The World Bank and the Politics of Hunger

international | anti-capitalism | opinion/analysis Tuesday December 21, 2004 13:25 by Terry - NUIG Ecology Society/Anarchist Federation/Organise! (personal capacity) room101ucg at yahoo dot co dot uk

Backgrounder on the social origins of world hunger and on the policies of the I.M.F. and World Bank.

THE POLITICS OF HUNGER

“The more important lesson of the 20 years of Band Aid must surely be bringing into sharp relief the naiveté of those years that symbolic acts of genuine human solidarity will somehow change the hearts and minds of the powerful both in Africa and internationally. They can throw a few coins at the problem to appease immediate pressure and gain public mileage but the real change will only come from raising the power questions that turn drought into famine. It is politics and power that makes Africans seemingly more vulnerable to hunger and starvation than other peoples. Africa is not a poor continent but our peoples are poor because they are powerless over their resources. People are powerless in their countries and our countries are impotent in global power relations. That is why we get fleeced on all fronts.”
”The extreme poverty faced by many Africans in a majority of our countries is structural and unless both the internal and external dimensions of that unequal power relation are transformed I can assure you that in another 20 years, when Bob Geldof and many of his original collaborators would have become Old Age Pensioners (OAPs) they may still be organizing Band Aid”
- Dr Tajudeen Abdul-Raheem, of the Pan-African Movement, Kampala, Uganda.

The starting premise of charity is of weakness, hopelessness and helplessness, passive suffering in the Majority World occurring as if by force of nature, as if by accident, usually without any reference to the social context, always without any reference to factors external to the South. That is without any reference to relations between the North and the South. Hunger is not an accident.
Hunger is not caused by lack of resources. Hunger is not caused by too many mouths. Hunger is not caused by nature.

We live in a global economy where the determinant of what is produced and what is distributed is competitive market exchange for private profit. What sells is what is produced. If it doesn’t sell it isn’t produced. If it is produced and cannot be sold, it is destroyed.
The factors at the core of world hunger are access to land, that is, private ownership, and production for market exchange. Hence land is used for export agriculture because the is where the profits are.

The primary commodity export orientation of Southern economies was established under colonialism, primary commodities being raw materials and unprocessed food stuffs. This was reinforced during the last decades of structural adjustment policies dictated by the global financial institutions, the World Bank and I.M.F. So this makes for a situation where the working population is not a market just a labour cost, hence no need to do anything in regard to them other than just reduce costs, that is, wages and working conditions.

The fact that innumerable other areas are also producing the same few commodities, e.g. cocoa, sugar, coffee, makes for a price war with other producers and a further drive to reduce costs.
Dependence on the world market leads to devastation from changes in trading conditions as was the case with sugar production in the Philippines and bananas in Jamaica.
High taxation on Southern imports in the North by the stealth of farm subsidies adds a further twist of the screw.

For some examples consider the famously fertile land of the Punjab in India currently producing cat and dog food for export, while Haryana, also fertile, also in India, dedicates itself to the production of tulips.

The majority of the rural population, labourers and small farmers, have their access to land, never good to start with, steadily eroded due to ‘development’, that is greater use of mechanisation and technologies. This for the reason that such “development” is only affordable to the strongest farmers, making small farming uncompetitive and replacing hands with machines.

There are 830 million hungry people world wide – one third in India. In 2000 the Indian government had 60 million ton surplus of food grain and would buy no more from its farmers. Thus food stuffs were being destroyed in India, amidst widespread hunger. Giving it away would, after all, adversely affect the market price. Meanwhile India was importing grain from U.S. companies in stipulation with World Bank demands. India is actually the biggest importer of grain it exports, that is to say it sells to multi-nationals and then buys back from them.

Brazil is the world’s third largest agricultural exporter, with two thirds of the population hungry, and a massive amount of unused agricultural land – as large as the size of India. It also has a considerable movement of landless labourers attempting to alter this situation. This is not, of course, the image of helplessness promoted by charity.
20 million rural poor are landless in Brazil, while the richest 1% own as much land as the poorest 56% of Brazilian farmers. In 83 countries 3% of farmers’ control 79% of farmland.

If that wasn’t enough there is also food dumping, which is the sale, below market price, of state subsidised food stuffs by Northern corporations, to create a new market. This is sometimes achieved in the form of government “aid”. For instance Kenya switched from self sufficiency to importing 80% of its food, while 80% of its exports are agricultural. EU subsidised wheat was dumped there in the early 90s, another overall reduction in food security.

This shouldn’t surprise any Irish person with as much as a vague notion of their country’s history, and yes Ethiopia managed to find agricultural exports at the time of Live Aid.
So it is a matter of what is produced, by whom, and why, for what purpose.

A DIGRESSION: WHAT THE WORLD BANK FUNDS.

I’ll turn to the whole issue of international financial institutions and the debt crisis in a moment, but first I want to take a detour into the issue of what the World Bank dishes out the big cash for, what are the major projects of “development” it funds.

In 2000 the World Bank commissioned an independent study “Dams and Development” into major hydro electric dam projects. According to ‘The Ecologist’ magazine this study: “provides stark evidence that the world’s 45,000 large dams – which block over half the world’s rivers – have been failed experiments. They have failed to produce as much electricity and water, or control as much flood damage, as their backers claim.”
“They have made up to 80 million people homeless, and their benefits have largely gone to the urban well-off not the rural poor they displace.”
“Their effects on eco-systems have been disastrous”.

In 1982, more than 400 Maya Achí men, women and children were tortured, raped and killed by the Guatemalan army after their community peacefully opposed their forced relocation caused by the construction of the World Bank and Inter-American Development Bank (IADB) funded Chixoy Dam. The World Bank was closely involved in this development and massacre survivors are currently seeking reparations from both the banks and the government.

The World Bank has funded 500 dams in 90 countries, displacing 10 million people, and it is still funding dams. It has directly funded four out of the five highest dams in developing countries outside China, three out of the five largest reservoirs in these countries, and three of the five largest hydroplants.
So World Bank funded dams are larger and more destructive than average dams.

A study in 1999 found that the World Bank was financing 30 projects involving the incineration of medical waste, thereby producing harmful dioxin pollution.
In 1989 it was funding an anti-malaria project in Brazil involving the use of the notorious and much banned pesticide D.D.T., and it was the roads into the Amazon funded by the World Bank which were responsible for the rise in the incidence of malaria in the first place.

The World Bank provides ‘political risk insurance’ for the copper, gold and silver mine in Ertsberg Mountain, West Papua, Indonesia, which is jointly owned by American corporation Freeport Sulphur and British corporation Rio Tinto Zinc. It constitutes the richest copper deposit in the world, produces one fifth of Indonesia's G.N.P. and is the largest single contributor to the states’ tax revenue. Part of this mine is built upon the hunting ground of the Amungme people, whose resistance culminated in several acts of sabotage in the summer of 1977, principally the destruction of a pipe line which brings copper and other minerals to a sea port. The response of the Indonesia state, which annexed West Papua in the 60s, was to bomb the population. An estimated 300,000 people have been slain in the continuing occupation of West Papua. The relationship between mining and repression was underlined by the fact that the mine’s opening ceremony was the event where the then dictator Suharto re-named West Papua ‘Irian Jaya’, and the fact that metal containers on the mine site were used to hold political prisoners.

The World Bank also provided funding for the Indonesian state’s ‘transmigration’ programme, under which landless peasants are taken from Java and sent to settle places like West Papua. This is both an instrument against the indigenous population and a safety valve for unrest in Java itself, where 1% of the rural population own 35% of the land.
Most of them don’t fare very well, as they are sent into cleared forest land unsuitable for agriculture.

During the cold war period a clear corelation could be observed between the oppression carried out by pro-Western regimes and the opening up of the World Bank’s wallets in Washington. For instance following the coup d’etat which brought the above mentioned Suharto to power, a wave of repression was launched which claimed a quarter of a million lives according to the C.I.A. , half a million according to the Indonesian Army and many more than a million according to Amnesty International.
In its wake there was massive World Bank funding for the Indonesian state. The same is true of Pinochet in Chile, and Argentine and Brazilian military juntas.


STRUCTURAL ADJUSTMENT AND THE DEBT CRISIS:
A BACKGROUNDER


“When they decide to charge us back
Our land will be given away for nothing
There’s no way to pay our debts, no!
The US dollar gets higher
And so does our debts
There’s no way out
There’s no excuse
The International Monetary Fund
Don’t give a goddam fuck!”
- F.M.I. by Ratos de Porao


“Debt is an efficient tool. It ensures access to other peoples’ raw materials and infrastructure on the cheapest possible terms”.
- Susan George

“The problem can be seen every day in villages, towns and cities of the Third World when poor people, especially women and children, are unable to purchase food and medicine and slowly starve to death. Repaying Third World debts is literally killing the poor and costing the earth.”

- Father Sean McDonagh

According to Christian pressure group Jubilee 2000 7 million children die each year as a result of the debt crisis.


The International Monetary Fund and the World Bank were set up in July 1944 as part of the Bretton Woods conference. This was intended to regulate the global economy and facilitate international trade, preventing a return to the protectionist policies which came in after the Great Depression of 1929.
The IMF was to oversee fixed exchange rates and currency convertibility, as well as give loans in the last resort. The World Bank was to be principally a lending institution. Both of these organisations were structured in such a way as to ensure American dominance, and can be seen as one of the mechanisms by which American imperialism moved into the vacuum left by the collapse of European Empires during the Second World War. Following the recovery of Europe in the 1950s their focus switched to the South.

The debt crisis came about through a variety of factors in the mid-70s.
Firstly through the oil crisis by which OPEC raised the price of oil, this meant that Arab states had a lot of capital floating about which ended up in Western banks and was recycled through loans to the South.
It also made for greater confidence in the south as it was thought this would be the first of many producer cartels to raise the price of basic commodities.
Its impact on the American economy was to intensify the trade deficit caused by the Vietnam war, so the American dollar was devalued, interest rates went up and developing countries struggled to pay for oil and to pay off loans. The real shock came with the second oil price rise in 1979.

The whole debt issue has to be seen in class terms, it is the elite who accrued the debt, often through corruption cream offs, or for military spending, something usually directed at their own subjects, or for “development” in a form diametrically opposed to the interests of the poor majority, e.g. subsidies for ranchers, or for wasteful status projects. Somoza in Nicaragua and Mobutu in Zaire were the classic examples of this. It is the working class and poor peasantry who have to pay however.

The full scale debt crisis kicked off in 1982 when Mexico came close to defaulting on its loans. The I.M.F. stepped in to bail out the private banks and financial institutions who lent the money in the first place.
Subsequently structural adjustment came out of 1985’s ‘Baker Plan’.

Structural Adjustment Policies, or SAPs, seek to deflate domestic demand and hence promote exports to earn hard currencies to pay debts. SAPs also divert public spending away from social purposes to debt payment and aim to restructure economies away from import substitution toward ‘traditional’ cash crop exports. In general they promote monetarist neo-liberal economic policies over state intervention.
These are imposed by the I.M.F. and the World Bank both as means of paying off loans, and as conditions on new loans. Their imposition is possible as without the green-light from these institutions a state will be much less likely to receive loans from elsewhere or to receive foreign investment.

The privatisation and neo-liberal policies of structural adjustment make for large reductions in state employment, lay offs associated with privatisation, worse working conditions, pension reductions, and wage reductions. This is particularly horrendous as, with a weak private sector, state employment is of greater importance in southern countries.

For instance IMF structural adjustments, in Nicaragua in the early 1990s reduced state employment from 290,000 jobs to 107,000 – this representing a loss of employment for 9% of Nicaragua’s workforce. By 1999 only 80,000 were in public sector employment in the country.
In Tanzania there was a 27% reduction in public sector employment between 1992 and 1999.
In Ghana 100,000 workers lost their jobs both through privatisation and civil service reforms.
10% of government employees were made redundant in Haiti in 1998.
In 1996 in Kenya 33,000 state employees lost their jobs.
The author, and most readers of this article, cannot put ourselves in their shoes as the deprivation resulting from unemployment in the South is beyond our imagining.

Privatisation has included banks, rubber plantations, water services, national airlines and railways, telecommunications companies, transportation companies, breweries, copper mines, refineries and just about anything which can be sold off, often to multi-national corporations.

IMF/World Bank policies on water services have included both privatisation and price hikes.
This has resulted in, in the case of Ghana, the cost of a bucket of water becoming a seventh of the minimum daily wage of 1 dollar a day (which many people do not even earn). This has created much greater work for women, who have to travel further for cheaper, or free, water. Worldwide water privatisation has gave impetus to cholera, including the return of cholera to Latin America. According to the World Health Organisation 2 million people die annually from diseases associated with a lack of access to clean water, e.g. guinea worm, cholera.

The affects of health cut backs and health care privatisation need hardly be elaborated, especially in regard to AIDS in Africa and the millions who die every year from preventable diseases.
One Chilean doctor outlined the effects of a two tier health service, with a privatisation on the one hand and an under-funded state service on the other, thus:

“We don’t even have enough sheets…We have to tell patients’ relatives to bring sheets, syringes, medicines, it’s embarrassing and it’s demoralising to work now in a public hospital. The patients we see here and their families – they have to sell everything, their furniture, everything, to afford the medicines. Sometimes, it’s better not to tell them that, yes, we could do something to cure you or your loved one because you know they won’t be able even with the help of relatives and friends to come up with the money for the medicines.”

In regard to trade, core issues are the removal of regulation for investment, currency devaluation to promote exports and the reduction of protective tariffs. This promotes the classical colonial style development based around the export of one or two primary commodities, that is raw materials or unprocessed food stuffs. More than 50 developing countries depend on 3 or fewer commodities for over half their export earnings, 20 countries are dependant on such commodities for over 90% of all their foreign exchange earnings. The effects of this have been addressed above in the section on hunger.
From the opening up of trade, comes the resulting decline of industries unable to compete which produces unemployment. Unemployment, as we know, brings in its wake, lower wages and worse working conditions.

Deregulation allows for more capital flow out of the South, and for multi-nationals to export pollution, and enjoy non-unionised workforces with less entitlements and health and safety protection.
The wider social impact of structural adjustment includes an increase in violence and crime as people seek other means of acquiring livelihoods and status.
The wider ecological impacts of structural adjustment include greater deforestation and desertification as more land is used for cash crops and peasant farmers are forced off the most fertile lands into clearing hills for agriculture, furthermore more destructive mining, or logging, and other such expansions of the production of basic commodities. Moreover greater international trade facilitated by the decline of indigenous industries makes for environmental harm from more shipping, while the orientation of southern economies towards often their only growth industry, tourism, makes for more of what is one of the worst contributors to global warming – air travel. This then helps create the devastation caused by flooding and extreme weather.

The debt crisis represents a massive transfer of capital and resources from the South to the North, a remorseless extraction from some of the poorest areas in the world.
50% of Tanzanians live on less than a dollar a day, 33% live on less than 50 cents a day; the infant mortality rate of under fives is 137 per 1,000 births, making a Tanzanian child 23 times more likely to die before age five than an Irish child.
In Tanzania life expectancy is 47.9 years, thus an average Tanzanian can expect to die almost 30 years before an Irish person.
49% of the population have access to safe water, access to sanitation is less than 10%, and secondary school enrolment is 6%.
Meanwhile 27% of government revenue is spent servicing the debt.
A 1999 study of the Horn of Africa (Ethiopia, Eritrea, Somalia), found that nearly seven out of ten of the population suffer from malnutrition, and half of all children under five are underweight with nearly 500,000 dying each year, while Ethiopia sends £1.2 million sterling every week to service a £10 billion debt.

In the later half of the 90s Heavily Indebted Poor Countries Initiatives (H.I.P.C.s) were launched, supposedly to reduce the impact of debt crisis on the most impoverished areas. This part of the new look World Bank, new look I.M.F., new look debt crisis, addressed further on. An investigation into the H.I.P.C. for Tanzania by the Tanzania Social and Economic Trust and the Debt and Development Coalition found that it “fails to deliver even on its own inadequate terms”.