VOLUME 11, NUMBER 4, APRIL 1990 BANKING ON POVERTY Founder Ralph Nader Editor Robert Weissman Editor-at-Large Ellen Hosmer Associate Editor Amy Allina Managing Editor John Richard Contributing Writers Alexandra Allen, Diane Bartz, Katherine Isaac, William Jackson David Lapp, Russell Mokhiber, Allan Nairn, Sandy Smith, Samantha Sparks, Jim Sugarman, William Steif and Cathy Watson Staff Researchers Jim Donahue, Holley Knaus, Jennifer Kassan Production and Design Kathy Cashel Business Manager Bryan Penas Multinational Monitor [ISSN 0197-4637] is published monthly by Essential Information, Inc., P.O. Box 19405, Washington, DC 20036. Telephone: (202) 387-8030. Contents: Behind the Lines Editorial Brutal Banking The Front Corporate Greenwash High-Tech Pollution Features Preserving Inequality: The World Bank in Zimbabwe By Patrick Bond The World Bank's Assault on the Environment By Vandana Shiva Indigenous Peoples Speak to the Banks Interview The Economics of Debt Economics Disastrous Decade: Africa's Experience with Structural Adjustment By Nancy E. Wright Corporate Profile RTZ: The British Mining Monster By Roger Moody Labor Death on the Job By Joseph A. Kinney & William G. Mosley Names In the News Review Activist Primers Resources ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 LETTERS To the editor: The prescription in your editorial "Union Jobs, Union Power" would have some force if unions in the United States of America had the right to mount effective strikes. When an employer may hire scabs or move elsewhere, at will, there is no right to strike. For openers, we must repeal Taft-Hartley, restore the closed shop, permit secondary boycotts and common situs pickets, etc. It's an old fight. Robert C. Sommer New York, NY To the editor: You do a good job but I'm not going to renew my subscription. As I see it, the anti-social forces (corporate, political and religious) are unbeatable. Progressives can write and talk but little else. I'm convinced that while Eastern Europeans gain freedom, U.S. citizens are losing theirs and we can do absolutely nothing about it in the face of the awesome power of the corporate state. The U.S. government is now big business and doing less and less for private citizens. They want to privatize any and all services for the people into the hands of profit seekers. In response to the fascism that's taking over, progressives and liberals intellectualize and summarize but have absolutely no ability to mobilize. With the privatizing of the "public airwaves," we lost our ability to educate, illuminate and inspire the American people to stand up for their rights. The corporate state has successfully divided us against ourselves, has created a whole generation of educated automatons and is in the process of establishing state militias and other paramilitary groups to protect itself against any civilian unrest. So you see why, at the age of 69, I am giving up. I won't live to see a multiparty, representative political system in the United States. Thank you for the past publications. Evelyn Christoffersen Santa Monica, California BEHIND THE LINES (omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 EDITORIAL BRUTAL BANKING Structural adjustment doesn't work. Structural adjustment doesn't work. Structural adjustment doesn't work. How many times does it have to be said? Structural adjustment doesn't work. "Structural adjustment" is the name the IMF and World Bank give to the austerity measures they require countries to implement in order to receive loans desperately needed to meet payments on their debt. The measures range widely, from trade liberalization and currency devaluation to raising interest rates to cutting government expenditures and privatizing state-owned enterprises. Structural adjustment packages are premised on the notion that relying on market forces is the most efficient way to distribute resources. By freeing up market forces and correcting distortions in the economy, the IMF and World Bank expect poor countries to increase export earnings and cut expenditures so that they can reduce their balance of payments deficits. Structural adjustment plans gained prominence in the early 1980s, with the onset of the debt crisis. Third World debtor nations found themselves without the money to repay commercial bank loans taken out in the 1970s. The primary solution available to them was to borrow more, and the only financial institutions willing to lend more were the IMF and the World Bank. In fiscal year 1989, the IMF had structural adjustment arrangements in effect with 46 countries; in the same year, the World Bank made structural adjustment loans to 26 countries. The conditions attached to these loans have wreaked havoc with Third World economies and taken a devastating human toll. In the 1980s, per capita incomes declined slightly in Latin America and more sharply in Africa. Infant mortality rates rose throughout Africa in the 1980s, and now range between 100 and 170 for every 1,000 live births. These consequences should not be surprising, as critics of the austerity measures have repeatedly pointed out. Currency devaluations in less developed countries do make exports cheaper, but they also make imports--which usually include machinery, energy resources, medicines and food--more expensive, thereby squeezing import-reliant domestic industries and causing severe social ills. Higher interest rates, which are supposed to encourage savings, deter the investment needed to create jobs. Cuts in government spending, designed to eliminate waste and save money, create further unemployment and devastate vital social services, including healthcare and education. Proponents of structural adjustment claim that these sacrifices will be offset by the economic growth generated by exports. But with almost all of Africa and Latin America caught in the structural adjustment trap, Third World countries are trying to export similar, and often identical, agricultural products and mineral resources to the industrialized nations. The result is a glut. Staple export prices collapse and people in the Third World suffer. Yet because structural adjustment fulfils the International Monetary Fund (IMF) and the World Bank's fundamental, but unarticulated, mission to serve the corporate powers of the industrialized nations, they remain committed to it. By forcing poor countries to open their borders to foreign investment from multinational corporations, to orient their economies to exports and to privatize state-owned enterprises, structural adjustment ensures that these countries stay enslaved to the industrialized world. Structural adjustment guarantees the continued exploitation of the Third World by the First. The abolition of all protective trade barriers and the orientation of economies to exports thwarts efforts of Third World nations to escape from their dependence on the industrialized nations and to become economically self-sufficient. The reliance on exports forces the poor countries to provide their raw resources to the developed world. And the continued efforts of Third World debtors to repay their loans have led to the irony--despite IMF and World bank loans--of poor countries engaging in a net transfer of wealth to the rich nations. The multilateral lending institutions view mass impoverishment as an unfortunate consequence of structural adjustment programs, but it is not their concern. Poverty is a peripheral issue to them. The IMF's most recent annual report notes, for example, that "in a discussion of poverty issues in economic adjustment, the [Fund's Executive] Board reiterated that questions of income distribution should not form part of Fund conditionality." While IMF officials can ignore widespread suffering, the victims of structural adjustment policies cannot. They see the impact of austerity measures in human terms: babies dying of preventable disease, children starving, adults unable to find work. These are not short-term problems associated with "adjustment," as IMF and World Bank officials assert; these tragedies are the natural outcome of unmitigated free enterprise policies. Because structural adjustment programs are working to promote the IMF and World Bank's real agenda of keeping the Third World locked into dependent status, they are not open to reform. Only the joint renunciation of their debt by Third World governments can put an end to the human carnage wrought by the IMF and World Bank loan policies. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 THE FRONT Corporate Greenwash CHARGING THAT CORPORATE polluters are "trying to clean up their image but not their act," environmentalists denounced the Earth Tech '90 Technology Fair, held April 4-8 at the foot of the U.S. Capitol. Greenpeace, the Nuclear Information and Resource Service (NIRS), the U.S. Public Interest Research Group (U.S. PIRG), the Citizen's Clearinghouse for Hazardous Wastes and Earth First! joined in condemning the fair. Advertised as showcasing "the technologies, products and strategies that may help achieve environmentally sustainable development," Earth Tech featured displays from dozens of companies, as well as several government agencies and environmental organizations. Among the exhibitors at Earth Tech were the American Nuclear Society, Arco, Bechtel Group, Inc., Chevron Corp., Du Pont, the National Coal Association, the Society of the Plastics Industry and Westinghouse Electric Corp. Earth Tech also included displays from several companies, such as U.S. Windpower, involved in the development of "clean" technologies. By participating in Earth Tech, held in the weeks leading up to the April 22 celebration of Earthday, some of the nation's worst polluters sought to achieve "innocence by association," according to environmental critics. The environmentalists said the corporations participating in Earth Tech tried to project the image of being ecologically minded, even as they continue their environmentally destructive practices. The largest corporate polluters "sure look good, all dressed up here in America's front yard," said Peter Bahouth, executive director of Greenpeace, but "at the same time it's business as usual with their pollution in our backyards." The sponsors of Earth Tech dismissed such comments. Ken Murphy, the executive director of the Environmental and Energy Study Institute, the sponsor of Earth Tech, said the idea that corporations could obscure their poor environmental records through involvement with events like Earth Tech "assumes a level of naivete on the part of the media, politicians and the public which I just don't think exists." Earth Tech did not screen participating companies, Murphy stated. Instead, Earth Tech co- chairmen Senators John Heinz, R-Pa, and Al Gore, D-Tenn, "issued a challenge to American business, non-profit organizations and government agencies to come to Washington and show your stuff." The plastics industry had a particularly large presence at the fair, touting plastic as a recyclable substance. Bonnie Merrill Linebach, director of external communications for the Society of the Plastics Industry (SPI), said SPI attended Earth Tech to "spread the word on plastic recyclability and the exciting possibilities" it creates. David Rappaport, toxics campaign director for Greenpeace, said it is understandable that "plastics recycling is very exciting to the plastics industry, since it is used as a tool to ensure the industry's continued growth." He explained that the concept of plastics recycling is misleading, because it does not conserve resources in the way other forms of recycling do. "Because most recycled plastic is not used for its original purpose, [but for] lower grade and in many cases new purposes," he said, recycling requires the "continued generation of as much plastic as [was produced in] the first place." Du Pont added to SPI's promotional efforts, displaying benches made from recyclable plastic. And Earth Tech itself encouraged visitors to separate their trash into two sets of trash cans: one for ostensibly recyclable plastic; a second for other trash. Du Pont also highlighted its phase-out of chlorofluorocarbon (CFC) production. A Du Pont spokesman at Earth Tech acknowledged that Du Pont had been slow to explore alternatives to CFCs, but claimed that scientific concern about the dangers of CFCs dipped in the mid-1980s and that no corporations realized the need to consider substitutes. Carolyn Hartmann, a staff attorney with U.S. PIRG, countered that Du Pont has been slow in phasing out CFCs and was especially to blame for the lack of alternatives. "Du Pont halted its search for alternatives for approximately five years in the early 1980s," Hartmann stated. "In 1980, Du Pont and other CFC producers and users joined together to form the Alliance for Responsible CFC Policy to fight against CFC regulations. This certainly does not support Du Pont's claim that regulatory concern was on the decline. Five years of important research was lost, and today Du Pont cites the lack of alternatives as a primary reason for why we cannot phase out CFCs before 2000." The nuclear power industry also maintained a high profile at Earth Tech. At least 10 companies closely involved with commercial nuclear power either had booths at the technology fair or served on the Earth Tech organizing committee. The American Nuclear Society (ANS) handed out a question and answer booklet which attacked the idea of energy conservation by asserting that having "more energy and more electricity [is] very important. If we limit the amount of energy we have, we lose our freedom and our democratic society." The booklet went on to claim that "of all the electricity generating methods, nuclear is the cleanest and least damaging to our environment. This is true from mining of the uranium ore to final disposal of waste." Environmental critics blasted the views presented by the ANS, saying they directly contradict the record of the nuclear power industry. "Nuclear power is one of the dirtiest energy forms ever devised," stated Justine Gulledge of NIRS. "Nuclear power kills people and contaminates the environment at every step of the fuel chain: from mining and milling, through processing, enrichment and fuel fabrication, to electrical production and radioactive waste storage." To counter the views of the worst polluting participants, Greenpeace activists donned white lab coats and tried to stand near targeted displays so they could speak to visitors. When security officers attempted to escort the protestors out, they handcuffed themselves to the displays. Nineteen were arrested for demonstrating without a permit. Earth Tech's environmental critics view the event as a precursor to a burgeoning corporate strategy of capitalizing on and co- opting growing public concern about the environment. "As environmental awareness increases and citizens everywhere begin to put polluters' feet to the fire, corporate America has engaged in a campaign to paint [itself] green," commented Bahouth. "To the polluters under the tents, you can be sure that there are those who will continue to track your records on the environment and won't let the public be fooled by your greenwashing." - By Robert Weissman High-Tech Pollution (omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 PRESERVING INEQUALITY: The World Bank in Zimbabwe By Patrick Bond Patrick Bond is a Visiting Research Associate in the Department of Political and Administrative Studies at the University of Zimbabwe. Harare, Zimbabwe--In Zimbabwe, the beleaguered northeastern neighbor of South Africa, the result of the World Bank's new role as policeman for the big commercial banks is discouragingly clear. Zimbabwe's ruling ZANU party's fierce pride and Marxist- Leninist rhetoric notwithstanding, President Robert Mugabe and his conservative finance minister, Bernard Chidzero, are now at the mercy of the World Bank's money mandarins. Numerous confidential World Bank staff loan reviews of Zimbabwe were leaked to the press shortly after World Bank President Barber Conable's November 1989 visit to Zimbabwe's capital of Harare. They illustrate the Bank's control over national planning and key economic sectors. The World Bank's influence stems from its adoption in the last few years of many of the traditional functions of the International Monetary Fund (IMF). With the IMF facing hostility from many quarters and fast running out of money, the World Bank joined the Fund in making short-term, "structural adjustment" loans designed to address balance-of-payment problems. Though the Bank recently announced its intention to shift away from these loans, 25 percent of its loans are currently devoted to structural adjustment. Not their own masters Today, 10 years after Mugabe wrested power over what was then Rhodesia from Ian Smith, Zimbabwe's economy is still in the hands of several thousand whites, while most of the nine million blacks remain landless, unemployed and highly vulnerable to periodic droughts. The country's commercial banks, for example, make 97 percent of their loans to whites, the Financial Times recently reported. Effective prohibitions on land reform combined with greater integration with and dependence on a hostile world economy have distorted what was potentially a model developing country economy employing an import- substitution strategy and striving toward self-reliance. Even the broadly-based manufacturing sector, inherited intact from the sanctions era, has withered under the strain of Zimbabwe's dept repayment schedule. Although a black middle class of high-ranking civil servants has emerged and luxury goods are abundant, much of the illusion of economic prosperity is due to stock market and real estate speculation. From the recent meteoric stock market rise-- valuation increased from US$ 150 million in 1984 to $800 million at present--just $50 million of the increase can be attributed to productive capital investment, the rest being mainly gambling by insurance companies. Zimbabwe's political and economic landscape was molded by British and U.S. geopolitical strategists who organized the Lancaster House settlement (which brokered the end of the civil war and mandated a transfer of political power to the black majority) in London just over a decade ago. Western goals were to constrain ZANU's mild socialist urges, to prevent white flight (only half of 200,000 settlers left, and some have since returned) and to make Zimbabwe a responsible actor in world politics. Most importantly, argues Zimbabwe's leading political economist, Ibbo Mandaza, the 1980 settlement was to serve as a model for transition to pro-Western majority rule in South Africa. Enter the World Bank and IMF. These lenders provided loans to Zimbabwe on the condition that the new country adhere to their orthodox economic prescriptions. As early as 1982, the IMF was pressuring Zimbabwe to cut wages and limit domestic demand. According to a 1983 Bank report, "Zimbabwe's major short-run problem is controlling domestic demand so as to reduce inflation.... The Government is discussing with the IMF a stabilization program which stipulates a number of measures including: an exchange rate adjustment--as a result of the dialogue, the Government devalued the Zimbabwean dollar by 20 percent on December 9, 1982 in order to restore export competitiveness that had been eroded by large increases in labor costs and high domestic inflation; an adjustment in the basket of currencies on which the value of the Zimbabwean dollar is determined; a reduction in the budgetary deficit; limitations to wage and salary increases; and ceilings to short-term external debt and domestic credit." Chidzero termed the IMF pressure "a psychological-political situation which we can't ignore;" he eventually agreed to the entire list. But the IMF later cut Zimbabwe off from the $385 million line of credit that followed, because the finance minister presented a 1984 budget driven into deficit by horrendous drought and the costs of South African destabilization efforts. Most of Zimbabwe's cabinet "hated the IMF," says one former official. So Mugabe authorized the treasury to repay the Fund completely and invited the World Bank to expand its activities. For the Bank, Zimbabwe was not completely unfamiliar turf. The World Bank and Rhodesia In 1956 the World Bank had largely funded the Kariba Dam on the Zambezi River (a few hundred miles below Victoria Falls), producing what was then the biggest artificial lake in the world. But the loan for the dam and power generation infrastructure--which amounted to $80 million (in 1956 dollars), the Bank's largest project up to that point--made inadequate provisions for the 56,000 Batonka tribespeople who were displaced from their traditional grounds on the shores of the Zambezi. Based on numerous academic studies, World Bank critic Cheryl Payer concludes that the forced resettlement destroyed the Batonka's matrilineal land rights, cut their food supplies and access to fresh water and dramatically increased disease and death rates. The instigators of the Kariba Dam project--and its major beneficiaries--were the copper subsidiaries of the Anglo American Corporation (See Multinational Monitor, September 1988) and American Metal Cimax, Inc. Hundreds of workers were killed while constructing the dam. The World Bank sent another US$ 60 million to what was then the racist colony of Southern Rhodesia. According to Payer, major agricultural loans were largely geared to forcing privatization of plots in the Communal Lands. This had the dual effect of avoiding the real moral issue--the equitable return of the people's land--and also breaking up the local culture which was resisting Rhodesian white capitalism. With his Unilateral Declaration of Independence, Ian Smith defaulted on those early World Bank loans, but the British repaid some of them. The Bank's surprising new allies The World Bank returned shortly after independence, initially funding imports--mainly raw materials and spare parts--for the manufacturing industry and railways. An initial goal was to limit the country's import-substitution policy and integrate Zimbabwe into the international capitalist economy. Chidzero's Finance Ministry has been instrumental in achieving this goal. In 1982, Chidzero made clear to U.S. investors--including top officials of Citibank, Chemical Bank, Chase Manhattan, Manufacturers Hanover Trust and First Bank of Boston--how he felt about his Government's official policy of socialist transformation, saying "We talk about ideologies without doing much about it." (Citibank and Bank of Boston accepted invitations to open offices in Harare, but withdrew shortly afterwards because of hostility from the local banking industry, led by London-based giants Barclays and Standard Chartered.) (Balance of this article omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 THE WORLD BANK'S ASSAULT ON THE ENVIRONMENT By Vandana Shiva Dr. Vandana Shiva, originally a physicist and philosopher of science, is now an activist/researcher on ecological issues. She is part of the Third World Network. Her books include Staying Alive: Women, Ecology and Development in India and the forthcoming The Violence of the Green Revolution. The World Bank's latest assault on the environment comes in strange trappings. Although wrapped in green rhetoric, the World Bank's new "environmental" projects bear striking resemblance to the ecologically devastating projects it has funded as part of the so-called "green revolution," which promoted the widespread use of chemical-intensive agriculture in the Third World. Tropical forests and the Third World countries that house them are the targets of the Bank's new brand of environmentalism. The Tropical Forest Action Plan (TFAP) is an $8 billion program designed and implemented by the World Bank, World Resources Institute, the United Nations Food and Agricultural Organization and the United Nations Development Program. The program was designed to protect the tropical forests and the tremendous biodiversity contained within them. Yet the TFAP projects, in conception and operation, are advancing deforestation and the destruction of genetic diversity. TFAP is replete with contradictory impulses. As a review done by Marcus Colchester and Larry Lohmann for the World Rainforest Movement (WRM) shows, most projects under this plan are accelerating deforestation through commercial logging and industrial forestry. The TFAP, for example, proposes a 400-600 percent increase in logging in the Peruvian Amazon and a 250 percent increase in industrial forestry in Nepalese Himalaya. Single-species, single-commodity production plantations have been the basis of the Bank's green revolution in forestry. But monoculture plantations wreak havoc with the local environment and people. They displace diverse tree species which fulfil local needs for fodder, food, fertilizer, fuel and other commodities. The planting of eucalyptus, a pulpwood species, is a shining example of the faulty rationale behind the Bank's lending. It has been the Bank's favorite monoculture and has been planted, with World Bank encouragement, in countries throughout Southeast Asia. "Greening" with eucalyptus leads to desertification because the trees require large amounts of water while the trees return few nutrients to the soil (see Multinational Monitor, June 1987). Ironically, the Bank views the continued spread of monocultures and genetic uniformity as a means for "biodiversity conservation." John Spears of the World Bank, for example, has recommended intensification of monoculture practices in agriculture and forestry for preserving biological diversity in Asia. This conflicting approach destroys diversity in production processes and attempts to preserve it in small "set-aside" plots which are to remain undisturbed. Biodiversity cannot be ensured, however, unless production itself is based on a policy of preserving diversity. The fundamental problem with the World Bank's approach is that its "only way of valuing the forest is for it to benefit the big companies," Lohmann told Multinational Monitor. According to Lohmann, "The Bank says that in order for the forests to be saved they're going to have to pay their way." In other words, interest in preserving the forests will only occur if they yield immediate financial rewards for forestry and other interested companies and for indebted Third World governments. Lohmann argues that the forests "are already paying their way" environmentally and financially for indigenous people who earn their livelihoods from them. He says that indigenous concerns should play a decisive role in any effort to conserve the forests. The World Bank, however, "exists within a mindset beyond which it can't see," according to Suzanne Head, a program manager for the Rainforest Action Network. She says the Bank is "trying to cure the illness with the same poison that caused it." Critics argue that the Bank has not addressed the problems of landlessness and land use which underlie deforestation and that the programs it funds benefit local elites, not the environment or those dependent on it. According to Korinna Horta, an economic analyst at the Environmental Defense Fund who has analyzed Cameroon's participation in TFAP, the Bank's priorities are such that it "can't afford to lend just for the environment. It must lend for things that get a rapid and easy [financial] return," such as timber. The Bank's model of forest exploitation is integrally related to the way the program was designed and implemented. The WRM review concludes that TFAP's failure to address the root causes of deforestation is primarily a result of its emphasis on top-down planning. Colchester and Lohmann contend that grassroots non-governmental organizations (NGOs) and indigenous peoples have very little input into TFAP planning and implementation, and that severe restrictions have been placed on access to relevant documents. Ecologically sound management of the forest will require a "devolution of power to the people who have the greatest interest in the forest," such as indigenous forest dwellers and those groups that exist on the periphery of the forests, Lohmann says. He and other critics of TFAP want to see "the end of imposed, top-down so-called solutions" to which, he believes, the Bank is totally committed. TFAP's destructiveness could be curtailed if NGOs were more actively involved and provided with early and consistent access to documents, says Horta. Specific arrangements between the countries and the World Bank, however, are "all state secrets," she says. Even proponents of TFAP concede that the system needs to be opened. "My conviction is that the process should be as open as possible both in planning and implementation," says Ralph Roberts, director of forestry and conservation for the Canadian International Development Agency and chairperson of the TFAP forestry advisors group. Roberts even suggests that the advisory group could disseminate TFAP planning documents to NGOs if recipient countries cannot afford to do so. Proponents disagree, however, with TFAP's critics on the origins of the plan's problems and on the means of correcting them. For instance, Roberts argues that "commercializing the forests is a legitimate pursuit if done in a reasonable manner." He says that it is a "ridiculous proposition" to stop all logging. "You're not going to preserve two billion hectares of tropical forest," he says. Roberts acknowledges the need for reform of the Bank's role, but does not believe TFAP should be abandoned completely. World Bank staff say they are aware of TFAP's shortcomings and fully support the idea of a review process. Raymond Rowe, senior forestry advisor at the Bank, emphasizes, however, the economic imperatives of forest resource issues. "There's a continual trade-off between the conservation and production aspects of forestry," he says. Since "developing countries have few resources [other than] big forests, they will tap those resources." The consensus of the critics is that TFAP is fatally flawed and should be financially suspended until a wholesale restructuring, incorporating a grassroots perspective, is undertaken. The World Bank and the green revolution TFAP is not the first time that the Bank has played a key role in obscuring the reality of, and thereby legitimizing, an assault on biodiversity. The so-called "green revolution" in agriculture, which the World Bank was instrumental in spreading to the Third World through credits and advice, was an early example of such a program. The World Bank's involvement in the green revolution began in 1964 when it sent a mission headed by Bernard Bell to India. The Bell mission called for a devaluation of Indian currency, liberalization of trade controls and greater emphasis on chemical-intensive and capital-intensive agriculture. The Bank provided the credit that was needed to replace the low- cost, low-input agriculture in existence with an agricultural system that was both capital- and chemical-intensive. In a 1983 publication, the World Bank recalled the role that the International Development Agency (IDA), the Bank's soft-loan arm, played: "A number of foreign experts working in India for the Rockefeller and Ford Foundations began pressing the Indian government to import high yielding wheat varieties .... The Indian government decided that the potential of the new technology far outweighed the risks.... IDA was closely involved with this decision." The foreign exchange component of the green revolution strategy for the five-year plant period (1966-1971) was projected to be about $2.8 billion. This was more than six times the total amount allocated to agriculture during the preceding third plan. Most of the foreign exchange was to be spent on imports of fertilizer, seeds, pesticides and farm machinery. World Bank credit subsidized these imports. As a corollary to making the credit available, the World Bank, along with the U.S. Agency for International Development, exerted pressure to obtain favorable conditions for foreign investment in India's fertilizer industry, import liberalization and the elimination of most domestic controls. The Bank financed the destruction of genetic diversity in Indian agriculture most directly by advocating the replacement of diverse varieties of food crops with monocultures of imported varieties of seeds. The preservation of biodiversity is vital for local populations and ecosystems, as Jeffrey McNeely, Kenton Miller, Walter Reid, Russell Mittermeier and Timothy Werner describe in the journal Environment. Ecosystems suffering from a loss of biodiversity "are losing their capacity to support the human populations dependent upon them. [T]his degradation is exacting further costs through soil erosion, siltation of reservoirs, local climate changes, desertification and loss of productivity." The introduction of monocultures exacerbates social inequities by favoring wealthier farmers, they write. "[T]he substitution of high-response cultivars for local varieties ... often handicap small farmers who cannot afford the necessary expensive inputs like fertilizer and pesticides." In 1969, the Terai Seed Corporation was started with a $13 million World Bank loan. This was followed by two National Seeds Project (NSP) loans. This program led to the homogenization and corporatization of India's agricultural system. The Bank provided NSP $41 million between 1974 and 1978. The projects were intended to develop state institutions and to create a new infrastructure for increasing the production of green revolution seed varieties. In 1988, the World Bank gave India's seed sector a fourth loan to make it more "market responsive." The $150 million loan aimed to privatize the seed industry and open India to multinational seed corporations. Jack Doyle, director of the Agriculture & Biotechnology Project for Friends of the Earth, notes, "The first recognition that there was money to be made in the green revolution came from the value placed on the seed itself." After the loan, India announced a New Seed Policy which allowed multinational corporations to penetrate fully a market that previously was not as directly accessible. Sandoz, Continental, Cargill, Pioneer, Hoechst and Ciba Geigy now are among the multinational corporations that have major interests in India's seed sector. By making credit available for the purchase of seeds and controlling the information and research system, the World Bank made the green revolution appear to be the only available alternative for countries attempting to meet their food needs. The Consultative Group on International Agricultural Research (CGIAR), an umbrella organization, was launched in 1970 on the initiative of the Bank and has its offices in the World Bank. The expansion of the international institutes coincided with the erosion of the knowledge systems of Third World peasants and Third World research institutes. The International Rice Research Institute (IRRI), for example, was set up in 1960 by the Ford and Rockefeller foundations, nine years after India had established its own highly regarded institute, the Central Rice Research Institute (CRRI) in Cuttack. The Cuttack Institute was working on rice research-based on indigenous knowledge and genetic resources, a strategy clearly in conflict with the goals of the U.S.-controlled IRRI. The director of the CRRI was removed, under international pressure when he resisted handing over his collection of rice germplasm to IRRI. He had also asked for restraint on the hurried introduction of the High Yielding Varieties (HYV) of rice from IRRI (Balance of this article omitted here; unscannable) Indigenous Peoples Speak to the Banks (omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 INTERVIEW THE ECONOMICS OF DEBT Lance Taylor is a professor of economics at the Massachusetts Institute of Technology in Cambridge, Massachusetts. He received a B.S. in mathematics from the California Institute of Technology in 1962 and a Ph.D. in economics from Harvard University in 1968. His articles have been published extensively and his books include Macro Models for Developing Countries and Varieties of Stabilization Experience. MULTINATIONAL MONITOR: How did the current international debt problem develop? LANCE TAYLOR: Beginning in the seventies, there was an episode of loan pushing from the commercial banks to developing countries. The chief source of supply was the recycling of OPEC bank deposits after the oil shock in 1973. You began to get overheating of the economies and overborrowing. The loans were cut off drastically in 1982, which gave rise to the debt crisis. After 1982 [there] was a phase of running around twisting commercial bankers arms to try to push in a little bit of money to keep countries afloat on the notion that they were liquidity constrained. So you got these endless negotiations in 1982-83 which were succeeded by the Baker Plan. The rationale of the Baker Plan came from U.N. studies saying that countries had dramatically cut back investment as part of the adjustment to the debt crisis and also the declining terms of trade and export shocks. The notion behind the Baker Plan was that if investment could be built back up again then countries might be able to grow fast enough to grow out of their debt obligations. But there never were enough resources put in the Baker Plan to allow countries to do that, and its not clear that the Treasury was paying much attention to the rationale anyway. I think the hidden agenda was to give U.S. banks a chance to regroup, which they roughly did between 1984 and '87, ... [by] building up some equity against the bad loans they had made in the developing countries.... Some of the worst hit banks were able to do that beginning in 1984-85. In 1984 there was a real chance of bank failure but by about 1987 there was not much of a chance. What the Baker Plan did was permit the banks to do that but it did very little for the developing countries. The Baker plan gave them time and pushed in enough money and generated enough political pressure to keep countries from defaulting. Then, beginning in 1987, you get different countries doing different things. There were debt-equity swaps, which the Chileans took first, and Bolivia did a sort of half-way debt buyback supported by foreign donors. Argentina went in and out of debt moratoria and tried to put pressure on the banks. And then you wind up with the Brady Plan, the rationale of which is close to the Baker Plan: if countries were provided access to foreign exchange, they might be able to grow out of their difficulties. But the trouble with the plan is there's not enough money around. The commitment to refunding of debt in the Brady Plan is about $30 billion, which might generate something like $4 or $5 billion in net additional inflow to developing countries and that's just nothing. MM: What would be needed? TAYLOR: Oh, maybe three times, four times that. So the capital commitment would probably have to be upwards of $100 billion, and that seems unlikely. MM: What were the characteristics of the debt-led growth in the seventies? TAYLOR: Basically, you had access to foreign exchange and you could use that to support growth in consumption or growth in investment.... And all the countries, to a greater or lesser extent, were also subject to capital flight. Firms borrowed abroad and then redeposited the money in the United States. So there was some investment, some consumption, some capital flight, with the exact mix depending very much on local circumstances. In Mexico, for example, maybe half of the net inflow went back abroad in the form of capital flight. Of that which remained, roughly half went into true capital formation and half probably went into some kind of consumption. MM: What happened to the developing countries' economies when the debt crisis erupted in the 1980s? TAYLOR: Traditionally, the big borrowing countries have been able to run trade deficits on the order of 2 or 3 percent of Gross Domestic Product (GDP). But during a debt crisis to meet their interest [payments] they have to run trade surpluses. So basically you get an enormous macroeconomic shift from a 2-3 percent trade deficit to a 2 or 3 percent trade surplus. That is 5-6 percent of GDP and a tremendous macroeconomic shock. MM: Which means that they would have to increase exports and cut back on imports. TAYLOR: Yes, that's right. And the way they increase exports and cut back on imports is to run a recession--that's the most effective way--and then have some inflation which takes money out of people's pockets. And combining those two things, a lot of the capacity that had been created by investment in the 1970s was now going underutilized and decaying rapidly in the sense of becoming technologically obsolete. MM: Did this phenomenon of recession plus inflation apply across the board to the borrowing countries? TAYLOR: Well, you got different reactions. There are only a few developing countries that borrowed assets in major commercial bank lending; the rest essentially got very little. African countries, for example, have big debt problems, but that's due to official lenders. The big countries that borrowed from commercial banks are Mexico, Brazil, Argentina, Venezuela, the Philippines and Korea. Korea has switched over to having a surplus because they have had historically unprecedented export growth for three decades now. Mexico, Argentina and Brazil have gone in and out of moratoria and in and out of negotiations. The Philippines and Venezuela are sort of on the edge. Turkey is sort of on the edge. Romania has paid back essentially by squeezing the citizenry to the bone. Chile also paid back, but the Chilean per capita income in the late 1980s is roughly what it was in the late 1960s. M: How has the practice of running a recession and having inflation in order to generate a trade surplus related to the policy of the IMF? TAYLOR: The IMF has excellent policy tools to force a country to run a recession; they claim they're doing otherwise but basically that's what they do. The inflation they'd like not to have. If prices go up by 10 percent a month let's say and you only index wages 70 percent to prices, then you get dramatic reductions in real wages which cut back on consumption. You see real wage reductions via inflation all over the debtor countries. At the same time, inflation erodes the value of the money supply and that also tends to cut back on consumption. The IMF, in principle, doesn't want that to happen, but it's an unavoidable side effect when you have to make these major macroeconomic adjustments. MM: What has been the net effect of the lending boom and the austerity plans that followed on the income distribution and the internal organization of the economies in the borrowing countries? TAYLOR: The general effect of austerity and recessions is to put people out of jobs or to destroy jobs. There are various adjustments that people within the country can make in terms of inventing ways to share work and inventing different kinds of urban subsistence strategies. In the African context, for example, that depends on the existence of family structures which can absorb people who get put out of jobs. Within Mexico, probably relatively poor people in agriculture have not been hit as hard as have people in urban areas. On the other hand, the agricultural sector is now lagging for other reasons so there may be some distributional loss there. Real wages have gone down very dramatically, employment has not gone down that much. So the shock has been taken by the working class is in terms of payment per job rather than destruction of the job per se. But there probably have been adverse shifts in distribution. At the same time, the people who have put capital abroad have had capital gains because of the depreciation of the peso. Brazil has had more open unemployment with some real wage loss. Capital flight historically was not as severe in Brazil, but it has been picking up. And there has been tremendous out-migration from Brazil. MM: How has the debt crisis affected the financial relations between the rich and poor countries? TAYLOR: I helped organize a study for a branch of the UN university in Helsinki called The World Institute for Development Economic Research (WIDER). We did detailed case studies of macroeconomic adjustment and resource transfers in 18 developing countries and used econometric statistical techniques to look at the developing world as a whole. Beginning around 1983 84, instead of a net resource transfer from North to South, there was a net resource transfer the other way. That's basically what the trade surpluses of the debtor countries have spawned. In the mid-1980s, it was about $50 billion a year. By the late 1980s the transfer was someplace between $20 and $40 billion a year. MM: What will be the likely distributional effect in Brazil of recently elected President Fernand Collor's program? TAYLOR: It is an interesting program and it may well turn out to be favorable. Brazil was, of course, the extreme case of indexation, with all financial contracts essentially indexed to the rate of inflation in the so-called overnight market. In a sense, the whole government's assets were turned over every 24 hours. This gave rise to enormous amounts of speculation and the banks were making a tremendous amount of money out of it. With the overnight, the banking share of GDP in Brazil rose from 2 to 15 percent. What the plan did was freeze all this funny money, if you like, but left real money in the hands of poor people who never participated in the overnight game anyway. By freezing all this stuff, including the stuff in people's safe deposit boxes, they succeeded in, I hope, putting an end to all this speculation and perhaps making an opening for the price and wage freeze which are also part of the package to work in getting rid of the inflation. MM: Even if this does revive growth, will it necessarily do anything to the distribution? TAYLOR: No. Presumably if growth revives, it will go back to the traditional Brazilian model. Brazilians have never really wanted to confront their distributional problem in any serious way. MM: Brazil is a special case because it is such a large country, but do you think that, given the international mobility of capital now, it is possible for a small, poor country to move toward a genuinely alternative course that emphasizes redistribution without being subject to a capital boycott and outside political pressures? TAYLOR: Well, for a very small country, like Nicaragua, it is pretty hard to do. For a larger, less explicitly revolutionary country, I should think it would be possible. No one is going to accuse the Christian Democrats in Chile of being revolutionary, but they are reformist and they have an explicit, progressive redistribution agenda. If they are lucky, I think they will be able to pull it off. MM: What about Peruvian President Alan Garcia's policy? TAYLOR: Well, I see it as an example of the dangers of pursuing the expansionist redistributive policy. That is, expansion itself adds to aggregate demand and if you do progressive income redistribution, that's also going to add to aggregate demand. MM: So there is the danger of high inflation if you tried to do both? TAYLOR Yes. If you're starting out with excess capacity, then redistribution looks like a good thing. It worked very well, for example, under the first year of [the ousted government of President Salvador] Allende in Chile. But then you begin to bump into capacity limits. If you're really a revolutionary government, you also run into external foreign exchange and trade limits imposed by others. And then you sort of switch over from a regime in which the redistribution is helpful into a regime in which it is completely counter-productive because you're pushing demand up against the supply limits and prices begin to take off. And you start losing foreign reserves and then you've really had it. That in fact is the Peru story. Garcia said he would use only 10 percent of export revenue to pay for debt. That was a policy inherited from his predecessor, who essentially stopped paying the foreign debt because he figured that was the only way to keep the country on track. And Peru was a small enough debtor so he was able to get away with that for a while. But then Garcia turned it explicitly into a policy and ended up paying more in fact than he had promised he would pay.... MM: What do you think about the policy of debtor countries putting moratoria on their repayments? TAYLOR: They are essentially negotiating ploys more than anything else. The real issue in macroeconomic terms is whether they'll continue to run the 2-3 percent trade surplus. And if they do, then they're going to continue to have macroeconomic difficulties. Now, putting on a moratorium and sticking with it or defaulting and sticking with it essentially puts you into unchartered financial waters. And nobody has yet wanted to try that. MM: You don't know whether you'll be able to get money in the future. TAYLOR: Well, you know perfectly well you're not going to get money in the future for long-term capital formation. The real issue is whether you're going to get money for trade finance. MM: What's your view of Poland's new economic policies? TAYLOR: I think [Poland] is in a phase, like a two-year-old kid. They're going to go through this exercise in free markets and they're going to run a huge recession and then they'll, one way or another, try to invent managed capitalism. MM: What would be a wiser course for the Eastern European countries? TAYLOR: Not to go through the free market flirtation. We had a meeting of the WIDER project a couple of weeks ago and we got into a very interesting discussion about what was going on in Poland. At least according to the person who gave the presentation, their hope was that you'd get all kinds of entrepreneurs coming out and setting up free market operations. But that's not happening because their aggregate demand has gone down very dramatically. And nobody has any reason to consider undertaking entrepreneurial activities because she or he would know that they couldn't sell anything. So ultimately you're going to have to have the state entering in, establishing rules of the game, supporting aggregate demand and probably pushing people into private enterprise activity. But it'll take them a while to learn that and they'll probably have a year or so of recession before they decide. What they're trying to do, in a sense, is re-invent nineteenth century capitalism which, I think, having read a lot of Marx and Engels, they should know had its problems. MM: Some have said Eastern Europe may economically become the Central America of Western Europe. Is that plausible? TAYLOR: Well, as a low-wage, peripheral, capitalist area, sure. Czechoslovakia less, Romania more. But the per capita income levels in Yugoslavia, Hungary, Poland are well above Central American levels. It will be different in the sense that the Central American countries are very poor and are essentially in the agro-export business. Presumably in Eastern European countries there's going to be some kind of basis for low-wage manufacturing industry. MM: For the smallest, poorest Third World countries, what do you currently see as the best balance to strike between developing the internal market and export orientation? TAYLOR: The balance depends very much on the historical and institutional circumstances of the country. Small countries-- populations of say one to 10 million--are just never going to have enough internal market size to pursue an import substitution strategy very far. It's just too expensive to pursue for every product, which means they have to import a lot, which means you have to export a lot to pay for it. And then there's the question of what you want to export and finding exports which have income elastic demands and advanced country markets.... A larger economy has enough market size to isolate itself from the world for a while. There are advantages and disadvantages to that. The disadvantage is that the domestic market is never going to be as big as the world market so you lose a chance for technological advance and economies of scale. On the other hand, with a dynamic inwardly-oriented industrialization, you're much more sheltered from international shocks. MM: What would be the impact of debt relief on an economy like, say, Mexico? TAYLOR: The Brady plan, depending on how you juggle the numbers, would give Mexico relief of between $1 and $2 billion a year. If you got $3 or $4 billion, that would be enough, according to our modelling in the WIDER project, to let Mexico have a growth rate of say 4.5 to 5 percent per year. There has been zero per capita growth over this decade, which means there has been something like 2 percent real growth. So to restore historical per capita growth in Mexico, you need a transfer of roughly $5 billion per year, growing at the same rate as the economy over time. At this point, the Mexican government is basically turning somersaults and handsprings to say, "We are the most open, capitalist, friendly, low-wage economy in this hemisphere, so why don't we get a lot of direct foreign investment to be partially financed by repatriated capital flight and by American enterprises?" So, in a sense, what the Mexican version of the Brady plan is doing is giving a modicum of debt relief and hoping that changes people's expectations enough so that they will get a massive recovery of capital. MM: Is there any chance for an actual cancellation of the debt? TAYLOR: I don't think a cancellation is in any sense in the cards. About the only thing that might happen is a massive recycling of the outstanding debts of the commercial banks. That is,you would have to get money to pay off the commercial banks, or countries would have to be given access to long-term loans which they could use to pay off the commercial banks, and then think about paying off those long-term loans in the future. So there would essentially be a transfer from whoever made the loans to the commercial banks, and the countries would pick up the corresponding long-term liability. MM: Is there any prospect for alleviating the most basic suffering in Africa and Latin America? Would it involve sacrifices in the living standards of the wealthiest countries? TAYLOR: There are different issues involved. In the WIDER study, we estimated that $40 billion in transfers to developing countries would yield 1 percent capacity growth. If you really wanted to help, you are talking $60, $70 billion. Now, in terms of advanced country income, which is $12 trillion or so, that is a drop in the bucket. But there are lots of potential slips. First, the global macroeconomic system appears quite sensitive to shocks on the order of $100 billion. That is, if you look at the magnitude of the two oil shocks or the U.S. trade and fiscal deficit or the Volcker interest rate increase in the late 1970s, they were on the order of $100 billion and they made the world economy ring like a bell. So it is not clear in that sense that the transfer would be effective. Whether or not African economies can absorb much more money at this point, whether they can absorb an extra $5 billion--those are tiny economies--[is unclear].... We think $5 billion would give them an extra 1 percent capacity growth. So that means you are going around dropping $50 million here and $100 million there in economies whose size is only $1 or $2 billion. And whether or not they can absorb that money effectively in terms of investment projects and government cadres is very much an open question. Due to austerity programs, the public sector has been virtually destroyed in much of Africa. It will be a very long, slow process to build it back up. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 ECONOMICS DISASTROUS DECADE Africa's Experience with Structural Adjustment By Nancy E. Wright Nancy E. Wright is a former research associate for the United Nations and a former consultant for the United Nations. The 1980s were disastrous for sub-Saharan Africa. Per capita income was lower at the end of the decade than at the beginning, and a host of other social indicators--infant mortality rates, per capita calorie intake, number of students enrolled in primary and secondary schools--also suggest that the continent made no progress or slipped in the effort to alleviate social ills. A diverse set of factors produced this tragedy, including shifts in the terms of trade, high interest rates on huge debts to international lending institutions, structural adjustment programs imposed on African nations by the International Monetary Fund (IMF), economic mismanagement, corruption, massive allocation of resources to the military, military destabilization and the legacy of colonialism. As a new decade begins, a struggle is underway to define what course Africa should follow to escape its predicament. International lending institutions, which play a major role in African economies, and other actors in the field of international development are evaluating the failures of the 1980s and battling to set the agenda for Africa in the 1990s. Last year, both the World Bank and the United Nations Economic Commission for Africa (ECA) issued major reports on the African economy. The ECA's report, "African Alternative Framework to Structural Adjustment Programs for Socio-Economic Recovery" (AAFSAP), criticizes the structural adjustment programs of the IMF and World Bank and their emphasis on export-led growth, privatization of state entities, limiting domestic demand and an overall reliance on market forces. While accepting some of the prescriptions of structural adjustment, the Alternative Framework calls for a continued role for the state in the guidance of African economies and a heightened focus on meeting human needs. Five months after the release of the ECA's report, the World Bank issued its most comprehensive report on African development to date. Entitled "Sub-Saharan Africa: From Crisis to Sustainable Growth," the report diverges from some of the Bank's recent policies and clearly constitutes a response to some of the criticisms embodied in the ECA document as well as those made by nongovernmental organizations (NGOs). "The transformation taking place within the World Bank reflects the Bank's uneasiness about structural adjustment," says Doug Hellinger of the Development Group for Alternative Priorities (Development GAP). "The Bank is now trying to find a way out. We will definitely see some evidence of change within the next year, because the Bank is under attack from the public and markets alike." "From Crisis to Sustainable Growth" recommends government involvement in human resource development, improvements in infrastructure and environmental action plans. The report acknowledges that "there are certain social and economic activities that market forces and private initiative cannot deliver," states Seyoum Haregot, a senior policy analyst at the Center for Study of Responsive Law and former head of the Ethiopian prime minister's office. "Therefore, the World Bank has conceded, the state must intervene to develop human resources in general and specifically to provide education and health services." The Bank's report calls for a "human-centered development strategy," including a doubling of expenditures for human resource development, which would bring such costs to between 8 and 10 percent of sub-Saharan Africa's gross domestic product. Still committed to structural adjustment The shift in World Bank thinking is limited, however, and the Bank has not abandoned the central tenets of structural adjustment. Reliance on market forces remains the key element of the World Bank's policy prescriptions. "The new report views structural adjustment as fundamentally important, but within a broader context," explains one World Bank source. "It uses the phrase 'adjustment with a difference.' ... It is an adjustment that is more sensitive to social dimensions." Though it places some importance on regional integration, environmental protection and human resource development, "From Crisis to Sustainable Growth" still calls on African governments to allow market forces to govern both agricultural and industrial production, to involve multinational companies in exploiting Africa's mineral resources and to produce manufactured and agricultural goods for export. The ongoing promotion of structural adjustment draws attacks from critics like Hellinger, who fault adjustment programs for their effect on the internal distribution of wealth and for increasing developing countries' dependence on external economic forces. "There is no doubt that [structural adjustment] polices have made things worse, by widening economic disparities," Hellinger says. "While larger farmers can benefit because they participate in the export trade, landless rural workers do not have access to the increased producer prices brought about by structural adjustment. Urban dwellers, deprived of subsidies and [hurt by] job cutbacks, also suffer," Hellinger adds. "Adjustment programs are the antithesis of what the World Bank says they are. Rather than ensuring fair wages and promoting economic self-sufficiency, they divert economies to an export focus and bring about diminishing demand." Evidence in the ECA's report indicates that the aggregate impact of structural adjustment programs has been negative. The report reveals that countries pursuing strong structural adjustment programs had significantly lower rates of growth in the 1980s than ones which did not, though it notes that exogenous factors make direct correlations problematic. Additionally, the ECA report provides evidence that structural adjustment fails to correct even the problems it is designed to address. Sub-Saharan African countries which implemented structural adjustment programs experienced: "GDP growth decline from 2.7 percent to 1.8 percent; a decline in the investment/GDP ratio from 20.6 percent to 17.1 percent; a rise in the budget deficit from -6.5 percent of GDP to -7.5 percent of GDP; and a rise in the debt service/export earning ratio from 17.5 percent to 23.4 percent." The World Bank, however, stands by the record of structural adjustment. Pierre Landell-Mills, principal co-author of "From Crisis to Sustainable Growth," claims that "structural adjustment has worked where it has been undertaken on a sustained basis. Guinea and Ghana are now growing at a rate of 5 to 6 percent per year, and Madagascar has grown from -2 to 2 percent per year." The Bank's report cites Ghana as an important example of the benefits of structural adjustment policies. In 1983, Ghana negotiated two Stand-By agreements with the IMF. Four years later, a Structural Adjustment Facility and an Extended Fund Facility were introduced along with a $115 million structural adjustment credit from the World Bank. Ghana undertook two Economic Recovery Programs, from 1984-1986 and again from 1987-1989. The goal of the first recovery program was to reduce inflation and fiscal and external deficits by reducing demand. The second recovery program subsequently sought to reverse declining agricultural production, restore Ghana's economic credibility in the eyes of western creditors, increase foreign exchange earnings, reform prices and reestablish production incentives for cocoa, as well as to improve living standards and continue to control inflation. The ultimate goal of both measures was to maintain 5 percent yearly economic growth, achieve balance-of-payments equilibrium and improve public sector management. During this time, significant agricultural reform did take place, and by 1988 cocoa production had increased by 20 percent. At the same time, however, the world price of cocoa fell, and the prices of imports escalated. As a result, many Ghanaians have not experienced the improved conditions which adjustment was supposed to bring. Discussing Ghana recently, Flight Lieutenant Jerry John Rawlings, Chairman of the governing People's National Defense Council, stated, "I should be the first to admit that the Economic Recovery Program has not provided all the answers to our national problems. In spite of all the international acclaim it has received, the effects of its gains remain to be felt in most households and pockets.... Many families continue to experience severe constraints on their household budgets." Eboe Hutchful, a Ghanaian national and a professor of political science at the University of Toronto, confirms that the results in Ghana have not been altogether commensurate with the economic recovery efforts. "Many local populations do think things have improved somewhat," he acknowledged, "but not as dramatically as one would have hoped.... There is significant concern over the disparities in resource distribution." Even the limited success Ghana has achieved is tainted by its continuing heavy dependence on foreign development assistance. With a population of just over 14 million, Ghana receives more than $500 million per year in aid. The International Development Association, the World Bank's soft loan arm, has contributed more to Ghana than to any other country except China and India. Yet, in addition to persistent poverty and a stagnated domestic industrial sector, Ghana's debt service ratio exceeds 70 percent, one of the highest in Africa. World Bank critics claim that such facts disprove the Bank's claim that Ghana is a structural adjustment success story. "The World Bank has bent the rules in the case of Ghana, including allowing Ghana to postpone its debt payments, to be able to exhibit a successful model," argues Fantu Cheru, professor of development studies at American University in Washington, D.C. The battle over the interpretation of the success of structural adjustment programs in Africa has tremendous significance for the African people. The World Bank wants not only to continue to rely on structural adjustment programs, but also to extend the use of the market as a resource allocator. "From Crisis to Sustainable Growth" promotes user charges as a means to cover the costs of providing basic social services, including "universal primary education, primary health care and water supply." The report denigrates African governments, which, "encouraged by donors, ... insist on providing water free." The ECA report criticizes the World Bank's exaltation of market forces, condemning "the substitution of the profitability criterion for the social welfare criterion in vital areas such as water supply in a continent where the majority of the population has no access to potable water." The ECA alternative As well as diverging from the World Bank's focus on market forces, the Alternative Framework proposed by the ECA focuses on self-sufficiency, especially in food production, rather than Africa's role in the international market. Instead of constraining demand merely to achieve financial balances, it advocates the strengthening and diversification of Africa's productive capacity. The Alternative Framework also calls for greater and more efficient domestic resource mobilization, improvement in human resources capacity, strengthening Africa's scientific and technological base and vertical and horizontal diversification, both to meet the needs of all sectors of the population and to lessen single-commodity export dependence. Other policy objectives recommended in the ECA report include establishing a more pragmatic balance between the public and private sectors, achieving broader bases of decision-making, correcting the imbalance between military and social expenditures, and improving the pattern of income distribution among different sectors. Grassroots development? Despite their competing perspectives, the ECA and the World Bank reports both fail to focus attention on the issue of grassroots participation in economic development. Though the ECA places a greater emphasis on the importance of local involvement, it does not go nearly far enough. This is not surprising given the absence of grassroots participation in the preparation of the ECA report. "The Alternative Framework came out of an exercise by governments; that is, the process came from the top. While this is not necessarily bad, it does suggest that the process did not include local participation," says Gayle Smith of Development GAP. The ECA's failure to include local input in its research is mirrored by a similar weakness in its proposals, according to Smith. "The report calls for consultation at the local level, but does not propose mechanisms for doing this," she says. "Even if the mechanisms are put into place, how can governments be held accountable to those mechanisms?" In any case, the ECA position will have far less impact on developing countries than that of the World Bank. "Ultimately, [the entity] that controls the purse is the one that influences policy," says Haregot. "The World Bank, not the ECA, provides funds, and therefore it influences disproportionately the policies of developing countries." In the area of grassroots involvement, critics have little hope that the World Bank will change. "The so-called 'shift' in World Bank policy is actually rhetorical," says Cheru. "The World Bank's mission is not promoting grassroots development, but facilitating global economic integration. Therefore, the Bank is not set up to do bottom-up development." Cheru says that the massive structural changes which would be necessary for the Bank to support grassroots development effectively are extremely unlikely. "An effective bottom-up method would mean restructuring the entire lending approach of the Bank--turning it completely upside down." Yet it is exactly this "bottom-up" approach of democratic, grassroots development which non-governmental organizations believe is fundamental to achieving sustainable growth that benefits all levels of society. "A truly progressive approach must have two elements," claims Hellinger, "first, a participatory approach, and second, a fundamental change in the local economic structure." Countries must allow and encourage the development of "civic organizations, such as producer cooperatives, farmer associations and urban dweller organizations which both perform economic functions and provide feedback and input to policymakers," says Haregot. "Moreover," he adds, "there can be no economic democracy without political democracy. African countries must provide basic democratic rights, not only the right to vote, but the right to speak freely, the right to organize political parties and so on." The relatively minor shifts in World Bank policy may translate into some benefits for the African people, but as long as the Bank remains committed to the framework of structural adjustment, Africa's future will remain bleak. "Structural adjustment works under an international economic system of which Africa is not a part," explains Eugenie Aw, a Senegalese journalist and the Africa Coordinator for Development Education with Interaction. Sustainable development will require a wholly different approach. "To have a real adjustment," Aw says, "one must have the agreement of the people." The World Bank has never been responsive to this factor. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 CORPORATE PROFILE RIO TINTO ZINC: The British Mining Monster By Roger Moody Roger Moody is director of Minewatch, a new community-based consultancy on mining, land-rights and the environment. His full-length study of RTZ, Plunder, will be published this fall. In 1981, the Canadian subsidiary of the Rio Tinto Zinc Corporation (RTZ), along with Denison Mines, negotiated a ground-breaking agreement with the United Steelworkers of America, empowering the union to appoint safety inspectors at its Elliot Lake uranium mines. For RTZ, the agreement was a rare concession to demands that human needs be given consideration in the company's operations. Even so, the compact was reached only after a government commission revealed that Elliot Lake miners were laboring regularly under radioactive exposures seven times higher than is considered safe and three subsequent years of union agitation. RTZ is a truly global corporation, however, and many of its operations affect communities more vulnerable and less able to protect themselves than the Canadian mineworkers. With 52 mines in 40 countries, RTZ is one of the world's most powerful mining companies. According to investment analysts Morgan Stanley Capital International, RTZ's market capitalization stood at $5.7 billion in June 1988, putting it head and shoulders above its competition. In addition, RTZ's 40 percent-owned Australian associate, CRA, Ltd. ranked sixth with assets of almost $4 billion. Having acquired a large number of properties in related industries, RTZ with its subsidiary companies--known as the Group--has interests in almost every major metal and fuel, including aluminum and its products, borax, coal, copper, gold, industrial chemicals, iron ore, lead, silver, specialty steels, tin, uranium and zinc. A 1989 purchase brought RTZ most of British Petroleum (BP) Minerals' mines and prospects, including Kennecott Copper with its plum asset, the Bingham Canyon copper mine in Utah, as well as several important North American and Asian gold interests. The London-based Financial Times now rates RTZ as the third most important gold producer outside of South Africa. But this is only a small side-venture for RTZ; even collapsing gold prices would leave the company's fortunes largely intact. RTZ's core assets are sunk in minerals which, while subject to cyclical fluctuations that have seen the downfall of smaller miners, regularly return huge profits to a company large enough to wait out the downturns. RTZ excels in mining and marketing a range of minerals from one lode, persisting in exploiting mines not generally viewed as prospective money-makers and in overcoming political obstacles to its projects. RTZ's financial success also stems from low labor costs, inadequate environmental regulations, generous tax allowances and leases which are literally dirt cheap. The Rossing uranium mine The site of some of RTZ's greatest successes as well as the source of some of its most strident opposition, the Rossing uranium mine in Namibia exemplifies many RTZ practices. The mine enjoys the unenviable distinction of being the most condemned mining project of the twentieth century. No other mine has been the subject of UN resolutions, a UN-sponsored court case and scores of demonstrations throughout Western Europe. The Rossing mine, which by the early 1980s had become the world's biggest uranium project, was constructed by hundreds of Ovambo laborers who were separated from their families and housed in what the Economist magazine called "appalling temporary camps." Even when a more permanent black township was constructed, conditions hardly improved; in 1979 (six years after mine construction started) South African researchers Gillian and Suzanne Cronje found them "akin to slavery." In a speech delivered in early 1980, the General Secretary of the Mineworkers Union of Namibia (MUN), Ben Ulenga, observed that "92 percent of all black and 51 percent of all colored workers still remain in the company's lowest income bracket, [which does not] constitute a living wage.... [B]lack workers in the Exploration Department have no house [and] no housing allowance." Ulenga charged that the miners' living "conditions in crowded army-style tents are, in fact, among the worst in the mining industry." Under the spotlight of international pressure, RTZ made a show of cleaning up its act in the 1980s, but the changes were largely cosmetic. Until South Africa's recent withdrawal from Namibia, RTZ's Rossing operations violated the United Nations' Decree on Namibia's Natural Resources and numerous other resolutions prohibiting the exploitation of Namibia's resources. But because Namibia' s economic fortunes are so dependent on mining, RTZ gambled that the longer it held on in the territory, the more likely it was that it would be invited to remain after independence. The illegality and immorality of RTZ's operations in Namibia notwithstanding, the company gained a seal of approval from successive British governments. When she visited the Rossing mine last year, Prime Minister Thatcher said, "It makes me proud to be British." Her uncritical view was hardly surprising, considering the history of protection that several British administrations (including her own) have afforded RTZ to plunder Namibian uranium. Officials within the British Ministry of Technology signed a secret contract enabling Rossing to supply the country's uranium needs, although the British cabinet was told that Britain would obtain the uranium from Canada. Once Britain was committed to the illegal source, both Labor and Conservative governments defied United Nations decrees in order to maintain the supplies. The British government promulgated a Protection of Trading Interests Act which not only prohibited British corporations from supplying documentation to a potentially hostile foreign interest (a Chicago court investigating the uranium cartel) but entitled British courts to seize the assets of any overseas power which impounded British corporate assets. Government relations Though RTZ unceasingly exploits the resources of many regions, it gives little or nothing back. The company has paid no taxes on the Rossing mine during most of the mine's existence even though, at one point in the 1980s, the Namibian mine was the company's biggest money-spinner. Similarly, the Bougainville copper mine in Papua New Guinea enjoyed a five year tax holiday (until the then-newly-independent government of Michael Somare forced a renegotiation in 1974). The Weipa mine in north Queensland, Australia, the largest bauxite mine in the world, is functioning on land which was seized from Aboriginal people who have never received any compensation. With the Weipa project, RTZ was able to extract extra financial support from the local government. Weipa's bauxite is converted into aluminum in Australia and refined at the Tiwai Point Smelter in New Zealand (Aotea-roa). Although RTZ and its partner Kaiser agreed in 1960 to build a power station to run the smelter, within two years they backed away from the promise, pleading poverty. The New Zealand government, eager to promote industrial development, not only constructed the power station at the taxpayers' expense but sold electricity to the two companies at one thirteenth of the rate charged to New Zealand citizens and one twentieth of that charged to other industries and farmers. By sharing bits of its wealth with those in a position to help them, RTZ and its subsidiaries and partners maintain an extraordinary capacity to influence domestic power brokers in the regions where they operate. When Conalco (the joint RTZ- Kaiser company formed to exploit the Weipa mine) was publicly floated in 1970, for example, only 10 percent of its shares were offered to the Australian public. A significant portion had been offered secretly the day before to friends of RTZ in high office in Queensland; these friends included the state Treasurer, the Ministers of Aboriginal Affairs, Industrial Development, Local Government and Electricity, and the Premier of Western Australia. Acting Premier of Queensland Gordon Chalk distributed the ill-gotten gains to his entire family, leading one journalist to comment that "only the dog" had failed to benefit. When the value of RTZ skyrocketed upon its public offering, these politicians saw the value of their investments double in a day. No national government has proven immune to RTZ's influence. In the late 1970s, a U.S. subsidiary of RTZ, U.S. Borax, overcame the opposition of President Jimmy Carter and gained access to nationally protected lands. In 1977, U.S. Borax located a massive molybdenum deposit at its Quartz Hill property in Alaska. To the company, the find promised a "valuable diversification into a market where prices have continued to rise even during recession." Unfortunately for RTZ, the deposit lay in an area which had recently been designated as inviolable. Despite opposition from the Sierra Club, Representative Morris Udall and Carter himself, RTZ/Borax mounted a well-funded lobby of Congress, arguing that its exploration of the deposit was in the "national interest." By December 1980, the company had prevailed: the Alaska National Interest Lands Conservation Act was passed, allowing RTZ to mine in the world's largest national park. Remarkably, even while Congress was legislating exceptions for RTZ, a Congressional investigation was citing the company and several subsidiaries as prime movers in the world uranium cartel whose contract and price-fixing in the early 1970s boosted the mark-up for "free world" supplies of yellowcake by a factor of five. One calculated result was to justify the development of the Rossing mine, whose low-grade refractory ore had not previously been considered profitable to mine. The company's masterminding of the cartel, euphemistically dubbed the "Uranium Producers' Club" by its members, consolidated and extended RTZ's influence over key government personnel in South Africa, Canada and Australia. It sat as an equal among representatives of sovereign states--leading one commentator, Stephen Ritterbush, then an advisor to the White House, to declare at the 1980 United Nations (UN) Hearings on Namibian Uranium: "Rio Tinto Zinc is in the position of acting in many respects as a uranium producing and exporting nation." Indigenous people against RTZ RTZ has not been able to act with impunity, however. Its actions have generated resistance among the people it has affected, especially among indigenous peoples. In a rare acknowledgement of the opposition to the company in his 1984 Annual Report, RTZ's chair Sir Anthony Tuke wrote "We are conscious that some people hold deep and strong beliefs that our activities are in themselves damaging." "Some people" includes the UN Commission on Namibia, President Mugabe of Zimbabwe, the one-time Greater London Council, the National Federation of Aboriginal Land Councils, the Guaymi Congress of Panama and a whole battery of community groups stretching from northern Ireland to New Zealand. Indigenous land claims have been the bane of RTZ's expansionist policies for two and a half decades. Indigenous people and their supporters have had some success in curbing the company's actions. For example, RTZ was forced to put its huge Cerro Colorado copper project in Panama on hold during the mid-1980s. International support for the Guaymi Congress in its struggle to gain land rights, combined with opposition from Panamanian Bishops and CEASPA, the country's leading radical think-tank on development, proved too much for the top brass at RTZ's corporate headquarters in London. "We have had more opposition to this project than anything else we've done," confessed Tuke to a private meeting with members of Survival International. He added that he found the degree of opposition "quite astonishing." Nonetheless, RTZ continues to hold 49 percent of the Panamanian mine's equity, pays the salaries of workers from the state mining company and keeps a substantial contingent of its own staff in and around the "copper mountain." Most often, RTZ has been able to expand its operations, even at the costs of displacing native people or jeopardizing their lives. The view of RTZ and its associate company, CRA. on the validity and importance of indigenous land claims is best captured by a callous statement CRA chair Sir Roderick Carnegie made at the 1984 annual general meeting of RTZ: "The right to land depends on the ability to defend it." Two entire Aboriginal communities, for example, lacking sufficient defensive capabilities, were forcibly removed from their land during the construction of the north Queensland bauxite strip-mine at Weipa in the early 1960s. The Bougainville copper mine in Papua New Guinea has ravaged vast areas of Nasioi and Rorovana farmland and forest. The Elliot Lake uranium mines in Canada, while not situated on Indian territory, leach poisonous heavy metals and acids into lakes and rivers essential to the livelihood of the Serpent River Band. The encroachment and destruction proceeded apace during the 1980s. A sacred women's dreaming site was levelled to uncover the lucrative kimberlite diamond pipe at Lake Argyle, Western Australia. Test drilling for uranium has been carried out near water supply sources on Mardu land in the desert to the south of Lake Argyle. CRA is operating one of Asia's major new coal mines upstream of Dyak settlements in East Kalimantan in Indonesia, while both CRA and RTZ have been accused of engineering the removal of indigenous miners and their families further inland. One of the Group's most important future mines--a wet-dredge mineral sands project in southeastern Madagascar--is likely to affect profoundly the coastal areas used by the Antonosy, one of the island's largest tribal communities. And, earlier this year, CRA announced a 30 percent stake in a gold mine on Igorot land, high in the Filipino Cordillera. Its partners in the Philippine gold mine are Galactic of Canada and Lepanto Mining, a domestic company which has banned organizing by the broad-based National Federation of Labor Unions (NAFLU) and uses it own private army to silence dissidence. RTZ has had to expend a disproportionate amount of time and energy in counteracting the growing strengths of indigenous people and their supporters. It has even been willing to resort to violent threats. An RTZ board member once threatened to "squash Survival International like a fly, if we didn't get off their backs," says Survival International President Robin Hanbury-Tenison. And an Aboriginal activist who helped expose CRA's links with Anglo-De Beers of South Africa over the marketing of Lake Argyle diamonds swears he was nearly run over on a Melbourne street by a company car. But these are exceptions to the general RTZ Group policy for dealing with land-based peoples: keep a low profile and foment division within indigenous organizations. This technique was born in Cape York (where an RTZ-sponsored Council has often been at odds with other Aboriginal people), honed at Lake Argyle (where a small family group was separated from the rest of the community and inveigled into signing away its land rights) and most recently employed in Australia's Western Desert. As one close observer of events in Australia's Western Desert summarized the company's ploys, "CRA early on established that the majority of the Western Desert people--the Mardu--were adamantly opposed to uranium mining. Instead of sitting down with the Western Desert Land Council ..., the company sought to undermine them by signing deals with another community whose claims on the area were weaker but whose organization was stronger. This group also operated [its] own mining projects in the past and [was] therefore considered [a] softer target by the company." Ultimately, CRA failed to get the go-ahead to open the mine after Australian Prime Minister Bob Hawke banned the project earlier this year. Expanding to new territories: Asia and the United States Conflicts between the RTZ Group and indigenous peoples are bound to continue well into the twenty-first century, although the field of combat is likely to shift as the company expands in the mainland United States and forages further into Asia. Since the 1989 takeover of BP Minerals, just over half of RTZ's investments are in the United States, although a mere 3 percent of its shares are held by North Americans. This may soon change, however. The Mining Journal reported in March 1990 that "the group is aiming for a share listing on the New York Stock Exchange in June this year. This is expected to attract the institutional investors. The medium-term target is for around 10 percent of RTZ's equity to be held in North America." At the same time, RTZ's chief executive, Derek Birkin, is determined not to let any opportunity slip by in Asia. "The Pacific Rim is a region of growing importance," he said earlier this year. "By the turn of the century, ... there will be a southerly shift in world economic power away from the old axis of Northern Europe and North America. [Already] between 20 percent and 25 percent of current metals demand ... comes from developing countries, especially those in South East Asia." Birkin expects these nations to perform "the same function for overall growth rates as Japan did in the 1960s." A few years ago, RTZ might justifiably have regarded the opposition in these two regions as malleable: North America as an area starved of new investment where the power of the mining unions has been broken; Southeast Asia as an eldorado of untapped reserves where pliable governments (such as Indonesia, the Philippines and even Vietnam) are content to leave the running of their mines to heavyweight outsiders. Certainly RTZ has made enviable headway in the Pacific Rim: it recently became the first multinational to conclude a mining agreement with the People's Republic of China and it is the only foreign concern which is permitted to manage a major coal mine in Indonesia. But two developments shook the company's confidence last year. The first, and most important, was the growth of a guerilla army on the island of Bougainville, Papua New Guinea. The Bougainville Revolutionary Army (BRA) is led by Francis Ona, a former employee of the huge Bougainville Copper mine which RTZ established in the 1970s while Papua New Guinea was still an Australian protectorate. The guerillas campaigned for compensation for traditional land owners who were dispossessed by the company's operations and who suffer the effects of massive pollution. As Perpetua Serero, leader of the island's matrilineal landowners told a visiting reporter in 1988, "We don't grow healthy crops any more, our traditional customs and values have been disrupted and we have become mere spectators as our earth is being dug up, taken away and sold for millions." Serero says the BRA developed as the people awoke to the severity of the exploitation. "Our land was taken away from us by force; we were blind then, but we have finally grown to understand what's going on." Regular attacks by the BRA against mine installations, mine workers, visiting politicians and expatriates forced the mine to close in May 1989. The Papua New Guinea government of Rabbie Namaliu was incensed, since Bougainville copper generated up to 20 percent of the country's internal revenue and was its biggest export earner. CRA, operator of Bougainville Copper, was also greatly disturbed, fearing a market-share loss. While the company's copper contracts could be filled by other RTZ mines, business was more likely to go to competing companies, such as Freeport in West Papua. Other CRA projects in the country were also jeopardized. Finally, in the closing days of 1989, CRA packed up, told its Australian personnel to leave the island and put the mine in mothballs. Only two months later, as a result of a political shift by the central government, a cease-fire was signed with the BRA. Within a week, all Papua New Guinea forces had pulled out of Bougainville. Sam Kauona, military chief of the BRA, urged his forces not to damage the abandoned mine, in case it could be "re opened in an independent Bougainville." The prospects of that, however, are slim. The term "to bougainville" is now common currency among indigenous people in the Pacific region; it is synonymous with the increasingly militant stance adopted by traditional landowners who confront exploitation by multinational mining and natural resource corporations and collusion between their central governments and the corporate villains. For example, major blockades were mounted by Highlanders in Papua New Guinea last year to gain a renegotiation of the Ok Tedi mining agreement. Ok Tedi is managed by Australia's biggest company, BHP, along with Amoco, several West German companies and the Papua New Guinea government. The ripples from Bougainville spread beyond the Pacific Rim. Last January, at a "shop window"called by RTZ to sell itself to institutional investors in New York, the company found its activities in Papua New Guinea sharply challenged. Said an investment advisor, "They expecting to talk gold and ended up talking rebellion." The latest challenge to RTZ's well-laid plans has erupted in North America. When RTZ took over BP Minerals in 1989, and with it complete control of Kennecott Copper, it immediately took Kennecott's Flambeau mine in northern Wisconsin off the back burner. According to Al Gedicks of the Center for Alternative Mining Development Policy, Kennecott and Exxon went directly to work promoting legislation conducive to mining development in the region. Gedicks says that the companies "determined the precise wording of key pieces of legislation," while Exxon lobbyist James Klauser helped reframe the state's groundwater protection bill so that mining companies could be permitted to pollute previously unpolluted groundwater to the level of federal drinking standards. The farmers around Flambeau and the Lax du Flambeau band of Chippewa, in an unprecedented move, have now joined the protests against the mine as an official party. For perhaps the first time ever, a coalition of farmers, environmentalists, treaty rights supporters and indigenous people has mobilized to defeat a mining proposal in the continental United States. Such a potent mixture has derailed RTZ elsewhere in the past and now threatens to do so again. Though the power and arrogance of RTZ are overwhelming, the company is not unassailable. Those who get the short end of the stick in regions where RTZ operates mines are usually those with little power to protect their interests. By working together, however, and putting a spotlight on the corporation's high- handed disregard for the land, people and laws of the world, opponents have been able to create some semblance of accountability and to protect themselves against some of RTZ's worst deeds. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 DEATH ON THE JOB By Joseph A. Kinney and William G. Mosley Joseph A. Kinney is the Executive Director and William G. Mosley is a Professional Staff Member of the National Safe Workplace Institute in Chicago, Illinois. On June 26, 1988, a young worker at the Bastian Plating Company in Auburn, Indiana was asphyxiated while cleaning out a tank. The tank had been treated with a substance that emitted lethal vapors when mixed with water--but nobody informed the worker. Four coworkers, aged 19 to 25, were subsequently asphyxiated one by one as they tried to save their friend. Shock and outrage at the grisly deaths spread far beyond the small town of Auburn. The National Institute for Occupational Safety and Health (NIOSH), a federal agency, said the disaster was the single worst accident to take place in a confined space. Bastian Plating, however, escaped with a minimal penalty. The Occupational Safety and Health Administration (OSHA) fined the company just $42,000 for negligence; the company is contesting all but $2,000. Under Indiana's workers compensation law, Bastian Plating had to pay only $2,000 for each of the five fatalities. Modern day sweatshops Bastian Plating and companies like it have radically transformed the industrial United States, creating modern day sweatshops where workers labor in hazardous conditions with few protections. Built in the void of the 14 million union jobs lost during the 1980s, the new sweatshops maintain the high accident rates and low compensation for victims that characterized the sweatshops of old. They have emerged in places like Auburn, which have weak or no unions and disgraceful environmental and workers' safety and compensation laws, lacking even minimal corporate accountability. Public awareness of this workplace transformation and its accompanying dangers is lamentably low. Even the Bureau of Labor Statistics, the federal agency charged with data collection, does not keep track of how many workers are killed each year. Only once, in 1985, did a government agency actually try to count the number of workers who died as a result of traumatic, job-related accidents. After painstakingly going through death certificates, NIOSH put the 1985 worker death toll at 7,771. However, NIOSH's count involved only those deaths where information was properly recorded on the death certificate. Dr. Anthony Suruda, a physician who participated in the study, said that the actual figure could be much higher, perhaps 50 percent higher in some states, because of improper diagnoses of the causes of deaths by coroners and physicians. NlOSH's count further ignored at least 50,000 to 70,000 workers who die annually from workplace-related disease. That is the equivalent of the town of Peoria, Illinois being wiped off the face of the earth by job death and destruction each year. NIOSH also overlooked the roughly 70,000 workers who become permanently disabled from workplace accidents each year. Despite the magnitude of the crisis, federal spending on occupational safety and health is low. For example, while there is widespread agreement that the Environmental Protection Agency (EPA) is under funded, the federal budget allocates the EPA $20.00 for every $1.00 that goes to OSHA. Similarly, U.S. fish and game inspectors outnumber job safety inspectors by a ratio of six to one. Reagan and Bush administration officials have defended low OSHA appropriations, claiming that diligent efforts by businesses have reduced the worker death rate. Data collected by the National Safe Workplace Institute (NSWI), however, show that the dangers of the workplace have not decreased in the past decade; they have only been disguised. The shift of jobs from high-risk industries like steel-making, heavy manufacturing and construction, to low-risk jobs like flipping hamburgers has diluted the fatality rates. But workers in high-risk jobs are still four times more likely to die on the job than other workers. In fact, the death rate for these workers, which had been declining at an annual rate of 2.2 percent by the end of the 1970s levelled off in the 1980s. During this period, the Reagan administration reduced the number of Occupational Safety and Health Administration inspectors by a third and the number of site inspections dropped even further. As many as 9,000 workers may have paid with their lives for Reagan's deregulation. The NSWI offered another perspective on the severity of U.S. workplace safety problems by comparing the U.S. worker fatality rate to fatality rates of other advanced industrialized nations. Using International Labor Organization (ILO) data adjusted for under-reporting, the NSWI study showed that the United States had a worker fatality rate at least 5.8 times higher than Sweden's and 3.5 times higher than Japan's. Many U.S. workers are killed on the job because U.S. worker safety laws are inadequate. The laws fall into two basic categories: workers' compensation laws which are written by state governments, and federal OSHA regulations and laws that are designed to provide safe and healthy workplaces nationally. State workers' compensation laws were first passed in 1911; the last state to enact a comprehensive workers' compensation statute was Mississippi in 1958. Under state workers' compensation laws, injured workers receive income, irrespective of fault in their accident; in exchange, workers forfeit their right to sue an employer for recklessness or negligence. Until 1969, workers' compensation laws were the only avenue open to injured workers following work-related accidents. But these laws focused on compensation rather than prevention and did not significantly reduce workplace injuries. In 1969, coal miners marched on Washington, D.C. demanding a federal mine safety law. They won it, and a year later Congress also passed the Occupational Safety and Health Act of 1970, a broader--but weaker--piece of legislation. President Richard Nixon signed both bills into law, creating a leading role for the federal government in assuring safe and healthy working conditions in U.S. plants, factories and mines. The combination of workers' compensation and job safety laws has failed to protect workers to the extent expected. Compensation to workers and penalties for employers have been so meager that employers still do not have a strong enough motivation to comply with safety standards. Families and communities are forced to bear the brunt of the cost of workplace death. The costs come in the form of medical bills, wage replacements and other public welfare expenses. The Social Security system, for example, pays well over $10 billion every year in wage replacements to injured workers. The workplace also became less safe following the millions of lay-offs which occurred during the 1980s, partly as a result of the leveraged buy-outs and corporate restructurings that took place during the latter half of the decade. While companies' workforces were sharply reduced, many U.S. businesses tried to maintain production levels by pushing their remaining workers harder and by hiring cheap temporary labor to fill in. Unfortunately, some of the deepest cuts were in the ranks of engineers, technicians, trainers and safety personnel--the middle managers who were responsible for testing and maintaining plant equipment and training new workers. Huge numbers of the blue-collar employees who knew the workplace and its dangers best also lost their jobs. The clearest example of the damage caused by the loss of workers and middle managers is the experience of the petrochemical industry. No industry has been more torn asunder by corporate raiders than the petrochemical giants. And probably no company within the industry has been harder hit than Phillips Petroleum. In December 1984, corporate raider T. Boone Pickens launched a raid on Phillips, sending its stock price soaring. Phillips tried to fend off Pickens and his cronies, ultimately initiating a massive stock buy-back program to keep the company independent. The price of Phillips' stock more than doubled, driving the company into debt. Although Phillips managed to stay out of Pickens' hands, its workers did not escape his attack unscathed. Saddled with huge debts, Phillips laid off 10,000 of its approximately 25,000 employees. But the company did not cut production, instead demanding more from its workforce. Many jobs once performed by skilled employees were transferred to untrained, low-wage, temporary workers. Worker safety suffered. In 1989, the Phillips Petroleum refinery in Pasadena, Texas exploded, igniting an inferno that could be seen for 10 miles. The final body count was 23 workers dead and 125 injured. Gerard Scannell, Assistant Secretary of Labor for Occupational Safety and Health, told a Congressional subcommittee investigating the accident that "excluding construction accidents, this is the single most tragic industrial workplace accident in the history of the Department of Labor's Occupational Safety and Health Administration." Robert Wages, Vice President of the Oil, Chemical and Atomic Workers union which represents workers at the plant, testified that "this catastrophe was a disaster waiting to happen--that the consequences were foreseeable." He added, "It is also our belief that this tragedy is only the most recent in a long history of similar events, sharing similar causes and outcomes, and that the Houston fire and explosion portends even greater disasters to come." NSWI calculations from public and union safety records buttress Wages' claims. The fatality rate in the petrochemical industry soared six-fold from 1985 through 1989. Major oil companies such as Amoco, Union Oil, Mobil and Chevron had numerous accidents involving multiple fatalities. Virtually every petrochemical company that cut back on skilled workers but not production experienced a dramatic increase in accidents. And virtually none of them has been inspected regularly or thoroughly by OSHA. The future Prospects for improvement in workplace safety are mixed. Recently there have been some encouraging signs that job safety is working its way up the public agenda. The best chances for change lie with the federal government's enforcement system. Until recently, OSHA was content to play an educational role, meting out only small penalties. For most of the agency's 20- year existence, the Department of Justice investigated no more than one workplace accident every two years for violations of OSHA rules. Now, as many as 10 important cases may be under scrutiny. But many violators still go unpunished. Even though the 1970 OSHA Act provided for criminal penalties, it was not until last year that a company executive served time in jail for OSHA violations. The executive was sentenced to only 45 days. Recently, Senator Howard Metzenbaum, D-Ohio, introduced legislation in Congress that would strengthen OSHA and job safety enforcement. The bill, S.2154, would substantially increase prison terms and would sanction felony prosecutions in the case of reckless endangerment and serious bodily injury. Another bill quickly working its way through the legislative process is S.2442, introduced by Senator Paul Simon, D-Ill., which would give family members the right to participate in any investigations into the workplace death of a relative. In response to the bill, OSHA issued a directive which provided many of the rights that Simon's bill would mandate by law. Simon is proceeding with the bill, spokesman Brian Kennedy explained, because "a directive can be changed at any time. Previous OSHA administrators haven't felt the way this one does." Kennedy believes there is a good chance the bill will pass in the next few months. Reforms are also needed on the occupational health front. Occupational disease is one of the most under-researched, under- funded and ignored areas of public health today. Although data are scarce, conservative estimates put the death toll from occupational disease at 50,000 to 100,000 workers per year, with some 390,000 new cases of occupationally-related diseases appearing each year. The economic costs--not to mention the social consequences--of this neglect are enormous, possibly running as high as $300 billion each year (including wages lost, lost investments and multiplier effects, since workers who die or are injured in the workplace may no longer make the same contribution to the national economy that they did as full workforce participants). The majority of these costs are passed on to the victims and to society. For example, it is estimated that 16.7 percent of all Social Security Disability Income recipients are occupational disease victims. Victims, families, communities and society cannot afford to continue to subsidize business by sacrificing workers' health. The solution to the occupational disease crisis lies in prevention. Measures that should be pursued include surveillance of workplaces, medical screening of workers, early intervention and health care and policies which force employers to internalize the costs of occupational disease. In order to prevent a further rise in the incidence of occupational disease, OSHA must more effectively regulate toxic substances used in the workplace, and standards must be developed to establish safe levels of worker exposure. Despite some state initiatives and evidence that the Bush administration will be somewhat less antagonistic to OSHA, the Reagan years left a legacy that will be difficult to overcome. Legislative and regulatory changes will help alleviate some problems, but meaningful improvement in workplace health and safety will come about only with a renewed national commitment to ensuring that work is not a life-threatening endeavor. NAMES IN THE NEWS (omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 4, APRIL 1990 BOOK REVIEW ACTIVIST PRIMERS Bridging the Global Gap: A Handbook to Linking Citizens of the First and Third Worlds By Medea Benjamin and Andrea Freedman. Washington, DC: Seven Locks Press, 1989. 338 pages, $11.95 Commonwealth: A Return to Citizen Politics By Harry C. Boyte. New York: The Free Press, 1989. 221 pages, $22.95 Reviewed by William Jackson Both Bridging the Global Gap by Medea Benjamin and Andrea Freedman and Commonwealth by Harry C. Boyte are about citizen movements. Bridging the Global Gap shows the extraordinary range and diversity of citizen organizations in the United States, while Commonwealth focuses on the experiences of a specific set of U.S. community-based groups which share a common philosophy. Bridging the Global Gap is a much needed overview of the wide array of solidarity groups working with communities in the Third World. Benjamin and Freedman report on alternative tourism, citizen exchanges, consumer action, human rights, fair trade and the cooperative movement, activities which they point to as a modern-day incarnation of the international spirit which sparked efforts like the solidarity brigades of U.S. citizens who fought in the Spanish Civil War in the 1930s. The authors stress the value of people-to-people ties as a means to express and solidify relations with citizens throughout the world. Many U.S. cities and towns have established "sister city" relationships with cities and towns in Latin America and Africa. Such a relationship exists between Decatur, Georgia and the city of Ouahigouya in Burkina Faso in West Africa, for example. Visiting delegations have gone back and forth between Georgia and Burkina Faso, and the Georgians have helped to support the Burkina efforts to combat hunger and poverty. Often these relationships are based on humanitarian ideals rather than overt political action, but despite the initial humanitarian impulse, residents of Decatur learned that their activities had political implications, since the U.S. government was engaged in a conflict with Burkina over its support of liberation struggles. Decatur residents especially praise the two-way nature of the sister city program. While U.S. cities are providing money and supplies to their sister communities, the sister city relationship subverts the historical charitable relationship between industrial and developing nations; each of the sister cities has something to offer the other. The U.S. participants in the Decatur-Burkina exchange, once they discarded their presuppositions about Africans, gained political insight from their African partners. "Americans hold onto the myth that we're the ones who get things done," the authors quote Gary Gunderson of Decatur as saying. "Africans, we say, are very nice and sincere people, but they can't organize. Well, our Burkinabe partners are highly organized, committed .... [O]ne thing we've learned from them is the need to organize ourselves and to be clear about our goals." Some U.S. activists have found that their mere physical presence can protect Third World progressives from repression. The Marin Interfaith Task Force on Central America, for example, sends volunteers to San Salvador in support of the Independent Human Rights Commission of El Salvador. The church group was activated when it learned about the torture and imprisonment of members of the Commission. Church group members act as escorts for Salvadoran commissioners in danger of assassination by right wing death squads and take testimony about the killings and disappearances. While valuing the work of groups like the Marin Interfaith Task Force, Benjamin and Freedman find problems with the "relatively narrow focuses" of many U.S. progressive activists. The single- issue approach fails, they say, because it must confront a more broadly encompassing vision. While there is "a network of activists, poised to respond to the needs of individual countries," the U.S. government is "carrying out similar policies all over the world." In part, the authors argue, single-issue groups fail to recognize that their issue is not necessarily "the" issue but one part of a larger problem. The single-issue focus also exacerbates an often crippling dependence on fickle media coverage. Ensuring the continuity of progressive organizations is a formidable challenge. Benjamin and Freedman believe the international spirit can provide a common bond between single- issue activists and help meet the challenge. But if progressive groups are to grow, the authors argue, they must establish democratic structures to match their democratic goals. One issue the authors do not adequately explore is the distinction between solidarity work (people-to-people programs) and efforts to influence actors in the First World who affect the Third World. While both are fuelled by the spirit of internationalism and the two approaches are complementary, both individuals and organizations must make choices about how to allocate their limited resources. People-to-people programs may be uniquely valuable to activists in the United States who benefit from their interaction with Third World people, but it is worth considering whether Third World people derive greater benefits from efforts to change the U.S. government's foreign policy or to curb abuses by multinational corporations. The focus of Bridging the Global Gap is on solidarity actions, though it does contain a chapter on consumer and corporate accountability and one on efforts to influence U.S. foreign policy. In contrast to Benjamin and Freedman's book, Commonwealth: A Return to Citizen Politics emphasizes domestic, community-based organizations. Boyte describes and analyzes attempts to create a democratic citizen politics around the idea of commonwealth, "citizen authority over 'the commons,' .. . an alternative to technocratic, top-down politics." Through an analysis of the Industrial Areas Foundation (IAF), the work of its founder, Saul Alinsky, and his followers such as Arnie Graf of Baltimoreans United in Leadership Development (BUILD) and Ernesto Cortes of Communities Organized for Public Service (COPS), the author traces the evolution of commonwealth principles and the growth of citizen power. Like Benjamin and Freedman, Boyte is concerned with organizational structures and decision-making processes as well as the goals or results of individual organizations. His ideal conception of a community group is one which is able to reconcile the process of gaining power, in which Alinsky broke new ground, and the goals of that process. The examples of the IAF, BUILD and COPS show clearly the advantage of tapping the cultural and religious roots of a community both in forming a group and determining its objectives. The organizations portrayed in Commonwealth are established by groups of people within communities in accord with their needs and beliefs. Each case seems to define a particular vision of the commonwealth idea. But Boyte makes clear that the vision is not static. The selection of a particular tactic may reflect a re- definition of the group's original philosophy and goal. When BUILD leaders approached Baltimore Superintendent of Schools Alice Pinderhughes, for instance, they found that they had a common interest in remedying the problem of supply shortages within the school system and they then agreed to announce and discuss the problem publicly and together. Rather than forcing a confrontation, BUILD was able to work in coalition with groups in the city which had overlapping interests. The BUILD organizers found that it was not only parents and educators who had a stake in improving the schools, Boyte writes. "From the point of view of a few key business leaders as well, schools provided a perfect "neutral issue" around which to repair a badly fractured city." Along with the principles of working in concert with beliefs and values which exist in the community and of creating power, IAF organizers stress what they call the "relational" aspect of wielding power. Boyte describes this view, writing that by acting to change another person or thing, the actors are also effecting change in themselves. "A relational view of power changes the dynamics of one-way operations. It recognizes the constant transformation of self as well as "other" in any power exchange...." For this reason, Boyte argues, it is important that change take place within the framework of self-evaluation and community participation. In this context, Boyte is critical of Alinsky's emphasis on tactics and the pursuit of power disconnected from the community values and larger social vision which he considers integral to the idea of commonwealth. Boyte believes that the loss of commitment to commonwealth stunted the development of the progressive left and enabled the reactionary right to grow by laying claim to the community values abandoned by progressives: Thus a generation of new, progressive citizen organizations developed with an arsenal of effective techniques and methods for day-to-day grass-roots mobilization, yet with goals devoid of larger vision and purpose. In contrast a right-wing version of populism ... proved far more effective in expressing older civic themes in the 1970s and eighties. The examples of current IAF projects, however, leave Boyte hopeful. In his estimation, they represent a renewal of the commonwealth tradition, educating citizens for public life while remaining grounded in community values. Yet it is fair to ask if Boyte is too optimistic. He focuses on the dynamics of community activism at the expense of the dominant institutions of society, not dealing sufficiently with how community organizations can function effectively as countervailing forces to corporate and government power. Even more than Benjamin and Freedman's emphasis on solidarity, Boyte's emphasis on commonwealth values may limit his analysis by skirting the issue of how to significantly affect the actions of society's dominant political and economic institutions. Still, both Bridging the Global Gap and Commonwealth are useful resources for activists working for a just social order. .