[] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 INDONESIA: Devastating Development 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 Roots of the Gulf Crisis The Front Bankrupting Harlem Slamming the World Bank and IMF Features Plundering Indonesia's Rainforests By Peter Halesworth Uprooting People, Destroying Cultures: Indonesia's Transmigration Program By Carolyn Marr Economics Rich Land, Poor People: The Economics of Indonesian Development By Robert Weissman Interview A New South Africa An Interview with Max Sisulu Labor Unions Fight for Power: Labor Conflict in Nicaragua By Alexander Patterson Corporate Profile Another Tree, Another Dollar Rampant Expansion at Georgia-Pacific By Jim Donahue Names In the News Book Review Global Dumping Ground Resources ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 LETTERS To the editor: Official estimates put the cost of the police action in the Middle East at $15 billion or more annually. In the event of war, the cost could exceed several hundred billion. But, American cities are deteriorating, crime is uncontrollable, adequate health care unavailable for many. How is it possible for the United States to make these expenditures? Congress and the President are ready to declare war but insist on a reduction in domestic spending. Is the U.S. a strong nation, if an impasse or war with a minor nation must delay essential funding to renew our cities, overhaul education and provide adequate medical care to all citizens? If a military adventure would reduce most Americans to poverty, should we try to be the world saviour for the United Nations? It is time Congress and the President put aside political tirades and evasions and explain how a war in the Middle East is to be financed. Although assistance has been offered by other nations, obviously the U.S. will pay the major costs. In order to defend the U.S. position vis-a-vis Iraq, the military forces will spend a prolonged period in the Middle East, under adverse and trying physical conditions. It would be a hollow victory to win on the battlefield and allow individuals and corporations to profit from a wartime economy that would be paid for primarily by low and middle income taxpayers. Who profits from dividends produced by the munition makers? Americans must spend adequate tax money for purposes that serve the national well-being, rather than personal contentment and greed. Instead of mouthing "no new taxes," Congress and the President must construct a tax system that is, above all other considerations, fair as well as adequate to meet the justifiable needs of all citizens, of what should be an important world republic. Frank M. Chambers McDonough, NY BEHIND THE LINES (omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 EDITORIAL ROOTS OF THE GULF CRISIS WE ARE IN THE MIDEAST for three letters, oil, o-i-l," stated Bob Dole, Senate Minority leader, from the Senate floor on October 16. "That is why we are in the Gulf. We are not there to save democracy. Saudi Arabia is not a democracy. Neither is Kuwait." Dole's analysis is simplistic, but essentially correct. Democracy is not the real issue in the Gulf. Economic interests and power are. Aside from the domestic political gains--now mostly worn off-- which the Bush administration hoped to achieve, several related factors explain the massive U.S. military buildup in Saudi Arabia. First, the oil-dependent U.S. economy needs guaranteed access to the oil supplies of the Middle East, which constitute two-thirds of the world's proven oil reserves. U.S. economic managers are less concerned with low than stable prices--the oil companies usually benefit from higher prices--but they are preoccupied with maintaining control over the region's reserves. Second, U.S. dominance in the Middle East has given the country a lever of control over industrial rivals Europe and Japan. The U.S. military build-up in Saudi Arabia--which the Bush administration hopes to transform into a smaller, permanent outpost--secures that control. Third, the end of the Cold War was generating popular expectations of a "peace dividend." But the peace dividend would have been spent on programs to which the Bush administration is ideologically opposed, and, perhaps more importantly, would have come at the expense of government subsidies of the politically powerful defense industry. Yet, though the military-industrial complex is anxious to maintain excessive levels of military spending, the scope of Operation Desert Shield would be inconceivable were access to oil not at stake. The appropriate short-term response to Saddam Hussein's brutal invasion of Kuwait is to let the United Nations-imposed sanctions do their job and use them as a backdrop for negotiations with Iraq. The idea that the worldwide embargo against Iraq has been given a chance and has proven ineffective is ridiculous. There is no reason to expect sanctions to work in a few months. Nor is there any compelling reason the world cannot wait for them to take effect. Most U.S. troops should be brought home. A comparatively small number should be incorporated into an international military presence which will be more than enough to deter whatever threat Saddam Hussein's troops may pose to Saudi Arabia. The Gulf crisis does highlight, however, the continued oil dependence of the U.S. economy. It is primarily because of oil that U.S. business and government planners maintain their obsession with the region and primarily because of oil that the U.S administration is willing to take the country to the brink of war. The United States's long-term response to the crisis must be to develop an environmentally sound energy policy structured around energy efficiency and alternative energy sources. First, Congress should set an automobile fuel efficiency standard of 50 mpg; this would reduce automotive gasoline use by 30 percent. Budget appropriations for mass transit should be dramatically increased. And public and private research into cars which run on alternative fuels must be undertaken. Second, the government should launch a major campaign to promote widespread conversion to existing energy efficient technologies. Japan uses half as much energy per dollar of gross national product as the United States; the United States could do as well. For example, the Rocky Mountain Institute estimates that electricity use can be cut in half with existing technologies-- at a savings of $50 billion a year. It is not necessary to rely on hi-tech innovations; simple changes such as installing insulation, using fluorescent instead of incandescent lights and employing energy efficient refrigerators and freezers offer tremendous potential energy savings. Third, the government must encourage the development of new technologies and renewable energy sources, most importantly solar power. Under the Reagan and Bush administrations, the federal research and development budget for renewables was cut 90 percent. It must be restored and raised. The solar tax credit, which gave tax breaks to users of solar technologies and was abolished by the Reagan administration, should be reinstated. And the government should use its procurement power to support burgeoning solar technologies, purchasing solar products to make possible the economies of scale which will bring the technology's costs down. The development and implementation of a sustainable and environmentally sound energy policy runs against the interests of the oil and other energy companies which have worked for so long to ensure that the United States maintains its fossil fuel addiction. To overcome the energy cartel's immense political influence, angry citizens will have to take to the streets and protest loudly and relentlessly for the United States to achieve a rational energy policy. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 THE FRONT Bankrupting Harlem COMMUNITY GROUPS IN New York City charge that a proposed merger of two of Puerto Rico's largest banks will encourage the banks to continue a policy of providing insufficient resources to their capital-starved service areas in Manhattan, the Bronx, Brooklyn and Queens. On August 7, 1990, East Harlem's Community Coalition for Fair Banking filed a challenge August 7 with the Federal Reserve Board attempting to block the merger of Banco Popular and Banco de Ponce on the grounds that neither bank offers substantial housing or small business loans in their moderate to low income service areas. Legal Aid attorney Lori Keitz, who represents the Coalition, says "Banco do Ponce tells prospective applicants that they don't do housing loans." And the coalition discovered that, of over $200 million which Banco Popular had on deposit in 1987 and 1988, it loaned only $2.6 and $2.0 million respectively, mostly in neighborhoods where there are no Banco Popular branches. Most of the branches are located in moderate to low income Puerto Rican neighborhoods. Keitz points out that the two banks "consider Puerto Rico their first priority," and offer loans all over the island. "What they are doing is taking New Yorkers' deposits and lending them in Puerto Rico," she says. The CRA states that a bank's capital must be made available in all of its service areas. To demonstrate compliance, the Act requires that banks applying for mergers submit meticulous records from their investment portfolio, dividing their service areas by census tract. The Coalition's project director, Jasmine Hopper, says that Banco de Ponce listed the entire New York metropolitan area as its service area. Such information "is useless in determining their reinvestment record," she says. "It means they can be investing in [affluent] suburbs and 'redlining' low and moderate income areas." Redlining involves banks discriminatorily depriving certain communities access to bank loans. Another deficiency in the Ponce/Popular application is a result of CRA's limited reporting requirements, explains Hopper. The act does not require banks to submit records for commercial and business loans. Without these, "they can say they make loans to small businesses in their service area to rationalize a lack of equitable investment in home mortgages." Hopper helped found the Coalition in 1987 in response to an exodus of banks from East Harlem. In 1987, Chemical Bank left the area. That same year, the Coalition persuaded Chase Manhattan to stay. Presently, there are seven bank branches in East Harlem, which, according to a 1988 census, has a population of 108,513 people. "In wealthier neighborhoods there's a bank branch on every corner. They practically push their services on people. In East Harlem, people are made to grovel for services," Hopper says. "What banks are about is making money, and to do that they have to market their product. By abandoning East Harlem, they are saying that this community is not worth marketing their products to." Hopper says that the absence of bank branches in East Harlem costs the community jobs and harms small businesses that do not have the benefit of nearby financial institutions or the capital to make their operations grow. "When a community is physically or financially abandoned by capital institutions, and there is a lack of money for rehabilitating homes and developing housing, you can observe an increase in homelessness and families doubling up," she states. "Dozens of businesses have left the East Harlem area since 1980. People have left and buildings are deteriorating." In neighborhoods that are redlined, she adds, "drug traffic becomes the major employment opportunity." New York Federal Reserve Bank spokesman Bart Sotnick explains that the CRA is intended to make financial institutions "treat the low and moderate income members of their communities as they would any other market." According to Sotnick, when considering a merger challenge on CRA grounds, the Federal Reserve reviews several performance categories, including the ascertainment of community credit needs, marketing and types of credit extended; geographic distribution and record of opening and closing offices; discrimination and other illegal credit practices; and community development. Sotnick claims that "there haven't been a hell of a lot" of successful challenges made since CRA was passed by Congress in 1977, but most challenges are withdrawn after community groups extract concessions. One successful challenge against an application by Continental Bank Corporation of Chicago to acquire a small out of state bank, however, describes credit practices similar to those of Popular and Ponce. The level of participation of a Continental subsidiary, Continental Bank N.A., in community development and redevelopment was found "unsatisfactory" by the Fed's Board of Governors. "The bank made no significant effort to ascertain the credit needs of its communities or advertise its products to the community," according to the April 1989 decision. Banco Popular and Banco de Ponce representatives were not available to comment on the Community Coalition for Fair Banking's challenge. But the two banks have responded to the Coalition's efforts. In early September, an entourage of Popular and Ponce executives veered off the FDR Drive and pulled into East Harlem, parking their black Lincolns against the spartan backdrop of East 106th Street. The bankers were attending a meeting they had scheduled to try to persuade the Coalition to withdraw its challenge, but they have yet to make the substantial commitment of capital necessary to appease the group. The coalition is demanding that the banks provide: reduced rate financing to construct and rehabilitate a certain number of units in the community within the next three years; construction and long-term permanent financing; contributions to the East Harlem revolving loan fund for low and moderate income housing development and rehabilitation; an automatic teller machine (ATM) accessible 24 hours per day; contributions to housing and small business loan packaging agencies; a $500,000 deposit base for a proposed credit union with flexible underwriting criteria; bridge loans for non-profit organizations to cover delays in federal and state funding grants; and investment in the East Harlem Industrial Incubator program. The coalition hopes that the banks will adopt enough of the investment plan to warrant the withdrawal of its challenge. Hopper thinks the chances are good. If not, the challenge threatens to cause a long and expensive delay to the merger. -Matthezo Retss ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 Slamming the World Bank and IMF OVER 170 ACTIVISTS in non-governmental organizations (NGOs) from 53 countries and six continents came together in late September in Washington, D.C. to denounce the policies of the World Bank and the International Monetary Fund (IMF). Meeting concurrently with the World Bank/IMF annual meetings, the People's Network for Eco Development sharply criticized the social and environmental impacts of Bank and IMF programs and mapped out strategies to counter the Bank and IMFs agenda. Activists blasted the Bank and the Fund's structural adjustment policies, which force governments to cut back social programs, devalue currencies and privatize state-owned enterprises, for devastating Third World economies and exacerbating the suffering of the poor. "Everywhere on the ground, people are saying [to the Bank and IMF], 'take your money back home,"' said Vandana Shiva of the Research Institute for Natural Resource Policy in India. Future historians will "record that the Bank cares about nothing beyond increasing its own power," stated Shiva. "The Bank cares nothing about whether people live or die." Joan French of the Caribbean Association for Feminist Research and Action focused on the effect of structural adjustment policies on women. "Women are central to World Bank and IMF policies," she said. When schools and hospitals are closed as a result of structural adjustment policies, "it is women who take up the slack.... [The Bank and IMF] depend on the unpaid labor of women." Leonar Briones of the Philippines Freedom From Debt Coalition explained how the privatization of government enterprises, promoted by the Bank and Fund, furthers foreign dominance in Third World countries. With the World Bank's agreement, she said, the Philippines is supposed to complete the privatization of government entities in five years. But, she asked, "who [dominates] the private sector in the Philippines?" The answer: "Foreign interests. So privatization [leads to] the entrenchment of elites and the expansion of foreign control." The activists also targeted the projects funded by the World Bank, which have had disastrous effects on the environment and entire communities. Environmentalists focused on the Sardar Sarovar Project, a dam project on India's Narmada River, as an example of the effects of World Bank-sponsored development ventures. The Sardar Sarovar Project, just one part of a larger effort in the Narmada Valley, will force the relocation of approximately 100,000 people and submerge vast tracts of fertile farmland and forests. While the NGOs from the industrialized countries and the Third World offered similar analyses of the problems with Bank and Fund policies, some tension arose between the Northern and Southern NGOs. On the second day of the three day conference, Third World participants met by themselves to discuss their experience and strategies to combat the Bank and the IMF. Third World activists charged that many Northern environmentalists ignore the fact that people are hurt by the World Bank, the IMF and the international debt crisis. "It is not only the environment which pays for debt, it is people," stated Briones. Northern environmental NGOs have "a tendency to discuss the environment in terms of 'natural resource management,"' said Uganda's Charles Abugre, and thus ignore the interests of the people who live in the environment they want to protect. Harry Sakulas of the Way Ecology Institute in Papua New Guinea identified Conservation International and the World Wildlife Fund as two groups guilty of adopting a resource management approach. He said they have worked with the much criticized World Bank-sponsored Tropical Forest Action Plan to develop a forestry management plan for Papua New Guinea without consulting with Papua New Guineans. Many participants found the airing of such grievances constructive. Doug Hellinger of the Development Group for Alternative Priorities said that "groups in the South helped groups in the North see that the economic policies being pushed by the [IMF and World Bank] are the underlying causes of social demise and environmental degradation." Hellinger says the NGO campaign against the policies of the World Bank and IMF "is much more comprehensive and sophisticated" than it was a few years ago, and he expects that "over time a more coordinated and aggressive campaign will emerge to not only push these institutions, but to put forward an alternative [development model] emerging from the ground" in Third World countries. -Robert Weissman ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 INDONESIA PLUNDERING INDONESIA'S RAINFORESTS By Peter Halesworth Peter Halesworth is a freelance writer working in Boston. A NEW SENSE OF URGENCY IS EMERGING about Indonesia's seemingly inexhaustible rainforests. Dubbed the Amazon of Southeast Asia, Indonesia is second only to Brazil in its holdings of tropical forests; ten percent of the world's total rainforest grows on the Indonesian archipelago of 13,667 islands that stretch across the equator from southern Vietnam to Australia. But years of uncontrolled logging are taking their toll and today the country's once abundant rainforests are rapidly being destroyed. Each year, approximately 1.3 million hectares of Indonesia's tropical rainforest are destroyed, according to a United Nations/Government of Indonesia forestry study. The deforestation rate has quadrupled since 1970, and some species of hardwood trees are being "logged out" entirely. In addition to the acres lost directly to logging, thousands of hectares of trees are damaged by logging operations. And still more acreage is lost because logging roads open previously inaccessible forests to roving slash and burn farmers, who exacerbate the damage done by the loggers. The unlikely partners of greed and poverty are destroying an enormous economic and biological resource. Indonesia's tropical forests are the most biologically diverse in Southeast Asia, and their destruction threatens many species of natural life. Considered the richest genetic storehouse in the world, Indonesia is home to over 40,000 plant species, about 5,000 tree species, 1,500 bird species, almost 500 species of mammals, 7,000 species of fish and 1,000 species of reptiles and amphibians. Although the country occupies only 1.3 percent of the earth's land surface, it houses 10 percent of the world's plant species, 12 percent of the mammal species, 16 percent of the reptile and amphibian species and 17 percent of the bird species. The loss of habitat through deforestation has been catastrophic for many forms of life. Indonesia's list of endangered species is longer than Brazil's and includes 126 birds, 63 mammals, and 21 reptiles. So far, efforts to slow deforestation remain relatively timid. Protecting logging concessionaires, often well-connected retired Indonesian government officials and military officers, and attracting foreign companies are still the highest priorities of the country's government. Above all, says Agus Purnomo, former executive director of the Indonesian Environmental Forum, known as WALHI, "The ministers need to show they have made revenues for the country." Timber's commercial value is enticing to a nation burdened with a foreign debt of $55 billion, plagued with massive unemployment and eager for economic development. Indonesia, an oil exporter, was hard hit by the 1986 fall in world oil prices and has come to depend upon timber as a major foreign currency earner. Indonesia produces about 70 percent of the world's hardwood supply, earning it the nickname the "Plywood King." Indonesia's share of world timber exports rose from 1 percent in 1966 to a peak of 31 percent in 1979-81, when timber was the country's second largest export in gross receipts; it has remained relatively stable since. Wood-based industries brought in more than $2.4 billion to the nation's economy in the first three quarters of 1989. They accounted for 4 percent of Indonesia's gross domestic product and almost one-quarter of its non-oil and gas export revenues. About 38 percent of the country's annual earnings go toward the repayment of its massive foreign debt, the third largest in the world. The forest industry employs about 300,000 workers directly, and an estimated 700,000 workers indirectly. Logging and the loggers Logging on the Indonesian Outer Islands (those other than Java) began in 1967. Fuelled by foreign investment, timber exploitation rates skyrocketed, remaining high throughout the seventies. Japanese investment poured in, initiating Kalimantan (Indonesian Borneo)'s timber boom. Two U.S. companies, Weyerhaeuser and Georgia Pacific, also obtained large concessions in East Kalimantan. Weyerhaeuser invested $32 million in a 600 square kilometer area and Georgia Pacific $8 million in a 3,200 square kilometer concession, according to SKEPHI, the Network for Conservation in Indonesia. Logging dropped off in 1979 and the early 1980s, as the Indonesian government nurtured the development of a domestic logging industry. The government implemented a log export tax in 1979, and began phasing in a ban on raw timber exports in the early 1980s. By 1985, the export of unprocessed timber was banned entirely. (balance of this article omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 UPROOTING PEOPLE, DESTROYING CULTURES Indonesia's transmigration program By Carolyn Marr Carolyn Marr works in London on a project, managed by Survival International, which monitors environmental and development issues in Indonesia. DESPITE OBJECTIONS by human rights and environmental organizations, the Indonesian government and the international lending community defend and continue the controversial transmigration program which moves poor farming families from the crowded islands of Java, Bali and Madura to less densely populated islands of the archipelago. Human rights organizations charge that the program destroys indigenous communities, and environmentalists focus on its ecological devastation, including deforestation. The Indonesian government dismisses these concerns, arguing that transmigration is necessary to reduce overpopulation and develop undeveloped territories, and asserting that everyone benefits from the program. The government claims that families participating in the transmigration program do so voluntarily. Indeed, as its supporters describe it, the government's offer is very attractive. In theory, participants receive two hectares of land, a house and the basic necessities which enable them to build new, more prosperous lives in settlements with schools, health facilities and access to markets. The conditions in which transmigrants actually live, however, are less appealing. They are sent to Sumatra, Kalimantan (Indonesian Borneo), Sulawesi, the Moluccas and most controversially, the disputed territories of West Papua referred to as "Irian Jaya" by the Indonesian government) and East Timor where the land is infertile and there are few or no facilities. Most find their living conditions worse than on their native islands. There is little public criticism of transmigration within Indonesia, where the government ruthlessly suppresses democratic organizations and press freedoms and imposes harsh prison sentences on those who dare question Indonesia's presence in those disputed territories. President Suharto's 25-year-old military regime tolerates no dissent. Millions of people have already been resettled under transmigration, the world's largest resettlement program. And the program is growing rapidly. According to official data, between 1950 and 1986, 698,200 families (about 3.5 million people) were moved, most of them to Sumatra. In 1985, Indonesia intensified the program and announced a five-year transmigration target of 750,000 families (3.75 million people). When critics voiced objections, the transmigration department backtracked, saying, "We are realizing that it may now be impossible to achieve this ambitious target, because of unpredictable budgetary constraints and related problems." Nevertheless, the lack of funds was overcome by encouraging the participation of self-financing transmigrants. The target for the current five- year plan (1989-1994) is 550,000 families (2.5 million people), requiring an estimated 4.5 million hectares of land. Population transfer or territorial management? In 1987, Indonesia's Ministry of Transmigration claimed, "Transmigration is the name of the Republic's bold program to help spur the development of the sprawling island nation and give its poorest families the chance to own their land and significantly improve their living standards." It went on to list the aims of the resettlement program: to encourage development; raise living standards; generate new jobs; increase food and tree crop production; relieve population pressure; control environmental degradation; and foster greater national interdependence. In fact, internal documents of the government's transmigration department acknowledge that transmigration does not achieve its publicly stated goals: it makes virtually no dent in the population pressure on Java and it exacerbates the country's environmental degradation instead of reducing it, as forests are destroyed to make way for the new sites. The Transmigration Ministry does not mention, however, one of transmigration's most important goals: national defense and security. The World Bank makes the same omission in its justifications for continued funding. But at home, Indonesian officials have been very clear about it. In 1989, for example, Defense Minister General Murdani said that transmigration is not only concerned with population redistribution but is "related to the importance of territorial development," which means "spreading out human resources as a defense and security potential." Transmigration Minister Lieutenant General Soegiarto also included strengthening defense and security when he described the program's purpose. In practice, this means resettling ethnic Javanese in sensitive border areas. The government also plans to populate border sites with retired army personnel. One such settlement was established in 1986 on the island of Natuna, located in the China Sea between Borneo and Vietnam. And according to the head of the provincial transmigration office, 500 retired army families will soon be sent to the Malaysian border in West Kalimantan. Voluntary? Transmigration promoters say the program is voluntary. But an official in the province of Aceh described transmigrants as "poor people who were thrown out of Java like rubbish." Indeed, some of those who end up at transmigrant sites, including beggars and vagrants, have been rounded up in some of the larger cities and bundled off to transmigration sites. One site established especially for this category is on the island of Buru, where thousands of political prisoners were sent in the wake of President Suharto's 1965 anti-communist reign of terror. As part of a campaign to "modernize" Jakarta, government officials confiscated the vehicles of the becak (trishaw) drivers who throng the streets of many Javanese cities, and sent the drivers to start new lives as farmers on other islands. Some families join the ranks of transmigrants after natural disasters such as floods and volcanic eruptions destroy their land, while others--such as the families displaced by the World Bank-funded Kedung Ombo Dam in Central Java--are coerced into joining to make way for large-scale development projects. In Gresik, a major industrial zone of Java, people living on land earmarked to accommodate the expansion of a chemical plant have been offered transmigration as an escape from the increased pollution. But the bulk of transmigrants are drawn from landless and poor farmers. On Java, where 60 percent of Indonesia's population lives on only 7 percent of the total land area, the population density is one of the highest in the world. Still, industrial and tourist projects gobble up more and more land, exacerbating the land squeeze and accelerating the marginalization of poor farmers. Transmigrants are lectured about the scarcity of land in Java and Bali as a justification for transmigration, while big business interests with ties to the Suharto family announce plans for luxury tourist resorts, golf courses, industrial estates and chemical complexes. Transmigration is primarily a "safety valve," designed to defuse pressure for the redistribution of land and for political change. A catalogue of failures A recent survey by a French consultant found that 80 percent of sites fail to improve the living standards of transmigrants. Even Indonesia's Transmigration Minister, Lieutenant General Soegiarto, admits that conditions in 903 sites throughout Indonesia concern the government. Similarly, the World Bank acknowledged this year that the expectation that transmigrants would raise their household incomes through the introduction of cash crops has not been met. The Bank reports that agricultural support services and supply of inputs are "inadequate;" access roads are "of poor quality and inadequately managed;" and the general management and coordination of the program is "weak." The Indonesian daily, Kompas, recently outlined the problems faced by transmigrants on one of the earliest sites. Settlement began in Kurik, in the southern part of West Papua, even before the territory had been officially incorporated into Indonesia. Here, where the soil is rock-hard in the dry season and waterlogged in the wet season, the meager crops that can be grown are likely to be devoured by pests. Women usually fare worse than men when families transmigrate; they have no part in the decision to transmigrate, and they receive no training or preparation for the move. Typically, the men are forced to leave the site, often for months at a time, to find work after the government support has run out. The women must stay behind to tend the plot and look after the children. Kurik, however, was an exception. There the women left the site- -with the blessings of their husbands--to become prostitutes in the town. Many transmigration sites have been abandoned altogether. One woman, living in makeshift accommodations in the provincial capital after leaving a settlement, says "the land was too acidic to grow crops and there were so many mice." She and other "failed " transmigrants eke out a living as rubbish recyclers. Others live on the rubbish dump itself. These people are not calculated in the rate of return to Java, which signifies the failure of the program and which is officially at least 15 percent. Government spending on transmigration was cut during the mid- eighties slump in the price of oil, Indonesia's major foreign exchange earner. Falling revenues from the oil sector and the spiralling foreign debt left fewer funds for the program. A plan to save money by encouraging transmigrants to pay their way to the site (370,000 of the current 550,000 families target is for these so-called "spontaneous" transmigrants) was introduced and the program was directed away from the original food crop model to state-run or private plantations and processing projects for export. Transmigrants working on these projects, which were first introduced in the mid-eighties, are given a house and 0.25 hectares for growing subsistence foods and are required to work on a plantation as wage laborers. After a number of years, the transmigrants are supposed to gain ownership of plantation plots and from then on sell their produce to a processing plant. In reality, projects rarely reach this stage; instead transmigrants are exploited as cheap labor. The government responds to the failure of many sites by blaming the transmigrants themselves. Last year, Vice President Sudharmono told transmigrants in South Kalimantan who appealed to him for funds to improve their site that they should use their own skills and resources. "Don't rely only on the government and don't wait for divine intervention to overcome your problems," he said. Sudharmono surely would not approve, however, of the increasingly popular survival tactic which the transmigrants have developed on their own: families register as transmigrants, receive free government supplies for the six- month period, and then sell their land, return to Java and re- register as transmigrants to begin the whole cycle again. Transmigrants as colonists The families which are thrown out of Java and Bali are not the only ones to suffer. The indigenous communities and the environment at the transmigration sites are also victims of the program. The government claims that the islands are appropriate sites for the new settlements because they are "virtually empty" or "underpopulated." But it is no accident that the population density is lower than in Java; the rainforests there cover thin soils which cannot sustain intensive agriculture without the massive and unsustainable use of fertilizers. The indigenous peoples of these islands have evolved strategies to live in and from the forests without destroying them, but they are being displaced by transmigration settlements. They are losing their land because the Indonesian government refuses to recognize their traditional land rights. And their indigenous cultural heritage is threatened with extinction by the large influx of outsiders. Some indigenous groups have responded militantly to the invasion of their territory. A government official in Aceh expressed particular pity for transmigrants who he said had been "thrown out of Java," and were now being chased out of Aceh too--in fear for their lives. A recent upsurge of separatist violence in the province, where, alongside the military and police, transmigrants have come to symbolize Javanese domination of this fiercely Islamic region, has prompted thousands of settlers to abandon their sites. The violence is partly inspired by Acehnese opposition to the large mining, gas, oil and pulp and paper projects which are exploiting Aceh's (balance of this article omitted here; unscannable) ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 E C O N O M I C S RICH LAND, POOR PEOPLE: The Economics of Indonesian Development By Robert Weissman THE INDONESIAN ECONOMY is replete with contradictions. Extreme and widespread poverty exists in a land of immense natural resource wealth. Foreign corporations play a dominant role in a traditionally protectionist economy. Indonesia's development efforts have received strong praise from the World Bank, the International Monetary Fund and the U.S. government but harsh criticism from environmentalists and human rights, labor and community development activists. Two forces have shaped the Indonesian economy over the last 25 years: Indonesian President Suharto and oil. Suharto launched his "New Order" government after taking power in 1966. He has maintained an authoritarian regime and managed a command economy. His efforts to develop Indonesia received a big boost in 1973, when the price of oil, Indonesia's primary money earner, shot up. Oil money provided up to 70 percent of the government's revenue in the late 1970s, fuelling the government's programs to develop the nation's infrastructure, increase agricultural productivity and improve the national standard of living. Successful structural adjustment? The Indonesian government fundamentally reoriented the country's economy in 1983. With the rate of economic growth and the price of the country's main export, oil, declining, the government embarked on an economic liberalization campaign. It devalued its currency (the rupiah) 28 percent, adopted an austerity budget, liberalized trade and substantially deregulated the financial sector. The ultimate goal was to restore economic stability and decrease the country's dependence on oil. Most significantly, the government abandoned its old model of development and its commitment to protecting national producers. In place of import substitution, it began pursuing a strategy of export-led growth. In 1986, the country received an economic jolt. International oil prices plummeted and the country's terms of trade declined 34 percent due to fluctuations in U.S. currency valuations. In response, says Richard Caulkins, principal country officer for Indonesia at the World Bank, Indonesia "began its second major effort to restore the economy," intensifying its economic liberalization and deregulatory policies. As a short-term response, the country again devalued the rupiah, this time by 31 percent. More far-reaching, however, was the country's deregulation campaign, which reached into every sector of the economy and continues today. In 1986 and 1987, the country eliminated tariffs on 59 import components, simplified licensing regulations for the production of goods and relaxed or abolished a host of regulations affecting foreign investors. In 1988, the government introduced a series of measures deregulating the banking sector and established a private stock exchange. In 1990, the government dramatically reduced tariffs. Indonesia's policies have met with apparent success. Growth rates since 1986 have averaged 5.8 percent. The World Bank has been particularly impressed with Indonesia's economic performance. Deepak Gupta, senior economist at the World Bank, says Indonesia is "one of the most successful developing countries," praising it especially for its performance since the 1986 decline in oil prices. Caulkins calls Indonesia "one of the most amazing examples of structural adjustment in the developing world, with important lessons" for other Third World countries. A new land of opportunity A crucial component of the government's deregulation campaign was its opening of the economy to foreign investors. Foreign investment in Indonesia is regulated by the country's 1967 Foreign Capital Investment Law, which, as amended in 1974, allows foreign firms to hold up to 49 percent of joint venture companies in Indonesia. Many specific economic sectors were designated as off-limits to foreign investors. As part of its late eighties deregulation efforts, the Indonesian government relaxed the laws governing foreign investment. In 1986, the government doubled the number of business categories open to foreign investors. In 1987, the government decreed that foreign companies could maintain 95 percent shares in Indonesian ventures exporting at least 65 percent of their products. It also changed the law to make joint ventures with majority domestic ownership eligible for treatment as national firms, enabling joint ventures to borrow from state banks, sell products locally and invest in sectors previously open only to local companies. In 1989, regulations affecting foreign investment were further eased. The government's deregulatory policies and conservative macroeconomic management techniques are designed to attract foreign capital. "Indonesia wants and welcomes foreign investment," states J.B. Sumarlin, Indonesia's minister of finance. "Continuity, predictability and coherence of policy are key elements of our management of the economy. Investors can confidently make long-term plans for investment in our country." For the foreign investor, says Sudradjat Djiwandono, Indonesia's vice minister of trade, "Indonesia is a new land of opportunity." Foreign, especially Asian, capital has jumped at the opportunity. In 1989, 294 companies made investments of $4.7 billion (excluding oil-related and financial investments). Japan is the leading investor in the country with a total of $6.2 billion, followed by Hong Kong with $3.4 billion and the United States with $2 billion. Additionally, Asian and U.S. banks have responded to the changes in Indonesian banking laws allowing foreign banks to enter into joint ventures with domestic banks and to open sub-branch offices. As of June 1989, Citibank was the largest foreign bank operating in Indonesia, with assets of around $600 million. It was followed by the Bank of Tokyo and Chase Manhattan. U.S. companies in non-oil sectors have been slower than Asian companies to respond to the open Indonesian economy. "Although Indonesia is one of the countries which really wants U.S. investment," says Karen Gaddin, Indonesian desk officer at the U.S. Department of Commerce, U.S. companies "have not responded aggressively" to the opportunities the country offers. Indonesia's reputation for maintaining a corrupt bureaucracy and a protectionist economy has apparently deterred U.S. investors. Gaddin says there is a "time lag" for U.S. companies to respond to new conditions. She expects that U.S. companies will start entering Indonesia in greater numbers in two to three years. Foreign debt Underlying the Indonesian government's drive to attract foreign investors and increase its export earnings is the need to pay off its massive $39 billion foreign debt. Indonesia last received a loan from the International Monetary Fund, for about $609 million, in 1987. World Bank financing has been more significant, totalling $14 billion since the mid-1960s. In the past five years, the World Bank has loaned Indonesia $1.2 billion a year, both for structural adjustment and sector specific loans "covering all key sectors," according to Gupta. Caulkins says he expects the Bank will loan $1.5-1.6 billion a year to Indonesia over the next five years. Despite the size of the debt, international bankers do not express concern about repayment. Indonesia has not missed a single debt payment and Gupta reports that Indonesia's debt crisis is past its peak and its debt obligation falling. Still an oil economy Despite the government's diversification efforts, oil remains the dominant sector of the Indonesian economy. A member of the Organization of Petroleum Exporting Countries, Indonesia accounts for approximately 5 percent of OPEC's total production. Before the Persian Gulf crisis, Indonesia produced approximately 1.4 million barrels of oil a day, half of which was exported to Japan. U.S. companies dominate the oil sector, with Caltex, a joint Chevron-Texaco company, accounting for half the nation's oil production. Caltex and other foreign companies operate under contract of work agreements with the state petroleum company, Pertamina. Under an agreement negotiated in 1983, Caltex keeps 12 percent of the oil it produces, with the rest going to Pertamina. Other foreign companies, including the second largest foreign producer, the French company Total, operate at a slightly more favorable 85-15 production-sharing ratio. Caltex's investment in Indonesia has paid off handsomely. Profits from Indonesia accounted for three quarters of the company's 1984 profits of $990 million, for example, and over 23 percent of Chevron's and 30 percent of Texaco's 1984 worldwide earnings. Natural resources As the Indonesian government tried to steer the economy away from oil dependence in the 1980s, it turned to the country's diverse natural resource wealth, which extends far beyond oil. Indonesia has vast reserves of natural gas. Wood products (see "Plundering Indonesia's Rainforests") are its main non-oil and gas export earner, bringing in more than $2.4 billion in the first three quarters of 1989. The agriculture sector, which employs over half of the nation's workforce, earned over $1.5 billion in the first three quarters of 1989. Coffee, tea, shrimp, fish and spices were the main agricultural exports. Non- oil and gas mineral export revenue totalled more than $1 billion in the first three quarters of 1989. Major mineral products include nickel, gold, copper, tin and coal. In many ways, Indonesia's copper industry represents a microcosm of the country's development path as it opens its economy to foreign investment and intensifies its exploitation of natural resources. Freeport Indonesia, a subsidiary of the Nevada-based Freeport-McMoran Copper Co., is the country's sole copper producer. It entered Indonesia in 1967, after Suharto's coup, but before the country's foreign investment law was written. Because it invested before the regulations requiring foreign companies to invest in Indonesian joint ventures were enacted, it was able to make Freeport Indonesia a wholly-owned subsidiary. Today, the Indonesian government owns 9 percent of the company and a German group owns an additional 3.7 percent. Freeport has a work contract for a 100 square kilometer area in the Central Fold belt of Irian Jaya. The contract has been tremendously profitable for Freeport. Mines developed under the contract have proved to be among the lowest cost in the world, enabling Freeport Indonesia to maintain high profits even when the world copper price is low. New discoveries have Freeport expecting to produce about 2 percent of the world's copper supply from its Indonesian mines and have led the Mining Journal to remark that Freeport Indonesia "faces unanticipated buoyant years ahead." Freeport's concession also contains significant amounts of gold and silver. And in late 1989, the Indonesian government granted Freeport exploration rights for a huge 2.5 million hectare (9,649 square mile) site adjacent to its existing concession. Freeport has extracted tremendous wealth from Indonesia, but the people who live in areas surrounding the company's mines have not benefited. Only 20 out of Freeport Indonesia's 3,500 workers are local Irianese, according to the London Financial Times. Freeport's mining operations, which encroach on the Lorentz National Park, have reportedly contaminated the Otomona River and a downstream village. A United Nations Development Report states that Freeport has continuously dumped untreated copper mine tailings into a tributary of the Ajika River, damaging the local population's fishing grounds and posing possible health risks to local people. Now environmentalists fear that Freeport Indonesia's expansion into the 2.5 million hectare tract for which it was granted exploration rights will further damage Irian Jaya's rainforests and the people who live in them. An October letter from an international group of environmentalists to George Mealey, the president of Freeport-McMoran Copper Co., calls on the company to postpone its exploratory and mining activities until an independent entity carries out an environmental and social impact assessment, open to public input. The letter states that "we are concerned about impacts of exploratory and mining activities on the local indigenous populations," and demands that the company respect indigenous people's customary rights. Noting that Freeport Indonesia's exploration area includes part of the Peg Jayawijaya Wildlife Reserve and an additional portion of the Lorentz Nature Reserve, it also asks for guarantees that these reserves not be adversely affected by Freeport's operations. Mealey has indicated that he will soon offer a detailed response to the environmentalists' letter, saying in the meantime, "I can assure you that Freeport-McMoran Copper Company's operations in Irian Jaya are conducted in full accordance with applicable laws, and that environmental concerns are certainly a significant part of our operational considerations." Manufacturing and worker repression While much of the country's diversification away from oil has been into other natural resources, Indonesia's manufacturing sector has also grown at an extreme rapid pace over the last decade. An average growth rate of 13.2 percent over the last five years raised manufacturing's contribution to Indonesia's gross domestic product to 18.4 percent in 1989. After plywood, textiles lead the way, earning almost $1.4 billion in export revenue in the first three quarters of 1989. Gupta says that Indonesia is "successfully following other East Asian countries" on the path to industrialization. As in the mineral sector, however, the benefits of growth in the manufacturing sector accrue disproportionately to foreign investors and domestic elites. Indonesian workers receive extraordinarily low wages and are denied the right to organize. To international acclaim, Indonesian Minister of Manpower Cosmas Batubara has declared 1990 the "Year of Wages" in Indonesia. Indonesian workers, however, have not been impressed. In May, 600 workers marched on parliament demanding that the government force employers to pay the minimum wage, which varies from region to region but hovers around 90 cents per day. Over 70 percent of workers in industrial Northern Jakarta reportedly receive less than the minimum wage. Wages are kept down by a huge surplus labor pool and severe restrictions on workers' rights to organize. The rate of underemployment is 44 percent, according to the Indonesian government. Two million new workers enter the workforce every year. The domestic economy is so overwhelmed by the burgeoning labor force that the Indonesian government encourages workers to emigrate to foreign countries, especially Malaysia. The Ministry of Manpower oversees national labor policy. The current structure of the Ministry was established by Batubara's predecessor, Kopkamtib Sudomo, a former military officer who created an array of agencies to expand his power base and enhance his control over labor organizations. Under the Ministry of Manpower's watchful eye, labor is ruthlessly suppressed. In 1985, the government ordered the firing of over 1,600 workers at Pertamina and foreign oil companies, charging that they had been members of the Indonesian Communist Party, which was banned 19 years earlier when Suharto took power. Though it affords them little protection, approximately five percent of Indonesian workers are trade union members, according to the U.S. Embassy. The only legal trade union is the government-dominated All Indonesia Workers Union (SPSI), which was formed in 1985. Fourteen of the 17 top SPSI officials belong to the Indonesian ruling organization, Golkar. Even the anti-worker Bush administration has concluded that, "as regards the rights of association in Indonesia, the unitary trade union structure faced by private sector employees remains a problem." While strike activity is legally permissible in most industries, it is extremely infrequent in Indonesia. The government reports that approximately 40 strikes occur each year. In 1988, in a nation with a population in excess of 175 million, there were 39 strikes involving only 7,544 workers. Critics charge that this low level of strike activity is a result of widespread intimidation of workers and the low level of worker organization. Workers in public enterprises and industries deemed of "national interest" are not allowed to strike at all. The government trumpets Indonesia as stable and strike-free in wooing foreign investment. In 1987, for example, Ginandjar Kartasasmita, chairman of Indonesia's Investment Coordinating Board, boasted that "there is no labor strife in Indonesia, nor are there communal or religious disturbances." The government touts its low wage structure as well; average Indonesian wages are approximately one-fifteenth South Korea's and half of the low-wage neighboring countries of Malaysia and Thailand. Perhaps the most significant problem with Indonesia's labor policy, argue critics, is that SPSI functions as part of the government's system of social control. Nishiskawa Atsushi, writing in the Japan-Asia Quarterly Reznew, says, "it is clear that the unions' aims are not to protect the workers. They are, rather, the people who control the workers." The AFL-CIO argues in a 1989 petition requesting that the U.S. government refuse Indonesia privileged status under the Generalized System of Preferences because the Indonesian government denies workers basic rights that "what Indonesians defend as a tripartite system of labor-management-government relations is in reality a technique of social and political control. Control is exerted both by the civilian elements of the power structure, represented by Golkar, and by the army." (The Bush administration denied the AFL-CIO's petition, just as the Reagan administration denied similar petitions in the two previous years.) The AFL-CIO points to an August 1988 regional SPSI congress in Tangerang, located outside of Jakarta, to justify its claims. Workers in Tangerang, the AFL-CIO reports, frequently stage illegal, wildcat strikes. When the workers' election committee met to choose a new district chair, "their review was interrupted by the local military authorities. The committee was compelled to relocate its meeting at Tangerang military headquarters. As a result of this blatant interference and intimidation, the committee elected as the new chairman of the SPSI's Tangerang regional office a retired military officer named Darmawan Eddy, who was then a personnel officer at a local textile plant. Eddy was also a leader of the APINDO [employers' association] organization bureau.... Eddy has since resigned from his two management slots." The Indonesian government defends itself against the AFL-CIO's claims, saying that the U.S. Iabor organization's complaints "reflect an American cultural bias in favor of dispute resolution through an adversary system and a less paternalistic governmental approach." The Indonesian government asserts that the country's national philosophy, known as Pancasila and embodied in five principles in its constitution-"Belief in the One Supreme God; A Just and Civilized Humanity; the Unity of Indonesia; Democracy guided by the wisdom of deliberation/representation; and Social Justice," justifies the close relations between the government and SPSI and explains the low level of strike activity in the country. Responding to the Tangerang incident, the government argues that the involvement of the military in civil society must be understood in the context of Indonesia's "tradition, history and culture, [which] have combined to give the Armed Forces a role in the 'nation's development' under the doctrine of 'dual function."' That military officers "are elected to high union positions has to do with the respect accorded to members of the Armed Forces." The use of the military hall and the election of Eddy were purely innocent, the government claims: "Pursuant to the dual function principle, use of a military building by social and political organizations is common. This does not mean, however, that the groups who use the building have their independence and autonomy undermined by the military. Mr. Darmawan Eddy represented the company trade union during the Regional Congress. Based on the leadership abilities he demonstrated, he was elected chairman of the Regional SPSI." Indonesia's sordid labor record is dismissed or ignored by those who tout its magnificent development record. Gaddin of the Commerce Department says that although she is aware of the AFL- CIO's petition, violations of worker rights in Indonesia are "not a big problem as far as I am aware." She points to the Manpower Ministry's "Year of Wages" campaign as evidence that the government is "very concerned" about worker rights and that all Indonesians benefit from the country's development. The World Bank's Gupta reports that "in our assessment, in comparison with the region generally, Indonesia has a good set of labor policies. In practice, they work relatively well." Poverty and the poverty of development Along with the high rates of economic growth, Indonesia's advocates say, the country has been extremely successful in alleviating poverty. Gupta says that in comparison to other countries, Indonesia has been "eminently successful" on this score. The government, he says, has focused on human resource development and has "protected social programs even when major [budgetary] cutbacks" have been necessary. Caulkins too says that Indonesia has done an excellent job, particularly in improving access to healthcare and education. Some of the national statistics support these claims. Per capita GNP stands at about $450, having risen at a 4.3 percent rate in the period 1965 to 1988. The infant mortality rate has fallen from 125 per thousand in 1965 to 68 per thousand in 1988, according to the World Bank, although the United Nations puts the current figure at 84. The UN reports that life expectancy has risen from 41 years in 1960 to 57 years in 1987 and that the literacy rate has gone from 54 percent in 1970 to 74 percent in 1985. Other figures are less positive, however. Only 38 percent of the population has access to safe water. The per capita GNP of the lowest 40 percent of households is $160. One development worker in Indonesia who asked Multinational Monitor to withhold her name and organizational affiliation says that while schools and health centers are more accessible than they were a decade ago, "the income gap is widening and people feel poverty more." She adds that "poor people in the cities are not better off," and that the burgeoning population is worsening the situation by intensifying competition for resources--like clean water or jobs--which are already insufficient. Some groups have not benefitted at all from Suharto's mixed development record. Indigenous people, whose access to forests and other natural resources is now curtailed by concessions to natural resource exploitation companies, are undoubtedly worse off than they were before Suharto's New Order government (see "Uprooting People, Destroying Cultures: Indonesia's Transmigration Program"). The authoritarian, top-down strategy of economic development has also had, and promises to continue to have, high costs for labor and the environment. Indonesia may be the best example the World Bank can trot out to demonstrate the efficacy of structural adjustment policies, but it is not a model of sustainable development. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 I N T E R V I E W A NEW SOUTH AFRICA Max Sisulu is the Head of the Economic Planning Department of the African National Congress, the major national liberation organization in South Africa. He is the son of Walter and Albertina Sisulu, two prominent, long-time anti-apartheid activists. Multinational Monitor: How do you explain the current crisis of the South African economy? Max Sisulu: The apartheid economy has reached its limits and is now in decline. For the past decade, it has been systematically declining, despite some slight improvements. There are a number of reasons for this. It is an economy that is based on cheap black labor. It is an economy that was built on dispossessing people of their land, forcing them to go and work. It is an economy that was and continues to be based on high-cost production and low-wage labor. The 1960s and 1970s were periods of import substitution. The economy grew behind high tariff barriers and catered mainly to the white market-the people who had the money. A corollary of cheap labor is that the majority of people don't have the means to buy goods, so the domestic market is limited. [But the country's export potential was also limited], because the economy, growing behind tariff barriers and with government subsidies, was inefficient. The cost of production was not competitive anywhere in the industrialized world. It would have been competitive in Africa, but because of sanctions that option was closed. After the 1970s, the process of capital accumulation changed. The labor force became restless and fought for changes and higher wages. There was political instability in the country which also scared off some investors. The profit to be made from investment in South Africa gradually diminished. So the economy has reached a crisis where it is unable to move forward. Numerous obstacles are built into the economy, like [the lack of] education, training and housing for blacks. Blacks were deliberately not trained as part of the policy of apartheid. For a person to be productive, they must have a roof over their head, they must be educated and their working conditions must be decent. With advances in technology, the economy needs a more educated and a more skilled workforce. The South African economy does not have this because blacks have been denied education and training. To resume development, the economy will have to change its orientation; the market will have to be broadened and basic goods and services will have to be produced for the people. MM: How important a factor is the economic crisis in the decision of the white government to negotiate with the ANC? Sisulu: The crisis is very important because it affects the whites directly. The cake is shrinking for the whites also. Many whites are losing their jobs. So the whites are beginning to see that apartheid, which has historically enabled them to have high standards of living, is putting a brake on the country's further economic development. Whites are beginning to see that the regime which systematically destroyed or mismanaged the economy is the Nationalist Party, which has mismanaged the economy for four decades. MM: What kinds of added pressures or sanctions should the Western countries put on South Africa? Sisulu: I would like those sanctions that have already been adopted to be implemented much more stringently. Many Western countries have adopted sanctions but they haven't really been very strict in applying them. An important corollary to the sanctions is increased political and material support for the opponents of apartheid and the countries of the region that have suffered from apartheid aggression and destabilization, countries like Zambia, Zimbabwe, Mozambique and Angola. MM: What about financial sanctions? Sisulu: We are concerned that the international community of banks not roll over South Africa's debt. When the debt does come up for review, it should not be rescheduled until apartheid is gone. There are a number of financial sanctions that can be applied. Also, there are "people sanctions" of South African goods. If a government is unwilling to enact sanctions, then the people shouldn't buy South African food or South African krugerands. Those are sanctions that people can impose by buying or not buying. MM: At what point will the ANC call for sanctions to be lifted? Sisulu: The ANC has said that since we as people of South Africa are the ones who have asked for sanctions, we will come back to the world and say when we think they have served their purpose. Right now, the whole process of change in South Africa can still be reversed. The laws of apartheid are still in place. De Klerk's cabinet can, if it wishes, re-ban the African National Congress. We need to see the scrapping of all apartheid laws, the beginning of serious negotiations and a constitution that is agreed upon. At that point, we can then say, "We think the process has gone far enough, it can't go back"--and sanctions can be lifted. MM: What is the role of foreign investment in the apartheid economy? Sisulu: Foreign investment has been very important to the apartheid economy. It should be remembered that South Africa's initial development was based on gold. Foreign investment poured into the country to mine the gold (and also diamonds) with extra low wage black labor. From the resources gained from mining, foreign investors diversified into manufacturing. Up to the 1960s, there was an influx of direct investment. The trend changed in the 1970s, when there was less direct investment and more loans. South Africa was able to get the loans in order to build and develop the economy and ensure that whites had a high standard of living. With foreign investment came technology and skilled managers from England and North America. Technology has been very important in buttressing the apartheid system. The military industry, for example, was built with the help of the South African government but depended crucially on foreign expertise. Most of the basic infrastructure was set up with the help of foreign investment. MM: What role do you see for foreign investment in the post- apartheid economy? Sisulu: We have said that once sanctions go, we would want investment to flow into South Africa. But the investment coming into the country must not be a substitute for domestic savings and domestic investment; it will be in addition to mobilizing internal resources and putting them to productive use. Because of apartheid, companies today are not putting their money to productive use. There is a lot of spare capacity in the factories because there is no demand. Companies therefore prefer to put their money into the Stock Exchange. This doesn't produce any wealth, of course. So you have liquid money chasing paper assets, not being put into production. In a free South Africa, those resources should be put into productive use, expanding capacity and producing for the majority of the people. The role of foreign investment would be to add on to what we have. We also want foreign investment to bring in its wake technology and to pass on knowledge and skills. MM: What will be the government's attitude toward companies that stayed in South Africa when you asked them to leave? Sisulu: I don't know what is going to happen to foreign companies that refused to leave South Africa, but clearly we will remember who our friends were and who worked with us. In terms of awarding contracts, a democratic government would obviously want to remember its friends. MM: Assuming the ANC takes power, how far-reaching do you anticipate nationalization will be and what sectors are most likely to be nationalized? Sisulu: There is no prior agenda saying what the ANC is going to nationalize. The ANC is in the process of formulating its economic policy. We have, of course, broad guidelines, but economic policy will be formulated by the people, not merely by the ANC. We are currently consulting with all sectors of the population, including the business community, small and big. As with any government, nationalization is going to be an option that remains open. Whether it is going to be used or not is something else, but it is an option that can be used as one of the instruments for redistributing wealth and income. In evaluating the issue of nationalization, you look at what you want to achieve by nationalization, the costs of nationalization, other instruments available to achieve your objectives. Certainly we could not nationalize all industries, because we would need the ability to be able to run those nationalized industries. It would be crazy with the few people that we have to spread them in all these industries; that would be spreading them too thin and they wouldn't have the expertise to run them. So then we would be forced to call on the people [whose factories] had been taken to run things. That would open us to sabotage. The present debate in South Africa over nationalization is a "red herring," really. It is a red herring because it is said that the ANC has no economic policy except nationalization. This is politically expedient for our opponents because of the experience of the socialist countries and because of the pressing for privatization in the West. They hope to portray the ANC as weak, as having no policy except nationalization. We are saying that the ANC has broad outlines to redistribute wealth and that this is only one of the ways of doing it. MM: The Freedom Charter, written in 1955 under the auspices of the ANC and other groups, contains a political and economic program for a democratic South Africa. Is the ANC's commitment to nationalization more flexible than indicated in the Freedom Charter? Sisulu: The Freedom Charter was a very broad outline. It said that the nation's resources must be brought under [popular] control. We are looking at every instrument available to us, taking into account the many changes that have taken place in Africa and South Africa [since the Freedom Charter was written]. We are not wedded to nationalization. MM: What are some different methods that you are considering to redistribute wealth in the post-apartheid economy? Sisulu: Increase the minimum wage. Put resources into education and training. Devote resources to building housing and infrastructure, such as water and electricity services, particularly in the black areas where these services do not exist. There is a need for a social welfare network for the unemployed and also for the elderly and for a sound pension system. The whole land issue is very important. Land hunger is an area that needs to be solved. I don't have any answers and the ANC is discussing this problem. One possible way to address the question is to tax the land which is not used heavily or is unproductive, so that the land is sold to whoever can make use of it. We're talking about a number of possibilities when it comes to the land. For example, we are considering having the land belong to the state but making it available through leases. We are looking at all the options and studying them, so that we can find a way that enables people to work on the land and feed themselves and that also ensures that food is produced at an affordable price. MM: So you are not necessarily committed to land redistribution? Sisulu: We are very pragmatic. We are going into the situation committed to improve the standard and quality of life of our people. We are not going to nationalize unless it is going to solve land hunger, unless it is going to solve the issue of poverty. What we want is an economy that is going to address these issues, which are a result of apartheid and centuries of oppression. MM: How concerned are you about capital flight and the flight of whites with professional skills as apartheid is dismantled? Sisulu: There has been capital flight in South Africa for some time now. More money is going out of the country than is coming in. Part of it is to pay the debt. Much of it is going out because there is no confidence in the present apartheid economy due to political instability and other causes. In a democratic South Africa, we would want to gain the confidence of the business community so that they would invest. We would also use laws to make sure that money remains in the country and is reinvested in the country. About white skills: sure, some whites are going to leave the country, but we hope that others who have skills will come back home. There are thousands and thousands of both blacks and whites who left because of apartheid. If some would leave because of the demise of apartheid, some will come back for the same reason. If some whites want to leave because apartheid is gone and they are wedded to racism, they are free to leave. MM: What role do you anticipate trade unions will play in a democratic government? Sisulu: I think trade unions will continue to play an important role in a free South Africa, particularly in the areas of wage negotiations, improving the health of workers and improving the work environment. As members of the community, they play an important role in a wider aspect, in housing and in many other areas. They will also have a wider influence in working with the government. The trade union movement, the private sector and the government will need to come to some working arrangement in a post-apartheid South Africa. We will need some peace and stability to deal with South Africa's problems. The trade union movement has fought for change and has also been involved in the process of building a post-apartheid South Africa, and it must be involved in the decision-making process, not just on the factory floor, but also on the national level. MM: What do you expect the southern Africa regional economy will look like with a post-apartheid, democratic South Africa as a central component? Sisulu: I think once apartheid goes there will also be opportunities for South Africa to be integrated into the regional economy. Cooperation and integration would have important benefits for the countries in the region, including a free South Africa. Southern Africa has a combined population of almost 100 million people. It is a territory almost as big as the United States. It has a varied climate so that any fruit or crop can grow. It has tremendous mineral resources. So cooperation has a lot of potential. Of course, there will have to be renegotiation of some of the regional treaties because up to now they have been based on an unequal footing and benefited South Africa and not the region. MM: How do you think you will be able to instill confidence in the business community when in many ways the ANC's goals are contradictory to both domestic and international business interests? Sisulu: Our primary concern, of course, is to raise the quality of life of our people. And we do believe that business, particularly South African business, has in the past benefitted from the system of apartheid. If you want business to contribute to the destruction of apartheid and to building a new South Africa, it must have a stake in the future. We are prepared to sit down with business and talk about the future, so that its activities benefit not just the business community or the white community as in the past, but all the people of South Africa. Any economic development that is going to take place in a free South Africa is going to be in a framework that is put out by the government and designed to make the economy serve the people. I'm sure business understands that there is a need to redistribute wealth. In South Africa, nobody doubts that. The disagreement with the business people is not about whether there isa need, but over how to redistribute wealth and income. And as I said, discussions are going on. As far as the international community is concerned, they will be assured of a return on their investment. But this is going to be within the laws of the country; every country has laws which regulate business activity, whether by foreign companies or domestic companies. MM: Are you pleased with how the ANC's discussions with South African business leaders have progressed? Sisulu: Well, I think there is still a long way to go before we can say we have reached a point where we agree on a number of issues. We have expressed our concerns and perspective on the need to develop the economy. They have expressed some of their fears and we have addressed the fears of the business community and the white people particularly. But, of course, it is not a one-way street. There are also the concerns and aspirations and needs of the vast majority of the people which also have to be met and understood by the white community, by business. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 LABOR UNIONS FIGHT FOR POWER: Labor Conflicts in Nicaragua By Alexander Patterson Alexander Patterson is a freelance writer and radio reporter working in Central America. MANAGUA--THE SANDOSTA FRONT (FSLN)'s effort to "rule from below" during the tenure of the new UNO government has given the union movement in Nicaragua unprecedented political clout. Because Nicaragua's National Assembly is relatively weak and has been ignored by President Violeta Charmorro, the FSLN has shifted the focus of its activity from its 39-seat minority in the 92-seat legislature to its large majority in the union movement. Twice in the first two months of UNO rule, Sandinista-led general strikes paralyzed the country, the second nearly bringing down the Chamorro government. At the same time, the change in government and recent changes in labor legislation have presented many opportunities for new unions, most of them UNO-oriented, to organize and attempt to wean workers away from Sandinista-affiliated confederations. The outcome of the struggle for power in the labor movement will be a crucial factor in determining the character of Nicaragua's economy and society. The rise of unions The Sandinistas' victory in July 1978 ignited a massive organizing drive. Labor organization grew from only 133 unions representing 5 percent of the labor force in 1979 to over 1,100 unions with 55 percent of the workforce by 1984. About 90 percent of the unions are affiliated with the six FSLN confederations, the most important of which are the Sandinista Workers Confederation (CST) and the Association of Farm Workers (ATC). The status of workers' rights has been greatly elevated in both Nicaragua's constitution and its political culture since 1979. Since the revolution, workers have made many gains, according to Domingo Gomez, general secretary of the Rice Workers Federation of the ATC. He cites land reform, the literacy campaign and an improved health and education infrastructure as benefits won by the revolution and the new unions. He also notes that workers play an unprecedented role in the management of businesses, particularly state enterprises and some private ones in which workers have access to financial records and have union representatives on management committees. Day care centers are common in factories that employ many women, and most collective bargaining contracts guarantee maternity leave, as well as lunch and transportation subsidies. The war takes its toll Despite the rapid growth of unions, Nicaragua's perpetual economic crisis--greatly exacerbated by the U.S.-sponsored war and economic aggression (see "Making the Economy Scream," Multinational Monitor, December 1989)--prevented workers from making many material advances during the period of Sandinista rule. With the economy collapsing, Sandinista unions focused on supporting the war effort, discouraging strikes and asking workers to subordinate their needs to the national interest. Meanwhile, workers bore the brunt of the economic chaos, their buying power dropping 90 percent over 10 years. Even non-wage worker concerns, like reform of the Somoza-era labor code, which permits the arbitrary firing of workers, were never addressed. With leaders able to offer nothing but appeals for more sacrifices and more patience, many workers stopped taking the unions seriously. While the Sandinista unions tried to mobilize workers for the war effort, non-Sandinista labor leaders on both the left and right complained that Sandinistas tried to repress or manipulate their unions. Antonio Jarquin, general secretary of the pro-UNO CTN, admitted in 1984 that some of the repression occurred because "some workers have been engaging in counter- revolutionary activities." Some pro-UNO union confederations acknowledge receiving money from organizations with documented connections to the U.S. Central Intelligence Agency. Nevertheless, much of the repression was unrelated to the effort to combat U.S.-sponsored subversion. Although most workers freely joined the Sandinista confederations in the wake of the party's popularity following the Revolution, opposition union leaders across the spectrum claim that the government, the police and Sandinista turbas (gangs) worked together to persuade and at times coerce workers, including those already organized in opposition unions, to join the CST. Having organized most workers into its unions, the Sandinistas ensured that these unions would continue to dominate the labor movement. They enacted a prohibition against formation of minority unions to compete with an existing one (usually Sandinista) in a given enterprise. When competing unions threatened Sandinista power, the Sandinistas used extra-legal methods to defend their position. The Worker's Front Malespin Martinez says that whenever his competing labor confederation managed to elect its own leadership to head a nominally Sandinista union, the Ministry of Labor would require new elections and the Sandinistas would send "goons" to the enterprise to intimidate the workers into voting for the Sandanistas' preferred candidates. As a result, from 1981 until UNO won the elections in February 1990, few non-Sandinista unions gained legal status, and the Sandinista confederation lost few member unions. While denying that the CST held what critics call "captive" unions, Damaso Varga, general secretary of the Managua region of the CST, admits that workers did not have the opportunity to organize during the war. "The conflicts of war imposed on us in those years didn't allow a type of democratic discussion in which each group could participate in accord with its beliefs, in accord with its political affiliation, because there was a general mobilization." No competing confederations were eliminated or silenced during Sandinista rule, however. The new scramble for worker support Although the CST succeeded in its primary goal of keeping the workers united to win the war, the cost in terms of maintaining a solid base was high. Pacifying workers' militancy, justifying sacrifices and obliging membership in the CST weakened the unions. One of the reasons most experts expected the FSLN to win the February 1990 election was the size of its mass organizations, including unions, which succeeded in mobilizing vast crowds for Sandinista rallies. On February 25, these organizations turned out to provide fewer votes than expected. On April 19, just six days before they left office, the Sandinistas changed the labor law to permit the formation of minority unions. Since then, new unions, particularly non- Sandinista organizations, have been forming at a rapid pace. Three factions in the Nicaraguan labor movement compete to draw workers away from the Sandinista confederations. The fiercest competition comes from the Permanent Workers Congress (CPT), which unites four labor confederations, two rightist and two nominally leftist, in an alliance with UNO. The second faction is the Nicaraguan Workers Confederation (CTN), which is also pro-UNO and anti-Sandinista. It carefully guards its independence from UNO and the CPT, however. CTN General Secretary Carlos Huembes says the CTN doesn't want to be labelled an "official" confederation. "In Nicaragua, 'officialism' is something that is looked on badly and tends to disqualify," he comments. The third faction is the Workers Front (FO), which is affiliated with the far left Marxist-Leninst MAP- ML and is genuinely independent of both the FSLN and UNO. Leaders of all three factions express optimism that they will be able to lure many workers away from the Sandinista unions. The change in government offers the pro-UNO unions distinct advantages in the competition to attract workers. Approximately $5 million in U.S. aid to Nicaragua is earmarked to support non- Sandinista unions. CPT confederations regularly receive assistance from organizations like the U.S. government-sponsored National Endowment for Democracy. The AFL-CIO also contributes to the Confederation for Trade Union Unity (CUS), an affiliate of the CPT, and provides scholarships for union cadres to be trained at the George Meaney Center in Maryland. The AFL-CIO- operated American Institute for Free Labor Development helped organize the CUS in the early 1960s. Furthermore, the UNO government has demonstrated its eagerness to help the CPT by trying to include CPT officials in negotiations to settle strikes by Sandinista unions. The Ministry of Labor appears eager to confer majority status on CPT unions, giving them the legal mandate to represent workers in collective bargaining and other negotiations with management. The Ministry of Labor has already conferred majority status on a pro-UNO union of water utility workers in the San Antonio Sugar Mill, among others. But the Sandinista-affiliated CST asserts that the CUS union is not in fact representative of the majority of the mill's over 4,000 workers. The Sandinista labor movement is mobilizing to face the new competition. To increase the cohesiveness of the movement, the six Sandinista confederations have joined together to form the National Workers Front (FNT). At the same time, affiliated unions are being granted more autonomy so their leaders can respond directly to the concerns of rank-and-file workers. New elections are being held to enhance the representativeness and popularity of union leaders at the base level. Most importantly, the whole movement is becoming more militant. In the two months between the elections and the transfer of power, workers went on strike 188 times, perhaps as many as in the previous 10 years combined. The FNT has become a staunch defender of the workers' rights (like the right to strike) that the CST verbally supported but rarely exercised with the Sandinistas in power. The strikes There have already been two major confrontations between the FNT and the UNO government. Only two weeks after Chamorro assumed the presidency, her government was paralyzed for five days by a massive strike by UNE, the government employees union. A month later, many other workers and peasants joined government workers in an even bigger strike that brought the country to the brink of chaos. Strikers coupled wage demands with protests over unconstitutional presidential decrees, revisions to the Sandinista land reform and the government's failure to consult with workers and the FSLN about its economic policy. The strikes shut down or interrupted most government services and offices, including Managua buses, telephones, banks and the airport. Workers occupied most government buildings and staged strikes outside the presidential offices. During the second strike, workers erected barricades reminiscent of the 1979 insurrection in the streets beside burning tires. About a dozen people were killed in skirmishes between roving UNO and Sandinista gangs. The Minister of Labor declared the strikes illegal. The Sandinista police followed government orders to tear down the barricades, but they refused to attack striking workers. In between the two strikes, it appeared that UNO and the Sandinista's FNT might be in the process of establishing a working relationship. In early June, without recourse to a strike, the government and the workers reached an accord that Vice Minister of Labor Antonio Ibarra said inaugurated "a climate of participation and cooperation between all the sectors--union, government, and private business--to resolve the common and particular interests of each sector in a harmonious manner without recourse to more conflicts." Three weeks later, however, the workers were again building barricades. Despite the wage issue orientation of the accords, the strikes were a qualified political success for the Sandinistas and the workers. The first strike accord requires monthly meetings between the FNT and the government to set new wages and discuss other worker concerns, an important step toward increasing the Sandinistas' voice in government. Lucio Jimenez, secretary general of the CST, said, "We didn't get everything we wanted, but we set a precedent. From now on the workers must be consulted about economic policy." Behind the scenes, a similar agreement was probably reached to settle the second strike as well. The strikes strengthened the position of the Sandinistas and the FNT versus UNO and the competing labor confederations. According to Malespin Martinez, "the tactic of the FSLN of pushing the workers and then negotiating allows them to gain leverage in negotiating with UNO as well as to keep the workers from looking for alternatives outside the CST." The strikes also demonstrated that UNO cannot rule the country without the cooperation of the Sandinista labor movement. UNO attempted to implement rapid radical changes in government policy in the belief that the Sandinista base was too weak and the labor movement too disorganized to oppose them. With the strikes, the FNT proved that it has enough worker support to pull off a successful general strike. Until the Sandinistas and the UNO government can work out some lasting compromise, which may take a long time considering the ideological gulf currently separating them, the cycle of dialogue and confrontation will probably continue. Finding a political role for workers For both UNO and the FSLN, building worker support is crucial to a successful political future. Finding a role for their union allies, however, presents each with difficult dilemmas. In accordance with its much smaller influence in the labor movement, the CPT's primary goal in the political struggle between UNO and the FSLN is to organize new unions in as many enterprises as possible and turn them into majority unions in order to weaken the FNTs base and strengthen its own. The CPT's support for UNO in the strikes, followed by settlements generally favorable to the FNT, and the CPT's subsequent exclusion from further talks may have damaged the CPT's claim to be a nonpartisan representative of workers' interests. In the future, reconciling the political interests of UNO with the interests of the workers will probably be an especially difficult problem for the CPT because UNO is eager to privatize state enterprises and reduce subsidies for public services like healthcare, education and transportation. If UNO pursues policies that are clearly anti-worker, the CPT may have to distance itself from the government in order to achieve its primary goal of gaining worker support. One month of UNO government was needed to demonstrate that the FNT is the most potent weapon the Sandinistas currently possess in their efforts to "govern from below." Continued FNT militancy, however, presents the FSLN with similar problems of reconciling divergent party and worker interests. While general strikes help the party to pressure the UNO government and win some gains for the workers, they risk alienating other sectors of the population, which suffer greatly and may see the strikes as non-constructive efforts to sabotage the UNO economic plan. On the other hand, the FNT cannot seek further worker sacrifices on behalf of UNO and hope to retain firm worker support. Alejandro Bandana, a former official in the Ministry of the Exterior in the FSLN government, says questions naturally arise in FSLN internal debates about the relationship between the party and the unions: "How far do you go towards the national responsibility as opposed to representing your basic social constituency? New points of equilibrium are going to have to be defined ... responsibly and with an electoral view." Finding a political role for the unions is further complicated by the need to give them more autonomy from the party. The democratization under way in the FNT is designed to increase worker support, but it will also inevitably result in greater responsiveness on the part of the unions to the workers, even at the expense of the party leadership. While the FSLN wants its affiliated unions to be belligerent enough to pressure UNO and autonomous enough to win the allegiance of the workers, it also has an interest in limiting the independence and militancy of the unions. The FSLN must retain enough control of the workers to be able to use the promise of labor stability as a bargaining chip in negotiations with UNO. As Malespin Martinez put it, "the problem that [the Sandinistas] have is that they need to push the workers to recover their space, but only to a certain limit.... [If] the workers recover their dynamism and destabilize the co- government, the Sandinista Front also loses. Then the Front will have to support their demands or lose the workers." Ultimately, the kind of brinksmanship displayed in the two general strikes risks detonating the powder keg of Nicaragua's polarized politics. Vice president Virgilio Godoy's right wing of UNO together with some contra elements took advantage of the mayhem surrounding the second strike to form a National Salvation Committee that appeared to be maneuvering to take over the government. A coup by hardliners would be a disaster for both the FSLN and for President Violetta Chamorro's more moderate wing of UNO. Unless UNO accepts the fact that the Sandinista labor movement must be appeased for national reconciliation and economic development to occur, and unless the Sandinistas find a way to retain the support of their workers without sending them into the streets, future labor conflicts could explode into a new civil war. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 CORPORATE PROFILE ANOTHER TREE, ANOTHER DOLLAR Rampant Expansion at Georgia-Pacific By Jim Donahue The ever-expanding Georgia-Pacific Corp. (GP), founded in 1927, has become the largest lumber company in the United States and the largest landowner in the forest products industry. GP began as a small lumber company in Augusta, Georgia, and moved to the Pacific Northwest in the early 1950s. GP operated primarily in that region until it revolutionized the plywood industry in 1963. When it developed technology to manufacture plywood exclusively from Southern pine trees, as opposed to Douglas firs, GP expanded its operations in the South. In 1964, it built the first Southern pine plywood plant in Fordyce, Arkansas, and in 1982 it moved its headquarters back to Atlanta. To finance its voracious appetite for expansion, GP borrowed heavily in the 1950s and 1960s. It used the money to buy up timberlands and manufacturing facilities. Between 1955 and 1965, the company increased its size by seven times, becoming one of the forestry industry's goliaths. In 1972, the Federal Trade Commission forced the company to sell 20 percent of its operation, thus spawning another pulp and paper giant, Louisiana-Pacific. Today, with its operations located primarily in the South and Northeast, GP is a leading manufacturer and distributor of a wide variety of building products and pulp and paper products. It manufactures common household items such as tissue paper, paper towels and napkins as well as printing paper; GP also ranks first in U.S. production of softwood plywood and other wood panels. In addition to its wood and paper products business, GP also has a small interest in gypsum mining with 10 gypsum board plants and associated mines, quarries and deposits located in Iowa, Kansas, Michigan, Nevada, Texas, Utah, Wyoming and Nova Scotia, Canada. Ten percent of GPs revenues come from its operations in foreign countries. Its foreign subsidiaries operate in Panama, Brazil, Netherlands Antilles, Germany, Switzerland, Mexico, Canada and the Virgin Islands. Finished wood products, primarily from Indonesia, Malaysia and the Philippines--areas undergoing intense deforestation--account for 50 percent of GPs imports. GP has seen its greatest expansion in the last decade. Between 1982 and 1990, the company's sales doubled to $10.2 billion, while earnings increased from $20 million to a record $661 million in 1989. GP's growth, however, is largely the result of gobbling up existing companies rather than creating new operations. Among its recent acquisitions are a $216 million purchase of U.S. Plywood Corp. in 1987, a $228 million purchase of timberland and two lumber mills from American Forest Products Co. in 1988 and a $665 million purchase of Brunswick Pulp & Paper Co., also in 1988. GP made its most notorious acquisition in March 1990, when it completed a $3.8 billion hostile takeover of its rival, Great Northern Nekoosa. The takeover added six paper and pulp mills, four container-board mills, 26 box plants and 3.4 million acres of timberland to GP's already growing empire. Before the takeover, the corporation owned 42 paper and paper board converting plants and 31 corrugated container plants throughout the United States. Currently, GP manages 10 million acres of land in the United States, more than any of its competitors, and commands one-third of the U.S. paper market. After the Great Northern takeover, it became the largest landowner in Maine and the largest private landowner in Wisconsin. Like other forest products companies, GP refers to itself as a "tree growing" company. Sheila Weidman of the GP corporate communications office says that in 1988 GP harvested 87,000 acres of timber in the United States and regenerated 50,000 acres by planting 30 million seedlings. Approximately 37,000 acres were left for "natural regeneration," a process whereby spared trees naturally re-seed the immediate vicinity of the harvested area. Jonathan Pont of the Oregon Natural Resources Council, a Portland-based environmental group that deals with forest issues, says that GP's claim of regenerating trees after a harvest obscures the more important issue of destroying whole forests. "We're running out of ancient forests," says Pont, "and you can't cut part of the ancient forest and expect it to sort of come back.... What you're getting is a monoculture, you're getting a tree farm, a plantation. It is not the same as the ancient forest." Pont also points out that massive tree-cutting operations of companies like GP contribute to greater pollution of streams and rivers as a consequence of soil erosion. Georgia Pacific's 1980s acquisition binge is taking its toll in 1990. A $55 billion debt and a 30 percent decline in earnings since the Great Northern takeover have forced the corporation to sell off assets. GP is currently selling a container-board mill in Valdosta, Georgia and one in Tomahawk, Wisconsin (these were acquired through the Great Northern acquisition), 19 corrugated box plants (about half of these plants were acquired from Great Northern), 540,000 acres of timberland and an undisclosed amount of timber cutting rights for $740 million. In addition, the company is seeking a buyer for its pulp and paper mill in Toledo, Oregon. Attacks on workers Georgia Pacific has financed its expansion and increased profits to record levels on the backs of its workers. GP forced its employees to accept cuts in premium pay and healthcare and has either cut wages or provided annual wage increases running far below the cost of living index. After acquiring mills from American Forest Products, for example, GP reduced the workforce by 25 percent and cut wages by up to $2.25 an hour. Within a year of acquiring its plant in Brunswick, Georgia, GP cut what it called "redundant" jobs while reducing overtime pay. According to Dick Blin, director of publications at United Paperworkers International Union (UPIU), GP successfully forced concessions at all facilities where UPIU has members. "We frankly think that a lot of their record profits have to do with the fact that we granted them concessions," Blin said. But workers did not grant these concessions voluntarily. Over the last few years, thousands of striking paperworkers have been replaced by non-union workers at lower wages, making it more difficult for unions to reject company proposals during contract negotiations. About 3,300 UPIU members have lost their jobs to replacement workers in recent years. "Basically, we do not have the power to strike," says Blin. In September 1990, about 500 members of UPIU demonstrated in front of the White House to protest the growing practice of replacing striking workers. The demonstrators, including UPIU president Wayne Glenn, called on Congress and President Bush to support pending legislation sponsored by Sen. Howard Metzenbaum, D-Ohio, and Rep. William Clay, D-Mo., that would allow striking workers to return to their jobs. Trust building Georgia-Pacific has repeatedly abused the power which comes with its dominant position in the market. The company is notorious for price fixing. In 1975, it was convicted of fixing prices of $4.8 billion worth of gypsum board with U.S. Gypsum Co., National Gypsum Co. and Celotex Corp. After the conviction, the case was appealed and subsequently settled out of court in 1980 for $6 million. In December 1982, GP settled a $2 billion price-fixing suit for $165 million. The class-action suit, representing 20,000 lumberyards nationwide, charged GP, Willamette Industries and Weyerhaeuser with fixing the prices of plywood from February 1968 through December 1973. The case began in 1972, when 39 plaintiffs charged that they had been required to pay higher prices than were appropriate because of "phantom" freight rates. The suit contended that the manufacturers agreed to charge freight on softwood plywood produced in the South as if it had been produced in the West, thus instituting a "phantom freight charge." The plaintiffs said the freight charges cost them billions of dollars. The case was settled after the paper giants appealed a 1981 ruling by the New Orleans Circuit Court of Appeals which upheld a 1978 jury verdict that found the three companies guilty of price-fixing in violation of the Sherman Antitrust Act. GP paid 60 percent of the settlement. A dismal environmental record As Georgia Pacific tightens its budget to deal with its debt problems, its already dismal environmental and workplace health and safety record may worsen. In March 1990, GP was fined a record $637,000 for water and air pollution violations at its Woodland, Maine mill dating back to 1986. It was the largest environmental fine ever assessed in Maine. The fine includes $250,000 for dumping six million gallons of waste water into the St. Croix River and $387,000 for 6,000 violations of state air pollution discharge limits between 1986 and 1989. The fines also involved monitoring and reporting violations. In January 1990, the Occupational Safety and Health Administration fined GPs Fort Bragg, California facility after an explosion caused a release of PCBs; OSHA ruled that GP failed to provide adequate equipment to protect workers from the leak and cited GP for a "serious" violation of the Occupational Safety and Health Act. In June 1989, the Environmental Protection Agency (EPA) charged GP with dumping dioxin into the Mississippi River near Baton Rouge in violation of the Clean Water Act. In 1985, GPs Plaquemine, Louisiana plant paid $625,000 to the federal and state governments for releasing vinyl chloride, a known carcinogen, into the air between 1977 and 1985. At the time, it was the largest air pollution settlement on record. The Plaquemine facility was also fined a record $308,000 in 1981 for illegally dumping 42,000 pounds of phenol into the Mississippi River. The federal EPA fined Georgia Pacific seven times for a total of $1.16 million between January 1, 1977 and May 1, 1990, even though the agency was eviscerated for much of that time under the Reagan and Bush administrations. Of the largest 50 corporations in the United States, only USX and Dupont were fined more often by the EPA. The future For the sprawling forestry giant, the 1990s are an uncertain period. A recession will pose serious problems for highly indebted companies like Georgia Pacific. This raises disturbing questions about how a company with a history of exploiting and endangering its workers, cheating consumers and damaging the environment will respond to the pressure of an economic downturn. ------------------------------------------------------------------------------ [] MULTINATIONAL MONITOR VOLUME 11, NUMBER 10, OCTOBER 1990 BOOK REVIEW GLOBAL DUMPING GROUND Global Dumping Ground: The International Traffic in Hazardous Waste By Center for Investigative Reporting and Bill Moyers Washington, D.C.: Seven Locks Press, 1990 144 pages, $11.95 Reviewed by David Lapp Global Dumping Ground, a companion book to an excellent public television documentary, is a horrifying tale of what may be termed "environmental racism." It is the story of international commerce in toxic cargo that runs from the United States to the Third World, devastating the recipient countries' citizens and environment. Based on their investigative work, the Center for Investigative Reporting (CIR) and Bill Moyers explain how hazardous waste exporters legally and illegally ship industrial by-products and other toxic waste, much of which is banned for use in the United States, to unsuspecting Third World countries. By showing Mexican children bathing in polluted waters, Brazilian workers suffering the effects of lead poisoning, and Nigerian villagers dying from PCB-contaminated rice, CIR and Moyers demonstrate how U.S. toxic exports cause irreparable harm to the environment and injure and kill Third World citizens. They found that this inherently dangerous business results from weak workplace and environmental regulations in the Third World and the desire to avoid high disposal costs in the United States. The hazardous waste trade is fuelled by mounting piles of toxic waste generated by the soap, plastics, pesticides, medicines, fertilizers and explosives industries. This deadly cargo consists of toxic substances such as dioxins, organic chemicals, heavy metals, PCBs and cyanide. CIR and Moyers point out that the United States generates more than one ton of hazardous waste annually for every man, woman and child. As a result, they explain, "Both criminals and legitimate entrepreneurs sense handsome profits from this excess of hazardous waste, from steering the flow of harmful substances along the path of least resistance toward what they hope will be a final resting place." The authors argue that U.S. environmental regulations have functioned to encourage the exportation of hazardous waste. The Resource Conservation and Recovery Act specifies that a company is responsible for its hazardous waste even after it is disposed of in U.S. landfills. But when a broker exports the waste to a foreign country, the responsibility is also exported. Global Dumping Ground demonstrates the reluctance of Third World countries to receive the industrialized countries' waste by recounting the widely publicized saga of the Khian Sea, one "poison ship" in a "seeming armada of toxic vessels unleashed by the developed world in the late 1980s." In June 1986, loaded with 13,000 tons of toxic incinerator ash from Philadelphia, the Khian Sea headed for the Bahamas, where Amalgamated Shipping Corp., the ship's owner, claimed the government had agreed to accept the ash. But when the ship arrived at Ocean Cay in the Bahamas, the Bahamas' Ministry of Health denied it permission to unload. The Khian Sea set sail, embarking on an endless search for a country which would accept the toxic ash. After sparking congressional inquiries and a number of lawsuits, and wandering through the seas for 27 months on a journey that took it to four continents where country after country declined to accept the ash, the ship, renamed the Pelicano, arrived in Singapore without its cargo. The ship owners have refused to say where the ash went and a Justice Department inquiry has so far been unable to locate it. CIR and Moyers emphasize that the case of the Khian Sea, which garnered international attention, carried only one month's waste from one major U.S. city. The authors also relate the stories of "entrepreneurs" who have been convicted of illegally exporting hazardous waste. They focus on brothers Jack and Charlie Colbert, who were convicted in 1986 for exporting misleadingly labelled hazardous wastes. CIR and Moyers found that the bulk of the hazardous waste the Colberts shipped to over 100 countries, mostly in the Third World, emanated from the U.S. government. It was legal for the Colberts to buy poisons like DDT from the government and sell them overseas, but they broke the law when they relabelled the hazardous waste "surplus chemicals." The Colberts said they also did business with numerous multinational corporations, including Ford, Exxon, DuPont and Celanese. In their most significant findings, the authors explore loopholes in U.S. federal hazardous waste export laws which allow dumping abroad. By tracing the paths of used acid-lead batteries and non-ferrous scrap metals, the authors uncovered processing plants which expose workers and nearby residents to dangerously high levels of lead, PCBs, asbestos and other toxins. Scrap metal and used car batteries are exempt from federal hazardous waste export laws, although their health dangers are well known. By processing used car batteries abroad (over 70 million are discarded in the United States every year), companies avoid stringent exposure limits in the United States. The authors claim that millions of used car batteries were shipped in 1989 to Mexico, Japan, Canada, India, Venezuela, China, South Korea, South Africa and Taiwan. CIR and Moyers found that at one lead smelting plant in Brazil, workers who have been overexposed to lead complain of headaches, dizziness, stomach cramps, nausea, kidney pains, a sense of weakness and aching. The authors also document a growing scrap metal industry in Asia, especially China, where labor is cheap and regulations are lax. The scrap metal is covered with PCBs, asbestos and other hazardous materials. This startling evidence on the dumping of non-ferrous metals in Asia--probably the greatest contribution of the book--has not previously been explored, according to Jim Vallette, a hazardous waste expert with Greenpeace. The authors also discuss the hazardous waste trade between the industrialized nations. Waste travels from the United States to Canada, and from Western Europe to the United Kingdom. Canada and the United Kingdom have "built flourishing businesses to take in unwanted materials from other nations," CIR and Moyers write. Canada, for example, has a booming business of importing, processing, and exporting hazardous wastes to the First World and the Third World. Truckloads from the U.S. arrive in Canada daily, carrying the waste of companies like Monsanto, Dow Corning, IBM, General Electric, and Ashland Oil. While much of the information presented in Global Dumping Ground has previously been documented, the book offers an accurate, precise and accessible overview of a critically important issue. But it does not provide an in-depth analysis of the export of hazardous waste. For example, CIR and Moyers provide only two examples of the illegal export of hazardous waste and fail to extrapolate on the magnitude of this illicit business, leaving it unclear whether the illegal acts described are rare or common. The book may dizzy the reader by jumping from one subject to another. The first chapter, for example, begins by discussing the environmental and human health effects of the trade on the Third World and the "powerful economic equation" driving the trade. The authors then explain that the United States is the main producer of the waste, explore the defects in U.S. environmental regulation and finally conclude with the Basel Convention, a 1989 international meeting where the United States successfully fought Third World attempts to enact measures which would limit international hazardous waste commerce. Each one of these subject areas could be a chapter, if not a book, of its own. The dangers exposed in Global Dumping Ground demand a reassessment of hazardous waste production, regulatory standards and international law. Accordingly, the authors conclude that the human health and environmental dangers posed require not only an overhaul of U.S. hazardous waste export controls and greater enforcement measures, but technological changes to reduce the generation of hazardous waste at it s source. Although it is rarely discussed, source reduction is feasible, as Joel Hirschhorn, a former Office of Technology Assessment official, told CIR and Moyers: "The greatest misconception I find among all sorts of people is the assumption that we have to produce toxic waste. And that is simply wrong. We can run American industry, we can operate industrial facilities, we can make the kinds of products people want and we don't have to produce so much toxic waste.... Waste is inefficiency. Waste is non-competitive." And, most troubling, waste from the North kills in the South. .