This week has witnessed two very different reactions to European debt. At one end of Europe, Iceland’s voters decided once again not to accept the payment terms of their ‘creditors’, the British and Dutch governments, following the collapse of Icelandic banks in 2008. At the other, Portugal is being pushed down the path of shock therapy by the European Union, with the people of that country cut out of a process which will change their lives dramatically.
Neither Iceland not Portugal will have it easy in the years ahead. But there is a world of difference between the refusal of the people of Iceland ‘to pay for failed banks’ in the words of their President, and the pain being imposed on Portugal from the outside. The European Central Bank’s head Jean-Claude Trichet has made it perfectly clear that the negotiations on Portugal’s future are ‘certainly not for public’ debate.
Iceland’s people have not made a knee-jerk reaction. They are well aware that refusal to pay is the less easy short-term route to take. An impending court case by the UK and the Netherlands, the negative reaction of credit markets and the threatened block to their EU membership will all take a toll.
But for the people of Iceland the orthodoxy as to how countries are supposed to deal with debt is not simply economically flawed, it is deeply unjust, unfairly distributing power and wealth within and between societies. 28-year-old voter Thorgerdun Ásgeirsdóttir said: ‘I know this will probably hurt us internationally, but it is worth taking a stance.’
If the people of a country which truly bought into free market ideology, deregulated capital markets and cheap lending can refuse to pay for the crimes of the banks, then those that did less well from the decades of financial boom can be expected to feel even more impassioned.
In Greece such anger is starting to turn into a constructive challenge to the power of finance. A debt audit commission has been called for by hundreds of academics, politicians and activists. Such a commission would throw open Greece’s debts for public examination – directly confronting the way that the IMF and European Union work behind closed doors to force their often disastrous medicine on member countries.
As Greek activists have said, ‘the people who are called upon to bear the costs of EU programmes have a democratic right to receive full information on public debt. An Audit Commission can begin to redress this deficiency.’
Their resolve is currently being bolstered by a website phenomena – a short viral film called debtocracy (government by debt) – sweeping Greece’s online population and convincing them they have been taken for a ride. Early next month activists from across Europe and the developing world will gather in Athens to put together a programme which will challenge the IMF’s policies in Greece.
Portugal’s deal is just beginning to be hammered out. As in Greece and Ireland, a ‘bail-out’ package will primarily benefit Western European banks, with €216 billion of outstanding loans to Portugal, while ordinary people endure a programme of deep spending cuts, reduced workers’ rights and widespread privatisation. The head of Portugal’s Banco Carregosa told the FT: ‘It’s not an exaggeration to call it shock therapy.’
The comparisons with developing world countries are obvious and the mistakes there are already being repeated. Time and again banks were bailed out and the poorest people in the world were pushed even deeper into poverty. Today countries from Sierra Leone to Jamaica are racking up ever more debts, once again, to weather the banker’s storm.
This is why a line must be drawn in Europe. Pouring more debt on top of Portugal’s woes will do nothing to resuscitate the economy. Portugal’s debt is totally unsustainable – largely the result of reckless private lending over the last decade. Those responsible are being bailed out, those that aren’t are suffering the pain. This is what Iceland has refused to do.
The people of Iceland have stood up for their sovereignty. Their future looks considerably brighter than those of Ireland or Portugal. The people of Greece are just beginning their struggle. The outcomes will have a monumental impact on the fight against poverty and inequality across the world.
Thursday, 14 April 2011
The revolution will not be organised
Nick Dearden writes from the World Social Forum in Dakar, Senegal.
There is one word that I've heard to sum up this year's Word Social Forum again and again: chaos. Just days before the WSF started the University which is hosting the event got a new director, who decided that classes would not be postponed for the Forum, leaving it over 400 rooms down.
The daily programmes were therefore pretty meaningless, even when they did eventually go online a couple of hours after the first session had started, because no-one knew which of the hastily constructed tents the session they were looking for might be in. Participants were rather like a very multicultural group of squatters on the dusty, windswept wasteland of Dakar University grounds.
All too often this meant that participants stuck together with their own group of friends or colleagues, unable to branch out into anything else for fear of another wasted two hours. For the truly new activists, unconnected to an organisation, the experience was intensely frustrating.
Not that the event wasn't enjoyable, as activists were forced to use their self-organising skills simply to make sure their sessions happened at all. Palestinian activists had commissioned their own tent to be built right outside the main library which became a very visible hub for their activities, attracting large groups of students from the University to come and learn the basics of a struggle they knew little about. The forum had something of a festival feel from the fantastic food tents to the street sellers to the grotty toilets.
The location was also appropriate. My hotel window overlooked Goree Island, the point of departure for tens of thousands of Africans shipped into slavery in the New World. This slavery was the basis for the industrial revolution and the economic rise of the global North, as well as being at the heart of the serious under-development which is still so sharply felt across Africa today.
Despite this, and while the fault for the chaos of the forum can clearly not all be laid at the feet of the organisers, the experience has forced a more urgent questioning as to whether the WSF is still worthwhile. Set up as an expression of the rapidly burgeoning 'anti-globalisation' movement in 2001, the WSF faces a very different world, and caters to a different movement.
It seems there will be changes to the Forum next year. Some on the unwieldy International Council which organises the Forum are arguing for it to be less frequent, others that the WSF should cease to exist altogether and more focus be given to the regional and issue-based social forums.
But we need to be careful not to throw out what is truly amazing about the WSF. Struggles against tyranny in Egypt and Tunisia have formed a backdrop to this Forum, showing us what is possible, the vital role of solidarity that the WSF can play a role in creating. The thousands of people marching in Dakar as the Forum opened reminds us that the purpose of holding such an event here is the injection of energy it can give to struggles in the regions in which the WSF is held. One activist told us that the point is not how many meetings we go to, but the effect of the preparation of the WSF on the size and unity of the movement in its host country. It didn't ease our frustration at the time, but is clearly an important consideration.
I leave the WSF convinced of why I work on debt. Seeing 2,000 activists dancing to a famous Senegalese hip-hop band singing about debt in an assembly festooned with the banners of the Committee for the Abolition of Third World Debt, is a pretty powerful reminder of just how central this struggle remains in Africa, even if it doesn't always feel that important in London.
None of this can be compromised, even if reform is necessary. The World Social Forum is an intensely frustrating, unwieldy and chaotic process. But perhaps that's the nature of our movement.
You can find the full blog at the JDC website.
There is one word that I've heard to sum up this year's Word Social Forum again and again: chaos. Just days before the WSF started the University which is hosting the event got a new director, who decided that classes would not be postponed for the Forum, leaving it over 400 rooms down.
The daily programmes were therefore pretty meaningless, even when they did eventually go online a couple of hours after the first session had started, because no-one knew which of the hastily constructed tents the session they were looking for might be in. Participants were rather like a very multicultural group of squatters on the dusty, windswept wasteland of Dakar University grounds.
All too often this meant that participants stuck together with their own group of friends or colleagues, unable to branch out into anything else for fear of another wasted two hours. For the truly new activists, unconnected to an organisation, the experience was intensely frustrating.
Not that the event wasn't enjoyable, as activists were forced to use their self-organising skills simply to make sure their sessions happened at all. Palestinian activists had commissioned their own tent to be built right outside the main library which became a very visible hub for their activities, attracting large groups of students from the University to come and learn the basics of a struggle they knew little about. The forum had something of a festival feel from the fantastic food tents to the street sellers to the grotty toilets.
The location was also appropriate. My hotel window overlooked Goree Island, the point of departure for tens of thousands of Africans shipped into slavery in the New World. This slavery was the basis for the industrial revolution and the economic rise of the global North, as well as being at the heart of the serious under-development which is still so sharply felt across Africa today.
Despite this, and while the fault for the chaos of the forum can clearly not all be laid at the feet of the organisers, the experience has forced a more urgent questioning as to whether the WSF is still worthwhile. Set up as an expression of the rapidly burgeoning 'anti-globalisation' movement in 2001, the WSF faces a very different world, and caters to a different movement.
It seems there will be changes to the Forum next year. Some on the unwieldy International Council which organises the Forum are arguing for it to be less frequent, others that the WSF should cease to exist altogether and more focus be given to the regional and issue-based social forums.
But we need to be careful not to throw out what is truly amazing about the WSF. Struggles against tyranny in Egypt and Tunisia have formed a backdrop to this Forum, showing us what is possible, the vital role of solidarity that the WSF can play a role in creating. The thousands of people marching in Dakar as the Forum opened reminds us that the purpose of holding such an event here is the injection of energy it can give to struggles in the regions in which the WSF is held. One activist told us that the point is not how many meetings we go to, but the effect of the preparation of the WSF on the size and unity of the movement in its host country. It didn't ease our frustration at the time, but is clearly an important consideration.
I leave the WSF convinced of why I work on debt. Seeing 2,000 activists dancing to a famous Senegalese hip-hop band singing about debt in an assembly festooned with the banners of the Committee for the Abolition of Third World Debt, is a pretty powerful reminder of just how central this struggle remains in Africa, even if it doesn't always feel that important in London.
None of this can be compromised, even if reform is necessary. The World Social Forum is an intensely frustrating, unwieldy and chaotic process. But perhaps that's the nature of our movement.
You can find the full blog at the JDC website.
Born into debt?
For south Sudan, sovereignty must mean more than having your own border
The nearly unanimous south Sudanese referendum result announced over the weekend is likely to lead to independence for a southern state by July. But it only marks one step along the road to true sovereignty for this oppressed and impoverished people. As south Sudan's oil wealth has been used to enrich elites in the North for decades, so it is now being viewed with hungry eyes by the US and its allies.
The debt which is inherited by this new state is likely to play a key role in attempts to assert control on south Sudan from the outside. The Sudanese government in Khartoum currently has a debt of $35 billion, large parts of which stretch back to the 1970s and 1980s when the regime of General Nimeiry was propped up by the US. Of this debt, $20 billion represents interest, following years of default by the Bashir regime.
The UK claims Sudan owes £650 million ($1 billion) to the government's Export Credit Guarantees Department – the department which insures some British exports, usually arms, aerospace and big fossil fuel projects. The department refuses to say what projects the debt is based on. What we do know is that since 1984 an interest rate of between 10 and 12 per cent has been charged on this debt, wildly inflating it – in fact new figures reveal that up-to 90 per cent of Sudanese debt owed to the UK is interest.
Justice demands that south Sudan is not handed a portion of Khartoum’s debt, but the International Monetary Fund probably has other ideas. One suggestion is that Sudan will be allocated debt on its inception that will then be cancelled. No-one should fall into the trap of believing this to be just – in reality it would mean the southern state would be forced to go through a lengthy cancellation process, during which it would probably have to take out new loans to pay interest on its unjust debts, as well as whatever reforms the IMF felt like pushing on the country. It would ensure south Sudan could not escape from the grips of international institutions and their neoliberal ideology.
Meanwhile, popular protests have spread to Khartoum in north Sudan. Here too, most of the accumulated debts undoubtedly arose more through international power play than genuine attempts to improve the lives of Sudan’s people. The people of Sudan might want to take a look at the calls of people as far apart as Greece and Bolivia, and call for an audit of Sudan’s debts so they can find out just what the debts paid for and how legitimate they are.
Sovereignty for south Sudan means much more than a declaration of independence from the north. It means the people of that country controlling their own economic development. But with a large debt hanging over their heads, and reserves of oil ready to plunder, the people of south Sudan will need to be prepared to continue to struggle for real freedom.
The nearly unanimous south Sudanese referendum result announced over the weekend is likely to lead to independence for a southern state by July. But it only marks one step along the road to true sovereignty for this oppressed and impoverished people. As south Sudan's oil wealth has been used to enrich elites in the North for decades, so it is now being viewed with hungry eyes by the US and its allies.
The debt which is inherited by this new state is likely to play a key role in attempts to assert control on south Sudan from the outside. The Sudanese government in Khartoum currently has a debt of $35 billion, large parts of which stretch back to the 1970s and 1980s when the regime of General Nimeiry was propped up by the US. Of this debt, $20 billion represents interest, following years of default by the Bashir regime.
The UK claims Sudan owes £650 million ($1 billion) to the government's Export Credit Guarantees Department – the department which insures some British exports, usually arms, aerospace and big fossil fuel projects. The department refuses to say what projects the debt is based on. What we do know is that since 1984 an interest rate of between 10 and 12 per cent has been charged on this debt, wildly inflating it – in fact new figures reveal that up-to 90 per cent of Sudanese debt owed to the UK is interest.
Justice demands that south Sudan is not handed a portion of Khartoum’s debt, but the International Monetary Fund probably has other ideas. One suggestion is that Sudan will be allocated debt on its inception that will then be cancelled. No-one should fall into the trap of believing this to be just – in reality it would mean the southern state would be forced to go through a lengthy cancellation process, during which it would probably have to take out new loans to pay interest on its unjust debts, as well as whatever reforms the IMF felt like pushing on the country. It would ensure south Sudan could not escape from the grips of international institutions and their neoliberal ideology.
Meanwhile, popular protests have spread to Khartoum in north Sudan. Here too, most of the accumulated debts undoubtedly arose more through international power play than genuine attempts to improve the lives of Sudan’s people. The people of Sudan might want to take a look at the calls of people as far apart as Greece and Bolivia, and call for an audit of Sudan’s debts so they can find out just what the debts paid for and how legitimate they are.
Sovereignty for south Sudan means much more than a declaration of independence from the north. It means the people of that country controlling their own economic development. But with a large debt hanging over their heads, and reserves of oil ready to plunder, the people of south Sudan will need to be prepared to continue to struggle for real freedom.
Optimism of the will
Noam Chomsky's Hopes and Prospects (Hamish Hamilton), reviewed by Nick Dearden
The great genius of Noam Chomsky is his way of presenting supposedly radical politics as so reasonable as to be obvious, showing with great clarity how the 'mainstream' political establishment is truly extremist.
Hopes and Prospects lacks the painstaking detail of earlier works, based as it is on a series of lectures. To readers of Red Pepper, the book's topics will also be nothing new - from Latin America to Palestine, the election of Obama to the 10th anniversary of the fall of Soviet communism.
But even if the information is not completely new, the clarity with which Chomsky exposes the hypocrisy, illogic and lack of democracy inherent in the current political and economic system makes you feel like you're hearing the arguments for the first time.
Famously, Chomsky calls the current economic system 'socialism for the rich', and in this book he elaborates how this form of 'state capitalism' has created the wealth that our development is based on. 'In the phrase "North American free trade agreement" the only accurate words are "North American",' says Chomsky, characterising the current trading system as constituting a series of top-down charters for investor rights.
In fact, US power has been constructed on heavy state intervention in, and protection of, the economy. Cotton production, a key element of the industrial revolution, more or less occupying the role of oil today, was facilitated through slavery and the elimination of native Americans - 'rather extreme forms of market interference'. Even sectors of the economy regarded as textbook examples of entrepreneurialism today, like IT and communications, developed through massive military spending and state development. Paid for by taxpayers, the rewards are handed to the richest.
Chomsky considers the crucial role of the media in 'manufacturing consent' in modern capitalism by looking at Israel and Palestine. The consistent failure of western media to report fairly on the occupation is highlighted by its emphasis on the kidnap of Corporal Shalit in justifying Israeli aggression, while totally ignoring the capture of two Gazan civilians by Israeli forces just one day before. In reporting on Iran, the media ignores repeated attempts by Arab states, Iran and most countries in the world, excepting successive US administrations, to seek a Middle East free from all weapons of mass destruction.
In fact, increasing global militarisation is consistently supported by the US, with allies like Britain, in the teeth of opposition from most countries and people. Through their military strategy, their contribution towards climate change and their support of increasingly dangerous forms of capitalism, it is indeed these western countries that threaten the extinction of civilisation.
Chomsky will disillusion anyone who places hopes in the election of Obama. Obama's first appointments included Rahm Emanuel, pro-war and pro-Wall Street; Robert Rubin and Lawrence Summers, major de-regulators of the financial sector; James Jones, fierce advocate of the expansion of Nato; and Dennis Blair, formerly a strong supporter of US ties with the barbaric President Suharto of Indonesia.
Obama's view of the world is nothing new, excepting some rhetoric: the policy of arming and training Palestinian security forces on the West Bank to maintain tight control of society; the vilification of Iran; the support of friendly thugs such as Hosni Mubarak in Egypt; the use of terror centres (just not in Guantanamo); and support (albeit indirect) of the violent coup in Honduras.
This should come as no surprise, according to Chomsky, as Obama's campaign was above all a public relations triumph (and named so by that industry - he beat Apple as 'marketer of the year' in Advertising Age): 'Obama's message of "hope" and "change" offered a virtual blank slate on which supporters could write their wishes.' Chomsky contrasts Obama's election with the 2005 election in Bolivia, where the campaign 'was focused on crucial issues, very well known to voters: control of resources, cultural rights, questions of justice'.
Such a critique might be expected to depress, but the anger Chomsky's writing provokes is complemented by an incredible hope. In particular, Chomsky never blames ordinary people, highlighting opinion poll after poll pointing out the deep desire for a more peaceful, equal and generous world.
Ultimately, however, this might be Chomsky's biggest flaw. It is difficult to square the existence of an all-seeing, all-controlling, death-driven capitalist system with a real opening for the kind of radical change that is so necessary. The system makes no mistakes in Chomsky's analysis - from Vietnam to Iraq, ultimately the Empire gets what it wants.
In societies where people's emotions and drives are so expertly manipulated, it takes a real leap of faith to see these same people as agents of change - almost a belief that some innate goodness will overpower the social conditioning that keeps us passive and ineffective.
Indeed, Chomsky seems to have the same concerns, as when he invokes biologist Ernst Mayr, who speculated that higher intelligence might be an evolutionary error, incapable of survival. Perhaps ultimately he is expressing no more than the necessary optimism of the will that governs most activists' work. With these concerns in front of us, Chomsky nonetheless remains the sharpest, clearest and most inspirational thinker the movement has. Hopes and Prospects will keep you going through a good few dark hours.
This review first appeared in Red Pepper.
The great genius of Noam Chomsky is his way of presenting supposedly radical politics as so reasonable as to be obvious, showing with great clarity how the 'mainstream' political establishment is truly extremist.
Hopes and Prospects lacks the painstaking detail of earlier works, based as it is on a series of lectures. To readers of Red Pepper, the book's topics will also be nothing new - from Latin America to Palestine, the election of Obama to the 10th anniversary of the fall of Soviet communism.
But even if the information is not completely new, the clarity with which Chomsky exposes the hypocrisy, illogic and lack of democracy inherent in the current political and economic system makes you feel like you're hearing the arguments for the first time.
Famously, Chomsky calls the current economic system 'socialism for the rich', and in this book he elaborates how this form of 'state capitalism' has created the wealth that our development is based on. 'In the phrase "North American free trade agreement" the only accurate words are "North American",' says Chomsky, characterising the current trading system as constituting a series of top-down charters for investor rights.
In fact, US power has been constructed on heavy state intervention in, and protection of, the economy. Cotton production, a key element of the industrial revolution, more or less occupying the role of oil today, was facilitated through slavery and the elimination of native Americans - 'rather extreme forms of market interference'. Even sectors of the economy regarded as textbook examples of entrepreneurialism today, like IT and communications, developed through massive military spending and state development. Paid for by taxpayers, the rewards are handed to the richest.
Chomsky considers the crucial role of the media in 'manufacturing consent' in modern capitalism by looking at Israel and Palestine. The consistent failure of western media to report fairly on the occupation is highlighted by its emphasis on the kidnap of Corporal Shalit in justifying Israeli aggression, while totally ignoring the capture of two Gazan civilians by Israeli forces just one day before. In reporting on Iran, the media ignores repeated attempts by Arab states, Iran and most countries in the world, excepting successive US administrations, to seek a Middle East free from all weapons of mass destruction.
In fact, increasing global militarisation is consistently supported by the US, with allies like Britain, in the teeth of opposition from most countries and people. Through their military strategy, their contribution towards climate change and their support of increasingly dangerous forms of capitalism, it is indeed these western countries that threaten the extinction of civilisation.
Chomsky will disillusion anyone who places hopes in the election of Obama. Obama's first appointments included Rahm Emanuel, pro-war and pro-Wall Street; Robert Rubin and Lawrence Summers, major de-regulators of the financial sector; James Jones, fierce advocate of the expansion of Nato; and Dennis Blair, formerly a strong supporter of US ties with the barbaric President Suharto of Indonesia.
Obama's view of the world is nothing new, excepting some rhetoric: the policy of arming and training Palestinian security forces on the West Bank to maintain tight control of society; the vilification of Iran; the support of friendly thugs such as Hosni Mubarak in Egypt; the use of terror centres (just not in Guantanamo); and support (albeit indirect) of the violent coup in Honduras.
This should come as no surprise, according to Chomsky, as Obama's campaign was above all a public relations triumph (and named so by that industry - he beat Apple as 'marketer of the year' in Advertising Age): 'Obama's message of "hope" and "change" offered a virtual blank slate on which supporters could write their wishes.' Chomsky contrasts Obama's election with the 2005 election in Bolivia, where the campaign 'was focused on crucial issues, very well known to voters: control of resources, cultural rights, questions of justice'.
Such a critique might be expected to depress, but the anger Chomsky's writing provokes is complemented by an incredible hope. In particular, Chomsky never blames ordinary people, highlighting opinion poll after poll pointing out the deep desire for a more peaceful, equal and generous world.
Ultimately, however, this might be Chomsky's biggest flaw. It is difficult to square the existence of an all-seeing, all-controlling, death-driven capitalist system with a real opening for the kind of radical change that is so necessary. The system makes no mistakes in Chomsky's analysis - from Vietnam to Iraq, ultimately the Empire gets what it wants.
In societies where people's emotions and drives are so expertly manipulated, it takes a real leap of faith to see these same people as agents of change - almost a belief that some innate goodness will overpower the social conditioning that keeps us passive and ineffective.
Indeed, Chomsky seems to have the same concerns, as when he invokes biologist Ernst Mayr, who speculated that higher intelligence might be an evolutionary error, incapable of survival. Perhaps ultimately he is expressing no more than the necessary optimism of the will that governs most activists' work. With these concerns in front of us, Chomsky nonetheless remains the sharpest, clearest and most inspirational thinker the movement has. Hopes and Prospects will keep you going through a good few dark hours.
This review first appeared in Red Pepper.
Know Your Enemy: The Export Credit Guarantee Department
In December 2006, a little know Government department became part of a national scandal when Tony Blair called on the Serious Fraud Office to drop a corruption investigation into how a British arms company secured a massive Saudi Arabian arms deal during the 1980s. The controversial deal had been insured by the British government through the Export Credits Guarantee Department (ECGD).
The Al-Yamamah deal was the biggest arms deal in British history, and had been controversial even when first discussed by the Thatcher government the mid-1980s. By 2004, the Serious Fraud Office had began looking at alleged corruption in the deal – notably that the sales had been overpriced in order to pay off and entertain members of the Saudi Royal Family.
Only at the end of 2006, amidst negotiations for a further Saudi arms deal, did Blair ask the SFO to drop the inquiry, which it did. Opposition MP Vince Cable said at the time that the decision to drop the case: “has undermined the rule of law and Britain’s reputation” and made a mockery of Gordon Brown’s fondness for lecturing the developing world on corruption.
Today that same MP, Vince Cable, is effectively in charge of the ECGD, answerable as it is to the Department for Business, Skills and Innovation. To date, little has been announced by way of reform.
What is the ECGD?
The ECGD exists to support British exports by providing them with a sort of insurance. It normally supports big companies involved in big projects in the developing world. In fact, over the last 10 years, ECGD support for fossil fuels, arms sales and aerospace (aeroplanes) has accounted for around 75% of its work. Last year one single company, Airbus, received 89% of ECGD support.
From arms sales to dictators to oil and gas pipelines through to mega-dams, ECGD has backed projects which have been implicated in corruption, environmental destruction and human rights abuses.
Even worse, when deals go wrong, it is often the developing country that ends up in debt. The ECGD pays out insurance (backed by the British taxpayer) and the amount becomes a debt of the country where the project took place.
Today, developing countries owe £2 billion of debt to the ECGD and have repaid £2.9 billion since 2005.
Arms sales and controlling energy supplies
To really get to grips with the problem with the ECGD, you only need to look at some of their past projects. Indonesia currently ‘owes’ the ECGD over £500 million, most of which was run-up selling British weapons to the brutal General Suharto in the 1980s and ‘90s.
Suharto killed between 500,000 and 1 million activists during his first year in office and conducted a 24-year occupation of East Timor. From 1994, Suharto bought half of his military equipment from the UK, supported by the ECGD. Some of these weapons, including Hawk aircraft, Scorpion tanks and water cannons, were sighted in use against civilians, including during the attack on Aceh. Yet the current Indonesian government is still paying for these tools of repression.
As fossil fuels become more difficult to access, export credits are again used to protect ‘British interests’ throughout the world. That’s why ECGD supported the Baku-Tiblisi-Ceyhan pipeline – an oil pipeline connecting up the Azeri oil field in the Caspian Sea to the Mediterranean, passing through Azerbaijan, Georgia and Turkey. The pipeline started pumping up to a million barrels of oil a day in 2006.
The pipeline included a series of controversial agreements between oil companies and the countries involved, which gave those companies special legal status. In essence, the agreements took priority over all national laws except the constitution, and prevented any new laws, including improvements in environmental or human rights laws, from affecting the companies' profits. Amnesty International argued that these agreements “effectively create a ‘rights-free corridor’ for the pipeline”.
There’s more where they came from. Like a hydro-electric power station in Kenya which cost four times what it should have done and produced only a fraction of the power promised. The Kenyan press called the project “a stinking scandal” for which the Kenyan government are still repaying.
Then there’s a power station in Dabhol, India. In June 2001 the station was closed after the electricity board decided not to buy any more power from the plant because it cost four times more than other domestic power producers. The power plant now sits dormant and a country in which 450 million people are living in extreme poverty, faces a compensation bill for a project that has not served its needs.
Promoting a green and pleasant land?
In a recession, export credits are presented as a key way that the British government can support struggling industry and re-stimulate the British economy.
But what sort of economy is the ECGD currently promoting? Sure it could help struggling British exporters at the leading edge of useful innovation. It could help create jobs in renewable energy sectors. But there isn’t much chance of that when the ECGD does not even have a policy on climate change.
While campaigners have given ECGD a relatively easy ride in recent years, business lobbyists have been pushing back on the already poor standards that do exist. Early in 2010, the Labour Government watered ECGD standards down. One example of what this change will mean is that smaller investments will no longer be screened for any sort of social or environmental impact – even on issues as significant as child labour and forced labour.
This means supporting British interests at the expense of human rights abuses, environmental destruction and corruption in other parts of the world. If we want to avoid another generation of reckless projects and toxic debts, we need to change the ECGD now.
This article first appeared in Red Pepper.
The Al-Yamamah deal was the biggest arms deal in British history, and had been controversial even when first discussed by the Thatcher government the mid-1980s. By 2004, the Serious Fraud Office had began looking at alleged corruption in the deal – notably that the sales had been overpriced in order to pay off and entertain members of the Saudi Royal Family.
Only at the end of 2006, amidst negotiations for a further Saudi arms deal, did Blair ask the SFO to drop the inquiry, which it did. Opposition MP Vince Cable said at the time that the decision to drop the case: “has undermined the rule of law and Britain’s reputation” and made a mockery of Gordon Brown’s fondness for lecturing the developing world on corruption.
Today that same MP, Vince Cable, is effectively in charge of the ECGD, answerable as it is to the Department for Business, Skills and Innovation. To date, little has been announced by way of reform.
What is the ECGD?
The ECGD exists to support British exports by providing them with a sort of insurance. It normally supports big companies involved in big projects in the developing world. In fact, over the last 10 years, ECGD support for fossil fuels, arms sales and aerospace (aeroplanes) has accounted for around 75% of its work. Last year one single company, Airbus, received 89% of ECGD support.
From arms sales to dictators to oil and gas pipelines through to mega-dams, ECGD has backed projects which have been implicated in corruption, environmental destruction and human rights abuses.
Even worse, when deals go wrong, it is often the developing country that ends up in debt. The ECGD pays out insurance (backed by the British taxpayer) and the amount becomes a debt of the country where the project took place.
Today, developing countries owe £2 billion of debt to the ECGD and have repaid £2.9 billion since 2005.
Arms sales and controlling energy supplies
To really get to grips with the problem with the ECGD, you only need to look at some of their past projects. Indonesia currently ‘owes’ the ECGD over £500 million, most of which was run-up selling British weapons to the brutal General Suharto in the 1980s and ‘90s.
Suharto killed between 500,000 and 1 million activists during his first year in office and conducted a 24-year occupation of East Timor. From 1994, Suharto bought half of his military equipment from the UK, supported by the ECGD. Some of these weapons, including Hawk aircraft, Scorpion tanks and water cannons, were sighted in use against civilians, including during the attack on Aceh. Yet the current Indonesian government is still paying for these tools of repression.
As fossil fuels become more difficult to access, export credits are again used to protect ‘British interests’ throughout the world. That’s why ECGD supported the Baku-Tiblisi-Ceyhan pipeline – an oil pipeline connecting up the Azeri oil field in the Caspian Sea to the Mediterranean, passing through Azerbaijan, Georgia and Turkey. The pipeline started pumping up to a million barrels of oil a day in 2006.
The pipeline included a series of controversial agreements between oil companies and the countries involved, which gave those companies special legal status. In essence, the agreements took priority over all national laws except the constitution, and prevented any new laws, including improvements in environmental or human rights laws, from affecting the companies' profits. Amnesty International argued that these agreements “effectively create a ‘rights-free corridor’ for the pipeline”.
There’s more where they came from. Like a hydro-electric power station in Kenya which cost four times what it should have done and produced only a fraction of the power promised. The Kenyan press called the project “a stinking scandal” for which the Kenyan government are still repaying.
Then there’s a power station in Dabhol, India. In June 2001 the station was closed after the electricity board decided not to buy any more power from the plant because it cost four times more than other domestic power producers. The power plant now sits dormant and a country in which 450 million people are living in extreme poverty, faces a compensation bill for a project that has not served its needs.
Promoting a green and pleasant land?
In a recession, export credits are presented as a key way that the British government can support struggling industry and re-stimulate the British economy.
But what sort of economy is the ECGD currently promoting? Sure it could help struggling British exporters at the leading edge of useful innovation. It could help create jobs in renewable energy sectors. But there isn’t much chance of that when the ECGD does not even have a policy on climate change.
While campaigners have given ECGD a relatively easy ride in recent years, business lobbyists have been pushing back on the already poor standards that do exist. Early in 2010, the Labour Government watered ECGD standards down. One example of what this change will mean is that smaller investments will no longer be screened for any sort of social or environmental impact – even on issues as significant as child labour and forced labour.
This means supporting British interests at the expense of human rights abuses, environmental destruction and corruption in other parts of the world. If we want to avoid another generation of reckless projects and toxic debts, we need to change the ECGD now.
This article first appeared in Red Pepper.
Egypt's debt must fall with Mubarak's regime
The debts of Egypt and Tunisia must be cancelled if the people on the streets of Cairo and Tunis are to take control of their economy and hold Western countries to account
In the best tradition of dictators, Hosni Mubarak pillaged Egypt’s economy, and leaves office with as much as $70 billion in his family’s bank account while he bequeaths $30 billion in debt to the Egyptian people. Zine el Abidine Ben Ali leaves $15 billion to the people of Tunisia, taking a more modest $3 billion for himself. As more regimes come tumbling down, so these injustices will multiply.
The true creditors of Egypt, Tunisia and elsewhere are not the Western states who used loans to prop up their tough guys across the Arab world – they are the people of these countries who suffered under this rule. The West must now repay those debts by opening up their lending to public scrutiny, returning the assets of Mubarak and his cronies that have been banked in Europe and the US, and cancelling unjust debts across the Arab world. The Egyptian people must not continue to pay the bill for Western complicity through large debt repayments.
It is too easy for American and British leaders to issue warm words to the people of these police states who have endured corruption, torture and violations of human rights for decades. In fact Tony Blair has been the most honest appraiser of the situation. While most Western leaders dropped Mubarak so fast that you wonder how his desperately unpopular regime clung onto power for so long, Britain's former Prime Minister called his one time ally "immensely courageous and a force for good".
For the US and Europe, Mubarak was indeed an excellent client. Egypt repays its loans, many of which were undoubtedly run up in the interests of the regime rather than the people, at a rate of around $3 billion a year. This money has diverted what could otherwise have been used to improve the lives of ordinary Egyptians. Since 1981, Egypt has paid the equivalent of $80 billion dollars in debt and interest repayments, helping redistribute money from Egypt's poor to the global rich.
Some of the country's debt is undoubtedly military in nature. Egypt receives more US military support than any country in the world apart from Israel – well over $1 billion a year since Mubarak came to power in 1981. The British Government has allowed UK companies to supply Egypt with as much as £23 million ($37 million) of military equipment in 2008, £16 million ($26 million) in 2009. No doubt this came in useful when Egypt became a major centre for the US’s “war on terror” programme of kidnapping, secret flights and illegal detention and torture.
Egypt currently owes nearly £100 million ($160 million) to the UK. Although the Government refuses to say what Egypt's debt is based on, we know that it relates to British exports through the controversial Export Credits Guarantee Department, largely based on sales which took place early in Mubarak's rule. This shadowy Government department insures British business working in ‘risky’ parts of the world – usually supporting arms, aerospace and fossil fuel industries.
Tunisia faces a similar situation – under Zine el Abidine Ben Ali, the country made repayments well in excess of $40 billion. Again, Ben Ali served Western interests while suppressing his people who finally rose up against his rule in January.
When people have begun to take control of their countries in the past – from apartheid South Africa to Bolivia, from Argentina to Poland – debt has been used as a key means of forcing undemocratic economic policies on those countries. These policies have caused great pain and suffering to the poorest in those societies, and put a block on democracy extending in anyway into the economic sphere. If the revolutions in Tunisia and Egypt genuinely usher in a new era of independence for the people of those countries and if, as seems likely, the spark which has been lit in North Africa spreads across the Arab world, the next step will be holding to account those responsible for decades of kleptocratic and brutal rule.
As well as trying to recover money stolen by their former rulers, this means questioning the legitimacy of the debt that kept those rulers in power. It is time for the people's of North Africa to break their chains of debts which have already helped suppress freedom and development for a generation.
This article first appeared on: www.naomiklein.org/articles
In the best tradition of dictators, Hosni Mubarak pillaged Egypt’s economy, and leaves office with as much as $70 billion in his family’s bank account while he bequeaths $30 billion in debt to the Egyptian people. Zine el Abidine Ben Ali leaves $15 billion to the people of Tunisia, taking a more modest $3 billion for himself. As more regimes come tumbling down, so these injustices will multiply.
The true creditors of Egypt, Tunisia and elsewhere are not the Western states who used loans to prop up their tough guys across the Arab world – they are the people of these countries who suffered under this rule. The West must now repay those debts by opening up their lending to public scrutiny, returning the assets of Mubarak and his cronies that have been banked in Europe and the US, and cancelling unjust debts across the Arab world. The Egyptian people must not continue to pay the bill for Western complicity through large debt repayments.
It is too easy for American and British leaders to issue warm words to the people of these police states who have endured corruption, torture and violations of human rights for decades. In fact Tony Blair has been the most honest appraiser of the situation. While most Western leaders dropped Mubarak so fast that you wonder how his desperately unpopular regime clung onto power for so long, Britain's former Prime Minister called his one time ally "immensely courageous and a force for good".
For the US and Europe, Mubarak was indeed an excellent client. Egypt repays its loans, many of which were undoubtedly run up in the interests of the regime rather than the people, at a rate of around $3 billion a year. This money has diverted what could otherwise have been used to improve the lives of ordinary Egyptians. Since 1981, Egypt has paid the equivalent of $80 billion dollars in debt and interest repayments, helping redistribute money from Egypt's poor to the global rich.
Some of the country's debt is undoubtedly military in nature. Egypt receives more US military support than any country in the world apart from Israel – well over $1 billion a year since Mubarak came to power in 1981. The British Government has allowed UK companies to supply Egypt with as much as £23 million ($37 million) of military equipment in 2008, £16 million ($26 million) in 2009. No doubt this came in useful when Egypt became a major centre for the US’s “war on terror” programme of kidnapping, secret flights and illegal detention and torture.
Egypt currently owes nearly £100 million ($160 million) to the UK. Although the Government refuses to say what Egypt's debt is based on, we know that it relates to British exports through the controversial Export Credits Guarantee Department, largely based on sales which took place early in Mubarak's rule. This shadowy Government department insures British business working in ‘risky’ parts of the world – usually supporting arms, aerospace and fossil fuel industries.
Tunisia faces a similar situation – under Zine el Abidine Ben Ali, the country made repayments well in excess of $40 billion. Again, Ben Ali served Western interests while suppressing his people who finally rose up against his rule in January.
When people have begun to take control of their countries in the past – from apartheid South Africa to Bolivia, from Argentina to Poland – debt has been used as a key means of forcing undemocratic economic policies on those countries. These policies have caused great pain and suffering to the poorest in those societies, and put a block on democracy extending in anyway into the economic sphere. If the revolutions in Tunisia and Egypt genuinely usher in a new era of independence for the people of those countries and if, as seems likely, the spark which has been lit in North Africa spreads across the Arab world, the next step will be holding to account those responsible for decades of kleptocratic and brutal rule.
As well as trying to recover money stolen by their former rulers, this means questioning the legitimacy of the debt that kept those rulers in power. It is time for the people's of North Africa to break their chains of debts which have already helped suppress freedom and development for a generation.
This article first appeared on: www.naomiklein.org/articles
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