Keys of This Blood

by Malachi Martin

  In true evolutionary fashion, the second leg of the globalist tripod creation is essential to the first. If trade is to be increasingly international, then there must be an increasingly effective and acceptable system of mutual payment. Hence the scramble on the part of Internationalists and Transnationalists to find some universally acceptable monetary system.

  As the first leg of the tripod, international trade, got its modern footing with the help of GATT, so the second leg was set on the right path by means of an international agency established in the same year, 1947.

  Because the basic agreements making this new monetary agency possible were signed in Bretton Woods, New Hampshire, they are often referred to collectively as the Bretton Woods Agreement(s). The agency itself, however, was named for its function: the International Monetary Fund, or IMF. Because the IMF from the beginning was affiliated with the United Nations, it depends to a certain extent on the “umbrella” influence of the U.N.

  By 1967, thirty-one members had accepted IMF obligations—to maintain full convertibility of their currencies (freedom of exchange transfer for current transactions). By 1968, there were 107 members (many former colonies joined). The IMF board is composed of finance ministers of member countries. Five board members are appointed by countries with the largest quotas; fifteen are elected the IMF governors of groups of countries with quotas ranging from 3 percent to 1 percent.

  In today’s climate of the fast-paced development of international trade, it is difficult to mount a practical argument against the need for an improved international monetary system to keep that first leg from running into serious trouble. Indeed, just how essential to our common good is the strengthening of this second leg of the globalist tripod was made clear by the specter of worldwide financial chaos that lurked behind the so-called Black Monday market crash in New York on October 19, 1987.

  Still, looking on the bright side, that crash did have at least one salutary effect in the eyes of true Internationalist and Transnationalist managers of our global welfare. It demonstrated to nonglobalist politicians and money managers that, like it or not, the individual private money markets of the United States, Europe and Japan have already been globalized. They have already evolved to a higher state of interdependence.

  It is argued, therefore, that a more efficient pooling of methods than can be provided by such arrangements as GATT and IMF is urgently needed. A greater homogenization of procedures and a tighter coordination of aims are required for a world economy in which the equivalent of the annual GNP of the United States changes hands every day on the international capital markets.

  Some members of these globalist groups speculate about a single acceptable monetary unit—the shadowy “Phoenix” and “Bank of Ultimate Resort” surface in this regard from time to time in futuristic Internationalist and Transnationalist discussions.

  Also discussed is some more clever convertibility plan that can overcome the hurdles IMF struggles with in our present and separate national monetary systems. Perhaps an overall and truly global agreement can be fashioned by Internationalists with the savvy input of their Transnationalist brothers.

  In the view of some of Pope John Paul’s expert advisers in the field, there is a more likely starting point for improved monetary interdependence. In such a scenario, they see the emerging stock exchanges in Asia joining forces over time, and eventually producing an integrated securities market. In the view of these Vatican analysts, this would shatter the already deficient nationalist monetary mold once and for all. It would provide at least the example of a healthy regionalism. And it would represent a new stage on the road to the worldwide securities system the nations will ultimately have to establish if they are to reach the heights of socioeconomic interdependence envisioned for the common good in the evolutionary scheme of the Internationalist and Transnationalist groups.

  Whatever improved global monetary system is finally fashioned, certainly it will rest on some overall agreement devised by the cooperative efforts of Internationalists and Transnationalists. And certainly it will ensure that tariffs and trade arrangements will benefit the poor nations as well as the rich. Otherwise the final leg of the tripod—global physical security—will be jeopardized to the point of toppling the tripod creation before it reaches its full evolutionary potential.

  There is little need for Internationalists or Transnationalists to argue the case for the need to establish and maintain the improved physical security of nations. They do have their own specialized view of the role of physical security, however, as the third leg of their global tripod. For international trade and payment systems to work, we must all be secure from such things as robbery and blackmail, harassment, depredation, destructive taxation and fines, and unfair competition. And such freedom depends in large part, and in plain words, on military security.

  Our recent history supports this globalist view of military security. Hitherto, the only purpose of NATO—on which the United States alone spends $150 billion annually for the maintenance of American forces in Europe—has been to discourage any attempt by the Soviets to interfere by military invasion with the free-market economies of Western Europe.

  Similarly, the booming economies of Japan, Germany and the United States—economies that anchor the present uneven evolutionary development of interdependence in the rest of the world—depend on that all-important international commodity, oil. Thus, when the possibility arose in the 1980s that the bloody Iran-Iraq war would seriously interrupt international trade in oil, the presence of American military and naval power in the Persian Gulf was required for the duration.

  Pope John Paul is not the only international leader to understand that among the several difficulties admittedly faced by the Internationalist and Transnationalist groups regarding their tripod creation, including its attendant systems and structures, is its dependence on the now insecure and fast fading hegemonic position of the United States in trade, finance and military-political power.

  Take the areas of trade and finance, represented by the first and second legs of the tripod. For the first four decades following World War II, global foreign direct investment (FDI) was dominated by the United States.

  By 1987, however, that picture of U.S. dominance in both areas had totally changed. Of the $250 billion FDI, fully 75 percent came from a whole spectrum of nations outside the United States: $70 billion from the United Kingdom; $51 billion from the Netherlands; $30 billion from Japan; $20 billion from Canada; and $17.5 billion from West Germany.

  Single trade items tell the same tale. In the decade of the nineties, 20 percent of the cars in the United States will be produced by Japanese-owned firms, with similar trends in a host of other areas, such as office equipment, consumer electronics and many luxury items.

  Given the loss of hegemonic leadership to provide drive and stability, the multilateral system of trade favored until recently by both Internationalists and Transnationalists is now gravely affected by the recent emergence of bilateral and regional arrangements. Rightly or wrongly, many Internationalist voices in particular are raised now, stating that GATT is dead. And no less a figure than George Shultz—a leading light for both the Internationalists and the Transnationalists—has said that “regional initiatives are playing an ever more important role in promoting free trade, closer economic cooperation and stronger growth.”

  Even the preparations for the much-heralded 1992 single-market program for Europe, together with the successful conclusion of the free trade agreement (FTA) to he implemented over ten years between the United States and Canada, have both increased the trend favoring world trade resting on bilateral and regional agreements fashioned through government auspices.

  Harvard professor Lester Thurow, for example, claimed in 1989 that what we need now is “a system to manage business between the three blocs [North America, Europe and the Asian Pacific], rather than global liberalization measures” (modeled on GATT). A prominent Internationalist himself, Thurow was speaking as the p
oint man for a thoroughgoing Internationalist structure of world trade, and finance as well, as the best way to avoid calamity, given the urgent need to fill the current vacuum in global leadership.

  The second leg of the globalist tripod, representing global economic cooperation, has suffered many of the same difficulties as trade on account of the lack of hegemonic leadership. For international trade to be strong and viable, the all-important issue is not so much stable exchange rates per se as it is a stable anchor for exchange rates. And here again, hegemony is the indispensable anchor. One chief function of postwar American hegemony was its ability to provide that anchor, among all the others. But here again, the United States is by no means in a position to continue that role nowadays.

  U.S. hegemony in financing has passed to others: notably to Japan, which is now the strongest financial power in our world—but not necessarily the most Internationalist or Transnationalist in spirit. And as we enter the nineties, United States military and political supremacy—the rule of the day for some thirty years after World War II—is over. America does still possess military clout, but not an exclusive military supremacy. It still has political assertiveness internationally, but without any moral surety that its political solutions are the best—or that they are even viable in today’s world.

  The classical and effective political assertiveness required for world hegemony—embodied formerly in the once flourishing British empire and later in the United States of the immediate postwar period—was pegged to its bedrock by two traits: an admitted and nourished patriotism, and a moral consensus springing from shared religious beliefs. The United States of the 1980s and ’90s has lost its grip on both of those traits. It no longer displays any nationwide acceptance of its old-time patriotism. And the only viable—but fragile—consensus is a legal one, based on legislation and case law.

  The whole Internationalist-Transnationalist tripod system, therefore, appears to have developed a case of three wobbly legs. And yet, there is no denying that interdependence among nations has gone so far that the Internationalist and Transnationalist masters of our new global systems are more than justified in their concern for the consequences for all of us, should their programs collapse even before they are totally up and running.

  The differences between the Internationalist and the Transnationalist approach to globalist interdependence are magnified in the ways they favor to solve the problems that face them at this most crucial juncture.

  The Internationalist group appears willing to meet the world halfway. Internationalists do not see the nations of the world as a single community in quite the same fashion as the more doctrinaire among the Transnationalists do; they do not seem married to the idea that the nations of the world are already unevenly integrated members of a “global community.”

  Rather, Internationalists are essentially men of politics. They do realize that their own national political parties can no longer solve the economic and financial difficulties besetting their particular political systems and national economies. They believe that the answer lies in treaties and agreements that will team nations with congenial nation partners.

  Internationalists, therefore, have come to view the world as made up of possible groups of nations. “Islands” of nations is a perfect image, in fact. Islands of nations afloat in a vast archipelago. The task to be accomplished, as the Internationalists see it now, is to build bridges between those islands, drawing them together into several communities according to regional interests, geographical location and certain economic-political conditions that favor successful bloc policies between them.

  As professional bureaucrats, Internationalists choose for the creation of such blocs—and eventually, if time allows, perhaps the fusing of all blocs—governmental means. For the fashioning and maintenance of administrative structures through bilateral agreements is what bureaucrats do most efficiently and naturally.

  It is in that context that Lester Thurow called for “a system to manage business between … blocs.” It is in that context, too, that George Shultz touted the importance of regional initiatives; and that in 1989 he pinpointed again, and categorically, “regional economic cooperation and prosperity” as the primary challenge of the post-Reagan era.

  The Internationalist chorus is an impressive one indeed. Major voices are heard almost daily, all calling for the same solution to the fairly swift disappearance of the stabilizing hegemony of the United States, in order to avoid the possibly disastrous results of the current vacuum in global leadership.

  “There is only one way to make up for this grave deficiency (in world hegemony),” said C. Fred Beregsten, director of the Institute for International Economics, “and that is by agreeing upon a pluralistic management.” Respected Japanese columnist Misahiko Ishizuka clearly sees the same need. Japan’s function in such a pluralistic system of management, said Ishizuka, “will require a grand design involving not only economic but political and military matters.”

  So far, however, that grand Internationalist design has made only spotty and halting progress. The most advanced form of Internationalist regionalism as a solution to the crisis in global leadership is represented by the European Economic Community (EEC) and by the Free Trade Agreement (FTA) between the United States and Canada.

  As a single-market program, EEC is—by prior standards, at least—the most ambitious enterprise on the horizon. Much has been made of the EEC aim to remove the tariffs within the region by 1998. But the plan concerns wider measures. The goal is to eliminate border controls on the movement of people and goods; to free up capital movement and trade in services; and to grant the right of establishment. Ultimately, there is to be a truly single-market community comprising the whole of Western Europe’s 350 million people. Some Internationalists raise their sights for the future even higher. Norwegian Prime Minister Gro Harlem Brundtland, for one, has speculated that “in the light of the extended contacts between East and West, we have a vision of a future market, not merely of 350 million people, but of 700 million people in Europe alone.”

  Visions are all very well. But as impressive as the EEC program is, and for all the hope that Internationalists attach to it, Transnationalists will point out that virtually every other regional arrangement, except the FTA between Canada and the United States, remains bogged down in discussions, in exchanges of experience and in research and analysis. And to give the Transnationalists their due, the story does appear to be one of foot dragging and reluctance in region after region.

  On one side of the Atlantic, there is the Caribbean Common Market (CARICOM), the Caribbean Basin Initiative (CBI) and the Central American Common Market (CACM). On the other side of the Atlantic, there is the Assembly of Regions of Europe (ARE), while across the Pacific there is the Pacific Basin Forum (PBF), proposed by George Shultz, and the Asian-Pacific Organization (APO), proposed by Australian Prime Minister Robert Hawke. There is even the Soviet bloc’s Council for Mutual Economic Assistance (COMECON). The United Nations has its regional commissions as well—its Economic Commission for Europe (ECE), for Africa (ECA), and for the Far East and Asia (ECFEA).

  The United States and Mexico actually drew up the framework for an agreement in 1987 that listed several specific areas for bilateral consideration, much in the manner that led to the U.S.-Canadian FTA. But no concrete concessions were granted by either side. Similar proposals have been entertained, so far with the same meager results, between the United States and Japan, and for the members of the Association of South-East Asian Nations (ASEAN).

  As nearly as Pope John Paul can see, therefore, clearly the weakest link in the Transnationalist solution for the urgent need to provide stability in the tripod globalist system is that there is no sign of the broad formation of blocs required for their plan to work.

  Even the three “Asian tigers” show no sign of unitary regional action. Indeed, Korea’s and Taiwan’s markets are even more tightly closed than Japan’s. Moreover, while all the signs are that the Europea
n Community (EC) will achieve a certain intracommunity easement of border duties and labor movement, no one—least of all the Europeans themselves—thinks that the EC is going to trade as one bloc with the rest of the world.

  As a group, dyed-in-the-wool Transnationalists are neither surprised nor entirely dismayed at the failure of the Internationalist initiative. In fact, blood brothers though they are, Transnationalists assail the regional approach of the Internationalists on several accounts. Their most important objection, perhaps, is that they are certain the legal machinery required to link one region or bloc of nations with another will involve protectionist restrictions—in such things as trade quotas, as just one example—as inducements to get certain nations to sign on.

  To make their point, in fact, Transnationalists have only to point to GATT itself, the very underpinning of the Internationalist model. Transnationalists applaud the phasing out of the Multi-Fiber Arrangement by GATT members, because it will end the practice of developed countries to set limits on the quantity of clothing and textiles the developing countries can sell them. That phaseout is right down the Transnationalists’ alley, because their effort is to avoid any head-to-head confrontation by which one economy attempts to protect its interests through legal restrictions that prevent others from full competition in the global market.

  Happily for the Transnationalists, similar thorny issues concerning agricultural subsidies and protectionism are at least on the way to a solution. Unless such protectionist confrontations and arrangements can be phased out, say the Transnationalists, we will be faced with a regional system as mordant as any nationalist protectionism ever was.

  Moreover, in the Transnationalist mind, solutions for problems and realizations of opportunities can no longer be achieved solely within a system of single nations, or even within a system of sectors or blocs of nations. No regional or bloc system, however interrelated it might be, will supply an adequate solution, because it is already too late to forge or control interdependence by means of blocs of trading partners. And it is too late because the nations are already interdependent.