The economy of permanent war

War is not an anomaly, nor an exception to the rule, but a prerequisite of free trade, or so says Dr Ali Kadri, Senior Fellow at the National University of Singapore.

Dr Kadri specialises in the economics of accumulation through destruction, the production of waste and militarism, particularly in the Middle East.

He is a former visiting fellow at the Department of International Development at the London School of Economics and the principal author of several United Nations reports addressing the right to development in Western Asia.

Permanent war: the cost of doing business

Dr Kadri says that free trade is ‘a poisonous concept’ that requires a state of permanent war.

“In way we are caught in a catch-22 situation,” he says. “War is awful, but it does wonders for the macroeconomy.”

“One need only look at what has occurred in Yemen, Gaza, Libya, Syria, Afghanistan and Iraq to discover the new shape of war and what happens to countries that attempt to control their own resources in an age where war and war spending have become all the more necessary to take the market out of its slump.”

Syria’s GDP was $73 billion in 2012, a 73% decrease in economic output from 2008, according to Statista. Cumulative GDP loss between 2011–2016 is estimated at $226 billion, according to the World Bank.

“Why would the US be interested in billion dollar trade, when it has made more than a trillion out of war in Syria?,” he says. “If you want cash in against the Syrian government, you spend a trillion dollars mobilising intelligence in the west, another couple of trillion sowing dissent, saying Syria is bad, we have a bad guy in power, we should kill him and free this country, maybe bring in ISIS, al-Qaeda or some other obscurantist group. They’re willing to pay even tens of trillions, because they will earn back every penny.”

“If they spend ten trillion on this war, they’re going to earn $10–20 trillion back,” he says.

Around 30,000 people daily succumb to hunger and malnutrition. Not long ago, the UN’s Special Rapporteur on the right to food reported that one child perishes every four or five seconds from hunger and other preventable diseases.

“We live in a planet that must destroy its resources — including human resources,” says Dr Kadri. “This is what capital concedes: it requires death, either through severe austerity or through wars. There is nothing in the way they frame these concepts that is bereft of destruction.”

“Either you’re in the pocket of the US or you are going to be destroyed. The point many people don’t see is that destruction and war is an end in itself.”

When war is more profitable than trade

The former UN economist says that free trade basically dislocates resources and never re-employs them back.

“It either drives resources out of business, or it simply destroys them,” he says.

“If you force governments in sub-Saharan Africa or the Middle East to subsidise their agriculture, while the EU, for instance, spends a trillion euros a year subsidising its agriculture, you already have an economic imbalance in the way policy occurs.”

In many cases, war is actually more profitable than trade.

The Iraq war made Halliburton $20 billion in revenue. KBR, its controversial former subsidiary, (previously run by George W Bush’s Vice President, Dick Cheney) was awarded at least $39.5bn in federal contracts related to the Iraq war between 2003–2013.

Cheney himself profited handsomely from the conflict. Halliburton rose from the 22nd largest military contractor in 2000 to seventh in 2003 when Cheney took office. His financial disclosure statements from 2001, 2002 & 2003 revealed he received $1,997,525 from the company since becoming VP, along with stock options. Though Cheney resigned as CEO in July 2000 (to ‘avoid any conflicts of interest’), he walked away from the company with a retirement stock package worth $33.7 million.

The 100 largest arms producers and military services contractors recorded $395 billion in arms sales in 2012. Lockheed Martin, the largest arms seller, alone accounted for $36 billion in such sales during 2012.

“Iraq was willing to negotiate, and it would continue to sell its oil in the dollar, yet it got invaded and the costs of its war were nearly $6 trillion in some estimates,” says Dr Kadri.

“Had the US just traded with Iraq, which was a US $50 billion GDP country, it may have made off with say tens or a hundred billion. Without going further into details, the gains of war are tremendous.”

War ‘debt’ is credit for the finance sector

What the world thinks of as debt creation is actually the creation of credit for the financial sector.

Dr Kadri says the west can make far more money from destruction than from trade.

“Whether that is trade in oil, or carpets, or pistachios, or whatever asset the region produces; that sort of trade pales in comparison to say, for instance, the $13 trillion of ‘debt’ issued by the US to fund these wars,” he says.

“When you issue $13 trillion, people think the US is issuing a lot of debt and is therefore losing money, but this is not so on the macro level,” (as we have explored in detail here, here & here).

“You cannot expand the economy without war. War is, in fact, a necessity; it absorbs the surplus. By issuing bonds the state absorbs the excess surplus existent in the western hemisphere. That is the principal condition for global economic imbalance.”

Issuing bonds has the effect of creating a military economy in a way that doesn’t interfere or compete with the private sector and acts as conveyer belt for its resources.

“The private sector owns the state, really,” he says.

Weaponising identity politics

Dr Kadri says most people thinks capitalism is unique only to the western hemisphere, but actually this is a fiction.

“Value has no race or colour,” he says. “Production is always global. The world is a single factory. So what happens when you make wars, you cheapen humans, you lesson their value. War is an important proxy for depopulation policies, as an adjacent and concomitant force.

He says it is not people in power that make history, history makes people in power, and it makes war.

“It’s all the ideologies we have been born into, whether through political families, institutions like the World Trade Organisation, and government institutions, these are all bodies through which the social classes operate to make things work in their favour,” he says.

Dr Kadri says identity politics are being used as a weapon to create divisions of labour through informal caste systems.

“They’re not going to spend on poor African Americans or Native Americans, or providing clean drinking water, recognising and reparating the genocides they are responsible for. They are not going to fund or subsidise maternity leave or Universal Health Care, or decrease the ‘correctional’ incarcerations of 2.3 million prisoners,” he says.

“They will not do that because that is a redistribution of value, a social measure which empowers poor people, which makes people feel they are the same. Whether they are Arabs, Africans, African Americans, LatinX or whites, that’s not good, that destroys identities in order to split labour.

“The most important manifestation of capital is how much working people hate each other. The more hate that exists, we call it racism. In reality, this is how capital works.”