Tuesday, May 24, 2005

Perpetual Reconstruction

Many of us went into a state of shock when we learned that our President had appointed Paul Wolfowitz as head of the World Bank. This was the guy who so ineptly designed the Iraqi project, i.e. the war and the reconstruction. He obviously was unfit to head up the World Bank. But was he? There were those who felt that Iraq had actually prepared him for his new job. As many of us know Wolfowitz was doing in Iraq what the World Bank had been doing in every country in the world torn by war or natural disaster, e.g. tsunami).Formerly the UN would step in after a conflict ended to provide emergency aid and re-build housing. But since Iraq and prior it was discovered that reconstruction was a lucrative business and that it was a profit making venture to attempt to ameliorate poverty through reconstruction. But why is reconstruction so inept? It is a fact that after the tsunami in Aceh 3 months later nothing had been done to re-build. It is also true that the water plants in Iraq that Bechtel had re-built at huge profit are breaking down. Foreign contractors in Afghanistan are corrupt and are wasting aid money that was provided. Unfortunately re-building is not its principle purpose. What the World Bank wants is to re-construct the society or in effect to reengineer the economy by privatizing state industry. The tsunami is a good example of the use of catastrophe to “re-shape” the society. In Sri Lanka corporate globalization is taking control of the sea coast and giving it over to foreign corporations with the help of the U.S. Marines. Condoleezza Rice back in January considered the tsunami as “a wonderful opportunity” that “has paid great dividends for us”. Using tragedy for political advantage was for some people appalling.

Linked to Wolfowitz and the World Bank is an organization created by the White House called the Office of the Coordination for Reconstruction and Stabilization and run by the former Ambassador to the Ukraine, Carlos Pascual. The purpose of this organization is to make plans for reconstruction prior to conflict. After the conflict it would be possible to handle “three full scale reconstruction operations” simultaneously for 5 to 7 years. No longer would it be necessary to wait for the conflict to end to make plans. There are 25 countries on the list for monitoring that are not yet in conflict. Pascual’s organization has teams ready to mobilize reconstruction after the conflict ends. Private companies and non-governmental organizations (NGO’s) will have prior contracts to re-build the country at a huge profit. The idea is to change the economy of the nation from a state run economy to a market-oriented one, i.e. privatization. According to Pascual re-building could mean “tearing apart the old”. One East Indian observer commented that we formerly had “vulgar colonialism” but now it is a more “sophisticated colonialism” and we call it “reconstruction”. There are more and more regions world wide now under reconstruction through the efforts of the World Bank and the International Monetary Fund (IMF) but the actual re-building is done by private consulting firms, engineering companies, NGO’s and other financial organizations. In 1998 16% of the World Bank loans were provided for reconstruction in “post-conflict” countries. Now this year it is up to 20-25%, an 800% increase since 1980.One company that has a so-called “public service division” reports that its profits in 2002 increased by $342 million, a 35% margin.

There are several advantages to the World Bank when dealing in post-conflict or post-catastrophe areas. The situation is usually so bad that the country will agree to any thing to improve its plight. So they do whatever the World Bank demands. They will agree to huge debt and major changes in policy. The population is without housing or food and therefore cannot effectively prevent privatization. The country is considered too unstable to manage money and therefore the World Bank puts the aid money in a trust fund to be managed by the bank. The bank allows the government a certain amount of money periodically as long as they are acting responsibly. Thus public service jobs are gradually eliminated and aid money is given to the “private foreign consultants” that government is required to hire. These people earn many times more than any public service employee, if there are any left.

Linked to this plan of reconstruction is the President and his national security advisers’ plan to control intelligence analysis and covert operations. The program will first be directed toward the control of Iran. The CIA will have less independent responsibility and will only carry out policies as dictated by Bush and Cheney. The Bush administration does not consider the Iraq operation a failure and intends to continue its attempt to “democratize”, i.e. privatize the Middle East. The re-election of Bush indicates support for his position by the American people. The neoconservatives’ agenda has been justified. Rumsfeld told his Jt. Chiefs of Staff that the American people support the Pentagon’s program and that America will remain in Iraq.

Iraq is not the only campaign. The future looks toward many more like campaigns and the next one will be Iran. Rumsfeld will be responsible for any future operations. He will expand the war on terrorism and the Pentagon will run the program. The President has authorized covert operations in the Middle East and Asian countries using secret commando groups and Special Forces. Giving Rumsfeld control over these operations also allows him to run them “off the books”. This means there will be no “legal restrictions” as there had been when the CIA was in control. CIA covert operations formerly required reporting all such activities to Congress. Now under Rumsfeld there is no necessity to report to Congress. It will be called “black reconnaissance” instead of “covert ops”. Not even the upper level military commanders will be told.

Already the administration since last summer has conducted secret reconnaissance missions in Iran. They are collecting intelligence on “nuclear, chemical and missile sites”. The purpose is to identify at least 3 dozen sites that we might destroy by bombing strikes or commando raids. The neocon civilians in the Pentagon would like to destroy as much of Iran’s military installations as possible by actually invading the country. The civilians do not believe that diplomatic negotiations will prove effective and that Iran will only respond to the threat of military action. Haven’t we heard this before? However in the event that we attacked we would not know when or how a counter-attack might occur. They do have long-range missiles. Also once having been attacked they would certainly repudiate the Non-Proliferation Treaty and future inspections would halt. Thus the treaty would become a dead issue world-wide.

On the one hand, the President as usual is dissembling by talking diplomacy as the road to nuclear disarmament in Iran, while the Pentagon insists that negotiations will not achieve that goal. They want to attack Iran in some limited way in the hope that the religious leadership will fall. Within Iran there is a conflict between the secular leaders and the religious fundamentalists, i.e. the mullahs. Rumsfeld and Wolfowitz believe that if the mullahs are severely weakened the regime will topple. This is slightly reminiscent of their prediction that Iraq would fall after two weeks of fighting. On the other hand there are those who maintain that attacking Iran’s nuclear facilities will not produce a “popular uprising” because these sites are extremely popular with both the secular and religious population. It is essential to their desire to be a modern technological nation. One observer believes that such an attack will produce a “backlash” against America and strengthen the present rulers.

Rumsfeld has worked 2 years to convince the President that military commandos be used for covert operations. The President finally conceded that the Pentagon should have control over the CIA’s para-military units that have been operating covertly around the world for many years. Furthermore, two former CIA covert officers announced recently that the Pentagon had been finally permitted to act in certain countries where there was a terrorist threat. One former CIA operative does not believe that the military can handle this type of assignment. To be successful requires “finesse and sensibility’, which the military lacks. The CIA was much better equipped for this role. Even the special operations officers aren’t sure about its success. Furthermore, Congress isn’t being told much about these plans, and there are serious legal questions regarding not informing Congress about covert operations. Congress has always been concerned about the military getting us into trouble politically when they were not informed beforehand.

Under the new Rumsfeld rules the Special Forces will go into action in certain countries looking for terrorist organizations. It is mindful of the “right wing execution squads” of El Salvador. We organized and financed them. They were roving gangs that murdered and tortured members of anti-American populist groups. We want to repeat this kind of operation but we are not going to tell Congress. The point of this kind of activity is to eliminate so-called terrorist groups and once having done so seize control of the government by putting down any possibility of a populist uprising. We are doing it to some degree in Afghanistan, we are doing it more successfully in Haiti and we are still trying to do it in Iraq, but not so successfully.

It is Rumsfeld’s intention to maintain the efficiency of Pentagon intelligence and devitalize the CIA on the basis that the CIA did not provide useful intelligence in the Middle East. Human intelligence on the ground was severely lacking in the CIA, at least so the Pentagon claimed. In addition the White House put pressure on certain CIA analysts to support the political position of the Administration. A political purge of the Directorate of Intelligence (CIA) took place after Tenet left. A number of senior analysts quietly resigned who were at loggerheads with the Administration. Rumsfeld under a new reform bill passed by Congress will be able to end-run around the CIA and will not have to refer anything through government intelligence. He does not have to tell anyone what he is doing.


References:


Hersh, Seymour. The Coming Wars. New Yorker. Jan. 19, 2005.
Klein, Naomi. The Rise of Disaster Capitalism. The Nation. April 19, 2005

The New Imperial Age

Journalists today are writing tomes about the American Empire. In fact the Bush administration policies seem clearly to be moving relentlessly in the direction of a global empire. And serious journalists are writing columns and books in support of those policies. For example, Thomas Friedman, who is the N.Y. Times correspondent for the State Dept. has stated that “the U.S. had to make clear to Iraq and the U.S. allies that…America will use force without negotiation, hesitation or U.N. approval. And further he has written that “the hidden hand of the market will never work without a hidden fist.” Major corporations cannot profit globally without the safety of the U.S. military. Corporate globalization and the free market economy as applied to the third world countries, as Arundhati Roy, India’s dissident political essayist has stated, is “the perfect vehicle for endless expansion of American Imperialism.”

Friedman, although a three- time winner of the Pulitzer prize for journalism, is considered by some critics as a “blowhard”. Nevertheless, he does have the ear of the administration and he believes that Iraq will not be controlled without a strong leader with an iron fist and the presence of a strong military force. He believed that the invasion of Iraq was the correct policy to depose Saddam but he tended to ignore the administration lies about WMD and the supposed Iraqi connection to Al Qaeda. Of course, Saddam used the iron fist to prevent chaos, but he was no longer “our guy”. We could not control him. And we require obedience from third world leaders.

In any case, there has been developing for some time a new world government that answers to the needs and is controlled by “an international corporate ruling class”. It is an actual world government based on international trade agreements, viz. NAFTA and GATT. And these agreements are linked to the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO). The purpose is “to centralize power in a world economic system” and to make sure that the world’s population plays no role in decision making. The planning of policy is raised to such a level that the ordinary citizen has no idea what decisions are being made and if he did would not be able to understand or influence them in anyway. In short, a country could have all the democracy it wanted, but if the people have no say in the decision making, they are no threat to the corporate elite. Clearly that is a democracy that is not real because in that system the press only pretends to be free and the criminal justice system only pretends to administer justice. The reality is a corrupt government that uses a paramilitary force to suppress populist uprisings.

In the last decade what has corporate globalization produced? The total income of the world has increased by 2.5% annually. That’s the good news but the bad news is that at the same time the total poor in the world has increased by 100 million. And the “War Against Terror” is playing the role of increasing the disparity. Corporate globalization and widespread privatization is forcing people off their land and increasing joblessness. As the poor get poorer popular unrest spreads throughout the third world. In order to control extensive dissent these movements are tagged as “terrorists” and are suppressed by brutal paramilitary forces financed by the power elite, viz. the U.S. and the huge trans- national corporations. It is in this way that democracy to the extent that it exists at all is totally subverted.

Now what does the World Bank and the IMF offer third world countries in distress that in the end destroys their economy and hands over their national resources to the mega-corporations of the world? The philosophy of the IMF World Bank is based in what has come to be known as neo-liberalism. This political economic framework is founded on a free market that promotes and supports private enterprise, prizes entrepreneurial aptitude
and discourages bureaucratic government through widespread economic deregulation. In the end private investors control the economic and social life of a country in order to achieve maximum profit.

So let’s look at the African country of Tanzania to see how the IMF World Bank puts into practice the neo-liberal policies. Tanzania today is on the verge of losing 1.3 million people to AIDS. There is no money to treat this dying population despite IMF control for the last 15 years. In order for a third world country to get a loan the World Bank requires the country to meet certain requirements. According to Greg Palast, the first requirement placed on Tanzania was to charge for hospital appointments that were formerly free. As a result, the number of patients treated in three major hospitals dropped by 53%. Next it required that the schools charge attendance fees and the attendance thus dropped from 80% to 66%. So far so good, is the situation improving? Then the IMF World Bank required a total of 157 additional changes and Tanzania had no option but to accept, otherwise no loan. This took place in 1985 when the country was suffering under a socialist regime characterized by deep poverty and disease. So then the IMF went on to reduce trade barriers, cut subsidies and sell the nationalized industries. The net result after 15 years was a GDP (Gross Domestic Product) that dropped from $309 to $210 per capita, poverty rose to 51% of the total population and literacy decreased. According to Greg Palast, the World Bank did not understand why it failed. After so many years of Socialism the population still felt that the state should provide social services.

The West assured the third world countries that through the efforts of the IMF they would enjoy unparalleled prosperity. In many cases Globalization and the free market has instead increased the number of poor. Colonial independence rather than improving the plight of the African has, as Joseph Stiglitz, the former chief economist of the World Bank, points out, plunged the continent “deeper into misery” as incomes fell to less than a dollar a day. In those countries which were converting from communism to a market economy, the latter proved considerably worse than was predicted. Stiglitz compares Russia to China in 1990 when China’s GDP was 60% of Russia’s and by 2000 that number had reversed. China’s poverty had decreased while Russia’s had increased. And China’s economy was not controlled by any international institution as was Russia’s.

Again hypocrisy plays a big role in the application of the free market economy. The West insists that the third world drop its trade barriers while the West refuses to drop theirs. Thus the poor countries cannot export their agricultural products and are therefore robbed of their export income necessary to their survival. The U.S. was primarily guilty of this disgraceful offense. This obtuse policy was also costly to the American consumer in higher prices and to the taxpayer who was paying for expensive agricultural subsidies. The latter made it impossible for the poor countries to compete. It was impossible to change this policy because the power elite had control. The West obviously gains most of the benefits from globalization. In addition the “terms of trade” decided on in the trade agreement of 1995 resulted in lowering prices the poorest countries received in relation to “what they paid for their imports.” This in effect made the poorer countries poorer.

The World Bank offers every poor country that comes with a begging bowl in hand a document called “a restructuring agreement”. A careful analysis is supposedly done of the economic problems of the country and then a plan is designed to deal with them. The issue is that the plan as outlined is all smoke and mirrors because the investigators rarely leave their hotel to interact with the people. It helps to understand poverty when you re forced to face it in close proximity. As a result, the major weakness in the World Bank plan is that the same plan is handed out to every finance minister who appears at the door begging for aid.

It is usually a four-step program as described by Palast and Stiglitz. The first step is privatization. This means that the leaders of the country are forced to sell off their nationalized industries, e.g. water and electricity to foreign investors mainly the U.S. corporations at discount prices. In essence corrupt national leaders are bribed into selling at less then the value of the industry for a piece of the pie. Often a 10% commission went directly into a Swiss bank account. The worst case occurred in Russia where “industrial assets” were sold at a price that reduced domestic production by one half. The final result was a severe economic depression and starvation.

The second step is called Capital Market Liberalization. The deregulation of the capital market laws allows money to flow in and out of a country freely without taxation. The problem, however, was in certain countries capital just kept flowing out, e.g. Brazil. According to Stiglitz, this is “hot money” that enters the country for speculation in real estate or currency. Then if there is trouble that will jeopardize the funds, it immediately is pulled out. The reserves of a country can under these conditions be totally depleted. So then the IMF in order to attract that capital back into the country requires that the nation raise interest rates astronomically, viz. anywhere from 30% to as high as 80%. In Latin-America, for example, the higher rates destroyed property values, savagely reduced industrial production and emptied the national treasuries. Same problem occurred in Asia.

The third step is also disastrous. It is called Market Based Pricing which is simply raising the prices on necessary commodities, viz. food, water and domestic gas. This, of course, leads to the “IMF riot”, according to Stiglitz. The situation becomes so painful to the people of the country that a major blowup occurs. In every country where this was done riots were so intense that the paramilitary forces were called in to quell the uprising. And they are well known for their brutality. This happened in Indonesia, Bolivia and Ecuador to name just three. The riot caused capital to flee and widespread bankruptcies to occur. Then it is possible for foreign investors to step in and buy the national assets for pennies on the dollar. It would almost appear that the riots were written into the plan for this very reason. At this point the IMF steps in and raises tens of billions of dollars to save the financiers and the Western banks that are holding loans. This “churning” of capital is profitable for the Western banks and the U.S. Treasury, the latter owning 51% of the IMF.

The last step is called “poverty reduction” strategy, or free trade. Free trade according to the World Bank is reducing barriers to trade in the third world and at the same time blocking trade from the third world, e.g. agriculture.

The World Bank plans are designed in secrecy by a group of technocrats who are employed in essence by the huge international corporations. The plans are evolved by employees “insulated” from the public. The policies are developed undemocratically and are not open to discussion by outsiders. It is essentially an autocracy driven by a neo-liberal ideology for purposes of deriving maximum profit. There is much talk about free elections and democracy but the programs themselves destroy democracy. And even worse, as Stiglitz says, they don’t work.


References:


Chomsky, Noam . Profit Over People. Seven Stories Press, 1999
Chomsky, Noam . Understanding Power. New Press, 2002
Palast, Greg. The Best Democracy Money Can Buy. Penguin, 2003
Roy, Arundhati. War Talk. South End Press, 2003
Stiglitz, Joseph. Globalization and Its Discontents. Norton, 2003

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