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John Passant

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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

I am not surprised
I think we are being unfair to this Abbott ‘no surprises’ Government. I am not surprised. (0)

Send Barnaby to Indonesia
It is a pity that Barnaby Joyce, a man of tact, diplomacy, nuance and subtlety, isn’t going to Indonesia to fix things up. I know I am disappointed that Barnaby is missing out on this great opportunity, and I am sure the Indonesians feel the same way. [Sarcasm alert.] (0)



Rudd gives China a Stern talking to

Kevin Rudd is the popinjay of international relations. He bestrides the world like a coxcomb.

His latest performance has been lecturing the Chinese over the detention of Australian citizen Stern Hu.

Mr Hu is a senior executive with Rio Tinto, one of the world’s largest miners.  Based in China, he is in fact Chinese born. 

Fluent and well connected are two words that come to mind. You can understand why he is valuable to Rio Tinto.

At the moment Rio and other miners are in negotiations with the Chinese over iron ore prices.  The previous contracts have lapsed and the spot price is often the going rate. 

The Chinese wanted to cut the contract price by 40 percent.  Other major buyers have done a deal for a 33 percent reduction.

The spot market price is higher than both at the moment and rising.  So the ore producers like Rio Tinto are in no hurry to finalise negotiations.

The Chinese have arrested Mr Hu as part of a crackdown on corruption and accused him of espionage. He and other Rio Tinto employees have allegedly been bribing officials for information that would be beneficial to Rio Tinto in the negotiations over the iron ore contracts.

If that is the case why shouldn’t the Chinese detain Mr Hu?

The xenophobes in Australia have responded on cue about China being a dictatorship, about the right to consular visits, to habeas corpus and so on.

All true, but all irrelevant.

Indeed it is arguable (except for the dictatorship part and that’s another story) the treatment of Stern Hu highlights the similarities between Chinese and Australian capital and their rule in their respective countries.  Hicks, Habib, Haneef, anti-terrorism laws, anti-bikie laws, all come to mind.

We will sell iron ore (or uranium for that matter) to almost anyone. 

Our two way trade with China is worth $74 billion a year.  That’s the equivalent of 7 percent of our Gross Domestic Product.

So for Rudd the economic relationship with China will be  a major consideration.  He fears that China will search the world (as it already doing) even more vigorously for alternative long term suppliers of minerals and energy. 

Indeed the current spot price makes some mothballed Chinese iron ore mines profitable.

The Chinese have been hoarding iron ore.  However two of the three iron ore suppliers to China come from Australia and make up over 70 percent of the supply.  You can’t turn that around overnight or even in five years.

The Great Recession has seen Chinese steel producers lose  billions and the Communist Party is looking at ways to both defend and rationalise that industry.  Stern Hu’s arrest in the context of a crack down on corruption is part of that.

It is true that the Chinese economy is growing, possibly at the moment through unsustainable pump priming. But it may not be growing enough to absorb the villagers and young people looking for jobs.

Couple that with nationalist outbreaks recently in Tibet and with the Uighur, and the crackdown on corruption may also be part of an attempt to divert attention away from the current economic and political crises.

This might their children overboard or Tampa moment.

While Rudd welcomes the benefits China’s growth brings to Australia’s ruling class he also fears China as a consequence of that growth and the threat it poses to US global dominance,  and of necessity Australia’s role in the global economy and power in the region.

This hope and fear drive US policy too. The response is to both engage and encircle China. 

Iraq and Afghanistan are partly about encirclement.

Australia’s recent Defence White Paper  is an encirclement strategy too. It is designed to give Australia some sort of forward defence capability against China in the region and involve the US more heavily here. 

Money dominates.  As Lenin once wrote, the last capitalist would sell the hangman the rope with which he was to be hung.

So for a while Rudd went softly softly on Mr Hu with China.

The Opposition, freed from the constraints Government imposes, appealed to the redneck in Australia with bluster about Rudd being tougher and standing up to China and so on.  I suspect the Conservative Colonel Blimps think gunboats might be the answer.

Rudd too thinks he has this domestic audience to satisfy and to defend Australian miners.  So he has begun to talk tough.  He now says:

Australia, of course, has significant economic interests in its relationship with China, but I also remind our Chinese friends that China too has significant economic interests at stake in its relationship with Australia and with its other commercial partners around the world. 

Imagine if a Chinese official had threatened a judicial process in Australia along those lines.  The reactionaries and uber-nationalists, joined by the Liberals and the ALP, and conducted by the main stream media, would go mad.

And now Rudd has sent the cavalry in. The US Secretary of Commerce will raise Stern Hu’s case with the Chinese Prime Minister.

US imperialism will no doubt talk about transparency, fairness, enforcement, openness, and certainty.  They will mention that companies will be less keen to invest in China.

China needs foreign direct investment for long term growth. It knows this and so wants to have that investment, but under its terms.

The merger of state and capital in China – state capitalism – has been changing since Deng Xiaoping opened up the economy.  Political power lies with the dictatorship.  And that colours all economic ‘freedom’.

The trend to closer and closer relations between state and capital appears universal and has taken different forms.  In some the Stalinised version exists to lift a backward country to the level of modern capitalism. 

In other more mature economies the relationship is close and develops in countries like the US into major imperialism .  The state guarantees the private sector its ability to expropriate surplus value from the working class and this is true both within and outside the ‘home’ country. 

So Stern Hu’s arrest  has to be seen in this context.  It is a very small part of the struggle between two imperialisms – Chinese and American (and under that latter umbrella, the interests of Australian capital). 

What if the Chinese are right?  What if they do want to clean up corruption (even if this conveniently helps them in their dealings with Australia, the US and so on. )

After all, if the Australia Government thought that the interests of our trade negotiators were being adversely affected by industrial espionage, they too would take action similar to that which China has.

And this leads me to another point.  As the Attorney General’s Department puts it:

It is a criminal offence to bribe a foreign public official. The offence applies to:

• Individuals or companies, whether or not they are Australian, who bribe or attempt to bribe a foreign public official while in Australia, and

• Australian citizens, Australian residents or companies incorporated in Australia who bribe or attempt to bribe a foreign public official while overseas.

Individuals or companies that commit the offence can be prosecuted in an Australian court.

The penalty is up to ten years in jail and/or fines.

According to an older AG’s publication after four years of this law being in place there had not been one investigation.  Not one investigation! What saints Australian businessmen are!

So I have a question. Will the Rudd Government begin independent investigations of Australian mining companies to see if they have breached Australian law by possibly bribing foreign officials?

I doubt it.  Just as Chinese capitalism has its reasons for pursuing alleged corruption in the steel industry, our rulers have their own economic reasons for not pursuing the same thing allegedly in Australia.


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