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Walden Bello - 2006
Walden Bello is a member of the House of Representatives of the Republic of the Philippines and president of the Freedom from Debt Coalition. A retired professor of sociology at the University of the Philippines, he is currently a senior analyst at the Bangkok-based analysis and advocacy institute Focus on the Global South. He is the author of 15 books, the most recent of which is The Food Wars.
11 Released as Hong Kong Civil Society and Global Movements Pressure HK Government (11 January 2006)title
At a police hearing on Jan 18, the Hong Kong government dropped charges against 11 of the 14 individuals it had detained in connection with the protests at the World Trade Organization Ministerial in mid-December. However, charges of unlawful assembly and unauthorized assembly have been formally made against three of the detainees: Kyung Kyu Yang, a vice president of the Korean Confederation of Trade Unions (KCTU), and In Hwan Park and Il Kwon Yoon of the Korean Peasants’ League.
The three have pleaded not guilty. Their trial has been set for March 1 and 7. In the meantime, they have been released on bail of HK$30,000 each and are allowed to go home before the trial. Immediately before the police hearing, civil society in Hong Kong was abuzz with activities in support of the 14 activists. Nightly vigils took place at the Star Ferry Terminal since January 5, when 12 of the 14 began a hunger strike to pressure the authorities to drop all charges and allow all of them to return home. On January 10, over a hundred people from Hong Kong along with about 25 members of an international delegation staged a 24 hour solidarity hunger strike on the eve of a pre-trial hearing on January 11. Aside from Yang, Park, and Yoon, the other detained activists who fasted for their freedom included eight other Koreans: Dae Hyuk Lim of the Korean Metal Workers’ Union; Dae Sub Hwang of the Korean Catholic Farmers’ Movement; and Seung Kyu Kang, Young Hoon Lee, Suk Namgung, Chang Joon Kim, Dong Ung Han, and Hyung Jin Lee, all belonging to the Korean Peasants’ League. Joining the Koreans was fellow detainee Kosuke Nakagiri, an activist working with the homeless in Osaka, Japan. Support for the activists has been rising in the city. Aside from attendance at vigils and fasting, acts of solidarity have been shown by, among others, the Hong Kong Professional Teachers Union. The Teachers’ Union donated HK$20, 000 towards the living expenses of the detainees, whose means of existence has been precarious owing to their not being able to return to work in their home countries. Pressure on the Hong Kong authorities escalated over the past week with protest actions demanding the release of the detainees taking place or planned at the WTO headquarters in Geneva and at Chinese embassies in several cities throughout the world. Adding to the pressure was the arrival on January 8 of an International Mission of 25 civil society leaders led by three members of the National Assembly of the Republic of Korea: Dan Byung Ho, Ki Kap Kang, and Young Gil Kwon. The mission was organized by Korean groups together with the Hong Kong Confederation of Trade Unions and the Hong Kong People’s Alliance. At a meeting with the International Mission on Jan 10, five members of the Hong Kong Legislative Council (Legco) announced that they were asking their other colleagues to sign a letter demanding dropping of the charges. According to Legco member Lee Cheuk Yan, “We are asking the Permanent Secretary of Security to drop the charges for three reasons: First, there is little evidence linking the 14 [detainees] to violent acts. Second, this is selective prosecution. Third, the whole case is politically motivated.” Later that day, a meeting between mission members and the Permanent Secretary, Stanley Ying, produced little positive interaction, with the latter simply saying that his office would make a decision on whether or not to recommend prosecution after the police finished with their investigation. “Under our constitution,” he said, “the Department of Justice will manage the prosecution free from outside interference.” The antiseptic bureaucratic response, according to some observers, actually hid the Hong Kong authorities’ increasing apprehensions over the case. “The government has a very weak case,” said one Hong Kong activist. The question is why it has allowed things to go this far. Maybe the reason is that it really does not have a foreign affairs office, one that would have looked at the matter and realized all the negative diplomatic consequences for Hong Kong and recommended dropping it.” Even with the release of 11 of those detained, questions persist as to why the Hong Kong government has decided to continue charging three of them. Some members of the International Mission think that pressure on the Hong Kong government from the World Trade Organization to pursue the case may be one of the reasons. Other members of the International Mission are Ali Fami, Via Campesina; Balan Nair, Building and WoodWorkers International Union; G. Rajasakaran, International Confederation of Free Trade Unions; Jae Hwan Jeon, Korean Confederation of Trade Unions; Chih-Chieh Tsai, Taiwan Labor Information and Education Association; Osamu Yomono, Japan Railway Union; Hyewon Chong, International Union of Food and Agricultural Workers (IUF); Edgar Bilayon, Alliance of Philippine Workers (BMP); Theodorico Navea, Jr., Freedom from Debt Coalition, Philippines; Kasihiko Sato, Asia Regional Secretary, Public Services International (PSI); Crispin Beltran, Party of the Toiling Masses(Philippines), Jae Hwan Jeon, KCTU; Walden Bello, Focus on the Global South; Max de Mesa, Forum Asia; Young Ie Wuo, Committee for the Action of Labor Legislation, Taiwan; Edwina Antonia, International League for Peoples Struggles; Jong Hwe Lee, Jinbo Network Center, Korea; Min Woong Park and Kyung Sik Moon of the Korean Peasant League; Suk Chi Soon, International Center for Labor Solidarity; Geun Il Lee, UNI-Korea; and Jae Don Cheong, Catholic Farmers’ Association, South Korea. Humanitarian Intervention: Evolution of a Dangerous Doctrine (19 January 2006)
As war clouds gather over Iran, the topic we are focused on in this conference is very timely: great power military intervention in the affairs of sovereign states for “humanitarian reasons.”
“Humanitarian intervention,” defined simply, is military action taken to prevent or terminate violations of human rights that is directed at and is carried without the consent of a sovereign government. While the main rationale for the invasion of Iraq by the United States was its alleged possession of weapons of mass destruction, an important supporting rationale was regime change for humanitarian reasons. When it became clear that there were in fact no WMD, the Bush administration retroactively justified its intervention on humanitarian grounds: getting rid of a repressive dictatorship and imposing democratic rule.The show trial of Saddam for human rights violations now taking place in Baghdad is part of this retroactive effort to legitimize the invasion. Iraq: Dead End of Humanitarian Intervention Iraq shows the dangers of the humanitarian rationale. It can so easily be used to justify any violation of national sovereignty to promote the interests of an external force. Yes, under Saddam Hussein, the Iraqi people were subjected to systematic repression, with many people executed and jailed. Yet, most of us, at least most of us in the global South, recoil at Washington’s use of the humanitarian logic to invade Iraq. Most of us would say that even as we condemn any regime’s violations of human rights, systematic violation of those rights does not constitute grounds for the violation of national sovereignty through invasion or destabilization. Getting rid of a repressive regime or a dictator is the responsibility of the citizens of a country. In this regard, let me point out that not even during the darkest days of the Marcos dictatorship did the anti-fascist movement in the Philippines think of asking the United States to do the job for us. Now, for some people in the North, who belong to states that dominate the rest of the world, national sovereignty may seem quaint. For those of us in the South, however, the defense of this principle is a matter of life and death, a necessary condition for the realization of our collective destiny as a nation-state in a world where being a member of an independent nation-state is the primordial condition for stable access to human rights, political rights, and economic rights. Without a sovereign state as a framework, our access to and enjoyment of those rights will be fragile. So long as nation-states remain the prime political collectivities of human beings, so long as we live in a Westphalian world—and let me say emphasize that we are not in a post-Westphalian world—our defense of national sovereignty must be aggressive. And absolute, for imperialism is such that if you yield in one case, it uses that as a precedent for other, future cases. Are we exaggerating our case? No. The Iraq tragedy is a result only of the American Right’s drive to place US power far beyond the reach of any potential rival or coalition of rivals. The way to Iraq was paved by the actions of liberal democrats, of the very same Clintonites that currently criticize the Bush administration for its having plunged the US into a war without end. In other words, the road to Iraq would have been more difficult without the humanitarian intervention in Yugoslavia in the 1990’s. As one conservative writer so aptly put it, George W. Bush, in invading Iraq, simply took the “doctrine of ‘democratic engagement’ of the first Bush administration, and that of ‘democratic enlargement’ of the Clinton administration, one step further. It might be called ‘democratic transformation.’”(1) Kosovo, Realpolitik, and Intervention Kosovo has been called, along with the US troop landing to put Jean Bertrand Aristide in power in Haiti in 1994, a classic humanitarian intervention. But rather than be emulated, the Kosovo military intervention is something we cannot afford to repeat. Let us look at the reasons why. First of all, it contributed mightily to the erosion of the credibility of the United Nations, when the US, knowing it would not get approval for intervention from the Security Council, used the North Atlantic Treaty Organization (NATO) as the legal cover for the war. NATO, in turn, was a fig-leaf for a war 95 per cent of which was carried out by US forces. Second, the humanitarian rationale was undoubtedly the purpose of some of its advocates, but the operation eventually mainly advanced Washington’s geopolitical designs. The lasting result of the Kosovo air war was not a stable and secure network of Balkan states but NATO expansion. That is not surprising, since eventually that was what the air war was mainly about. Milosevic’s moves in both the earlier Bosnian crisis and in Kosovo, according to Andrew Bacevich, “called into question the relevance of NATO and, by extension, US claims to leadership in Europe.”(2) If it did not successfully manage Slobodan Milosevic, the US could not have supported its drive for NATO expansion. For the Clinton administration, such expansion would fill the security vacuum in Eastern Europe and institutionalize US leadership in post-Soviet Europe. In Washington’s view, according to one analyst, “NATO enlargement would provide an institutional framework to lock in domestic transitions under way in Eastern and Central Europe. The prospect of alliance membership would itself be an “incentive” for these countries to pursue domestic reforms. Subsequent integration into the alliance was predicted to lock in those institutional reforms. Membership would entail a wide array of organizational adaptations, such as standardization of military procedures, steps toward interoperability with NATO forces, and joint planning and training. By enmeshing new members in the wider alliance institutions and participation in its operations, NATO would reduce their ability to revert to the old ways and reinforce the liberalization of transitional governments. As one NATO official remarked: “We’re enmeshing them in the NATO culture, both politically and militarily, so they begin to think like us—and over time—act like us.”(3) A major aspect of the politics of NATO expansion was securing the Western European states continuing military dependence on the United States, so that the European governments’ failure to follow through on an independent European initiative in the Balkans was quickly taken advantage of by Washington via the NATO air war against Serbia to prove the geopolitical point that European security was not possible without the American guarantee. Third, the air war soon triggered what it was ostensibly meant to end: an increase in human rights violations and violations of international treaties. The bombing provoked the Serbs in Kosovo to accelerate their murder and displacement of Albanian Kosovars, while doing “considerable indirect damage” to the people of Serbia through the targeting of electrical grids, bridges, and water facilities--acts that violated Article 14 of the 1977 Protocol to the 1949 Geneva Convention, which prohibits attacks on “objects indispensable to the survival of the civilian population.”(4) Finally, Kosovo, as noted earlier, provided a strong precedent for future violations of the principle of national sovereignty. The cavalier way in which the Clinton administration justified setting aside national sovereignty by reference to allegedly “overriding” humanitarian concerns became part of the moral and legal armament that would be deployed by people of a different party, the Republicans, in Afghanistan and Iraq. As the right-wing thinker Philip Bobbitt saw it, the Clinton administration’s actions in Kosovo and Haiti served as “precedents” that “strengthen the emerging rule that regimes that repudiate the popular basis of sovereignty, by overturning democratic institutions, by denying even the most basic human rights and practicins mass terror against their own people, by preparing and launching unprovoked assaults against their neighbors—jeopardize the rights of sovereignty, including the inherent right to seek whatever weapons a regime may choose.”(4) From Kosovo to Afghanistan When the invasion of Afghanistan took place in 2001, there was relatively little opposition in the North to the US move to oust the Taliban government. Washington took advantage of sympathy for the US generated by the Sept. 11 events and the image of the Taliban government sheltering Al Qaeda to eliminate negotiations with the Taliban as an option and throw international law out of the window by invading Afghanistan, with little protest from European countries. But to strengthen its position, the Bush administration not only used the rationale of bringing the perpetrators of Sept. 11 to justice. It also painted its move into Afghanistan as a necessary act of humanitarian intervention to depose the repressive Taliban government--one that was justified by the precedents of Haiti and Kosovo. Invoking the humanitarian rationale, states belonging to the North Atlantic Treaty Organization like Canada, Germany, and the Netherlands also eventually sent armed contingents. And in this connection, it must be pointed out that many NGO’s—including many liberal organizations—supported the US intervention for the same reason Like the Kosovo air campaign, Afghanistan soon showed the pitfalls of humanitarian intervention. First, great power logic soon took over. Hunting for Bin Laden yielded to the imperative of establishing and consolidating a US military presence in Southwest Asia that would allow strategic control of both the oil-rich Middle East and energy-rich Central Asia. Moreover, Afghanistan was seized on by Defense Secretary Donald Rumsfeld as what one analyst described as “a laboratory to prove his theory about the ability of small numbers of ground troops, coupled with air power, to win decisive battles.”(6) The Afghanistan invasion’s main function, it turned out, was to demonstrate that the Powell Doctrine’s dictum about the need for a massive commitment of troops to an intervention was obsolete—a view that skeptics had to be persuaded to accept before they could be convinced to take on what emerged as the Bush administration’s strategic objective: the invasion of Iraq. Second, the campaign soon ended up doing what its promoters said they would eliminate: the terrorizing of the civilian population. US bombing could not, in many cases, distinguish military from civilian targets—not surprising since the Taliban enjoyed significant popular support in many parts of the country. The result was a high level of civilian casualties; one estimate, by Marc Herrold, placed the figure of civilian deaths at between 3,125 and 3,620, from Oct. 7, 2001 to July 31, 2002.(7) Third, the campaign ended up creating a political and humanitarian situation that was, in many respects, worse than that under the Taliban. One of the fundamental functions of a government is to provide a minimum of order and security. The Taliban, for all their retrograde practices in other areas, were able to give Afghanistan its first secure political regime in over 30 years. In contrast, the regime of foreign occupation that succeeded them failed this test miserably. According to a report of the Center for Strategic and International Studies, “security has actually deteriorated since the beginning of the reconstruction in December 2001, particularly over the summer and fall of 2003.”(8) So bad is basic physical security for ordinary people that one third of the country has been declared off limits to United Nations staff and most NGO’s have pulled their people from most parts of the country. The Washington-installed government of Hamid Karzai does not exercise much authority outside Kabul and one or two other cities, prompting UN Secretary General Kofi Annan to state that “without functional state institutions to serve the basic needs of the population throughout the country, the authority and legitimacy of the new government will be short-lived.”(9) Worse, Afghanistan has become a narco-state. The Taliban were able to significantly reduce poppy production. Since they were ousted in 2001, poppy production has shot up, producing a record crop in 2004 and earning Afghanistan the dubious honor of supplying close to 80 per cent of the world’s heroin supply. Some 170,000 Afghans now use opium and heroin, 30,000 of them being women.(10) Government officials are involved in 70 per cent of the narcotics traffic, with about a quarter of the 249 recently elected members of Parliament linked to the drug trade. One estimate in a study conducted for the independent Afghanistan Research and Evaluation Unit concludes that at least 17 newly elected MPs are drug traffickers themselves, 24 others are connected to criminal gangs, 40 are commanders of armed groups, and 19 face serious allegations of war crimes and human rights abuses.(11) For these people, who dominate Afghanistan’s political life, “insecurity,” according to Kofi Annan, is a “business” and extortion is a “way of life.”(12) Can one really honestly claim that this life is an improvement over Taliban rule? Many Afghans would say no, saying that at least the Taliban were able to provide one thing: basic physical security. Now, this argument may not cut any ice with upper and middle class people in the North that live in safe suburbs or gated communities. But talk to poor people anywhere, and they put great value on ridding their shantytown communities of criminals and drug dealers. Oh yes, what about the impact of NGO humanitarianism? Well, on the heels of the US troops came a veritable army of NGO’s of different kinds, all seeking to help the Afghan people with hundreds of well-funded projects. Indeed, like the Southeast Asian tsunami disaster and that wrought by Hurricane Katrina in the US, raising money for “helping the Afghans” soon became a profitable operation that made humanitarian-related NGO jobs among the most desirable in local economy. How positive these projects have been is another story, since like the military campaign, there were many badly thought out and badly executed projects whose main effect was to stoke resentment in the local population. The Case against Humanitarian Intervention Popular among certain elite circles in the US and Europe in the 1990’s, humanitarian intervention has earned a bad name, especially in the South. Kosovo, Afghanistan, and Iraq underline the bitter lessons of humanitarian intervention. To repeat:
- Humanitarian intervention seldom remains the dominant rationale for long, with geopolitics quickly becoming the driving force of a military operation.
All this does not mean that states and international civil society should not make use of all the moral and diplomatic means at their disposal to isolate repressive regimes such as the Taliban. Indeed, when one can be certain that their impact will be felt mainly by the regime and not the people, economic sanctions are valid and useful in certain circumstances. Sanctions had a positive role in apartheid South Africa but they had a very negative on ordinary people in Iraq, but that is a topic for another discussion. But we must always draw the line when it comes to the use of force by one state on another. Forcible regime change is not only wrong. It has far-reaching destabilizing consequences for the whole international state system. Once it has managed to get the green light from significant others in one case, you can be sure that the hegemon will resort to it again and again, driven by the imperative of increasing its power and accumulated advantages within the international system. You begin with a Haiti or a Kosovo, and you end up with an Iraq. In international relations, there is a distinction made between “status quo powers” and “revisionist powers.” Status quo powers seek to maintain the structure and distribution of relative power within the system. Revisionist powers seek to change the structure and distribution of power. Ironically, the US is today a revisionist power—that is, it seeks to achieve a balance of power in its favor that is even greater than that it enjoys today. By going alone with its earlier “humanitarian interventions” in Kosovo and Afghanistan, many states and civil society organizations must bear some responsibility for creating this unrestrained hegemon. We must forcefully delegitimize this dangerous doctrine of humanitarian intervention to prevent its being employed again in the future against candidates for great power intervention like Iran and Venezuela. Like its counterpart concept of “liberal imperialism,” there is only one thing to do with the concept of humanitarian intervention: dump it. Notes
The 6th WSF in Caracas: A Shot in the Arm for Global Civil Society (4 February 2006)
The 6th World Social Forum held in Caracas, Venezuela, provided the shot in the arm needed by this annual gathering of global civil society. The WSF had come under fire, even from some of its key founders, for simply recycling the discussions of previous fora with no discernible direction and goal.
In Caracas, discussions at the seminars and workshops appeared to have a more urgent note than in the previous gatherings. The 52,000 participants met for seven days in an atmosphere quite unlike sedate Porto Alegre. In contrast to Porto Alegre, which is located in one of the richer areas of Brazil, Caracas is a more typically Third World city—one marked by a sharp divide between rich and poor, a glaring contradiction between plush urban malls frequented by the elites and middle class and the squalid but vibrant shantytowns or ranchos rising on the mountains surrounding the city, a highly efficient underground mass transit system coexisting with hopelessly clogged surface roads, and high rates of violent crime that not a few delegates experienced first hand in the form of muggings. Caracas, for all of Venezuela’s oil wealth, is “deep” third world and it constantly reminded us of the many dimensions of the social and ecological problems we had come to discuss. Radical Climate Yet it was more than the setting that accounted for the bracing atmosphere at this social forum. Delegates were inserted into a process of radical change the marks of which that were evident everywhere—in the highly partisan attachment of the masses to President Hugo Chavez, in the venomous articles against him in the establishment press, in the ubiquitous soldiers with the trademark red berets of the Chavista revolution. Not to be overlooked was the obvious affection felt by lower class Venezuelans for their president, which took the form of the mass production and mass consumption of Chavez T-Shirts, Chavez clocks, and “Chavecito” dolls that, when pressed, would declaim on the “Bolivarian Revolution.” Likewise, we could not resist the sense that we were in a country that is on the frontlines of the struggle against the US empire. Posters of George W. Bush, with a Hitler-moustache and the words “Bush Asesino” were everywhere. And feted as the de facto guest of honor was Cindy Sheehan, the woman who reignited the US peace movement with her highly publicized campout outside Bush’s ranch in Crawford, Texas last summer. Hosted by Chavez at his weekly television show, Sheehan, who lost a son in Iraq, electrified the forum and the country with her strong denunciation of Bush as a “terrorist,” before flying off to Washington, DC, to disrupt the American president’s “State of the Union” speech at the US Congress. Chavez at Center Stage Chavez, of course, was at center stage throughout the week, hosting a number of public and private events with participants. Calling Bush “Mr. Danger,” he told a cheering crowd of 15,000 at the Poliedro Stadium that “the empire is not omnipotent” and predicted that “we will bring down the empire in this century.” At every opportunity, he reminded us of the US’ long history of intervention in Latin American affairs, its isolation of Cuba, and its role in the unsuccessful coup attempt against him in April 2002. This was clearly a politicized forum in the sense that it could not resist being suffused with the militant anti-imperialist spirit surrounding it. Clearly, this bothered some participants. Undoubtedly, the Chavistas hoped that with the WSF being held in Caracas, they would have a platform from which to project the truth about the Venezuelan process internationally and gather more allies to neutralize Washington, which, they believe, is out to get Chavez. Not surprisingly, the government went all out to support the event, providing everything from visa assistance to participants to free buses from the airport to downtown Caracas, to free rides on the subway for everyone who had a WSF participant badge. On the other hand, despite some frictions between the Chavez people and the forum organizers, there were no claims that there had been an effort on the part of the government to set the forum agenda or determine its content. This was not a manipulated event; if anything, it suffered from a great deal of unorganized energy. The Alternatives Debate The issue of alternatives to the current system of global capitalism was debated in many workshops and seminars. Chavez unhesitatingly jumped into the debate, mincing no words when he declared that the alternative he was constructing in Venezuela was “socialism.” This did not exactly resonate with many delegates whose notion of socialism was the system that prevailed in the old Soviet Union and Eastern Europe. And it did not help matters when he claimed that Marx and Rosa Luxemburg said “Socialism or Death,” which they did not. On the other hand, Chavez seemed to be distancing his project from that of his close friend Fidel Castro when he claimed that “socialism was one of the great failures of the 20th century,” and when he referred to his enterprise as a mélange of “authentic socialism,” “Christian socialism,” and the “socialism of Latin America’s indigenous peoples.” More stimulating was Chavez’ discussion of his short and medium term programs, such as the massive nationwide crash course to eliminate illiteracy, the drive to set up community clinics spearheaded by Cuban doctors, and land reform. Also fascinating was his discussion of the first steps of the ALBA project—the “Bolivarian Alternative for the Americas.” In his Petrocarib initiative, 13 countries in the Caribbean importing Venezuelan oil get a 40 per cent discount off the international market price of oil. In the Petrosur project, Bolivia exchanges soybeans and Argentina trades cattle for Venezuelan oil. This kind of exchanges, he underlined, go “beyond the logic of capitalism.” Chavez’ Challenge and Ours Perhaps Chavez’ main contribution to the forum was to challenge it, warning about the dangers of it becoming simply a forum of ideas with no agenda for action. He also told participants that they had to address the question of power. “We must have a strategy of ‘counter-power.’ We, the social movements and political movements, must be able to move into spaces of power at the local, national and regional level.” The frank talk was, however, two-way. Some of us challenged Chavez on trade issues, asking him not to rest on his laurels after the historic Mar del Plata Conference in November that effectively killed the Free Trade of the Americas. The WTO, he was warned, posed an equal if not greater danger We went on to tell him that while we appreciated Venezuela’s registering “reservations” at the WTO Agreement arrived at in the Hong Kong Ministerial in December, that was not good enough and we fully expected Venezuela to help in derailing the talks based on the agreement that are unfolding in Geneva in the next few months--even if that meant his upsetting neighboring Brazil, one of the architects of a global deal that poses serious threats to the economies of developing countries. Tonic for a Movement The mood was so heady that a week seemed rather short, with us leaving with a sense that there was so much more to absorb, not only about Venezuela but about the whole of Latin America, where a continent-wide revolution against neoliberalism is underway, the latest signpost of which was the election of Evo Morales, the radical peasant leader of Indian descent to the presidency of Bolivia. Caracas was good tonic for a process that is in danger of losing its way. It underlined the fact that success for our side can only come at the price of tough struggles and great risk. Constantly threatened by a formidable alliance between the US and the local oligarchy, Chavez and his supporters are fighting for the space to transform Venezuela and Latin America. And he was daring us to fight for the space from which to transform the world, to translate into action the WSF slogan that “Another World is Possible.” Military Radicalism in Venezuela: How Relevant for Other Developing Countries? (3 March 2006)
"An Army of the People"
That something interesting and unusual is taking place in Venezuela first really struck me when, in response to a sarcastic comment about an anti-war meeting of the 2006 World Social Forum taking place in an Air Force base, a member of the audience rose and, in the best pedagogical manner, told us foreigners, “Look, what we have here in Venezuela is not a regular army but an army of the people.” Venezuela is undergoing, if not a revolution, a process of radical change, and the military is right in the center of it. How could this been happening, many skeptics ask, when the military, especially in Latin America, is usually an agent of the status quo? Others, less skeptical, ask: Is Venezuela the exception, or is it the wave of the future? Many explanations have been advanced for the behavior of Venezuela’s military. Edgardo Lander, a noted Venezuelan political scientist, says that one reason could be that compared to other Latin American armies, there is a much higher proportion of “people of humble origins in the Venezuelan officer corps.” Unlike in many other Latin American countries, he contends, “the upper classes have really looked at a military career with scorn here.” Richard Gott, one of the leading authorities on the American left, adds another factor, the mingling of officers with civilians in the country’s educational system. “Beginning in the seventies, under a government program called the Andres Bello program, officers were sent to the universities in significant numbers, and there they rubbed elbows with other students studying, say, economics or political science.” This “immersion” in civilian life had fateful consequences. One, the officers were exposed to progressive ideas at a time that “the left dominated the universities.” Two, it resulted in a deeper integration of the officer corps with civilian society than in most other countries in Latin America. Probably also critical, says Gott was that, for some reason, Venezuela appears to have sent far fewer officers than many other Latin American countries to the US Army-run School of the Americas in Fort Benning, Georgia, which is the main conduit of counterinsurgency training to the western hemisphere’s military forces. Now, these conditions may have contributed to making the Venezuelan Army less reactionary than others in Latin America, but they do not explain why it would be one of the spearheads of what is today the most radical social transformation taking place in the hemisphere. Gott, Lander, and other Venezuela specialists concur in one thing: the absolutely central role of Hugo Chavez. The Chavez Factor Chavez is many things: a charismatic figure, a great orator, a man who plays local, regional, and global politics with skill and verve. He is also a man of the army, one who reveres the military as the institution that, under Simon Bolivar, liberated Venezuela and much of Latin America from Spain, and who has acted on the belief that it is destined to play a decisive role in Venezuela’s social transformation. Chavez, according to his own account, joined the military because it would be a springboard for him to play professional baseball. But whatever his initial motivations, he came into the army at a time of great institutional flux. The army in the 1970’s was engaged in counter-guerrilla operations at the same time that its officers were being exposed to progressive ideas through the Andres Bello program at the university and many were being recruited by leftist groups into clandestine discussion groups. Instead of becoming a baseball star, Chavez became a popular lecturer in history at Venezuela’s War College, while moving up the chain of command. When not performing his official duties, he was engaged in building a clandestine grouping of young, like-minded, idealistic officers called the “Bolivarian Revolutionary Movement.” Disillusioned with what they perceived to be a dysfunctional democratic system dominated by corrupt parties--Accion Democratica and Copei-- that alternated in power, these Young Turks evolved from a study circle to a conspiracy that hatched ideas for a coup that would, in their view, inaugurate a period of national renewal. As Richard Gott writes in his authoritative book Hugo Chavez and the Bolivarian Revolution, Chavez’ preparations were overtaken by the “Caracazo” of 1989, a social cataclysm triggered by a sharp rise in transportation prices owing to pressure from the International Monetary Fund. For about three days, thousands of urban poor from the ranchos or shantytowns on the mountainsides surrounding Caracas, descended on the city center and affluent neighborhoods to loot and riot in what was ill-disguised class warfare. The Caracazo seared itself in the minds of many young officers. Not only did it reveal to them how the vast majority of the population had become thoroughly disenchanted with the liberal democratic system. It also made many bitter that they were placed in the position of having to give orders to shoot hundreds of poor people to defend that system. When Chavez was given command of a parachute regiment nearly three years later, he and his co-conspirators felt that the moment was ripe for their long-planned coup. The attempt failed, but it catapulted Chavez to fame in the eyes of many Venezuelans…and to notoriety in the eyes of the elite. Chavez appeared on national television to ask participating units to lay down their arms, and, according to Gott, that “one minute of air time, at a moment of personal disaster, converted him into someone perceived as the country’s potential savior.” Chavez took full responsibility for the failure of the coup but electrified the nation when he declared that “new possibilities will arise again.” Chavez was imprisoned, and almost immediately after his release, began campaigning for the presidency. What he could not get by a coup, he was now determined to pursue by constitutional means. No longer in the military, he nevertheless kept in close touch with his fellow officers and with enlisted men, among whom he was tremendously popular. When he finally won the presidency by a large margin in 1998, it was not surprising that he recruited brother officers to head up or staff key government agencies. More important, Chavez gradually brought in the military to serve as a key institutional instrument for the change he was unleashing in the country. The massive disaster brought about by torrential rains in 1999 provided an opportunity for Chavez to deploy the military in its new role, with the army units mobilized to set up and man soup kitchens and build housing for thousands of refugees on army land. Then military civic action and engineering units were deployed to the new government’s program to set up “sustainable agro-industrial settlements” in different parts of the country. Military hospitals were also made available for the poor. Transforming the Military: Problems and Opportunities The involvement of the military in a program of radical change was not, however, regarded positively in all quarters of the army. Indeed, many generals resented the populist ex-colonel and, when the process accelerated, as Chavez moved to implement land reform and take direct control of the oil industry, these elements began to conspire with the newspaper owners, the elite, and the middle class to oust him by force. After a series of violent confrontations between the opposition and Chavistas in the streets of Caracas, a coup put into motion by a number of high ranking generals, including the head of the armed forces, the chief of the staff of the armed forces, and the commander of the army, succeeded in toppling Chavez on April 11, 2002. However, most of the officers with field commands and most junior officers either stayed loyal to Chavez or remained neutral, and when thousands of urban poor descended on Caracas to demand Chavez’ release, the loyalists launched a counter-coup, arrested the conspirators, and restored Chavez to power. The coup attempt was a blessing in at least one way: it gave Chavez the opportunity to complete the transformation of the military. About 100 top generals and officers were cashiered for treason, with the key posts in the high command going to people loyal to Chavez and the Bolivarian Revolution. The purge probably deprived the US, which had supported the coup, of its key supporters within the Venezuelan military. Chavez’ project, which he has now defined as a movement toward “socialism,” rests on the tremendous support he has among the urban and rural poor. However, the military is the only reliable organized institution he can count on to move things. The press is hostile to him. So is the Church hierarchy. The bureaucracy is slow and riddled with corruption. Political parties are discredited, with Chavez himself leading the attack against them and preferring to keep his supporters organized as a loose mass movement. Given the centrality of the military as a reforming institution, Chavez has created an army of urban military auxiliaries or reservists to support the regular armed forces. Originally known as “Bolivarian Circles,” this reserve force, which is projected to eventually number one million, is becoming instrumental in the organization and delivery of social programs in the shantytowns. These auxiliaries also now participate, alongside the National Guard, in the expropriation of private land for the accelerated agrarian reform program. Skepticism in Some Quarters With its central role in the Bolivarian Revolution, many observers are asking the question: is the military up to it? For Chavez, according to political analyst Lander, the military is reliable because it is not corrupt and is more efficient than other institutions in delivering results. Lander questions this. “I don’t think there is anything inherent in the military that somehow makes it less susceptible to corruption than other institutions.” As for military efficiency, this is, he says, a half-truth: “Yes, the military may be effective when deployed to solve immediate problems like building schoolhouses or clinics staffed by Cuban doctors. But it is not a long-term solution. You need to institutionalize these solutions, and that’s where this revolution is weak. You have a proliferation of ad hoc solutions that remain ad hoc.” Yet there is no doubt that among Chavez and his generation of officers, there is a reforming zeal that will fuel the revolution for some time to come. It is a zeal borne out of a tremendous sense of frustration, one which Chavez expressed to Gott in an interview a few years ago: “Over many years the Venezuelan military were eunuchs: we were not allowed to speak; we had to look on in silence while we watched the disaster caused by corrupt and incompetent governments. Our senior officers were stealing, our troops were eating almost nothing, and we had to remain under tight discipline. But what kind of discipline is that? We were made complicit with the disaster.” A Model for Other Countries? The sentiments expressed by Chavez in the preceding paragraph would probably resonate with many junior officers in many other Third World armies. Which brings us to the question: What are the lessons of the Venezuelan experience for other societies in the South? More specifically, is the Venezuelan experience replicable? Rather than do broad comparisons, perhaps it might be wise to pick a military that today is undergoing tremendous turmoil and discontent much like the Venezuelan military in the late eighties: the Philippine military. This restiveness is in response to a similar crisis that Venezuelan society was undergoing during that period: a deep-seated crisis of corrupted liberal democratic institutions. Can the Venezuelan experience be replicated in the Philippines? The answer is probably a cautious no. First of all, unlike the Venezuelan military, the Philippine military does not have a revolutionary nationalist heritage. It is not a direct descendant of the Katipuneros and the Army of the Philippine Revolution of 1896-99. It was formed by the US following the “pacification” of the country, initially to act an auxiliary force to support US occupation troops, then to maintain public order during the colonial period, and finally to back up US forces fighting the Japanese during the Second World War. Since the granting of independence in 1946, the Philippine Armed Forces have maintained very close links to the US military via aid and training programs. In this respect, the relationship with the US, the Philippine military’s experience is probably more typical than the Venezuelan army’s. Second, the Philippine military has not had the equivalent of an Andres Bello program, where officers were systematically immersed in the civilian educational system and consistently exposed not only to the latest technical and managerial concepts but also to progressive ideas and movements. But even if such a system existed, the ideological hegemony of neoliberal economics in Philippine universities in from the nineties till today would probably have nullified the positive effects of immersion. Third, in Venezuela, officers had an ambivalent relationship with the political left, on the one hand, fighting them as guerrillas, on the other hand, absorbing their ideas and proposals for change. In the Philippines, in contrast, the military sees the New People’s Army, with which it has been struggling for nearly 30 years, as its enemy unto death, both institutionally and ideologically. Not surprisingly, while groups like the Reform the Armed Force Movement (RAM) or Magdalo have periodically emerged, their programs have had little social and national content, their agenda being merely to seize power and put the military in command of society in order to purge civilian politics of corruption. Class analysis, imperialism, land reform—these are concepts that most officers see as belonging to the paradigm of a rival military force. Finally, if there is a military that is so thoroughly permeated by the dominant social relationships of civilian society, it is the Philippine military. From top to bottom, the military is enmeshed in patron-client relationships with local and national elites. Competing civilian elites have cultivated and manipulated their factions within the military. Even military reform groups have often ended up in unhealthy relationships of dependency with traditional politicians and economic elites. The godfather relationship between the traditional politician Juan Ponce Enrile and the military rebel Gringo Honasan, for instance, was probably the key factor that stood in the way of RAM becoming a truly autonomous and progressive force. But history is anything if not open. The Philippine military may still be capable of yielding surprises. So might the armed forces in some other countries. After all, an observer of the Venezuelan military circa the late eighties would probably have wagered that with its cadre of corrupt senior officers tied to the US military, that institution would remain a faithful instrument of the status quo in the coming years. Military Intervention: Definitely a Cure Worse than the Disease (24 March 2006)
It is becoming increasingly clear that the main beneficiary of the stalemate between an unpopular and illegitimate president and a weak opposition is the Armed Forces of the Philippines (AFP).
The president has stayed in power mainly by pampering senior officers and keeping a critical mass of them loyal to her. Unable to break the stalemate through a civilian-based "People Power" uprising, key sectors of the opposition have been none too subtle in making the military know that only they can get rid of the president. To think that she can indefinitely keep the bulk of the military loyal to her through plum appointments, frequent reshuffling, and bribery is a desperate illusion on the part of Arroyo. And to think that they can persuade the military to depose Arroyo, then expect the officers to return to the barracks is breathtakingly na?ve on the part of the opposition. Indeed, it is alarming to see some progressive personalities express certainty that, as one of them put it, "the military will only come in to oust Gloria, then leave the succession to civilians because they realize they know nothing about running a government." Three Currents The military is one of the most opaque institutions in Philippine society. But there are indications that there are probably three key currents that are sweeping through it at this point. One is that of the constitutionalists, the officers that believe in civilian supremacy. It is likely that, with the way that civilian politicians have destroyed the democratic promise of the 20-year-old EDSA state, the position of this current has been badly eroded. The second current is that of the extra-constitutionalists, the people who believe that only via military intervention and the leading role or participation of the military in political leadership that the nation can be set on the right path. This appears to be a current that is strong mainly among junior officers, though some senior field commanders of elite units like the Marines and the Scout Rangers seem to have decided on this path as well. Though not yet dominant, this current is likely to gain more credibility among the officer corps as the civilian stalemate continues. The third current, which apparently is dominant at the moment, is not willing to do away with formal civilian leadership, but is keen to take advantage of the weakness of civilian politicians to expand the power and institutional prerogatives of the armed forces. Over the last few years, this current has practically shaken off civilian surveillance in the area of national security and carried out at will its preferred policies of dealing with the left and with the insurgency. The systematic killing of militants, which is reaching epidemic proportions, is part of this determined expansion of institutional power. While the drive to criminalize some representatives of the left in Congress may serve Arroyo's survival in the short term, it is the military, with its agenda to completely control national security matters, that will benefit strategically. Major General Jovito Palparan, Jr., who has left a trail of killings of activists in Mindoro, Samar, and Central Luzon, is a hero to folks within this current. A weak civilian leadership behind which the military becomes the real power in "internal security" issues--a process that involves the systematic weakening of constitutionally guaranteed human rights, political rights, and due process--is apparently the preferred arrangement for key sectors in the high command at this point. Having experienced scorn and popular disapproval for the AFP's being the chief pillar of dictatorial rule under Marcos, these officers feel that overt and direct leadership that the military radicals of the second current propose may again invite the institutional crisis and disarray that afflicted the armed forces in the early EDSA years. This is not to say that this group will never sanction or support a coup attempt against Arroyo. Once the costs, in terms of growing institutional fissures, of keeping a discredited president in power, become too great, these "pragmatic institutionalists" may either remove her directly or allow "unauthorized" military units to move against her. At this point, the agenda of the pragmatic institutionalists may fuse with that of the military radicals in the second current. This fusion is increasingly a likely scenario, for as former President and General Fidel Ramos noted recently, with the military so thoroughly politicized over Arroyo's continued stay in power at this point, there will be no end to mutinies in the ranks. Crisis of Liberal Democracy What civilian leaders that subscribe to an "intervene-then-withdraw" scenario fail to appreciate is that the radical agenda of the second current within the AFP finds fertile ground in the population at this point. The reason that Filipinos are not out in the streets like the people are in Thailand is that there is throughout the Philippines at this juncture tremendous disillusionment with liberal democracy. My personal brush with this sentiment has been in the classroom, among youth and students who are normally expected to be the bulwarks of progressive sentiment. . A few months ago, two thirds of my undergraduate class in political sociology at the University of the Philippines said that current Philippine democracy is "not worth saving." More recently, I asked a class of young graduate students at another center of learning whether their parents would prefer current democratic freedoms or support their being curtailed by an authoritarian regime in exchange for economic growth. The response: 95 per cent said their parents would definitely prefer the latter. These are, of course, not scientific samples, but if we view them in the light of the consistently small numbers of people in the anti-Gloria protests, then it is cause for trepidation for those of us who still believe that while democracy has serious flaws, other forms of governance are worse. In the long term, only a program that goes beyond formal political rights and makes economic equality, serious poverty reduction, and rapid development a central concern will be able to regain and maintain people's faith in democracy. But in the short term, an emergency effort must be launched to oppose the erosion of political rights by the combination of Arroyo's desperation tactics, popular cynicism, and the military's expansion of its prerogatives via salami tactics. Rules of Engagement Very important are the following rules of engagement, the violation of which will certainly lead to the collapse of liberal democratic politics:
- Arroyo must go, but this must be the outcome of a civilian political process.
These rules of engagement must be accompanied by several urgent steps on the part of the AFP and the citizenry:
- The AFP high command must decisively repudiate Arroyo's invoking measures such as the declaration of a state of emergency that have nothing to do with national security and everything with her illegitimate effort to hang on to the presidency.
In this regard, one might disagree, as I do, with some of the political goals and methods of the radical left, but the latter are entitled to the same basic rights as all citizens. Political assassinations and arbitrary arrests, such as the arrest of Rep. Crispin Beltran and the threat to apprehend four other members of Congress, simply have no place in our political order. Moreover, allowing the military to isolate and repress the radical left with little protest, will guarantee that repression will fall on an even wider political circle next time as the military expands its control of the political process. In sum, getting rid of Arroyo is an urgent task, but the way we citizens do it is just as important as our goal. Asking the military to intervene as an institution to oust this illegitimate powerholder is a cure that will eventually prove worse than the disease. Critics Plan Offensive as IMF-World Bank Crisis Deepens (26 April 2006)
The spring meetings of the World Bank and International Monetary Fund took place this weekend with police barricades ringing the two institutions at the heart of Washington, DC. There were almost no protesters in sight.
The action was indoors, a few blocks away, at the Institute for Policy Studies. There, the opposition was putting the final touches to a global campaign to “disempower” the two institutions. To the 70 activists from different parts of the world attending the two-day strategy meeting, the relative absence of street protests was deceptive. They knew that, in fact, the two institutions were in the midst of their most serious crisis in years, one that provided the opportunity for weakening their hold on the governance of the world economy. Crisis of Legitimacy at the IMF The crisis is more evident at the International Monetary Fund. The IMF never recovered from the Asian financial crisis in 1997, according to former IMF and World Bank official, Dennis de Tray, vice president of the Center for Global Development. “It lost its legitimacy then,” he said at a lunch forum sponsored by the Carnegie Endowment for International Peace. Since the crisis, key Asian countries such as Thailand, Philippines, China, and India have refrained from new borrowings from the IMF, mindful of the consequences of disastrous financial liberalization programs that many Asian countries adopted at the behest of the Fund in the early 1990’s. To the Asian countries’ reluctance to get into more debt with the Fund has now been added a conspicuous move among Latin American countries, led by Brazil and Argentina, to completely pay off their debts to the IMF in order to declare independence from an institution that is much hated in the region. What is, in effect, a boycott by some of its biggest borrowers is creating a budgetary crisis owing to the fact that over the last two decades, the IMF’s operations have been increasingly funded from loan repayments by its developing country clients rather than contributions from the wealthy Northern governments, which deliberately shifted the burden of sustaining the institution to the borrowers. But with key client countries now ending their financial ties, where will the Fund get its resources? Speaking at the same event as de Tray, Ngaire Woods, an Oxford University specialist on the IMF and World Bank, revealed that the IMF projects that payments of charges and interest to the organization would more than halve from US$3.19 billion in 2005 to US$1.39 billion in 2006 and halve again to US$635 million in 2009, creating what she described “a huge squeeze on the budget of the organization.” Problems at the Bank While it does not have the aura of controversy and failure that surrounds the IMF, the World Bank is also in crisis, say informed observers. A budget crisis is also overtaking the Bank, according to Woods: Income from borrowers’ fees and charges dropped from US$8.1 billion in 2001 to US$4.4 billion in 2004, while income from the Bank’s investments went from US$1.5 in 2001 to US$304 million in 2004. China, Indonesia Mexico, Brazil and many of the more advanced developing countries are going elsewhere for their loans. The budgetary crisis is, however, only one aspect of overall crisis of the institution. The policy prescriptions offered by Bank economists is increasingly seen as irrelevant to the problems faced by developing countries, says de Tray, who served as the IMF’s resident officer in Hanoi and the World Bank’s representative in Jakarta. The problem, he said, lies in the emphasis at the Bank’s research department on producing “cutting edge” technical economic work geared to the western academic world rather than coming out with knowledge to support practical policy prescriptions. The Bank is currently staffed by some 10,000 professionals, most of them economists, and de Tray claims that “there is nothing wrong at the World Bank that a 40 per cent staff reduction would not fix.” Woods supports de Tray, writing in a recent report that the “most common complaint in the field is that the Fund and Bank staff have no policy experience. Having completed doctorates in economics or finance, the staff are ill-equipped for the complex and messy work of the political systems in which they work.” The disdain for politics that incapacitates many staff in dealing with the developing world is often coupled with a blind eyes to the fact that politics of a more consequential kind than complex developing country politics also influences the policy prescriptions of the Bank and the Fund. “Politics has always influenced the advice offered by the IMF and World Bank,” writes Wood. “South Korea’s first standby agreement with the IMF in 1997 was clearly decorated with conditions which had been added at the behest of the United States. In Russia through the 1990’s, political pressures in the G 7 pushed the Bank to make loans, which were never used (but for which Russia had to pay charges), and pushed the IMF to turn a blind eye to failures to meet its targets. World Bank projects are sometimes covertly shaped by preexisting agreements for contracts between large companies backed by powerful governments and borrowers.” How to Hide a Crisis One of those present at the meeting of non-governmental organizations at the Institute for Policy Studies was Robin Broad, an associate professor at American University. A long-time student of the World Bank whose book Unequal Alliance: the World Bank and the Philippines is regarded as a classic case study of the institution’s relations with its client countries, Broad claims that the World Bank is, in fact, in more of a crisis than the IMF but that this is less visible to the public. “The IMF’s response has been to withdraw behind its four walls, thus reinforcing the public perception of its being besieged,” she notes. “The Bank’s response, however, has been to engage the world to hide its mounting crisis.” She identifies three elements in the Bank’s offensive. “First, it goes out and tells donors that it is the institution best positioned to do lending to end poverty, for the environment, for addressing HIV-AIDS, you name it…when in fact its record proves that it’s not. Second, it has the world’s largest ‘development’ research department—funded to the tune of about $50 million—whose raison d’etre is to produce research to back up predetermined conclusions. Third, it has this huge external affairs department, with a budget of some $30 million—a PR unit that feeds these so-called objective research findings to the press and fosters the image of an all-knowing Bank..” But, she concludes, “This can’t last. Inside the Bank, they know they’re in crisis and are scrambling. And sooner or later, if we do our work, the truth will come out.” Reaction to New Initiatives At the NGO meeting, people dismissed World Bank President Paul Wolfowitz’ much publicized anti-corruption campaign as another public relations stunt designed to shore up the Bank’s faltering legitimacy. “Talk about being hypocritical. He was the US ambassador to Indonesia in the mid-eighties, when corruption involving World Bank projects was rife, and he never did anything about it,” said Shalmali Guttal of the Bangkok-based Focus on the Global South. “About one out of every three dollars that the Bank gave Suharto government over a 30 year period from the mid-sixties to the mid-nineties went to the pockets of Suharto’s people. This came to about $10 billion of the $30 billion World Bank lending program. Wolfowitz, in fact, was known as a great friend of the Suharto regime.” Deep skepticism also met the plan to increase the voting power of some the big developing countries, such as China and Brazil, and the announcement that a few more poor countries would be made eligible for debt reduction under the Bank-managed “Highly Indebted Poor Country Initiative” (HIPC). The latter was seen as a PR effort to shore up a faltering program while the former was seen as a desperate attempt to head off the move of many developing countries to move away from dependence on the two institutions. End of Reform? There was little talk at the meeting about reforming the Fund and the Bank’s lending and project policies, the preferred approach of many of the bigger international NGO’s in the nineties. Sameer Dossani, coordinator of the 50 Years is Enough! Campaign expressed the meeting’s doubts about the viability of a reformist approach: “We criticized structural adjustment programs, and they came up with PRSP’s [Poverty Reduction Strategy Papers]. We called for debt cancellation, and they came up with HIPC. With these initiatives now mired in failure, isn’t it time for another approach?” With the deepening crisis of the two institutions, the critics sense an opportunity for putting in place a more radical strategy. “We’ve united around a strategy of disempowering the Bank and the Fund,” Lidy Nacpil of Jubilee South, a global coalition demanding debt cancellation, at the conclusion of the two-day meeting. Instead of attaching conditions to IMF and Bank operations in order to reduce their negative impacts, the new approach would identify the most vulnerable operations or divisions of the two institutions and wage global campaigns to shut them down with the strategic goal of eventually rendering the two institutions with radically reduced power and influence. “It’s like cutting off the tentacles of an octopus,” Dossani said. “You start with the most vulnerable parts, then move on.” Among two initiatives considered by the new campaign are international mass mobilizations at the time of the World Bank-IMF Fall Meeting in Singapore during the third week of September and an international conference on “Alternatives to the World Bank and the IMF” timed to coincide with the Fall meeting. Take the IMF Off Life Support (24 May 2006)
As economists and politicians debate what to do about the latest challenges facing the IMF, civil society groups have a straightforward answer: take the IMF off life support.
For over 25 years the world has had one answer for countries that find themselves in a financial crisis: take the IMF policy medicine and get on the debt treadmill that comes with IMF and World Bank loans. This path has worked very well – for big corporations in wealthy countries which walk into countries through the doors opened by the IMF’s policies and walk out with massive profits. But for the people the IMF and World Bank say they are trying to help – the poor – the results have been very different – in fact, downright disastrous. The IMF has tremendous power -- it can tell all other creditors to cut a country off if its orders are disobeyed -- so it is no surprise that governments comply with its demands. Neither should it be surprising that when a government lays off workers, sells off companies to foreigners, cuts spending on nurses and teachers, cuts the subsidies poor farmers and consumers rely on, privatizes essential services like healthcare and water provision, and makes credit unavailable to small businesses – in other words, following IMF instructions – the result is deeper poverty, worsening health indicators, growing illiteracy, and an economy reduced to providing raw materials and cheap labor to multinational corporations. The IMF’s commitment to market fundamentalism – the conviction that the solution to every problem is to open up to the forces of supply and demand -- is so extreme that it ordered Malawi to “commercialize” its grain reserve agency in 2001. If you are puzzled by why an agency devoted to preventing famine would submit itself to market forces, imagine how the families of the thousand people who died later that year feel. They were left without access to food after the agency was forced to sell its existing reserves in order to “capitalize” itself; before it could replenish, shortages set in and prices shot up, leaving it, and poor Malawians, defenseless. The governments that control the IMF – the U.S., the European Union, Canada, and Japan – met in Washington in April amid growing signs that the IMF’s borrowers have had enough of these one-sided, catastrophic policy demands. While the poorest countries, mostly in Africa, remain locked in the grip of the IMF, those countries that can afford to do so – Brazil, Argentina, Indonesia, Uruguay, Turkey – are either paying off their IMF debts ahead of schedule or seriously discussing the option. All of them say they will take no more IMF loans. That these are also some of the IMF’s biggest debtors has given its bosses serious pause, since it might mean shrinking or even closing the IMF. The assembled finance ministers and central bank governors – several of whom had been making loud noises of concern in the weeks leading up to the IMF meeting – pronounced themselves satisfied with the solution they had mapped out. What is the new approach for the IMF? That’s not entirely clear – mostly they talked about giving the institution more power to convene mini-summits of countries facing possible economic problems. But if the relieved expressions on the delegates’ faces mean that they feel they have saved the IMF by increasing its role in the global economy, we could all be in trouble. Since the end of the “Bretton Woods” currency arrangements in the early 1970s, the IMF has had virtually no influence over wealthy governments that do not require its loans. If what emerges from the latest crisis of confidence about the institution’s role is an agency newly-emboldened to impose its constricted brand of economic orthodoxy – the same one that exacerbated the Asian financial crisis by ordering layoffs and increased interest rates, moves the IMF itself now admits might not have been very wise – then the notoriety that the IMF has earned in Latin America, Asia, and Africa could spread quickly in the richer parts of the world. Global economic governance is not a bad idea. But the IMF is not the agency to carry it out. It is thoroughly discredited in developing countries and “emerging economies” after 25 years of abuse. Its attempts to impose its solutions on governments and citizenries accustomed to making their own decisions is not likely to get very far. Indeed, the only solution to the continuing crises in Africa and other impoverished parts of the world is a restoration of policy sovereignty to people and governments. The IMF’s obsolescence is showing; rather than trying to put it on life-support by supplying it with new power, it should be allowed to die a natural death. The Rise of the Relief and Reconstruction Complex (26 May 2006)
Massive infrastructure damage and great social dislocation have been common consequences of natural disasters and social disasters like wars. Up until a few years ago, the aims of relief and reconstruction efforts were fairly simple: immediate physical relief of victims, reduction of social dislocation, restoration of a functioning social organization and reparation of physical infrastructure. In major disasters or wars, international actors were central players-most prominently United Nations agencies and the Red Cross Movement.
In recent years, however, the objectives of both disaster relief and post-conflict reconstruction have become more complex. Strategic considerations have become more prevalent in military-led disaster relief operations. Post-disaster and post-conflict reconstruction planning and implementation are increasingly influenced by neoliberal market economics. A new militant humanitarianism infuses not only post-conflict reconstruction work but, in a number of cases, has itself helped to precipitate conflicts. Disaster relief and post-conflict reconstruction have thus become increasingly intertwined, so that it is difficult to understand the dynamics of one arena without looking at the other. This is all the more true since the same set of actors now dominate both arenas: the U.S. military-political command, the World Bank, corporate contractors and humanitarian and development non-governmental organizations (NGOs). Humanitarian missions led by the United Nations and Red Cross are a thing of the past, though these players continue to participate in relief and reconstruction work along, of course, with national governments. The new establishment in post- disaster and post-conflict reconstruction is what will be termed here the "relief and reconstruction complex" (RRC). Power structures develop legitimating ideologies, and accompanying the rise of the RRC is a formulaic discourse that is built on appeals to national and international security, neoliberal economics and a burgeoning, militant "rights-based humanitarianism. The Tsunami as oportunity I: The Pentagon Within hours after the massive tsunami that hit at least eleven countries bordering the Indian Ocean on 26 December 2004, U.S. Navy Orion reconnaissance aircraft began flying over the affected areas to deliver emergency relief and to assess the damage. This was the prelude to a massive expedition that eventually came to ncompass more than twenty-four U.S. warships, over 100 aircraft and some 16,000 military personnel-the largest U.S. military concentration in Asia since the end of the Vietnam War. (1) It was not a disinterested peacetime military mission. One immediate sign of this was the deliberate U.S. effort to marginalize the United Nations, which was expected by many to coordinate, at least at the formal level, the relief effort. Instead, Washington sought to bypass the United Nations by setting up a separate assistance "consortium" with India, Australia, Japan, Canada and several other governments, with the U.S. military task force's Combined Coordination Center at U Tapao, Thailand, effectively serving as the axis of the whole relief operation.(2) Showing the flag was seen by the Bush administration as an important objective in light of the low point in the relations between the United States and many communities in the Southeast Asian region owing to the War on Terror, which many Muslims, who were in the majority in the most devastated country, Indonesia, had seen as being directed against them. The War on Iraq was also universally unpopular throughout the area, yet here was an opportunity to show a different face of the U.S. military than that of a force imposing a harsh military occupation on that Middle Eastern country. However, there were more immediate military objectives as well. The Indonesian military had been subject to a ban on U.S. arms sales as well as restrictions on U.S. led military training for close to a decade owing to the successful campaign of human rights groups during the 1990s to expose the systematic oppression carried out by the Indonesian Army, the TNI. The tsunami relief effort became an opportunity for the Pentagon to push for dropping those restrictions. As then-Deputy Secretary of Defense Paul Wolfowitz put it during a visit to Jakarta a few weeks after the disaster, "the more we can cooperate on a peaceful basis with militaries in this region in normal times [the more we can increase] our capacity to respond to disasters." He then went on to say, "Everybody loses a great deal when a long period of time goes by with severe limitations on the ability of our military...when you cut off their contact with a military, whether it be in Pakistan...or here, as we've done to a lesser extent but continue. I think it is not supportive of the very goals that these restrictions are meant to achieve." (3) The military-to-military cooperation during the tsunami relief became an important step in a process of the Wolfowitz-led effort to restore military aid to Indonesia. In January 2005, Washington, citing the tsunami, allowed commercial sales of "nonlethal" defense items, including spare parts for military transport planes. In February 2005, the ban on military training was lifted, followed that May by the lifting on government sale of non-lethal defense equipment. Finally, in November 2005, despite Congress voting to maintain the ban two weeks earlier, the State Department, exploiting a national security waiver provision, resumed unrestricted military and training aid, citing among other reasons, the objective of strengthening the Indonesian military's capability for "disaster relief." (4) Dealing with two active insurgencies, in Aceh and West Papua, the TNI would find U.S. military aid very useful, especially if the tenuous post-tsunami ceasefire that it has entered into with GAM, the Acehnese independence movement, gives way again to open hostilities. Strategic maneuvering using the tsunami as a platform was not limited to Southeast Asia. In South Asia, Pentagon relief efforts were poised to move into areas in Sri Lanka controlled by the Tamil Tigers (LTTE), a group that the State Department includes in its list of terrorist organizations. Several hundred U.S. Marines from the Navy assault ship Bonhomme Richard were set to be deployed to Galle, on the west coast, to provide "limited engineering capability" for repairing roads and other damaged infrastructure. Given the fact that a few days before, the Tigers and the Sri Lankan army were on the brink of renewed hostilities, one military expert noted, the use of U.S. troops and ships for the relief effort had strategic implications: "[I]f there is a showdown, the presence of foreign troop -- particularly from the U.S. and India -- involved in relief work could make a world of difference... In case of a military operation, additional airlift capability now available to Sri Lanka from the foreign helicopters employed in relief work would be formidable. These forces have also added to infrastructure restoration and repair capability. Similarly the foreign naval ships can create a strong cordon to prevent external access to the LTTE." (5) While it is doubtful that the United States had any intention to actively intervene in an open conflict, its nearby presence would serve as a strong psychological deterrent to the Tigers. Moreover, Washington was anxious to reassert influence in an area where it had been sidelined by the successful Norwegian government initiative to broker a truce between the Sri Lankan government and the Tigers. Aware of the strategic disadvantage at which they were placed, the Tigers objected strongly to the U.S. military presence, prompting Sri Lankan President Chandrika Kumaratunga to scale down her request for U.S. aid. As a result only U.S. naval helicopters were eventually involved in the relief effort. (6) The U.S. military-led relief effort contributed to saving lives, alleviating the misery of tsunami survivors and repairing infrastructure. Nevertheless, it went hand-inhand with strategic and propaganda objectives. While it is doubtful that it was able to repair the tattered image of the United States among Indonesian Muslims, this initiative scored a stunning success in creating the climate for the lifting of restrictions on military aid to the TNI, which the Pentagon had long considered its most strategic ally in Southeast Asia. The Tsunami as oportunity II: The World Bank While the U.S. military spearheaded the immediate relief effort, the World Bank assumed the dominant role in the reconstruction arena, and here, as in the former scenario, the United Nations was placed in a subordinate role. In the first next six months after the tsunami, the World Bank committed $835 million to tsunami-devastated countries. Of equally importance, it became the manager of a Multi-Donor Trust Fund for Aceh and North Sumatra to handle some $500 million in aid from the European Commission, the Netherlands, United Kingdom, Canada, Sweden and other contributors. A cynical view might be that the World Bank needed the tsunami to refurbish its image as a disaster-management agency. At the time, it was still dogged by its record following the devastating Hurricane Mitch, when of the $8.7 billion that the World Bank and Western governments promised to raise as aid for the affected Central American countries, less than a third materialized. (7) World Bank officials were also bothered by the belief of many Hondurans that it had imposed a "permanent hurricane" on their country. To satisfy the World Bank and the International Monetary Fund (IMF), the Honduran Congress had passed a comprehensive set of laws allowing privatization of airports, seaports and highways, and fast-tracked plans to privatize the national electric utility, telephone company and parts of the water sector while the country was "still knee deep in rubble, corpses, and mud," as Naomi Klein described it. During that same period, Guatemala and Nicaragua announced plans to sell off their telephone systems, with Nicaragua also throwing in its electric company and petroleum sector. (8) Indeed, as the World Bank waded into the post-tsunami reconstruction arena, some of the same criticism resurfaced. To be sure, no one was accusing the World Bank of using the disaster as an opportunity to push through a privatization program as it did in the post-Hurricane Mitch situation. However, it was criticized, along with governments, for placing emphasis on the rehabilitation of commercial enterprises such as prawn farms and tourist resorts.(9) Indeed, a February 2005 report on its post-tsunami operations noted that the International Finance Corporation, the World Bank's financing arm, was "considering financing facilities that will rapidly mobilize long-term debt financing for the recovery of the tourism operations in the affected areas." (10) Whether supported by World Bank aid or not, rehabilitation of tourism did receive special treatment in a number of countries. In Sri Lanka, according to a Red Cross report, "The government is intent on maintaining a shoreline exclusion zone in which private residential buildings will not be permitted and in which tourist/holiday commercial property development is to be exclusively permitted."(11) In Thailand, many tourist resorts had been completely rebuilt and were, after one year, welcoming a steady stream of visitors. However, according to one report, this "speedy construction has created its own problems; local Thai villagers accuse developers of expanding their beachfront holdings illegally. More than two-thirds of the forty-seven Thai villages destroyed by the tsunami are currently embroiled in land-title disputes." (12) In response to critics, the World Bank contended that its performance in the post-tsunami recovery and reconstruction was nothing short of sterling. Its report to donor governments over a month after the tsunami amounted to a strong pat on the back: "The disaster brought out the best in World Bank staff and demonstrated the effectiveness of decentralization. The [World] Bank moved quickly to a) provide assistance on the ground in affected countries for expedited recovery planning; b) mobilize its financial support; and c) help coordinate rehabilitation and recovery support... The [World] Bank was able to use its comparative advantage-in-house expertise on recovery and reconstruction, knowledge of the overall economies of these countries, sectoral knowledge from operations and analytic work, procurement and financial management skills, and experience with donor coordination and reconstruction financing-in assisting countries in formulating their recovery plans." (13) One might note here that it is this same argument-the alleged "comparative advantage" it possesses due to its comprehensive knowledge of the institutions of natural disaster-hit countries-that the World Bank deployed to justify its leading role in post-conflict reconstruction. (14) The World Bank's defensiveness during the tsunami relief stemmed not only from its poor performance in Hurricane Mitch. Over the previous decade, it had received tremendous criticism from a variety of influential quarters. In 2000, it was pilloried by a U.S. Congress-appointed body, the Meltzer Commission, which came up with a number of devastating findings, among them that 70 percent of the of the Bank's non-aid lending was concentrated in eleven member countries, with 145 other members left to scramble for the remaining 30 percent; 80 percent of the Bank's resources were devoted not to the poorest countries but to the better-off ones that enjoyed positive credit ratings; and that the failure rate for World Bank projects was 65-70 percent in the poorest societies and 55-60 percent in all developing countries. These numbers, according to the commission, meant that the World Bank had become irrelevant to its avowed mission: alleviating global poverty. (15) Moreover, the structural adjustment programs that the World Bank and the IMF had administered in over ninety developing and transition economies had mostly failed in terms of meeting their declared goals of promoting sustained growth, poverty reduction and mitigating inequality, prompting the renaming of these programs as the "Poverty Reduction Strategy Papers." The World Bank also had to deal with accusations that it had tolerated corruption, contrary to its propaganda that it was promoting "good governance." For instance, of the $30 billion that it had funneled to the Suharto government in Indonesia for over thirty years, about 30 percent, admitted one World Bank official, had been pocketed by Indonesian government officials. (16) Post-conflict reconstruction: The World Banks's new frontier Perhaps partly because of its poor record in development work, the World Bank began to devote more and more of its resources to disaster and reconstruction work, including in post-conflict societies. While the World Bank could be faulted for its development work, nothing could substitute for its reconstruction efforts. This was, in a sense, a return to its origins, since it began its existence in the mid-1940s as a key agency in the post-war reconstruction of Europe. Even as it intensified its post-disaster work in the 1990s, the World Bank moved into post-conflict reconstruction. In 1997, it established the Post Conflict Fund to "enhance the World Bank's ability to support countries in transition from conflict to sustainable peace and economic growth." (17) Post-conflict countries now receive 2025 percent of the World Bank's total lending, according to Klein, up from 16 percent in 1998, which in turn was up 800 percent since 1980.(18) It also now has a special unit to develop programs for conflict-affected countries, the Conflict Prevention and Reconstruction Unit. (19) According to Focus on the Global South's Shalmali Guttal: "What is remarkable about the [World] Bank's involvement in post-conflict reconstruction is the breadth and size of its operations, and the ease with which it repackages its usual programs into reconstruction mode. The World Bank's reconstruction activities span a wide spectrum, from giving policy "advice" and commissioning studies, to financing in-country activities and managing the donor funds channeled to a war-torn or conflict-ridden country for reconstruction. "Through various mechanisms, such as the management of joint donor trust funds or "transitional support strategy" schemes, the World Bank now plays "a significant role in shaping the economic, social, and political climates in Afghanistan, Cambodia, Africa's Great Lakes region, the Balkans, Liberia, Nepal, Sierra Leone, Timor Leste, Sri Lanka, the West Bank and Gaza, and other areas torn by war, conflicts, and disasters." (20) Post-conflict reconstruction has enmeshed the World Bank more closely with the foreign policy and security objectives of its dominant member and donor, the United States. Indeed, the appointment of Paul Wolfowitz to serve as World Bank president was seen by many as confirmation of the Bush Administration's drive to mesh the World Bank's development, disaster relief and post-conflict reconstruction work more tightly with its strategic objectives. (21) This is most clearly seen in Afghanistan and Iraq, where the Bush administration's twin objectives -- pacification and privatization -- have also become the key goals of the World Bank. In Afghanistan, the World Bank is at the center of reconstruction activity, committing as of January 2006 some $973 million for eighteen projects, as well as administering six grants totaling $1.31 billion from the Afghanistan Reconstruction Trust Fund. The World Bank states that it is channeling supporting investments "aligned with national priorities." (22) Privatization, writes Naomi Klein, is clearly one of these priorities: "In Afghanistan, where the World Bank administers the country's aid through a trust fund, it has already managed to privatize healthcare by refusing to give funds to the Ministry of Health to build hospital... [and] mandated "an increased role for the private sector" in the water system, telecommunications, oil, gas and mining and directed the government to "withdraw" from the electricity sector and leave it to "foreign private investors." These profound transformations of Afghan society were never debated or reported on, because few outside the bank know they took place: The changes were buried deep in a "technical annex" attached to a grant providing "emergency" aid to Afghanistan's war-torn infrastructure-two years before the country had an elected government." (23) In this regard, the World Bank considers especially critical the participation of foreign investors in the privatization process, as evidenced by the fact that its Afghanistan Investment Guarantee Facility for foreign investors emphasizes coverage for "acquisitions that involve the privatization of state enterprises." (24) In Iraq, one of the first acts of the U.S. authorities upon the overthrow of Saddam Hussein was to have the World Bank finance reconstruction. Then-World Bank President James Wolfenson promised to raise $3 to $5 billion, and the World Bank went on to set up the Iraq Trust Fund, a multi-donor agency, that would funnel money into economic reconstruction. In announcing the creation of the Trust Fund, the World Bank identified Iraq's "centralized command economy" as one of the factors that had stifled growth and development and indicated that one of the key objectives of the fund's interim strategy for Iraq would be to "provide policy advice and analytical work that will pave the transition to a market-based economy." (25) The World Bank, of course, was just one of a number of actors coordinated by Washington to radically transform Iraq into a market nirvana protected by U.S. troops. Along with the Coalition Provisional Authority (CPA), the U.S. State Department and the U.S. Agency for International Development (USAID) brought in contractors to "establish the basic legal framework for a functioning market economy," as one USAID directive put it.26 Among the priorities was the creation of a legal regime for foreign investment. In this regard, the World Bank declared its support for the CPA's radical effort to rewrite Iraq's foreign investment law without a sovereign regime in place, as it had also done in the case of Afghanistan. A World Bank/United Nations Joint Needs Assessment report, Kathy Hoang explained, positively cited CPA Order 39 which, it noted: "...would make the country one of the most open in the word. The law permits full foreign ownership of businesses in all sectors (with the exception of natural resources [e.g., oil]), permits foreign firms to enter Iraq as direct owners of branches or through joint ventures, provides for national treatment of foreign firms and permits the full and immediate repatriation of profits." (27) As the Financial Times noted at the time, these changes "make Iraq one of the most liberalized economies in the developing world and go beyond even the laws in many rich countries." (28) The World Bank's endorsement of the CPA decree, which would later be enshrined along with other radical pro-market decrees in the Iraqi constitution "the final draft of which appeared in the summer of 2005" was not surprising. A World Bank working paper, citing the lessons of an earlier war, asserted: "One of the main lessons of BiH's [Bosnia and Herzegovina's} experience is the need to press for investment-related policy reforms as early as feasible...[T]here is no doubt that earlier reform would have been desirable, and this is one of the most important lessons for other post-conflict environments." (29) Along with foreign investment, a key World Bank concern was privatization and the dismantling of state enterprises. As the World Bank's interim strategy notes, "An open economy and an enabling environment for private investment are essential for growth. Iraq also needs to establish a sound regulatory framework, and to reform and privatize SOE's [state-owned enterprises] and banks." (30) While clearly following the U.S. agenda, the World Bank was also trying to carve out a unique role in Iraqi reconstruction by stressing its superiority over other institutions, including U.S. government agencies such as USAID, in managing comprehensive economic transformation: "The Bank's comparative advantage is to build Iraqi institutional capacity, by implementing operators using Iraqi institutions and by emphasizing Iraqi ownership, sector-wide approaches and coherent expenditure frameworks. In contrast, many other external partners channel assistance to particular projects through private contractors, external agencies, or nongovernmental organizations. Another important comparative advantage is to ensure consideration of international experience and best practice." (31) As noted earlier, this was, almost word-for-word, the same rationale that the World Bank deployed to legitimize its leading role in disaster relief efforts. Corporate contractors, hard and soft: a short note Corporations "and U.S. corporate contractors in particular, such as Halliburton and Bechtel "have been key actors in the reconstruction process, prompting Naomi Klein to coin the felicitous term "disaster capitalism." These infrastructure builders have been the recipients of hundreds of millions of dollars in bilateral and multilateral aid. One key study claims, for instance: "The vast bulk of the $3.9 billion Halliburton received from the Pentagon in FY 2003 went for the company's work in and around Iraq and Afghanistan, including everything from building military bases, to providing meals, to doing the laundry, to maintaining military vehicles, to rebuilding Iraq's oil infrastructure. The $3.9 billion the company earned in 2003 doesn't include billions in new contracts that have been issued since that time for rebuilding oil infrastructure in southern Iraq or for work in other parts of the world. Halliburton has also built bases in Uzbekistan and prison camps in Guantanamo Bay, Cuba. "Anywhere you go where the U.S. Army has to deploy on short notice, Halliburton is there, working on a cost-plus contract," notes Frida Berrigan, Deputy Director of the Institute's Arms Project and a co-author of the new analysis. "The billions they have earned thus far are just the tip of the iceberg." (32) While "hard" infrastructure contractors like Bechtel and Halliburton have been the focus of much attention, "soft" infrastructure agents have also played a critical role in the reconstruction process. In Iraq, for instance, USAID has brought in Research Triangle Institute to manage the restructuring of local government, Creative Associates to work on "public-private partnerships," Abt Associates to reform the public health system, Development Alternatives Inc. to manage the rural poor's transition towards a market-led economy, and Bearing Point to create the legal regulatory framework for a free-market economy. (33) Many of the same contractors operate in Afghanistan, where the U.S.-installed President Hamid Karzai felt obliged to condemn "corrupt, wasteful, and unaccountable" foreign contractors for "squandering the precious resources that Afghanistan received in aid." (34) It is not surprising that with their close links to Washington, the overall managers of reconstruction in Afghanistan and Iraq as well as the post-Katrina relief work in Louisiana, were some of the same faces -- including Bechtel, Halliburton, the notorious Blackwater and Dyncorp private security agencies-that showed up in devastated New Orleans.(35) One significant byproduct of this process, says one analyst, is that many of the questionable practices used in the reconstruction of Iraq are now being implemented in this largest effort at reconstruction in the history of the U.S. "which could total several hundred billion dollars" including non-competitive contracts and cost-plus provisions that guarantee profit regardless of the amount a firm spends, with contracts going to many politically well-connected companies. (36) NGOs and the new, militant humanitarianism The role of foreign contractors has been much publicized and analyzed, but the role of the fourth member of the Relief-and-Reconstruction Complex-NGOs or civil society organizations (CSOs -- is less well understood. NGOs are a central part of the disaster and reconstruction effort. For instance, NGOs have been so prominent in countries affected by the tsunami that there is a widespread perception that "relief and rehabilitation has been purely NGO-driven." (37) Indeed, in many areas NGOs have practically supplanted the government in the provision of emergency services. The record has been mixed. While the work of the NGOs has generally been appreciated, there has been skepticism in some quarters about their being loaded with money, their outsider perspectives and their modus operandi. In some areas, such as the Kanyakumari district, Tamil Nadu, India, according to a Frontline correspondent, reconstruction "has gone awry with the genuinely needy groups caught in a crossfire between competing NGO and Church interests."(38) Lack of a long-term strategy beyond the immediate relief phase into the reconstruction phase was another common complaint in many areas. Still another was the consequence of the state's abdication of its responsibilities. As one community in Tamil Nadu's hard-hit Cuddalore district saw it, aside from the disruptive consequences of "easy money" flowing in from NGOs, a greater worry was that the dependence on NGOs for housing had drastically reduced the State's duty as a provider of basic infrastructure. This "government-less approach," he warned, "could lead to significant disempowerment of the community." (39) The agility of NGOs compared to a lumbering state was not, however, the only reason for the prominence of NGOs. In fact, the prevailing neoliberal atmosphere has brought its basic perspective that government is inefficient and private organizations are efficient from the economic to the social sphere. Having been criticized by the right in the U.S. for funneling its aid through governments, which it sees as "socialism", the World Bank is channeling more and more of its support to private entities like NGOs. In Thailand, for instance, the World Bank plans to partner with such NGOs as the Population and Community Development Association, World Vision and the Local Development Institute to provide assistance in a number of provinces. In Aceh, the World Bank was looking to finance not the government but a U.S.-based NGO, Catholic Relief Services, to repair the temporary road along the western coast. The government was also shut out of the land rights project, which would enable people to identify their properties after the tsunami wiped away property boundaries. Instead, according to a World Bank news release, "A number of CSOs (big international organizations as well as Aceh-based ones) have been trained by this World Bank-administered program to conduct Community Mapping and Community Driven Adjudication." (40) NGOs have not, of course, been passive actors; they have actively lobbied the World Bank and governments to more actively manage the delivery of assistance. They have not been pawns in post-conflict reconstruction. In the last fifteen years, some NGOs have become partisans of military intervention in their humanitarian interventions. In the Balkan crisis of the 1990s, for instance, Medicins Sans Frontieres, the Peace Prize Winner for 1999, was an active proponent of NATO military intervention in the Bosnian crisis and again during the Kosovo crisis to protect Muslim and Albanian Kosovars from Serb repression. Many had agitated informally and quietly for international action against the Taliban prior to the U.S. invasion, and when the invasion did take place, they flooded into Afghanistan. Less than two years later, in June 2003, seventy-nine NGOs demanded that the international community accord NATO a "robust stabilization mandate" in the country. In a manifesto entitled "Call for Security," they elaborated on this demand: "This mandate should include the expansion of the International Security Assistance Force (ISAF) to key locations and major transport routes outside of Kabul and the active support for a comprehensive program of disarmament, demobilization, and reintegration of all militia forces outside the control of the central government." (41) This meant that the signatories-which included CARE International, Catholic Relief Services, Caritas International, Human Rights Watch, World Vision US, Save the Children UK and Oxfam International-were quite consciously taking sides in an ongoing civil war. According to David Chandler, this transformation of humanitarian philosophy from "needs-based" to "rights-based" humanitarianism has involved both advocacy of setting aside the principle of national sovereignty during humanitarian crises as well as an abandonment of the traditional neutrality of the Red Cross, meaning actively siding with those parts of the population seen as "oppressed" against those seen as "oppressors". As expressed by Geoffrey Robinson, one advocate of this new, muscular humanitarianism, sanctions on post-war Serbia were justified because "most of Serbia's eight million citizens were guilty of indifference towards atrocities in Kosovo." (42) Many of the influential NGOs have steered clear from making major commitments to Iraq, partly because of the controversy over a war that could not be justified on grounds of either humanitarianism or self-defense, and partly because the security situation could never be stabilized enough to assure NGO personnel that they could move around in relative safety. Civil society organizations were present nevertheless. Aside from a handful of anti-war NGOs determined to extend symbolic people-to-people support to Iraqis, most of the key NGOs present were conservative U.S. organizations that functioned as semi-official bodies working closely with the occupation authorities on "democracy promotion." These included the U.S. Congress-funded National Endowment for Democracy (NED), National Democratic Institute, International Republican Institute and the International Foundation of Election Systems, which had earlier funded pro-U.S. parties in critical hot spots such as Venezuela, Nicaragua, Haiti, Ukraine and El Salvador. (43) Often, as in the case of NED, these bodies worked closely with the contractors specializing in social management hired by the government such as Development Alternatives Inc., and Abt Associates. (44) All were virtual appendages of the CAP, which ruled Iraq until June 2004. It is in Afghanistan that the role of NGOs in the reconstruction effort has become truly central. The marriage of strategic rationale, neo-liberal suspicion towards the state and the aggressive humanitarianism of the NGOs produced contemporary Afghanistan's current mode of governance, where NGOs have assumed many of the functions of government while the government itself has been deliberately starved of funds to support itself and carry out what have traditionally been seen as state functions. According to one insightful account, the collapse of the Taliban government opened up a vacuum that Afghan NGOs relocating from Pakistan or newly founded NGOs rushed to fill: "Consequently, a high percentage of the newly established Afghan NGOs began to take on the role of sub-contractor or according to the donor community "implementing partners." As a result, these Afghan NGOs began to carve their own niche in delivering the very much needed humanitarian aid throughout the country in line with the donor community policy and guidelines. Overall, this was easy to do (donor agencies were eagerly seeking partners), easy to implement (mostly in their own villages and regions), there was some capacity within the organizations (mostly returning refugees that were educated in their host countries) and there was a desire to attract funding. A fluid and undefined civil society sector began to emerge in response to large sums of money being available for quick infrastructure and aid distribution projects." (45) Soon, according to the former planning minister of the Karzai government, Dr. Ramazan Bashar Dost, a full third of the $4.5 billion pledged to Afghanistan at the Tokyo Conference in 2003 went to NGOs, a third went to the government and a third to the United Nations.(46) He went on to say that the NGO sector was also raiding the government of its best people owing to the much higher salaries it offered. (47) The sequel to Dost's criticism confirmed his accusation about the power of NGOs in Afghanistan: He was forced to resign. (48) With NGOs available to take on tasks, the multilateral donors found a convenient channel for their aid-one that was more pliable than the government and accorded with their ideological redilection for slim states. Thus, when it came to rescuing the country's health system, the World Bank has managed to privatize health care by refusing to give funds to the Ministry of Health to build hospitals and channeling money instead to NGOs to run their own private health clinics on three-year contracts.(49) Indeed, in many instances, the NGOs became more influential than either the government or the private sector. (50) Supportive of the occupation, dependent on foreign military support and performing the functions of government in many parts of the country, it is no wonder that NGO workers, including highly visible foreigners, have become targets of the insurgents; over forty NGO workers have been killed since the U.S. invasion. The insurgents, in short, simply know where the power lies. Perhaps the best description of the status of NGOs in contemporary Afghanistan was presciently provided by then-Secretary of State Colin Powell in a speech to American NGOs when Operation Enduring Freedom-the invasion of Afghanistan-began in October 2001: "NGOs are such a force multiplier for us, such an important part of our combat team." (51) Towards a new relief and reconstruction paradigm A number of steps can be taken to reverse the descent into a blurring of disaster relief and reconstruction aid. First, in a major regional disaster it is important to immediately establish a rescue and recovery command center under the auspices of the United Nations, Red Cross and affected governments that will supervise relief efforts, including those of participating foreign military units such as U.S. forces. The unilateral establishment of a U.S.-dominated command center such as that set up at the former U.S. air base in Utapao, Thailand, during the post-tsunami relief operations must not be repeated. Second, direct military-to-military entanglements must be discouraged except for operational purposes. Key decisions for relief activities within a country should be cleared and approved by local civilian authorities. Also, foreign military units participating in a relief effort should be integrated into operations led and managed by the affected government's civilian disaster agencies. Third, medium-term and long-term relief and recovery aid should be managed by a consortium led by UN agencies, with the role and programs of the World Bank set by this grouping. Affected governments, other multilateral bodies and international NGOs should be included in this aid consortium, which would take the lead in terms of determining priorities from the governments. Fourth, when it comes to post-conflict reconstruction, participation in such efforts should be undertaken only when no violation of the principles of national sovereignty have taken place. In situations where these principles have been observed, the role of external participants should fall under a reconstruction consortium led by the United Nations and the affected government. While there should be sufficient flexibility, NGO efforts should be coordinated with the host government and NGO support must not lead to activities that displace government services. If anything, these efforts should facilitate the development and independence of local service providers. Finally, participants in post-conflict reconstruction must scrupulously observe neutrality when it comes to dealing with target groups and political groupings within the country. This does not mean a head-in-the-sand type of neutrality but an activist one that strives for impartiality -- though that will always be an ideal -- not only in the allocation of resources but also in documenting and calling attention to violations of human rights and agreements. Perceived non-partisanship is, in fact, likely to make aid and reconstruction agents more valuable on the ground to all parties to a conflict and thus increase their leverage in mediation efforts. Conclusion In sum, a sea change has occurred in disaster relief and post-conflict reconstruction work. The old image of the United Nations raising the funds and managing the aid effort while the Red Cross tended to the hurt and the sick with studied neutrality no longer reflects contemporary realities. Disaster relief and post-conflict reconstruction are increasingly driven by the same dynamics, reflecting the intersection of strategic interest, ideologically motivated economics and muscular humanitarianism. The new RRC establishment has as its central players the U.S. military and political command, the World Bank and NGOs. An ideological melange of national and international security, neoliberal economics and partisan, military humanitarianism advances the institutional interests of these groups. Whether in disasters or in wars, the same key actors emerge to take over the post-disaster or post-war situation. With its volatile mixture of strategic concerns, bureaucratic imperatives, profitmaking and partisan humanitarianism, it is questionable that this new paradigm of relief and reconstruction is superior to the traditional arrangements. Notes
Why Today's Collapse of Doha is the Best Outcome for Developing Countries (25 July 2006)
Today's collapse of the Doha Round negotiations of the World Trade Organization in Geneva is one of the best things to happen to the developing world in a long while.
In the past two weeks, in anticipation of the July 27-28 meeting of the World Trade Organization's General Council, a major rescue effort was mounted to save the "Doha Round" of global trade negotiations from collapse. The most prominent of these efforts took place at the Group of Eight Summit in St. Petersburg, where the leaders of the world's most powerful economies called for a successful conclusion to the round, painting it as a "historic opportunity to generate economic growth, create potential for development, and raise living standards across the world." This was pure myth. The idea that the Doha Round is a "development round" could not be farther from the truth. At the very outset of the Doha negotiations in November 2001, the developed country governments rejected the demand of the majority of countries that the talks focus on the hard task of implementing past commitments and avoid initiating a new round of trade liberalization. From the very start, the aim of the developed countries was to push for greater market openings from the developing countries while making minimal concessions on their part. Invoking development was simply a cynical ploy to make the process less unpalatable. Lopsided Negotiations in Agriculture The state of the agricultural negotiations before today's unraveling was reflective of this. Even if the United States had conceded to the terms of WTO Director General's compromise on cutting its domestic support, this would still have left it with a massive $20 billion worth of allowable subsidies. Even with the European Union agreeing to phase out its export subsidies, this would still have left it with 55 billion euros in other forms of export support. In return for such minimal concessions, the US, EU, and other developed countries wanted radically reduced tariffs for their agricultural exports in developing country markets. Indeed, even at a very late stage in the negotiations, the US appeared determined to eliminate any protection for developing country farmers. US Trade Representative Susan Schwab attacked the provisions for "special products" and "special safeguard mechanisms" already institutionalized in the December 2005 Hong Kong Ministerial declaration. Admittedly imperfect, these mechanisms would nevertheless allow governments to slow down the erosion of local agriculture by exempting some products from tariff cuts and raising tariffs on subsidized imports. The WTO negotiations, if brought to a conclusion on such lopsided terms, would result in the slashing of poor countries' farm tariffs while preventing them from maintaining food security. This is a recipe for massively expanded hunger and threatens to further impoverish hundreds of millions of the poor worldwide. The consequences for the South were perhaps best summed up by a Philippine government negotiator before the WTO Agriculture Committee: "Our agricultural sectors that are strategic to food security and rural employment have already been destabilized as our small producers are being slaughtered by the gross unfairness of the international trading environment. Even as I speak, our small producers are being slaughtered in our own markets, [and] even the more resilient and efficient are in distress." The Specter of Deindustrialization But the developed countries not only want radically reduced agricultural tariffs from developing countries. They also want maximum entry to southern markets for their industrial and other non-agricultural goods. In the NAMA (Non-Agricultural Market Access) negotiations, they have demanded that the industrializing economies of the South cut their non-agricultural tariffs by 60-70 per cent while offering to cut theirs by only 20-30 per cent. This not only violates the GATT-WTO principle of less-than-full-reciprocity. It is absurdly inequitable. The South African government reflected the frustrations of most of the global South about the Doha process when it stated that "developing countries will not agree to destroy their domestic industry on the basis of unreasonable and irrational demands placed on them by the developed countries." The extinction of agriculture and deindustrialization is not the only price that developing countries are being asked to pay for a successful conclusion to the Doha Round. In addition, under the General Agreement on Trade in Services (GATS) negotiations in the WTO, they are being asked to allow foreign corporations more rights to buy and control public services in developing countries, at the expense of guaranteeing essential public services for the poor. The Cost-Benefit Equation It is no longer just the developing countries or global civil society that is warning that WTO-managed liberalization will be detrimental to the interests of the developing world. Even the most pro-liberalization agencies are now admitting that the benefits of the Doha Round to the poor have been greatly inflated. According to a fall 2005 study by the World Bank, in a "likely Doha scenario" of reforms, developing countries would gain a mere $16 billion in ten years. That's a miniscule 0.16 percent of developing-country gross domestic product, or less than a penny a day per capita. The poorest billion people are projected to increase incomes by a mere $2 per year. That's why it is so heartbreaking to see "the poor" being invoked to sell the project of massive corporate expansion of the Doha agenda. Yet the 2005 World Bank study, though less unrealistic than that agency's previous studies, is extremely inadequate, for it does not factor in many costs that the WTO regime imposes on developing countries. It fails to account, for instance, for the negative impact of corporate patent monopolies under the WTO's "Trade-Related Intellectual Property" agreement, which force the poor to pay vastly increased prices for access to life-saving medicines. Some estimate that these costs to developing countries are far greater than any alleged gains from liberalization. For example, a recent United Nations Conference on Trade and Development (UNCTAD) study predicts that the losses in tariff income for developing countries under Doha could range between $32 billion and $63 billion annually. This loss in government revenues - the source of developing-country health care, education, water provision, and sanitation budgets - is two to four times the mere $16 billion in benefits projected by the World Bank. Africa, the least developed region, will be one of the most prominent victims should the round be concluded successfully. Summing up the findings of other recent research from the Carnegie Endowment, the European Commission, and the Food and Agriculture Organization (FAO), Aileen Kwa of Focus on the Global South points out that "the majority in Africa will be faced with losses in both agriculture and industrial goods liberalization. Even if agricultural export markets were open to Africa, the majority of African farmers - subsistence farmers - will not be in a position to compete. In addition, they will lose through having to open their domestic markets in the negotiations. The poorest countries in Africa will be worst hit - many are LDC countries in Sub-Saharan or East Africa." Breaking out of the WTO Paradigm In sum, not only do the economic costs of a potential Doha conclusion clearly outweigh any projected benefits to the poor; the loss of policy space for developing countries - to create jobs through industrialization, guarantee public services, and protect farmers and food security - would be tantamount to kicking away the ladder of development, to use the image of Cambridge University economist Ha Joon Chang, and prevent developing nations from using the very tools used by developed nations to pull themselves out of poverty. So clearly detrimental to development is free trade that a recent study of the United Nations Developing Program (UNDP) advised poor Asian countries to do what Japan and South Korea did successfully: protect key industries with tariffs before exposing them to foreign competition. To promote development and reduce poverty, governments should be encouraged to increase spending on health care, education, access to water, and other essential services, not pressured to sell them off to foreign corporations for private profit. Trade can be a medium of development. Unfortunately, the WTO framework subordinates development to corporate-driven free trade and marginalizes developing countries even further. It is time to cease entertaining illusions about the alleged beneficial effects on development of the Doha Round. The collapse of the Doha Round will be good for the poor. With today's unraveling of the WTO talks, the task should now be to shift to creating alternative frameworks and institutions other than the WTO and other neoliberal trade mechanisms that would make trade truly beneficial for the poor. Report from Lebanon (13-14 August 2006)
Part I: Tracing a Trail of Destruction, 13 August 2006
The wounds of war were evident shortly after we crossed the Syria-Lebanon border at 1130 in the morning on August 12. At Haissa, about three kilometers from the Dabboussiyeh border crossing, we come across the ruins of a bridge hit by Israeli war planes just the day before. Villagers tell us 12 people were killed and 10 wounded, all civilians. An Anti-Civilian War? Twenty minutes later, at a place called Abu Shamra, we come across the remains of a gasoline station and bridge, the targets of an Israeli airstrike just eight hours earlier. "Now, what was the military logic behind that?" asks Seema Mustafa, an Indian journalist with our international peace delegation of 12 people. It is a question shared by the Lebanese who tell us what happened. At three other places, Matfoun, Halat, and near the famous Casino du Lebanon at Jumieh, we have to take detours around bridges and vehicles destroyed by Israeli attacks. These are sites very far from the front in Southern Lebanon, in a part of the country where Hezbollah, the movement Israel is fighting, has very little presence. These very fresh instances of destruction bring home to us one of the key features of the Israeli offensive: it has deliberately targeted non-military infrastructure to raise the costs of the war for the civilian population. With evidence of Israel's anti-civilian strategy fresh in our minds, we are not surprised when we hear, after arriving in Beirut, about the strafing of a convoy of civilians leaving the town of Marieyoun in the South. On Friday, several hundred cars left the town, after negotiations between the Israelis and the non-belligerent Lebanese Army. As it snaked up North, it came under fire repeatedly from Israeli planes with at least six people killed and many others wounded. What was the reason for violating the agreement? The Israeli excuses ranged from "it was a mistake" to "suspicion that the convoy was carrying Hezbollah guerrillas." Nahla Chahal, one of the coordinators of international civil society delegations to Lebanon, tells us: "The deliberate attacks on civilians is a new element in Israel's redrafting of the rules of war. It's nothing less than a war crime." Herbert Docena, one of the members of our delegation who spent time in occupied Iraq, says, "What is different between Iraq and here is that in Iraq, the US does seem to have a modicum of concern about international public opinion. Here, the Israelis simply don't care about public opinion. So it's more dangerous." Israel and Hezbollah: Contrasting Strategies The delegation is told at a briefing on the evening of our arrival by our Lebanese hosts that the contrast between the war strategies of the Israelis and the Hezbollah is evident in the nature of the casualties: most of the more than 1000 Lebanese killed by the Israeli armed forces are civilians, while most of the more than 100 Israelis who have died in the war so far are soldiers. There is, in fact, a strong sense of pride in the Hezbollah's military performance that is evident as we are briefed that evening by representatives of several of Lebanon's political parties, including the right-wing Free Lebanon Movement led by Gen. Aoun, the centrist "Third Force", the Lebanese Communist Party, and the Hezbollah itself. According to Dr. Issam Naaman of the Third Force, the war has now lasted 31 days, more than any of the previous Arab-Israeli wars. "At this point, it is clear that Israel has lost the war on the ground and is trying to get at the diplomatic front, with the support of the United States, what it has lost on the military side." A New Nasser? The destruction of some 34 Israeli Merkava tanks in Friday's fighting, the death of some 19 Israeli soldiers-the highest so far in this month-long war--and the downing of an Israeli helicopter are cited as proof not only of a victory by the Hezbollah, around whom some 87 per cent of the Lebanese people, according to the polls, now seemed to have gotten behind in its resistance to Israel. Equally important, it becomes clear to us at the briefing that for Arabs, the successful resistance of a few hundred well-motivated and well trained Hezbollah guerrillas has ended the era of Arab humiliation by Israel's military might. "It's really quite interesting and exciting", comments Seema Mustafa, the Indian journalist, "the way the Arab Street has come behind Hassan Nasrallah." Indeed, the man one Hezbollah representative at the briefing fondly refers to as "our baby faced" leader is achieving a status once reserved for Gamal Abdel Nasser, the Egyptian leader. This point was brought home to me by Taufik, the driver who ferried us from Damascus to Beirut, who said as he steered us through the detour around one of the bombed bridges earlier in the day, "I belong to no party except the one that can bring food to my family. But I really like this man Nasrallah. He has brought pride to all of us Lebanese." Part II: Bombing till the Last Minute, 14 August 2006 (6:17 am, Monday, August 14. I got awakened a few minutes ago by two massive blasts. They sounded very close, but they were probably coming from South Beirut. I am in Central Beirut. With the ceasefire due to take effect in less than an hour, the Israelis are bombing up till the last minute. These guys are unbelievable. Then I remember I have to file a story on what happened the day before, August 13.) "We could have been there", Rep. Mujiv Hataman of Mindanao remarks quietly after it is confirmed that the blasts we heard just moments before were those of Israeli shells falling on the Shia neighborhoods in South Beirut that we visited just two hours ago. The images of flattened buildings and still smoldering ruins and crushed, dust-covered cars are still fresh in our minds. I also remember the teddy bear, the child stroller, and the books I saw as I clambered over the ruins of a 12-story building at the neighborhood of Haret Hreik. "The Most Dangerous Day" "Today is the most dangerous day in this war", the restaurant manager tells us as the delegation sits down for lunch thankful for our good luck but also very angry at the Israelis. "They know that people will let down their guard now that a ceasefire has been agreed to. But they want to make thing uncertain for us until the very last minute." Nahla Chahal, the Lebanese activist coordinating the visit of our 12-person Civil Society-Parliamentary Delegation, agrees: "They can't accept the fact that they¹ve not been able to beat Hezbollah, so they'll terrorize the civilian population till the very end." After walking though the ruins of South Beirut earlier in the day, we move on to Beirut University General Hospital. We briefly visit Firas Chahal, a 27 year old man suffering internal and external wounds after being thrown out of a minibus when an Israeli jet bombed the bridge at the Casino du Liban that we had to take a detour around on the way to Beirut. Confined at a nearby room is Khaleek Mahmoud, a 68 year old grandmother whose legs were shattered after the roof of her house collapsed on her when Israeli warplanes pounded her village in South Lebanon. "Israel is a tyrannical state", she tells us. "You should go down there and see for yourselves." Children of War After visiting the hospital, we hurry to the Ecole El Ghoul in downtown Beirut, which serves as temporary quarters for 355 people from 66 families from the South. One million Lebanese have been displaced by the war, so the conditions of the people we meet are typical of those of a full third of the country. "The integration of the refugees into old neighborhoods brings its share of problems", says Nahla Chahal. "The Hezbollah, however, is trying its best to provide the social services to support the people in this school." Children and adolescents fill the courtyard and greet our delegation with glee, taking advantage of every photo opportunity. For a few moments, confronted by this sea of smiles, the war seems far away. The younger ones readily break out into cheers when Vijaya Chauhan, one of our delegation members who has worked with women and children in India, waves and talks to them. Then they break out into a chant that invokes the name of Hezbollah leader Hassan Nasrallah that translates roughly into "Nasrallah, we're with you/ You can bomb Tel Aviv." A Stoic People After the lunch disrupted by the sound of Israeli bombs falling in South Beirut, we spend most of the afternoon with Lebanese NGOs assessing the scale of the humanitarian and ecological disaster and looking ahead to post-cease fire cooperation. Two massive blasts interrupt our discussion, but our Lebanese hosts continue talking, assuring us that the sounds came from Israeli Navy boats shelling South Beirut a few miles away. At dinner at a restaurant later that evening, the sound of explosions in South Beirut does not deter people at a nearby table from continuing to carouse loudly. The Israelis are bombing up till the last minute to terrorize the Lebanese. It¹s not working. These people are very angry, but they¹re used to war and are not about to let it get in the way of living their lives. These are brave, stoic people. Part III: Beirut, August 14: A Bittersweet Day The bittersweet mood in Beirut on this day when the ceasefire took effect was perhaps best expressed by Rahul, a taxi driver, who tells me, “We won, but at what cost? So many people displaced, so many dead, so many buildings destroyed.” The final toll of this war is still being counted but it is likely that the death count will go above 1400 and the economic damage will reach $6 billion. As soon as the cessation of hostilities came into effect at 8 am, cars and vans and trucks started to roll down to the South as people who took refuge in the Beirut and other parts of the country went back to their homes. “They’ll most likely find their houses gone, but their lands will still be there and there’s really no place like home,” says Anwar El Khalil, an MP representing the area of Marieyoun, the site of the strafing of a civilian convoy by Israeli planes last week, who himself is eager to return home. With a full third of the country’s inhabitants having been displaced from their homes, a massive civilian movement is expected to bring traffic along the country’s main highways to a crawl in the next few days. The Losers There is no doubt about who the loser is in this war. Everyone we talk to in this day of national pride agrees with the editorial in the Daily Star, Lebanon’s liberal English language paper, that states that “The Israeli government has been discredited and serious wrinkles in the US-Israeli relationship have been exposed. The Israelis now have to contend with a political arena that is in disarray.” With even members of the government of Prime Minister Ehud Ohlmert saying Israel has lost the war, the Jewish state is indeed plunged into its worst political crisis in years. Perhaps the prevailing mood in the Israeli establishment is reflected in Haaretz commentator Zeev Schiff’s call for a “reconsideration of the military and strategic management after the facts have proved that the army is no longer capable of adapting to the kind of warfare imposed by Hezbollah.” Nor is there doubt about who the other loser is. For many Lebanese politicians and analysts, there is a strong conviction that this war was planned by Washington way before the Hezbollah captured two Israeli soldiers in a cross-border raid in early July. During our brief visit with him, Lebanese President Emile Lahoud tells our peace delegation, “We know that the Israeli offensive was planned way in advance, with the support of external forces.” MP El Khalil is not shy about identifying the US as the real author of this war, and he points to a recent article in the New Yorker by Seymour Hersh that claims that US neoconservatives had a grand plan for restructuring the Middle East via Israeli military force as early as 1996. Destruction of the Hezbollah was perhaps even more vital for the United States than Israel, claims Henri Barkey, chairman of Lehigh University’s International Relations Department and a former member of the US State Department’s Policy Planning Staff. In a recent article, Barkey claims that while Israel can live with a Hezbollah driven north of the Litani River, the US would not. The key reason has to do with the “Hizbullah model.” According to Barkey, “it represents the nightmarish metamorphosis of a well supplied and trained militia. If it can work in Lebanon, the model can be emulated elsewhere around the world…Hizbullah is far more sophisticated and entrenched than Al Qaeda. It is impossible to defeat it without inflicting civilian casualties. Therein lies Hizbullah’s strength: it calculates that the outside world will relent in the face of civilian casualties.” In this view, the triumph of the Hezbollah over Israel is the worst of all possible worlds. The Victor For the Lebanese, the view is very different. In the thirty day war, most of the country’s political groups and most of the country have come together in supporting the struggle against Israeli aggression led by the Shiite Muslim-led organization. First among these is the country’s Maronite Christian President Emile Lahoud, who is not shy about praising “the leadership of Hezbollah in the national resistance.” Everybody acknowledges that Hezbollah’s sterling military performance is the source of what the Daily Star calls the “unprecedented level of solidarity” of Lebanese society today. Domestic critics who, at the start of the war, accused Hezbollah of dragging Lebanon into war by capturing two Israeli soldiers for prisoner-exchange purposes are quiet in these heady days of national pride. If anything has been put to rest by the events of the last 30 days, it is the lie that the Hezbollah is a terrorist organization. Deliberate Israeli targeting of civilian targets while Hezbollah fighters focused on fighting Israeli soldiers has put the shoe on the other foot. Indeed, there is now a massive clamor among international civil society groups to try the Israeli political leaders and the army for war crimes and state-sponsored terror. It has not only been Hezbollah’s military prowess that has been on display but also its tremendous capacity to provide welfare services, in this instance for the country’s displaced population. Indeed, in a country whose social services, especially for the poor, are very backward, Hezbollah’s social infrastructure is a model of efficient modernity. It runs, for instance, 46 medical centers and a hospital. Its Jihad for Construction, which supervised the material and social infrastructure of South Lebanon in the 1990’s, is now poised to manage an even more massive post-war reconstruction. Also on display on both the local scene and the international stage have been the talented intellectuals and spokespersons of the Hezbollah, among who is Dr. Ali Fayyad, the head of the organization’s Consultative Center for Studies and Documentation (CCSD), which has produced more than 300 reports on social, economic, political, and administrative issues. An urbane intellectual, Dr. Ali explains to us that there were three main reasons for Hezbollah’s victory. One was the employment of rockets to neutralize Israeli airpower and give Hezbollah an offensive air capability without airplanes. The second was the Hezbollah’s use of guerrilla warfare, which stymied an Israeli Army used to fighting conventional Arab armies. Third was the Hezbollah fighter who is “not only a guerrilla trained in self reliance but is also filled with ideological conviction that he is on the right track.” Switching to another topic, Fayyad says that while Hezbollah’s policies are “of course, determined principally by internal Lebanese considerations, we also consider the Palestinian struggle and international solidarity.” It is this Arabic and internationalist perspective that has given Hezbollah a great deal of resonance throughout not only the Arab world but in other parts of the globe. Hezbollah leaders speak with admiration of Venezuelan President Hugo Chavez, and the admiration is said to be mutual. Fayyad, a member of the Political Bureau, became one of the public faces of Hezbollah during the thirty day war, forcing him to switch cars and lodgings almost every night since it was assumed that he was a prime Israeli target. Beirut in the evening of August 14 is a city filled with sorrow and pride, with the latter clearly dominant. Throughout the city, there are motorcades celebrating Hezbollah and its General Secretary Hassan Nasrallah. Everyone tunes in when Nasrallah comes on television at nine o’clock to announce what he considers a “tremendous strategic victory for Lebanon” and announces Hezbollah’s preparedness to withdraw its fighters behind the Litani River. As he speaks, a high official of the Lebanese Communist Party, perhaps the epitome of secular politics in Lebanon, says of the man who is the face of Islamic politics, “There is our Arab Che Guevara…with a turban.” The Crisis of Multilateralism (13 September 2006)
Already buffeted by institutional crisis and policy conflicts, the International Monetary Fund (IMF) and the World Bank are heading into their fall meeting—scheduled to begin September 13 in Singapore—with yet one more problem. Desperate to win credibility among civil society groups, the Bank and the Fund had given official accreditation to representatives of four civil society organizations. The Singapore government had a different idea. It banned the groups “for security reasons.” This commentator was among those specifically named and banned as a “security threat.”
The two institutions have formally protested the government's action. But they are simply reaping the consequences of their decision to hold the fall meeting in the authoritarian island-state in order to avoid street protests like those that have attended WTO ministerial meetings. Angry at the banning of their colleagues, many civil society representatives are now asking the Bank and Fund to cancel the annual meeting, demanding that the two agencies be consistent with their declared support for practices of “good governance.” Controversial Reforms Prior to the controversy over the banning of the NGO's, the IMF's Executive Board was trying to steer through two reforms intended to “safeguard and enhance the Fund's credibility.” The first involved reallocating the voting power of IMF member countries according to the current size of their gross domestic product. This proposal was ostensibly intended to increase the voting power of a selected number of big developing countries—Korea, Turkey, China, and Mexico—while laying the ground for eventually expanding the decision-making power of other developing countries. The other initiative the IMF leadership was trying to get off the ground would give the Fund the new role of solving “global macroeconomic imbalances”—a euphemism for disciplining countries with large trade surpluses like China. Both reforms are mired in controversy. A bloc of about 50 developing countries objects to the proposed GDP-based formula. These countries see the move as dividing developing countries while producing only one real winner: the United States, which would increase its voting power under the new system. The second initiative has generated opposition for attempting to get the Fund to do Washington's dirty work of pressuring China to revalue its currency to reduce the massive U.S. trade deficit with Beijing. These troubles are the latest in a string of crises to plague the two agencies, also known as the “Bretton Woods institutions” after the site of the July 1944 conference where they were founded. The Fund, in particular, is in a state of demoralization. “Ten years ago, the IMF was flying high, arrogant in its belief that it knew what was the best for developing countries,” notes one civil society policy paper. “Today, it is an institution under siege, hiding behind its four walls in Washington, DC, unable to mount an effective response to its growing numbers of critics.” The IMF's Stalingrad The IMF's equivalent of Stalingrad—where the defeat of the German Sixth Army marked the turning point of World War II—was the Asian financial crisis, where it “lost its legitimacy and never recovered it,” according to Dennis de Tray, a former IMF and World Bank official who is now vice president of the Washington-based Center for Global Development. The Fund was blamed for pushing policies of capital account liberalization that made the Asian economies vulnerable to the volatile movements of speculative capital; assembling multibillion dollar rescue programs that rescued creditors at the expense of the debtors; imposing expenditure-cutting programs that merely worsened the downspin of the economy; and opposing the formation of an Asian Monetary Fund that could have provided the crisis countries with financial reserves to save their currencies from speculative attacks. The Fund went from one financial disaster to another. The Russian financial collapse in 1998 was attributed to its policies, as was Argentina's economic unraveling in 2002. Resistance was not long in coming. In the midst of the Asian financial crisis, Prime Minister Mohamad Mahathir of Malaysia broke with the IMF approach and imposed capital controls, saving the country from the worst effects of the crisis. Mahathir's defiance of the IMF was not lost on Thaksin Shinawatra, who ran for prime minister of Thailand on an anti-IMF platform and won. He went on to push for large government expenditures, which stimulated the consumer demand that brought Thailand out of recession. Nestor Kirchner completed the humbling of the IMF when, upon being elected president of Argentina in 2003, he declared that his government would pay its private creditors only 25 cents for every dollar owed. Enraged creditors told the IMF to discipline Kirchner. But with its reputation in tatters and its leverage eroded, the Fund backed off from confronting the Argentine president, who got away with the radical debt write-down. By 2006, underscoring the crisis of legitimacy of the institution, the governor of the Bank of England described the IMF as having “lost its way.” From Crisis of Legitimacy to Budget Crisis The crisis of legitimacy has had financial consequences. In 2003, the Thai government declared it had paid off most of its debt to the IMF and would soon be financially independent of the organization. Indonesia ended its loan agreement with the Fund in 2003 and recently announced its intention to repay its multibillion-dollar debt in two years. A number of other big borrowers in Asia, mindful of the devastating consequences of IMF-imposed policies, have refrained from new borrowings from the Fund. These include the Philippines, India, and China. Now, this trend has been reinforced by the move of Brazil and Argentina earlier this year to pay off all their debts to the Fund and declare financial sovereignty. What is, in effect, a boycott by its biggest borrowers is translating into a budget crisis for the IMF. Over the last two decades the IMF's operations have been increasingly funded from the loan repayments of its developing country clients rather than from the contributions of wealthy Northern governments. The burden of sustaining the institution has shifted to the borrowers. The upshot of these developments is that payments of charges and interests, according to Fund projections, will be cut by more than half, from $3.19 billion in 2005 to $1.39 billion in 2006 and again by half, to $635 million in 2009. These reductions have created what Ngaire Woods, an Oxford University specialist on the Fund, describes as “a huge squeeze on the budget of the organization.” Role Crisis The erosion of the Fund's role as a disciplinarian of debt-ridden countries and an enforcer of structural adjustment has been accompanied by a futile search to find a new role. The Group of Seven tried to make the Fund a central piece of a new “global financial architecture” by putting it in charge of a “contingency credit line” to which countries about to enter a financial crisis would have access if they fulfilled IMF-approved macroeconomic conditions. But the prospect of a government seeking access to a credit line that could trigger the very financial panic that it sought to avert doomed the project. Another proposal envisioned an IMF-managed “Sovereign Debt Restructuring Mechanism”—an international version of a Chapter 11 bankruptcy mechanism that would provide countries protection from creditors while they came out with a restructuring plan. But when South countries objected that the mechanism was too weak and the United States opposed the proposal for fear it would curtail the freedom of operations of U.S. banks, this new prospect also collapsed. The role of righting “global macroeconomic imbalances” assigned to the Fund during the spring meetings of the IMF leadership earlier this year is part of this increasingly desperate effort by the G 7 governments to find a task for an international economic bureaucracy that had become obsolete and irrelevant. Hiding the World Bank's Crisis While it does not have the aura of controversy and failure that surrounds the IMF, the World Bank is also in crisis, say informed observers. A budget crisis is also overtaking the Bank, according to Ngaire Woods. Income from borrowers' fees and charges dropped from US$8.1 billion in 2001 to US$4.4 billion in 2004, while income from the Bank's investments fell from US$1.5 billion in 2001 to US$304 million in 2004. China, Indonesia, Mexico, Brazil, and many of the more advanced developing countries are going elsewhere for their loans. The budgetary crisis is, however, only one aspect of overall crisis of the institution. The policy prescriptions offered by Bank economists are increasingly seen as irrelevant to the problems faced by developing countries, says de Tray, who served as the IMF's resident officer in Hanoi and the World Bank's representative in Jakarta. The problem, he says, lies in the emphasis at the Bank's research department on producing “cutting edge” technical economic work geared to the western academic world rather than coming out with knowledge to support practical policy prescriptions. The Bank is currently staffed by some 10,000 professionals, most of them economists, and de Tray claims that “there is nothing wrong at the World Bank that a 40% staff reduction would not fix.” American University Professor Robin Broad, an expert on the Bank, claims that the Bank is, in fact, in more of a crisis than the IMF but that this is less visible to the public. “The IMF's response has been to withdraw behind its four walls, thus reinforcing the public perception of its being besieged,” she notes. “The Bank's response, however, has been to engage the world to hide its mounting crisis.” Broad identifies three elements in the Bank's offensive. “First, it goes out and tells donors that it is the institution best positioned to do lending to end poverty, for the environment, for addressing HIV-AIDS, you name it…when in fact its record proves that it's not. Second, it has the world's largest ‘development' research department—funded to the tune of about $50 million—whose raison d'etre is to produce research to back up predetermined conclusions. Third, it has this huge external affairs department, with a budget of some $30 million—a PR unit that feeds these so-called objective research findings to the press and fosters the image of an all-knowing Bank.” But, she concludes, “This can't last. Inside the Bank, they know they're in crisis and are scrambling. And sooner or later, if we do our work, the truth will come out.” Multilateralism in Disarray The crisis of the Bretton Woods institutions must be seen as part of the same phenomenon that has overtaken the World Trade Organization, whose latest round of trade liberalization negotiations fell apart in July. Noting that “trade liberalization has stalled, aid is less coherent than it should be, and the next financial conflagration will be managed by an injured fireman,” the Washington Post's Sebastian Mallaby contends that “the great powers of today are simply not interested in creating a resilient multilateral system.” What is troubling for people like Mallaby, however, offers an opportunity for those who have long regarded the current multilateral system of global economic governance as mainly concerned with ensuring the hegemony of the developed countries, particularly the United States. Proposals for alternative institutions for global finance have been circulating for some time. The current crisis may be the break in the system that will make governments, especially those in the South, willing to seriously consider the alternatives. Microcredit, Macro Issues (14 October 2006)
The awarding of the Nobel Peace Prize to Muhammad Yunus, regarded as the father of microcredit, comes at a time when microcredit has become something like a religion to many of the powerful, rich and famous. Hillary Clinton regularly speaks about going to Bangladesh, Yunus's homeland, and being "inspired by the power of these loans to enable even the poorest of women to start businesses, lifting their families--and their communities--out of poverty."
Like the liberal Clinton, the neocon Paul Wolfowitz, now president of the World Bank, has also gotten religion, after a recent trip to the Indian state of Andhra Pradesh. With the fervor of the convert, he talks about the "transforming power" of microfinance: "I thought maybe this was just one successful project in one village, but then I went to the next village and it was the same story. That evening, I met with more than a hundred women leaders from self-help groups, and I realized this program was opening opportunities for poor women and their families in an entire state of 75 million people." There is no doubt that Yunus, a Bangladeshi economist, came up with a winning idea that has transformed the lives of many millions of poor women, and perhaps for that alone, he deserves the Nobel Prize. But Yunus--at least the young Yunus, who did not have the support of global institutions when he started out--did not see his Grameen Bank as a panacea. Others, like the World Bank and the United Nations, elevated it to that status (and, some say, convinced Yunus it was a panacea), and microcredit is now presented as a relatively painless approach to development. Through its dynamics of collective responsibility for repayment by a group of women borrowers, microcredit has indeed allowed many poor women to roll back pervasive poverty. However, it is mainly the moderately poor rather than the very poor who benefit, and not very many can claim they have permanently left the instability of poverty. Likewise, not many would claim that the degree of self-sufficiency and the ability to send children to school afforded by microcredit are indicators of their graduating to middle-class prosperity. As economic journalist Gina Neff notes, "after 8 years of borrowing, 55% of Grameen households still aren't able to meet their basic nutritional needs--so many women are using their loans to buy food rather than invest in business." Indeed, one of those who have thoroughly studied the phenomenon, Thomas Dichter, says that the idea that microfinance allows its recipients to graduate from poverty to entrepreneurship is inflated. He sketches out thedynamics of microcredit: "It emerges that the clients with the most experience got started using their own resources, and though they have not progressed very far--they cannot because the market is just too limited--they have enough turnover to keep buying and selling, and probably would have with or without the microcredit. For them the loans are often diverted to consumption since they can use the relatively large lump sum of the loan, a luxury they do not come by in their daily turnover." He concludes: "Definitely, microcredit has not done what the majority of microcredit enthusiasts claim it can do--function as capital aimed at increasing the returns to a business activity." And so the great microcredit paradox that, as Dichter puts it, "the poorest people can do little productive with the credit, and the ones who can do the most with it are those who don't really need microcredit, but larger amounts with different (often longer) credit terms." In other words, microcredit is a great tool as a survival strategy, but it is not the key to development, which involves not only massive capital-intensive, state-directed investments to build industries but also an assault on the structures of inequality such as concentrated land ownership that systematically deprive the poor of resources to escape poverty. Microcredit schemes end up coexisting with these entrenched structures, serving as a safety net for people excluded and marginalized by them, but not transforming them. No, Paul Wolfowitz, microcredit is not the key to ending poverty among the 75 million people in Andhra Pradesh. Dream on. Perhaps one of the reasons there is such enthusiasm for microcredit in establishment circles these days is that it is a market-based mechanism that has enjoyed some success where other market-based programs have crashed. Structural-adjustment programs promoting trade liberalization, deregulation and privatization have brought greater poverty and inequality to most parts of the developing world over the last quarter century, and have made economic stagnation a permanent condition. Many of the same institutions that pushed and are continuing to push these failed macro programs (sometimes under new labels like "Poverty Reduction Strategy Papers"), like the World Bank, are often the same institutions pushing microcredit programs. Viewed broadly, microcredit can be seen as the safety net for millions of people destabilized by the large-scale macro-failures engendered by structural adjustment. There have been gains in poverty reduction in a few places--like China, where, contrary to the myth, state-directed macro policies, not microcredit, have been central to lifting an estimated 120 million Chinese from poverty. So probably the best way we can honor Muhammad Yunus is to say, Yes, he deserves the Nobel Prize for helping so many women cope with poverty. His boosters discredit this great honor and engage in hyperbole when they claim he has invented a new compassionate form of capitalism--social capitalism, or "social entrepreneurship"--that will be the magic bullet to end poverty and promote development. Chain-Gang Economics: China, the US, and the Global Economy (1 November 2006)
"The world [is] investing too little," according to one prominent economist. "The current situation has its roots in a series of crises over the last decade that were caused by excessive investment, such as the Japanese asset bubble, the crises in Emerging Asia and Latin America, and most recently, the IT bubble. Investment has fallen off sharply since, with only very cautious recovery."
These are not the words of a Marxist economist describing the crisis of overproduction but those of Raghuram Rajan, the new chief economist of the International Monetary Fund (IMF). His analysis, though a year old, continues to be on the mark.(1) Overproduction: the Key Trend in the Global Economy Overcapacity has been the key link between the global economy in the Clinton era and the Bush period. The crisis has been particularly severe in the so-called core industries. At the beginning of the 21st century, the US computer industry’s computer capacity was rising at 40 per cent annually, far above projected increases in demand. The world auto industry was selling just 74 per cent of the 70.1 million cars it sold each year, creating a profitability crunch for the weakest players, like former giant General Motors, which lost $10.6 billion in 2005, and Ford, which lost $7.24 billion in the first nine months of 2006. In steel, global excess capacity neared 20 per cent. It was estimated, in volume terms, to be an astounding 200 million tons, so that plans by steel producing countries to reduce capacity by 100 million tons by 2005 would still leave “a sizeable amount of capacity which…would not be viable.” In telecommunications, according to Robert Brenner, overcapitalization has resulted in a “mountainous glut: the utilization rate of telecom networks hovers today at a disastrously low 2.5-3 per cent, that of undersea cable at just 13 per cent.” As former General Electric Chairman Jack Welch put it, there has been “excess capacity in almost every industry.” Global overcapacity has made further investment simply unprofitable, which significantly dampens global economic growth. In Europe, for instance, GDP growth has averaged only 1.45 per cent in the last few years. And if countries are not investing in their economic futures, then growth will continue to stagnate and possibly lead to a global recession. China and the United States, however, appear to be bucking the trend, though GDP growth in the US has flattened very recently. But rather than signs of health, growth in these two economies--and their ever more symbiotic relationship with each other--may actually be an indicator of crisis. The centrality of the United States to both global growth and global crisis is well known. What is new is China’s critical role. Once regarded as the greatest achievement of this era of globalization, China’s integration into the global economy is, according to an excellent analysis by political economist Ho Fung Hung, emerging as a central cause of global capitalism’s crisis of overproduction.(2) China and the Crisis of Overproduction China’s 8-10% annual growth rate has probably been the principal stimulus of growth in the world economy in the last decade. Chinese imports, for instance, helped to end Japan’s decade-long stagnation in 2003. To satisfy China’s thirst for capital and technology-intensive goods, Japanese exports shot up by a record 44%, or $60 billion. Indeed, China became the main destination for Asia’s exports, accounting for 31% while Japan’s share dropped from 20 to 10%. As Singapore’s Straits Times pointed out, “In country-by-country profiles, China is now the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia” At the same time, China became a central contributor to the crisis of global overcapacity. Even as investment declined sharply in many economies in response to the surfeit of productive capacity, particularly in Japan and other East Asian economies, it increased at a breakneck pace in China. Investment in China was not just the obverse of disinvestment elsewhere, although the shutting down of facilities and sloughing off of labor was significant not only in Japan and the United States but in the countries on China’s periphery like the Philippines, Thailand, and Malaysia. China was significantly beefing up its industrial capacity and not simply absorbing capacity eliminated elsewhere. At the same time, the ability of the Chinese market to absorb its own industrial output was limited. Agents of Overinvestment A major actor in overinvestment was transnational capital. In the late 1980s and 1990s, transnational corporations (TNCs) saw China as the last frontier, the unlimited market that could endlessly absorb investment and endlessly throw off profitable returns. However, China’s restrictive rules on trade and investment forced TNCs to locate most of their production processes in the country instead of outsourcing only selected number of them. Analysts termed such TNC production activities “excessive internalization.” By playing according to China’s rules, TNCs ended up overinvesting in the country and building up a manufacturing base that produced more than China or even the rest of the world could consume. By the turn of the millennium, the dream of exploiting a limitless market had vanished. Foreign companies headed for China not so much to sell to millions of newly prosperous Chinese customers but rather to make China a manufacturing base for global markets and take advantage of its inexhaustible supply of cheap labor. Typical of companies that found themselves in this quandary was Philips, the Dutch electronics manufacturer. Philips operates 23 factories in China and produces about $5 billion worth of goods, but production two thirds of their production is exported to other countries. The other set of actors promoting overcapacity were local governments which invested in and built up key industries. While these efforts are often “well planned and executed at the local level,” notes Ho-fung Hung, “the totality of these efforts combined…entail anarchic competition among localities, resulting in uncoordinated construction of redundant production capacity and infrastructure.” As a result, idle capacity in such key sectors as steel, automobile, cement, aluminum, and real estate has been soaring since the mid-1990s, with estimates that over 75% of China’s industries are currently plagued by overcapacity and that fixed asset investments in industries already experiencing overinvestment account for 40-50% of China’s GDP growth in 2005. China’s State Development and Reform Commission projects that the automobile industry will produce double what the market can absorb by 2010. The impact on profitability is not to be underestimated if we are to believe government statistics: at the end of 2005, Hung points out, the average annual profit growth rate of all major enterprises had plunged by half and the total deficit of losing enterprises had increased sharply by 57.6%. The Low-Wage Strategy The Chinese government can mitigate excess capacity by expanding people’s purchasing power via a policy of income and asset redistribution. Doing so would probably mean slower growth but more domestic and global stability. This is what China’s so-called “New Left” intellectuals and policy analysts have been advising. China’s authorities, however, have apparently chosen to continue the old strategy of dominating world markets by exploiting the country’s cheap labor. Although China’s population is 1.3 billion, 700 million people—or over half—live in the countryside and earn an average of just $285 a year, according to some estimates. This reserve army of rural poor has enabled manufacturers, both foreign and local, to keep wages down. Aside from the potentially destabilizing political effects of regressive income distribution, the low-wage strategy, as Hung points out, “impedes the growth of consumption relative to the phenomenal economic expansion and great leap of investment.” In other words, the global crisis of overproduction will worsen as China continues to dump its industrial production on global markets constrained by slow growth. Chain-Gang Economics Chinese production and American consumption are like the proverbial prisoners who seek to break free from one another but can’t because they’re chained together. This relationship is increasingly taking the form of a vicious cycle. On the one hand, China’s breakneck growth has increasingly depended on the ability of American consumers to continue their consumption of much of the output of China’s production brought about by excessive investment. On the other hand, America’s high consumption rate depends on Beijing’s lending the U.S. private and public sectors a significant portion of the trillion-plus dollars it has accumulated from its yawning trade surplus with Washington. This chain-gang relationship, says the IMF’s Rajan, is “unsustainable.” Both the United States and the IMF have decried what they call “global macroeconomic imbalances” and called on China to revalue the renminbi to reduce its trade surplus with the United States. Yet China can’t really abandon its cheap currency policy. Along with cheap labor, cheap currency is part of China’s successful formula of export-oriented production. And the United States really can’t afford to be too tough on China since it depends on that open line of credit to Beijing to continue feeding the middle-class spending that sustains its own economic growth. The IMF ascribes this state of affairs to “macroeconomic imbalances.” But it’s really a crisis of overproduction. Thanks to Chinese factories and American consumers, the crisis is likely to get worse. Notes
Americans Want a New Direction, but will Democrats Lead? (13 November 2006)
The recent US election was a redemptive election. At a time that many throughout the world had written off the American electorate as lifeless putty in the hands of Karl Rove, it woke up to deliver the Republican Party its worse blow in the last quarter of a century. Not only independents and centrists voted to repudiate Republican candidates, but a third of evangelicals-Bush's fundamentalist Christian base-voted for Democrats.
One of those pleasantly surprised was this writer, who in the aftermath of the 2004 presidential elections, predicted that the Republicans would rule for the next quarter century owing to the formidable grassroots machinery that they had forged-a "juggernaut" that was anchored by a fundamentalist base in the so-called "red states." Two Roads Of course, many of those who voted Democrat did so because they could no longer take the daily scandals engulfing the Republicans in Congress. But poll after poll showed that the two key reasons animating voters were the Iraq War and the strong feeling that Bush was leading the country down the wrong path. In terms of the national direction, the choice in the minds of voters on November 7 was presciently articulated by Jonathan Schell in his 2003 book The Unconquerable World: "For Americans, the choice is at once between two Americas, and between two futures for the international order. In an imperial America, power would be concentrated in the hands of the president, and checks and balances would be at an end; civil liberties would be weakened or lost; military spending would crowd out social spending; the gap between rich and poor would be likely to increase; electoral politics, to the extent that they still mattered, would be increasingly dominated by money, above all corporate money, whose influence would trump the people's interest; the social, economic, and ecological agenda of the country and the world would be increasingly rejected." In contrast to this path of an "Imperial America" was that of "Republican America" "dedicated to the creation of a cooperative world, [where] the immense concentration of power in the executive would be broken up; power would be divided again among the three branches, which would resume their responsibility of checking and balancing one another as the Constitution provides; civil liberties would remain intact or be strengthened; money would be driven out of politics, and the will of the people would be heard again; politics, and with it the power of the people, would revive; the social, economic, and ecological agendas of the country and the world would become the chief concern of government." On November 7, the American electorate clearly rejected the imperial path. But one cannot say with confidence that they were very clear about the signposts of the alternative path that they were choosing. It is the role of leadership to illuminate signposts, and the big question at the moment is whether the exultant Democrats can provide that leadership. Iraq: Bad Options All Iraq is the test case. As many have pointed out, the Democrats have no unified strategy on Iraq. And the reason for this is that developments around Iraq have deteriorated to the point where there are only bad choices available. The current Bush strategy is to shore up the Shiite-dominated government militarily, and that isn't working. Bringing in more troops temporarily to stabilize the situation, then leaving--a plan originally endorsed sometime back by John Kerry--won't work since the civil war has progressed to the point where even a million troops won't make a difference. Partitioning Iraq into three entities-the Sunni center, the Shiite South, and the Kurdish North-will simply be a prelude to even greater conflict tying down more US troops. Withdrawing to the bases or to the desert to avoid casualties will simply raise the question, well why keep troops there at all? Getting Iran, Turkey, and Syria to come in to create a diplomatic solution-one that some expect the bipartisan "Iraq Study Group" headed by James Baker and Lee Hamilton to propose--is not going to work because no foreign-imposed settlement can counteract the deadly domestic dynamics of a sectarian conflict that has passed the point of no return. Bush, of course, remains the boss when it comes to Iraq policy, and it is not likely that this stubborn, stupid man has ceased to believe in victory, which he restated as his goal at the same press conference where he announced Donald Rumsfeld's resignation. The more Machiavellian Republican strategists like Karl Rove will probably want to enmesh the Democrats in a protracted bipartisan exit strategy that will cost more Iraqi and American lives so that by the time the 2008 presidential elections come around, the mess in Iraq will be as much their mess as the Republicans.' As of now, the Democrats have the moral weight of the country behind them, and they have the opportunity not only to cut off a foreign policy millstone but to open up the road to a new relationship between America and the world if they take the least unviable route out of Iraq-that espoused by Rep. John Murtha, who, perhaps among the key Democrats, knows the military realities on the ground: immediate withdrawal. With all their inchoate feelings about wasted American lives, "our responsibility to Iraqis," or being seen as "cutting and running," many of those who voted for the Democrats may have some difficulty accepting the reality that immediate withdrawal is the least unviable of all the options. But then, that is what leaders are there for: to articulate the bitter truth when the times demand it. It is not likely that most Democratic politicians will embrace immediate withdrawal of their own accord. Without more sustained pressure, the likely course they will take is to come with a plan that will compromise with Bush, which means another unworkable patchwork of a plan. The US Military: Will it go on Strike? One source of pressure could be the military. It is well known that the top brass are in a state of extreme disaffection with the civilian leadership because they feel that Iraq is destroying the credibility of US military. When Major General William Caldwell, the senior US military spokesman in Iraq, pronounced on October 19 that the results of the Pentagon's strategy of focusing troops in Baghdad to assist the Iraqi military in containing the runaway violence was "disheartening," he drove the nail in the coffin of the Republicans' electoral chances. Most likely, his words were not cleared by the civilian leadership. The US military in Iraq may not have yet have experienced significant cases of mutiny, but the deterioration of morale is evident in the growing incidents of civilian killings, rape, and prisoner abuse for which an increasing number of marines and soldiers are undergoing trial or have been sent to prison. Unlike during the Vietnam War, the US military is not a conscript military. But the high command knows that even professional militaries have their limits and that at some point the rank and file will balk at being sent to a pointless war. Nobody wants to die for a mistake. Nobody wants to be in the last bodybag sent from Baghdad. This is what Murtha, a decorated Vietnam veteran who has been hawkish on most other military issues, has been telling his Democratic Party colleagues. Nevertheless, a de facto military mutiny such as that which swept the US Army in the last years of the Vietnam War is not likely. What will probably happen though is that Democrats and Republicans bicker on a plan for an "honorable exit," the brass will steadily place US units in a de facto defensive posture in order to cut down on the casualty rate, leaving the mercenary Iraqi security forces to fend for themselves. The troops might even be ordered to hole up in the bases, with increasingly infrequent patrols meant not to ensure security but simply to show the flag. This would be the military equivalent of going on strike. The Challenge to the Anti-War Movement So it comes down to the anti-war movement. The movement is to be congratulated for its role in the titanic struggle to turn the tide of American public opinion on Iraq. Cindy Sheehan's campout at Bush's ranch in Crawford, Texas, the many other acts of protest and civil disobedience engaged in by so many others, the big protest rallies and demonstrations-all this made a difference, a big difference. But the movement cannot even think about relaxing for a second. The moment is critical. Now-the immediate post-election period-is the time to raise the ante. Now is the time for the US anti-war movement to escalate its efforts-- to mount demonstration after demonstration--to effect immediate withdrawal. Electoral choice has created the momentum that can be translated into street action that can in turn translate into strong pressure on the Democrats not to agree to a protracted exit strategy. The movement cannot afford to squander this momentum, for the price of stepping back and letting the Democrats come up with the strategy will be more Iraqis and Americans dead, sacrificed for a meaningless war with no real end in sight. Globalization in Retreat (27 December 2006)
When it first became part of the English vocabulary in the early 1990s, globalization was supposed to be the wave of the future. Fifteen years ago, the writings of globalist thinkers such as Kenichi Ohmae and Robert Reich celebrated the advent of the emergence of the so-called borderless world. The process by which relatively autonomous national economies become functionally integrated into one global economy was touted as "irreversible." And the people who opposed globalization were disdainfully dismissed as modern day incarnations of the Luddites that destroyed machines during the Industrial Revolution.
Fifteen years later, despite runaway shops and outsourcing, what passes for an international economy remains a collection of national economies. These economies are interdependent no doubt, but domestic factors still largely determine their dynamics. Globalization, in fact, has reached its high water mark and is receding. Bright Predictions, Dismal Outcomes During globalization's heyday, we were told that state policies no longer mattered and that corporations would soon dwarf states. In fact, states still do matter. The European Union, the U.S. government, and the Chinese state are stronger economic actors today than they were a decade ago. In China, for instance, transnational corporations (TNCs) march to the tune of the state rather than the other way around. Moreover, state policies that interfere with the market in order to build up industrial structures or protect employment still make a difference. Indeed, over the last ten years, interventionist government policies have spelled the difference between development and underdevelopment, prosperity and poverty. Malaysia's imposition of capital controls during the Asian financial crisis in 1997-98 prevented it from unraveling like Thailand or Indonesia. Strict capital controls also insulated China from the economic collapse engulfing its neighbors. Fifteen years ago, we were told to expect the emergence of a transnational capitalist elite that would manage the world economy. Indeed, globalization became the "grand strategy" of the Clinton administration, which envisioned the U.S. elite being the primus inter pares -- first among equals -- of a global coalition leading the way to the new, benign world order. Today, this project lies in shambles. During the reign of George W. Bush, the nationalist faction has overwhelmed the transnational faction of the economic elite. These nationalism-inflected states are now competing sharply with one another, seeking to beggar one another's economies. A decade ago, the World Trade Organization (WTO) was born, joining the World Bank and the International Monetary Fund (IMF) as the pillars of the system of international economic governance in the era of globalization. With a triumphalist air, officials of the three organizations meeting in Singapore during the first ministerial gathering of the WTO in December 1996 saw the remaining task of "global governance" as the achievement of "coherence," that is, the coordination of the neoliberal policies of the three institutions in order to ensure the smooth, technocratic integration of the global economy. But now Sebastian Mallaby, the influential pro-globalization commentator of the Washington Post, complains that "trade liberalization has stalled, aid is less coherent than it should be, and the next financial conflagration will be managed by an injured fireman." In fact, the situation is worse than he describes. The IMF is practically defunct. Knowing how the Fund precipitated and worsened the Asian financial crisis, more and more of the advanced developing countries are refusing to borrow from it or are paying ahead of schedule, with some declaring their intention never to borrow again. These include Thailand, Indonesia, Brazil, and Argentina. Since the Fund's budget greatly depends on debt repayments from these big borrowers, this boycott is translating into what one expert describes as "a huge squeeze on the budget of the organization." The World Bank may seem to be in better health than the Fund. But having been central to the debacle of structural adjustment policies that left most developing and transitional economies that implemented them in greater poverty, with greater inequality, and in a state of stagnation, the Bank is also suffering a crisis of legitimacy. But the crisis of multilateralism is perhaps most acute at the WTO. Last July, the Doha Round of global negotiations for more trade liberalization unraveled abruptly when talks among the so-called Group of Six broke down in acrimony over the U.S. refusal to budge on its enormous subsidies for agriculture. The pro-free trade American economist Fred Bergsten once compared trade liberalization and the WTO to a bicycle: they collapse when they are not moving forward. The collapse of an organization that one of its director generals once described as the "jewel in the crown of multilateralism" may be nearer than it seems. Why Globalization Stalled Why did globalization run aground? First of all, the case for globalization was oversold. The bulk of the production and sales of most TNCs continues to take place within the country or region of origin. There are only a handful of truly global corporations whose production and sales are dispersed relatively equally across regions. Second, rather than forge a common, cooperative response to the global crises of overproduction, stagnation, and environmental ruin, national capitalist elites have competed with each other to shift the burden of adjustment. The Bush administration, for instance, has pushed a weak-dollar policy to promote U.S. economic recovery and growth at the expense of Europe and Japan. It has also refused to sign the Kyoto Protocol in order to push Europe and Japan to absorb most of the costs of global environmental adjustment and thus make U.S. industry comparatively more competitive. While cooperation may be the rational strategic choice from the point of view of the global capitalist system, national capitalist interests are mainly concerned with not losing out to their rivals in the short term. A third factor has been the corrosive effect of the double standards brazenly displayed by the hegemonic power, the United States. While the Clinton administration did try to move the United States toward free trade, the Bush administration has hypocritically preached free trade while practicing protectionism. Indeed, the trade policy of the Bush administration seems to be free trade for the rest of the world and protectionism for the United States. Fourth, there has been too much dissonance between the promise of globalization and free trade and the actual results of neoliberal policies, which have been more poverty, inequality, and stagnation. One of the very few places where poverty diminished over the last 15 years is China. But interventionist state policies that managed market forces, not neoliberal prescriptions, were responsible for lifting 120 million Chinese out of poverty. Moreover, the advocates of eliminating capital controls have had to face the actual collapse of the economies that took this policy to heart. The globalization of finance proceeded much faster than the globalization of production. But it proved to be the cutting edge not of prosperity but of chaos. The Asian financial crisis and the collapse of the economy of Argentina, which had been among the most doctrinaire practitioners of capital account liberalization, were two decisive moments in reality's revolt against theory. Another factor unraveling the globalist project is its obsession with economic growth. Indeed, unending growth is the centerpiece of globalization, the mainspring of its legitimacy. While a recent World Bank report continues to extol rapid growth as the key to expanding the global middle class, global warming, peak oil, and other environmental events are making it clear to people that the rates and patterns of growth that come with globalization are a surefire prescription for ecological Armageddon. The final factor, not to be underestimated, has been popular resistance to globalization. The battles of Seattle in 1999, Prague in 2000, and Genoa in 2001; the massive global anti-war march on February 15, 2003, when the anti-globalization movement morphed into the global anti-war movement; the collapse of the WTO ministerial meeting in Cancun in 2003 and its near collapse in Hong Kong in 2005; the French and Dutch peoples' rejection of the neoliberal, pro-globalization European Constitution in 2005 -- these were all critical junctures in a decade-long global struggle that has rolled back the neoliberal project. But these high-profile events were merely the tip of the iceberg, the summation of thousands of anti-neoliberal, anti-globalization struggles in thousands of communities throughout the world involving millions of peasants, workers, students, indigenous people, and many sectors of the middle class. Down but not out While corporate-driven globalization may be down, it is not out. Though discredited, many pro-globalization neoliberal policies remain in place in many economies, for lack of credible alternative policies in the eyes of technocrats. With talks dead-ended at the WTO, the big trading powers are emphasizing free trade agreements (FTAs) and economic partnership agreements (EPAs) with developing countries. These agreements are in many ways more dangerous than the multilateral negotiations at the WTO since they often require greater concessions in terms of market access and tighter enforcement of intellectual property rights. However, things are no longer that easy for the corporations and trading powers. Doctrinaire neoliberals are being eased out of key positions, giving way to pragmatic technocrats who often subvert neoliberal policies in practice owing to popular pressure. When it comes to FTAs, the global south is becoming aware of the dangers and is beginning to resist. Key South American governments under pressure from their citizenries derailed the Free Trade of the Americas (FTAA) -- the grand plan of George W. Bush for the Western hemisphere -- during the Mar del Plata conference in November 2005. Also, one of the reasons many people resisted Prime Minister Thaksin Shinawatra in the months before the recent coup in Thailand was his rush to conclude a free trade agreement with the United States. Indeed, in January this year, some 10,000 protesters tried to storm the building in Chiang Mai, Thailand, where U.S. and Thai officials were negotiating. The government that succeeded Thaksin's has put the U.S.-Thai FTA on hold, and movements seeking to stop FTAs elsewhere have been inspired by the success of the Thai efforts. The retreat from neoliberal globalization is most marked in Latin America. Long exploited by foreign energy giants, Bolivia under President Evo Morales has nationalized its energy resources. Nestor Kirchner of Argentina gave an example of how developing country governments can face down finance capital when he forced northern bondholders to accept only 25 cents of every dollar Argentina owed them. Hugo Chavez has launched an ambitious plan for regional integration, the Bolivarian Alternative for the Americas (ALBA), based on genuine economic cooperation instead of free trade, with little or no participation by northern TNCs, and driven by what Chavez himself describes as a "logic beyond capitalism." Globalization in Perspective From today's vantage point, globalization appears to have been not a new, higher phase in the development of capitalism but a response to the underlying structural crisis of this system of production. Fifteen years since it was trumpeted as the wave of the future, globalization seems to have been less a "brave new phase" of the capitalist adventure than a desperate effort by global capital to escape the stagnation and disequilibria overtaking the global economy in the 1970s and 1980s. The collapse of the centralized socialist regimes in Central and Eastern Europe deflected people's attention from this reality in the early 1990s. Many in progressive circles still think that the task at hand is to "humanize" globalization. Globalization, however, is a spent force. Today's multiplying economic and political conflicts resemble, if anything, the period following the end of what historians refer to as the first era of globalization, which extended from 1815 to the eruption of World War I in 1914. The urgent task is not to steer corporate-driven globalization in a "social democratic" direction but to manage its retreat so that it does not bring about the same chaos and runaway conflicts that marked its demise in that earlier era. |