The United States of America and Iran’s Periphery in 2011

 

Tahmoures Gholami

International Peace Studies Centre – IPSC

Abstract:

2011 began with the turmoil of the Arab Spring in the Middle East. These events altered circumstances in the region, and forced the United States, the world power with the most influence in the Middle East, to pursue a new course of action. US policy in this region also focused on the continuation of its wars with extremist groups in Afghanistan and Pakistan, and on finding a solution for Iraq. In 2011, the US was also concerned with human rights in Iran, as well as the country’s nuclear issue. In this article, I will specifically discuss three important and noteworthy issues in the Middle East in 2011, as they pertained to the United States.

Keywords: The United States of America, The Middle East, The Arab Spring, Afghanistan, Iran, Iraq, Pakistan.

 

Introduction:

Due to its position in the hierarchy of global powers, the United States of America is deeply involved in world events. The Middle East was one of the areas defined by the US as a field of interest after WWII, and especially after the dissolution of the Soviet Union. The Middle East in general and the Persian Gulf subsystem in particular, have always played a key role in the American presidents’ doctrines, and in National Security bills. This is a result of the region’s strategical, political and economical importance. However, this position became much more significant after the dissolution of the Soviet Union, a trend which was only heightened after 9/11. In 2011, the Middle East received a degree of US attention that went far beyond that received by any other region in the world. The basis of this interest lay in a series of important developments (and high degree turmoil) that unraveled in the Middle East during 2011, widely referred to as “The Arab Spring.”

The United States’ interest in and attention towards the Middle East can be broken down into the following categories:

1. Issues related to the United States’ war in Afghanistan and Iraq, and its fight with terrorism in Pakistan.

2. Issues related to the turmoil in Arab countries and the United States’ policies in this regard.

3. Iran

The first issue discussed here is the United States’ economic crisis and the movement known as Occupy Wall Street which resulted from this financial crisis.  The economic crisis at home, and Middle East tensions abroad, made 2011 a difficult year for the United States.

 

Internal Economic Crisis and the Occupy Wall Street Movement:

The US economic crisis was a financial crisis, which, in its early stages, resulted from the government’s inability to control and restrain events, leading to instability, and the continuance of serious problems. The financial crisis involved a social dimension: the Occupy Wall Street movement, which signified the dissatisfaction felt by many Americans, critiqued widespread injustice and the persistent economic disparity in the United States. The financial crisis, which had weakened the economic situation of the country since 2007, led thinkers like Zbigniew Berginski to warn of the likelihood of future social unrest, even before the Occupy Wall Street movement. This financial crisis, and government attempts to control it, will be further discussed below, as will the social aspect of this crisis— the Occupy Wall Street Movement – and its grounds.

 

The United States Financial Crisis:

The financial crisis in the US, which also destabilized the financial institutions of other countries, came to a head at the end of September 2008. However, the crisis really began in mid-2007, as a result of the downfall of the subprime mortgage market. That collapse resulted in the bankruptcy of financial institutions in the mortgage market, including large investment banks such as Lehman Brothers.

The Lehman Brothers’ bankruptcy announcement, which came on September 14, 2008, swiftly initiated the bankruptcy of other banks. Stock exchange prices and financial assets hit an extreme low on September 15. The crisis and its aftermath led to the unemployment of 6.2 million Americans in 2008; the unemployment rate was at its highest in 40 years. The crisis also had an impact worldwide; by late September 2008, the financial institutions of other developed countries had suffered in similar ways.

Many economists believe that extremely risky policies adopted by financial institutions caused the financial crises in recent decades. Previous financial crises have been explained as the result of the governments’ irresponsible policies. For instance, many believe that weak regulations played a key role in motivating major financial institutions to adopt extremely risky policies. The regulation of the financial system in the US is weak and insufficient; most analysts consider the system that regulates the US financial markets to be old-fashioned and inefficient.

In addition to the weakness of US financial regulations, another important factor that encouraged American financial institutions to take high risks were the new possibilities generated by financial innovations. Such innovations allowed financial institutions to transfer their individual risks to the other members (or sectors) of the market. It was in this context that a crucial gap emerged between necessary risks and system risks.

There were two important actions taken in the US to control the crisis. The first was the Paulson Plan, designed to rescue critical institutions, that was presented to congress in September 19, 2008. Based on the law, the American government was authorized to spend up to 700 billion dollars to help the “distressed assets” program. The second action was a policy of fiscal expansion in the form of the Obama Stimulus Plan. The cost of the economic stimulus package was estimated to be $787 billion at the time of its passage. The Act included direct spending in infrastructure, education, health, energy, federal tax incentives, and expansion of unemployment benefits, as well as other social welfare provisions. Other measures were also taken at the international level, and in the framework of the European Union and the G20, to control the crisis.

The Occupy Wall Street Movement:

America’s national financial crisis resulted in increasing pressure on American society and its people, which led to the emergence of the Occupy Wall Street Movement – a mass protest against unemployment and injustice that condemned American financial institutions for the crisis. In order to fully understand the source of this crisis, it is necessary to examine the history of wealth distribution in the US. After World War II, the US enjoyed the most flourishing economy worldwide. It possessed a huge amount of the globe’s wealth. In such a position –with the presence of giant multinational companies, huge factories, and highly developed technology – American people expected prosperity, and a high standard of living, to continue. But that has not been the case.

Based on confirmed data, America has the largest gap between rich and poor citizens of all the developed countries in the world. The gap between the rich – the one percent – and the rest of Americans – the remaining 99 percent – has reached an unprecedented size. For the first time in American history, the one percent owns more than 70 percent of the country’s assets.  In other words, the assets and wealth of America’s 400 wealthiest people is equal to the wealth of the other 155 million.[1]

Between 1980 and 2006, the income and revenue of the one percent tripled, while the income of the remaining 90 percent increased by only 20 percent. According to Robert Freeman, a well-known American economist, between 2002 and 2006, three quarters of America’s economic growth benefited the one percent. The taxes received from 400 of the wealthiest American citizens were 17% of their earnings, a significant decrease from the 26% percent they paid in 1992.The income of the one percent grew 700 % between 1980 and 2007, while the revenue growth of the middle class was only 20 % during the same period.

Based on the analysis done by “The McClatchy Newspaper,” presently more than 16 million Americans live in absolute poverty, with an annual income of less than $9,000. The rate of all Americans who live in absolute poverty has increased from 29 percent in 1975 to 43 percent in 2005, and it is still growing. Over the past two decades, Americans have experienced the highest increase in poverty of all the 31 developed countries in the world.[2]

 With the unprecedented gap between the rich and the poor, never before seen in the history of America, the middle class that made the US a global superpower is now on the decline.  But in spite of the recent economic recession, American companies have earned unprecedented profits. 2009 was a year of comparatively low profits and bonuses, yet executives were able to earn more than $150 billion in both. That amount is certainly earned from the taxes paid by ordinary people; if these resources were used to create jobs, it  would be possible to allocate annual salaries equal to $30,000 for 5 million people.[3]

Corporate executives receive the highest salaries. Executives’ salaries have increased by 250% since 1970, while ordinary workers’ salaries have increased by only 26%. Managers of large companies earn 500 times more than regular employees. Today, workers work longer hours, and produce higher profits for companies, but what they receive is rapidly being reduced.[4] The profit that they make goes directly into the pockets of the rich and the economic elites. While 68.2 million Americans struggle to put food on the table, and while 90% of the population is experiencing a decline in income, the revenue of American billionaires is at an all-time high. The bottom 20% does not have any assets or wealth, and their debt is higher than their level of income. The middle class has an average total value of $60,000; however, this pales in comparison to the average assets of the one percent, estimated at $12.5 million.[5]

In short, since 2011:                        

• 1.3 million People have become poor.

• 1.4 million People have been deprived of health care.

• More than 2 million jobs have been lost in the private sector.

• A 6.5 trillion dollar budget surplus has transformed into over a $1 trillion deficit.

• Economic growth rate has fallen to nearly one percent, which is unprecedented in the last 50 years.[6]

The huge gap between the rich and the poor in America is not an accident and it has not happened overnight. This process is a result of the government’s economic policies over several decades. It results from measures taken by the wealthy class and big banks that use their assets and influences to persuade politicians to implement policies that exploit 99.9 percent of the population, in order to increase the interests and benefits of the one percent. Some experts have named these actions “financial terrorism.”

Some scholars believe that “Fascism has transformed; therefore, there is no need to shed blood and force people to work in labor camps. You can do all that through more peaceful means, by the use of economic policies, while sitting in your Jacuzzi or your private jet, separating yourself from the world around you.” This statement is not mere hyperbole. As we digest the fact that trillions of dollars benefit about one-tenth of the one percent of the rich, while the majority of people live in poverty, one may very well conclude that a so-called new “feudal and fascist” government is indeed in power in America today. Their wealth has never been as great as it is now. Meanwhile, politicians act as puppets, implementing policies that reduce standard of living of the poor and the middle class, while benefiting themselves.[7]

Experts believe that the crisis that has currently plagued America is the result of the actions of the one percent – to be specific, by the richest one-tenth of that one percent. These are the ones who profit most from this crisis. For example, in the first quarter of 2011, US companies recorded profit growth at 31%, while they also received tax cuts of 31%. The richest one-tenth of the one percent is regularly able to receive financial aids and easy loans to increase their profits and continue their production overseas (where they often avoid paying taxes). Furthermore, this group manages to affect the legislative process of the country, by persuading Congress to pass bills and bylaws in their favor. Some of the most complex pieces of tax legislation have been supported by such wealthy figures in America. Such laws allow the one-tenth of the one percent to increase their wealth, protect it, and influence the country’s policies, legislation and law-making processes. The real wealth and power belongs to the one-tenth of the one percent. 99.9% of the rest of the population do not possess sufficient knowledge of the financial system; nor do they participate in its processes.

Experts believe that even after the financial crisis, major banks and financial institutions continued to benefit from billions of dollars in tax breaks and other financial aid. As a result, the annual profit of Wall Street executives peaked in the midst of the economic crisis, reaching a record of $145 billion dollars in 2009. That figure rose to $150 billion dollars the following year. According to official statistics, companies such as Cigna, Humana, United Health, WellPoint and Aetna received around $200 million dollars in financial aid in 2009; in the same year, their profits also increased by 39%. [8]

Among these corporations, Oil companies that are primarily owned by Wall Street banks, also benefit from war and crisis. Five large oil companies in America reached an unprecedented record of $36 billion profit in the first quarter of the last year. These companies also receive an annual tax cut of $6 billion. Statistics and figures demonstrate how these wealthy individuals have managed to influence America’s political processes. In 1995, 400 of richest Americans paid 30% of their revenue as their income tax to the government, but that amount dropped down to about 18 percent in 2010.[9]

The current crisis of capitalism differs greatly from previous recessions due to its broad social impact. The Occupy Wall Street Movement, the social dimension of the current crisis, not only includes the usual determined opponents of capitalism; it gathers people from a range social groups and classes. Social injustice in the United States is not limited to any particular group or movement: it is an epidemic. The wide range of injustices that led to this movement makes it possible to call Occupy Wall Street a social movement.

United States and the Middle East:

 

2011 began with the turmoil of the Arab Spring in the Middle East. These events altered circumstances in the region, and forced the United States, the world power with the most influence in the Middle East, to pursue a new course of action. US policy in this region also focused on the continuation of its wars with extremist groups in Afghanistan and Pakistan, and on finding a solution for Iraq. In 2011, the US was also concentrated on Iran: human rights, the country’s nuclear abilities, and terrorism being the three key issues which, according to Brzezinski, would lead to war.

Accordingly, we will discuss the three important and noteworthy issues relevant to US policy in the Middle East specifically in 2011.

Continuing the War Against Terrorism in Afghanistan and Its Penetration into Pakistan:

After the September 11 attacks, the United States targeted Afghanistan in its war with fundamentalists and, according to the US, with terrorist groups. During the presidency of George W. Bush, the war continued on and off (at times intense, at times slow and sluggish), fought by America and its NATO allies. Different aspects of the reconstruction of Afghanistan were also considered. Beginning in Obama’s presidency, it was announced that the United States’ “war on terror” would centre on Pakistan. Thus began America’s military operations in and around Pakistan’s border with Afghanistan. At certain times, these military operations were conducted with the consent of the government of Pakistan; at other times, they were conducted without this consent. With Bin Laden hiding in Pakistan and finally discovered there by the United States, the US became more determined to shift its main focus to Pakistan in the fight against terrorism. However, this does not mean that all troops are to leave Afghanistan. While the US emphasizes the evacuation of NATO troops from Afghanistan by 2014, it has signed a strategic alliance pact (a treaty) based on its long-term national interests in Afghanistan.

With the withdrawal of American troops from Iraq, the Obama administration signed a security pact with that country, at which point it was agreed that some American forces would remain in Iraq for military training-related matters. The United States was working to end the wars in Afghanistan and Iraq; the result of this was Washington’s success in concluding strategic security treaties with Afghanistan and Iraq.

The Revolutions of the Arab Spring

 

The Arab Spring brought many changes and challenges to the leaders of the region. Consequently, the United States worked to change its policies to suit the new circumstances in the Middle East in general, and to specifically address the crisis in each of the countries involved. In early 2011, the United States concluded that support for the challenged rulers, and resistance to the passionate demands of the people, would result in negative consequences for America. Therefore, Washington asked Hosni Mobark to leave office, called on the leaders of Bahrain to engage in internal reform, invited the Yemeni government to respect the rights of the people, and supported the opposition in Syria by imposing pressure on the Syrian government. Offering support to the people was one aspect of the US policies. The other aspect was crisis management. As much as White House officials were not interested in resisting the passionate demands of the Arab nations, they were not prepared to stand back either, since such passion and excitement might lead to negative consequences for American interests in the region. Thus, the United States’ main policy in relation to the Arab Spring was to manage and control the situation in order to prevent outbursts that might result in unforeseeable and permanent change.

In Egypt, the United States seized control of the situation through the Egyptian military, in order to keep the changes gradual, rather than sudden and revolutionary. In Yemen, it entrusted the management of the country’s situation to the Persian Gulf Cooperation Council (The Cooperation Council for the Arab States of the Gulf). However, while expressing dissatisfaction towards Abdullah Saleh, for civilian deaths in Yemen, the US did not impose much pressure on him to leave power. In Bahrain, too, though the US initially called for reforms, its preferred policy was to manage the situation rather than help change it. Washington entrusted the Saudi government in that regard, which then sent its military forces to Bahrain to control the situation. Since the United States had never trusted Gaddafi, the US welcomed the involvement of European countries in Libya and, with their support, followed through on a policy of change. In order to escape the negative consequences of conflict with Syria, in that country the US assigned responsibility to the Arab League and to Turkey. Thus, America took responsibility for managing developments in Egypt by itself, entrusted the management of changes in Yemen to the Persian Gulf Cooperation Council, in Bahrain to Saudi Arabia, in Libya to the European Union, and in Syria to Turkey and the Arab League. The main purpose of these policies was to prevent rapid, unexpected and explosive changes.

The United States and Iran

The United States paid special attention to Iran in 2011. Though Washington has never stopped putting political and economical pressure on Tehran, its actions against that country in 2011 – which were accompanied by the total support of America’s Western, Arabic and Asian allies – surpassed previous pressures both quantitatively and qualitatively. The second half of 2011 marked the peak of the United States’ political and economic actions against Iran. The United States took four basic measures against Iran this year:

1) The US and its allies imposed strong sanctions against Iran’s oil, gas and petrochemical industries. The United States took direct aim at these industries in full awareness of Iran’s economic dependence on oil and gas. Prior to 2011, European governments had recognized “D’Amato Law” as an America’s domestic law in relation to the prohibition of investment in Iranian oil and gas industries, and they refused to accept the law. But in 2011 they not only supported a boycott of the Iranian oil and gas industry alongside America, they were even quicker to put it into action. In addition to sanctions against Iran’s oil and gas industry, the US and its allies are presently discussing sanctions against Iran’s oil exports as well.

2) America and its allies imposed financial sanctions against Iran, and especially against the Central Bank of Iran. The purpose of this action was to create problems for Iranian exports and imports and foreign trades. This sanction plan has been approved by the US Congress and only needs to be signed by the country’s president. Financial sanctions against Iran by Britain resulted in tensions between Iran and the United Kingdom.

3) The United States, supported by its allies, plans to apply sanctions against Iranian political and military officials, as well as against public and private companies associated with the country’s nuclear plans. This kind of sanction has no historical precedent.

4). The fourth measure taken by the United States against Iran is in the field of information technology and virtual space. Since the beginning of Obama’s administration, the US Foreign Relations Department has repeatedly stated that Internet freedom and free access to the net (virtual space) are of primary importance, and are at the center of its foreign policy. The US is engaged in designing and distributing these “liberating technologies,” and is currently conducting the “internet in a suitcase” project in relation to Iran and other countries with which it is on unfavorable terms.

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http://www.reuters.com/

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Notes

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