Explanations in terms of both imperialist gains and a descent into irrationality grasp only part of the reason why Europe and the USA recently went to war in Kosovo. This article argues that the timing of events is explicable in terms of both the end of the Cold War and the recent world financial crisis.
After the Gulf War we carried an article that considered the failure of No War But the Class War to make an effective communist intervention in the anti-war movement. This time round, despite the fact that support for the war was incredibly weak on the part of the population at large, there was barely a credible anti-war movement to make an intervention in!
The liberal-left that had grown up around CND and the peace movement since the Suez crisis in 1956, and which has always provided the mainstream of anti-war movements in Britain ever since, was irrevocably split. Many of those who had been the most vocal in denouncing the Gulf War now lined up behind Blair and became the most vociferous of the warmongers. As a result opposition to the war was left to a motley collection of die hard old labourites, Serbian nationalist exiles and the depleted ranks of the various Trotskyist and Stalinist parties.
This is of course hardly surprising. The liberal-left and the British peace movement have always supported the imperialist aims of British foreign policy. They have only disputed the means of carrying such policies out. Thus CND was quite prepared to support the Falklands war so long as nuclear weapons were not involved, while against the bombing of Iraq Tony Benn and co. simply argued that it was more 'humane' to starve Iraq into submission through UN sanctions than to carpet bomb them. The latter policy subsequently was adopted by the US and British State to great effect. With the war in Kosovo, the moralism that has been so central to the British peace movement was turned against it with devastating effect. In the face of a 'humanitarian war' that 'aimed to prevent mass ethnic cleansing' the peace movement was flummoxed.
Yet it was not only the liberal-left and the peace movement that were paralysed by this 'humanitarian war' but also the DIY/Direct Action movement that has grown up since the Gulf War.(1) Confronted by their own argument 'that you have got to do something!' the DIY movement was unable to do anything against the war. At most a few lined up behind the ex-WRP and 'Workers Aid to Kosovo' but in doing so ended up effectively, or even openly, supporting the Kosovo Liberation Army (KLA). If anything has exposed the limits of Direct Actionism and the moralism of what passes for the left in Britain it has been the Kosovo war. What the war has emphasised is a need for a clear analysis of the current world situation that has rendered many old assumptions obsolete.
Oil and chestnut trees
The immediate cause of the Gulf War could be summed up in one word - 'oil'. Of course the Gulf War was not simply about securing oil supplies and the profits of the major oil companies. The war was also about securing the recycling of petrodollars through the Kuwaiti banks, crushing the militant 'oil proletariat' of both Iraq and the Middle East in general and asserting a New World Order following the collapse of the USSR. However, the existence of a tangible and obvious material interest such as oil meant that few could be taken in by the facile justifications concerning the 'violation of international law' that were put forward to legitimate 'Operation Desert Storm'.
In contrast there are no immediate economic interests in Kosovo. All attempts to discover an immediate but hidden tangible interest in Kosovo have failed. Whether it is the strategically important chestnut forests so vital to western economies, the mines of northern Kosovo or the prospect of routing oil from the Caspian Sea 1000 miles away through this area, all attempts to expose the 'humanitarian war' as a conflict over economic resources have failed to stand up. Furthermore, not only is there a lack of immediate economic resources, Kosovo itself appears to have very little strategic interests for the western powers.
It was this absence of any obvious economic or strategic interests involved in Kosovo which lent credence to those pro-war liberals who saw the war as a 'humanitarian war' whose sole aim was to prevent 'ethnic cleansing'. Of course, the fact that this 'humanitarian war' unleashed the very 'ethnic cleansing' that it was supposed to have prevented led to the wholesale bombing of civilian targets in Serbia and has now created conditions for retribution and revenge against the Kosovan Serbs which NATO forces have proved incapable of preventing, only goes to show the justifications for the war in Kosovo were just as facile as those used to justify the Gulf War.
However, the question remains: why did NATO bomb Serbia into submission? What implications does such 'humanitarian imperialism' have for the future? What is clear is that the underlying causes of the war do not lie in Kosovo as such. In fact it could be argued that it was the very insignificance of Kosovo in economic and strategic terms that allowed it to become a site of conflict. The war in Kosovo can only be understood as being symptomatic of wider conflicts that have emerged with the break up of Eastern Europe and the attempt to impose a New World Order.
Yet in setting Kosovo in a global context it is not sufficient to simply dismiss all the obvious and immediate explanations that have been put forward and then merely assert some abstract tendency for decaying capitalism to generate wars or to become 'senile and irrational'(2). It is necessary to see how such general tendencies of capitalism have come to manifest themselves in such concrete situations as the Balkans. In considering the war in Kosovo we must therefore first of all consider the general tendencies towards war and peace in capitalism.
War and Peace
Capitalism enters the historical stage drenched in blood. In coming into being capitalism must destroy, or transform, all pre-capitalist social relations and replace them with its own world of competitive individuals united through the abstract unity of money and the state. But while money itself is an effective solvent for the dissolution of pre-capitalist social relations, it is insufficient to create the pre-conditions for capital. Capitalism requires force - both in order to tear the direct producers from the land and the means of production to create an exploitable proletariat and to batter down all the traditional and customary barriers to the free circulation of money and commodities. Furthermore, the emergence of capitalism calls forth the modern bourgeois nation state as its protector. A state that can only be forged through war and patriotism.
As a result the emergence of capitalism has necessarily involved war, plunder and genocide. Yet once capitalism becomes established on its own basis - once exploitation can assume the veil of the free exchange of commodities - capital can stride forth in the guise of the cosmopolitan liberal, extending the hand of trade and friendship to all across the globe. Of course, the need to create and preserve the preconditions of capital remain, yet they exist only at the peripheries and are no longer, except in times of crisis, of central concern, least of all for the individual capitalist. Industrial capital demands law and order - peace and stability - in order to protect its investments. War no longer represents a chance to make quick profit but only means disorder, disruption and higher taxes(3).
It is therefore no surprise that those pioneers of industrial capitalism - the cotton lords of 19th century Lancashire - were often Quakers, nor that modern secular pacifism arose amongst the liberal intellectual bourgeoisie. In dissociating itself from the necessary evil of the state - that guarantees capitals preconditions through the ultimate threat of force - capital can proclaim itself as the envoy of peace, civilisation and reason. Therefore those who oppose the spread of capital and bourgeois reason can only be unenlightened, criminal or insane,(4) or a combination of all three.
During the Pax Britannica of the 19th century liberals could believe that the spread of bourgeois rationality and free trade would eventually civilise the world and bring an end to war. However, such illusions in capitalism as the harbinger of peace were to be shattered by the world wars of the 20th century. Of course, for the liberal pacifists of the 20th century the cause of endless wars was not so much capitalism as such but those evil capitalists of the arms industry whose close connection with the state allows them to hijack foreign policy.
Of course, it is important not to underestimate the considerable influence of the military-industrial complex that has grown up in the 20th century and the effect this has had on the foreign policy of the modern state. Yet it is an insufficient explanation of the drive to war that has emerged so forcefully within 20th century capitalism. War, and the preparations for war, are hugely expensive and a drain on the surplus-value that could otherwise be invested. Why should an otherwise 'peace loving' bourgeoisie allow the state to be run for the profits of a few arms manufacturers at their expense? Are they simply dupes or do they recognise their own interests in the drive towards war and arms production?
The first world war not only shattered the illusions of capitalist progress and peace but also exposed capitalism's inherent tendency towards war. Of course, war has existed long before capitalism. But with capitalism war is completely transformed. If nothing else, capitalism's development of the forces of production allows it to produce forces of destruction on an unprecedented scale. More than ever before the balance of military power rests ultimately on the balance of economic power(5). As such war, and the long preparations for war, come to encompass the whole of society. In capitalism war becomes total war, galvanising whole nations and continents as was seen in the world wars. Yet, at the same time, as the war becomes more technological it also can become more specialised. As we have seen in Kosovo, mass destruction can be wrought by a few bomber pilots while the effects and demands of such a war can remain remote from the domestic population of those nations inflicting such devastation.
These two forms of modern war - total war between major imperialist powers and specific or punitive wars between major and minor imperialist powers or between minor powers - can be seen to be inherent in capitalism, emerging in the alternating phases in capital accumulation. How then do such forms of war arise?
As Hobbes recognised, behind all its civilised formalities, bourgeois society is ultimately based on a war of all against all. Life in capitalist society is a competitive battle where individuals are pitted against each other and are forced to survive by fair means or foul. Yet this competitive struggle is most intense between capitals which by their very nature must 'expand or die'. However, these conflicts of capitalist society are contained and mitigated through the capitalist state. By concentrating legitimate violence into its hands, the bourgeois state is able to impose law and order and provide the social cohesion necessary for the relatively peaceful development of capital accumulation. At the same time the state provides protection for the expansion of its own domestic capital abroad - and as such all states become actual or potential imperialist powers at some level.
Yet at the international level there is no world state, only an 'anarchy' of competing nation states each seeking to further capital accumulation of their own national capitals. The war of all against all that is reconciled at the national level re-emerges as imperialist rivalries at an international level. However, such rivalries can be contained to the extent that there are plenty of profits to be made and that there exists a dominant nation state which, in pursuing its own national interests, can impose a general interest of capital world-wide.
During a period of stable capital accumulation, in which there is an uncontested hegemonic power, war can be confined to the peripheries of the capitalist world. War is then merely a means of 'policing' the capitalist world order, or reflects mere squabbles within the imperialist pecking order. However, capital tends to undermine its own conditions of accumulation. The eventual overaccumulation of capital on a world scale leads to falling profits and an intensification of competition. As the international cake of surplus-value shrinks relative to the claims on it, economic competition gives way more and more to imperialist rivalries and political power. At the same time the growth of capital brings with it the development of an antagonistic proletariat. To the extent that such barriers to capital accumulation appear in the most advanced capitalist powers first then the hegemonic power declines. In such a situation capitalist competition becomes world war.
Total war serves as means to forcibly break down the barriers capital itself has created to its own further accumulation. War provides the means through which a New World Order can be established. At the same time it serves to destroy excess capital, accelerate technological innovations and exterminates the superfluous population. But above all war serves as a weapon against the development of an international proletarian movement.
This was the situation at the beginning of the 20th century. Britain as a hegemonic power had gone into decline and economic stagnation and growing class conflict had intensified imperialist rivalries leading to world war. Many of the communist and socialist theories of war and imperialism date from this time when the issue was quite clearly 'war or revolution'. Yet the failure of the world revolution following the first world war meant that this issue was resolved in favour of war. The second world war finally broke through the barriers to capital and opened a new era of capitalist expansion within a New World Order. It is to this period that we must now turn.
The Peculiarities of U.S. Hegemony
Apart from the hysterical denunciation of those opposing the bombing of Serbia as being supporters and appeasers of fascism, the main argument advanced by the former peaceniks of New Labour was that opposition to the war was based on a 'crude anti-Americanism'. Of course it could be said that this accusation was more to do with their own past crude anti-Americanism than anything else, but it also reflected the realities of power that these New Labourites now faced. Like the Attlee Government before it, New Labour now sees NATO not merely as a means to tie Germany down and keep Russia out, but also as a means to keep the US in Europe. The danger for Britain is once more the danger of American isolationism(6). The USA has always been a rather reluctant hegemonic power. Being isolated from Europe by 3000 miles of ocean and having grown up outside and against the absolutist states of Europe, the American bourgeoisie, after the war of independence, never had to unite behind an immediate foreign threat, nor did it have to bother about European power rivalries. As a continent wide nation state, the USA was able to industrialise behind tariff barriers which, while keeping competitors out, provided enough space to allow ample room for capital expansion at the time. As a result large sections of the American bourgeoisie have always tended to be inward looking and isolationists in terms of foreign policy.
To the extent that the USA had never faced an immediate external threat from a foreign power, nor a cohesive internal threat from its own working class, it had retained a rather ideal pluralistic bourgeois constitution that allowed all sections of the American bourgeoisie to express their particular interests. As a result it was not so easy when the US was called on to play a world role to override the many particular and narrowly focused interests, which advocated lower taxes and isolationism, in order to pursue the general interest of American capital with an active, but expensive, foreign policy.
As with the first world war, the second world war rather belatedly mobilised the American bourgeoisie behind an active foreign policy. In the immediate post-war period the US attempted to construct a New World Order with which the USA was to be the dominant world power. The US had no need for direct rule or an empire. With the devastation of Europe, the USA came out of the war as the foremost military and economic power. In most industries US capital was the most advanced in the world and could easily out compete all potential competitors. The US wanted a world open to American capital and as such sought to dismantle all the European Empires that had grown up at the end of the last century. In their place the US sought to construct a series of international organisations at the economic and political level which would provide the forms through which the powers of the world would be represented and united behind the leadership the USA. Thus with such organisations as the UN, the IMF and the World Bank the US state sought to unite the world bourgeoisie behind it under the banner of free trade and democracy.
Unlike the inter-war years, the US was not to abandon its active foreign policy and return to isolationism. The threat of 'Communism', that took hold with the cold war, served to mobilise both the American and the European bourgeoisie behind an active US foreign policy. In order to protect US capital at home and abroad the US state had to contain 'Communism', and in Europe this took the form of NATO that bound the western European powers together behind the military leadership of the USA(7).
However, at the same time, the onset of the Cold War, and the Chinese Revolution of 1949, prevented the full development of Pax Americana. The existence of nuclear weapons inhibited an outright confrontation between the two superpowers - the US and the USSR. Instead the world became divided into two blocs maintained through a balance of terror based on the doctrine of Mutually Assured Destruction. The slogan of the right of national determination, which had been advanced by the US against the old European Empires, now became turned against the US itself as numerous third world national liberation movements sought to take power and break from the dictates of the international law of value by adopting state capitalist forms of economic development in alliance with the USSR. As a result numerous 'proxy wars' were fought in the 'third world' as each superpower sought to extend or protect its 'sphere of influence'(8).
Yet the full realisation of Pax Americana was not merely prevented by the fact that a third of the world's population lived under state capitalism and thus outside the economic dominance of American led Western capital. In order to prevent the 'spread of Communism' the US had to tolerate restrictions on the free movement and operation of capital within the Western Bloc itself. Hence the US had to tolerate not only the social democratic concessions made to the European working class, but also the state led models of economic development in Asia, firstly with Japan and later with the so called Asian tigers such as South Korea, Taiwan, Indonesia etc.
The new Pax Americana
The rapid break up of the Eastern Bloc that followed the fall of the Berlin Wall, and the subsequent disintegration of the USSR, transformed the world situation. After forty years of stalemate the USA emerged as the sole superpower that could now extend its economic and military hegemony over the entire planet. As such the end of the Cold War heralded a new era which held out the promise of new opportunities, as well as new dangers, for the realisation of a renewed Pax Americana.
As we have argued repeatedly elsewhere, the working class offensive of the 1960s and 1970s had produced a serious crisis in western capitalism and had prompted a major restructuring of capital. Central to the restructuring had been the development of global finance capital, which by facilitating a greater mobility of capital both between countries and industries, had allowed capital to outflank the well-entrenched working classes of the advanced industrial economies. Now, with the collapse of the Eastern Bloc, whole areas of the world were opened up to Western capital. At the same time the collapse of the USSR discredited all forms of state led development. Under the banner of neo-liberalism, global finance capital could now triumphantly roll back the frontiers of state interference without the fear of opening the door to 'Communism'.
Yet the collapse of the Eastern Bloc also contained serious dangers. The chief danger being that, in the absence of a common threat of 'Communism', the US would retreat once more into isolationism allowing a revival in old imperialist rivalries amongst the European powers or the break up of the world into protectionist regional blocs. Indeed, at the time of the fall of the Berlin Wall the full fruits of Reaganomics in reviving the profitability of American capital had yet to become apparent. The attempt to facilitate the transfer of capital from the highly unionised sectors of the North East of the USA to the new industries of South and West, through huge levels of military spending financed by borrowing on the international money markets, had only served to transform the USA from being the world's largest creditor nation into the world's most indebted nation. Far from arresting the relative decline of the USA as an economic power, the huge growth of military spending under Reagan seemed to have accelerated the demise of American hegemony. In the face of the apparently remorseless economic growth of Japan and its exports, increasing sections of the American bourgeoisie were calling for protectionism and the abandonment of the burdens of 'world leadership'.
The Gulf War and the New World Order
Saddam Hussein had long been supported by the US both as a bulwark against the Islamic fundamentalism of Iran and as the only strong man that could contain the militant Iraqi proletariat. Yet Saddam Hussein could only maintain power through the militarisation of Iraqi society. A policy that led to ten years of war against Iran and ultimately to the invasion of Kuwait.
The defence of the oil fields of Kuwait provided George Bush with the opportunity to mobilise both the American bourgeoisie and the West as a whole around a renewed Pax Americana. Under the auspices of the United Nations, Bush was not only able to draw together a multinational military operation on an unprecedented scale but was also able to make Japan and Germany pay for it. In doing so Bush laid the basis for his 'New World Order'. An order uniting all the major imperialist powers under the leadership of the US that would aim to make the world safe for capital. An order in which any nation unable or unwilling to subordinate itself to the dictates of the international law of value could be isolated and crushed. And above all an order in which the costs of policing the world would be shared by all the major imperialist powers.
By insisting that the burdens and responsibilities of sustaining the New World Order should be shared by all the major powers under the auspices of the various international organisations Bush had sought to placate the isolationist voices within the American bourgeoisie. But what has served to sustain the New World Order more than anything else since the Gulf War has been the economic recovery in the USA. Since the Gulf War the USA has undergone an economic boom the length of which has not been seen since that which ended in the Wall Street crash and the world depression of 1929. While Japan has been mired in a prolonged period of economic stagnation, and European economic growth has slowed, the USA has seen eight years of sustained economic growth. As a result the US has been able to reassert its economic hegemony.
The bourgeoisie of the Western powers, particularly those of western Europe, now look to America. They all hope to emulate America's success by adopting neo-liberal and neo-reformist policies to promote 'labour flexibility', 'free markets' and capital mobility seeing in them the means to overcome their problems of an entrenched working class. Thus the bourgeoisie of the West can speak a common language in following the lead of the USA.
Europe and the New World Order
As we have already noted, the development of global finance capital had served to outflank the entrenched working classes of the advanced capitalist nations. In America finance capital, supported by the 'military Keynesianism' of Reaganomics, had facilitated the relocation of industrial capital from the car plants of the North and East to the new electronic and information based industries of the South and West of the USA and Mexico. In Japan industrial capital was able to shift to the newly industrialising countries of the Pacific rim. In contrast Europe had lacked any such immediate hinterland within which to relocate industrial capital. The collapse of the Eastern Bloc seemed to offer the bourgeoisie of Western Europe a chance to remedy this disadvantage.
First of all, many of the countries of Eastern Europe possessed both a relatively advanced economic infrastructure and an urbanised and educated proletariat. While the workforce of Eastern Europe was not known for its efficiency it had been trained to turn up for work on time and had the transport to do so. However, even if it proved unprofitable to produce in Eastern Europe it could provide a pool of cheap immigrant labour. Secondly, Eastern Europe possessed a large peasantry, which with a little investment could perhaps provide Western Europe with an ample supply of cheap food. Such a supply of cheap food from the East would then provide the means with which to accelerate both the displacement and proletarianisation of the peasant/small farmers of Western Europe. This might then increase the supply of labour as well as reducing the costs of the Common Agricultural Policy.
A unified Germany appeared to be well placed to exploit the great potential opened up by the fall of the Berlin Wall. Indeed, many feared that after being occupied and divided for the forty years of the cold war Germany would re-emerge as the unchallengable economic power of the new Europe. In response, the other powers of western Europe sought to tie the newly unified Germany into the structures of the European Union. As a result of this danger of a resurgent Germany, and in the face of the growing competition from Japan and East Asia, the process of European integration was accelerated. The introduction of the single market in 1992 was rapidly succeeded by plans for European monetary union and the expansion of the European Union to the East.
In the long term, the process of European integration would seem to inevitably lead to a United States of Europe which would be an economic power that could seriously rival that of the USA. However, despite the future prospect of a United States of Europe, US foreign policy has been to support this process of European integration, but on two crucial conditions. Firstly, European integration has to be committed to free market principles and be open to the competition of US capital. Secondly, the European Union has to remain committed to NATO and hence the military leadership of the USA. Given the Europeans' compliance to these two conditions, the US has attempted to constitute the European Union as a central pillar in the New World Order. To the extent that the European Union allows the Western European powers to speak and act with one voice it facilitates the mobilisation of the major imperialist powers behind US leadership, and at the same time provides a reliable means through which the US can delegate its responsibilities to sustain the world order within the European region(9).
The extent and limits to which the European Union has acted in partnership with US is perhaps most clearly illustrated with the reconstruction of Eastern Europe.
The Break up of the Eastern Bloc
The fall of the Berlin Wall raised the crucial question of the break up of the Eastern Bloc and its reintegration into the world economic system. The predatory logic of the 'free market' pointed towards the integration as industrial nations of a limited number of the more profitable regions and industries while the bulk of Eastern Europe would be destined to be deindustrialised and dumped into the 'third world'.
At first proposals emanating both within East and West Europe argued for a huge state led investment programme, on the scale of the post war Marshall Aid programme, which would allow the gradual transition of Eastern Europe to the 'German model' of social democratic capitalism. However, the western powers were both unwilling and unable to take up such an ambitious programme. Germany had enough on its plate integrating East Germany, while the rest of West European powers were reluctant to underwrite such an expensive endeavour. The US was anxious to impose a 'free market' led solution which was not only cheaper but ensured that Eastern Europe would be open to American capital.
As a result the Eastern European states had to scramble to ingratiate themselves with the more adventurous and predatory western capitalists. Harvard economists were dispatched to advise East European states on how to introduce widespread privatisation, close unprofitable factories, slash subsidies and phase out price controls. While a few members of the ruling classes of Eastern Europe were made fabulously rich, rising unemployment, cuts in subsidies on food and housing and soaring inflation had a disastrous effect on the majority of the East European working classes.
According to the quack remedies of the Harvard whiz kids, a short sharp shock of mass unemployment and declining living standards for the working class, and deregulation and incentives for prospective capitalists would be sufficient to release the entrepreneurial skills of the nation and transform the economy. While they accepted that this shock therapy would produce a few years of dislocation, most were confident that with five years the blood letting would have done the trick and the Eastern European economies would be embarking on a period of rapid economic growth.
After nearly ten years such prophecies remain unfulfilled. While the more well placed economies such as Poland, Hungary and the Czech Republic have recovered from the short sharp shock policies imposed by western capital, and with modest foreign investments have managed to resume low levels of economic growth, much of the rest of the former Eastern Bloc has made little progress.
Apart from offering loans through the IMF, the European Bank of Reconstruction and Development and the World Bank in return for pro-market reforms, the West has sought to encourage the transition in the former Eastern Bloc through the offer of membership of NATO and the European Union. While admittance to NATO is costly for it requires a commitment to a certain level of military expenditure and the purchase of NATO standard equipment, it is a badge showing that the country concerned is committed to western-style capitalism and is a stepping stone towards membership of the European Union which promises easy access to West European markets and economic aid. Of course, for the US, the extension of both NATO and the European Union to the former Eastern Bloc serves to tie these countries into the New World Order and commits them to the 'free market' and democracy.
If the 'short sharp shock' policies imposed by western capitalism on the former Eastern Bloc countries were disastrous for the working classes of these countries, they have been a near catastrophe for the Russian working class. If nothing else the dismemberment of the highly integrated economy of the USSR, whose development had been based on the specialisation and economies of scale of huge industrial plants, could only present major problems for its transition to a fully fledged free market capitalism. None of which have been solved by wholesale privatisation(10).
After 8 years of economic 'reforms' the Russian economy languishes at 50% of its former GNP. Of course apologists for the economic reforms imposed by western capital clutch at the fact that such figures exclude the flourishing black market. But such a black market only demonstrates the gradual disintegration of the Russian state and the emergence of a Mafia system based on extortion and crime rather than any emergence of a capitalist class willing to make productive investments(11).
The US had little objection to the dismemberment of the USSR. After all it provided easier access to the former Soviet Union's vast natural resources(12). However, the American government was concerned that the disintegration of the USSR might go as far as Russia itself. So long as Russia retains its formidable nuclear arsenal its break up threatens to create an uncontrollable myriad of statelets and petty fiefdoms armed with nuclear weapons. However, while the US policy towards Russia is governed by the fear of it breaking up, it is also governed by the fear that a new 'hard-line' nationalist government may come to power and regroup the less well placed countries of the former USSR and the former Eastern Bloc into a renewed autarchic state capitalist Bloc. In its efforts to avoid these twin dangers the US has been led to support Boris Yeltsin as the only man who can hold together the warring factions of the Russian ruling class at the same time as keeping the Stalinist and nationalist threat at bay.
Amidst the neo-liberal triumphalism that followed the collapse of the Eastern Bloc and the break up of the USSR, US policy makers were confident that, with sufficient encouragement and western influence, Russia under the firm leadership of Yeltsin would be able to make the transition to the 'free market' and democracy and in doing so would be able to take it place, albeit in a subordinate role, in the New World Order. Of course, it was soon recognised that this period of transition may be prolonged and as a consequence lead to a growing backlash against the necessary economic reforms. But the US policy makers seemed to be confident that by supporting Yeltsin and his pro-western supporters, together with the drip feeding of IMF led loans with tight conditions to prevent backsliding, Russia could be kept on course. It was simply a matter of holding out until the economic reforms had begun to take effect and the Russian economy entered the inevitable period of free market prosperity.
Yet while each tranche of IMF loans serves to prop up the Russian Government and keep the Russian economy ticking over, the economic reforms which are the price extracted for such loans have simply contributed to the slow disintegration of the state and its authority. Economic reforms have simply provided the means through which members of the Russian ruling class in alliance with Western capital have plundered the Russian economy. As taxes and wages remain unpaid for months, as the burden of debt with the west mounts and with the long promised economic miracle receding into distant future, both the state and the economy of Russia is slowly disintegrating. As US policy makers are coming to recognise, the current policy towards Russia is untenable. Sooner or later Yeltsin will be gone and the USA will have to confront one of the twin dangers of Russian disintegration or a neo-Stalinist-Nationalist Russia.
It is such a prospect that overshadows US policy in Europe and it is in this light that we should perhaps consider the war in Kosovo.
The Origins of the War in Kosovo
The war in Kosovo has been widely seen as the final act in the break up of Yugoslavia: a break up which is itself part and parcel of the collapse of the Eastern Bloc and its reintegration into global capitalism. The economic crisis of Yugoslavia and the resulting social tensions and class struggle that led up to the disintegration of the Yugoslavian state, and the subsequent wars in Croatia and Bosnia, have been well documented(13). There is therefore little need to provide a detailed analysis here. However, it is perhaps necessary to sketch out the broad developments that led up to the recent Kosovan crisis before analysing the crisis itself.
The class struggle and the break up of Yugoslavia
Yugoslavia's break from Stalinism and its adoption of its own model of a 'decentralised' and 'self-managed socialism' meant that it developed as something of a half-way house in the division of Europe between the two capitalist blocs. As a consequence, Yugoslavia was far more open to the rhythms of capitalist accumulation of Western capitalism than any other of the 'socialist' economies of Eastern Europe. Hence, while Yugoslavia prospered during the post-war economic boom of the 1950s and 1960s, it was particularly hard hit by the economic crisis of the 1970s and the oil price shocks of 1973 and 1979.
Confronted by a militant working class response to the economic crisis, the Yugoslavian state had sought to take advantage of the flight of capital from the more advanced capitalist countries of the west in order to borrow its way out of trouble. However, like many other countries on the peripheries of western capitalism, Yugoslavia was caught out when western capitalism lurched back into recession in the late 1970s. With the recession in the west the foreign earnings needed to service the debts that had been built up diminished. At the same time the policies of the major western economies changed in dealing with the recession. Rather than spending their way out of recession, as they had done before, the governments of the US and western Europe adopted stringent monetary policies which led to a sharp rise in interest rates. Thus Yugoslavia faced being squeezed between having to pay out more in hard currencies to pay the interest on its loans and a fall in its foreign currency earnings.
At first the Yugoslavian state could respond by borrowing more to bridge the gap but this only led to a further escalation in its total debt burden. Faced with the western banks demanding their pound of flesh, the Yugoslavian ruling class had little option but to launch an attack on its working class. To this end inflation was allowed to take off and firms were allowed to go bankrupt producing increasing unemployment. However, the use of inflation to erode the living standards of the working class only served to unite and politicise the Yugoslavian working class around the demand for higher wages. During the 1980s wildcat strikes became endemic, while political protests against the bureaucracy took on an increasingly threatening form.
Although there were numerous instances of workers' solidarity actions across Yugoslavia and moves towards a Yugoslav wide general strike, most strikes and protests remained largely directed at the level of each constituent republic. This allowed room for various factions of the ruling bureaucracy to mobilise around national and ethnic lines and exploit the real material conditions that increasingly divided Yugoslavia in order to divide the Yugoslavian working class.
The economic crisis had accelerated the economic polarisation between the relatively prosperous republics of Slovenia and Croatia and the rest of Yugoslavia. From the point of view of these wealthier republics the rest of Yugoslavia, with its demands for subsidies, was a drag on their economic development. For both the ruling and middle classes of Croatia and Slovenia the obvious solution to crisis was to jettison the rest of Yugoslavia through secession and become fully-fledged members of the Western Bloc. At the same time, with the severe conditions of economic austerity, the growing disparity of wealth between the northern republics and the rest of Yugoslavia could easily be turned into a cause of resentment in Serbia and the poorer republics. While the prospect of secession by Croatia and Slovenia was a direct threat to all those dependent on the continued position of Serbia as the political centre of Yugoslavia.
These social tensions that had been developing through the 1980s were finally brought to a head with the collapse of the Eastern Bloc. Riding the popular enthusiasm for reform generated by the overthrow of the old Stalinist regimes throughout Eastern Europe, the nationalist factions of the Yugoslavian ruling class were able to sweep away the last remnants of the Titoist old guard which had sought to retain the unity of Yugoslavia. For Slovenia and Croatia the way was now open for secession and integration into the West. For Serbia the question was how to limit the break up of Yugoslavia.
Seeing that the eventual secession of Slovenia and Croatia was inevitable Milosevic, as the new leader of Serbia, pursued a policy of uniting all the Serbs into a Greater Serbia which would encompass as much of the former Yugoslavia as possible. But this required reasserting a Serb identity, which had been submerged for nearly two generations, through a policy of repression of ethnic minorities such as the Albanians in Kosovo.
For Slovenia, as a small but most economically advanced republic of Yugoslavia, and the one with the closest ties to the West, the option of secession and integration into western capitalism was a relatively easy way out of the problems of Yugoslavia. The economic advantages of secession were apparent not merely to both the ruling and middle classes, which had most to gain from such a development, but also to the Slovenian working class, which could look forward to stable prices, lower taxes and to western wage levels. However, for the less developed Croatia the economic advantages were far less apparent. Of course, for those in the ruling and middle classes who could hope to act as economic and cultural intermediaries in Croatian integration into western capitalism, secession offered the prospect of making a fortune, as it had for the similarly placed throughout Eastern Europe. For the working class of Croatia, on the other hand, the economic prospects of secession were far less clear. The creation of an independent Croatia, against the interests of the Croatian working class, therefore, required the virulent nationalism provided by Tudjman and his reinvented neo-fascist and anti-Serbian Ustashe movement.
An independent Croatia and a greater Serbia could only be forged through war and ethnic cleansing. Tudjman and Milosevic were complicit in mutually reinforcing terror against the working class of Yugoslavia. The atrocities committed by one side only served to inflame the fears and hatreds of the other widening the divisions in the working class along national and ethnic lines(14). Thus with Slovenia's and Croatia's secession war and ethnic cleansing became inevitable; firstly in Croatia as Serbia sought to rescue the Serbian regions there, and then in Bosnia as both Croatia and Serbia attempted to carve it up between them.
The policy of the Western powers towards the disintegration of Yugoslavia
The generally agreed policy of the western powers to the break up of the Eastern Bloc was, where possible, to maintain the existing international boundaries. However, in the case of Yugoslavia, neighbouring western powers - Italy, Austria and most importantly Germany - were all eager to see the secession of Slovenia and Croatia. In contrast Britain and France had little strategic or economic interests in Yugoslavia and as a result were little concerned with its fate. As a result Britain and France were quite prepared to concede the early recognition of Slovenian and Croatian independence in their bargaining over the terms of the Maastricht treaty: France in order to secure Germany's acceptance of European Monetary Union, Britain in order to extract an opt out from the social chapter of the agreement.
At first US policy had been to preserve the unity of Yugoslavia - if nothing else to avoid the complications that would arise in attributing Yugoslavia's debts to its various states that may replace it. However, the recognition by European governments of Croatia and Slovenia soon rendered such a policy untenable. Faced with the isolationist tendencies within the American bourgeoisie, the US government was reluctant to become involved in a war where the US had little economic interests. Instead the US policy was to delegate responsibility to the European Union to sort out the problems on its own doorstep. However, the European Union lacked both the political will and the ability to produce a coherent policy towards the crisis in Yugoslavia. Of course the European Union could not ignore the war in Yugoslavia given its geographical position, but divisions between the main west European powers meant that the only policy that could be agreed was to contain the conflict to Yugoslavia, impose an arms embargo and mount various token peace keeping efforts to bring the conflict under control.
The dismal failure of the European Union to bring the wars in Yugoslavia to a conclusion eventually prompted the US to make its first major about turn in policy towards the break up of Yugoslavia and to become involved in the war in Bosnia. The US now aligned itself with the official Bosnian Government. Unable to convince the other major powers to lift the arms embargo so that it could openly arm the Bosnian Government, the US eventually entered the war itself on the side of the alliance between the Bosnian Government and the Croatian Bosnians against the advancing Bosnian Serbs. Providing air supremacy to the anti-Serbian ground forces the US was able to inflict a decisive defeat on the Bosnian Serbs forcing them to the negotiating table.
As a result the US was not only able to bring the fighting to a halt but to impose a peace settlement in the form of the Dayton Agreement. According to the Dayton Agreement Bosnia was to become a multi-ethnic confederal state. The three way division of Bosnia would be consolidated in the form of distinct republics with their own Parliaments but an overarching confederal structure was to be put in place that would prevent Bosnia being broken up and divided between Croatia and Serbia. The US would lead the policing of the agreement for a year while the European powers would be responsible for organising the economic reconstruction of the war-torn Bosnia.
Central to the Dayton Agreement was the tacit compliance of Milosevic. In return for calling his dogs of war to heel and persuading the Bosnian Serbs to accept the Dayton Agreement Milosevic gained US support for preventing the further break up of the rump of Yugoslavia, including the acceptance of Kosovo as an integral part of Serbia, and the relaxation of economic sanctions against Serbia. Having been cast as the villain of the Yugoslav conflict by the Western press, Milosevic became temporarily transformed into a responsible and reliable leader, a bulwark against further instability in the region particularly following the Albanian insurrection of 1996-7.
However, while the US had been able to impose a cessation of the Bosnian war, the vision of a multi-ethnic confederal state soon proved to be unworkable. The recalcitrance of all sides to allow the return of refugees and to hand over war criminals and the election of hard-line nationalists in the elections thwarted the US hopes of a quick end to the affair.
Increasingly Milosevic, by encouraging the Bosnian Serb in their defiance of the various details of the Dayton Agreement, was seen as the main obstacle to progress towards 'peace' and the return of American troops. By the beginning of 1998 the US was beginning to 'lose patience' with Milosevic and began to advocate the reimposition of sanctions against Serbia.
Then, around September 1998, the US made its second and most important turn about in policy with regard to the former Yugoslavia. As we have seen, as part of the tacit agreement with Milosevic, and later in order to contain the Albanian insurrection, the US had backed Serbia's dominance of Kosovo. After all Kosovo had little economic or strategic importance and its secession could only threaten the stability of other states in the area with substantial Albanian populations. As a consequence, the US had provided no encouragement for the pro-western Rugova in his opposition to Serbia and repeatedly denounced the KLA as a band of criminals and bandits. The failure of Rugova to elicit western support for the cause of Kosovan autonomy led many Albanian Kosovans to turn to the KLA, which in the Spring of 1998 launched an offensive against the Serbian security forces in Kosovo. The ill-organised KLA were soon driven into the hills by the Serbian Army and Police. The atrocities committed by the Serbian forces against Albanian Kosovan villages suspected of supporting the KLA were tacitly accepted by the US as necessary in the fight against the 'terrorism' of the KLA.
In September this changed. The KLA now became transformed into 'freedom fighters' as the US threatened military action against Milosevic(15). The KLA was reorganised and rearmed, no doubt with US backing, and the US intervened to broker a cease-fire in October. In February, with the KLA now recognised by the US as the representatives of the Albanians in Kosovo, the US sought to impose a 'peace deal' between the KLA and Milosevic.
As the details of the Rambouillet Agreement have emerged it has become clear that this 'peace deal' was little more than a pretext for war. Not only did the proposed agreement require that a referendum on independence should be held within three years, almost certainly leading to the secession of Kosovo from the rump of Yugoslavia, but that NATO forces were to have free access to Serbia itself and have immunity to Serbian law. In other words the US could occupy Serbia at will! There could be little doubt that however many 'last miles that NATO was prepared to go for peace', so long as the US insisted on such conditions, Serbia would have to reject the agreement. Having promoted the stories of atrocities perpetrated by the Serbian forces and warned of the potential for wholesale ethnic cleansing of the Albanian population of Kosovo, the US government was now able to mobilise the governments that make up NATO to go to war.
What is perhaps significant is that the offending conditions of the Rambouillet agreement were dropped in the final settlement that ended the war. Given that Milosevic could have accepted the Rambouillet agreement without such conditions before the war, and that there is no evidence that Milosevic was planning mass ethnic cleansing in Kosovo, it would seem that the ten weeks of bombing and the displacement of 100,000s of Kosovans was completely unnecessary. Why then did NATO go to war? Was it some irrational sentimentality induced in the leaders of the west?
To understand the underlining causes of the Kosovan conflict we must look at the two about turns in US policy towards the break up of Yugoslavia that we have identified in the broader context of Europe in the New World Order.
'Humanitarian Imperialism' and the New World Order
As we have seen there have been two sharp turns in US policy towards the break up of Yugoslavia. Firstly there was the decision to back the official Bosnian Government which finally led to armed intervention and the imposition of the Dayton Agreement. Secondly there was the about turn in the US policy towards the KLA in September 1998, which was to lead directly to the war over Kosovo. Both of these decisions can be seen to be concerned with the 'projection of US power into Europe', but this only raises the question of why should the US want to 'project its power' when there are no immediate economic interests to defend. It does not tell us why such sharp changes of policy occurred. To answer such questions we must place these sharp turns in US policy in the context of both the integration of the European Union and the break up of the Eastern Bloc that we outlined above(16).
The Bosnian about turn
As we have argued the US have supported the process of European integration on the condition that it created a Europe open to American capital and remains committed to US foreign policy through the structures of NATO. However, the failure to adequately respond to the conflicts in Yugoslavia had raised the question in the chancelleries of the European Union of developing structures through which it could formulate a common foreign policy. Yet a common foreign policy implied a common defence policy and ultimately an integrated European army(17).
Fearing such a development policy makers in the US saw the need to show the indispensability of US diplomacy and military power in Europe. As a result the US diplomatically shifted its position to a more active role by backing the Bosnian Government - a distinct but not necessarily opposed position to that of Germany which was tacitly backing Croatia.
However, the US policy makers in the Clinton administration were held back by isolationist elements in the American bourgeoisie who were reluctant to allow an open ended commitment to a conflict where there were no immediate economic interests at stake. It was only when the European 'peacemaking efforts' had clearly failed that the US Government could make an armed intervention and impose a 'peace settlement' and only then on the basis of air power and a time limited commitment to police the settlement with ground troops.
Yet a further consideration may have entered into the calculations of the US foreign policy formulators and that was the state of Russia and its transition to fully fledged market capitalism. As we have seen, US policy towards Russia has been to encourage its rapid transformation into a western style capitalist nation so that it can play an important but subordinate role in the New World Order. Yet such a policy has faced serious difficulties. Firstly, while much of the Russian elite accepts the 'need for reform' - and is doing quite well out of it in the process - it has insisted on retaining the vestiges of its former superpower status, both in maintaining and using its veto on the UN Security Council, which could then be used as a valuable bargaining counter in its negotiations with the US and the IMF over economic reforms. A position backed up by its rather decrepit but nonetheless formidable nuclear arsenal. Secondly, the policy has depended on the continuance in power of the rather sickly and alcoholic Boris Yeltsin.
The failure of the miracle cures, hawked by the Harvard whiz kids, to bring quick results to Russia's economic woes had become apparent by 1995. With the coming Russian Presidential elections in 1996 it seemed that the popular backlash against 'economic reform' and austerity would bring the Red-Brown Alliance of the Communists and ultra-Nationalists to power derailing US plans for Russia. Hence there was a need for the US to make a display of force in Eastern Europe. Yet such considerations were to play an even more important role in the second about turn in policy that was to occur over Kosovo.
Kosovan about turn
What was the cause of the abrupt about turn in US policy towards both Kosovo and Serbia in September 1998? Why did the US suddenly abandon its previous support for the status quo and risk undermining the stability in the Balkans? Of course, under pressure to 'bring the boys back home' and in the face of the intransigence of Bosnian Serbs it was no doubt true that US diplomats and envoys charged with the implementation of the Dayton Agreement had been losing patience with Milosevic. However, this was far from being a sufficient reason to take the considerable risk of launching a war against Serbia and putting the credibility of US foreign policy on the line. After all the Bosnian Serbs were not the only ones blocking the Dayton Agreement. The US could have easily extricated themselves from Bosnia by quietly accepting its de-facto division between Croatia and Serbia and shifting the policing responsibilities to its European Allies.
As for Kosovo, the fact that thousands of civilians had already been driven from their homes by the Serbian security forces in the war against the KLA was hardly a reason for the US to go to war against Serbia. Furthermore, the failure of the KLA to defeat the Serbian security forces meant that there was no pressing reason for the US to reconsider its relation with them. After all the defeat of the KLA meant that Milosevic was doing his job in containing the threat to the stability of the region of a resurgent Albanian nationalism.
The cause of the abrupt turn in US foreign policy in September 1998 therefore had little to do with the situation in the former Yugoslavia as such. To find the cause we must look at the impact of the financial crisis that had been unfolding during 1998 on US foreign policy both in regards to the relations between the US government and Russia and its own isolationist critics at home.
1998 was a critical year for US foreign policy. US policy efforts were being stretched in its efforts to contain the unfolding financial crisis in the Far East, which threatened to bring down the entire global financial system with catastrophic economic consequences. Against protests from isolationist Republicans and Democrats complaining about the waste of tax payer's money bailing out speculators, the Clinton administration was concerned with saving the US and western banks and shifting the burden of the crisis on to working class of the afflicted countries through the mechanism of the IMF. In order to turn the crisis to its own advantage, US foreign policy had to head off proposals to establish an Asian Monetary Fund that could rival American dominance exercised through the IMF. Only then could it use IMF loans as a means to open up Asian financial markets to western capital in its crusade against the newly discovered 'crony capitalism' of the former miracle economies of the Far East.
Yet despite all the efforts to contain the crisis in the Far East the lack of confidence of financial speculators began to spread to all 'emerging markets', the obvious weak point being Russia.
Following Yeltsin's re-election as President in 1996 there was renewed western confidence in Russia. As part of this a new wheeze was dreamt up by Yeltsin's western advisors to bridge the gap between government spending and declining tax revenues without recourse to printing money. This was to issue special short term and high interest Government bonds known as GKOs to finance the deficit(18). These government bonds attracted both foreign investors and internal funds of various institutions and deepened the fledgling money markets. Yet it depended crucially on the Government maintaining the exchange rate of the rouble and investor confidence.
In 1998 the IMF loans were up for renewal leading to intense negotiations over the pace of
economic reforms and deregulation. At the same time political developments were creating uncertainty. The miners, who had played an active role in supporting Yeltsin's rise to power, were camped on the Presidential lawn in protest at the chronic delay in the payment of wages, an indication that the previously acquiescent Russian working class may have been about to throw its weight into the political arena around the crucial issue of the non-payment of wages. Secondly, the governments of both the Ukraine and Belarus were beginning to make noises that they were disillusioned with the IMF and its programme for reform and were considering realignment with Russia(19).
In August, after the IMF negotiations were completed, the confidence of foreign investors collapsed. Capital took flight and the repayment of the GKOs were suspended. The Rouble went into free fall on the foreign exchange markets bringing down the 'pro-reform' Prime Minister with it. Yeltsin then proposed Chernomyrdin as the new Prime Minister but he was rejected by the Russian Duma. For the first time Yeltsin was forced to back down in his first choice of Prime Minister and was obliged to appoint the 'hard-liner' Primakov. For most commentators at the time it seemed that Yeltsin's days as President were numbered.
The financial crisis that hit Russia in August 1998 brought to a head the contradictions of American foreign policy both in regard to Russia and Eastern Europe, and in regard to the isolationists in the USA itself. The resolution of such contradictions demanded that the US policy makers take decisive action. Action that was made all the more urgent given the need to restore confidence in the midst of the unfolding financial crisis that was threatening to engulf the entire global economic system.
With the economic and political crisis sweeping Russia, the twin dangers of anarchy or autarky that haunted US policy towards the Russia, but which had abated following Yeltsin's re-election in 1996, now re-emerged all the more starkly. Whatever reassurance Yeltsin and his pro-western ministers might make that Russia was committed to 'economic reform' and westernisation, there was now no certainty that either Yeltsin or his pro-western policies would survive long. In September 1998 it seemed that either Yeltsin would be shortly deposed or else become a prisoner of the Communist controlled Duma. Even if Yeltsin did cling to office, it seemed unlikely that he would last beyond the presidential elections scheduled for the year 2000.
Yet, while the crisis in Russia presented the danger of a Russian rebellion against its subordination to the dictates of western capital, it also presented an opportunity for the US to force the issue within the Russian ruling class: that is, was Russia for or against the West? While Yeltsin remained in power, and presided over a pro-western policy committed to 'economic reform', the financial and political crisis in Russia weakened its bargaining position in its negotiations with the US and the IMF. With Russia having to go cap in hand to borrow money necessary to feed its population over the winter the US could insist on a renewed commitment to 'economic reform'.
But this opportunity to wring further concessions from the Russian government could only last so long as the opposition to pro-western policies amongst the Russian ruling class was unable to mobilise around a viable alternative economic and foreign policy. If the US was to secure Russia's adherence to IMF led 'economic reforms', and its subordinate role within the New World Order, it had to act to pre-empt the emergence of any such alternative economic and foreign policies. To do this the US had to underline Russia's political and economic isolation in Eastern Europe.
War against Serbia, over the economically and strategically insignificant province of Kosovo, provided a perfect opportunity to isolate Russia. Serbia is Russia's last remaining overt ally in of the former Eastern Bloc. By attacking Serbia, the US could expose the weakness of both Russia itself, and the ultra-nationalist opposition within the Russian ruling class. With little or no economic interests in Kosovo the Yeltsin government would not be compelled to intervene to defend its ally. Instead Yeltsin's government could be counted on to try to act as an intermediary, using its influence over Serbia as a bargaining counter with the West. On the other hand the ultra-nationalist and Stalinist opposition, to which pan-Slavism is an important ideological motif, would be left impotently demanding solidarity with Russia's Slav brethren.
However, the US was determined not to allow Yeltsin to use Russia's position as Serbia ally as a means to lever concessions out of the IMF. By operating through NATO rather than the UN, the US was able to outflank Russia's veto on the Security Council. As a result Russia's role was reduced from being an essential intermediary to that of a mere messenger boy carrying Nato's ultimatums to Milosevic.
In addition the use of NATO not only served to mobilise the West European powers behind the war against Serbia it also served to force the issue of which side the new and prospective members of NATO were on. Countries such as Hungary, which had recently joined NATO, now had to show a practical commitment to US foreign policy in Europe. A policy that was implicitly in opposition to Russia. At the same time the bombing of Serbia served to assert a new role for NATO as an overtly offensive organisation that could through 'out of area operations' serve to impose Pax Americana throughout Europe and the Middle East.
The old assurances made to Gorbachev that NATO would not be extended beyond Germany, or the subsequent assurances made to Yeltsin that Nato's extension to the former borders were merely for the peaceful purposes of promoting democracy, could be buried. Russia could now be in no doubt that NATO could intervene militarily on its very doorstep if necessary.
Yet the war against Serbia not only underlined Russia's isolation and non-viability of any alternative to the IMF and economic reform, it also served as a show down against the isolationists at home. It showed that the US administration could mobilise a 'humanitarian war' to defend the general interests of Pax Americana even if there was no immediate economic or sufficient interest around which to mobilise the American bourgeoisie. As such it was a risky venture only justified by the critical conditions confronting the US administration in the Autumn of 1998. We can not tell as yet whether the US policy makers thought that Milosevic would cave in early or whether they were prepared to go all the way to ground war. They were after all saved from the ultimate showdown of convincing Congress to commit US troops to a war by the mutiny of Serbia's reservists that finally brought Milosevic to the negotiating table(20).
With the end of the Cold War the USA has managed to renew its position as the world's hegemonic power. Having overcome the crisis of the 1970s through the radical restructuring of its economy the US has once again become the centre of world accumulation dragging the rest of the world behind it. The potential re-emergence of inter-capitalist rivalries have been mitigated by continued capitalist expansion and submerged through the continuing dominance of the USA as the world's sole superpower.
Of course, the current performance of the US is not without its problems. Rising profits that have fuelled capital accumulation in recent years has been based primarily on eroding real wages rather than raising productivity whose growth remains at historically low levels(21). Much investment has become speculative fuelling a stock market that is vastly overvalued in comparison with any prospects of increasing profitability of American capital. Whether the inevitable collapse of the US stock market can be contained or whether it will plunge the real economy into a slump or a period of prolonged stagnation is yet to be seen. But it could well be that the current period is the Indian summer of Pax Americana.
Nevertheless, to the extent that the present period is one of continued capitalist expansion under a stable and unchallenged hegemonic power then the war in Kosovo must be seen as war on the periphery - albeit a periphery uncomfortably close to capitalist heartland of Western Europe - rather than as some symptom of capitalism decomposition and irrationality as some would have it.
However, the Kosovan conflict does highlight certain peculiarities and contradictions of the new Pax Americana. There is always a problem of constituting a general interest out of the competition of particular capitals. Yet such problems have become exacerbated not only by the fall of the USSR as a common threat to western capital and the resurgence of the US bourgeoisie's particular propensities towards isolationism, but also with the growing importance of global finance capital.
The investment of industrial capital demands long term commitment to particular concrete conditions and circumstances that generate specific interests. When an oil company builds an oil refinery its capital is tied up for years in a particular place. For finance capital investment is less committed. It can always cut its losses and invest somewhere else by calling in its loans or selling its shares. Yet while each finance capital can cut and run it can only do so long as everyone else does not do the same. The conversion of particular uncertainties into abstract and tradable risk, which is central to finance capital, depends on the confidence in the system as whole. Thus for finance capital there is no particular interest as such just a general interest in the confidence of the system as a whole.
This creates both problems and opportunities for the implementation of foreign policy on the part of the hegemonic capitalist power. Finance can be used as an effective instrument of foreign policy that avoids the use of direct armed intervention, as the operations of the IMF clearly shows. At the same time, to the extent that USA is the home to much of global finance, the foreign policy of the USA must guarantee the operation of the global financial system. But because monied capital has little particular long term interests (because it can also cut its losses and run) it becomes difficult for the US foreign policy makers to mobilise such capital behind a concerted foreign policy.
The outcome of the particular isolationism of the American bourgeoisie and the emergence of global finance is firstly the rather ludicrous situation where the US has to fight wars without suffering any casualties. Secondly, because it can not necessarily mobilise around specific economic interests it has to mobilise for war around abstract principles such as 'human rights' and wage 'humanitarian wars'. Yet the limits of such ideological covers of war are all too obvious. In 'humanitarian' terms armed intervention usually makes things worse. A point taken up by American isolationists to argue that the USA should let conflicts in the world burn themselves out(22).
Of course, the Kosovan war ended with much triumphalism for the advocates of humanitarian war, although the subsequent events of reverse ethnic cleansing has undermined many of their claims. But the true shallowness of these pro-war liberals is exposed in the recent events in East Timor. It is perhaps no coincidence that the new President of Indonesia announced that there would be a referendum on East Timor's independence last January in the middle of the ideological mobilisation for the war in Kosovo. No doubt this was an important concession wrung from the new Indonesian government desperate for IMF loans in order to placate the conscience of the former anti-war Greens and leftists in the various West European Governments. Now the East Timorese are paying with their lives for such humanitarian concern.
1 See 'War is the health of the state:An open letter to the UK direct action movement' in Do or Die 8 (c/o 6 Tilbury Place,Brighton,BN2 2GY).
2 This is a position put forward by Left Communists such as the ICC.See also 'Humanitarian Barbarism:Nato's war against Yugoslavia' in Uniundercurrent 7,June 1999.
3 Unlike industrial capital,mercantile capital is unable to produce suplus-value since it is confined to the sphere of circulation.In the absence of industrial capital,mercantile capital's profits depend on either accidental or enforced monopoly that allows the mercantile capitalist to the law of equal exchange so as to buy cheap and sell dear.With the development of the world market in the sixteenth century mercantile capital became increasingly dependent on state power to enforce its monoploly position.Piracy and war were central to the accumulation of mercantile capital until the development of industrial capital in the nineteenth century.
4 The obvious example of those who have offended cosmopolitan liberal reationality for attempting to defend their own national accumulation of capital are Stalin,Saddam Hussein,Milosevic. 5 Of course the obvious exception to this was the Vietnam war where the worlds greatest economic power was defeated by one of the weakest.However,the defeat of the US was caused,not by the superior military prowess or tactics of the Viet Cong,but by the insubordination of the the American conscripts and social unrest at home.The fear of war inciting insubordination and class struggle that followed Vietnam is one that still haunts the American Bourgeoisie and has proved a powerful argument in the hands of America's isolationists.Ultimately the overwhelming economic and military power of the US depends on the compliance of its working class.
6 As British capital becomes increasingly dependent on the appropriation of surplus-value produced elsewhere in the world,through its position as one of the principal centers of global finance capital,it has become increasingly dependent on the global system guaranteed by the intervention of the USA as the hegemonic power.The danger of America retreating from both Europe and the world stage,and the break up of the global economic system into distinct regional blocs threatens all the major powers of Western Europe but it would be particularly serious for the UK.
7 France was something of an exception to this.Refusing to subordinate itself to the military command of the USA it was nominally independent of NATO throughout much of the Cold War.
8 While there were no wars in Europe for forty years following the second world war more than a hundred wars were fought in the 'third world'.
9 For a clear statement of this strategy see Madelaine Albright,US Secretary of State,in the Financial Times,7th December 1998:'Our interest is clear:we want a Europe that can act.We want a Europe with modern,flexible military forces that are capable of putting out fires in Europes backyard and working with us through the alliance [NATO] to defend our common interests'.
10 This highly integrated nature of the Russian economy meant that the 'short,sharp,shock' policies have not been so short and sharp.Seeing that such policies would not only be disasterous for the Russian economy and their own interests within it sections of the Russian ruling class have been highly resitant to many aspects of reform.
11 During the entire period of'economic reform' not one major plant or factory has been built anywhere in Russia!
12 The privatisation of the major oil and natural gas monopolies took the form of distributing shares to workers and Russian citizens, most of which were then sold back to management. Thus in effect privatisation transferred ownership to the former industrial bureaucracy rather than opening up these potentially profitable companies to westem capital. An important aspect of rb/if led reforms has been to pressure these monopolies with the aim of opening them up for foreign investment. The IMF insistence on cuffing the huge budget deficit has been directed at breaking the power and influence of the oil and natural gas companies by forcing them to pay their huge tax arrears.
13 See 'Class Decomposition in the New World Order:Yugoslavia Unravelled' in Aufheben 2,1993 and 'Yugoslavia:From wage cuts to war' in Wildcat 18,Summer 1996.
14 As Wildcat (op. cit.) pointed out,ethnic cleansing did not suddenly erupt between neighbours who lived side by side for years as a result of some long repressed collective subconscious as is often portrayed.Ethnic cleansing was deliberately created by state sponsored gangs.Once the enmities had been created through terror they then became self-sustaining.
15 By December 1998,James Rubin,US State Department spokesman,could say of Milosovic that "He is not simplt part of the problem.He is the problem.We have no illusions about milosovic and do not see him as a guarantor of stability."Financial Times 7th December,1998.
16 A useful analysis of the origins of the war in Kosovo in the break up of Yugoslavia is Peter Gowan's, 'The NATO Powers and the Balkan Tragedy' in New Left Review May-June 1999. Gowan also identifies the two about turns in US policy. However, his explanation of the sharp turn in US policy in September 1998 in terms of the personal ambitions of Madeline Albright is far from adequate.
17 Talks to this effect also took place in the closing months of 1998. In November there was an 'informal EU Security meeting in Geneva and Anglo-French talks in December. Both meetings were to discuss developments towards a unified EU defence policy, especially in light of the Kosovo crisis. However, the idea of a coherent EU defence policy, championed most by Britain, falls into line with the US vision for the future of NATO and the EU. See Financial Times, 4th November 1998 and 3rd December 1998.
18 Of course all developed capitalist states borrow money on the money markets to finance their budget deficits. But usually persistent budget deficits are financed through issuing long term government bonds that are redeemed after several years. In contrast short term treasury bills, which are redeemable in a matter of a few months, are usually issued to bridge the gap between day to day government spending and the receipt of tax revenues. However, few speculators were willing to hold long term bonds for fear that a future Russian Government might not redeem them. Hence short term GKOs, which were more akin to treasury bills, were presented as the answer to financing Russia budget deficits, as well as deepening the limited money markets. But financing a budget deficit by issuing treasury bills is like buying a house with a credit card.
19 In the Ukraine confidence in IIVF loans had waned by the end of September with the collapse of the Rouble. With this disillusion with the West attention was being turned East with the Presidents of Ukraine and Russia meeting to 'discuss ways of re-invigorating the Russia-dominated Common-wealth of Independent States as a way out of the crisis.' However, while Ukraine insisted that it was not seeking to break its ties with the West it would obviously have to choose which economic model it was going to follow - 'East or West.' See Financial Times, 23rd September 1998. The situation in Belarus was of a more serious nature for US policy towards the former USSR: 'Workers under orders from the Belarusan government welded shut the gates to the US ambassador's residence yesterday in order to prevent him from entering. 'This concerns me greatly," Ambassador Daniel Speckhard said outside the gate with his wife and three children. "If the government wants to lock us out, we will have to leave the country." At a news conference earlier, Mr Speckhard said: "If diplomats in the Drozdy residences are expelled, this will be the first incident of its kind after the end of the cold war. We hope that (Belarus president) Alexander Lukashenko. . . will correct this situation in time." Mr Lukashenko, condemned by western governments for his authoritarian-style rule, has repeatedly lashed out at the west and accused it of seeking to isolate his country of 10m people.' See Financial Times, 9th June 1998. Of further concern to the West was 'Belarus's Independence Day parade... complete with tanks, rocket trucks, goose-stepping paratroopers, inline skaters, athletes pretending to play ping-pong, and ranks of children holding up model aircraft. The event was a chance for Alexander Lukashenko, the country's stern, moustachioed president, to showcase his country's march back to Soviet-style communism.. The parade and its stage-management were vintage Lakashenko. A former collective farm boss, he ran for president of his country in 1994 on a platform of restoration of Soviet virtues and won a resounding victory. Last month, he improved his image among his supporters by taking over the residences of several western ambassadors, who promptly left the country in protest. Many western diplomats believe the crisis was in fact a tactic to bolster Mr Lukashenko's popularity in Belarus and in neighbouring Russia. Some say he has one eye on a bid for the Russian presidency in 2000. Since taking power, Mr Lukashenko has cracked down on dissent, changed the constitution to increase his powers, and begun re-nationalising the economy. His hope is that this "Belarusan model" appeals not just to Belarusans, but to Russians as well. Part of his prograrrune for Belarus is the eventual re-unification of his country with Russia, and though real unity is a long way off, analysts are nearly unanimous in their view that Mr Lukashenko sees a role for himself in Russian politics. The problem - according to Valery Karbalevich, a political analyst at the Minsk-based National Centre for East West Strategic Initiatives - is that "Russia may well want to integrate with Belarus, but they don't want to integrate with Lakashenko". Financial Times, 4th July 1998.
20 See "'We won't go to Kosovo": The movement of draft refusal and desertion in Krusevac, Aleksandrovac, Prokuplje. . .May 1999- a chronology of events' in No War but the Class War! Discussion Bulletin 3 (Escape, c/o P0 Box 2474, London N8 OHW).
21 For most years of the 1990s economic growth in the USA has been based on employing more workers and making them work longer hours rather than investing in plant and machinery to make them more productive. This is indicated by the fact that during this period the annual growth in the average hourly output of American workers rarely exceeded 1%. However, since 1996 there are indications that both real investment and growth in productivity have picked up as limits to extending the working day and enlarging the workforce have been reached. However, this surge in productivity seems unlikely to be sulficient to support the high expectations for profit growth implied by the current levels of the stock market.
22 In his election campaign George Bush jnr., front running Republican Presidential hopeful, has made it quite clear that the main problem for American foreign policy is the recalcitrance to the free movement of western capital on the part of Russia and China. Affempting to rally the Republican Party around an active interventionist foreign policy, he has sought to articulate the growing criticisms of the Clinton adrninistration's policy of 'humanitarian wars'. See The Guardian, 24th September 1999.