Las Am��_��_ricas

Banks, Beaches, and Bondage

After the gala opening festivities of the Inter-American Development Bank’s Annual Meeting in Brazil last month, Enrique Iglesias, the President of the IDB, and Martus Tavares, Brazil’s Planning Minister, received the Medal of the Abolition from the Governor of the host state, Ceará. The medal, commemorating the abolition of slavery in 1884 in Ceará, was given in a touching ceremony recognizing the distinguished public service of both men. The two of them then presided over three days of intense negotiations while the IDB, Latin America’s major creditor, and the Central Bankers of the hemisphere flogged their policies of lending huge amounts of money to corrupt politicians and unscrupulous businesspersons.

Attending the meeting was not easy, unless you had little flags on the front of your limo or a great fat wallet in your back pocket. The convention center where it was held was surrounded by a heavily armed military cordon, apparently prepared to hold off the Tet offensive. Entrance points included slalom courses of bright orange barrels to slow all approaching vehicles and turn them into easy targets for the crack firing squads of the Brazilian Armed Forces, if necessary. But once safely inside, the gathered bankers periodically took breaks from awarding and lending to congratulate each other on their handling of the current financial crises affecting Argentina, Brazil, Ecuador, Colombia, Peru, and Nicaragua, without, needless to say, recognizing the common denominator in all of these fiscal cave-ins, which is, of course, themselves.

Lamentably, awarding the Abolition Medal to Iglesias and Tavares may have been premature, as The New York Times reported two weeks later that slavery is on the rise in Brazil. The Times article, “Brazil’s Prized Exports Rely on Slaves and Scorched Land,” explained that mounting pressure to exploit the Amazon frontier for mahogany and beef exports has led to a dramatic increase in forced labor, never mind scorched earth. Recent estimates show that there are now more than 25,000 coerced workers in Brazil, up from about 5,000 ten years ago.

The usual suspects are behind Brazil’s relentless push for exports: the International Monetary Fund, the World Bank, and the IDB. The country needs the income from exports to pay its catastrophic external debt (more than $240 billion and rising), which these institutions helped create. The whole operation is like an enormous bankruptcy sale, where Mr. Iglesias on behalf of the creditors and Mr. Tavares on behalf of the debtors, supervise the disposal of the collateral. Brazil’s Amazonian mahogany, for example, is popular at Ethan Allen Furniture in the United States and can be appropriated, while Brazilian steaks are experiencing growing demand in Europe where the gourmands have discovered that their offal-fed local supply threatens to turn their brains to mush. For expedient export of both commodities only new roads and raw labor are necessary.

This can be arranged. In fact, as The New York Times pointed out, a lot of it has already been arranged. Over the past four years, the IDB alone has lent Brazil $550 million for highways and roads because after all, a long smooth stretch of pavement from the Amazon to the closest seaport is helpful in speeding those tree trunks and cow corpses on their way.

“Agriculture figures prominently in Brazil’s move toward a stable, open, and globally integrated economy…” says the IDB’s country strategy paper. The government and the IDB are going to make Brazil’s agriculture more competitive and “overcome constraints to development,” they go on to say, apparently believing that scorched earth land-clearing methods and slave labor are not quite competitive enough.

With its typical understatement the IDB admits that, in Brazil, the globalization process–meaning the opening of domestic markets and the consequent devastation of national industry, the privatization of public enterprises and the resulting theft of public funds and assets, the slashing of the public budget and the loss of food subsidies and jobs, and the desperation to export–”has not been as favorable as it might have been.”

I’ll say. More than 20 percent of the population lives in extreme poverty (less than a dollar a day), while the richest 10 percent swallows up nearly 50 percent of the income produced. This situation, which the IDB refers to as a “knotty challenge,” persists despite enlightened IDB-sponsored development policies, such as the “Advance, Brazil” program, promoted under the heartwarming slogan “Export or die.” Advance, Brazil calls for the government to boost exports and cut its deficit from 100 percent of GDP in 2000 to 4 percent in 2004, which means that it’s going to have to spend a lot less. In adopting this plan, Mr. Tavares has agreed to spend a whole lot less on the luxury services typically provided by civilized governments, such as public health and education, since nearly half of public expenditures go to pay the debt and those payments must continue, by God.

The IDB does recognize that such a rapid Advance may be bad news for poor people, as well as for much of the rest of the population in this part of Brazil. To take up the slack, Mr. Iglesias and Mr. Tavares are sponsoring microenterprise development and tourism because microenterprises are, essentially, poor people exploiting themselves, and tourism is also a form of export, since theoretically it brings in foreign money. The city of Fortaleza on the coast of Ceará, where the IDB Annual Meeting took place, will be a major beneficiary of both programs, although it is very possibly the hottest, wettest place on earth and hardly the ideal spot for a holiday unless you’re a snake or a maggot. Never mind. So long as there is a palm tree or salt water in sight, tourism is the IDB’s answer to any and all development lapses. In a highly publicized flourish, therefore, Iglesias signed a $240 million loan for the PRODETUR II program to bring casinos and cruise ships to Fortaleza in a manner that is both socially responsible and environmentally sound. He did say that.

In the spirit of complete candor and transparency, the IDB now concedes that PRODETUR I was not all that it was cracked up to be, with individual and unplanned investments ballooning unexpectedly–without adequate infrastructure. This apologia must refer to the 10 or so blocks of downscale Ramada-type hotels that are already choking up what must once have been a reasonably scenic beachfront boulevard and routinely dumping raw sewage into the bay. Mistakes were made, but economists “learn by doing.” In this case they learned too late that a fleet of turds will take all the fun out of a day at the beach.

But curiously, if you read the terms of PRODETUR I and compare them to PRODETUR II, you will discover that–they are exactly the same. They did add some new blah-blah about promoting awareness campaigns among the citizens. In the tourism context, this generally means discouraging the locals from throwing trash on the street or mugging foreigners, and encouraging them to learn their national anthem, smile broadly at strangers, and wear colorful outfits. The IDB and the government have to be careful about this, though, because they don’t want to promote too much awareness. If the Brazilians are really paying attention, they will notice the following cautionary footnote in the PRODETUR II loan description: The public bank designated to handle the funds and lend them out to other government agencies has reached its limit for such loans under current law. The Central Bank of Brazil, however, intends not to question the IDB loan, but to change the law so that the federal government can guarantee the additional amounts. This means that when the Fortaleza Water Authority defaults on its loan because the Fortaleza Hyatt stopped paying its bills after the beachfront was transmogrified into a cesspool, the taxpayers of Brazil will have to cover the damage.

Slavery was an ugly chapter in the history of the Americas; it was abolished later in Brazil than in the United States and, it seems, reinstituted earlier. But already there are signs of revolt. On March 24, some 300 members of the Landless Peasants’ Movement occupied a plantation belonging to Fernando Cardoso, the President of Brazil, and his sons. They put on clothes that belonged to the President and his wife, threw a big party on the palatial grounds–eating and drinking everything in sight–and finished by smoking cigars given to Cardoso by Fidel Castro. Those who could be accommodated slept in presidential beds; the following day they were all arrested and returned to the quarters.

After official abolition, forms of bondage having to do with usury and debt achieve much the same ends as slavery once did: They rob whole populations of any meaningful role in politics, so that the peasants’ best shot is a plantation uprising. On a grand scale, the accumulation of billions of dollars in debt to the likes of the IDB effectively abolishes national sovereignty, along with democratic decision-making. The debt leaves policy-making in the hands of Massa Iglesias and his local administrator, Mr. Tavares, neither of whom seem to realize that Fortaleza is not Barbados, and that neither the Sheraton nor the Marriott Corporation are known for their commitment to social responsibility or environmental standards. But unfortunately, without the abolition of debt bondage, there is no emancipation from the crackpot policies of the IDB and their slavish implementation by the national overseer.

Gabriela Bocagrande, who knows that Fortaleza is not Barbados, is based in Washington, D.C.

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Published at 12:00 am CST
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