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Walden Bello - 2007
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.
Beijing’s Diplomacy in Africa Sparks Debate at World Social Forum (6 February 2007)
At the Seventh World Social Forum (WSF), held in Nairobi, Kenya, in late January, the most controversial topic was not HIV-AIDS, the US occupation of Iraq, or neoliberalism. There was a rough consensus on these issues. Aside, of course, from the lively internal politics of the WSF, perhaps the topic that generated the most heat was China's relations with Africa.
The China Question At a packed panel discussion organized by the semi-official "China NGO Network for International Exchanges," the discussion was candid and angry. "First, Europe and America took over our big businesses. Now China is driving our small and medium entrepreneurs to bankruptcy," Humphrey Pole-Pole of the Tanzanian Social Forum told the Chinese speakers. "You don't even contribute to employment because you bring in your own labor." Stung by such remarks from the floor, Cui Jianjun, secretary general of the China NGO Network, lost his diplomatic cool and launched into an emotional defense of Chinese foreign investment, saying that "We Chinese had to make the same hard decision on whether to accept foreign investment many, many years ago. You have to make the right decision or you will lose, lose, lose. You have to decide right, or you will remain poor, poor, poor." At this point, Dale Wen, a Chinese environmentalist, intervened: "That's not true. The Chinese people did not decide to accept foreign investment. Deng Hsiao Ping [the late Chinese leader] decided." An African in the audience added: "You have to treat us with respect." The vigorous exchange at this panel and at another organized by the Fahamu Network for Social Justice and Focus on the Global South was perhaps to be expected, since many Africans view China as having the potential of bringing either great promise or great harm. One sensed that if the African speakers were hard on China, this was because they desperately wanted China to reverse course before it was too late for it to avoid the path trod by Europe and the United States. Beijing's High Profile in Africa The debate at the WSF took place amidst a marked elevation of Africa's profile in China's foreign policy. President Hu Jintao is now on his third trip to Africa in three years, following the success of the Forum on China-Africa Cooperation (FOCAC), which took place on November 4 and 5, 2006. Attended by 48 African delegations, most of them led by heads of state, the event was the largest international summit ever held in Beijing. At the start of the meeting, Beijing unveiled a glittering trade and aid plan designed to cement its "strategic partnership" with Africa. The key items in the package were raising the volume of trade from US$40 billion in 2005 to $100 billion by 20010; doubling of 2006 assistance by 2009; provision of $3 billion worth of preferential loans and $2 billion worth of export credits; setting up of a China-Africa Development Fund that would be capitalized to the tune of $5 billion to support Chinese companies investing in Africa; and cancellation of all interest-free government loans owed to China by the heavily indebted and poorest African countries that matured at the end of 2005. If not yet the biggest external player in Africa, China is certainly the most dynamic. It now accounts for 60 per cent of oil exports from Sudan and 35 per cent of those from Angola. Chinese firms mine copper in Zambia and Congo-Brazzaville, cobalt in the Congo, gold in South Africa, and uranium in Zimbabwe. Its ecological footprint is large, says Michelle Chan-Fishel of Friends of the Earth International, consuming as it does 46 per cent of Gabon's forest exports, 60 per cent of timber exported from Equatorial Guinea, and 11 per cent of timber exports from Cameroon. Contrasting Images of China China is popular with African governments. "There is something refreshing in China's approach," said a Nigerian diplomat who asked not to be identified. "They don't attach all those conditionalities that accompany Western loans." Adds Justin Fong, executive director of the Chinese NGO Moving Mountains: "Whether accurate or not, the image Africans have of the Chinese is that they get things done. They don't waste their time in meetings. They just go ahead and build roads." An African development specialist working with a western aid organization claimed that Chinese projects are low-cost affairs compared to western projects. "Labor costs are low, they integrate African labor, so some transfer of skills takes place, and the Chinese workers live in the village, and this means living like the villagers, down to competing with them for dog meat!" This characterization of the Chinese impact would be disputed by many observers. However, most NGO's are nuanced in their assessment of China. They acknowledge that China has a different trajectory in Africa than Europe and the United States. Whereas the West began by exploiting Africa, China initiated its relations with Africa with "people-to-people" medical and technical assistance missions in the sixties and seventies, the most famous of which was the now fabled building of the Tanzania-Zambia (Tanzam) Railway. But with China's rise as a modernizing economic superpower after the definitive decision in 1984 to use capitalism as the engine of growth, the old solidarity rationale has been replaced by a dangerously single-minded pursuit of economic interests-in this case, mainly oil and mineral resources to feed a red-hot economy growing at 8-10 per cent a year. If African governments were accountable to their people, say NGO critics, Chinese aid could play a very positive role, especially compared to World Bank and IMF loans which come with conditions to bring down tariffs, loosen government regulation, and privatize state enterprises. But with non-accountable, non-transparent governments, such as those in Sudan and Zimbabwe, say the critics, Chinese loan and aid programs contribute instead to consolidating the rule of non-democratic elites. No conditions, in effect, means intervention on the side of the governing groups. Crossing the Line in Sudan Where China has definitely crossed the line, they claim, is in Sudan. Using its membership in the United Nations Security Council, China has prevented a multinational peacekeeping force from being constituted that would protect people in Darfur who are being killed or raped by militias backed by the Sudanese government. Even one African diplomat sympathetic to China asserts, "China's strong backing for the Sudanese government has discouraged African governments that are trying to push it to accept an African Union solution to the problem." China has very substantial interests in Sudan. These are set out in detail in an important collection of studies launched at the WSF entitled African Perspectives on China in Africa, edited by Firoze Manji and Stephen Marks. China obtained oil exploration and production rights in 1995 when the China National Petroleum Corporation (CNPC) bought a 40 per cent stake in the Greater Nile Petroleum Operating Company, which is pumping over 300,000 barrels per day. Sinopec, another Chinese firm, is building a 1500-kilometer pipeline to Port Sudan on the Red Sea, where a tanker terminal is being constructed by China's Petroleum Engineering Construction Company. Chinese investment in oil exploration is estimated by analyst John Rocha to reach $8 billion. Chinese interests go beyond oil. Its investment in textile mills is estimated at $100 million. It has emerged as one of Sudan's top arms suppliers, with one deal being a barter arrangement whereby it would supply $400 million worth of weapons in return for cotton. It is active in infrastructure building, with its firms constructing bridges near the Merowe Dam and on two other sites on the River Nile. It is involved in key hydropower projects, the most controversial being the Merowe Dam, which is expected to ultimately cost $1.8 billion. The construction of the Merowe Dam has involved forced resettlement of the Hambdan people living at or near the site and repression and an armed attack on the Amri people who have been organizing to prevent the authorities' plan to displace them to the desert. Local police and private agencies now provide 24-hour security to Chinese engineering detachments, but civil society observers say the aim of these groups is less protection of the Chinese than repression of the growing opposition on the ground. As Ali Askouri, director of the London-based Piankhi Research Group, puts it, "The sad truth is, both the Chinese and their elite partners in the Sudan government want to conceal some terrible facts about their partnership. They are joining hands to uproot poor people, expropriate their land, and appropriate their natural resources." Chinese and Sudanese officials tend to be dismissive of such criticism, which they often attribute to the machinations of western powers who are alarmed at China's becoming the top international player in a country that they had long treated as being in the West's sphere of influence but whose dismal record of colonial plunder deprives their statements of any moral authority. Defending its close relations with the Sudanese government, a Chinese Foreign Ministry official, Zhai Jun, noted the contrast in African governments' reception of China and the West: "Some people believe that by ‘taking' resources and energy from Africa, China is looting Africa...If this was so, then African countries would express their dissatisfaction...they would approach China, as they did...countries that exploited the continent in the past." Chinese officials are, however, wrong to think that African NGO's are merely parroting the rhetoric of self-interested western governments. In fact, civil society groups are just as critical of such western criticism, considering them as hypocritical. Commenting on the remark of a World Bank official to the effect that "Chinese handouts without reforms" would not be beneficial to Africa, John Karumbidza, a contributor to the China in Africa volume, acidly remarks that "It is the case...that this same bank and Western approach over the past half century has failed to deliver development, and left Africa in more debt than when they began." Other Problematic Partnerships Moreover, being based on actual events, the criticisms are unlikely to go away, not only in Sudan but in many other countries where Chinese involvement with controversial regimes is deep. With relations with the west and even South Africa deteriorating over his political record, President Robert Mugabe of Zimbabwe has increasingly turned to China, which one of his key ministers has characterized as an "all-weather friend." Chinese investment in mining, energy, telecommunications, agriculture, and other sectors was estimated at $600 million at the end of 2004, with another $600 million pledged in June 2005. The price, however, has been high, according to critics, who claim that Mugabe's government has handed de facto control of key strategic industries to the Chinese. A contract with China to farm 386 square miles of land while millions of Zimbabweans remain landless has also come under fire, with rural sociologist John Karumbidza blasting it as amounting "to nothing more than land renting and typical agri-business relations that turn the land holders and their workers into labor tenants and subject them to exploitation." The Nigerian government is another problematic Chinese partner, according to civil society activists. China has extensive interests in Nigeria, particularly in oil exploration and production. The China National Offshore Corporation (CNOOC), notes John Rocha, has acquired a 45 per cent working interest in an offshore enterprise, OML 130, for $2.3 billion; the China National Petroleum Corporation (CNPC) has invested in the Port Harcourt refinery; and a joint venture between the Chinese Oil and Natural Gas Corporation and the L.N. Mittal Group, plans to invest $6 billion in railways, oil refining, and power in exchange for rights to drill oil. These interests have led to an increasingly tight alliance with the faction of the ruling People's Democratic Party dominated by President Olusegun Obasanjo. This relationship has a controversial security dimension. As Ndubisi Obiorah, another contributor to the China in Africa volume who is also director of the Center for Law and Social Action in Lagos, notes: "The Nigerian government is increasingly turning to China for weapons to deal with the worsening insurgency in the oil-rich Niger Delta. The Nigerian Air Force purchased 14 Chinese-made versions of the upgraded Mig 21 jet fighter; the navy has ordered patrol boats to secure the swamps and creeks of the Niger Delta." Not surprisingly, the rebel Movement for the Emancipation of the Nigerian Delta (MEND) has warned Chinese companies to keep out of the region or risk attack. With their integrated political, military, economic, and diplomatic components, China's "strategic partnerships" with governments such as those of Nigeria, Sudan, and Zimbabwe increasingly have the feel of the old US and Soviet relationships with client states during the Cold War. Will Civil Society Make the Difference? Nevertheless, many civil society activists do not discount the possibility that things may yet be turned around. Though critical of current Chinese policies, Humphrey Pole-Pole of Tanzania appealed at the Nairobi meeting for a "win-win-win" strategy-that is, "a win for China, a win for African governments, and a win for African people. This is not impossible." The key to such a change may be the growth of Chinese civil society organizations, some of which are increasingly independent of and indeed critical of government policies within China, according to Dorothy Guerrero, coordinator of Focus on the Global South's China program: "If the Chinese government and business interests in Africa are to be moderated by concerns for local people, the environment, human rights, etc., it is of extreme importance that the international voices arguing for this are joined by a constituency of people within China who are also concerned about such principles." She added that links must be forged between African and Chinese NGO's and it was for that reason that representatives of Chinese went to Nairobi. But closer ties are not enough, said Justin Fong. Mechanisms have to be devised that could be effectively used to press for accountability on the part of the Chinese government. One point of vulnerability he identified is the practice of Chinese government entities, such as the China Export-Import Bank, of seeking co-financing for their Africa projects from international banks such as HSBC and Citigroup. When it came to controversial projects, he suggested, pressure might be indirectly placed on the Chinese by lobbying these institutions, which are more sensitive about their image than Beijing. Others were skeptical that such tactics, which might have worked with western governments and firms, would succeed with China. But whatever their differences, civil society activists, African and Chinese, have a consensus on one thing: it will be a hard, uphill struggle to change the Chinese juggernaut's direction in Africa. The Penitent’s Progress (22 February 2007)
The passage of the Anti-Terror Bill-now incongruously rebaptized the "Human Security Act of 2007"-- marks the end of Gloria Macapagal Arroyo's penance for withdrawing the Philippine military contingent from Iraq following the kidnapping of Angelo de la Cruz in July 2004. Caught between tremendous pressure from de la Cruz' compatriots to save a man who had come to symbolize the Filipino diaspora, and stern warnings from Washington not to "give in" to Cruz's abductors, Arroyo chose to conciliate the electorate.
That miffed George W. Bush, who sees everything in very personal terms and in black and white, and he made his displeasure felt over the last two and a half years. Atoning for the Angelo de la Cruz affair was at the front and center of the administration's appalling decision to violate the country's judicial processes and hand over Lance Corporal Daniel Smith, a man convicted of rape by a Philippine court, to the US Embassy. Atonement was also the reason for Arroyo's giving the US a free hand in dealing with Muslim movements in Mindanao, letting it call the shots in a counter-insurgency campaign where the Philippine military effectively functions as a subordinate force, much like the pre-war Constabulary commanded by American officers. Contrary to the claims of lawmakers who chose to cave in to pressure from the administration and US Embassy, the legislation severely weakens civil liberties Warrantless arrest and detention for an initial period of three days is now legal, and this can be extended so long as "written approval" can be obtained from a judge or official of the government's Human Rights Commission. One can be sure that there will be no shortage of compliant judges or commissioners that will oblige the military and the police. The act creates an Anti-Terrorism Council made up of the heads or senior officials of the key state security agencies, vests it with sweeping powers with inadequate judicial oversight, and allows it to operate with an extraordinarily broad definition of terrorism that includes insurrection, coup d'etat, murder, piracy, kidnapping, arson, unlawful possession of firearms, when such actions are seen as "sowing and creating a condition of widespread and extraordinary fear and panic among the populace, in order to coerce the government to give in to an unlawful demand." One need not exert too much imagination to see how the terrorist brush can be made to cover people engaging in legitimate acts of resistance to abuse of authority or outright illegal exercise of power-for instance, individuals who organize people power actions involving massive civil disobedience or soldiers who declare they will withdraw support from authority that is assumed or exercised illegitimately, such as elective office that is gained through fraudulent elections. The Anti-Terror Act, make no mistake, is but one more step in a process that criminalizes legitimate dissent, erodes traditional legal protections, and strengthens the authoritarian aspects of the state. We only have to see how in the US, the passage of the Patriot Act went hand in hand with the legalization of torture, the practice of indefinite detention with no legal recourse for those detained, systematic violation of the provisions of the Geneva Convention regarding prisoners of war, and "extraordinary rendition," that is, turning over to the authority of another state persons suspected of terrorist crimes. The section on extraordinary rendition reveals the provenance of this bill. In Orwellian fashion, Sec. 57 carries the title "Ban on Extraordinary Rendition" then proceeds to legitimize it by specifying that extraordinary rendition of a suspect to another country (read: the United States) may be allowed "if his or her testimony is needed for terrorist related police investigations or judicial trials in the said country" and respect for the person's rights is officially assured (something that US authorities would undoubtedly be quick to give!) This law-abiding superpower has gotten into trouble in Europe for literally snatching suspected terrorists from the street and flying them to the United States. Not surprisingly, it has been pressing for more effective legal mechanisms to substitute for this controversial practice, and our Congress, by passing the Anti-Terror Act, has just provided it with an example that it can cite as a precedent for other countries. But if the pressure to pass this act came from Washington, it was not with reluctance that the Arroyo administration complied. With its lack of respect for legal processes and democratic institutions like the ballot and its insatiable desire to accumulate power in the hands of the presidency at the expense of countervailing powers like the judiciary, translating the repressive bill into law was something that Malacanang did willingly, if not with pleasure. Satisfying Washington jibed perfectly with the administration's own project of creating a president-centered national security state where legitimate dissent is steadily but inexorably criminalized and the military is increasingly invested with absolute power in the realm of internal security. President Arroyo may be a penitent but she is a joyful penitent. We are witnessing the deepening of a national tragedy. At a time that our leaders should be exerting all their efforts to protect activists, journalists, workers, and farmers by decisively reining in the state security agencies, the president and a compliant Congress are presenting the soldiers and the police with one more powerful instrument of repression. The End of the Affair? (23 February 2007)
Political sociologists have sometimes described the Chinese Revolution as the product of an alliance between middle class intellectuals and the peasantry. In his innovative revision of Marxist-Leninist theory, Mao Zedong transformed the peasantry, a class disdained by Marx, into the "main force" of his anti-feudal, anti-imperialist revolution. Translated into practice by the Communist Party, which was led and dominated by the revolutionary intelligentsia, this reformulation proved to be the key to the Communist triumph in 1949.
But the relationship between the Chinese Communist Party (CCP) and the Chinese peasantry has never been an easy one. Indeed, it may be more aptly described as tumultuous. A receding vision The vision that won for the Communists the support of millions of peasants -- that of a countryside where land seized from landlords would be tilled by millions of small owners-cultivators -- remained precisely that: a vision. Agrarian transformation managed by the party took the form of requisitioning the grain surplus to fulfill Mao's industry-first policy. Peasant freedom was curtailed further when production was collectivized in the mid-fifties. Then during the Great Leap Forward from 1958 to 1961, to spur production and more effectively requisition surplus above the peasants' survival needs to support Mao's super-industrialization drive, the party herded peasants into communes --26,000-plus in the whole of China -- where their life revolved around hard labor. In their riveting biography Mao: the Unknown Story (New York: Random House, 2005), Jung Chang and Jon Halliday depict party cadres micromanaging production, keeping peasants "penned inside their villages," and preventing them from "stealing" their own harvest. After the disaster that overtook this social experiment, where some 30 million people, mainly peasants, died from malnourishment and starvation, the balance in the struggle over the surplus shifted to the peasantry. Requisitioning targets were lowered, and, as Chang and Halliday note, "In many places, peasants were allowed to lease land from the commune, and effectively were able to return to being individual farmers. This alleviated starvation and motivated productivity." Peasants and the great proletarian cultural revolution Specialists in rural China are split on the impact on the peasantry of the next great event, the Cultural Revolution. To Chen Guidi and Wu Chantao, authors of Will the Boat Sink the Water? (New York: Public Affairs, 2006), a compassionate chronicle of peasant suffering under party rule, the Cultural Revolution was a "disaster" for the peasantry: "A peasant would be accused of 'taking the capitalist road' if his household kept two chickens or planted a few vegetables for the market." In contrast, for Roderick MacFarquhar and Michael Schoenhals, the Cultural Revolution, which began in earnest in 1966, spelled relief for the peasantry. With the party self-destructing as Mao purged "capitalist roaders" he saw ensconced at all levels of the party, the ability of the authorities to requisition grain was eroded. As they describe it in their magisterial Mao's Last Revolution (Cambridge: Harvard University Press, 2006): "To be left alone was what many peasants secretly wished for, and when the state's tax collectors failed to show up on time or in force because they were involved in struggles, the peasants were content. In parts of rural China, an unintended by-product of a dysfunctional state bureaucracy was hailed as a great, newborn thing. In Shehong county, Sichuan, peasants were told that "Cultural Revolution means no more grain deliveries to the state!" Wracked by factional infighting, party and government operatives could not collect grain taxes on time or in full. Indeed, in the "two subprovincial regions of Suzhou and Zhenjiang, in Jiangsu, agricultural taxes equal to 200 million jin [100 million kilograms] of grain were simply never collected. The situation was similar in the subprovincial regions of Enshi and Xiangyang, in Hubei, where agricultural taxes equal to 60 million jin remained uncollected." Not surprisingly, from 214 million tons in 1966, production rose throughout the Cultural Revolution, reaching 286 million tons in 1976. With the disruption in collection and transportation, added production did not benefit the cities but were absorbed by peasant households. But greater production was not the only consequence of the relaxation of the party's iron hand. The Cultural Revolution years saw, in some parts of rural China, "a resurgence of household-based farming, which the peasants preferred. In Yibin prefecture, Sichuan, 8,355 of 49,349 production teams were by 1969 redistributing fields to individual households, contracting production out to individual households... allowing the 'seizure of the collective economy' by private interests." The golden age The change in the balance of power in favor of the peasantry appeared to be consolidated with the reforms initiated by Deng Xiaoping after the death of Mao in 1976. The peasants wanted an end to the communes, and Deng and his reformers obliged them by introducing the "household-contract responsibility system." Under this scheme, each household was given a piece of land to farm. Of what it produced, the household was allowed to retain what was left over after selling to the state a fixed proportion at a state-determined price, or by simply paying a tax in cash. The rest it could consume or sell on the market. There is consensus among China specialists that these were the golden years of the peasantry. The sense of great expectations is evoked by Chen Guidi and Wu Chuntao in their report on agrarian conflicts in Anhui Province: "When the Cultural Revolution was finally brought to a halt, following Mao's death in 1976, the household-contract system was tried out in Anhui Province and proved a great success. The lethargy of the previous years was gone. One could frequently see three generations of a family working together under one of those contracts, looking toward a better life. The reform saw a sustained 15 per cent increase of per capita income for the years 1978 to 1984. It was the years of recovery." The rural reform has been characterized as a "big-bang" reform, the consequences of which were felt throughout the economy. The surpluses generated by the reform, notes Minxin Pei in China's Trapped Transition: the Limits of Developmental Autocracy (Cambridge: Harvard University Press, 2006) "allowed rural governments to invest in new manufacturing businesses, which eventually became a critical source of public finance." Having studied the economic transformation of Taiwan, one cannot but be struck by the similarity between reform period 1978-84 and the 1950s in Taiwan, when radical land reform created and consolidated former tenants into a prospering owner-cultivator class, whose demand for farm implements and other manufactures triggered and sustained the island's early import-substitution industrialization. The great reversal But as in Taiwan, the golden age of the peasantry came to an end, and the cause was identical: the adoption of a strategy of urban-centered, export-oriented industrialization based on rapid integration into the global capitalist economy. This strategy, which was launched at the 12th National Party Congress in 1984, was essentially one that built the urban industrial economy on "the shoulders of peasants," as Chen and Wu put it. Primitive capital accumulation took the form mainly of the requisitioning of peasant surpluses via heavy taxation. And as in the Great Leap Forward, the party organization in the countryside played the role of overseer in the new strategy. The consequences of a development strategy oriented towards urban industrial development were stark. Peasant income, which grew by15.2 per cent a year from 1978 to 1984 dropped to 2.8 per cent a year from 1986 to 1991. Some recovery occurred in the early 1990s but stagnation of rural income marked the latter part of the decade. In contrast, urban income, already higher than that of peasants in the mid-eighties, was, on average, six times the income of peasants by 2000. Key reasons for the stagnation of rural income were the rising costs of agricultural inputs, falling prices for agricultural products, and rising taxes, all of which operated to transfer income from the countryside to the city. But the main mechanism for the extraction of surplus from the peasantry was expanded taxation. Taxes on 149 items of agricultural products were levied on the peasants by central state agencies by 1991, but this proved to be but part of a much bigger bite, as the lower levels of government began to levy their own taxes, fees, and charges. Currently, the various tiers of rural government impose a total of 269 types of tax, along with all sorts of often arbitrarily imposed administrative charges. While taxes and fees were not supposed to exceed five per cent of the income of farmers, the actual amount was likely to be much greater, with some Ministry of Agriculture surveys reporting that the peasant tax burden was three times the official national limit, or 15 per cent. Expanded taxation would perhaps have been bearable had peasants experienced returns in the form of improved public health and education and more agricultural infrastructure. In the absence of tangible benefits, the peasants saw their incomes as subsidizing what Chen and Wu describe as the "monstrous growth of the bureaucracy and the metastasizing number of officials" who seemed to have no other function than to extract more and more from them. Aside from being subjected to higher input prices, lower prices for their goods, and more intensive taxation, peasants have borne the brunt of the urban-industrial focus of economic strategy in other ways. According to China: the Balance Sheet (Center for Strategic and International Studies and the Institute of International Economics: Washington, DC, 2006), "40 million peasants have been forced off their land to make way for roads, airports, dams, factories, and other public and private investments, with an additional two million to be displaced each year." The threat of trade liberalization But the impact of all these forces may yet be dwarfed by that of China's commitment to eliminate agricultural quotas and reduce tariffs when it joined the World Trade Organization (WTO). These commitments were, as China: the Balance Sheet underlines, substantial: "The challenge of managing the farm sector has grown with China's WTO commitments in agriculture, which are more far-reaching than those of other developing countries and in certain respects exceed those of high-income countries. The Chinese government agreed to reduce tariffs and institute other policies that meaningfully increase market access; accepted tight restrictions on the use of agricultural subsidies; and pledged to eliminate all agricultural export subsidies -- commitments that go far beyond those made by other participants in the Uruguay Round negotiations that led to the WTO's creation." The WTO deal reflects China's current priorities. If the party leadership has chosen to put at risk large sections of its agriculture, such as soybeans and cotton, this is because the party wants to open up or keep open global markets for its industrial exports. The social consequences of this trade-off are still to be fully felt, but it is likely that it contributed to the dramatic slowdown in the pace of poverty reduction in the period between 2000 and 2004. The new overlords? Corruption, which multiplied among party cadres in the "to get rich is glorious" climate of the post-Mao era, was oil poured on this already volatile relationship between peasants and the party, and when local party officials were seen to abetting or coddling mafia elements--many of them party members themselves--peasant anger at people they now seemed to regard as their new feudal overlords intensified. Chan and Wu's book is a dismal chronicle of this transformation of the party from dedicated and respected cadres to a veritable rural ruling class lording it over the peasants. It is worth reproducing in full their description of how this class exercises one of its "privileges": "The fact of the matter is the vast countryside of China has become a gourmand's paradise. Like a cloud of locusts, officials with their appetites in tow descend on the countryside and are infinitely inventive in coming up with excuses to eat and drink: dinners for inspectors, dinners for conferences, dinners for rural poverty relief; dine if you can afford it, and dine if you can't; dine on credit, dine on loan; keep the dinners going from one year's end to another, from one month's end to another, from morning till night; enjoy dinners when you take office and when you leave office. "A popular saying about eating and drinking at public expense runs "There's nothing to be gained by not eating since it's free; so why not eat?" To eat free has become a sign of status, an index of position. The quality of a dinner may determine whether or not a project is approved or a deal clinched, or whether a promotion is in the works. It has become part of political culture." With the prevalence of such practices, it is not surprising that protests have multiplied. From 8700 in 1993, what the Ministry of Public Security calls "mass group incidents" have grown to 87,000 in 2005, most of them in the countryside. Moreover, the incidents are growing in average size from 10 or fewer persons in the mid-1990s to 52 people per incident in 2004. A widespread form of protest is tax resistance. Minxin Pei of the Carnegie Endowment for International Peace claims that in Xinjiang in 2001, tax resistance was said to be prevalent in 40 per cent of the villages surveyed. In that same survey, about 70 per cent of village cadres felt that collecting fees was the most difficult task. The use of police to force peasants to pay up, such as those documented by Chen and Wu, are common. And in many areas, party officials, according to Pei, "recruited thugs as their collection agents. Such a practice has resulted in illegal imprisonment, torture, and the deaths of peasants who were unable to pay." Can the CCP regain peasant confidence? The relations between the party and the peasantry are perhaps at their nadir today. Throughout their turbulent 75 year old relationship, the party has always been able to bounce back and regain the peasantry's confidence after disastrous policies, such as the Great Leap Forward and the Cultural Revolution. Is it resilient enough to be able to do so once more? Emulating the ancient tradition of appealing to the imperial center to curb the depredations of local lords, peasants have sent delegations to Beijing to lodge complaints against local authorities. Yet positive responses from the center in the form of prosecution of corrupt cadres and reining in of abusive practices and corrupt cadres are erratic and inconsistent. There are, as Chen and Wu's accounts make clear, people in the party who do care about peasants and have taken up the cudgels for them. The problem is that inertia, corruption, bureaucracy, and indifference militate against any serious internal party reform. Are there possibilities of ideological renewal that could reinvigorate the old relationship? With its jettisoning of its socialist vision-even as it has kept the socialist rhetoric--the party has had to construct an alternative ideology of legitimation for the era of rapid capitalist development. This it has found in a vision that Dennis Lynch in his book Rising China and Asian Democratization (Stanford: Stanford University Press, 2006) describes as a "CCP-led return to national greatness" through the achievement of "comprehensive national power" and a "recentering of Chinese civilization." The new, expanding urban middle classes that have benefited from the export-led, urban-centered development of the last two decades have certainly been susceptible to this vision. It is, however, unlikely, that this ideology has significant appeal to the peasants, migrant workers, and laid off workers from state owned enterprises that have borne the costs of China high-speed industrialization. What about the much-touted village elections? Not even the harshest of China's critics can deny that there is increasingly a strong element of competition in the village elections, which were introduced in the 1980s. The role that rural democratization, limited though it may currently be, can play in revitalizing the relationship between party and peasants must not be underestimated. But while the elections have allowed rural people some measure of control over local government, all too often they have been manipulated by party and government officials. Moreover, the CCP has blocked elections above the village level, so that the party continues to fill township and country level offices with its cadres. In looking for "a way out" of the current impasse, Chen and Wu cite the views of a prominent rural specialist Yu Jianrong of the Agricultural Research Center at Central China University: "Yu's solution is to rally the peasants to form their own organization and replace the current local bureaucracy by peasants' self rule. Yu proposed that only a network of peasant organizations could truly represent the peasants' interests and needs and communicate them in an orderly way and prevent and ameliorate confrontations and conflicts." Yu's solution may sound Utopian, but it does reflect what seem to be really dismal prospects for improving the relations between the party and the peasantry. This puts a pall of uncertainty over the future of China, despite the country's double-digit growth rates. It is one of the greatest ironies of contemporary history that the Chinese Communist Party, after having led the Chinese people to victory against imperialism and bringing about what is undoubtedly an economic miracle, should now find itself alienated from what used to be its primary and, arguably, its most important constituency owing to the consequences of its strategic decision to ride the tiger of global capitalism while retaining authoritarian controls. Few analysts see peasant discontent as a serious challenge to the party's rule in the short and medium term, but lacking legitimacy among such a great part of the population can only have disastrous consequences ultimately. Free Trade vs. Small Farmers (29 April 2007)
The 20th century was a terrible blight on small farmers everywhere. In both wealthy capitalist economies and in socialist countries, farmers paid a heavy price for industrialization. In advanced capitalist countries like the United States, a deadly combination of economies of scale, capital-intensive technology, and the market led to large corporations cornering agricultural production and processing. Small and medium farms were relegated to a marginal role in production and a minuscule portion of the work force.
The Soviet Union, meanwhile, took to heart Karl Marx's snide remarks about the “idiocy of rural life” and, through state repression, transformed farmers into workers on collective farms. Expropriation of the peasants' surplus production was meant not only to feed the cities but also to serve as the source of the so-called “primitive accumulation” of capital for industrialization. Today, perhaps the greatest threat to small farmers is free trade. And the farmers are fighting back. They have helped, for instance, to stalemate the Doha round of negotiations of the World Trade Organization (WTO). This tug of war between farmers and free trade is nowhere more visible than in Asia. The Triple Threat to Asia’s Peasantry Asian governments placed the burden of industrialization on the peasantry during the phase of so-called developmentalist, industry-first policies. In Taiwan and South Korea, land reform first triggered prosperity in the countryside in the 1950s, stimulating industrialization. But with the shift to export-led industrialization in 1965, there was demand for low-wage industrial labor, so government policies deliberately depressed prices of agricultural goods. In this way, peasants subsidized the emergence of Newly Industrializing Economies. Peasant incomes declined relative to urban incomes, and the resulting stagnation of a once-vibrant countryside led to massive migration to the cities and a steady supply of cheap labor for factories. The farmers left in the countryside were primarily poor and aging, and they formed an increasingly small part of the national work force. In Thailand, for instance, a tax on rice exports insulated the domestic market from price movements in the international market, depressing the price of rice and reducing the wage costs of non-agricultural employers. A transfer of real wealth from the countryside to the city took place every year between 1962 and 1981, except for 1970. Not surprisingly, despite the image of Thailand as an agricultural superpower, a large percentage of the rural population remains poor. In China, millions of peasants died of starvation during the Great Leap Forward as the government requisitioned grain surplus to finance Mao Zedong's super-industrialization drive. The chaos of the Cultural Revolution allowed peasants to regain a degree of control over production because the government was in crisis. Following the death of Mao in 1976, Deng Xiaoping dealt with the crisis by introducing the “household contract responsibility system.” Each family was given a piece of land to farm, along with the right to sell what was left over after a fixed proportion of the produce was sold to the government at a state-determined price. This led to peasant prosperity that, as in Taiwan, stimulated industrial production to fulfill rural demand. But, as in Taiwan, this golden age of the peasantry came to an end, and the cause was identical: the adoption of urban-centered, export-oriented industrialization. Primitive capital accumulation for industry took the form of requisitioning peasant surpluses via heavy taxation. Currently, the various tiers of the Chinese government foist a total of 269 different taxes on farmers, along with often-arbitrary administrative charges. Not surprisingly, in many places, taxes now eat up 15% of farmers' income, three times the official national limit of 5%. Not surprisingly, too, while the economy has been growing at 8-10% a year, peasant income has stagnated, so that urban dwellers now have, on average, six times the income of peasants. True indeed is the observation of the rural advocates Chen Guidi and Wu Chuntao that the urban industrial economy has been built “on the shoulders of peasants.” The Typhoon of Trade Liberalization The forcing of peasants to subsidize industrialization was indeed harsh. But at least trade policies at the time helped to mitigate the pain by barring agricultural imports that were even cheaper than local commodities. Practically all Asian countries with agricultural sectors tightly controlled imports via quotas and high tariffs. This protective shield, however, was severely eroded when countries signed the Agreement on Agriculture (AOA) and began joining the World Trade Organization (WTO) starting in 1995. The AOA forced open agricultural markets by banning quotas, which were converted to tariffs, and required governments to import a minimum volume of each agricultural commodity at a low tariff. At the same time, under the pretext of controlling the heavy subsidization of agriculture in developed countries, the AOA institutionalized the various channels through which subsidies flowed, such as export subsidies and direct cash payments to farming interests in the northern hemisphere. As a result, the level of subsidization of agriculture actually increased in developed countries in the first decade of the WTO. The total amount of agricultural subsidies provided by the OECD's member governments rose from $182 billion in 1995 to $280 billion in 1997, $315 billion in 2001, $318 billion in 2002, and almost $300 billion in 2005. The United States and the European Union (EU) were spending $9-10 billion more on subsidies in the early 2000s than they were a decade earlier. For every $100 of agro-exports from the United States, government subsidies accounted for $20-30. In the case of the EU, the figure was $40-50. While unsubsidized smallholders in the developing world had to survive on less than $400 a year, American and European farmers were receiving, respectively, an average of $21,000 and $16,000 a year in subsidies. With massive American and European subsidies distorting global prices in a downward direction, developing country agriculture became “non-competitive” under the conditions of WTO-mandated trade liberalization. As the Food and Agricultural Organization (FAO) notes, instantaneous import surges following the adoption of the AOA in a number of developing countries led to “consequential difficulties” for “import-competing industries.” The report continued, “Without adequate market protection, accompanied by development programs, many more domestic products would be displaced, or undermined sharply, leading to a transformation of domestic diets and to increased dependence on imported foods.” This historic shift to dependence on food imports was, needless to say, accompanied by the displacement of millions of peasants. Even before the AOA took effect, the World Bank was predicting that Indonesian farmers would lose out under the new regime. Indeed, since 1995, farmers in rice and other basic commodities have been marginalized. Meanwhile, competitive pressures induced by trade liberalization led to the expansion of commercial plantations at the expense of smallholders. In the Philippines, corn farmers, chicken farmers, cattle raisers, and vegetable growers were driven to bankruptcy in huge numbers. In Mindanao, where corn is a staple crop, many farmers were wiped out. As analyst Aileen Kwa has described, “It is not an uncommon sight to see farmers there leaving their corn to rot in the fields as the domestic corn prices have dropped to levels [at which] they have not been able to compete.” With production stagnant, land devoted to corn across the country contracted sharply from 3,149,300 hectares in 1995 to 2,150,300 hectares in 2000. In China, tens of thousands of farmers, including those growing soybeans and cotton, have been marginalized with China's entry into the WTO. Indeed, to maintain and increase access for its manufacturers to developed countries, the government has chosen to sacrifice its farmers. According to the Institute of International Economics: “The challenge of managing the farm sector has grown with China's WTO commitments in agriculture, which are more far reaching than those of other developing countries and in certain respects exceed those of high-income countries. The Chinese government agreed to reduce tariffs and institute other policies that meaningfully increase market access; accepted tight restrictions on the use of agricultural subsidies; and pledged to eliminate all agricultural export subsidies. These commitments went far beyond those made by other participants in the Uruguay Round negotiations that led to the WTO's creation.” In Sri Lanka, thousands of small farmers staged street demonstrations to protest the import of chicken parts and eggs, claiming they were being driven out of business. The FAO concurred, noting that import surges on major food items like chilies, onions, and potatoes made local production “precarious, as reflected in the significant drop in areas of production.” In India, tariff liberalization, even in advance of WTO commitments, has translated into a profound crisis in the countryside. Indian economist Utsa Patnaik has described the calamity as “a collapse in rural livelihoods and incomes” owing to the steep fall in the prices of farm products. Along with this has come a rapid decline in consumption of food grains, with the average Indian family of four consuming 76 kg less in 2003 compared to 1998 and 88 kg less than a decade earlier. The state of Andra Pradesh, which has become a byword for agrarian distress owing to trade liberalization, saw a catastrophic rise in farmers' suicides from 233 in 1998 to over 2,600 in 2002. One estimate is that some 100,000 farmers in India have taken their lives owing to collapsing prices stemming from rising imports. Governments under Pressure The resistance to the new regime so opposed to the interests of small farmers has come from several sectors. At the international level, trade liberalization and other anti-agriculture policies led to the formation of two blocs of developing countries: the Group of 20 and the Group of 33. The G-20 put the developed countries on notice that, unless they significantly reduced unfair domestic support for agriculture, there would be no more concessions on market access. The G-33 demanded exemptions from tariff liberalization for certain products considered vital to agricultural production and employment (special products or SPs). They also wanted the right to raise tariffs and resort to other measures -- special safeguard mechanisms (SSMs) -- to protect their products from surges of agricultural imports. When the EU and the United States refused to compromise on these issues, the WTO's Fifth Ministerial Meeting in Cancun in 2003 collapsed. The Ministerial Declaration of the Sixth Ministerial Meeting of the WTO in Hong Kong in December 2005 recognized the right of developing countries to designate SPs and institute SSMs. However, the U.S. backtracking on this commitment as well as its refusal to significantly reduce its domestic subsidies led to the collapse of the Doha Round of negotiations in July 2006. Developing countries simply could not provoke more discontent among their peasant populations by opening their markets even more in exchange for cosmetic reductions in the massive EU and U.S. agricultural subsidies. The driving force behind the positions some developing countries have taken in these multilateral forums is the backlash in the countryside. In 2004, for instance, a rural backlash against agrarian distress led to the unexpected defeat of the BJP-led ruling coalition that had campaigned on the vision of “India Shining.” India's rural electoral revolt was part of a global phenomenon that put governments on notice that the countryside would no longer accept policies that sacrifice farmer interests. In Asia, protests in the form of land occupations, hunger strikes, violent demonstrations, and symbolic suicides made rural distress a pressing issue. In China, what the Ministry of Public Security calls “mass group incidents” -- in other words, protest actions -- increased from 8,700 in 1993 to 87,000 in 2005, most of them in the countryside. Moreover, the incidents are growing in average size, from 10 or fewer persons in the mid-1990s to 52 people per incident in 2004. Not surprisingly, the current leadership increasingly sees the countryside as a powder keg that needs to be defused. Farmers' Internationale? The suicide of the Korean farmer Lee Kyung Hae at the barricades in Cancun in September 2003 was a milestone in the development of farmers' resistance globally. Committed under a banner that read “WTO Kills Farmers,” Lee's suicide was designed to draw international attention to the number of suicides by farmers in countries subjected to liberalization. He succeeded only too well. The event shocked the WTO delegates, who observed a minute of silence in Lee's memory. By adding to what was already a charged atmosphere, Lee’s act was certainly a key factor in the unraveling of the talks. In December 2005, invoking Lee's sacrifice, hundreds of Korean farmers tried to break through police lines in an effort to storm the Hong Kong Convention Center. Some 900 protesters, the bulk of them Korean farmers, were arrested. Both Lee and the Korean farmers protesting in Hong Kong were members of Via Campesina, an international federation of farmers established in the mid-1990s. Since its founding, Via Campesina -- literally translated as the Peasants' Path -- has become known as one of the most militant opponents of the WTO and bilateral and multilateral free trade agreements. While there are other international farmers' networks, Via is distinguished by its position that small farmers must not only fight to survive in the current global system of corporate-dominated industrial farming, they should lead the process to transform or replace the current system. Commenting on the vision of Jose Bove the famous French activist who dismantled a MacDonald's restaurant in his hometown of Millau, France and other Via leaders, one progressive journal has described the aim of the organization as the creation of a Farmers' Internationale in much the same way that Communist and Social Democratic groups sought to establish the Communist International and Socialist International to unite workers in the 20th century. The main battle cry of Via Campesina, whose coordinating center is located in Indonesia, is “WTO Out of Agriculture” and its alternative program is food sovereignty. Food sovereignty means first and foremost the immediate adoption of policies that favor small producers. This would include, according to Indonesian farmer Henry Saragih, Via's coordinator, and Ahmad Ya'kub, Deputy for Policy Studies of the Indonesian Peasant Union Federation (FSPI), “the protection of the domestic market from low-priced imports, remunerative prices for all farmers and fishers, abolition of all direct and indirect export subsidies, and the phasing out of domestic subsidies that promote unsustainable agriculture.” Via's program, however, goes beyond the adoption of pro-smallholder trade policies. It also calls for an end to the Trade-Related Intellectual Property Rights regime, which allows corporations to patent plant seeds, thus appropriating for private profit what has evolved through the creative interaction of the natural world with human communities over eons. Seeds and all other plant genetic resources should be considered part of the common heritage of humanity, the group believes, and not be subject to privatization. Agrarian reform, long avoided by landed elites in countries like the Philippines, is a central element in Via's platform, as is sustainable, ecologically sensitive organic or biodynamic farming by small peasant producers. The organization has set itself apart from both the First Green Revolution based on chemical-intensive agriculture and the Second Green Revolution driven by genetic engineering (GE). The disastrous environmental side effects of the first are well known, says Via, which means all the more that the precautionary principle must be rigorously applied to the second, to avoid negative health and environmental outcomes. The opposition to GE-based agriculture has created a powerful link between farmers and consumers who are angry at corporations for marketing genetically modified commodities without proper labeling, thus denying consumers a choice. In the European Union, a solid alliance of farmers, consumers, and environmentalists prevented the import of GE-modified products from the United States for several years. Although the EU has cautiously allowed in a few GE imports since 2004, 54% of European consumers continue to think GE food is ”dangerous.” Opposition to other harmful processes such as food irradiation has also contributed to the tightening of ties between farmers and consumers, large numbers of whom now think that public health and environmental impact should be more important determinants of consumer behavior than price. More and more people are beginning to realize that local production and culinary traditions are intimately related, and that this relationship is threatened by corporate control of food production, processing, marketing, and consumption. This is why Jose Bove's justification for dismantling a MacDonald's resonated widely in Asia: “When we said we would protest by dismantling the half-built McDonald's in our town, everybody understood why -- the symbolism was so strong. It was for proper food against malbouffe [awful standardized food], agricultural workers against multinationals. The extreme right and other nationalists tried to make out it was anti-Americanism, but the vast majority knew it was no such thing. It was a protest against a form of production that wants to dominate the world.” Many economists, technocrats, policymakers, and urban intellectuals have long viewed small farmers as a doomed class. Once regarded as passive objects to be manipulated by elites, they are now resisting the capitalist, socialist, and developmentalist paradigms that would consign them to ruin. They have become what Karl Marx described as a politically conscious “class-for-itself.” And even as peasants refuse to “go gently into that good night,” to borrow a line from Dylan Thomas, developments in the 21st century are revealing traditional pro-development visions to be deeply flawed. The escalating protests of peasant groups such as Via Campesina, are not a return to the past. As environmental crises multiply and the social dysfunctions of urban-industrial life pile up, the farmers' movement has relevance not only to peasants but to everyone who is threatened by the catastrophic consequences of obsolete modernist paradigms for organizing production, community, and life. World Social Forum at the Crossroads (4 May 2007)
A new stage in the evolution of the global justice movement was reached with the inauguration of the World Social Forum (WSF) in Porto Alegre, Brazil, in January 2001.
The WSF was the brainchild of social movements loosely associated with the Workers’ Party (PT) in Brazil. Strong support for the idea was given at an early stage by the ATTAC movement in France, key figures of which were connected with the newspaper Le Monde Diplomatique. In Asia, the Brazilian proposal, floated in June 2000, received the early enthusiastic endorsement of, among others, the research and advocacy institute Focus on the Global South based in Bangkok. Porto Alegre was meant to be a counterpoint to “Davos,” the annual event in a resort town in the Swiss Alps where the world’s most powerful business and political figures congregated annually to spot and assess the latest trends in global affairs. Indeed, the highlight of the first WSF was a televised transcontinental debate between George Soros and other figures in Davos with representatives of social movements gathered in Porto Alegre. The world of Davos was contrasted to the world of Porto Alegre, the world of the global rich with the world of the rest of humanity. It was this contrast that gave rise to the very resonant theme “Another world is possible.” There was another important symbolic dimension: while Seattle was the site of the first major victory of the transnational anti-corporate globalization movement -- the collapse amidst massive street protests of the third ministerial meeting of the World Trade Organization -- Porto Alegre represented the transfer to the South of the center of gravity of that movement. Proclaimed as an “open space,” the WSF became a magnet for global networks focused on different issues, from war to globalization to communalism to racism to gender oppression to alternatives. Regional versions of the WSF were spun off, the most important being the European Social Forum and the African Social Forum; and in scores of cities throughout the world, local social fora were held and institutionalized. The Functions of the WSF Since its establishment, the WSF has performed three critical functions for global civil society: First, it represents a space -- both physical and temporal -- for this diverse movement to meet, network, and, quite simply, to feel and affirm itself. Second, it is a retreat during which the movement gathers its energies and charts the directions of its continuing drive to confront and roll back the processes, institutions, and structures of global capitalism. Naomi Klein, author of No Logo, underlined this function when she told a Porto Alegre audience in January 2002 that the need of the moment was “less civil society and more civil disobedience.” Third, the WSF provides a site and space for the movement to elaborate, discuss, and debate the vision, values, and institutions of an alternative world order built on a real community of interests. The WSF is, indeed, a macrocosm of so many smaller but equally significant enterprises carried out throughout the world by millions who have told the reformists, the cynics, and the “realists” to move aside because, indeed, another world is possible…and necessary. Direct Democracy in Action The WSF and its many offspring are significant not only as sites of affirmation and debate but also as direct democracy in action. Agenda and meetings are planned with meticulous attention to democratic process. Through a combination of periodic face-to-face meetings and intense email and Internet contact in between, the WSF network was able to pull off events and arrive at consensus decisions. At times, this could be very time-consuming and also frustrating, and when you were part of an organizing effort involving hundreds of organizations, as we at Focus on the Global South were during the organizing of the 2004 WSF in Mumbai, it could be very frustrating indeed. But this was direct democracy, and direct democracy was at its best at the WSF. One might say, parenthetically, that the direct democratic experiences of Seattle, Prague, Genoa, and the other big mobilizations of the decade were institutionalized in the WSF or Porto Alegre process. The central principle of the organizing approach of the new movement is that getting to the desired objective is not worth it if the methods violate democratic process, if democratic goals are reached via authoritarian means. Perhaps Subcomandante Marcos of the Zapatistas best expressed the organizing bias of the new movements: “The movement has no future if its future is military. If the EZLN [Zapatistas] perpetuates itself as an armed military structure, it is headed for failure. Failure as an alternative set of ideas, an alternative attitude to the world. The worst that could happen to it apart from that, would be for it to come to power and install itself there as a revolutionary army.” The WSF shares this perspective. What is interesting is that there has hardly been an attempt by any group or network to “take over” the WSF process. Quite a number of “old movement” groups participate in the WSF, including old-line “democratic centralist” parties as well as traditional social democratic parties affiliated with the Socialist International. Yet none of these has put much effort into steering the WSF towards more centralized or hierarchical modes of organizing. At the same time, despite their suspicion of political parties, the “new movements” never sought to exclude the parties and their affiliates from playing a significant role in the Forum. Indeed, the 2004 WSF in Mumbai was organized jointly by an unlikely coalition of social movements and Marxist Leninist parties, a set of actors that are not known for harmonious relations on the domestic front. Perhaps a compelling reason for the modus vivendi of the old and new movements was the realization that they needed one another in the struggle against global capitalism and that the strength of the fledgling global movement lay in a strategy of decentralized networking that rested not on the doctrinal belief that one class was destined to lead the struggle but on the reality of the common marginalization of practically all subordinate classes, strata, and groups under the reign of global capital. What Constitutes “Open Space” The WSF has, however, not been exempt from criticism, even from its own ranks. One in particular appears to have merit. This is the charge that the WSF as an institution is unanchored in actual global political struggles, and this is turning it into an annual festival with limited social impact. There is, in my view, a not insignificant truth to this. Many of the founders of the WSF have interpreted the “open space” concept in a liberal fashion, that is, for the WSF not to explicit endorse any political position or particular struggle, though its constituent groups are free to do so. Others have disagreed, saying the idea of an “open space” should be interpreted in a partisan fashion, as explicitly promoting some views over others and as openly taking sides in key global struggles. In this view, the WSF is under an illusion that it can stand above the fray, and this will lead to its becoming some sort of neutral forum, where discussion will increasingly be isolated from action. The energy of civil society networks derives from their being engaged in political struggles, say proponents of this perspective. The reason that the WSF was so exciting in its early years was because of its affective impact: it provided an opportunity to recreate and reaffirm solidarity against injustice, against war, and for a world that was not subjected to the rule of empire and capital. The WSF’s not taking a stand on the Iraq War, on the Palestine issue, and on the WTO is said to be making it less relevant and less inspiring to many of the networks it had brought together. Caracas versus Nairobi This is why the 6th WSF held in Caracas in January 2006 was so bracing and reinvigorating: it inserted some 50,000 delegates into the storm center of an ongoing struggle against empire, where they mingled with militant Venezuelans, mostly the poor, engaged in a process of social transformation, while observing other Venezuelans, mostly the elite and middle class, engaged in bitter opposition. Caracas was an exhilarating reality check. This is also the reason why the Seventh WSF held in Nairobi was so disappointing, since its politics was so diluted and big business interests linked to the Kenyan ruling elite were so brazen in commercializing it. Even Petrobras, the Brazilian state corporation that is a leading exploiter of the natural resource wealth of Latin America, was busy trumpeting itself as a friend of the Forum. There was a strong sense of going backward rather than forward in Nairobi. The WSF is at a crossroads. Hugo Chavez captured the essence of the conjuncture when he warned delegates in January 2006 about the danger of the WSF becoming simply a forum of ideas with no agenda for action. He told participants that they had no choice but 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.” Developing a strategy of counter-power or counter-hegemony need not mean lapsing back into the old hierarchical and centralized modes of organizing characteristic of the old left. Such a strategy can, in fact, be best advanced through the multilevel and horizontal networking that the movements and organizations represented in the WSF have excelled in advancing their particular struggles. Articulating their struggles in action will mean forging a common strategy while drawing strength from and respecting diversity. After the disappointment that was Nairobi, many long-standing participants in the Forum are asking themselves: Is the WSF still the most appropriate vehicle for the new stage in the struggle of the global justice and peace movement? Or, having fulfilled its historic function of aggregating and linking the diverse counter-movements spawned by global capitalism, is it time for the WSF to fold up its tent and give way to new modes of global organization of resistance and transformation? Chain-Gang Economics: China, the US, and the Global Economy (25 May 2007)
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 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 US 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. The Climate Change Flap at the G8: A Spat Over Detail, Not Substance (5 June 2007)
The climate change section of G8 declaration is really one long and all-too transparent exercise to get around the reality that the only real effective response to climate change is radically reduced economic growth rates and consumption levels, particularly in the North, and in the very near future.
The news in the lead-up to the G8 meeting here in Rostock is the dispute over the proposed declaration on climate change. German Chancellor Angela Merkel wants the rich countries to make a commitment to limit global warming to two degrees centigrade. This will involve cutting greenhouse gas emissions to 50 per cent of their 1990 levels by 2050 and increasing energy efficiency by 50 per cent by 2020. This had drawn predictable opposition from George W. Bush. However, to contain further damage to his battered image, Bush announced his intention of calling a conference of the biggest greenhouse gas polluters to deal with global warming. This has alarmed Merkel, who wants to keep the process securely within the United Nations. G8 It is tempting to compliment Merkel, as many have done, but anybody would look good beside Bush. Indeed, a close look at the G 8 draft declaration that has emerged under the German presidency reveals that this is more a quarrel over detail than over substance. Given the immediate, extreme threat posed by global warming underlined by the most recent report of the International Panel on Climate Change (IPCC), the 50 per cent reduction from1990 levels by 2050 figure is simply too little too late. As the German Green MP Barbel Hohn noted at a Berlin conference on Sunday, the rich countries should be talking about at least an 80 per cent cutback. Growth is Still Sacrosanct The leaked draft reveals why Merkel cannot offer more. The guiding principle of the document's approach to climate change is to "decouple economic growth from energy use." In other words, economic growth remains central and sacrosanct, meaning no cuts are proposed in consumption levels. For instance, instead of calling for a radical cutback in automobile use, the declaration accepts as given that the number of motor vehicles will double to 1.2 billion by 2020, and the challenge is to expand production and accelerate development of non-fossil fuel alternatives for future cars such as synthetic biofuels and C02-free hydrogen. The reason the draft declaration cannot call for deeper cuts in greenhouse gas emissions is that its authors realize that maintaining a growing "efficient and competitive economy" while radically reducing greenhouse gas emissions is not technologically feasible at this point. The solution: lower the targets and try to convince the public that this is simply being realistic. The G8 Approach: Look for Technofixes There are three elements in the declaration's strategy for dealing with climate change. One is increasing energy efficiency-or getting more bang for every unit of energy generated. A second element is diversification of the means of generating energy. Here the draft pays the obligatory nod to renewable energy sources like wind and solar, but the emphasis is on nuclear. Indeed, the G 8 draft goes out of its way to favorably position an energy source long opposed by the environmental movement owing to its proven dangers as a key alternative owing to its allegedly minimal contribution to global warming. Specifically, the draft states that the G 8 leaders "endorse the peaceful use of nuclear energy by those interested countries that are also committed to non-proliferation and international nuclear safety standards...endorse international initiatives to further develop peaceful and carbon-free nuclear energy and to realize the potential for nuclear energy to contribute to the energy needs of developing countries...[and] will examine creative ways for international finance to make nuclear energy more available to developing countries." The third element is technological innovation. Here the document stresses accelerated development of futuristic technologies to address global warming. The paper specifically urges "prioritizing national and international research and technology cooperation...of the different carbon capture technologies and to clarify geotechnical conditions for secure CO2 storage." Indeed, this is a document that is obsessed with technofixes, among them "clean coal, carbon capture and storage, offshore windpower, second generation biofuels, hydrogen..." James Lovelock of Gaia fame may be wrong in his advocacy of nuclear power as a way to deal with climate change but he is right that there will be something like a 40-year gap before such new technologies become really feasible-and by then it will be too late. The climate change section of G8 declaration is really but one long and all-too transparent exercise to get around the reality that the only real effective response to climate change is radically reduced economic growth rates and consumption levels, particularly in the North, and in the very near future. Promoting Investment and TRIPs The other parts of the declaration are even worse. Curiously enough, the declaration begins with a long disquisition on the merits of foreign investment flows that is addressed to developing countries who are warned that "erecting barriers" to capital flows will "result in a loss of prosperity." According to the document, "freedom of investment is a crucial pillar of economic growth, prosperity, and employment." It does not take too long to sense that the G8 is telling particularly China, Brazil, India, and the other dynamic developing economies that their investment regimes need to be more hospitable to western investors. Continuing in this vein, the second part of the document is also addressed to developing countries. Innovation, it says, is central to economic growth, and it can only continue to play this role if there is "strong protection and enforcement of intellectual property rights." The writing bears the fingerprints of the northern pharmaceutical industry and the high tech lobbies. Again, it does not take any special effort to figure out that the G 8 is warning Thailand, India, Brazil, and the African countries to stop using methods like compulsory licensing to enable their populations to gain access to cheap drugs to fight HIV-AIDs and other pandemics, and telling China and the Southeast Asian countries to restrict the diffusion of advanced technologies through tighter enforcement of corporate intellectual property claims. Targeting China, Recycling Africa There is, interestingly, a section entitled "Responsibility for Raw Materials: Transparency and Sustainable Growth." The G8, the document states, seek "to support resource rich countries in their efforts to further expand their resource potentials while promoting sustainable development, human rights, and good governance." Why, one asks, is the G 8 suddenly concerned with "increased transparency'' in the extractive sector when their corporations have so long opposed efforts to control their depredations in the developing world? The answer is transparent in their "call on our trading partners to refrain from restraints on trade and distortion of competition in contravention of WTO rules and to observe market economy principles." China, which has been concluding scores of mineral extraction agreements in Africa, Latin America, and Southeast Asia, is undoubtedly the main target of this section. The document reflects the fear among many rich country governments and corporations that the Chinese might end up shutting them out of many resource-rich areas. As for the G 8 Declaration on Africa, it is mainly a recycling of old unfulfilled promises of raising development aid, along with the usual platitudes about promoting good governance, institutionalizing "market-friendly" development frameworks, more effective and cleaner public financial management, and "improving our response to fragile states." The Financial Times notes that "At the Gleneagles summit in 2005, the G8 committed itself to increasing overall annual aid levels by $50 billion by 2010 and doubling aid to Africa. Official figures show almost all these countries are behind their targets." We usually do not find much to agree with the Times editorial page, but this time it is hard to dispute its judgment that "Nobody expects much from this increasingly outmoded talking shop of the complacent rich." All Fall Down: Ten Years After the Asian Financial Crisis (27 July 2007)
Ten years after the Asian financial cataclysm of 1997, the economies of the Western Pacific Rim are growing, though not at the rates they enjoyed before the crisis. There is no doubt that the region has been indelibly scarred by the crisis, the key indices being greater poverty, inequality, and social destabilization than existed before the crisis. South Korea’s painful labor market reforms, for instance, have produced the quiet desperation that is resulting in one of the highest suicide rates among developed countries.
What global financial architecture? Meantime, despite all the talk about a “new global financial architecture,” there is little in place to regulate the massive movements of capital shooting through global financial networks at cyberspeed. Leave-it-to-the-market enthusiasts tell us not to worry and confidently point out that there’s been no major crisis since the Argentine bankruptcy in 2002, but people who know better, like Wall Street insider Robert Rubin, who served as Bill Clinton’s Secretary of the Treasury, are very worried even as they resist regulation: “Future financial crises are almost surely inevitable and could be even more severe. The markets are getting bigger, information is moving faster, flows are larger, and trade and capital markets have continued to integrate…It’s also important to point out that no one can predict in what area—real estate, emerging markets, or whatever else—the next crisis will occur.” A recent study by the Brookings Institution confirms Rubin’s fears: there have been over a hundred financial crises over the last thirty years. The reign of finance capital The amounts of speculative capital sloshing around in global financial circuits are truly mind-boggling. According to McKinsey Global Institute, the global stock of “core financial assets” stood at $140 trillion in 2005. Traditional commercial banks held a significant amount of global financial assets, but non-bank financial operators, which have become important intermediaries between savers and investors, accounted for $46 trillion in 2005, hedge funds for $1.6 trillion, and private equity investors about $600 billion. These figures and other data on the stupefying rise and scale of global finance capital were presented by economist C.P. Chandrasekhar at the conference “A Decade After: Recovery and Adjustment since the East Asian Crisis” held in Bangkok, the epicenter of the 1997 financial earthquake, on July 12-14. The explosive growth of finance capital is seen by some analysts as stemming from the overcapacity that is plaguing the global economy. This has resulted in a marked slowdown in investment in major parts of the global economy, with notable exceptions like China and the US. With stagnation, capitalists are less motivated to invest in more productive capacity and have more incentive to move their money to speculative activity, that is, to try to squeeze more value out of already created value. This is indicated by the fact that the ratio of global financial assets to annual world output has risen from 109 per cent in 1980 to 316 per cent in 2005, according figures from the McKinsey Instituted cited by Financial Times columnist Martin Wolf. Speculative activity as a mode of profit-making has also outran trade, with the daily volume of foreign exchange transactions in international markets standing at $1.9 trillion daily, compared to an annual value of $9.1 trillion of trade in goods and services -- that is, speculative activity in a single day amounted to 20 per cent of the annual value of global trade! Martin Wolf, one of the cheerleaders of globalization, captures today’s power relations among the fractions of global capital when he writes: “The new financial capitalism represents the triumph of the trader in assets over the long-term producer.” Ten years after the IMF and the US put the blame for the crisis on the alleged non-transparency of financial transactions in Asian countries, opaqueness is the order of the day when it comes to global finance, as the movements and mutations of speculative capital have outrun the capacity of national and multilateral regulatory authorities. In addition to traditional credit, stocks, and bonds, new, esoteric financial instruments such as derivatives have exploded on the financial scene. Derivatives represent the financialization or the buying or selling of risk of an underlying asset without trading the asset itself. Today risk on everything can be financialized and traded, from the pace of carbon trading to the rate of internet broadband connections to weather predictions. Paralleling the emergence of more complex instruments has been the rise of hedge funds and private equity funds as the most dynamic players in the global casino. Hedge funds, said to be key villains in the Asian financial crisis, are even more freewheeling now. Now numbering over 9500, hedge funds take short and long positions on a variety of investments, with a view to minimizing overall risk and maximizing profits. Private equity funds target firms with the end in view of controlling them, restructuring them, then selling them for a profit. Accumulating reserves as a defensive strategy With the absence of global financial regulation to tame the whirlwind of global finance, the Asian countries have taken measures to defend themselves from the volatile global speculators that brought down their economies by pulling $100 billion in panic from the region in a few fateful weeks in July and August 1997. The ASEAN countries have banded with China, South Korea and Japan to form the “ASEAN Plus Three” financial grouping that will enable member countries to swap reserves in the event their currencies are targeted by speculators, as they were in 1997. Even more important, they have built up huge financial reserves by running massive trade surpluses, an objective they have achieved by keeping their currencies undervalued. Between 2001 and 2005, according to Nobel laureate Joseph Stiglitz, eight East Asian countries -- Japan, China, South Korea, Singapore, Malaysia, Thailand, Indonesia, and the Philippines -- more than doubled their total reserves, from roughly $1 trillion to $2.3 trillion. China, the leader of the pack, is estimated to now have over $900 billion in reserves, followed by Japan. This has resulted in a highly paradoxical situation. In a global economy marked by strong tendencies toward stagnation, China as producer and the US as consumer are the twin engines that keep the world economy afloat. Yet keeping US economy going necessitates a constant flow of credit from China and the other East Asian countries to the US to finance middle class consumption of goods from China and Asia. In the meantime, countries that really need the capital from East Asia, such as countries in Africa, get very little of these reserves since they are not considered creditworthy. The demise of the IMF The building up of massive reserves on the part of the Asian countries is directly related to their bitter experience with the International Monetary Fund. Governments recall the crisis as the result of a one-two-three punch delivered by the IMF. First, the Fund, along with the US Treasury Department, pushed them to liberalize their capital accounts, which resulted in the easy exit of foreign capital that brought down their currencies. Then, the IMF provided them with multibillion dollar loans, not to rescue their economies but to rescue foreign creditors. Then, as their economies wobbled, the Fund told them to adopt pro-cyclical expenditure-cutting policies that accelerated their plunge into deep recession. “Never again” became the slogan of a number of the affected governments. The Thaksin government in Thailand declared its “financial independence” from the IMF after paying off its debts in 2003, vowing never to return to the Fund. Indonesia has said it will pay off all its debts to the IMF by 2008. The Philippines has refrained from contracting new loans from the Fund, while Malaysia defied it by imposing capital controls at the height of the crisis. Ironically, then, the IMF has become one of the key victims of the 1997 debacle. This arrogant institution of some 1000 elite economists never recovered from the severe crisis of legitimacy and credibility that overtook it -- a crisis that was deepened by the bankruptcy of its star pupil Argentina in 2002. In 2006, Brazil and Argentina, following Thailand’s example, paid off all their debts to the Fund in order to achieve financial independence. Then Hugo Chavez let the other shoe drop by announcing that Venezuela would leave the IMF and the World Bank. 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 largely funded from the loan repayments of its developing country clients rather than from the contributions of wealthy Northern governments. But with the biggest borrowers refusing to borrow, debt repayments are being to be reduced to a trickle. The upshot of these developments is that payments of charges and interests, according to Fund projections, would 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.” This succession of events has left the IMF with scarcely any influence among the big developing countries and groping for a new role. But the unraveling of the authority and power of the IMF is due not only to the resistance to further Fund intervention by developing countries. The Bush administration itself contributed to eroding the Fund’s search for a meaningful role in global finance when it vetoed a move by the conservative American deputy director of the Fund, Ann Krueger, to create an IMF-supervised “Sovereign Debt Restructuring Mechanism” (SDRM) which would have allowed developing countries a standstill in their debt repayments while negotiating new terms with their creditors. Many developing countries regarded the proposed SDRM weak, and what Washington’s veto showed was that the Bush people were not going to tolerate even the slightest controls on the international operations of US finance institutions. Neoliberalism rejected: Thailand It is not only the IMF but neoliberalism, the dominant ideology of the nineties, that came crashing down in the aftermath of the crisis. Malaysia imposed capital controls and stabilized the economy, allowing it to weather the recession in 1998-2000 better than other afflicted countries. It was, however, Thailand that most dramatically broke with neoliberalism. After three stagnant years under governments faithfully complying with the IMF’s neoliberal prescriptions, the newly elected government of Thaksin Shinawatra propelled countercyclical, demand-stimulating neo-Keynesian policies to get the economy back on track. Rural debt was frozen, government-financed universal health care was instituted, and each village was given one million baht to spend on a special project. Despite dire predictions from neoliberal economists, these measures contributed to propelling the economy into a moderate growth path, one that has since been sustained by export growth stimulated by China’s red-hot economy. The 1997 financial crisis, which saw one million Thais drop below the poverty line in a few short weeks, turned Thais against neoliberal globalization. Even as the government refocused on stimulating domestic demand through income-support for the lower classes in the countryside and the city, popular sentiment went against free trade. On Jan 8, 2006, several thousand Thais tried to storm the building in Chiang Mai, Thailand, where negotiations for an FTA (free trade agreement) were taking place between the US and Thailand. The negotiations were frozen; indeed, Prime Minister Thaksin’s advocacy of the FTA became one of the factors that contributed to his loss of legitimacy and eventually his ouster from power in September 2006. The souring on globalization has been paralleled by the rise in popularity of an economic paradigm promoted by the country’s popular monarch, King Bhumibol. Dubbed “sufficiency economy,” it is an inward-looking strategy that stresses self-reliance at the grassroots and the creation of stronger ties among domestic economic networks. Taking advantage of the King’s popularity, the military-supported government that overthrew Thaksin is said by critics to be invoking the sufficiency economy to legitimize its rule. Whatever the case, globalization is an unpopular word in Thailand today. Neoliberalism imposed: Korea While Thailand broke with neoliberalism and the IMF, Korea followed almost to a “t” the neoliberal reforms forced on the government by the Fund: undertaking radical labor market restructuring, trade liberalization, and investment liberalization. According to sociologist Chang Kyung Sup, “labor shedding was the most crucial measure for rescuing South Korean firms. Even after the breathtaking moments were over, most of the major firms continued to undertake organizational and technological restructuring in an employment minimizing manner, and thereby got reborn as globally competitive exporters.” Regarded as the classic activist developmental state that a report of the US Trade Representative once characterized as the “most difficult place in the world” for US enterprises to do business in, Korea under IMF management has become a much more liberal economy than Japan. Denationalization of Korea’s financial and industrial firms has taken place with “appalling speed,” Chang told the Bangkok conference, with foreign ownership now accounting for over 40 per cent of the shares of Korea’s top financial and industrial conglomerates or chaebol. Samsung now has 47 per cent foreign ownership, Posco, the steel company, over 50 per cent, Hyundai Motors 42 per cent, and LG Electronics 35 per cent. The IMF has touted Korea as a “success story.” However, Koreans hate the Fund and point to the high social costs of the so-called success. Poverty has increased sharply, from three per cent of the population in 1996 to 11.6 per cent in 2006, and the Gini coefficient that measures inequality jumped from 0.27 to 0.34. Social solidarity is unraveling, with emigration, family desertion, and divorce rising alarmingly, along with the skyrocketing suicide rate. “We have one big unhappy society that looks back to the pre-crisis period as the Golden Age,” says Chang. All fall down In retrospect, the Asian financial crisis of 1997 may have brought about the downfall of the IMF, but, as economist Jayati Ghosh pointed out at the Bangkok meeting, it also marked the demise of the East Asian developmental state that had aggressively and carefully managed the integration of the national economy into the world economy so that it would be strengthened, not marginalized by global economic forces. Despite their different pathways from the crisis since 1997, all the economies of East Asia have been irrevocably scarred and weakened. The crisis marked the end of their being at the forefront of development, as models to be emulated. The 21st century that was supposed to be their century slipped away. The cataclysm marked the passing of the torch to China, and indeed, in their weakened state, the smaller East and Southeast Asian economies have now become increasingly dependent on the dynamism imparted by their giant neighbor. The Post-Washington Dissensus (17 September 2007)
"[World] Bank researchers have...done extremely visible work on globalization, on aid effectiveness, and on growth and poverty. In many ways, they have been the leaders in these issues. But the panel had substantial criticisms of the way that the research was used to proselytize on behalf of Bank policy, often without taking a balanced view, and without expressing appropriate skepticism. Internal research that is favorable to Bank positions was given great prominence, and unfavorable research ignored. In these cases, we believe that there was a serious failure of checks and balances that should have separated advocacy and research. The panel endorses the right of the Bank to strongly defend and advocate its own policies. But when the Bank leadership selectively appeals to relatively new and untested research as hard evidence that these preferred policies work, it lends unwarranted confidence to the Bank's prescriptions. Placing fragile selected new research results on a pedestal invites later recrimination that undermines the credibility and usefulness of all Bank research.
(An Evaluation of World Bank Research, 1998-2005)" When two studies last year detailed how the World Bank’s research unit had been systematically manipulating data to show that neoliberal market reforms were promoting growth and reducing poverty in developing countries, development circles were not shocked. They merely saw the devastating findings of a study by American University Professor Robin Broad and a report by Princeton University Professor Angus Deaton and former International Monetary Fund chief economist Ken Rogoff as but the latest episode in the collapse of the so-called Washington Consensus. Taking off from Margaret Thatcher’s famous remark, partisans of this development model during its heyday the 1980’s and early 1990’s claimed that the alternative to the Washington Consensus was TINA -- that is, “There is no alternative.” The Washington Consensus broke with economic strategies involving heavy participation by government and positioned the unfettered market as the driver of development. Imposed on developing countries in the form of “structural adjustment” adjustment programs funded by the International Monetary Fund (IMF) and the World Bank, the Consensus reigned until the late 1990s, when the evidence became clear that on all key criteria of development -- sustained growth, poverty reduction, and reduce inequality -- it simply was not delivering. By the first half of this decade, the Consensus had undergone a process of unraveling, although neoliberalism remained the default mode for many economists and technocrats that had lost confidence in it, simply out of inertia. The former adherents of the Consensus have gone off in divergent directions. Despite frequent references to it, there is, in fact, no “Post-Washington Consensus.” Washington Consensus Plus Mindful of the failures of the Washington Consensus, the IMF and the World Bank are now promoting what Nobel laureate Joseph Stiglitz has disdainfully described as the “Washington Consensus Plus” approach -- that is, that market reforms, while crucial, are not enough. Financial reforms, for instance, must be “sequenced,” if we are to avoid such debacles as the Asian financial crises, which even the Fund now admits was due to massive capital inflows into countries that liberalized without strengthening their “financial infrastructure.” Mindful of the Russian descent into the hell of mafia capitalism in the 1990s, the two institutions also now talk about the importance of accompanying market reform with institutional and legal reforms that can enforce private property and contracts. Other accompaniments of market reforms are “good governance” and policies to “develop human capital” such as female education. This mix of market and institutional reforms were consolidated in the first years of this decade in the so-called Poverty Reduction Strategy Papers (PRSPs). In contrast to what one analyst has described as the “bare knuckle neoliberalism” of structural adjustment programs, PRSPs were not only more liberal in content but in process: They were supposed to be formulated in consultation with “stakeholders,” including civil society organizations. Despite its icing of institutional reforms, the core of the PRSP cake remains the same macroeconomic fundamentals of trade liberalization, deregulation, privatization, and commercialization of land and resources at the heart of structural adjustment programs. And community consultation has been limited to well-resourced, liberal nongovernmental organizations rather than broad-based social movements. PRSPs indeed are simply second generation structural adjustment programs that seek to soften the negative impact of reforms. As IMF Managing Director Rodrigo Rato has admitted, the purpose of institutional reforms is “to make sure that the fruits of growth are widely shared and the poorest people are protected from the costs of adjustment” in order to prevent people from being “tempted to give up on orthodox economic policies and structural reforms.” Neoconservative neoliberalism A second successor to the Washington Consensus is what one might call the “neoconservative neoliberalism.” This approach is essentially the development policy of the Bush administration. The inspiration for this strategy was provided by the famous 2000 report of a congressional commission on multilateral institutions headed by conservative academic Alan Meltzer, which proposed a radical slimming down of the World Bank. It supports -- at least rhetorically -- debt relief for the poorest countries on the ground that they won’t be able to pay the debt and seeks a shift from loans to grants. However, debt relief and grant aid are conditioned on how governments perform in terms of liberalizing their markets and privatizing their industries, land and natural resources. Indeed, the main reason for preferring grants is that, in contrast to loans channeled through the World Bank, grants, as Undersecretary of State John Taylor put it, “can be tied more effectively to performance in a way that longer-term loans simply cannot.” Moreover, grants would allow pro-market reforms and aid policy generally to be more directly coordinated with Washington’s security objectives and with the agenda of US corporations. Compared to the original Washington Consensus, neoconservative neoliberalism is less doctrinaire, but in an illiberal direction, ready as it is to let the market play second fiddle to power. Neostructuralism A third distinctive successor to the Washington Consensus, neostructuralism, moves, in contrast, in a more liberal direction. This is an approach associated with the Economic Commission for Latin America (CEPAL) that produced the structuralist theory of underdevelopment in the 1950s under the leadership of the venerable Argentine economist Raul Prebisch. According to neostructuralism, neoliberal policies have simply been too costly and counterproductive. In fact, there is no trade-off between growth and equity, as the neoliberals claim, but a “synergy.” Less inequality in fact would enhance, not obstruct, economic growth by increasing political and macroeconomic stability, boosting the saving capacity of the poor, raising educational levels, and expanding aggregate demand. The neostructuralists thus propose progressive transfer payment policies that redistribute income in ways that increase the human capital or productivity of the poor, including higher spending for health, education, and housing programs. These are the kinds of programs associated with what the Mexican polemicist Jorge Castaneda has called the “Good Left” in Latin America, meaning the governments of Lula in Brazil and the Concertacion alliance in Chile. Being focused on managing transfer payments to protect and upgrade the capacity of the poor, the neostructuralist approach does not interfere with market forces in production, unlike the policies of the “Bad Left” (meaning Hugo Chavez and friends) that intervene in production, markets, and wage policies. The neostructuralists also embrace globalization, and they say that a key objective of their reforms is to make the country more globally competitive. Because they simultaneously allegedly alleviate income disparities, upgrade the capacity of the poor, and make the work force more globally competitive, neostructuralist reforms are said to hold out the prospect of making globalization more palatable, if not popular. Neostructuralists proudly proclaim that their approach is the “high road” to globalization, in contrast to the “low road” of the neoliberals. The problem is that neostructuralist reforms have led to what one of its most thoughtful critics, Chilean economist Fernando Leiva, calls the “heterodox paradox,” that is, in the quest for systemic or comprehensive competitiveness, the carefully crafted neostructuralist policies have actually led to “the politico-economic consolidation and regulation of neoliberal ideas and policies.” In the end, neostructuralism, like the Washington Consensus Plus approach, does not fundamentally reverse but simply mitigate the poverty and inequality-creating core neoliberal policies. The Lula government’s targeted anti-poverty program may have reduced the ranks of the poorest of the poor but institutionalized neoliberal policies continue to reproduce massive poverty, inequality, and stagnation in Latin America’s biggest economy. Global social democracy The more than residual attachment to neoliberalism of neostructuralism is less evident in the case of what we might call Global Social Democracy, an approach that has become identified with people such as economist Jeffrey Sachs, sociologist David Held, Nobel laureate Joseph Stiglitz, and the British charity Oxfam. Unlike the three previous approaches, this perspective acknowledges the fact that growth and equity may be in conflict, and it ostentatiously places equity above growth. It also fundamentally questions the central thesis of neoliberalism: that for all its problems, trade liberalization is beneficial in the long run. Indeed, Stiglitz says that in the long run, trade liberalization may in fact lead to a situation where “the majority of citizens may be worse off.” Moreover, the global social democrats demand fundamental changes in the institutions and rules of global governance such as the IMF, WTO, and the Trade Related Intellectual Property Rights Agreement (TRIPs). David Held, for instance, calls for the “reform, if not outright abolition, of the TRIPs Agreement,” while Stiglitz says that “rich countries should simply open up their markets to poorer ones, without reciprocity and without economic or political conditionality.” Also, “middle-income countries should open up their markets to the least developed countries, and should be allowed to extend preferences to one another without extending them to the rich countries, so that they need not fear that imports might kill their nascent industries.” The global social democrats even see the anti-globalization movement as an ally, with Sachs thanking it “for exposing the hypocrisies and glaring shortcomings of global governance and for ending years of self-congratulation by the rich and powerful.” But globalization is where the global social democrats draw the line. For like classical neoliberalism, the Washington Consensus Plus school, and neostructuralism, global social democracy sees globalization as necessary and fundamentally sound and, if managed well, as bringing benefits to most. Indeed, the global social democrats see themselves as saving globalization from the neoliberals. This is all the more important because, contrary to an assumption that was gospel truth just a few years ago -- the globalization was irreversible -- the global social democrats worry that contemporary globalization is, in fact, in danger of being reversed, and they hold up as a cautionary tale about the consequences of such a development the turbulent reversal of the first wave of globalization after 1914. To Sachs, Held, and Stiglitz, the benefits of globalization outstrip the costs, and what the world needs is a social democratic or “enlightened globalization” where global market integration proceeds but is one that is managed fairly and is accompanied by a progressive “global social integration.” The aim, as Held puts it, is to “provide the basis for a free, fair, and just world economy,” where the “values of efficient and effective global economic processes…function in a manner commensurate with self-determination, democracy, human rights, and environmental sustainability.” Can globalization be humanized? There are several problems with global social democracy’s attachment to globalization. First of all, it is questionable that the rapid integration of markets and production that is the essence of the globalization can really take place outside a neoliberal framework whose central prescription is the tearing down of tariffs walls and the elimination of investment restrictions. Slowing down and mitigating this inherently destabilizing process, not reversing it, is the global social democratic agenda. That global social democrats have come to terms with the fundamental tendency of global market forces to spawn poverty and inequality is admitted as much by Sachs who sees social democratic globalization as “harnessing [of] the remarkable power of trade and investment while acknowledging and addressing limitations through compensatory collective action.” Secondly, it is likewise questionable that, even if one could conceive of a globalization that takes place in a socially equitable framework, this would, in fact, be desirable. Do people really want to be part of a functionally integrated global economy where the barriers between the national and the international have disappeared? Would they not in fact prefer to be part of economies that are susceptible to local control and are buffered from the vagaries of the international economy? Indeed, the backlash against globalization stems not only from the inequalities and poverty it has created but also the sense of people that they have lost all semblance of control over the economy to impersonal international forces. One of the more resonant themes in the anti-globalization movement is its demand for an end to export-oriented growth and the creation of inwardly-oriented development strategies that are guided by the logic of subsidiarity, where the production of commodities takes place at the local and national level whenever that is possible, thus making the process susceptible to democratic regulation. The larger problem The fundamental problem with all four successors to the Washington Consensus is their failure to root their analysis in the dynamics of capitalism as a mode of production. Thus they fail to see that neoliberal globalization is not a new stage of capitalism but a desperate and unsuccessful effort to overcome the crises of overaccumulation, overproduction, and stagnation that have overtaken the central capitalist economies since the mid-1970s. By breaking the social democratic capital-labor compromise of the post-World War II period and eliminating national barriers to trade and investment, neoliberal economic policies sought to reverse the long-term squeeze on growth and profitability. This “escape to the global” has taken place against the backdrop of a broader conflict-ridden process marked by renewed inter-imperialist competition among the central capitalist powers, the rise of new capitalist centers, environmental destabilization, heightened exploitation of the South -- what David Harvey has called “accumulation by dispossession” -- and rising resistance all around. Globalization has failed to provide capital a escape route from its accumulating crises. With its failure, we are now seeing capitalist elites giving up on it and resorting to nationalist strategies of protection and state-backed competition for global markets and global resources, with the US capitalist class leading the way. This is the context that Jeffrey Sachs and other social democrats fail to appreciate when they advance their utopia: the creation of an “enlightened global capitalism” that would both promote and “humanize” globalization. Late capitalism has an irreversible destructive logic. Instead of engaging in the impossible task of humanizing a failed globalist project, the urgent task facing us is managing the retreat from globalization so that it does not provoke the proliferation of runaway conflicts and destabilizing developments such as those that marked the end of the first wave of globalization in 1914. The Environmental Movement in the Global South (12 October 2007)
The Pivotal Agent in the Fight against Global Warming
Leaders of countries in the South who defend pollution in order to "catch up" with the North do not represent a Majority World view of the environment. Standing against them are burgeoning environmental movements in countries like India and China who are questioning export-led economic models and paving the way for a global alliance against climate change. The developing world’s stance towards the question of the environment has often been equated with the pugnacious comments of former Malaysian Prime Minister Mohamad Mahathir, such as his famous lines at the Rio Conference on the Environment and Development in June 1992: When the rich chopped down their own forests, built their poison-belching factories and scoured the world for cheap resources, the poor said nothing. Indeed they paid for the development of the rich. Now the rich claim a right to regulate the development of the poor countries…As colonies we were exploited. Now as independent nations we are to be equally exploited. Mahathir has been interpreted in the North as speaking for a South that seeks to catch up whatever the cost and where the environmental movement is weak or non-existent. Today, China is seen as the prime exemplar of this Mahathirian obsession with rapid industrialization with minimal regard for the environment. This view of the South’s perspective on the environment is a caricature. In fact, the environmental costs of rapid industrialization are of major concern to significant sectors of the population of developing countries and, in many of them, the environmental movement has been a significant actor. Moreover, there is currently an active discussion in many countries of alternatives to the destabilizing high-growth model. Emergence of the Environmental Movement in the NICs Among the most advanced environmental movements are those in Korea and Taiwan, which were once known as “Newly Industrializing Countries” (NICs). This should not be surprising since the process of rapid industrialization in these two societies from 1965 to 1990 took place with few environmental controls, if any. In Korea, the Han River that flows through Seoul and the Nakdong River flowing through Pusan were so polluted by unchecked dumping of industrial waste that they were close to being classified as biologically dead. Toxic waste dumping reached critical proportions. Seoul achieved the distinction in 1978 of being the city with the highest content of sulphuric dioxide in the air, with high levels being registered as well in Inchon, Pusan, Ulsan, Masan, Anyang, and Changweon. In Taiwan, high-speed industrialization had its own particular hellish contours. Taiwan’s formula for balanced growth was to prevent industrial concentration and encourage manufacturers to set up shop in the countryside. The result was a substantial number of the island’s 90,000 hectares locating on rice fields, along waterways, and beside residences. With three factories per square mile, Taiwan’s rate of industrial density was 75 times that of the US. One result was that 20 per cent of farm land was polluted by industrial waste water and 30 per cent of rice grown on the island was contaminated with heavy metals, including mercury, arsenic, and cadmium. In both societies, farmers, workers, and the environment bore the costs of high-speed industrialization. Both societies, it is not surprising, saw the emergence of an environmental movement that was spontaneous, that drew participants from different classes, that saw environmental demands linked with issues of employment, occupational health, and agricultural crisis, and that was quite militant. Direct action became a weapon of choice because, as Michael Hsiao pointed out: People have learned that protesting can bring results; most of the actions for which we could find out the results had achieved their objectives. The polluting factories were either forced to make immediate improvement of the conditions or pay compensation to the victims. Some factories were even forced to shut down or move to another location. A few preventive actions have even succeeded in forcing prospective plants to withdraw from their planned construction. The environmental movements in both societies were able to force government to come out with restrictive new rules on toxics, industrial waste, and air pollution. Ironically, however, these successful cases of citizen action created a new problem, which was the migration of polluting industries from Taiwan and Korea to China and Southeast Asia. Along with Japanese firms, Korean and Taiwanese enterprises went to Southeast Asia and China mainly for two reasons: cheap labor and lax environmental laws. Environmental Struggles in Southeast Asia Unlike in Korea and Taiwan, environmental movements already existed in a number of the Southeast Asian countries before the period of rapid industrialization, which in their case occurred in the mid-eighties to the mid-nineties. These movements had emerged in the seventies and eighties in struggles against nuclear power, as in the Philippines; against big hydroelectric dams, as in Thailand, Indonesia, and the Philippines; and against deforestation and marine pollution, as in Thailand and the Philippines. These were epic battles, like the struggle against the Chico River Dam in the northern Philippines and the fight against the Pak Mun Dam in the northeast of Thailand, which forced the World Bank to withdraw its planned support for giant hydroelectric projects, an outcome that, as we shall see later on, also occurred in struggle against the Narmada Dam in India. The fight against industrial associated partly with foreign firms seeking to escape strict environmental regulations at home was a case of a new front being opened up in an ongoing struggle to save the environment. Perhaps even more than in Northeast Asia, the environmental question in Southeast Asia was an issue that involved the masses and went beyond being a middle-class issue. In the Chico struggle, the opposition were indigenous people, while in the fight against the Pak Mun Dam, it was small farmers and fisherfolk. The environmental issue was also more coherently integrated into an overarching critique. In the case of the Philippines, for instance, deforestation was seen as an inevitable consequence of a strategy of export-oriented growth imposed by World Bank-International Monetary Fund structural adjustment programs that sought to pay off the country’s massive foreign debt with the dollars gained from exporting the country’s timber and other natural resources and manufactures produced by cheap labor. The middle class, workers, the urban poor, and environmentalists were thrust into a natural alliance. Meantime, transnational capital, local monopoly capital, and the central government were cast in the role of being an anti-environmental axis. The environmental movements in Southeast Asia played a vital role not only in scuttling projects like the Bataan nuclear plant but in ousting the dictatorships that reigned there in the seventies and eighties. Indeed, because the environment was not perceived by authoritarian regimes as “political,” organizing around environmental and public health issues was not initially proscribed. Thus environmental struggles became an issue around which the anti-dictatorship movement could organize and reach new people. Environmental destruction became one more graphic example of a regime’s irresponsibility. In Indonesia, for example, the environmental organization WALHI went so far as to file a lawsuit for pollution and environmental destruction against six government bodies, including the Minister of the Environment and Population. By the time the dictatorships wised up to what was happening, it was often too late: environmentalism and anti-fascism fed on one another. Environmental Protests in China We might be seeing the same process in China today. The environmental crisis in China is very serious. For example, the ground water table of the North China plain is dropping by 1.5 meters (5 feet) per year. This region produces 40 percent of China's grain. As environmentalist Dale Wen remarks, “One cannot help wonder about how China will be fed once the ground aquifer is depleted”. Water pollution and water scarcity; soil pollution, soil degradation and desertification; global warming and the coming energy crisis—these are all byproducts of China’s high-speed industrialization and massively expanded consumption. Most of the environmental destabilization in China is produced by local enterprises and massive state projects such as the Three Gorges Dams, but the contribution of foreign investors is not insignificant. Taking advantage of very lax implementation of environmental laws in China, many western TNCs have relocated their most polluting factories into the country and have exacerbated or even created many environmental problems. Wen notes that the Pearl River Delta and Yangtze River Delta, the two Special Economic Zones where most TNC subsidiaries are located, are the most seriously affected by heavy metal and POPs (persistent organic pollutants) pollution. Global warming is not a distant threat. The first comprehensive study of the impact of the sea level rise of global warming by Gordon McGranahan, Deborah Balk, and Bridget Anderson puts China as the country in Asia most threatened by the sea level rise of up to 10 meters over the next century. 144 million of China’s population live in low-elevation coastal zones, and this figure is likely to increase owing to the export-oriented industrialization strategies pursued by the government, which has involved the creation of numerous special economic zones. “From an environmental perspective,” the study warns, “there is a double disadvantage to excessive (and potentially rapid) coastal development. First, uncontrolled coastal development is likely to damage sensitive and important ecosystems and other resources. Second, coastal settlement, particularly in the lowlands, is likely to expose residents to seaward hazards such as sea level rise and tropical storms, both of which are likely to become more serious with climate change”. The recent spate of super-typhoons descending on the Asian mainland from the Western Pacific underlines the gravity of this observation. In terms of public health, the rural health infrastructure has practically collapsed, according to Dale Wen. The system has been privatized with the introduction of a “fee for service” system that is one component of the neoliberal reform program. One result is the resurgence of diseases that had been brought under control, like tuberculosis and schistosomiasis. Cuba, in contrast, has won plaudits for its rural health care system, which is ironic, says Wen, given that the Cuban system was based on the Maoist era’s “barefoot doctor” system. Another big public health issue has been food safety. The combination of the industrialization of food production and the lengthening of the food chain from production to consumption is strongly suspected to be the cause of bird flu, which has migrated from China to other countries. The government has become an unreliable actor in dealing with new diseases such as bird flu and SARS, prone as it is to engage in minimizing the threat if not promoting a cover-up, as it did in the case of SARS. As in Taiwan and Korea 15 years earlier, we see unrestrained export-oriented industrialization bringing together low-wage migrant labor, farming communities whose lands are being grabbed or ruined environmentally, environmentalists, and the proponents of a major change in political economy called the “New Left.” Environment-related riots, protests and disputes in China increased by 30% in 2005 to more than 50,000, as pollution-related unrest has become “a contagious source of instability in the country,” as one report put it. Indeed, a great many of recorded protests fused environmental, land-loss, income, and political issues. From 8700 in 1995, what the Ministry of Public Security calls "mass group incidents" have grown to 87,000 in 2005, most of them in the countryside. Moreover, the incidents are growing in average size from 10 or fewer persons in the mid-1990s to 52 people per incident in 2004. Notable were the April 2005 riots in Huashui, where an estimated 10,000 police officers clashed with desperate villagers who succeeded in repelling strong vested interests polluting their lands. As in Taiwan, people have discovered the effectiveness of direct action in rural China. "Without the riot, nothing would have changed," said Wang Xiaofang, a 43-year-old farmer. "People here finally reached their breaking point". As in Southeast Asia, struggles around the environment and public health may be leading to a more comprehensive political consciousness. The strength of China’s environmental movement must not be exaggerated. Indeed, its failures often outnumber its successes. Alliances are often spontaneous and do not go beyond the local level. What Dale Wen calls a national “red green” coalition for change remains a potential force, one that is waiting to be constructed. Nevertheless, the environmental movement is no longer a marginal actor and it is definitely something that the state and big capital have to deal with. Indeed, the ferment in the countryside is a key factor that is said to have made the current Chinese leadership to be more open to suggestions from the so-called “New Left” for a change of course in economic policy from rapid export-oriented growth to a more sustainable and slower domestic-demand led growth. The Environmental Movement in India As in China, the environment and public health have been sites of struggle in India. Over the last 25 years, the movement for the environment and public health has exploded in that country. Indeed, one can say that this movement has become one of the forces that is deepening Indian democracy. Environmental and public health struggles go way back, but perhaps the single biggest event that propelled the movement to becoming a critical mass was the Bhopal gas leakage on December 3, 1984, which released 40 tons of methyl isocynate, killing 3000 people outright and ultimately causing 15,000 to 20,000 deaths. The struggle for just compensation for the Bhopal victims continues till this day. There is today a proliferation of struggles in this vast country. There is the national campaign against Coca Cola and Pepsi Cola plants for drawing ground water and contaminating fields with sludge. There are local struggles against intensive aquaculture farms in Tamil Nadu, Orissa, and other coastal states. There is a non-violent but determined campaign by farmers against GMO’s, which has involved the uprooting and burning of fields planted to genetically engineered rice. In public health, the key issue has been the tremendous pressure from foreign pharmaceutical companies to get India to adopt patent legislation that would be consistent with the WTO’s Trade Related Intellectual Property Rights Agreement (TRIPs). The great fear is that this would affect the ability of the country’s pharmaceutical industry to produce cheap generic drugs for both the home market and for export. With between 2 million and 3.6 million people living with HIV—putting India behind South Africa and Nigeria in numbers living with HIV—and with so many African countries with large HIV-infected populations depending on cheap Indian drug imports, to comply or not to comply with TRIPs has become a life-and-death issue. Two years ago, key amendments pushed by progressive forces were incorporated into the Indian Patents Act, resulting in what one influential journal described as “a relatively loose patents regime for now”. One key amendment was that Indian companies could continue to produce and market drugs they were producing before January 1, 2005, after paying a “reasonable royalty” to the patent holder. They were banned from doing this under the previous patent regime. Another important amendment made the process of exporting drugs to another country less cumbersome by eliminating the need for a compulsory license from that country. These may seem to be minor gains, but in the byzantine world of TRIPs, the devil is in the detail. It would be worthwhile, at this point, to look closely at what has become the most influential of India’s mass-based environmental movement: the anti-dam movement. Dams often represented the modernist vision that guided many Third World governments in their struggle to catch up with the West in the post-War period. The technological blueprint for power development for the post-World War II period was that of creating a limited number of power generators--giant dams, coal or oil-powered plants, or nuclear plants--at strategic points which would generate electricity that would be distributed to every nook and cranny of the country. Traditional or local sources of power that allowed some degree of self-sufficiency were considered backward. If you were not hooked up to a central grid, you were backward. Centralized electrification with its big dams, big coal-fired plants, and nuclear plants became the rage. Indeed, there was an almost religious fervor about this vision among leaders and technocrats who defined their life's work as "missionary electrification" or the connection of the most distant village to the central grid. Jawaharlal Nehru, the dominant figure in post-World War II India, called dams the "temples of modern India," a statement that, as Indian author Arundhati Roy points out, made its way into primary school textbooks in every Indian language. Big dams have become an article of faith inextricably linked with nationalism. “To question their utility amounts almost to sedition". In any event, in the name of missionary electrification, India's technocrats, Roy observes in her brilliant essay, The Cost of Living, not only built "new dams and irrigation schemes...[but also] took control of small, traditional water-harvesting systems that had been managed for thousands of years and allowed them to atrophy". Here Roy expresses an essential truth: that centralized electrification preempted the development of alternative power-systems that could have been more decentralized, more people-oriented, more environmentally benign, and less capital intensive. The key forces behind central electrification were powerful local coalitions of power technocrats, big business, and urban-industrial elites. Despite the rhetoric about "rural electrification," centralized electrification was essentially biased toward the city and industry. Essentially, especially in the case of dams, it involved expending the natural capital of the countryside and the forests to subsidize the growth urban-based industry. Industry was the future. Industry was what really added value. Industry was synonymous with national power. Agriculture was the past. While these interests benefited, others paid the costs. Specifically, it was the rural areas and the environment that absorbed the costs of centralized electrification. Tremendous crimes have been committed in the name of power generation and irrigation, says Roy, but these were hidden because governments never recorded these costs. In India, Roy calculates that large dams have displaced about 33 million people in the last 50 years, about 60 per cent of them being either untouchables or indigenous peoples India, in fact, does not have a national resettlement policy for those displaced by dams. The costs to the environment have been tremendous. Roy points out that "the evidence against Big Dams is mounting alarmingly--irrigation disasters, dam-induced floods, the fact that there are more drought prone and flood prone areas today than there were in 1947. The fact is that not a single river in the plains has potable water". Things changed when the government announced its plans to dam the mighty Narmada River in the late seventies. Instead of quietly accepting the World Bank-backed enterprise, the affected people mounted a resistance that continues to this day. The Narmada Bachao Andolan movement led by Medha Patkar at the Sardar Sarovar Dam and Alok Aggarwal and Silvi at the Maheshwar Dam drew support from all over India and internationally. The resistance of the people, most of them adivasis or indigenous people, succeeded in getting the World Bank to stop funding the project and saddling it with delays, making the completion of the dam uncertain. The Supreme Court, for instance, ordered rehabilitation for all those affected by the Sardar Sarovar Dam's construction, and in March 2005 ruled to halt construction on the dam until this had happened. Construction of the dam has now been halted at 110.6 meters, a figure that is much higher than the 88 metres proposed by the activists, and lower than the 130 meters that the dam is eventually supposed to reach. It is unclear at this point what the final outcome of the project will be or when it will be completed, though the entire project is meant to be finished by 2025. The fate of the Maheshwar Dam is similarly unclear. Equally important was the broader political impact of the Narmada struggle. It proved to be the cutting edge of the social movements that have deepened India’s democracy and transformed the political scene. The state bureaucracy and political parties must now listen to these movements or risk opposition or, in the case of parties, being thrown out of power. Social movements in the rural areas played a key role in stirring up the mass consciousness that led to the defeat in 2004 of the neoliberal coalition led by the Hindu chauvinist BJP (Bharatiya Janata Party) that had campaigned on the pro-globalization slogan “India Shining.” While its successor, the Congress Party-led coalition, has turned its back on the rural protest that led to its election and followed the same anti-agriculture and pro-globalization policies of the BJP, it risks provoking an even greater backlash in the near future. The environmental movement faces its biggest challenge today: global warming. As in China, the threat is not distant either in space or in time. The Mumbai deluge of 2005 came at a year of excessive rainfall that would normally occur once in a hundred years. The Himalayan glaciers have been retreating, with one of the largest of them, Gangotri, receding at what one journal described as “an alarming rate, influencing the stream run-off of Himalayan rivers”. Six per cent, or 63.2 million, of India’s population live in low elevation coastal zones that are vulnerable to sea-level rise. On the Gujarat coast, sea level rise is displacing villages, as it is many more places along India’s 7,500 km-long coastline. One report claims that in the “Sunderbans, two islands have already vanished from the map, displacing 7000 people. Twelve more islands are likely to go under owing to an annual 3.14 sea level rise, which will make 70,000 refugees. Five villages in Orissa’s Bhitarkanika National Park, famous for the mass nesting of Olive Ridley turtles, have been submerged, and 18 others are likely to go under”. As in China, the challenge lies in building up a mass movement that might be unpopular not only with the elite but also with sections of the urban-based middle class sectors that have been the main beneficiaries of the high-growth economic strategy that has been pursued since the early 1990’s. National Elites and Third Worldism The reason for tracing the evolution of a mass-based environmental movement in East Asia and India is to counter the image that the Asian masses are inert elements that uncritically accept the environmentally damaging high-growth export-oriented industrialization models promoted by their governing elites. It is increasingly clear to ordinary people throughout Asia that the model has wrecked agriculture, widened income inequalities, led to increased poverty after the Asian financial crises, and wreaked environmental damage everywhere. It is the national elites that spout the ultra-Third Worldist line that the South has yet to fulfill its quota of polluting the world while North has exceeded its quota. It is they who call for an exemption of the big rapidly industrializing countries from mandatory limits on the emission of greenhouse gases under a new Kyoto Protocol. When the Bush administration says it will not respect the Kyoto Protocol because it does not bind China and India, and the Chinese and Indian governments say they will not tolerate curbs on their greenhouse gas emissions because the US has not ratified Kyoto, they are in fact playing out an unholy alliance to allow their economic elites to continue to evade their environmental responsibilities and free-ride on the rest of the world. This alliance has now become formalized in the so-called “Asia Pacific Partnership” created last year by the US, China, India, Japan, Korea, and the United States as a rival to the United Nations-negotiated Kyoto Protocol. Having recently recruited Canada, which is now led by Bush clone Stephen Harper, this grouping seeks voluntary, as opposed mandatory curbs on greenhouse gas emissions. This is a dangerous band of states whose agenda is nothing else than to spew carbon as they damn well please, which is what voluntary targets are all about. The Need for Global Adjustment There is no doubt that the burden of adjustment to global warming will fall on the North, and that this adjustment will have to be made in the next 10 to 15 years, and that the adjustment needed might need to be much greater than the 50 per cent reduction from the 1990’s level by 2050 that is being promoted by the G 8. In the eyes of some experts, what might be required is in the order of 100 or 150 per cent reduction from 1990 levels. However, the South will also have to adjust, proportionately less than the North but also rather stringently. The South’s adjustment will not take place without the North taking the lead. But it will also not take place unless its leaders junk the export-oriented, high-growth paradigm promoted by the World Bank and most economists to which its elites and many middle strata are addicted. People in the South are open to an alternative to a model of growth that has failed both the environment and society. For instance, in Thailand, a country devastated by the Asian financial crisis and wracked by environmental problems, globalization and export-oriented growth are now bad words. To the consternation of the Economist, Thais are more and more receptive to the idea of a “sufficiency economy” promoted by popular monarch King Bhumibol, which is an inward-looking strategy that stresses self-reliance at the grassroots and the creation of stronger ties among domestic economic networks, along with “moderately working with nature”. Thailand may be an exception in terms of the leadership role for a more sustainable path played by an elite, and even there the commitment of that elite to an alternative path is questioned by many. What is clear is that in most other places in the South, one cannot depend on the elites and some sections of the middle class to decisively change course. At best, they will procrastinate. The fight against global warming will need to be propelled mainly by an alliance between progressive civil society in the North and mass-based citizens’ movements in the South. As in North, the environmental movements in the South have seen their ebbs and flows. It appears that, as with all social movements, it takes a particular conjunction of circumstances to bring an environmental movement to life after being quiescent for some time or to transform diverse local struggles into one nationwide movement. The challenge facing activists in the global North and the global South is to discover or bring about those circumstances that will trigger the formation of a global mass movement that will decisively confront the most crucial challenge of our times. |