The era of market fundamentalism is over
" Reckless deregulation in California enabled Enron
and other energy companies to gouge customers."
iht.com
Robert Weissman The Washington Post.
Thursday, September 26, 2002
Developing countries
WASHINGTON Marketization, deregulation,
privatization and the opportunities for market
manipulation offered by inadequate regulation -
all central elements in the rise and fall of Enron -
are now discredited in the United States. And in
developing countries, where their effects have
been most devastating, they are the object of
widespread public opprobrium. Unfortunately, the
IMF and the World Bank continue to sing from the
market fundamentalist hymnal.
Just as Enron created new markets in exotic
commodities such as bandwidth, so the IMF and
the World Bank have worked to marketize services
previously in the public and noncommercial
realm. Case in point: user fees for primary health
care. The World Bank continues to support such
charges, even after reversing its support for
education fees.
The effect is to deny poor people access to care. In
Papua New Guinea, for instance, introduction of
user fees led to a decline of about 30 percent in
the average monthly attendance at outpatient
health centers.
Reckless deregulation in California enabled Enron
and other energy companies to gouge customers.
Similarly, IMF- and World Bank-induced
deregulation in developing countries has had
disastrous consequences. In the Philippines and
in Ghana, for example, deregulation in the mining
sector has opened the country to giant
multinational companies, displacing tens of
thousands of residents and paving the way for
environmental devastation. Central to Enron's
international agenda was the takeover of
privatized electricity and water services in
developing countries. One country where it sought
to gain control of a privatized water system was
Ghana. Concerns about corruption, including
those voiced by the World Bank, led to the
collapse of the deal. But the World Bank
continues to push for water privatization in the
West African nation. In preparation, water prices
have doubled, and the bank anticipates prices
rising for the foreseeable future, even though poor
Ghanaian consumers can pay as much as 10 to 20
percent of their income for drinking water. In a
country where one-third of urban consumers are
not even connected to water pipes, the private
operators would have no duty to expand service to
the poor.
In the Dominican Republic, World
Bank-supported privatization let Enron swoop in,
buy parts of the electric utility and jack up rates.
When consumers and the government could not
pay the high prices, Enron turned off the power.
Enron and other buyers of the privatized utility
are now alleged to have paid too little, thanks to a
valuation performed by an Arthur Andersen
subsidiary. Enron's financial fraud is now
legendary, but consider the IMF's deceit in Brazil.
Everyone knows that the country has no prospect
of paying off its foreign debt. But rather than
acknowledging this and working out a discounted
payment arrangement for creditors, the IMF is
making new loans to pay off old ones.
This has two immediate effects: It enables the
private creditors, including the big U.S. banks, to
be paid off, with debt obligations shifted to the
IMF; and it enables the IMF to extract austerity
measures from Brazil that are explicitly intended
to lock in fundamentalist market policies, no
matter which party Brazilians elect in coming
elections.
Restraints on corporate power are even more
necessary in developing countries than in the
United States. But the market fundamentalists at
the IMF and the World Bank continue to
systematically unshackle corporate activity in the
Southern Hemisphere. That is a major reason why
thousands will demonstrate against the IMF and
the World Bank in Washington this weekend.
Action makes a difference. In 2000, after the last
major U.S. demonstrations against the IMF and
the World Bank, Congress passed a law requiring
the United States to oppose IMF or World Bank
loans that include user fees for primary education
or health care. Partly as a result, Tanzania lifted
primary education user fees, and 1.5 million
additional children, mostly girls, were able to go to
school.
The writer, editor of Multinational Monitor
magazine, contributed this to The Washington
Post.
iht.com |
