Far-reaching strategic debate is underway about how to respond to the global financial crisis, and indeed how the North's problems can be tied into a broader critique of capitalism.

At minimum, the ongoing chaos offers new ideological space and material justifications for African finance ministries to re-impose exchange controls and re-regulate finance, and to find sources of hard currency not connected to the Bretton Woods Institutions or Western donors.

The 2008 world financial meltdown has its roots in the neoliberal export-model (dominant in Africa since the Berg Report and onset of structural adjustment during the early 1980s) and even more deeply, in thirty-five years of world capitalist stagnation/volatility. As South Centre director (and Ugandan political economist) Yash Tandon put it: ‘The first lesson, surely, is that contrary to mainstream thinking, the market does not have a self-corrective mechanism.‘ Such disequilibration means that Africa receives sometimes too much and often too little in the way of financial flows, and the inexorable result during periods of turbulence is intensely amplified uneven development. Africa has always suffered a disproportionate share of pressure from the world economy, especially in the sphere of debt and financial outflows. But for those African countries that made themselves excessively vulnerable to global financial flows during the neoliberal era, the meltdown had a severe, adverse impact.

In Africa’s largest national economy, for example, South African finance minister Trevor Manuel had presided over steady erosion of exchange controls (with 26 consecutive relaxations from 1995-2008, according to the Reserve Bank) and the emergence of a massive current account deficit: nine percent in 2008, the second worst in the world. The latter was in large part due to a steady outflow of profits and dividends to corporations formerly based at the Johannesburg Stock Exchange but which re-listed in Britain, the USA or Australia during the 1990s (Anglo American, DeBeers, Old Mutual, Didata, Mondi, Liberty Life, BHP Billiton). In the second week of October 2008, South Africa’s stock market crashed 10 percent (on the worst day, shares worth $35 billion went up in smoke) and the currency declined by nine percent, while the second week witnessed a further 10 percent crash. The speculative real estate market had already begun a decline that might yet reach those of other hard-hit property sectors like the US, Denmark and Ireland, because South Africa’s early 2000s housing price rise far outstripped even these casino markets (200 percent from 1997-2004, compared to 60 percent in the US).

On the other hand, the cost of market failure could at least be offset, somewhat, by ideological advance. The main gains so far were in delegitimating the economic liberalisation philosophy adopted during the 1994-2008 governments of Nelson Mandela and Thabo Mbeki (presided over by Manuel). Indeed Mbeki’s dramatic September 2008 departure occurred partly because of substantially worsened inequality and unemployment since 1994, which in turn was responsible for thousands of social protests each year. When a solidarity letter Manuel wrote, resigning from Mbeki’s government on its second-last day, was released to the press (by Mbeki)) on 23 September, the stock and currency markets imposed a $6 billion punishment within an hour. The crash required incoming caretaker president Kgalema Motlanthe to immediately reappoint Manuel with great fanfare.

In the same spirit, Mbeki’s replacement as ruling party president, Jacob Zuma, had visited Davos and paid tribute to Merrill Lynch and Citibank in 2007-08 (ironically the latter two institutions insisted on having their jitters calmed). Zuma assured international financiers that Manuel’s economic policy would not change. Hence the opening of ideological space to contest neoliberalism in practice became a crucial struggle for the trade unions and SA Communist Party, which in mid-October held an Alliance Economic Summit that suggested Manuel make only marginal shifts at the edges of neoliberalism.

However, as the financial meltdown unfolded in the US and Europe, the merits of South Africa’s residual capital controls became clearer. As SA deputy trade minister Rob Davies wrote approvingly in the main Communist journal: ‘Interestingly, The Business Times of 21 September attributed this [safety from contagion] partly to “exchange control”’ which meant ‘there is a healthy degree of trapped liquidity within the financial system.’ Another factor was that many exotic financial products had been banned. As a leading official of the central bank, Brian Kahn, explained:

‘The interbank market is functioning normally and the Reserve Bank has not had to make any special liquidity provision. We have a relatively sophisticated and well-developed banking sector, and the question then is, what has saved us? (This may be tempting fate, so perhaps I should say what has saved us so far?) This all raises the old question whether or not exchange controls work. The conventional wisdom is that they do not, particularly when you need them to work. We seem to have been exception to this rule. It turns out that we were protected to some extent by prudent regulation by the Bank regulators, but more importantly, and perhaps ironically, from controls on capital movements of banks. Despite strong pressure to liberalise exchange controls completely, the Treasury has adopted a policy of gradual relaxation over the years. Controls on non-residents were lifted completely in 1996, but controls on residents, including banks and other institutions, were lifted gradually, mainly through raising limits over time. With respect to banks, there are restrictions in terms of the exchange control act, on the types of assets or asset classes they may get involved in (cross-border). These include leveraged products and certain hedging and derivative instruments. For example banks cannot hedge transactions that are not SA linked. Effectively it meant that our banks could not get involved in the toxic assets floating that others were scrambling into. They would have needed exchange control approval which would not have been granted, as they did not satisfy certain criteria. The regulators were often criticised for being behind the times, while others have argued that they don’t understand the products, but it seems there may be advantages to that! Our banks are finding it more difficult to access foreign funds and we have seen some spikes in overnight foreign exchange rates at times. But generally everything seems ‘normal’ on the banking front… Our insurance companies and institutional investors were also protected to some extent, in that there is a prudential limit on how much they can invest abroad (15 per cent of assets), and the regulator in this instance (the Financial Services Board) places constraints on the types of finds or products they can invest in. (Generally it appears that exotics are excluded). One large South Africa institution, Old Mutual, moved its primary listing to the UK a few years back (when controls were relaxed), and the plc has had fairly significant exposure in the US.’

Demands for deeper exchange controls were made by the South African Communist Party (SACP). And as Riaz Tayob of Third World Network points out, Manuel has been terribly irresponsible in pushing further financial services deregulation through the World Trade Organization (WTO).

As for the rest of Africa, similar opportunities to contest financial system orthodoxy now arise. At this stage, it is practically impossible for staff from the most powerful external force in African economic policy, the International Monetary Fund (IMF), to advise elites with any credibility. The IMF’s October 2006 Global Financial Stability Report, after all, claimed that global bankers had shown ‘resilience through several market corrections, with exceptionally low market volatility.’ Moreover, global economic growth ‘continued to become more balanced, providing a broad underpinning for financial markets.’ Because financial markets always price risk correctly, according to IMF dogma, investors could relax: ‘[D]efault risk in the financial and insurance sectors remains relatively low, and credit derivatives markets do not indicate any particular financial stability concerns.’ The derivatives and in particular mortgage-backed securities ‘have been developed and successfully implemented in U.S. and U.K. markets. They allow global investors to obtain broader credit exposures, while targeting their desired risk-reward trade-off.’ As for the rise of credit default swaps (the $56 trillion house of cards bringing down one bank after the other), the IMF was not worried, because ‘the widening of the credit default swaps spreads [i.e. the pricing in of higher risk] across mature markets was gradual and mild, and spreads remain near historic lows.’

Fast forward to the April 2008 launch of the IMF’s ‘Regional Economic Outlook for Sub-Saharan Africa’ study. IMF Africa staffer John Wakeman-Linn’s powerpoint slideshow, ‘Private Capital Flows to Sub-Saharan Africa: Financial Globalization’s Final Frontier?’, concluded that the vast rush of finance is generally good for Africa, but policies would have to be changed – making Africa more vulnerable to the international financial system – in order to take full advantage:

• More transparency and consistency: exchange controls in sub-Saharan Africa complex and difficult to implement.
• Gradual and well-sequenced liberalisation strategy can help limit risks associated with capital inflows.
• Accelerated liberalisation in the face of large inflows may help their monitoring (e.g. Tanzania); selective liberalisation of outflows may help relieve inflation and appreciation pressures, but further work needed on modalities.

The IMF proclaimed the merits of liberalisation and rising financial flows to Africa, especially portfolio funding (i.e., short-term hot money in the forms of stocks, shares and securities issued by companies and government in local currencies but readily convertible). Such ‘hot money’ - speculative positions by private-sector investors – flowed especially into South Africa’s stock exchange, and also to a lesser extent into share markets in Ghana, Kenya, Gabon, Togo, and Seychelles.

However, financial outflows continue apace. An updated report on capital flight by Leonce Ndikumana of the Economic Commission for Africa and James Boyce of the University of Massachusetts shows that thanks to corruption and the demise of most African countries’ exchange controls, the estimated capital flight from 40 sub-Saharan African countries from 1970-2004 was at least $420 billion (in 2004 dollars). The external debt owed by the same countries in 2004 was $227 billion. Using an imputed interest rate to calculate the real impact of flight capital, the accumulated stock rises to $607 billion. According to Ndikumana and Boyce:

‘Adding to the irony of SSA’s position as net creditor is the fact that a substantial fraction of the money that flowed out of the country as capital flight appears to have come to the subcontinent via external borrowing. Part of the proceeds of loans to African governments from official creditors and private banks has been diverted into private pockets – and foreign bank accounts – via bribes, kickbacks, contracts awarded to political cronies at inflated prices, and outright theft. Some African rulers, like Congo’s Mobutu and Nigeria’s Sani Abacha, became famous for such abuses. This phenomenon was not limited to a few rogue regimes. Statistical analysis suggests that across the subcontinent the sheer scale of debt-fueled capital flight has been staggering. For every dollar in external loans to Africa in the 1970-2004 period, roughly 60 cents left as capital flight in the same year. The close year-to-year correlation between flows of borrowing and capital flight suggests that large sums of money entered and exited the region through a financial “revolving door”.’

Where did this leave African debtors in 2008? According to the IMF, the ‘debt sustainability outlook’ of low-income African countries ‘has improved substantially, with 21 out of 34 countries classified on the basis of the Debt Sustainability Framework at a low or moderate risk of debt distress at end-2007.’ Yet the major lesson from the prior quarter-century of debt distress was not the abstract ratios, but instead, the ability to pay the debt in the context of pressing human needs. It was here, according to London-based Jubilee Research, that the Bretton Woods institutions had not accurately assessed the damage done by debt, or the injustice associated with repaying debt inherited from prior undemocratic governments:

‘Current [mid-2008] approaches to debt relief (HIPC and MDRI for poor countries, and Paris and London Club renegotiations for middle income countries) are not solving the problems of Third World indebtedness. HIPC and MDRI are reducing debt burdens but only for a small range of countries and after long delays, and at a high cost in terms of loss of policy space. While non-HIPC poor countries continue to have major debt problems and middle-income country indebtedness continues to grow. The present approach is marred by the involvement of creditors as judge, prosecution and jury in direct conflict with natural justice and by the failure to take into account either the human rights of the people of debtor nations or the moral obscenity of odious debt. It is all too little and too late… Even after the debt relief already granted under HIPC and MDRI, 47 countries need 100% debt cancellation on this basis and a further 34 to 58 need partial cancellation, amounting to $334 to $501 billion in net present value terms, if they are to get to a point where debt service does not seriously affect basic human rights.’

Hence the system of debt peonage remains, and the only prospect for its relief is the weakening of Washington’s power, along with the overhauling of the aid system that is so closely connected to debt (for the richest set of recommendations, see Yash Tandon's work). The Accra Agenda for Action (AAA) conference in September 2008 provided an opportunity to address the problems of donor/financier cross-conditionality, ‘phantom aid’ (including tied aid), corruption, waste, economic distortions and political manipulation, as well as to add the South’s demand for repayment of the North’s ecological debt to the South. But the opportunity was lost, and even mild-mannered NGOs realised they were wasting their time, as a staffer at Civicus, Nastasya Tay, revealed:

‘A colleague from a major international NGO gave an excellent summary of the whole High Level Forum process: “Why should I attend interminably long meetings, to passionately lobby for reform, when countries like the US and Japan are refusing to sign on because of some “language issues” with the AAA? In the end, we will have worked incredibly hard to, if we’re lucky, change a few words. And it’s just another document”.’

Hence, for some African countries, the solution lies in an alternative source of hard currency finance. It is not only China who provides condition-free loans to several of Africa’s most authoritarian regimes. More hopefully, Venezuela is considering a proposal to replace and displace the IMF, as happened in Argentina in 2006, in which case repaying the IMF early or even defaulting would be feasible. In other African countries, progressive social movements have argued for debt repudiation and are concerned about any further financial inflows beyond those required for trade financing of essential inputs. This would also entail inward-oriented light industrialisation oriented to basic needs (and not to luxury goods, a major problem that emerged in Africa’s settler colonial economies during the 1960s-70s).

The crucial ingredient for establishing an alternative African financing strategy from the Left is pressure from below. This means the strengthening, coordination and increased militancy of two kinds of civil society: those forces devoted to the debt relief cause, which have often come from what might be termed an excessively polite, civilised society based in internationally-linked NGOs which rarely if ever used ‘tree shaking’ in order to do ‘jam making’ and; those forces which react via short-term ‘IMF Riots’ against the system, in a manner best understood as uncivilised society. The IMF riots that shook African countries during the 1980s-90s often, unfortunately, rose up in fury and even shook loose some governments’ hold on power. When these, however, contributed to the fall of Kenneth Kaunda in Zambia (one of many examples), the man who replaced him as president in 1991, former trade unionist Frederick Chiluba, imposed even more decisive IMF policies. Most anti-IMF protest simply could not be sustained.

In contrast, the former organisations are increasingly networked, especially in the wake of 2005 activities associated with the Global Call to Action Against Poverty (GCAP), which generated (failed) strategies to support the Millennium Developmental Goals partly through white-headband consciousness raising, through appealing to national African elites and through joining a naïve appeal to the G8 Gleneagles meeting. Since then, networks tightened and became more substantive through two Nairobi events: the January 2007 World Social Forum and August 2008 launch of Jubilee South’s Africa network. These networks could return to the cul-de-sac of GCAP’s ‘reformist reforms’ – i.e., to recall Andre Gorz’s phrase, making demands squarely within the logic of the existing neoliberal system and its geopolitical power relations, in a manner that disempowers activists if they gain slight marginal changes.

Or they could embark upon ‘non-reformist reform’ challenges, by identifying sites where the logic of finance can be turned upside down. The most striking case might have been the South African ‘bond boycott’ campaign of the early 1990s, wherein activists in dozens of townships offered each other solidarity when collective refusal to repay housing mortgage bonds was the only logical reaction. This forewarned the 1995-96 ‘El Barzón’ (‘the yoke’) strategy of more than a million Mexicans who were in debt when interest rates soared from 14 to 120 percent over a few days in early 1995: they simply said, ‘can’t pay, won’t pay’. That slogan was also heard in Argentina in early 2002, following the evictions of four presidents in a single week due to popular protest. The ongoing pressure from below compelled the government to default on $140 billion in foreign debt so as to maintain some of the social wage, the largest such default in history.

At the time of writing, a November 2008 summit was called by the G8 in New York, to refashion the world’s financial architecture, likely adding China, India, Brazil and South Africa for legitimacy (and access to substantial dollar reserves). Activists began contemplating whether to ‘Seattle’ the event (shut it down with protest); African social movements and a few patriotic African trade ministers were, after all, not only present but instrumental in preventing the World Trade Organization’s Seattle summit from proceeding nine years earlier. A serious danger for civil society would be to settle for a UN-sponsored event full of reformist reforms. Enormous damage to Southern finances was caused by the 2002 precedent set in Monterrey at the UN Financing for Development conference, which had as key UN advisors Michel Camdessus (former IMF managing director) and Trevor Manuel.

Instead, much more forthright national action can be taken, spurred by far-seeing civil society activists, such as those who demand reparations for apartheid, colonialism, slavery and ‘ecological debt’ owed by the North to the South. Africa needs to re-impose national exchange controls and import controls (especially on luxury goods for the elites), as installed successfully by Malaysia, Chile and Venezuela in recent years.

As commodity prices plunge from their 2002-07 speculation-driven bubble prices, as trade deals with the North are unveiled as clearly disadvantageous and as trade finance becomes difficult as a result of bank mistrust of counterparty debt, and as the hot money portfolio flows dry up and new sources open for hard currency, the argument for what Samir Amin calls ‘delinking’ and Walden Bello terms ‘deglobalisation’ becomes all the more compelling. The evidence above suggests it is already beginning to happen, in no small part thanks to civil society advocacy.

* Patrick Bond is professor at the University of KwaZulu-Natal School of Development Studies where he directs the .
* Please send comments to [email protected] or comment online at http://www.pambazuka.org/

The past week has been a wild roller-coaster ride down the troughs of capitalism and up the peaks of radical social activism. Glancing around the world from those peaks, we can see quite a way further than usual.

First, look to Wall Street where Monday's stock market crash was worse than any since the terrorist attacks of September 11 2001, and where one investment bank after the other faces ruin or bale-out – three of the USA’s five largest flushed down the toilet.

Fourteen years ago, these same New York financiers put extreme pressure on Nelson Mandela’s new African National Congress government (a time I worked in his reconstruction and development program ministry and saw first hand). Mandela was defeated by neoliberal strategies - nicknamed ‘Freedom next Time’ and ‘Shock Doctrine’ by John Pilger and Naomi Klein, respectively, in their excellent South Africa chapters in recent books.

In response to the recent extract from William Gumede's book "Thabo Mbeki and the Battle for the Soul of the ANC" published by Zed Books (http://zedbooks.co.uk), Patrick Bond suggests that there is a need to go beyond the individual reasons and look at the structural forces that have informed Mbeki's AIDS policy such as international and domestic financial markets, pharmaceutical manufacturers and a large reserve army of labour.

With millions of South Africans dying early because of AIDS, the battle against the disease would become one of the most crucial tests of the post-apartheid government. Its systematic failure to address AIDS, and especially its ongoing sabotage of medicinal treatment for HIV+ patients, led to periodic charges of ‘genocide’ by authoritative figures such as the heads of the Medical Research Council (Malegapuru William Makgoba), SA Medical Association (Kgosi Letlape), and Pan Africanist Congress health desk (Costa Gazi), as well as leading public intellectual Sipho Seepe.

Aside from Mbeki, Pretoria’s main saboteurs were health minister Manto Tshabalala-Msimang and trade minister Erwin; the latter two were accused by the Treatment Action Campaign (TAC) of culpable homicide during a March 2003 civil disobedience campaign. Even in the weeks before the 2004 election, Mbeki and Tshabalala-Msimang continued to practice denialism, obfuscation, delays, bureaucratic manoeuvres, and withdrawal of resources for treatment. Educational campaigns like LoveLife’s were based upon fatuous marketing to hip-hop youth, and there was virtually nothing done to combat domestic violence, rape, multiple partners and patriarchy. Across Africa more generally, the ‘ABCs’ of abstinence, being loyal and condoms were particularly ineffectual within the confines of male-dominated marriage, leading to the tragedy that young women’s infection rate was twice as high as that of men.[1]

A great deal has been written about Pretoria’s malfeasance.[2] The point of revisiting it here while documenting South Africa’s elite transition is to provide a structural explanation for the crisis. Beyond the oft-cited peculiarities of the president himself, there are three deeper reasons why local and global power relationships mean that the battle against AIDS has to date mainly been lost.[3]

One reason is the pressure exerted by international and domestic financial markets to keep Pretoria’s state budget deficit to three per cent of GDP. Recall the telling remark of the late Parks Mankahlana, Mbeki’s main spokesperson, who in March 2000 justified to Science magazine why the government refused to provide relatively inexpensive antiretrovirals (ARVs) like Nevirapine to pregnant, HIV-positive women: ‘That mother is going to die and that HIV-negative child will be an orphan. That child must be brought up. Who is going to bring the child up? It’s the state, the state. That’s resources, you see.’[4] Instead of saving lives, Mbeki’s finance ministry adopted higher priorities: slashing corporate taxes, redeploying state resources to purchase high-tech arms, and repaying roughly $25 billion of apartheid-era foreign debt and a bit more in apartheid domestic debt, which could have been declared ‘odious’ in legal terms. Local and international bankers generally approved such examples of fiscal laxity, in contrast to expanding state health spending and other social budgets, which they have explicitly not supported.

The second structural reason is the residual power of pharmaceutical manufacturers to defend their rights to ‘intellectual property’, i.e. monopoly patents on life-saving medicines. This pressure did not end in April 2001 when the Pharmaceutical Manufacturers Association withdrew their notorious lawsuit against the South African Medicines Act of 1997. That Act allows for parallel import or local production, via ‘compulsory licences’, of generic substitutes for brand-name antiretroviral medicines. Big Pharma’s power was felt in the debate over essential drugs for public health emergencies at the November 2001 Doha World Trade Organisation summit, and ever since.

The third structural reason for the ongoing HIV/AIDS holocaust in South Africa is the vast size of the reserve army of labour, for this feature of capitalism allows companies to replace sick workers with desperate, unemployed people instead of providing them with treatment. The latter point deserves elaboration, simply because so many lives are at immediate risk, and so much evidence has mounted that corporate South Africa’s preferred approach has been, in essence, mass murder by denial of medical benefits.

This was the initial conclusion reached after a year of study at Africa’s largest company, Anglo American Corporation. Anglo has 160,000 employees, of whom 21 per cent are estimated to be HIV-positive. Once Big Pharma appeared to retreat from its lawsuit, the company announced that it would provide antiretroviral medicines to its workforce, which meant literally tens of thousands of lives might be saved in the short term. But in June 2001, the Financial Times reported on Anglo’s ‘plans to make special payments to miners suffering from HIV/AIDS, on condition they take voluntary retirement.’ However, in addition to bribing workers to go home and die, Anglo told the Financial Times, ‘treatment of employees with antiretrovirals can be cheaper than the costs incurred by leaving them untreated.’ In August, Anglo’s vice president for medicine, Brian Brink, bragged in Business Day about a ‘strategy [which] involved offering wellness programmes, including access to antiretroviral treatment.’ According to that report, ‘The company believed that the cost of its programmes would eventually be outweighed by the benefits its received in gradual gains in productivity, [Brink] concluded. Although it was indeed a risky strategy, it was the only one Anglo could pursue in the face of such human suffering.’

Then in October 2001, Anglo simply retracted its promise, once cost-benefit analysis showed that 146,000 workers just weren’t worth saving. According to the Financial Times, Brink ‘said the company’s 14,000 senior staff would receive antiretroviral treatment as part of their medical insurance, but that the provision of drug treatment for lower income employees was too expensive.’ Brink explained the criteria for the fatal analysis: ‘[Antiretrovirals] could save on absenteeism and improved productivity. The saving you achieve can be substantial, but we really don’t know how it will stack up. We feel that the cost will be greater than the saving.’ As the Wall Street Journal recorded:
‘In a controversial move that could have wide ramifications for how companies in poor countries handle AIDS, mining giant Anglo American PLC has put on hold a feasibility study to provide AIDS drugs to its African work force, according to people familiar with the situation. When it disclosed its plans for the study a year ago, Anglo garnered wide praise because it was one of the first major corporations to reveal measures aimed at treating AIDS cases among its rank and file African employees.’[5]

A few months later Anglo changed its mind once again, as AIDS ravaged the middle layer of the workforce, and the multi-class TAC raised consciousness sufficiently high as to get trades union support for members’ treatment. Indeed, in the cases of both Anglo and Coca Cola, the other factor that appeared in 2002 was the spectre of consumer protest over the firms’ refusal to treat employees. I was reliably informed by insiders that for Anglo, the prospect of demonstrators at the August 2002 World Summit on Sustainable Development dragging up many other bits of dirty laundry intimidated the company’s executives into taking pre-emptive action on the AIDS front. Coke’s main bottler in South Africa had also failed to insure two-thirds of its 4,000-strong workforce at a sufficient level to allow the HIV-positive workers access to ARVs, and was subject to international protest over African AIDS policies.

However, even though the costs of HIV/AIDS - absenteeism, declining productivity, payouts for early death - soared to as high as 25 per cent of payroll by 2003, according to the Financial Times, most employers are still hesitant to provide ARVs:

‘Untreated, HIV typically takes four to five years to manifest itself as full-blown AIDS, and companies are reluctant to pay for a risk that they cannot see… Persuading managers to part with fees [AIDS treatment programmes] today for costs that will hit company earnings years down the line has been a hard sell.’[6]

In sum, no matter the effectiveness of activism against government, Big Pharma and the corporate employers, all three structural factors are still deterrents to the provision of treatment. By late 2003, each was slightly mitigated, however, and that led to an ostensible change of policy by Pretoria. The budget deficit was projected to climb from just over one per cent of GDP during the early 2000s to nearly three per cent in 2004-05, allowing extra leeway for AIDS spending. Pharmacorps were cooperating more closely with the World Health Organisation, the Global Fund, the Clinton Foundation and governments to lower prices for Africa. Canada’s former prime minister Jean Chretien - spurred by the dynamic, outspoken UN advisor Stephen Lewis - even introduced path-breaking legislation to promote generics (although a sabotage clause was later included in the draft law to support patent rights, in turn attracting a new round of solidarity protests). And employers began waking up, in part because of the dramatic rise of AIDS-related disability claims as a percentage of all disability claims, from 18 per cent in 2001 to 31 per cent in 2002.

These factors converged in a November 2003 cabinet statement, finally endorsing a roll-out of antiretrovirals. Pretoria cited factors which included:

‘a fall in the prices of drugs over the past two years…new medicines and international and local experience in managing the utilisation of ARVs… [sufficient] health workers and scientists with skills and understanding… and the availability of fiscal resources to expand social expenditure in general, as a consequence of the prudent macro economic policies pursued by government.’

However, these factors were minor compared to intensive activist pressure, which Pretoria did not dare mention lest it encourage further protests. TAC’s victory statement was explicit: ‘The combination of the Constitutional Court decision on mother to child transmission prevention, the Stand Up for Our Lives march [of 15,000 people on parliament] in February, the civil disobedience campaign and the international protests around the world have convinced Cabinet to develop and implement an ARV roll-out plan.’

Another factor, of course, was the 2004 presidential election, which Mbeki would win easily but which would be characterised by high levels of apathy and no-vote campaigning by the Landless Peoples Movement. An AC Nielsen survey in November 2003 confirmed that Mbeki’s AIDS policy was hurting the chances of the ruling African National Congress of turning out the vote. The cabinet statement promised that ‘within a year, there will be at least one service point in every health district across the country and, within five years, one service point in every local municipality.’ In addition to medicines, the state would provide an education and community mobilisation programme, promotion of good nutrition and traditional health treatments such as herbal remedies, support for families affected by HIV and AIDS, and funds for upgrading health infrastructure. The health system was already massively overextended, with far too few essential medicines, much less ARVs, available in South Africa’s under-funded rural clinics.

As TAC was the first to concede, ARV availability could generate negative unintended consequences. One would be non-compliance with treatment regimes by poor people, and the concomitant emergence of drug-resistant strains. Another would be the black market smuggling of cheap drugs to Europe and North America which would reduce access in Africa. Another would be that, although stigmatisation would decline given the availability of hope-giving drugs, so too might the practice of safe sex. These would remain major challenges to TAC and other health-sector groups, although the Khayelitsha operation of Médecins Sans Frontières was already proving high levels of treatment compliance.

Moreover, the conflict between neo-liberalism and life, so explicit in the case of access to AIDS medicines, was severely compounded by patriarchy, traditional and modern sexual practices such as multiple partners for men, and domestic violence against women. Rape continued at scandalous levels.

But the primary contradiction involved the regime in Pretoria. In February 2004, TAC attacked President Thabo Mbeki in the wake of more government prevarication on AIDS treatment.[7] Claiming that Mbeki ‘misrepresented facts and once again caused confusion on HIV/AIDS’ on national television, TAC’s Zackie Achmat accused him of ‘denialism.’ Moreover, Pretoria had originally promised to distribute AIDS medicines to at least 50,000 people within a year, and to reach everyone in need of treatment within five years. Tshabalala-Msimang blamed slow drug procurement – Pretoria’s own fault – and the lack of qualified health personnel. TAC strategist Mark Heywood commented, ‘Many hospitals have the capacity, they just don’t have the medicines.’ The finance ministry also cut the budget dramatically for medicine purchases in February 2004.

At the same time, Tshabalala-Msimang suggested that while HIV-positive people waited for medicines, a diet of lemons, beetroot, (extremely expensive), olive oil and garlic would improve the body’s immune system. A week earlier, the minister had come under fire by the SA Medical Association, whose chairperson Dr Kgosi Letlape accused her of ‘dividing the profession when we have gone to great lengths to unite it.’ The minister unsuccessfully attempted to halt a protest march of 2,000 medics against poor conditions in public health facilities by implying that the demonstrating doctors were white, whereas black medics supported the government.

Mbeki continued supporting his minister, no matter how outrageous this became. He told the SA Broadcasting Corporation on 8 February 2004 that the major problem was inaccurate mortality statistics, which made it impossible to know whether AIDS was as fatal as claimed. According to Mbeki, his doctors informed him that diabetes is also an epidemic, and he questioned why no-one talks about diabetes. Achmat replied:

‘Drugs for treating diabetes are heavily overpriced; there should be a campaign for their reduction. But unlike HIV until November 2003, diabetes is treated in the public health sector. However, the President should be aware that according to an initial investigation into the burden of disease estimates in South Africa released in 2003 by the Medical Research Council, AIDS was responsible for 39 per cent of lost life-years in 2000 - more than the next 10 worst diseases. Diabetes is the 12th worst disease and is responsible for slightly more than one per cent of lost life-years. The two diseases are incomparable in scale.’

Achmat also ridiculed Mbeki’s claim that ‘few countries can hold a candle to South Africa’s HIV/AIDS programme.’ Achmat replied:

‘A number of developing countries do much better than South Africa when it comes to HIV prevention and treatment, often with far fewer resources. Currently, South Africa treats approximately 1,500 people in its public sector, who are not on drug trials, paying for their own medicines or being sponsored. By contrast, Brazil’s government treats over 100,000 people and has less than a quarter of South Africa’s HIV infections. Botswana is treating approximately 15,000 and Cameroon approximately 7,000 people.’

In March 2004 the need to harass Pretoria to ensure roll-out was confirmed again, when TAC was forced to threaten an urgent court interdict in order to permit the urgent acquisition of antiretroviral medicines consistent with the November 2003 cabinet decision. Tshabalala-Msimang was sufficiently threatened by yet more embarrassing court proceedings that she finally agreed, just before a deadline provided by TAC lawyers. TAC declared victory, though remarked that ‘by implementing the interim procurement mechanism and thereby avoiding a three-month delay of the treatment programme, approximately 6,000 excess deaths could be avoided.’ [8]

What is the way forward, given persistent presidential denial, state bureaucratic sabotage, and structural factors that mitigate against access to treatment? One major stumbling block would probably emerge in subsequent months and years: the nature of political alliances within South African politics. TAC had been effective in attracting support from the most forward-looking trades unions, the SA Communist Party, churches, NGO activists and technical supporters (lawyers, health workers, academics, journalists). Yet these alliances did not stray far from the ANC. Would TAC forge sufficient linkages to non-ANC communities, especially those devoted to building the new independent left? In coming years, would the myriad of problems that cause opportunistic infections, especially dirty water and air (thanks to coal/wood/paraffin), also be addressed? At a time that the South African government was disconnecting water and electricity at a lethal rate, alongside evictions for those who could not afford expensive rental and mortgage bond payments, the need to address the links between AIDS and the diseases of poverty/homelessness was obvious.

Moreover, would TAC and its allies make the case that access to ARVs is a human right and that people should not pay user-fees or partial cost-recovery for the medicines? By 2004 they were taking this position, but only in the event that people were too poor to pay for medicines. Yet means-testing of black South Africans with irregular informal incomes is notoriously difficult. In contrast, a more explicit ‘free lifeline’ strategy would parallel the demands of the water and electricity campaigners.

Nevertheless, whether or not TAC continues to tackle the three structural impediments to ARV access – neo-liberal fiscal policy, pharmacorps and corporate control of health perks - the immediate victory of November 2003 will potentially make a huge difference. For the half million South Africans who are symptomatic with AIDS or who have a CD4 blood count less than 200, there was suddenly hope. Across the world, for three million people who die each year of AIDS, and for 40 million others infected, the treatment activists and their international allies deserve a standing ovation.

* Patrick Bond directs the Centre for Civil Society at the University of KwaZulu-Natal in Durban. This article is an extract from his book 'Elite Transition: From Apartheid to Neoliberalism in South Africa'.

**Please send comments to or comment online at www.pambazuka.org

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As the world waits to see what will happen in Zimbabwe, Patrick Bond argues that lessons should be taught and retaught about the dangers of elite transition between a voracious, corrupt, violent and divisive set of rulers, and an incoming crew who might not withstand the blandishments of local power-sharing and global economic seduction.

http://www.pambazuka.org/images/articles/359/47087finger.jpgAs the world waits to see what will happen in Zimbabwe, Patrick Bond argues that lessons should be taught and retaught about the dangers of elite transition between a voracious, corrupt, violent and divisive set of rulers, and an incoming crew who might not withstand the blandishments of local power-sharing and global economic seduction.

Zimbabwe's March 29 election surprised many, because although it seemed President Robert Mugabe had the machinery in place to ensure a victory even by stealth, as has happened before, the groundswell of opposition was overwhelming. By late on April 3, we don't know how many votes he won, either in reality or in the cooked books of the Zimbabwe Electoral Commission (ZEC), but certainly fewer than 50%.

What is known, at this writing, is that a bare plurality of the 210 seats in the House of Assembly were won by Morgan Tsvangirai's Movement for Democratic Change: 99. This was two ahead of Mugabe's Zanu-PF, with Arthur Mutambara's MDC faction getting 10 and the independent Jonathan Moyo retaining his seat. (Three more seats will be fought for in by-elections due to the deaths of MDC candidates.)

But these are official statistics, and who knows what the actual votes were, once the multiple systems of rigging are exposed, if ever they are?

As for the presidential race – for which at this time no figures have been released by the ZEC - Tsvangirai says that based on polling place reportbacks, he received 1,171,079 votes, or about 49%, with Mugabe getting 44% and Makoni the balance. (Mutambara told his supporters to vote for Makoni.)

Senate and municipal election results are also not being released as we write. In any case, the official parliamentary results are so distorted that on Thursday morning the state-owned Herald newspaper claimed, “Zanu-PF had won 45,94 percent of the votes, MDC-Tsvangirai 42,88 percent, the MDC [Mutambaraba] 8,39 percent and the minor parties and independent candidates 2,79 percent.” The Herald even claimed Zanu-PF outpolled Tsvangirai's MDC in Matabeleland South.

Though Zanu-PF has definitely lost control of parliament, such numbers justify Mugabe potentially contesting a run-off, which would be held no more than 21 days after March 29. Tsvangirai and former finance Minister Simba Makoni had a pre-election pact to unite in such an event, and it is hard to imagine that if the pact holds, Tsvangirai would not beat Mugabe outright, one on one.

Makoni, who ran solo for president with no machine behind him, never gained the open public support of key military factions and of dissident Zanu-PF politicians that his main handler, Ibbo Mandaza, had predicted.

Makoni's arrogance in entering the race – probably drawing away roughly the same votes from each main party – was again witnessed this morning. His advisor, former Mugabe spokersperson Godfrey Chanetsa, now insists that in a new government in alliance with Tsvangirai, Makoni would not “play second fiddle. He came to lead.”

As reporter Fiona Forde put it, “frantic behind-the-scenes negotiations were laying the groundwork for a government of national unity that would include not only the opposition MDC but also Zanu-PF with Makoni taking on a senior role with extended executive powers.”

Here's Chanetsa's strange rationale: "Eight percent is an illusion. Many people were afraid to vote for Simba, afraid of letting Zanu in the back door and losing their chance of getting rid of Robert. But if they got rid of Robert, do you still think they would see Morgan as the right man for the job?"

Meanwhile, an ominous dance began between Tsvangirai and the forces of imperialism. According to a Reuters report today, the MDC would gain access to US$2 billion per year in 'aid and development' – which normally is top-heavy with foreign debt and chock-full of conditions. Amongst these, most likely, are dramatic cuts to the civil services, so that the Zimbabwe central bank stops printing so much money, fuelling inflation. But the downside is the potential deepening of the country's economic crisis in the short term, as effective demand falls while more luxury goods become available thanks to foreign exchange inflows.

The key players are the International Monetary Fund, World Bank, European Union and the United Nations. No doubt Bush's White House is also involved in negotiations, which, if Tsvangirai persuades Mugabe to depart, may even reach fruition next week at the IMF/Bank spring meetings in Washington.

Given that Tsvangirai has chosen advisors from the International Republican Institute and Cato Institute, such a process was anticipated. It simply means that the left-leaning civil society forces that backed Tsvangirai have a huge regroupment challenge. If after an April 21 victory, many progressive Zimbabwean organisations lose cadres into an expanded state, this may recall the liquidation of South Africa's Mass Democratic Movement into the African National Congress government.

At least in Kenya, reports from Tuesday's street battles between hundreds of protesters and police show that civil society will not necessarily accept a 'supersized state' as a gimmick to seduce contesting parties into a government of national unity. “No more than 24!” was the activists' demand for a slim state so that more social spending can be spent on ordinary people, not the bloated ministers' Mercedes.

In the same critical spirit, Kenya's National Civil society Congress and Kenyans for Peace with Truth and Justice offered wisdom and solidarity in a statement today. Amongst their concerns, were “That SADC should review their statement that concluded that elections were free and fair while closing their ears to the significance of the undemocratic practices of the Zanu-PF regime.”

Between Kenya's tragic election last December and Zimbabwe's uplifting experience last Saturday, lessons should be taught and retaught about the dangers of elite transition between a voracious, corrupt, violent and divisive set of rulers, and an incoming crew who might not withstand the blandishments of local power-sharing and global economic seduction.

*Professor Patrick Bond is the Director of the Durban based Centre for Civil Society.

**Please send comments to or comment online at www.pambazuka.org

Patrick Bond asks the question: With Jacob Zuma's election, shall we see a significant change in South African neoliberal policies?

Congratulations are due Jacob Zuma – apparently far more Machiavellian than even his arch-opponent since 2005, Thabo Mbeki – and the tireless band of warriors from the Congress of SA Trade Unions, SA Communist Party and African National Congress Youth League who kept his political life support on when everyone else declared him dead.

But after his election as ANC president on Tuesday, the disintegration of his voting bloc is not far off. As Brian Ashley of Amandla magazine explains, Zuma commands “a broad coalition of disgruntled elements within the ANC. A period of political instability awaits. The 'dreaded' two centres of power have materialised and given rise to a lame duck President.”

This is promising indeed, after 13.5 years of unrelenting neoliberalism mixed with triumphalist nationalism (often, in turn, flavoured with 'Breshnevite Marxism', as the ANC's left discourses have been termed in rare moments of autocritique). Indeed amongst the general public, there is a widespread conviction that a new balance of forces within the ANC presages a genuine left policy turn. To make this impression more palatable to bourgeois society and those near-mythical foreign investors, a seductive – yet incorrect - line of analysis also arises now to explain the logic behind Zuma's landslide victory. The first period of ANC rule (1994-2001) required 'macroeconomic stabilisation', so the argument goes, and subsequently a 'developmental state' with a strong welfarist bias has been under construction. Hence Zuma's victory will not change anything, really.

Actually, Zuma's huge (nearly 20%) margin reflected not a heroic new ruler, but rather a ruling regime out of touch with the misery experienced by its mass base, no one denies. The SA Police recently revealed that the rate of social protests has risen from 5800 in 2004-05 (when it would have been the world's highest per person, I reckon) to more than 10 000/year since, and no doubt even higher numbers will be released for 2007/08 given the long public workers' strike.

Zuma wasn't an instigator of more than a few of these, such as when disgracefully in May 2006 he let his rape trial devolve into an orgy of misogyny, with effigies of his victim burned outside the courthouse. No, indeed, the grassroots protests were largely against the ANC's neoliberal economic policies, prior to and after Zuma's firing as deputy president in mid-2005 in the wake of his friend Schabir Shaik's conviction on corruption charges.

Zuma was subsequently harrassed no end by Mbeki's vindictive state. This meant that at the ANC conference and in the words of commentators, the angry rumble from below was readily channeled away from structural critique of neoliberal nationalist rule, and into the song Umshini Wami ('Bring me my machine gun'). The prodigious venality of the Zuma-Mbeki squabble threw copious amounts of toxic dust high into the air, blinding most to what's really at stake here: class struggle, to borrow a worn but potent phrase.

Indeed the tone of the internecine battle with Mbeki was sufficiently vicious as to require cries of 'unity' immediately from both camps immediately afterwards, as well as from Zuma's speech on Thursday afternoon. But like much that happens in this party, the lovely rhetoric concealed yet more brutal power plays.

The other major ANC vote – for 80 positions on the ANC National Executive Committee – confirmed that the Zuma majority took no prisoners, leaving Mbeki's most trusted allies in the political wilderness. Although six cabinet ministers were elected in the top 20, those who lost their NEC places and are now ANC outsiders include some formidable names: Deputy President Phumzile Mlambo-Ngcuka (who replaced Zuma), Mbeki's top state official Frank Chikane, his top political advisor and hatchet man (and Minister in the Presidency) Essop Pahad, Intelligence Minister Ronnie Kasrils, the man who served as ANC chairperson until Monday, Terror Lekota, the head of the Mbeki's office at ANC headquarters Smuts Ngonyama, and Safety and Security Minister Charles Nqkula (formerly SACP chairperson).

The top vote-getter was veteran and often flamboyant populist Winnie Madikizela-Mandela (ex-wife of Nelson), who gets counted out as irrelevant by the mainstream media periodically and makes comebacks worthy of the Zuma camp.

There really has been a change of the guard. But is it a move left? SACP intellectual leader Jeremy Cronin - who was #5 in the ANC vote – offers this spin about the party's ideological direction. The ANC conference just complete witnessed a “deepening and consolidation” of the progressive trajectory already underway, says Cronin. Hence under a President Zuma, “There would be no dramatic U-turn” on matters already under contestation: Pretoria's tight monetary policy, chaotic credit market regulation, and the liberalised trade and industrial policies which have killed a million jobs. For those like Cronin, the recent revival of the “National Democratic Revolution” is already undermining the neoliberal bloc within the ANC.

Is it? In reality, many on the centre-left – Cronin too - have been rather lukewarm about the Zuma campaign, because as national deputy president starting in 1999, Zuma was nowhere visible with workers and the poor (or women, needless to say) pulling against Mbeki and the other weighty neoliberals: Trevor Manuel (finance), Alec Erwin (trade/privatisation), Tito Mboweni (central bank governor), Geraldine Fraser-Moleketi (public service) and Sydney Mufamadi (local government). Of these, only Manuel retained an NEC seat, voted in at #57 after having been #1 in the 2002 vote.

In his first speech to the ANC as its president, Zuma himself intoned that there was “no reason why the business or international community or any other sector should be uneasy.” Quite so; after all, a mealy-mouthed Zuma made this clear last month in closed-door meetings organised by officials of two New York banks, Citi and Merrill Lynch, which are themselves making the world markets rather uneasy with their financial shenanigans.

Still, even Manuel, in a Mail & Guardian interview last week, condemned the private outsourcing of state services, something he himself has promoted harder than anyone since 1996 as keeper of the ever-tightening SA fiscus, notwithstanding that this 'New Public Management' technique is the root cause of many a fierce protest. Bizarrely, Manuel even endorsed the core legal argument put forward by the Soweto left-left in constitutional case earlier this month against Johannesburg Water (whose policies were products of Paris-based Suez's eco-social engineering during a failed 2001-06 outsourcing), namely, that the key water problem for the poor is the inordinate access that rich people enjoy at a too-cheap price.

With such rhetoric in the air these last few days, South African society does indeed feel like a 'post-Washington' semi-liberated zone. Free marketeers, who still run many a Pretoria ministry's policy units and finance departments, have had to hunker down.

But like so much other 'talk left walk right' activity here, that's precisely where the problem of seduction emerges, in illusions that Zuma's long and winding road to the country's presidency in 2009 (when Mbeki must retire) will generate conditions for social change along the route. We all witnessed how most of the US progressive movement fell flat on its face in 1993, suckered by Bill 'Slick Willy' Clinton – whose defeat of an elite incumbent (George Bush Sr), rural roots, home-boy humility, traditions of Southern patriarchy (and promiscuity) and apparent empathy for ordinary people presaged Zuma's own character flaws – and I think this is probably going to be the fate of a large portion
of the SA centre-left.

South Africa's left-left forces don't buy it, though. No one from the new social movements believes that a small increase in anti-poverty grants and other social wage improvements – amounting to less than 3% of GDP over apartheid-era stats – represents more than tokenistic welfare. With a 14% increase in electricity prices set for next year, and privatisation of 30% of generation capacity also on the cards, any suggestion of expanding basic services runs up against a contrary, commodified logic.

And then looking at the vast ($60 billion) spending planned for what amounts to a small herd of white elephants – 2010 soccer stadiums, big dams largely for mining houses, dicey nuclear power plants, aluminum smelter co-investments, speedy trains for the rich (who won't use public transport) and the rearmaments craze replete with corrupting German, French and British weapons dealers – it is hard to see anything 'developmental' about this crony-capitalist state.

Because of this week's momentous events, though, the centre-left's hard reality check lies a couple of years away, after Zuma takes power (if he is not in prison for bribe-taking, a distinct possibility, according to the National Prosecuting Authority in a statement on Thursday) and reverts to his militarist roots. Those who are championing his cause now may have reason in 2009 to renew their disgust at what we thought was 'Mbekism' – as Ashwin Desai has termed local neoliberalism - but can soon be renamed Zumism. We could well see the deepening of macroeconomic policies that do not deliver 'stability' (the currency has crashed four times since 1996 after all) but instead one of the world's highest current account deficits (trade shortfalls and financial outflows) at 8% of GDP, and hence repeated hikes in interest rates to draw in global financial assets, which are in turn making the credit-saturated middle-class scream in pain.

Unless I'm mistaken (and I really hope I am), there's simply no basis for believing Zuma is lying to Citi, Merrill or his audience when he says none of Mbeki's economic policies will change. So the root cause of the rebellion against Mbeki's malgovernance of the ANC – which is described too often as haughty style but which is grounded in a commitment to a haughty new class apartheid socio-economic structure – will reassert itself within weeks or months.

Only then will South Africa enjoy the possibility of a fully liberatory, post-Mbeki set of politics, not personalities, as the far-sighted left-left makes common cause with serious comrades in labour and the Communist Party, egged on no doubt by increasingly angry feminists and other democrats. This week's Polokwane theatrics will be looked back upon as a bit of distraction, at that stage in the making of South Africa's real history.

* Patrick Bond directs the Centre for Civil Society at the University of KwaZulu-Natal:

* Please send comments to [email protected] or comment online at www.pambazuka.org

Patrick Bond assesses the aftermath of the World Social Forum, held from January 20-25 in Nairobi. There were some triumphs for social justice, but also some worrying trends that emerged from the forum. Bond examines what it means for the future of the WSF concept.

A mixed message - combining celebration and autocritique - is in order, in the wake of the Nairobi World Social Forum. From January 20-25, the 60,000 registered participants heard the triumph of radical rhetoric and yet, too, witnessed persistent defeats for social justice causes - especially within the WSF's own processes.

* Kenya Social Forum coordinator Onyango Oloo listed grievances that local activists put high atop the agenda: 'colonial era land edicts and policies which dispossessed their communities; the impact of mining and extraction activities on the environment and human livelihoods; discriminatory policies by successive governments that have guaranteed the stubborn survival of pre-colonial conditions of poverty and underdevelopment among many pastoralist and minority communities; the arrogant disregard for the concerns raised by Samburu women raped over the years by British soldiers dispatched on military exercises in those Kenyan communities; … and tensions persisting with neo-colonial-era settler farmers and indigenous Kenyan comprador businessmen in hiving off thousands of hectares of land while the pastoralists and minority communities are targets of state terror, evictions and denunciations.'

* WSF organiser Wahu Kaara: 'We are watching [global elites] and this time around they will not get away with it because we are saying they should cancel debts or we repudiate them. We refuse unjust trade. We are not going to take aid with conditionality. We in Africa refuse to be the continent identified as poor. We have hope and determination and everything to offer to the prosperity of the human race.'

* Firoze Manji, the Kenyan director of the Pambazuka (www.pambazuka.org) Africa news/analysis portal: 'This event had all the features of a trade fair - those with greater wealth had more events in the calendar, larger (and more comfortable) spaces, more propaganda - and therefore a larger voice. Thus the usual gaggle of quasi-donor and international NGOs claimed a greater presence than national organisations - not because what they had to say was more important or more relevant to the theme of the WSF, but because, essentially, they had greater budgets at their command.'

* Nairobi-based commentator Tajudeen Abdul-Raheem (also writing in Pambazuka): 'The WSFs show up Africa's weaknesses whether they are held outside or inside Africa. One of the critical areas is our level of participation and preparedness. A majority of the African participants - even many from Kenya itself - were brought by foreign paymasters or organisations funded by outsiders. Often they become prisoners of their sponsors. They must attend events organized or supported by their sponsors who need to put their "partners" on display, and the "partners" in turn need to show their loyalty to their masters.'

* New Internationalist editor Adam Ma'anit: 'The sight of Oxfam-branded 4x4s cruising around flauntingly, the many well-resourced charity and church groups decking out their stalls (and even their own office spaces) with glossies and branded goodies, all reinforce the suspicion that perhaps the WSF has become too institutionalized. Perhaps more worryingly has been the corporate sponsorship of the WSF. The Forum organizers proudly announced their partnership with Kenya Airways. The same company that has for years allegedly denied the right to assembly of its workers organized under the Aviation and Allied Workers Union.'

* Blogger Sokari Ekine ('Black Looks') on the final WSF event: 'Kasha, a Lesbian-Gay-Bisexual-Transgender and Intersex activist from Sexual Minorities Uganda, went up to the stage and asked to make a statement. She was asked for a copy of what she would be speaking about and gave them her piece. The organisers threw her piece on the floor and refused to allow her to speak. Kasha stood her ground saying she, like everyone else, had a right to speak here at the WSF. Despite the harassment by the MC and organisers, Kasha took the mic and spoke. She spoke about being a lesbian, about being a homosexual. She refuted the myth that homosexuality was un-African. She spoke about the punishment and criminalisation of homosexuals in Kenya, in Uganda, and in Nigeria. She said homosexuals in Africa were here to stay. Homosexuals have the same rights as everyone else and should be accepted and finally that even in Africa Another World is Possible for Homosexuals. Kasha was booed and the crowd shouted obscenities at her waving their hands screaming: "No! No! No!" But she persisted and said what needed to be said.'

These sobering observations were reflected in a statement by the Social Movements Assembly at a January 24 rally of more than 2000: 'We denounce tendencies towards commercialisation, privatisation and militarisation of the WSF space. Hundreds of our sisters and brothers who welcomed us to Nairobi have been excluded because of high costs of participation. We are also deeply concerned about the presence of organisations working against the rights of women, marginalised people, and against sexual rights and diversity, in contradiction to the WSF Charter of Principles.' (http://kenya.indymedia.org/news/2007/01/531.php)

Conflicts included arrests of a dozen low-income people who wanted to get into the event; protests to forcibly open the gates; and the destruction of the notoriously repressive Kenyan interior minister's makeshift restaurant which had monopolized key space within the Kasarani stadium's grounds.

Soweto activist Trevor Ngwane was a protest leader, but after the first successful break-in by poor Kenyans, reported stiff resistance: 'The next day we again planned to storm the gates but found police and army reinforcements at the gates. Those officers carried very big guns. Comrades decided to block the main road until the people were allowed in for free. This action took about half an hour and then the gates were opened. The crowd than marched to the Organising Committee's offices to demand a change of policy on the question of entrance. Another demand was added: free water inside the WSF precinct and cheaper food.'

Although that demand was not met, Oloo gracefully confessed the 'shame' of progressive Kenyans during the Social Movements Assembly rally. WSF logistical shortcomings reflected the Kenyan Left's lost struggles within the host committee, he said. The interior minister ('the crusher') snuck in at the last second, and the Kenya Airports Authority systematically diverted incoming visitors to hotels, away from home stays (2000 of which were arranged - only 18 actually materialized thanks to diversions).

Setting these flaws aside, consider a deeper political tension. For Oloo, 'These social movements, including dozens in Kenya, want to see the WSF being transformed into a space for organizing and mobilizing against the nefarious forces of international finance capital, neoliberalism and all its local neo-colonial and comprador collaborators.'

Can and should the 'openspace' concept be upgraded into something more coherent, either for mobilizing around special events (for instance, the June 2-8 summit of the G8 in Rostock, Germany) or establishing a bigger, universalist left-internationalist political project?

In South Africa, the Centre for Civil Society (CCS) has hosted several debates on this question, with at least four varying points of view emerging. Last July, for example, the great political economist Samir Amin presented the 'Bamako Appeal', a January 2006 manifesto which originated at the prior WSF polycentric event, and which combined, as Amin put it, the traditions of socialism, anti-racism/colonialism, and (national) development (http://www.forumtiersmonde.net/fren/forums/fsm/fsm_bamako/appel_bamako_…).

In support was the leader of the Organisation of African Trade Union Unity, Hassan Sunmonu (also a WSF International Council member). Complaining that 'billions of ideas have been generated since 2001 up till the last Forum', Sunmonu found 'a lot of merit in that Bamako Appeal that we can use to transform the lives of ourselves, our organizations and our peoples.'

But reacting strongly against the Bamako Appeal, CCS student (and Johannesburg anti-privatization activist) Prishani Naidoo and three comrades criticized its 'last century' tone and content, which mirrored 'the mutation of the WSF from an arena of encounter for local social movements into an organized network of experts, academics and NGO practitioners.'

For Naidoo, 'It reassures us that documents like the Bamako Appeal will eventually prove totally irrelevant and inessential to struggles of communities in South Africa as elsewhere. Indeed, the WSF elite's cold institutional and technicist soup, occasionally warmed up by some hints of tired poeticism, can provide little nourishment for local subjectivities whose daily responses to neoliberalism face more urgent needs to turn everyday survival into sustained confrontations with an increasingly repressive state.'

In contrast, Nauvoo and the others, praise the 'powerful undercurrent of informality in the West’s proceedings [which] reveals the persistence of horizontal communication between movements, which is not based on mystical views of the revolutionary subject, or in the official discourse of the leaders, but in the life strategies of their participants.'

A third position on WSF politics is the classical socialist, party-building approach favoured by Ngwee and other revolutionary organizers. Ngwee fretted, on the one hand, about reformist projects that 'make us blind to recognize the struggles of ordinary people.' On the other hand, though, 'I think militancy alone at the local level and community level will not in itself answer questions of class and questions of power.' For that a self-conscious socialist cadre is needed, and the WSF is a critical site to transcend local political upsurges.

A fourth position, which I personally support, seeks the 21st century's anti-capitalist 'manifesto' in the existing social, labour and environmental movements that are already engaged in excellent transnational social justice struggle. The WSF's greatest potential - so far unrealized - is the possibility of linking dozens of radical movements in various sectors.

Instead, at each WSF the activists seem to disappear into their own workshops: silos with few or no interconnections. Before a Bamako Appeal or any other manifesto is parachuted into the WSF, we owe it to those activists to compile their existing grievances, analyses, strategies and tactics. Sometimes these are simple demands, but often they are also articulated as sectoral manifestos, like the very strong African Water Network of anti-privatisation militants from 40 countries formed in Nairobi (http://www.ipsterraviva.net/tv/nairobi/en/viewstory.asp?idnews=838).

These four positions are reflected in a new book released at the Nairobi WSF by the New Delhi-based Institute for Critical Action: Centre in Movement (CACIM) and CCS. The book, free to download at contains some older attempts at left internationalism, such as the Communist Manifesto (1848) and the Bandung Communiqué of the Asian-African Conference (1955), as well as the 'Call of Social Movements' at the second and third Porto Alegre WSF, the 2005 Porto Alegre Manifesto by the male-heavy Group of Nineteen, and the Bamako Appeal with sixteen critical replies.

There are also selections on global political party formations by Amin, analysis of the global labour movement by Peter Waterman, the Women's Global Charter for Humanity, and some old and newer Zapatista declarations. Jai Sen and Madhuresh Kumar of CACIM have worked hard to pull these ideas into 500 pages.

Lest too much energy is paid to these political scuffles at the expense of ongoing struggle, we might give the last word to Ngwane, who reported on his Nairobi debate with WSF founder Chico Whitaker at a CACIM/CCS workshop: 'Ordinary working class and poor people need and create and have a movement of resistance and struggle. They also need and create and have spaces for that movement to breathe and develop. The real question is what place will the WSF have in that reality. What space will there be for ordinary working class and poor people? Who will shape and drive and control the movement? Will it be a movement of NGO's and individual luminaries creating space for themselves to speak of their concern for the poor? Will it be undermined by collaboration with capitalist forces? I think what some of us saw happening in Nairobi posed some of these questions sharply and challenged some of the answers coming from many (but not all) of the prominent NGO's and luminaries in the WSF.'

* Patrick Bond directs the Centre for Civil Society: http://www.zmag.org/sustainers/content/2007-02/01bond.cfm and is reproduced here with the permission of the author.

* Please send comments to [email protected] or comment online at www.pambazuka.org

The South African government is channeling Africa’s largest-ever industrial subsidies into the Coega industrial zone complex and port, located in the country’s fourth largest city, the Nelson Mandela Metropole (better known by its apartheid-era name, Port Elizabeth). Government proponents say Coega represents sound industrial and development policy, but a growing legion of critics are labeling it a corporate welfare boondoggle in a country that does not have resources to spare.

Aside from tailor-made infrastructure, including a 20 meter deep port, the key attraction of Coega for foreign investors is super-cheap energy. Following a year of frequent brownouts in the two largest metropolitan areas, Johannesburg and Cape Town, a fierce debate has erupted over the idea of providing discounted electricity to industrial users when citizens cannot get a dependable supply at any price. Mismanagement of the state electricity company, Eskom, in the course of its corporatization has interfered with a steady supply.

The main beneficiary of Coega's cheap energy, the Canadian firm Alcan, agreed in early December to a quarter-century power supply agreement from Eskom -- the world’s fourth-largest power company -- at an extremely generous price, less than the $0.02 cents per hour that bulk industrial consumers pay. This is already the world’s cheapest electricity, but Alcan insisted on the subsidy due to volatile commodity prices, a factor that has caused consternation in prior deals the South African government made with large mining houses and metals smelters such as BHP Billiton, the Anglo American group and Mittal Steel.

Alcan and Eskom claim that the deal will bring job creation and foreign exchange earnings, and pay off for the country. Using imported bauxite, Coega’s $3 billion aluminum smelter could by 2014 produce 720,000 tons of the metal annually in one of the world’s biggest smelters. Fewer than 1,000 permanent jobs will be created in the process, however

Coega is one in a long list of post-apartheid megaprojects undertaken by the South African government. These include the Pebble Bed Nuclear Reactors (one of the first global deployments of a new nuclear energy technology that purports to offer new safety guarantees), the Lesotho Highlands Water Project (six vast dams under construction) which supplies Johannesburg its water [see "Making the Earth Rumble," Multinational Monitor, May 1996], and the "Gautrain" elite fast rail network that will link Johannesburg, Pretoria and the country’s largest airport. An impoverished South African majority, increasingly well organized and mobilized, is challenging these megaprojects and demanding instead that state resources be deployed to deliver basic services to the majority, on a more ecologically sustainable basis.

The costs of corporate welfare

Coega’s site will include a new port, container terminal and Industrial Development Zone (IDZ), utilizing vast public investments -- at least $1.5 billion, including a $300 million tax break for Alcan -- and enormous quantities of land, water and electricity. The new employment anticipated at the port/IDZ would be the most expensive, in terms of capital per job, of any major facility in Africa. Environmentally, the costs of the Coega projects in water consumption, air pollution, electricity usage and marine impacts are potentially immense.

The infrastructure under construction is unprecedented in Africa, and dwarfs the basic-needs development infrastructure required by deprived citizens of Mandela Metropole and across the Eastern Cape. Hence controversy has surrounded the decision-making process to construct the port and IDZ. Reports of conflicts of interest for key decision-makers cloud the project’s governance. Coega was also initially meant to represent a key site at which European industrial firms involved in arms sales to South Africa could make “offset” investments that would create jobs, so government could justify to the public its corruption-ridden $6 billion weapons purchase. These so far haven’t been forthcoming.

Socially, there are significant costs as well. Several hundred families were already displaced to build Coega’s infrastructure, and those in the area will bear the brunt of the environmental toll exacted by the project. The opportunity costs of Coega include as many as 10,000 jobs lost in economic sectors which either must close or cannot expand, including the existing salt works, mariculture, fisheries, agriculture and eco-tourism. Most importantly, community and environmental activists point to far better prospects for employment creation and socio-economic progress if resources were used elsewhere. Six years ago, the Mandela Metropole Sustainability Coalition proposed an alternative economic development scenario. The alternative strategy prioritizes basic-needs infrastructure investment throughout the Eastern Cape and, at Coega, the development of state-supported eco-tourism and black-owned small-scale agriculture and mariculture.

Of the many subsidy components of Coega, civic groups find Eskom’s new deal most worrying, given the persistent electricity shortage across South Africa and the problem of mass disconnections of poor people for whom electricity remains too expensive. Using roughly 1,300 MegaWatts, about 3 percent of the country’s total, Coega will constitute an enormous new drain, requiring expensive new transmission lines from Eskom’s coal-fired generators 1,000 kilometers away.

Moreover, South Africa’s carbon dioxide emissions are already running approximately 20 times higher than even the United States on a per capita income basis. Ironically, Environment Minister Martinus van Schalkwyk returned triumphant from the November climate change treaty renegotiations in Nairobi, claiming that "South Africa achieved most of its key objectives." Those included promoting "Clean Development Mechanisms."

By bringing the vast "ghost on the Coast" (the long-empty Coega’s nickname) to life through the new subsidies, the national government will substantially increase carbon emissions. Yet because Alcan promises to use relatively energy efficient technologies, the market-oriented New York-based group Environmental Defense has suggested that Coega be considered worthy of Clean Development Mechanism investments by large international polluters, which would permit them to continue present rates of emissions. In promoting these kinds of investments, Van Schalkvyk says that his government is sending "a clear signal to carbon markets of our common resolve to secure the future of the Kyoto regime." But there are vast problems with the new emissions trading system, and projects such as Coega show why this market should not be expanded in ways that generate new ecological problems without making a dent in overall emissions.

Captive regulation and revolving doors

From the standpoint of meeting basic needs for electricity, South Africa's regulation of Eskom and municipal distributors has not been successful. This is not only because of an extremely weak performance by the initial National Electricity Regulator -- Xolani Mkhwanazi, who subsequently became, tellingly, chief operating officer for BHP Billiton Aluminum Southern Africa -- but also because government policy has increasingly imposed "cost-reflective tariffs," as a 1995 document insisted. The key issue is whether all consumers must cover the costs of the electricity they use, or whether richer and industrial consumers pay higher rates to subsidize the poor.

The 1998 White Paper allowed for "moderately subsidised tariffs" for poor domestic consumers. (White Papers are formal governmental policy statements.) But it also stated, "cross-subsidies should have minimal impact on the price of electricity to consumers in the productive sectors of the economy," meaning industrial users should not subsidize costs for poor residential consumers.

In addition to Mkhwanazi, the man responsible for Eskom’s late-apartheid pricing -- Mick Davis -- left the parastatal’s treasury to become the London-based operating head of Billiton. Davis took the post after former Finance Minister Derek Keys gave permission for an Afrikaner-controlled industrial company (Gencor) to expatriate vast assets in order to buy Billiton from Shell. After apartheid ended, Keys became chief executive of Billiton.

Ironically, the deals that gave Billiton, Anglo American and other huge corporations the world’s lowest electricity prices came under attack in 2005 by Alec Erwin, the minister of public enterprises. The package Davis had given Billiton for smelters north of Durban and in Maputo, Mozambique, during the period when Eskom had extreme overcapacity, resulted in prices that often dropped below $0.01 per kiloWatt hour, when world aluminum prices fell. (Most households pay five times that amount.)

Erwin reportedly insisted on lower "financial-reporting volatility." Because the amount the foreign companies pay for energy changes with the value of the rand, every time the rand changes value by 10 percent, Eskom’s wins or loses $300 million. Erwin said the utility should work to escape from existing contracts. From Billiton’s side, Mkhwanazi replied that any change to the current contracts could be "a bit tricky for us. … We would adopt a pragmatic approach and, who knows, perhaps there will even be some sweeteners in it for us."

But the allegedly new approach was not applied at Coega, where Erwin as trade and industry minister from 1996 to 2004 had led negotiations for a new smelter. According to the chief executive of the parastatal Industrial Development Corporation (IDC), Geoffrey Qhena, "The main issue was the electricity price and that has been resolved. Alcan has put a lot of resources into this, which is why we are confident it will go ahead."

Meanwhile, however, to operate a new smelter at Coega, lubricated by at least 15 percent financing from the IDC, Alcan and other large aluminum firms were in the process of shutting European plants that produce 600,000 metric tonnes between 2006-09, simply "in search of cheaper power," according to industry analysts.

The main Alcan negotiator, 49-year-old Cynthia Carroll of the United States, was recognized for her skill in browbeating South African officials when in late 2006 she was named CEO-designate at Anglo American Corporation. Breaking the longstanding tradition, dating to the era of founder Ernest Oppenheimer, of giving the top job to insider elderly male candidates, Anglo’s offer was seen as a way to better position the firm -- South Africa’s largest even though its financial headquarters since 1999 is in London -- for further international metals deals.

Coal-fired power, climate change and carbon trading

The state’s decision to provide Alcan such vast subsidies at Coega comes amidst rising elite and popular consciousness about climate change problems. For years, global rulers have avoided action on CO2 emissions, as reflected in October in Monterrey, in the wake of the July St.Petersburg summit of the G8 group of rich countries, which ignored climate change. In Monterrey, the G8’s energy ministers were joined by 12 other major polluters, including South Africa, but again, no commitments were made to reduce greenhouse gas emissions.

Three weeks later, however, the British government released The Stern Review: The Economics of Climate Change, which estimates climate change costs of 5-20 percent of global GDP at current warming rates. Former World Bank chief economist Nick Stern calls for demand-reduction of emissions-intensive products (the opposite of Coega), energy efficiency, avoiding deforestation and new low-carbon technology.

The key problem is that Stern and the establishment want many of these improvements to be financed via carbon trading. Likewise, in 2002, Princeton University researcher Nipun Vats and Environmental Defense – through its “Partnership for Climate Action” relationship with French aluminum firm Pechiney (subsequently purchased by Alcan) – promoted Coega as eligible for subsidies under the Clean Development Mechanism. Coega could receive such subsidies if it can show its technology is cleaner than existing aluminum suppliers, and in turn that the energy-savings smelter technology can only be profitably financed through "additional" investment resources using carbon trading mechanisms like the World Bank’s Prototype Carbon Fund.

In November, Alcan said it would proceed with the $2.7 billion aluminum Coega smelter thanks to vast electricity subsidies from Eskom. Within days, University of Cape Town Environmental Studies Professor Richard Fuggle -- the country’s most respected environmentalist -- attacked the increase in CO2 emissions due to Coega in his retirement speech. He described Van Schalkwyk as a "political lightweight" who is "unable to press for environmental considerations to take precedence of “development."

According to Fuggle, "It is rather pathetic that van Schalkwyk has expounded the virtues of South Africa’s 13 small projects to garner carbon credits under the Kyoto Protocol’s CDM, but has not expressed dismay at Eskom selling 1360 megawatts a year of coal-derived electricity to a foreign aluminum company. We already have one of the world’s highest rates of carbon emissions per dollar of GDP. Adding the carbon that will be emitted to supply power to this single factory will make us number one on this dubious league table."

Civil society begins to react

In Mandela Metropole, emerging resistance to Coega’s guzzling of water and power will add to existing popular unrest. In South Africa during 2004-05, the police counted more than 5,800 protests against government, possibly the highest per-person rate in the world. In China, with 1.3 billion people, there were 87,000 mainly rural protests, while South Africa’s population is 45 million.

Thirty years ago, in the wake of the Soweto uprising near Johannesburg, the revitalized anti-apartheid social movements known as civic associations were founded in Port Elizabeth’s impoverished townships, thanks in part to the legacy of black consciousness and community empowerment activist Steve Biko, killed by the city’s police in 1979.

Twenty years later, the assistant city engineer for hydraulics wrote a blunt memo about the prospects for imposing a redistributive tariff to help poor consumers through cross-subsidization, funded by higher prices paid by large industrial users: If such a plan "were to be implemented for industry, Coega would not go ahead."

The redistributive scheme subsequently adopted by the city does not assure low-income citizens basic electricity and water access. In other words, the perceived need to pump cheap water and electricity into Coega industries will likely sabotage government’s objectives of social justice, public health, and economic growth via municipal services.

In all these respects, say critics, the Coega port and IDZ exacerbate the apartheid economic legacy of division, marginalization and grandiose, unworkable public-investment schemes. Such ventures were traditionally grounded not in a logic of development, but instead reflected the power of special interest groups.

Civil society resistance to this sort of maldistribution is already quite advanced, but often takes the form of illegal reconnections after prolific disconnections by municipalities and Eskom. To alter policy decisions, what is needed is a more sustained campaign for radically new industrial policies as well as tough state regulation of emissions. It may be inspired by the case of Coega, which stands out as a beacon of irresponsibility and corporate welfare.

• This article was originally commissioned by
and is reproduced here with kind permission of the author. Patrick Bond is director of the Centre for Civil Society at the University of KwaZulu-Natal in Durban: [email protected] or comment online at www.pambazuka.org

Muhammad Yunus is the founder of Grameen Bank which has promoted microcredit for millions, loans to women too poor to qualify for traditional bank loans. He is the 2006 Nobel Peace Prize for “…efforts to create economic and social development from below.” But there is more hype than substance, says Patrick Bond, behind the claim that micro-credit schemes have been effective in poverty alleviation. There is ample evidence to challenge the claims for the alleged benefits of micro-credit programmes.

What sort of dogmatic free-market ideologue would use poor people’s (often socially-constructed) desire for credit to justify shrinking the already beleaguered welfare policies of wretched Third World states?

Consider this outlandish claim: ‘I believe that “government”, as we know it today, should pull out of most things except for law enforcement and justice, national defense and foreign policy, and let the private sector, a “Grameenized private sector”, a social-consciousness-driven private sector, take over their other functions.’

Grameen is Bangladesh’s ‘barefoot bank’ specializing in group loans to low-income women. And the Vanderbilt University-trained economist who made that statement, Muhammad Yunus (in his autobiography Banker to the Poor), just won the Nobel Peace Prize.

Yunus immediately announced to a Dhaka press conference: ‘Now the war against poverty will be further intensified across the world. It will consolidate the struggle against poverty through microcredit in most of the countries.’

Yet this seemingly benign, three-decade old attempt to foster entrepreneurship amongst impoverished women has attracted intense grassroots – and also professional – criticism.

Not surprisingly, the establishment press loves Yunus, nearly as much as do Bill and Hillary Clinton. The Financial Times made this argument, backed by no evident research: ‘Microfinance has played a central part in Bangladesh's success in reducing poverty by almost 10 percentage points over the past five years, to 40%, a rate that puts Bangladesh on track to meet its Millennium Development Goal of halving poverty by 2015.’ Moreover, ‘Grameen's business model is in rude health.’

The Wall Street Journal profiled Yunus on its front page five years ago: ‘To many, Grameen proves that capitalism can work for the poor as well as the rich,’ having ‘helped inspire an estimated 7,000 so-called microlenders with 25 million poor clients worldwide.’

Yet looking more closely, the Journal’s reporters - including the late Daniel Pearl (senselessly beheaded by Islamic extremists) - conceded the prevalence of Enron-style accounting. A fifth of the bank’s loans in late 2001 were more than a year past-due: ‘Grameen would be showing steep losses if the bank followed the accounting practices recommended by institutions that help finance microlenders through low-interest loans and private investments.’

A typical Grameen gimmick is to reschedule short-term loans that are unpaid after as long as two years, instead of writing them off, letting borrowers accumulate interest through new loans simply to keep alive the fiction of repayments on the old loans.

Not even extreme pressure techniques - such as removing tin roofs from delinquent women’s houses, according to the Journal report - improved repayment rates in the most crucial areas, where Grameen had earlier won its global reputation amongst neoliberals who consider credit and entrepreneurship as prerequisites for development.

By then, even the huckster-filled microfinance industry felt betrayed: ‘Grameen Bank had been at best lax, and more likely at worst, deceptive in reporting its financial performance’, wrote leading microfinance promoter J. D. Von Pischke of the World Bank in reaction to the WSJ revelations. ‘Most of us in the trade probably had long suspected that something was fishy.’

Agreed Ross Croulet of the African Development Bank: ‘I myself have been suspicious for a long time about the true situation of Grameen so often disguised by Dr. Yunus’s global stellar status.’

Several years earlier, Yunus was weaned off the bulk of his international donor support, reportedly $5 million a year, which had until then reduced the interest rate he needed to charge borrowers and still make a profit. Grameen had become ‘sustainable,’ self-financing, with costs to be fully borne by borrowers.

He had also battled backward patriarchal and religious attitudes in Bangladesh, and his hard work extended credit to millions of people. The secret was that poor women were typically arranged in groups of five: two got the first tranche of credit, leaving the other three as ‘chasers’ to pressure repayment, so that they could in turn get the next loans.

But at a time of new competitors, adverse weather conditions (especially the 1998 floods) and a backlash by borrowers who used collective power of nonpayment, Grameen imposed dramatic increases in the price of repaying loans. And it is here that Grameen Bank’s main philosophical position – ‘We consider credit as a human right’ – was reduced merely to an argument for access, not affordability.

In that regard, Yunus is entirely different from all the rights-based social movements which have demanded ‘rights’ in terms of free lifeline access to healthcare, education, housing, land, water, electricity and the like.

‘Microcredit is an almost perfect case of a phenomenon that has come to characterise much of development assistance - a widening gap between reality and propaganda,’ argued microfinance consultant Thomas Dichter in a SA Institute for International Affairs publication, ‘Hype and Hope: The Worrisome State of the Microcredit Movement’: ‘Much of Africa offers an infertile context for borrowing as the only customers available to the poorest are other very poor people. In such infertile economic contexts, the people at the bottom are by definition the ones who “need” credit the most, but can do the least with it.’

Dichter continued, ‘In part because of what has been aptly called “microfinance evangelism”, the prospect of significant returns from microcredit made available to solid enterprises has become less likely. This is because those who can really leverage a small loan are not the poorest or the most destitute… An additional limitation is that many microcredit clients are reduced to “copycat” behaviour, everyone selling the same thing, and more sellers saturating the market as more microcredit is made available. In this sense, expanding microcredit can actually lower incomes.’

What about the impact Yunus has made on his home turf? In Bangladesh, according to Dichter, ‘Microcredit is such a common development intervention that many people borrow from one project to repay another. In that context, even if a woman borrower increases her volume of sales by 100% say from 10 bunches of bananas to 20, she is still limited by her inability to add any value to what she sells, limited by her low skills, and the copycat pattern that almost always prevails at the low end of the informal sector.’

Although criticism of Grameen ‘is still a minority view’ and Yunus performed ‘miracles’ in rolling out credit to the masses, according to Munir Quddus, who chairs the Department of Economics and Finance at the University of Southern Indiana, the hype needs more investigation than apparently was given by the Nobel committee: ‘The very nature of setting up groups leaves out the very poor who would be perceived by fellow members to have no ability to generate income and therefore high risk.’

Quddus continues: ‘Others have pointed out that micro-credit simply deepens the exploitation of the women since the rates of interest charged by the bank in real [after inflation] terms are quite high; consequently, credit often worsens the debt situation and gives the husbands even more leverage.’

Gaining leverage over women – instead of giving them economic liberation - is a familiar accusation. In 1995, New Internationalist magazine probed Yunus about the 16 ‘resolutions’ he required his borrowers to accept, including ‘smaller families’.

When New Internationalist suggested this ‘smacked of population control’, Yunus replied, ‘No, it is very easy to convince people to have fewer children. Now that the women are earners, having more children means losing money.’

In the same spirit of commodifying everything, Yunus set up a relationship with Monsanto to promote biotech and agrochemical products in 1998, which, New Internationalist reported, ‘was cancelled due to public pressure.’

As Sarah Blackstock reported in the same magazine the following year: ‘Away from their homes, husbands and the NGOs that disburse credit to them, the women feel safe to say the unmentionable in Bangladesh – micro-credit isn’t all it’s cracked up to be… What has really sold micro-credit is Yunus’s seductive oratorical skill.’

But that skill, Blackstock explains, allows Yunus and leading imitators ‘to ascribe poverty to a lack of inspiration and depoliticize it by refusing to look at its causes. Micro-credit propagators are always the first to advocate that poor people need to be able to help themselves. The kind of micro-credit they promote isn’t really about gaining control, but ensuring the key beneficiaries of global capitalism aren’t forced to take any responsibility for poverty.’

Though I have never been to Bangladesh and have only discussed these problems with Yunus once (more than a decade ago when he visited Johannesburg), microfinance gimmickry certainly did damage in Southern Africa.

For example, in 1998, when the emerging markets crisis raised interest rates across the Third World, a 7% increase imposed over two weeks as the local currency crashed drove many South African borrowers and their microlenders into bankruptcy.

The highest-profile local proponent of microcredit is First Lady Zanele Mbeki. But her Womens Development Banking project has not only financed rural women, according to the oil company BP, a supporter. It has also made ‘investments in high-growth businesses’ such as Ceasars Gauteng and ‘Siza Water Company, the first privatised water company’ in KwaZulu-Natal – both of which, arguably, are counter-examples of poverty eradication.

Next door in Zimbabwe, a $66 million flood of World Bank financing during the 1980s (in lieu of land reform) revitalised a rural microfinance sector initiated under late 1940s racist Rhodesian rule. The Bank program ultimately reached 94,000 households. But within a decade, the result was a peasant default rate of 80% in the impoverished ‘Communal Areas’ (equivalent to apartheid Bantustans).

Repayment affordability was a huge factor, since a typical lender’s overhead and collection costs represent 15-22% of the amount of a small loan, including incorporation of a 4% default rate. In Zimbabwe, servicing loans of even just a few hundred US dollars represented enormous burdens when, according to one Agriculture Ministry survey in 1989, the average net crop profit per hour of labour was just $0.15.

Michael Drinkwater’s detailed study of central Zimbabwe showed that ‘improving farmers’ access to credit has placed many of them in serious difficulties’ compounded by ‘an overzealous launching of a group credit scheme’ and the ‘doubtful viability of high cost fertiliser packages’ inappropriate for the erratic climate. ‘The increase in credit use means farmers have to market more to stay solvent... At the household level it is commonly debts not profits that are on the rise.’

To address the crisis, in 1991 the World Bank unsuccessfully promoted even more Grameen-style group credit, albeit with the caveat that ‘Zimbabwe’s experience to date with group lending has not been favourable. The organisation of groups is initially expensive and time-intensive’, and ‘major problems have become apparent.’

Not far away, in Lesotho, anthropologist James Ferguson studied a 1975 World Bank report that guided the country’s development strategy: ‘In a “Less Developed Country”, where the cash economy is on such a precarious basis, there must be [according to the Bank] “a conspicuous lack of credit for the purchase of farm inputs,” and it is obvious that “credit will play a critical role in all future major agricultural projects.”’

Rebutted Ferguson, ‘It is never explained exactly why the need for credit is so critical. It is true that most Basotho invest very little in agriculture probably due to their intelligent appreciation of the low potential and high risks of capital intensive farming in Lesotho but this is usually not a matter of being unable to obtain the cash to make such an investment. Most families have access to wage-earnings or remittances, and this money most commonly comes in large lumps which could easily be used for agricultural inputs, but for the most part is not. Yet in the “development” picture, the need for credit is almost an axiom.’

Ugandan political economist Dani Nabudere has also debunked ‘The argument which holds that the rural poor need credit which will enable them to improve their productivity and modernise production.’ For Nabudere, this ‘has to be repudiated for what it is ? a big lie.’

Even from inside the World Bank these lessons were by then obvious. Sababathy Thillairajah reviewed the Bank’s African peasant credit programmes in 1993 and advised colleagues: ‘Leave the people alone. When someone comes and asks you for money, the best favour you can give them is to say “no”... We are all learning at the Bank. Earlier we thought that by bringing in money, financial infrastructure and institutions would be built up ? which did not occur quickly.’

But not long afterwards, Yunus stepped in to help the Bank with ideological support, as it rejuvenated microfinance with a $200 million global line of credit aimed at poor women in August 1995, just prior to the Beijing gender conference.

The global justice movement’s Attac group has an excellent Oslo branch, which last week published a new book, Economic Apartheid. Its members pointed out to me that that Yunus was strongly supported by his friends in the Norwegian ruling class, including a former top finance ministry bureaucrat and leading officials of Telenor, Norway’s phone company. Telenor owns 62% of GrameenPhone, which controls 60% of Bangladesh’s cellphone market.

At a time when the centre-left Norwegian government has a high profile for partially cancelling illegitimate Third World debt and threatening to defund the World Bank, both of which are applauded by local activists, the people who make these decisions were conscious of how important it is for Norway to project the possibility of capitalism with a human face.

The question is whether they looked hard enough at conflicts generated by credit, thus negating the meaning of the Nobel Peace Prize – and not for the first time.

• Patrick Bond is director of the Centre for Civil Society at the University of KwaZulu-Natal. His most recent book is Looting Africa: The Economics of Exploitation, available from Zed Books and UKZN Press.)
• Please send comments to or comment online at www.pambazuka.org/

Patrick Bond argues that the assault against the international civil society has been devastating. He writes that nearly all the major multilateral institutions have been captured by hardliners over the past couple of years. Bond postulates that it is from this standpoint that “…We can understand not only the recent debacles of global governance: the inability to expand the UN Security Council in September 2005; the breakdown of the Doha Round of World Trade Organisation negotiations in July 2006; and the planned shrinkage of Africa’s voting power within the IMF board of governors, from 4% to 2%.”

The World Bank and International Monetary Fund (IMF) annual meetings just completed in Singapore were a disaster for the Third World, especially Africans who face a dramatic decline in voting shares on the IMF board, at the same time a few middle-income countries led by China recapitalise the institutions.

For civil society activists, the official welcome in Singapore may not have matched last week’s brutality by Robert Mugabe against Harare trade union leaders or Durban police against shackdwellers. But it more than confirmed Singapore’s reputation as an intolerant police state:

• the regime simply banned the arrival of dozens of social and environmental activists, including many with official Bank/IMF accreditation;
• others who got to the airport were immediately extradited;
• Singapore even asked neighbouring Indonesia to cancel a citizen’s conference critical of the Bank and IMF, held across the bay from the city-state.

Civil society activists replied with a boycott call. According to a petition by Jubilee South, the World Development Movement, Greenpeace, Friends of the Earth International, Oil Watch International and several other groups, ‘Knowing full well the authoritarian character of the Singaporean Government, the Bank and IMF appear to have picked Singapore as the site because they wanted to avoid legitimate and peaceful street protests.’

True, but consider the broader context for the assault on institutions of international civil society. Nearly all the major multilateral institutions have been captured by hardliners over the past couple of years:

• the European Union chose Spanish neoconservative Rodrigo Rato as IMF managing director in mid-2004;
• the new head of UNICEF, chosen in January 2005, was George Bush’s agriculture minister Ann Veneman, although the US and Somalia are the only two out of 191 countries which refused to ratify the United Nations Convention on the Rights of the Child;
• for another key UN post in February 2005, the outgoing head of the World Trade Organisation, Supachai Panitchpakdi from Thailand (who mainly served US and EU interests from 2003-05), was chosen to lead the United Nations Conference on Trade and Development;
• Paul Wolfowitz was appointed by Bush to head the World Bank in March 2005;
• the European Union’s trade negotiator Pascal Lamy won the directorship of the World Trade Organisation a few weeks after that; and
• to ensure that Washington’s directives to Kofi Annan continued to be as explicit as possible, Bush appointed John Bolton as US Ambassador to the UN.

Bolton is illustrative, for he was never confirmed by the US Congress since Bush gave him the job during a mid-2005 recess. As the once-powerful, pro-apartheid former US senator Jesse Helms put it, he is ‘the kind of man with whom I would want to stand at Armageddon.’

Coming from the State Department, Bolton’s main function beginning in 2001 when Bush captured the White House, was to disempower the UN. He also engineered Washington’s withdrawal from or weakening of the anti-ballistic missile treaty, a biological weapons convention protocal, the Organisation for the Prohibition of Chemical Weapons, the nuclear test ban treaty, the UN conference on the illicit trade in small arms and light weapons, and the International Criminal Court.

It is in this context that we can understand not only the recent debacles of global governance: the inability to expand the UN Security Council in September 2005; the breakdown of the Doha Round of World Trade Organisation negotiations in July 2006; and the planned shrinkage of Africa’s voting power within the IMF board of governors, from 4% to 2%.

In addition, at a time of fusion between ‘neoliberalism’ (promoting US/EU corporate and especially financial interests) and ‘neoconservativism’ (promoting US petromilitary profits and religious-extremist values) as the dominant bloc in global geopolitics, we must concede the utter futility of reform proposals being advanced by some in civil society, along with some governments, like Thabo Mbeki’s.

The neolib-neocon fusion is personified by Wolfowitz, close ally of the exceptionally corrupt, brutal Indonesian dictator Suharto during the 1980s and more recently, as deputy Pentagon leader, architect of and apologist for imperial theft and US corporate patronage associated with the illegal Iraq War.

Since January this year, Wolfowitz’s Bank has a new self-declared mission: to stem project graft, whose historical costs to the 62-year old institution are conservatively estimated at $100 billion. Wolfowitz is getting plenty of press ink for his anti-corruption plan by asking its contractors and staff to declare their knowledge of backhanders. If so, an amnesty will be granted and they won’t be prosecuted.

Patricia Adams from the Toronto NGO Probe International condemns Wolfowitz’s strategy because it ‘immunises bribers from debarment, allows the Bank to cover-up its own negligence or complicity, and undermines the administration of justice in countries where it is a criminal offence to bribe a foreign official.’

Lesotho is a good example, because the Maseru government is standing up to the ‘dirty dozen’ corrupt firms and consortiums which bribed top Highlands Development Authority officials – including one now in jail, and another in charge of water for the New Partnership for Africa’s Development.

After a key US Senator, Richard Lugar, supported Lesotho, the Bank finally began some limited debarment in 2004. Pretoria is yet to follow suit (perhaps because some local giants like LTA and Concor were implicated, which would throw off 2010 infrastucture construction timing.)

Civil society groups are used to the runaround. In the case of the Bank’s ill-fated 1998-2001 World Commission on Dams (WCD), chairperson Kader Asmal despaired at the follow-up findings of the (2002-03) World Panel on Financing Infrastructure, led by former IMF Managing Director Michel Camdessus. Asmal wrote: ‘For an esteemed panel to effectively write off the WCD, whose core recommendations have been endorsed by many of its member organisations, is quite remarkable and raises concerns about the value of the report. Failing to address this point effectively takes us back many years.’

Remarked activist Patrick McCully of International Rivers Network, ‘The World Bank’s singularly negative and non-committal response to the WCD Report means that the Bank will no longer be accepted as an honest broker in any further multi-stakeholder dialogues.’

Moreover, ubiquitous Bank/IMF Poverty Reduction Strategy Papers (1999-present) also proved to be a dead end, according to dozens of cases considered carefully by civil society and academic researchers.

Likewise, the (1999-2003) Structural Adjustment Participatory Review Initiative (Sapri) failed when Bank staff walked out of the process near its conclusion. Commented Richard Peet, author of a major book on the Bretton Woods Instituitons, ‘the President of the World Bank did not listen to Sapri, because he could not. For he would hear, and he even might learn, that his finest, most splendid ideas had produced the worst, most harmful effects.’

The crucial Extractive Industries Review (EIR) was similarly constructed as a multi-stakeholder project (2002-04). But the Bank was not serious about tackling problems caused by the mineral, petroleum and timber industries. According to analysts at Friends of the Earth, Environmental Defence and International Rivers, ‘One of the Bank’s most important environmental reforms of the 1990s was its more cautious approach to high-risk infrastructure and forestry projects. This policy is now being reversed.’

Specifically, the environmentalists complained, ‘The World Bank recently announced that it would re-engage in contentious water projects such as large dams in what it refers to as a “high risk/high reward” strategy. In 2002, the Bank dismissed its “risk-averse” approach to the forest sector when it approved a new forest policy. The World Bank is also considering support for new oil, mining, and gas projects in unstable and poorly governed countries, against the recommendations of its own evaluation unit.’

The EIR recommended a phasing out of all Bank fossil fuel investments in late 2003. In February 2004, SA’s then energy minister and now deputy president, Phumzile Mlambo-Ngcuka, explicitly advised the Bank to oppose the ‘green lobbyists’, and six months later the Bank board rejected the EIR’s main proposals.

Ultimately, nearly all civil society initiatives aimed at reforming the Bank and IMF have been disasters. The Civicus World Citizens Assembly withdrew from its controversial 2003-05 initiative to rebuild relations.

The boycott of Bank activities by most forces within civil society launched last week reminds of the calls to stigmatise South Africa before 1994. And why not? After all, Thabo Mbeki has popularized the term ‘global apartheid’ – and now the question is whether to polish the chains or break them.

* (On September 26, Bond – who directs the UKZN Centre for Civil Society – will lead a morning discussion about the Bank and IMF in Durban at Diakonia; two additional presentations will occur on 27 September at the Institute for Policy Studies in Washington from noon-2pm, and on 1 October at the Brecht Forum in New York City, noon-3pm.)

* Please send comments to or comment online at www.pambazuka.org

The unwillingness of governments, multilateral bodies and big business to promote rudimentary democracy and social justice in Zimbabwe is now glaringly obvious. Renewed solidarity initiatives can be taken with more confidence by grassroots activists on both sides of the Limpopo River and beyond, writes Patrick Bond.

Item: Kofi Annan appears to have been intimidated into not taking a trip to Harare, after Thabo Mbeki raised expectations he would achieve a breakthrough.

Mbeki last week passed the buck to Annan and Robert Mugabe: ‘It’s best left to them, to the UN and the Zimbabwean government and hopefully that will produce its outcome so that we remove this particular matter from the international agenda.’ Mugabe simply refused to give Annan an audience.

Item: Last Friday, the head of the European Commission’s Harare mission and the Austrian ambassador to Zimbabwe wrote a letter to the Herald newspaper firmly stating, ‘There are no economic EU sanctions against Zimbabwe. There have never been economic EU sanctions against Zimbabwe.’

The bureaucrats were right, and they pointed out that for the latest year data are available, 2004, ‘Zimbabwe had a trade surplus of E261 million [R2.23 billion] with EU states.’

Item: A few days earlier, South African Foreign Minister Nkosazana Dlamini-Zuma told parliament that Pretoria would not wield targeted 'smart' sanctions against Zimbabwe's rulers: ‘It may not be a very useful tool to use right now because it doesn’t seem to be yielding results, even in the hands of the most powerful block in the world.’

Of course not, but for a simple reason: Pretoria is a smart-sanctions ‘buster’ by permitting the Zimbabwe elite’s shopping visits, real estate speculation and illicit financial holdings. If Pretoria joined in imposing smart sanctions, the results would be immediate and formidable.

Item: big business is again hopping into bed with Mugabe, according to Dianna Games of the SA Institute of International Affairs writing last week in Business Day: ‘Many South African companies believe that Zimbabwe is still a better and easier place in which to do business than many other African countries because of its strong business culture, diversified industrial base and relatively good infrastructure. And many companies are still making good, albeit often declining, profits.’

Pointing out that more than two dozen large SA corporations employ about 20 000 Zimbabweans in mining, retail, franchising, commercial agriculture and banking, Games concluded, ‘There may be no better time for investors to take a long, hard look at the opportunities that Zimbabwe presents right now.’

That was also a point made last year by Tony Hawkins, professor of business studies at University of Zimbabwe and well known to Financial Times readers: ‘South Africa has gained market share in exports, tourism and services. SA’s share of investment in Zimbabwe has also risen as there has been an element of bargain-basement buying by some mining and industrial groups.’

Added Hawkins, ‘SA is also taking significant skills from the country, especially scarce black skills in health, education, banking, engineering and IT. It would be too much to say that SA has benefited in net terms, but there is a good deal of evidence to suggest that it is securing some gains from the crisis.’

Reflecting business confidence in Mugabe’s ability to hold on, two large multinational firms – South Africa’s Implats and the French bank BNP Paribas – last week announced, respectively, a R1.7 billion platinum investment (36% of which represents a gift to government for crony ‘empowerment’) and a R332 million credit secured by future nickel export revenues.

Another new Mugabe ally is the brutal dictator of Equatorial Guinea, Teodoro Obiang Nguema, who visited Zimbabwe in March and whose country’s oil began flowing to Zimbabwe last week. Nguema wants the British mercentary Simon Mann extradited from Harare, where Mugabe’s forces are holding him after he transited Harare in a 2004 attempted coup bid.

Is pressure being applied by the West, as Mugabe often claims? Aside from an arms embargo on the government, the EU’s smart sanctions apply to just 100 key ZANU(PF) leaders, and take the form of travel bans and a threat to freeze any assets they place in European banks. There are similar provisions in the US, but these countries together provide in excess of R1 billion in aid to Zimbabwe, largely for food and humanitarian relief.

No one calls for that aid to be turned off because it feeds millions of people for whom Zimbabwe’s own farms – especially the small-scale and peasant sectors – generated maize surpluses, prior to the more general meltdown of the country’s agricultural infrastructure. The starvation threat has less to do with the takeover of white farms and more to do with the general lack of access to rural transport, fuel, pesticides, fertilizers, farm implements, electricity and the like.

What about a renewed diplomatic initiative from the West? A good reflection of the US imperial agenda in Zimbabwe may be last week’s report in a Harvard University journal authored by Todd Moss and Stewart Patrick of Washington's Centre for Global Development.

Moss and Patrick argue against existing sanctions: ‘The US and EU may need to review their sanctions legislation to ensure that it does not create a legal problem or disincentive for re-engagement or private investment.’

They also argue that a post-Mugabe Zimbabwe government will ‘have to deal with an inherited external debt of some $5 billion. Clearing arrears will be the first step, but the arrears accrued within the past few years account for nearly half the current debt stock, suggesting that some special dispensation may need to be found with the multilateral institutions and the Paris Club of creditors.’

In contrast, the position advocated by civil society campaigners, such as the Zimbabwe Coalition on Debt and Development and Zimbabwe Social Forum, is that the vast but useless 1990s loans advanced by the International Monetary Fund and World Bank should be completely cancelled.

Indeed, following the lead of the Archbishop of Bulawayo, Pius Ncube, Zimbabwean civil society may need to more publicly advocate serious sanctions, given the lack of pressure from opportunistic politicians and businesses.

Patrick Bond, director of the UKZN Centre for Civil Society in Durban, is coauthor of the book Zimbabwe's Plunge - and author of Uneven Zimbabwe. This article first appeared in The Mercury on June 7.)

* Please send comments to or comment online at www.pambazuka.org

Despite the rhetoric, the people of Sub-Saharan Africa are becoming poorer. From Tony Blair's Africa Commission, the G7 finance ministers' debt relief, the Live 8 concerts, the Make Poverty History campaign and the G8 Gleneagles promises, to the United Nations 2005 summit and the Hong Kong WTO meeting, Africa's gains have been mainly limited to public relations. The central problems remain exploitative debt and financial relationships with the North, phantom aid, unfair trade, distorted investment and the continent's brain/skills drain.

One in five people in the world now lacks access to clean water and 40 per cent do not have basic sanitation. Water, the most precious global resource, is the subject of World Water Day on March 22, which was preceded by the World Water Forum, held between 16-22 March, where officials from 140 countries met to discuss how to achieve the UN Millennium Development Goal of halving the proportion of people without sustainable access to safe drinking water by 2015. Patrick Bond discusses the “water wars” – the battle by activists against the global trend that seeks to turn the delivery of water into a commercial enterprise.

On March 16 in Mexico City, thousands of grassroots water warriors marched against an equivalent number of establishment delegates from governments, corporations and international agencies at the World Water Forum.

The activists, opposed to what they term the 'commodification' of water, were stopped a kilometer away from their establishment opponents. But as the Washington Post reported, 'Youths in ski masks attacked journalists and fought with police, smashing a patrol car and hurling rocks during largely peaceful Water Forum protests involving about 10,000 marchers.'

The Post continued, 'Many of the battles over water in Mexico don't involve people who would otherwise be considered radicals. Those on the front lines are residents of low-income neighbourhoods in Mexico City who get in fistfights over water-truck deliveries, or housewives who can no longer stand the stink of untreated sewage flowing beside their homes. And then there are the Indian families whose crops are ruined by the diversion of water to feed a nearby city, while their children go without safe drinking water.'

Here in South Africa, there are millions who can tell stories of water 'delivery drought'. Rural areas are under-serviced due to lack of operating subsidies which mean that a large percentage of taps installed in the post-apartheid era are now dry. And for those lucky to be on municipal water grids, mass disconnections due to unaffordability affect more than 1.5 million South Africans each year, even the government admits.

According to Desmond D'Sa of the South Durban Community Environmental Alliance, 'Across the metro, low-income people and even whole blocks of flats are having trouble paying their rates, and quite a few have had their water cut off recently. I've negotiated for some reconnections, but the amounts outstanding are vast. People simply can't afford the rates. Council is even reneging on a pre-election promise to write off arrears.'

Water warriors here also decry the new 'pre-paid meter' technology that leads to self-disconnection. Conlog, a firm directed by the late ANC leader Joe Modise once he retired as minister of defense in 1999, is manufacturing these devices, which Johannesburg activists backed by the Freedom of Expression Institute will argue in court next month are unconstitutional.

Meanwhile, Conlog is installing them across the African continent. Soweto Electricity Crisis Committee activists have taken the lead in ripping out pre-paid meters - both water and electricity - and periodically marching to municipal offices to trash the hated technology.

And as part of the New Partnership for Africa's Development, with its focus on public-private infrastructure partnerships, state-owned Rand Water - which supplies bulk water to Johannesburg - is helping a Dutch company and the World Bank privatise water in Accra, Ghana. That country's National Coalition Against the Privatisation of Water is already in close contact with the Johannesburg Anti-Privatisation Forum, helping coordinate protests.

The highest profile citizens' campaign against commodified water was in Bolivia six years ago, when the people of the third-largest city, Cochabamba, fought the US firm Bechtel, backed by the World Bank. As of two months ago, the new Bolivian water minister in Evo Morales' indigenous-led government is Abel Mamani, a neighbourhood activist veteran of another water war, in El Alto, who cut his teeth battling the French water company Suez.

Mamani made five points in a speech last week:
* Water is a fundamental human right and a pre-requisite to the realization of other human rights;
* Water belongs to the earth and all living beings including human beings and it is the duty of everyone to protect access to water for all forms of life and for the earth itself;
* Water is a public good and therefore its management needs to be in a sphere that is public, social, community-based, participative and not based on profit;
* Water should not be privatised and should be withdrawn from all free trade and investment agreements; and
* There should be profound change in the organization of the World Water Forum to allow majority and decisive participation in the negotiations by the poorest and those who most need water.

Bolivia is just one of the sites where the balance of forces has shifted left; other major battles - not always victorious - have been fought in Manila, Jakarta and Detroit. Biwater was kicked out of Dar es Salaam last year, to the regret of its advisor, the Adam Smith Institute, funded by British taxpayers.

Civil society movements and governments have forced Suez to retreat from major cities ranging from Atlanta to Buenos Aires to Montevideo in recent months. The firm's bid to retain the Johannesburg Water contract for another 25 years will be considered by council in June, but after mass protests in Soweto, Orange Farm and other townships, is by no means secure.

The goals of progressive civil society activists, generally, are 'decommodification' of water, improved access by poor people, better conditions for water workers, and more appropriate eco-management of water. The latter should include penalties for hedonistic consumption.

Additional campaigns are waged against megadams, inappropriate irrigation, fish destocking, water pollution, bulk water diversions, bottled water, abuse of water by golf courses and extractive firms like Coca Cola and Nestle, and looming water scarcity. On one crucial battleground, control of water by the World Trade Organisation, activists appear to have just won, by exempting water from the WTO's General Agreement on Trade in Services.

As the Mexico confrontation shows, protesters are linking up with vigour. Back in 1992, after the Rio Earth Summit and a Dublin water conference that both advanced the principle that water is 'an economic good', privatisation began in earnest. Within a few years, a broad-based international front of community, consumer, environmental and labour organisations emerged to fight back.

The formal privatisation of water slowed during the late 1990s, in part because it became so difficult for the big British, French, German, Spanish and US firms to realise profits across the Third World, not least thanks to rising social resistance. Nevertheless, municipalities and water supply agencies are still being pressured by the World Bank to adopt commercial principles, including pricing water high enough to at least cover operating/maintenance costs, at a time of declining subsidies.

No one disputes that with at least 2.6 billion people lacking adequate sanitation and 1.1 billion lacking access to improved water sources, there is an urgent need for dramatic improvements in investment, management and affordability. Third World states shrunk during the past quarter-century of sustained structural adjustment, addled by debt payment outflows, capital flight and foreign aid cutbacks. So the resources required for water and sanitation cannot often be found.

Still, the primary strategy adopted by water advocates has been to defend the state as the key institution for delivering water. There are vast problems with relying on state agencies (whether national or municipal), yet in most societies it remains the institution which can best redistribute and organise resources.

Some water-delivery NGOs such as WaterAid, members of Freshwater Action Network or South Africa's Mvula Trust do find themselves occasionally accused of betraying mass popular movement sentiments over water prices, standards and institutional delivery systems. While expanded community control is generally an objective of progressive activists, a primary concern is that decentralization should not replace a serious state commitment to subsidizing poor people's water. Unlike what most NGOs can provide, an operative state's grid service is more likely to offer purified, high-pressure water in sufficient quantities to serve gender equity, public health and other broader eco-social goals.

Critics argue that some NGO interventions lubricate neoliberalism, because installing inadequate collective tap systems - usually without sufficient sanitation - contributes to further state shrinkage. The general trend towards private outsourcing, including some examples of NGO delivery, has been destructive, because standards are lower, prices are higher, disconnections are more common, maintenance is worse and accountability is harder to establish.

The struggles against commodified water often erupt on global platforms, such as the triannual World Water Forum - at The Hague in 2000, Kyoto in 2003 and Mexico City in 2006 - and related meetings of the water establishment such as WTO summits. There, activists have battled a series of enemies:
* the Global Water Partnership (created by the World Bank, UN Development Programme and Swedish aid);
* the Marseilles-based World Water Council (founded by Suez, Canadian aid and the Egyptian government and joined by 300 private companies, government ministries, and international organisations);
* the International Private Water Association (privatisation firms plus the World Bank, US Credit Export Agency and Overseas Private Investment Corporation and the European Bank for Reconstruction and Development);
* the World Bank itself (which in $20 billion worth of 1990s water projects imposed privatisation as a loan condition in a third of the transactions);
* Mikhael Gorbachev's Green Cross (in ongoing dispute with Council of Canadians over global-scale water rights and property rights in the UN);
* Aquafed (a federation set up by a former Suez managing director); and
* the World Panel on Financing Infrastructure.

The latter was chaired by former IMF managing director Michel Camdessus during 2002-03, with major multilateral development banks, Citibank, Lazard Freres, the US Ex-Im Bank, private water companies (Suez, Thames Water), state elites (from Egypt, France, Ivory Coast, Mexico, and Pakistan) and two NGOs (Transparency International and WaterAid). It proposed much greater amounts of public subsidies for privatisers, via a risk insurance mechanism to safeguard companies like Suez against currency crises which devastated the firm's Argentina operations after 2001.

Some of the strongest critics of neoliberal water policies are citizens'/consumers' organisations (especially the Council of Canadians in Ottawa and Public Citizen in Washington); trade unions (Public Services International and their affiliates); indigenous people's movements; environmental groups (led by the International Rivers Network and Friends of the Earth); and think-tanks (e.g., the PSI Research Unit at Greenwich University, Polaris in Ottawa, the TransNational Institute in Amsterdam, the Agriculture and Trade Policy Center in Minneapolis, the Municipal Services Project in South African and Canadian universities, Parivartan and the Centre for Science and the Environment in New Delhi, Food and Water Watch in Washington, and the International Forum on Globalization in San Francisco).

From the struggles have emerged inspiring leaders, intellectuals and politicians, including Accra campaigners Rudolf Amenga-Etego (who was awarded the 2004 Goldman environmental prize) and Alhassan Adam, Canadians Maude Barlow and Tony Clarke (who won the 2005 Right Livelihood Award) and writer Varda Burstein, Paris-based Danielle Mitterrand, Cochabamba movement leader Oscar Olivera, Washington-based water watchdogs Maj Fiil-Flynn and Sara Grusky, Olivier Hoedeman and Satoko Kishimoto of 'Reclaiming Public Water' at the Transnational Institute, filmmakers Alan Snitow and Deborah Kaufman, European campaigner Ricardo Petrello, anti-dam strategists Paddy McCully and Lori Pottinger, and extraordinary Indian women like Sunita Narrain, Medha Patkar, Arundhati Roy, Vandana Shiva and Shiney Varghese. South Africans who are well-known internationally include Bryan Ashe and Lianne Greef of the SA Water Caucus, Dale McKinley of the national Campaign Against Water Privatisation, Wits sociology researcher Ebrahim Harvey, Anil Naidoo (based in Ottawa), trade unionist Roger Ronnie, and Sowetans Trevor Ngwane and Virginia Setshedi.

The World Social Forum in Porto Alegre, as well as regional Social Fora, have provided spaces for water activist assemblies during the early 2000s. Email listserves such as 'water warriors', 'reclaiming public water' and 'right to water' permit information exchange and coordination. A People's World Water Forum was held in Delhi two years ago, preceded by the 2001 'Blue Planet' conference in Vancouver, as well as periodic European gatherings.

Because the water movements have generated superb examples of cooperation across borders, campaigns against commodified services will continue to serve as a model for global civil society. If in the short-term here in South Africa activists can reconnect water to Durban's poor and working people and disconnect Suez from Johannesburg and Rand Water from Accra, over the longer-term, the world desperately needs to link their visions, programmes and projects to similar processes, in the next set of 21st century water wars.

* Patrick Bond (pbond (at) mail.ngo.za) is based at the Centre for Civil Society,

* Please send comments to [email protected]

Exactly how much wealth does Africa lose every year? Third World repayments of $340 billion each year flow northwards to service a $2.2 trillion debt, more than five times the G8's development aid budget, notes Patrick Bond. In addition Africa’s citizens experience depletion of assets like forests and mineral resources, and suffer the impact of pollution as a result of mining. In this context, Bond argues that those who claim international integration can enrich Africa are wrong.

There is a timeless line of argument from Walter Rodney's 1973 book 'How Europe Underdeveloped Africa': 'The question as to who and what is responsible for African underdevelopment can be answered at two levels. Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more rapidly the resources of the continent.'

'Secondly, one has to deal with those who manipulate the system and those who are either agents or unwitting accomplices of the said system.'

Sub-Saharan Africa today still suffers the dispossession of wealth, along two trajectories: South-North resource flows, and adverse internal class formation. In the former case, the central processes are associated with exploitative debt and finance, phantom aid, capital flight, unfair trade, distorted investment, ecological exploitation and the 'brain drain'.

In the latter case, instead of accumulation and class formation via an organic middle class and productive capitalist class, Africa has seen an excessively powerful 'comprador'-oriented ruling elite whose income is based upon financial-parasitical accumulation and political-bureaucratic patronage power, which in turn is then subject to vast capital flight.

Although remittances from the Diaspora now fund development and even a limited amount of capital accumulation, capital flight is far greater. At more than $10 billion/year since the early 1970s, collectively, the citizens of Nigeria, the Ivory Coast, the DRC, Angola and Zambia have been especially vulnerable to the overseas drain of their national wealth. A major factor during the late 1990s was the relisting of the primary share-issuing residence of the largest South African firms, from Johannesburg to London.

In Washington, perhaps the most highly regarded of African elites is South African finance minister Trevor Manuel, who until late last month served as chair of the World Bank/IMF Development Committee. Having failed for four years to get even partial democratisation of the Bretton Woods Institutions onto the committee's agenda, Manuel gloried in the return of attention to Africa: 'Right now, the macroeconomic conditions in Africa have never been better. You have growth across the continent at 4.7%. You have inflation in single digits. The bulk of countries have very strong fiscal balances as well.'

These statements are true only if we take misleadingly narrow economic statistics seriously. Fortunately we don't need to because even the Bank is occasionally compelled to confess how Africa is drained of 'genuine savings' through depletion of minerals and forests, and other eco-social factors which ostrich-like economists invariably ignore.

Manuel's riff sounds impressive. Indeed, because of structural adjustment austerity, African states reduced their early-1990s deficit rates of around 6% of annual output, to just under 4% today. However, the fastest growing economies actually increased their deficits by a full percentage point over the last decade, suggesting that Keynesianism still works as well for African elites as it does for George Bush.

Meanwhile, monetary policy was tightened, interest rates soared and African central banks - typically run by IMF or ex-IMF staff - were discouraged from printing money (which sometimes fuels inflation). Price increases were reduced from double-digit rates prior to 2004 to an average of 9% this year. However, that level is far too low for a developmental trajectory, former Bank chief economist Joseph Stiglitz argued in his 'Post-Washington' critique of economic orthodoxy.

Bank president Paul Wolfowitz - architect of the Iraq War - was in a sporting mood at Manuel's Development Committee press conference on September 25: 'The path has been cleared to complete debt relief, and at the risk of a dangerous metaphor, I think Trevor has given us the ball right in front of the goal, and the goalie has tripped, and all we have to do now is kick it in.'

A dangerous move indeed, for Manuel warned of at least one more hurdle: 'a legal challenge because countries may feel that some have been favoured against others. My understanding is that both Rodrigo [Rato, IMF managing director] and Paul will go before their boards, sort out what the equality of treatment principle would be in each of the instances, and ensure that there is equality of treatment.'

It seems the InterAmerican Development Bank and Asian Development Bank won't participate in the debt relief pantomime. So 14 African countries favoured by the G8 - and four others in Asia and Latin America - will get a few crumbs of relief, costing the G8 less than $2 billion per year to service (on $40 billion in outstanding debt).

But because their leaders have ceased putting up a fuss, the debt of these 18 is reduced: not to nothing, but to levels where the Bank and IMF retain macroeconomic control, so that capital flight and ultra-cheap commodities can continue their outward flow.

None of the trade reforms proposed for the Hong Kong WTO meeting in December will alter the basic calculus of long-term decline for their (non-oil) primary commodity prices. Christian Aid recently estimated the damage done to African countries by trade liberalisation at $272 billion since 1980.

Even in the face of those 'internal contradictions and conflicts' - including vast overcapacity, wars, real estate bubbles, hurricane repairs, debt crises and balance of payments problems - men like Wolfowitz can afford to make small concessions. After all, Third World repayments of $340 billion each year flow northwards to service the $2.2 trillion debt. This is more than five times the G8's development aid budget (and ten times the level of Northern donations once we subtract the 'phantom aid' which never reaches the masses).

As Brussels-based debt campaigner Eric Toussaint concludes, 'Since 1980, over 50 Marshall Plans worth over $4.6 trillion have been sent by the peoples of the Periphery to their creditors in the Centre'.

Consider, as well, the South as ecological creditor. According to ecologist Joan Martinez-Alier, 'The notion of an ecological debt is not particularly radical. Think of the environmental liabilities incurred by firms under the United States Superfund legislation. Although it is not possible to make an exact accounting, it is necessary to establish orders of magnitude in order to stimulate discussion.'

Martinez-Alier and Jyoti Parikh of the UN International Panel on Climate Change argue that based upon the Third World's role as a carbon sink, an estimated annual subsidy of $75 billion flows South to North. Africans are most exploited because non-industrialised economies have not begun to utilise more than a small fraction of what should be due under any fair framework of global resource allocation such as carbon emissions.

The amounts involved would easily cover financial debt repayments. Instead, the G8 Gleneagles scam keeps poor countries down in several ways. According to Jubilee South: 'The multilateral debt cancellation being proposed is still clearly tied to compliance with conditionalities which exacerbate poverty, open our countries further for exploitation and plunder, and perpetuate the domination of the South. Even if the debt cancellation were without conditionalities, the proposal falls far too short in terms of coverage and amounts to demonstrate a bold step towards justice by any standard.'

However, almost by accident another Bank document began to do the rounds just prior to the Bank/IMF Annual Meetings: 'Where is the Wealth of Nations?' Here at least, World Bank environmental staff recognise that foreign investors may diminish overall wealth and savings, once resource depletion and pollution are factored in.

(To be sure, the Bank adopts a minimalist definition based upon current pricing - not potential future values when scarcity becomes a more crucial factor, especially in the oil sector. Nor do Bank economists yet deign to calculate the damage done to local environments, to workers' health/safety, and especially to women and vulnerable people in communities around mines. And unpaid household and community work is still left out of national statistical accounts, reducing women's labour to a nil value.)

What investments are most important, then? Dating to the mid-1990s, foreign direct investment has flowed mainly into oil rigs in the West African Gulf of Guinea and Angola's offshore Cabinda field, aside from an ill-fated South African privatisation spree in 1997.

Meanwhile, corrupt host regimes waged war against their people, not only in Angola (where formal conflict ended after a rightwing Unita guerrilla movement faded following Jonas Savimbi's death). In addition, as Amnesty International pointed out last month, the Bank was meant to finance the multi-billion dollar Chad-Cameroon pipeline to add human rights sensitivity, but deepening repression is the actual result.

Other Africans suffering oil depletion under dictatorial or militarised conditions include citizens of the Republic of the Congo, Equatorial Guinea, Gabon, Nigeria and Sudan.

South Africans are also implicated in a kind of subimperial looting of oil. At the country's annual Political Science Association conference in KwaZulu-Natal last month, senior government researcher John Daniel shifted from claiming in 2003 that 'non-hegemonic co-operation has in fact, been the option embraced by the post-apartheid South African state.'

After reviewing the record of the African National Congress (ANC) in the continent's energy sector, especially Sudan and Equatorial Guinea, he conceded, 'The ANC government has abandoned any regard to those ethical and human rights principles which it once proclaimed would form the basis of its foreign policy.'

Big Oil celebrated this state of power relations at the World Petroleum Congress in Johannesburg last month. Opponents also came together, invited by the excellent NGO groundWork. The Ogoni people, for example, demanded reparations not only for the thorough destruction of their Delta habitat, but also for the depletion of what economists call 'natural capital'.

How much natural capital value is removed from Africa? In South Africa, the value of minerals in the soil fell from $112 billion in 1960 to $55 billion in 2000, according to the UN, while Africa as a whole suffers negative net annual savings.

Adding not just oil-related depletion but other subsoil assets, timber resources, nontimber forest resources, protected areas, cropland and pastureland, the Bank calculates that Gabon's citizens lost $2,241 each in 2000, followed by people in the Republic of the Congo (-$727), Nigeria (-$210), Cameroon (-$152), Mauritania (-$147) and Cote d'Ivoire (-$100).

In addition to mineral depletion worth 1% of national income each year, the Bank acknowledges that South Africans lose forests worth 0.3%; suffer pollution ('particulate matter') damage of 0.2%; and emit C02 that causes another 1.6% of damage. In total, adding a few other factors, the actual 'genuine savings' of South Africa is reduced from the official 15.7% to just 6.9% of national income.

These analyses, documents and calculations are new and fresh, and should shame those who claim international integration can enrich Africa. The opposite is more true.

Unlike Trevor Manuel, African justice activists like those who met at groundWork's conference know it. They wrote to officials of the World Petroleum Congress: 'At every point in the fossil fuel production chain where your members "add value" and make profit, ordinary people, workers and their environments are assaulted and impoverished. Where oil is drilled, pumped, processed and used, in Africa as elsewhere, ecological systems have been trashed, peoples' livelihoods have been destroyed and their democratic aspirations and their rights and cultures trampled.'

The letter concluded, 'Your energy future is modeled on the interests of over-consuming, energy-intensive, fossil-fuel-burning wealthy classes whose reckless and selfish lifestyles not only impoverish others but threaten the global environment, imposing on all of us the chaos and uncertainty of climate change and the violence and destruction of war. Another energy future in necessary: yours has failed!'

Indeed the Southern African Social Forum in Harare earlier this month generalised this sentiment to the entire set of economic relations that dispossess Africa of all kinds of wealth.

* The author is based at the University of KwaZulu-Natal Centre for Civil Society. This work is part of a larger study carried out in collaboration with the Johannesburg-based Southern African Centre for Economic Justice and Harare-based Equinet, and participants at their 10-12 October workshop in Harare are thanked for feedback. Comments are welcomed, at [email protected]

* Please send comments to [email protected]

The Zimbabwean economy has contracted by 50% in the last five years, inflation stands at 255% and unemployment hovers at 75%, say economists. Recently, there was much controversy over a proposed $500m loan from South Africa to Zimbabwe in order to prevent Zimbabwe's suspension from the International Monetary Fund (IMF). However, South Africa made it clear that the loan was available only if Zimbabwean President Robert Mugabe reformed economic policies and changed his politics. Patrick Bond critically examines the politics surrounding the proposed loan agreement and South African president Thabo Mbeki's vision that the IMF can be used as a tool for "normalisation" of Zimbabwean society.

Consider these wise words from a leading African National Congress politician: ‘As we speak, the neoliberal orthodoxy sits as a tyrant on the throne of political-economic policymaking. The dominant social and economic forces are doing their utmost to hegemonise the discourse - both materially and in respect of how developmental processes are to be institutionalised and theorised. Among other things, they use such transnational governmental organisations as the International Monetary Fund (IMF), the World Bank and the World Trade Organisation to shape the discourse within which policies are defined, the terms and concepts that circumscribe what can be thought and done.’

This quote, from an April speech, is worth keeping in mind; its author (revealed at the end of this article) knows well of what he speaks. In between, though, we will consider the main way in which the region’s dominant social and economic forces intend to hegemonise political transition in Zimbabwe. The objective seems to be to bring the IMF back into play, for the first time since 1999.

It may surprise some readers, but a decade ago, Robert Mugabe’s regime was in fact a successful protégé of Washington financiers. In 1995, the World Bank gave his government the highest possible rating in its scorecard of neoliberal orthodoxy: ‘highly satisfactory’. This followed fifteen years of arm twisting by the Bank and IMF, leading to the Economic Structural Adjustment Programme (ESAP).

Things began to go badly wrong for Harare’s elites soon thereafter. From 1996-2000, a series of overlapping worker/peasant/student/war veteran rebellions became a serious threat to Robert Mugabe and his ruling Zanu(PF) party. This in turn resulted in a zig-zag economic policy based on a mix of carrots and sticks, combining frontal attacks on poor and working-class urban Zimbabweans with fiery anti-imperialist rhetoric.

At the heart of Harare’s fiscal crisis are Mugabe’s expensive carrots to disgruntled sections of society: large new pensions for tens of thousands of Liberation War vets (previously ignored or repressed) from September 1997; periodic payolas of various kinds to the army and police, including license to loot the Democratic Republic of the Congo during the late 1990s civil war; on-again/off-again price controls from 1998, in order to prevent further ‘IMF Riots’ (which had broken out periodically during the 1990s); occasional gifts to key constituents during the early 2000s, such as very inexpensive rural electricity; and state-sponsored land invasions immediately following Mugabe’s defeat in a constitutional referendum in February 2000, as the opposition Movement for Democratic Change became a threatening electoral force.

The sticks we have learned much more about these past months. They don’t need recounting in detail, but include, in the words of South African Communist Party (SACP) general secretary Blade Nzimande, ‘the wanton destruction of homes and community facilities’ for more than a million of the urban poor, and ‘anti-democratic legislation, including legislation directed against the right to assembly and against media freedom’.

Durable nationalism

Mugabe’s alliances have generally been maintained the past five years, and both external and internecine rebellions have been crushed. Regular predictions that the ruling party will fragment - mainly due to ethnic factionalism - never reach fruition. After three decades of control over Zanu(PF) and six years’ experience harassing a strong opposition party, Mugabe has an even stronger grip on his politburo. Evidence of his dominance during this period includes the expulsion, demotion or jailing of figures with substantial regional or sectoral powerbases.

However, with Mugabe apparently now unable to raise basic hard currency for importing petrol, food and other vital necessities, the time is ripe for the next stage of what might be termed ‘exhausted nationalism’. When Simba Manyanya and I began using this phrase in 2002 as shorthand for Mugabe’s incapacity to deliver a higher standard of living, it was not clear that the nationalist project could be reinvigorated, at least in a manner the masses would find compelling.

We cited Frantz Fanon’s Wretched of the Earth: ‘A bourgeoisie that provides nationalism alone as food for the masses fails in its mission and gets caught up in a whole series of mishaps. But if nationalism is not made explicit, if it is not enriched and deepened by a very rapid transformation into a consciousness of social and political needs, in other words into humanism, it leads up a blind alley. The bourgeois leaders of underdeveloped countries imprison national consciousness in sterile formalism.’

The problem of ‘exhausted nationalism’ also applies to South Africa, where SACP deputy secretary Jeremy Cronin once translated it as the ‘Zanufication’ of the African National Congress (he was hurriedly forced to apologise). In turn, this is why the vigorous debate now underway on lending to Mugabe is so revealing. For it appears that Mbeki and the IMF have, to borrow the quote above, successfully shaped the discourse within which policies are defined, and indeed a proposed loan of $500 million from South Africa to Zimbabwe may circumscribe what can be thought and done.

There is no better example than Pretoria spokesperson Joel Netshitenzhe’s comment that the loan could ‘benefit Zimbabwean people as a whole, within the context of their program of economic recovery and political normalisation.’ Much of the debate in South Africa concerns whether Pretoria is putting sufficient – or indeed any – pressure on Harare to reform, as Netshitenzhe refuses to comment on speculation that both political and economic liberalisation are conditions for the proposed loan.

Mugabe spokesperson George Charamba revealed the process on August 14: ‘We never asked for any money from South Africa. It was the World Bank that approached Mbeki and said please help Zimbabwe. They then offered to help us.’ According to the World Bank’s own press service, a Pretoria-based Bank economist, Lollete Kritzinger-van Niekerk, confirmed that her institution ‘is not ready to thaw relations with the ostracised Harare’, hence Mbeki’s backchannel. A reported $160 million out of Pretoria’s proposed loan was meant to repay the IMF, with the rest earmarked for importing (from South Africa) agricultural inputs and petroleum.

But in Zimbabwe there is, in reality, no ‘normalisation’ under way, if by which is meant Mugabe’s agreement to hold serious democratisation talks with the Movement for Democratic Change, to run genuinely free and fair elections, to unban the media and revoke extremist laws, to recall fascistic security forces to the barracks, and to provide emergency food and shelter in a non-politicised manner to the millions who urgently require it.

In any case, Mbeki has repeatedly shown that these objectives are unimportant: by propping up Mugabe in the United Nations Human Rights Commission, by public commentary downplaying repression and vote theft, by silence at key junctures and by sending biased observation teams to monitor elections. Mugabe himself publicly rejected even the idea of negotiating with the MDC.

Setting the fake ‘reform’ rhetoric aside, what is instead revealed by the current crisis is another of Fanon’s insights, namely that Zanu(PF)’s sterile formalism now sharply contradicts further capital accumulation by Zimbabwe’s parasitical ruling class, a key faction of which desperately requires foreign exchange.

For the impoverished Zimbabwean masses, there is no economic bailout on the horizon, much less democratic leverage, only a choice of which financiers will worsen austerity in future years: the predictable money mandarins of Washington, or the new subimperialists of Pretoria, backed by a gullible media and superficially critical opposition parties, or both.

IMF squeeze on the Zimbabwean poor

Consider the first lot, the Bretton Woods Institutions. Beginning in September 1980, when Zimbabwe formally joined, the role of the IMF was never to benefit ‘Zimbabwean people as a whole’. As York University’s radical economist Colin Stoneman explained, ‘In encouraging borrowing, the IMF recognised that it had as yet no means of exerting leverage on Zimbabwean economic policy.’ What was that leverage? Five examples are illustrative:

- By early 1982, finance minister Bernard Chidzero – later to head the IMF/Bank Development Committee – denied that ‘the IMF would impose any conditions as Zimbabwe was already restructuring its economy.’ Though it was ‘a sensitive issue not for public debate,’ Chidzero made statements to Parliament claiming ‘devaluation of the dollar is not imminent and is not being contemplated.’ Less than three months later, Chidzero announced a 20% decline in the currency, admitting it ‘had been under consideration for some months.’

- In late 1982, interest rates were raised dramatically, a move Chidzero pointed out with pride to the World Bank in private correspondence.

- In March 1983, an editorial by the government-owned Herald observed that ‘Zimbabwe has a democratically elected people’s government and therefore, the people, its supporters have the right to know what the IMF asked of this country.’

- By 1984, Zimbabwe was paying vast proportions of export earnings to cover foreign loans, in part because of apartheid destabilisation of the region. As Stoneman put it, ‘there can be no doubt that Zimbabwe’s payments crisis was partly caused by South Africa, and that this was the means whereby the IMF gained a lever on Zimbabwean economic policy’.
- The IMF soon terminated its $315 million line of credit due to Harare’s budget overruns, forcing more painful austerity. By early 1985, Mugabe complained of ‘pressure from the IMF to cut government spending on education and defence but the government has a way of overcoming this pressure’. Yet within a few years, Zimbabwe’s vaunted education programme was indeed under threat as Bretton Woods cost-recovery policies gained momentum.

The Bretton Woods Institutions applied neoliberalism across a variety of sectors, and applied heavy pressure on Mugabe to continue his ineffectual ‘willing seller, willing buyer’ rural land policy. At last month’s land summit in South Africa, Mbeki told the audience that Zimbabwe’s failure to embark upon land redistribution prior to the chaotic takeovers of 4000 white-owned farms from February 2000, was because ‘They slowed down to get the negotiations in this country to succeed’ since South Africa’s white farmers would be ‘frightened’ about the transition to democracy.

In reality, Harare’s 1993 Land Designation Act was ‘shelved,’ as Zanu(PF) member of parliament Lazarus Nzarayebani complained in late 1994, because ‘it is not in conformity with the World Bank and IMF’ and instead served government only ‘to save its face’. In fact, South Africa’s first ANC land minister, Derek Hanekom, invited the same World Bank team that was preventing Zimbabwe’s land reform during the early 1990s, led by Robert Christenson, to guide post-apartheid policy. (That policy was also characterised by willing seller, willing buyer neoliberalism, and in August was publicly recognised as a failure at a major state-sponsored land summit.)

What of the last batch of IMF credits to Zimbabwe? Did these contribute to the welfare of all Zimbabweans, and promote peace and democracy? The opposite conclusion is more logical. The IMF’s $53 million loan in 1999 was meant to release another $800 million from other lenders. The IMF’s stated objectives were straightforward: reversal of both the luxury import tax and price controls on staple foods.

Details were confirmed in a March 1999 statement by leading IMF negotiator Michael Nowak, ‘There are two issues outstanding and these have stopped the IMF from making the standby credit available to the country. These issues are, one, we want the government to reduce the tariffs slapped on luxury goods last September, and secondly, we also want the government to give us a clear timetable as to when and how they will remove the price controls they have imposed on some goods.’

Five months later, the IMF agreed to increase the loan amount to $200 million, but two more conditions were reportedly added: access to classified Democratic Republic of Congo war information and a commitment to pay new war expenditure from the existing budget. According to an IMF official, ‘The Zimbabweans felt offended, shocked, but they all the same agreed to give us the information, we got all the clarification we wanted. They had no choice... We have had assurances [that] if there is budgetary overspending, there will be cuts in other budget sectors.’

In sum, the IMF gave permission to penalise health, education and other badly-defended sectors on behalf of Mugabe’s military adventures and business cronies, and also ordered Mugabe to immediately reverse the only redistributive policies he had adopted in a long time: a) a ban on holding foreign exchange accounts in local banks (which immediately halted the easiest form of capital flight by the country’s elites); b) a 100% customs tax on imported luxury goods; and c) price controls on staple foods in the wake of several urban riots.

That deal quickly fell apart, however, when fiscal targets were missed. Harare was, quite simply, broke. The previous year, Mugabe had spent an historically-unprecedented 38% of export earnings on servicing foreign loans, exceeded that year only by Brazil and Burundi. With foreign debt at $4.92 billion, fully $980 million was repaid to foreign creditors, while donor aid fell from its 1995 peak of $310 million to just $150 million. But due to compound interest rates, barely a dent was made in the total foreign debt outstanding.

The IMF continued giving advice to impose austerity, both from its Harare office and via periodic high-level missions from Washington. The 2000 mission called for ‘tight monetary and wage policies… privatisation, civil service reform and trade liberalisation,’ according to the Herald newspaper.

By mid-2001, finance minister Simba Makoni confessed to the Southern Africa regional session of the World Economic Forum in Durban, ‘We are committed to fulfilling these obligations, but it’s clear that our economy is in no state to generate sufficient funds to clear these arrears.’ As a result, by mid-2005, Mugabe had run up repayment arrears of $295 million to the IMF, and more than $1 billion to other lenders, including the World Bank and African Development Bank. The total foreign debt that is either in arrears or will come due in the next decade is $4.5 billion, far more than the national GDP in a given year.

Was Zimbabwe punished for failing to make most foreign debt payments since 1999? To almost everyone’s surprise, Mugabe was able to get away with the de facto default. No new long-term credit has been available, to be sure, but nor did the US Marines or other hostile military forces invade so to collect collateral, as was the practice a century earlier against defaulting Latin American countries.

Instead, once Zimbabwe fell into deep arrears to the IMF, a convoluted official procedure began, culminating a few months ago in the threat of expulsion. From 2001, the Zimbabwean finance ministry scrounged $1.4 million each quarter to make token payments on the debt, but from mid-2003 through 2004 found $16.5 million to send the IMF. This was also the point at which Zimbabwe ran out of petrol and many other essential imports.

Diplomatic scuffling

By August 2005, Mbeki assumed that his offer of a $500 million credit could influence the course of an elite transition, aiming at installing a neoliberal, low-intensity democracy regime. That model would slightly sideline Mugabe by 2008 at the latest; permit Zanu(PF) to retain power – possibly in a government of unity by coopting MDC leaders - with the friendlier face of a technocratic president (former neoliberal finance minister Simba Makoni is usually tipped for the job) even if Mugabe still controlled the ruling party itself; and then open the economic borders up much more to Johannesburg capital.

Mugabe didn’t play along. Showing an impressive resilience and desire to hold on to maximum power at all cost, he visited China in August and then snubbed Mbeki in a brutal diplomatic manner. At an African Union (AU) meeting in Addis Ababa, according to the Sunday Independent, Mugabe built an alliance of other leaders to ‘defeat a South African tactical move to win two permanent seats for Africa on the United Nations security council… Mugabe, Egypt and others spoke out against a compromise deal which South Africa had helped forge between the AU and the so-called G4, a coalition of four other nations seeking permanent seats on the security council - Germany, Japan, India and Brazil.’

‘Mbeki argued strongly at the AU summit in Addis Ababa in favour of the compromise as the only realistic way to get Africa permanent seats. But the Mugabe camp prevailed. The summit rejected the compromise deal that AU and G4 foreign ministers, including SA’s Nkosazana Dlamini-Zuma, agreed on at a meeting in London… Mugabe and others argued against this, saying the lack of a veto would relegate African permanent members to “second-class status”.’ Fortunately, the second-class citizenship he sought in the UN Security Council was not offered at the September heads of state summit. Hence a more serious fight can be waged at some stage, instead of legitimising a UN under Washington’s thumb.

This brings us back, though, to Mbeki’s vision that the IMF can be a vehicle for normalisation. As Nzimande reported to a Congress of SA Trade Unions central committee, the SACP was ‘extremely concerned about the danger of a loan amounting to little more than extending the crisis-ridden shelf-life of anti-worker, anti-poor authoritarian policies and practices. We call on our own government to show the maximum resolve in ensuring that there are very clear requirements attached to any loan. These requirements must include guarantees that the loan will not be squandered on elite consumption or repression. But the requirements must also embrace a much wider package of commitments with clear time-lines… These wider issues are, in fact, essential for resolving the present financial crisis.’

And then Mugabe pulled a card from his sleeve no one thought he had: in September he came up with $135 million from having scrounged all foreign currency available, and he paid the IMF a substantial downpayment, enough to earn a six-month reprieve on the expulsion threat. Mugabe promised $50 million more by March, and vowed to repay the full amount. (No one outside Pretoria really believes the IMF would expel Zimbabwe, given that China and many African regimes would oppose this in the IMF executive, where 15% of the vote would be enough to veto such a move.)

By all accounts, this was an insane gesture. Even the white business spokespeople who are most aggrieved by Mugabe’s dirigisme were opposed to the payment. The only explanation is Mugabe’s ego: it is so gargantuan that, under pressure from Pretoria, he ignored the extraordinary sacrifices being made by his citizens these past months, with every commodity in short supply, simply to massage his pride at repaying the IMF.

South African government officials were also surprised, and continue to maintain that negotiations for the additional $500 million are on track, merely delayed a bit. The Cabinet had made one other similar loan to a country so as to repay the IMF, three years earlier. It was Joseph Kabila’s unelected regime in the Democratic Republic of the Congo, and the $45 million loan by Pretoria allowed Kabila to clear enough of the old Mobutu arrears. Those debts should be declared ‘Odious’ in international law, but their payment by Pretoria gained Kabila a new IMF credit at the cost of renewed IMF control over the Congolese people.

The extent of Mbeki’s own commitment to getting the IMF back into Zimbabwe was revealed on October 15. Addressing a forum of African Editors, he explained, ‘We had indeed said that we were ready to assist, and the reason we wanted to assist was because we understood the implications of Zimbabwe's expulsion from the IMF. What it would mean, among other things, is that everybody who is owed something by Zimbabwe would demand immediately to be paid. You would even get to a situation where they would seize anything that was being exported out of Zimbabwe because of that debt.’ This is utter nonsense, as the IMF has never acquired much less used such power. Many creditors presently dealing with Zimbabwe have various forms of security, because the government’s likelihood of nonpayment has been demonstrated for six years already.
By the way, returning to our opening quote, it was Pretoria’s local government minister, Sidney Mufamadi, who in April this year warned that the IMF molds ‘the discourse within which policies are defined, the terms and concepts that circumscribe what can be thought and done.’ There is no better example of this than Pretoria’s latest subimperial gambit in Zimbabwe, combining high finance and venal politics.

But let’s also pause to consider Mufamadi’s own borrowing from the World Bank, in a loan that directly places Bretton Woods advisors in dozens of municipalities. The World Bank website gives away Mufamadi’s game: ‘The Municipal Financial Management Technical Assistance Project, totaling $15 million is the only active World Bank loan to South Africa. It supports the building of financial management capacity in more than 40 key municipalities around the country. The World Bank country office is also supporting the government in … [its] oversight role in municipal public/private partnerships.’

On the same site, the Bank brags about its ‘support to Johannesburg’s iGoli’ (the city’s privatisation policy), allegedly a ‘model’ for South Africa. In reality, Africa’s largest water corporatisation quickly became a world-renowned site of brutal disconnections, prepaid meters and substandard sanitation for low-income townships – as well as heroic resistance by the Anti-Privatisation Forum and Jubilee South Africa, which combined to protest Paul Wolfowitz’s Johannesburg visit in July.

In contrast to activists, the key politicians prefer to ‘talk left, walk right’. Once we dispense with the rhetoric, this surreal financial game of hide-and-seek from the IMF unveils imperial/subimperial/dictatorial power relations uniting Washington, Pretoria and Harare. It remains for critics of the regimes to pursue a democratic, anti-neoliberal strategy – and too, for international protest against the Bretton Woods Institutions to now intensify.

* Patrick Bond directs the University of KwaZulu-Natal Centre for Civil Society: he is author of ‘Uneven Zimbabwe: A Study of Finance, Development and Underdevelopment’ (1998) and coauthor of ‘Zimbabwe’s Plunge: Exhausted Nationalism, Neoliberalism and the Search for Social Justice’ (2003). This article is excerpted from a longer version in the US journal ‘Against the Current’.

* Please send comments to [email protected]

Call it institutional change-management fatigue. Or an unlimited spin-doctoring capacity by clever public relations officials. Or naivety on the part of those NGOs, environmentalists, trade unionists and Third World activists who cheered the appointment of Renaissance Man James Wolfensohn as World Bank president in 1995.

Whatever the excuse, the bottom-line is obvious: no substantive changes at the Bank and International Monetary Fund. And yet the need for a radical transformation could not be more obvious, in the wake of the late 1990s legitimacy crisis, itself a function of at least four managerial and economic factors that still have not been tackled properly:

- the institutions' 'democratic deficit', which made them unsuitable for genuine global governance;
- the continued reliance upon the neoliberal 'Washington Consensus' approach to public policy;
- the Bank's ongoing orientation to controversial mega-projects; and
- both agencies' failure to cancel Third World debt and cool international financial speculation born of liberalised capital markets.

But we have to be frank about what drives these institutions, even when their credibility is at an all-time low: lubrication of private capital accumulation and stabilisation of geopolitical tensions through subsidised credits (often 'bail-outs' for earlier commercial lenders). So the four factors were not really failures - they were and are integral to the workings of the international economy.

Did reformers understand this problem, and did they adjust their plans accordingly? Confusingly, hopes were raised in part because of the 1997-99 tenure of Joseph Stiglitz as chief economist. Simultaneously, other catalysts for change included commissions on structural adjustment, dams and extractive industries.

However, the internal procedural changes, rhetorical shifts, research reports, individual initiatives, and multi-stakeholder forum exercises that emerged since the short-lived Stiglitzian glasnost did not fundamentally affect operations. The view from the inside is revealing, as staff in the Middle East and North Africa section complained in a leaked 1999 memo to Wolfensohn: 'The World Bank is increasingly being drawn into activities which are politically sensitive (participatory processes, involvement of civil society, corruption and so on). There is no doubt about the importance and relevance of these for development and success of World Bank assistance, but staff are not well prepared to handle these issues which creates more anxiety and stress.'

Yet because the legitimacy crisis has continued growing, it has been rhetorically important for the Bank and Fund to claim they are now 'post-Washington' in their ideology. In March 2002, midway through the United Nations Financing for Development (FFD) summit in Mexico, the Bank, Fund and German officials began promoting the idea of a new 'Monterrey Consensus', which would usher in an era of fair global finance. Even John Williamson has argued in the IMF's own magazine that his celebrated 1990 definition of the Washington Consensus was misunderstood and manipulated by leftist critics.

The institution's 60th birthday provides a chance to review the reform agenda, and to ask whether the late 1990s challenge from high-profile critics - Stiglitz and other enlightened economists, some Third World governments and protest movements -- was as effective as it could have been. Were issues posed by reformers -- debt relief, community and NGO participation in neoliberal programme design, democratic governance, global financial regulation, and commissions dealing with structural adjustment, dams and energy -- the correct ones to tackle?

And if all these reforms were foiled by institutional lethargy or worse, is it appropriate to consider an entirely different strategy, based on Third World states removing themselves from influence by the Bank and IMF? Is collective default feasible, and should Northern supporters assist the process by refusing to buy bonds issued by the World Bank?

Debt relief deferred

Within a year of Monterrey, the World Bank made an embarrassing concession, regarding its prize reform: the Highly Indebted Poor Countries (HIPC) debt relief initiative. The Bank acknowledged longstanding criticisms that its staff 'had been too optimistic' about the ability of countries to repay under HIPC, and that projections of export earnings were extremely inaccurate, leading to failure by half the HIPC countries to reach their completion points. Paradoxically, the Bank blamed failure upon 'political pressure' to cut debt further, as the key reason repayments were still not 'sustainable.'

HIPC was a mirage from the outset, as even the moderate London lobby group Jubilee Plus admitted in its September 2003 progress report: 'According to the original HIPC schedule, 21 countries should have fully passed through the HIPC initiative and received total debt cancellation of approximately $34.7 billion in net present value terms. In fact, only eight countries have passed Completion Point, between them receiving debt cancellation of $11.8 billion.'

Add a few other countries' partial relief via the Paris Club ($14 billion) and it appears that the grand total of debt relief thanks to the 1996-2003 exercise was just $26.13 billion. There remained more than $2 trillion of Third World debt that should be cancelled, including not just HIPC countries but also Nigeria, Argentina, Brazil, Mexico, South Africa and other major debtors not considered highly-indebted or poor in the mainstream discourse.

Inadequate financial provision for HIPC in western capitals probably reflects the merits of using debt as a means of maintaining control over Third World economies. An 'enhanced HIPC' was introduced to give the appearance of concern, and at the G8's Evian Summit in 2003, the world's leaders agreed with pleas by African representatives to relook at the programme. Yet no fundamental changes or substantial new funds were mooted. Proposals to write off further debt owed by Ethiopia and Niger in April were, at press time, likely to be vetoed by the US Treasury.

Poverty 'Reduction' Strategy Papers

In 1999, HIPC was accompanied by a renaming of the structural adjustment philosophy: Poverty Reduction Strategy Papers (PRSPs). More than two years later, at Monterrey, South Africa's finance minister Trevor Manuel - who joined former IMF managing director Michel Camdessus as special envoys of UN secretary general Kofi Annan - argued that PRSPs were 'an important tool for developing countries to reduce their debt burdens… a thorough and useful PRSP requires time, resources and technical capacity.' He suggested the Bretton Woods Institutions increase their role, to 'provide more technical assistance to meet those particular challenges.'

In contrast to Manuel's desire for PRSP expansion, civil society resistance to structural adjustment increased across the Third World, including Manuel's home continent, sometimes in the form of 'IMF riots.' A May 2001 Jubilee South conference of the main African social movements in Kampala concluded: 'In addition to the constraints placed on governments and civil society organisations in formulating PRSPs, the World Bank and IMF retain the right to veto the final programs. This reflects the ultimate mockery of the threadbare claim that the PRSPs are based on “national ownership.” An additional serious concern is the way in which PRSPs are being used by the World Bank and IMF, directly and indirectly, to co-opt NGOs to “monitor” their own governments on behalf of these institutions.'

The latter gambit had begun to fail by the time the FFD convened in Monterrey. Even the World Bank's best African case, Uganda, heard its National NGO Forum report: 'Among CSOs there is growing concern that perhaps their participation in the endeavour has amounted to little more than a way for the World Bank and IMF to co-opt the activist community and civil society in Uganda into supporting the same traditional policies.'

Democratic governance?

Barely acknowledging the power imbalances in the global system, the Monterrey Consensus offered only timid suggestions for global governance reforms. The Bank and IMF took nearly a full year to come forward with a plan, which, as it turned out, was an insult to the concept of democratic global governance.

The Bretton Woods Institutions' nearly fifty Sub-Saharan African member countries are represented by just two directors, while eight rich countries enjoyed a director each and the US maintained veto power by holding more than 15% of the votes. (There is no transparency as to which board members take what positions on key votes.) The leaders of the Bank and IMF are chosen from, respectively, the US and EU, with the US treasury secretary holding the power of hiring or firing.

In this context, some reformist gestures were needed for the sake of appearance. Nevertheless, the Financial Times reported that the 2003 Bank/Fund strategy emanating from the IMF/Bank important Development Committee (chaired by Manuel) offered only 'narrow technocratic changes,' such as adding one additional representative from the South to the 24-member board. For the US, even those mildmannered reforms were too much, and the Bush regime's executive director to the Bank, Carol Brooking, opposed reforms and instead suggested merely a new fund for extra research capacity aimed at the two institutions' Third World directors. Asked about the democracy deficit at the September 2003 annual meeting in Dubai, Manuel merely remarked, 'I don't think that you can ripen this tomato by squeezing it.'

Fanning financial fires

A final example of Monterrey's amplification of the self-destructive tendencies of international finance, was the conference's call for 'liberalising capital flows in an orderly and well sequenced process'. The Asian financial crisis had earlier stalled the persistent armtwisting efforts of US treasury secretary Larry Summers to force through an amendment to the IMF articles of agreement which would end all exchange controls everywhere.

When Ethiopian prime minister Meles Zenawi had resisted Summers' gambit in 1997, according to Stiglitz, the IMF cut off the cheaper loans it had earlier made available. Cross-conditionality also made Ethiopia ineligible for other low-interest loans and grants from the World Bank, the European Community, and aid from bilaterals.

Stiglitz waged war within the Bank and Clinton regime, finally winning concessions, but he learned a lesson: 'There was clear evidence the IMF was wrong about financial market liberalisation and Ethiopia's macroeconomic position, but the IMF had to have its way.' Zenawi poignantly implored, at a mid-2003 Economic Commission for Africa meeting, 'While we will not be at the high table of the IMF, we should at least be in the room where decisions are made.'

The only reform project to deal with financial speculation was a bailout mechanism which might save Wall Street from its own worst excesses, but also allow a 'workout' system for countries that had urgent repayment difficulties. In mid-2003, a debt arbitration mechanism was finally proposed by the IMF's current acting managing director, Anne Krueger, a Bush appointee. However, the plan came to naught, for as the The Guardian's Larry Elliott explained, 'Billions of dollars from the bail-outs ended up in the coffers of the big finance houses of New York and George Bush was told not to meddle with welfare for Wall Street. The message was understood: the US used its voting power at the IMF to strangle the bankruptcy code at birth.'

Reforming from the outside?

Under the prevailing balance of power, the top-down reform processes discussed above could not have worked. But what of other efforts at reform from the outside (ostensibly from below), particularly via international commissions in which the World Bank plays a crucial hosting and financing role?

The three major recent processes in which well-meaning civil society advocates went inside the Bank were the World Commission on Dams, the Structural Adjustment Participatory Review Initiative (Sapri) and the Extractive Industries Review. In the first case, a Bank water expert, John Briscoe, actively lobbied southern governments to reject the findings of a vast, multi-stakeholder research team in 2001. According to Patrick McCully of International Rivers Network, 'The World Bank's singularly negative and non-committal response to the WCD Report means that the Bank will no longer be accepted as an honest broker in any further multi-stakeholder dialogues.'

As for Sapri, hundreds of organisations and scholars became involved in nine countries: Bangladesh, Ecuador, El Salvador, Ghana, Hungary, Mexico, the Philippines, Uganda and Zimbabwe. They engaged in detailed analysis from 1997-2002, often alongside local Bank and IMF officials. Bank staff withdrew from the process in August 2001. In April 2002, when the research, a 188-page report, The Policy Roots of Economic Crisis and Poverty, was tabled for action, civil society groups found that the Bank ignored it.

The third case, the Extractive Industries Review (EIR), also nearly went off the rails when an April 2003, incident in Bali, Indonesia delegitimised the exercise before a final report was drawn up. A meeting between the Bank, international mining industry and civil society ended in an uproar when 15 environmental and human rights groups left in protest. According to the New York Times, 'The group of reviewers set up by the Bank had already circulated its draft conclusions supporting the Bank's oil, gas and mining investments, even though conferences organised to gather information from concerned groups and individuals in Asia, the Middle East and Africa had not yet taken place.'

In the meantime, the Bank approved loans for two infamous pipelines, Chad-Cameroon and Caspian, despite objections from the environmental, human rights and social justice communities. By late 2003, civil societies indignation meant that the EIR leader, former Indonesian environment minister Emil Salim, encountered another legitimacy crisis for World Bank participation politics.

In response, Salim ensured the critique by social movements and environmentalists made it into the December 2003 draft report, including the recommendation that public funds should not be used to facilitate private fossil-fuel profits. The recommendations would have meant an end to World Bank coal lending by 2008; mandatory revenue sharing with local communities; extensive environmental and social impact assessments; 'no go' zones for mining or drilling in environmentally sensitive areas; no new mining projects that dump tailings in rivers; obligatory environmental restructuring; and increased renewable energy investments.

No one was surprised when lead Bank energy staffer Rashad Kaldany disagreed with the recommendations. Several major environmental NGOs blasted the institution: 'One of the Bank's most important environmental reforms of the 1990s was its more cautious approach to high-risk infrastructure and forestry projects. This policy is now being reversed. The World Bank recently announced that it would re-engage in contentious water projects such as large dams in what it refers to as a 'high risk/high reward' strategy. In 2002, the Bank dismissed its 'risk-averse' approach to the forest sector when it approved a new forest policy. The World Bank is also considering support for new oil, mining, and gas projects in unstable and poorly governed countries, against the recommendations of its own evaluation unit.'

Starting from scratch?

Civil society enthusiasts of such commissions should have been warned by well-meaning insiders who also failed to move the reform agenda forward. From a vantagepoint in the chief economist's office during the late 1990s and early 2000s, David Ellerman saw more than his share of reform gambits. Finally, Ellerman threw up his hands: 'Agencies such as the World Bank and the IMF are now almost entirely motivated by big power politics and their own internal organisational imperatives. All their energies are consumed in doing whatever is necessary to perpetuate their global status. Intellectual and political energies spent trying to “reform” these agencies are largely a waste of time and a misdirection of energies.'

Persuasion by reformists within the chief economist's office did not affect the institution, agreed William Easterly, a former senior staffer: 'There's a big disconnect between World Bank operations and World Bank research. There's almost an organisational feud between the research wing and the rest of the Bank. The rest of the Bank thinks research people are just talking about irrelevant things and don't know the reality of what's going on.'

Abuse of power and dogmatic ideology were Stiglitz's long-standing justifications for his August 2002 call to consider replacing the IMF: 'I'm beginning to ask, has the credibility of the IMF been so eroded that maybe it's better to start from scratch? Is the institution so resistant to learning to change, to becoming a more democratic institution, that maybe it is time to think about creating some new institutions that really reflect today's reality, today's greater sense of democracy. It is really time to re-ask the question: should we reform or should we build from start?

At the same time, a Columbia University colleague of Stiglitz, Jeffrey Sachs, began arguing that low-income countries should not repay World Bank and IMF loans, and should redirect debt servicing directly towards health and education. Decapitalisation of the Bretton Woods Institutions through a new wave of sovereign defaults would be a sensible and direct closure tactic.

After all, Sachs insisted, no one 'in the creditor world, including the White House, believes that those countries can service these debts without extreme human cost. The money should instead be rerouted as grants to be spent on more demanding social needs at home. Poor countries should take the first step by demanding that all outstanding debt service payments to official creditors be reprocessed as grants for the fight against HIV/AIDS.' The idea was not as outlandish as it appeared at first blush, according to the Boston Globe, for during the 1980s Bolivia and Poland both got away with this strategy: 'Because the two countries used that money for social causes both were later able to win debt forgiveness.'

Default may be the logical option, since so few HIPC resources are being allocated for debt relief. Argentina, Nigeria and Zimbabwe may have been the highest-profile defaulters since 2000, but there are many more that will eventually feel pressure from the grassroots, conduct a cost-benefit analysis, and decide that default -- combined with internal financing of development using local currency to meet basic needs--is the common sense approach.

Solidarity and strength

In parallel to Third World governments becoming more militant, pressure on the institutions from their main shareholders - Northern citizens via their governments - will be vital. An extraordinary new tactic will assist: the World Bank Bonds Boycott. US groups like Center for Economic Justice and Global Exchange have been working with Jubilee South Africa and Brazil's Movement of the Landless, among others, to ask: is it ethical for socially-conscious people to invest in the World Bank by buying its bonds (responsible for 80% of the Bank's resources), hence drawing out dividends which represent the fruits of enormous suffering?

In even the conservative belly of the global economic beast, the USA, organisations endorsing the Boycott included important US cities such as San Francisco, Milwaukee, Boulder and Cambridge; major religious orders; the most important social responsibility funds; and major trade union pension/investment funds. During late 2003, the world's largest pension fund, TIAA-CREF, sold its World Bank bonds as campaigners made it a special target.

Bank Boycott activists understand that the institutions' waning legitimacy - and hence threatens to funding by socially-responsible investors and eventually angry taxpayers -- is the only target that most Third World social movements can aim at. They have done so in recent years with an increasingly militant perspective that worries not about the Fund and Bank's 'failure to consult' or 'lack of transparency' or 'undemocratic governance' -- all easy populist critiques, whose reformist ambitions are terribly weak. (What difference, after all, would it make if Trevor Manuel were the first non-European IMF MD?)

Most of the attention that the leading activists pay to the Washington Consensus ideology is to the core content: commodification, whether in relation to water, electricity, housing, land, anti-retroviral medicines and health services, education, basic income grant support or other social services, ideally all at once and in cross-sectoral combinations. It is there, in grassroots movements to decommodify the goods and services which the World Bank and IMF increasingly put out of reach, that the only feasible alternative strategy can be found.

* Patrick Bond is professor at the University of the Witwatersrand, Johannesburg. A longer version of this article is in the June 2004 issue of Capitalism, Nature, Socialism. Further details of the South Africa case are in Bond, P. (2004), Talk Left, Walk Right: South Afica's Frustrated Global Reforms, Pietermaritzburg, University of KwaZulu-Natal Press; and Bond, P. (2003), Against Global Apartheid: South Africa meets the World Bank, IMF and International Finance, London, Zed Books.

* Please send comments to

The third free election and the 10th anniversary of democracy in SouthAfrica this month together offer a chance to distinguish between celebratory and critical thinking.

Global and local mainstream media tend to the former, adding the obvious caveats about Pretoria's handling of AIDS and Zimbabwe, and remarking upon unemployment. Henning Melber's Pambazuka #151 article, 'What choices for South African voters', in the latter category, has already advanced a variety of other doubts about, especially, the regional and international weaknesses of president Thabo Mbeki's government, which we need not dwell on here.

Now that the dust is settling on the election results - with no surprises whatsoever - the polity can consider what trajectories might lead to a different future, and what socio-economic results of a ten-year neoliberal governing strategy must be reversed. The details of the government's domestic performance since 1994 should be subject to far more rigorous examination, now that the hot rhetoric of the campaigns is fading.

The results, after all, appear tediously similar to 1999. The ruling African National Congress won roughly 70%, as anticipated, and Mbeki's brilliant Machiavellian divide-and-conquer of the white-dominated opposition parties reduced their combined vote markedly, with Tony Leon's Democratic Alliance winning around 13%. At closer to 5%, half its 1994 percentage, the Zulu-based Inkatha Freedom Party will need the DA to help it continue governing KwaZulu-Natal. The 2% won by Patricia de Lille's centrist Independent Democrats was in the same league as the conservative African Christian Democratic Party and the New National Party, which in 1994 had more than 20% and in 1999, 7%. The Afrikaner bitter-ender Freedom Front had 1%. Parties whose critique of ANC rule was mainly from the left did badly: the United Democratic Movement and Pan Africanist Congress appear to have each barely maintained a parliamentary seat; the black-consciousness Azanian Peoples Organisation and its breakaway Socialist Party of Azania do not seem to have even attained parliamentary standing.

But with its two-thirds of the vote, will the ANC use its power to pass constitutional amendments that could, in theory, revise the Constitution against residual property rights and patriarchy, in favour of the ANC's low-income, black, women constituents? Although ANC campaigners are talking left these days, the same people, when in government, persist in walking right.

One reason is that the progressive forces which did not run candidates for election have not shown sufficient strength and consistency, what with ANC-aligned trade unionists sending mixed signals, and independent leftists in the urban communities and rural landless movement working at cross-purposes. Leading Johannesburg township activists engaged in a spoiled-ballot exercise (they scrawled all over their voter card), in tactical conflict with the Landless People's Movement, which called for a simple boycott, in anticipation that the apathy factor would rise substantially. Early returns suggest that turnout was substantially lower than 1994 and 1999, but at more than 70% of registered voters, the LPM cannot claim victory for the boycott strategy.

What the landless activists can do, however, is honour the arrests of more than 50 of their members in the ghetto of Thembelihle, near Soweto, on election day. As their press release explained, 'The people have been arrested in terms of the Electoral Code of Conduct and the 1993 Prohibition of Illegal Gatherings Act. The charges are related to illegal gatherings on the day of elections. The LPM regards the charges as spurious. The LPM members were not permitted to gather even though they were prepared to observe regulations allowing only protests held at least 200m from any polling station. They were arrested as they disembarked from their transport, and so no gathering or meeting even took place.'

Judging by this sort of repressive - indeed, paranoid - security and the falling living standards experienced by the majority of black South Africans, the government should be subject to the kinds of insurgent protests witnessed recently in Bolivia and Argentina. To naysay these harsh realities, the ANC took to doctoring simple statistics during the campaign.

Some illustrations demonstrate why the government can make inspiring claims of delivery - but retain market-oriented policies ranging from macroeconomics to microdevelopment. It is no secret that Pretoria's homegrown structural adjustment policy, co-authored by the World Bank in 1996, codified the pro-corporate economic philosophy inherited from apartheid. The result was the doubling of the formal unemployment rate from 16% in 1994 to 32% in 2002. When one considers, in addition, those millions of people who have given up any hope of finding a job, the rate rises to 43%. Both the public and private sectors shed more than 10% of formal sector jobs since liberation in 1994.

Yet as the election neared, ANC politicians like trade and industry minister Alec Erwin began insisting that two million new jobs were created since 1994, based on an official Labour Force Survey. That survey defines 'employment' as including 'beg[ging] money or food in public' and 'catch[ing] any fish, prawns, shells, wild animals or other food for sale or family food.' Asked about this measure two months ago, the main trade union official, Zwelinzima Vavi, said simply, 'It is absurd to record such labour as jobs.' Nevertheless, last week Vavi's chief economist defended the statistics by way of justifying labour's endorsement of the ANC as the only party with, supposedly, 'the workers' interests at heart.'

In reality, the ten-year liberation celebrations to be held around the day of Mbeki's re-inauguration, April 27, will be much more boisterous in the mansions and corporate headquarters of Johannesburg. 'The government is utterly seduced by big business, and cannot see beyond its immediate interests,' remarked the neoliberal editor of Business Day newspaper, Peter Bruce, last June.

Shortsighted ANC election propaganda bragged of having created 'a level of macroeconomic stability not seen in the country for 40 years.' Stability? In reality, there were three currency crashes witnessed over a period of a few weeks in February-March 1996, June-July 1998 and December 2001, ranging from 30 to 50% each. Each led to massive interest rate increases which sapped growth and rewarded the speculators. These moments of macroeconomic instability were as dramatic as any other incidents during the previous two centuries, including the September 1985 financial panic that split big business from the apartheid regime and paved the way for ANC rule.

It is here that the core concession made by the ANC during the early 1990s transition deal is apparent, namely in the desire by white businesses to escape the economic stagnation and declining profits born of a classical capitalist crisis, in the context of a sanctions-induced laager, and amplified by the 1970s-80s rise of black militancy in workplaces and communities.

The deal represented simply this: black nationalists got the state, while white people and corporations could remove their capital from the country, and simultaneously remain domiciled in South Africa with, thanks to economic liberalisation, still more privileges. Trade, credit, cultural and sports sanctions ended; exchange controls were lifted; luxury imports flooded in; white people's incomes rose by 15% during the late 1990s; taxes were cut dramatically; and the corporate pre-tax profit share soared during the late 1990s, back to 1960s-era levels associated with apartheid's heyday.

Hence inequality soared during ANC rule, state statistics show. Black 'African' South Africans suffered an income crash of 19% from 1995-2000, with every indication of further degeneration in subsequent years. The ANC rebuttal is that when state spending is accounted for, the inequality lessens. Yet notwithstanding deeper poverty, the state raised water and electricity prices, to the point that by 2002 they consumed 30% of the income of those households earning less than $70 per month. An estimated 10 million people had their water cut off, according to two national government surveys, and 10 million were also victims of electricity disconnections (see for the ongoing numbers controversy).

This is all crucial for the coming months, in the event policies can be altered by a more confident government, as claimed by leftists within the ANC and amongst its allies.

On an optimistic note, the debate over whether state services have been provided to low-income black customers in a sustainable manner - or instead are priced too high because of privatisation pressures -- was finally joined by Mbeki last week. As reported in Sunday's City Press newspaper (mainly read by blacks), 'After meeting pensioners like 92-year-old Mamelodi resident Johanna Mashigoane, whose electricity had been cut off as she could not afford to pay for it, and unemployed Macassar resident Zelna Hendricks, who had received an eviction letter from the council after failing to pay rates, Mbeki could not hide his outrage. Local government policy towards the poor, he declared, would have to change after the elections and central government would need to allocate more money to municipalities to deal with this problem.'

Although municipal policy on disconnections and evictions is in fact a national policy with World Bank fingerprints, approved by the Cabinet on several occasions, Mbeki's raised consciousness is a step forward to reality. The week before, his chief communications officer took a step backwards when he wrote insensitively in the Sunday Times (mainly read by whites) in defense of disconnections: '10 million people connected to water which cannot by any stretch of the imagination be compared with the few households occasionally cut off.'

The question is whether such zigzagging is merely a product of election rhetoric, or instead reflects the permanent contradictions between big-business advocates of essentially neoliberal development policies, and well-moblised activists. South Africa hosts some of the world's most militant social movements, who demand the decommodification of water, electricity, anti-retroviral medicines and healthcare, education, and even a Basic Income Grant.

Defenders of the elite transition deal may claim that leftward pressure on the ANC also emanates from the Constitution's celebrated socio-economic rights clauses. But the 1996 document appears a bit tattered these days, partly because the judges are too frightened to take a stand against the state's neoliberal policies, and partly because of an incident on March 21 at the opening of the Court's beautiful new building in central Johannesburg
at the site of the old Fort Prison next to Hillbrow.

The tale is worth recounting. Johannesburg community activists in the Anti-Privatisation Forum called a march to protest the installation of pre-paid water meters in Soweto by the French company Suez, which is running the city's outsourced water company. City officials banned the march on absurd grounds (traffic disturbances - on a Sunday?). The police arrested 51 activists, some simply because they were wearing red shirts, and blocked travel of APF buses into Johannesburg. Neither the judges nor Mbeki – who attended the opening ceremony - uttered a word in the protesters' defense, so even first-generation civil/political rights now appear merely contingent.

That incident aside, the country's highest court has heard three major cases on socio-economic rights: one led to the death of a man denied kidney paralysis treatment because the judges deemed it too expensive; the next helped the Treatment Action Campaign acquire AIDS medicines for pregnant women because the judges agreed the state was needlessly killing tens of thousands of infants each year; and another allegedly enforced the right to emergency municipal services - but checking back on the successful plaintiff, Irene Grootboom, in her Cape Town ghetto, the Sunday Times found her community as destitute as in September 2000, at the time of her case.

To be sure, the status of women like Grootboom includes some improvements since 1994, especially in reproductive rights, albeit with extremely uneven access. But contemporary South Africa retains apartheid's patriarchal modes of surplus extraction, thanks to both residual sex discrimination and the migrant (rural-urban) labour system, which is still subsidised by women stuck in the former bantustan homelands.

Structured super-exploitation of women is accompanied by an apparent increase in domestic violence associated with rising male unemployment. Mbeki was quoted by the SA Press Association on March 22, the day after Human Rights Day: 'He said if ever his sister was to arrive home and tell him that she was in love with African Christian Democratic Party leader Kenneth Meshoe, he would have to beat her.' A spokesperson said the president was only joking.

Women are also the main caregivers in the home, and bear the highest burden associated with degraded health. Public-sector services continue declining due to underfunding and competition from private providers. Infectious diseases such as tuberculosis, diarrhea, cholera, malaria and AIDS are rife, all far more prevalent than during apartheid. Most South Africans with HIV still have little prospect of receiving antiretroviral drugs to extend their lives. Only last week - in time for the election -- did the medicines finally begin to make their way to hospitals and a few clinics.

During his five years as president, Mbeki has taken various obstinate stands against the poor and the sick. He has also stood down human rights activists and arms-control groups opposed to his $6 billion purchase of sophisticated weaponry from European corporations. The widespread influence-peddling scandals associated with the arms deal threatened deputy president Jacob Zuma last year, after he allegedly solicited a bribe in a manner the justice minister deemed 'prima facie corruption', and it forced the resignation of several leading ANC politicians and officials caught in plots.

On the environmental front, the country's ecosystem as today in worse condition, in many crucial respects -- e.g., water and soil resources mismanagement, contributions to global warming, fisheries, industrial toxics, genetic modification -- than during apartheid. For example, in spite of water scarcity, major dam projects are generating destructive environmental consequences downriver, and the extremely high costs of water transfer deter consumption by poor people. The location of natural surface and groundwater remains skewed towards white farmers due to apartheid land dispossession. Because a World Bank-style neoliberal land reform policy was adopted just after liberation, less than 3% of arable land was redistributed, as against a 1994-99 target of 30%.

The systematically repressive side of Mbeki's regime was unveiled to the world during the August 2002 protests against the UN's World Summit on Sustainable Development. Leading anti-privatisation activists in the black townships of Johannesburg and Cape Town are repeatedly harassed and detained by police -- mainly illegally (resulting in high-profile acquittals) – for resisting evictions and disconnections. Treatment Action Campaign members were savagely beaten in early 2003 during a non-violent civil disobedience campaign to acquire medicines.

In short, the record upon which the ANC campaigned was one of low-intensity democracy in which the ruling party regularly wins elections because US-style corporatist trade unions remain aligned to the ruling party, their leaders unwilling to risk establishing a broad-based progressive movement to fight neoliberalism from outside. But because the transition from racial to class apartheid will not go unpunished forever, this state of affairs is certainly not the last word. Certainly in another ten years, or before, a much more optimistic report will be filed: optimistic, that is, for genuine socio-economic transformation.

Patrick Bond - [email][email protected] - teaches at Wits University, Johannesburg and York University, Toronto while on sabbatical. His new book, out this month from University of KwaZulu-Natal Press, is Talk Left, Walk Right: South Africa's Frustrated Global Reforms.

Well, that was a really great moment on the southeast corner of Mexico on Sunday, was it not?! A few Third World elites - led by Kenyan and Ugandan delegates - finally walked out of the World Trade Organisation summit, insulted to the bitter end by US and EU dictator-negotiators Robert Zoellick and Pascal Lamy. Meanwhile, thousands of activists on the outside tore away at the barricades, a few getting within meters of the Cancun conference centre. (As many predicted, South African officials talked left but acted centrist in Cancun, playing the subimperialist card as long as possible, but saving a bit of face by joining the group of 20+ agricultural exporting countries. Trade minister Alec Erwin expressed 'concern and disappointment', while South African progressives in the streets of Cancun were thrilled at the meeting's demise.)

Bangkok-based Focus on the Global South director Walden Bello summed up: 'The WTO has been severely damaged. Two collapsed ministerials (Seattle and Cancun) and one that barely made it (Doha) recommend the institution to no one. For the trade superpowers, it is no longer a viable instrument for imposing their will on others. For the developing countries, membership has not brought protection from abuses by the powerful economies, much less serving as a mechanism of development.'

Last week also bore two other gifts of 'deglobalisation,' that shorthand phrase Bello has been using to promote the roll-back of corporate power. The Swedes voted decisively against adopting the Euro, and the Argentine masses maintaining sufficient pressure on president Nestor Kirshner to prevent a sell-out to the IMF. Along with economists interviewed by the Financial Times, French water privatiser Suez is furious that the IMF failed to get the desired massive increase in utility price hikes as part of the new loan deal, indicating an unprecedented degree of Argentine official resistance to neoliberalism.

Can anything comparable reoccur this weekend, in the midst of the annual meetings held by the International Monetary Fund and World Bank? It's worth considering both the last summit on financing (back in 2002), and prior annual meetings. Once out of every three years, these are held away from Washington. In Berlin in 1988, 80,000 protesters came out to demand an end to structural adjustment and Third World debt. In Bangkok in 1991, the urban movements of the Klong Toey ghetto fought displacement by a government intent on prettifying the meeting site and, in turn, they harangued and harassed the Thai regime and IMF/WB delegates. In Madrid in 1994, more tens of thousands came out to say, 'Fifty years is enough!' (the institutions were founded in 1944). In 1997, the Hong Kong meeting hosted Asian elites in their most angry, anti-Washington mode, in the midst of the regional economic crisis. In 2000, Prague became the birthplace of 21st century European anti-capitalism, as 15,000 people managed to force the chairperson of the IMF/WB board of governors to close down the meeting a day early.

That man, South African finance minister Trevor Manuel, was once an anti-apartheid revolutionary, but at the famous Prague Castle debate with Bello and other leftists, he insisted, 'Without the international financial institutions, things would be even worse for poor countries.' A few months earlier, in April 2000, Manuel was called into flack-catching duty when 30,000 demonstrators made life miserable for several hundred suits at the annual spring meeting in Washington.

One thing the A16 Washington and S29 Prague protests did was force the two institutions to look in the mirror and put on some makeup. Because of the grotesque hypocrisy identified with the bankers' hedonistic partying, subsequent annual meetings were cut back dramatically from eight days to three. Instead of the fanciest Washington hotels on Rock Creek Parkway, the Bank and IMF retreated to their headquarters, in the staid (and more readily defended) centre of town, two blocks west of the White House.

Now, in the wake of their Cancun catastrophe, those responsible for global minority rule are reconvening in a favoured terrain: an undemocratic Arab state where protest is simply not tolerated. With Qatar's capital of Doha serving nicely as the WTO conference retreat in 2001 (and no protests to speak of), the question now is whether Dubai will allow global financiers the breathing space to reassert forward momentum for corporate globalisation.

Here are two worrying signs: first, the elites are sufficiently confident to extend the meeting time back to eight days; and second, Trevor Manuel again appears in their midst, suavely chairing the policy-making IMF/WB Development Committee, as Mr Fix It (see his line at pubs/ft/fandd/2003/09/).

Back in March 2002, under Manuel's co-leadership (with former IMF boss Michel Camdessus), the Monterrey UN Financing for Development conference was the first major opportunity to correct global capital markets since the spectacular late 1990s emerging markets crises. South Africa's own 2000-01 currency crash of
57% was the freshest evidence. But similar financial problems and power relations were patently obvious, having spread from Mexico through Latin America (1995), then to Eastern Europe and South Africa (1996), to Thailand, Indonesia and Malaysia (1997), then to South Korea, Russia and South Africa again (1998), to Brazil (1999), then to Turkey (2000), and then Argentina and South Africa (2001).

Yet in Monterrey, Manuel revitalised the Washington Consensus. He openly endorsed privatisation in a major address to big business: 'Public-private partnerships are important win-win tools for governments and the private sector, as they provide an innovative way of delivering public services in a cost-effective manner.' Meanwhile, back in South Africa, the 'partnerships' were nearly universally failing, from the standpoint of both workers and consumers (and sometimes also businesses), in the water/sanitation, electricity, telecommunications, postal system, forestry, air transport, ports, road transport and road construction sectors. In August 2001 and October 2002, South African workers Cosatu held two-day mass stayaways against private partnerships involving essential public services. Manuel didn't mention these problems, even as caveats.

Debt relief was even more elusive. The Heavily Indebted Poor Countries Initiative (HIPC) was endorsed by Manuel as 'an opportunity to strengthen the economic prospects and poverty reduction efforts of its beneficiary countries.' Within a year, however, even the World Bank openly conceded HIPC's failure, including longstanding criticisms both that its staff 'had been too optimistic' about the ability of countries to repay under HIPC, and that projections of export earnings were extremely inaccurate. HIPC debt cancellation had by then reached only around $30 billion (and hasn't proceeded much further since), while total Third World debt which the Jubilee South movement demands be cancelled exceeds $2 trillion.

In late 1999, HIPC was accompanied by the renaming of the Washington Consensus philosophy of structural adjustment: Poverty Reduction Strategy Papers (PRSPs).
At Monterrey, Manuel told fellow finance ministers that the PRSPs were 'an important tool for developing countries to reduce their debt burdens.' In contrast, civil society resistance to structural adjustment intensified across the Third World, including Manuel's home continent. The World Development Movement's annual 'States of Unrest' series covers dozens of countries and hundreds of IMF Riots. The report covering 2002 showed that 'this broad based movement clearly indicates how policies promoted by the IMF/WB are not only keeping the poor in poverty, but are also impoverishing sectors of society generally relied upon for wealth creation, economic development and civil society leadership.' Civil society meetings in Africa now regularly denounce PRSPs as a scam.

Is better global governance the answer? The charge of 'global apartheid' certainly applies to the IMF/WB, where nearly fifty Sub-Saharan African countries are represented by just two directors, while eight rich countries enjoyed a director each and the US maintains veto power by holding more than 15% of the votes. (There is no transparency as to which board members take what positions on key votes.) The IMF/WB chief executives are chosen from, respectively, the EU and US, with the US treasury secretary holding the power of hiring/firing.

It's much like what was termed, in the days two centuries ago when Washington, DC hosted slavery, the 'Big House.' Nevertheless, the Financial Times reported that the 2003 governance reform strategy emanating from Manuel's Development Committee offered only 'narrow technocratic changes,' such as adding merely one additional representative from the South to the 24-member board. (Even this was vetoed by the Bush regime's executive director to the Bank, Carol Brooking.)

In all of this, far more than mere intra-organisational positioning is at stake. The IMF/WB remain central to lubricating US imperialism, including in Afghanistan and Iraq. The Bank, for example, is reinvigorating its push towards state services privatisation in the 2004 World Development Report, which will be released on Saturday. (The best preliminary english-language critique, by Uruguay-based Tim Kessler of Citizens' Network on Essential Services, is at http://www.servicesforall.org/ html/tools/2004WDR_critique.shtml )

According to London School of Economics professor Robert Wade, 'The World Bank has made no evaluation of its earlier efforts to support private participation in social sectors. Its new private sector development thrust, especially in the social sectors, owes almost everything to intense US pressure.' As a result, the frustration over African impotence in Washington occasionally boils over. In June, at a UN meeting in Addis Ababa, Ethiopian president Miles Zenawi poignantly implored, 'While we will not be at the high table of the IMF, we should be at least in the room where decisions are made.' In sum, as we will see again in Dubai, the likes of Manuel and Zenawi are reduced to serving as the international equivalents of South Africa's apartheid-era bantustan leaders. Their function is merely begging the new global version of the hated apartheid state for a few crumbs and a bit more dignity, while promising to obey the rules of the game and even endorsing the language as their own homegrown policy.

Some say that Manuel's softly-softly approach divulges that, in the words of a Business Day newspaper report in May, he has been considering other 'international posts--perhaps at the World Bank or IMF,' allegedly, 'for ages. The rationale is that he... is seeking new challenges. A few other reasons have been put forward, but a desire by the well-respected finance minister to move on to the global stage seems most plausible.' Of course it is certainly not necessary to endorse a conspiracy theory to explain Manuel's spinelessness. His patriotism is not an issue; his consistent application of neoliberal ideology is, however. That's why, in contrast to the lowly Kenyan and Ugandan trade negotiators, we can't expect African leadership from the current chair of the IMF/WB development committee. Nor can we expect an end to structural adjustment, debt peonage or the institutions' massive democracy deficit at Dubai.

Manuel is an Anglican, and occasionally joins a congregation in Cape Town presided over by Archbishop Njongonkulu Ndungane (Desmond Tutu's successor). I bet he hasn't read Ndungane's new book, A World with a Human Face (published by David Philip, CT), which contains these useful marching orders for the global justice movements: '[If] we must release ourselves from debt peonage - by demanding the repudiation and cancellation of debt - we will campaign to that end. And if the World Bank and IMF continue to stand in the way of social progress, movements like Jubilee South Africa will have no regrets about calling for their abolition. To that end, the World Bank Bonds Boycott movement is gaining even great momentum. Even a money centre city like San Francisco decided to redirect funds away from Bank bonds into other investments, on the moral grounds that taking profits from World Bank operations contributes to poverty, misery and ecological degradation. More and more investors are realising that profiting from poverty through World Bank bonds is not only immoral, but will not make good financial sense as the market shrinks.' Have a look at http://www.worldbankboycott.org to join this great movement - and then help prepare for a 60th anniversary ('retirement party') protest in Washington next year.

* Patrick Bond's updated book, Against Global Apartheid, is published this month by Zed Press, London and University of Cape Town Press.

The poor nations are preparing for another unsatisfying round of trade talks in Cancun, and South Africa once again is lining up in a manner consistent with Third World rhetoric - and First World interests.

Consider the rhetoric, which on Tuesday in Malaysia took a surprising turn. South African president Thabo Mbeki was speaking at the Institute of Strategic and International Studies, during the course of a state visit to a leader - prime minister Mahathir Mohamed - considered amongst the Third World's most militant nationalists. (Accused of anti-semitism for his paranoid 1998 attacks on George Soros and 'Jewish bankers,' Mahathir then imposed tough exchange controls which, according to local progressive economist Jomo K.S., mainly served to protect Mahathir's cronies.)

Earlier this year, Mbeki had passed the three-year leadership of the Non-Aligned Movement to Malaysia, and he encouraged Mahathir's delegation to take leadership at Cancun. But it was not only South-South unity that Mbeki apparently sought.

The Straights Times reported: 'Mbeki said that from South Africa's past experience, it helped to have strong anti-apartheid groups in developed countries to lobby its case. In the same way, he suggested linking up with groups in developed countries which were concerned about the negative effects of globalisation - which seemed to cause greater imbalances and disparity among the rich and poor nations. "They may act in ways you and I may not like and break windows in the street but the message they communicate relates."'

Well, this is new and different. It was, after all, only a year ago that Mbeki's government used stun grenades to disrupt a non-violent Johannesburg march of nearly 1000 global justice movement supporters outside the University of the Witwatersrand, and then initially banned another mass march to the World Summit on Sustainable Development. Defying the ban, at least 20,000 people marched from Alexandra township to Sandton, against Mbeki and the corporate-dominated talk-shop.

Within days, Mbeki provided this analysis to an African National Congress Policy Conference: 'Our movement and its policies are also under sustained attack from domestic and foreign left sectarian factions that claim to be the best representatives of the workers and the poor of our country. They accuse our movement of having abandoned the working people, saying that we have adopted and are implementing neoliberal policies.'

And indeed they still do, and will continue to after Cancun's dust has settled. What kinds of responses is Mbeki likely to get from the local allies of the global justice movements?

First, the wonderful network of trade activists across Africa have chosen September 13 to demonstrate in 18 cities, focusing on how public water systems are under threat due to the creeping privatisation advanced through the WTO's General Agreement on Trade in Services. Mohau Pheko, coordinator of the Gender and Trade Network in Africa, was invited to attend Cancun as part of the official South African delegation on August 15. However, on August 20, the day after Pheko gave a critical talk, the invitation was withdrawn along with an excuse that the delegation had to be downsized. On August 21, Pheko found herself on the famous Mexican 'watchlist' of neoliberalism's enemies.

The point is not a personal one: it is that SA trade minister Alec Erwin is subimperialist in his negotiating strategy. He positioned himself as a 'Green Room' apologist for free trade at Seattle, and a 'Friend of the Chair' (a.k.a. Green Man) at the 2001 Doha round. The new book, 'Behind the Scenes at the WTO', by Fatoumata Jawara and Aileen Kwa of Focus on the Global South (published this month by Zed Press), tells the story well. Even neoliberal think-tanks like the South African Institute of International Affairs concede, as two researchers recently put it, that African governments view Erwin 'with some degree of suspicion' because he 'does not have their best interests at heart.'

You can be sure that September 13 will include not only catcalls at US embassies across the continent, but also criticisms by African activists about Mbeki's New Partnership for Africa's Development, which would open Africa up to further global trade and financial vulnerabilities.

Second, another source of extraordinary conflict where international alliances play a key role is litigation over reparations for apartheid-era profits and interest. Two dozen multinational corporations are being sued by various South African groups for many billions of dollars 'for knowingly aiding and abetting the commission of crimes against humanity,' to compensate black victims and also to serve as a disincentive to any company considering similar bedfellows in future.

The cases are scheduled to begin in November, and so Mbeki has turned his attention to the matter in recent months, using a Swiss audience to declare it 'completely unacceptable that matters that are central to the future of our country should be adjudicated in foreign courts which bear no responsibility for the well-being of our country and the observance of the perspective contained in our constitution of the promotion of national reconciliation.' Erwin added that Pretoria was 'opposed to and contemptuous of the litigation' and that any findings against companies 'would not be honoured.'

The main venue is New York, because the South African government has failed to establish any enabling legislation to support reparations, and, moreover, now actively opposes Jubilee South Africa and its US and Swiss allies. In July, Mbeki's justice minister, Penuell Maduna, filed a formal objection with judge John Sprizzo, asking him to throw out the lawsuits on grounds that it would discourage 'much-needed foreign investment [and] could have a destabilising effect on the South African economy.' (Sprizzo replied that Maduna's letter was something he 'could not ignore.')

However, whereas Maduna asked that the corporations be let off the hook 'in deference to the sovereign rights of foreign countries to legislate, adjudicate and otherwise resolve domestic issues without outside interference,' a different agenda was revealed at last week's Reparations Conference in Johannesburg. Picking up the story of the August 27 opening plenary debate is Berend Schuitema from Jubilee South Africa's Eastern Cape affiliate:

'Dumisa Ntzebeza [one of the lawyers who filed reparations claims] basically picked the sovereignty argument to pieces. "Show me the enabling legislation and I will leap at the opportunity." A remarkable fact then slipped out from the Minister. The reason why he had made the objection was that he was asked for an opinion on the lawsuit by Colin Powell. He thus gave Powell his written response. Where upon Powell then said that he should lodge this same submission to the Judge of the New York Court. Howls from the floor. Jubilee South Africa president M.P. Giyose pointed out the bankruptcy of the sovereignty argument.'

Nobel laureate and former World Bank chief economist Joseph Stiglitz has also chimed in, writing to the court in opposition to Maduna and Mbeki last month: 'Those who helped support that system, and who contributed to human rights abuses, should be held accountable.'

Third, the last few weeks also witnessed developments in the Treatment Action Campaign (TAC) for access to anti-retroviral medicines, which has been so powerfully assisted by the US group ACT UP, the French doctors in Medicins sans Frontiers, and even Oxfam. TAC leader Zackie Achmat announced that he didn't want to see yet one more South African killed by Mbeki's AIDS policies (600 die every day), and so began taking his pills, to the great relief of virtually the entire society. His rationale was that TAC was on the verge of winning access for at least half a million people who need medicines urgently.

The big question remains whether this occurs through generic medicines, and hence is more affordable and more easily established across the rest of Africa. Erwin remains a target, because, according to a TAC charge of culpable homocide filed with police in March, he 'unlawfully and negligently caused the death of men, women and children' when he ignored 'repeated requests' to issue compulsory licenses for anti-retroviral treatment. His 'conduct in failing to make these medicines available to people who need them does not meet the standards of a reasonable person.' (The police refused to charge Erwin, and instead used violence against peaceful TAC protesters in Durban.)

When, last month, the SA cabinet finally announced that a plan would be prepared for rolling out expanded access to medicines, no one trusted health minister Manto Tshabala-Msimang to do so. The state Medical Research Council further complicated matters by threatening the deregistration of the drug Nevirapine, which TAC says has saved more than 50,000 babies from getting the HIV virus from their mothers. Meanwhile, the US government's pre-Cancun concessions on Trade in Intellectual Property Rights clauses that protect pharmaceutical corporate patent monopolies continued to disappoint activists. In sum, given the trio of Mbeki, Bush and Big Pharma, people like Achmat and their international allies will need all the sustenance they can get, because the fight is by no means over.

Fourth, water privatisation is another site where internationalist allies have supported post-apartheid South African opponents of worsening class apartheid. Here again, the last days have shown the need to intensify the pressure.

In Johannesburg's Orange Farm and Soweto townships, the Anti-Privatisation Forum has been opposing attempts by Paris-based Suez to install thousands of pre-paid water meters. During the last two weeks, Trevor Ngwane and a half-dozen of his comrades were arrested for filling in trenches that are being dug in Phiri zone of Soweto. The South African government delegation to Cancun still hasn't revealed whether it will follow European Union requests for much more extensive water privatisation through the General Agreement on Trade in Services.

These are just four sites where it seems that Mbeki's newfound interest in the world's anti-capitalist movement will not be met with trust and respect. Should international progressive groups -or even just those who like to 'break things' - be open-minded about Mbeki's apparent desire for an alliance? Five days earlier, the Reparations Conference concluded its deliberations with this sentence: 'The conference was informed of the call by the President's Office for a list of participants to the conference and expressed its condemnation of this approach as an invasion of participants' rights.'

In other words, they don't trust the man - not one bit.

* The new edition of Patrick Bond's book 'Against Global Apartheid' is being published this month by Zed Press; Patrick is at [email][email protected])

* Please send comments on this editorial to [email protected]

Cancun websites:
* Oneworld: Spotlight on Cancun http//www.oneworld.net/article/frontpage/339/4953
* Global Issues: Introduction to the issues

* Draft Cancún Ministerial Text
http://www.cancun2003.org/en/nav/index.html
- Comment by Third World Network on the text http://www.cancun2003.org/en/nav/index.html
* Alternative Information and Development Centre

FOR MORE NEWS AND COMMENTARY ON THE WTO MEETING IN CANCUN, MEXICO, VISIT THE DEVELOPMENT SECTION OF PAMBAZUKA NEWS.

"Africa didn't really shine here," South African finance minister Trevor Manuel told a press conference in snowy Davos, Switzerland, at the World Economic Forum last week. "There is a complete dearth of panels on Africa."

Nevertheless, in any five-star hotel gathering of powerbrokers, backslapping is crucial, no matter how artificial the camaraderie. Here is how former Johannesburg Star newspaper editor Peter Sullivan witlessly described the Davos experience for Sunday Independent readers this week:

"The SA contingent worked hard to get investment but partied equally hard: a real 'jol' was had by all with great jiving from Kader Asmal, Trevor Manuel and Alec Irwin (sic), while Bertie Lubner and his wife boogied the night away. We also drank a few bottles of KWV's best red." (Too many, apparently, to subsequently spell trade minister Erwin's name correctly.)

Sullivan regaled with stories of meeting "the beautiful Queen Rania of Jordan", Bill Gates and Bill Clinton. But as one shrewd journalist - not the social-climber Sullivan - reported on January 28, "Among the many snubs Africa received here was the decision by former US president Bill Clinton to cancel his presence at a press conference on Africa today to discuss the New Partnership for Africa's Development. Forum officials said Clinton did not give reasons for not attending."

The ingratitude!

Recall that over the previous eighteen months, Thabo Mbeki, Manuel and Erwin had either hosted, chaired or played a crucial backroom role on globalisation's equivalent of a big-five hunting safari - mainly for the benefit of the Davos club:

* At the World Conference Against Racism in Durban, Mbeki shot down NGOs and African leaders who argued in favour of reparations for slavery/colonialism/apartheid.

* Ten weeks later at the World Trade Organisation's Doha ministerial summit, Erwin split his continent's delegation to prevent a Seattle-style denial of consensus by African trade ministers, in the process promoting multinational corporate interests.

* Then, at the UN's Financing for Development conference in Monterrey, Mexico last March, Manuel was summit co-chair and endorsed the World Bank and IMF "Washington Consensus", relegating debt relief to the status of a dead duck.

* A few months later, at the Kananaskis, Canada Summit of the G8 powers, a grovelling Mbeki departed with a handful of peanuts for his hungry and now badly wounded African elephant - and yet, against all evidence to the contrary, declared that the meeting "signifies the end of the epoch of colonialism and neo-colonialism".

* Finally, at Johannesburg's World Summit on Sustainable Development, Mbeki undermined standard UN democratic procedure, advanced the privatisation of nature, and did virtually nothing to genuinely address the plight of the world's majority.

A little sympathy from the world's ruling class for Pretoria's men in kneepads would surely have been in order - even if just the face-saving sort, for the cameras, as is normally the case.

So let's leave the grey-monied set in favour of a hot, sunny, colourful place crowded with ordinary grassroots activists who took the world's problems rather more seriously last week. In Porto Alegre, Brazil, the World Social Forum attracted 100,000 leftist delegates from across the globe who insisted, "Another World is Possible!"

Here at least, South Africa - especially Soweto campaigners for free electricity, water, medicines, education and housing - shone as brightly as a house reconnected late at night thanks to Operation Khanyisa.

Several times in Porto Alegre, I witnessed the passion with which former Soweto city councillor Trevor Ngwane addressed the crowds, moving the agenda from basic human rights, to continent-wide organising in the year-old Africa Social Forum, to his widely-applauded declaration that the World Bank must now be defunded and decommissioned.

"Weakening the power of Washington is our main challenge," Ngwane announced, "especially now that Bush is in heat after Middle Eastern oil, and because the IMF and World Bank show they will not reform."

Moreover, the World Social Forum has spawned a variety of localised social forums of labour, women, environmentalists, community militants, church activists, and youth. In conjunction with the African Social Forum which met last month in Addis Ababa, Ngwane has been mandated to help get a Southern African Social Forum off the ground.

Decentralisation will help avoid, as Canadian author Naomi Klein warns, domination by the new "big men" of the left: Brazilian president Lula Inacio da Silva and embattled Venezuelan president Hugo Chavez. Crucial for a coming generation of bottom-up social forums, says Klein, is the chance to replant Porto Alegre's most radical seeds: "The ideas flying around included neighbourhood councils, participatory budgets, stronger city governments, land reform and co-operative farming - a vision of politicised communities that could be networked internationally to resist further assaults from the IMF, the World Bank and World Trade Organisation."

Icy Davos and friendly Porto Alegre will clash again - as elites marginalise Africa through intensified globalisation and as social forums break out across Africa uniting to demand, as Asian intellectual Walden Bello suggests, economic "deglobalisation". Which forum philosophy will prevail?

On two previous occasions, South Africa's famous two Trevors - Manuel and Ngwane - have seen their respective teams square off. Once, during an April 2000 clash covered by SABC's Special Assignment ("Two Trevors go to Washington"), Manuel chaired the World Bank board of governors for two days while Ngwane taught 30,000 protesters outside to toyi-toyi.

And again last August, when Manuel was negotiating some meaningless treaty or other at the Sandton Convention Centre, Ngwane and 20,000+ demonstrators marched over from Alexandra to demand that the elites pack up and end their charade.

With the world's environmental and developmental crises worsening ever more rapidly, lubricated by petro-warrior George Bush, can any conclusion be reached about the latest confrontation? Perhaps only this: one Trevor was cold and lonely fighting a battle he can never win; the other was flush with the warmth of solidarity, basking in the resurgence of a humanistic but uncompromising international left.

* Patrick Bond teaches at Wits University and recently authored ‘Unsustainable South Africa: Environment, Development and Social Protest’, published by University of Natal Press. This article was due to appear in the Sowetan newspaper on February 7.

* Send comments on this editorial for publication in the Letters and Comments section of Pambazuka News to