Geo-economics of democracy

Geo-economics follows the dictates of capitalism; it demands property rights — not only in one’s own states but even in other states wherever multinationals can go and do buying. It is profit-seeking and interest-making. It encourages FDIs and debts. And it runs on hierarchical decision-making by CEOs, sponsors and wealth-owners. This is diametrically opposite to democratic values, which call for seeking common good for all citizens, meaning an economy of distribution not capital-accumulation. It calls for consensus and majority decision-making, equal rights and opportunities, and a welfare state.

One could say that in embracing democracy, states have warped themselves with all the good ideas of people-based socialism, but one should be warned that this may only be a warping, when the real economics and decision-making is going on in the most brute, exploitive manner in the corridors of power. The lust of accumulated wealth and power has been so strong that post-Cold War socialist states have opened up for capitalist development, resulting in rising inequality in China and Russia too, with growing number of billionaires and oligarchs just like there have been in the US and Western Europe.

So, with the capitalist free-marketing and liberalisation in the geo-economics backstage, and with playing the flute of democracy to charm the public at the geopolitical frontstage, the real iron-curtain now is the one behind which the rich and the powerful of the world shake hands and conspire on how to exploit the lesser publics of the world.

In this context, the case of bankruptcy and sale of Credit Suisse last month has been quite revealing.

According to Financial Secrecy Index 2022, the top jurisdictions most complicit in helping individuals to hide their finances from the rule of law is the US, followed by Switzerland, Singapore, Hong Kong and others. As for Switzerland, a law on banking secrecy — the ‘duty of absolute silence’ — was enacted in 1934. Later, in the 2000s Swiss banks have boosted that secrecy is a thing of the past, but in February 2022, a massive leak disclosed Credit Suisse hiding wealth of clients involved in torture, drug-trafficking, money laundering, corruption and other serious crimes. About 30,000 such CS clients were holding over $110 billion in the bank.

Another angle of this story is that Russia invaded eastern Ukraine in February 2022, and from March that year to March 2023, the US has increased the interest rate by 4.75%. This rate hike and the resulting bond-price decline had a ripple effect across the Atlantic into many western banks that invest in US bonds.

The thing is: why would clients want to withdraw their money from banks, leading to their collapse, at times when interests are up? Turns out that it is people’s confidence that keeps the money in the banks! In 2021, when two major clients with dubious records collapsed, client confidence on the working of the bank CS decline, resulting in $1 billion withdrawals; in 4Q 2022, after more scandals, again there was panic withdrawals of $119 billion. One could ask: was the opening of scandals the reason for these huge withdrawals when everybody knew from the beginning that Swiss banks were safe havens for dirty money from all around the world?

In February 2022, another thing happened: Biden and Boris announced they would put restrictions on Russian banks, cut them off from SWIFT and place sanctions on the Russian Central Bank so that it wouldn’t be able to use its $630 billion foreign reserves.

So, client confidence was shattered again. In February 2023, CS froze $19 billion of Russian clients, most of foreign clients, in fear of sanctions fled their money from the bank, including Russia’s $214 billion.

Beginning March, four US banks — Silvergate, Silicon Valley, First Republic and Signature — collapsed; and on March 20, CS shares dropped 62% and those of UBS fell 16%. With two of its biggest banks falling, Swiss Central bank had to intervene and save the system by merging CS into UBS. Stocks fell in banks in Australia, Germany, Japan and the UK too.

This whole story has two lessons: one, unilateral isolationist policies of the US have harmed its allies more than its foes; two, in the present global order of things, there is no narrative nor any policing for systemic global rackets. Capitalism breeds the banking system, and banks facilitate the biggest frauds and illicit acts, on the pretext that the people trust them.

Under the facade of rule-based everyday processes of the banks are hidden the heinous crimes of massive thefts by plutocrats around the world. Reportedly, few years back, Micheline Calmy-Rey, a former Swiss foreign minister, put the amount of Pakistani money hidden in Switzerland alone at $200 billion, when today our external debt is $126 billion.

Just imagine, you impose the idea of democracy on us; you interfere in our political spectrum to get your puppets elected; you show them the way to launder the people’s wealth into western safe-haven banks; the state and its people get bankrupt, the economy gets stagnated; you force us to take IMF programmes; we go deeper into the debt trap; you blame the people and country for being corrupt — and the vicious cycle keeps repeating!

Imagine again, all the world’s money is bled into your safe havens; you use half that money to buy our assets, and to fund your new projects; and half you give us back as loans via IMF etc; and you never for once get the idea, to bust those rackets operating right under your nose, and give the countries their money back, for the sake of democracy, for the sake of justice and human rights!

Imagine, how Swiss Central Bank felt the urgency to save CF and UBS, but nor the Bank neither the Swiss people felt the need to return what does not belong to them. To keep the secrecy of the thief simply means your compliance in the theft! And if the US can invade Afghanistan for democracy, if it can fight against Russia for democracy, why can it not wage war against Switzerland, Singapore, Cayman Islands and the likes, for the sake of dear democracy! Because that will kill their capitalist exploitative model, their cherished ‘way of living’.

As for us, we are not capitalist, nor are we socialist, nor is there any democracy for us. We are but victims of international fraud, and of excessive crime against humanity.

Published in The Express Tribune, April 14^th, 2023.

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