JUNE 2007

WHY IRELAND SHOULD WAKE UP RE. OUR POST OFFICE CLOSURES AND PRESENT GOVERNMENT INFLUENCE ON THE SYSTEM:

ROBERT ZOELLICK,( PUT UP TO REPLACE WOLFOWITZ IN THE WORLD BANK) AND THE PRIVATIZATION OF POSTAL SERVICES

RE. PENSION SAVINGS, IF EXPECTED IN POST OFFICE SAVING SYSTEM, WILL POSSIBLY BE PLACED IN INSECURE GLOBAL CAPITAL INVESTMENTS

The Japanese Postal System - Public-sector linchpin

September 2005

Washington has been pressing for privatization of the postal service—above all, its $3.3 trillion Postal Savings System—for years. Japan Post is a unique institution. It handles not only the management of 25,000 local branches—the central social institution in many rural and island communities—and nation-wide postal delivery, but also the country’s major savings and life-insurance systems. In this latter capacity, it now sits atop the world’s largest pool of funds: over $2 trillion in savings accounts and over $1 trillion in insurance policies, representing around a third of the Japanese life-insurance market. Its assets are over twice the size of Citigroup’s.

Despite the Big Bang deregulation of Japanese financial markets in 1998, people have preferred to entrust their money to the security of the Postal Savings System, even with interest rates under 1 per cent, rather than expose it to the risks of casino capitalism. These funds have long been allocated for national-development purposes under the system known as the ‘construction state’ or doken kokka, built up in the 1970s under the long official and unofficial reign of Tanaka Kakuei. [1] This form of bureaucratic developmentalism proved, in some respects, a Japanese variant of the Keynesian state, channelling the population’s savings and insurance funds into a wide range of semi-public bodies for the construction of highways, airports, bridges and dams under an over-arching national plan. It combined an element of social and geographical redistribution through the archipelago with plentiful opportunities for power-broking and corruption under the aegis of the ldp.

In its Cold War heyday, the doken kokka provided Japan’s population with lifetime employment, universal education and health provision, corporate welfare and the company-loyalty system. Most people felt they were middle class in those years. Yet the construction state was predicated on growth. By the late 1980s, as over-capacity continued to build in the world economy and growth slowed, its debts began to accumulate. Through the long stagnation of the post-bubble 1990s, the doken kokka became increasingly discredited for its wasteful public works, corruption and special interests.

AMERICAN PRESSURE FOR PSS PRIVATIZATION has been stepped up ever since the 1989 bilateral trade negotiations, known in the US as the Structural Impediment Initiative—the title softened by the Japanese Foreign Ministry to kozo kyogi, ‘structural negotiations’, to avoid the implication of peremptory US intervention in Japan’s internal affairs. The process was described by one senior official as 'TANTAMOUNT TO A SECOND OCCUPATION'[2] As Post and Telecommunications Minister, Koizumi had been closely involved in the 1993 Clinton–Miyazawa round of negotiations over the ‘opening up’ of Japan’s economy. Washington’s view that public-sector control over Japan’s Post Savings System constituted an ‘impediment’ to be dismantled coincided with Koizumi’s personal interests in attacking party and factional enemies; his first political godfather had been Fukuda Takeo, Tanaka’s bitter rival in the 1970s. Elected prime minister in 2001, Koizumi rapidly reopened negotiations with Washington over ‘telecommunications, information technology, energy, medical devices and pharmaceuticals, financial services, competition policy, transparency, legal reform, commercial law revision, and distribution’; in short, pretty well everything. [3] Japan’s institutions were to be adjusted to American requirements.

The office of the US Trade Representative has played an active part in drafting the Japan Post privatization law. An October 2004 letter from Robert Zoellick to Japan’s Finance Minister Takenaka Heizo, tabled in the Diet on 2 August 2005, included a handwritten note from Zoellick commending Takenaka for the splendid job he was doing. Challenged to explain this apparent us government intervention in a sensitive domestic matter, Koizumi merely expressed his satisfaction that Takenaka had been befriended by such an important figure. When Bush raised the Postal Savings System with him in New York in September 2004, Koizumi is said to have replied: ‘Shikkari yatte ikitai—I will do my utmost’. It was tantamount to an absolute commitment, and the President duly expressed his satisfaction.

It is hard to overestimate the scale of the opportunity offered to US and global finance capital by the privatization of the Postal Savings System. Its aim, as the Japan External Trade Organization puts it, is

to develop a banking and business culture that can efficiently allocate capital according to market mechanisms and the basic tenets of modern credit analysis . . . It marks a definitive shift from an approach that relied upon allocated government funding to an autonomous and flexible system based on market principles. [4]

Privatization would lead to the development of ‘more sophisticated and efficient financial and capital markets’, as Japanese savings were directed into the private sector. As a result, jetro hopes that households will become ‘far more receptive to a wider range of investment instruments’. At that point, ‘Huge amounts of pent-up household capital would be moved into private financial markets’. In the us, about 50 per cent of the population are share-owners, and 36 per cent trade them; the respective figures for Japan’s 127-million-strong population are 10 and 3 per cent. ‘It’s a big space for us to grow into’, as one broker puts it.

The pss has long been the main—undemanding—customer for Japanese Government Bonds. Privatization would break this link, and the private and overseas investors who would henceforth be the main bond purchasers would have the virtue, jetro suggests, of subjecting state expenditure to more rigorous disciplines. Foreign investors:

are less likely to be forgiving about chronic budget deficits. They will also need to perceive a risk–reward ratio that effectively balances the ability of jgbs to provide stability, liquidity, diversification and Yen exposure with the interest rate offered. This transition will be difficult and the resulting upward pressure on interest rates does hold the potential to slow down economic recovery in Japan.

The implication, then, is a prolongation of high unemployment levels and a further deterioration of the social fabric, while rising interest rates compound the crisis of Japan’s fiscal deficit. By way of reassurance, jetro cites a study by Christian Broda of the New York Federal Reserve and David Weinstein of Columbia University which argues that, given the 2017 deadline, Japan’s government officials ‘have ample time and latitude to meet their obligations via higher taxes or reduced benefits and services’. [5]

None of these issues were publicly argued during the election campaign. Nor was there any serious scrutiny of the implications of Japan Post privatization for the future of postal delivery and local branches, especially those in remote regions which often serve as a focus for social services. Under the proposed legislation, once the functions are separated into four discrete companies in 2007, employees will lose their civil-servant status and branches will have to operate according to market principles. The role of the Postal Savings System in providing back-up for the innumerable family shops and small businesses that still form the backbone of a distinctively Japanese daily life was also ignored; they are likely to be obliterated once local savings are invested according to the dictates of global capital.

FREE TRADE IN AFRICA AND USA INFLUYENCE IN SUDAN - WHO IS ROBERT ZOELLICK?

US President George W Bush has chosen Robert Zoellick, former deputy secretary of state, to be president of the World Bank, US officials say. Mr Zoellick would replace Paul Wolfowitz, who resigned amid a scandal over his role in winning a new pay and promotion package for his girlfriend. Mr Wolfowitz will leave the post at the end of June. Mr Bush will name Mr Zoellick on Wednesday, and expects the Bank's board to accept him, an aide told Reuters. BBC WORLD NEWS



VIEWS ON ZOELLICK FROM WIKIPEDIA:

Tom Barry, the policy director of the International Relations Center, has written that Zoellick "regards free trade philosophy and free trade agreements as instruments of U.S. national interests. When the principles of free trade affect U.S. short-term interests or even the interests of political constituencies, Zoellick is more a mercantilist and unilateralist than free trader or multilateralist."^[17]

Gavan McCormack has written that Zoellick used his perch as U.S. trade representative to advocate for Wall Street's policy goals abroad, as during a 2004 intervention in a key privatization issue in Japanese Prime Minister's Junichiro Koizumi's re-election campaign. Writes McCormack, "The office of the U.S. Trade Representative has played an active part in drafting the Japan Post privatization law. An October 2004 letter from Robert Zoellick to Japan’s Finance Minister Takenaka Heizo, tabled in the Diet on August 2, 2005, included a handwritten note from Zoellick commending Takenaka. Challenged to explain this apparent U.S. government intervention in a domestic matter, Koizumi merely expressed his satisfaction that Takenaka had been befriended by such an important figure… It is hard to overestimate the scale of the opportunity offered to U.S. and global finance capital by the privatization of the Postal Savings System."^[18]

In a January 2000 Foreign Affairs essay entitled "Campaign 2000: A Republican Foreign Policy," he was one of the first of those now associated with Bush's foreign policy to invoke the notion of "evil," writing: "[T]here is still evil in the world — people who hate America and the ideas for which it stands. Today, we face enemies who are hard at work to develop nuclear, biological, and chemical weapons, along with the missiles to deliver them. The United States must remain vigilant and have the strength to defeat its enemies. People driven by enmity or by a need to dominate will not respond to reason or goodwill. They will manipulate civilized rules for uncivilized ends." The same essay praises the "idealism" of Theodore Roosevelt and Woodrow Wilson. Two years earlier, Zoellick was one of the signatories (who also included Donald Rumsfeld, Paul Wolfowitz, Richard Perle, Elliott Abrams, Zalmay Khalilzad, John R. Bolton, Richard Armitage, and Bill Kristol) of a January 26, 1998 letter to President Bill Clinton drafted by the Project for the New American Century calling for "removing Saddam [Hussein]'s regime from power."^[19]

Since taking the position of Deputy Secretary of State, Zoellick has visited Sudan four times. He supported expanding a United Nations force in the Darfur region to replace African Union soldiers. He was involved in negotiating a peace accord between the government of Sudan and the Sudan Liberation Army, signed in Abuja, Nigeria in May 2006.
WIKIPEDIA.ORG