Barbarians at the gates: The image is evoked frequently these
days to describe the defensive condition of the West, and not
just by right-wing extremists like Pat Buchanan.
Listen to Jacques Attali, the well-known French Socialist party
stalwart who until recently headed the European Bank for Reconstruction
and Development. In his latest book [Millennium: Winners and Losers
in the Coming World Order], he writes off the billions of people
of the southern hemisphere as "millennial losers." Africa
is a "lost continent," according to Attali, while Latin
America is sliding into "terminal poverty." With no
future of their own, says Attali, the peoples of the South can
only look forward to "migrating from place to place looking
for a few drops of what we have in Los Angeles, Berlin, or Paris,
which for them will be oases of hope, emerald cities of plenty
and high-tech magic."
What worries Attali, though, is that the poor of the South "will
redefine hope in fundamentalist terms altogether outside modernity.
This dynamic threatens true world war of a new type, of terrorism
that can suddenly rip the vulnerable fabric of complex systems."
In other words, the gates must remain well-guarded against the
insurgent tide.
Attali is hardly a reactionary. Indeed, the ease with which he
and liberals like him have been seduced by the image of "the
beleaguered North" testifies to how many in the West now
perceive that the interests of the rich, white North and the poor,
colored South are irreconcilable. We may dismiss the popularity
of David Duke as an anomaly and attribute violence against foreigners
in Germany to a handful of neo-Nazis, but intellectuals are a
weathervane, and thinking like Attali's points to a dangerous
closing in Westerners' thinking.
It is not popular these days for opinion leaders in Europe and
the United States to suggest that the North may have had a hand
in creating the massive movement of people from the South. Surely,
however, the migration cannot be separated from the draconian
policies of debt collection that produced a staggering net transfer
of financial resources -- $155 billion -- from the South to the
North between 1984 and 1990.
Moreover, this massive decapitalization, which triggered the virtual
collapse of economies throughout the South, was not simply the
unfortunate consequence of repaying debt, as Northern media have
portrayed it. It was, in fact, the intentional outcome of a global
economic counterrevolution set in motion in the 1980s by Northern
states and economic institutions under the leadership of the Reagan
administration.
"Development": Defeat Solidarity
To understand this counterrevolution, we must place it against
the background of the 1960s and 1970s, which the United Nations
labeled the "first two development decades." These years
were marked by the growth of a more assertive, more confident
South. Though a mixed bag politically, the newly emerging independent
countries of Asia and Africa, as well as the older states of Latin
America, were determined to achieve development through economic
programs that included vigorous state leadership, domestic market
protection and strong controls on Western investment. While the
East-West conflict split the South on some issues, it did not
prevent its coming together in the Non-Aligned Movement, the United
Nations Commission on Trade and Development (UNCTAD) and the Group
of 77 [comprising the bulk of African, Asian and Latin American
countries] to press for a fundamental redistribution of wealth
on a global level.
The rhetoric of solidarity seemed on the verge of becoming reality
in the early 1970s, when OPEC countries managed to seize control
of the price of oil. OPEC's success triggered further attempts
by Third World countries to create cartels in bauxite, tin and
other raw materials, as well as in agricultural commodities. Southern
governments expected the OPEC producers to stand united with them
to demand a comprehensive deal on a wide range of commodities.
This would mark the beginning of the "New International Economic
Order."
OPEC did not deliver, but even the near emergence of a unified
Southern economic bloc controlling strategic commodities gave
the Northern countries a bad scare. Anti-South sentiment became
a mass phenomenon in the United States, where it contributed to
Ronald Reagan's election in 1980. Preceding the resurgence of
chauvinism and racism in Europe by a decade, this earlier reaction
in the U.S. probably stemmed from the coincidence of the Third
World economic challenge with such direct political threats to
U.S. hegemony as the defeat in Vietnam and the Iran hostage crisis.
In any event, the Reagan administration came to power with an
agenda to discipline the Third World. While U.S. military adventures
against radical Third World movements and governments dominated
the news, even more lethal was the economic warfare the U.S. unleashed
against the South on a global level.
The Reagan project was certainly helped by the fall in raw-material
prices to their lowest point since the 1930s. But the rollback
of the South was not primarily a result of market forces; it was
engineered. The U.S.-dominated World Bank spearheaded the effort.
The main mechanism employed was the aid program, which was transformed
from an instrument of limited wealth redistribution and pacification
under Cold War liberals like World Bank head Robert McNamara to
a device that completely reshaped Third World economies under
Reaganites at the Treasury Department and the World Bank.
Structural Adjustment Loans: The Weapon of Choice
Right-wing economists had identified strong state leadership,
protection of domestic markets and controls on foreign investment
as strategic building blocks of a subversive "New International
Economic Order." Dismantling them became a priority, and
for this task the World Bank deployed the formidably named "structural
adjustment loan" (SAL).
SALs were not tied to one specific project, but access to these
multi-million-dollar loans was made contingent on a Third World
government's agreement to carry out a drastic program of liberalization.
This included reducing the state's role in the economy, lowering
barriers to imports, removing restrictions on foreign investment,
eliminating subsidies for local industries, reducing spending
for social welfare, cutting wages, devaluing the currency and
emphasizing production for export rather than for local consumption.
While World Bank economists tried to sell these measures as necessary
to promote "efficiency," Third World leaders accurately
perceived them as striking at the heart of the Southern project
of gaining more economic independence at the national level and
seeking income redistribution at the global level. Not surprisingly,
initially there were few takers.
The opportunity for the Treasury Department and the World Bank
to have their way came in the early 1980s: as more and more Third
World countries ran into greater difficulties servicing the huge
loans made to them by Northern banks in the 1970s, the banks made
the adoption of the World Bank structural adjustment program essential
to debt rescheduling. They argued that the structural reforms
ensured debtors' abilities to continue paying their debts beyond
the short term. Unable to gain access to further private bank
financing without the World Bank seal of approval, governments
surrendered. By the end of 1985, 12 of the 15 debtors designated
as top-priority debtors -- including Argentina, Mexico and the
Philippines -- had submitted to structural adjustment programs.
Over the next seven years, SALs proliferated as the economies
of more and more Third World countries came under the surveillance
and control of the Bank. About 187 SALs had been administered
by the end of the decade, many of them coordinated with equally
stringent standby programs administered by the International Monetary
Fund (IMF). Whereas in the previous division of labor between
the two institutions, the World Bank was supposed to promote growth
and the IMF was supposed to monitor financial restraint, their
roles now became indistinguishable. Both became the enforcers
of the North's economic rollback strategy.
The cooperation between the Bank and the Fund was brought to a
higher level with the establishment in 1988 of the Structural
Adjustment Facility (SAF) to closely coordinate both institutions'
surveillance and enforcement activities, especially in sub-Saharan
Africa. Out of a total of 47 countries in that region, 30 are
currently implementing adjustment programs administered by the
Bank or the Fund. Since most of these countries have very weak
political structures, an IMF-World Bank condominium has been imposed
over much of sub-Saharan Africa under the guise of providing aid.
Structural adjustment programs functioned extremely effectively
as a mechanism to collect Third World debt and cause a massive
redistribution of financial resources from the South to the North.
But more importantly, they achieved the strategic objective: imposing
"reforms" that have since transformed scores of Third
World economies. From Argentina to Ghana, state intervention in
the economy has been drastically curtailed, protectionist barriers
to Northern imports have been eliminated wholesale, restrictions
on foreign investment have been lifted and, through export-first
policies, internal economies have been more tightly integrated
into the capitalist world market dominated by the North.
The crowning achievement of this strategy came in 1991: India,
a leader of the Non-Aligned Movement and long the champion of
state led nationalist development, promised a thoroughgoing restructuring
of its economy in exchange for a structural adjustment loan to
enable it to service its debts to Western banks. Conservative
publications like The Economist gave the event almost as much
significance as the dismantling of socialism in the Soviet Union.
"Bitter Medicine," No Cure
Like all counterrevolutions, the costs of dominating the South
have been ghastly. The average Gross National Product for nations
in sub-Saharan Africa fell by 2.2 percent per year in the 1980s;
by 1990, per capita income on the continent was back down to its
level at the time of independence in the 1960s. A United Nations
advisory group reported that throughout the continent, "health
systems are collapsing for lack of medicines, schools have no
books, and universities suffer from a debilitating lack of library
and laboratory facilities." Structural adjustment programs
have also promoted massive environmental damage, as many African
countries were forced to cut down forests rapidly and exploit
other natural resources more intensively to gain the foreign exchange
they needed to make mounting interest payments.
Latin Americans regard the reverse financial flow from their continent
as the "worst plunder since Cortez" and refer to the
1980s as the "lost decade." Per capita income in 1990
was at virtually the same level as ten years earlier. Severe malnutrition
stalks the countryside, paving the way for the return of cholera,
which people thought had been eradicated.
Technocrats at the World Bank and the IMF view this social devastation
as the "bitter medicine" Southern countries must swallow
to regain economic health. But after more than a decade of structural
adjustment programs, the technocrats still haven't come up with
an unqualified success story. They sometimes point to Chile as
a model, but change the topic when conversation turns to the hunger
and malnutrition pervasive in that land, where wages have declined
by over 40 percent in real terms since the early 1970s. At other
times, World Bank types wax eloquent over Mexico's resumption
of growth, but become evasive when they have to explain why more
than 50 percent of the population is now unemployed or underemployed,
and why the real purchasing power of the minimum wage is about
two thirds of what it was in 1970.
Perhaps it is the migrants who most clearly perceive the truth
about structural adjustment: it was intended not as a transition
to prosperity but as a permanent condition of economic suffering
to ensure that the South would never rise again to challenge the
North. If that is the case, flight is a rational solution. Migrants
are not obsessed nomads seeking the emerald cities, as Attali
would have it; they are refugees fleeing the wasteland that has
been created by the economic equivalent of a scorched-earth strategy.
Attali paints one possible outcome to the North-South "tragedy":
"a war unlike any seen in modern times, [one that] will resemble
the barbarian raids of the seventh and eighth centuries."
The image of permanent war is shared by the U.S. Presidential
Commission on Integrated Long-Term Strategy. Conflict with the
Third World, the Commission tells us, "is a form of warfare
in which 'the enemy is more or less omnipresent and unlikely ever
to surrender." The Commission goes on to say that whereas
"in the past we have sometimes seen these attacks as a succession
of transient and isolated crises, we now have to think of them
as a permanent addition to the menu of defense planning problems."
But another outcome is possible. It can come about if people emerge
who are brave enough to accept the North's responsibility for
the economic devastation of the South and lead the effort to forge
the only lasting solution to the global crisis: the creation of
a North-South alliance that would shatter the shackles of structural
adjustment and unleash the long-repressed promise of Southern
sovereignty.
IMF,
World Bank, Structural Adjustment