A Global System Gone Mad
By Cameron Walker, Auckland
‘Globalisation’, ‘free trade’, ‘neo-liberalism’ (call it what you will - the economic policies supported by global institutions such as the International Monetary Fund (IMF) and the World Bank ) have been protested about and opposed by tens of millions of people around the globe. Why are so many people so angry? In the Western World, before 9/11, coverage of ‘violent anti-globalisation protests’ often splattered the news in the mainstream media. 9/11, according to the mainstream media signalled the death of the movement. However, such feelings have not died and, in fact, in many developing nations they have become more intense.
The historical background of the World Bank and IMF
The World Bank and IMF were set up at the end of the Second World War to provide loans to help rebuild nations shattered by the conflict. In the 1970s and 1980s the two institutions had a change of policy. Nations who wanted loans or financial assistance would have to follow ‘structural adjustment’ programs. In other words developing nations would have to make changes to their laws and economic policies as prescribed by the World Bank and IMF.
The effects of Structural Adjustment Programs
Often structural adjustment programmes make conditions even worse for the poorest citizens of developing nations, while the well off and multinational corporations reap the rewards. Typically, structural adjustment programs consist of slashing public education and healthcare spending, cutting welfare to the poor, opening markets to penetration by multinational corporations and privatising public assets, such as water utilities and railways.
An example of Structural Adjustment Programs’ negative impacts: Bolivia.
A classic example of structural adjustment occurred in 1999 in Bolivia, the poorest nation in South America. The city of Cochabamba was pressured to privatise its public water company by the World Bank. It was sold to Aguas del Tunari, part of International Water Limited, a British based company part owned by the American engineering giant Bechtel and the Spanish company Abengoa.
‘Within weeks of taking over the city’s public water company Bechtel hiked up rates by as much as 200%, far beyond what the city’s poor could afford to pay.’ (1)
Many poor families now paid higher water bills than those paid by residents of the wealthy suburbs of Washington DC, home to many World Bank officials.
To further compound the problems of the poor, the government banned collecting rain water without a permit. For many families it was a choice between spending money on food to eat, or having water to drink. This spurred a huge peoples’ movement to return water to public hands. After unprecedented street protests, in which police fired on the crowds killing a 17 year old boy and wounding scores of others, the city returned water to public ownership.
However, the story did not end there. Bechtel, citing unfair loss of profits, launched a US $25 million (New Zealand $35.4 million) lawsuit against Bolivia. Thankfully, after bearing the brunt of an international campaign, Bechtel dropped the lawsuit in December 2004. Unfortunately, the Spanish company Abengoa is still pursuing legal action against Bolivia, despite international calls for it to drop it.
G8 Debt Relief - with strings attached
In June 2005, the nations of the G8 declared that the most highly indebted nations in the World will have their debts to the World Bank and IMF cleared. This sounds nice, but to qualify for debt relief poor nations must practice ‘good governance’ meaning the nations must “boost private-sector development” and eliminate “impediments to private investment, both domestic and foreign”. Quite simply this means that to qualify for debt relief, poor nations must continue to put in place Structural Adjustment Programmes (like those forced on Bolivia) which are fundamentally damaging to their nation’s citizens, but good for multinational corporations from the World’s richest nations in the G8.
Speak out against the injustice
As a young activist and writer in New Zealand, I believe it is important for young people to become informed and speak out against the grave injustices that are occurring as a result of the so called ‘globalisation’ process. The New Zealand government is an enthusiastic supporter, at an international level, of the so called ‘free market’ policies supported by the World Bank and IMF. As the citizens of Bolivia have demonstrated though, people power can overcome this madness!
Reference:
1) Shultz Jim ‘The Second Water War in Bolivia’
Learn More:
The Democracy Center, The Democracy Center works globally to advance human rights through a unique combination of investigation and reporting, training citizens in the art of public advocacy, and organizing international citizen campaigns, it’s founder and Executive Director Jim Shultz lives in Cochabamba and was fundamental in breaking the story of the city’s water war to the outside World
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