Truth in Media Global Watch Bulletins

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TiM GW Bulletin 2002/3-1

Mar. 8, 2002

Analysis of U.N. Report 2001 on Global Investments  

China: Real Cold War Winner

Russia Is Still a Bogey Even If Eastern Europe Is Fastest Growing Region



Phoenix                            1. China: Real Cold War Winner 

Analysis of U.N. Report 2001 on Global Investments

China: Real Cold War Winner

Russia Is Still a Bogey Even If Eastern Europe Is Fastest Growing Region

PHOENIX, Mar. 8 - Who won the Cold War?  “We did, of course,” most Americans would probably respond, uncritically repeating the mantra served up originally by George H. Bush, who claimed credit for it back in the heady days of crumbling Berlin walls, and “velvet” and real revolutions against the Evil (Soviet) Empire.

“We did?”, some more sober-minded Americans might wonder.  If we really won, how come we are still fighting ‘perpetual wars for perpetual commerce’ 13 years later?  How come we are importing record numbers of immigrants at a time of a supposed recession and terrorist threats by legal or illegal immigrants?  How come we are exporting American jobs instead of goods and services? (over six million manufacturing jobs in 2001 alone).  How come we are now running the world’s biggest trade deficits ($427 billion in 2001), especially with China?

In other words, if we really won the Cold War, how come all U.S. presidents and leaders of both major political parties, have been playing on the Red China team since our “victory” in 1989? (China is where most of our jobs and investments have gone).

“American presidents and politicians playing for Red China?  Preposterous!”, most (dumbed-down) Americans would probably also say.  As for the rest of us who may be less indoctrinated, all we need to do is “watch their steps, not their lips.”  Or more specifically, “follow the money!”

Well, “follow the money” is what we do.  Sort of… (not like gumshoes in dark alleys, of course, but with computer spreadsheets).  And we do it at least once a year on a global scale, by analyzing investments of top multinational companies, based on the basic data provided by UNCTAD (the Geneva-based United Nations Conference on Trade and Development). 

As we “followed the money” this year, it became crystal clear that Red China is the real Cold War winner.  This still staunchly communist country reaped most of the benefits from international “free trade” advocated by the “capitalist” globalist ideologues.  Since 1990, China has received nearly half a trillion dollars in private foreign investments ($325 billion directly and $136 billion through Hong Kong).Text Box:

That’s more money than any other country in the world had received, except for the U.S.   That’s one-third of all investments made in all developing countries in the world in the 1990-2000 period.  That’s about the same amount as an entire continent right next door to us got (Latin America).  That’s more than three times the aggregate investments that the world’s fastest growing region has received (Eastern Europe).

And the trend toward a global “China Mart” is accelerating…

In 2000, the latest year for which the UNCTAD statistics are available, China’s share of multinationals’ investments into developing world increased to 44%! (see the chart).  The U.S. trade deficit with China surged from $6 billion in 1989, to nearly $84 billion in 2000.  The U.S.-China trade rose from $17.8 billion in 1989, to $116.4 billion in 2000 (see China-U.S. Trade Issues, a Congressional Research Service report).

Far from having been defeated, therefore, communism has simply morphed into “state capitalism.” 

Red Presidents, Red Congress

But Red China could not have done it without generous help from plutocratic western governments, and the world’s top multinational bankers and companies.  The latter fund and run our “Red Presidents” and our “Red Congress” (with some honorable exceptions, of course).

Why is Red China so attractive to big multinationals?  Because of cheap labor and a more stable political system than that of the western “democracies.”  Or of the Latin American and other “banana republics.”

And because China’s communist leaders “stay bought”[1].  They can be trusted not to change their course suddenly, as various international crises have proven over the years (e.g., Tiananmen Square, Chinese Embassy bombing, U.S. spy airplane crash, President Jiang’s Boeing jet bugging, etc.).  All of them, including the June 4, 1989 massacre of thousands of Beijing pro-democracy demonstrators, will be remembered as history’s “tempests in a tea pot.”

Bush (the Dad), for example, hushed up the Tiananmen Square massacre so that Big Business could “reward” the Beijing butchers with more than $100 million of foreign investments per head of each killed Chinese pro-democracy victim (see “Two Faces of Globalism”, Dec. 1998).

Bush (the Son) cheered China’s recent entry into the World Trade Organization, as did his Dad and most of Congress (see “Who Lost China?”, Aug. 1999). 

Between these two Red Bush Leaguers, another Red President and Vice President incessantly lobbied for Red China’s “free trade” during their two terms in office.  Bill Clinton and Al Gore did it despite Beijing’s restrictive trade practices (see “China Wing of the New World Order”, Jan. 1998).  Plus, they accorded the communist military leaders a red carpet treatment, by having the Harvard Reds train the Chinese Reds on how to fight a war against America (see “Harvard Reds Train Chinese Reds,” Aug. 24, 2000).Text Box:

Of course, Clinton and Gore were vigorously assisted by the Republican “opposition” leaders.  Bob Dole, Newt Gingrich, John McCain and others, all took turns at the helm when Clinton and Al Gore steered our Ship of State straight into China Straits (see "China Kicks U.N. Butt Out of Macedonia", Feb. 27, 1999, and "Foreign Policy Made in Beijing: Chinese Dragon Wagging Macedonian Tail", this writer’s Washington Times column, Mar. 21, 1999). 

Aiding Potential Enemies

And what did we get for having western companies pour nearly half a trillion dollars into a virtually closed China market?  Potential future mega-headaches.  Check out, for example, the following excerpt from the Mar. 7 New York Times story, “China Is Increasing Its Military Spending by 17.6 Percent”:

“BEIJING, March 6 — China is increasing military spending this year by 17.6 percent, or $3 billion, bringing the publicly reported total to $20 billion, the finance minister announced today…

The jump in spending follows many years of double-digit increases, reflecting China's effort to improve its mostly outdated (but 2.5 million strong armed) forces and to attract better educated men into a military that has suffered from low morale (Annex Ed. Comment in brackets). 

The publicly disclosed figures do not include major spending for weapons research and for the purchase of foreign weapons like two Russian- built destroyers China bought last year. Actual military spending may be three to five times the reported total of $20 billion, according to Western experts.”

So we are aiding and abetting a potential enemy!

Worse, enemies…

Please note that not only is the western capital being used to train, arm and equip a formidable future military adversary; not only does Red China restrict foreign companies from freely expatriating their profits or currency; but Beijing is spending some of our money to buy weapons from - Russia!  Rightly or wrongly, Russia is another potential U.S. opponent, according to Washington’s geopolitical strategists (see "Russia is still the bogey", Oct. 1997).  And it is certainly our competitor in global arms and energy sales (see “Bush League All Stars,” Feb. 2002).

So we are helping fund two potential enemies at once! 

Are we nuts or what?  Has folly now become the norm in Washington and New York?  Who in his right mind could possible devise such an un-American foreign policy? 

Well, un-Americans would.  Such as our Red Presidents and our Red Congress, acting on behalf of their Red Wall Street bosses.  To them, “China Mart communism” or “Wal Mart capitalism” are equally attractive and freely interchangeable.  That’s the kind of “free trade” they are really after.

Once the western taxpayers realize that, suddenly, the loony-looking game of geopolitical dominoes will start to make sense. 

It goes like this… You scratch our back, we scratch yours.  We manufacture a little crisis here, a little crisis there (see “Washington’s Crisis Factory,” Jan. 1999).  You kill a few of your own, we protest.  We kill a few of our own, you protest.  “Just for the symmetry of it,” as the Dustin Hoffman character puts it in the prescient “Wag the Dog” film. 

Of course, every once in a while, we also produce a bigger war.  Such as the Gulf War, or Bosnia, or Kosovo, or Afghanistan... to help justify bigger military spending.  And to help the drag-along other commerce that follows wars.

We keep it up for a number of years, and sooner or later, the western public is not only dumbed-down by the government and media war propaganda, the peoples’ senses are also numbed down by the banality of constant violence and war.  The society reaches a state of perpetual war. 

Are we there yet?  Well, what do you think the open-ended, amorphous “war on terrorism” is?  With no end and no clear enemy in sight, it is a license to tax, steal, cheat and kill ad infinitum… the ultimate government nirvana. 

George Orwell described this well in his masterpiece “1984.” This writer has also hinted at such a possibility in his July 2000 piece, “Dubya Dubya Dubya Dot Warmonger Dot Com,” a sub-heading of a report published at a time the dot-coms were still worth something (see “Weep Mankind!” - Jul 26, 2000). 

So “perpetual war for perpetual commerce” is the real post-Cold War globalists’ mantra, as we said over six years ago.  It replaces the benign “world peace through world trade”-motto of the Cold War era (also see this writer’s “Chronicles” column, Aug. 1998).  The western multinationals’ China investment strategy, and our government’s China policy, only serve to confirm it.

Cross-border M&A Drivers

Nor is a surge in foreign investments since the mid-1990s a coincidence.  Or the preference for China and Southeast Asia a spontaneous urge.  Take a look at the chart showing the ratio of Wall Street-driven mergers and acquisitions (M&As) to foreign investments.  In 2000, it stood at 90%.  In 1993, it was only 38%.

During the 1991-2000 period, global foreign investments had grown at a compound annual rate of 25%.  Cross border M&As grew at 22%.  But since 1994, the trends have been reversed.  Cross-border M&As have been growing at 45% per year, while total direct investments (of which M&As are a part) increased at 29% per year. Text Box:

So it’s clear that the Wall Street dog is wagging the multinationals’ tail, causing a surge in M&As as a result. 

That’s not surprising, especially as it may be self-serving.  For, investment bankers usually get their fees upfront.  Whether or not the merged companies are an ultimate success doesn’t become obvious until much later.  Often they end up as failures, as last year’s UNCTAD report also noted (see “Robber Baron Era Is Back” , Jan. 2001).  But by that stage, the bankers will have ridden off into the sunset, looking for another pray to hunt and skin. 

The Compaq-HP shareholders may also want to heed this M&A angle (see “Two Losers Don’t Make a Winner,” Sep. 2001), even if this mega-merger isn’t likely to show up on our global M&A charts, since it’s not a cross-border deal.

Regional Analysis

U.S. and E.U. Based on the foregoing, one would assume that the U.S., the home of the House of Greed (Wall Street Casino), and the host to the world’s most powerful economy, as we are repeatedly reminded by Washington, would be leading the world in foreign investments.  Right?  Wrong!

As a recipient of foreign investments, the U.S. accounts for only half of the money the European Union (E.U.), for example, received ($1.2 trillion vs. $2.4 trillion - see the chart).  The U.S. direct investment inflows are roughly equal to those in Southeast Asia (which includes China, of course).  China’s foreign investment stock alone is about two-thirds that of the U.S., even though its GDP is 10 times smaller ($3,600 per capita in 2000, versus $36,200 per capita in the U.S. - see the CIA World Factbook).Text Box:

So is the U.S. then, as the world’s money center, a dominant player when it comes to foreign investment outflows?  Logic would suggest “yes.”  Facts say “no.”

In 2000, for example, the E.U. exported nearly six times more capital into foreign markets than did the U.S. ($773 billion vs. $139 billion). 

Even some individual E.U. countries outperformed the U.S. multinationals in this respect.  The U.K., for example, whose economy is seven times smaller, provided nearly double the foreign investment capital as did the U.S. in 2000 ($250 billion vs. $139 billion).  Even France, with $172 billion of foreign investment outflows the same year, was bigger than the U.S.  And the tiny Belgium and Luxembourg forked out over $200 billion in the last two years, nearly three-quarters of the U.S. foreign investment outflows during the same period.

In short, when it comes to foreign investments, the American multinationals’ bark is worse than their bite.

No wonder foreigners tend to regard the U.S. with a mixture of disdain and mockery.  Especially when it comes to Washington’s trying to champion the cause of “free trade” around the world while practicing protectionism.  The new tariffs on steel imports imposed this week are the latest case in point.  Here’s an excerpt from a Mar. 5 CBS Market Watch report:

“(President) Bush, acting on the recommendations of the International Trade Commission, an independent federal agency, said imports of 12 types of steel have harmed the U.S. industry. Depending on the type of steel, the United States will add tariffs of 8 to 30 percent, raising prices for end consumers.”  

So “do as I say, not as I do,” seems to be an apt description of the self-declared leader of the “free world.”  “Watch my lips, not my tips,” is another good advice for watchers of the “Bush League” clan (Bush, father and son, with no Holy Ghost in sight J ).

Eastern Europe. China may have received the greatest amount of foreign investments since 1990 among all developing countries, but it isn’t the world leader when it comes to growth.  That honor goes to Eastern Europe, as we predicted in our 1996 special report (see “Renaissance II,” June 1996).Text Box:

Foreign investments into Eastern Europe, mostly from the E.U. countries, have grown at a compound annual rate of 56% in the 1990-2000 period.  Hong Kong and Israel came in second and third respectively, with 44% and 42% annual increases.  Brazil was forth with 38% (see the chart).

But the investments aren’t evenly spread across Eastern Europe.  Once again, politics plays a role in multinational business. Some of Europe’s developing countries are being treated as more equal than others.  The new NATO members, Poland, Czech Republic and Hungary, for example, continue to receive most of the money from the West.  Russia, on the other hand, continues to be treated as a bogey.

In 2000, for example, Poland alone received nearly four times more foreign investments even though its economy is nearly four times smaller than Russia’s ($10 billion of foreign investments vs. Russia’s $2.7 billion). 

Israel Tops Foreign Investments per Capita

That Russia still continues to be treated as a bogey by multinational companies is also evident from the chart that compares the world’s biggest country with a variety of other states on an investment per capita basis. 

As you can see, the tiny Israel and Hungary have received 20 and 14 times more money respectively since the end of the Cold War.  Mexico and Brazil have attracted seven and six times more money respectively.  China, the world’s most populous country, received twice as much money per capita as did Russia.  Only India, Russia’s nuclear client, received fewer “per capita” investments from multinational companies.

So much for the self-proclaimed Cold War victor putting its money where its mouth is!

In some respects, however, that’s not a bad thing.  “He who pays the piper calls the tune,” goes an old saw.  The less foreign ownership, the more sovereignty a country retains.

When one looks at Eastern Europe from that point of view (based on what UNCTAD calls the “transnationality index,” an average of four foreign investment criteria), you can see how the countries stack up, from the highest to the lowest in terms of foreign control, in the above table).  We’ve highlighted three countries. 

First, Russia, the region’s biggest country, is barely scratched by foreign investors, ranking No. 13 with a “transnationality index” of only 5% (also see "Russia is still the bogey", Oct. 1997). 

Second, Yugoslavia (now comprising only of Serbia and Montenegro), an economy that has been devastated by wars and under the U.N. sanctions for most of the 1990s (1992-2001), is ranked just under Russia at the No. 14 spot.

Third, Bosnia, another former Yugoslav republic that has been promised massive reconstruction aid after the 1995 Dayton peace agreement, is dead last among all Eastern European countries, with a “transnationality index” of only about 1%. 

The message is clear.  Why waste the money on a country that we have already militarily occupied?  (The Dayton agreement also brought on a NATO occupation of Bosnia, so multinational companies don’t need to colonize it further with additional dollars). 

Speaking of colonization by dollars rather than bombs or bayonets, the average foreign ownership (“transnationality index”) in Eastern Europe is about 10%, as compared to about 15% in developed countries.  In the U.S., for example, the index is about 7%.  That’s about the same as that for Slovakia, which ranks only as No. 12 among the Eastern European countries.  The average “transnationality index” for all developing countries is around 17%.

But averages can be deceiving… (remember that unfortunate statistician who drowned while trying to cross a lake with an average depth of three feet? J ).  Hong Kong’s “transnationality index,” for example, is 54%.  Malaysia’s, Singapore’s and Indonesia’s are 44%, 42% and 30% respectively.  Mainland China’s is about 13%.

Meanwhile, back to Yugoslavia, for a moment, the latest UNCTAD report also illustrates how politicized the U.N. reporting can be.  Suddenly we discover in the latest (2001) edition that even while under the sanctions, Yugoslavia has been apparently receiving foreign investments.  In 1997, for example, they amounted to $740 million, more than the amount Croatia ($540 million) or Slovenia ($321 million) got, even though both latter countries have been obedient western minions!? 

Yet in the 2000 edition of the same U.N. report, the UNCTAD simply didn’t mention Yugoslavia at all.  But in its 1999 issue, the 1997 investments into Yugoslavia were reported as $17 million, only a fraction of the actual.  So much for the integrity and reliability of some of some of the UNCTAD statistics.

Latin America.  Remember all the hoopla about NAFTA (North American Free Trade Agreement) back in 1993?  Remember the highly publicized and highly charge Ross Perot-Al Gore debate on the subject?  (see “NAFTA or Bust.” Annex Bulletin 93-53, Nov. 1993).  Well, it was all “much ado about nothing,” as it turns out.

Yes, Perot’s “great sucking sound” of the American jobs heading south of the border did take place.  But Mexico was only a transit point in the last two years.  Brazil and Argentina got $65 billion and $35 billion of foreign investments respectively in 1999 and 2000, for example, versus Mexico’s $25 billion. 

Between 1990 and 2000, the three largest Latin American economies received $136 billion (Brazil), $97 billion (Mexico) and $75 billion (Argentina).

Of course, some unfortunate investors in Argentina are now licking their wounds, as this Latin American country becomes the latest poster child for globalism gone awry.  No surprise there, as we warned about it over four years ago (see “Don’t Cry for Me, Argentina,” Feb. 1998). 

There is one large multinational company, however, that may have escaped the Argentina massacre by having been accused of bribery well before all hell broke loose in Buenos Aires.  Yes, IBM can consider itself lucky to have had some allegedly corrupt executives on its payroll (see “Big Blue No Longer Lilly White,” July 1998).  For, the carnage in the last several months could have been far worse than the damage to its image that the company suffered as a result of that embarrassment, back in 1998.

Top 100 Multinationals: Pace of Globalization Accelerating

The pace of globalization is accelerating, the latest (1999) results of the world’s top 100 multinationals show.  Foreign assets held by the world’s top 100 companies increased by 10% in 1999, to $2.1 trillion. Text Box:

But foreign sales have not kept pace with the confidence that the top 100 companies seem to have in international business. Their foreign sales declined by 3% to $2.1 trillion, while the total global sales edged up by only 2% to $4.3 trillion.

But the top 10 among the largest 100 multinationals did better than the top 100 in the aggregate.  Foreign assets owned by the top 10 surged by 18% to $684 billion, the same percentage increase as that of their total assets.  The top 10 companies’ foreign sales, however, rose by only 5% to $620 billion, while their total global sales jumped by 12% to $1.2 trillion, 28% of the top 100 worldwide sales.


Many businessmen and most of the western public, may not be even aware of the magnitude of multinational companies’ investments in Red China.  Correspondingly, most may not be cognizant of the extent of our governments’ betrayal of the taxpayers’ interests.  All most ordinary citizens see is that our stores are becoming “China Marts” - flooded with “made in China” goods.

But even common folk with certain amount common sense have a chance to ask “why?”  And “how?”

We’ve already answered the “why” question in the “Red Presidents…” section of this report.  As to “how,” common sense would suggest that for Red China to be transformed from a communist pariah state to the “world’s factory,” and to receive nearly half a trillion dollars of foreign investments, hundreds, if not thousands, of very smart and powerful people who run multinational companies and western governments would have had to arrive at the same conclusion: “The Reds and the Feds… are our friends.” 

And they had to act upon it together, as sort of a team, not unilaterally.  Just as they stayed out of China and Soviet Union prior to 1989, they went into China together in the 1990s.  But not into Russia, or into other democratic successor-states to the USSR (see "Two Faces of Globalism; Yin and Yang; Princes and Paupers", Dec. 1998).

For Russia to continue to be treated by foreign multinational companies as some sort of a pariah state, despite ample evidence that this country’s society is now probably freer and more democratic than those in most of the so-called “free world,” also required globalist “teamwork.”

Ditto re. Israel, a tiny country with no natural resources, smack in the middle of a troubled, war-torn region.  Which ‘sane” investor would have put 20 times more dollars per capita into such a country than into Russia?  Or any dollars at all.  Like Afghanistan, another war-torn country that received no discernible foreign investments in the 1990s, according to UNCTAD. 

After all, “capital is a coward,” we’ve been taught by political economists.  Money seeks safe havens.  Neither Israel, nor Afghanistan, nor communist China could be construed as “safe.”  Certainly no safer than Russia, for example (also see "A Cleaner, Neater World? Hardly. Deadlier, for Sure", Jan. 2000).

But some investments are evidently more “politically correct” than others, at least according to the globalist high priests who define “political correctness” at various multinational business forums.

Just like justice is no longer blind in the morally and materially corrupted, money-driven, atheist, globalist society, neither are the investments made in a political vacuum.  Top multinational companies’ investment strategies have shown that most have a 20/20 globalist vision when it comes to “political correctness.”  The shareholders be damned. 

Sound familiar?  “The public be damned,” railed the 19th century American railroad tycoon, Cornelius Vanderbilt, students of history might recall (see “Robber Baron Era Is Back”, Jan. 2001). 

So after all the “progress” that the 20th century was supposed to have brought mankind, we’ve ended up right where we started - back in the 19th century. 

An exaggeration?  Okay.  Don’t take our word for it.  Writes Paul Craig Roberts, a “free trader” and co-architect of the Reagan tax cuts: "It comes as something of a shock to discover that the United States ... has the export profile of a 19th-century Third World colony."  We export resources; import finished goods.

Former presidential candidate, Pat Buchanan, also railed in his latest column:

“Between 1990 and 2000, the U.S. merchandise trade deficit with all the WTO nations, including the E.U., grew 300 percent. Our merchandise trade deficit with China grew 700 percent. Our merchandise trade deficit with Mexico exploded by 1,900 percent. Those who cut and sold these deals will one day have to answer before the bar of history for what they did to America.”

The sooner the better… perhaps starting with our “Red Presidents?”


[1]  Someone once said that “the only honest politician is one who stays bought” (meaning who doesn’t switch horses and sponsors midstream).

For some past TiM reports on global investments, check out...

 “Robber Baron Era Is Back”, Jan. 2001

"A Cleaner, Neater World? Hardly. Deadlier, for Sure", Jan. 2000

“Two Faces of Globalism”, Dec. 1998

"Russia is still the bogey", Oct. 1997

“Eastern Europe: Renaissance II,” June 1996


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