Year 501 (17 page)

Support for democratic forces is limited, not because of opposition to democracy, but because of what it becomes under Western rules. It will either have the very special meaning dictated by the needs of the rich men, or it will be the target of destabilization, subversion, strangulation, and violence until proper behavior is restored. Exceptions are rare.
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Loss of faith in democracy is of small concern in the West, though the “bureaucratic capitalism” that might be introduced by Communists-turned-yuppies is a potential problem. In the Western doctrinal system, democratic forms are meritorious as long as they do not challenge business control. But they are secondary: the real priority is integration into the global economy with the opportunities this provides for exploitation and plunder.

With IMF backing, the European Community (EC) has provided a clear test of good behavior for Eastern Europe. In the old days, the Russians had to prove that they were not “flirting with the thought” of supporting the aspirations of “the common man.” Today, East Europe must demonstrate that “economic liberalization with a view to introducing market economies” is irreversible. There can be no attempts at a “Third Way” with unacceptable social democratic features, let alone more substantive steps towards democracy and freedom, such as workers' control. The chief economic adviser to the EC, Richard Portes, defined acceptable “regime change” not in terms of democratic forms, but as “a definitive exit from the socialist planned economy—and its irreversibility.” One recent IMF report, Peter Gowan notes, “concentrates overwhelmingly on the Soviet Union's role as a producer of energy, raw materials, and agricultural products, giving very little scope for the republics of the former Soviet Union to play a major role as industrial powers in the world market.” Transfer of ownership to employees, he notes, “has commanded strong popular support in both Poland and Czechoslovakia,” but is unacceptable to the Western overseers, conflicting with the free market capitalism to which the South must be subjected.

The South, that is. Conforming to traditional practice, the EC has raised barriers to protect its own industry and agriculture, thereby closing off the export market that might enable the East bloc to reconstruct its economies. When Poland removed all import barriers, the EC refused to reciprocate, continuing to discriminate against half of Polish exports. The EC steel lobby called for “restructuring” of the East European industry in a way that would incorporate it within the Western industrial system; the European chemical industry warned that construction of free market economies in the former Soviet empire “must not be at the expense of the long-term viability of Western Europe's own chemical industry.” And as noted, none of the state capitalist societies accept the principle of free movement of labor, a
sine qua non
of free market theory. Eastern Europe, or at least large parts of it, is to return to the Third World service role.
21

The situation is reminiscent of Japan in the 1930s, or of the Reagan-Bush Caribbean Basin Initiative, which encourages open export-oriented economies in the region while keeping US protectionist barriers intact, undermining possible benefits of free trade for the targeted societies.
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The patterns are as pervasive as they are understandable.

The US has watched developments in Eastern Europe with some discomfort. Through the 1980s, it sought to impede East-West trade relations and the dissolution of the Soviet empire. In August 1991, George Bush advised Ukraine not to secede just before it proceeded to do so. One reason is that after Reagan's wild party for the rich, the US is not well-placed to join German-led Europe and Japan in taking advantage of the newly opened sectors of the South. Liberal Democrats urge that “foreign aid” be diverted from Central America to the USSR, warning that without the traditional export-promotion devices, the EC and Japan will exploit “the vast trade and investment potential of Eastern Europe” while “We debate how to clear up two foreign policy debacles” (Senator Patrick Leahy); no serious person would be so rude as to suggest that we might at least help wash away some of the rivers of blood we have spilled. In 1992, President Bush proposed his Freedom Support Act to remedy the problem. A “stream of high-ranking US officials and big-business leaders” lobbied for the measure, Amy Kaslow reports. Ambassador Robert Strauss urged rapid action “lest US firms lose out to competitors...in the huge consumer market of the former Soviet Union.” The Act will provide “new opportunities” for US “farmers [agribusiness] and manufacturers,” and “help pave the way for US corporations to explore vast new markets.” There is no confusion about just whose “Freedom” is being “Supported.”
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4. Some Free Market Successes

It would only be fair to add that the IMF-World Bank recipe now being imposed upon the former Soviet empire has its successes. Bolivia is a highly-touted triumph, its economy rescued from disaster by the 1985 New Economic Policy prescribed by the expert advisers now plying their craft in Eastern Europe. Public employment was sharply cut, the national mining company was sold off leading to massive unemployment of miners, real wages dropped, rural teachers quit in droves, regressive taxes were introduced, the economy shrank along with productive investment, while inequality increased. In the capital, Melvin Burke writes, “street vendors and beggars contrast with the fancy boutiques, posh hotels and Mercedes-Benzes.” Real per capita GNP is three-fourths what it was in 1980, and foreign debt absorbs 30 percent of export earnings. As a reward for this economic miracle, the IMF, Interamerican Development Bank, and the G-7 Paris Club offered Bolivia extensive financial assistance, including secret payments to government ministers.

The miracle that is so admired is that prices stabilized and exports are booming. About two-thirds of export earnings are now derived from coca production and trade, Burke estimates. The drug money explains the stabilization of currency and price levels, he concludes. About 80 percent of the $3 billion in annual drug profits is spent and banked abroad, mainly in the US, providing a lift to the US economy as well. This profitable export business “obviously serves the interests of the new illegitimate bourgeoisie and the ‘narco-generals' of Bolivia,” Burke continues, and “also apparently serves the United States national interest, inasmuch as money laundering has not only been tolerated by the United States but has, in fact, been encouraged.” It is “the poor peasant coca growers” who “struggle to survive against the combined armed might of the United States and the Bolivian military,” Burke writes. There are always plenty more to ensure that the economic miracle will continue, eliciting much praise.

Confirming these figures, Waltrad Morales estimates that about 20 percent of the labor force depends for a livelihood on coca/cocaine production and trade, which amounts to about half of Bolivia's GDP. The export miracle has disrupted land prices and agricultural development, “and as a consequence Bolivians can no longer feed themselves.” Malnutrition for children under 5 is over 50 percent higher than the (awful) regional average. A third of the country's food must be imported. “This ‘national food crisis'—further aggravated by the neoliberal economic model—has contributed to the marginalisation of the peasantry, which has forced many of them to grow coca leaf in order to survive,” in a downward cycle.
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On to Poland.

Achievements have also been recorded elsewhere, thanks to timely US intervention and expert management. Take Grenada. After its liberation in 1983—following several years of US economic warfare and intimidation that have been effectively barred from history—it became the largest per capita recipient of US aid (after Israel, a special case). The Reagan Administration proceeded to make it a “showcase for capitalism,” the conventional formula as a country is rescued from its population and set on the right course by its benefactors; Guatemala in 1954 is another announced “showcase” that should be famous (see chapter 7.7). The reform programs, which brought the usual social and economic disaster, are condemned even by the private sector they were designed to benefit. Furthermore, “the invasion has had the long-term effect of neutering the island's political life,” Carter Special Assistant Peter Bourne reports from Grenada where he is teaching at the Medical School whose students were “rescued”: “No creative vision aimed at plans for solving Grenada's social and economic ills has emerged from the lackluster and pliantly pro-American leaders” as the island suffers from record levels of alcoholism and drug abuse, and “crippling social malaise,” while much of the population can only “flee their beautiful country.”

There is, however, one bright spot, Ron Suskind reports in a front-page
Wall Street Journal
article headlined “Made Safe by Marines, Grenada Now is Haven for Offshore Banks.” The economy may be “in terrible economic shape,” as the head of a local investment firm and member of Parliament observes—thanks to USAID-run structural adjustment programs, the
Journal
fails to add. But the capital “has become the Casablanca of the Caribbean, a fast-growing haven for money laundering, tax evasion and assorted financial fraud,” with 118 offshore banks, one for every 64 residents. Lawyers, accountants, and some businessmen are doing well; as, doubtless, are the foreign bankers, money launderers, and drug lords, safe from the clutches of the carefully crafted “drug war.”
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The US liberation of Panama recorded a similar triumph. The poverty level has increased from 40 percent to 54 percent since the 1989 invasion. Guillermo Endara, sworn in as President at a US military base on the day of the invasion, would receive 2.4 percent of the vote if an election were held, according to 1992 polls. His government designated the second anniversary of the US invasion a “national day of reflection.” Thousands of Panamanians “marked the day with a ‘black march' through the streets of this capital to denounce the US invasion and the Endara economic policies,” the French press agency reported. Marchers claimed that US troops had killed 3000 people and buried many corpses in mass graves or thrown them into the sea. The economy has not recovered from the battering it received from the US embargo and the invasion. A leader of the Civic Crusade, which led the middle-class opposition to Noriega, told
Chicago Tribune
reporter Nathaniel Sheppard that “Economic sanctions imposed by the US against our will in 1987 to oust Noriega did nothing to hurt him but ruined our economy. Now we believe the sanctions may have been part of a plan to destroy our economy in such a way that we would not have strong ground to demand dignity and better treatment from the US.” George Bush's June 1992 visit, which ended quickly in a well-publicized fiasco, “focused attention on long-simmering animosity toward Bush” for the invasion, Sheppard reported; the “rifle-toting American troops” in residential neighborhoods are a particular irritant, and the mood was not improved when security forces accompanied by “about eight American personnel” invaded the home of a National Assembly member, rifling through papers, taking passports, firing shots, and intimidating his wife, who was home alone, he alleged.

A post-invasion report on Panama presented to the UN Committee of Economic, Social and Cultural Rights by Mexican Ambassador Javier Wimer reports that the economy has collapsed, with “catastrophic effects in the areas of food, housing, and basic services such as health, education, and culture.” Human rights violations are on the rise as a result of the invasion and subsequent efforts to “liquidate the vestiges of the former nationalism,” with labor rights under particular attack along with any institutions that might be “nuclei of civic protest and political opposition.” The governments of Panama and the US are jointly responsible for “serious and systematic” human rights violations, his report concluded. According to the respected
Central America Report
(Guatemala,
CAR
), the US drug war may be providing a cover for attacks on community activists by the security forces and other human rights abuses.

But some indicators are up. The General Accounting Office of Congress reported that drug trafficking “may have doubled” since the invasion while money laundering has “flourished,” as was predicted at once by everyone who paid attention to the tiny European elite whom the US restored to their traditional rule. A study financed by USAID reported that narcotics use in Panama is the heaviest in Latin America, up by 400 percent since the invasion. The executive-secretary of the Center of Latin American Studies, which participated in the study, says that US troops “constitute a very lucrative market for drugs,” contributing to the crisis. The increase is “unprecedented,...especially among the poor and the young,” the
Christian Science Monitor
reports.
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Another triumph of free market democracy was recorded in Nicaragua, where the Chamorro government and US Ambassador Harry Shlaudeman signed accords opening the way for the US Drug Enforcement Agency (DEA) to operate there “in an attempt to control the growing drug trafficking problem,”
CAR
reports. The DEA agent in Costa Rica declared that Nicaragua is now “being used as a corridor for transferring Colombian cocaine to the United States,” and a Department of Justice prosecutor added that the Nicaraguan financial system is laundering drug money. There is also a growing drug epidemic within Nicaragua, fueled by the high level of drug use by recent returnees from Miami as well as the continued economic decline and the new avenues for drug trafficking since the US regained control. “Since the installation of the Chamorro government and the massive return of Nicaraguans from Miami,”
CAR
reports, “drug consumption has increased substantially in a country long free from drug usage.” Miskito leader Steadman Fagoth accused two members of the Chamorro cabinet, his former contra associate Brooklyn Rivera and the minister of fishing for the Atlantic Coast, of working for the Colombian cartels. The Nicaraguan delegate to the Ninth International Conference on the Control of Drug Trafficking in April 1991 alleged that Nicaragua “has now become a leading link in cocaine shipments to the US and Europe.” In Managua, the number of street children is rapidly increasing, as is drug addiction, which had been virtually eliminated by 1984. Ten-year-old children sniff glue on the street, saying that “it takes away hunger.”