Who says this is a do-nothing Congress? Sure, it can't agree on expanding the childcare tax credit or approve an increase in the minimum wage. Yet, as Congress prepares to adjourn, legislators were rushing to protect and expand tax subsidies for some of the largest, most profitable corporations in the world. Under current law, US exporters can set up largely paper presences in foreign tax havens like Barbados. The exporters can then exempt between 15 and 30 percent of their export income from taxes by routing products through these entities, called Foreign Sales Corporations. In a recent case filed by the European Union, however, the World Trade Organization ruled that the FSC tax break was an illegal subsidy.
Precedent has shown the United States more than willing to bend to the will of the WTO. For example, when the WTO ruled against an Endangered Species Act protecting sea turtles, the United States quickly eased its regulations. Yet when a multibillion-dollar tax incentive is at stake, Washington falls all over itself to protect corporate welfare.
Immediately after the WTO ruling against FSCs, the Clinton Administration, a few members of Congress and the business community began meeting in secret to work out a bill that eliminates FSC in name only while actually expanding export subsidies for a total cost to taxpayers of about $4 billion a year. The beneficiaries? General Electric, Boeing, Raytheon, Cisco Systems, Archer Daniels Midland and others. The House approved this bill with only forty minutes of debate and no amendments allowed, by a vote of 315 to 109. The bill was held up in the Senate because some objected to the tax break for arms manufacturers and subsidies for tobacco exports. Despite the objections, the bill is expected to be tacked onto a must-pass budget bill and signed by the President.
The proponents of this giveaway claim it will promote US jobs. However, the Congressional Budget Office, whose director was appointed by Republicans, has written, "Export subsidies do not increase the overall level of domestic investment and domestic employment.... In the long run, export subsidies increase imports as much as exports." The nonpartisan Congressional Research Service reached a similar conclusion.
It gets worse. The tax break may actually subsidize moving US jobs overseas. There is no requirement that a substantial portion of a product covered by the subsidies be made with US content or with US labor. An Administration official said that an eligible product could have "little or no US content" and still qualify.
Not only is the legislation not economically justifiable, it is not likely to comply with the WTO ruling. The EU has already stated that the changes aren't adequate, and it intends to seek authority to retaliate by imposing 100 percent tariffs on some $4 billion worth of US goods.
I am not a fan of the WTO. It is an unaccountable, secretive, undemocratic bureaucracy that looks out for the interests of multinational corporations and investors at the expense of human rights, labor standards, national sovereignty and the environment. But by pointing out that export subsidies like FSCs are corporate welfare, the WTO has done US taxpayers a favor. It has once again highlighted the fact that US trade policy is written by and for corporations, with no concern for workers, human rights or environmental protection.
If Western Europe is to be independent it must defend its welfare state.
It took them thirteen years to ditch
Old Slobodan Milosevic.
Now people see a new day dawn,
But notice that he's still not gone.
In Serbia people power has swept out another tyrant. In the aftermath the Yugoslav federation's new president, Vojislav Kostunica, the constitutional scholar of strong nationalist leanings who led the surprisingly velvet revolution, faced the tough job of renewing a government that stank of rot from the top down. Opposition leader Zoran Djindjic summed up the fast-changing post-Slobo status quo: "We've done two-thirds of the job, but we used the power of the streets more than the power of the institutions and more the power of the people than of political organizations. Now it's up to us to turn what people chose with their energy into reality."
The task of institutionalizing the revolution presented the new federal president with daunting problems. His moves to oust the pro-Milosevic officials in the Serbian government--the still-loyal secret police, the military, corrupt factory managers, bureaucrats and legislators--and install honest civil servants were complicated by resistance from leaders of the old regime and some generals. But he still had the powerful force of unleashed democratic energy behind him. Given Kostunica's nationalistic sentiments, however, which permeate the Serbian Orthodox Church hierarchy and other institutions to which he claims some fealty, there is a danger of the recrudescence of chauvinistic patriotism, which Milosevic stirred up during his reign and to which elements of the populace remain vulnerable. We can hope at this point that Kostunica will work to keep these emotions within bounds.
Kostunica must also deal with restive Montenegro, which harbors secessionist dreams and, unhappy over the current Constitution, boycotted the elections. And he must confront the issue of the future of Kosovo, whose people suffered greatly at Serbian hands. Hundreds of Albanian political prisoners are in Serbian jails, and Kostunica has the power to pardon them. His attitude toward municipal elections in Kosovo, set for October 24, is crucial. These elections were seen as an important step in UN efforts to establish workable institutions in the province--and by many as part of an irreversible process of readying Kosovo for independence.
The West must give Kostunica and his new-fledged democracy strong support, both diplomatic and economic, including lifting sanctions. Billions of dollars are needed to rebuild the economy that the Milosevic regime ransacked and that sanctions crippled, and to repair the infrastructure damage inflicted by NATO bombs.
That does not, however, mean putting on indefinite hold the reckoning with Milosevic and his henchmen before the war crimes tribunal in The Hague. The meting out of justice to indicted war criminals must continue, but the West should give Kostunica running room while persuading him to cooperate with the tribunal.
The Contact Group, led by the United States, France, Britain and Germany, must begin thinking seriously about a broader international diplomatic process to resolve many of the outstanding questions and conflicts of the entire region and to give the Balkans a secure place in the European "house." The Serbs' yearning to be integrated into Europe was a strong motive behind their overthrow of Milosevic.
The crimes of Serbia's leaders, its army and its paramilitaries cannot be forgotten, but the NATO air war left a residue of bitterness among the people. Now, Yugoslav democracy needs to be nourished. The hope of better lives can sustain the Serbs in the arduous task of reconstruction they face in the years ahead.
A new era has begun in Serbia, not only because Slobodan Milosevic has at last been expelled from office but because the deed was accomplished by the Serbian people acting in solidarity and without recourse to violence to seize their political destiny. The world will not soon forget the spectacle of Serbian riot police embracing demonstrators or the ballots spilling from the windows of the Serbian Parliament building.
Six months ago, such developments were unthinkable: Serbia's opposition had grown battle-weary and despondent, outmaneuvered by a repressive regime and fractured by internal divisions. Much of the credit for the energy, creativity and wherewithal of the protests belongs to Serbia's youth movement, Otpor, which aggressively advocated coalition-building, nonviolent civil disobedience and the importance of winning police and military support. The popular rebellion in Serbia bore the hallmarks of Otpor's strategy, as well as the youth movement's exuberance and optimism.
Still, the politics of coalition-building are complicated and perilous. Can groups, individuals and institutions that once supported Milosevic's ruling party or that launched and sustained the rhetoric of war really be trusted to help lead Serbia into the new era? For how long will the eighteen opposition parties that united behind Vojislav Kostunica continue to cooperate in the absence of a common enemy? Given Serbia's deeply divided political scene, Kostunica, a nationalist democrat from the center right, was a canny choice for presidential nominee: Uncorrupted by regime ties or mafia connections, Kostunica has a reputation for personal honesty and integrity. An anti-Communist, he also has a history of fierce opposition to Western interference in Serbian affairs. He has denounced the Hague war crimes tribunal as a political tool, he had strong wartime ties to Bosnian Serb leader Radovan Karadzic, and he decried the Dayton agreement of 1995, favoring more substantial Serbian territorial claims in Bosnia. As for the Serbian offensive against Albanians in Kosovo, Kostunica once told the Chicago Tribune, "Their leaders asked for Kosovo to be bombed. How should we behave? How would Americans behave?"
These views appealed to Milosevic's former constituency as well as to the substantial nationalist opposition that has long felt that Milosevic betrayed Serbian territorial aims and soiled the country's international image. Many ordinary Serbs share an abiding distrust of the international community, especially the United States, which they feel punished the people for the actions of a leader many of them despised. At the same time, although he wears his nationalism proudly, Kostunica says that it entails neither chauvinistic intent nor "Greater Serbian" aspirations. Kostunica has always opposed the deployment of paramilitaries, and he is a democrat who favors a free press, a truth commission and the rule of law. His impressively level-headed command of the peaceful rebellion speaks for his commitment to nonviolent conflict resolution within Yugoslavia.
And yet there is an antinationalist segment of the Serbian opposition, however small, that embraces the country's new leader very cautiously. These civil society leaders, many of whom weathered the Milosevic years in Serbia's sizable NGO community, worry that Kostunica will bring with him certain elites who fell from Milosevic's favor in the mid-nineties. After all, among Kostunica's close allies are the Serbian Academy of Sciences and Arts and the Serbian Orthodox Church, both of which helped produce the nationalist rhetoric that Milosevic seized to bolster popular support and to fuel the war machine. Serbian nationalism in all its varieties will not soon disappear, and the student movement in particular has a crucial role to play in keeping Kostunica, as well as his future challengers, honest and in helping a meaningful political life to take root at last in Serbia.
Meanwhile, the practical challenges are monumental. Yugoslavia's economy is a shambles. Not only did NATO bomb key factories last year; not only did sanctions create a vacuum since filled by an all-pervasive black market; not only does Serbia lack a banking system and access to foreign banks; but Milosevic and his cronies established an elite class of gangsters and paramilitaries whose ill-gotten wealth will be difficult to simply wish away. To neutralize the power of organized crime, the holdings of war profiteers and mafia lords may have to be legalized, or at the very least, these characters, who have played such a nefarious role in Serbia's financial and cultural life for the past decade, must be persuaded to invest their wealth constructively. In a society whose institutions, from banks and hospitals to schools and courts, have been neglected or co-opted, and where the flight of the professional classes became a virtual hemorrhage, the road to recovery will be long indeed. Although the easing of sanctions and the promise of aid will help, the people of Serbia must survive a very difficult period of adjustment.
At the end of this period, however, Serbia, the largest and most populous nation in the ex-Yugoslav region, could once again become a forceful neighbor. This is just one reason that it is so important for Serbia to reckon with its recent history and rebuild its relationships with the other ex-Yugoslav republics on a foundation of humility and cooperation. The status of Montenegro remains an open and vexed question, with some of Milo Djukanovic's followers still straining for independence and Milosevic's party officially governing Montenegro on the federal level. And against the will of the Albanian majority, Kosovo remains nominally a part of Yugoslavia; with a reputable government in Belgrade, the international community will eventually withdraw.
The question of reconciliation with the past, specifically Serbia's role in the Yugoslav wars, is also a critical one, and it will most likely be resolved on local terms or not at all. Many Serbs believe they have been demonized by the world media and unfairly singled out for punishment for the Bosnian war. Thus, stern rebukes from abroad often meet with hostility. Although Kostunica has unfortunately vowed not to cooperate with The Hague, he may offer war crimes trials on Serbian soil. One hopes the new freedom of expression Kostunica promises will allow journalists and academics to explore recent history publicly and candidly. This internal process will be delicate, painful and contentious, but it offers the possibility of deep and lasting change.
Call it the Prague Fall: a season not only to test the democratic progress of Central Europe's most favored post-Communist nation but to find out whether a nonhierarchical, nonviolent movement of fair traders, environmentalists, debt-relief activists, socialist workers and revolutionaries can--by applying public pressure to the world's most powerful economic institutions--force real change. Prague proved, if nothing else, that the issues of corporate reform and increased social services have worldwide appeal. Red-sashed Catalonian Marxists marched alongside white-clad Italian Zapatista sympathizers. Nervous Czech environmentalists rubbed shoulders with black-hooded German anarchists. Activists from Greece and Turkey--yes, Greece and Turkey, together--commanded the front line of a march blockaded by police and kept it calm. This was not the globalization of multinationals, but in the words of Scott Codey, a US activist, "globalization of human rights, workers' rights and economic justice."
As Day One of the Initiative Against Economic Globalization in Prague began, all was quiet and orderly. Leaders of nonprofit organizations held thinly attended public discussions. Fourteen thousand dark-suited bankers and politicians yawned through World Bank and the International Monetary Fund meetings with titles like "Building the Bottom Line Through Corporate Citizenship" in a Stalin-era convention hall. Meanwhile, the police looked on benevolently--I saw one Czech lieutenant blithely pop a ball into the air with the inscription Liquidate the IMF.
By late morning, however, activists had begun a three-pronged assault on the heavily guarded Congress Center. One group of mostly anarchists and communists managed to snake its way through police barricades and get within yards of the bankers' meeting hall. It remains unclear how the violence escalated so quickly, but fifty Czech police were injured in a bombardment of sticks, stones and Molotov cocktails. By nightfall, after activists had smashed the windows of a McDonald's on Wenceslas Square, cops were again beaten back, this time by protesters wielding the policemen's own batons. The day ended in a cloud of tear gas, with thousands of World Bank delegates being shuttled in buses, searching for the four-star hotels not besieged by young radicals.
By Day Two, to no one's surprise, the Czech police had abandoned their restraint. I saw officers round up protesters for no apparent reason and cart them off to jail, where things got decidedly worse. Many of the 859 arrested were denied food, water and phone calls. And in numerous cases, they were severely beaten. "The jails here are a place of no control, a place of complete darkness," said Marek Vesely, an observer with Citizens Legal Watch, a Czech nonprofit. "A lot of people who didn't have anything to do with the violence got arrested." In addition to investigating a range of human rights violations, Citizens Legal Watch is trying to determine whether police provocateurs urged on the crowds and whether--as was widely rumored--some activists were turned away at the Czech border based on information provided by the FBI.
But amid the apparent chaos, there were signs of accomplishments. For one, pressure from the streets, building ever since Seattle, finally forced two traditionally secretive institutions to let some critics in the door. Representatives of Transparency International, which is calling for public access to World Bank and IMF documents, along with 350 representatives of nongovernmental organizations, were admitted to meetings in Prague (five years ago, only two NGOs were allowed in). World Bank president James Wolfensohn and IMF managing director Horst Köhler even met with NGO leaders in a public meeting presided over by Czech President Vaclav Havel.
Still, the substance of the new dialogue left much to be desired. "Understand that we are not a world government," Wolfensohn told NGO leaders. "Very often people blame us for the politics in a country when they should really blame themselves." Such defensiveness makes it hard to take seriously the World Bank and IMF claim that they want "to make globalization work for the benefit of all." As Liane Schalatek of the Heinrich Böll Foundation said, "NGOs have pointed out for more than three decades that growth is not just economic growth. We have heard the rhetoric." (Wolfensohn did manage to win over rock star Bono of U2, who left Prague calling him "the Elvis of economics.")
The Italian Zapatistas and Catalonian Marxists have now returned home. Czechs have reoccupied their city. And the jails are mostly empty (as of this writing, only twenty protesters remain in custody). But the Prague Fall is not over. The movement is globalized; critics have been admitted into the tent. And perhaps most important, politicians, central bankers and multinational chiefs are beginning to understand that corporate globalization faces truly global antipathy.
Momentum for the euro wanes.
The krone is preferred by Danes.
And recent surveys all have found
That British voters love their pound.
But, seeing this through New World eyes,
Why is it such a big surprise?
Imagine how we Yanks would holler
If someone tried to take our dollar!
You'd see a war like Vietnam,
But this time we would use the bomb.
During the Kosovo crisis of last year, it was commonplace if not routine to hear two mantras being intoned by those who had decided that "never" would be about the right time to resist ethnic cleansing with a show of force. We were incessantly told (were we not?) that NATO's action would drive the Serbs into the arms of Slobodan Milosevic. And we were incessantly told (were we not?) that the same NATO action would intensify, not alleviate, the plight of the Kosovar refugees. Now there has been an election that was boycotted by almost all Kosovars and by the government of Montenegro. And even with the subtraction of these two important blocs of opposition voters, it is obvious that Milosevic has been humiliated, exposed, unmasked, disgraced.
At the beginning of September, Hans Blix, head of UNMOVIC, the latest UN
commission for verifying Iraqi disarmament, poised to report his new
team's readiness to go into Iraq.
Perhaps one of the most fatuous theories ever promulgated was Francis Fukuyama's "End of History," put forth just as, in most parts of the world, history resumed its sanguinary progress as soon a