ISp Conference: World Perspectives, part 3 – Geopolitics

Between February 11 and 15 the first international Conference of Internationalist Standpoint took place. Four documents were discussed and amended in the course of the pre-conference period and the conference itself.
The first document, on “World Perspectives” was drafted between the beginning of November and the middle of December 2022. Although the facts and figures provided are a bit outdated, no attempt has been made to update it so as not to alter the character of the initial document. Afterall, the main emphasis of the document is on the processes under development.
After the World Perspectives document, a number of Resolutions agreed by the Conference will also be published. They deal with a) the lessons from the splits of the CWI and ISA, b) environment and c) socialist feminism.

The first document, World Perspectives, will be published in parts. The following sections will be posted in the coming days: 

1. An epoch of crisis and immense instability
2. The War
3. Geopolitics 
4. Tasks

Internationalist Standpoint Conference – February 2023 

World perspectives 

Part 3:
Geopolitics

  1. No other war has caused so much havoc in the rich capitalist countries, since the 60s and the ‘70s. One reason, already mentioned, is that Russia attacked a devoted ally of the West – the US and the EU did not react in a similar way when the Russian army launched wars in the Caucasus, in Georgia, Tajikistan, Chechnya etc, or intervened in Syria and Central Africa. A second factor, linked to the former, is the fact that this war has to been seen in the context of the challenge posed to the global hegemony of the US by China. 

Historical decline of Europe and USA 

  1. The US has been the dominant power on the planet since the end of WWII. After the collapse of the Soviet Union at the turn of the 1990s, its hegemony was considered absolute by the spokespersons of capitalism. The mood of the ruling classes of the West was best reflected in Fukuyama’s aphorism “the end of history” which became their slogan for the 1990s. They agreed to China joining WTO (World Trade Organisation) confident that in a matter of 10 to 15 years they would develop some kind of “neo-colonial” domination over it. This analysis was superficial. 
  2. The capitalist spokespersons do not understand the inherent contradictions of their system and were caught by surprise by the new movements that developed in the 2000s and 2010s (anti-global, Occupy, feminist, etc) and by the 2007-8-9 recession, the worst since 1929. 
  3. China was able to cope better than the West in the 2007-8-9 recession (despite contradictions and bubbles piling up there as well) and it actually played a central role in helping the global economy come out of the recession. In the second half of the 2010s, while the West was still trying to recover from the preceding recession, all projections showed that around 2030 China would overtake the US as the strongest economy on the planet. This sent shock waves to the US ruling class. Donald Trump, elected president of the US in 2017, soon entered the trajectory of a trade war with China which has been continued and escalated by Joe Biden. 
  4. Until last year (2021) it was more or less established that by 2030 China’s gdp would surpass the US GDP in dollar terms. In terms of PPP (purchasing power parity) China is already, since 2016, the most powerful economy. In recent months a number of Western think tanks are beginning to question this timeline, claiming that it could take decades for China to overtake the US and that perhaps this may never happen. Thus, the Economist (2022/09/06) for example carries an article casting doubt on this perspective, titled “Will China’s economy ever overtake America’s? Some economists think not”. Capitalist commentators also raise the possibility that India could overtake China at some stage and thus block its road to the top. And Bloomberg (November 8, 2022) states that: 

“For China, the dollar’s strengthening makes it all the more a question of whether it can exceed the US, as once seemed inevitable in the nearer term. With Covid Zero here to stay for some time, it means no “sorpasso” [surpass] in sight”.

  1. According to Morgan Stanley, India will become the world’s third-largest economy and stock market before the end of the decade; India has already overtaken Britain as the 5th strongest economy on the planet (and measured on a PPP basis it is already the 3rd biggest economy, i.e., ahead of Japan); its GDP is to surpass $7.5 trillion by 2031, more than double current levels ($3.2 trillion at the end of 2021) overtaking Japan in nominal dollar terms (at around $5 trillion) and Germany (around 4); the number of households earning in excess of $35,000/year is likely to rise fivefold, to over 25 million; and 25% of incremental global car sales over 2021-2030 will be from India, with 30% of PV sales to be EVs. 
  2. Bloomberg (26.11.2022) shares similarly optimistic perspectives for India: 

China’s economy zoomed past India back in the early 1990s, when it was following the initial chapters of the high-growth playbook. Now, just as China is running into major headwinds, India has the chance to emerge as a new dynamo. The South Asian giant is on the cusp of sustained 7% GDP growth over the medium term… Bloomberg Economics is even more optimistic, seeing potential growth ascending to 7.6% by 2026 and peaking around 8.5% in the early 2030s”

  1. We need to be open about such timelines, particularly because the trade war against China will inevitably slow down its growth. But the perspective of India overtaking China seems very remote. 
  2. Global economic activity is shifting from the West to Asia – Asia now representing more than 50% both of global production and of global trade of manufactured goods. China is the biggest producer on the planet. It has the fastest growing internal market in the world. China is very close to the US in nominal dollar terms – US gdp is at US$23 trillion while China’s is at US$17.73 trillion (2021 figures). India is a long distance behind, at US$ 3.173 trillion
  3. Goldman Sachs economists attempted a very long-term estimate of the balance of power on the economic level, up until 2075, encompassing 104 countries (published 06.12.2022). They expect average global growth to drop in the present decade to 3% from 3.6% average before the financial crisis (2008-9). And a continuous drop to around 1.8% per annum by the 2070s, i.e., half of the pre-2008-9 average. By 2075 they predict China to be the strongest economy and India to be the second strongest (Indonesia by the way is predicted to be the 4th strongest economy behind the US). Goldman Sachs expects a “weakening in the globalization of trade” by which they mean “the growth in cross-border movement of goods, capital, people, technologies, data and ideas”.   
  1. The process of the shifting balance of power from the West to Asia is a tendency that is inherent in the capitalist system. It is a manifestation of the powerful law of “combined and uneven development” which characterizes capitalism from its inception. Thus, political decisions can speed up or delay the manifestation of these processes, but they cannot make them disappear. The US can delay the speed with which China is challenging it, but it cannot put absolute breaks on it. 
  2. When Britain was developing as the dominant imperialist force on the planet in the 18th and 19th century, it had “free” trade on its banner. When the US was overtaking Britain and Europe in the course of the 20th century, it also was a great propagator of the advantages of free trade. The fact that now the US is the one that is applying protectionist policies and China presents itself as a defender of free trade is an indication of weakness on the part of the US and of the decline of the West. The West of course claims that this is from a position of strength and in order to defend its national security, democratic rights and the rights of minorities like the Uyghurs in China. Marxists of course defend the rights of the Uyghurs and condemn the atrocities of the Chinese state. But the West always knew about the Uyghurs and never uttered a word, until they began to worry that China would overtake the US – once again, hypocrisy without limits. 
  3. Thus, we have entered a new period of global competition for domination, which has many similarities to the first Cold War between the West and the Soviet Union, often called 2nd Cold War.

What kind of “cold war”?

  1. The fact, which is of central importance in the geopolitical and economic conflicts of today, is that the West is losing ground, entering a process of “historical decline”. This is what Britain and the rest of the European powers that dominated the world in the 19th century and before, faced in the first part of the 20th century. A similar process is now developing in relation to US capitalism. 
  2. This is a slow process, not one that can be completed in a number of years. It would take many decades unless interrupted by revolutionary developments which put socialism on the agenda. Such a socialist perspective would necessitate the existence of mass revolutionary Marxist parties. Such parties do not exist today and therefore the perspective of revolutionary change is a long term one. Thus, the new Cold War will drag on for a whole historical period. 
  3. The epoch of the historical decline of US imperialism creates the conditions of great economic and geopolitical instability. In previous historical periods (from ancient times, thus the usage of the term “Thucydides’ Trap”[]) such conflicts would almost certainly (historically in 3 out of 4 cases) lead to a war between the main antagonists, i.e., in the present epoch, a new world war. This is not taking place today because all the main antagonists are in possession of nuclear arms, meaning that a new world war would destroy all belligerents. 
  4. Cold War II differs from Cold War I, essentially because it is a conflict between capitalist powers The first cold war was a conflict between the capitalist world and the nationalised and planned economies of the Soviet Union and its allies. The West is trying to give the new cold war ideological characteristics, presenting it as the conflict between the democratic and free West against the autocratic regimes of China and Russia and their allies. This argument has attraction only in the rich industrial countries of the West. It carries little weight in Asia, Africa and Latin America, where parliamentary democracy (corrupt and exposed as it is) is a recent and fragile development and where there is huge suspicion towards the Western powers as a result of their imperialist/colonial past. Also, the West was always on fine terms with the various dictatorial regimes that plundered the neo-colonial countries on behalf of the local capitalists and their Western collaborators. 

Reserves in dollar terms 

  1. China has intervened economically in many countries of the Global South (but also in Europe) in the context of its “belt and road initiative”, which was launched in 2013 and is involving 65 countries representing 29% of the global gdp and 63% of the global population, according to a 2016 HSBC survey (today it’s obviously more). China has already spent around 1 trillion US dollars on its “initiative”. It has some powerful advantages over its Western antagonists in relation to its expansionary aims: it has huge reserves estimated at more than around $3 trillion and it’s quick to deliver loans without putting conditions of the kind IMF is and without interfering in internal affairs. If the loans aren’t served, the projects can pass under the ownership of Chinese companies for periods of up to 100 years.

Deglobalization and decoupling 

  1. In the past few years some new words have entered the economic vocabulary – such as “decoupling” and “deglobalization”. These are a reflection of the new situation created by the US-China trade war and the US’ effort to push US companies to relocate, i.e., move from China back to the US or to friendly (Asian or other) countries. These processes are important and need to be taken into account in our analysis, but with a sense of proportion. 
  2. Decoupling cannot take an absolute character. It cannot take place in one huge leap or a massive U-turn, because it would mean the crash of the US and the West’s economies. It should not be expected to create a new “iron curtain” as was the case with the Soviet Union in the past. The main reason for this, is that the West needs China both as a workshop/factory for its products and as a market. Therefore, the basic prediction that we can make, at least for the foreseeable future, is that it will be a partial process, a slow process and at the same time an expensive one. 
  3. This is in line with the thinking of some of the systems important spokespersons. Thus, according to Lorenzo Flores (Financial Times) vice-chair of Kioxia (Japan), one of the world’s leading chipmakers, decoupling global supply chains will be “very complicated, expensive and time-consuming” process. “Decoupling supply chains from China… would not happen in six months or a year’”. The Financial Times explains that Washington’s controls have specifically targeted Kioxia’s Chinese rival Yangtze Memory Technologies, but Flores noted that the Chinese company had “leapfrogged” in technology after lagging behind. Thus according to FT, while chip memory makers that compete directly with YMTC, such as Kioxia, might benefit from the US restrictions, “China is also expected to accelerate the development of domestic capabilities, which could pose a threat to Kioxia in the long term”
  4. “Deglobalisation” is also a debatable term. It does not describe accurately what most probably will be the feature of the next period, which is a slowing down of globalization (i.e., a fall in its rate of growth) but not a contraction in absolute terms. The Financial Times describes it correctly, in our opinion: “Globalisation is not dying, it’s changing”. What is most probable is that the process of globalization will be slowed down compared to the previous historical period, but it will not end and it should not be taken for granted that it will contract i.e., go in reverse, for any significant length of time. The only period in history when globalization contracted in absolute terms was between World War I and World War II. We are not in such a period. 
  5. The UN warns that efforts to “friend-shore” manufacturing could weigh on a global trading system. “The trade system is a very complex system,” according to Rebeca Grynspan, secretary-general of the United Nations Conference on Trade and Development (Unctad). “…If you try to get away from one part of the world, you create a huge disruption to the system. Everything changes”. Unctad projects that growth in total seaborne trade will be 1.4% in 2023, same as this year’s level, and then it will average just above 2% through to 2027. That’s below the historical average in recent decades of about 3.3% annual growth but it is not negative. 
  6. The main antagonists are the US on the one hand and China on the other, but both powers have strong alliances around them. Obviously, the EU is backing the US but it is important to note this alliance is not without internal rifts. This is due to the fact that within the Western alliance Europe is losing further ground while the US is strengthening its relative position. Of course, the US-EU block, particularly over the war in Ukraine, is quite a solid one, forged over many decades particularly in the post WW2 period but the rifts are notable.
  7. On the other hand, China is not isolated in the global economy despite all the efforts of the West. Russia is of course its closest ally but it is not the only one. Two of the most noteworthy alliances build around China and supplemented by Russia are the Shanghai Cooperation Organisation (SCO) and BRICS. 
  8. The SCO is a political, economic and security (i.e., it collaborates militarily) organization. It is the world’s largest regional organization in terms of geographic scope and population, covering 40% of the world population and more than 30% of global GDP.It is the successor to the “Shanghai Five”, formed in 1996 between China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. In the years that followed, it expanded further. Its Charter was signed in 2002 and entered into force in September 2003. Its membership has since expanded to nine states, with India and Pakistan joining in 2017. Several countries are engaged as observers or dialogue partners – nearly 20 in total.
  9. BRICS is the acronym coined to describe the alliance between five major emerging economies: Brazil, Russia, India, China and South Africa. The BRICS have an estimated population of about 3.21 billion (41.5% of the global population) and a combined nominal GDP of US$26.6 trillion (about 26.2% of global GDP in dollar terms – in PPP their combined GDP rises to US$51.99 tr., 32.1% of global GDP) and an estimated US$4.46 trillion in combined foreign reserves (2018 figures). 
  10. According to Goldman Sachs the BRICS will dominate the world economy by 2050.
  11. The BRICS together with the SCO represent a direct challenge to the international institutions which are in the hands of Western imperialism, such as the G7, the IMF and the World Bank. They have already announced competing initiatives to the G7’s, such as the New Development Bank, the Contingent Reserve Arrangement (a BRICS payment system) and a BRICS basket reserve currency aiming at a direct challenge to the dollar (and the euro), officially announced in 2022. A number of countries are following the BRICS as observers (again the total number is close to 20). Argentina, Iran and Algeria have already applied to join BRICS soon after the BRICS’ last meeting in July 2022. Also, according to the Chinese Foreign Ministry, several other countries are interested in joining, including Indonesia, Turkey, Saudi Arabia and Egypt.
  12. It is notable that the West seems to have entirely missed seeing the processes that have been taking shape. They missed the importance of the creation of SCO and BRICS and had the naïve impression that they could break China away from Russia, after the war in Ukraine. They even failed to see the importance of the China–Russia declaration made only days before the invasion in Ukraine (on Feb 4, 2022) which among other things stated that they: 

“…reaffirm that the new inter-State relations between Russia and China are superior to political and military alliances of the Cold War era. Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation, strengthening of bilateral strategic cooperation is neither aimed against third countries nor affected by the changing international environment and circumstantial changes in third countries.”

Similarly, the US tried but failed to pressurize Saudi Arabia to take an anti-Russian position after the war in Ukraine. On the contrary, relations between China and S. Arabia are being strengthened

  1. China may overcome the US in the foreseeable future as the stronger economy on the planet, but this does not mean that it will be the dominant power on the planet. This will be a much longer process which will have to do with the levels of productivity and competitiveness, technological superiority, military capacity etc. If we look at the history of how the US overtook Britain, there are some useful analogies: the US overtook Britain towards the end of the 19th century and by the end of WWI it had overtaken the British empire as a whole. But it only became the dominant power on the planet only after WWII. The massive catastrophe of two world wars, of course, accelerated this process. If it is not interrupted by the building of mass revolutionary parties which will raise the perspective of the overthrow of capitalism, the US-China conflict for global supremacy will be one of the main features characterizing the decades to come. 
  2. The processes described above are of course conditional. Developments must be followed closely and any corrections necessary should made. There are many factors involved and some of them are entirely unpredictable. One of the most important ones is the internal situation in China. 

China – internal contradictions 

  1. A major upheaval against the regime is inevitable at some stage. The high growth figures of the economy over the past decades are declining and the impact of this on social eruptions remains to be seen. There has been a lot of turmoil in the past decade in China, but it has all been around local issues. The mass demonstrations in November 2022 against the lock downs have been the most important for decades but not comparable to the Tiananmen square movement of 1989. However, at some stage a popular revolt against a brutal dictatorship is unavoidable. The regime will of course react with massive violence – as it did in the case of Tiananmen and worse. What the perspectives of a future mass revolt will boil down to, is if the working class will enter struggle as a class, with strikes and general strikes. Of course, if there is no revolutionary Marxist party present the revolt will not be able to challenge the capitalist system. If successful, it could end up with a change of guard inside the ruling class and the Communist Party bureaucracy, and with a “democratic parliamentary façade”. Such a development will mean a major disruption of the “normal” development of China, particularly if it is coupled with a revolt of national minorities on national and religious lines. Such developments will not in general solve the problem that China will be posing to US supremacy, but it can complicate matters for the Chinese capitalists and allow the West to gain time and other antagonists of China to gain ground. There should be no doubt that the US will not hesitate to encourage all sorts of revolts of national and religious character inside China, whatever the consequences, in a cold-blooded manner and cynical calculations with the sole aim to prolong its superior position globally, projecting of course the “struggle for democracy”. 

Rifts in the Western front 

  1. Another factor which is of importance, as mentioned above, is relations within the western powers. On 24.11.2022 Politico describes the situation as one of: 

an “…increasingly toxic atmosphere” between the US and its European allies and of “fears over a transatlantic trade war”. It reports that “Top European officials are furious with Joe Biden’s administration and now accuse the Americans of making a fortune from the war, while EU countries suffer”. According to a senior anonymous EU official who spoke to Politico “…the country that is most profiting from this war is the U.S.”. 

  1. This is not difficult to explain: the US liquid natural gas (LNG) that arrives in Europe is sold at 4 times the price it sells in the US – this seriously undermines the competitiveness of European industry; then the Biden administration went ahead with a $369 billion industrial subsidy scheme to support “green industries”, further undermining EU competitiveness; at the same time the EU officials are frustrated at the fact that the US arms industry is making massive profits because of the war in Ukraine. The seriousness of the rifts between key European powers and the US is manifested not just in the comments of some EU officials but in the official statements and actions of many high standing EU officials, particularly of the two most powerful leaders of the EU, the French president Emanuel Macron and the German Chancellor Olaf Scholz.
  2. In an article titled “Macron Accuses US of Trady ‘Double Standard’ Amid Energy Crunch” published October 21, Bloomberg reports on Macron openly criticizing the US, in a press conference in Brussels, for using double standards; and both the US and Norway of making super-profits out of the geopolitical war at the expense of Europe. And that on top of this, it hands out state subsidies to the auto industry up to 80% of the production costs, for the manufacture of EVs, in the name of the green transition, while in Europe state subsidies are prohibited. Bloomberg referred to earlier comments by Macron in which he stated that 

“…the EU must join forces with Asian economies to demand from the US and Norway to show a more friendly approach by selling natural gas at lower prices”. Bloomberg also mentioned a statement by Charles Mishel, the president of the European Council in which he said: “…it is clear we don’t want to be naïve, but we also do not want to enter the logic of a systematic confrontation with China”.

  1. What however draw the attention of the bourgeois media more than anything, was the visit that Olaf Scholz made to China on November 4, 2022. This visit created a lot of tensions among the Western allies but also inside the ruling coalition in Germany (SPD, Greens and Free Democrats). There were many protests from German, European and American media. Der Spiegel wrote that this represented “a god sent present to the Chinese leadership”. Politico raised the question: “Will Europe ever draw the lessons?”. Scholz was accused of being naïve, and of making a serious mistake, underestimating the geopolitical factors, etc, etc. But the fact that Scholz was accompanied in this visit by some of the most powerful representatives of German multinational capitalism, such as Volkswagen, BASF, BMW, Merck, Deutsche Bank and Bayer fully clarifies the picture: it is not a matter of naivety or lack of understanding, but of economic interests. 
  2. Just to site one example, VW is at the top of the list in vehicle sales in the Chinese economy: 4 out of 10 cars sold by VW are sold in China (VW employs 100.000 workers in China). VW will not agree to committing suicide for the sake of the US wanting to maintain its hegemony. The example of BASF, the number one chemical corporation globally, is also telling. BASF’s second market after Germany (18% of annual sales) is China with 14% of its annual sales. BASF is de-investing in Europe and investing in China (a new plastic unit, valued at €19 bn) in order to “support rising demands for its products in the country”, at a time when “the European chemical market is facing very weak growth for the past decade” according to its CEO Martin Brudermüller.  The energy crisis was the last straw, making production more costly in Europe. One week before Scholz’s visit to China, the German government had agreed to the buying of 24.9% of the port of Hamburg by the Chinese giant Cosco. While in China, Scholz made a clear statement: Germany is against decoupling. Essentially, the same statement was made by Charles Michel, mentioned above. 
  3. It is clear that despite the fact that the alliance between the US and the EU cannot break, the EU is not willing to follow the US all the way, either in relation to the Ukraine war or in relation to the “war” of domination between the US and China.
  4. Divisions also exist in the US ruling class. The Trumpite wing of the Republicans blames the war in Ukraine on the blunders of Biden’s administration, although they did not vote against the aid to Ukraine. Bernie Sanders was also vocal in distancing himself from the policies of the US administration although he also did not vote against US aid (military and otherwise) to Ukraine. In the last week of October 30 Democratic members of the House of Representatives published a letter by which they were calling on the Biden administration to go for direct negotiations with Moscow, only to retrieve it one day later due to the avalanche of protests against them. Foreign Affairs, (a US journal on US foreign policy) has come out clearly in favour of searching for a diplomatic solution to the war, warning that the US policy is leading to a never-ending war, which in the end endangers the global interests of the US. Some of the clearest criticisms to US policies have come from Henry Kissinger (ex-minister of Foreign Affairs in the US, undoubtedly one of the shrewdest analysts) who initially came out openly in favor or accepting the loss of Ukrainian land in order to come to an understanding with Russia, siting China as the real enemy. His statements met with angry responses, as a result of which he had to “explain” himself and water down his positions.   

Conclusions 

  1. To sum up the main processes at work, the capitalist system is faced with one of the worst crises in its history, particularly in the post WWII period. The policies used to cushion the crisis of 2007-8-9 and then the pandemic and the impact of the war in Ukraine, have led to the huge rise of global debt (public and private) and the reemergence of inflation after more than 4 decades, at the same time as the economies are stagnant or in recession. The world economy is entering into stagnation or recession in 2023 but the strategists of capital cannot apply the policies that would be normal in any recession, i.e., increase in public spending, quantitative easing and lower interest rates. They are forced to do exactly the opposite: quantitative tightening, decrease in public spending, sharp increases in interest rates. By reversing the policies that would have cushioned a recession, they are pushing the global economy into what is described as “a hard landing” i.e., a deeper recession. The system is not just faced with a harder economic situation next year than 2022, it is not just faced with declining growth in the present decade, it is faced with falling average rates of growth on a global scale, as Goldman Sachs predict, for the next historical epoch. The cost, of course, will be laid on the working-class masses and the poor.
  2. The system lacks economic policies that can help it out of the impasse. It ended in a blind alley through the application of Neoliberalism, but if they turn to Keynesianism, they will cause even greater chaos. The “Modern Monetary Theory” that was developed in the course of the 2010s, of unlimited borrowing to finance infrastructure and investments, was based on the perception that interest rates would remain indefinitely at 0% – it was ditched silently, before it was ever applied. 
  3. We are in a vicious new Cold War between capitalist powers for global hegemony, not seen in decades, since the time of Cold War I between the planned economies of the Soviet Block and the West. The background to the new Cold War is the historical decline of the West relative to Asia and, especially, China. A new “mad” arms race is taking place affecting every corner of the planet. Geopolitical clashes and proxy wars can be expected to be more frequent, more determined and bloodier – the war in Ukraine is such an example. The world is faced with an unprecedented climate crisis. The Paris Agreement, adopted by 196 UN nations in December 2015, set the target of keeping temperature rise below 1.5oC. Now environmental scientists say the planet is heading for 2.5oC to 3oC – the last UN international conferences (COP 26 and COP 27) are a farce. 
  4. Political instability has become inherent in the system. This time it is not just characteristic of the neo-colonial countries, but of Western “democracies” as well. The working class does not have the proper political and trade union representation. The traditional parties of the Left have been “bourgeoisified” while the New Left has been tested and shown to be completely inadequate. In view of this vacuum the forces that are making ground internationally are those of the far and populist right. This is causing a reaction in sections of society particularly the youth, who see the need to fight. Antifascism, feminist struggles and fight to save the climate are major issues, which are pushing many in the direction of left radicalization.
  5. The real choice before humanity, as Rosa Luxemburg put it, is “Socialism or Barbarism”. The need to build the political forces which will help the working class raise its consciousness and understanding to the level of challenging and overthrowing the system, is the most important task faced by Marxists of our epoch.

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