E-Bangladesh, November 24th, 2007
People from all walks of life in Dinajpur Friday vowed to resist open pit mining in the region and any attempt by the controversial Asia Energy to develop the Phulbari coal mine. “Let alone men of Phulbari, ask Asia Energy to come in front of any woman in our area, we will show them how we feel about the company for which people had lost their lives,” Saima Begum, a resident of Phulbari, told a discussion meeting at the National Press Club.
“The people, who are propagating that we want open pit mining and Asia Energy, are the brokers of the company. Please government, take steps so that Asia Energy leaves the country,” said Saima who along with thousands of men and women participated in the movement against Asia Energy last year.
National Committee to Protect Oil, Gas, Mineral Resources, Power and Port organized the discussion on “Open pit mining method and evil activities of Asia Energy: Statement of public representatives from the coal mine area.”
Farmers, members of indigenous communities, day laborers, employees of shops and small businesses, construction workers and college teachers of Phulbari, Parbatipur, Birampur and Hakimpur demanded the ouster of Asia Energy from Bangladesh as per an agreement the previous government signed with demonstrators.
“I have received bullets in my abdomen and hand during the protest against Asia Energy on August 26 last year and have been living in miserable condition. I will give more blood, if Asia Energy tries to enter Phulbari and develop the coal mine,” said Pradip Sarker.
Three people were killed and more than 200 injured when law enforcers opened fire on the agitating people while they were staging demonstrations protesting the planned open pit mining project of Asia Energy on August 26, 2006.
“An open pit mine project is only for 30-40 years. But its impact on agricultural land will remain for ever. Why should we give our farmland from where we will get crops till the end of the world for getting coal for 30-40 years,” asked Moslem Uddin of Berdighi village.
Ramai Soren, a indigenous community member, said brokers of Asia Energy were creating confusion among them telling lies, “We are illiterate but we are not fools. We will give our blood but will not Asia Energy in our land.”
Aminul Islam Bablu, an organizer of the committee in Phulbari, vowed that the people of Phulbari and adjacent areas would not give any more blood to stop Asia Energy from entering Phulbari coal field rather they would take blood if the company tries to enter the field.
Almost all the speakers blasted a section of media and reporters who were supporting the propaganda of the Asia Energy. “We urge all media people not to act in favour of Asia Energy, otherwise we will also declare the reporters who work in favor of the company as traitor,” said Abdul Majid, a farmer.
Member secretary of the committee, Professor Anu Muhammad, also blamed a section of media who were publishing advertisements of Asia Energy on Phulbari coal project, against which “the people had already given verdict.” “It is strange how Asia Energy is propagating in front of the government and under the present state of emergency, as the government has already said there was no mining agreement with the company.”
Anu demanded punishment for Asia Energy for raising money through London Stock Exchange showing the Phulbari coal project. He also demanded that the advisory committee, formed to finalize draft coal policy, drops the open pit mining method including the pilot project.
Committee convener Sheikh M Shahidullah, Professor MM Akash, Liakot Ali of Muktijoddha Sangsad Phulbari command council, Kamal Chandra Saha of Phulbari Dokan Karmachari Union, MA Quyum of Phulbari Thana Traders Union, Shah Mohammad Ilyasur Rahman, Rafiqul Islam from Birampur, Shahjahan Ali from Nawabganj, Hafizar from Madhyapara and Mozammel Hauque from Parbatipur also spoke.
A critical review of Naomi Klein’s The Shock Doctrine: the Rise of Disaster Capitalism (New York: Metropolitan Books, 2007)
Walden Bello*, Republished from Focus on the Global South website.
Naomi Klein’s The Shock Doctrine: the Rise of Disaster Capitalism is very impressive indeed. This is, however, not immediately evident, a sense that is confirmed by Joseph Stiglitz’ review of the book. Even before I read it, I was certain that the Nobel laureate would highlight Klein’s attempt to make a connection between the electric shock experiments performed by the notorious McGill University psychologist Ewen Cameron who was on contract with the CIA and the economic shock approach developed by Milton Friedman at the University of Chicago.
And indeed, he does, in the course of writing a typical New York Times Book Review piece that dares not evince too much enthusiasm for a book that comes from left field lest it provoke the ever-alert watchdogs of the right to question one’s credentials. Stiglitz, in fact, suggests that Klein’s analysis might be infected with conspiracy theory with his very first sentence: “[T]here are no accidents in the world as seen by Naomi Klein.” The Nobel laureate does have some positive things to say about the book, but he neutralizes this by dropping the line that Klein “is not an academic and must not be judged as one.” As for Klein’s central concept of “disaster capitalism,” it is mentioned once but otherwise ignored. It all adds up to damning with faint praise.
The New York school of publishing says that you win or lose your audience in the first few pages, but whatever their reason for bringing the Cameron experiments up front and strongly implying a link between the genesis of Cameron’s shock treatment and the Chicago School approach to economic policymaking, it is bad judgment on the part of Klein and her editors. What is transparently intended mainly as a dramatic device risks achieving its opposite. Conspiracy theory buffs will be elated but not the critical, discerning audience the book is aimed at.
Which is a pity since, despite this initial fumble, The Shock Doctrine recovers to emerge as a towering work, one that brilliantly follows neoliberalism’s march from marginal theology to universal policy. Klein combines the journalist’s eye for the arresting detail, the analyst’s ability to spot, surface, and dissect deeper trends, and a talent for telling a spell-binding story to prove once again that a masterful journalist can often illuminate social realities far better than the best-trained economist or political scientist.
With her ability to combine no-stones-left-unturned investigative reporting with in-depth social analysis, Klein is her generation’s David Halberstam, her Shock Doctrine and an earlier book No Logo being on par with The Best and the Brightest and War in a Time of Peace. There is one difference, though: Klein is unashamedly a woman of the left, and this is where her analysis derives both its power and its passion.
The Shock Doctrine traces neoliberalism’s rise to dominance to a program set up in the mid-fifties to enable Chilean students to imbibe the radical free-market doctrine being propagated by Milton Friedman and his associates at the University of Chicago, then an oasis of radical free-market thinking in a world dominated by Keynesianism in the United States and Europe and “developmentalism” or desarrollismo in Latin America, with their pragmatic compromises between the state and the market, labor and management, trade and development.
Los Chicago Boys
The opportunity for neoliberalism to come in from the cold arrived in the early seventies, when General Augusto Pinochet overthrew the revolutionary government of President Salvador Allende in Chile and invited the “Chicago Boys” that had been waiting in the wings for years to manage the economy. With the population stunned by the coup, the “Chicago Boys” went about the task of swiftly dismantling the Keynesian and developmentalist compromises that underpinned one of Latin America’s most advanced industrial economies.
With a Year Zero mentality akin to the Khmer Rouge, they forced Chile’s overnight transformation into the free-market “paradise” prescribed by Friedman, a believer in seeing crisis as an opportunity for radical restructuring. It was, however, a paradise that could be created only with massive repression–and an even greater dose of repression was necessary to radically liberalize neighboring Argentina, where tens of thousands were murdered and over a hundred thousand were tortured by a murderous military regime that gave a free hand to free-market radicals to restructure the economy.
Some of Klein’s most original insights are found in her chapters on Bolivia, Poland, China, and South Africa. Bolivia, under the tutelage of a younger “Doctor Shock”–Harvard economist Jeffrey Sachs–showed that neoliberal measures could be imposed by a democratically elected government if it was willing to resort to emergency measures, like arresting and isolating labor leaders. Poland, also advised by Sachs, showed how democratic transitions could actually be an opportunity to deliver a system-transforming shock that included eliminating price controls overnight, slashing subsidies, and rapidly privatizing state enterprises to a population that was still dazed by the collapse of communism.
There was no democratic transition in China, but Deng Hsiao Ping and his allies used the Tiananmen Square massacre and its aftermath, when the population was confused and paralyzed, to decisively advance and consolidate the ambitious capitalist reform program they had begun in the late seventies. Neither in Poland nor in China were people who were tired of communism clamoring for the free market, Klein emphatically points out; they were demanding greater popular, democratic control over economic policy.
South Africa provided yet another route to neoliberalism. Here there was an element of stealth, with white business interests taking advantage of the African National Congress’ (ANC) overwhelming focus on the politics of achieving Black majority rule to preserve their property rights and install a conservative macroeconomic regime. But not everything was that subtle: big capital made clear their intention to leave should socialist policies be introduced, conveying the prospect of economic destabilization.
In these circumstances, the white elite found a valuable ally in chief ANC negotiator and future South African President Thabo Mbeki, who convinced Nelson Mandela that what was needed to stabilize the new regime was “something bold, something shocking that would communicate, in the broad, dramatic strokes the market understood, that the ANC was ready to embrace the neoliberal Washington Consensus.”
Margaret Thatcher and Ronald Reagan’s contribution was to show that neoliberal programs antithetical to the interests of the majority could be imposed in a western democracy if one was ruthless enough to exploit certain situations. For Thatcher, the war with Argentina over the Falklands in 1982 was a heaven-sent opportunity to enlist jingoism in the service of a radical program, one of her tactics being to portray the labor unions as the “enemy within.” Thatcher’s tactics prefigured those of George W. Bush in the aftermath of 9/11, when he and his crew exploited the hysterical state of the population to declare a “war on terror” that was meant to kick-start a new phase of the neoliberal enterprise that Klein labels “disaster capitalism.” But before we go into this, let us pause to assess Klein’s analysis so far.
Klein’s account is superb, but it is not without its flaws. For one, Klein has too rosy a view of the Keynesian state that reigned in the United States and Europe and the developmental state that dominated the Southern Cone in the period from late nineteen forties to the mid-seventies. She writes that owing to developmental regimes, “[T]he Southern Cone began to look more like Europe and North America than the rest of Latin America or other parts of the Third World.”
Again, “Developmentalism was so staggeringly successful for a time that the Southern Cone of Latin America became a potent symbol for poor countries around the world: here was proof that with smart, practical policies, aggressively implemented, the class divide between the First and the Third World could actually be closed.”
That certainly was not what it felt like at the time. Indeed, if the neoliberals walked in from the wilderness, it was because they were perceived as presenting an alternative, albeit untested, to economic systems in crisis. In the United States, the period of rapid economic growth fuelled partly by the reconstruction of Japan and Europe gave way to a state of stagnation cum inflation that was a symptom of a deeper crisis, the growing gap between enormous productive capacity and limited consumption, leading to erosion of profitability that Marxists have called the crisis of overproduction. In Latin America, the leading critics of the developmental state were found on the left, who charged that the process of industrial import substitution presided over by the state was “agotado,” or exhausted, owing to a domestic market limited by a very unequal distribution of income.
In the United States and Britain, the experience of seeing their salaries and savings eroded by double digit inflation made the middle strata receptive to the Friedmanite message. In Chile, they were initially receptive to the left’s critique of the developmental state. But when the left came to power with a socialist project in 1970, the middle classes–fearing the rise of the poor, whom they called rotos, or “lowlifes”– turned on the left with a vengeance, with the middle-class-based Christian Democrats joining the right on an anti-communist platform that shrilly proclaimed a defense of private property, capitalism, and “liberty.”
This leads us to the question of how the neoliberals came to power. This was not simply a matter of the elite using the military or manipulating democracy to impose a neoliberal program on a recalcitrant but stunned population, which is the image that Klein’s account—wittingly or unwittingly—projects. This was not the case even in Klein’s paradigmatic example, Chile. Neoliberalism’s coming to ascendancy there involved the elite and the military acting in concert with a counterrevolutionary middle-class mass base that controlled the streets, with Christian Democratic youth joining their more fascist brethren, Fatherland and Liberty, in intimidating and beating up partisans of the left.
I know, since as a PhD student doing a dissertation on the rise of the counterrevolution, I was nearly beaten up a couple of times by angry anti-Allende middle class youths who insisted I was a Cuban agent sent to destroy Chile by Fidel. Sure, the CIA played a critical role, but it was in support of an already heated counterrevolution with a middle-class base, a process that was reminiscent of Italy and Germany in the post-World War I period.
In other words, in practically every instance, neoliberalism found a middle class that was disenchanted with the Keynesian or developmental state or felt threatened by the left, or both.
The Construction of Hegemony
This is why to counter Stiglitz’ suggestion that she operates with a conspiracy paradigm, Klein’s instrumentalist account must be supplemented with David Harvey’s notion of the “construction of hegemony,” a process by which the elite creates a consensus among the subordinate classes in support of a neoliberal project that principally serves its interests. (David Harvey, A Brief History of Neoliberalism [Oxford: Oxford University Press, 2005])
In the case of the UK, it was not so much the jingoistic atmosphere of the Falklands War as the ideological captivation of the middle class by a conservative leader adept at evoking the themes of freedom, the individual, and property that was the tipping point towards neoliberal reform. Thatcher was an expert at promoting what Harvey calls a “seductive possessive individualism” and she “forged consent through the cultivation of a middle class that relished the joys of homeownership, private property, individualism, and the liberation of entrepreneurial opportunities.”
The construction of consent was the main avenue to hegemony in the United States, where neoliberals deftly connected their free market program to the agenda of a middle class-based coalition that was propelled by resentment against minorities that were allegedly coddled by liberal democrats and by an inflamed attachment to religious values that were seen as being under attack from the left. “Not for the first time,” says Harvey, speaking of the ascendancy of the Republicans under Reagan, “nor, it is feared, for the last time in history has a social group voted against its material, economic, and class interests for cultural, nationalist, and religious reasons.”
Even some blue-collar workers were in danger of being coopted: “Greater freedom and liberty of action in the labor market could be touted as a virtue for capital and labor alike, and here, too, it was not hard to integrate neo-liberal values into the ‘common sense’ of the work force.”
Neoliberalism, in fact, became so “commonsensical” that even where social democratic parties have come to power, displacing the traditional conservative parties of neoliberalism, as they have in Britain, Chile, and the United States, they have not dared to reassemble the interventionist liberal state and have made it a point to pay homage to the “magic of the market.” Indeed, it has not been conservatives but social democrats such as the Blairites in Britain, the Clintonites in the United States, and the Socialist-led Concertacion government in Chile, with their rhetoric about “market-oriented social policies,” that have consolidated the neoliberal economic regime.
Crisis of the Keynesian State
The book’s most important contribution is its theory of “disaster capitalism.” But to fully appreciate Klein’s insight, it is important to go back to the roots of the crisis of the Keynesian state and the developmental state in the 1970’s that she glosses over. This crisis, which paved the way for the neoliberal ascendancy, had its origins in what economists have called the crisis of overaccumulation or overproduction.
The golden period of postwar growth globally that skirted major crises for nearly 25 years was due to the massive creation of effective demand via rising wages for labor in the North, the reconstruction of Europe and Japan, and the import-substituting industrialization in Latin America and other parts of the South. This dynamic period came to a close in the mid-seventies, with stagnation setting in, owing to global productive capacity outrunning global demand, which was constrained by continuing deep inequalities in income distribution.
According to the calculations of Angus Maddison, the premier expert on historical statistical trends, the annual rate of growth of global gross domestic product (GDP) fell from 4.9% in what is now regarded as the golden age of the post-World War II Bretton Woods system, 1950-73, to 3% in 1973-89, a drop of 39%.
These figures reflected the wrenching combination of stagnation and inflation in the North, the crisis of import substitution industrialization in the South, and erosion of profit margins all around. For global capital, neoliberal policies, which included redistribution of income towards the top via tax cuts for the rich, deregulation, and an assault on organized labor, were one escape route from the crisis of overproduction. Another was corporate-driven globalization, which opened up markets in the developing world and moved capital from high-wage to low-wage areas.
A third was what Robert Brenner and others have called “financialization,” or the channeling of investment towards financial speculation, where much greater returns were to be derived than in industry, where profits were largely stagnant.
Feverish speculation triggered the proliferation of novel sophisticated speculative instruments like derivatives that escaped monitoring and regulation. Finance capital also forced the elimination of capital controls, the result being the rapid globalization of speculative capital to take advantage of differentials in interest and foreign exchange rates in different capital markets.
These volatile movements, the result of capital’s liberation from the fetters of the post-war Bretton Woods financial system, was one source of instability. What was fundamentally problematic with speculative finance, however, was that it boiled down to an effort to squeeze more “value” out of already created value instead of creating new value since the latter option was precluded by the problem of overproduction in the real economy. But the divergence between momentary financial indicators like stock prices and real values can only proceed to a point before reality bites back and enforces a “correction,” like the recent collapse of stocks tied up in myriad Byzantine ways to overvalued subprime mortgages. Corrections or crises have become more frequent in the neoliberal era, with one Brookings study counting about 100 over the last 30 years.
At any rate, neoliberal policies, globalization, and financialization, while restoring and strengthening elite power by redistributing income from the bottom to the top, have not been effective in reinvigorating global capital accumulation. Its actual record, Harvey points out, “turns out to be nothing short of dismal.” Aggregate annual global growth rates came to 1.4% in the 1980s and 1.1% in the 1990s, compared to 3.5% in the 1960s and 2.4% in the 1970s.
It is this fundamental failure of finance-driven capitalism to reignite vigorous capital accumulation that allows us to fully appreciate Klein’s theory of disaster capitalism and David Harvey’s closely related notion of “accumulation by dispossession.” Both may be seen as the latest desperate effort of an increasingly sputtering capitalist machine’s effort to surmount the persistent and deepening crisis of overproduction.
In the last few years, stagnation or weak growth has marked most areas of the world economy, with the exception of China and India. U.S. growth has been higher than that of sclerotic Europe, but it has been largely illusory, being largely the result of middle-class spending fuelled by massive credit from China and East Asia. China has to lend to the United States to keep up demand for its cheap-labor based export-industrial sector, but the expansion of its production has itself contributed mightily to the overcapacity, overproduction, and shrinking profitability plaguing the whole global system. Even the International Monetary Fund (IMF) has recognized that the world is skating on thin ice, which could break should American consumers rein in their debt-driven spending, as they now seem to be doing.
In its efforts to surmount the crisis, capitalism has increasingly supplemented, if not supplanted accumulation through production with accumulation through dispossession, or the expropriation of already created wealth or sources of wealth akin to the process of primitive accumulation that marked early capitalism in the 14th to the 17th centuries. Accumulation by dispossession involves an acceleration of the privatization and commodification of the commons, which includes not only land but also the environment and knowledge. Millions of peasants and indigenous peoples are displaced from the soil as private property supplants common property or communal regimes, often with the active support of institutions like the World Bank and the Asian Development Bank. Seeds, the end-result of eons of interaction between nature and human communities, are now privatized through mechanisms such as the Trade Related Intellectual Property Rights Agreement (TRIPs), which has also dampened technological development in the South owing to fear of infringing on the patents of northern corporations.
Contracting Out the War on Terror
A key mechanism for accumulation by dispossession is the accelerated privatization of hitherto public or state assets, which is what disaster capitalism is all about. Disaster capitalism is the Bush administration’s central contribution to neoliberalism. Its key feature is the parceling out to the private sector of the “core” functions of security, defense, and infrastructure that Adam Smith himself thought had to be left to the state. Through the “war on terror,” Klein writes, the Bush administration brought about:
“The creation of the disaster capitalism complex—a full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad. The economic stimulus of this sweeping initiative proved enough to pick up the slack where globalization and the dot-com booms had left off. Just as the Internet launched the dot-com bubble, 9/11 launched the disaster capitalism bubble…It was the pinnacle of the counter-revolution launched by Friedman. For decades, the market had been feeding off the appendages of the state; now it would devour the core.”
In the disaster capitalism paradigm, the state serves as the engine of capital accumulation— that is, it raises capital via taxes, then transfers it to private contractors that take over its core functions, from defense to incarceration to the provision of infrastructure. Security provision becomes the new growth industry, incorporating but going beyond the old military-industrial complex. Disaster, either of the natural kind like Katrina or the socially created kind like Iraq, is seen as opportunity in several ways. It creates demand for a commodity, that is, for security or reconstruction. By taking advantage of natural disasters, it provides the opportunity to alter the physical landscape and “add value” to it, by sweeping away “value-deprived” poor communities and converting the land to upscale commercial or residential real estate, as in post-Katrina New Orleans.
Finally, as in Iraq, war becomes the instrument to erase the old interventionist state and create from scratch the ideal neoliberal government whose key function is to delegate its own functions to private contractors, like the engineering firm Bechtel or the notorious private security firm Blackwater. “In Iraq,” Klein writes, “there was not a single governmental function that was considered so “core” that it could not be handed to a contractor, preferably one who provided the Republican Party with financial contributions or Christian footsoldiers during elections campaigns. The usual Bush motto governed all aspects of the foreign forces’ involvement in Iraq: if a task could be performed by a private entity, it must be.”
The problem, of course, is that disaster capitalism is so brazenly anti-people that even dressed up in the rhetoric of freedom, entrepreneurship, and efficiency, it cannot win over people in the way early neoliberal ideology was able to captivate the middle classes in the era of Reagan and Thatcher. Reading Klein’s chilling account, one wonders how Paul Bremer, the head of the Coalition Provisional Authority, could not have realized that the decrees he made which had the effect of making Iraqi youth a surplus population in a society where the state functioned mainly to enrich foreign contractors would turn them into insurgents. Disaster capitalism and accumulation by dispossession represent a capitalist order that no longer seeks ideological hegemony but seeks to impose itself through pure force. This is not sustainable.
Klein’s last chapter, which looks at the vast and varied global movement that has risen against what French thinkers call “savage capitalism” shows that, as Gramsci noted, nothing can remain hegemonic for long without legitimacy. People have become both more hopeful and more savvy: they will not be easily subjected to another neoliberal shock.
Klein Past versus Klein Present
So here’s the inevitable question: which is the better book, No Logo or The Shock Doctrine? This is not an easy choice, but I would land on the side of No Logo.
Let me explain. The critical edge, analytical sharpness, and passion of No Logo are to be found in The Shock Doctrine as well. But there is something different about the writing. In a review I did for Yes! in 2001, I wrote: “No Logo is compelling, but it’s not an easy read. Reading Klein is like serving alongside a skilled commander who relentlessly probes the enemy’s many defenses to locate the principal point of vulnerability. And just when the reader thinks Klein has identified the key to the defense, she reveals that this is only one episode in unraveling the dynamics of contemporary capitalism. This is deconstructive writing at its best, the product of a first-rate, restless mind that is not satisfied with drawing a solitary insight or two from her material.”
Reading The Shock Doctrine is a different experience. You don’t need to work. You’re like a tourist being guided on a well-lit path where there are few surprises.
I much prefer the discourse of No Logo, and I certainly do not relish being subjected at the very beginning to a literary shock treatment that has no other purpose but to prod me to read further. That flaw—and the change in style–I prefer to attribute not so much to the Toronto-based Klein but to the New York School of publishing, which, like Hollywood, much prefers an in-your-face approach to a more allusive, more indirect, less predictable but ultimately more enlightening discourse.
*Walden Bello is currently a Distinguished Visiting Professor at St. Mary’s University in Halifax, Canada. Bello is also a senior analyst at the Bangkok-based institute Focus on the Global South and professor of sociology at the University of the Philippines at Diliman. He is the author of Walden Bello Presents Ho Chi Minh (London: Verso, 2007), Dilemmas of Domination (New York: Metropolitan Books, 2005) and Deglobalization (London: Zed, 2002).
The Indonesian People’s Movement Against Neo-colonialism and Imperialism (GERAK LAWAN; The Indonesian Federation of Peasant’s Union/ FSPI, Indonesian Human Rights Commitee for Social Justice/ IHCS, KAU, LS ADI, Federation of Trade Union Jakarta/ FSBJ, KAM LAKSI, Indonesian Youth Front Struggle/ FPPI, KMAI, SHI, Women Solidarity/ SP, WALHI, Institute for Global Justice/ IGJ)
La Via Campesina, Friends of the Earth International, Focus on the Global South, Korean Confederation of Trade Unions (KCTU), Migrant Forum in Asia, ATTAC Japan, Stop the New Round Coalition, Philippines, Kilusang Mangingisda (Fisherfolk Movement-Philippines), Hong Kong Confederation of Trade Unions (HKCTU), Globalization Monitor, Hong Kong, Transnational Institute, FTA Watch Thailand
are inviting their friends, allies and social movements from Indonesia and the world to join them at the “Solidarity Village for a Cool Planet”
Organised in Bali from December 7 to 10 2007 during the United Nation Climate Change Conference.
This will be an open space gathering all those men and women, from East, West, North and South who believe that global warming cannot be tackled with market solutions and neoliberalism. We believe that solutions can only be found in fundamental changes in the way we produce, trade and consume.
The Solidarity Village for a Cool Planet will be a space for debates, peoples assemblies, conferences, self organised workshops, cultural events, fiestas, symbolic events and informal gatherings.
The Village will be a meeting place but not a space for accommodation/camping.
For more information, please contact Tejo Pramono: email@example.com and Mary Lou Malig: firstname.lastname@example.org
*Martin Khor, Third World Resurgence, September 2007
The United Nations Framework Convention on Climate Change (UNFCCC) is currently preparing to host a crucial conference in Bali in December to launch negotiations and a roadmap for international action to combat global warming, with a specific focus on the post-2012 period when certain provisions of the existing Kyoto Protocol adopted in 1997 under the Convention will expire. Among the events in the preparatory process have been a thematic debate on climate change at the UN General Assembly (31 July-2 August) and ‘the Vienna climate talks’ later in August. Arguing that at this juncture, it is important to put forward perspectives that promote the environment and the interests of developing countries, Martin Khor, who participated in both the New York thematic debate and the Vienna meeting, identifies four important building blocks as being crucial for the building of a new international consensus to tackle the problem of climate change in the post-2012 period.
THE United Nations General Assembly thematic debate on climate change (31 July-2 August 2007) and the ‘Vienna climate talks’ (27-31 August 2007) under the umbrella of the UN Framework Convention on Climate Change (UNFCCC) have made gradual headway in clarifying the issues that will be crucial at the Bali meetings this December which will hopefully launch negotiations and a roadmap for global action to combat climate change, especially in the post-2012 period.
At Vienna, participants held a dialogue on the ‘building blocks’ required for such global action, and especially for a framework or regime to guide activities after the expiry in 2012 of the first Kyoto Protocol set of commitments. They also held initial discussions on the range of commitments for developed countries to reduce their greenhouse gas emissions by 2020.
Key among the present Kyoto commitments is the agreement of most developed countries to reduce their greenhouse gas emissions by 5.2% collectively by 2012 as compared to 1990 levels. However, a few developed countries, notably the United States and Australia, have not signed up to the Kyoto commitments.
At this significant moment in the conceptualisation of a climate regime that is equitable and fair, it is important to put forward perspectives that promote the environment and development interests of the developing countries.
From this viewpoint, there are at least four important building blocks towards a post-2012 UNFCCC climate regime – science and targets; relations between developed and developing countries; the need to link development and environment; and policy coherence.
Science and targets
First, on science and targets. Developments in the science of climate change have progressed recently so that there is broad consensus that the climate problem is real and serious, and that developing countries will be most affected.
There is a need to set targets for global action, such as to limit temperature rise to 2 degrees Centigrade (in fact, well below that), and to prevent greenhouse gas concentration from exceeding 450 parts per million (ppm) of carbon dioxide equivalent. Even at these levels, there will be great damage. At levels higher than these, scientists inform us, the damage will be catastrophic.
However, the establishment of such science-based targets has to be linked to agreement on ‘burden-sharing’ principles, particularly as between North and South.
Second, therefore, is the crucial building block of fair North-South relations in a climate agreement. The UNFCCC and Kyoto principles of equity, historical responsibility, and common but differentiated responsibilities have to be reaffirmed and, more importantly, operationalised in concrete terms and measures to be worked out.
Indeed, these principles must be infused into all aspects of the negotiations and reflected in the agreements to be made.
The implications for developing countries of proposals on global targets should be more explicitly discussed. For example, the European Union has made a proposal for a global emission cut of 50% by 2050 (compared to 1990 levels) and a cut of 60-80% for developed countries.
It is good that the EU has started the ball rolling by putting forward these proposals and figures. Of course, it is only a start and the EU and other developed-country parties must be expected to improve on their proposed commitments.
However, there are also implications for developing countries in such figures, which have thus to be considered seriously. If we assume, for simplicity, that developed and developing countries account 50:50 for total emissions, then a global 50% cut with a 70% developed-country cut implies a 30% emission cut for developing countries. If developing countries’ population doubles in that period (from 1990 to 2050), then the implication is a 65% cut collectively in their emissions per capita.
This is a very deep cut, and whether developing countries should or can take on such cuts should be openly debated. It is insufficient to leave these as implicit targets, as a residue of global and developed countries’ targets.
The above is of course only one aspect, though an important one, in the operationalisation of the principles of equity, common but differentiated responsibilities, etc.
Integrating development concerns with climate issues
Third, there needs to be more work on the building block of integrating development with environment. Addressing climate change as an environmental crisis requires simultaneously a development solution. The development challenges are enormous, far more than has been generally acknowledged as yet.
As has been effectively argued, if climate change is not addressed, its effects would themselves devastate development prospects. Thus, adequately addressing climate change through mitigation and adaptation is crucial, and is more cost-effective than adopting a ‘business as usual’ attitude.
At the same time, we should also not underestimate the tremendous efforts required to switch to new development pathways that match the new emission-stabilisation pathways required to curb the growth of greenhouse gas emissions.
For example, the Vienna meeting heard presentations that the economic costs of addressing climate change would be only 0.12% of world Gross National Product (GNP) per year, up to 2050.
If this is so, then operationalising this would still be an enormous challenge. It may imply, for instance, that if developed countries are growing at 2.12% a year, they would have to make do with 2%, and if developing countries are growing at 6.12%, they would have to make do with 6%.
(Of course, if developed countries were to agree to reduce their growth rates more than this, developing countries will have more space to grow.)
This may be a relatively small price to pay to address climate change and still enable relatively good growth. But it would be a tremendous challenge indeed for developing countries to be able to grow economically at 6% a year and also be able simultaneously to reduce their per capita emissions by 65% by 2050.
Perhaps it can be done. However, many in-depth studies must be conducted to show how this tremendous transformation can be undertaken, or it would remain at this stage only a vision.
On the issue of finance, there should not be an impression that the sums are small and that the private sector will take care of most of the costs.
The UNFCCC Secretariat paper on investments needed to address climate change (presented at Vienna) has done a good job of stimulating discussions on a complex issue. It has given estimates of an extra investment and financial flow of US$200-210 billion required in 2030 for mitigation and ‘tens of billions of dollars’ for adaptation.
The enormous costs of mitigation and adaptation should be realistically spelt out, and national studies (such as the one presented by India on the immense costs of emission-reducing reforms in industry) and examples of costs of addressing real-life climate-related events would be illustrative.
For example, in the newspaper USA Today (dated 29 August 2007) it was reported that the 2005 Hurricane Katrina caused US$150 billion damage and the costs of reconstruction include US$116 billion allocated by the US Congress as well as many more billions of dollars to be met by private financing including insurance.
The 2004 tsunami would also have cost many billions of dollars in rehabilitation and reconstruction. Mitigation and adaptation measures would help prevent or reduce such high costs of disaster-related reconstruction. The high costs of damage and reconstruction also have to be addressed.
At the least, there is a need for a large publicly financed and operated fund to address adaptation. Private finance can only be a supplement, especially since it is difficult for poorer countries to access these funds and on affordable terms. A fund to address costs of damage may also need to be looked into, especially since climate-related damage is already taking place.
On technology transfer, the challenge is also enormous. A key question is the treatment of intellectual property rights (IPRs) over climate-friendly technologies. IPRs confer monopoly rights, and can curb affordable access through higher prices (that usually include monopoly profits) as well as be a barrier to the introduction or upgrading of technology by private industry or public-sector agencies in developing countries.
The lower the cost and the greater the ability of developing countries’ enterprises to make use of or to make existing or new climate-friendly technologies, the faster would be the developing countries’ ability to switch to more climate-friendly technologies and to the new emission-stabilisation pathways as well as new development pathways. If there is insistence on the ‘full protection of intellectual property’ in relation to climate-friendly technology, it would be a barrier to technology transfer. The example of how Indian companies were hindered from introducing a new chemical that is not harmful to the ozone layer as a substitute to chlorofluorocarbons (CFCs), because of patents on that chemical, is illustrative.
Thus, a post-2012 regime has to deal with this thorny issue of IPRs and developing countries’ access to technology (existing and new technologies, for mitigation, adaptation and reconstruction). On new development pathways, there should be more discussion and work done. Stabilisation pathways (aimed at greater energy efficiency and emission reduction) are an important component.
However, there are other key components if developing countries are to explore new ways of looking at economic and social development strategies that meet the requirements of emission-stabilisation pathways.
The pathway of moving from primary production and commodity-based sectors to commodity processing and first-stage manufacturing and services to more mature industrialisation and services, the pathways of addressing sustainable development in agriculture, industry, commercial and social services, the pathways of trade policy, investment policy, financial policy, technology policy and social policy, all have to be thought through. These are massive challenges.
Need for policy coherence
Fourth, there should be policy coherence at national and international levels. If climate change is indeed the most pressing challenge of our times, then policies made in other areas and in other fora have to be looked at through the fresh lens of addressing climate change, and made consistent with the aims and measures that we are trying to implement in combating climate change.
For example, at the World Trade Organisation (WTO), there are proposals to consider as a non-tariff barrier (which should be removed) the imposition of higher taxes on cars with a higher engine capacity, or the lack of government action to facilitate financing of consumers’ purchase of motor-cars.
Also at the WTO, some developed countries are also pushing developing countries to drastically reduce their tariffs on food products, so that the developed countries’ highly subsidised farm products can penetrate the poorer countries’ markets. At the same time, developed countries are insisting that the developing countries’ markets for industrial products also be opened up very significantly.
Developing countries that take measures, consistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), to provide cheaper generic medicines for their population are being condemned or punished by the major developed countries like the US or the EU, as the recent case of Thailand and its compulsory licences on three types of medicines shows.
If some of the proposals at the WTO were to be adopted, they would make it far more difficult for developing countries to switch to an emission-stabilisation pathway and a sustainable development pathway.
Similarly, reviews should be made of the provisions of bilateral and regional free trade agreements, and of loan and aid conditionalities facing countries dependent on the international financial institutions and on aid donors.
These are some of the issues that at present could be stumbling blocks that have to be transformed into building blocks towards new goals, frameworks and structures in the cooperative efforts to combat climate change.
*Martin Khor is Director of the Third World Network. This article is partly based on his presentation on behalf of the Third World Network at the UNFCCC meeting in Vienna on 27-31 August.
Khawaza Main Uddin, NewAge, November 13, 2007. Dhaka, Bangladesh
The government has initiated the process of formulating the second version of the lender-driven poverty reduction strategy paper to be effective from fiscal year 2008-09 on expiry of the current development document at the end of the current fiscal.
The initiative has been taken recently without assessing the impacts of the current strategy styled ‘Unlocking the Potentials: National Strategy for Accelerated Poverty Reduction’, say officials of the government agencies concerned.
The government is supposed to prepare and present a review report on the strategy paper at the Poverty Reduction Forum with international lenders and donors expected to be held in January.
An independent committee on PRS implementation may also come up with a report in January 2008, officials at the General Economics Division of the Planning Commission informed New Age.
‘Updating the three-year rolling plan and policy matrix may be the major focus of the next PRSP,’ said economist Hossain Zillur Rahman, a member of the independent committee who was also involved in authoring the current document.
The strategy paper was incorporated into the budgetary process in 2004-05 through a three-year rolling plan, which was later extended for one more fiscal year.
The document was endorsed by the cabinet of Khaleda Zia, although a cabinet minister, Abdul Moyeen Khan, had thrown away a copy of the PRSP at a function in Dhaka in presence of donors and lenders in 2006. Moyeen Khan had made an attempt to prepare a 15-year perspective plan during Khaleda’s first stint in office but failed due to opposition from colleagues.
Asked if the second document would be more home-grown than the first one, which was prepared under diktats of the multilateral lending agencies, an official concerned said there would be ‘shadow of the lenders’ in it as the government would hold dialogue with them as well.
The General Economics Division as the focal point for formulation of such development policy documents has already formed 20 thematic groups to make suggestions on various aspects of the second PRSP.
The finance secretary, Mohammad Tareq, has been made the team leader of a 21-member group assigned to prepare a thematic paper on Social Safety Net including Food Security, Disaster Management, Micro-Credit and Rural Development/Non-Development Activities.
The members have also been asked to give their inputs for preparing the theme paper by November 30, according to an official notification.
‘Since this is a policy document, not something specifically on programmes, the second PRSP will be more or less same as the first one. The entire task is due to be completed before June 2008 so that the objectives can be inserted in the next budget,’ said a finance ministry high official.
Apart from internal exercises, the General Economics Division is expected to hold consultation meetings with the media and the civil society, including non-governmental organisations and the business community, to give the PRSP a ‘popular face’.
The prescriptions of multilateral lending agencies for preparing the PRSP were given when the late Shah AMS Kibria was the finance minister, and the finance and planning minister of the BNP-led alliance government, M Saifur Rahman, swallowed the lenders’ recipes by embarking on the PRSP.
Asked about the redundancy of the second PRSP when the government is preparing a long-term participatory perspective plan, an official concerned said the PRSP would be a part of the greater plan eying 2021 as the deadline for making the country free of poverty and corruption.
A project styled Outline Participatory Perspective Plan will design the document, which will include a vision-2030 of a prosperous Bangladesh, leaving behind a trail of unrealised development plans and goals.
The division has meantime identified 18 areas of economic, social and other issues dealt with by various ministries and divisions for incorporating in the perspective plan.
The country had adopted four five-year plans till 2002 interspersed with a two-year plan undertaken during the rule of the late president Ziaur Rahman.
Staff Correspondent, The Daily Star, November 18, 2007. Dhaka, Bangladesh
The government should ensure the people’s right to information before signing any international deal or formulating any policy, especially for energy or coal, speakers told a roundtable in Dhaka yesterday.
The roundtable on ‘Energy Security and Right to Information’ was organised by weekly magazine Shaptahik 2000, and moderated by its Acting Editor Golam Mortoza.
The speakers also pointed out that the caretaker government has no legitimate right to approve energy or coal policy, or sign any international agreement for the sector, as it is not an elected government.
They said the deals made by previous governments with a few multinational companies including Kafco and Lafarge, leaving the people of the country in the dark, are ultimately taking their toll on the common people.
The proposed right to information act should be enacted immediately so that no information can be concealed and the people can access any information to make their observation, they observed.
Attempts are being made to keep international deals out of the purview of the proposed right to information act with the excuse that people’s access to information on such deals would affect foreign direct investment in the country, they said adding that right to access any information has to be ensured disregarding the prospect of foreign investments.
Prof Anu Mohammad of Jahangirnagar University said the state is failing to perform its duty in making all information public. On the contrary, it is even trying to hide information.
“If the people had known about the deal between the government and Kafco, it wouldn’t be possible to close the deal,” he said.
He questioned how Asia Energy could run advertisements in different newspapers claiming to be approved by the government for implementing the Phulbari Coal Mine Project when there has been an agreement barring Asia Energy from continuing with the project.
Prof Anu also urged the caretaker government to launch anti-corruption drives against international deals signed by previous governments.
Former state minister for power Maj Gen (retd) Anwarul Kabir Talukder said all kinds of information will have to be shared with the people.
Productivity has to be increased in every sector, more employment opportunity has to be created and dependency on import has to be reduced gradually, Talukder said adding, “All these things are related to energy, and therefore, we also have to ensure our energy security.”
GM Kader, former lawmaker of Jatiya Party, said lack of transparency creates the opportunity of corruption and free flow of information can bring in transparency.
Former Awami League lawmaker Col (retd) Faruk Khan said a world energy congress was held last week in Rome where representatives from 112 countries except Bangladesh participated. The goal of the energy conference was to monitor the status of energy sector and find solutions that could promote economic development in any country, he added.Col (retd) Faruk said since the caretaker government is not an elected government, it has no right to formulate any energy or coal policy. “It can make a draft policy on energy or coal and make it public for people’s observation. And the next elected government should approve it.”He also stressed the need for improving the government’s negotiation skills while discussing with prospective investors.Writer-columnist Syed Abul Maksud said it is necessary to be ensured that the adopted policies are not against the interest of the people. “Any policy should be taken on the basis of national consensus,” he said.Prof M Shamsul Alam of Chittagong University of Engineering and Technology presented a keynote paper on ‘Energy Security and Right to Information’ at the roundtable.Prof Hossain Mansur of Dhaka University, Prof Golam Rahman of Dhaka University, politician Haider Akber Khan Rono, former Rural Electrification Board chairman Maj Gen (retd) Golam Mawla, Barrister Tanjb-Ul Alam, Shahidur Rahman of Action Aid Bangladesh, and Radio Today Executive Director Shakil Manjur also spoke at the discussion.