LOOKOUT
The Rise of Disaster
Capitalism by Naomi Klein
" We used to have vulgar
colonialism ", says Shalmali Guttal, a
Bangalore-based researcher with Focus on the Global
South. " Now we have sophisticated colonialism, and
they call it 'reconstruction'. '"
Last summer, in the lull of the August media doze, the
Bush Administration's
doctrine of preventive war took a major leap forward. On
August 5, 2004, the White House created the Office of the
Coordinator for Reconstruction and Stabilization, headed
by former US Ambassador to Ukraine Carlos Pascual. Its
mandate is to draw up elaborate "post-conflict"
plans for up to twenty-five countries that are not, as of
yet, in conflict. According to Pascual, it will also be
able to coordinate three full-scale reconstruction
operations in different countries "at the same
time," each lasting "five to seven years."
Mr. Pascual was named Coordinator for U.S.
Assistance to Europe and Eurasia in September
2003. He guided the development of regional and
country assistance strategies to promote
market-oriented and democratic states and to
ensure that U.S. assistance reinforces American
interests. He managed the allocation and
implementation of approximately $1.1 billion in
annual assistance. Mr. Pascual served as U.S.
Ambassador to Ukraine from October 2000-August
2003. He oversaw U.S. policy focused on promoting
Ukrainian reforms critical to its integration
with the Euro-Atlantic community. Key priorities
included strengthening grassroots democratic
initiatives, promoting counter-terrorism and
non-proliferation, and building a strong private
sector. Mr. Pascual served as Special Assistant
to the President and Senior Director for Russia,
Ukraine, and Eurasia from July 1998 to January
2000. He advised the President on U.S. policy to
advance security interests with Russia and reduce
proliferation risks. Mr. Pascual guided U.S.
policy to encourage Ukraines commitment to
democratic and market reforms and to address
stability, security, and democracy concerns in
the Caucasus and Central Asia. From June 1995 to
July 1998,
Mr. Pascual was Director for Russian, Ukrainian
and Eurasian Affairs at the National Security
Council (NSC), responsible for economic policy
and for Ukraine, Moldova, and Belarus. Prior to
his work at the NSC, Mr. Pascual was Deputy
Assistant Administrator for Europe and the New
Independent States at the U.S. Agency for
International Development from February 1994 to
June 1995. Mr. Pascual oversaw budget and policy
development for USAIDs annual programs of
$1.2 billion in the region. In June 1992, Mr.
Pascual became Director of the Office of Program
Analysis and Coordination for the New Independent
States Task Force. Mr. Pascual joined USAID in
1983. He served in Sudan (1983-1986), South
Africa (1986-1988), Mozambique (1989-1991), and
in Washingtons Africa Bureau (1991-1992). |
Fittingly, a government devoted to perpetual pre-emptive
de-construction now has a standing office of perpetual
pre-emptive reconstruction.
Gone are the days of waiting for wars to break out and
then drawing up ad hoc plans to pick up the pieces. In
close cooperation with the National Intelligence Council,
Pascual's office keeps "high risk" countries on
a "watch list" and assembles rapid-response
teams ready to engage in prewar planning and to
"mobilize and deploy quickly" after a conflict
has gone down. The teams are made up of private
companies, on-governmental organizations and members of
think tanks -- some, Pascual told an audience at the
Center for Strategic and International Studies in
October, will have "pre-completed" contracts to
rebuild countries that are not yet broken. Doing this
paperwork in advance could "cut off three to six
months in your response time."
The plans Pascual's teams have been drawing up in his
little-known office in the State Department are about
changing "the very social fabric of a nation",
he told CSIS. The office's mandate is not to rebuild any
old states, you see, but to create "democratic and
market-oriented" ones. So, for instance (and he was
just pulling this example out of his hat, no doubt), his
fast-acting reconstructors might help sell off
"state-owned enterprises that created a nonviable
economy." Sometimes rebuilding, he explained, means
"tearing apart the old."
Few ideologues can resist the allure of a blank slate --
that was colonialism's seductive promise:
"discovering" wide-open new lands where utopia
seemed possible. But colonialism is dead, or so we are
told; there are no new places to discover, no terra
nullius (there never was), no more blank pages on which,
as Mao once said, "the newest and most beautiful
words can be written." There is,
however, plenty of destruction--countries smashed to
rubble, whether by so-called Acts of God or by Acts of
Bush (on orders from God). And where there is destruction
there is reconstruction, a chance to grab hold of
"the terrible barrenness", as a UN official
recently described the devastation in Aceh, and fill it
with the most perfect, beautiful plans.
" We used to have vulgar colonialism ", says
Shalmali Guttal, a Bangalore-based researcher with Focus
on the Global South. " Now we have sophisticated
colonialism, and they call it 'reconstruction'. '"
It certainly seems that ever-larger portions of the globe
are under active reconstruction: being rebuilt by a
parallel government made up of a familiar cast of
for-profit consulting firms, engineering companies,
mega-NGOs, government and UN aid agencies and
international financial institutions. And from the people
living in these reconstruction sites -- Iraq to Aceh,
Afghanistan to Haiti -- a similar chorus of complaints
can be heard. The work is far too slow, if it is
happening at all. Foreign consultants live high on
cost-plus expense accounts and thousand-dollar-a-day
salaries, while locals are shut out of much-needed jobs,
training and decision-making. Expert "democracy
builders" lecture governments on the importance of
transparency and "good governance", yet most
contractors and NGOs refuse to open their books to those
same governments, let alone give them control over how
their aid money is spent.
Three months after the tsunami hit Aceh, the New York
Times ran a distressing story reporting that "almost
nothing seems to have been done to begin repairs and
rebuilding." The dispatch could easily have come
from Iraq, where, as the Los Angeles Times just reported,
all of Bechtel's allegedly rebuilt water plants have
started to break down, one more in an endless litany of
reconstruction screw-ups. It could also have come from
Afghanistan, where President Hamid Karzai recently
blasted "corrupt, wasteful and unaccountable"
foreign contractors for "squandering the precious
resources that Afghanistan received in aid". Or from
Sri Lanka, where 600,000 people who lost their homes in
the tsunami are still languishing in temporary camps. One
hundred days after the giant waves hit, Herman Kumara,
head of the National Fisheries Solidarity Movement in
Negombo, Sri Lanka, sent out a desperate e-mail to
colleagues around the world. "The funds received for
the benefit of the victims are directed to the benefit of
the privileged few, not to the real victims", he
wrote. "Our voices are not heard and not allowed to
be voiced".
But if the reconstruction industry is stunningly inept at
rebuilding, that may be because rebuilding is not its
primary purpose. According to Guttal, "It's not
reconstruction at all--it's about reshaping
everything". If anything, the stories of corruption
and incompetence serve to mask this deeper scandal: the
rise of a predatory form of disaster capitalism that uses
the desperation and fear created by catastrophe to engage
in radical social and economic engineering. And on this
front, the reconstruction industry works so quickly and
efficiently that the privatizations and land grabs are
usually locked in before the local population knows what
hit them. Kumara, in another e-mail, warns that Sri Lanka
is now facing "a second tsunami of corporate
globalization and militarization", potentially even
more devastating than the first. "We see this as a
plan of action amidst the tsunami crisis to hand over the
sea and the coast to foreign corporations and tourism,
with military assistance from the US Marines."
As Deputy Defense Secretary, Paul Wolfowitz designed and
oversaw a strikingly similar project in Iraq: The fires
were still burning in Baghdad when US occupation
officials rewrote the investment laws and announced that
the country's state-owned companies would be privatized.
Some have pointed to this track record to argue that
Wolfowitz is unfit to lead the World Bank; in fact,
nothing could have prepared him better for his new job.
In Iraq, Wolfowitz was just doing what the World Bank is
already doing in virtually every war-torn and
disaster-struck country in the world--albeit with fewer
bureaucratic niceties and more ideological bravado.
"Post-conflict" countries now receive 20-25
percent of the World Bank's total lending, up from 16
percent in 1998 -- itself an 800 percent increase since
1980, according to a Congressional Research Service
study. Rapid response to wars and natural disasters has
traditionally been the domain of United Nations agencies,
which worked with NGOs to provide emergency aid, build
temporary housing and the like. But now reconstruction
work has been revealed as a tremendously lucrative
industry, too important to be left to the do-gooders at
the UN. So today it is the World Bank, already devoted to
the principle of poverty-alleviation through
profit-making, that leads the charge.
And there is no doubt that there are profits to be made
in the reconstruction business. There are massive
engineering and supplies contracts ($10 billion to
Halliburton in Iraq and Afghanistan alone);
"democracy building" has exploded into a $2
billion industry; and times have never been better for
public-sector consultants -- the private firms that
advise governments on selling off their assets, often
running government services themselves as subcontractors.
(Bearing Point, the favored of these firms in the United
States, reported that the revenues for its "public
services" division "had quadrupled in just five
years," and the profits are huge: $342 million in
2002 -- a profit margin of 35 percent.)
But shattered countries are attractive to the World Bank
for another reason: They take orders well. After a
cataclysmic event, governments will usually do whatever
it takes to get aid dollars--even if it means racking up
huge debts and agreeing to sweeping policy reforms. And
with the local population struggling to find shelter and
food, political organizing against privatization can seem
like an unimaginable luxury.
Even better from the bank's perspective, many war-ravaged
countries are in states of "limited
sovereignty": They are considered too unstable and
unskilled to manage the aid money pouring in, so it is
often put in a trust fund managed by the World Bank. This
is the case in East Timor, where the bank doles out money
to the government as long as it shows it is spending
responsibly. Apparently, this means slashing
public-sector jobs (Timor's government is half the size
it was under Indonesian occupation) but lavishing aid
money on foreign consultants the bank insists the
government hire (researcher Ben Moxham writes, "In
one government department, a single international
consultant earns in one month the same as his twenty
Timorese colleagues earn together in an entire
year").
In Afghanistan, where the World Bank also administers the
country's aid through a trust fund, it has already
managed to privatize health-care by refusing to give
funds to the Ministry of Health to build hospitals.
Instead it funnels money directly to NGOs, which are
running their own private health clinics on three-year
contracts. It has also mandated "an increased role
for the private sector" in the water system,
telecommunications, oil, gas and mining and directed the
government to "withdraw" from the electricity
sector and leave it to "foreign private
investors." These profound transformations of Afghan
society were never debated or reported on, because few
outside the bank know they took place: The changes were
buried deep in a "technical annex" attached to
a grant providing "emergency" aid to
Afghanistan's war-torn infrastructure--two years before
the country had an elected government.
It has been much the same story in Haiti, following the
ouster of President Jean-Bertrand Aristide. In exchange
for a $61 million loan, the bank is requiring
"public-private partnership and governance in the
education and health sectors", according to bank
documents -- i.e., private companies running schools and
hospitals. Roger Noriega, US Assistant Secretary of State
for Western Hemisphere Affairs, has made it clear that
the Bush Administration shares these goals. "We will
also encourage the government of Haiti to move forward,
at the appropriate time, with restructuring and
privatization of some public sector enterprises," he
told the American Enterprise Institute on April 14, 2004.
These are extraordinarily controversial plans in a
country with a powerful socialist base, and the bank
admits that this is precisely why it is pushing them now,
with Haiti under what approaches military rule. "The
Transitional Government provide[s] a window of
opportunity for implementing economic governance
reforms...that may be hard for a future government to
undo", the bank notes in its Economic Governance
Reform Operation Project agreement. For Haitians, this is
a particularly bitter irony: Many blame multilateral
institutions, including the World Bank, for deepening the
political crisis that led to Aristide's ouster by
withholding hundreds of millions in promised loans. At
the time, the Inter-American Development Bank, under
pressure from the State
Department, claimed Haiti was insufficiently democratic
to receive the money, pointing to minor irregularities in
a legislative election. But now that Aristide is out, the
World Bank is openly celebrating the perks of operating
in a democracy-free zone.
The World Bank and the International Monetary Fund have
been imposing shock therapy on countries in various
states of shock for at least three decades, most notably
after Latin America's military coups and the collapse of
the Soviet Union. Yet many observers say that today's
disaster capitalism really hit its stride with Hurricane
Mitch. For a week in October 1998, Mitch parked itself
over Central America, swallowing villages whole and
killing more than 9,000. Already impoverished countries
were desperate for reconstruction aid--and it came, but
with strings attached. In the two months after Mitch
struck, with the country still knee-deep in rubble,
corpses and mud, the Honduran congress initiated what the
Financial Times called "speed sell-offs after the
storm." It passed laws allowing the privatization of
airports, seaports and highways and fast-tracked plans to
privatize the state telephone company, the national
electric company and parts of the water sector. It
overturned land-reform laws and made it easier for
foreigners to buy and sell property. It was much the same
in neighboring countries: In the same two months,
Guatemala announced plans to sell off its phone system,
and Nicaragua did likewise, along with its electric
company and its petroleum sector.
All of the privatization plans were pushed aggressively
by the usual suspects. According to the Wall Street
Journal, "the World Bank and International Monetary
Fund had thrown their weight behind the [telecom] sale,
making it a condition for release of roughly $47 million
in aid annually over three years and linking it to about
$4.4 billion in foreign-debt relief for Nicaragua".
Now the bank is using the December 26 tsunami to push
through its cookie-cutter policies. The most devastated
countries have seen almost no debt relief, and most of
the World Bank's emergency aid has come in the form of
loans, not grants. Rather than emphasizing the need to
help the small fishing communities -- more than 80
percent of the wave's victims -- the bank is pushing for
expansion of the tourism sector and industrial fish
farms. As for the damaged public infrastructure, like
roads and schools, bank documents recognize that
rebuilding them "may strain public finances"
and suggest that governments consider privatization (yes,
they have only one idea). "For certain
investments," notes the bank's tsunami-response
plan, "it may be appropriate to utilize private
financing".
As in other reconstruction sites, from Haiti to Iraq,
tsunami relief has little to do with recovering what was
lost. Although hotels and industry have already started
reconstructing on the coast, in Sri Lanka, Thailand,
Indonesia and India, governments have passed laws
preventing families from rebuilding their oceanfront
homes. Hundreds of thousands of people are being forcibly
relocated
inland, to military style barracks in Aceh and prefab
concrete boxes in Thailand. The coast is not being
rebuilt as it was -- dotted with fishing villages and
beaches strewn with handmade nets. Instead, governments,
corporations and foreign donors are teaming up to rebuild
it as they would like it to be: the beaches as
playgrounds for tourists, the oceans as watery mines for
corporate fishing fleets, both serviced by privatized
airports and highways built on borrowed money.
In January Condoleezza Rice sparked a small controversy
by describing the
tsunami as "a wonderful opportunity" that
"has paid great dividends for us". Many were
horrified at the idea of treating a massive human tragedy
as a chance to seek advantage. But, if anything, Rice was
under-stating the case. A group calling itself Thailand
Tsunami Survivors and Supporters says that for
"businessmen-politicians, the tsunami was the answer
to their prayers, since it literally wiped these coastal
areas clean of the communities which had previously stood
in the way of their plans for resorts, hotels, casinos
and shrimp farms. To them, all these coastal areas are
now open land!".
Disaster, it seems, is the new terra nullius.
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