Naomi Klein: The Rise of Disaster Capitalism

2005-04-16

Richard Moore

--------------------------------------------------------
From: "Janet M Eaton" <•••@••.•••>
To: •••@••.•••
Date: Fri, 15 Apr 2005 21:53:40 -0300
Subject: The Rise of Disaster Capitalism by Naomi  Klein April 14th The Nation 

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."

fyi-janet  

===================

http://www.thenation.com/doc.mhtml?i=20050502&s=klein  
column | Posted April 14, 2005 
LOOKOUT by Naomi Klein 
The Rise of Disaster Capitalism  

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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