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INTERVIEW

Michael Roberts: A new slump is imminent

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Economists of all views join the debate on whether a new economic collapse is inevitable in advanced capitalist countries. The protracted collapse of neoliberalism, the economic collapse that emerged with the COVID pandemic and the pandemic regime, the deterioration in supply chains, the evolution of ‘globalization’ into a kind of ‘regionalization’ have not yet deterred central banks from the neoliberal creed of ‘fighting inflation’ and tight monetary policy.

There is less and less hope that a rate hike in the US can be handled without causing a recession. We talked about the future of the world economy with economist Michael Roberts, who argues in his books and articles that what is seen as the crisis of neoliberalism is actually the crisis of capitalist production. Roberts, who worked for many years in the City of London, which is considered the financial center of the world, and who, in his own words, “observed the machinations of global capitalism in the dragon’s den”, explains the reason for the stagnation in the developed capitalist countries with the law of the tendency of the rate of profit to fall, both theoretically and empirically.

According to him, the cause of the crisis and stagnation is not the Keynesian lack of aggregate demand or the neoclassical over-expansion of credit, but the fall in capitalist productivity and the decline in profitability. The tendency of the rate of profit to fall also reduces the appetite for investment, and in capitalist economies where investment does not expand, employment and consumption decrease. For Roberts, this is the ‘normal’ cycle of capitalist production. The way out of this slump is the devaluation of certain capitals through capitalist ‘creative destruction.’ It can be caused by war, or by other things. It is possible to think that the new economic boom Roberts expects from global capitalism resembles the exit from the depression period that lasted from 1873 to the end of the century.

You make a distinction between depression and recession in your book Long Depression How It Happened, Why It Happened, and What Happens Next: ‘Every depression has come when the cycle in clusters of innovation have matured and have become “saturated”; when world production and commodity prices enter a downward phase, namely, that inflation is slowing and turns into deflation; when the cycle of construction and infrastructure investment has slumped; and above all, when the cycle of profitability is in its downward phase.’ You also describe our era as ‘Long Depression.’ Do you think we are living now in a looming recession within a depression in the long term?

My book, The Long Depression, argues that capitalism is a system of production for profit that does not proceed in a harmonious way, gradually improving the living standards for us all. On the contrary, it proceeds in cycles of booms and slumps, accompanied by growing inequalities and exploitation. Booms in production, employment and incomes are interrupted by severe contractions, where millions lose their jobs, companies go bankrupt and incomes fall. That is the ‘normal’ character of capitalist production.  

However, sometimes, the contradiction between improving living standards and the profits accruing to the owners of the means of production becomes so great that capitalist economies stay locked in a depression. A depression is when growth in production, investment, employment and profitability do not return to previous levels in any recovery after a slump.  

That happened for nearly 20 years in the late 19th century in the major economies of Europe and America; then in the Great Depression of the 1930s, and I would argue now since 2008-9. The decade of the 2010s was one of such a long depression. Economies remain depressed in the sense of low investment growth, poor productivity growth and above all low profitability on average in most sectors and most countries.   

Per your calculations, the profit rate in advanced capitalist countries is still below the 2007 levels. You always dismiss neoclassical or Keynesian explanations (excessive credit, government intervention, lack of effective demand, etc.) for the economic crisis and explain it with low profit rates and low investment appetite. Do you think is it possible for a sharp devalorization of capital via some ‘external’ factor, such as war or COVID-19-style pandemic?

Normally in the capitalist boom and slump cycle, capitalism goes into a slump when profitability falls so low that total profits contract and weaker capitals go bankrupt, causing a cascade of contraction in investment and employment. But that means the stronger capitals survive and can gain market share from those that have collapsed while costs of production have fallen with the shedding of the workforce and new technologies can be applied. So profitability rises and a new boom commences. You can call this process of ‘creative destruction’ of previous capital values in order to start again anew. However, in this Long Depression it has been much more difficult to revive profitability, particularly as the monetary and fiscal policies of governments have deliberately propped up the weaker capitals and the financial sector with cheap money and subsidies. So no ‘creative destruction’ has taken place, so far. That’s why Keynesian policy solutions based on increased government spending and monetarist solutions of ‘cheap money’ have not worked in restoring economies to previous growth rates.

Yes, it could be an external factor that changes that. The Great Depression of the 1930s only came to an end with a world war where governments stepped in to take over and run the economy for the war effort. A major war and arms race globally in the next decade could be such a factor again – but at the grotesque expense of millions of lives and even the destruction of the planet. I think more likely that such a new wave for capitalism through a sustained revival of capitalism will only be possible after a series of severe slumps have ‘destroyed’ capital values enough to achieve a revival. That is what happened in the late 19th century depression of 1873-95. After several slumps, a boom period ensued but eventually leading up to a world war in 1914.

‘A NEW SLUMP WILL OCCUR IN 2023’

You have been writing that in advanced countries a new recession is imminent. It also seems that inflation has reached its peak, especially energy prices, and now a moderation is on the way. Do recent GDP and inflation data support your expectations?

Yes, all the indicators on output, investment and profits suggest a new slump in 2023, only three years after the COVID pandemic slump of 2020, which was deepest and had the widest effect globally of any slump in over 100 years. A new slump will inevitably reduce the rate of inflation of prices for goods and services because workers will lose their jobs and companies will close so that investment and consumption demand will fall. However, the continuing weakness of supply globally that had been evident even before the pandemic began. That means that inflation rates will not return to the very low levels we saw before 2020. Indeed, 2023 and 2024 will be years of what might be called ‘stagflation’, with contracting output but still rising prices. And the Long Depression will continue.

In connection with the above question, can the so-called green transformation in advanced capitalist countries be an exit for the whole system, with new privatization and appropriation for the transnational capital?

Investment in green technology and renewable energy will not be enough to compensate for the general collapse of profits and investment in the wider economy. Indeed, capitalist investment in saving the planet by switching from fossil fuel production to carbon free production is woefully inadequate. ‘Green capitalism’ is no escape route. The green transformation of the planet requires public ownership of finance and key industries and a global plan for investment in the environment.

After the Russo-Ukrainian War and the rise of the People’s Republic of China, do you see in capitalism’s future configuration new regulative institutions such as the World Bank and the IMF? 

The World Bank and the IMF, along with other international financial agencies, were designed to ensure the continuance of the existing international order of dominance by the US and its other imperialist allies to control trade, investment and profits globally. That has been the case since their formation under the Bretton Woods meeting in 1944.

But US hegemony and the dollar are now under threat from rising economic powers like China, and also from weaker powers like Russia, Saudi Arabia, India or Turkey which do not go along with the declared interests of the Western imperialist alliance. This means the emergence of several geopolitical blocs. This is a dangerous development.  As the US hegemony weakens, the American ruling class is intensifying its efforts to curb and contain resisting countries like Russia and above all, to weaken and destroy the main enemy of Western imperialism, China. This is the great geo-political struggle of the 21st century. 

‘CREATIVE DESTRUCTION IS NEEDED FOR A NEW CAPITALIST EXPANSION’

Neoliberalism’s protracted demise since the 2007-8 crisis is stamped as the “death of finance” or revival of the ‘real sector.’ The US government’s new Inflation Reduction Act subsidies new electric cars which are produced in North America. Do you think capitalism is going into a new era with a new industrial growth, where fictitious capital is swept under the carpet?

In short, no. The US government fiscal measures are really quite small relative to the task of sustaining economic growth both in the US and elsewhere. The main producer of electric cars globally is actually China. And electric cars are not the great solution to providing productive investment that is profitable enough for corporations and banks to switch from speculating in ‘fictitious capital’ i.e. bonds, stocks and other financial assets. A new era of capitalist expansion as in 1950-73 or 1982-97 will not happen without substantial ‘creative destruction’ first of old unproductive capital so that raises profitability sufficiently to invest in these new technologies.

Do you think capitalist production does not need an external stimulus? For example, Indian economists Prabhat and Utsa Patnaik claim, in their recent book Capital and Imperialism: Theory, History, and the Present, that capitalist production needs an external world, such as a colonial one, to work. You also refuse Ernest Mandel’s claim that the down phase in Kondratiev cycles is endogenous to capitalist production but the up phase is exogenous is. How can you explain such denominations monopoly capitalism, imperialism, and fascism? Can there be a phase that capitalist production can not solve its inherited problems via ‘economic’ ways and apply ‘non-economic’ ways?

I don’t subscribe to the view that capitalist crises are the result of the lack of demand in the major economies and capitalism has only continued to accumulate by relying on the consumption and labor force of what was colonial Global South i.e. externally to modern capitalist economies. Regular and recurring crises are the result of internal contradictions between productivity and profitability. Imperialism extracts huge profits from the economies of the Global South, but crises still continue in the advanced capitalist economies.

Yes, sometimes exogenous factors can turn a down phase in capitalism into an upward phase (as with WW2 at the end of the Great Depression). But a down phase can also become an up phase if higher profitability is sustained after a series of slumps, as in the late 19th century.

INTERVIEW

“The US should stay, the PKK should leave”

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Exclusive interview with Safeen Dizayee, Head of Department of Foreign Relations of IKRG

In an exclusive interview, Safeen Dizayee, Head of Department of Foreign Relations of Iraq’s Kurdish Regional Government (IKRG), has discussed various pressing issues facing the IKRG and its broader regional relations with Dr. Esra Karahindiba for Harici. The conversation had delved into the intricate dynamics of IKRG’s relations with neighboring Türkiye and Iran, its strategic partnerships with global powers like the United States and China, and the internal political landscape within Iraq including domestic disputes and Turkmens’ presence in the administration.

Minister Dizayee also provides insights into key projects like the Development Road Project, the ongoing conflict with the PKK, and the broader implications of regional conflicts, including the situation in Gaza.

Minister Dizayee highlighted the long-standing relationship between IKRG and Türkiye, emphasizing economic and infrastructural collaborations, especially in energy. The closure of the oil pipeline through Türkiye has cost Iraq and IKRG billions, but negotiations are ongoing to resume exports. Besides, the Development Road Project aims to enhance regional connectivity from the Gulf to Europe, but Minister Dizayee brings some issues about the ideas which aim at excluding IKRG region from the route and says “the project should benefit all Iraqi regions, including their region”.

The interview also addresses the reduction of the US military footprint in Iraq and its implications for IKRG’s security. While the US withdrawal is discussed, Minister Dizayee underscores the necessity of international presence to maintain stability and counter insurgent threats, stressing the need for a new framework of bilateral relations with the United States that extends beyond military cooperation. The overall response of him is that the US withdrawal is not desired by their side.

Meanwhile, the IKRG maintains a stable relationship with China, focusing on economic and infrastructural projects. While major Chinese investments are currently more aligned with federal Iraq, the IKRG is keen on expanding this cooperation to benefit the region directly.

Minister Dizayee confirms that IKRG views the PKK’s presence in its territories as problematic once again, advocating for respect for Iraqi laws and emphasizing the need for regional cooperation with neighboring countries such as Türkiye to ensure security. The PKK’s activities are seen as detrimental to Kurdish interests in both Iraq and neighbors. Türkiye is expected to implement a wide-scale military operation in Northern Iraq this summer aiming at sweeping all the terrorist elements out, which is out by the Turkish Ministry of National Defense as the sources said “We will lock the door this summer in Northern Iraq”. Minister Dizayee was careful while responding the related question and he used a quite a diplomatic language saying “Within the context of international laws and norms, it should not be possible to have any groups to threaten the security and stability of neighboring countries. Within that context, there has to be some kind of understanding in order to defuse to situation and to come to a reasonable end that would re-establish better relations and to make sure that the region would not be used to create instability.”

Here is the full interview:

Relations with Türkiye

With Türkiye’s strategic push to become an energy conduit to Europe, what specific collaborative projects involving energy pipelines or electricity grids are being discussed between the IKRG and Türkiye? How does the IKRG view its role in Türkiye’s energy strategy affecting its own energy sovereignty and economic development?

First, we have to accept that we are neighbors with Türkiye. In 1988, our refugees ended up in camps in Muş, Mardin and Diyarbakir, and in 1991, again, a large portion of exodus over 2 million people fled, half of them to the borders with Iran and the other half to the border with Türkiye.  Therefore, this relationship is a longstanding one.

Economically today, since 2003, after the demise of the regime in Baghdad and after the embargo was lifted on Iraq, Turkish companies have been very active in KRG region in terms of infrastructure and economic development.

Türkiye is the largest partner to Iraq as a whole in terms of trade, I believe, after Germany. So, there are many reasons that we should be enjoying a good relationship with Türkiye, not to mention we have common borders, and for the our region, we also have people of the same ethnic background within the Republic of Türkiye. We have enjoyed a relationship with Türkiye for the last 30 years and more. In terms of energy, as you know, the pipeline that was used to export KRG oil since 2014 was going via Türkiye to Ceyhan. That brought extra revenue to the our government at a time when, in February 2014, the budget was cut from Baghdad, and in May of 2014, that’s when we started to export oil via Ceyhan.

For 15 months since the pipeline closed, at a loss of over 15 billion dollars to Iraq

It was extremely helpful and led to the arbitration case of Iraq against Türkiye. Currently, it has been 15 months since the pipeline has been closed at a loss of over 15 billion dollars to Iraq as a whole and to our region in particular. There are serious negotiations to revitalize that pipeline and resume the oil export from KRI, whereby everybody will benefit from it.

For sure, Türkiye has been trying in the past with Azerbaijan, the Black Sea, other countries in Central Asia, and Russia to have a transit via Türkiye and to be a hub for the distribution of energy. I believe that is still possible, whether it’s oil or gas from Iraq and also from the Gulf.

When the Development Route materializes, it can easily be utilized from Qatar, Kuwait, and even going as far as the UAE. This development route will be important for the Gulf States, Iraq, Türkiye, and of course ending up in Europe. This is a long-term project for sure, but all projects start from an idea; ideas can develop into projects, and projects can be implemented. Currently, there is no project on the power grid or such.

In the past, in the 90s, Türkiye was providing a certain amount of electricity to the province of Dohuk when electricity was cut from Saddam’s regime. Even today, some electricity has been provided to Mosul because of the lack of electricity production in Iraq. But this can also be expanded. There are talks between the federal government and Ankara regarding the supply of water, the possibility of resumption of oil, security issues, and the more recent visit of President Recep Tayyip Erdogan to Baghdad. A couple of dozen memorandums of understanding (MoUs) have been signed.

We hope that they can materialize because some of those MOUs bring benefits to both countries, to the people of the region, and the stability of the region. I hope that those understandings or those negotiations can be developed further into something more substantial and more concrete.

Could you detail the Development Path Project’s key initiatives planned for the next five years, particularly those aimed at enhancing the transportation and digital infrastructure within Iraq? Does the project cover IKRG, too?

This idea has been contemplated for quite some time, and we believe it will revitalize Iraq and its economy. Iraq is at a crossroads, and utilizing routes from both East to West and South to North can happen, and there is a great deal of support from the Gulf States, which can lead to easy access to European markets. And of course, with the current issues in the Red Sea and the lack of security and piracy, this can be an alternative in terms of less time taken, more cost-effective, and easy accessibility.

IKRG should also benefit from Development Road Project

Naturally, cutting through major towns and cities of Iraq, we have been discussing this with the federal government that we should benefit from it, from Kirkuk to Erbil and then to Dohuk and then entering Türkiye. But unfortunately, in Baghdad, certain ideas have been developing that the route should be diverted, not even going to Kirkuk, but not even to Mosul. It should go to the west of Mosul, west of Tigris, and then along the border with Syria, and then somewhere near entering Türkiye.

So that means a big city of 3.5 million, Mosul, which is the trade center of Iraq, will not benefit, and we will not benefit from it. So, we have been standing against this idea that the project from South to North should benefit all Iraqis, all components. It is of vital importance that we should be discussing this with Baghdad, Erbil, and Ankara to ensure that it will benefit every component, every region. Geographically, practically, and technically, it will not be possible to marginalize and sideline KRI when this route is being built.

Mosul must benefit. Our proposal is that it should be east of Mosul, meaning east of Tigris, which will get close to some of the Nineveh plains and some of the Christian communities, and then getting close to southwest of Duhok. It can still enter Ovaköy into Türkiye. So, this route is being discussed, debated, and argued, but if done properly, it will bring benefit to all area components of Iraq and all regions of Iraq. It should not be politically oriented. It should be with the intention of economic development and revitalization of the economy, benefiting every component in this region. Iraq needs such a thing after the war.

Over 44 years of detachment from the world since 1980, Iraq has been at war for eight years with Iran. Then it occupied Kuwait, followed by 13 years of embargo. And in 2003, there has been the current situation, which is ongoing. So, 44 years in the lifespan of a nation is too long to be detached from all developments. Iraq needs this vital, important project, but it has to benefit all Iraqis.

Multilateral Joint Fight Against the terrorist group PKK

Can you provide an update on any recent security collaborations or dialogues between the IKRG, the Iraqi government and Türkiye in addressing PKK activities? What measures have been effective, and what challenges remain?

Unfortunately, PKK has been a problem for the region since 1991. And of course, prior to that, since the early 80s, it has been operating inside Türkiye and also from Syria. But they’ve taken advantage of the area that has been vacant along the border, particularly the more difficult terrains in Qandil and Hakurk and other areas.

PKK has changed its route from what they claimed to serve an independent “United Kurdistan”. They seem to have changed their rotation for something totally different, which does not serve the interests of the Kurds, be it in Türkiye, Iraq, Syria, or Iran. Therefore, their agenda is totally different from the agenda of other Kurdish leaders or political parties here in Iraq.

We believe that PKK has no business in Kurdistan Region of Iraq (KRI). Therefore, they should respect the laws of the country and should not create problems for our own people, settlers, villages, and remote areas. As per international norms and regulations, it is not possible to allow groups operating in a neighboring country against the security and interest of another country.

What are the IKRG’s strategies for managing the delicate balance of local Kurdish populations’ sentiments and the geopolitical necessity of cooperating with Türkiye against the PKK?

Unfortunately, PKK has become a tool in the hands and interest of others, serving other agendas and not that of the Kurds. The security issue has been discussed between Ankara and Baghdad, one of them being to what extent the federal government would be able to deliver what has been promised. I’m not sure. Because PKK’s presence for the last almost 40 years has been in these difficult terrains and rugged mountains, and what the federal government can do is questionable.

But what is important is to make sure that some of the offshoots of PKK operating under different names inside Iraq, particularly in the Sinjar area, in areas close to Kirkuk, in areas close to Garmian, the south of Garmian, should not be allowed to operate. They should not be funded as part of the local militia forces. Measures should be taken to drive them out, and probably that would be sufficient at the first stage in combating them. Apart from that, other normal and natural communication and security communication is a necessity between all neighboring countries to exchange information and to cooperate in various fields to make sure that the security and stability of the country is not being undermined.

Factionalism within Kurdish politics

What steps are being taken to address factionalism within the Kurdish political landscape, particularly in relation to power sharing and resource allocation among different Kurdish parties?

I think for any democracy and perhaps a newly born democracy, it is very normal to have differences of opinion. If all political parties think alike, it will be quite monotonous, and there would be a lack of development, lack of ideas, and lack of development in terms of projects and differences of opinion. Therefore, political parties have been functioning for quite some time in KRI but the process of democracy is relatively new. It will take some time to adjust to the process. However, since 1992, under very difficult circumstances, where we just came out of the exodus of 1991, where there was no voter registration and when there was no culture of democracy in Iraq at that time, particularly in our region, we went to the first elections in 1992. We established or formed our first parliament and our first government.

Yes, we did have internal conflicts, but we have been able to work together to be a strong base for the opposition against the former regime and became instrumental for the regime change in 2003 and major changes in Baghdad, including the reforms and the new constitution.

Yes, strength comes in unity. We have been united, but unfortunately, there are times when certain smaller party interests may diverge from the main course. Sadly, I have to also say that certain external powers may increase their influence on individuals or on political parties. Knowingly or unknowingly, there might be a discourse from the main aim and goal. However, we have a coalition government. The main political parties, Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK), are partners in this government, and this will be the case for the foreseeable future. The elections have been delayed due to certain positions taken by some political parties in the opposition.

At any given time when there has been an election and a particular political party did not perform well, they blamed the electoral law. So, they were calling for reform in the electoral law, which was not seen the same way by the KDP, but at the end of the day, all parties agree that there should be a reform in the electoral law, which was the case, but it took longer than expected.

Authority clashes with central Government of Baghdad

The elections were supposed to be taking place two years ago, and it is the aim and the goal that it will take place before the end of this year. One thing which saddened us greatly is the federal court in Baghdad, which has no authority because the law was passed by the regional parliament in order to provide quotas for the Turkmens and for the Christians, and the 11 seats of the quota were canceled by the federal court.

Currently, we have a 100-seat parliament, or elections will be for a 100-seat parliament, and within that, there will be five quotas for the Christians and the Turkmens to compete for only five seats. So hopefully, once this parliament is elected, there will be new legislation by the new parliament to reestablish the quota for the Christians and the Turkmens for future elections.

In terms of interest, yes, every political party has its interest to be party number one and to take over power. But no particular party, even if they become party number one can have the government; the trend or political climate in KRI is that there has to be a coalition government, which has been the case since 1992.

Elections before the end of 2024

We are aiming for elections before the end of the year. Political disputes are very normal. In the past, whenever there was a political dispute, there was armed conflict between the parties. But for the last 20 plus years, even though there have been very serious political disputes, there have always been negotiations and discussions, leading to amicable solutions. We believe that we can reach a solution that can be for the security, stability, and interest of the people of KRI.

What specific initiatives are underway or planned to improve the political inclusion and social welfare of the Turkmen community under the IKRG administration?

On the issue of the Turkmens, as I mentioned earlier, the Turkmens are a major component of our society. In 2003 and 2004, when the draft constitution was prepared in Baghdad, I was on the team of President Barzani. It was us and President Barzani who pushed for the rights of the Turkmens, Chaldeans, and Assyrians to be inserted in the constitution. Many people opposed that, but it was Masoud Barzani who pushed for that, and we made sure that the Turkmens have a presence in the parliament of KRG by setting up a quota. Unfortunately, recently this quota has been canceled by the federal court. So, our position towards these communities, including the Turkmens, is very clear. They are part of our society. They should enjoy their political, cultural, and economic rights.

I was Minister of Education from 2009 to 2012. We established schools in the Turkmen language, also in Chaldean, and in Arabic and Kurdish. So, the families here have the choice to send their kids to any of those schools. The full curriculum is either in Arabic, Kurdish, Chaldean, or Turkmen, and English for that matter. The people have been living together for millennia, and they will continue to do so. Particularly in the KRG administration, in Erbil, there is no issue or disputes between individuals because of different culture and background. Citizenship and equality before the law apply to everybody.

In addition to that, having a Turkmen minister in the cabinet, having Turkmens in the parliament, having Turkmen education, these are areas which we take pride in, and perhaps we can even improve on that. This can be developed further, but as equal citizens, we all are equal before the law. As different ethnic groups, we should all enjoy our rights as different ethnicities with different cultures and different political ideologies.

Iraqi Domestic Politics

How is the Iraq Kurdish Regional Government advocating for Kurdish interests in the ongoing debates over federalism and oil revenue sharing in the Iraqi Parliament?

It is important to remind ourselves that the new Iraq, particularly the opposition who were based in KRI at the time, are now ruling or are rulers and leaders in Baghdad. So, we in KRG actually helped them take over power, and we, as Kurd leaders in Baghdad, including the late Talabani, Masoud Barzani and others, were instrumental in rebuilding Iraq based on a federal democratic, pluralist Iraq.

The constitution that was ratified in 2005 is the best document available. Unfortunately, many articles of the constitution have not been respected or implemented. There are a couple of dozen articles which require regulation by law, but unfortunately, they have not been. The upper chamber of the federal chamber needs to be established, but it has not been established. The federal court needs to be established as per the law. So, there are many issues which need to be addressed to make sure that Iraq is indeed a new Iraq based on the constitution, which was voted on by 85 percent of the Iraqi population.

What are the IKRG’s priorities for the upcoming electoral cycle, and how do you plan to address voter concerns regarding corruption and governance?

We do have our issues. Unfortunately for us, the case is not about the individuals who is the prime minister in Baghdad and who is not. It’s about the system or lack of system. Since 2011 and 2012, Baghdad has been gearing more towards a centralized authority rather than decentralization and giving more power to provinces and regions.

Some areas like Basra and Anbar have been calling to establish their own regions, similar to that of KRI, but Baghdad has been reluctant to allow that. They have been making sure that no other regions are being formed. Centralization is in the minds of some leaders in Baghdad, where everybody should return and curtail the power of KRI, which has been granted by the constitution in terms of legislation, administration, the executive, judiciary, and in terms of economy, oil, and oil administration.

These are all issues which need to be addressed seriously, particularly Article 140 of the disputed territories, which needs to be solved. It was supposed to be implemented by the end of 2007. Unfortunately, it has not been, and the situation is more difficult than it used to be. The policy of Arabization and bringing more Arab tribes into Kirkuk, Khanaqin, and Sinjar areas is ongoing.

Oil export issue is the priority

It’s affecting both the Kurds and the Turkmen communities in those areas. Prior to the formation of the current government of Prime Minister Mohammad Shia Sabbar as-Sudani, a roadmap was set and an agreement was signed that these priorities should be given attention to some of these pending issues like the oil export, the issue of the budget and salary, and the issue of Article 140, and other issues which relate to all of Iraq. But unfortunately, none of that has been met.

Prime Minister Sudani, we believe, is sincere, but unfortunately, the political parties supporting him are the ones who probably are making the final decisions. Nevertheless, we are working with Baghdad to ensure that the current government survives and can lead to more stability.

The prime objective of the KRI region is to make sure that the rights of our people that have been stipulated in the constitution are respected and met. Yes, there are certain jurisdictions, certain statuses that we have and practice, but we feel that if certain authorities or circles in Baghdad are given the upper hand, they would undermine that and take it away.

More recently, in the past year or two, they’ve been using the federal court to undermine our authority. In addition to that, there are states within states. Certain lawless militia forces are taking matters into their own hands, particularly in the Sinjar area, where an agreement was signed between Baghdad and Erbil four years ago to encourage people, IDPs, to go back to their homes. But unfortunately, because of the presence of these militias and some pro-PKK elements in that area, over 200,000 people cannot go back to their homes. These are issues that we need to talk to Baghdad about seriously. Some of those issues have been spoken to Prime Minister Sudani, and certain issues have been handled well, but it’s a process that will take some time.

There has to be sincerity and trust between us. Sometimes, unfortunately, discussions are being passed from one group to another, from technical groups to political groups, from political groups to legal groups. It’s going around in a circle without an outcome. But we will continue with our discussions. As I said, we have confidence in Prime Minister Sudani, and we will continue to support him.

China’s Expansion into the Middle East

Given China’s growing economic presence in the Middle East through projects like the Belt and Road Initiative, can you discuss any ongoing negotiations or agreements between the IKRG and Chinese firms, especially in sectors such as infrastructure or energy?

China has a consulate general in Erbil. Currently, we have 26 diplomatic missions, including the P5. They have a presence here, and UN agencies also have a presence in KRI region. We do enjoy a good relationship with all of them, and we, within the Iraqi constitution, has the right to establish its international relations. And we have been doing so with various countries, and we are planning to expand even further.

With China, yes, there has been good communication and a stable relationship. Of course, every country has its own interest, and China is a big power, a global power. There are economic interests in this region, in Africa and the Middle East. And particularly in Iraq, which is trying to rebuild its infrastructure and obviously the economic or development route from east to west, which will be coming through Iraq are all on the agenda now. Part of those big projects, mega projects, are related to federal Iraq; they do not involve the KRI.

However, if any such mega projects happen in Iraq, it will be of interest to our region. Currently, there is the south to north development route, which will be cutting through the KRI directly, and that will be affecting the KRI directly.

There is a stable economic relationship with China; many business people, traders from KRI and Iraq purchase their supplies, commodities, and products from China, and like many other countries, the market in Iraq is full of Chinese products. Chinese companies in the oil sector in the south, in infrastructure, and many other fields are engaged in KRI.

They are mostly engaged in service companies to oil companies. They are not directly involved in any investment of any kind. But there is a good stable relationship. This is one of our policies to maintain a good friendly relationship with every nation, with every country. And of course, we understand that.

How does the IKRG plan to balance its economic relationships with both the U.S. and China, considering the geopolitical rivalry between these two powers?

This region has been protected by our Western friends since 1991, and during the war against ISIS again. It was the Western countries, the coalition, who helped us. So, we are not trying to draw parallels between this one and that one. Our position is to maintain good relations with everybody.

But of course, those who have been contributing, those who have been supporting more, obviously, they stand in a different position, and their presence and influence seem to be more. That’s the reality on the ground.

With the U.S. reducing its military footprint in Iraq, how is the IKRG adjusting its security strategy to mitigate any increased threats from insurgent groups or neighboring state influences?

Obviously, the United States and the Western world and any other state for that matter have short, medium, and long-term interests.

The United States, after the fall of the Soviet Union and after the first Gulf War in 1991, has had a permanent presence in this region, be it in the Gulf States or even in the our region itself. After the exodus of 1991, after the collapse of the uprising of the Shiites in the south and those of the Kurds in the north, the aftermath of the war and the reprisals taken by Saddam’s regime against Kurds; over 2 million people fled from cities, towns, and villages to the borders of Türkiye and Iran. This led to what is known as the mass exodus or the exodus of the million, which led to the Security Council Resolution 688 to be passed in order to call upon the Iraqi regime to end its oppression of its people.

A safe haven was established and then a No-Fly Zone along the 36th parallel. This region was protected by the United States primarily, with the support and participation of France and Britain and the base from Incirlik in Türkiye. There was an office called MCC (Military Coordination Center) based in Zakho, having key offices from those four countries: the United States, Türkiye, France, and Britain.

This maintained stability in the region and made sure that the regime would not move against the people, which led to the first-ever elections in the KRI in May of 1992, despite the fact that we were also enduring international sanctions on Iraq and Baghdad’s own sanctions on KRI.

From time to time, the borders with neighbors were tightened up. But we managed to survive until 2003. So, for those 12 or 13 years, this region was already under surveillance by the United States. In 2003, the KRI and its political leadership became the key part and parcel of the changes in the regime in Iraq, and the presence of U.S. forces and coalition partners in Iraq made major changes by rebuilding the country. KRG was instrumental in rebuilding the structure of the country: its military, administration, and political system, and in moving towards having a new constitution, which was ratified in 2005. So, we have become a beacon of development, progress economically, democratically, administratively, socially, and politically. This has been supported and promoted by our international friends.

“The threat of ISIS is still there”

Particularly, in 2011, after it was seen that the newly built Iraqi federal army was capable of maintaining security and stability in the country, the coalition left. We felt at that time they were leaving prematurely because the country was not yet ready.

Unfortunately, that argument was correct because three years later, in 2014, ISIS came onto the scene and managed to control a third of Iraqi territory, obliging the federal government and Prime Minister Maliki to call for an international coalition under the leadership of the United States to come back to Iraq.

Since 2014, these forces have been back in Iraq to help the Iraqi forces and also the Peshmerga to fight ISIS for over three years. This was done jointly, and the caliphate was destroyed, but the threat of ISIS is still there. The reasons that led to the creation of ISIS still exist. Many people are still internally displaced. They are displaced from their homes. Many people have fled the country and migrated. The economic situation is still dire. Therefore, the reasons are there. And there are many people, particularly smaller communities such as the Yazidis, the Turkmens, Christians, Shabaks, Kakais, Sabeans, Mandaeans, and even Sunnis in many parts, who feel very vulnerable.

“International presence is a necessity”

What specific assurances or support has the IKRG sought from remaining U.S. forces or other international partners to maintain stability in Kurdish regions?

There is an overall belief that international presence is a necessity. It’s a must to ensure that the situation returns to normalcy and the threat of ISIS is totally eradicated. There have been negotiations and talks, and the former government of Mustafa el-Kazemi engaged in what was called strategic dialogue some three or four years ago, to restructure the presence of future coalition forces, primarily those of the Americans, in Iraq.

It would be multi-dimensional, not just a military presence. In other words, the future relationship between the United States and Iraq will be based on social, political, economic, industrial, energy, finance, and security aspects. So, there have been discussions on that. More recently, when Prime Minister Sudani was in Washington, I was also part of his delegation. Discussions evolved around different committees set up to discuss various issues, topics, and fields on how the future relations of Iraq would be.

The framework has been set, but there is a need for more discussion. In July, I believe there will be more discussions on these issues to enable the committees to discuss more about these issues and the future relations and areas of cooperation.

Basically, this is the aim and goal that we are promoting, and we feel the need for coalition forces in Iraq for the foreseeable future. The structure and format may change from the previous military presence of combating ISIS, but definitely, a new structure, a new framework of bilateral relations is needed.

Some experts say that the U.S. will not withdraw but increase their presence on the contrary. What do your partners tell you about that?

The increase in presence depends on the developments in the region. As you know, the issue or the conflict between Russia and Ukraine was unexpected. The unfolding situation in Gaza, and of course, the Houthis in the Red Sea and other proxies in the area who are promoting conflict and violence under those circumstances, the United States feels that its security is at risk.

“There may be reconsideration about certain future presences of (Americans)”

Its presence and interests are being threatened. Therefore, whether they will increase the presence or not, that’s for them (the US) to decide. But for sure, these situations that have unfolded were not on the table. So, there may be reconsideration about certain future presences. And of course, with the available technology in this day and age, larger personnel may not be required. Other forms of presence may be envisaged. So basically, that’s the case with the United States. We for sure, want to see the coalition forces remain within a framework agreed upon between the federal government and the United States.

Their presence is important. It has provided security and stability, and its continuation is a must. Therefore, we need to discuss this more, and we are part of this negotiation, and we are trying to bring about a framework that would be acceptable to everybody. At the end of the day, it will be for the interest of Iraq, for the security of Iraq, for the stability of Iraq, and the stability of Iraq means stability of the entire Middle East.

Iran and Gaza…

How do you evaluate the pass away of Iranian President Reisi and top diplomat Abdullahiyan? Do you expect any foreign policy changes after the incident?

As for the accident in Iran and the loss of life of the president and the foreign minister, it was an unfortunate accident. We don’t believe it will bring about major changes in Iran. Iran’s system is such that, unfortunately, leaders or high-ranking leaders have been involved in such accidents since the early 80s.

Dozens of key leaders were assassinated or killed in a single bomb attack. Over 70 key leaders were killed, but the country continued to function.

So, we will continue to try and develop our relations with Iran. Yes, we had some sad experiences in recent months. But after a visit by our president Nechirvan Barzani to Tehran just weeks before this accident, things have been put on the right track.

After that accident, a high-level delegation, including the president and the prime minister of the KRG, went to Iran for funeral. Last week, we had a visit from the current foreign minister or the acting foreign minister. We will continue to develop our relations based on respect and mutual interest as neighbors.

Yes, it’s an obligation for all of us to enjoy good, stable relations, but of course, we also have to respect what we stand for, and we cannot accept pressures to be imposed on us. We can work together for the benefit of our peoples and the stability and security of the region. That can be done through negotiation and understanding and not through pressure and force.

What impact does the IKRG foresee the Gaza conflict having on the broader Middle East peace process, and how does this align with the IKRG’s diplomatic posture in the region?

Regarding Gaza, it’s very unfortunate that there’s a human tragedy and tens of thousands of people have been killed and hundreds of thousands have become internally displaced persons in their own country. It’s very sad to see this human tragedy. The international community owes it to them to make sure that this conflict comes to an end.

There is a solution. There is a roadmap. There is an internationally recognized solution that needs to be accepted and implemented. We sincerely hope that human conscience will overcome these greeds and conflicts. The war mongers, wherever they may be from any side, should be condemned, especially for the attacks embarked on by Hamas on Israel, killing innocent people.

But the response and the heavy-handed actions that have been taking place are also not helping the situation. In fact, it has antagonized the situation. The international community must act more and be more engaged than they already are to bring this conflict to an end. It has had a ripple effect. It has had a major impact on human conscience to see all these lives lost. Therefore, we all owe it to humanity to end this conflict as soon as possible.

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INTERVIEW

What’s behind assassination attempt on Fico?

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Ján Pšenica, Ambassador of Slovakia to Ankara spoke to Harici: “Being an EU and NATO member is of essence for Slovakia. I cannot imagine that we were not a member of those entities which provide us with basic anchor on a political map, in international economy domain and also security.”

Answering our questions, Ambassador Pšenica assessed the socio-economic and international circumstances that led to the assassination attempt on Prime Minister Fico and the impact of the Russian-Ukrainian war on Slovakia.

What is the latest update about the Prime Minister Fico’s health condition?

Fortunately, there are good news. Prime Minister Fico was released from the hospital at the end of May his treatment and recovery continue at home in Bratislava.

What is the latest information about the assassination of Prime Minister Fico? The Minister of Internal Affairs said that the suspect was not a “lone wolf” and that there might be someone behind him. Do you have information about the suspect’s political connections?

The relevant Slovak authorities are continuing in a comprehensive investigation, which also includes an examination of the attacker’s psychological profile and condition. All relevant aspects as well as possibilities are being carefully investigated. It certainly will take some time before the authorities will present their findings and conclusions.

Can we say that Fico’s assassination has a connection with the tense political environment in Europe after the Ukrainian war? In particular, voices against the war are branded as “pro-Putin” and silenced in many countries. Keeping in mind Prime Minister Fico’s views on the war, would it be an exaggeration to think that the bullets were actually fired at everyone who wanted to end the war through diplomatic means? Or Do the majority of public opinion go for internal reasons?

 Usually the simplest interpretation works the best, but on the other side, overly simplistic explanations can lead to wrong conclusions or assumptions. It is not only the unlawful Russian aggression against Ukraine. We all remember well the COVID period and different sorts of restrictions and measures which authorities had to implement, including in Slovakia and in Türkiye. Yet, the COVID cost us a lot: many people, including our friends or family members died, our social and societal interactions weakened, economies suffered too, so the disease had overall clearly negative impact on our health and mental condition. Then the aggression started and increased our uncertainty about future. People are asking themselves: What will be the impact of the war and of the current international situation on my life? Will I be able to adapt on new situations? Will I be able to maintain my current living standard? Is there a possibility how I could help others? Are my representatives able to make the right decisions? – although I do not know which they should be… Is the war going to expand on our territory? If so, will there be someone helping us? And so on. And of course, some people perceive situations only within their families or small communities, whereas other perceive situations in wider context that exceeds the boundaries of their own states. Therefore, I do not want to speculate and will wait for investigation findings and conclusions.

Commenting on the assassination attempt against Prime Minister Fico, the Russian Foreign Intelligence Service said that the globalist elites were turning to open political terror against their opponents. How do you evaluate this comment?

Frankly, I do not know what the Russian Foreign Intelligence Service publicly said and would not comment on it. But I think that everyone should ask himself/herself what is the purpose of a secret service speaking publicly….

How do you evaluate the effects of the current geopolitical fragmentation on your country? Previously, Prime Minister Fico had evaluated Ukraine as “not a sovereign state, but under the control of the USA”. What is your opinion about the USA and the EU continuing the war in Ukraine “to the last soldier” and continuing military aid?

Being an EU and NATO member is of essence for Slovakia. I cannot imagine that we were not a member of those entities which provide us with basic anchor on a political map, in international economy domain and also security. If we were not a member, the level of challenges we would have to address ourselves and alone would be much more difficult.

Now, on our relations with Ukraine. We are neighbours so relations between of our nations go back to history. Similarly, as Türkiye, we support independence and territorial integrity of Ukraine, its democracy and prosperity. Already in 2014, we set up a reverse gas flow to be able to cover part of Ukraine gas demand if necessary. Since February 2022 to nowadays, Slovakia´s assistance to Ukraine has reached approximately 1% GDP. In the past, our assistance included also military equipment, such as fighter jets Mig-29s and surface-to-air missile system S-300. Current Slovak government does not provide any military aid from our active military storages anymore and focuses mainly on humanitarian and developments assistance. However, commercial contracts, including those in weapons and ammunition fields are still in force and being implemented. Slovakia recently also set up a reverse electricity flow so our neighbour does not experience large blackouts despite fierce Russian attacks against electricity generation and distribution infrastructure.

Since February 2022, approximately 2 million of refugees from Ukraine came to Slovakia and around 130 000 found a shelter in my country. Many Slovak citizens, including my family have been helping Ukrainians in Slovakia.

In April 2024, a joint meeting of the Governments of Slovakia and Ukraine under the leadership of the two Prime Ministers – Robert Fico and Denys Shmygal – took place in Slovakia. A new phase in relations between the two countries was launched. Three main common projects have been agreed on: 1) Direct railway connection between Kyiv and Košice; 2) Modernization of the Vyšné Nemecké border crossing point.; 3) Reconstruction of the electricity transmission network Mukačevo – Veľké Kapušany. The two Governments also adopted a road map of joint activities.

The war against Ukraine is fundamental violation of international law that brought countless of human tragedies. Slovakia has been contributing to international effort to help Ukraine as much as it can and 1% GDP speaks for itself. Similarly, as Türkiye, we consider crucial that a comprehensive, just, and lasting peace, based on the core principles of the UN Charter, is achieved as soon as possible.

On 15 and 6 June 2024, a Summit on peace in Ukraine took place in Bürgenstock in Switzerland. Slovakia was represented by its Foreign Minister Juraj Blanár. However, originally it was the Prime Minister Robert Fico who had planned to attend the event. Unfortunately, the assassination attempt prevented him from participating. But his will to attend is yet another confirmation that my country, in addition to helping Ukraine, cares about achieving a peace that would be just and in line with the core UN principles.

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INTERVIEW

“The British may not like the Americans, but they have no choice but to stand behind them”

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On July 4, the United Kingdom will hold snap elections to elect a new parliament and a new government. Decades of economic stagnation in the United Kingdom have been accompanied by a political and social crisis exacerbated by the Brexit process and the rise of geopolitical tensions that began with its inclusion in the holy alliance against Russia.

On the other hand, there is something “unique” about British imperialism. London has long been the nerve center of global financial flows. In the aftermath of the 2008-9 financial crisis, the Gulf countries’ ties with British finance capital came to the fore, while in the 2010s a similar issue arose with China, with London becoming the most important focal point of the global renminbi trade in the West.

At the center of all these financial flows is the famous City of London, or simply The City, also known as the “Square Mile” in reference to its small size. The City, which has its own separate administrative and legal structure, is somehow involved in all the conspiracy theories about finance in the world, as it has always had a dark side.

Tony Norfield, author of The City: London and the Global Power of Finance (Verso, 2017), which focuses on the role of finance in the functioning of the City of London and British imperialism, strongly emphasizes that finance is an integral part of the capitalist world system and that it would be absurd to attempt to separate the two.

However, the City of London and finance also point to the specific nature of British imperialism, with the financial sector in particular playing a critical role in both British GDP and investment structure.

Norfield does not think it is possible for London to pursue a policy independent of Washington. In his view, even if the British wanted to do so, they are too weak to act separately from the US. The rise of China and the pivot of Asia and Latin America towards China, as well as Russia’s victory in Ukraine, are inevitable, Norfield believes, despite all British efforts to the contrary. Norfield writes about his thoughts on current affairs on his personal blog “Economics of Imperialism.”

Let me start with Britain’s role in global finance. The City of London is not well known in Turkey. But especially in the 2010s, City officials have developed deep ties with the AKP government. For example, Public-Private Partnership projects, which are often criticized in Turkey, were approved through Britain and the City of London in the same decade; even the legislation was taken from Britain. Can you tell us a little bit about what distinguishes the City of London from other financial centers and the importance of the City for British imperialism?

Yes, it’s a big topic, of course, but one thing you might remember is that in the middle of the financial crisis in 2008, there was a lot of discussion about interest rate swaps and the sheer volume of them. You know, if you look at how much they are technically involved in terms of hundreds or even thousands of billions of dollars worth of swaps.

What many people overlook is that the legal basis for these interest rate swaps is actually in English law. This may seem strange because not many swaps are done with people in Britain, but it reflects the fact that the British influence on finance is quite large. And this is really based on historical factors because the growth of the British empire, especially in the 19th century, even before that, meant that all kinds of commercial, maritime, transportation, insurance and trade relations, most of these were dominated by the British.

The British, for example, in an earlier period, were the biggest slave traders. So basically they played a very big role in international trade, partly because of their imperial ambitions. In the case of India, for example, they more or less closed down the Indian shipbuilding industry and the Indian shipping industry. Indians were able to build ships, sail ships and go from port to port. But what the British did was that they prevented ships from docking in colonial India unless it was a British port. So a large part of the shipping and shipbuilding industry in India closed down and was instead dominated by the British.

In insurance, marine insurance, Lloyd’s of London I think is the biggest marine insurance company in the world. And of course Lloyds is made up of wealthy individuals who are members. But it still reflects this historical factor, it’s a historical factor that continues today.

The multiple connections that the British have actually go back much further than the Americans. Even though the US is the largest economic power, obviously much larger than Britain, it is quite clear that the connections on which financial and business transactions can be built are very strong in the case of Britain and are actually more widespread than they are for the US.

So what happened? There are actually two phases. First, in the 19th century the City of London was a major financial center for the world economy, as I said, finance, shipping, insurance, insurance in general and trade, basically trade. One historian put it quite nicely and said that England was not the workshop of the world, it was the warehouse of the world. In other words, a lot of goods came in and were sent out again.

So Britain has a long history of being a kind of trading center and financial relationships were built on that basis. So, again, maritime insurance, trade, finance and things like that, and this was very important for the British.

So, even though the British economy in the 19th century had a deficit in commodities, the money that it made from insurance and the investment income from all its investments overseas meant that its current account was actually about 5% of GDP. So it had a huge deficit in trade but a huge surplus in investment income and various financial incomes, including insurance.

This was hit by the First World War of 1914-1918. As you know, this damaged world trade and meant that Britain was in a weaker economic position. In the inter-war period they tried to remedy this. Although they used the empire as a basis for doing that, it didn’t go very well.

Then, in the post-war period, the British were in a much weaker economic position, but they used their relationship with the US to continue to strengthen their financial dimension. So in the period immediately after the war, for example in the 1950s, you saw that trade financing was predominantly in British Pounds, not in US Dollars. Again, this seems a bit unusual because of the dominant economic position of the US, but that’s what happened. There was also, especially during the 1960s, the growth of the euro markets. The center of the euro markets was largely in London. The City of London was attracting foreign banks to come to London where they could do these transactions. This was because of the low regulations that existed in the City of London to circumvent local laws in the US that restricted the amount of interest that could be paid on a bank deposit.

European markets, for example, have very different regulations and the Bank of England and the City of London have much less regulation. So most of the big boom in international finance through the euro markets took place in London.

And despite the relative weakness of the UK economy, which was never in very good shape during this whole period, British finance used the US dollar, but it acted as a kind of financial trading instrument. So even today you see that the City of London, or the UK more generally, is not like that.

The City itself is a relatively small area. There’s also Canary Wharf and some other places within London. So geographically it’s not exactly a city, but the City of London, even after Brexit and despite the weakness of the British economy, is still the largest foreign exchange trading center in the world. It’s also one of the biggest financial derivatives trading venues between banks and their clients, like interest rate swaps and things like that.

The banks in the UK, not all of them are British banks of course, but the banks in the UK had the largest international links compared to other countries. And this again was creating stress. I emphasize how big the City is despite the relative weakness of the UK economy, certainly compared to the US, but also compared to a number of European countries.

And you know, they had a big role in setting regulations for the bank, for international agreements, for all sorts of things, because of this accumulation of expertise and because of this role that they played as an allied partner and accomplice with the US. That gave them a lot more freedom and influence than they would have had on their own as the British economy.

The City has a separate administrative structure alongside the British state apparatus. We hear some people in Turkey, some people close to the government, talk about London barons, London bankers trying to interfere in our domestic politics. Because the City of London is a kind of, you know, dark place, an ominous place for foreigners.

I think a lot of the discussion about this on the internet is completely wrong. The City of London has been given all sorts of privileges in terms of financial regulation, but it’s not as if it’s a separate power in its own right. This has been the policy of every government. It has been a deliberate policy of Conservative governments and Labour governments, particularly since the 1970s. To stimulate the financial sector, loosen regulations and allow the city to expand massively.

In 1979, exchange controls were relaxed. From 1986 or 87, I can’t remember, the so-called big boom happened. Then governments did not say, no, this is a bad idea, let’s change it. No, they continued it and they did more and more.

And under the Labor government in 1997, one of the biggest supporters of City was Gordon Brown, the Labour Chancellor of the Exchequer. He even ridiculously praised Lehman Brothers, as I mentioned in my book on the City. This was just a year or so before everything went to hell. This was a consistent British government policy.

So, okay, even though the Bank of England is a different institution, different governments, different policies, etc., it is completely wrong to portray the City as some kind of demon that sits indoors. This is a deliberate, precise and consistent part of British policy. And that’s because they make a lot of money out of it, or the British economy does.

And again, this was looking at the period when a former Labour government was in power. And they were actually praising all these jobs, big bonuses and a lot of tax revenues from tax revenues.

This is something that ironically the Brexit policy has messed up because it has been a factor in reducing the economic benefits for the City.

We’ll come to that. Okay, but I read an article in Politico yesterday and it said that the City has already won the elections because both Labour and the Conservatives have guaranteed how the City will function. But again, in your book you emphasize that all capitalist corporations carry out important financial operations. Where do you think the particular anger towards financial activities comes from? Could it be that the masses, especially the non-proletarian masses, are confronted with the capitalist structure, with the financial sector as one of its 1001 faces?

In general, there is a public opinion that looks at banks, the city, finance and things like that as a negative for the economy of the country. And this was a little bit less. During the boom years, so to speak, when everything looked ridiculously great, stock prices were soaring, all sorts of financial indicators looked good, there was a more popular view against the greed of bankers, that sort of thing. And of course, even young people earning millions of pounds, let alone big executives, were dealing with this sort of thing. It was an easy focus of resentment.

Then the financial crisis of 2008 and the bailout of the banks and things like that became a big thing and there was widespread dislike and hatred of bankers, that sort of thing. But what none of them could deny was that finance was an important factor for the British economy in terms of tax revenue, news and that sort of thing.

So there is a popular view against banking and finance, and it is very common among left radical people. But it’s a very simplistic view. Maybe I should not say that, but I think it’s a stupid view because it ignores the fact that the financial sector is a necessary element added to the functioning of capitalism.

As you mentioned, I talk about this in my book and I even give an example, let’s take Apple. Apple is a huge technical marvel of a company in the US. It also owns one of the biggest bond trading companies, right? It’s funny, I always thought Apple was all about consumer technology and stuff like that. No, they have a huge amount of financial derivatives deals.

It’s involved in a lot of bonds and it’s got a company called Braeburn. Right? Braeburn is a kind of Apple and it’s based in Nevada and a lot of people don’t know about it. They know about iPods and iPhones and Macs and things like that, but they do not really know about Braeburn.

Every big company, not just Apple, every big company has to have a finance arm in terms of dealing with currency risk, interest rate risk transactions and everything else. So you can not escape that. Every single company does it, technically an industrial company, a commercial company or whatever, has to do it. And this is a necessary, inevitable factor of capitalist markets.

So if you don’t like finance but you want capitalist markets, then there is a contradiction. In your view, these things inevitably arise from capitalist markets. So you can’t get around that. You have to do something about capitalist markets, if you don’t like capitalist finance. Otherwise you are on the losing side.

Yes, but related to the previous question, in the aftermath of the 2008 crisis and during the Brexit debate, attention was simultaneously drawn to the City of London’s evasion of EU regulations and to the hyperinflation of the financial sector in the UK and the relative decline in the competitiveness of the so-called productive sectors. Was this debate purely populist or was it an extension of real material class interests for Britain? I mean, there is some debate about industrial capital versus finance capital and so on.

I think this is again a misguided, ill-informed debate. Let me put it this way, there is no great distinction between an honest and wonderful industrial capitalist and an evil finance capitalist, because all these necessary links are there where you find, for example, an oil company like British Petroleum, BP, right? Yes, they do.

They will have a big treasury trading department because they deal with the ups and downs of oil prices, cash flows and all kinds of things. So every big industrial company necessarily has a financial aspect. True, technically they produce things or they are engaged in other things, but they have to do them.

But at the moment most of the world’s production takes place in a number of countries, particularly in Asia, where wages are relatively low and production costs are lower. And that means that the richer countries are focusing on having a monopoly position in the narrower industrial areas – specialized engineering and so on. Or they get involved in commercial power.

Let’s go back to Apple. They get everybody else to produce for them. And they rely on licensing and commercial monopolization to make their big profits. So they do not produce a lot. They outsource all the production elsewhere, but they still make a big profit because they can make big mark-ups.

So everybody else produces for them and they raise prices. It’s an extreme case, but it’s similar to what most of the rich capitalist countries do. So you see that in all these countries in general the share of manufacturing and industry is declining and instead the services sector is growing.

I mean, of course you need a service sector, don’t you? You cannot live in an economy with only manufacturing, mining or industry. But what happens is that the trading power of the rich countries is an important way for them to siphon value from the rest of the world. This is part of their parasitism on the world economy.

The financial dimension is also an important part of it. So this commercial parasitism and financial parasitism is an important part of the infrastructure of the rich powers that run the world economy. You know, they have a problem when the financial sector goes crazy and explodes, but when the post-crisis period comes and they want to do something else, they try to re-impose it in a different way.

Right now they are having even bigger problems with Russia, China and a number of countries trying to build something different. On top of all this, there is the parasitic system of domination over the world economy that the US, the British and other western powers have been in charge of for decades.

So you disagree with the claim that there is no capitalism anymore and that we are living in a new feudal world order?

No, that’s absurd. It is basically, if you want to call it that, imperialist capitalism, and in many ways a much more parasitic and corrupt capitalism.

You know, rather than having the good old 19th century concept of, you know, I’m a greedy capitalist, but at least I’m investing and producing and things like that. Right? No, what they are doing is they’re setting up a commercial monopolized system to control things and, you know, in the financial commercial sense, it means benefiting their producers as long as they still own them. But even if they don’t own the producers and they outsource the production to you, they want to make sure that the financial links and the commercial links are run by them and that all the big price increases happen for their benefit. That’s what happens, isn’t it?

Yes, I see. Now let’s talk a little bit about the Brexit discussions and this is also relevant. With Brexit, some of the Thatcherite Tory economists said that they wanted to make the UK a new Singapore, and you criticized that very harshly in one of your articles. But don’t you think that complaints about bureaucracy in the EU, Brussels’ attempts to regulate financial institutions, and Tory criticism of a move away from the free market, all of these things represent a bifurcation with capitalist institutions and ideas on the continent?

It’s always been a problem for the British because for a long time Europe seemed to be the main growth area of the world economy, not anymore but for a while it was. With the growth of the European economy and the growth of the EU, there was a big debate in Britain about whether to join the EU or not. Throughout the 1960s there was a lot of internal British debate: Should we join? Should we not join?

And they found that their previous imperial connections were not doing them much good economically. Most of Australia and New Zealand, for example, was one long railroad. The Canadian connections were not as strong. So basically it looked like Germany, France, Italy, Spain. These European countries were growing. Maybe we should have joined them.

The problem was, if the British did that, then would they still have a dominant position? That was always the problem and that was always the calculation they had to make.

In the early 1970s they finally decided: Yes, we have to do this. So they joined the European Economic Community. It made a lot of economic sense for them, but they were using their ties with other Europeans to put economic pressure on their own industries, which were in decline, and to have a competitive whip to improve them and put them in better shape, whereas before they had strong ties with the old empire, the Commonwealth, which gave them a privileged position, but it meant that they were no longer competitive in the rest of the world.

So the Conservative government in the early 1970s and the Labour governments afterwards tried to make the British economy more competitive so that it could compete a little bit more with the Europeans. But they had a big problem, even in the European context, of how to maintain your dominant position when you are no longer so dominant economically.

And they were very concerned about losing their political power. So that was why they didn’t want to join the European Union; or they joined the EU, but they didn’t want to join the new order of creating a single currency and having the euro, because that would be a step too far and it would mean that they would lose their influence. So they didn’t like to do that.

They were also afraid that it would weaken the City’s position and instead give more direct power to, for example, Germany, to the European Central Bank and things like that. So they didn’t like that and they wanted to step back from doing it.

There was always this tension, they wanted to have the connections. In fact, the City of London was doing most of the euro-related business in Europe, and the Europeans didn’t like that very much because the size of Frankfurt or Paris as an alternative financial center was relatively weak to do that compared to the size and power of the British financial system dealing with European finance.

You also mentioned in your Singapore article that during the Brexit debate some Londoners, particularly hedge funds and venture capital, were trying to separate the UK from the EU. But other institutions, some banks and pension funds, and asset managers were in favor of staying. How do you explain this phenomenon?

Brexit was a very stupid economic idea, completely stupid except in a few narrow dimensions. And that’s why you saw that the big companies didn’t make a big deal out of Brexit, because just over half of the population was in favor of Brexit. So they didn’t want to make a big deal out of it and piss off half of their customers. They didn’t want to talk too much about it.

But in the financial sector, for example, or in the business world, the people who were really in favor of Brexit were either hedge funds or venture capitalists, people like that who thought they could benefit from less regulation, lower wages and that sort of thing. So they had a more Brexit-oriented perspective. They also appealed to a more nationalist version which, frankly, most of the British working class supported. So it was British nationalism against a so-called European power that they didn’t like. We were going to be free, we were going to be able to do separate things and that sort of thing. It was a rather silly nationalist view and it actually undermined the social welfare aspects of the British working class. But the British working class generally supported this nationalist, anti-European view.

I’m not saying that Europeans are great progressives and that’s a negative thing from that perspective, but it was certainly a bit stupid from an economic point of view, and it opened the way for a more reactionary perspective that could be implemented by whatever government, in this case a Conservative government rather than a Labour government, because the trade unions, for example, were generally a bit more pro-European because they saw more positive social welfare events in Europe than were likely to happen outside Europe, outside the EU. So this was a reality.

And it was also an anti-immigration against EU migrants, undermining our living conditions and, you know, trying to get British welfare benefits and that kind of thing. That was the anti-immigration aspect of populism, it was anti-European stuff, which led to the British working class, not everybody but most of them, having an anti-EU view, which was the fuel for the Brexit view, which was linked to the anti-EU Nigel Farage type, UKIP type view.

But economically it’s a stupid thing, economically Brexit was a bad mistake. You know, you see the way the European Union is going, it’s not very progressive, it’s also dominated by the US and it’s doing stupid things.

So my position, to be honest, was to abstain. I thought that the European Union was bad and I thought that the great British alternative was bad. I mean, you know, I wouldn’t say that one was better than the other, but, you know, it was clearly absurd to have the view that there was a great British alternative.

Throughout 2010, the UK and the City of London became a hub for Chinese financial flows and in particular the renminbi. In turn, the UK joined the Belt and Road Initiative and the Asian Infrastructure Investment Bank, attracting Chinese investment to Britain despite the crisis. Did Brexit have anything to do with these developments, or was it just a coincidence? Does China still see Britain as a gateway to the western hemisphere?

The British expected more positive economic growth from Asia, whereas the European dimension of growth looked rather weak by comparison. But at the same time they were afraid of Asia’s growing economic power. So it was a bit of a mixed view. So, yes, for a while they wanted more Asian engagement in the economy, but at the same time they were afraid of a larger Chinese dimension and then they easily bought into the American paranoia about China. And that always undermined how much the British could embrace the Asian perspective. So, you know, they. Basically they wanted to be involved in Asia but as long as it could keep Western power in place, which they had a big role in. So that was the angle they were trying to push. And that led to this absurd “Singapore on the Thames” alternative, which went nowhere and looked silly.

But the British are in the middle of nowhere in this respect, frankly, they are not strong enough to implement some kind of independent view. As far as the Americans are concerned, they are number two or three on the list. The Europeans don’t like them very much, but they are stuck. They look a bit stupid, frankly.

But they will always, you know, try to strengthen their great international position. We are not Americans. We are not as aggressive and imperialistic as the Americans… But they are doing a lot of what the Americans are doing.

Today the European Union also announced new tariffs on Chinese electric vehicles. According to news reports, Germany, Sweden and Hungary opposed the new tariffs, while France and Spain in particular pushed for new tariffs. So how realistic do you think Europe’s decoupling from China, or “de-risking” as it is officially called, is?

First, it cannot be done. Secondly, whether from a British perspective or a European perspective, it is an attempt to prop up a very weak European economy.

But we can say that many German companies are completely against this idea of decoupling. And decoupling from China cannot be done. Basically, it cannot be done. And it’s stupid to try to do it.

And it’s not only China. They are worried about Korea, they are worried about India, they are worried about basically all kinds of things where they cannot compete with Asia. That’s the bottom line. You know, they cannot compete with the growing power of the Asian economy. So they want to do these kinds of things but basically they cannot compete. That’s the whole thing.

And they’re going to pick China in particular, because China is a big economy that continues to grow, a stronger, competitive economy. So they will claim that Huawei is doing all this bad spying, whereas the great Google, the great Amazon and all these kinds of things don’t spy as much as the Chinese do. It’s just ridiculous.

And they just want more western, American based power rather than Chinese risk, which they don’t like, which is not an independent power.

Lately we have been hearing a lot of talk in the western media about China’s overcapacity. Before it was about China dragging emerging economies into debt. Do you think there is any truth in all this? Does China’s great economic power aim to make countries, especially in Asia and Latin America, dependent? Or accusations of dumping from the EU?

This is absurd. You know, many African countries, for example, are choosing China as a more progressive alternative, a productive alternative to western domination. That’s it and it works for them, doesn’t it?

Who is going to build these things? I mean bridges, roads, railroads, power stations, etc. It’s not going to be the fucking Brits, Europeans and Americans. It’s going to be the Chinese. So it’s not a debt trap. And frankly this whole debt trap hoax is nonsense and has been proven not to be true. But basically they want to argue that.

Of course, I’m not claiming that every Chinese investment is great and every European investment is completely terrible, that’s not true. But to say that China is a debt trap and everything else is good is nonsense. There is all sorts of evidence that this is nonsense and that they cannot compete. But they don’t have as much control as they did when the Anglo-American view of the wonders of Western power was dominant. And that’s the point. And they are worried about losing that. That’s basically the issue.

You said this in one of your articles. In the past years, the BRICS countries have done some things outside the western financial system. It is also argued that the sanctions policy of western imperialism, led by the US, has failed and accelerated this process. But unlike Russia, China is still cautious about relations with the US, given the tensions between the other members of the bloc. What are the prospects for BRICS as an alternative?

Basically very good. And this is the way to go. It’s a good idea to build something more productive and different than the Western-US-Anglo type of domination that many Asian countries, Latin American countries and African countries have suffered and know they have suffered in previous decades.

There will be all kinds of conflicts and grievances and all the rest, but this is a more productive alternative than what was offered to them by the British, Americans and Europeans.

So this is the way to go and they are doing it in all kinds of ways. This will continue. The Americans will complain, the British will complain, the Europeans will complain, but it is a good thing that they are trying to build an alternative productive economy that is not dominated by parasitism, by the parasites of the western world. Basically, they are trying to get out of this trap and it is working. It’s better for them. And they see it every time. One of them now sees that there is an alternative to this nonsense and they don’t want it anymore, so they are trying to build an alternative. And that’s it.

There might be a mess here and there, whatever. It may not always work exactly. Yes, but to build an alternative to these things; that’s what they have to do and they are doing it.

Turkey, Asia and other countries should join in. Not the western nonsense that is trying to dominate them instead.

Finally, let’s talk about the ongoing occupation of Gaza, the war in Ukraine and Britain’s role in all this. Britain has been actively supporting Israel since October 7th. In addition, London has established a very close financial and political relationship with reactionary Arab regimes that have overt or covert relations with Israel. Given the financial infrastructure of British imperialism, what can you say about the role of the British government in the Middle East at the moment? As far as Ukraine is concerned, Britain seems to be pursuing a tougher anti-Russian policy than the US in Eastern Europe and the Black Sea region, as well as in the South Caucasus. It has established deep relations with Poland, the Baltic states, Turkey and Azerbaijan. Is Britain trying to create a cordon sanitaire against Russia?

The British, of course, are strong allies with the Americans and they see any real challenge to American power as a problem for them. It’s kind of like, you know, being the great helper who wants to be a great alternative or not an alternative but has their own thing. It doesn’t exactly suit them but they can’t do anything else. They want to be bullies but they are dependent on the Americans. That’s the real issue. They want to pretend that they have alternatives, but they don’t. They need to depend on the Americans to increase their power.

So they are more anti-Russian when it comes to Ukraine than the Americans are when it comes to Ukraine. They are more against what the Russians are doing than the Americans are. But this policy will lose because Russia will win.

But instead they want to strengthen something else because they are worried about losing their power, the power of the Americans and the West in general. And something else is being built that is not the power of the Americans and the West. That’s why they don’t like it.

That’s how all these things should be looked at. That is the key point. Anything that happens today is about whether there will be western power, mainly American power, and the British have their own point of view or European power or whatever, and instead there will be an alternative built by other countries.

The British don’t like it, the Americans don’t like it and they try to argue how terrible it is. But these other countries are obviously trying to build a better alternative. That’s what we are trying to build.

What about the Middle East connections and the Gaza war going on in the Middle East in Palestine?

Yes, the British have a reactionary role in this. They have a terrible role in this. But you know, there is no way they can be a progressive force in Palestine, in Gaza, in the Middle East, in West Asia. It will always play a reactionary role. They realize that now with their policy of supporting Israel in every way, it depends on supporting the Americans.

But it has to fail. I hope so, but it’s not something that they are really going to back down or try to do something different. All their policies are reactionary and stupid and they will fail.

So you still think that the UK will act as a kind of lapdog of American imperialism around the world?

Yes, because that’s basically their only option. They want to be independent, they want to be a great alternative. They don’t like the Yanks. They want to be something different but they can’t be because they are too weak. So they want  British stuff. But the British don’t do anything for anybody, they don’t build anything and they are not an alternative for any other country. So basically they support the reaction, not the alternative. That’s how it works.

So they have to support the reaction in the Middle East and in the rest of the world and that’s what they are doing.

I think the basic idea is that the Europeans are losing. They may not like the Americans very much and they want to be different from the Americans, but it turns out that they are not that different. The Americans, one of them, is trying to ruin you too. Okay, I’m British, but that’s basically what they’re doing. So if you want to build something different you have to look elsewhere.

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