We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

Removing The Noose

Structural Adjustment

Removing the noose
The shopworn solutions of international finance need democratic alternatives.
Susan Meeker-Lowry looks at one such effort in Guyana.

In the current global economy gaps between rich and poor are increasing both within and between nations. The core problem is the concentrated accumulation and control of capital in an ever decreasing number of hands. This process is now accelerating as capital escapes national controls. A green economy would recognize the link between consumption, poverty and equity and would reduce the poverty gap by breaking the cycle of capital concentration. It would encourage Third World self-reliance by working to reform dramatically or shut down the World Bank and the International Monetary Fund (IMF).

Guyana It’s pay day for government workers in Guyana – a day people once looked forward to. But these days the money doesn’t go far. ‘Only God knows how we make two ends meet,’ one office worker groaned. ‘Today I can buy a chicken. After that it is pure starvation for me and my children.’ It is hard times like these that have turned people in this tiny South American country into leaders in the struggle against IMF and World Bank structural adjustment policies. The Guyanese are coming together in support of a unique, country-wide program aimed at fostering the long-term well-being of all the country’s citizens, rather than responding to the short-term demands of the international market.

Guyana is one of the most heavily indebted countries in the world and one of the poorest in the Western hemisphere. The irony is that the money-poor nation is rich in natural resources (bauxite, gold and diamonds) and has some of the most extensive tropical rainforests in the world. In the late 1980s under World Bank supervision the government of Desmond Hoyte implemented an ‘Economic Recovery Program’ which removed the last barriers to foreign control over key sectors of the economy, benefiting outside investors and multinational corporations almost exclusively. Today, three-quarters of Guyana’s forests have been leased by foreign corporations – many of them Asian-based firms already responsible for pillaging rainforests in their own part of the world. Under the terms of a recent IMF agreement Guyana now offers multinationals a ten-year exemption from all taxes. (Last August this policy backfired dramatically when Omai Gold Mining Ltd – run by Canadian-based Cambior Inc and US-based Golden Star Resources – was responsible for one of the world’s worst cyanide spills. Four billion litres of cyanide-laced effluent spilled into the Essequibo River after a waste-holding pond broke. Guyana is still dealing with the environmental devastation caused by the spill.)

Since the late 1980s, nearly 80 per cent of revenues and 60 per cent of export earnings have gone to service and repay foreign debt while malnutrition, infant mortality, disease, unemployment and poverty have all soared.

The tide turned when voters elected Cheddi Jagan of the People’s Progressive Party in the first free elections in 30 years. Ironically, Jagan, a Marxist, was Guyana’s first native-born Prime Minister when in 1953 British leader Winston Churchill ordered his Government dissolved. In 1961 Jagan’s overtures to US President John Kennedy were rebuffed and a covert CIA operation was mounted to drive Jagan from power. Though keen to introduce much-needed social and economic reforms when he was elected in 1992 Jagan found himself handcuffed by the strict conditions of the IMF deal.

And that’s when the Bretton Woods Reform Organization (BWRO) came along. BWRO was launched in 1991 by Davison Budhoo, a former senior economist with the IMF where he had been responsible for designing and implementing structural adjustment programs (SAPs) for Africa, Latin America and the Caribbean. Budhoo resigned from the IMF in disgust, hoping, he said, to ‘wash my hands of the blood of millions of poor and starving people’.

Instead Budhoo sought to create the world’s first concrete alternative to SAPs – an Alternative Structural Adjustment Program or ASAP. Budhoo calls the ASAP concept ‘a people’s economic program with equity’. The idea is to combine direct grassroots involvement with the technical skills of governmental officials and other interest groups. ‘The IMF/World Bank system is dead,’ Budhoo says bluntly. ‘What we are trying to do is manage the transition’ – to design democratically an economic policy whose main goal is to meet the basic needs of the entire population.

In May 1994, Jagan agreed to a resolution proposing ‘extensive government co-operation with BWRO and the people of Guyana in designing an ASAP’. The first step was to appoint a National Committee to carry out countrywide consultations. So far several seminars have been held bringing together unions, small businesses, women’s groups, consumer organizations, manufacturers, teachers, Amerindians and environmental groups.

According to Eileen Cox, BWRO’s Vice Chair in Guyana, the proposed ASAP includes recommendations for a People’s Assembly as well as a national ‘liveable’ minimum wage and an International Debt Tribunal ‘to remove the noose from around our children’s necks’. BWRO would also like to see a Privatization Commission ‘to protect Guyana from the undue influence of multinational companies’ and a new public utilities act to enable the Public Utilities Commission ‘to uphold the public interest’. Says Eileen Cox: ‘We cannot let our democracy be hijacked by two agencies in Washington. It is time for us to reclaim our economic destiny.’

The specifics of an ASAP would vary from country to country, but Budhoo stresses the need to focus on food security, as well as small-scale, labor-intensive, high value-added enterprises. BRWO also underlines the need to improve rural infrastructure (including roads, communications, affordable energy and technology) and the need for ‘friendly’ credit – local banks which make small loans to poor people, particularly women, at no or low interest rates, using a peer group lending process. Exporting primary resources and commodities like grains and minerals is firmly rejected.

Several other SAPped countries have also begun working with Budhoo’s Bretton Woods Reform group to create their own ASAPs, most recently Grenada. And the BWRO has also been invited to Nicaragua, Papua New Guinea, Mozambique, India, the Philippines, Trinidad and Haiti.

Elsewhere activists are also working to create national alternative economic platforms. In El Salvador, the National Development Foundation (FUNDE), a Salvadorean research institute with ties to popular organizations, started work on an alternative development program for El Salvador in 1994. And in Papua New Guinea, a coalition of 35 organizations including trade unions, church groups, student, women’s and other community groups, has called for the renegotiation of their structural adjustment program and BWRO has been asked to help.

On another front, during the autumn of 1995, almost half a million Mexicans cast their ballots in favour of a ‘Liberty Referendum’. The vote was organized by a coalition of non-governmental organizations and sponsored by the Mexican Action Network on Free Trade (an alliance of labor, farmer, environment and social organizations) as well as groups representing small and medium businesses, coffee growers and peasants.

The Referendum was a stinging indictment of economic globalization. It called for reorienting public spending to create jobs and meet the needs of the Mexican people; adopting a new monetary policy that promotes production without excessive inflation; lowering interest rates; suspending privatization of state-owned businesses; redirecting agricultural policy to local markets and renegotiating both the foreign debt and the North American Free Trade Agreement. According to Referendum spokesman Alejandro Nadal Egea the vote was an attempt by civil society ‘to recover the right and the capability to make strategic decisions in economic policy’.

There are many who argue that the kinds of grassroots alternatives presented in this article don’t have a chance, given the realities of free trade and the global economy, even while agreeing that adjustment policies lead to pain and destruction. But the fact is grassroots alternatives are working every day in every country. There are co-operatives, micro-enterprises and small-scale lending schemes that help get them off the ground. There are sustainable forestry operations, appropriate technology and agricultural programs, projects designed by and for women and workers that are making strides in improving people’s lives and healing the environment.

In all corners of the world people are ready for the opportunity to participate in creating equitable, environmentally-sound and politically-liberating alternatives to what is currently offered by the élite and powerful. But that’s not all it will take. As Davison Budhoo says: ‘We need millions and millions of people to stand up and protest.’

Susan Meeker-Lowry is a writer, activist and the author of Economics as if the Earth Really Mattered (1988) and Invested in the Common Good (1995), both published by New Society Publishers. She lives in Montpelier, Vermont where she is initiating a local currency project.   

[image, unknown]
Contents page
[image, unknown]
NI Home Page

©Copyright: New Internationalist 1996

Subscribe   Ethical Shop