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Looking out for western business and investor rights: why the West approves military interventions to topple one Arab government and prop up another

Via What’s Left

By Stephen Gowans

In a previous article I pointed to three factors to explain the West’s decision to intervene militarily in Libya to prevent the government there from putting down an armed rebellion while it tacitly approves the Gulf Cooperation Council’s military intervention in Bahrain to put down a peaceful rebellion there. The double-standard, I argued, reflects dramatic differences between Libya and Bahrain in their relationship with the United States and its dominant investor and corporate class.

Bahrain is the home of the US Fifth Fleet, has long-standing warm relations with Washington, and strongly caters to western corporate and investor interests. Since the Khalifa regime supports US corporate profit-making and military interests, and a new regime might not do the same to the same degree, Washington is prepared to allow Saudi and other GCC troops and tanks to assist Bahraini authorities in violently quelling a peaceful rebellion.

Libya, I pointed out, doesn’t provide bases for the US or other western militaries, hasn’t had long-standing warm relations with Washington, and isn’t particularly accommodating of western corporate and investor interests. From a neo-colonialist standpoint, western powers could do better in Libya.

Some readers objected, arguing that in recent years Libya has sought to open itself to western corporations and investors and has struck a number of deals with western oil companies. It cannot be concluded, they continued, that the West’s decision to intervene military in Libya was motivated by western profit-making considerations, for Libya is already catering to western business interests.

To be sure, Libya has opened itself to the West, but doing deals with western corporations is not the same as engineering a wholesale subordination of domestic interests to those of foreign bankers and corporations — typically, what corporate-and investor-oriented western governments look for in third-world ‘partners’. For the wealthy scouring the globe for investment opportunities and corporations seeking export markets, an opening door in Libya doesn’t necessarily mean that Libya’s business climate is fully conducive to maximising profits.

That Libya allows some western corporations to operate in the country doesn’t guarantee that investments are safe from expropriation, that performance requirements aren’t imposed on foreign investments, that repatriation of profits isn’t controlled, that taxes aren’t high, or that there is a commitment to labor market ‘flexibility’. In short, the Gaddafi government may, in recent years, have sought to expand western access to investment opportunities in Libya, but that alone doesn’t mean that the conditions of access were regarded by corporations and investors as being as desirable as they could be, or as desirable, for example, as those provided by the government of Bahrain, or a desirable as those a future government might provide.

The Heritage Foundation provides a guide to how accommodating countries are to the profit-making interests of US corporations and investors. Every year the foundation publishes an Index of Economic Freedom, which ranks countries on how open they are to exports and foreign investment, how low their taxes are, how committed they are to protecting property rights, and so on; in short, how strongly a country favors foreign businesses and investors over its own people.

Significantly, governments that are perennially targets of US government regime change efforts rank at or near the bottom of the index. This year’s list identifies the following 10 countries as the least economically free (ie, least accommodating to foreign businesses), in order, from worst to slightly better:

  • North Korea
  • Zimbabwe
  • Cuba
  • Eritrea
  • Venezuela
  • Myanmar
  • Libya
  • Democratic Republic of Congo
  • Iran
  • Timor-Leste

Seven of the bottom 10 (North Korea, Zimbabwe, Cuba, Venezuela, Myanmar, Libya and Iran) are the targets of open regime change operations by the United States and its allies, carried out ostensibly because the targeted countries are not protecting human rights, threaten regional stability, or in the case of Libya, because the government is said to be attacking its own people.

That these countries happen to be considered the least accommodating of foreign business profit-making points to an ulterior motive on the part of western governments to bring about regime change, and to use human-rights and humanitarian rhetoric as a cover for pursuing the economic interests of western corporate and investor elites.

Significantly, not one country in the top 10 is a target of western regime change efforts. If regime change were linked to human-rights concerns and not unfavorable investment and export conditions, we might expect to find regime change targets scattered throughout the rankings, rather than bunched up at the bottom.

One counter-explanation is that economically free countries tend to respect human rights, which is why the worst offenders on both counts are found at the bottom of the list. However, this couldn’t possibly be true, for the United States, which has an atrocious human rights record (Guantanamo, Abu Ghraib, torture and rendition of prisoners, arrest and detention without charge, extrajudicial assassination, weakening of Miranda rights, spying on its own citizens, restrictions on travel to Cuba, and so on) ranks as the ninth freest country in the world in economic terms, and Saudi Arabia, the least free country in terms of political and civil liberties and perhaps the most contemptuous of human rights, ranks in the top half.

Bahrain, as it turns out, is ranked number 10 of 179 countries on the Heritage Foundation list, next to the United States. Regionally, Bahrain is top ranked in North Africa and West Asia, while Libya, ranked 173 over all countries, falls dead last in regional rankings.

Bahrain’s higher ranking is based on an array of government policies aimed to please foreign businesses. Property ownership is secure and expropriation is unlikely, whereas in Libya foreign companies are vulnerable to expropriation. Bahrain welcomes foreign investment and allows new businesses to be 100 percent foreign owned and controlled, while Libya screens foreign investment, imposes performance requirements on foreign investors that domestic investors are not required to meet, and demands that Libyans have a 35 percent stake in foreign companies that operate in the country. And while Bahrain imposes no restrictions on repatriation of profits, Libya does.

On trade, Bahrain imposes few restrictions on imports, while Libya maintains a variety of tariff and non-tariff barriers to help local firms develop. With the exception of oil companies, businesses that operate in Bahrain pay no corporate tax, while businesses in Libya are subject to a tax rate as high as 40 percent. Personal income tax is extremely low in Bahrain, but can reach as high as 90 percent in Libya. And while Bahrain provides businesses maximum flexibility in dealing with employees, even allowing them to pay desperation-level wages, Libya demands that businesses meet minimum standards on pay and working conditions.

In short, the Bahraini monarchy runs a foreign-investment- and import-friendly regime, while Libya’s economic policies favour local investors and businesses and provide a minimal standard of protection for labor. A government that was more like Bahrain’s, and less like Gaddafi’s, would unquestionably be congenial to foreign business interests.

Heritage Foundations 2011 evaluation of economic freedom in Bahrain and Libya

Heritage Foundation's 2011 evaluation of economic freedom in Bahrain and Libya

Some readers contend that western military intervention in Libya is aimed at preventing the slaughter of Libyan civilians. But a stronger case can be made that western military intervention is aimed at regime change, and that, far from protecting civilians, Nato bombing is only setting the stage for a prolonged civil war by weakening loyalist forces and thereby allowing the rebels to contest for power.

There are a number of reasons why the Nato operation in Libya can be seen as a regime change effort, apart from the motivation of replacing the current government with one more congenial to western profit-making interests, as discussed above.

First, the decision of the French government to recognise the rebel opposition as the legitimate government was a declaration that France, at least, is manoeuvring to install a new government in Libya. (1) Indeed, both France and Britain have acknowledged that they are seeking the ouster of Gaddafi. (2)

Second, US secretary of state Hilary Clinton said “Gaddafi’s ouster was the ultimate goal of the UN resolution” (3), and while US president Barack Obama denied this, he did say that the military “campaign will likely continue as long as Libyan leader Moammar Gaddafi is in power”. (4) If the intervention’s goal is to protect civilians and not install a new government, how can the aims of France and Britain and the comments of Clinton and Obama be reconciled?

Third, Washington hopes that sanctions “combined with Nato air power, will be enough to turn the tide militarily”. While the UN Security Council resolution authorises the use of military means to protect civilians, it doesn’t authorise the use of military means to aid rebel forces. Yet newspapers on 23 March 2011 were full of stories on how fresh airstrikes were allowing rebel forces to recover lost ground. For example, the Wall Street Journal commented that,

“The hope for the West is that a continuation of military pressure on Col Gaddafi’s forces, even at somewhat lower levels in coming days, combined with continued forward movement by the rebels, will be enough to make the Libyan army either buckle or turn on the Libyan leader. That would produce the outcome the West hopes for – the removal of Col Gaddafi.” (5)

Meanwhile, the New York Times reported that “the airstrikes have lifted the rebels back from the brink of defeat in the eastern city of Benghazi and enabled them to rush west along the coast past their farthest gains of the previous peak weeks ago”. (6)

It is clear that the intention of the military intervention, which was authorised when the rebels’ defeat by loyalist forces was imminent, was to weaken the government side to allow the rebels to rally and seize the momentum. This hardly favors a quick resolution of the conflict. The conflict could go on for some time, perhaps taking more lives than would have been lost had the UN sent a fact-finding mission in return for a cease-fire, or had loyalist forces successfully put down the uprising weeks ago.

The potential for the conflict to drag on, fuelled by the aid Nato provides the rebels through its airstrikes, was acknowledged by US secretary of defense Robert Gates. The Pentagon boss said “he couldn’t be sure Nato would have finished its mission by year-end”. (7)

The idea, then, that the UN Security Council authorised military intervention to protect civilians has no substance. Furthermore, the idea that the intervention is protecting civilians, whether that is the real intention of the intervention or not, seems unlikely, since the outcome so far has been to create the conditions for a protracted civil war – one moreover, that will be worsened by civilian deaths caused by Nato bombing on behalf of rebel forces.

If the rebel forces prevail and extend their control to all of Libya, or eventually settle for partition of the country, we can expect the economic policies of the future government to be closer to those of Bahrain, and therefore closer to the profit-making interests of western corporations and investors. In this sense, the UN Security Council, and the military operation it authorises, can be seen as investments in making Libya a more attractive place to do business in.

Finally, it might be pointed out, as Johnstone has, (8) that the Gaddafi government has invested a considerable part of its oil revenues in sub-Saharan Africa, contrary to the usual practice among Arab oil states of shipping the proceeds of their oil sales to New York investment banks, the London stock exchange, and US arms manufacturers. These practices are more conducive to western business interests than Gaddafi’s investments in Africa, and might be expected to become the standard practice in Libya if the rebel movement succeeds in ousting Gaddafi.

1. ‘Why are they making war on Libya?’ by Diana Johnstone, Counterpunch, 24 March 2011
2. ‘Obama bets on limited engagement’ by Jay Solomon and Carol E Lee, Wall Street Journal, 24 March 2011
3. ‘Allies rally against Gadhafi’ by Keith Johnson, Yaroslav Trofimov and Sam Dagher, Wall Street Journal, 19 March 2011
4. ‘Allies strain to mend split’ by Nathan Hodge, Sam Dagher, Stephen Fidler and Stacy Meichtry, Wall Street Journal, 23 March 2011
5. ‘Fresh airstrikes aid rebels’ by Sam Dagher and Stephen Fiddler, Wall Street Journal, 28 March 2011
6. ‘Libyan rebels march toward Qaddafi stronghold’ by David D Kirkpatrick and Kareem Fahim, New York Times, 27 March 2011
7. ‘Fresh airstrikes aid rebels’ by Sam Dagher and Stephen Fiddler, Wall Street Journal, 28 March 2011
8. ‘Why are they making war on Libya?’ by Diana Johnstone, Counterpunch, 24 March 2011