How Privatisation Looted Country After Country

                                                                                      B  S  Rao

THE people all over the world are feeling the pinch of capitalist economic ‘reforms’ encompassing liberalisation of corruption, privatisation of economic resources in favour of foreign and local multinational companies, and globalisation of scandals and frauds. In countries such as Argentina, Brazil, Mexico, Chile, Zambia etc, where everything was privatised, there is no free competition, private sector monopolies got strengthened and the external debt multiplied amidst the sale of public services and resources.  The earlier examples were Indonesia, Thailand, South Korea and other countries.

Across Latin America, millions of people are protesting against capitalist dictatorship. A powerful political groundswell is building up against the privatisation policies.  The capitalist economic reforms that have shrunk the state and allowed monopoly of powerful foreign companies, have enriched corrupt political-bureaucratic nexus but failed to improve the lot of common people. 

ARGENTINA’S AGONY

Argentina’s economy became bankrupt as a result of IMF-World Bank prescribed capitalist economic reforms and the corrupt politicians who enriched themselves as they sold off, whole sale and in pieces, the country’s basic industries to transnational corporations.  Corruption became  rampant in Argentina because of rapid privatisation of valuable state-owned assets to political insiders, crooks and politically powerful MNCs.  Foreign corporations even own the highways. The capitalist reforms included sacking of 4,00,000 public employees.

After privatisation of economic resources in favour of multinational companies, the revenues of the government fell by over 29 per cent. Besides, the foreign debt has become too huge to be paid back. As the payment crises deepened, the banks and wealthy Argentineans sent $ 106 billion out of the country i.e. three quarters of the entire debt owed to the IMF.  In order to overcome the payment crisis, the government froze the people’s bank accounts, which in turn grounded the industries to a standstill. In April 2002 alone over 6,000 businesses closed.

The role of the state as an engine propelling industrial growth and in running and monitoring public services has been abandoned.  The people without work are now around 30 per cent. The prices of foodstuffs increased by up to 40 per cent. 57% of the  36 million population is struggling to find enough to eat. Food riots and protests have become frequent. Children going to school without taking food and fainting, is a common sight. The privatisation process thus translated into mass impoverishment and an offensive concentration of wealth in the hands of a few corporate houses. The international banking system and foreign debt are strangulating the people of Argentina. The people are condemned to financial dictatorship though in the name of destiny.

The gross domestic product contracted 16.3 per cent in the first three months of 2002. Domestic investment plunged by 46.1 per cent in the first quarter.  The inflation rate reached 25.1 per cent in the first five months of the year.  Forex reserves were reduced to less than 9.8 billion dollars, with the government now spending as much as 50 million dollars per day to protect its currency, peso. 

As the contradictions between the foreign investors, the local laws and angry protests are catching up, some foreign banks from Canada, France, Italy are closing their shops. Schedules of interest payments on several foreign bonds could not be met. There is a move to convert the frozen bank deposits into 10-year government bonds which the people are resisting. However, as the bank accounts are frozen, the people are resorting to barter system of exchange of goods and services. More than 5,000 barter groups have cropped up across Argentina, which people are using for sale and purchase goods and services. The barter system is leading to tax evasions, inefficiency and corruption.

Some Argentines charge that the Americans’ strategy is to do nothing until the crisis is so great that they can come in and take over the vast resources of Argentina for virtually nothing. The purpose is to make “Argentines believe that they are incapable of governing themselves.” According to experts, the manoeuvre will allow US capital to take advantage of the peso’s depreciation so as to take over local and European enterprises.

The only real force that is opposing the capitalist economic reforms in favour of local and foreign MNCs, is the valiant struggles the workers, unemployed and other progressive forces, who are waging valiant struggles. In May, tens of thousands of workers took to the streets in Buenos Aires and across the country to demand food and jobs,  while thousands picketed roads and staged rallies across the country. These mass actions led to a general strike on May 29 to protest against hunger, unemployment and the Duhalde government’s economic policy.   On an average one police officer is killed a day.  Suicides are increasing day by day.

URUGUAY, PERU, CHILE & MEXICO

Some 73 per cent people of Uruguay voted against privatisation of their resources in a plebiscite. As a result, the country has been able to maintain its control over basic resources and its economic sovereignty. But the collapse of neighbouring Argentine economy did impact Uruguay because the tourists from Buenos Aires who used to bring about 5 billion US dollars every year are not arriving. As the Uruguayans began to draw their savings from banks, the Uruguayan peso got devalued thus increasing the burden of dollar debt. In order to bridge the resultant deficit in the budget, the government resorted to higher taxes and cuts in spending. The austerity measures, which are pauperising the people, have been greeted by street protests.

In Peru and Chile, the people have hit back against the giant MNCs. A Canadian firm, Manhattan Minerals, wanted to mine the Tambo Grande valley in Peru for copper, silver and gold. In a referendum held with the support of some foreign environmental groups, an overwhelming 95 per cent people said ‘no’ to the proposal. But this democracy is not acceptable to the MNCs and the Peru government. Anti-government protests are multiplying. 

In Peru, in one instance, the protestors blocked the runway of Arequipa airport, opposing the privatisation of two electricity companies that will rob them of jobs, increase electricity bills and worsen the service. Flights were cancelled after residents walked onto the runway and refused to leave. After the mass action, the government halted the sale of two power companies along with four other power transmission companies. An estimated 54 per cent of Peru’s 27 million residents live in poverty.

Similarly, a Spanish power company is not welcome in Chile.

All along the Mexican border with the US, once busy factories are closing down. Since the 2000-end, tearful farewell parties have been held for 2,50,000 factory workers. More than 500 foreign-owned assembly line factories have closed in the past two years.

PRIVATISATION IN ZAMBIA

Coming to Africa, the experience of people over capitalist economic ‘reforms’ is no different. Only two years ago, Zambia’s rich copper mines were privatised. At that time the Anglo-American, the company which bought the mines, boasted that it would take only 12 months to make the mines profitable and “world class” once again. Now the mines are struggling to stay open and the blame-game goes on. The falling prices of copper, corrupt and vacillating politicians, mismanagement and complicit donors (MNC-controlled IFIs) etc are held as responsible for the tragedy. The Anglo-American is not willing to pump in any fresh investments. Some 15,000 jobs are threatened. 

Earlier, the international donors (controlled by MNCs) insisted on aid to Zambia to be conditional on the government privatising the state-owned companies. As a result, from 1991 till early this year, 251 out of the 287 state-owned companies were sold. Reports by such groups as Transparency International called Zambia’s privatisation programme a “looting exercise.”

INDIA, PAKISTAN AND BANGLADESH

The privatisation programme, started in Pakistan in 1988, has so far sold 108 companies through 10 governments, for a total value of 1.5 billion dollars. Further, Pakistan is going ahead with an aggressive privatisation schedule under which some of the biggest state-owned enterprises (including banks, oil and gas companies) are being put up for sale.

Bangladesh plans to privatise 49 state-owned firms next year, according to the country’s Privatisation Commission. The government wants to offer a 40 per cent discount to the buyers who would pay the full price all at once, in foreign exchange.

In India, both the Congress and BJP are ardent supporters of capitalist economic reforms and  their governments both at the centre and in the states are privatizing huge national wealth in favour of private corporate houses.  Only the Left parties comprising the CPI(M), CPI, Forward Bloc and the RSP are opposing privatisation in India.

However,  there is an emerging backlash against capitalist black markets and privatisation of economic resources in favour of MNCs, across the world.  Violent protests have derailed the sale of state-owned companies in several countries.  The unrest has made potential buyers jittery.  The leftist politicians in several countries especially in Latin America are combining the local issues and economic nationalism to great effect.  Venezuela’s deepening revolution, the social and economic crisis in Argentina, huge protests from Bolivia to Puerto Rico, the massive strikes sweeping across Europe, the defeat of governments that pursued privatisation programmes everywhere --- all these are important indicators.

By the time India catches up with Argentina, Mexico and other countries in terms of economic bankruptcy arising out of privatisation, the perpetrators and benefactors of the loot in India will escape to the other side of  globe like Marcos and others.  That is the capitalist “freedom”.