Monday, April 18, 2005

Reconstruction deconstruction

/ colonialism / reconstructed /
Naomi Klein lambasts the Rise of Disaster Capitalism, not least but most pertinently on the ruins of the tsunami ravaged countries of SE Asia:
"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."

This seems to describe a reality on the ground. While locals complain about the snail's pace of reconstruction, developers attempt to reclaim the lands of the victims (more on the land grab from the CS Monitor and The Asian Coalition for Housing Rights), Australian and EU aid is denounced as neo-colonialism, while the whole Paris Club gesture of freezing debt is blasted or simply seen as a cynical PR gesture:
...the fact that interest accruing during 2005 will be capitalised and not cancelled is a quite striking repudiation of the creditors’ self-claimed generosity and solidarity toward those devastated regions and its survivors.

Moreover, the decision on the level of interest rates will depend on the willingness and generosity of each creditor country. “It seems illogical that debtor countries need to negotiate individually with each creditor country”, says Klaus Schreiner, from the International NGO Forum on Indonesian Development (INFID), based in Jakarta. “Why would a collective statement by the Paris Club be necessary in that case?”...

The disaster has proved to be a windfall for the spiritual vampires, who are buying "souls" with aid.

Thus your eagerness to donate to relief funds - was dwarfed by the eagerness of the usual culprits to suck an easy and vulnerable target dry. The IMF is looking forward to the tsunami spurring growth in the region. Others disagree.


Anonymous said...

Hum. Since I'm in the donor sector, this hits close to home. But I don't have time for a detailed response right now.

Short version: she's got a big piece of an important story, viz., the gross inefficiency of a lot of major donors, and the very high percentage of the take that's going to rent-seekers and middlemen. But (as always) she has to bend it to fit her world-view. It *must* be about wicked globalizers, because _that's what my last book was about_.

This is a much, MUCH more complicated topic than she's making it sound. There are multiple actors and multiple agendas. Just here in Romania, we got through a bruising fiscal policy battle where the World Bank was supporting higher payroll taxes in order to keep Romania's medical and pension systems afloat, the IMF was supporting higher taxes in order to keep Romania's budget balanced, and the Romanian government was determined to cut them in order to stimulate growth and, well, foreign investment. Nobody was lined up where Ms. Klein would put them, and the ultimate outcome -- a regressive flat tax -- was entirely the work of Romanians, with nary a foreign donor or consultant to be found.

That said, yeah, the donor sector is long overdue for massive reform. Putting aside Iraq as _sui generis_, I've watched firsthand as massive amounts of donor money have flowed into the pockets of consultants, subcontractors, rent-seeking "specialists", and well connected former bureacrats.

Anyway. Time being short, I'll just pick on the last point. "Spiritual vultures"... the CSM article that you link to doesn't really support that. It does say that "there are reports that... some smaller Christian groups" are proselytizing. (And I wouldn't be surprised if that were so.) But it points out that most of the major aid groups have signed the Red Cross code of conduct prohibiting proselytizing. Most of the article is about the responses to rumors of missionary activity, like the Buddhist group that wants to make it illegal to receive aid from someone of another faith.

I hold no brief for missionaries. But the major faith-based groups actually police themselves tolerably well. There will always be creeps and fanatics, but there's no evidence that the tsunami has triggered much new, opportunistic missionary work.

Also, note that many of the tsunami-affected countries have large Christian minorities. There are about a million Catholics in Sri Lanka, half a million Catholics and Protestants in Thailand, and about 15 million Protestants in Indonesia. I mention this only because local, established Christian churches are sometimes particularly hostile to aggressive missionaries. After all, they can upset delicate relationships that have kept the peace for generations. But when things blow up, the missionaries can fly home, and it's the local Christians who have to face the mobs. The Indonesian churches, in particular, are quick to mess with foreign missionaries who get too pushy.

Doug M.

talos said...

Doug. I think that the facts Klein mention hardly need any bending to fit her worldview.

As for Romania. I feign no expertise. But could it be that the IMF was thinking of implementing policies that would allow Romania to honour its agreement with that particular non-charitable organisation, as this article from the (Pentagon funded as I need to always point out) SE European Times suggests?

Having said that this "flat tax first and figure things out later" policy seems to be an interesting economic experiment... which seems rather risky with the EU accession pending - and which I wouldn't personally want to live through.

As for the "vampires" - I was referring to the groups mentioned in the article. I don't think that I suggested that *all* or even *most* of the religious based groups fit the description. No argument here really. I do think that the article suggests a heavier than usual flow of the creeps you mention in the area however.

I'm not sure what the situation is in Romania but there seesm to ba a lot of missionaries arriving over here lately too. Mormons and Pentacostals mostly. So annoying they make one feel that the (odious) Greek Church is a beacon of spirituality in comparison.

Anonymous said...

Actually, yeah, they do. (Require bending, I mean.) She's right about one big thing, wrong about almost everything else. But parsing that would require a longish comment even by my standards, and I'm going to Albania for a week of work on Sunday, so maybe not.

The new Romanian government implemented the flat tax, then found it had blown a billion+ dollar hole in the state budget. The IMF reasonably pointed out that this put them in violation of their agreement, and was also a very questionable idea economically anyhow (true).

IMO the Romanians would have been within their rights to say, "So?" More to the point, I think they would have gotten away with it... Romania is sort of a poster child at the moment (average 6% GDP growth since 2000), and new governments traditionally get some slack.

But the new guys were worried about "credibility". So they quickly scrambled to pass a package of mostly bad, mostly stupid, and mostly regressive taxes to plug the gap.

What's ironic here... actually, there's a bunch of ironic stuff here. One is that the government lowballed their estimates of revenue increase from the flat tax. In the first two months of 2005, over 100,000 new jobs were registered in Romania. Those aren't actually "new" jobs, of course; they're grey market jobs that got legitimized because the new tax structure made it worthwhile. But this alone is about an $80 million windfall to the budget.

On the other hand, the new government stupidly *over*estimated the revenue that the regressive taxes would bring in. Frex, they increased the special tax for microenterprises (which you can pay instead of a normal tax) from 1.5% to 3%... and then stated that this would double the revenues from that particular tax!

The result can charitably be described as a hell of a mess. I have deeply mixed feelings about the flat tax, but they would definitely have been better off just passing it and telling the IMF to wait a few months to see how it worked.

My point was, the IMF was *against* the regressive flat tax in the first place... in part because it's regressive, in part because it's a budget-buster. And they didn't encourage the new government to pass the other regressive taxes; they just expressed concern about the hole in the budget. (Which is a legitimate concern here, BTW. Big budget deficit + big trade deficit = huge current account deficit, which is the one thing that could break Romania's current virtuous circle of growth.)

And the World Bank is against cutting payroll taxes, because the Bank wants to be sure that Romania's social safety net isn't destroyed. (Not that it's in great shape now, of course.)

But you'd never get a hint of these complexities from reading Naomi Klein. IMF /bad/, World Bank /bad/, local actors /good/, especially if they're young or badly dressed. I'm simplifying, but not by much.


Doug M.