I think we are already in a Third World War that will decide whether the
future is an Anglo-Saxon unipolar one or a multipolar one. The military
aspect of the fight is done by proxies, because a direct confrontation
between the main players would result in mutual defeat. Money is the
nerve of war (Thomas More), the strategy is to economically exhaust
adversaries; the weapon of choice is economic diplomacy.

Putin proposes sharing with Europe the resources of the Euro-Asian
Economic Union, to create an economic entity from Lisbon to Vladivostok.
That is the worst Anglo-Saxon nightmare, because the world economy based
on the dollar would cease to be and continental Europe would return as a
major power. Such an advantageous proposal for Europe should have
awakened European enthusiasm, but its political class serves interests
distinct from those of their peoples. Therefore it collaborated in the
coup in Kiev, which destabilized Ukraine, its neighbour, and jeopardized
its most convenient energy connection.

The United States took over from Britain to serve the same financial
interests and also inherited the same policy of sowing conflicts, that
justify military bases and invasions everywhere. The excesses committed,
with an unbridled emission of inorganic dollars that fuel the rise of
stock market values, disassociated the financial sector from the rest of
the economy, which shows negative indicators. The dollar must maintain
its exceptional and indispensable currency role, because its use is a
worldwide tribute paid to the United States. The network of free trade
and now partnership agreements the US proposes has a vital role to
maintain the use of the dollar as a reference value. It is to maintain
that seigniorial advantage, that today the US proposes two ambitious
agreements, negotiated in secret: the Trans-Pacific Partnership
Agreement (TPP) and the Trans-Atlantic Trade and Investment Partnership.
In the first, the US excludes China; in the second it excludes Russia.

This week has seen a wave of popular protests against these two
initiatives of American economic diplomacy. On April 21, in Washington,
unions and many House Democrats protested against the Trans-Pacific
Partnership (TPP). On April 19, all across Europe people protested
against the Transatlantic Trade and Investment Partnership (TTIP), just
after the US Congress authorized, on April 17, the so-called Fast Track,
to negotiate it.

Such a Fast Track, of which the official name is "trade negotiating
authority", came this time with a curious condition. Section 8, on
Sovereignty, says that all US trade agreements are not binding on the
United States, if they contradict any American rule, present or future.
Whereupon the agreements are binding only for US partners, but for the
US it is only when it wants to. To better ensure such an exception,
Congress granted itself the power to decide if a case is part of
international law. The vassals only have the rights that their master is
good enough to recognize to them.

China, for its part, has been very successful with its own network of
FTAs and EPAs, where trade can also be done in remimbi; in particular
the Regional Comprehensive Economic Partnership, which excludes the
United States, but includes important Pacific economies such as Japan,
India, South Korea, Australia and Indonesia. Another Chinese initiative
is a USD 40 billion fund to build transport infrastructure and
industrial cooperation among all Asian countries that the land and
maritime versions of the New Silk Road goes through.

In the financial area of economic diplomacy, strategic moves are also
taking place. Since the Bretton Woods Conference in 1944, the US had
veto power in the International Monetary Fund, the World Bank and in
regional development banks. Their loans impose measures inspired in
neoliberal philosophy favourable to the interests of big business.
Countries like China, now the world's largest economy, want to update
the value of the individual vote in these international financial
institutions, but the US vetoes it. Such rigidity led to the creation of
two new financial institutions: the New Development Bank (USD 40
billion) of the BRICS and Asian Infrastructure Investment Bank (57
countries, USD 50 billion) of which all financially important countries
are part, but for Japan and the US.

The content of the Association Agreements

Although negotiated in secret, the content of the agreements proposed by
the United States to the Pacific Rim and to the European Union are well
known, because there is nothing actually negotiated, but to adhere to a
prewritten text for membership, as in contracts with banks. The United
States has imposed on its partners the same text since NAFTA, with
Mexico and Canada in 1994. It has been the same model for Jordan, Chile,
Central America (CAFTA), Morocco, Colombia and a long etcetera. When the
US wanted to expand it regionally, with the FTAA, it was firmly rejected
in Buenos Aires, by Mercosur countries, plus Bolivia, Ecuador and Venezuela.

The main disadvantage of these agreements, which pretend to be several
and are always the same, is that they impose neoliberal economics as the
only policy and look only to the gain of Big Business. Their most
salient features are four.

On trade they require an indiscriminate openness to US subsidized
agricultural exports - even including OGMs - that destroy local
agriculture. That also destroys a source of national culture and causes
a peasant exodus to cities where their overcrowding generates misery and
crime or pushes them to desperate migration. Such is the case of Mexico
and Central America.

On Intellectual Property, they impose norms that prolong patent
monopolies on production of pharmaceuticals and agrochemicals. The
manufacture of cheap generic pharmaceutical drugs is delayed and public
health care becomes more expensive. In agrochemicals, it postpones the
use of new products to the detriment of agricultural productivity and
performance.

On foreign investment, they consider it such by the mere purchase by a
foreign entity of equity in a domestic company, without any new
contribution, be it a capital increase, new infrastructure, new
technology or new jobs. The host State must open the door and guarantee
the success of the foreign investments and will respond before foreign
arbiters for any change that may affect their profits. For example,
Occidental Oil obtained a ruling against Ecuador for $ 2.3 billion,
because Ecuadorian courts applied Ecuadorian laws against corruption.

On trade in services, those agreements change the approach used at WTO
of a 'positive list', which opens access only for the sectors mentioned
in a list, for the approach of a 'negative list' where what is not
formally excluded remains open. That opens all future services and
removes the right to favour any future national development policies. It
is remarkable that in those services agreements the US explicitly
excludes all the states and only subscribes for the District of Columbia
and Puerto Rico.

A Perspective of Economic Diplomacy

Since the sixteenth century, Anglo-Saxons, under the label of free
trade, practised economic imperialism. Such is the case of the English
East India Company, the first Big Corporation, that imposed its rule to
the lords of India, Pakistan, Bangladesh, Myanmar and Sri Lanka. It is
meaningful that the US flag is identical to the one used by the BEIC,
but for upper quadrant where the Union Jack is replaced by stars.

What is negotiated today at multilateral forums, such as WTO, WIPO, IMF,
World Bank, WHO or ILO, almost always involves an erosion of
sovereignty; a reduction of space for autonomous social and economic
policies. Harsher demands are made in all bilateral agreements under
free trade, economic cooperation or in regional partnership tags.

The classic perception that international agreements reflect and
consolidate a Status Quo does not apply to Economic Diplomacy. The
initiative here tends to alter the Status Quo. It is altered by
negotiating international standards which have political, economic and
social consequences within countries. The rules do not always deal with
economic issues. The negotiations on trade in services are about changes
in internal legal codes. The WIPO negotiations are on future private
privileges and monopolies. The ILO moves along under coalitions of
governments, employers and unions. International financial institutions
often impose economic agendas with their loans. The Doha Round of the
WTO, launched to stop subsidizing agricultural exports, now turns around
the future opening in agriculture, industry and services.

The use of economic strategies to weaken the enemy before starting a war
is ancient. In later times, diplomacy negotiates application of economic
sanctions since the League of Nations. What is a novelty is to compel a
group of sovereign countries to impose economic sanctions on another
when it also harms their own economic interests. Such is the case of the
European Union imposing economic sanctions on Russia and it is a clear
case of "killing two birds with one stone."  Cui bono?

Pillage, plunder, taxes and credit have always been used as economic
tools to maintain supremacy. Emmanuel de Waresquiel says in his Fouché
(2014), that Napoleon financed his wars with plunder while the English
financed theirs with debt. The US uses both.

Conclusion

Economic diplomacy deserves much more attention from foreign ministries,
because its role and influence in international politics is real,
concrete and decisive; it is the main weapon in the ongoing war. In
their struggle to prolong their hegemony, the US use their large
military force, but there are opponents to whom it cannot be applied.
Their power has a weak point in the dollar, essential to maintain their
arsenal operative and vulnerable due to lack of real value backing and a
gross accumulation of debt. Therefore, they negotiate a web of economic
agreements that impose the use of the dollar, along with their own
system of wealth distribution. Countries that prefer a modern multipolar
world, other than the Bretton Woods model, are building a parallel
economic order and waiting for results, while modernizing their armies.
Si vis pacem, para bellum

- Umberto Mazzei has a PhD in political science from the University of
Florence. He has taught international economics at universities in
Colombia, Venezuela and Guatemala. He is Director of the Institute of
International Economic Relations in Geneva.
www.ventanaglobal.info


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