Will Hiroshima deliver the economic interests behind militarism? – IBON Foundation

May 19, 2023

The 49th summit of the Group of 7 (G7) countries (namely, United States, France, United Kingdom, Germany, Italy, Canada and Japan) is taking place on 19-21 May 2023 in Hiroshima, Japan. The declared agenda is Russia’s aggression against Ukraine; nuclear disarmament; climate, energy and environment; economic resilience and security; engagement with international partners; and food, health and development.

These themes however cannot mask the G7’s militarist agenda of forging military alliances and agreements and increasing nuclear capability in order to control global politics and economy. The G7 even has the audacity to hold this summit in Hiroshima, which is historically the first city in the world where the US dropped an atomic bomb in 1945, committed a crime against humanity, and was never sorry for it. Hiroshima since then has become the launching point for global peoples’ peace movements, which the G7 is now insulting with its militaristic campaign.

US warmongering

This year’s G7 summit could not have come at a better time and place for the United States. Japan is hosting, right in Indo-Pacific, the heart of today’s geopolitics. The Indo-Pacific is a mental map that the US devised, which excludes yet encircles China, and Japan plays a junior role in containing China.

The Biden administration has identified China as the real and present danger to US national security. This is what is behind the expedient formation of the US’s quadrilateral dialogue (QUAD) with Japan, India and Australia and the nuclear alliance and deal with the UK and Australia (AUKUS). AUKUS has recently revealed the plan to launch a fleet of nuclear-powered submarines in Australia, but Japan undoubtedly has the crucial role of rolling out strategic armament and military mobilization in the Orient, even if this is against Japan’s “peace constitution”. This is what is to be unveiled in Hiroshima.

The Kishida administration, on the other hand, has been openly declaring its intention to rearm Japan and to strengthen trilateral military cooperation with the US and South Korea. This is even in the guise of resolving and compensating for historical issues with South Korea, such as forced labor and the Japanese army’s systematic rape of ‘comfort women’ during the Second World War. Japan Prime Minister Kishida is also pushing for a warfare system that will make the Ryukyu Island Arc the front line of possible wars, provoking further tension in the Taiwan Strait. Japan hosts the most number of US military bases in the world, and most of these are in Okinawa, which is the largest of the Ryukyu islands.

An unresolved crisis

But underneath US growing militarism are G7’s aggressive economic interests. The G7 countries are seeking to overcome the long-standing global recession that otherwise they are not recognizing. What is not being said is that the crisis of global capitalism has only reasserted itself with more vigor even as economies had reopened after the pandemic. The world economy is facing great financial instability and disrupted supply chains, which are being addressed by further expansion of capital, greater debt, and the reorganization of supply chains through intensified protectionism.

But these conventional solutions only serve to deepen the imperialist crisis as they do not address the root crisis of overproduction. They have only heightened the degree of financialization of the economy, where for instance, the assets of global financial institutions amounting to US$483.7 trillion in 2021 was already equal to 501% of the global gross domestic product (GDP). Global debt reached US$303 trillion, a record high ratio of 351% of GDP. Global trade and investments are slowing, if not flattening out. The 1.7% World Bank-projected growth of the global economy in 2023 will be the lowest in 40 years.

This crisis has manifested itself rather too soon after reopening in record high food and energy inflation, which the G7 countries led by the US have only addressed with higher interest rates. This is another non-solution that is presumably to temper aggregate demand and contain price increases but eventually strangles economic production. As the G7 relies on accustomed approaches, it is inevitable that before this decade ends, the world economy is diving into recession that is going to be even deeper than what has been started since 2008. And the G7 countries with their militarist agenda cannot hope to reverse that.

Renewed neoliberal offensive

The G7 countries are abandoning their own globalization rhetoric and reshoring their global investments. They are steeply increasing protectionism and support, especially for their domestic high-technology, digital and industrial sectors by ramping up lavish subsidies, tariffs, local content rules, domestic production targets, export restrictions, investment controls, and increasing sanctions on the use of intellectual property rights (IPR). They want to control semiconductors, artificial intelligence, renewables and climate technologies. Food and health are also basic avenues of imperialist control.

The US has always identified China as the sole competitor to this control. China has long been protectionist, which makes its rise steady and expansive, propelling its high-technology sector to be a large portion of its GDP. China accounts for 60% of global rare earth mined production and 85% of rare earth processing capacity. It can use this for green technologies and as negotiating leverage in global trade and investment. The US started in earnest a ‘trade war’ with China even before the pandemic with the end-view of recovering US technology and industrial capacity. The US is now escalating a chips war where it is imposing a chips embargo on China, specifically sanctioning China’s use of US IPR. The impact of this war on both sides will be devastating.

The G7 countries are tackling ‘development finance’ as they come to Hiroshima. Their particular focus on infrastructure investment is another attempt to contain what China has started with its Belt and Road Initiative (BRI). To counter and eventually offset China, the G7 has launched the Global Partnership for Infrastructure Investment (PGII), a US$600 billion funding initiative to spearhead infrastructure projects in the Global South. It will mainly be by the private sector and in four areas, namely digital connectivity, climate and energy security, healthcare, and gender equality.

But its aggressive aims are apparent. These are mainly to shore up alliances in the Global South in order to support the reordering of supply chains. G7 finance chiefs have also directed the World Bank to set up RISE (Resilient and Inclusive Supply-chain Enhancement), a loan facility for developing countries allegedly to help them strengthen global supply chains.

Harsh realities

Yet, the G7 countries are carrying out their economic interests not in congruence with the harsh realities of the global economy. The spending target for PGII is easily dwarfed by BRI; in fact, G7 is yet to unveil a concrete plan where it will get the funds. In reality the financial distress is undeniable. The US is edging closer to a debt default, while a banking crisis is getting more and more apparent with the recent collapse of the First Republic Bank and subsequent takeover by JP Morgan; the US government bailout of the Silicon Valley Bank, the second biggest bank failure in US history; the takeover of Credit Suisse by the United Bank of Switzerland (UBS) with Swiss government guarantees; and even the slide of the shares value of Deutsche Bank. These heighten fears over the instability of the banking sector, prompting the G7 to focus on the resilience of not only supply chains but of the financial system itself.

This is where the role of Japan becomes apparent. Japan is the largest source of official development assistance (ODA) in the region, which it has historically used as an instrument to open up the Association of the Southeast Asian Nations (ASEAN) economies. ODA are mostly loans, with concessional rates but with neoliberal policies attached as conditionalities. In recent years, Japan ODA has been emphasizing the need for the global value chain approach as key to development. This is quite useful now for the reordering of supply chains for G7’s sole benefit.

The other bigger reality is that the people in the Global South are reeling from fuel and food inflation, poor government pandemic response, increasing employment precariousness, and worsening poverty. Infrastructure, specifically only to improve global supply chains and sustain profits of transnational corporations (TNC) and their local counterpart, should not be the priority. What the G7 offers as development finance will only benefit the domestic economic oligarchs and their partner TNCs as well as commissioning government officials. The increasing debts of the underdeveloped countries have already ushered them in an uncertain period of austerity, where more debts and more taxes burden the people, while social services and protection are being cut.

What the G7 wants and the manner it exacts these are untenable and are only bound to hurt the majority of the world’s populations. Thus, these vested economic interests can only be pursued through relentless US warmongering and militarism. But even that is a paper tiger – people around the world are rising up with more vigorous struggles and resistance against imperialism and war. Hiroshima after all has taught a valuable, unforgettable lesson. ###

Rosario Guzman

Rosb is IBON’s executive editor and head of the Research Department. She is also a member of the IBON Board of Trustees.

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IBON Foundation

IBON Foundation is a non-stock, non-profit development organization. We have been serving the Filipino people through research and education since 1978. IBON seeks to promote an understanding of socioeconomics that serves the interests and aspirations of the Filipino people. We study the most urgent social, economic, and political issues confronting Philippine society and the world.

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