[Mb-civic] Disaster Capitalism

[ean at sbcglobal.net]

Naomi Klein explains how the hypocritical, voracious wolves of the 
phony "free market" prey on the most vulnerable and needy wherever 
they find them..............


This article can be found on the web at
http://www.thenation.com/doc.mhtml?i=20050502&s=klein

lookout by Naomi Klein
The Rise of Disaster Capitalism

[from the May 2, 2005 issue]

Last summer, in the lull of the August media doze, the Bush 
Administration's doctrine of preventive war took a major leap forward. 
On August 5, 2004, the White House created the Office of the 
Coordinator for Reconstruction and Stabilization, headed by former US 
Ambassador to Ukraine Carlos Pascual. Its mandate is to draw up 
elaborate "post-conflict" plans for up to twenty-five countries that are 
not, as of yet, in conflict. According to Pascual, it will also be able to 
coordinate three full-scale reconstruction operations in different 
countries "at the same time," each lasting "five to seven years."

Fittingly, a government devoted to perpetual pre-emptive 
deconstruction now has a standing office of perpetual pre-emptive 
reconstruction.

Gone are the days of waiting for wars to break out and then drawing up 
ad hoc plans to pick up the pieces. In close cooperation with the 
National Intelligence Council, Pascual's office keeps "high risk" 
countries on a "watch list" and assembles rapid-response teams ready 
to engage in prewar planning and to "mobilize and deploy quickly" after 
a conflict has gone down. The teams are made up of private 
companies, nongovernmental organizations and members of think 
tanks--some, Pascual told an audience at the Center for Strategic and 
International Studies in October, will have "pre-completed" contracts to 
rebuild countries that are not yet broken. Doing this paperwork in 
advance could "cut off three to six months in your response time."

The plans Pascual's teams have been drawing up in his little-known 
office in the State Department are about changing "the very social 
fabric of a nation," he told CSIS. The office's mandate is not to rebuild 
any old states, you see, but to create "democratic and market-
oriented" ones. So, for instance (and he was just pulling this example 
out of his hat, no doubt), his fast-acting reconstructors might help sell 
off "state-owned enterprises that created a nonviable economy." 
Sometimes rebuilding, he explained, means "tearing apart the old."

Few ideologues can resist the allure of a blank slate--that was 
colonialism's seductive promise: "discovering" wide-open new lands 
where utopia seemed possible. But colonialism is dead, or so we are 
told; there are no new places to discover, no terra nullius (there never 
was), no more blank pages on which, as Mao once said, "the newest 
and most beautiful words can be written." There is, however, plenty of 
destruction--countries smashed to rubble, whether by so-called Acts of 
God or by Acts of Bush (on orders from God). And where there is 
destruction there is reconstruction, a chance to grab hold of "the 
terrible barrenness," as a UN official recently described the devastation 
in Aceh, and fill it with the most perfect, beautiful plans.

"We used to have vulgar colonialism," says Shalmali Guttal, a 
Bangalore-based researcher with Focus on the Global South. "Now we 
have sophisticated colonialism, and they call it 'reconstruction.'"

It certainly seems that ever-larger portions of the globe are under 
active reconstruction: being rebuilt by a parallel government made up 
of a familiar cast of for-profit consulting firms, engineering companies, 
mega-NGOs, government and UN aid agencies and international 
financial institutions. And from the people living in these reconstruction 
sites--Iraq to Aceh, Afghanistan to Haiti--a similar chorus of complaints 
can be heard. The work is far too slow, if it is happening at all. Foreign 
consultants live high on cost-plus expense accounts and thousand- 
dollar-a-day salaries, while locals are shut out of much-needed jobs, 
training and decision-making. Expert "democracy builders" lecture 
governments on the importance of transparency and "good 
governance," yet most contractors and NGOs refuse to open their 
books to those same governments, let alone give them control over 
how their aid money is spent.

Three months after the tsunami hit Aceh, the New York Times ran a 
distressing story reporting that "almost nothing seems to have been 
done to begin repairs and rebuilding." The dispatch could easily have 
come from Iraq, where, as the Los Angeles Times just reported, all of 
Bechtel's allegedly rebuilt water plants have started to break down, one 
more in an endless litany of reconstruction screw-ups. It could also 
have come from Afghanistan, where President Hamid Karzai recently 
blasted "corrupt, wasteful and unaccountable" foreign contractors for 
"squandering the precious resources that Afghanistan received in aid." 
Or from Sri Lanka, where 600,000 people who lost their homes in the 
tsunami are still languishing in temporary camps. One hundred days 
after the giant waves hit, Herman Kumara, head of the National 
Fisheries Solidarity Movement in Negombo, Sri Lanka, sent out a 
desperate e-mail to colleagues around the world. "The funds received 
for the benefit of the victims are directed to the benefit of the privileged 
few, not to the real victims," he wrote. "Our voices are not heard and 
not allowed to be voiced."

But if the reconstruction industry is stunningly inept at rebuilding, that 
may be because rebuilding is not its primary purpose. According to 
Guttal, "It's not reconstruction at all--it's about reshaping everything." If 
anything, the stories of corruption and incompetence serve to mask 
this deeper scandal: the rise of a predatory form of disaster capitalism 
that uses the desperation and fear created by catastrophe to engage in 
radical social and economic engineering. And on this front, the 
reconstruction industry works so quickly and efficiently that the 
privatizations and land grabs are usually locked in before the local 
population knows what hit them. Kumara, in another e-mail, warns that 
Sri Lanka is now facing "a second tsunami of corporate globalization 
and militarization," potentially even more devastating than the first. 
"We see this as a plan of action amidst the tsunami crisis to hand over 
the sea and the coast to foreign corporations and tourism, with military 
assistance from the US Marines."

As Deputy Defense Secretary, Paul Wolfowitz designed and oversaw a 
strikingly similar project in Iraq: The fires were still burning in Baghdad 
when US occupation officials rewrote the investment laws and 
announced that the country's state-owned companies would be 
privatized. Some have pointed to this track record to argue that 
Wolfowitz is unfit to lead the World Bank; in fact, nothing could have 
prepared him better for his new job. In Iraq, Wolfowitz was just doing 
what the World Bank is already doing in virtually every war-torn and 
disaster-struck country in the world--albeit with fewer bureaucratic 
niceties and more ideological bravado.

"Post-conflict" countries now receive 20-25 percent of the World 
Bank's total lending, up from 16 percent in 1998--itself an 800 percent 
increase since 1980, according to a Congressional Research Service 
study. Rapid response to wars and natural disasters has traditionally 
been the domain of United Nations agencies, which worked with NGOs 
to provide emergency aid, build temporary housing and the like. But 
now reconstruction work has been revealed as a tremendously 
lucrative industry, too important to be left to the do-gooders at the UN. 
So today it is the World Bank, already devoted to the principle of 
poverty-alleviation through profit-making, that leads the charge.

And there is no doubt that there are profits to be made in the 
reconstruction business. There are massive engineering and supplies 
contracts ($10 billion to Halliburton in Iraq and Afghanistan alone); 
"democracy building" has exploded into a $2 billion industry; and times 
have never been better for public-sector consultants--the private firms 
that advise governments on selling off their assets, often running 
government services themselves as subcontractors. (Bearing Point, 
the favored of these firms in the United States, reported that the 
revenues for its "public services" division "had quadrupled in just five 
years," and the profits are huge: $342 million in 2002--a profit margin 
of 35 percent.)

But shattered countries are attractive to the World Bank for another 
reason: They take orders well. After a cataclysmic event, governments 
will usually do whatever it takes to get aid dollars--even if it means 
racking up huge debts and agreeing to sweeping policy reforms. And 
with the local population struggling to find shelter and food, political 
organizing against privatization can seem like an unimaginable luxury.

Even better from the bank's perspective, many war-ravaged countries 
are in states of "limited sovereignty": They are considered too unstable 
and unskilled to manage the aid money pouring in, so it is often put in 
a trust fund managed by the World Bank. This is the case in East 
Timor, where the bank doles out money to the government as long as 
it shows it is spending responsibly. Apparently, this means slashing 
public-sector jobs (Timor's government is half the size it was under 
Indonesian occupation) but lavishing aid money on foreign consultants 
the bank insists the government hire (researcher Ben Moxham writes, 
"In one government department, a single international consultant earns 
in one month the same as his twenty Timorese colleagues earn 
together in an entire year").

In Afghanistan, where the World Bank also administers the country's 
aid through a trust fund, it has already managed to privatize healthcare 
by refusing to give funds to the Ministry of Health to build hospitals. 
Instead it funnels money directly to NGOs, which are running their own 
private health clinics on three-year contracts. It has also mandated "an 
increased role for the private sector" in the water system, 
telecommunications, oil, gas and mining and directed the government 
to "withdraw" from the electricity sector and leave it to "foreign private 
investors." These profound transformations of Afghan society were 
never debated or reported on, because few outside the bank know 
they took place: The changes were buried deep in a "technical annex" 
attached to a grant providing "emergency" aid to Afghanistan's war-
torn infrastructure--two years before the country had an elected 
government.

It has been much the same story in Haiti, following the ouster of 
President Jean-Bertrand Aristide. In exchange for a $61 million loan, 
the bank is requiring "public-private partnership and governance in the 
education and health sectors," according to bank documents--i.e., 
private companies running schools and hospitals. Roger Noriega, US 
Assistant Secretary of State for Western Hemisphere Affairs, has 
made it clear that the Bush Administration shares these goals. "We will 
also encourage the government of Haiti to move forward, at the 
appropriate time, with restructuring and privatization of some public 
sector enterprises," he told the American Enterprise Institute on April 
14, 2004.

These are extraordinarily controversial plans in a country with a 
powerful socialist base, and the bank admits that this is precisely why it 
is pushing them now, with Haiti under what approaches military rule. 
"The Transitional Government provide[s] a window of opportunity for 
implementing economic governance reforms...that may be hard for a 
future government to undo," the bank notes in its Economic 
Governance Reform Operation Project agreement. For Haitians, this is 
a particularly bitter irony: Many blame multilateral institutions, including 
the World Bank, for deepening the political crisis that led to Aristide's 
ouster by withholding hundreds of millions in promised loans. At the 
time, the Inter-American Development Bank, under pressure from the 
State Department, claimed Haiti was insufficiently democratic to 
receive the money, pointing to minor irregularities in a legislative 
election. But now that Aristide is out, the World Bank is openly 
celebrating the perks of operating in a democracy-free zone.

The World Bank and the International Monetary Fund have been 
imposing shock therapy on countries in various states of shock for at 
least three decades, most notably after Latin America's military coups 
and the collapse of the Soviet Union. Yet many observers say that 
today's disaster capitalism really hit its stride with Hurricane Mitch. For 
a week in October 1998, Mitch parked itself over Central America, 
swallowing villages whole and killing more than 9,000. Already 
impoverished countries were desperate for reconstruction aid--and it 
came, but with strings attached. In the two months after Mitch struck, 
with the country still knee-deep in rubble, corpses and mud, the 
Honduran congress initiated what the Financial Times called "speed 
sell-offs after the storm." It passed laws allowing the privatization of 
airports, seaports and highways and fast-tracked plans to privatize the 
state telephone company, the national electric company and parts of 
the water sector. It overturned land-reform laws and made it easier for 
foreigners to buy and sell property. It was much the same in 
neighboring countries: In the same two months, Guatemala 
announced plans to sell off its phone system, and Nicaragua did 
likewise, along with its electric company and its petroleum sector.

All of the privatization plans were pushed aggressively by the usual 
suspects. According to the Wall Street Journal, "the World Bank and 
International Monetary Fund had thrown their weight behind the 
[telecom] sale, making it a condition for release of roughly $47 million 
in aid annually over three years and linking it to about $4.4 billion in 
foreign-debt relief for Nicaragua."

Now the bank is using the December 26 tsunami to push through its 
cookie-cutter policies. The most devastated countries have seen 
almost no debt relief, and most of the World Bank's emergency aid has 
come in the form of loans, not grants. Rather than emphasizing the 
need to help the small fishing communities--more than 80 percent of 
the wave's victims--the bank is pushing for expansion of the tourism 
sector and industrial fish farms. As for the damaged public 
infrastructure, like roads and schools, bank documents recognize that 
rebuilding them "may strain public finances" and suggest that 
governments consider privatization (yes, they have only one idea). "For 
certain investments," notes the bank's tsunami-response plan, "it may 
be appropriate to utilize private financing."

As in other reconstruction sites, from Haiti to Iraq, tsunami relief has 
little to do with recovering what was lost. Although hotels and industry 
have already started reconstructing on the coast, in Sri Lanka, 
Thailand, Indonesia and India, governments have passed laws 
preventing families from rebuilding their oceanfront homes. Hundreds 
of thousands of people are being forcibly relocated inland, to military 
style barracks in Aceh and prefab concrete boxes in Thailand. The 
coast is not being rebuilt as it was--dotted with fishing villages and 
beaches strewn with handmade nets. Instead, governments, 
corporations and foreign donors are teaming up to rebuild it as they 
would like it to be: the beaches as playgrounds for tourists, the oceans 
as watery mines for corporate fishing fleets, both serviced by privatized 
airports and highways built on borrowed money.

In January Condoleezza Rice sparked a small controversy by 
describing the tsunami as "a wonderful opportunity" that "has paid 
great dividends for us." Many were horrified at the idea of treating a 
massive human tragedy as a chance to seek advantage. But, if 
anything, Rice was understating the case. A group calling itself 
Thailand Tsunami Survivors and Supporters says that for 
"businessmen-politicians, the tsunami was the answer to their prayers, 
since it literally wiped these coastal areas clean of the communities 
which had previously stood in the way of their plans for resorts, hotels, 
casinos and shrimp farms. To them, all these coastal areas are now 
open land!"

Disaster, it seems, is the new terra nullius.

----


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