Neoliberalism: A Failsafe Bulwark against Terrorism

When I heard this line from Obama’s counterterrorism speech last week,

We are actively working to promote peace between Israelis and Palestinians — because it is right and because such a peace could help reshape attitudes in the region.  And we must help countries modernize economies, upgrade education, and encourage entrepreneurship — because American leadership has always been elevated by our ability to connect with people’s hopes, and not simply their fears. [my emphasis]

My immediate thought was,

“modernize economies.” Because neoliberalism is a failsafe bulwark against terror.

Sunday, John Kerry rolled out that plan in Amman — in the form of $4 billion in private donations led by Tony (!) Blair (!).

I have asked Quartet Representative Tony Blair and many business leaders to join together. And Prime Minister Blair is shaping what I believe could be a groundbreaking plan to develop a healthy, sustainable, private-sector-led Palestinian economy that will transform the fortunes of a future Palestinian state, but also, significantly, transform the possibilities for Jordan and for Israel.

It is a plan for the Palestinian economy that is bigger, bolder and more ambitious than anything proposed since Oslo, more than 20 years ago now.


To achieve that, these leaders have brought together a group of business experts, who have donated their time, who have come from around the world over the course of the last six weeks to make this project real and tangible and formidable – as we say, shovel-ready. They have come from all over the world because they believe in peace, and because they believe prosperity is both a promise and a product of peace.

This group includes leaders of some of the world’s largest corporations, I’m pleased to say. It includes renowned investors and some of the most brilliant business analysts out there – and some of the most committed.


The fact is that we are looking to mobilize some $4 billion of investment.


The preliminary results already reported to me by Prime Minister Blair and by the folks working with him are stunning: These experts believe that we can increase the Palestinian GDP by as much as 50 percent over three years. Their most optimistic estimates foresee enough new jobs to cut unemployment by nearly two-thirds – to 8 percent, down from 21 percent today – and to increase the median annual wage along with it, by as much as 40 percent.

These experts hope that with their plan in full force, agriculture can either double or triple. Tourism can triple. Home construction can produce up to 100,000 jobs over the next three years, and many of them would be energy efficient.

Ultimately, as the investment climate in the West Bank and Gaza improves, so will the potential for a financial self-sufficient Palestinian Authority that will not have to rely as much on foreign aid. So just think, my friends – we are talking about a place with just over 4 million people in a small geographic area. When you’re talking about $4 billion or more and this kind of economic effort, you are talking about something that is absolutely achievable.

Aside from all the obvious problems with this plan — such as the stranglehold Israel has on Palestine’s “borders” and the prior expropriation of good farmland, aside from the fact that Israel and its booming economy gets something like four times more aid per capita as the Palestinians (though Israel’s aid gets recycled back into war toys), aside from the fact that investment in Palestinian territories isn’t going to make Bibi Netanyahu any more willing to negotiate in good faith, there’s the underlying assumption that throwing a bunch of “investment” money (Stephen Walt calls it a bribe) and “modernizing” an economy will fix things. Granted, increasing employment in the territories is an improvement over what exists today, but is a Tony Blair style economy really going to help?

Tellingly, in the same speech, Kerry provided this explanation for the Arab Spring.

As we all remember, it was the lack of that kind of basic respect that ignited the Arab Awakening. It started with a single protest – a street vendor who deserved the right to be able to sell his goods without police interruption and corruption. And then it spread to Cairo, where young Egyptians used their cell phones and tweeted and texted and Googled and called and summoned people to the cause. And they used the social media to organize and demand more jobs, more opportunity, and the liberty to embrace and direct their own destiny. In doing so, these individuals and these individual acts embraced values that are so powerful that they, against all probability, removed dictators who had served for years. And they did it in a matter of days.

Now, of course, there are sectarian and religious and ideological motivations to many of today’s clashes that have followed those events, but those events weren’t inspired by religious extremism or ideological extremism. They were driven by motivation for opportunity and a future.

It acknowledges that underlying the Arab Spring were real economic issues, but it doesn’t talk about the way neoliberal policies exacerbated those economic issues. Indeed, Kerry went from warning against missing the lesson of the Arab Spring to embracing public-private partnerships.

So we ignore the lessons of the Arab Awakening at our own peril. And with an important part of the world upside down, it is imperative that all of us channel our creativity and our energy into making sure that people actually do have better choices.

The public and private sectors alike – and this is where you all come into this. The public and private sectors alike have a fundamental responsibility to meet the demands of this moment.

We tried this kind of public-private investment in both Iraq and Afghanistan. It doesn’t appear to have worked all that well in either place.

If Obama’s really looking for bold new ideas to foster stability, maybe he should consider first of all whether neoliberalism is less a part of the solution and more one of the underlying problems.

16 replies
  1. P J Evans says:

    The politicians pushing ‘modernized economies’ will never have to live with the consequences.

    BTW, and not really OT, they’re starting to push Summers to replace Bernanke. I doubt that he would be an improvement.

  2. Phil Perspective says:

    If Obama’s really looking for bold new ideas to foster stability, maybe he should consider first of all whether neoliberalism is less a part of the solution and more one of the underlying problems.

    Not when Bob Rubin still runs the Democratic Party!!!

  3. sOlbus says:

    Neoliberslism, for the comp-lit in you, re this, that, so this: (and with much affection)

    Bomb Crater Sky

    They say that you, a road builder
    Had such love for our country
    You rushed out and waved your torch
    To call the bombs down on yourself
    And save the road for the troops

    As my unit passed on that worn road
    The bomb crater reminded us of your story
    Your grave is radiant with bright-colored stones
    Piled high with love for you, a young girl

    As I looked in the bomb crater where you died
    The rain water became a patch of sky
    Our country is kind
    Water from the sky washes pain away

    Now you lie down deep in the earth
    As the sky lay down in that earthen crater
    At night your soul sheds light
    Like the dazzling stars
    Did your soft white skin
    Become a bank of white clouds?

    By day I pass under a sun-flooded sky
    And it is your sky
    And that anxious, wakeful disc
    Is it the sun, or is it your heart
    Lighting my way
    As I walk down the long road?

    The name of the road is your name
    Your death is a young girl’s patch of blue sky
    My soul is lit by your life

    And my friends, who never saw you
    Each has a different image of your face

    –Lam Thi My Da

  4. john francis lee says:

    A note from an alien demonstrating his conscientious self-reduction to subhuman, and his pride in his achievement.

    DATE: December 12, 1991
    TO: Distribution
    FR: Lawrence H. Summers
    Subject: GEP

    ‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:

    1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

    2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

    3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate[sic] cancer is obviously going to be much higher in a country where people survive to get prostrate[sic] cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

    The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

    —Lawrence Summers

    If our drones don’t get you our sewing machines will. And that’ll cut down on terrorism. (Obamaspeak … That will increase terrorism and that’s our goal. We war profiteers need an enemy to drone against and jobs for the white bus crowd who’ll build the drones and keep the lid on and ‘monitor’ communications).

  5. 4jkb4ia says:

    Just from the NYT reporting I think what Kerry and Blair are doing is lending support to Israeli and Palestinian businesspeople talking to each other because they cannot really get Bibi and Abu Mazen to talk to each other. They may hope that these businesspeople can be a control on what the PA is doing to replace Fayyad.

    The private-public partnerships in Iraq and Afghanistan (or any contribution we made to the economy of either country) were centered on the military-security industry. In the PA that isn’t going to happen and the list of things Kerry was talking about have no obvious military use. (I’m glad I stayed away long enough not to engage in my “Defense contractors are people, my friends” rant.) If you can encourage any private business at all you may be able to take people off the PA payroll and keep the PA solvent.

  6. 4jkb4ia says:

    Being a terrorist gives people a sense of mission. If you have a sense of dignity and identity from having a good job you may not turn to terrorism, but the reason that people become the kind of fanatic that will kill their fellow Muslims can’t be reduced to anything materialistic.

  7. orionATL says:

    “…We are actively working to promote peace between Israelis and Palestinians — because it is right and because such a peace could help reshape attitudes in the region.  And we must help countries modernize economies, upgrade education, and encourage entrepreneurship — because American leadership has always been elevated by our ability to connect with people’s hopes, and not simply their fears…”

    though he’sa good human being in my opinion,

    i don’t think many people understand what an unimaginative, cautious, conventional, uncourageous thinker pur president is BY NATURE.

    a year pr so ago, yves smith commented at “naked capitalism” about a conversation she had had with an obama harvard law school fellow student.

    the schoolmate related that, in his experience, obama had a pronounced tendency to comment, when asked to his opinion on an issue, to comment along the lines of “water is wet” (see december xxxx).

    this hearsay observation coincides with my own observations of the president’s rhetoric – in painting and drawing terms, the president smears every clear line._

    that style of public rhetoric has resulted in a president who is well-liked but who has changed almost nothing in his 4+ years in power.

    but we hear

    from time-to-time

    echoes of lear:

    “i will do such wonderful things..,”

    when, barry, when?

    and, more importantly, with what if any determination and intensity, barry?

  8. 4jkb4ia says:

    In private talks, Haaretz has learned, Abbas and his negotiating team complained that Kerry had not presented any formula that could satisfy them. Instead, they said, most of Kerry’s proposals focused on “economic peace” and the large potential for investment in areas under control of the Palestinian Authority.

    OK, that’s another source. This is what I wrote if you assume that Kerry is no dummy and knows that economic peace is not the whole story but part of it.

    (I have taken for granted as long as I have been blogging that the NYT is not the last word on Israel. The NYT doesn’t report on Israel as much as they report on what Markos called “Israel/Palestine FUBAR”. Jodi Rudoren is very refreshing because there is something to the articles beyond “Can’t they all just get along?”)

  9. Jay says:

    I notice that Obama talked about “mobilizing” USD 4bn. This is a term of art in public finance, meaning that (in this case) TB’s friends will put in a certain amount of money on concessionary terms that they expect will act as seed capital to encourage others to invest on commercial terms (as loans or equity). The 4bn is the total amount of all the money expected to eventually be invested by all parties, if all goes according to plan. So the amount put in by TB’s friends will be much smaller.

  10. GKJames says:

    It’s a joke, and a cruel one. Obama buried the two-state solution with his 2011 UN speech, in which he smacked down Palestinian aspirations by telling them that they were on their own in negotiating with Israel, risibly suggesting that the parties have equal bargaining power. He said nothing about Israel’s impossible-to-meet preconditions, or its unambiguous, publicly stated position: “The Government of Israel flatly rejects the establishment of a Palestinian Arab state west of the Jordan river.”

    The chatter about the $4 billion is part of Obama’s kicking the can down the road long enough — a mere 24 months, according to Kerry — for the Greater Israel project to become a fait accompli. We’ll get stirring rhetoric in the interim, but as we’ve come to know, with this president that’s all there is.

  11. tjallen says:

    Just more targets for Israel to bomb. We did this before and what happened? The Israelis blew it back to the stone age. History!

  12. sOLbus says:

    Oh, don’t take the grave and death imagery wrong – as I saw it as describing marginalization, poverty, otherization. The author doesn’t seem to translate too well, there’s a lot of interpretations. But neoliberalization tends to claim a lot of built roads, eh? Speaks to the idea of 4 billion as a free market solution in a place of zilch natural resouces, stolen water, eh?
    Those beautiful kids…

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