Welcome to the beta version of newint.org — we have just redesigned it — more features coming soon!
We care about your opinion. Let us know what you think, or report any problems. Feedback »

For their eyes only





When Churchill said, ‘democracy is the worst form of government except all the others’, he simply lacked the vision to see that the World Trade Organization would design a system to replace democracy with something much better – Article VI. 4 of the General Agreement on Trade and Services, or GATS. Last year an extraordinary document, dated 19 March 2001, marked ‘confidential’, came through my fax machine from the WTO Secretariat. This unassuming six-page memo which the WTO modestly hid away in secrecy may one day be seen as the post-democratic Magna Carta. It contained a plan to create an international agency with veto power over parliamentary and regulatory decisions. The memo begins with considering the difficult matter of how to punish nations that violate ‘a balance between two potentially conflicting priorities: promoting trade expansion versus protecting the regulatory rights of governments’. Think about that. For a few centuries Britain, America and now almost all nations have relied on elected parliaments, congresses, prime ministers and presidents to set the rules. It is these ungainly deliberative bodies that ‘balance’ the interests of citizens and businesses. Now kiss that obsolete system goodbye. Once nations sign on to the GATS, Article VI. 4 – otherwise known as The Necessity Test – will kick in. Then, per the Secretariat’s secret programme outlined in the 19 March memo, national parliaments and regulatory agencies will be demoted, in effect, to advisory bodies. Final authority will rest with the GATS Disputes Panel to determine if a law or regulation is ‘more burdensome than necessary’. And the GATS panel, not Parliament or Congress, will tell us what is ‘necessary’. As a practical matter, this means nations will have to shape laws protecting the air you breathe, the trains you ride in and the food you chew by picking, not the best or safest means for the nation, but the cheapest methods for foreign investors and merchants. Let’s get down to concrete examples. The Necessity Test had a trial run in North America via inclusion in NAFTA, the region’s free-trade agreement. The state of California had banned a gasoline additive MBTE, a chemical cocktail that was found to contaminate water supplies. A Canadian seller of the ‘M’ chemical in MBTE filed a complaint saying California’s ban on the pollutant fails the Necessity Test. The Canadians assert, quite logically, that California, rather than ban MBTE, could require all petrol stations to dig up storage tanks and reseal them, and hire a swarm of inspectors to make sure it’s done perfectly. The Canadian proposal might cost Californians a bundle and might be impossible to police. But that’s just too bad. The Canadians assert their alternative is the ‘least trade-restrictive’ method for protecting the California water supply. ‘Least trade-restrictive’ is NAFTA’s Necessity Test. If California doesn’t knuckle under, the US Treasury may have to fork out over $976 million to the pollutant’s Canadian manufacturer. The GATS version of the Necessity Test is NAFTA on steroids. Under GATS, as proposed in the memo, national laws and regulations will be struck down if they are ‘more burdensome than necessary’ to business. Notice the subtle change from banning ‘trade-restrictive’ rules (NAFTA) to ‘burdensome’ rules. Suddenly, the GATS treaty is not about trade at all, but a sly means to wipe away restrictions on business and industry, foreign and local. What burdensome restrictions are in the corporate cross-hairs? The US trade representative has already floated proposals on retail distribution. Want to preserve Britain’s greenbelts? Well, forget it – not if some bunch of trees are in the way of a Wal-Mart superstore. Even under the current, weaker GATS, Japan was forced to tear up its own planning rules to let in the retail monster boxes. The Blair Government assures us that nothing threatens the right to enforce laws in the nation’s public interest. But not according to the 19 March memo. The WTO reports that, in the course of the secretive multilateral negotiations, trade ministers have agreed that, before the GATS tribunal, a defence of ‘safeguarding the public interest... was rejected’. In place of a public interest standard, the Secretariat proposes a deliciously Machiavellian ‘efficiency principle’. ‘It may well be politically more acceptable to countries to accept international obligations which give primacy to economic efficiency.’ This is an unsubtle invitation to load the GATS with requirements which rulers know their democratic parliaments could not accept. This would be supremely dangerous if, say, one day, the US elected a president named ‘Bush’ who wanted to shred air-pollution rules or, say, Britain elected a prime minister named ‘Blair’ with a mad desire to sell off his nation’s air traffic control system. How convenient for embattled chief executives: what elected congresses and parliaments dare not do, GATS would require. Britain’s government can brush off the green-haired anti-GATS protester, but can’t ignore the objections of the British Medical Association (BMA) jittery about GATS’ control over the National Health Service. In the journal, _The Lancet_, the BMA nervously questions European Trade Commissioner Pascal Lamy’s assurances that ‘interpretation of the rules [must not be] settled by disputes procedures’, that is, the GATS panel. One defender of GATS calls the BMA’s accusation ‘hysterical’. But after reading the 19 March internal memo, hysteria may be the right prescription. The Secretariat’s memo makes no concession to sovereign interpretation of the rules. Under the post-democratic GATS regime, the Disputes Panel, those Grand Inquisitors of the Free Market, will decide whether a nation’s law or a regulation serves what the memo calls a ‘legitimate objective’. While parliaments and congresses are lumbered with dated constitutional requirements to debate a law’s legitimacy in public, with public evidence, with hearings open to citizen comment, GATS panels are far more efficient. Hearings are closed. Unions, consumer, environmental and human-rights groups are barred from participating – or even knowing what is said before the panel. Is the 19 March memo just a bit of wool-gathering by the WTO Secretariat? Hardly. The WTO was working from the proposals suggested in yet another confidential document also sent to me by my good friend, Unnameable Source. The secret memo, ‘Domestic Regulation: Necessity and Transparency’, dated 24 February 2001, was drafted by the European Community’s own ‘working party’ in which Britain’s ministry claims a lead role. In a letter to MPs, Britain’s then-Trade Minister Dick Caborn swears that, through the EC working party, he will ensure that GATS recognizes the ‘sovereign right of government to regulate services’ to meet ‘national policy objectives’. Yet the 24 February memo, representing Britain’s official (though hidden) proposals, rejects a nation’s right to remove its rules from GATS jurisdiction once a service industry is joined to the treaty. Indeed, this official and officious document contains contemptuous attacks on nations claiming ‘legitimate objectives’ as potential ‘disguised barriers’ to trade liberalization. Moreover, that nasty little codicil borrowed from NAFTA, that regulation must not be ‘more trade restrictive than necessary’, is promoted in the secret EC document, ready for harvesting by the WTO Secretariat’s free-market fanatics.

for a few centuries nations have relied on elected parliaments... now kiss that obsolete system goodbye

Not knowing I had these documents in hand, Britain’s Trade Ministry still insisted when I called that GATS permitted nations a ‘right to regulate to meet national policy objectives’. I was not permitted to question Dick Caborn himself (and in the post-GATS future, I understand, no mortal may gaze directly upon him). But let us suppose, for a moment, that Caborn believed what his press office said on his behalf: that there is nothing to fear from GATS, especially because Britain can opt in or out of clauses as it chooses. Don’t count on it. According to Professor Bob Stumberg of Georgetown University, Washington DC, the WTO has suggested that the Necessity Test, the shark in the swimming pool, will be applied ‘horizontally’, that is, to all services. No opt-outs. A Caborn letter to MPs admits that Blair’s pleasant interpretation of GATS has not been ‘tested in WTO jurisprudence’. In other words, he doesn’t actually know if a GATS panel will rule as in his fantasies. This is, after all, the minister who, with his European counterparts, lost a $194 million judgment to the US over the sale of bananas. Now, I can understand how Caborn goofed that one. Europe argued that bananas are a product, but the US successfully proved that bananas are a service – try not to think about that – and therefore fall under GATS... And note: America doesn’t grow bananas – so how did it get in this dispute anyway? Did it have anything to do with the fact that Carl Lindner, Chief of the Chiquita Banana Company, is one of the top donors to both Democrats and Republicans? (See also – _*The Big Banana Split*_.) And that illustrates the key issue. No-one in Britain should bother with what some domestic trade minister thinks. The only thing that counts is what George W Bush thinks. Or at least, what the people who think for George think. Presumably, Britain’s trade minister won’t sue his or her own country for violating the treaty. But the US might. It has. Forget Caborn’s assurance – we need assurance from President Bush that he won’t use GATS to help Wal-Mart, Citibank or Chevron Oil beat the hell out of Britain or Canada (or California for that matter). The odd thing is, despite getting serviced in the bananas case, the Blair Government and the European Commission have not demanded explicit language barring commerce-first decisions by a GATS panel. Instead, the secret 24 February EC paper encourages the WTOs Secretariat to use the punitive form of The Necessity Test sought by the US. So there you have it. Rather than attack the rules by which corporate America whipped the planet, Blair and the EC are keen to hand George Bush a bigger whip.

This is an extract from _The Best Democracy Money Can Buy_, Pluto Press.

A tale of two coups

Blondes in revolt

On May Day, starting out from the Hilton Hotel, 200,000 blondes marched East through Caracas’ shopping corridor along Casanova Avenue. At the same time, half a million brunettes converged on them from the West. It would all seem like a comic shampoo commercial if 16 people hadn’t been shot dead two weeks earlier when the two groups crossed paths. The May Day brunettes support Venezuelan President Hugo Chávez. They funnelled down from the _ranchos_, the pustules of crude red-brick bungalows, stacked one on the other, that erupt on the steep, unstable hillsides surrounding this city of five million. The bricks in some _ranchos_ are new, a recent improvement in these fetid, impromptu slums where many previously sheltered behind cardboard walls. ‘Chávez gives them bricks and milk,’ a local TV reporter told me, ‘and so they vote for him.’

Carmona’s coup was the ultimate in corporate lobbying

Chávez is dark and round as a cola nut. Like his followers, Chávez is an ‘Indian’. But the blondes, the ‘Spanish’, are the owners of Venezuela. A group near me on the blonde march screamed ‘Out! Out!’ in English, demanding the removal of the President. One edible-oils executive, in high heels, designer glasses and push-up bra had turned out, she said: ‘To fight for democracy.’ She added: ‘We’ll try to do it institutionally,’ a phrase that meant nothing to me until a banker in pale pink lipstick explained that to remove Chávez, ‘we can’t wait until the next election’. The anti-Chavistas don’t equate democracy with voting. With 80 per cent of Venezuela’s population at or below the poverty level, elections are not attractive to the protesting financiers. Chávez had won the election in 1998 with a crushing 58 per cent of the popular vote and that was unlikely to change except at gunpoint. And so on 12 April the business leadership of Venezuela, backed by a few ‘Spanish’ generals, turned their guns on the Presidential Palace and kidnapped Chávez. Pedro Carmona, the chief of Fedecamaras, the nation’s confederation of business and industry, declared himself President. This coup, one might say, was the ultimate in corporate lobbying. Within hours, he set about voiding the 49 Chávez laws that had so annoyed the captains of industry, executives of the foreign oil companies and _latifundistas_, the big plantation owners.

The banker’s embrace

Carmona had dressed himself in impressive ribbons and braids for the inauguration. In the Miraflores ballroom, filled with the Venezuelan élite, Ignazio Salvatierra, president of the Banker’s Association, signed his name to Carmona’s self-election with a grand flourish. The two hugged emotionally as the audience applauded. Carmona then decreed the dissolution of his nation’s congress and supreme court while the business peopled clapped and chanted, ‘_Democracia! Democracia!_’ I later learned the Cardinal of Caracas had led Carmona into the Presidential Palace, a final Genetesque touch to this delusional drama. The fantasy would evaporate by the crowing of the cock (as Chávez told me in his poetic way). Chávez minister Miguel Bustamante-Madriz, who had escaped the coup, led 60,000 brunettes down from Barrio Petare to Miraflores. Caracas television stations, owned by media barons who supported and possibly planned the coup played soap operas, hoping that the lack of coverage would keep the Chavista crowd from swelling; but it doubled and doubled and doubled. On l3 April, they were ready to die for Chávez. They did not have to. Carmona, fresh from his fantasy inaugural, received a call from the head of a pro-Chávez paratroop regiment stationed in Maracay, outside the capital. To avoid bloodshed, Chávez had agreed to his own ‘arrest’ and removal by the putschists, but did not mention to the plotters that several hundred loyal troops had entered secret corridors under the Palace. Carmona, surrounded, could choose his method of death: bullets from the inside, rockets from above, or dismemberment by the encircling ‘bricks and milk’ crowd. Carmona took off his costume ribbons and surrendered.

Taking on the oil giants

I interviewed Carmona while I leaned out the fourth floor window of an apartment in La Alombra, a high-rise building complex. I spoke my pidgin Spanish across to his balcony on the building a few yards away. The one-time petrochemical mogul was under house arrest – the lucky bastard. If he had attempted to overthrow the President of Kazakhstan (or for that matter, the President of the US), he would by now have a bullet in his skull. Chávez, in a gracious if strained nod to the ultimate authority of the privileged, simply confined Carmona to his expensive flat. In response to my question about who gave him authority to name himself president, coup leader Carmona responded, ‘Civil society’. To him this meant the bankers, the oil company chiefs and others who signed his proclamation. Most telling were Chávez’s laws to which Carmona and coup leaders objected. The prime evil was the _Ley De Tierras_, the new land law which promised to give unused land to the landless, in particular, properties held out of production by the big plantation owners for more than two years.

Chávez provoked the oil industry by doubling the royalty taxes paid by ExxonMobil

But Chávez’s tenure would not have been threatened had he not also taken on the international petroleum giants. Chávez’s crimes against the oil industry’s interests included passing a law that doubled the royalty taxes paid by ExxonMobil and other oil operators from about 16 per cent to roughly 30 per cent on new finds. He had also moved to take control of the state oil company PDVSA – nominally owned by the government, but in fact in thrall to the foreign operators. Chávez had almost single-handedly rebuilt the Organization of Petroleum Exporting Countries (OPEC) by committing Venezuela to adhere to its OPEC sales quotas, causing world oil prices to double to over $20 per barrel. It was this oil money which paid for the ‘bricks and milk’ programme and put Chávez head to head against ExxonMobil, the number-one extractor of Venezuelan oil. This was no minor matter to the US. As OPEC’s general secretary Alí Rodriguéz says: ‘The dependence of the US on oil is increasing progressively. Venezuela is one of the most important suppliers of the US, and the stability of Venezuela is very important for [them].’ It was the South American nation that broke the back of the 1973 Arab oil embargo by increasing output from its vast reserves way beyond its OPEC quota. Indeed, I learned from Alí Rodriguéz that the 12 April coup against Chávez was triggered by US fears of a renewed Arab oil embargo. Iraq and Libya were trying to organize OPEC to stop exporting oil to the US to protest American support of Israel. US access to Venezuela’s oil suddenly became urgent. In an interview Chávez told me: ‘I have the written proof, I have the time of the entries and exits of the two military officers from the United States into the headquarters of the coup plotters – I have their names, who they met with, what they said on video and still photographs.’ He elaborated: ‘I have in my hands a radar image of a military vessel that came into Venezuelan waters on 13 April. I have radar images of a helicopter that takes off from that ship and flies over Venezuela and of other planes that violated Venezuelan air space.’ With such powerful enemies, it seems unlikely that attempts to remove Chávez will stop there.

Exception to the New Order

While the immediate cause of America’s panicked need to remove Chávez was a looming oil embargo, the Bush administration’s grievances go much deeper. Miguel Bustamante-Madriz, a member of Chávez’s cabinet, paints a bigger conflict with the global corporate agenda: ‘America can’t let us stay in power. We are the exception to the new globalization order. If we succeed, we are an example to all the Americas.’ Despite the European and American media’s hoo-ha over how Chávez has ‘ruined’ Venezuela’s economy, in fact last year its Gross Domestic Product grew by 2.8 per cent. And it wasn’t all due to improvements in oil-prices; excluding crude oil, economic activity jumped by about 4 per cent. Compare the ‘ruined’ Venezuelan economy to Argentina’s. That ‘poster boy’ of neoliberalism ended last year in a depression which has since turned into an economic death spiral. Chávez is an old-style social democratic reformer: land to the landless, increasing investment in housing and infrastructure, control over commodity export prices. But with Marx discredited as the philosophy of the ‘losers’ of the Cold War, ‘Chavismo’ is as radical as it gets. His redistributionist reformism offers an operating, credible alternative to the corporate-friendly free-market prescriptions of the kind currently being handed to Argentina by the World Bank and the International Monetary Fund (IMF). Since 1980, the World Bank and IMF have peddled a four-part free-market agenda: free trade, ‘flexible’ labour laws, privatization and reduced government budgets and regulation.

Argentina sold off everything including the kitchen-sink tap

Chávez rejects it all outright, beginning with the phoney ‘free’ trade agenda under the terms of the World Trade Organization (WTO) and the North American Free Trade Agreement (which the US would expand to South America under the aegis of the Free Trade Area of the Americas). Trade under these terms is anything but free to the peoples of the Southern Hemisphere. Instead he calls for a change in the North-South terms of trade, increasing the value of commodities exported to Europe and America. Chávez’s longer-term policies of rebuilding OPEC and higher tariffs on oil must be seen in the context of smashing imbalanced trade relations epitomized by the WTO. World Bank and WTO rules have also forced nations such as Argentina to sell off their state-owned and locally owned banks and insurance companies to foreign financial giants such as America’s Citibank and Spain’s Banco Santander. These swiftly vacuumed up the country’s hard currency reserves, setting the stage for the national bankruptcy at the first hint of speculator-driven currency panics.

The anti-Argentina

Argentina accepted the World Bank’s four-step economic medicine with fatal glee. Not that it had much choice. I have obtained the secret June 2001 ‘Country Assistance Strategy’ progress report of the World Bank, ordering Argentina to pull out of its economic depression by increasing ‘labour force flexibility’. This meant cutting works programmes, smashing union rules and slicing real wages. Contrast that with Chávez’s first act after defeating the coup: announcing a 20-per- cent increase in the minimum wage. Chávez’s protection of the economy by increasing the purchasing power of the lower-paid workers, rather than cutting wages, is anathema to the globalizers. His Venezuela is the anti-Argentina, taking a path exactly opposite to the guidance given, and ultimately imposed, on Argentina by the World Bank and IMF. For example, in the June 2001 document, World Bank President James Wolfensohn expressed particular pride that Argentina’s Government had made ‘a $3 billion cut in primary expenditures’. Slicing government spending in the midst of a recession is economic suicide, killing demand when it’s most needed. Who could have pushed the banks to demand such a berserk programme? The answer is hinted at in the document. That $3 billion cut will ‘accommodat[e] the increase in interest obligations’ to pay off those foreign banks – Citibank, Chase Manhattan Bank, Bank of America, Credit Suisse, and Lloyds Bank – who, having bled the nation of capital, lent Argentina back its own money at rates that can only be called usury. Foreign banks working with the IMF had demanded that Argentina pay a whopping 16-per-cent risk premium above US Treasury lending rates. Chávez would take Venezuela in the opposite direction. His plan is to pull out of a downturn threatened by a corporate embargo of investment in his nation by taxing the oil companies and spending – the ‘Bricks and Milk’ solution, old-style Keynesianism. And while Chávez moved to renationalize oil and rejects the sale of water systems, Argentina sold off everything including the kitchen-sink tap. The World Bank beams: ‘Almost all major utilities have been privatized.’ That includes the sale of water systems to Enron of Texas and Vivendi of Paris, companies which immediately fired workers _en masse_, let the pipe systems fall apart and raised prices as much as 400 per cent. Wolfensohn, for some reason, is _surprised_ to note that after these privatizations, the poor lack access to clean water.

Coup Nouvelle

George W Bush is an oil man; he owned oil companies, now it looks like they own him. Certainly the Keystone Kops-style plot against Chávez by Venezuela’s military-industrial complex served Big Oil’s interests. But that’s an old-style shoot’em-up coup, likely to fail. The _coup d’etats_ of the 21st century will follow the Argentine model, in which the international banks seize the financial lifeblood of a nation, making the official presidential title-holder merely inconsequential except as a factotum of the corporate agenda.

*Greg Palast*’s latest book, _The Best Democracy Money Can Buy_, is published by Pluto Press (London 2002).