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THE HORROR OF CHRISTMAS II The Social Pathologies of Our Grandest "Holiday"James S. Henry**

"Christmas has us all by the throats..." -- Noel Coward

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When I was a kid in Minnesota, my family had a huge Scandinavian feast every Christmas Eve, complete with more than two dozen relatives, three feet of snow, a mountainous evergreen that was trimmed to the top with popcorn balls, candy canes, tinsel, and hundreds of precious once-a-year decorations, a six-course dinner with lutefisk, ham, turkey and eight or ten pies, long-winded after-dinner stories about baseball, the space race, and World War II, and, of course, lots of brightly-wrapped presents.

It has taken more than three decades of rigorous training in economics and law and life on the East Coast for me to shake off the nostalgia of those warm, festive occasions.  But I am now willing to say out loud what I expect many Americans are muttering all across the country at this time of year: Christmas is a real net loser as a socio-economic institution.

Although for decades the observance of Christmas has been justified on the grounds that it is “merry,” rigorous quantitative analysis proves that precisely the opposite is the case. Despite numerous claims by its proponents that this holiday promotes a desirable “spirit,” and makes people “jolly,” the hard data clearly demonstrate that the yuletide period is marked by environmental degradation, a sharp increase in unfortunate encounters with hazardous products, massive congestion,  tedious, time-consuming travel,  and the abuse and inefficient use of vast numbers of animals, birds, trees, and many other valuable resources.

Moreover, the number of people who are rendered truly “joyous” by Christmas is almost certainly exceeded by the number who are made to feel rather blue. Nor does Christmas truly fulfill its purported distributional objective: the transfer of gifts to those who really need them.

Finally, it turns out that this so-called “holiday” may make a significant contribution to America’s dwindling savings rate, unsustainable trade deficit,  declining competitiveness, and the motivation for a great many property crimes.

In short, although Christmas may be an important source of religious inspiration for some, and a genuine source of wintertime fun for others -- mainly children, who would probably be having fun anyway -- it fails the test of social cost effectiveness.  It is high time for those of us who are serious adults to take a good long holiday from this overblown annual ritual.

THE INDICTMENT

Christmas consumes vast resources in the dubious, really quite uncharitable pursuit of “forced giving.”

To begin with, let us recall the countless hours that we have wasted on Christmas – all that precious time spent searching for “just the right gifts” for people we barely know; writing and mailing cards or emails to “friends” that one ignores the entire rest of the year; hanging ornate decorations on so-called “evergreen” trees that will become un-decorated, un-green fire hazards in less than a month;  attending all those semi-compulsory, over-produced parties that are saturated with cholesterol-rich food, drink, and false cheer; and the tedious task of returning all those mismatched presents after the New Year, just as their retail values plummet.

Assuming conservatively that each American adult spends an average of two days a year on such activities, this represents a wasted investment of 1.2 million person-years per season. At a  per capita “shadow wage” of $38,000,  that works out to a “deadweight Christmas loss” of $45 billion per year -- even apart from any extra spending associated with these dubious activities.   

Just as important is the amount that Americans spend on gratuitous gifts each year - at least $50 to $60 billion per season, by my careful estimates. All this extra consumer spending is sometimes considered beneficial because it stimulates the economy.  But a closer look reveals that this massive yuletide spike actually creates many harmful side-effects.

Gratuitous Gifts

Misfit gifts are one key example. According to New York department stores, at least 15-20 percent of all retail purchases at Christmas are returned after the holidays. Allowing for the inability of young children to return undesired gifts, and the fact that many other misfit gifts are retained involuntarily because recipients feel obliged to disguise their true feelings, perhaps as much as a third of all Christmas season purchases may be unwelcome.

This means that Christmas is really a throwback to a barter economy, where people have to try and match each other’s wants to their own offerings. The whole institution of money was invented precisely to solve this inefficiency – the so-called “double coincidence of wants” problem. In the case of Christmas, one simple solution might be to require people to give each other cash. But that would expose the absurdity of the whole institution.

All this “forced giving” artificially pumps up consumption and reduces savings, since it is unlikely that all the silly, expensive presents given at Christmas would be given at other times of the year. One particularly noxious aspect of surplus consumption is “conspicuous giving” -- luxury gifts like Tiffany eggs, gold toothpicks, crystal paperweights, $30,000 sable stoles, and $15,000 watches. Such gifts are designed precisely for those who are least in need (e.g., “for the person who has everything”).  And most of these high-priced gifts are given at Christmas. According to a sample of New York department stores, the fourth quarter of the year provides more than half of the year’s diamond,  watch, and fur sale, and an even higher share of their annual profits.

No doubt all this gratuitous spending delights these retailers, and many other “dealers” in the Christmas racket. To the neo-Marxists in the crowd, this suggests that the holiday is explained by economic determinism -- what we have here is not just a coherent, self-sustaining religious ideology, but a powerful set of underlying economic interests, with a huge stake in perpetuating this season’s fatuous gift-giving mythology.

Lower Savings, Higher Debt 

Meanwhile, for the nation as a whole, the fact is that Christmas just reduces our already-flagging personal savings rate -- now just a paltry 1 to 2  percent of personal income.  It also adds to the burden of consumer debt. Almost a quarter of Christmas season sales are financed by credit cards or charge accounts, and  January has become the peak month for credit card delinquencies. It turns out, in other words, that Christmas is quite literally a festival that we can no longer afford.   

Toy Fetishism

For parents, another exasperating aspect of Christmas binge spending is toy fetishism. The holiday season accounts for more than  60 percent of the US’ annual $31 billion expenditure on toys and video games. Much of this new toy capital depreciates rapidly, if it works at all. The surfeit of hyper-stimulating toys is no doubt a major contributor to the ADD scourge among young Americans, and to our pitifully low youth savings rates. It is also educationally unproductive. According to the National Toy Industry Association, the US now spends nearly three times as much each year on mindless video games ($10 billion), action figures ($1.2 billion) like the Hulk, Harry Potter, and Anne Coulter, and dolls ($2.8 billion),  as on all retail book sales for children ($1.5 billion). Toys in the “learning and exploration” category account for a mere half billion dollars. 

Over time, all this free-wheeling spending on unproductive child toys also encourages heavy spending on unproductive “adult toy capital,” like Porsches, J-120 sail boats, and synthetic Vice Presidential candidate action figures with Southern accents and really thick hair.   

Since a large share of the leading Christmas toys in the US market are now made by Chinese companies,  the toy binge is also making the US dangerously dependent on foreign toy imports. This opens the door to insidious, all-too-poorly-understood cultural influences that may take decades to reverse.   

Many Christmas toys are also hazardous -- snowboards, skates, sleds, hockey sticks, Roller Blades,  bicycles, baseball bats, boxing gloves, even iPods when put in the wrong hands. The US Consumer Product Safety Commission reports that last year there were 17 deaths and 203,000 emergency room admissions in the US due to hazardous toys. There were also more than 11 million toy recalls. If we allocate these deaths, injuries, and recalls in proportion to seasonal sales, Christmas is clearly the dominant problem. (The comparable figures for deaths caused by books and book recalls were zero and zero, respectively.)

Finally, one only has to visit any Toys ‘R’ Us or Walmart at this time of year to see the holiday’s negative impact on parent-child relations. The store floors are replete with distraught mothers and fathers dragging their tiny, toy-addled munchkins kicking and screaming away from the latest high-priced, must-have offerings. All this unproductive consumption would be much better spent on mathematical drill books, computer learning,  alarm clocks, pencil sharpeners and green eyeshades.

Christmas creates massive congestion at the worst possible time of year.

At least in large urban areas, Christmas is by far the most unpleasant time of year to shop, travel, dine out, or visit a bathroom in a mall. Just when stores are the most crowded, shopping becomes mandatory; just when everyone else in the nation is making their de rigueur, mid-winter, cross-country trek to “be with” friends and family, we also are drafted into this forced march. 

December 21 and 22 are the year’s peak dates for air travel, according to the Air Transport Association of America, with more 2.1 million Americans per day jamming the nations airports, (twice the annual daily average.) Nearly forty million people will travel during the period from  December 17 to January 3, just when the weather is the worst,  airlines, buses, and trains are charging the highest prices, and security threats from the growing ranks of our non-Christian enemies around the globe are peaking.

According to the US Postal Service, the volume of mail traffic triples at Christmas time, to more than 288 million letters and 8.6 million parcels per day during the week before Christmas. This batters a delivery system that is barely profitable to begin with, and has already been weakened in the previous two months by tens of millions of extra direct-mail catalogs and advertisements.

Telephone calls can reach more than 200 million per day during  the month from Thanksgiving to New Years’ Eve, and there is also a seasonal surge in Internet traffic. At many businesses, stores and offices, costly second- and third shifts have to be added to handle the excess demand. All this “peak loading” means that airlines, Internet services, mail delivery, stores, banks, warehouses, telephone systems, roads, and parking lots must carry more excess capacity than if these activities were distributed more evenly throughout the year. This is peak load capacity that we consumers ultimately have to pay for – it  is a waste of our nation’s precious capital.

Christmas destroys the environment, plus untold numbers of innocent animals,  birds, and other wildlife.

These have perhaps not been mainstream concerns for hardnosed economists like myself.  But if  one takes account of all the Christmas trees, letters, packages, increased newspaper advertising, wrapping paper, catalogs and cards, as well as the millions of animals slaughtered for feast and fur at the holidays,  it becomes clear even to an economist that this holiday is nothing less than a catastrophe for the entire ecosystem.

According to the US Forest Service, 23.4 million natural Christmas trees are now consumed in the US alone. This number has recently been growing fast, driven by resurgence in hard-shell Christianity and the trend toward more than one tree per household – related, in turn, by our rapidly expanding average home sizes. Americans also now use 18 million artificial Christmas trees each year, half of which are purchased brand new. 

All this produces nothing less than an environmental calamity. Since natural Christmas trees have to be grown from scratch each year, millions of forest acres are now subject to an artificially-short rotation period.  Recent evidence from countries like Denmark, now the world’s second largest producer of Christmas trees, suggests that the resulting “industrialization” of non-organic Christmas tree production creates massive problems with groundwater pollution. And the piles of needles these natural trees produce shorten the lives of untold numbers of vacuum cleaners and household pets.

Given the growing role of foreign tree producers like China and Denmark in the global Christmas tree trade – the emerging “tree cartel” – the resulting “Christmas tree gap,” on top of the “foreign toy gap,” also adds to our burgeoning trade deficit.   

Sanctimonious Slaughter

As for the impact on our feathered and furry friends, Christmas has become nothing less than a giant abattoir. This year, according to the Animal Protection Institute, 5.3 million foxes, 36 million minks, 100,000 polecats, 70,000 chinchillas, 330,000 nutrias,  352,000 seals, 4 million Persian lambs, and hundreds of thousands of sable, plus millions of leather-producing cows,  will be butchered around the world just to satisfy the seemingly-insatiable human lust for real fur coats, stoles, hats, and leather coats and shoes. While many of these animals meet their fates for the sake of other occasions than Christmas, a disproportionate share are feeling Herod’s sword.

Furthermore, to stock our holiday tables Americans will also slaughter more than 20.6 million turkeys, 9.4 million pigs, 2-3 million head of cattle, 2.2 million ducks, and 718 million chickens.

To anyone who has ever visited a turkey, pig, or chicken farm, Christmas and Thanksgiving take on a whole new meaning. Every single day during the run-up to these festivals, thousands of bewildered, de-beaked, growth-hormone-saturated, inorganic birds are hung upside down on assembly-line racks and given electric shocks. Then their throats are slit and they are dropped into pots of boiling water.

After they are cooked and on the table,  a few poor dead animals do have an opportunity to take revenge on their human persecutors.  According to one health expert, day-old turkey contains more than 2100 separate strains of bacteria. Even washing a turkey before cooking it just helps to spread all these bugs around the kitchen.   

Christmas introduces seasonal fluctuations into the demand for money, and may also lead to a seasonal slump in labor productivity.

Christmas is the peak season for carrying big bills around in the wallet, and cash is also a very popular Christmas gift. The volume of currency in circulation peaks each year in December, then declines by 4 to 5 percent. As noted below, this probably helps to stimulate robberies at this time of year. It also forces the US Federal Reserve and the banking system to work hard to supply all this currency, and to cushion the resulting cycles in money demand.

As for work force productivity, many American companies completely shut down for the two-week period from Christmas to New Year’s. Even those that remain open often find that on-the-job performance suffers because of seasonal high jinks and absenteeism. Armies of illegal aliens from Mexico and Central America also sneak back across the border to their homelands just to visit their families at Christmas time – a costly subterranean migration that may be touching, but deprives us of cheap labor.

Meanwhile, our Asian competitors – except for the Philippines and South Korea, which have large Christian populations --  are insulated from these Christmas-induced distortions. They continue beavering away while we party. 

Far from being “the season to be jolly,” Christmas is really the season of sadness and despair.

The season’s compulsory merriment, hyper-commercialism, heavy drinking, and undue media emphasis on the idealized, two-child, two-parent, orthodox Christian family makes those who don’t happen to share such lifestyles or religious sentiments feel left out, lonely, and even somewhat un-American.

Even in so-called normal families, media hype about the season’s merriments raises expectations beyond reasonable levels, and sets up many of us for disappointment. According to a leading East Coast psychiatrist, many women exhaust themselves trying to meet both the demands of full-time jobs and more traditional expectations about what holidays are supposed to be like -  in many cases, established by their (non-working) mothers.

There is also a great deal of emotional stress associated with overspending and involuntary displays of affection. While it is apparently a popular myth that US suicide rates are higher during the holiday season, police, psychiatrists, and hospitals do report that there is a dramatic rise in alcoholic “slips,” drug overdoses, domestic quarrels, hotline calls, and emergency medical calls at this time of year. “Any redolent setting can be very sad for people who don’t have a dancing partner,” says the psychiatrist. “Christmas is one of those times.”

 

Christmas is one of the most hazardous times of the year for humans and our pets. 

The combination of trees, lights, blazing hearths, yuletide passion, and other indoor festivities results in more household fires at this time of year than any other. The fire department in Washington, D.C., reports that fire calls in December are 40 percent above its monthly average; New York City had 2,600 residential fires last December, as compared with a 2,300-per-month average.

According to the National Highway Traffic Safety Administration, December is the peak month for drunk driving and “DWI” arrests, which totaled 1.5 million last year. It is also the peak month for accidents-because of drunkenness, congestion, and bad weather - with more than 585,000 last year, compared with a monthly average of only 527,000. 

In the three days around Christmas last year, 513 people died on the nations highways. The only consolation is that last year’s Thanksgiving was even worse, with 560 deaths.  Of course bad weather is a compounding factor. For those of us in colder climes, life would be much easier if we could at least agree to observe Christmas in the summer, when the lutefisk is ripe.

December is also the peak month of the year for robberies, and  a pretty good month for auto theft and burglary, too.  Police suspect that much of this property crime is because many criminals are also motivated by the need to fill their families’ stockings. December also has a disproportionate number of murders -- almost 1500 last year – and aggravated assaults, many of which are committed by friends and families against each other in the course of holiday revels.  “Christmas is a crazy season,” says one former police chief. “It’s a potpourri of emotional extremes -- either extremely quiet, or all hell breaks loose. There are more assaults, bar-room brawls, and family altercations.”

Holiday Binging

Excessive eating and drinking are used to compensate for all these Christmas tribulations. According to the Distilled Spirits Counsel and the Department of Agriculture, in the six short weeks from Thanksgiving through New Year’s, last year we consumed more than $20 billion of alcohol - including 109 million gallons of hard liquor - plus more than 2 billion pounds of turkey, and a huge quantity of ham, cookies, pies, eggnog, stuffing, plum pudding, and other trimmings.

All this indulgence does little for the nation’s waistline: the Christmas season is the single most important contributor to obesity. The average American consumes at least 3,500-5000 calories at Christmas Day dinner alone, a three-days supply of calories.   

Naturally, January is the peak month for diet plans, many of which end up in failure and despair. This helps to account for the recent trend toward obesity in America – at last count, 65 percent of all American adults and 16 percent of all children were overweight.

Other Hazards to Adults

There are also many products associated with Christmas that are especially hazardous. For example, among those that are potentially very harmful to pets and small children are angel hair (spun glass), artificial snow (poisonous),  plants like holly, ivy, mistletoe and poinsettia, the Christmas Rose, the Christmas Cactus, dieffenbachia, Lily, the Star of Bethlehem, Yew, Jerusalem Cherry, Hibiscus, and Jequirity Bean;  tree decorations like tinsel, metal hooks, ornaments, and glass balls,  candles, ribbons, aluminum foil, pine cones, and other packaging, electronic lights, turkey bones, and chocolate. 

Furthermore, a high fraction of candles still have lead wires in their wicks, and many aromatherapy candles produce carcinogenic soot.

There is also a sharp increase in the number of household accidents at Christmas time, from scalded fingers and sliced thumbs to scissor stabs, bike spills, and ladder accidents. All this produces a sharp increase in Christmas-related hospital admissions each year. Among the vintage Christmas accidents reported recently:

1.    Turkeys exploding in microwave ovens;

2.    Children and pets swallowing Christmas tree bulbs whole;

3.    Painful glass cuts resulting from attempts to Xerox one’s lower extremities at the annual office party;

4.    Children who ran into the street and were hit by cars while their parents were distracted by Christmas shopping;

5.    The fellow who drowned after he tried to walk on the “ice” – actually, open water -- after a few holiday party drinks. 

6.    The fellow who tied a rope to the family car and around his waist, then climbed up on the roof and started down the chimney with presents. Unfortunately, he neglected to tell his wife, who got in the car and drove off. 

7.    The unfortunate would-be Chinese immigrant whose body was recently discovered in a shipping container filled with artificial Christmas trees.      

8.    The fellow whose sweater caught on fire when he fell into a tree with lit candles.

9.    The 5800 other Americans who suffered injuries last year while decorating their Christmas trees – all of which were serious enough to require visits to the emergency room;

   

From a distributional standpoint, Christmas aggravates social and economic inequality. 

This is because almost all gift-giving at Christmas time takes place within the family, or at least within the same social class, and doesn’t reach the folks who really need our help.

In fact, Salvation Army drum-beating aside, Christmas almost certainly reduces our capacity for charity, by draining us of wealth that might otherwise be given to the truly needy, and by exhausting our charitable impulses in costly bouts of spending, getting, and giving to “we happy few.”  Having just spent thousands on gifts and dinners for Muffy, Ben, Mom, and the kids,  we are not eager to make sizeable contributions to perfect strangers, no matter how deserving.   

Presumably this is not the outcome that the Person for whom this holiday was named would prefer. 

SUMMARY – STICK A FORK IN IT

Overall, the message is clear: Christmas is hazardous to our health and safety, imposes a huge efficiency tax on the economy,  and does little to further social justice.

Furthermore,  these harms may well be growing.  An analysis of long-term changes in the seasonality of the US economy suggests that the Christmas buying season has been getting longer, more costly, and more intense.

Of course, Christmas commercialism really is a rather modern innovation. The ancient Christians did not even observe the holiday until the fifth century. Medieval Christians observed it much more modestly, and the Puritans quite sensibly refused to celebrate it at all. Only in the last fifty years, with the perfection of mass-market advertising, department store merchandising, and the commercialization and expansion of pop-Christianity, has Christmas become such a command performance.

In short, from a purely economic and social standpoint, Christmas is an experiment that has been tried and found wanting. In a sense, it has become the  flipside of the positive contribution that the “Protestant Ethic” once made to capitalism:  Christianity’s second highest holiday now almost certainly makes most of us worse off.

What is to be done? We have a modest proposal:  a 3- to 5-year moratorium on the whole affair, to let us pay our bills and recover some of the fellow feeling that we’ve lost. After this interval, we can evaluate the “lessons learned” and the economic impacts again, and devise a new celebration strategy.

This may sound like tough medicine, especially to youngsters. It will also probably offend the many interest groups that have acquired a large commercial stake in this ritual, from bulb manufacturers  and tree floggers to ambulance drivers, bar tenders, Park Avenue door men, professional Santas, tinsel makers, and booze peddlers.   

But the truth is that the rest of us can no longer afford it. If we celebrate this holiday at all this year, we should do so mainly because it is over for one more year.

èèè

**This is an update and revision of an article by the author that first appeared as a cover story for The New Republic on December 31, 1990. Research assistance by Andrew Hellman. © Submerging Markets™, 2004.

(Some) Justice Finally Comes to Chile -Is More on the Way? James S. Henry

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After decades of inaction, Chile's own judicial system is finally beginning to hold leading members of the Pinochet dictatorship directly responsible for the brutal reign of terror that it inflicted on Chile  from September 11, 1973 to March 11, 1990.

The latest  piece of good news was this week's indictment of 89-year old former Chilean dictator General Augusto Pinochet Ugarte on charges stemming from the disappearance and murder of several individual activists.

In July 2002, another serious human rights case against General Pinochet had been dismissed in Chile on grounds that he was mentally incompetent to stand trial. That case echoed the controversial March 2000 decision by UK authorities to permit him to return home rather than extradite him to Spain, France, Switzerland, or Belgium, after he’d spent more than 17 months under house arrest in London.

As noted below, this week's indictment is just the latest in a series of recent efforts by Chile's judicial system to provide justice for more than 3,200  civilians who were murdered by the regime, more than 28,000 others who recently stepped forward to bare witness about being illegally jailed and tortured, and tens of thousands more who had similar experiences, but have so far kept silent. 

Several other cases that have been brought against Pinochet in Chile have recently been allowed to proceed, especially after Pinochet gave a lucid, self-serving interview to Channel 22, a Spanish language TV station in Miami,  in November 2003. This incredible act of hubris may have finally brought Pinochet to ground.

While this latest ruling will no doubt be appealed to Chile’s Supreme Court, it is at least another step in the right direction.

In addition to providing justice, such efforts also provide a measure of vindication for those who have long maintained that the Pinochet dictatorship was an unwarranted, illegal, and counterproductive intrusion on Chile's long-standing traditions of democracy and respect for human rights.

However, the real disgrace now is that while Spain, France, Belgium, Switzerland, Argentina, and Chile itself have already brought serious criminal charges against Pinochet or his key associates, the US Government has never done so.

This is despite the fact that several US citizens were also murdered by the regime, not only in Chile but also in the US itself.   

Furthermore, as examined below,  many of the Chilean junta's most important confederates and accomplices -- including leading bankers, economists, lawyers, media magnates, convicted professional terrorists, and several senior government officials -- continue to enjoy sanctuary abroad -- especially in the US, the supposed champion of the “post-September 11^th” global anti-terrorist campaign.

Many Americans may not recall that there was another September 11^th, one that was even more bloody and terror-stricken than their own. Indeed, this “other September 11^th” was one that their own government helped to create.

To do so, the US worked closely with an incredible bevy of transnational terrorists, butchers, and tin-horn "generals," like Pinochet (Chile), and later, Videla (Argentina), Banzer (Bolivia), Stroessner (Paraguay), and Rios Montt (Guatemala). These valorous "generals" specialized in the use of terror against defenseless civilians.

It is time for Americans who really care about human rights to demand that their own government follow the courageous lead that Chile has taken, and  help bring these uniformed savages and their foreign and domestic collaborators to justice.  

THE END OF IMPUNITY?

As noted above, there have been several other important recent steps toward justice in Chile with respect to the Pinochet regime. Among the most important are the following:

è On December 10, 2004, Colonel Mario Manriquez, a retired Chilean colonel, was arrested and charged with ordering the September 1973 execution of Victor Jara, an internationally-reknowned Chilean folksinger and playwright. Jara, 38 at the time, was detained and tortured to death at Santiago’s infamous National Stadium, where thousands were detained after the coup.  (For an example of Jara's songs, Download vctor_jara_ni_chicha_ni_limona_.mp3.)

è In addition to the decision by Judge Juan Guzman noted above, on December 4, 2004, Chile’s Court of Appeals also lifted Pinochet's immunity from prosecution with respect to his possible involvement in the  1974 murder of his precedecessor as Commander-in-Chief of the Chilean Army, General Carlos Prats Gonzales.

General Prats, a highly-regarded "constitutionalist" who stalwartly opposed the Army's intervention in political affairs, had fled Chile in September 1973 after the coup against Allende’s duly-elected government. 

In one of that decade’s clearest cases of international terrorism, General Prats and his wife Sofia Cuthbert were killed by a car bomb in Buenos Aires in September 1974.

In 2000, Eduardo Arancibia Clavel, a member of Chile's DINA, its secret service, was convicted by an Argentine court of helping to organize the killing, and was sentenced to life in prison. Argentina also requested the extradition of six other DINA agents to stand trial in the case, plus Pinochet, who was indicted for first-degree murder as the "intellectual author" of the crime. Chile's Supreme Court denied the extradition request in 2003, but the case was picked up by a Chilean prosecutor.  The recent ruling means that the case can proceed. Pinochet has appealed the decision to Chile's Supreme Court.

è On November 29,  2004, the Chilean Government released the Valech report, a year-long investigation of human rights crimes committed by the Pinochet regime. The report, requested by Ricardo Lagos, Chile's current Socialist President, documented the fact, long-denied by Pinochet and his loyalists, that systematic, widespread  torture had indeed been state policy during his reign -- including more than 3400 instances of sexual abuse.  Even Pinochet’s eldest daughter was shocked by the report, which was based on nearly 28,000 interviews with victims of the junta’s repression – the first opportunity they had ever had to tell their stories. The victims who had managed to survive to tell their stories were offered modest pensions by the Chilean government in compensation.

In anticipation of the report, on November 5, General Juan Emilio Cheyre, the head of the Chilean Army, reversed the Army’s previous refusal to accept responsibility for these abuses, declaring:   

"The (Chilean) Army has made the difficult but irreversible decision to acknowledge the responsibilities that it has as an institution in all the punishable and morally unacceptable acts of the past… Human rights violations never, and for no one, have an ethical justification."

è In October 2004,  Chile’s IRS filed tax evasion charges against the former dictator and his long-time financial advisor, Oscar Aitken. For these charges alone, Pinochet may face fines up to three times any taxes that he evaded, plus a jail term of up to five years. In late November, on the eve of the General’s 89^th birthday, a Chilean judge did manage to freeze more than $4 million of Pinochet’s Chilean assets, pending the outcome of investigations for tax fraud and money laundering.

è In May 2004, Pinochet’s immunity was lifted by Chilean judges investigating the Condor case,  a 1970s conspiracy among several “Southern cone” dictatorships at the time (Argentina, Brazil, Bolivia, Uruguay, and Chile) with US support and coordination, to disappear political opponents. The decision was upheld in August.  Pinochet has denied all responsibility for the disappearances. 

THE RIGGS CASE

So far, the main US contribution to these developments took place in July 2004, when the US Senate's Permanent Subcommittee on Investigations released a report on General Pinochet’s offshore banking -- especially his ownership of up to $15 millions of "funny money" in more than a dozen Pinochet-owned bank accounts at

Riggs National Bank (DC, Miami, London), Citibank (Miami), and Bank of America.

The reported, which had been conducted at the behest of Senator Carl Levin, the Subcommittee’s ranking Democrat, revealed that ten key Pinochet-related accounts were handled by Washington DC’s Riggs National Bank. These accounts, plus numerous Riggs-managed offshore trusts and companies, were reportedly established for General Pinochet in the mid-1980s and 1990s  with the knowledge and active involvement of Rigg’s owner and CEO, Joseph L. Allbritton (Baylor Law ’49).

Allbritton, a prominent Houston-based banking and media magnate who is now in his seventies, is a close friend of the Bush family, and a trustee of the Lyndon B. Johnson Foundation, the George Bush Presidential Foundation, the Reagan Presidential Foundation, the Kennedy Center, the Houston Symphony, and the Houston Museum of Fine Arts. He has also served on the board of the National Geographic Society and Washington DC’s Federal City Council.

A former owner of the now-defunct Washington Star, Allbritton started acquiring Riggs in the early 1980s, eventually buying at least 40.1 percent of the $6.3 billion asset bank. He served  as Rigg’s Chairman and CEO until 2001, when his only son, Robert L. Allbritton, took over.

The Allbrittons also owns several other businesses, including Allbritton Communications Co., which controlled WJLA, Washington D.C.'s main Disney/ABC affiliate, plus TV stations in Little Rock, Tulsa, Lynchburg, Charleston, Harrisburg, and Tuscaloosa.

But Riggs National Bank was the crown jewel in the empire. Founded in 1815, it was Washington D.C.'s oldest and largest bank, touted as "the most important bank in the most important city in the world,” where “at least 21 First Families banked.”

It acquired a commanding share of the city’s “Embassy banking” business, handling  prominent diplomatic customers for key foreign embassys, like Saudi Arabia’s Embassy. (The US Senate Committee on Governmental Affairs continues to investigate Rigg’s relationships to the Saudis.

These reportedly included more than 150 private accounts, one of which was apparently used, perhaps unintentionally, by Princess Haifa al-Faisal, the wife of Prince Bandar, Saudi Arabia’s Ambassador to the US, to relay funds to two September 11^th 2001 hijackers. In September 2004, several families of September 11^th victims filed a class action lawsuit against Riggs with respect to this matter.)

Under the Allbrittons, Riggs was not shy about recruiting political allies. Fellow Texan Jack Valenti (U of Houston, Harvard), the influential motion picture industry representative, is a long-time Riggs board member.

In 1997, Riggs acquired J. Bush & Co., an asset management firm owned by Jonathan J. Bush, George H.W.’s brother, George W.'s uncle and a former Chairman of the New York State Republican Finance Committee. In May 2000, Jonathan Bush briefly became CEO of the Riggs Investment Management Company, but now he concentrates on managing the private assets of wealthy clients at J. Bush & Co. In 2003, “JJ’s” Yale classmate, William H. Donaldson, was nominated by President Bush to head the SEC.

Ironically enough, in 1999, the US Treasury had even selected Riggs to redesign and manage its “CA$HLINK” cash management system, reportedly the world's largest deposit/cash reporting system. 

It is not yet clear whether “JJ” was involved in managing any assets for the bank’s wealthy private clients like General Pinochet, the Saudi Princess, or Equatorial Guinea's dictator, Teodoro Obiang Nguema, the bank's largest single private banking customer.

But other senior Riggs managers were involved in handling the relationship with General Pinochet, including the bank’s former President, Timothy C. Coughlin (Brown U., NYU MBA, US Marines, Federal City Council), who resigned in May 2004; Robert C. Roane, (UVA, George Washington MBA), the bank’s chief operating officer, and the former head of Riggs - London, who resigned on November 26, 2004;  Carol Thompson, Riggs' former SVP for Latin America, who also resigned in 2004; and Raymond M. Lund, the former EVP of the International Banking Group, who left the bank in March 2004.   

Also implicated in the Pinochet affair was Steven B. Pfeiffer (Wesleyan ‘69 – Chairman Emeritus;  Oxford - Rhodes Scholar; Yale Law School, US Naval Commander; Council on Foreign Relations), a Riggs board member since 1989, a former chairman of the bank’s International Committee, a former Vice Chairman of Riggs Bank Europe Ltd., and the bank’s Chairman in 2001. Pfeiffer remains a senior partner at Fulbright & Jaworski, the leading DC law firm, where he  has served as head of the firm’s International Practice, and, from 1998 to 2002, its Partner-in-Charge. According to the Senate report, Pfeiffer and his law firm provided key legal advice to Riggs with respect to its handling of the Pinochet accounts. 

BANKING ON THE GENERAL

Riggs' banking relationship with Pinochet may have dated back to the 1970s, when it was reportedly involved in helping to finance several Chilean arms deals. But it really heated up in the mid-1990s, when Pinochet came under investigation for more than 66 international criminal complaints involving human rights violations, drug trafficking, torture, assassination, illegal arms sales, and corruption, not only by Judge Garzon in Spain, but also by Argentina, Belgium, France, Switzerland, and the UK. The General was trying desperately to conceal his family’s assets around the world. 

According to the Senate report, Riggs National Bank participated in a long-term conspiracy to launder Pinochet's offshore holdings and conceal their ownership from US federal bank regulators, including the Comptroller of the Currency. Quite coincidently, the bank also reportedly hired  R. Ashley Lee, an OCC bank examiner who happened to be in charge of auditing Riggs from 1998 to 2002.  

That helped Riggs conceal the Pinochet matter for a couple years. But in May 2004, Riggs  was fined $25 million in civil penalties for "willful, systemic" violations of anti-money-laundering laws" with respect to its dealings with two other dubious clients, Saudi Arabia and Equatorial Guinea.

In light of all these embarrassments, the Allbrittons decided to sell the bank. In July 2004, it agreed in principle on a $779 million sale to PNC Financial Services Group Inc. However, this  merger is now reportedly on hold until at least April 2005,  and it may never be consummated, given all the many lawsuits and investigations that have arisen out of Rigs involvement in money laundering. If permitted, the PNC transaction would effectively permit the Allbrittons and their close associates to "launder" their profits from more than twenty years of scandalous, morally-unconscionable behavior, undertaken at the behest of some of the world's worst dictatorships.

Meanwhile, Riggs is fighting a number of other legal actions pertaining to this scandal. In April 2004, three law firms that specialize in shareholder derivative suits teamed up to sue Riggs’ directors for “intentionally or recklessly” ignoring the risks of failing to update the bank’s money laundering controls and dealing with dubious clients like the Saudis and Pinochet. 

In September 2004, several former Riggs senior managers and board members were named in a legal action filed by the courageous Spanish judge, Balthazar Garzon, who has been investigating human rights violations committed against Spanish citizens by the Pinochet regime. Judge Garzon has asked that US authorities seize the assets of their personal assets, prosecute them for money laundering,  and also freeze more than $10.3 million in alleged Pinochet assets.

So far, the US Department of Justice has basically ignored Judge Garzon’s request.

(c) James S. Henry, SubmergingMarkets™, 2004.

Global Growth, Poverty, and Inequality Part I. A Little Christmas Cheer?James S. Henry and Andrew Hellman

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The Christmas season is a very special time of year, when Americans, in particular,  engage in a veritable month-long orgy of holiday revels and festivities, including eggnog sipping, Santa sitting, package wrapping, neighborhood caroling, tree decorating, menorah lighting, turkey stuffing, and generally speaking, spending, getting, and giving as much as possible, at least with respect to their immediate friends and family.

We certainly don’t wish to question the legitimacy of all these festivities. After all, as this November’s Presidential election has reminded us, ours is surely one of the most powerful, vehement, unapologetic Judeo-Christian empires in world history.  Like all other such empires, it has every right to celebrate its triumph while it lasts.   

According to the latest opinion surveys, this is indeed an incredibly religious nation, at least if we take Americans at their word.  More than 85% of Americans adults consider themselves “Christians,” another 1.5% consider themselves “Jews," 84% pray every week, 81% believe in life after death, 60% believe the Bible is “totally accurate in all its teachings,” 59% support teaching creationism in public schools,  and fully 32% -- 70 million people, including 66% of all evangelicals --  would even support a Constitutional Amendment to make Christianity the official US national religion. 

In light of all this apparent religious fervor, it is disturbing to read several recent analyses by OXFAM and the UN of certain persistent, grim social realities around the world – and our paltry efforts to redress them. Is the intensity of our religious rhetoric and this season's celebrations just a way of escaping these unpleasant realities?  

CHRISTMAS CHEER?

·          According to the UN’s International Labor Organization (December 2004), among those still waiting for economic justice are nearly three-quarters of the world’s population – 4.7 billion people --  who somehow manage to survive on less than $2.50 per day. These include 1.4 billion working poor, half of the 2.8 billion people on the planet who are employed. 

·          According to the UN’s Food and Agricultural Organization (December 2004),  the world’s poor now include at least 852 million people who go to bed hungry each night – an increase of 20 million since 1997. The continuing problem of mass famine has many side-effects – including an estimated 20 million low-birth-rate babies that are born in developing countries each year, and another 5 million children who simply die of malnutrition each year. In some countries, like Bangladesh, half of all children under the age of six are malnourished.

·          Overall, for the 5.1 billion residents of low- and middle-income countries, average life expectancy remains about 20-30 percent shorter than the 78 year average that those who live in First World countries now enjoy. By 2015, this will produce a shortfall of some 50 million poor children and several hundred million poor adults.  But at least this will help us realize the perhaps otherwise-unachievable “Millennium Development Goals” for poverty reduction.

·          According to UNICEF (December 2004), more than 1 billion children – half of all children in the world -- are now growing up hungry, in unhealthy places that are suffering from severe poverty, war, and diseases like HIV/AIDs.

·          According to Oxfam (December 2004),  First World countries have basically reneged on their 1970 promise to commit .7 percent of national income to aid to poor countries.  Last year such aid amounted to just .24 percent of national income among OECD nations,  half the 1960s average.  And the US commitment level was just  .14 percent, the lowest of any First World country, and less than a tenth of the Iraq War’s cost to date.

·          This month’s 10th UN Conference on Climate Change (COP-10) in Johannesburg reviewed a growing body of evidence that suggests that climate change is accelerating, and that the world’s poor will be among its worst victims.  Among the effects that are already becoming evident are widespread droughts, rising sea levels, increasingly severe tropical storms,  coastal flooding and wetlands damage, tropical diseases, the destruction of coral reefs and arctic ecosystems, and, God forbid, a reversal of the ocean’s “thermohaline” currents. 

Overall, as the conference concluded,  for world’s poorest countries – and many island economies – the threat of such effects is much more threatening than “global terrorism.” 

So far, however, the US – which with less than one-twentieth of the world’s population, still produces over a fifth of the world’s greenhouse gases --  seems determined to do nothing but stand by and watch while energy-intensive “economic growth” continues.  This year’s oil price increases have slowed the sales of gas-guzzling SUVs somewhat,  yet more than 2.75 million Navigators, Hummers, Land Rovers, Suburbans, and Expeditions have already been sold. The  US stock of passenger cars and light trucks, which accounts for more than 60 percent of all US oil consumption, is fast approaching 220 million -- almost 1 per person of driving age.

Meanwhile, leading neoconservative economists and their fellow-travelers in the Anglo-American media continue to tout conventional measures of “growth” and “poverty.” Indeed, according to the most corybantic analysts,  a free-market-induced “end to poverty as we have defined it”  has either already arrived, or will only require the poor to hold their breath just a little bit longer – until, say, 2015. 

As we will see in Part II of this series, this claim turns out to be -- like so many other elements of modern neoconservative dogma – a preposterous falsehood.  But it does help to shelter our favorite dogmas – religious and otherwise --  from a day of reckoning with the truth.

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(Next: Part II: Is this Really Not the Best of All Possible Worlds?) © James S. Henry and Andrew Hellman, SubmergingMarkets™, 2004

”WHERE’S WARREN?” Bhopal’s 20th Anniversary

Today marks the twentieth anniversary of the deadly December 3, 1984, chemical gas leak at an Indian pesticide plant in the very  center of Bhopal, a city of 90,000 – just a little larger than Danbury, Connecticut -- in the state of Madhya Pradesh, in central India.  At the time the plant was owned by Union Carbide India, Ltd. (UCIL), an Indian company whose majority (50.9%) shareholder was Danbury-based Union Carbide Corporation (UCC) which was acquired by Dow Chemical in 2001.

This anniversary provides us with an opportunity to reflect on “lessons learned” from this disaster – including the need to make sure that the globalization of trade and investment is also accompanied by the globalization of justice for the victims of transnational corporate misbehavior.

Download WhereIsWarren12032004.pdf

THE COSTS

As a recent report by Amnesty International details, this industrial accident, perhaps the worst in history, killed more than 7,000 to 10,000 people in the first few days,  including many children.

There were also serious long-term injuries to up to 570,000 others who were exposed to the fumes.

At least 15,248 of these survivors have already died because of their injuries – in addition to the 7,000 to 10,000 initial victims.

Up to 570,000 others continue to suffer from a wide range of serious health problems, including birth defects, cancer, swollen joints, lung disease, eye ailments,  neurological damage, and many other painful, long-term illnesses.

Thousands of animals also died, and many people lost their homes, jobs, income, and access to clean water.

WHO WAS TO BLAME?    

U

nion Carbide’s ultimate “parent authority” for this accident is very clear. In the middle of the night, a cloud of lethal gas caused by the leak of at least 27 tons of “methyl isocyanate” (MIC), a high-toxic odorless poison,  and another 13 tons of “reaction products” began wafting through the city center. The gas spread without warning throughout the town. The leaks continued for more than two hours before any alarms were sounded.

All six of the plant’s alarm systems failed.  It was later shown that the company management had systematically tried to cut corners  on safety and warning equipment – by, for example, failing to equip the plant with adequate safety equipment and trained personnel to handle bulk MIC storage; failing to apply the same safety standards that it used in the US; and failing to insure that there was a comprehensive plan to warn residents of leaks. 

In fact,  company staff and many others were aware of the risks created by this situation. In June 1984, six months before the accident, an Indian journalist had written an article about them: “Bhopal – On the Brink of Disaster.” But nothing was done – partly, according to Amnesty, just to cut costs.   

The result was that shortly after midnight on December 3, 1984, Bhopal’s families woke up screaming in the dark, unable to breathe, their eyes and lungs on fire from the poison, choking on their own vomit. By daybreak there were already hundreds of bodies on the ground, with scores of funeral pyres burning brightly.

In addition, long before the 1984 accident, there had been a series of leaks at the site that management was well aware of, and which caused serious pollution – contamination that continues to this day.

All told, as the Amnesty report makes clear, this amounts not only to an health and environmental disaster, but a serious infringement of the human rights of thousands of Indian citizens. 

CONTINUING IMPUNITY

All this was bad enough.  But the other key part of Bhopal’s injustice has to do with the fact that key actors like Dow Chemical/Union Carbide, the Indian Government, and the individual US and Indian senior executives and other officials who were responsible for the accident have managed to avoid  liability for the full costs of the “accident,” as well as personal accountability. 

This impunity was underscored this week when the BBC fell victim to a hoax perpetrated by someone who pretended to be a Dow Chemical executive. He concocted a false statement that the company was reversing its denial of all responsibility for Bhopal, and was establishing a E12 billion fund for 120,000 victims.   

In fact,

·          Union Carbide (UCC) and Dow Chemical,   UCC's new owner since it purchased the company for $10.3 billion in 2001,  have consistently denied any liability for the disaster.  They have argued, for example, that UCC was a “domestic” US company, with no “operations” in India. Supposedly it was also not responsible for UCIL’ actions, because UCIL was just an “independent” Indian company.

·          In fact, while UCC disposed of its interests in UCIL in 1994, until then, UCC maintained at least 51 percent ownership in UCIL. Furthermore, according to the Amnesty report, UCC played an active role in UCIL’s management and board activities, and was responsible for the detailed design, senior staffing, and on-going operating procedures and safety at the Bhopal plant.

·          Furthermore, as UCC’s CEO at the time, Warren Anderson, bragged before the US Congress in 1984, Union Carbide had 100,000 employees around the world. At the same time, another senior UCC executive, Jackson Browning, said that UCC’s “international operations represented 30 percent of sales,” and that “India was one of three dozen countries where the company has affiliates and business  interests.” 

·          After the spill, according to the Amnesty report, UCC officials (1) tried to minimize MIC’s toxicity, (2) withheld vital information about its toxicity and the reaction products, which they treated as trade secrets; and (3) refused to pay interim relief to the victims.

·          The Indian Government and the State Government of Madhya Pradesh also bear grave responsibility for the disaster itself, and then for striking an irresponsible private settlement with the perpetrators. As the Amnesty report makes clear, environmental regulations were very poorly enforced against UCIL. Then,  having sued for $3 billion in damages in 1988, the Indian Government settled for just $470 million in 1989,  without adequate participation from victims. The Indian Government has also discontinued medical research on the impact of the gas leak, and failed to publish its interim findings.

In October 2003, it was disclosed that  by then, some 15,298 death claims and 554,895 claims for other injuries and disabilities had been awarded by the Madhya Pradesh Gas Relief and Rehabilitation Department – five times the number assumed in the settlement calculations by the Indian Supreme Court.

·          UCC’s insurance paid that paltry amount in full. But then the Indian Government was very slow to pay out the money to victims. As of July 2004, $334.6 million had been paid out, while $327.5 million was still sitting in Indian government custody.  At that point, 20 years after the disaster, the Indian Supreme Court finally ordered that the remaining money be paid out to some 570,000 registered victims – an average of $575 apiece. Even these payments won’t all get to the victims;  a significant portion is reportedly consumed by India’s notorious bribe-ridden state bureaucracy.     

·          Local authorities in Bhopal filed criminal charges against both UCC its former CEO Warren M. Anderson in 1991-2. Anderson was charged with “culpable homicide (manslaughter),” facing a prison term of at least 10 years. He failed to appear, and is still considered an “absconder” by the Bhopal District Court and the Supreme Court of India.

However, despite the existence of a US-India extradition treaty,  the Indian Government has failed to pursue a request for Anderson’s extradition vigorously.

The 82-year old Anderson, who is still subject to an Indian arrest warrant, has a very nice home with an unlisted number in Bridgehampton, New York, and another in Vero Beach, Florida.

Meanwhile, while the Indian Government has been willing to hold local Indian companies that operate hazardous businesses strictly liable for damages caused by them, it has been reluctant to apply this rule to transnational companies -- perhaps because it is more worried about attracting foreign investment than insuring that foreign investors manage their activities responsibily.

SUMMARY – GLOBALIZING JUSTICE

Overall, twenty years after the original incident, Bhopal remains a striking example of transnational corporate misconduct, an incredible case of the negligent mishandling of a true “chemical  weapon of mass destruction.”

This behavior may not have been as culpable, perhaps, as the willful use of toxic weapons against innocent civilians by former dictators like Saddam and Syria's Assad. But it was no less deadly. 

As we saw above, Bhopal was also an example of the incredible loopholes that still apply to leading companies in globalized industries.

Especially in corruption-ridden developing countries like India, they have often been able to take advantages of lax law enforcement, weak safety regulations, clever holding company structures that limit liability, and the sheer expense of bringing them to justice.

Evidently the globalization of investment and trade is not sufficient. Economic globalization needs to be augmented by the globalization of justice. Among other things, that means that it is high time for transnational corporations to be subject to an enforceable code of conduct, back up by an International Court for Corporate Responsibility.   

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                        © James S. Henry,  SubmergingMarkets™, 2004

THE BEST WEEK IN UKRAINIAN HISTORY? KIEV REPORT #2Matthew Maly

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Ukraine has just had perhaps its luckiest week in its history -- a week where everything went right, and the educational process was so intense, so logical, so marvelously cogent that the country went through a hundred years of political evolution. It is now, by right, a part of Europe, a part of the Western cultural tradition, a true democracy! This has been not merely a week in life of one country, but an entire page in the history of the world -- and, let us hope, global democracy!

MEET THE CANDIDATES

It all started out rather unpromising with this fall's presidential elections. The alternatives were the usual: on one hand, Prime Minister Viktor Yanukovich, with a much smarter and more sinister person, Viktor Medvedchuk (and Kuchma’s son-in-law Viktor Pinchuk in tow), lurking behind; on the other hand, former Prime Minister Viktor Yushchenko, with a much smarter and more sinister person, Yulia Timoshenko, lurking behind.

Both Yanukovich and Yushchenko were appointed by one and the same President Kuchma. Medvedchuk and Timoshenko had both proved that they know how to turn their government connection into enormous personal wealth. I could tell the difference between these two teams no better than I could tell Coke from Pepsi.

There was another divide: Ukraine speaks Ukrainian and Russian, it has Western and Eastern part, it can join NATO or ally itself with Russia. Yanukovich is from the Russian-speaking part of Ukraine, speaks bad Ukrainian, and so his campaign was getting its local currency by exchanging the rubles it had. Yanukovich’s campaign tone was thuggish, unmistakably betraying presence of Russian political consultants.

Yushchenko’s power base was in Western Ukraine, its tone was uncharacteristically sleek, it tended to mention democracy, and it was not hurting for dollars and euros.

Since I wanted Ukrainian people to actually have a better life, I had no preference between the two. But I strongly felt that using a thuggish tone was a better electoral tactic as that was something the Ukrainians could relate to. My money was on Yanukovich, and I thought I was smart.

SURPRISES

Then an amazing thing happened: people appeared to deeply resent Yanukovich talking down to them, while actually appreciating Yushchenko’s respectful and meaningful messages.

Yanukovich’s billboards, with wonderful, in a certain way, ultimate, slogans “Just because!” and “That’s the way it should be!” were everywhere, while Yushchenko’s slogan “Yes!” (with a horseshoe as a symbol of luck), were nowhere to be seen. In Ukraine, it is called “using the administrative resource”: after all, Yanukovich is a current Prime Minister while Yushchenko is just an opposition leader. Ukraine is a democracy, and everyone can sell advertising space to Yushchenko if they wish to have all their documents for the last five years audited by someone extremely unfriendly and their permits and licenses withdrawn. And of course there could not be any fair description of Yushchenko on any state-owned media.

Then, right in the middle of the campaign, Yushchenko had a little problem: in one day, his entire face got covered with horrific acne-like inflammation, his nose swelled to twice its former size, so that he started to look like a Hollywood movie monster. Since nobody in the world has ever had such a disease, especially one that developed so quickly and in such an inopportune time, people suspected that Yanukovich may have poisoned Yushchenko, probably with dioxin.

There is no direct evidence that Yanukovich was involved. But if you look like a thug, talk like a thug, and behave like a thug, people tend to suspect that you are a thug. It does not help matters if you come from a mafia-controlled Donetsk region of Ukraine, have a long history of association with the murderous mafioso who controls the region, and having had two criminal convictions, did time in jail. In a word, Yanukovich got stereotyped.

Yushchenko got stereotyped as well: people assumed that since he had suffered horrible disfigurement for talking about the truth and democracy he must have really meant it. You have the stigmata – you must be Jesus Christ. And as a result, two things happened: Yushchenko became infallible; for Ukrainians, he became the focus of all their dreams and aspirations, and (pay close attention!) truth and democracy became important because Yushchenko was talking about them. As far as poisoning, believers duly noted that mortal poison did Yushchenko no lasting harm.

Let me say it again, since this is very important. Jesus was the guy who could perform a miracle here and there. People did not have, nor could they understand, the moral code that Jesus was proposing. But since Jesus could do miracles, people accepted his moral code as their own.

Same here. Make no mistake, truth and democracy meant nothing for Ukrainians. Ukrainian students cheated and waited for the time when they become businessmen so they could start stealing. Kiev’s Mercedes-riding bureaucrats were the very epitome of graft, and now they are walking after Yushchenko with the strange smile on their faces, inviting students who demonstrated in the cold to spend the night in their palaces: obviously, there was more to them than graft.

Ukrainians did not accept the theoretical notion that somewhere there could be a government that actually served the people, respected them, and told them the truth. It has all changed now in Ukraine, probably forever, just because Yushchenko said that it should.

THE "ELECTIONS"

Then there came the first round of voting on October 31. It is now clear that Yushchenko got more than 50% of the vote. But God had mercy on Ukraine and prevented Yushchenko’s win in the first round. God has firmly decided to make Ukraine free and democratic once and for all, and for that Ukraine needed to go through some suffering so as to earn its freedom. There was serious fraud in favor of Yanukovich, with the result that both Yushchenko and Yanukovich got about 39% each, with Yushchenko getting marginally more votes. The total is less than 100% because there were 22 other candidates.

Now, that was really something. Never in the post-Soviet space did the opposition presidential candidate get more votes than the candidate of power. In fact, many people thought that voting against Yanukovich was quite useless. Other people thought that voting for Yanukovich was quite useless, but Yanukovich did much to disabuse them of this notion. Regional officials of the regions where Yanukovich would not win, knew they would be immediately fired (and they were). So, a lot of little tricks were used. Voting in Ukraine is voluntary, and students who wanted to get a failing grade on their next exam could abstain from voting. For the rest, the procedure was as follows: a student would obtain a ballot, choose any candidate he or she wanted as long as it was Yanukovich, show the ballot to the person quietly standing by the ballot box, probably their Civics or Ethics professor, drop the ballot into the ballot box, and be assured of a passing grade on their next Chemistry examination. For the older generation, there was another trick. Fail to vote for Yanukovich, and see your heat and water turned right off.

And yet, even with all these tricks, Yanukovich only obtained 45% of the vote. It meant that his true level support could not have been greater than 30%. And yet, Yanukovich HAD to win the second round, had to get at least 20% more. Why could not Yanukovich lose? Because there is a lot of stolen property at stake, and when property is stolen, there is no receipt to prove ownership. That means that a new government could take the property away. Whatever you could say about the famous Khodorkovsky case, it is no longer advisable for the oligarchs to have property for which they have absolutely no legal title.

In the second round, there was even more fraud on behalf of Yanukovich. As this is now well documented, I will not go into that. People of Ukraine are no strangers to fraud, and they could have submitted to it easily, with barely a sigh. But now they had a lightning rod of Yushchenko, a highly moral person they imagined him to be. Regardless of who Yushchenko actually is, what matters is that people appointed him as a personification of all the best that is in them, a focal point of all their hopes. From now on, a stab at Yushchenko was a stab in their heart.

And that made Yushchenko much more than a President: he is now in the same league with Reagan, the Pope of Rome, and the Beatles. There is a Woodstock atmosphere in Kiev, and Yushchenko supporters, people of all ages, look like the happiest people in the world. They have clearly found themselves, their inner freedom, and their strength.

IRONIES

Let us again return to what happened here, as it is unprecedented. In the second round of voting on November 21, Yushchenko got about 70% of support, and if the elections were fair he would have by now be the President-elect. Would Ukraine be a real democracy now?

Absolutely not!!! Ukraine would have gotten Yushchenko as President, and would have calmly gone back to cheating, stealing, hiding from authorities, and suffering as it always has.

After all, Yushchenko already HAD BEEN a Prime Minister, and quite recently. And there was no enthusiasm, no support, no happiness, no tears of joy, and lousy economic results, worse than those demonstrated by Yanukovich.

If the elections were fair, it would have made no difference who won, Yushchenko or Yanukovich. Again. After all, Yanukovich is no worse than Ken Lay: just a tough, self-serving, and cynical kind of guy.

What happened? With great help from Yanukovich, and thanks to him, Yushchenko has lit the inner light in the souls of mortally insulted people, the light they did not know was there. Truth, democracy, justice, or heroism mean nothing unless they are sanctified. In one fell swoop, Yushchenko have sanctified them all, and faces of his followers have changed. What happened in Ukraine is that the truth and justice were lost and are now being defended as a newfound, cherished, and fundamental possession of every citizen.

If Yushchenko now represents God, his detractors are with the Devil. Some of them, to be sure, are hellish personalities, gangsters and murderers, such as the Head of the Donetsk Region or the Mayor of Odessa.

TRANSFORMATION

I am more interested in a momentary transformation. There is a woman I know who went on TV to defend Yanukovich. Her eyes looked dead, her hands were shaking, and she had made her worst hairdo. Across from her, there was a woman who defended Yushchenko, and that one grew ten years younger in four days, her back was straight and her eyes were shining. Was the debate about Yushchenko? Absolutely not.

Actually both of these women used to be equally skeptical about him. But inside one woman a tiny flickering light was now almost extinguished, while the other had the light of her soul burning as brightly as it could, just like the bright orange she wore. It was the debate about human dignity, with Yushchenko as a starting point.

Yushchenko is a tall man with a robust face of a peasant. Women here consider him attractive. But after the second round of elections, with his pockmarked and swollen face, he is universally seen as beautiful. This adoration brings a real danger of Yushchenko not being able to live up to it, but this is the case right now.

And let me just mention the designer revolution that happened here: people that used to choose between gray and gray were now proudly wearing bright orange, and 99% of them are doing so for the very first time in their lives.

Ukrainian TV these last four days is beyond description. First, there was Channel 5, a pro-Yushchenko private channel beamed straight to the Independence Square where most of the demonstrations took place. Channel 5 had a constant stream of interviews with intellectuals, artists, politicians, etc, all of them wearing something orange. Most of the times, the orange color looked attractive, stylish, appropriate for a successful, accomplished, strong-willed person that was being interviewed.

But I remember a man in his seventies, in the cheapest brown suit and a pitiful tie. Around his thin wrinkled neck, he was wearing an bright orange woolen scarf they gave him in the studio, and this scarf looked horribly out of place on this frail, poor, sickly creature. Very uncomfortable in front of the camera, the man said, “I am a retired army major, a World War II veteran. I wish to address myself to the soldiers. My sons! Soldiers! I am kneeling before you! Do not shoot at people, the people have made their choice! I want to say… Soldiers… When I was young…”

The old man was searching for words, panicking as he was being broadcasted live to a huge, country-wide audience. “Thank you very much!” said the anchorwoman in a bright and crisp professional voice, eager to end his suffering. The camera zoomed in for a goodbye. For the first time, the old man looked straight into the camera and said, “People just want to be free!” The orange scarf did not look out of place, and I could suddenly tell the guy really was a major. The guy was having his moment, even if a bit late in life.

And this is important. God did not create Man to chew cud for seventy years and then die: God created Man for one, two, or three defining moments, and the old man was having his.

But sometimes official channels were even better than the opposition TV. One report I saw informed the public that “special riot police is always ready to defend the Constitution” and the camera proceeded to get a close-up of fearsome black police dog.

Then I realized that President Kuchma, unwittingly, is a true father of his nation!

There are things in the world, such as trees, oceans, and countries, whose existence depends on all people. And then there are things, such as love, truth, dignity, inspiration, that exist only because of you. If you are not ready to give your all to defend your love and your truth they cease to exist. Again: truth is something that depends solely and exclusively on you; if you fail to defend it, it dies.

There simply is no way to transfer this responsibility on someone else’s shoulders. And from the bottom of my heart I thank God for the existence of President Kuchma, who showed guard dogs to thousands and thousands of Ukrainian students so that they would stand up, put away their Chemistry textbooks, attach their orange armbands and go to the Square.

For truth cannot be defined as a statement that corresponds to reality. Truth is what makes you unafraid of guard dogs. What happens on that Square is no rock concert, people are braving dogs and weapons – and hallelujah! – a nation is reborn!

© Matthew Maly, SubmergingMarkets™, 2004

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