When a return to 'normal' spells crisis

Gamblers, speculators and investors on the world’s capital markets are watching and wondering what is going to happen now, in the wake of the US Federal Reserves’ decision to begin slowing the growth of credit.

There is widespread concern that the relatively minor reduction of $10bn per month in the US quantitative easing programme - from $85bn to $75bn – will trigger a new, much greater period of volatility than occurred last year, when the proposal for “tapering” was mooted.

The latest World Bank report is couched in terms which attempt to calm and limit precipitate action by the people who manage the world’s capital whilst preserving what they claim are “healthy signs” for the masters of the global economy, if not for the 99%.

Nevertheless the Bank warned that “a severely negative response to the return of monetary policy to normal might lead to capital flows to emerging markets falling by up to 80% for several months.”

Despite its professed humanitarian objectives for eradicating extreme poverty, reducing inequality, improving health and promoting environmental sustainability, in practice the World Bank is a key agency for promoting global capital.

In the 1980s it used a policy of so-called “structural adjustment”, drawing countries hit by crisis into debt dependency in exchange for a damaging involvement in labour-intensive production of commodities for export to the globalising economy. The result was impoverishment for millions.

The Bank became increasingly subject to the demands of corporations which were busy growing into transnational behemoths. In the 1990s it was instrumental in the adoption of the “Washington Consensus”. This involved the dismantling of international controls on capital flows, deregulation of markets, privatisation of public utilities and reducing the independence of national governments.

Now the Bank is attempting to assess the likely consequences of the slowing and ending of five-year post-crash, loose-money global hysteria and to prepare countries for what is to come. Its attempt at being encouraging is hardly convincing, predicting a modest “acceleration” in global growth.

Its assessment of risks and uncertainties provides a more sobering view. In the eurozone area things are particularly gloomy, with the report admitting that there “is still a long road ahead before all of the problems that the global financial crisis laid bare are fully resolved”.

The World Bank acknowledges that the “drivers” of the growth required to come out of recession “remain unclear” and adds: “Moreover with the banking sector still weak and details on a fully fledged banking union still being worked out, the currency bloc remains susceptible to shocks, including a tightening of policy in the United States.”

 

It expresses concern about “significant amounts of spare capacity” that have opened up and “a permanent deterioration in job skills and employability of the jobless”. The report adds: “At the same time, continued sharp credit contractions raise the spectre of deflation, which could exacerbate debt overhang problems and result in a much more muted recovery than considered in the baseline.”

And in China where extreme volumes of credit have limited the slowing of growth since the crash, the Bank warns that “abrupt unwinding of investment in China [there] remains a possibility, which if realised could sharply reduce GDP by 3% or more with significant knock on effects in the region and other economies with close trading linkages”.

Today’s news direct from China won’t be encouraging for the calm, measured approach the World Bank would like to see. The uncontrolled shadow banking sector now accounts for more than 30% of total finance in the world’s second biggest economy, up from 23% a year ago.

There’s a recipe for global volatility, if ever there was one.

Gerry Gold

Economics editor

Corporations cash in on climate change funds

As governments meet in Doha to discuss the transfer of funds from rich to poor countries to help them adapt to climate change, the developing world is asking both “where’s the money” and who is benefiting from the small amount allocated so far.

A Fast-start Fund (FSF) of £30bn was to be completed by December 2012, and then another £100bn by 2020. Now it’s clear that there will be no commitment to any further funding on the table this week.

The US, EU, Canada and Japan have made clear they will not say how or when they will commit to further funding. EU representative Peter Betts said they would not agree any targets: "These are tough financial times in Europe, as I'm sure you have noticed."

Jonathan Pershing from the US asked for trust: “The question really is did we do the first one and the answer is yes. Are we working on the second? The answer is yes." But given that the Obama administration’s total climate aid for this year was just £1.7bn, that trust is not likely to be translated into action.

The FSF replacement Green Climate Fund has a completely empty bank account. In any case, as Al Gore pointed out, the FSF money had mostly been moved around from existing aid commitments, and whereas grants were promised, they were actually mostly given out as loans with strings.

Much of it was handed out directly to corporations to do projects. The World Development Movement reports that UK climate finance (channelled through the World Bank) has been used to fund wind farms in Oaxaca, Mexico, which are controlled by French electricity giant EDF.

All of the energy produced is being used to provide cheap power to Walmart, and none is going to local people. The wind farms have been built on indigenous people’s land without their consent.

The EDF/Walmart involvement highlighted by WDM is not an aberration – it entirely represents the World Bank’s view on how to use climate mitigation funds. A recent report for the WB stated:

“The large potential for private investment to achieve climate-related objectives justifies using a substantial share of the public funding available in and before 2020 to stimulate this investment…

“Not all public funding will be used to stimulate private investment, but all else equal, channelling public funding through instruments that catalyze additional international private investment in a given action yields greater benefits than using the public funding directly for the same type of action.

“Over the period between now and 2020, public instruments will need to have the flexibility to respond to various dynamic factors such as emerging domestic climate policies in developing countries, and the expected scaling up of carbon markets.”

Translated into English that last paragraph means that developing country governments can decide to use climate change money for all sorts of policies – to leverage in land-grabbing investment funds; to switch to GM crops; to earn carbon credits from bio-fuel crops or indeed to generate power for Walmart.

The problem is that the Bank is not wrong in thinking that the only way to get things to happen quickly in today’s world is to get the global corporations on board. They have the know-how, the infrastructure, and the drive to do new things. What they don’t have is any real interest in mitigating climate change – profit is their only game and so the money will serve that end only.

Any tangential benefits, for example small reductions in greenhouse gas emissions, will be more than offset by their continuing rapacity everywhere they operate to resource, produce, distribute and sell goods.

A transformation of ownership and control of these corporations, as collectively owned democratic co-operatives, could change all that. Then the skills, knowledge and resources of what are after all the world’s biggest and most dynamic organisations, could be harnessed to tackle climate change and improve the lives of millions.

Penny Cole

Environment editor

A billion hungry people victim of land grabs

The World Bank is one now of the world’s leading land grabbers, channeling aid and loans into projects which force people off land they have used for generations. One of the results is a dramatic rise in food prices and global hunger.

Since 2008, when the World Bank put a modest monitoring and a complaints procedure in place, communities saying investments have violated their land rights have brought 21 formal complaints. Internal monitoring found that people were forced off their land in 30% of the projects the World Bank funds – that’s around one million people in total.

The World Bank’s investments in agriculture have tripled in the last decade from $2.5bn in 2002 to $6–8bn in 2012. But this investment is not aimed at easing hunger or poverty.

Rather it is simply bankrolling governments to get involved in the global market in land. Private investors and governments dedicated to carving out a toehold for their own elite in the world capitalist market are the beneficiaries.

A case in point is Cambodia, where mass removals of people from their land have brought protests, and ruthless government repression, including assassinations of campaigners and journalists.

This week 71-year-old broadcaster Mam Sonando was jailed for 20 years because his Beehive Radio supported land rights. The trumped-up charge was one of “inciting rebellion”. Security forces stormed a village in May after local people resisted the sale of a land to a corporation.

“Not a shred of evidence has been submitted in court that proves any connection between Mam Sonando and these bogus charges,” said Ou Virak, president of the Cambodian Centre for Human Rights, calling the verdict “embarrassingly unsophisticated and brazen.”

Reluctantly, the World Bank has frozen loans to Cambodia, after the government refused to say how it would meet the needs of displaced people (not that people shouldn’t, in principle, be displaced you understand – the World Bank accepts that kind of “collateral damage” if some gesture is made at resettlement).

So now the Cambodian government says it will halt land deals for the time being – but as 63% of all available land in Cambodia has already been passed on to private companies, there can’t be much left to deal.

A report published by Oxfam into investment in agricultural land by foreign interests found that between 2000 and 2010, 60% was invested in developing countries with serious hunger problems. Two-thirds of those investors plan to export everything they produce.

“In the past decade an area of land eight times the size of the UK has been sold off globally as land sales rapidly accelerate. This land could feed a billion people, equivalent to the number of people who go to bed hungry each night. In poor countries, foreign investors have been buying an area of land the size of London every six days,” the report says.

Oxfam estimates that 60% of land deals in the past decade are either being used to produce bio-fuels or left idle as investors wait for the price to rise. This land could have fed one billion people. To complete the vicious circle, those countries where the land grab has been most extensive, are also those suffering the biggest food price hikes.

Sub-Saharan Africa has had the highest increase in maize prices – for example 113% in Mozambique, and 47% in Malawi. These reflect poor local harvests, rises in world prices, combined with general inflation. The wheat price rose 27% in South Africa, 15% in Sudan, and 14% in India. These are higher price increases than in the major producer countries where drought has reduced this year’s crop.

And just to underline the market-driven nature of the food crisis, there have been big increases in the price of rice, in spite of this year’s plentiful harvest. The internationalisation of rice exports raises prices in local, more traditionally rice-dependent and producer countries. In India and Pakistan for example, rice prices are 30% higher than a year ago.

Land grabbing, aided by the World Bank, is about making profit while large parts of humanity go hungry. Capitalism is truly an obscene system.

Penny Cole

Environment editor

World Bank policies help drive global hunger

The World Bank has issued a global hunger warning after food prices soared by 10% in a single month from June to July. But this is disingenuous to say the least since the agency’s own policies backing corporate greed, are major contributors to hunger.

Maize and soybeans reached all time peaks due to an unprecedented summer of droughts and high temperatures in the United States and Eastern Europe, according to the World Bank’s latest food price watch report.

From June to July, maize and wheat rose by 25% and soybeans by 17%. The lives of millions of people are threatened, particularly in Africa and the Middle East. For example maize prices rose 113% in Mozambique in July and sorghum by 220% in South Sudan.

Drought in the US damaged crops of maize and soybeans, for which it is the world’s largest exporter. The dry summer in the Russian Federation, Ukraine, and Kazakhstan reduced the productivity of wheat.

“We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices,” said World Bank Group president Jim Yong Kim. “Countries must strengthen their targeted programmes to ease the pressure on the most vulnerable population, and implement the right policies.”

But this is hypocritical since the Bank’s own policies, supporting the requirements of the corporations and the rest of the global élite, are major contributors to hunger.

For example, the global land grab is entirely endorsed by the agency’s free market approach. Instead of bringing in rules to end this new brutal colonialism, the Bank and the UN developed a code of practice to facilitate it.

Governments are supported to treat traditional lands as state land with the right to sell it off to the highest bidder. Their own people are driven off to work for low wages from the new masters or to join the populations in the slums and barrios of the cities.

The mono-crops grown for export, using large quantities of water and fertilizer have negative effects on local markets. Water is being pumped to support the new large-scale agri-businesses, leaving family allotments, often planted by women, without adequate supply. And when the land is bled dry – literally – the land grabbers will move on, using investment funds from corporations like Goldman Sachs, to buy cheap somewhere else.

So far over 83 million hectares of land have been part of the global rush for land - 56.2 million hectares in Africa, 5% of the continent’s total agricultural land. Worldwide, 20 million hectares of land are growing crops to feed people who live a thousand miles away or more. And of course these intensive farming methods, clearing scrub land and pumping it full of fertiliser only serve to add to greenhouse gas emissions.

The World Bank’s much-vaunted focus on developing drought-resistant grains is all about profit – these will be grown on grabbed land and then exported to feed the beef that ends up in globo-burgers, or to burn up as bio-diesel.

La Via Campesina, the global movement of peasant farmers, sums it up by saying that the so-called agrarian reform supported by institutions like the World Bank, is all about sustaining capitalism:

“Because of the global crises, taking control of the earth’s remaining resources – land, water, forests, biodiversity – has become crucial to the survival of capitalism and the corporations. At the recently concluded Earth Summit in Rio de Janeiro, Brazil, this resource grab has been institutionalised under the label of ‘green economy’.”

Ending hunger means returning the land to the people to work in ways that mitigate the impacts of climate change that are now unavoidable. That would certainly involve abolishing capitalist agencies like the World Bank in favour of  democratic local, regional, national and international assemblies. Scientists could then help the majority develop ways to maintain themselves by sustaining the eco-systems they are a part of.

Penny Cole

Environment editor

Food as a commodity sends a message

As two-thirds of the United States suffers from the largest drought to hit the country in 50 years, food crop prices rocket and speculation is rising on the financial markets.

Corn and soybeans, essential for feeding large swathes of the planet’s population, stand at record highs. Corn has jumped between 30 to 50 per cent and soybeans are up 60% since last December.

For investors in food as commodities, of course, it’s great news. The Fiscal Times, for example, put matters like this:

“Agricultural commodities have handily beaten most other asset classes so far this year as a place where investors have been able not only to generate positive returns but capture gains of 20 percent or more, depending on their ability to buy into the right contract at the right time, and roll that contract over when it approaches expiry".

Thus, big consumers of grain from Egypt and Morocco to South Korea and Taiwan are facing a renewed bout of food inflation as cash rich gamblers on the commodity exchanges drive food inflation far beyond the limits of supply and demand.

In fact, it seems that economic, social and political effects of the sharp rise in agricultural commodity prices have barely begun. And with the increased cost of food, memories of the world’s recent food crises abound.

In 2007-08 rapidly rising food prices triggered riots around the world. In 2011 wheat prices were a major factor in pushing Egypt’s masses onto the road to revolution.

This time around, in Indonesia, the tofu industry has threatened to strike over rising soyabean prices; in Mexico, the cost of corn tortillas is on the rise; and Iran last week witnessed a rare protest over the cost of chicken.

Now, sharply rising food prices are intensifying the already existing impact of austerity measures imposed by governments since 2008.  Austerity measures are of course part of the effort to pass the responsibility for debts accumulated in bailing out the banks onto already beleaguered populations.

The World Bank is one of many agencies of the global capitalist class that are worried. Africa is their last hope of a source of profitable growth for corporations in the deepening global depression.

“Certainly there is a lot of reason to worry’ says Mthuli Ncube, Chief Economist and Vice President of the African Development Bank (AfDB).

“It is a threat … if they (the food prices) keep rising, again we will have social upheaval that will threaten economic growth in Africa”

Another global food price spike will squeeze net food importers in Africa. It will combine with the euro zone crisis in Europe and the continuing slowdown in China’s growth to negatively impact African exporters of oil and other commodities.

But, naturally, the Bank’s first and only concern is to return to profitable growth – the self-vicious circle of profit-fuelled commodity production process that has culminated in the present crisis.

The ways in which abnormal weather conditions like the US drought interact with global warming and climate change is extremely complex. But even Brad Plummer of the mainstream Washington Post is now warning about the effects of climate change on US farmers.

He has concluded that the Intergovernmental Panel on Climate Change’s (IPCC) 2012 report on extreme events, which brings together existing investigations, concluded that it was probable that droughts would “become more intense in many parts of the world if the planet keeps heating up — a trend that could disrupt the world’s food supply”.

The use of land and food production to generate profit and for speculation is fundamentally incompatible with feeding the world’s population.  Breaking the vicious circle between the corporate profit system, climate change and the threat of starvation for millions on the planet is most urgent.

A global network of People’s Assemblies can remove break the cycle by seizing control of the land, factories, offices and infrastructure and setting out on a path to sustainable production replacing the chase for profits with the interests of the planet and those who live on it.

Gerry Gold

Economics editor

'Clueless' as global crisis worsens

The World Bank is warning of a global downturn worse than that of 2008/09 which saw trade drop by 90% at it lowest point and production following suit. In a sharp about-face from the optimism of its June 2011 report, the Bank now says “the world economy has entered a dangerous period”.

It warns that countries do not have the “fiscal and monetary space” to stimulate the global economy or support the financial system to the same degree as they did in 2008/09. In other words, no rescue packages will be available this time round which is about as stark a message as it comes.

Following turmoil on the world’s financial markets in August, global trade volumes declined at an annualized pace of 8% during the three months ending October 2011, mainly reflecting a 17% annualized decline in European imports. On balance, the World Bank said global economic conditions were "fragile and there remains great uncertainty as to how markets will evolve over the medium term."

In an open admission that they, nor anyone else can do anything to prevent the worsening collapse, Andrew Burns, Manager of Global Macroeconomics and lead author of the report says “the importance of contingency planning cannot be stressed enough.”

The report admits: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.”

Underlining the interconnected self-feeding spiral of decline of the global capitalist economy, the Bank’s latest report adds: "The downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce one another, resulting in an even weaker outcome." Failure to resolve high debts and deficits in Japan and the United States and slow growth in other high-income countries, could trigger sudden shocks, the report says.

On top of that, political tensions in the Middle East and North Africa could disrupt oil supplies and add another blow to global prospects. In a sign that billions of people in developing countries are to be abandoned to their fate, the Bank warns that they “should evaluate their vulnerabilities and prepare contingencies to deal with a downturn”.


Meanwhile, the crisis in Europe is deepening by the day, as evidenced by the latest unemployment figures in Britain. The number out of work rose to its highest level in more than 17 years in November. The number of people without a job rose by 118,000 in the three months to November to 2.685 million, the highest level since August 1994. The number of young people without a job jumped to 1.043 million in the three months to November, taking the unemployment rate in the age group of 16-24 year-olds to 22.3%.

Unemployment looks set to rise further. Banks and retailers have cut jobs in recent weeks and Britain's largest food group Premier Foods announced yesterday that it would slash 600 jobs in the face of weak consumer demand.

None of this is surprising, given the ConDem coalition’s spending cuts and the crisis within the eurozone economies. In a sign of desperation, the Bank of England is expected to launch another round of “quantitative easing” – aka printing of money – next month in a bid to inject some life into the economy.

The sense of a loss of control at state level is palpable, as the unwinding of the economic and financial crisis continues to outrun governments. As one minister told the London Evening Standard this week: “The thing to remember, the unsayable thing, is that no one, not governments, not bond markets, not ratings agencies, not the World Bank, the ECB or the IMF has a bloody clue what to do about any of it.”

Gerry Gold
Economics editor

Market driving hunger crisis

The world is facing a hunger crisis unlike anything it has seen in more than 50 years. Some 925 million people don’t have enough to eat and almost 16,000 children die from hunger-related causes each day.

That’s the stark reality facing almost one in seven of the world’s population. With food prices reaching a new high, the head of the UN Food and Agricultural Organisation (FAO), Jacques Diouf, has called for “urgent structural change” to solve global hunger. The rapid increase in hunger and malnourishment since the food crisis of 2008 reveals the inadequacy of the present global food system, he said.

The World Bank estimates that the spike in global food prices in 2008, followed by the global economic recession in 2009 and 2010 has pushed between 100-150 million people into poverty.

But all Diouf’s talk of safety nets and social protection programmes, investment and support for small-scale farming is pie in the sky at a time when the market is driving land and food production in entirely the opposite direction.

In Africa, the main development activity at present is not land redistribution, or even food aid, but an enthusiastic entry into the world of global speculation in land and food production. The dramatic weather changes caused by global warming, which governments refuse to address, is also pushing up food prices.

The role of the market in buying and selling commodity futures is a further crucial factor in driving up prices. Last year, US wheat futures prices rose 47 per cent, corn rose more than 50 per cent and soybeans jumped 34 per cent.


Catherine Flax, investment bank JP Morgan's CEO for commodities, admitted that the financial crisis and fears of inflation have made investors suspicious of banks and financial services: "I do think investors are increasingly looking at physical assets, whether agricultural assets or infrastructure type assets, in part because of the expectations of inflation but also I don't think investors are entirely over the insecurity of the financial crisis."

Rising demand in Asia is a major issue. China’s food imports are soaring, as its own agricultural development is neglected, in favour of land privatisation and industrialisation.

There is no will on the part of governments to interfere in this unbridled operation of the market. In fact, there is an increasing tendency to end subsidies and to let inflation rip.

This policy is meeting resistance, especially in North Africa. The Algerian government rapidly cut import duties when food riots threatened its own survival. The price of basic goods rose by 30 per cent in less than a month in Algeria and a popular uprising led to the arrest of more than 1,000 people, many of them minors.

In neighbouring Tunisia dozens of people have been killed in clashes between protesters and security forces in clashes centred on unemployment and rising food prices. Bureaucrats in China also fear unrest, with inflation currently running at 5 per cent per year according to official figures, but in reality as much as double that.

Food prices in Australia are likely to soar in the coming months as a result of the Queensland floods, with 50 per cent of crops having been affected and 20 per cent wiped out entirely.

In reality it is THE MARKET in food that is in crisis, not the SUPPLY of food. There is food enough in the world – the rich never go hungry. The operation of the market is preventing people from either growing or purchasing what they need.

The structural change required is more fundamental than that proposed by the FAO. We must rapidly move away from the spoliation of agricultural land by market-driven farming systems. We need a commonwealth in land and a system of food production based on co-operation and the assumption that adequate food is a human right for all.

Penny Cole
Environment editor

Capitalism feeding off hunger

A capitalist perfect storm has ended all progress in reducing world hunger, and one billion people are now undernourished – 925 million more than before the economic crisis began. In every country, prices are soaring, including in the UK where food prices have risen by 22% in the last three years.

The crisis has been caused by the cumulative effects of:
• An expansion of commodity speculation in food products and land, including the poisonous hedgers and futures traders
• A year of extreme weather, from drought to floods
• Loss of agricultural land to bio-fuels, and urbanisation
• The collapse in purchasing power of the poorest people due to the economic slump.

Commodity speculators have moved strongly into food, betting on shortages and pushing up prices in a world where the food supply is increasingly globalised.

True, the wheat crop will be 30m tonnes lower than last year – a 5.5% decrease, due to drought in China, the heat wave in Russia and the floods in Pakistan. But stocks are not so low that prices could not be kept at a reasonable level. However that would assume a rational economic and trade system – and we are a million miles away from that. The market price of wheat and maize soared by 30% in just a few weeks.

In Russia, the price of buckwheat – a popular staple – has tripled. World meat prices – dependent on grain prices – are at a 20-year high. Egyptians can no longer afford their own basic diet of bread, cheese, tomatoes. Sugar and rice prices are at an all-time high.

According to the UN food price indicator (a figure based on a statistical analysis of 6 key commodities) prices have not reached the 2008 high of 199 – when there were food riots across the world – but they are heading in that direction at 188. The figure increased 14 points in 2010.

Governments across the world are preparing for social uprisings – already 12 people died last month in riots in Mozambique. But those same governments have facilitated the system that has led to the food crisis.

UN special rapporteur on the right to food, Olivier de Schutter, says a combination of environmental degradation, urbanisation and large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.

According to the World Bank, more than one-third of large-scale land acquisitions are intended to produce agro fuels. It is this loss of local agriculture that causes shortages – and not population increases.

Meeting in Rome, the UN’s Food and Agricultural Organisation’s committee on world food security (CFS) established a panel of experts to look at the “causes and consequences of food price volatility, including market distorting practices and links to financial markets, and appropriate and coherent policies, actions, tools and institutions to manage the risks linked to excessive price volatility in agriculture."

This panel will have as much success in changing the system as the International Panel on Climate Change has had in persuading governments to reduce greenhouse gas emissions; or experts working with the Convention on Bio-diversity have had in stopping the corporations destroying the planet’s eco-system.

The unsustainability of capitalism itself is the real problem, and the food crisis is a systemic, not a sporadic crisis. If we allow a system driven by profit and speculation to keep control of the world’s land use and agriculture, we will face famine on a scale not seen before.

Rioting and looting could well result as food prices rise out of reach. But these are not solutions. The real need is for a transformation in the ownership of land, the way food markets operate, the development of local food and the sharing of expertise and knowledge in a not-for-profit framework. That means grasping the opportunities offered by capitalist crisis to go beyond protest to democratising ownership, production and the political system itself.

Penny Cole
Environment editor

'Socially acceptable' land grab rejected

Over 100 community and farmers’ rights organisations from across Africa, Asia and Latin America have denounced the World Bank’s proposed code of practice on land sales. They issued a statement today headed Stop Land Grabbing Now, which says that the code effectively facilitates the corporate take-over of rural people’s land.

The World Bank starts from the idea that any investment to increase land productivity in lower income countries and rural areas “is desirable in principle”.

It admits, however, that “some countries have been confronted with informal requests amounting to more than half their cultivable land area”. The World Bank also acknowledges that the key driving forces behind this phenomenon are far from philanthropic.

They are “the 2008 price spike in food and fuel prices, a desire by countries dependent on food imports to secure food supplies in the face of uncertainty and market volatility, speculation on land and commodity price increases, search for alternative energy sources, and possibly anticipation of payments for carbon sequestration”.

The World Bank adds: “The range of actors includes agro-enterprises in agri-food, biofuels, and extractive industries, private equity and other financial institutions, government-linked companies including sovereign funds, and individual entrepreneurs.”

The opposition statement contemptuously dismisses the World Bank code, which is any case entirely voluntary, saying:

“Since these investment deals are hinged on massive privatisation and transfer of land rights, the WB wants them to meet a few criteria to reduce the risks of social backlash: respect the rights of existing users of land, water and other resources (by paying them off); protect and improve livelihoods at the household and community level (provide jobs and social services); and do no harm to the environment. These are the core ideas behind the WB’s seven principles for socially acceptable land grabbing.”

The community and farmers’ groups say that facilitating the long-term corporate takeover of rural people’s farmlands is “completely unacceptable no matter which guidelines are followed”. They also warn that the World Bank’s principles distract from the fact that today’s global food crisis, marked by more than 1 billion people going hungry each day, “will not be solved by large scale industrial agriculture, which virtually all of these land acquisitions aim to promote”.

The statement sets out its own principles for land use which support the rights of communities, small farmers, fisher people and pastoralists. They would ensure local food supply and local control over water use and bio-diversity.

No surprise then that almost the first comment posted on the statement comes from China Farmer – aka a Chinese government official assigned to monitor this issue on the web.

He/she states: “This sounds like it was written by a westerner who does not understand local situations and does not wish to help people get out of poverty. Where is analysis? Why do westerners wish to help poor people but not help poor people be rich?” This is Chinese government speak for “don’t challenge the right of our new-style agricultural corporations to rove the globe making money”.

Those governments who are buying land for profit represent a new brand of colonialism in cahoots with the global corporations, but hiding behind anti-imperialist rhetoric. Those who are selling it are not much better. They can try to put people off the scent, but global fairness can only be achieved by ending the market in land.

This means completing the anti-imperialist struggles of the 20th Century with a new political movement to overthrow the élites who inherited the colonialists’ power and are exploiting it to the full on the same free-market principles.

Penny Cole
Environment editor

Haiti a victim many times over

American forces have secured the airport in Port-au-Prince and thousands of Marines are on their way to Haiti, along with warships. Not for the first time in history either, which will help to explain why this week’s earthquake has had such a devastating impact on the impoverished country.

The United States has taken a hostile attitude to Haiti more or less since it declared independence from France in 1804, following a slave revolt. Haiti was occupied by US forces from 1915 to 1934. After World War I, angered by a US-instigated law requiring forced labour, as many as 40,000 Haitians rebelled. More than 3,000 Haitians were killed by American forces.

After World War II, Washington supported the notorious dictator Duvalier. When he was overthrown, the CIA helped depose elected politicians, including the popular president Jean-Bertrand Aristide. He was removed in 1991 and then again in 2004 after he got too close to Cuba and Venezuela. Several thousand people were killed in the internationally-sponsored coup which was bitterly resented by Haitians. In place of Aristide, the Haitians were sent a US-UN “stabilisation and pacification” force to secure the country for corporate-led globalisation.

In 1996, under pressure from President Clinton, who sent troops to restore Aristide to power in 1994, Haiti agreed to the draconian conditions set by International Monetary Fund and the World Bank. It called for suppressing wages, reducing tariffs, and selling off state-owned enterprises. The small amount for the countryside was designated for promoting export crops such as coffee and mangoes. The Haitian government also agreed to abolish tariffs on US imports, which resulted in the dumping of cheap US foodstuffs on the Haitian market.

Brian Concannon, director of the Institute for Justice and Democracy in Haiti, has explained how many of the earthquake victims came to live in shantytowns perched on hillsides. “The reason why the people got to the hillsides where they were most vulnerable to the earthquakes perched on the hillsides [is] they were pushed out of there by policies 30 years ago, when it was decided by the international experts that Haiti’s economic salvation lay in assembly manufacture plants. And in order to advance that, it was decided that Haiti needed to have a captive labour force in the cities. So a whole bunch of aid policies, trade policies and political policies were implemented, designed to move people from the countryside to places like Martissant and the hills — hillsides that we’ve seen in those photos.”

In July 2003, Haiti was forced to use more than 90% of its foreign reserves to service loans from foreign banks, requiring Aristide’s government to end fuel subsidies and slash spending on health and education programmes. This prompted Aristide to demand that France repay to Haiti “compensation” made after securing its independence. Six months later, France supported the coup against Aristide.

So it is no surprise that Haiti’s infrastructure has barely developed, explaining the slow to non-existent reaction by local authorities in the wake of the earthquake, as well as the large number of deaths of people living in makeshift dwellings on deforested hillsides. Instead, Haiti has been overwhelmed by aid agencies and NGOs of different sorts who come and go. No wonder Haiti is one of the poorest countries in the world and that large sections of the population have emigrated.

The country may have won independence more than 200 years ago, but Haiti has been robbed of its self-determination and its ability to meet the needs of its own people. No one can prevent earthquakes – but the swift despatch of US troops is a reminder that the power responsible for the extent of the disaster is human and headquartered in Washington, home of the American government, the IMF and the World Bank.


Paul Feldman
Communications editor

Profiting from the food crisis

The world’s major governments are sitting on their hands while the world’s poor face starvation from soaring food prices. This is the stark conclusion to be drawn from the fact that the United Nation’s World Food Programme (WFP) has so far received only £9 million towards closing a £380m funding gap, despite all the fine words from London, Washington and other capitals.

What is also increasingly clear is that the focus is on imposing top-down, market-driven “solutions”, which will deliver no benefits to the poor but will boost investment in research into agri-chemicals, GM crops, and second generation bio-fuels. The British government, for example, is giving just £30m extra to the WFP but has pledged £400m in extra investment in “agricultural research” over next five years. Much of it will be spent in the UK.

UN secretary-general Ban Ki-moon is doing his best to keep the issue upfront but he faces a slow reaction by governments more concerned about the impact of the global financial crisis on shares and property values then they are about starvation. The WFP believes 100 million people are currently going short of food. The prices of staple foods including rice, grain, oil and sugar are all at least 50% higher than a year ago. Fertiliser prices have soared too, leading to a decline in production by poorer farmers.

As for the leading agencies of global capitalism, they see the food crisis as an opportunity to boost corporate-driven globalisation. Dominique Strauss-Kahn, managing director of the International Monetary Fund, says curbs on food exports, “have a damaging global impact”. He called for the completion of the Doha round of trade talks as it “would reduce trade barriers and distortions and encourage agricultural trade”. The World Bank is developing a “Strategic Framework for Climate Change and Development” which will “provide direction on how adaptation - in agriculture as well as other impacted areas, such as flood-prone coasts - can be integrated into country, sectoral, and regional development strategies”. In other words, a series of expensive, prescriptive and ill-planned strategies will be imposed on poorer nations in return for World Bank funds.

In an excellent report on the food crisis, the biodiversity group GRAIN says:
“Farmers across the world produced a record 2.3 billion tons of grain in 2007, up 4% on the previous year. Since 1961 the world’s cereal output has tripled, while the population has doubled. Stocks are at their lowest level in 30 years, it’s true, but the bottom line is that there is enough food produced in the world to feed the population. The problem is that it doesn’t get to all of those who need it. Less than half of the world’s grain production is directly eaten by people.

“Most goes into animal feed and, increasingly, biofuels – massive inflexible industrial chains. In fact, once you look behind the cold curtain of statistics, you realise that something is fundamentally wrong with our food system. We have allowed food to be transformed from something that nourishes people and provides them with secure livelihoods into a commodity for speculation and bargaining. The perverse logic of this system has come to a head. Today it is staring us in the face that this system puts the profits of investors before the food needs of people.”

The way out of this impasse is through putting land into the hands of the people who work it and giving them independence and self-determination. It also means placing the global chemical and agri-business and food distribution corporations under democratic control and common ownership. Scientists and technologists could then get to work on sustainable, holistic approaches to agriculture and food production on the basis of need and not profit.

Penny Cole
Environment editor

IMF predicts the unpredictable

Headline reports of the stark admissions, predictions and warnings in the two latest reports from the International Monetary Fund (IMF) literally overshadow the impact of the developing financial and economic crisis on the world’s population. A third report, also released this week, for the weekend spring meetings of the central bankers and finance ministers has been almost universally ignored.

The World Bank’s global monitoring report report deals with the results and prospects of action on the Millennium Development Goals (MDGs) such as child and maternal mortality, poverty, malnutrition, education, climate change, sustainable development. It’s not really surprising that nobody is paying them much attention now, since progress on the MDGs has always been made contingent on extracting crumbs from an ever-expanding capitalist economy.

Now the blunt statements from the IMF’s Global Financial Stability report and World Economic Outlook (WEO) tell us that “the financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression”.

Headlines refer to the $945 billion predicted losses to the banks and other financial institutions arising from the US sub-prime mortgage crisis. But you should put this together with a muted, unquantified reference in the WEO to “rising questions about the soundness of the credit-default-swap market’”, which has played a big role in the so-called spreading of risk. Some put the size of that market, now effectively worthless, at $45 trillion, dwarfing the sub-prime losses. Doesn’t bear thinking about.

And, as “both of the financial system’s twin engines [the banking system and the securities markets] are faltering at the same time” the present credit squeeze could “mutate into a full-blown credit crunch”, warns the IMF. Especially as the huge injections of additional liquidity by the Federal Reserve and other central banks intended to ease the problem appear to be having the opposite effect – credit is becoming less available and more expensive.

With the US already in a recession, the IMF has revised its previous predictions for growth sharply downwards offering a 25% chance of a global recession. But is this a prediction dependent on the success of proposed co-ordinated action by a broad group of countries, or is it what might happen if such multilateral initiatives fail? It is just not clear. At least to me.

What the newspapers don’t report is that the IMF points to “a collective failure” to appreciate the extent of growth of credit and “the associated risks of a disorderly unwinding”. In other words, all those who were supposedly in a position to steer the global economy failed to see the dangers of a 60-year boom made possible only by a ballooning of credit in a variety of forms.

So why aren’t they all resigning? And why should we believe any of the predictions they are now making? Like this one: “All the advanced economies are expected to face serious consequences if deepening losses to bank capital and a further loss of confidence in structured financing were to transform the current credit squeeze into a full-blown credit crunch.” The IMF also admits that no previous episodes of distress in the finance sector “provide much guidance for the current unprecedented situation”.

As the mathematically-based econometric models they use for prediction aren’t up to the job, they’ve invented a new one based on “a combination of negative shocks” just to see what might happen. They consider three related shocks:

• A temporary shock to consumption and investment from a further tightening of credit conditions while the financial system goes through a protracted rehabilitation period during which capital and credibility are repaired after extended financial turmoil.
• A permanent downward shift in expectations for long-term productivity growth in the United States.
• A shift in investor preferences away from US assets.

Once again, the global consequences of this combination of shocks - a deeper and longer recession - don’t bear thinking about. Except that the IMF recommends that countries should start contingency planning. The worst is yet to come.

The uncertainly around the unravelling of credit and its impact brings to mind the famous 2002 statement by the then US secretary of defence, Donald Rumsfeld:

As we know,
There are known knowns.
There are things we know we know.
We also know
There are known unknowns.
That is to say
We know there are some things
We do not know.
But there are also unknown unknowns,
The ones we don't know
We don't know.

Gerry Gold
Economics editor