Wang Xiaosong, Chinese Researcher at the National Academy of Development and Strategic Studies, Professor of the School of Economics, and Key Member of the China Macroeconomic Forum (CMF), this article was published in Guangming Daily on April 2.
Number of characters: 3132 characters
Reading time: 7 minutes
Since the outbreak of the Russian-Ukrainian conflict, Western sanctions against Russia have led to a surge in global commodity prices, making the world economy, which has already suffered from the impact of the epidemic, worse. More importantly, the epochal theme of peace and development has been undermined and countries have fallen into fear of war. At the same time, the United States has continued to pour fuel into the conflict through various means, and its mask of "defender of peace" can no longer hide the true face of the war wealth.
The military-industrial complex is the driving force behind the United States' war fortunes
Under the current political system in the United States, public policy is the result of a game between the government and interest groups. On the surface, this embodies the characteristics of American-style democracy: all groups can become interest groups and have access to political decision-making. But in reality, the main way interest groups influence government decision-making is through political donations, that is, using money to support and lobby politicians to make policies that benefit their groups. Even some powerful groups have direct voices in the government, influencing the formulation and implementation of policies. That is to say, the essence of American democracy is money politics, and the political forces represented by money determine the position of a group in society and the trend of American public policy.
It is in the process of the evolution of money politics that specific interest groups in the United States interact with the government to form a unique military-industrial complex. The so-called military-industrial complex refers to the cooperation between the US military, industry, government, Congress and other groups, and the joint think tanks, media, etc. to form interest groups. This group is good at public opinion propaganda, constantly shaping the image of "enemies" around the world, and profiting from it by triggering conflicts in other countries.
The emergence of military-industrial complexes can be traced back to the period of World War II. At that time, the big five of the U.S. military industry — Lockheed Martin, Raytheon, Northrop Grumman, Boeing and General Dynamics — had made a windfall from the war, and the interests of the military industry and the U.S. government had been tied. After World War II, the U.S. military, military enterprises, governments, Congress, and even academic institutions, think tanks and the media worked closely together to cooperate with the outside world and extend their power to emerging industries, and a huge military-industrial complex grew and developed, and representatives of military enterprises directly entered the state power organs and used the power in their hands to seek benefits for the group in defense policy. In the 21st century, the Successive Wars Launched by the United States against Afghanistan, Iraq and other countries are the direct results of the military-industrial complex manipulating THE US defense policy and blatantly channeling benefits to domestic arms dealers.
The military-industrial complex represents a special interest in capital, and the essence of capital is the pursuit of unlimited appreciation. When the United States has no reason to send troops directly to other countries, the demand for weapons in the country declines, and the sales of arms become a problem, so the export of weapons becomes another way out. Practice has proved that the United States has long created threats and caused panic in the world, especially in those areas where conflicts and contradictions are intertwined, and opened up markets for domestically produced weapons. According to statistics from the Stockholm International Peace Research Institute in Sweden, U.S. arms exports amounted to $12.5 billion in 1991, accounting for 3 percent of its total exports. Since then, U.S. arms exports have remained high for many years, reaching a peak of $15.7 billion in 1998. At the beginning of the 21st century, although the United States has declined in arms sales, it has remained at an average annual level of more than $8 billion. In the past 2021, the UNITED ARMS exports amounted to $10.6 billion, and the export targets were scattered around the world, becoming an important hidden danger to global peace and stability.
According to the United Nations Statistical Office, from 1991 to 2021, the main targets of U.S. arms exports were Saudi Arabia, South Korea, Japan, Taiwan, Turkey, Egypt, Israel, Australia, the United Kingdom, and the United Arab Emirates. Among them, the total export value to Saudi Arabia is as high as 32.5 billion US dollars, the total export value to South Korea and Japan is 25.4 billion US dollars and 23.6 billion US dollars respectively, the arms sales to Taiwan region are as high as 18.5 billion US dollars, and the United Arab Emirates, which ranks tenth, has also imported US$12.2 billion in US arms. It is not difficult to see that the main targets of US arms sales are countries in the Middle East, their own allies, and East Asian economies. In particular, it should be pointed out that the US Government has been interfering in Taiwan affairs for a long time, and in addition to trying to use the Taiwan issue to suppress and contain China, expanding arms sales to Taiwan and taking advantage of contradictions in other countries to make a fortune are also important reasons behind it.
The Russian-Ukrainian conflict is also a case in point. Since 2008, the United States has continuously encouraged Ukraine to join the European Union and NATO, and promoted Ukraine's transformation into an anti-Russian and pro-American country, which gradually led to the inevitable Russian-Ukrainian crisis and eventually escalated into a military conflict. After the outbreak of the conflict, the United States, instead of providing any program and measures conducive to the armistice, continued to arch its fire, trying to expand the war, make war money, and fully safeguard the interests of the military-industrial complex. For example, Germany announced the purchase of American warplanes and allocated an additional 100 billion euros as a special budget to boost armaments, and it is not surprising that this large piece of "fat meat" should mainly fall into the mouth of the US arms giants.
On March 16, U.S. President Joe Biden signed a fiscal 2022 federal budget worth up to $1.5 trillion, of which defense spending was as high as $782 billion, up 5.6 percent from the previous fiscal year, while the budget for solving U.S. domestic problems was only $730 billion, $50 billion less than defense spending. Biden also unveiled a list of aid support worth a total of $800 million to Ukraine, including military aid such as air defense systems, anti-tank systems and drones. The budget, which was finally put to Congress for a vote, excluded $15.6 billion in the fight against COVID-19 and included $13.6 billion in aid to Ukraine and other Eastern European countries, of which nearly $7 billion was spent on the United States sending additional troops and weapons to Europe. Obviously, the Russian-Ukrainian conflict has become a new opportunity for the US government and related interest groups to amass wealth.
The hegemony of the US dollar has supported the United States in accumulating wealth
An important feature of the US economy is also manifested in a high degree of financialization, and the hegemony of the us dollar is an important basis for supporting financialization. The hegemony of the us dollar and the military-industrial complex are integrated to provide support and guarantee for the United States to frantically accumulate wealth around the world.
In the early 1970s, the Bretton Woods system collapsed and the dollar decoupled from gold. However, the development of world trade needs a common currency, and in order to maintain the status of the dollar as the world currency, the United States has bound the dollar to oil, so the gold dollar has become a petrodollar. The basis for the successful binding of the United States is military strength, and the United States has carried out a crazy suppression of the challengers of the petrodollar.
The United States reached an agreement with the world's major oil exporting countries, and oil transactions were settled in dollars, establishing a petrodollar system and establishing dollar hegemony. At present, the proportion of world trade settled in US dollars is much higher than that of other currencies, and the average proportion of US dollar reserves in foreign exchange reserves in countries around the world is more than 65%, and the proportion of US dollars in emerging market economies is even higher. In foreign exchange transactions, the proportion of dollar transactions is about 90% on average, and the share of dollar transactions in some foreign exchange markets is even as high as more than 99%.
In foreign trade, the United States plays the role of an "empty glove white wolf" because the United States only needs to issue virtual dollars in exchange for goods of equal value. When world trade booms and countries around the world need more and more dollars, the United States can gain more benefits through dollar hegemony. Not only does the United States receive seigniorage revenue worldwide, but it also gains pricing power over major industrial raw materials, including oil, through financial markets. The United States also uses the base currency characteristics of the US dollar to periodically use the rise and fall of the dollar value and the level of interest rates to grab the economic interests of other countries in the world.
With other countries' reserve needs for dollars, the United States levies seigniorage taxes around the world and obtains products and services from other countries at low cost. The United States pays the us dollar to obtain the economic resources of other countries, and if other countries reserve the us dollars, the United States obtains the benefits of international seigniorage, at the cost of the US government paying interest on the US government's holding of US dollar reserves for other countries. At the same time, the United States issued U.S. Treasury bonds guaranteed by the credibility of the government to further reap the interests of countries around the world. When the debt burden is too high and the domestic economic situation is poor, the Fed can adopt quantitative easing policies, export inflation, depreciate debt, reduce its own debt burden, and cut off the "leeks" of other countries.
In addition, because of its dollar hegemony, the United States can act arrogantly in the world, impose financial sanctions on other countries, and freeze assets. The New York Clearing House Interbank Payment System (CHIPS) dominates the clearing of cross-border dollar transactions, undertaking more than 95% of the world's interbank dollar payment clearing and more than 90% of foreign exchange transaction clearing. SWIFT is the world's financial message exchange network, where the U.S. government can track transactions involving the U.S. dollar based on SWIFT messages. If a financial institution is cut off from the payment channel by CHIPS, it will not be able to carry out cross-border DOLLAR business; once the message conversion channel is cut off by SWIFT, all foreign exchange business will be interrupted. After the outbreak of the Russian-Ukrainian conflict, the United States imposed sanctions on Russia under the pretext of maintaining peace and justice, and one of the important moves was to kick seven important Russian banks out of the SWIFT system in an attempt to forcibly plunder Russia's wealth and quickly destroy the Russian economy.
However, many acts of injustice will kill themselves, and frequent sanctions against other countries may shake the hegemonic position of the US dollar. On March 30, Russian State Duma President Vlodin vorokin reiterated that "if you want natural gas, go to the rubles," noting that "exports paid for in rubles will also extend to oil, grains, metals, fertilizers, coal, and timber." In addition, the Russian Ministry of Finance has proposed to use rubles to buy back dollar-denominated Eurobonds that are due next week, which means that the "ruble settlement order" is likely to be further upgraded. Supported by this series of moves, the ruble continued to appreciate, and the dollar-ruble exchange rate fell to 83 to 82.54 at one point, close to the pre-conflict exchange rate.
The U.S. government thought it could rely on its own financial advantages to kick Russia out of the SWIFT settlement system. But Russia's counterattack points directly at dollar hegemony and provides an example for other countries to settle around the dollar. One day, the US wealth-saving model, supported by dollar hegemony and the military-industrial complex, may end under the counterattack of countries around the world.
![J-20 debuted at the Paris Air Show, European fighters were eclipsed, why is the United States the happiest?[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)