of capitalist initiative will ensure a surer and easier flow of foodstuffs and industrial crops to the city. But here is the difficulty. The land reform implemented by the revolution in the village, free health and education in the village electrification and the rudiments of modern agronomy were vital in ensuring the support by the peasantry for the revolution. Without a strong political presence based on peasants who gained from the revolution and stand to suffer from its reversal, capitalism will sneak back into the village in one hundred and one ways. The masses of the peasantry will have to resort to the new village bourgeois for every basic need beyond mere subsistence. The social and economic might of the capitalist peasantry (the neo-kulaks) will of necessity allay itself with other forces in the city which dream of a capitalist China. A massive reactionary force in the peasantry is just what is needed to sign a death warrant for socialism in that country. The village wealthy which followed the Communist Party slogan “It is Good to Become Rich” will find another party and another slogan which it will inscribe on its banner “It is Good to Exploit and to Stay Rich.”