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Posts Tagged ‘privatisation’

Hunger, poverty and the real agenda of the IMF and world bank

Tuesday, October 18th, 2005

Cameron Walker

Created out of the Bretton Woods Conference of 1944 the World Bank and International Monetary Fund (IMF) claim to have the noble aims of helping third world nations to finance the building of infrastructure and to bridge balance of payments difficulties. However, many claim both institutions help ruin the economies of Third World nations through forced structural adjustment programmes, which are a condition to any loans or aid from them. Many also claim that the policies of both institutions directly benefit powerful multi-national corporations.

IMF logoThe draconian terms of the structural adjustment programmes often include the elimination of tariffs on imports, the forced privatisation of state owned assets, the removal of subsidies to local producers, the reduction of crop diversity and the forced export of crops to a small number of foreign buyers. These policies often lead to much poverty and injustice.

In 1999 the Bolivian city of Cochabamba privatised its public water supply under the intense pressure of the World Bank. The citizens of Cochabamba then as a result faced water bill price hikes of $20 a month. In a nation where the minimum wage is under $100 a month this was absolutely disastrous. What is even more shocking is that after privatisation the citizens of Cochabamba ended up paying more a month for water than people who live in the wealthiest suburbs of Washington D.C.

The policies of the World Bank and IMF are largely blamed for causing Malawi’s 2002 famine. The strings which were attached to an IMF loan package to Malawi included the privatisation of the Agricultural Development and Marketing Corporation, removal of agricultural subsidies to small farmers and the deregulation of price controls on staple foods such as maize. Between October 2001 and March 2002 the price of maize increased by 400 percent as a result of these policies. In 2002 Malawi spent 20 percent of its national budget on debt repayment to Western creditors. This is more than Malawi spent on health, education and agriculture combined.

The foreign debt of many Third World nations will literally take hundreds of years to pay off. Indonesia’s foreign debt for example is $262 billion. This is 170 percent of Indonesia’s gross domestic product. Every day poor nations pay $100 million to Western creditors in debt repayment, mainly to institutions such as the IMF and the World Bank. Since the 1980’s the policies of these institutions have led to developing nations paying out five times as much capital to rich industrialised nations as they have received in aid.

Decisions at the World Bank and the IMF are made by a vote of the board of executive directors, which represent member states. The voting process does not reflect proper democracy because voting power is determined by the amount a member state contributes to the institutions. This means the U.S.A has roughly 17 percent of the vote and has a dominant voice on policy and at times has exercised the power of veto. The World’s seven largest industrialised nations have 45 percent of the vote at the World Bank and IMF. As a result of this the policies of the World Bank and IMF often directly benefit industries based in Western industrialised nations. The company which bought Cochabamba’s water supply after it was privatised was Aguas del Tunari, part of International Water Limited, a British based company half owned by the American engineering giant, Bechtel. U.S. treasury officials have estimated that for every $1 the United States contributes to International development banks, U.S. exporters win more than U.S. $2 in bank financed procurement contracts.

It would seem to be common sense for poor nations to be encouraged to be self sufficient in food production; common sense seems to be contrary to World Bank and IMF policy. Some poor nations have had to endure having their crop diversity limited and then being forced to export the few crops produced to Western Nations. In the early 1990’s the famous investigative journalist John Pilger pointed out that forty percent of arable land in Senegal is used for growing peanuts for Western margarine and in Ghana fifty percent of arable land is used for growing cocoa for export to make Western chocolate bars. Both of these nations suffer malnutrition yet export most of their crops; a scene reminiscent of Ireland under British Imperialism during the potato famine of the 1840’s.

It is easy to come to the conclusion that the World Bank and IMF’s true agenda is very different than the one they sell to the public. They claim to help poor nations but really aid multinational corporations at the expense of Third World nations. These two institutions need to be greatly reformed to be any use in helping tackle one of the greatest problems of the early 21st Century, poverty.


Burgo, Ezequiel and Stewart, Heather ( 29/10/2002) The Guardian

Pilger, John (1994) Distant Voices London: Vintage

Pilger, John (2002) The New Rulers Of The World London: Verso


World Bank/IMF Factsheet

Greens shouldn’t waste time with immoral greed merchants

Wednesday, October 12th, 2005

Cameron Walker

Despite a well intentioned and highly publicized meeting, big business still finds the Green Party scary. By the way the media has portrayed this it seems like we are all supposed to be worried that the anti-business Greens’ may well form part of the next government.

On the contrary I would be more worried if big business and their lobbyists weren’t afraid of the Green agenda.

Policies which place the best interests of the business leaders and lobbyists present at the meeting, such as Telecom CEO Theresa Gattung and Business Roundtable Executive Director Roger Kerr, don’t necessarily co-incide with the best interests of the majority of New Zealand’s people or indeed the nation’s economy.

New Zealand’s telecommunications network was built up by the taxpayer, a form of economic collectivism the likes of Roger Kerr would no doubt oppose today. In 1990, as part of New Zealand’s neo-liberal reforms, Telecom was sold off for the small sum of $4.25 billion to two American multinational corporations Bell Atlantic and Ameritech. Considering the fact that every year since 1990 Telecom has posted profits well into the hundreds of millions of dollars makes the privatisation seem like an act of corporate welfare.

Thousands of technical staff were layed off, to be replaced with contractors on worse pay and conditions. Meanwhile the ranks of management, many with no specific knowledge of telecommunications, and their pay packets ballooned. Theresa Gattung receives a pay packet of 2.9 million a year. Yet just three years ago many Telecom technical staff, found out that if they wanted to keep their jobs they would have to apply to work for a contracting firm and lose their sick leave and redundacy payments that they’d built up over many years. Telecom claimed it needed to do this to remain viable.

According to Statistics NZ only 22 percent of Telecom shareholders are New Zealanders. This means the majority of Telecom’s profits go to wealthy overseas shareholders rather than being re-invested in the New Zealand economy or in the telecommunications network.

When they act like this it’s not suprising that these so called business leaders’ would oppose Green proposals to limit foreign control of the economy, strengthen workers rights and to increase the minimum wage.

Roger Kerr, and his organisation the Business Roundtable, have spent much time, effort and resources over the past two decades, supporting basically every government policy that has increased big business profits, at the expense of workers and the poor. He is also noted for opposing policies which help the majority of people, such as four weeks annual leave.

In the 1980’s the Business Roundtable viewed Pinochet’s Chile as a suitable economic model for New Zealand to follow.

In 1988 after TV One’s current affairs programme, Frontline, exposed that the workers employed by a New Zealand forestry company in Chile were axing trees, while wearing open toed sandals and living in rat infested huts, then Roundtable Chairman Ron Trotter, argued that New Zealand needed Chilean style’ labour laws.

A few years later the Roundtable got their wish when the Employment Contracts Act was passed, leading to less bargaining power for unions and worse wages. Its not suprising that one commentator dubbed New Zealand’s free market reforms Pinochet without the gun’.

Despite the well documented evidence that New Zealand’s neo-liberal reforms greatly increased poverty and inequality Kerr says we need to go back to the days of Pinochet without the gun’.

The Greens shouldn’t waste time trying to reassure the Roger Kerrs and Theresa Gattungs of our nation. To do so appears to be appeasement. If the party is to keep its principled policies then it should expect oppostion from such unscrupulous people and organisations.

A global system gone mad

Tuesday, August 9th, 2005

Cameron Walker

Globalisation’, free trade’, neo-liberalism’ (call it what you will - the economic policies supported by global institutions such as the International Monetary Fund (IMF) and the World Bank ) have been protested about and opposed by tens of millions of people around the globe. Why are so many people so angry? In the Western World, before 9/11, coverage of violent anti-globalisation protests’ often splattered the news in the mainstream media. 9/11, according to the mainstreammedia signalled the death of the movement. However, such feelings have not died and, in fact, in many developing nations they have become more intense.

The historical background of the World Bank and IMF
The World Bank and IMF were set up at the end of the Second World War to provide loans to help rebuild nations shattered by the conflict. In the 1970s and 1980s the two institutions had a change of policy. Nations who wanted loans or financial assistance would have to follow structural adjustment programs. In other words developing nations would have to make changes to their laws and economic policies as prescribed by the World Bank and IMF.

The effects of Structural Adjustment Programs
Often structural adjustment programmes make conditions even worse for the poorest citizens of developing nations, while the well off and multinational corporations reap the rewards. Typically, structural adjustment programs consist of slashing public education and healthcare spending, cutting welfare to the poor, opening markets to penetration by multinational corporations and privatising public assets, such as water utilities and railways.

An example of Structural Adjustment Programs’ negative impacts: Bolivia.
A classic example of structural adjustment occurred in 1999 in Bolivia, the poorest nation in South America. The city of Cochabamba was pressured to privatise its public water company by the World Bank. It was sold to Aguas del Tunari, part of International Water Limited, a British based company part owned by the American engineering giant Bechtel and the Spanish company Abengoa.

Within weeks of taking over the city’s public water company Bechtel hiked up rates by as much as 200%, far beyond what the city’s poor could afford to pay.’ (1)

Many poor families now paid higher water bills than those paid by residents of the wealthy suburbs of Washington DC, home to many World Bank officials.

To further compound the problems of the poor, the government banned collecting rain water without a permit. For many families it was a choice between spending money on food to eat, or having water to drink. This spurred a huge peoples’ movement to return water to public hands. After unprecedented street protests, in which police fired on the crowds killing a 17 year old boy and wounding scores of others, the city returned water to public ownership.

However, the story did not end there. Bechtel, citing unfair loss of profits, launched a US $25 million (New Zealand $35.4 million) lawsuit against Bolivia. Thankfully, after bearing the brunt of an international campaign, Bechtel dropped the lawsuit in December 2004. Unfortunately, the Spanish company Abengoa is still pursuing legal action against Bolivia, despite international calls for it to drop it.

G8 Debt Relief - with strings attached

In June 2005, the nations of the G8 declared that the most highly indebted nations in the World will have their debts to the World Bank and IMF cleared. This sounds nice, but to qualify for debt relief poor nations must practice good governance’ meaning the nations must “boost private-sector development” and eliminate “impediments to private investment, both domestic and foreign”. Quite simply this means that to qualify for debt relief, poor nations must continue to put in place Structural Adjustment Programmes (like those forced on Bolivia) which are fundamentally damaging to their nation’s citizens, but good for multinational corporations from the World’s richest nations in the G8.

Speak out against the injustice
As a young activist and writer in New Zealand, I believe it is important for young people to become informed and speak out against the grave injustices that are occurring as a result of the so called globalisation’ process. The New Zealand government is an enthusiastic supporter, at an international level, of the so called free market’ policies supported by the World Bank and IMF. As the citizens of Bolivia have demonstrated though, people power can overcome this madness!

1) Shultz Jim The Second Water War in Bolivia


The Democracy Center, The Democracy Center works globally to advance human rights through a unique combination of investigation and reporting, training citizens in the art of public advocacy, and organizing international citizen campaigns, it’s founder and Executive Director Jim Shultz lives in Cochabamba and was fundamental in breaking the story of the city’s water war to the outside World


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