The Democracy Center On-Line
Volume 45 - August 4, 2002
FROM SOUTH AMERICA: NEW RESISTANCE TO
AN ECONOMIC DOCTRINE IMPOSED FROM ABROAD
Dear Readers:
First, thank you to all who came out to our book events in Washington, Sacramento, and San Francisco, and to everyone who has been so supportive since the book's release. "The Democracy Owners' Manual" sold out its first printing in just twelve weeks. For those in California, have a look at the PBS program California Connected which airs Thursdays at 9pm around the state. The program features a series of one-minute "Citizen Action" segments based on our book. They're pretty funny. I believe the segment on building coalitions features Godzilla and Mothra.
Second, to everyone who has asked, "What's the latest with Bechtel's legal action against Bolivia?" We'll have a lot to say on that in another week or two, so keep your eyes peeled for the next issue of the newsletter. Meanwhile, in this issue we feature an article that is also being published in today's (Sunday's) Sacramento Bee - a look at an explosion of protest in South America that we ought to not ignore.
Jim Shultz
The Democracy Center
FROM SOUTH AMERICA: NEW RESISTANCE TO AN ECONOMIC DOCTRINE IMPOSED FROM ABROAD
South America is not generally a region of the world that attracts much U.S. attention these days. Nevertheless, a powerful message is coming our way from the other America. Over the past two months, in Peru, Bolivia, Paraguay and elsewhere, in election returns and in protests, South Americans are resisting as never before an economic doctrine imposed on them by international financial institutions from the north.
GUINEA PIG FOR THE WORLD BANK AND IMF
For more than a decade, much of South America has served as a laboratory for a set of economic policies developed by the World Bank and International Monetary Fund (IMF) and imposed on countries as a condition of receiving loans and aid. This economic formula is a simple one: reduce government spending, including that for programs essential to the poor; roll back labor protections; and turn essential services, such as water, electricity and telecommunications, over to the private sector (and almost always to some large multinational corporation). World Bank and IMF officials are so relentless in enforcing this economic model (dubbed "neoliberal" by its critics) that it borders on theology.
Protests against the model are on the rise. In Peru last June, a public uprising against government plans to privatize power companies nearly shut down the country's second largest city. In response, President Alejandro Toledo, a former World Bank economist, resorted to the worrisome Latin American standby of sending in troops and suspending political rights. In July virtually the same scene was repeated in Paraguay, where nationwide anti-privatization protests were met with a declaration of a state of emergency by President Luis Gonzàlez Macchi.
Bank/IMF doctrine is also starting to take a body blow at the polls as well. In Bolivian presidential elections at the end of June, Evo Morales, an Aymara Indian and leader of the coca farmer's union, surprised all observers by finishing a strong second, just a few percentage points out of first place. Morales' candidacy (which the U.S. embassy took the extraordinary step of publicly opposing) was in large part a referendum against Bank/IMF policies. As Brazil heads toward its national elections in October, the far-ahead leader is Luis Inacio da Silva "Lula", the candidate of the Workers Party and one of the continent's sharpest and most-long standing critics of Bank/IMF policies.
To be clear, a good deal of South America's chronic economic problems spring from the corruption and incompetence of local leaders, in both government and the private sector. Too often, both public office and high corporate position are just convenient opportunities to skim funds and dole out jobs to family and to political allies (It should be noted however, that the amounts involved pale in comparison to the multi-billion dollar, institutionalized scheming that Wall Street can call its own).
The Bank and IMF, determined to play economic sheriff in the region, believe that the answer lies in turning most everything that matters over to the magic of the marketplace. This handover of huge sectors of the economy also comes unaccompanied by any expansion of honest regulatory bodies to police against market abuses. It is an approach that Californians know all too well from the state's recent energy fiasco. The reality, as it has fallen on poor South Americans, has been no less disastrous.
BOLIVIA, THE POSTER CHILD FOR HOW WORLD BANK/IMF POLICIES FAIL
Consider the case two years ago, when Bolivia privatized the water system
of its third largest city, Cochabamba. World Bank officials told the
Bolivian President, point blank, that if the country didn't privatize
the water it would be cut out of the Bank's debt relief program, a decision
affecting billions of dollars. The government complied, leasing the
water system to a subsidiary of Bechtel Enterprises, the California-based
construction giant. Within weeks Bechtel raised water rates for the
poor by as much as double or more, forcing people earning $60 per month
to pay $15 just to keep water coming from the tap. The water rate hikes
were met with massive public protests and the familiar response of a
President declaring martial law to protect the company's interests.
Eventually the protests forced Bechtel to leave.
Bank and IMF economists are quick to blame such failures on faulty implementation or a lack of public patience rather than on any inherent problem with the policies themselves. For South Americans the message is essentially, "Just bang your head against the wall a little bit longer and the pain will stop." What those who live with these policies know, and what the Bank and IMF fail to understand, is that along with foreign corporate ownership comes the loss of local democratic control over basic services. Bechtel's arrogance was no surprise, nor was the Bolivian government's willingness to use tear gas and bullets to protect the company's contract.
Which basic services we want to place in public hands and which we want to place in private ones is among the most fundamental policy debates a nation faces. The U.S. has that same debate everyday on issues such as health care, schools, and power. South Americans are communicating in the strongest of terms that they are tired of having that debate decided and that control taken away by economists a hemisphere away. The message coming from the streets and the ballot boxes of our southern neighbors is also a simple one, "What part of 'no' don't you understand?"
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THE DEMOCRACY CENTER ON-LINE is an electronic publication of The Democracy Center, distributed on an occasional basis to more than 1800 nonprofit organizations, policy makers, journalists and others, throughout the US and worldwide. Please consider forwarding it along to those who might be interested. People can request to be added to the distribution list by sending an e-mail note to mailto: info@democracyctr.org. Newspapers and periodicals interested in reprinting or excerpting material in the newsletter should contact The Democracy Center at "info@democracyctr.org". Suggestions and comments are welcome. Past issues are available on The Democracy Center Web site.
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