[dropcap]The world’s geopolitics[/dropcap] major trade patterns and military alliances have changed radically in the past month. Russia has re-oriented its gas and oil trade, and also its trade in military technology, away from Europe toward Eurasia. 

The result is the opposite of America’s hope for the past half-century of dividing and conquering Eurasia: setting Russia against China, isolating Iran, and preventing India, the Near East and other Asian countries from joining together to create an alternative to the U.S. dollar area. American sanctions and New Cold War policy has driven these Asian countries together in association with the Shanghai Cooperation Organization as an alternative to NATO, and in the BRICS moves to avoid dealing with the dollar area, the IMF and World Bank austerity programs.

Regarding Europe, America’s insistence that it join the New Cold War by imposing sanctions on Russia and blocking Russian gas and oil exports has aggravated the Eurozone’s economic austerity, making it even more of a Dead Zone. This week a group of Germany’s leading politicians, diplomats and cultural celebrities wrote an open letter to Angela Merkel protesting her pro-U.S. anti-Russian policy. By overplaying its hand, the United States is in danger of driving Europe out of the U.S. economic orbit.

Turkey already is moving out of the U.S.-European orbit, by turning to Russia for its energy needs. Iran also has moved into an alliance with Russia. Instead of the Obama administration’s neocons dividing and conquering as they had planned, they are isolating America from Europe and Asia. Yet there has been almost no recognition of this in the U.S. press, despite its front-page discussion throughout Europe and Asia. Instead of breaking up the BRICS, the dollar area is coming undone.

This week, President Putin is going to India to negotiate a gas and arms deal. Last week he was in Turkey diverting what was to be the South Stream pipeline away from southern Europe to Turkey. And Turkey is becoming an associate of the Shanghai Cooperation Organization integrating the BRICS in a defensive alliance against the United States, now that it is obvious that it has no chance of joining the EU.

TIME magazine, along with the rest of the Western media, has done little to clarify the issues, report the truth, or defuse the developing Cold War. The carnage that has followed is also their direct responsibility.

A few months earlier, Russia announced the largest oil and gas trade and pipeline investment ever, with China – along with a transfer of missile defense technology.

There has been almost no discussion of this vast geopolitical realignment in the U.S. media, largely because it represents a defeat for the New Cold War policy pushed by the neocons over the past year, ever since Russia convinced President Obama not to go to war in Syria, which had been a neocon military aim.

Their response was to isolate Russia and economically attack its trade and hence balance-of-payments strength: its gas and oil trade with Europe. Last February, U.S. diplomats engineered a Pinochet-style coup d’état in Ukraine, and used this as a lever to reverse Europe’s buildup of trade with Russia.

The aim was to punish Russia’s economy – and in the process to press for a regime change against Putin, putting in place a more pro-U.S., neoliberal Yeltsin-style regime by causing a financial crisis.

The assumption underlying this policy was that since the Soviet Union was dissolved in 1991, Russia was turning toward Europe to re-integrate its economy and society. And Europe for its part sought to make Russia its main energy supplier – of oil as well as gas, through new pipelines being built to circumvent Ukraine. Northstream ran via the North Sea to northern Europe. Southstream was to be built via Bulgaria and Serbia to southern Europe – mainly Italy and Austria.

Germany for its part looked to Russia as an export market, to earn the rubles to pay for Russian gas and oil. Other European countries stepped up their agricultural trade with Russia, and France agreed to build the enormous Mistral aircraft carrier. In short, the ending of the Cold War promised to bring a much closer economic and hence political integration of Russia with Europe – cemented largely by a gas pipeline network.

U.S. Cold Warriors have tried to disrupt this trade. The plan was to isolate Russia and lock Europe into the U.S. economy. The dream was to export U.S. shale gas to Europe, squeezing out Russia and thereby hurting its balance of payments.

This was always a pipedream. But what U.S. heavy-handed military confrontation with Russia really has done is to drive a political wedge between the United States and Europe. Last week, Putin gave a speech saying that he found little point in negotiating with European politicians, because they simply followed U.S. orders via NATO and by U.S. pressure on German politicians, French politicians and other European politicians.

In following U.S. New Cold War confrontation, Europe has been acting against its own economic interests. Its neoliberal Third Energy law has effectively blocked Russia from having any economic gain in selling more gas to Europe.

Rentier pipeline politics

The U.S. neoliberal plan has been to insist on non-Russian control of the pipelines that would carry Russian gas and oil to Europe. The idea is to use this pipeline as a tollbooth to siphon off the revenue that Russia had hoped to receive from Europe.

Here’s the best way to understand what has occurred. Imagine that the United States had a law that owners of buildings could not also own the elevators in them. This would mean that the owners of the Empire State Building, for instance, could not own their elevators. Some other investors could buy the elevators, and then tell the building’s renters or other occupants that they would have to pay a fee each time they rode up to the 40^th floor, the 50^th floor, the 60^th floor, and so forth.

The result would be that instead of the landlord receiving the rental value of the Empire State Building, the elevator owner could demand the lion’s share. Without access, the building would be a walk-up and its rents would fall – unless renters paid the elevator tollbooth.

This is what would happen with an oil pipeline owned by parties hostile to Russia. It is to avoid this that Gazprom insisted on building its own pipeline, under Russian control, to prevent rent-extracting investors. When Europe sought to block this by pretending that “free markets” meant separating pipeline ownership from the gas suppliers, it was trying to carve out a rent-extraction opportunity to siphon off Russian gas revenue.

The European Commission earlier had pressed an anti-Gazprom policy last year, in the process of imposing its austerity program on Greece. It insisted that Greece pay the IMF for having bailed out foreign bondholders by selling off assets in the public domain. The largest asset was Greece’s oil rights in the Aegean and its commercial oil-related infrastructure. When Gazprom was the largest bidder, Europe blocked the sale. The result has been to impose even deeper austerity on Greece, polarizing that nation’s politics in an increasingly anti-EU and anti-IMF stance – and hence, anti-US Cold War politics.

What is occurring is a radical shift in U.S.-European diplomacy – in a way that according to textbook theory is inherently unstable and unworkable.

Europe has inverted the major textbook premises of how national diplomacy is conducted. Instead of basing this diplomacy on economic and commercial interests, it is subordinating these interests to U.S. control. And as for Europe’s membership in NATO, instead of viewing military policy as an arm of foreign diplomacy, it is subordinating economic diplomacy, trade patterns, gas and oil supplies, export markets for industry and agriculture all to serve NATO’s military ends.

The objective no longer is military security as originally was the logic for NATO. Europe’s economic realignment against Russia threatens to bring military conflict directly into the continent as a result of the proxy war in Ukraine.

It has been said that nations do not have friends or enemies, only national interests. Most of these are economic. But today in Europe, German Chancellor Merkel seems to be ignoring German and other European economic interests. Still obsessed with her hatred of the East German Communist regime, she sees in Russia only an enemy, not an economic market and supplier of raw materials and customer for German manufactures and technology. Likewise, her political love for the United States deems it Europe’s natural friend, without taking into account how its New Cold War policy toward Europe – “Let’s you and Russia fight” – undercuts European continental interests and exacerbates its austerity.

The United States for its part has adopted von Clausewitz’s statement that war is an extension of foreign policy in a very limited form: war seems to be the only lever that the United States is using in its foreign policy these days. But that does not mean that all wars have a long-term policy in mind. It seems to be war without policy – military force (from the air only) in itself, making America only a paper tiger when it comes to ground troops. Lacking an ability to mount a ground invasion, its only real threat is to tear economies apart by aerial bombing, as it has done to Iraq, Afghanistan, Libya and now Syria – and in its proxy war in Ukraine. It can smash and grab, but not build.

There is only one conclusion of such strategy: to drive enemies together, to drive neutral countries to join them in order to stop the threat to grab all the world’s resources and destroy all governments that act independently in their own interest. Old Europe has not reached that stage yet, so is safe. But the rest of the world is pulling together.

The Bubble and Beyond,” is available on Amazon. His latest book is Finance Capitalism and Its Discontents. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He can be reached via his website, mh@michael-hudson.com

These proposed reforms, like those out of Washington, D.C., fail to address the underlying cause of poverty, state-sponsored murder and the obscene explosion of mass incarceration – the rise of the corporate state and the death of our democracy. Mass acts of civil disobedience, now being carried out across the country, are the only mechanism left that offers hope for systematic legal and judicial reform. We must defy the corporate state, not work with it. 

The legal system no longer functions to protect ordinary Americans. It serves our oligarchic, corporate elites. These elites have committed $26 billion in financial fraud. They loot the U.S. Treasury, escape taxation, drive down wages, break unions, pillage pension funds, gut regulation and oversight, destroy public institutions including public schools and social assistance programs, wage endless and illegal wars to swell the profits of arms merchants, and – yes – authorize police to murder unarmed black men.

Police and national intelligence and security agencies, which carry out wholesale surveillance against the population and serve as the corporate elite’s brutal enforcers, are omnipotent by intention. They are designed to impart fear, even terror, to keep the population under control. And until the courts and the legislative bodies give us back our rights – which they have no intention of doing – things will only get worse for the poor and the rest of us. We live in a post-constitutional era.

Corporations have captured every major institution, including the judicial, legislative and executive branches of government, and deformed them to exclusively serve the demands of the market. They have, in the process, demolished civil society. Karl Polanyi in “The Great Transformation” warned that without heavy government regulation and oversight, unfettered and unregulated capitalism degenerates into a Mafia capitalism and a Mafia political system. A self-regulating market, Polanyi writes, turns human beings and the natural environment into commodities. This ensures the destruction of both society and the natural environment. The ecosystem and human beings become objects whose worth is determined solely by the market. They are exploited until exhaustion or collapse occurs. A society that no longer recognizes that the natural world and life have a sacred dimension, an intrinsic value beyond monetary value, commits collective suicide. Such societies cannibalize themselves. This is what we are undergoing. Literally.

As in every totalitarian state, the first victims are the vulnerable, and in the United States this means poor people of color. In the name of the “war on drugs” or the necessity of enforcing immigration laws, those trapped in our urban internal colonies are effectively stripped of their rights. Police, who arrest some 13 million people a year – 1.6 million of them on drug charges and half of those on marijuana counts – were empowered by the “war on drugs” to carry out random searches and sweeps with no probable cause. They take DNA samples from many whom they arrest to build a nationwide database that includes both the guilty and the innocent. And they charge each of the sampled arrestees $50 for DNA processing. They confiscate cash, cars, homes and other possessions based on allegations of illegal drug activity and use the proceeds to swell police budgets. They impose fines in poor neighborhoods for absurd offenses – riding a bicycle on a sidewalk or not having an ID – to fleece the poor or, if they cannot pay, toss them into jail. And before deporting undocumented workers the state levels fines, often in the thousands of dollars, on those being held by the U.S. Immigration and Customs Enforcement agency in order to empty their pockets before they are shipped out. Prisoners locked in cages often spend decades attempting to pay off thousands of dollars, sometimes tens of thousands, in court fines from the paltry $28 a month they earn in prison jobs; the government, to make sure it gets its money, automatically deducts a percentage each month from their prison paychecks. It is a vast extortion racket run against the poor by the corporate state, which also makes sure that the interest rates of mortgages, car loans, student loans and credit card loans are set at predatory levels.

The arrested (mostly poor) are acutely aware they have no chance – 97 percent of all federal cases and 94 percent of all state cases are resolved by guilty pleas rather than trials…

Since 1980 the United States has constructed the world’s largest prison system, populated with 2.3 million inmates, 25 percent of the world’s prison population. Police, to keep the system filled with bodies, have had most legal constraints on their behavior removed. They serve as judge and jury on the streets of American cities. Such expansion of police powers is “a long step down the totalitarian path,” U.S. Supreme Court Justice William O. Douglas warned in 1968. The police, who are often little more than predatory, armed gangs in inner-city neighborhoods, arbitrarily decide who lives, who dies and who spends years in prison. They rarely fight crime or protect the citizen. They round up human beings like cattle to meet arrest quotas, the prerequisite for receiving federal cash in the “drug war.” Because many crimes carry long mandatory sentences it is easy to intimidate defendants into “pleading out” on lesser offenses. The arrested are acutely aware they have no chance – 97 percent of all federal cases and 94 percent of all state cases are resolved by guilty pleas rather than trials. An editorial in The New York Times said that the pressure employed by state and federal prosecutors to make defendants accept guilty pleas – an action that often includes waiving the right to appeal to a higher court – is “closer to coercion” than to bargaining. There are always police informants who, to reduce their own sentences, will tell a court anything demanded of them by the police. And, as we saw after the fatal shooting of Michael Brown in Ferguson, Mo., and after the killing of Garner, the word of police officers and prosecutors, whose loyalty is to the police, is law.

A Department of Defense program known as 1033, which was begun in the 1990s and which the National Defense Authorization Act allowed along with federal homeland security grants to the states, has provided $4.3 billion in military equipment to local police forces, either free or on permanent loan, the website ProPublica reported. The militarization of the police, which includes outfitting departments with heavy machine guns, ammunition magazines, night vision equipment, aircraft and armored vehicles, has effectively turned urban police, and increasingly rural police as well, into quasi-military forces of occupation. “Police conduct up to 80,000 SWAT raids a year in the US, up from 3,000 a year in the early ’80s,” reporter Hanqing Chen wrote in ProPublica. The American Civil Liberties Union, in Chen’s words, found that “almost 80 percent of SWAT team raids are linked to search warrants to investigate potential criminal suspects, not for high-stakes ‘hostage, barricade, or active shooter scenarios.’ He went on to say, “The ACLU also noted that SWAT tactics are used disproportionately against people of color.”

The bodies of the incarcerated poor fuel our system of neo-slavery. In prisons across the country, including the one in which I teach, private corporations profit from captive prison labor. The incarcerated work eight-hour days for as little as a dollar a day. Phone companies, food companies, private prisons and a host of other corporations feed like jackals off those we hold behind bars. And the lack of employment and the collapse of education and vocational training in communities across the United States are part of the design. This design – with its built-in allure from the illegal economy, the only way for many of the poor to make a living – ensures rates of recidivism of over 60 percent. There are millions of poor people for whom this country is little more than a vast penal colony.

Lawyer Michelle Alexander, author of The New Jim Crow: Mass Incarceration in the Age of Colorblindness, identifies what she calls a criminal “caste system.” This caste system controls the lives of not only the 2.3 million people who are incarcerated but also the 4.8 million people on probation or parole. Millions more people are forced into “permanent second-class citizenship” by their criminal records, which make employment, higher education and public assistance difficult or impossible, Alexander says.

Totalitarian systems accrue to themselves omnipotent power by first targeting and demonizing a defenseless minority. Poor African-Americans, like Muslims, have been stigmatized by elites and the mass media. The state, promising to combat the “lawlessness” of the demonized minority, demands that authorities be emancipated from the constraints of the law. Arguments like this one were used to justify the “war on drugs” and the “war on terror.” But once any segment of the population is stripped of equality before the law, as poor people of color and Muslims have been, once police are permitted under the law to become omnipotent, brutal and systematically oppressive tactics are invariably employed against the wider society. The corporate state has no intention of carrying out legal reforms to curb the omnipotence of its organs of internal security. They were made omnipotent on purpose.

Matt Taibbi in his book, The Divide: American Injustice in the Age of the Wealth Gap, brilliantly illustrates how poverty, in essence, has become a crime. He spent time in courts where wealthy people who had committed documented fraud amounting to hundreds of millions of dollars never had to stand trial and in city courts where the poor were called to answer for crimes that, until I read his book, I did not know existed. Standing in front of your home, he shows in one case, can be an arrestable offense.

“That’s what nobody gets, that the two approaches to justice may individually make a kind of sense, but side by side they’re a dystopia, where common city courts become factories for turning poor people into prisoners, while federal prosecutors on the white-collar beat turn into overpriced garbage men, who behind closed doors quietly dispose of the sins of the rich for a fee,” Taibbi writes. “And it’s evolved this way over time and for a thousand reasons, so that almost nobody is aware of the whole picture, the two worlds so separate that they’re barely visible to each other. The usual political descriptors like ‘unfairness’ and ‘injustice’ don’t really apply. It’s more like a breakdown into madness.”

Hannah Arendt warned that once any segment of the population is denied rights, the rule of law is destroyed. When laws do not apply equally to all they are treated as “rights and privileges.” When the state is faced with growing instability or unrest, these “privileges” are revoked. Elites who feel increasingly threatened by the wider population do not “resist the temptation to deprive all citizens of legal status and rule them with an omnipotent police,” Arendt writes.

This is what is taking place now. The corporate state and its organs of internal security are illegitimate. We are a society of captives.