Growth addicts meet in Watford

George Osborne, the ConDem’s chancellor and Labour’s Ed Balls, who are locked in a fierce agreement about the need for more austerity to promote growth – work that one out for yourselves – are in not-so-exotic Watford this week.

They are rubbing shoulders with the rest of the 140-odd big shots, aka “global political and financial elite” of the US and European capitalist economies attending the highly secretive 61st annual Bilderberg meeting.

This year, however, it’s not quite so secret, as the organisers have decided to pre-empt the leaks by publishing lists of the participants from 21 European and North American countries and 12 key topics.

The assembly is heavily skewed in favour of the top men of banking and finance, but they’ve been joined by the key figures from the most visible global corporations including Jeff Bezos, Amazon’s CEO, Google’s Eric Schmidt, Jorma Ollila, chairman, Royal Dutch Shell, Craig Mundie of Microsoft and a small number of big hitters from other key industries.

Also on board are opinion leaders from politics and the media who’ll be advancing what they’ve learned of the developing needs of the powerful in the year to come. With resistance to austerity growing everywhere, the organisers have brought in the military.

In attendance are General David Petraeus, former head of the US Army, and Olivier de Bavinchove, Commander of Eurocorps, the little known 60,000 strong standing army of the European Union.

Top of the list of key topics is “Can the US and Europe grow faster and create jobs?” No surprise there. Perhaps it is just a touch odd, however, that the list doesn’t include even a passing reference to climate change.

Especially in the light of current extreme weather events spanning the globe.

Or is it?

As the participants assembled, heavy rain had deluged large parts of Central Europe – Germany, Poland, Hungary, the Czech Republic, Austria, and Switzerland. Some areas like Passau on the Danube have experienced their worst floods in 500 years.

Meanwhile, the US National Weather Centre announced that, at 2.6 miles, one of last Friday’s five tornadoes to hit Oklahoma was the widest ever recorded - with wind speeds reaching 295 mph.  This followed the devastation of the Oklahoma City suburb of Moore on May 20 that killed 24 people. It was the first time in that two such powerful tornadoes struck have Oklahoma within such a short period of time. 

Following last year’s unprecedented drought in the USA, 82% of New Mexico is experiencing “severe” or “exceptional” drought conditions, according to Dan Ware, of the state’s forestry agency, of historic proportions not seen since the 1950s. A wave of vast wildfires has been sweeping through California.  

This intensification of extreme weather across the globe is the result of the Bilderbergers’ top priority – profit-driven, economic growth. The reckless exploitation of resources to produce commodities with limited life spans, an addictive dependence on fossil fuel and the industrialisation of food production have driven climate change to crisis point.

And they want more of it. They’ll try anything and everything within their power to pursue it. More public spending cuts in the dream of reviving the private sector? Don’t worry, Labour agrees with the Tories on that one.

Unrepayable debt? Never mind, generations to come will be made to pay. Record levels of unemployment reaching as high as two-thirds among young Greeks? Press on, it’s reducing the cost of labour. Demonstrations, riots, violence on the streets? Bring out the army. Governments overthrown? They just appoint their own.

Breaking the power of the Bilderbergers and their ruling class chums throughout the world is a priority if we’re going to get through this historic economic, political and ecological crisis in one piece.  

Gerry Gold

Economics editor

Amazon and Google having a laugh at taxpayers' expense

Whatever angle you come at it from, the state at national level, as well as key global agencies, exist to make life easier for corporations like Amazon and Google when it comes to taxation.

States everywhere may be short of revenue as the worldwide recession continues to takes it toll. But instead of demanding more from the corporations, the very opposite is happening. 

The ConDems are telling business they can pay less. In the March budget, they cut corporation tax for the third time since 2010. It’s now fallen to 24% and will be reduced to just 21% next year. The cut will cost the Treasury about £400 million in 2015-16.

Where’s this shortfall to come from? Chancellor George Osborne is demanding £11 billion more in spending cuts in 2015-16, a level which has even frightened most of the cabinet into passive resistance. Front-line services like fire face draconian cuts and mass redundancies following today’s announcement by the government’s former chief fire and rescue officer.

Of course, global corporations do everything they can to avoid paying tax on their operations in Britain. Instead, companies like Amazon are registered in lower-tax territories like Luxembourg. They claim that although they employ thousands of workers in Britain, they are not actually based here!

MPs on the public accounts committee can rant and rage all they want – as they did yesterday when they had Google up before them – but the fact is that the UK tax authorities are pretty powerless to do anything about it. Moral pressure cuts no ice with the Googles of this world.

Take the example of Amazon. A Reuters investigation shows that over the past six years, Amazon has paid just £5.9 million in tax on over $23 billion of sales to British customers.  Yet Amazon claims it runs a single European business out of Luxembourg.

Reuters says, however, has gathered evidence which shows that Amazon’s UK operations have a high degree of autonomy, and while the corporation likes to identity itself as a virtual company, this is far from the case. Microsoft and Expedia are other firms that claim a similar position in order to minimise tax bills.

The investigation explains: “The practice is based on international tax rules which allow companies to conduct ‘preparatory and auxiliary’ activities in a country without creating a taxable presence there. The UK tax authority, Her Majesty's Revenue and Customs (HMRC), has never sought to define in court the limits of what an internet company can do in Britain before it is deemed to have a taxable presence.”

However, does such a limit actually exist? Not according to Jacques Sasseville, head of the tax treaty unit at the Organisation for Economic Co-operation and Development (OECD), which advises rich nations on tax policy. He said where sales were conducted online, it was almost “impossible to prove a taxable presence in a jurisdiction, irrespective of how much activity is conducted in that country.”

So with the tax authorities pretty much powerless in the face of transnational, internet-based operations, Osborne is playing along. The cut in corporation tax to 21% puts the rate on a par with Luxembourg’s, although well above Ireland’s 12.5%.

Corporations exist solely to maximise profits, minimise costs (including tax) and increase the market value of traded shares. This is a legal obligation, enforced by the same capitalist state that is at their beck and call. Herein lies the problem.

The state and its agencies through essentially political actions sustain the economic system. They are a perfect example of the division of labour first noted by the economist Adam Smith as capitalism established itself in Britain. That’s why we should never look to the present state to sort out the corporations. That’s not the job of what is now a market state.

Paul Feldman

Communications editor

Rain forest activists put their lives on the line

The survival of the world's eco-system is tied to the survival of rain forests, but those fighting to protect them are being systematically slaughtered. Everyone working to defend the Amazon from illegal activities knows their lives are in danger.

Loggers, ranchers and big farmers have organised the killing of more than 1,150 rural activists since the assassination of Chico Mendes, the Brazilian trade union leader and environmentalist in 1988.

Now Obede Lovia Souza has become the sixth forest activist killed this month alone. He was a 31-year-old family man, a member of the settlement of Esperanca, which occupied unused farmland in the Amazon in 2008.He was shot dead and his body dumped in the forest.

The loss of the Amazon would tip the global climate into chaos but the Brazilian government has a schizophrenic position in relation to it. Brazil has invested resources to prevent illegal logging, and is bringing in a new legal framework for protection. But its commitment to continued rapid agricultural development actually benefits from logging. Once an area is cleared of timber, the ranchers move in.

And now there have been huge finds of oil in the Amazon basin and the question is whether the Brazilian government will allow these to be exploited whilst preventing the Amazon basin suffering the same ecological fate as the Niger delta.

In Guatemala, the drug barons and ranchers have been working together to cut down the world's second-largest area of rain forest. More than a fifth of the 2.1m acres has been burned and cleared by settlers working for drug barons. Hundreds of airstrips have been carved out for the use of small planes delivering cocaine as close to the Mexican border as possible, where it completes the journey by road.

The Guatemalan government of the 1960s encouraged forest clearance and settlement, but the present government claims to want to protect it for the benefit of tourism and the environment. As a result, some of those early settlers are being forced out with no alternative land to farm. It is little wonder they choose the protection of the drug barons, working with them to clear land where the government's writ doesn't run.

The government of Ecuador has adopted an entirely different approach, forging a ground-breaking agreement with the UN, whereby it will not exploit oil finds in the Yasuni National Park in return for $3.6bn of international funding. This amount is only a fragment of the value of almost a billion barrels of oil, but the initiative is now foundering, as Germany announced it is going back on a pledge to contribute $50m to the scheme.

The reality is that the dirtiest end of capitalist production - illegal logging, drug dealing, oil extraction - continues to rule in the forests. Some governments are unable to stop it and others are complicit. The UN's 2011 declaration of the Year of the Forest is turning out to be a sad farce. The text adopted by the UN Forest Forum is entirely non-binding, and will not make any difference at all. The rate of destruction in the Amazon has actually speeded up this year.

Quite apart from being the key to regulating the world's climate, rain forests may contain not only plants that potentially cure disease, but also the food crops that could address increasing hunger as the climate changes and existing food crops fail. It is estimated that we are currently using only 7,000 of the 75,000 edible rainforest plants.

Indigenous people are courageously putting their lives on the line to protect this resource for us all. Since our survival is linked to the forest's continued existence we must find ways to ensure the victory of these front-line troops in the battle against climate change.

Penny Cole

Environment editor

Threat to Amazon grows

The news of a huge rise in the rate of deforestation of the vast Amazon rainforest is one of the most serious indications yet that governments are standing more or less idly by as the conditions for climate change worsen. While they may wring their hands in concern, they are essentially taking on the role of spectators as global warming continues its acceleration.

Take the Brazilian government under President Lula. His attempts to protect the rainforest are so puny that they have come to nought. The Brazilian government has announced that in the last five months of 2007 alone, some 3,235 sq km (1,250 sq miles) of the rainforest were lost. We are talking about what is referred to as the “lungs of the world”, a massive forest that holds and soaks up huge amounts of carbon dioxide. Satellite imaging experts say the rate of deforestation is unprecedented and could even be far higher after further analysis is completed.

Brazilian officials admit that a rise in the price of soya has encouraged companies and farmers to clear the forest at an increasingly rapid rate. This price hike is itself inextricably linked back to Lula’s government and climate change. One of the reasons soya is in short supply around the world is the fact that it is being used increasingly as a source of so-called biofuels. These are being put forward as a “cleaner” alternative to fossil fuels.

Only last year, the Lula government signed a deal with the US government to expand production of soya beans. Because soya beans are also used in 60% of all processed food, a rise in prices is now being felt by shoppers around the world. Biofuels are a key plank of the European Union’s market-driven, carbon trading approach to curbing carbon emissions. The EU reacted angrily to a UK Parliamentary report this week which concluded that biofuel targets were damaging the environment and threatening food supplies.

In the past 40 years, close to 20% of the Amazon has been cut down. Last year, Lula said his government's efforts to control illegal logging and introduce better certification of land ownership had helped reduce forest clearance significantly. The latest figures show this to be nonsense. In practice, the government’s efforts have been minimal. "We have a national plan to fight deforestation that, historically, was a good plan on paper but lacked implementation both due to political will and due to resources," says Marcelo Furtado, campaigns director for Greenpeace in Brazil.

“Although the government could celebrate in recent years a decrease in deforestation, the fact is that structurally this didn't change. The environment ministry still lacks funding. You still have situations where the police don't have a helicopter to fly over a certain area or there is no fuel in the truck to go to verify if an area is being deforested or not. You still have a problem with availability of maps," Furtado said. “The tools to decrease deforestation and monitor implementation of the law are still not good enough." At the United Nations Conference on Climate Change in Bali, Indonesia, last month, Brazil announced the creation of a voluntary fund to protect the Amazon, due to be launched this year. This is all too little, too late.


Paul Feldman
AWTW communications editor