Las Am��_ricas

The Real Looting Begins


Now that the Iraq invasion is complete, we can all breathe a short sigh of relief and settle down to wait for the price of oil to drop. Except for the Iraqis, who, unfortunately for them, are just waking up to their new post-conflict country, so recently demolished by the Coalition of the Willing. And we do mean demolished. After exterminating random civilian clusters, the Coalition was willing to bomb the electricity grid, blow up water systems, dynamite roads and bridges and leave the surviving population without such niceties of modern life as illumination, taps and toilets.

This will soon be fixed by the Junta—of-the-Promoters-of-Sustainable-Development-with Equity-Efficiency-and-Freedom. We are talking about, of course, the World Bank and the International Monetary Fund, which, in keeping with their long tradition of charitable giving, recently pronounced themselves available to support the reconstruction of Iraq as soon as the United States Treasury Department can rig up the necessary protocols. The World Bank, as you know, has a history of reconstruction and considerable expertise in this field. The crack team of conflict experts at the Bank has observed that war leads to a: “Collapse of the state’s ability to function for extended periods, widespread conflict-related destruction or neglect of infrastructure, and diminished state and civil society capacity to meet reconstruction needs.”

Yes indeed. This mess, however, will be addressed shortly by the Bank and the Fund working with development and humanitarian agencies, government authorities (as soon as the most ingratiating contestants can be selected), civil society and “private sector entities that have complementary mandates and common concerns.”

Question: Complementary and common to what?

Answer: To the World Bank’s “development” goals, which include, primarily, market penetrating and income concentrating through the creation of an attractive and healthy business investment climate. As we are all aware by now, private investment spurs economic growth, which provides jobs, which leads, in turn, to prosperity, appropriate cultural attitudes, and widespread enthusiasm for meaningless and diversionary political floor shows.

In compliance with this plan, the Heritage Foundation, a think tank frequently consulted by the Bush administration, has developed a quasi-official blueprint for post-conflict Iraq:

The new post-Saddam federal government should: develop a modern legal system that recognizes property rights and is conducive to privatization; create a public information campaign that prepares the people for structural reforms and privatization; hire expatriates and Western-educated Arabic speakers with financial, legal, and business expertise for key economic positions; deregulate prices, including prices in the utility and energy sectors; prepare state assets in the utility, transportation, pipeline, energy, and other sectors for privatization (psssst, this means OIL); keep the budget balanced and inflation, taxes, and tariffs low; liberalize and expand trade; and launch an effort to join the World Trade Organization (WTO).

So there you have it. As a result, we were not surprised to find Bechtel leading the pack into the reconstruction effort with a $680-million contract from the U.S. government over 18 months, awarded through a bidding process limited to a favorite few U.S. monolithic corporations and sweetened with taxpayer-backed guarantees so the company assumes no risk. And we can soon expect to see the customary clique of engineering corporations lining up to make generous withdrawals from the World Bank and the IMF Post-Conflict Fund. Clearly, the funds will go directly to the likes of Halliburton, Fluor, Bechtel, and AES to rebuild and operate the electricity and water systems because there will be no functioning government to handle them instead. Iraq can become the new model for privatized services, an example to be used by the Bank and the Fund as they pry open Third World markets in services ahead of the coming trade agreements.

Admittedly, the Iraq Attack was a fairly dramatic way to restructure the public sector, strip state assets and privatize services, three of the U.S. Treasury and Commerce Departments’ and the World Bank’s primary aspirations for the past decade or so. We do not mean to suggest that these developments were the principal motives behind the invasion (although the real ones have yet to be permanently pinned down), but since downtown everyplace in Iraq is a smoking ruin, why not take advantage of the chaos to set up the World Bank’s dream developing country? A military occupation relinquishing power to a gerrymandered election process in which desperate voters choose between Former Iraqi Banker A and Former Iraqi Investor B, one of whom will ultimately oversee an entirely corporate economy with the world’s taxpayers footing the bill for all costs and risks until the Iraqi taxpayers themselves can pick up the tab. Note: Oil revenues will be unavailable to support this process, as the oil fields are among the first of the public resources slated for privateering.

The World Bank has been trying to figure out how to set up this deal in its unlucky client states for a long time. We are not kidding. Or exaggerating. The Bank is right on out there with the Heritage Foundation when it comes to cranking up public information campaigns to flog privatization because, in addition to its post-conflict operations, the Bank has its no-conflict machinations. These are the stratagems devised to close down every meaningful channel of political debate about State assets and responsibilities for economic and social services by manipulating legislatures, trade unions and the media into agreement with the prevailing corporate agenda at the World Bank and the U.S. Treasury. Recently, in fact, the Public Communication Program for Privatization Projects: A Toolkit for World Bank Task Team Leaders and the Clients came to light illustrating this very point. In reading the toolkit, we learned that the Bank views democratization as a constraint to privatization because it can result in “investor uncertainty.” “Vested interests” are also an obstacle. By these, the Bank means organized public workers who obstinately prefer keeping their jobs to embarking on promising new careers in microenterprise by squeegeeing windshields at traffic lights.

The Toolkit identifies for task managers and team leaders the opposition they may face, for example, when trying to sell someone else’s water system to Bechtel or their oil fields to Amoco:

Such opposition can come from a variety of concerns, including: the preservation of national sovereignty or independence, the desire to retain national control over certain activities or interests, the fear that wealth may become concentrated in the hands of a few private parties, the dismantling of industries, labor unrest resulting from job loss, raising tariffs and costs.

Sounds like a legitimate set of qualms. Rather than addressing them, however, the Bank recommends that team leaders use high-profile political leaders to assure workers and consumers that their fears are groundless. To illustrate the cleverness of this approach, the Toolkit cites Argentina’s privatization of the telecommunication agency ENTEL. This could not have been accomplished “…had President Menem not established his office as the political champion of the reform program, and his government not espoused it so clearly and supported it so vigorously.” President Menem, of course, has since been convincingly exposed as one of the biggest crooks in the Western Hemisphere who, together with his cronies, stole a hefty percentage of the privatization proceeds and left office just ahead of Argentina’s catastrophic economic collapse. As it turns out in Argentina, those who were afraid of the loss of national sovereignty, industries and jobs, had good reason to be.

Never mind. Bad example. The Toolkit goes on to instruct users in methods of developing a propaganda campaign to sell off the state and the national patrimony. This requires money, well-defined goals, targeted messages and credible spokespersons. If Carlos Menem happens to be momentarily discredited or incarcerated, or (in Iraq’s case) the President has not yet been selected, the Bank suggests using non-governmental organizations, religious organizations and churches to shill for private corporations. These organizations have two compelling attractions: 1) people believe what they say, and 2) many of them sell cheap.

Next, audiences likely to question the program must be identified and targeted with appropriate messages. In the Bank’s experience, the most important targets are: government, politicians, the public-at-large, labor, managers of state-owned enterprises, consumers and the media, or, in other words, everybody.

Take on labor first: “Trade union leaders are among the most implacable foes of privatization because in most countries parastatal employees are overly politicized and provide more willing protesters than workers employed in the private sector.” For the World Bank, public sector labor leaders oppose privatization because they so enjoy those festive street demonstrations and refreshing blasts from the water cannons, and not because they have constituencies whose livelihoods are at stake. But whatever is at stake, this particular “audience” can be overcome. “In Argentina and Uganda, workers supported privatization when they understood through the government’s communication efforts that privatization was needed to obtain capital for new investments, to improve access to services, and that closure and loss of even more jobs could result from the failure to privatize.” In other words, once they understood that there would be no debate and that life would be even harder for them if they resisted, they caved.

To convince workers further, “Describe the incentives and social safety-net measures to be put in place…explain such concepts as property rights, shares as an alternative to bank deposits, the difference between interest and dividends….” In Argentina, of course, all of this was carefully explained, and, ten years after the public electricity provider was sold off for the city of Buenos Aires, not a single electrical worker retains a single share of the private companies. Many of the former workers remain unemployed, using their leisure to appreciate their profound comprehension of property rights. Could somebody explain that?

Well, yes, actually. The Toolkit: “…Free vouchers or discounted employee shares might not be appropriate instruments if the main objective is to maximize revenue, but they might well serve the political objectives of the program.” The Bank has thought of everything. In Argentina, political resistance from public workers’ unions required a two-phase privatization strategy. First, workers were awarded shares in the new company in exchange for resigning their jobs. Second, the shares were bought back by the company for a pittance over the course of the next two years from the now impoverished and unemployed former workforce.

Once these steps have been completed, task mangers and team leaders can stop worrying about labor: “Stake-holders of low influence and low importance are unlikely to be closely involved in the (privatization) project and require no special participation strategies.”

Stakeholders of high influence (although low importance) are another matter, however. These may include legislative representatives, who must also be co-opted. The Toolkit outlines this delicate operation: “Build a legislative support base for privatization transactions. To achieve timely passage of legislation on privatization, it is necessary that the government identify a key group of legislative supporters for individual transactions and that they be nurtured in a systematic and consistent manner.” Of course, everyone knows what it takes to nurture certain legislators—the only question is how expensive will their cultivation be? In the case of Iraq, where a legislature has not yet been invented, this may not be a problem. Still, the willingness to sell off the state is a useful criterion to apply in selecting contestants for potential legislative positions. For background on this procedure we turn to the Adam Smith Institute, a British think tank and a favorite source of privatization consultants for the World Bank. The ASI warns that transformation from an authoritarian state to a representative government can have negative consequences if not managed correctly. This is because, in order to privatize extensively, “rapid construction of a legal and institutional framework” is required, and therefore, legislation may also be necessary. To control legislators, the World Bank recommends the creation of a Privatization Commission made up of key ministers to: “Monitor information flow and the stance of members of parliament on key issues,” and “Refine strategies to ensure passage of key legislation.” Like labor unions, legislators must be made aware of the benefits of privatization and the “costs of inaction.”

This last is an extremely important point. Any holder of any stake must appreciate the fact that there is no alternative to a hostile private takeover of their country. Here’s ASI again on Iraq: “Privatisation is thus important in a negative sense, in that it will close off the path of a state-dominated approach to development. That path is a dead end. Investment in state enterprises is no longer regarded as an effective approach to economic development.” Period.

Well, thank God the state is dead. Or nearly so. The Toolkit warns us that journalists and the media may attempt to subvert privatization in pursuit of their own nationalistic agendas and are likely to adopt a cynical and disrespectful attitude toward the privateers. The media may even be antagonistic if journalists perceive that foreign capital is expropriating national assets. These troublemakers should therefore be made aware that they will need to cover the corporate takeover in a more objective and balanced manner. To accomplish this delicate maneuver in Africa, the World Bank Institute organized a series of seminars to train journalists and help them to understand the complexities of the privatization process. Together with the Adam Smith Institute, the Bank found it useful to obscure the sponsorship of these events. As explained in the Toolkit: “Experience has shown that such training is more credible and effective if organized by a well-established academic institution…” rather than by readily-identifiable craven toadies of the World Bank, such as the employees of the ASI, presumably.

Finally, the World Bank recommends that task managers evaluate the effectiveness of their communications strategy. This is harmoniously straightforward. If all goes according to plan, legislators pass authorizing legislation, political leaders express support for privatization in speeches, government and private sector officials chat up union leaders, consumers and civil servants, all of whom engage, in turn, in constructive meetings for planning privatization. Consumers cheerfully pay for the privatized service, citizens vote for privatization, and journalists cover the issue extensively and favorably.

Oh, please. Three years ago, Public Services International, an international trade union federation, and the Bretton Woods Project, a network of British nongovernmental organizations established to monitor the World Bank and the IMF, published a discussion of the New Washington Consensus in which the author, Brendan Martin, pointed out that the new part of the policy was the bogus
consensus. That is
the World Bank, the IMF, the U.S. Treasury and their corporate owners had come to believe that, just as infrastructure could be engineered by Bechtel, social consensus could be engineered by the Adam Smith Institute. Martin described “…a new paradigm in which the state is re-engineered to more actively assist a global market dominated by a few countries that are already rich and the transnational businesses primarily based in them, but emphasizing the need to win people’s consent for their own servitude.”

The plethora of communications campaigns, toolkits, public participation strategies, and civil society consultations churned out in recent years by the World Bank bears this out. The unspoken assumption behind all of these tactics is the conviction that workers and citizens are compliant morons who, no matter how crass the generalized larceny, will not notice what is going on. There is no empirical reason to believe that this is true. On the contrary, most people readily realize that they have lost their jobs and their water bills are suddenly higher than their monthly incomes. No matter how long and how often the Bankers and the Bechtels chant “equity and efficiency” or “freedom and democracy” as they rip off every thing worth having, looting is looting. No amount of propaganda will, in the end, make the public—to whom public assets really belong—like it any better or put up with it forever.

Gabriela Bocagrande writes about beltway bandits and multilateral malfeasance for the Observer. She lives in Washington, D.C.