A Friendly Stab in the Back

29.01.2004

In order to make sure that he is re-elected, Bush has engaged in a policy of economic terrorism against his friends and allies

The mindset of the Bush administration is quite clear: it's America first, even if this means tearing up old agreements, riding roughshod over international law, and even the occasional friendly stab in the back. All this has been quite apparent on the political stage. But in order to cover the weakness of his economic policy, it has also been put into force on the business stage as well.

The latest moves in this economic "first strike" policy has been in the meat industry. After suffering its first case of mad cow disease late last year, many countries had closed their borders to American beef, much in the same way that had been done against both Canada and the EU previously. Yet through tough diplomatic talk, not as many countries banned American beef as in other cases of BSE. This was mostly due to the strong-arm diplomacy attacks of the Bush administration.

The pressure which the US brings to bear could be clearly seen recently with Japan, the world's largest customer for US beef, which banned imports from the US last month after the mad cow case was discovered. Washington has been pressing Japan to drop the ban, arguing their beef products are safe. But the findings of the 11-day Japanese mission to the US advised caution. While acknowledging the safety measures implemented by the US, the team concluded the threat of further infections remained.

Because of the limited success of the diplomatic initiative, the US has decided to go on the offensive by banning meat imports from other countries. In some cases, this has been an easy task, as with Canada. Since Canada already had BSE, and that the mad cow in the US was traced to their northern neighbour, Washington simply extended its ban on Canadian beef, despite promising earlier that it would open its borders to imports in the new year.

In other cases, however, the tricks employed by the US were more of the WMD type: citing a problem that didn't really exist. For example, this week the US announced that it was suspending all meat imports from Hungary. According to the US ambassador to Budapest, the move is not a political one since in the US market there is great "competition".

But this just the problem: competition. The US is afraid of outside competition as it has become clear that it can no longer effectively compete in the global economy in terms of price or quality. Hence, the use of petty tariff blocks in order to safeguard their markets. The Bush administration has done this repeatedly ever since it had seized power: everything from softwood lumber with Canada, steel with the EU, and now meat coming small countries like Hungary.

In this case, the excuse given for banning meat from Hungary was that of hygiene. Two meat exporters from Hungary, who don't even have a license to export to the US in the first place, were seen as responsible for the ban on all Hungarian meat products. Not only this, but the problems they were cited for were minor, and under no circumstances should it have lead to a nation-wide boycott.

On a global scale, the effect of the meat ban against Hungary is small, but for a small country it nevertheless translates to a big problem. Hungarian meat exports to the US total about 1 million dollars per month. The ban directly affects seven exporters from Hungary. According to US officials, the ban could be in place for about a year, ironically just in time to ensure that Bush gets re-elected.

As the US election approaches, we can expect to see more such underhanded moves by the Bush administration in order to avoid a sudden economic downturn. The rise in both the NASDAQ and the Dow Jones, along with the plummeting US currency, should raise eyebrows as to what kind of voodoo economics is being employed behind the scenes. It's a mini bubble of sorts, but as long as it doesn't burst before November 2004, the stage will be set for Bush's re-election campaign. Conservatives are keen to avoid the same mistakes made by his father, and will go at any length to ensure victory this time round.

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