The Multinational Monitor


T H E   F R O N T

Venezuelan Debt Vortex

The Venezuelan government's decision in late February to raise the price of gasoline and bus fares unleashed the worst violence to wrack the country in 30 years. Caracas, Merida and other major cities were in an uproar for five days.

While the government put the death toll at 256, media reports indicate between 500 and 1000 people died in the riots or government reprisals. According to the government, rioters caused roughly $150 million in damage. In Caracas, many of the downtown stores were looted and/or burned. The violence was touched off by the announcement of a government plan to end subsidies on a variety of products, including gasoline, although rice, bread, chicken and 16 other staple foods were exempted. The plan was designed by the government of President Carlos Andres Perez in an attempt to gain International Monetary Fund (IMF) approval for a new round of loans.

In a news conference held the fifth day of the revolt, Perez, who had been in office less than a month, told reporters that the explanation for the riots "could be written in capital letters: foreign debt."

The next day, in a letter to IMF Managing Director Michael Camdessus, Perez blasted the governments of the developed world for seeking to impoverish Latin America and attempting to "destabilize its effort to remain democratic by imposing conditions on foreign debt repayment" with their IMF-style austerity plans.

Despite the riots, the IMF refused to lift its recessionary austerity requirements. In a March 6 letter to President Perez, the IMF's Camdessus said he was "profoundly moved" by the loss of life during the five days of upheavals but said the IMF was convinced "that the economic policies were well-conceived."

The indebted nations, he said, would only resume economic growth by implementing "reasonable interest rates" and "dismantling protectionism in the export markets." In short, the austerity measures would continue.

When asked if the riots had affected talks between the IMF and Venezuela, IMF press officer Graham Newman replied, "It's not really an issue. The economic program which is being implemented is the government's program."

As the revolts ended, the U.S. Treasury Department and a consortium of private banks scrambled to come up with $1.05 billion in emergency bridge loans for Venezuela. By March 4, Washington had a $450 million bridge loan in the works to tide Caracas over until the IMF loans could be approved. Venezuela's other major foreign lenders also pitched in $600 million to help the country remain afloat.

- Diane Bartz

A World Bank Disaster

Nearly 8,000 peasants in Central Java, Indonesia could soon be flooded out of their homes and off of their land by the waters of the World Bank-financed Kedung Ombo Dam.

The floodgates of the dam were closed on January 14. The water level was 60 meters in the first week of February, and was expected to reach the 90 meter mark in the weeks to come. Kemusu peasants from three different villages face eviction. Some homes have already been flooded and their owners have been forced to live on rafts. These peasants' property has been destroyed, leaving them dependent on food donations from villagers who live on higher ground. A senior official in Solo reportedly commented: "This is the first time the government has flooded out its own people."

The Kedung Ombo Dam is part of a huge irrigation and hydro-power development project for Indonesia, almost three quarters of which is funded by the World Bank The dam is also funded by the Asian Development Bank and Japan's Exim Bank.

Although the World Bank has established guidelines on involuntary resettlement that should protect the Kemusu peasants, there is no evidence that the Bank has taken any action on behalf of the peasants.

The dam was officially opened on January 16, amidst protests from local villagers who remained in their homes even though the floodgates had been shut. The dam opening ceremony was conducted under tight security. No one, including journalists, was allowed to enter the villages at the center of the protests.

For several years, Kemusu peasants have tried to negotiate with Indonesian authorities for real compensation for the land but they have had no success. They were offered compensation ranging from $19.60 for a square meter of dry riceland up to $54.60 for buildings. The peasants refused all cash compensation, however, and demanded land of similar size and equivalent value. Authorities tried to convince the peasants to transmigrate but they have insisted on their right to remain in the region.

When the authorities announced an alternative site for the village, the peasants rejected it. At first local newspapers described the site as "fertile" and claimed that various facilities including a school, a clinic, a village hall and a mosque had been built there. The peasants were said to be unreasonable for holding out against such an offer. But later reports from observers who visited the alternative site have confirmed that it is a piece of arid land without even basic facilities. There is no drinking water, let alone water for cultivation. Water-well probes as deep as 137 meters failed to reach the water table. And the soil is not fit for farming activities. Transportation would also be difficult since the nearest road is five kilometers away.

Faced with continued resistance over compensation, government authorities announced in December 1988 that the money allocated for the land had been deposited with the court for collection by the peasants. They effectively bought the land despite the peasants' refusal to sell it.

Recent news reports asserted that the controversy is over despite the fact that some peasants remain in the villages.

- Third World Network Features

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