The business of freedom and democracy

It's sun-down for the West's 300+ years' business model

As the war in Ukraine begins to wind down, Africa could become the next theater of geopolitical instability. Mali, Burkina Faso and Niger all recently experienced military coups overthrowing western-friendly governments. Some of their neighboring nations have expressed support for the Juntas while elsewhere in Africa, they galvanized popular social uprising that are demanding similar changes in government. They all have one thing in common: a desire to liberate themselves from colonialist exploitation by western powers.

Colonialism never went away

Indeed, as we can now appreciate, while colonialism had changed its disguises, it never went away. Colonies are the geese that lay golden eggs for western financial and corporate interests who can't and won't easily let go of their stranglehold on these sources of wealth. Instead, they changed the mechanism of colonial exploitation from outright occupation and hands-on management of mines and plantations to a debt-based exploitation. 

This mechanism was well established under the Roman Empire and re-discovered, apparently by the French after Haitian slaves rebelled and ousted their French oppressors in 1791. Napoleon did try to reconquer Haiti by force in 1804 but he failed. 

Getting slaves to whip other slaves

In 1824, the French offered Haitians a new deal: we'll recognize your independence, but you must pay us reparations. Haitians had no money with which to pay reparations, so they were forced to borrow those sums from French bankers. Haiti would take the next 130+ years paying off that debt to French bankers from the proceeds of their exports.

The magnitude of this extortion was such that it left Haiti, as well as other colonies in crushing and chronic poverty in spite of their extraordinary resource wealth. Under this arrangement, it was no longer necessary for French managers to whip slaves, manage the sugar and coffee plantations or port operations. The indebted governments would police all these operations themselves to make sure they could repay the nation's debts. 

Corrupting the local strongmen

Obedient officials could always count on their rewards with houses and apartments, bank accounts, luxury cars and yachts as well as accolades at the colonial mother-ships in London, Paris, Bruxelles, New York and elsewhere in the "civilized" world. These cooperative, obedient officials became the key node of the new-and-improved neocolonialist order. They were best placed to know the local cultures and navigate the political process necessary to optimize the oppression of their own countrymen.

But this also made them vulnerable to rebellion or assassination so they would have to be protected, which is why protecting human rights in colonized nations had to rely on French, British or American military bases. That's always been a costly outlay, but...

Passing the enforcement bill to taxpayers

Long passed are the days when the East India Company had to arm, clothe and feed its own enforcement troops. Defending "freedom and democracy" by the force of arms is today no longer the liability of the colonizers and the financier classes who are its ultimate beneficiaries. Instead, enforcement is outsourced to French / British / American and NATO militaries and paid for by domestic taxpayers.

It’s the National Interests, you see…

This business model is what the talking heads refer to when they invoke those mysterious and never properly explained "national interests." Of course, other than paying for it all, ordinary Americans, Frenchmen and Britons gain no benefit from the arrangement, which is why typically, the standards of living in the "free world" have a robust tendency to slide into the gutter over time.

That, in turn, requires a powerful industry charged with contriving a convincing narrative and justifications for the state of things. It consists of academia, think tanks, PR agencies and media who make it their business to uphold the status quo and demonize any and all challenges to the freedom and democracy business model: Putin is a murderer and a tyrant! Communist China is coming to getcha! Iranian Mullahs are killing Golden Retriever puppies!

A deal is a deal, we won't renegotiate

With all this in place, western powers can count on a steady stream of cheap commodities flowing from the chronically underdeveloped nations to power their industries' profits and share prices. Financialization of these flows in turn constitutes the collateral underlying the colonist nations' financial systems. For us who studied economics in university, they taught us that this ain’t so, but that too has been part and parcel of the great deception.

Problems have begun to emerge as the colonized nations started turning uppity, which is what we now have in Western Africa. Western powers could respond by renegotiating their relationships, by offering more lenient conditions, by cancelling their debts or paying more for commodities. But an inverted-pyramid financial system that can only remain stable for as long as it expands can't tolerate any reduction in the flow of the financialized resource wealth. 

Meanwhile, Russia won the hearts and minds

Furthermore, yielding to the uppity Nigeriens could give the wrong ideas to other clients across Africa and elsewhere: next, they might all demand debt relief and higher prices. Instead, these brazen afronts to freedom and democracy must be nipped in the bud, and preferably made an example of. That's how it's been for well over 2000 years, since the days of the "holy" Roman Empire and Greek antiquity.

Trouble today is, France's military footprint in West Africa has been drastically reduced, including by Russia’s Wagner group. Since the Russians can't think strategically, as western experts insist, we must assume the “musicians” were sent there on vacation, but whatever the reason for their presence in Africa, the reality is that they now constitute an obstacle and many actual and aspiring leaders across Africa now see the Russians as an ally and a liberator.

That whole thing about "winning hearts and minds," might have been Russia’s most important victory – one that might keep on giving throughout the ongoing clash between East and West.

West will act to defend freedom and democracy

The west will have to act, one way or another. We should expect sanctions as the very minimum, but also blockades, embargoes, military incursions, bombings, assassination attempts and wholesale destabilization of the area in a desperate attempt to defend freedom and democracy.

One thing we can say about the western power elites is that when it comes to "our values," we do not compromise. The resulting conflicts will likely fester for years. Let us hope that humanity will prevail and long suffering colonies get to enjoy the wealth that was being stolen from under them for centuries. 

Economic consequences for the west

They will probably curtail the flow of commodities out of Africa and jeopardize trade, exerting upward pressure on commodity prices including oil and gas, coal, uranium, metals as well as agricultural commodities.

The collateral underpinning the western inverted-pyramid financial system has already begun to vanish leaving governments and central banks with one tool to manage domestic economies: the printing press. The geopolitical instability could prove to be the key driver of commodity prices over the coming years.

At home, the bankers' printing presses will further exacerbate inflationary pressures. To think that we were expecting flying cars about this time...

Alex Krainer – @NakedHedgie is the creator of I-System Trend Following and publisher of daily TrendCompass investor reports which cover over 200 financial and commodities markets. One-month test drive is always free of charge, no jumping through hoops to cancel. To start your trial subscription, drop us an email at TrendCompass@ISystem-TF.com

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