THE US AND ITS "ALLIES" 45
or three million unemployed according to official sources, and nearer four million according to the TUC. In the OECD countries as a whole, unemployment has affected some 28.5 million people, against less than 20 million in 1979, a year in which it was thought things could not get worse!
In this background it is not surprising that sharp differences between the imperialist powers are coming to the forefront over policies which critically and adversely impinge on the efforts of each to protect, or rather slavage, their economies from the ravages of the recessionary crisis.
There are currently three major areas of contention between U S imperialism and the West European and Japasese imperialist countries. One is the high interest rates initiated by the U S government, another is the battle over steel prices and the third is the June 18 Reagan embargo on the supply of equipment for the 5000 km. Siberian gas pipeline.
In the first instance, the tight money policy dictated by 'suply-side economies', combined with heavy government borrowing to finance rising military outlays and offset declining taxes on corporations, sent interest rates in the U S soaring to more than 20 per cent and triggered budget deficits estimated this year at a staggering dollar 146 billion. The high interest rates in turn led to a flight of short-term capital from Europe, resulting in a rise in European interest rates, making investment less attractive, and severely contracting the demand for consumer goods, particularly in the hire-purchase market. With the simultaneous rise in the value of the dollar, any fall in prices of international commodities denominated in dollars did not help; in the case of oil, for instance, a 10 per cent fall in oil prices quoted in dollars was more than offset by a 30-35 per cent appreciation of the dollar against major European currencies. At the Versailles summit, Reagan overruled all protestations and for the time being, the U S imperialist will prevailed on this quest-ion. That interest rates have now fallen by 3 per cent is a fall-out of the tax increases Reagan was forced to introduce, negating his own economic strategy.
The 'steel war' began the day after Reagan's return from Versailles and his tour of Europe, and the "Spirit of Partnership", over v^hich he had waxed eloquent, evaporated like the morning mist. American steel-makers had been charging that European steel companies benefited from unfair government subsidies, On the other side, it was claimed that the West European share of American steel imports had already dropped by a third in the past decade despite the state subsidies which were only being given to help the EEC steel industry to modernise its plants. The U S government, backing its steel monopoly giants, threatened to slap down additional duties on steel coming into the U S market, adding up to 40 percent of its steel exports for Britain, and 20 per cent of the steel exports for France