What's Left

December 23, 2004

Regime Change: A Necessity of Inter-Imperialist Rivalry? 

By Stephen Gowans 

Not too long ago, James Kelly, U.S. assistant secretary of state for East Asian and Pacific affairs, visited the perennial U.S. bete noire, north Korea, and made an accusation. “You’re cheating,” he said. 

Under the terms of a 1994 agreement reached with the Clinton administration, the north Koreans were supposed to freeze operations at their Yongbyon nuclear facilities. In return, Washington would provide fuel-oil shipments, normalize relations, and arrange construction of two-light water reactors. The reactors would be incapable of producing weapons-grade material, giving Pyongyang a source of much needed electricity, but not fissile material for nuclear warheads.

All went well, at first. The north Koreans sealed their nuclear facilities, opened the door to U.N. inspectors, and signed on to the Nuclear Non-Proliferation Treaty. For their part, the Americans got the ball rolling on fuel-oil shipments and the construction of the light-water reactors.

However, Washington did little to thaw its frigid relations with Pyongyang. The Korean War, which had officially raged from 1950-1953, had never officially ended, and the two countries were still technically belligerents. It seemed the U.S., a military goliath next to the pipsqueak north Koreans, preferred it that way, agreement or not. 

Not that this was unexpected. The U.S. had never had much patience with Third World countries that sought to develop outside the orbit of U.S. capitalism. If they prospered, other countries might try to follow suit, closing off parts of the world to U.S. economic domination. That would cause too many problems, not only in terms of foregone profits for the investors and shareholders who are the real power in Washington, but for the American economy itself. Could jobs and a growing national income be provided if an expanding part of the world was closed off to US exports and investments on terms preferable to American investors?

Long before the 1994 accord, Washington was adamantine that north Korea would not become a “threat of the good example,” an inspiration to other developing countries. So it was steadfast in rejecting Pyongyang’s repeated pleas for a peace treaty, dismissing each one out of hand, going so far, at one point, to say “We don’t do non-aggression pacts or treaties, things of that nature”[1]. No one asked why not? 

Here was the answer: With an American sword of Damocles hanging over its head, Pyongyang would be forced to channel a large share of its scarce and dwindling resources into national self-defense, further impoverishing a civilian economy already weakened by the overthrow of its socialist trading partners, trade sanctions, and a series of natural disasters. Who in their right mind would think a country that appeared on satellite photos as a blacked-out nothingness could be a model of anything but of what happens to small countries that run afoul of imperialist behemoths?

As for the light water reactors the Clinton administration promised, they never got built. True, construction work had begun, but by the time the scheduled completion date rolled around in 2003, the promised reactors were little more than two holes in the ground. 

Then came Kelly’s accusation. “We have evidence you’re secretly running a nuclear weapons program.”  Confronted with the accusation, Kelly said the north Koreans confessed. Soon after, fuel-oil shipments were cancelled, leaving the country desperately short of energy, and – Washington hoped – on its last legs. 

But that’s not the way the north Koreans tell the story. Kang Sok Ju, north Korea’s First Deputy Foreign Minister – the official who Kelly said made the admission -- cried foul. No confession was made, he countered, because there was no secret program [2].

Indeed, Kelly’s story seems fishy. That a north Korean official would openly admit his government reneged on an important accord is unfathomable, indeed too unfathomable to be believed. If there was a secret program, why say one existed? 

Another thing: Can Kelly be believed? The Bush administration’s track record on telling the truth is hardly what you would call unimpeachable. Where are those weapons of mass destruction, anyway? 

That’s not to suggest that deception is unique to the Bush White House. No evidence of a Serb-orchestrated genocide in Kosovo was ever found either, despite the war-justifying claims of the Clinton administration and its NATO partners in London, Bonn and Ottawa. 

What seems likely is that Kelly fabricated the story to justify Bush administration plans to scupper the agreement. But what’s intriguing is the possibility that Washington cooked up the story to frighten off south Korea and Japan from opening trade relations with Pyongyang [3].

Seoul was moving to establish rail links with the north and to open an industrial park at Keasong, where south Korean corporations would establish factories employing ultra-low-wage labor [4]. Wages in the north would be only 15 percent of the minimum wage in the south, and half the base rate in low-wage China.

Ramanson, a south Korean watch manufacturer was thrilled by the prospect of paying skilled north Korean watchmakers only five percent of the going rate in the south.[5]

For shareholders and investors in the south, the north seemed to promise a bonanza of profits -- that is, if Pyongyang could keep its socialism confined to rhetoric.

To allay their anxiety, Seoul made a promise: Up to 90 percent of investments in the north would be repaid in the event of war, blockage of remittances or confiscation of assets [6]. This repeated a pattern typical of capitalist governments everywhere, of socializing the risk of investments that yield huge private returns. Taxpayers would bear the risk, north Korean workers would furnish huge profits through subsistence wages, and investors in the south would reap the generous rewards.

Even more attractive was Pyongyang’s promise of a minimal tax regime, allowing south Korean shareholders to enjoy even higher returns on their protected investments.

While this was happening, Tokyo was quietly exploring normalization of relations with the officially communist half of its former colony. Washington only found out three weeks before Japanese Prime Minister Junichiro Koizumi announced he would travel to the north Korean capital for talks, that Japan was working on a deal [7].

The Bush administration probably feared Koizumi would reach an accord with the north Koreans that would allow Japanese firms to build factories in the northern part of the peninsula, employing dirt-cheap labor, along the lines of the model the south Koreans were working on. If so, U.S. corporations and investors would remain out in the cold, while their counterparts in the southern part of the peninsula and Japan grew fat on low-wage north Korean labor. 

For the Americans, this was a pattern that was being repeated all too often. No sooner is a regime softened up through the threat of war, destabilization and trade sanctions, than a competitor rushes in to reap the benefits of what might have been decades of legwork.

China had done oil deals with Sudan, Libya, Iraq and Iran, the oil rich countries Washington had frozen U.S. corporations out of when it imposed punitive sanctions.

French, German and Russian firms were well placed to dominate the Iraqi oil industry, at the expense of U.S. oil majors, if sanctions there collapsed, a possibility that seemed highly likely on the eve of the 2003 Anglo-American invasion. This, indeed, was possibly a factor that set U.S. and British boots marching on Baghdad

And while Iran has come under growing pressure from Washington over its nuclear energy program, Russia is in the background, building reactors for the Iranians and promising to sell more. 

The Americans create commercial opportunities for rivals when they use their military and economic might to pry open closed economies. When embargoed states fall to their knees, rather than capitulating and throwing their doors wide open to U.S. investment, they look to U.S. rivals to provide much needed capital. 

This can happen as a result of a mad scramble by great powers for access to secure supplies of oil. For example, China has invested billions of dollars in Sudan’s oil industry, and is Sudan’s largest supplier of arms. Washington prohibits U.S. firms from investing in Sudan, leaving the field wide open – though not deliberately – to Chinese oil and arms enterprises. 

Last October, China signed a $70 billion oil deal with Iran, another U.S. embargoed country [8]. It’s as if the Chinese follow the strategy “go where the US has, through sanctions and economic warfare, left the field wide open by shutting their own corporations out.”

That poses a problem for Washington: How to isolate a country economically and bring it to its knees, if rival big powers are going to take advantage of the fact that US sanctions keep US capital on the sidelines? 

Understandably, the threatened, sanctioned and bombed governments are uninterested in allowing the corporations of their American tormentor access. So when the economies are opened up, they’re opened up to US rivals only, not US corporations. That’s one reason why regime change has become an indispensable fixture of Washington’s foreign policy.

As the Washington Post put it indirectly in connection with China, “From Kazakhstan to the Middle East…Chinese firms have been aced out by the multinational titans that dominate the energy business. Japan appears set to claim Siberian stocks that China once thought were in hand. The U.S.-led war in Iraq has thrown Chinese oil concessions in that country into doubt" [9].

Few U.S.-tormented governments, Pyongyang and Khartoum among them, are going to welcome US investment with open arms. There are plenty of other countries that can offer needed capital and trade goods, without having to go to the Americans cap in hand.

On the other hand, were it not for the U.S. carrying out economic warfare, these countries probably wouldn’t find themselves in the position of having to cater to foreign investors in the first place. This works out well for the junior imperialist countries, but for the Americans, it’s a growing problem, one, it seems, that necessitates regime change, with U.S.-installed comprador successors, as the solution.

[1] US Secretary of State Colin Powell after “North Korea revived its long standing demand for a non-aggression treaty and diplomatic relations with Washington.” “Beijing to Host North Korea Talks,” The New York Times, August 14, 2003.

[2] Selig S. Harrison, “Did North Korea Cheat?” Foreign Affairs, January/February, 2005.

[3] Ibid.

[4] Ibid.

[5]
“In Korea, High Hopes for an Industrial Marriage,” New York Times, October 20, 2004.

[6] Ibid.

[7] Harrison.

[8]
“China Invests Heavily In Sudan’s Oil,” The Washington Post, December 23, 2004.

[9] Ibid.

You may repost the above, provided the content remains unchanged.

Subscribe? Send an e-mail to What's Left and write "subscribe" in the subject line.

Unsubscribe? Send an e-mail to What's Left and write "unsubscribe" in the subject line.

What's Left