The New Nation - Internet Edition

The lies behind free trade

Washington: Rich countries preach free markets and free trade to the poor countries in order to capture larger shares of the latter's markets and preempt the emergence of possible competitors, says Cambridge economist Ha-Joon Chang. His latest book, Bad Samaritans, gives an insight on the disastrous trade policies of the industrialized countries which have been responsible for abject poverty in the Third World.

Chang has won the Gunnar Myrdal Prize for his essay *"Kicking Away the Ladder: Development Strategy in Historical Perspective" *and shared the Wassily Leontief Prize for his contributions to *"Rethinking Development in the 21st Century."* The first awarded book criticizes Britain for preaching free trade to other countries while having achieved its own economic supremacy through high tariffs and extensive subsidies. His new title is, according to Chalmers Johnson in Truthdig.com, a discursive, well-written account of what Chang calls the bad Samaritans, people who preach free markets and free trade to poor countries, taking advantage of those who are in trouble while keeping extensive subsidies to their agricultural producers. There is not a single simultaneous equation in the book and many of Chang's examples are taken from his own experiences as a South Korean born in 1963, says Johnson. This was the period in which Samsung subsidized its infant electronics subsidiaries for over a decade with money made in textiles and sugar refining.

Today Samsung dominates flat-panel TVs and cell phones in much of East Asia and the world. A similar evolution had Pohang Iron and Steel Co.which began as a state-owned enterprise that was refused support from the World Bank and today is the world´s third largest steel company. In Chang's conception, there are two kinds of Bad Samaritans. There are the genuine, powerful "ladder-kickers" working in the "unholy trinity" of the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO). Behind the ideologues of Bad Samaritans is neoliberalism, which stands for privitizing state-owned enterprises, maintaining low inflation, shrinking the size of the state bureaucracy, balancing the national budget, liberalizing trade, deregulating foreign investment, making the currency freely convertible, reducing corruption and privatizing pensions. Chang notes that the histories of today´s rich countries contradict this doctrine, mostly as a result rather than a cause of economic growth, says Chalmers Johnson in his review published Tuesday.

Chang´s basic conclusion: "Practically all of today's developed countries, including Britain and the US, the supposed homes of the free market and free trade, have become rich on the basis of policy recipes that go against neo-liberal economics." The 19th and early 20th century US tariffs of 40 to 50 percent were then the highest of any country in the world. With the US abandonment of overt protectionism after it became the world's richest nation, it still found measures to advance its economic fortunes beyond what market forces could have achieved. For example, the US government actually paid for 50 to 70 percent of the country's total expenditures on research and development from the 1950s through the mid-1990s, usually under the cover of defense spending.

The Third World was not always poor and economically stagnant. From the Marshall Plan (1947) to the first oil shock (1973), the United States was a Good Samaritan and helped developing countries by allowing them to protect and subsidize their nascent industries. The developing world has never done better, before or since. But then, in the 1970s, scared that its position as global hegemony was being undermined, the United States turned decisively toward neoliberalism. Through draconian interventions into the most intimate details of the lives of their clients, including birth control, ethnic integration, and gender equality as well as tariffs, foreign investment, privatization decisions, national budgets, and intellectual property protection, the IMF, World Bank, and WTO managed drastically to slow down economic growth in the Third World. Forced to adopt neoliberal policies and to open their economies to much more powerful foreign competitors on unequal terms, their growth rate fell to less than half of that recorded in the 1960s (1.7 percent instead of 4.5 percent). Since the 1980s, Africa has actually experienced a fall in living standards -- which should be a damning indictment of neoliberal orthodoxy because most African economies have been virtually run by the IMF and the World Bank over the past quarter-century. The disaster has been so complete that it has helped expose the hidden governance structures that allow the IMF and the World Bank to foist Bad Samaritan policies on helpless nations.

The United States has a de facto veto in both organizations, where rich countries control 60 percent of the voting shares. The WTO has a democratic structure (it had to accept one in order to enact its founding treaty) but is actually run by an oligarchy. Votes are never taken. Because of the shortcomings of neoliberalism, the main international development bureaucracies as well as much of the academic economics establishment have been busy trying to find plausible scapegoats or excuses. Among these stands out the excuse of corruption in poor countries. But the cases of Zaire (yesterday, the Congo) under Gen. Mobutu and Indonesia under Gen.

Suharto. were flagrantly corrupt, murderous military dictators they received red-carpet treatment by the World Bank and the IMF. Corruption is, of course, a problem, but to say that it is the reason for the spectacular failures of neoliberal economic programs is unconvincing. Another scapegoat is Culture against which List/Chang say that economically successful nations are almost pathologically afraid of competitors coming up from below and therefore try to block their progress by kicking away the ladder. One of the strengths of Chang's new book lies in the half-dozen lucid chapters on development and international trade, with a sound knowledge of history, comments Johnson. The present world lives an allegedly enlightened age of free trade.

Nonetheless, European citizens support their dairy industry with subsidies and tariffs to the tune of 16 billion pounds sterling a year. This amounts to more than 1 pound per cow per day, when half the world's people live on less. The US subsidizes corn and exports it to Mexico, where it is the staple diet of most of the people. These exports, however, drive small Mexican farmers into bankruptcy and encourage their illegal immigration into the United States, where a racist backlash is directed against them. Japan is one of the world's richest countries, with a remarkably even per capita income distribution, but it still lavishly subsidizes its extremely inefficient rice growers and prevents the import of rice that could easily compete on price with domestic rice. Reduction of tariff revenues also plays havoc with national budgets in poor countries.

Because they lack efficient tax collection capabilities and because tariffs are the easiest taxes to collect, developing countries rely heavily on them. Add to this lower level of business activity and higher unemployment that results from IMF-ordered trade liberalizations, which reduce income tax revenue. When such countries are then put under further IMF pressure to reduce their budget deficits, falling revenues mean severe cuts in spending, often eating into vital areas like education, health, and physical infrastructure, damaging long-term growth. "In the long run," writes Chang, "free trade is a policy that is likely to condemn developing countries to specialize in sectors that offer low productivity growth and thus low growth in living standards.

This is why so few countries have succeeded with free trade, while most successful countries have used infant industry protection to one degree or another." According to Chang, "The patent lobby talks nonsense when it argues that there will be no new technological progress without patents." For example, nonprofit organizations, such as universities, subsidize a great deal of research. Some 97 percent of all patents and the vast majority of all copyrights and trademarks are held by economically advanced countries, which use them to deny medicines, textbooks, and computers to underdeveloped countries, exploit epidemics such as HIV/AIDS to extract excess profits, and kick away the ladder for countries trying to catch up. With "Bad Samaritans," Chang has succinctly and comprehensively exposed the chief structures of economic imperialism in the world today. What is now required, says Chalmers Johnson´s review of the book, is the leadership to undermine and dismantle the barriers that keep so much of the world so poor.

(Source: Latin American News Agency)

Reinvent employment guarantee!

Dr. Sudhirendar Sharma

Should employment guarantee mean minion labour for the poor? Could there not be other ways in which the state can compensate its poor?

Suspecting me to be a government official, the tribal in village Gunnar in Koraput district of Orissa rushed forward with their job cards. Not having seen a magic job card that ensures 100 days of guaranteed employment under the National Rural Employment Guarantee Act (NREGA), I was curious to have a careful look at it. To my surprise, all the 42 cards in a 45-household village were blank. Not a single day worth of job was ushered to any of the poor tribals during the past two years. Second year of the UPA government's flagship scheme had come to a close, signalling that almost a million from the country's taxpayers money have been siphoned off from just one village.

With the scheme been extended to the entire country, previously restricted to 330 districts, securing employment rights of such hapless villagers has only become more compelling. While there have been success stories in NREGA files, exceptions fail to correct the abysmal failure of the scheme that could generate only 18 days of average employment across the country during the first two years. In the process, Rs 12,000 crore of taxpayers' money was devoured last year. Incompetent state machinery, riddled with corruption, will only better its previous year's achievement!

All said, the proponents of the scheme argue that there is nothing wrong per se in the idea of assured employment to the rural poor. That all governmental schemes of this magnitude invariably fall short of its targets must therefore be accepted as given. That a large fraction of the money ending up in the pockets of various intermediaries at the cost of the poor must not be frowned upon. An editorial in one of the business magazines has estimated that, in 596 districts where the scheme is being implemented, some 4,000 new millionaries will be created if the money siphoning process is not reversed.

Can the NREGA be made to deliver any better? Spending huge amount of manpower to create non-tangible assets such as kuccha roads, which will be washed away during the rains, could ensure employment but cannot create durable assets. Cleaning of village ponds and creation of water bodies may seem tangible but there is a limit to which these could be done, year after year. No wonder, some economists have even suggested enacting a law to help the government make a minimum monetary transfer to poor households every year. It is argued that if digging the earth is an excuse to distribute money, direct disbursements are sure to work better!

As the employment guarantee scheme transits into new areas, more questions related to defining 'wage work' have started to surface. Farmers in drought-ravaged Bundelkhand region of Uttar Pradesh wonder if tilling one's own land could be considered worthy of wage compensation. Why dig a pit in no-man's land when similar effort can help prepare a piece of farm for cultivation instead? Villagers in Sangrur district of Punjab desire that the workforce they hire from other states should be covered under the employment guarantee scheme, even if it amounts to direct subsidy.

The crucial question, however, is whether the state finds comfort in converting its massive rural communities into minion labour. Further, creating dependent millions may become a huge financial liability too. Can the poor farmers not barter their knowledge instead? Should the tribal not be compensated for preserving country's natural assets? There are several ways in which the productive potential of the economically poor could be assessed, measured and compensated. The poor harbour in them the living culture of survival techniques, of livelihoods ecology, of exquisite handmade objects, and of passionate folk songs.

The tribal households in Gunnar could do without wage labour provided the state can compensate them for their low-carbon lifestyle, evolved after centuries of living in harmony with nature. Converting such vibrant cultures to menial labour is also a crime, when the opportunity cost of such transformation is considered. There has been talk of initiatives to make communities stakeholders in conservation. These financial incentives should not be seen as subsidies, but necessary policy interventions to protect the environment and create wealth via the carbon trade route.

The employment guarantee scheme offers an opportunity for its innovative application across diverse situations, provided flexibility in its implementation is permitted. Since such populist measures find political support of all hues, the challenge will be to convert a resource-guzzling scheme into one that generates wealth and self-respect for the economically weaker sections of the society. A bad script that the NREGA is at present can indeed to turned into a good story!

(Dr. Sharma is a renowned journalist and environmental expert based in New Delhi)

Confessions of a British spy

Our Great Britain is very vast. The sun rises over its seas, and sets, again, below its seas. Our State is relatively weak yet in its colonies in India, China and Middle East. These countries are not entirely under our domination. However, we have been carrying on a very active and successful policy in these places. We shall be in full possession of all of them very soon. Two things are of importance:

1- To try to retain the places we have already obtained;

2- 2- To try to take possession of those places we have not obtained yet.

The Ministry of Colonies assigned a commission from each of the colonies for the execution of these two tasks. As soon as I entered the Ministry of Colonies, the Minister put his trust in me and appointed me the administrator of the company of East India. Outwardly it was a company of trade. But its real task was to search for ways of taking control of the very vast lands of India.

Our government was not at all nervous about India. India was a country where people from various nationalities, speaking different languages, and having contrasting interests lived together. Nor were we afraid of China. For the religions dominant in China were Buddhism and Confucianism, neither of which was much of a threat. Both of them were dead religions that instituted no concern for life and which were no more than forms of addresses. For this reason, the people living in these two countries were hardly likely to have any feelings of patriotism. These two countries did not worry us, the British government. Yet the events that might occur later were not out of consideration for us. Therefore, we were designing long term plans to wage discord, ignorance, poverty, and even diseases in these countries. We were imitating the customs and traditions of these two countries, thus easily concealing our intentions.

What frazzled our nerves most was the Islamic countries. We had already made some agreements, all of which were to our advantage, with the Sick Man (the Ottoman Empire). Experienced members of the Ministry of Colonies predicted that this sick man would pass away in less than a century. In addition, we had made some secret agreements with the Iranian government and placed in these two countries statesmen whom we had made masons. Such corruptions as bribery, incompetent administration and inadequate religious education, which in its turn led to busying with pretty women and consequently to neglect of duty, broke the backbones of these two countries. In spite of all these, we were anxious that our activities should not yield the results we expected, for reasons I am going to cite below:

1- Muslims are extremely devoted to Islam. Every individual Muslims is as strongly attached to Islam as a priest or monk to Christianity, if not more. As it is known, priests and monks would rather die than give up Christianity. The most dangerous of such people are the Shi'ites in Iran. For they put down people who are not Shi'ites as disbelievers and foul people. Christians are like noxious dirt according to Shi'ites. Naturally, one would do one's best to get rid of dirt. I once asked a Shi'ite this: Why do you look on Christians as such? The answer I was given was this: "The Prophet of Islam was a very wise person. He put Christians under a spiritual oppression in order to make them find the right way by joining Allah's religion, Islam. As a matter of fact, it is a State policy to keep a person found dangerous under a spiritual oppression until he pledges obedience. The dirt I am speaking about is not material; it is a spiritual oppression which is not peculiar to Christians alone. It involves Sunnites and all disbelievers. Even our ancient Magian Iranian ancestors are foul according to Shi'ites."

I said to him: "Well! Sunnites and Christians believe in Allah, in Prophets, and in the Judgement Day, too; why should they be foul, then?" He replied, "They are foul for two reasons: They impute mendacity to our Prophet, Hadrat Muhammad may Allah protect us against such an act! (1) And we, in response to this atrocious imputation, follow the rule expressed in the saying, if a person torments you, you can torment him in return', and say to them: 'You are foul.' Second; Christians make offensive allegations about the Prophets of Allah. For instance, they say: Isa (Jesus) 'alaihis-salam' would take (hard) drinks. Because he was accursed, he was crucified." In consternation, I said to the man that Christians did not say so. "Yes, they do," was the answer, "and you don't know. It is written so in the Holy Bible." I became quite. For the man was right in the first respect, if not in the second respect. I did not want to continue the dispute any longer. Otherwise they might be suspicious of me in an Islamic attire as I was. I therefore avoided such disputes.

2- Islam was once a religion of administration and authority. And Muslims were respected. It would be difficult to tell these respectable people that they are slaves now. Nor would it be possible to falsify the Islamic history and say to Muslims: The honour and respect you obtained at one time was the result of some (favourable) conditions. Those days are gone now, and they will never come back.

3- We were very anxious that the Ottomans and Iranians might notice our plots and foil them. Despite the fact that these two States had already been debilitated considerably, we still did not feel certain because they had a central government with property, weaponry, and authority.

4- We were extremely uneasy about the Islamic scholars. For the scholars of Istanbul and Al-adh-har, the Iraqi and Damascene scholars were insurmountable obstacles in front of our purposes. For they were the kind of people who would never compromise their principles to the tiniest extent because they had turned against the transient pleasures and adornments of the world and fixed their eyes on the Paradise promised by Qur'an al-karim. The people followed them. Even the Sultan was afraid of them. Sunnites were not so strongly adherent to scholars as were Shi'ites. For Shiites did not read books; they only recognized scholars, and did not show due respect to the Sultan. Sunnites, on the other hand, read books, and respected scholars and the Sultan.

We therefore prepared a series of conferences. Yet each time we tried we saw with disappointment that the road was closed for us. The reports we received from our spies were always frustrating, and the conferences came to naught. We did not give up hope, though. For we are the sort of people who have developed the habit of taking a deep breath and being patient.

The Minister himself, the highest priestly orders, and a few specialists attended one of our conferences. There were twenty of us. Our conference lasted three hours, and the final session was closed without reaching a fruitful conclusion. Yet a priest said, "Do not worry! For the Messiah and his companions obtained authority only after a persecution that lasted three hundred years. It is hoped that, from the world of the unknown, he will cast an eye on us and grant us the good luck of evicting the unbelievers, (he means Muslims), from their centres, be it three hundred years later. With a strong belief and long-term patience, we must arm ourselves! In order to obtain authority, we must take possession of all sorts of media, try all possible methods. We must try to spread Christianity among Muslims. It will be good for us to realize our goal, even if it will be after centuries. For fathers work for their children."

A conference was held, and diplomats and religious men from Russia and France as well as from England attended. I was very lucky. I, too, attended because I and the Minister were in very good terms. In the conference, plans of breaking Muslims into groups and making them abandon their faith and bringing them round to belief (Christianizing them) like in Spain was discussed. Yet the conclusions reached were not as had been expected. I have written all the talks held in that conference in my book "Ila Malakut-il-Masih."

It is difficult to suddenly uproot a tree that has sent out its roots to the depths of the earth. But we must make hardships easy and overcome them. Christianity came to spread. Our Lord the Messiah promised us this. The bad conditions that the east and the west were in, helped Muhammad. Those conditions being gone, have taken away the nuisances (he means Islam) that accompanied them. We observe with pleasure today that the situation has changed completely. As a result of great works and endeavours of our ministry and other Christian governments Muslims are on the decline now. Christians, on the other hand, are gaining ascendancy. It is time we retook the places we lost throughout centuries. The powerful State of Great Britain pioneers this blessed task.

(Source: Waqf Ikhlas, Istanbul)

Iraq numbers tell grim story

Dr. Mohamed Elmasry

It is sad these days to meet Iraqi academic and political leaders a full five years after the March 2003 American-led invasion and occupation of their country.

One cannot help being touched in heart and mind by their stories about witnessing death, destruction and despair on a scale unprecedented since the Middle Ages. Recently, I was among those listeners moved by what they shared of their experiences.

When I admitted regretfully that I did not visit Iraq prior to the 2003 occupation (although I had traveled to its neighbor states), my Iraqi colleagues commented that if I had visited their homeland then, and gone back to see it now, I would be shocked at the low state of public security, the high death rates and the general malaise that accompanies the widespread destruction and misery of any prolonged war-zone.

All the Iraqi expatriates or exiles with whom I spoke emphasized that Washingtonâ€™s repeated assertion that civil war will break out as soon as American and coalition troops leave, is a big propaganda lie. They were unanimous in their belief that Iraqâ€™s own political authorities are capable of peacefully resolving their differences and that nothing would do more for national reconciliation than for the entire country to be free of Americaâ€™s "liberation" forces.

In fact, the prevailing informed opinion of Iraqis both inside and outside their country is that the presence of occupation forces is the greatest single factor contributing to the incitement and proliferation of factional and sectarian violence. More than 80 per cent of Iraqis want the occupation to end, sooner rather than later; they are tired of seeing their country divided and shattered under an ineffectual puppet government. Among the remaining 20 percent are politicians exploiting the American occupation to enlarge their own wealth and power.

These conclusions are not merely anecdotal; they have been confirmed by experts such as Karen de Young in the Washington Post, when she recently reported on a focus group study done in Iraq and released in December 2007.

This survey, she wrote, "provides very strong evidence" that national reconciliation is possible and anticipated, contrary to what's being claimed. It was found that a sense of "optimistic possibility permeated all focus groups and far more commonalities than differences are found among these seemingly diverse groups of Iraqis" from all over the country and all walks of life. This discovery of "shared beliefs" among Iraqis throughout the country is "good news, according to a military analysis of the results."

But here is the shocking contrast of some other numbers that America is trying to ignore.

More than one million Iraqis have been killed over the past five years, a large number of them civilians, especially women, children, the elderly and the ill. The British polling agency, Oxford Research Bureau, estimates the Iraqi death toll to be even greater, at 1.3 million.

Today in Iraq there are more than one million widows, most of them under 30 years of age, and a staggering five million orphans. Of these, 1.6 million are under 12. All of these millions are destitute and many are homeless as well. An increasing number support themselves and their families through prostitution, according to beleaguered Iraqi humanitarian aid organizations, whose meagre resources cannot begin to address the scope of need.

The drop-out rate among school children is at an all-time high of 33 per cent. Urgently needed social services, such as mental health and therapeutic counseling for school-aged children - some of whom have lost all members of their immediate families-is almost non-existent.

Even further marginalized beyond the reach of most relief resources are the estimated three million Iraqis with special physical and mental needs; many of them require constant medical care and are not receiving it.

Contrary to U.S. president George Bushâ€™s claim that an influx of 30,000 more American troops last year quelled bloodshed, preventable deaths from all causes are in fact rising in Iraq. Deaths rose again sharply in February and early March of this year. New figures from the Iraqi government also indicate that civilian casualties in February 2008 were 33 percent higher than in January.

Internal and external displacement is another under-appreciated crisis that has ravaged Iraq over the past five years under occupation. More than 150,000 Iraqis languish in American military prisons, or in those of the puppet Iraqi government. Many of these prisoners are women and children, aged eight to 14.

Three million civilians have left their homes in and near conflict zones and moved to remoter parts of the country in hopes of greater safety. Another four million have become destitute refugees, mainly in Syria and Jordan. Their numbers have overwhelmed the aid resources of both countries, resulting in one of the worst - and most under-reported-humanitarian disasters of recent history.

Unemployment has reached a staggering 90 percent and there is a crisis in skilled services resulting from the deaths of some 400 professionals, including doctors, nurses, professors and teachers. As a result, medical facilities are almost non-functional and no sustained care or treatment can be given to people with serious conditions, or illnesses such as cancer. Electricity is available for only a few hours every day, and only 25 percent of schools and universities are even minimally functional.

Food staples, when available (and often, they are not) are distributed through monthly ration cards, while at the same time Iraqâ€™s oil resources are being robbed-literally from under the nationâ€™s feet - by American interests who are providing no fiscal accountability to anyone. Not surprisingly, Iraqis believe that the U.S. is financing its $3 trillion war against them by looting their oil.

Ironically, they can no longer afford to use their countryâ€™s only economic resource - consumer prices for gasoline and other kinds of petroleum-derived fuels have gone up by an incredible 2000 percent since the American invasion, while other services (when you can get them) have risen 100 to 150 per cent above pre-occupation levels.

The fear and resentment of Iraqis are borne out by comments from Paul Wolfowitz who when Deputy Secretary of Defense, stated that much of the warâ€™s cost could be covered by Iraqi oil revenues, since the country is after all, floating on "a sea of oil."

Furthermore, Wolfowitz told a Congressional hearing: "To assume we're going to pay for it all is just wrong." His statement did not address the human cost to America -- 4,000 U.S. soldiers killed and more than 60,000 wounded - much less the disproportionally greater loss of Iraqi lives and livelihoods.

American journalist Nir Rosen, who has witnessed death, destruction and misery in Iraq over the past five years, wrote in The Death of Iraq (an article appearing in Current History): "The American occupation has been more disastrous than that of the Mongols, who sacked Baghdad in the thirteenth century."

My Iraqi friends in Cairo sadly agree.

(Dr. Mohamed Elmasry is national president of the Canadian Islamic Congress. He can be reached at np@canadianislamicc ongress.com)