As anger over incoming tax hikes boils over in Kenya, African Stream takes a deep dive into the role the International Monetary Fund (IMF) has played in ramming austerity down Africans’ throats. It boils down to neocolonial debt slavery, a system designed to oppress Africans, while oiling the wheels of otherwise faltering Western economies. African Stream’s Kenneth Kaigua breaks down this complex issue.
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South Korean Dictator Dies, Western Media Resurrects a Myth
Editor’s Note: The following is the writer’s analysis, originally published in Hampton Think.
General Chun Doo Hwan was the corrupt military dictator that ruled South Korea (Republic of Korea or ROK) from 1979-88, before handing off the presidency to his co-conspirator General Roh Tae Woo. Chun took power in a coup in 1979, and during his presidency he perpetrated the largest massacre of Korean civilians since the U.S. war on Korea. He died on November 23, in pampered, sybaritic luxury, impenitent and arrogant to the very last breath.
Many western media outlets have written censorious, chest-beating accounts of his despotic governance and the massacres he perpetrated (here, here, here, and here)—something they rarely bothered to do when he was actively perpetrating them in broad daylight before their eyes. Like the light from a distant galaxy—or some strange journalistic time capsule—only after death, decades later, do “human rights violations” in South Korea burst out of radio silence and become newsworthy.
Better late than never, better faint than silent, better partial than absent, one could argue. Still all of them miss out on key facts, spread lies through omission. A key dimension of Korean history and politics looks to be buried with his death. A little background history is necessary to elucidate this.
The Sorrows of the Emperor-Dictator
Chun’s predecessor and patron, the aging South Korean dictator Park Chung Hee, had ruled the country as an absolute totalitarian despot for 18 years, but he knew in his bones that his days were numbered. He had survived two violent assassination attempts, mass civil protests, and even opprobrium from his U.S. puppet masters, despite serving them loyally by sending 320,000 South Korean troops to Vietnam. Even Park’s closest advisors were worried about the fragility of his rule.
Park Chung Hee had been a former Japanese military collaborator during Japan’s colonization of Korea. A U.S.-installed puppet Syngman Rhee had smashed socialism in the South through genocide—a method later to be replicated in Indonesia’s “Jakarta method.”
But the puppet-genocidaire Rhee was in turn toppled by student protests in 1960, and the integration of South Korea into a U.S.-led security structure and capitalist order looked precarious due to popular hatred of the United States. Into this foment, Brigadier General Park took power in a vicious putsch. Park was a totalitarian fascist groomed within the Japanese military system, where he had conducted counterinsurgency against Korean independence fighters in Manchuria. (One of them, a legendary guerrilla leader called Kim Il Sung, would escape his clutches and become a life-long nemesis.) He had then been trained and cultivated by the United States during the 1950s, attending military school in the United States. When Rhee was deposed, Park rapidly took power, pledging fealty to the United States and total war against communists. Having already proven his anticommunist credentials through a massive treachery, betrayal and slaughter, he was welcomed by the Kennedy administration. This established the Junta’s legitimacy, while maintaining the continuity of U.S. colonial “hub and spoke” architecture in the region.
Park nominally assumed the presidency through an election but then tightened his regime until he attained the powers of the Japanese emperor, whom he had worshipped and admired during Japanese rule. He formally rewrote the constitution after the Japanese imperial system, legally giving himself the powers of Showa-era Sun God. This, along with his dismissal of colonial atrocities to normalize relations with Japan, in obeisance to the U.S. strategic design for the region, resulted in massive civil insurrection against him. These protests were barely put down with mass bloodshed, torture, disappearances and terror. But even among his inner circle, doubts were voiced about his extreme despotic overreach.
The Insurance Policy: Ruthless and Cunning
From the earliest days of his rule, Park Chung Hee had cultivated high ranking officers to key positions, as loyal retainers in an insurance policy in case a coup happened against him. A secret military cabal, later to be called “Hanahwe” [also, “Hanahoe”; “the council of one”], a group of officers within the 1955, 11th class of South Korea’s Military Academy, had signaled their total fealty to Park during Park’s military coup in 1961. As a result, Hanahwe members were rapidly brought in-house, rewarded with powerful roles within the military government, and formed a deadly, elite Praetorian guard within the labyrinthine power structures of the Park Administration.
Two of them were the leaders of this secret-society insurance policy. One of them, Chun Doo Hwan, would be referred to as the “ruthless one”, known for his amoral brutality and utter lack of conscience. He would later be called “the slaughterhouse butcher.” The other was Roh Tae Woo, Chun’s military blood brother, the “cunning one,” known for his strategic, tactical and political cunning.
Together, “Ruthless and Cunning” would prove their mettle in Vietnam, auditioning as understudies for the U.S. imperial war machine, and proving their bona fides by operating a rolling atrocity machine, the SK 9th Infantry “White Horse” Division, where Chun’s 29th regiment would cut its teeth on brutal massacres against Vietnamese civilians. Psychopathic and amoral, they would form a two-headed hydra, ensuring Park’s rule against enemies within and without. A third member of Hanahwe, Jeong Ho Yong, would also cut his teeth in the 9th Division in Vietnam, as would the Capital Mechanized “Fierce Tiger” Division, and various Marine and special warfare brigades. All would gain recognition and favor with the U.S. military brass in Vietnam, where South Korean troops would eventually outnumber U.S. troops on the ground. They would also play key roles in future Korean history. Sex, Whiskey and Guns: High Deductibles
Park’s insurance policy kicked in when his KCIA chief pumped him full of bullets at a whiskey-sodden orgy gone bad in late autumn of 1979. Two young women—a nervous college student and a popular singer—had been procured to serve the sexual whims of the president at a luxurious KCIA “safehouse” that had been set up for such routine vernal assignations. During the pre-coital dinner banquet, with expensive whiskey serving as lubricant, a heated argument arose between the KCIA Chief, Kim Jae Kyu and Chief Presidential Bodyguard Cha Ji Chol, about how to put down massive civil protests against Park’s rule in Pusan and Masan. Cha Ji Chol proposed the “Pol Pot option” arguing that a massacre of 30,000 civilians would subdue civilians and put the genie back in the bottle. This was accompanied by insults at Kim for not having implemented such “effective” measures. Kim Jae Kyu, incensed either at the casual brutality or at the blatant criticism, put an abrupt end to the debate by drawing his pistol and shooting Cha and Park. “I shot the heart of the beast of the (Yushin) dictatorship,” he would later claim. Park’s insurance policy would rapidly kick in at that point, although the deductible would be his own life.
Enter the Praetorian Guard: Tigers, Horses, and Dragons
After Park’s death, Oct 26th, Lt General Chun Doo Hwan, the head of the Armed Forces Defense Security Command (DSC)—Park’s institutional Praetorian Guard—rapidly took matters in hand. Chun would rapidly take over, first the investigation of the assassination, then key army positions, and then the government. Some historians marvel at the rapidity with which Chun consolidated power and how quickly he disciplined loose factions within Park’s old guard. This ignores the rhizomatic base of Hanahwe deep within the executive and in all branches of the military, and the institutional powers baked into the DSC to preserve loyalty and deter subversion and coups. Chun, using his statutory powers, and good dose of military firepower, arrested key military leaders for the assassination, and then on December 12, 1979, instigated a coup, supported by Hanahwe comrade Roh Tae Woo, now division commander of the 9th “White Horse” Division. Roh withdrew the elite unit from its critical position on the Demilitarized Zone (DMZ) that separates northern and southern Korea to the Capital, where they were joined by another Vietnam/Hanahwe classmate, general Jeong Ho Yong. These troops, with another Vietnam-veteran division, the Capitol Mechanized “Tiger” Division, and various special warfare brigades, fought the old guard in the streets before rapidly subduing them. Not long after this class reunion, Chun would declare martial law and appoint himself president with a new constitution and fill all key military ranks with his Hanahwe classmates.
A “Splendid Holiday” Turns Sour
Mass protests broke out again after Chun’s declaration of Martial Law on May 17, 1980. In the city of Gwangju, hundreds of students protested. Chun’s response was to send a crack division of special warfare troops to smash heads, assault bystanders and shoot protestors, in an operation named “Splendid Holiday.” Beatings, rapes and mass killings were the order of the day; “blood flowed like rivers in the streets.”
However, in an extraordinary turn of events, stunned protesters, instead of capitulating at the terror, responded by storming police armories and requisitioning weapons, taxis, buses and improvised explosives, to fight the elite troops to a standstill. Despite the deployment of helicopter gunships and Armored Vehicles, 3,000 Special Warfare Paratroopers, along with 18,000 riot troops, found themselves driven out of the city. In this, the liberation of Gwangju stands out as one of the most astonishing feats of civil resistance of the 20th century.
This victory was not to last, however. After the rebels surrendered thousands of arms as a gesture of good faith to seek amnesty, Chun’s administration would assault the city with two armored divisions and five special forces brigades. An untold number of civilians—excess death statistics note 2,300 individuals—would be slaughtered, searing Gwangju into the historic annals of atrocity and infamy. Anti-government protests would go underground, and re-erupt seven years later, when Chun’s presidency, which had been awarded the Olympics found it inconvenient to perpetrate another massacre in front of the international press in the run up to the Olympics. Chun would accede to protesters’ demands for a direct election, the outcome of which conveniently passed the presidency to his Hanahwe second, General Roh Tae Woo.
The Missing Factor: Who Let the Dogs Out?
The Missing Factor: Who Let the Dogs Out?
The above are the basic historical outlines, acknowledged by most journalists and historians. But what they miss out, is the platform and permissions that circumscribed these historic events. In particular, two questions arise: Under what authority did Chun initiate his coups? And how did he subdue Gwangju? The answer leads back to the same place. South Korea has never had a policy independent of the United States—it has always been a vassal neo-colony. This was demonstrated when the United States placed Terminal High Altitude Area Defense (THAAD) missiles on Korean soil, ignoring the explicit orders of President Moon Jae-In by coordinating secretly with the South Korean military. Even U.S. Ambassador Donald Gregg acknowledged openly before Congress that the U.S.-South Korea relationship had historically been a Patron-Client relationship. This is because the southern state of Korea, from its inception, was created deliberately by the United States after liberation to thwart a popular, indigenous socialist government (the Korean People’s Republic) from taking sovereign power over the entire peninsula. Since its occupation in 1945 by the U.S. military government, South Korea has always been constrained and controlled by the United States. Its politics and culture, even where it might be nominally independent, has been thoroughly colonized by the United States. For example, in the early 1990s, a fractious intra-party conflict broke out between two cabinet factions of the liberal Kim Young Sam presidency. The “irreconcilable” fight was between cliques that had studied political science at the University of California Berkeley and those who had studied at Yale University. Such were boundaries of South Korean discourse and the overarching nature of U.S. influence. This state of affairs is most true of the South Korean military, which was cloned from the U.S. military during the U.S. occupation of 1945-48, and which has been continuously under U.S. operational control (or OPCON) since July 14, 1950.
Key leaders, such as Park, Chun, Roh were trained and indoctrinated into U.S. military practices and culture and had close personal connections with the U.S. military. Chun, for example, had attended the U.S. Psychological Warfare school and Special Warfare school in Fort Bragg, Ranger school at Fort Benning, and Airborne training at the U.S. Army infantry school before receiving commissions to lead Special Warfare forces. He then went to Vietnam, fighting under U.S. Military Assistance Command, Vietnam (MACV) command before ascending to key positions in the ROK military.
This dependency is starkest regarding military operational control, which the United States still maintains in “wartime” to this day. ROK divisions cannot move or act independently without explicit orders from the top of the military command chain, or unless explicit permission is granted to be released from this operational control. The head of the military command chain at the time of Gwangju was General John A. Wickham, Jr., the head of the ROK-U.S. Combined Forces Command, and United States Forces Korea (UNC/CFC) command. Wickham would have been subordinate to the U.S. Joint Chiefs of Staff.
In other words, South Korean troops do not get to commit massacres on their own. They need a hall pass from the United States to engage in any military maneuvers or actions. The U.S. military granted them such a hall pass to travel down to Gwangju, knowing that this plan that would likely result in the slaughter of students and citizens. The released units under the Special Warfare Command, a lethal killing machine, are all divisions with a deep integration with and long history of serving the United States.
The United States claims that it was utterly in the dark and in no position to refuse the release of OPCON demanded by South Korea: That the Koreans snatched up OPCON, like a bully stealing lunch money, and then went on to commit mass atrocities that the United States could only sit by and watch in slack-jawed innocence. These are after-the-fact re-workings of history by creative lawyers ignorant of military realities. Militaries are instituted to have unity of command, and Chun was a U.S.-trained, known actor in a specific chain of command, with close ties to the U.S. brass. The notion that a partially established coup junta of a client state could simply Swiss-cheese U.S. military command structure and snatch OPCON to commit massacres at will strains credibility. The absurd official portrayals of the U.S.military brass as hapless damsels before roguish generals is refuted by official records and smacks of satire or desperation.
In fact, journalist Tim Shorrock using the declassified “Cherokee files,” has detailed well the discussions that happened at the time of Gwangju: Top U.S. officials in the Carter administration 1) knew of the brewing crackdown and 2) greenlighted military action, knowing full well the costs. According to Shorrock’s meticulous reporting:
[Troops] were sent with the approval of the U.S. commander of the U.S.-Korea Joint Command, Gen. John Wickham… That decision, made at the highest levels of the U.S. government… exposed how deeply the Carter administration was involved in the planning for the military coup of 1980… the Carter administration had essentially given the green light to South Korea’s generals to use military force…
This action was authorized to avoid a second “Iran” debacle, where another U.S.-placed despot had been overthrown by popular revolt to U.S. consternation, humiliation and loss. Not only did the United States greenlight the massacre by U.S.-familiar Vietnam-veteran divisions, the United States deployed the USS Coral Sea to support the flank of Chun’s military during the retaking of the city and heightened surveillance support with Airborne Warning And Control System (AWACS). In other words, the Gwangju massacre was a U.S.-enabled-and-supported operation, done with explicit U.S. knowledge and coordination.
Pentagon lawyers have argued that they had previously “released OPCON” to the Korean military, so that these massacres were not done under direct U.S. control. That is a distinction without a difference, akin to a pit bull owner saying that they took their beast off the leash, and therefore are not responsible for the deadly consequences. The ROK military was a US-trained-and-coordinated combatant force; some units involved had served directly under the US I Corps in Vietnam only years prior to Gwangju. The very fact that the United States released OPCON, knowing full well their capacities, military histories, and what was on the cards, makes the whole argument a poor exercise in plausible deniability. No one who has the smallest understanding of how armies work would fall for “the pit bull ate my homework” excuse.
The United States has also argued that the Special Warfare division was exempt from OPCON at the time. This, too, is a legal fiction—Special Warfare Troops (SWF), of all ROK troops, are the most tightly integrated and bound to U.S. command, where they have a long history of training, coordinating, and working with and as proxies for the U.S. military. (The United States maintains this pretense because SWF are designed to infiltrate into North Korea, where the necessity to avoid U.S. command responsibility requires a legal fiction of “independence”).
The same could also apply for Chun’s coups as well. The Dec 12 coup involved the movement of the Vietnam-veteran 9th division, far away from its position guarding the DMZ to attack the incumbent government, along with maneuvers of the Capital Mechanized Division and Special Warfare Troops. The May 20 coup also involved large troop maneuvers to threaten and dissolve the Korean parliament. South Korea is a small, crowded peninsula, bristling with arms and military bases on hair trigger alert, surveilling and monitoring every inch of its territory for military movement. To assert that the U.S. command was aware of the coups is not conspiracy that presumes U.S. omniscience. It’s simply assuming clear signaling on a crowded dance floor to avoid inadvertent collisions. It’s inconceivable that such a massive troop maneuver would not have been signaled up the chain at minimum to avoid a friendly fire incident.
Return OPCON, Restore Peace
So where do these facts leave us?
As the media stir up the flies around Chun’s sordid past, they also seek to bury with his body the fact that South Korea’s military is an appendage of the U.S. military, and that its warts, chancres, and tumors are grown from within the U.S. body politic. Exorbitant atrocities such as the Bodo League Massacres, or the Gwangju Massacre, accrue to the secret debit account of the U.S. imperial ledger, where human rights violations vanish off the books, and where moral debt and karmic interest are never calculated or reconciled.
Despite a confusing, bifurcated organizational structure (independent command control vs. subordinated operational control; Peacetime OPCON vs. Wartime OPCON), the bare political fact is that South Korea’s military falls effectively under U.S. control, not simply in “wartime,” but whenever it is politically expedient or strategically necessary. This card was obvious when the ROK military simply defied Moon’s moratorium on THAAD missile installation and took its orders from the United States, not even bothering to notify the Korean president that the missiles had been delivered in-country. Subsequent investigation revealed that the South Korean military claimed a confidentiality agreement with the U.S. military as the reason to hide the information from South Korea’s own commander-in-chief.
Not only does the ROK military translate the will of the United States in domestic actions—including coups and massacres, but it also has functioned as a brutal sidekick for U.S. aggressions abroad, and serves as a strategic force projection platform and force multiplier for U.S. containment against China. Unlike any other “sovereign” state in the world, South Korea’s 3.7 million troops and material all fall under U.S. operational control the instant that the United States decides that they want to use them.
This is despite the fact that since the inception of its civilian government in 1993, South Korea has sued the United States for the return of OPCON. This request is now going into its third decade; the United States has simply stalled, moved goal posts, changed definitions and conditions, and stonewalled to this date.
This debate around OPCON is important in the current historical moment as the United States is escalating to war with China. Any de-escalation with North Korea will require the declaration of peace, predicated on the return of sovereign OPCON to South Korea. However, the United States will not seek to de-escalate tensions with North Korea, because if that happens, South Korea is likely to confederate in some manner with North Korea, join China’s Belt and Road Initiative and then become integrated as an ally of China. This would cripple the hegemonic control (or the architecture of U.S. hegemony) in Northeast Asia. Hegemony refers to the dominance of one group over another via various means. This renders any peace with North Korea antithetical to U.S. strategic interests.
Secondly, the U.S. escalation for war with China requires the capacity to access and threaten the Chinese landmass across a series of leverage points. Inescapably, South Korea will be a key theater of battle, because of its geostrategic position as a bridgehead onto China. Also, the temptation to leverage a force of 6.7 million South Koreans (3.7 million troops +3 million paramilitary) as cannon fodder for war against China is simply too irresistible to pass on. In light of this, Korea expert Tim Beal argues that in this moment of heightened tension with China, the most dangerous place in the Pacific is not the South China Sea or the East China Sea, but on the Korean peninsula.
We will see this conflict heighten as South Korea enters into a new presidential election cycle between a U.S.-favored conservative candidate, and a China-sympathetic progressive candidate.
Nevertheless, South Korea’s history offers a stark and ominous lesson, one that the mainstream media would prefer you ignore: A battle is brewing, with very high stakes. Under pressure, the United States has taken brutal actions to maintain control and hegemony. It may do so again.
Chun’s passing is being taken as an opportunity to distribute soporific drafts of historical amnesia—the better to sleepwalk into war or tragedy, again.
People with a conscience should not let this misdirection pass. To close one’s eyes to history is to enable future atrocities and war. Only with eyes wide open does the public have a chance of staving off this coming war.
K.J. Noh is a scholar, educator and journalist focusing on the political economy and geopolitics of the Asia-Pacific. He writes for Dissident Voice, Black Agenda Report, Counterpunch, Popular Resistance, Asia Times, MR Online. He also does frequent commentary and analysis on the news programs The Critical Hour, By Any Means Necessary, Fault Lines, Political Misfits, Loud & Clear, Breakthrough News and Flashpoints. He believes a functioning society requires good information; to that end, he strives to combat the weaponization of disinformation in the current cold war climate.
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Is the EU Bribing and Blackmailing Tunisia to Crack Down on Migrants?
This article was produced by Peoples Dispatch / Globetrotter News Service.
The Workers’ Party of Tunisia and several human rights groups have strongly objected to a deal proposed by European countries on the movement of migrants. They have called it a violation of sovereignty and the human rights of refugees.
On June 11, top European Union (EU) officials visited Tunisia and issued a joint statement after meeting President Kais Saied, saying that both parties have agreed to work jointly to end “irregular migration.”
Critics of the deal claim that the EU is using Tunisia’s precarious economic condition to force it to control the movement of migrants across the Mediterranean Sea in exchange for financial support, just like they did with Turkey and Libya.
The Workers’ Party claimed in a statement on June 15 that any such deal will make Tunisia a “policeman” patrolling its borders so that people trying to escape their deteriorating economic conditions can be stopped from going to Europe and punished.
Reports indicate that the EU is pushing Tunisia to establish a harsh border policy in exchange for its support for the country’s stalled bid to obtain a $1.9 billion loan from the International Monetary Fund.
Tunisia’s loan has been stalled for months due to Saied’s reluctance to implement the reforms demanded by the IMF. Saied is reportedly worried that his government—already facing large-scale popular resistance since his political coup in July 2021—will face another popular upsurge if the IMF’s demands to cut subsidies for essential commodities such as flour and fuel, cuts to social services, and privatization are implemented.
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The Geopolitics Behind Spiraling Gas and Electricity Prices in Europe
Editor’s Note: The following represents the writer’s analysis and was produced in partnership by Newsclick and Globetrotter.
The current crisis of spiraling gas prices in Europe, coupled with a cold snap in the region, highlights the fact that the transition to green energy in any part of the world is not going to be easy. The high gas prices in Europe also bring to the forefront the complexity involved in transitioning to clean energy sources: that energy is not simply about choosing the right technology, and that transitioning to green energy has economic and geopolitical dimensions that need to be taken into consideration as well.
Gas wars in Europe are very much a part of the larger geostrategic battle being waged by the United States using the North Atlantic Treaty Organization (NATO) and Ukraine. The problem the United States and the EU have is that shifting the EU’s energy dependence on Russia will have huge costs for the EU, which is being missed in the current standoff between Russia and NATO. A break with Russia at this point over Ukraine will have huge consequences for the EU’s attempt to transition to cleaner energy sources.
The European Union has made its problem of a green transition worse by choosing a completely market-based approach toward gas pricing. The blackouts witnessed by people in Texas in February 2021 as a result of freezing temperatures made it apparent that such market-driven policies fail during vagaries of weather, pushing gas prices to levels where the poor may have to simply turn off their heating. In winter, gas prices tend to skyrocket in the European Union, as they did in 2020 and again in 2021.
For India and its electricity grid, one lesson from this European experience is clear. Markets do not solve the problem of energy pricing, as they require planning, long-term investments and stability in pricing. The electricity sector will face disastrous consequences if it is handed over to private electricity companies, as is being proposed in India. This is what the move to separate wires from the electricity they carry aims to achieve through Indian Prime Minister Narendra Modi’s government’s proposed amendment to the existing Electricity Act of 2003.
In order to understand the issues related to transitioning toward green energy, it is important to take a closer look at the current gas supply-related issues being faced by the European Union. The EU has chosen gas as its choice of fuel for electricity production, as it goes off coal and nuclear while also investing heavily in wind and solar. The argument advanced in favor of this choice is that gas would provide the EU with a transitional fuel for its low carbon emission path, as gas tends to produce less emissions than coal. It is another matter that gas is at best a short-term solution, as it still emits half as much greenhouse gas as coal.
As I have written earlier, the problem with green energy is that it requires a much larger capacity addition to handle seasonal and daily fluctuations that planners have not accounted for while advocating for switching over to clean energy sources. During winter, days are shorter in higher latitudes, and the world therefore gets fewer hours of sunlight. This seasonal problem with solar energy has been compounded in Europe with low winds in 2021 reducing the electricity output of windmills.
The European Union has banked heavily on gas to meet its short- and medium-term goals of cutting down greenhouse emissions. Gas can be stored to meet short-term and seasonal needs, and gas production can even be increased easily from gas fields with requisite pumping capacity. All this, however, requires advance planning and investment in surplus capacity building to meet the requirements of daily or seasonal fluctuations.
Unfortunately, the EU is a strong believer that markets magically solve all problems. It has moved away from long-term price contracts for gas and toward spot and short-term contracts—unlike China, India and Japan, which all have long-term contracts indexed to their oil prices.
Why does the gas price affect the price of electricity in the EU? After all, natural gas accounts only for about 20 percent of the EU’s electricity generation. Unfortunately for the people in the EU region, not only the gas market but also the electricity market has been “liberalized” under the market reforms in the EU. The energy mix in the grid is determined by energy market auctions, in which private electricity producers bid their prices and the quantity they will supply to the electricity grid. These bids are accepted, in order from lowest to highest, until the next day’s predicted demand is fully met. The last bidder’s price then becomes the price for all producers. In the language of Milton Friedman’s followers—who were known as the Chicago Boys—this price offered by the last bidder is its “marginal price” discovered through the market auction of electricity and, therefore, is the “natural” price of electricity. For readers who might have followed the recently concluded elections in Chile, Augusto Pinochet—who was a military dictator in Chile from 1973 to 1990—introduced the Constitution of 1980 in Chile and had incorporated the above principle in a constitutional guarantee to the neoliberal reforms in the electricity sector in the country. Hopefully, the victory of the left in the presidential elections in Chile and the earlier referendum on rewriting the Chilean constitution will also address this issue. Interestingly, it was not the former UK Prime Minister Margaret Thatcher—as is commonly thought—who started the electricity “reforms” but Pinochet’s bloody regime in Chile.
At present in the EU, natural gas is the marginal producer, and that is why the price of gas also determines the price of electricity in Europe. This explains the almost 200 percent rise in electricity price in Europe in 2020. In 2021, according to an October 2021 report by the European Commission, “Gas prices are increasing globally, but more significantly in net importer regional markets like Asia and the EU. So far in 2021, prices tripled in [the] EU and more than doubled in Asia while only doubling in the U.S.” [emphasis added].
The coupling of the gas and the electricity markets by using the marginal price as the price of all producers means that if gas spot prices triple as has been seen recently, so will the electricity prices. No prizes for guessing who gets hit the hardest with such increases. Though there has been criticism from various quarters regarding the use of marginal price as the price of electricity for all suppliers irrespective of their respective costs, the neoliberal belief in the gods of the market has ruled supreme in Europe.
Russia has long-term contracts as well as short-term contracts to supply gas to EU countries. Putin has mocked the EU’s fascination with spot prices and gas prices and said that Russia is willing to supply more gas via long-term contracts to the region. Meanwhile, in October 2021, European Commission President Ursula von der Leyen said that Russia was not doing its part in helping Europe tide over the gas crisis, according to an article in the Economist. The article stated, however, that according to analysts, Russia’s “big continental customers have recently confirmed that it is meeting its contractual obligations,” adding that “[t]here is little hard evidence that Russia is a big factor in Europe’s current gas crisis.”
The question here is that the EU either believes in the efficiency of the markets or it doesn’t. The EU cannot argue markets are best when spot prices are low in summer, and lose that belief in winter, asking Russia to supply more in order to “control” the market price. And if markets indeed are best, why not help the market by expediting the regulatory clearances for the Nord Stream 2 pipeline, which will ship Russian gas to Germany?
This brings us to the knotty question of the EU and Russia. The current Ukraine crisis that is roiling the relationship between the EU and Russia is closely linked to gas as well. Pipelines from Russia through Ukraine and Poland, along with the undersea Nord Stream 1, currently supply the bulk of Russian gas to the EU. Russia also has additional capacity via the newly commissioned Nord Stream 2 to supply more gas to Europe if it receives the financial regulatory clearance.
There is little doubt that Nord Stream 2 is caught not simply in regulatory issues but also in the geopolitics of gas in Europe. The United States pressured Germany not to allow Nord Stream 2 to be commissioned, and also threatened to impose sanctions on companies involved with the pipeline project. Before stepping down as the chancellor of Germany in September 2021, Angela Merkel, however, resisted pressure from Washington to halt the work on the pipeline and forced the United States to concede to a “compromise deal.” The Ukraine crisis has created further pressure on Germany to postpone Nord Stream 2 even if it means worsening its twin crises of gas and electricity prices.
The net gainer in all of this is the United States, which will get the EU as a buyer for its more expensive fracking gas. Russia currently supplies about 40 percent of the EU’s gas. If this stalls, the United States, which supplies about 5 percent of the EU’s gas demand (according to 2020 figures), could be a big gainer. The United States’ interest in sanctioning Russian gas supply and not allowing the commissioning of Nord Stream 2 has as much to do with its support to Ukraine as seeing that Russia does not become too important to the EU.
Nord Stream 2 could help form a common pan-European market and a larger Eurasian consolidation. Just as it did in East and Southeast Asia, the United States has a vested interest in stopping trade following geography instead of politics. Interestingly, gas pipelines from the Soviet Union to Western Europe were built during the Cold War as geography and trade got priority over Cold War politics.
The United States wants to focus on NATO and the Indo-Pacific region, as its focus is on the oceans. In geographical terms, the oceans are not separate but a continuous body covering more than 70 percent of the world’s surface with three major islands: Eurasia, Africa and the Americas. (Although in the formulation of British geographer Halford Mackinder, the originator of the world island idea, Africa was seen as a part of Eurasia.) Eurasia alone is by far the bigger island, with 70 percent of the world’s population. That is why the United States does not want such a consolidation.
The world is passing through perhaps the greatest transition that human civilization has known in meeting the current challenges posed by climate change. To address these challenges, an energy transition is required that cannot be achieved through markets that prioritize immediate profits over long-term societal gains. If gas is indeed the transitional fuel, at least for Europe, it needs long-term policies of integrating its gas grid with gas fields, which have adequate storage. And Europe needs to stop playing games with its energy and the world’s climate future for the benefit of the United States.
For India, the lessons are clear. Markets do not work for infrastructure. Long-term planning with state leadership is what India needs to ensure supply of electricity to all Indians and ensure the country’s green transition—instead of dependence on electricity markets created artificially by a few regulators framing rules to favor the private monopoly of electricity companies.
Prabir Purkayastha is the founding editor of Newsclick.in, a digital media platform. He is an activist for science and the free software movement.