Friday, February 8, 2008

Compassionate Capitalism and Humanitarian Aid: Bolivia then and Iraq now

Selling rain to the poor: Bolivia, Cochabamba, end of 2001

Please note that the description by the youtube poster is wrong: the country in question was Bolivia. City of Cochabamba, Bolivia, end of 2001.

From article on the subject:

In November 2001 Bechtel sued the country of Bolivia for $25 million for canceling a contract to run the water system of Cochabamba, the third largest city in the country, after local people took to the streets to protest massive price hikes for water.

Aguas de Tunari, the local water company which supplies an estimated 500,000 people in the region, was being managed at the time under a newly awarded 40 year contract by International Water Limited, a subsidiary of Bechtel corporation of San Francisco, the construction multinational.

Bechtel got the contract as a result of the World Bank's aggressive pressure campaign on Bolivia to privatize state enterprises. "Bank water officials believe in privatization - the way other people believe in Jesus, Mohammed, Moses, and Buddha," says Jim Schultz, an activist from California who lives in Cochabamba where he runs an organization named the Democracy Center.

The price hikes that triggered the water war were driven by a 16 percent guaranteed rate of return negotiated by Bechtel's affiliate and the need to pay off a $30 million debt owed by the previous public water company.

The debt works out to roughly Bechtel's revenues for half a day. "In Bolivia that is the annual cost for hiring 3,000 rural doctors, or 12,000 public school teachers, or hooking up 125,000 families who don't have access to the public water system," says Schultz.

Bechtel says that the price hikes were minimal. "For the poorest people in Cochabamba rates went up little, barely 10 percent," says Gail Apps, a spokeswoman for Riley Bechtel, the chief executive of the company.
But Jim Schultz disagrees. Copies of actual water bills show that in December 1999, before Bechtel's rate hikes took effect, Cochabamba resident Lucio Morales had a monthly water bill of 25 Bolivianos (about $4.16).

Classified "R-2" Morales' household is among the very poorest of the poor, usually with an indoor toilet, no indoor shower and maybe a water tap in the yard. Typically these families survive by selling vegetables or other items in the street and work well below the current minimum wage of $67 per month.

In February, after Bechtel's price hikes took effect, Morales' water bill jumped to 39.80 Bolivianos ($6.63), a jump of 60% not 10% as Bechtel claims. As the bill indicates, there is no meter reading, no increase in water use. This is one of many houses that have no water meter and billed based on a basic rate. This bill would amount to more than 10% of the monthly minimum wage at the time.

While Bechtel appears for the moment to have the upper hand in the Bolivian lawsuit, the corporate giant has not been as lucky in its hometown of San Francisco. The Board of Supervisors voted last June to cancel a $45 million program management contract awarded to Bechtel in 2000 by the city government to oversee the reconstruction of the Hetch Hetchy public water system.

The vote took place soon after a four month investigation by the San Francisco Bay Guardian, a local alternative weekly, showed that out of nearly $8 million paid out to Bechtel for its first year of work, at least $5 million was a complete and total waste of money.

"In some cases the waste is astonishing: for instance, Bechtel took a city database of projects, resorted the information, transformed the data into a different format - and sold it back to the city for nearly $500,000," wrote reporter Savannah Blackwell.

Other examples of Bechtel's over-billing included tens of thousands of dollars' worth of personal expenses for Bechtel employees including laundry service, numerous meals at fancy restaurants, a $54 tab at Happy Donuts, and in one case, an umbrella and a dental pick. The city is paying far more for Bechtel staffers than it pays own employees who receive no such perks, making Bechtel extremely unpopular in its own hometown.

Oil is not the only resource in play.

This is done using economic pressure, using the World Bank (which is supposed to help poor countries) loans as a pressure to force a country which takes the loan to accept many weird stipulations, mostly dealing with privatisation of a country's resources (like oil, water, natural gas) so that US and other Western companies can take them over.

Oh and when they talked about charging people for rain water in Bolivia? According to Australian Newspaper theage, they were not kidding: "The contract gave the company control over groundwater and allowed it to close down people's private wells unless they paid Aguas del Tunari for the water. Union leader Oscar Olivera said: "They wanted to privatise the rain." When protests erupted throughout the city of 450,000 in 2000, police and army troops were called in. They killed two people. The government reacted by cancelling the concession."

Stealing a country: Iraq, whole, present day
If you take a look at Iraq, the same crazy zealous neo con fanatics that tried to do the privatization of everything in Bolivia thru the pressure applied by the World Bank, now do the same thing - in Iraq. The neocons are fanatics, pro business zealots, whose belief in the American style pro business "democracy" is as strong as that of the Jihadists who blow themselves up as human bombs believe in the paradise that will await them when they go to Islamic heaven.

Baghdad year zero:
Pillaging Iraq in pursuit of a neocon utopia by Naomi Klein

Then I saw it: a construction crane. It was big and yellow and impressive, and when I caught a glimpse of it around a corner in a busy shopping district I thought that I was finally about to witness some of the reconstruction I had heard so much about. But as I got closer I noticed that the crane was not actually rebuilding anything—not one of the bombed-out government buildings that still lay in rubble all over the city, nor one of the many power lines that remained in twisted heaps even as the heat of summer was starting to bear down. No, the crane was hoisting a giant billboard to the top of a three-story building. SUNBULAH: HONEY 100% NATURAL, made in Saudi Arabia.

Seeing the sign, I couldn't help but think about something Senator John McCain had said back in October. Iraq, he said, is “a huge pot of honey that's attracting a lot of flies.” The flies McCain was referring to were the Halliburtons and Bechtels, as well as the venture capitalists who flocked to Iraq in the path cleared by Bradley Fighting Vehicles and laser-guided bombs. The honey that drew them was not just no-bid contracts and Iraq's famed oil wealth but the myriad investment opportunities offered by a country that had just been cracked wide open after decades of being sealed off, first by the nationalist economic policies of Saddam Hussein, then by asphyxiating United Nations sanctions.

Looking at the honey billboard, I was also reminded of the most common explanation for what has gone wrong in Iraq, a complaint echoed by everyone from John Kerry to Pat Buchanan: Iraq is mired in blood and deprivation because George W. Bush didn't have “a postwar plan.” The only problem with this theory is that it isn't true. The Bush Administration did have a plan for what it would do after the war; put simply, it was to lay out as much honey as possible, then sit back and wait for the flies.

* * *

The honey theory of Iraqi reconstruction stems from the most cherished belief of the war's ideological architects: that greed is good. Not good just for them and their friends but good for humanity, and certainly good for Iraqis. Greed creates profit, which creates growth, which creates jobs and products and services and everything else anyone could possibly need or want. The role of good government, then, is to create the optimal conditions for corporations to pursue their bottomless greed, so that they in turn can meet the needs of the society. The problem is that governments, even neoconservative governments, rarely get the chance to prove their sacred theory right: despite their enormous ideological advances, even George Bush's Republicans are, in their own minds, perennially sabotaged by meddling Democrats, intractable unions, and alarmist environmentalists.

Iraq was going to change all that. In one place on Earth, the theory would finally be put into practice in its most perfect and uncompromised form. A country of 25 million would not be rebuilt as it was before the war; it would be erased, disappeared. In its place would spring forth a gleaming showroom for laissez-faire economics, a utopia such as the world had never seen. Every policy that liberates multinational corporations to pursue their quest for profit would be put into place: a shrunken state, a flexible workforce, open borders, minimal taxes, no tariffs, no ownership restrictions.
The tone of Bremer's tenure was set with his first major act on the job: he fired 500,000 state workers, most of them soldiers, but also doctors, nurses, teachers, publishers, and printers. Next, he flung open the country's borders to absolutely unrestricted imports: no tariffs, no duties, no inspections, no taxes. Iraq, Bremer declared two weeks after he arrived, was “open for business.”

One month later, Bremer unveiled the centerpiece of his reforms. Before the invasion, Iraq's non-oil-related economy had been dominated by 200 state-owned companies, which produced everything from cement to paper to washing machines. In June, Bremer flew to an economic summit in Jordan and announced that these firms would be privatized immediately. “Getting inefficient state enterprises into private hands,” he said, “is essential for Iraq's economic recovery.” It would be the largest state liquidation sale since the collapse of the Soviet Union.

In September, to entice foreign investors to come to Iraq, he enacted a radical set of laws unprecedented in their generosity to multinational corporations. There was Order 37, which lowered Iraq's corporate tax rate from roughly 40 percent to a flat 15 percent. There was Order 39, which allowed foreign companies to own 100 percent of Iraqi assets outside of the natural-resource sector (meaning us Americans would get the oil -AG). Even better, investors could take 100 percent of the profits they made in Iraq out of the country; they would not be required to reinvest and they would not be taxed. Under Order 39, they could sign leases and contracts that would last for forty years. Order 40 welcomed foreign banks to Iraq under the same favorable terms. All that remained of Saddam Hussein's economic policies was a law restricting trade unions and collective bargaining (of course, in a neocon free market utopia unions are illegal -AG.

That autumn was awash in “rebuilding Iraq” trade shows, in Washington, London, Madrid, and Amman. The Economist described Iraq under Bremer as “a capitalist dream,” and a flurry of new consulting firms were launched promising to help companies get access to the Iraqi market, their boards of directors stacked with well-connected Republicans. The most prominent was New Bridge Strategies, started by Joe Allbaugh, former Bush-Cheney campaign manager. “Getting the rights to distribute Procter & Gamble products can be a gold mine,” one of the company's partners enthused. “One well-stocked 7-Eleven could knock out thirty Iraqi stores; a Wal-Mart could take over the country.”

In only a few months, the postwar plan to turn Iraq into a laboratory for the neocons had been realized. Leo Strauss may have provided the intellectual framework for invading Iraq preemptively, but it was that other University of Chicago professor, Milton Friedman, author of the anti-government manifesto Capitalism and Freedom, who supplied the manual for what to do once the country was safely in America's hands. This represented an enormous victory for the most ideological wing of the Bush Administration.

Many of the other CPA postings were equally ideological. The Green Zone, the city within a city that houses the occupation headquarters in Saddam's former palace, was filled with Young Republicans straight out of the Heritage Foundation, all of them given responsibility they could never have dreamed of receiving at home. Jay Hallen, a twenty-four-year-old who had applied for a job at the White House, was put in charge of launching Baghdad's new stock exchange (unfortunately this is all true, and not a joke -AG). Scott Erwin, a twenty-one-year-old former intern to Dick Cheney, reported in an email home that “I am assisting Iraqis in the management of finances and budgeting for the domestic security forces.” The college senior's favorite job before this one? “My time as an ice-cream truck driver.” (also, scary enough, true; multiple sources on this -AG) In those early days, the Green Zone felt a bit like the Peace Corps, for people who think the Peace Corps is a communist plot. It was a chance to sleep on cots, wear army boots, and cry “incoming”—all while being guarded around the clock by real soldiers.

The teams of KPMG accountants, investment bankers, think-tank lifers, and Young Republicans that populate the Green Zone have much in common with the IMF missions that rearrange the economies of developing countries from the presidential suites of Sheraton hotels the world over. Except for one rather significant difference: in Iraq they were not negotiating with the government to accept their “structural adjustments” in exchange for a loan; they were the government. (this is THE KEY point in all of this - AG)

So how did the young republicans and other assorted neocon scum live in the Green Zone? Passage from Imperial Life in the Emerald City by Rajiv Chandrasekaran:

Chapter 1
Versailles on the Tigris

UNLIKE ALMOST ANYWHERE else in Baghdad, you could dine at the cafeteria in the Republican Palace for six months and never eat hummus, flatbread, or a lamb kebab. The fare was always American, often with a Southern flavor. A buffet featured grits, cornbread, and a bottomless barrel of pork: sausage for breakfast, hot dogs for lunch, pork chops for dinner. There were bacon cheeseburgers, grilled-cheese-and-bacon sandwiches, and bacon omelets. Hundreds of Iraqi secretaries and translators who worked for the occupation authority had to eat in the dining hall. Most of them were Muslims, and many were offended by the presence of pork. But the American contractors running the kitchen kept serving it. The cafeteria was all about meeting American needs for high-calorie, high-fat comfort food.

None of the succulent tomatoes or the crisp cucumbers grown in Iraq made it into the salad bar. U.S. government regulations dictated that everything, even the water in which hot dogs were boiled, be shipped in from approved suppliers in other nations. Milk and bread were trucked in from Kuwait, as were tinned peas and carrots. The breakfast cereal was flown in from the United States–made-in-the-USA. Froot Loops and Frosted Flakes at the breakfast table helped boost morale.

Through its gilded doors, Halliburton, the defense contractor hired to run the palace, brought in dozens of tables, hundreds of stacking chairs, and a score of glass-covered buffets. Seven days a week, the Americans ate under Saddam's crystal chandeliers.

Red and white linens covered the tables. Diners sat on chairs with maroon cushions. A pleated skirt decorated the salad bar and the dessert table, which was piled high with cakes and cookies. The floor was polished after every meal.

The kitchen, which had once prepared gourmet meals for Saddam, had been converted into an institutional food—processing center, with a giant deep fryer and bathtub-size mixing bowls. Halliburton had hired dozens of Pakistanis and Indians to cook and serve and clean, but no Iraqis. Nobody ever explained why, but everyone knew. They could poison the food.

The Pakistanis and the Indians wore white button-down shirts with black vests, black bow ties, and white paper hats. (isn't globalization just great for non Americans? What is this, a cruise ship? -AG) The Kuwaiti subcontractor who kept their passports and exacted a meaty profit margin off each worker also dinned into them American lingo. When I asked one of the Indians for French fries, he snapped: "We have no French fries here, sir. Only freedom fries." (this sentence always gets me - an Indian worker mouthing neocon political buzzwords -AG).

If you had a complaint about the cafeteria, Michael Cole was the man to see. He was Halliburton's "customer-service liaison," and he could explain why the salad bar didn't have Iraqi produce or why pork kept appearing on the menu. If you wanted to request a different type of breakfast cereal, he'd listen. Cole didn't have the weathered look of a war-zone concierge. He was a rail-thin twenty-two-year-old whose forehead was dotted with pimples.

He had been out of college for less than a year and was working as a junior aide to a Republican congressman from Virginia when a Halliburton vice president overheard him talking to friends in an Arlington bar about his dealings with irate constituents. She was so impressed that she introduced herself. If she needed someone to work as a valet in Baghdad, he joked, he'd be happy to volunteer. Three weeks later, Halliburton offered him a job. Then they asked for his résumé. (this is beyond surreal - AG)

The next point is key:
"Whatever could be outsourced was. The job of setting up town and city councils was performed by a North Carolina firm for $236 million. The job of guarding the viceroy was assigned to private guards, each of whom made more than $1,000 a day. For running the palace–cooking the food, changing the lightbulbs, doing the laundry, watering the plants– Halliburton had been handed hundreds of millions of dollars."

So no Iraqis were allowed to work in their own country's government; or at least as few as possible.

How did Mr. Bremer, who singlehandedly started the insurgency in Iraq (by his one decision to dissolve the Army, turning hundreds of thousands of soldiers into unemployed bums overnight, and by his second decision of actually implementing the insane neocon fantasy privatisation policies "free" market) do?

Not too bad:
"Halliburton had been hired to provide "living support" services to the CPA. What that meant kept evolving. When the first Americans arrived in Baghdad in the weeks after Saddam's government was toppled, all anyone wanted was food and water, laundry service, and air-conditioning. By the time Cole arrived, in August 2003, four months into the occupation, the demands had grown. The viceroy's house had to be outfitted with furniture and art suitable for a head of state. The Halliburton-run sports bar at the al-Rasheed Hotel needed a Foosball table. The press conference room required large-screen televisions."

So how did people of Iraq take to the American "democracy" and American "free" market, brought to them by American Abrams tanks and Bradley fighting vehicles?

Perhaps this website will give you a clue.

They must hate us for our freedoms...

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Anonymous said...

i enjoyed this post. when our military was prosecuting the war proper, i remember feeling quite alarmed by the executive branch's lack of post-war planning. i blamed the military for doing a poor job or, perhaps, not saying enough; the execute branch for their arrogance, etc. you make a good point in saying that, in fact, they DID have a plan, albeit an incredibly incompetent one.

it's a shame, because we saw post-war reconstruction work (more or less) after WWII. japan and germany did quite well in a relatively short period of time, and we (the U.S.) made money as the primary supplier / last man standing economically. now it seems like we've progressed to outright plutocracy / oligarchy with the end result being a sort of economic tyranny over not only foreign citizenry but even the public at home.

you should do a future post detailing some of the incidents involving blackwater security, a story that received minimal coverage in the U.S. news media. you should be able to find scads of information on the net. i read quite a few good articles last year, well researched. their legal amnesty was particularly interesting.

AmericanGoy said...

Hi Slates.
Great comment as always.

Re: blackwater security incidents in Iraq and elsewhere. Sounds like a good idea, although the media did report some of them.

There are several books on blackwater out now in the US.

arevolutionofone said...

But the good news is, the surge is working. And while all this is going on, the most trusted name in news and the rest of the MSM are reporting on Britney Spears, Paris Hilton and of course, the success of the surge. Insuring that average Americans keep believing the nonsense that they hate us for our freedoms.

Sometimes I believe Fox exists only to distract us from just how much the rest of the MSM is in the pocket of government and to keep the heat off them. Why do we never hear much of this on CNN or MSNBC? Excellent post.

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