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Africa:Money flowing into Africa from China and India Money flowing into Africa from China and India New investments from the East signal a shift in the global economy The Associated Press

Updated: 10:58 a.m. ET Sept 20, 2006 SINGAPORE - U.S. Treasury Secretary Henry Paulson calls it “irresponsible borrowing.” But many of Africa’s poor countries say the money they get from China and India is vital in their quest to fight poverty and raise living standards.

Many Western governments have forgiven loans to African nations, but fresh funds have been slow in coming. That’s prompting many African countries to turn to China, and to a lesser extent India, for money to finance development projects.

But Paulson and the World Bank are worried that without careful monitoring, such lending could burden these nations with enormous debts again.

The debate is as much about those concerns as it is about the changing dynamics in a global economy where China and India are assuming a greater role in Africa, which has traditionally relied on Europe and the United States.

China and India investing Without singling out any nations, Paulson went so far as to recommend the World Bank clamp down on such practices.

“We are already receiving anecdotal evidence of creditors providing large loans, the terms of which are unknown, to countries that have recently received debt relief,” he told the World Bank’s policy panel earlier this week.

“We need effective incentives or penalties to deter irresponsible borrowing or lending,” he said.

Hungry for resources to feed their growing economies, China and India are strengthening their economic and political ties with Africa by boosting loans and investments to the region.

During a trip to Africa this summer, Chinese Premier Wen Jiabao agreed to give Ghana, one of the countries benefiting from the Group of Eight’s debt relief deal earlier this year, a loan of about $66 million for its communication network and other projects. He also signed an agreement to gave Egypt a $50 million loan and a $10 million grant.

India’s state-run oil exploration firm Oil & Natural Gas Corp. is investing $6 billion in building a power plant and railroads in Nigeria.

African nations happy to get money African nations, pressed for funds to build their infrastructure — in many cases destroyed by years of warfare, are happy to get the money.

“We should look toward the East instead of looking toward the West because we believe we will benefit more from the relationship with countries like China and India,” said Nigerian Finance Minister Nenadi E. Usman. “India and China will be more sympathetic to what we are going through now because they have been down that road themselves.”

Trade and investment flows between Africa and Asia have soared in recent years as India and China’s growth has accelerated.

Asia’s share in Africa’s exports doubled to 27 percent in the past five years, almost the same as Europe and the United States, a World Bank study said. Europe’s share, however, has dropped by half.

Asia’s exports to Africa are also growing fast, about 18 percent annually.

A different relationship Africans say their engagement with China and India is different from the region’s ties to their former colonial rulers.

“Ours is an equal partnership. The trade is two-way,” said Amos Kimunya, Kenya’s finance minister. “It wasn’t like this” with countries that dominated trade with Africa in the past, he said.

African nations, home to a third of the world’s poor who live on $1 a day, also complain that funds from the World Bank come with conditions such as fiscal reforms and steps to privatize the economy that cause delays.

While the World Bank and donor countries have pledged more funds, these have come “far too slowly and the conditions are far too many,” said Abdoulaye Diop, Senegal’s economy minister.

A recent study commissioned by Britain-based aid group Oxfam International found that 15 out of 20 developing countries assessed in 2006 had privatization-related conditions attached to their World Bank lending contracts.

Loans and help from China and India, however, come with few conditions.

Changing global landsczpe China and India are also helping African countries to add value to their products, moves that are crucial to making trade a two-way street, said Kamal Nath, India’s trade minister.

African countries are increasingly exporting manufactured goods and processed commodities instead of the traditional agricultural goods like cotton, he said.

“The global economic architecture is changing,” Nath said.

Middle East:Debate on Reform in Saudi Arabia

Middle East Media Research Institute, DC - Sep 20, 2006 Inquiry and Analysis Series - No. 294 September 21, 2006 No.294

Debate on Reform in Saudi Arabia By L. Azuri* In late May 2006, an Islamist Saudi website published a statement condemning the reformists in Saudi Arabia. The statement, which was signed by 61 Saudi sheikhs, including university presidents, professors, attorneys, judges, educators and businessmen, warned that a "junta" had taken hold of the Saudi media and was acting in the service of external enemies in order to "Westernize" Saudi society - thus endangering society and its Islamic values. The statement called on the Saudi rulers to deny members of this "junta" positions of influence, and called on religious leaders to thwart the junta's plans.

The statement provoked angry responses from many Saudi columnists. Some pointed to what they called the statement's extremism, associating it with the Islamist movements that have made significant headway in Saudi Arabia in the last few years, and even noted similarities between the ideas expressed in the statement and some of Osama bin Laden's ideas. Other columnists expressed concern about the fact that the list of signatories included presiding judges and Education Department officials.

The following are excerpts from the statement, and from the critical reactions to it:

Excerpts from the Statement

  • A Deviant Junta Has Taken Hold of the Saudi Media and is Endangering Islamic Society and Its Values

The anti-reform statement, published May 23, 2006 on the Saudi Islamist website "Nur Al-Islam" ( ), read:

"...We warn the nation against the junta, known for its deviant Westernizing tendencies, that has managed to influence decisions and to take over some institutions that have great influence on [Saudi] society's identity and future. Our country is subject to pressures and foreign scheming, and this junta has become the eyes and ears of the foreign enemy and a tool in its hands, relying on its support and achieving its goals. This junta is a very great danger to [Saudi] society. It is waging a campaign against [our] morals, working to give a bad name to Islamic values, and [trying] to change [our] society's identity. In addition, it is making an accelerated effort to dry up the sources of good [in society], to drag it into various kinds of deviancy, and to take it away from religion by curtailing [the authority of] religious institutions and cutting down the religious curricula in state and popular educational institutions...

"The reform that is necessary, and through which [we] can mend both matters of religion and the matters of this world, can only be achieved through adherence to the dictates of shari'a and its principles on reform - and not through the false claims made by those who corrupt our society...

"It is a measure of Allah's grace that all society opposes [this junta's] Westernizing program... This society has proven that it is aware [of the danger in] this program, no matter how much [the junta] has taken hold of the media platforms in the press and in the [media], no matter how many sick writers they have enlisted in favor of their patently Westernizing program, and no matter how much they have tried to impugn religious scholars, preachers, and judges in the eyes of the ruler in an attempt to keep them away from him and to keep him from hearing their message of reform. This junta is a small circle [of people], the majority of whom live in isolation and estrangement from their society; but in spite of this, they speak in the name of the majority and in the name of society…"

  • "Since Women Have Great Influence on Society, [the Junta] Has Craftily Made Efforts to Westernize Them, Using the Patently Fraudulent Slogans of 'Women's Rights,' 'Liberating [Women] From Their Shackles' and 'Progress'"

"Since women have great influence on society, [the junta] has craftily made efforts to Westernize them, using the patently fraudulent slogans of 'women's rights,' 'liberating [women] from their shackles,' and 'progress' - all this in accordance with their deviant culture. They shed tears over women's current condition, and have not settled for just playing on their emotions, but have even dragged them into their [illusions] and deceit. Unfortunately, they have deceived some of the women, and used them as a tool in implementing their schemes...

"Since the media and its platforms [in Saudi Arabia] have considerable influence - whether constructive or destructive - they have tightened their control over it, and it has begun to express only their false opinions, with rare exceptions. Our media, at this stage, when it is in their hands, does not express the views of society, and does not reflect its identity; rather, it is directed towards undermining [Islamic] values and morals...

"They are acting like true hypocrites: They brandish deceptive slogans in order to market them via the media, yet act contrary to these slogans more than anyone else. They purport [to speak in the name of] patriotism, yet it is they who estrange themselves from the nation to the greatest degree, and act so much to lead its people astray. They maintain contacts with foreigners, and these contacts become known through these countries' embassies and through the Western media. It is they who write [for the Westerners] about the situation in the country, and write them reports on the school curricula and on [the status of] women. At the same time they [also] slander the 'ulama, claiming that the 'ulama support terror, and take advantage of the country's sensitivity to foreign criticism. Then they use these reports from the foreign media, to arouse fear in the country and among its leaders about the consequences of adhering to the Islamic way of life.

"These transparent and ignominious methods are well known to all, and our society today is aware of the danger inherent in the actions of this junta. They purport to respect the opinion of the other and to call for dialogue, but none are more extreme than they... Some of them say heretical things, stand by them, and do not retract them, and [others] promote abominations in their poems, stories, and writings. The writings of some of them are rife with heresy and atheism, and openly call for secularism, without hiding it. Some of them have established a satellite [television] station for the purpose of corrupting society's morals. Most of them were educated by atheist, communist, and pan-Arab parties. Some of them are senior [journalists] who hold managerial positions in some newspapers, and slander every shari'a institution in the country and every other positive aspect in society..."

  • The Nation Expects the Rulers "To Stand as an Impenetrable Bulwark Against These Corrupting Currents of Thought Which Aim to Spread Vice in the Country"

"The nation as a whole, and in particular those promoting [true] reform [i.e. the religious conservatives], expect the rulers to stand as an impenetrable bulwark against these corrupting currents of thought, which aim to spread vice in the country and among the people. They must repulse everyone whose [dedication to] religion and loyalty are in question... and keep them away from positions of authority, media platforms, and platforms of instruction.

"The responsibility that lies with the 'ulama of Islam is great, and it includes the obligation to make value judgments, to express opinions, to warn, [and] to command good and to forbid evil. Both those who hold official positions and those who do not [hold such positions] have equal responsibility, and they must fulfill it. [They should] advise the rulers and call on the entire public [to do] what is good for the country and for the people, and warn them about the surrounding dangers and the [heretical] tendencies that lead [people] astray, for the 'ulama's statements, sermons, and fatwas have already had great influence in thwarting the scheme of these hypocrites.

"We call on the general public to expose the disgrace of this scheme, to warn against this Westernizing program and against being deceived by it... Finally, we call on this deviant junta to [return] to the right path, and likewise [we call on] all those who followed them or were deluded by them to make sincere repentance..." [1]

Saudi Columnists Criticize the Statement

  • The Statement of the 61 Sheikhs is Reminiscent of bin Laden's Call to Murder Intellectuals

Reformist Saudi columnist Mashari Al-Dhaidi wrote in the London daily Al-Sharq Al-Awsat: "The question is not whether [people] have or do not have the right to publish statements and to collect signatures, but rather whether the publication of such statements, using such language and with such incitement, is acceptable. We must take into account the fact that the accusations [made by the authors] of the statement, and their characterization of [the intellectuals] who disagree with them, amount to incitement to murder [intellectuals]. [Under the influence of this statement] the [public] might remain indifferent to the - hypothetical - possibility that some excitable youth might take the statement [literally], translating the words into deeds, and might think that it is his duty [according to] shari'a to grant the people and the country a respite from one of these 'prophets of heresy.'

"Osama bin Laden's latest statement [of April 23, 2006], which incites to murder intellectuals, poets, and authors, is not far distant from [the sheikhs' statement] at all. On the contrary, there is some overlap between the imagery in bin Laden's statement and [the imagery] used in the statement of the 61 [sheikhs]. There is incitement against the same figures, but while bin Laden mentions people by name and explicitly urges 'to kill' them, the 61 [sheikhs], in insinuation that sounds very much like a pronouncement, describe them as being despicable hypocrites, and urge 'to fight' them and to speak harshly against them, as was done to the hypocrites in Medina in the Prophet's time. That is to say, the difference [between bin Laden's statement and the sheikhs' statement] is one of tone, not of type." [2]

  • The Sheikhs' Statement is Part of the Continued Spread of Political Islam in Saudi Arabia

Qinan Al-Ghamidi, former editor of the Saudi daily Al-Watan, wrote: "It is clear that the signatories [to the statement] think that they are the only ones who understand Islam, and that the millions of Saudis - the prominent figures as well as regular citizens - should adopt this understanding of theirs. [They think that] whoever strays from this understanding does not properly understand the religion, to say the least... These statements are a healthy phenomenon, since they reveal opinions and insights which need to surface and to be discussed openly...

"[The signatories to the statement] represent the ideology of extremism and fanaticism which is a natural part of the expansion of political Islam in the [Saudi] kingdom that has been going on for more than a quarter of a century. It is likely that the ideas and aims of political Islam, which exploits religion in order to achieve its goals, were behind the statement of the 61 [sheikhs], and, before that, [behind] the statement of the 130, and later [behind] the statement of the 14 doctors. [3] It is likely that they are all innocent - that this current [of political Islam] deceived them, exploited their sentiments and their natural [propensity] for religion, and thus brought them to the extremity at which they have arrived - [that is,] to a limited understanding of religious tolerance and [to the belief] that this [limited] understanding must be forced on others in any possible way...

"We have an historic opportunity to understand the views, the ideas, and the goals of this [Islamist] current, [now that they] are on public display, and then to discuss and debate them on the various platforms and in the appropriate forums, which need to hear their voice and to argue with them and to present [arguments that are] stronger than theirs, until they understand the danger towards which they are leading their country and their homeland - a danger which lies in the ideology they have adopted. This is what we must do on a national scale. Pushing them away and setting preconditions [for engaging them in dialogue] will [only] deepen the tragedy." [4]

  • Most Signatories to the Statement Are Educators

Attorney 'Abd Al-Rahman Al-Lahem wrote in the Saudi daily Al-Watan: [5] "Freedom of expression is one of the fundamental rights of man, and no one can dispute it or curtail it. Everyone has [the right] to express his opinion in complete freedom through legitimate channels. However, the exploitation of a particular issue in order to stir up the streets with extreme language, using religion in order to impugn the beliefs of others, and accusing anyone who disagrees with you of having turned away from religion... and of striving to spread corruption and abomination - these are things that cannot in any way be included under freedom of expression. This [kind of rhetoric] only excites the emotions of the youth, who understand, out of all this charged atmosphere, only the sharp angles and the total solutions that are likely to lead us to a new wave of accusations of apostasy...

"The positive aspect in this statement is that it answers many questions that have surfaced in the last few years concerning the education system and its curriculum. Did the curriculum contribute to the heightening of the extremist atmosphere, or does [this atmosphere] exist in our society and find expression, naturally, in our curriculum?... If we examine the names of the signatories to the statement and their [professional] positions, we find that most of them have a role in education, or have held such a role in the past. Moreover, [we find that they are involved] in the most sensitive stage of education - the university [education] - where students have already reached the stage of willingness to accept ideas and to embrace ideologies. So how can we be angry or amazed by our students' tendency towards extremism and towards embracing extremist and exaggerated ideas, [when] their studies are, or were, supervised by this kind of group? Is it conceivable that a professor who belongs to this group could teach his students values such as dialogue, tolerance, acceptance of the other, and coexistence with someone who disagrees with them?!..." [6]

  • Presiding Judges Are Among the Signatories to the Statement

Columnist Muhammad bin 'Abd Al-Latif Aal Al-Sheikh wrote in the Saudi daily Al-Jazirah: "It is not surprising that only 61 people out of millions of Saudis signed an extremist, irresponsible, and caustic statement like this one. There are extremists everywhere in the world. We are not the only ones suffering from this extremist group of people. [But] the point that I want to make here is that two of the signatories to the statement are judges: 'Abdallah bin Nasir Al-Suleiman, a judge at the Supreme Court in Riyadh, and Muhammad bin Suleiman Al-Mas'ud, a judge at the Supreme Court in Jeddah - both of whom, according to the statement, are still presiding... This demonstrates the gravity of the situation in our judicial institutions. [We have reached] the point where a judge - in whom the ruler has put his trust, and who is expected, in light of his public role, to be objective and to stay clear of such polemics and of political parties and blocs - [turns into] a member of [this] bloc..." [7]

  • "The State and the People Have Decided to Enter the 21st Century While Adhering to the 'Middle Way'"

Reformist columnist Hussein Shubakshi wrote in the London daily Al-Sharq Al-Awsat: "Publishing statements in order to express certain positions is a positive step in itself, and it is undoubtedly preferable to someone strapping on an explosives belt, videotaping himself before committing an act of terror, [and then] exploding himself, taking innocent civilians with him. But the larger problem arises when a statement includes an explicit and blatant lie, an outright fabrication and despicable deception. This is exactly what occurred with the recent statement that was published by a group [of people] sharing a common extremist view, [who want] to impose their approach by force, through a narrow and feeble understanding of what they believe to be Islam...

"As for the topic of Westernization, it is best to call things by their name. The state and the people have decided to enter the 21st century armed with the wasatiya [the 'middle way'] in religion and in knowledge. They should not heed the call of those who want to bury them in centuries-old caves.

"As for the topic of al-walaa wal-baraa, to which they urge us to adhere: [8] They have their own approach, which contradicts the biography of the Prophet Muhammad, who conducted a dialogue with the Christians in his mosque, and had [good] relations with his Jewish neighbors. It is surprising that they call for al-walaa wal-baraa when they themselves drive American 4x4s, and some of them call one another on cell phones made in Finland, America, Korea, Sweden, and Japan, not to mention the fact that they publish their ideas on websites that belong to [people of] every group, color, and religion..." [9]

L. Azuri is a Research Fellow at MEMRI.


[2] Al-Sharq Al-Awsat (London), May 30, 2006.

[3] The statement of the 130 doctors and sheikhs, published on March 31, 2006, opposed women's employment outside the home, and generally opposed gender equality based on the claim that the shari'a designates men to be superior to women. For the text of the statement, see:

The statement of the 14 doctors, published on January 28, 2006, called on heads of medical schools to ensure that male students examine only male patients and female students examine only female patients. For the text of the statement, see:

[4] Al-Watan (Saudi Arabia), June 4, 2006.

[5] 'Abd Al-Rahman Al-Lahem represented Professor 'Abdallah Al-Hamid, 'Ali Al-Damini, and Dr. Matruk Al-Falih, who were arrested on March 16, 2004 for the crime of agitating for a constitutional monarchy in Saudi Arabia. They were charged with using Western terminology in their calls for political reform. 'Abd Al-Lahem was arrested in early November 2004 for criticizing the way the case was being conducted, and he publicly called for the release of his clients. All four were granted amnesty by the king in August 2005. Al-Yawm (Saudi Arabia), August 9, 2005.

[6] Al-Watan (Saudi Arabia), May 30, 2006.

[7] Al-Jazirah (Saudi Arabia), June 4, 2006.

[8] Al-walaa wal-baraa is a Wahhabi concept meaning absolute mutual loyalty among Muslims and absolute detachment from heretical Muslims and non-Muslims.

[9] Al-Sharq Al-Awsat (London), June 6, 2006.

Latin America:The Geopolitics Of Latin American Foreign Debt

The Geopolitics Of Latin American Foreign Debt

By Pablo Dávalos

25 September 2006 Axis Of Logic

Despite its importance, consideration of foreign debt over the last few years has been diffuse and blurred. Whereas in the 1980s foreign debt was the focus of argument, twenty years later it appears as a marginal issue, as much in discussion of public policy on the development financing of alternatives to the current model as in critical theory.

The relevance of stabilization policies is not even discussed in the region. Argentina and Brazil may have cleared their debt with the IMF but at the same time their governments remain faithful to prescriptions for stabilization. Even ECLAC (1), formerly critical of power and a source of inspiration as much for critical theory as for the adoption of public policies of endogenous growth and income redistribution has now joined the single ideology chorus.

Despite that, the issue of debt in current circumstances may be perhaps even more strategically important than in the 1980s when the debt crisis broke and the programmes of adjustment and stabilization began.

In effect, reflections on debt have prioritized financial and also macroeconomic aspects in relation to development finance, without seeing debt as the trigger for radical changes in the structure e of the State and, now, in the negotiations and concessions relating to territorial sovereignty inherent in free trade agreements. In the same way that debt management worked as the master key to disengage projects of industrialization via a regulatory State, now it works through strategic plans like IIRSA (2) and Plan Puebla Panama to give coherence and consistency to free trade agreements linking structural reforms to mega projects involving intensive exploitation of natural resources and labour.

Operators of neoliberal reforms of the same type and vast, deep reach as the IMF and the World Bank, like the Andean Development Corporation (CAF), Fonplata and the Inter-American Development Bank have disappeared from sight. In fact, in reflections on debt neither the CAF nor Fonplata appear as political agents of neoliberal reform. The case of the reforms to the internal statutes of the CAF incorporating countries like the US and Brazil as class A investors, a fact of vital importance for the region because it implies de facto concession of territoriality and resources to corporations through the presence of the CAF as an IIRSA funder, has gone unnoticed in the theoretical debate. The consequences of the fact that private US banks can now finance the more than 300 IIRSA projects have not been analysed.

Nor has an analytical link been developed between the new process of multilateral indebtedness via the IADB and the CAF and the free trade agreements the US is imposing in the region. A closer look at recent processes shows there is something more than coincidence in placing US military bases in the wealthiest areas of biodiversity, along with projects of either IIRSA or Plan Puebla Panama and multilateral funding. From that point of view, the separatist declarations of elites in Zulia, Guayaquil or Tarija and Santa Cruz, are more significant and may be related to this new modality of negotiating state sovereignty. All of this without doubt offers a more dense and complicated panorama of the burden of debt payment for any country than merely viewing debt as an accounting aspect of development funding.

And so to understand these new dynamics of foreign indebtedness and consider foreign debt as "an agent of political transformation" linking free trade agreements with the demands of corporations, one has to escape from the financial and macroeconomic focus on debt and look at it as basically a political problem. Foreign debt is essentially a political problem working as a device to make radical changes in the State and in society and which now accommodates its formats and institutional frameworks to the requirements of capitalism.

Once the region has internalized the argument for stabilization as an argument of its own and in which critical voices have been extinguished, to the extreme that the whole of political economy has turned into variations on the theme of stabilization. Once the structural reform of the State has been consolidated and societies have been disciplined thanks to that reform's transversal axes like the fight against poverty, local participation, anti-corruption drives and decentralization, in such a way that even critical voices end up using the same conceptual schemes as the World Bank, like the dollar a day concept to define poverty. At that point, power needs to move into a deeper phase, namely the dismantling of the territorial sovereignty of States, because sovereignty dictates the use, ownership and management of natural resources.

So then it is necessary to render incoherent the vestiges of sovereignty that States may have over their natural resources and even over their populations. The free trade agreements the US is imposing in the region are meant to break up sovereignty. In effect the free trade agreements thanks to their single format, which almost by definition blocks any negotiating strategy, break up territorial sovereignty and open up territory for the operation of corporations and financial capital.

The free trade agreements are the terminus of the structural reforms. They are also meant to be points of no return, to be final, absolute strategies. And the mechanism that permits a direct convergence between corporations and financial capital with control, management, operation and ownership of territorial sovereignty and of natural resources is, precisely, foreign debt.

It is from this point of view that I propose a political reading of foreign debt in the region in which one can identify three main processes or stages, complementary one to the other but different in the function of the dynamic that orders them:

a) A financial stage in which world financial architecture is redesigned and in which international corporate finance consolidates and expands as a fundamental actor in financial globalization. This financial stage is typified by the imposition of structural adjustment programmes and macroeconomic stabilization programmes. This began with Mexico's debt crisis in 1982 and continues to the present. The principal organization in this stage is the IMF and the legitimating theoretical model for the transfers of resources to the capitalist centre is monetarism, whose concrete expression in order to guarantee debt payments and articulate structural adjustment programmes is a monetary focus on the balance of payments. During this stage, debtor countries design public policy around paying the debt and become net exporters of capital. The way these public policies are imposed in the economic field is via Letters of Intent agreed with the IMF.

b) A second stage that began in 1985 during the joint meeting of the World Bank and the IMF in South Korea is characterized by a series of credits from the World Bank aimed at projects to reform the legal and institutional structure of the State. From the time James Baker in 1985, then US Treasury Secretary, defined the new role of the World Bank in economic adjustment until the publication in 1989 of (John) Williamson's Washington Consensus, a period existed in which conditionalities of the IMF and the World Bank were juxtaposed so as at times to contradict each other as regards the time and speed of the structural reform.

The beginning of the 1990s clarified the roles of the IMF and the World Bank, so the latter focused on structural reform of the State; that is, on carrying out a series of projects whose main aim is to privatize State functions. So this stage can be defined as one of structural reform and institutional reform of the State. The basic axes are privatization, liberalization of markets, labour flexibility, public spending cutbacks and structural changes in the make-up of the State and the definition of public policy. The theoretical framework that legitimizes and offers some rationality to the strategies put forward in this stage consists of political and economic variants on neo-institutionalism.

During this phase, the new indebtedness focuses on programmes and projects of social control and institutional transformation of the State. To give normative and analytical coherence to these changes, the World Bank uses the so-called Country Assistance Strategies, equivalent to the IMF's Letters of Intent. The legitimising discourse is the fight against poverty, and the construction of poverty as an economic phenomenon dependent on economic growth. For its part, growth is conceived by the World Bank as a task and responsibility exclusively of the private sector.

c) A third stage, concomitant with the structural reform of the State, is related to the "strategic plans" that define mega projects for the intensive exploitation of natural resources and the labour force, as is the case with Cana Brava in Brazil, Camisea in Peru, or Yacyreta in Argentina and Paraguay, among others (6). These mega projects have been integrated into two grand initiatives covering the whole of Latin America - Plan Puebla Panama originating in the Tuxtla agreements of 1991 and the South American Regional Infrastructure Integration Initiative created in the presidential summit in Brazil of 2000. This stage incorporates the creation of strategic plans which integrate structural reform policies with the need to extract resources and create a physical base from which multinational corporations can expand their operations and control strategic resources like energy, water and biodiversity.

The stage can be described as strategic from the presence of these mega projects, which privatize natural resources and create vast areas of intensive exploitation. This stage complements new indebtedness with private investment and with the creation of regional markets guaranteed by free trade agreements between various countries in the region and the United States. The key institutions for this stage are the IADB, the CAF and Fonplata. No comprehensive theoretical framework exists in the same way as one did for the previous stages, but rather ad hoc theoretical proposals for new situations within the general epistemological framework of classical liberalism. In that sense, the most important theoretical creation for this new stage is the schemes of payments for environmental services.

So adjustment and structural reform of the State are global processes that define the geopolitics of power and the pre-eminence of financial capital. The strategic plans are regional maneuvers carried out to ensure the control, domination, ownership and use of strategic natural resources and abundant availability of labour. Both Plan Puebla Panama and IIRSA should be seen within the geostrategic world conflict for control of key areas. The frontier that defines control of strategic resources runs through points of armed conflict, like the area of coltan (7) in the Congo or the war for oil in Iraq (both wars treated in the news media as "civil wars"). And thus the US military bases in the case of Plan Puebla Panama and IIRSA border the areas wealthiest in resources, the Andean Choco, the Guarani aquifers and the Amazon basin.

To guarantee control and access to these areas, the US has tried to form a regional market in which US corporations would have privileged and unrestricted access to these resources with legal security and property rights via the Free Trade Area of the Americas. After the FTAA's failure the US has carried forward a bilateral strategy of free trade agreements with various countries in the region with the same components as the FTAA. The US has negotiated and in some cases signed free trade agreements with the Central American countries, with Mexico and Canada, with Colombia and Peru, with Chile, and is in the process of negotiations with Uruguay, Paraguay and Ecuador.

So Latin America, as it has been since the Monroe Doctrine of the 19th Century, is the object of hegemonic control by the US, which has oscillated between open and covert intervention and direct hostility towards governments that separate from or try to separate from that hegemonic control. Therefore, the region's economic, political, social and legal phenomena have to be understood within the geopolitical matrix of neocolonialism, interventionism and US domination.

And that means foreign debt has to be understood as a geopolitical phenomenon whereby the adoption of measures in one region necessarily affects the metropolis. If in the 1980s, when the debt crisis began, Latin American countries with high indebtedness like Mexico, Brazil and Argentina had acted together and established joint negotiating political priorities, the world order would have been significantly changed. For that reason, one of the concerns of US administrations has been precisely to avoid coordinated, convergent action by Latin American countries on the problem of foreign debt. The US assumed as a priority the task of avoiding the formation of a debtors' syndicate and as a secondary task to secure and protect its internal financial system by transferring the costs of excess credit and lack of financial regulation to the region's countries via policies of structural adjustment.

There is a relation between the debt crisis and the expansion of the US economy. Perhaps the most dramatic example is from the 1990s, which ECLAC calls the new lost decade, while for the US it was, by contrast, the "happy 'Nineties,” to use the phrase of the Nobel economist Joseph Stiglitz. The US had unprecedented growth while Latin America in the same period had serious problems overcoming the economic crisis caused by foreign debt and structural adjustment policies.

In addition the US transferred the costs of its own crisis to Latin American countries by using the debt problem as an opportunity permitting them greater geopolitical control in the region. It is by virtue of these circumstances that one ought to consider debt as basically a geopolitical phenomenon. The financial details of the debt, despite its overwhelming importance for the continent's peoples, are secondary to the neocolonial strategy, which is in truth inherent in foreign debt.

Scarcely had the 1982 debt crisis begun than the US reworked world financial arrangements and used the IMF to advance its own interests. During the debt crisis the IMF played a fundamental role, while during the crisis of August 1971, when President Richard Nixon decreed the inconvertibility of gold, it was shown to be powerless to protect the Bretton Woods system. It is the IMF whose macroeconomic stabilization policies have been the master key undoing regional strategies of industrialization and of the welfare State.

Thanks to the IMF the region went from prioritizing employment and growth to controlling inflation as the main aim of political economy. In that way the transition was made from policies of industrialization to policies of stabilization and from the priorities of an industrializing bourgeoisie to the needs of a financial and speculative bourgeoisie. After three decades of stabilization and structural reform and adjustment, the number of households in poverty has risen dramatically and unequal income distribution has become established.

The political crises in the region have corresponded to that adjustment. Social fragmentation and conflict have fed on the dynamics of adjustment and macroeconomic stabilization imposed by the IMF and the World Bank. Stable economies in reality mean under-resourced public spending for health, education and social services, insecure employment, growing unemployment, migration, poverty and inequality. But they also mean huge profits for financial capital and enormous net capital transfers. The adjustment policies of the IMF were a kind of artillery and aerial bombardment on the positions of a State that intervened directly in social regulation and the assignment of resources to promote growth, income distribution and employment creation. Once those State strategies were disarmed by adjustment and stabilization policies it was time for the World Bank infantry to come in, which, following the structural reform projects, implacably wrecked the institutional frameworks that one way or another still survived and which proposed a State responsible for distributing income and creating employment via public policy. When it was seen that the task of the World Bank of destroying the welfare State was in its final phase, strategic plans like Plan Puebla Panama and IIRSA came in to occupy the defeated, overthrown territory.

This warlike metaphor is more than just a rhetorical device, if one remembers that the French philosopher Michel Foucault may well have been right when he inverted the maxim of Clausewitz. For Foucault, war is not the continuation of politics by others means, but rather the reverse. Politics is the continuation of war because war and violence are the constant norm. In complete contradiction to Kant’s Enlightenment project of perpetual peace, what really exists is a state of permanent war.

The adjustment and structural reform policies of the IMF and the World Bank and now the strategic plans of the IADB and the CAF are part of this perpetual war. A war whose purpose is conquest, territorial control, domination and pillage, as in any war. One is not exaggerating. Remember that the US after invading and conquering Iraq proposed condoning Iraq's foreign debt and in fact did forgive a large part of the foreign debt while it militarily occupied the country and took over its oil resources. Iraq's foreign debt was used as a wartime argument so it is no exaggeration to think that the geopolitics of debt might also be a military strategy.

Once, reading the Lugano Report by Susan George, I thought she might possibly have exaggerated. The world she proposed, in a very interesting exposition, seemed to me too violent to be plausible. But reality always defeats the imagination. Now, I think George came up short. That violence, that cynicism, those designs of violence and domination of the Lugano Report are more than plausible. They are absolutely real.

If Plan Puebla Panama and IIRSA finally get implemented hundreds of indigenous peoples who live in the areas of intervention will have their days numbered. Rural workers families’ days will also be numbered. The tropical forest that still exists will disappear and in their place will be either desert or monocultivation of genetically manipulated crops. The Guarani aquifers will be used up in short order. After timber operations, only vestiges will remain of the Andean Choco. The multi-node corridors will not only devastate nature but also produce more insecurity and more poverty. IIRSA and Plan Puebla Panama are barely the tip of the veil covering the face of the Medusa.

© Copyright 2006 by

The author: Pablo Dávalos is a former Ecuatorian Vice-Minister of Economy and academic. Translated into English for Axis of Logic by Toni Solo, Tlaxcala*

Original Source:

Far East:DENNIS SEID: Capitalism in China: All aboard or get left behind

9/24/2006 1:17:05 PM Daily Journal

I could devote a year's worth of columns about what I experienced in a week in China, but that would probably be a little too much.

My impressions of China are almost impossible to put in a sentence, much less a single word. However this one will suffice for now: "wow."

The number of people alone is staggering. By any measure, 20 million is a lot of people. But Shanghai is just HALF the size of Chongqing, farther west into the Chinese mainland. Can you imagine?

Then take into consideration that everywhere you turn there is construction of some kind. A common joke is that the bird of Shanghai is the crane - but it is not a joke at all. You can't look anywhere without seeing at least one construction crane at work.

Your view into the horizon is filled with buildings, with high-rises painting the polluted sky.

And yes, for all the rapid growth has come a terrible price: pollution. The air stinks. It reeks of automobile fumes, sewage, human waste, sweat and food. Fresh air is found only in the filtered air conditioning of a hotel. You can't drink the water. Your eyes burn, especially if you're wearing contacts.

It took the U.S. nearly a century to become an economic superpower; it has taken China 25 years, going full throttle. By many accounts, its economy will be the largest in the world within a decade, with the U.S. and India behind.

This was an interesting exchange I had with Manson, a Chinese native living in Kunshun, a "small" suburb of 1.3 million west of Shanghai.

"The Communist Party? Nobody cares for that," he said. He laughed about joining the "party." "It's capitalism all the way. Who needs the party?"

While the People's Party remains the dominant political, lawmaking body, economically, it's anything but. Save for the language and the signs in Chinese, Shanghai and other metro areas in China could pass for any Western city.

But Manson doesn't understand the fuss that politicians have made about China.

"Chinese people don't understand why Americans are afraid of us," he said. "Every time something goes wrong, you blame the Chinese. Why is that?"

Because, my friend, you are a convenient scapegoat. Cheap labor has driven millions of jobs to China. Our trade deficit soars. We have to blame somebody, and granted, Chinese economic policy is partially at fault.

But Manson, like so many other younger Chinese, doesn't associate with the Communist Party. They associate with the Consumers Party, something we Americans are quite familiar with.

"People want to live a better life, they want to make money, they want to buy things," Manson said. "Just like in America."

Perhaps the Chinese understand us better than we understand ourselves. But we fail miserably at trying to understand them. Once we do, maybe we can not only close those cultural gaps, but the trade gaps, too.

Dennis Seid is business editor for the Daily Journal. Reach him at 678-1578 or

Appeared originally in the Northeast Mississippi Daily Journal, 9/24/2006 8:00:00 AM, section F , page 1

South Asia:Govt. plans ultra mega power project

The government in India is deciding whether to set up a new power plant in Tamil Nadu. Actions are expected soon. The Power Finance Corporation is quickly adding new plants to meet India's growing demand for electricty. Contracts are expected to be made soon, with more powerplants comming in the future. Contracts are expected to be awarded before mid-2007.

India and China both have a growing demand for power. India especially, faces rising incomes, meaning families will be able to buy more electronic "junk" which all consumes more power. The techs in the call centers are all sitting in front of thirsty computers. As India high-tech industry grows, the power supplied must be able to meet the demand or growth will be slowed. Luckily we can get electricity from many different sources, while gasoline for cars, only has one real source: crude oil. An increase in power is necessary for India's growing economy.

I would agree with the author. India needs more power and needs a good infustructure to support their new hi-tech industries, which will bring them out of poverty. Chennai (source) from the Hindu (org)

New Delhi, Sept. 13 (UNI): The government is currently considering setting up an ultra-mega power project in Tamil Nadu and the action on this project will be initiated shortly, official sources said.

The setting up of the ultra-mega project is in response to the State government to setting up the project in the state to bridge its growing demands.

Meanwhile, the two ultra-mega power projects, out of the five, of 5,000 MW each are being readied by the end of the year with the Power Finance Corporation (PFC) inducting State representatives to help resolve implementation issues.

PFC has reconstituted the Boards of Sasan and Mundra Ultra Mega Companies who will expedite issues with purchasers including signing of Power Purchase Agreements which has already been finalised through a broad-based consultation involving bidders, purchasers, regulatory commssion and the Central government.

Addressing media after the kick-off of the reconstituted boards, Additional Secretary in the Power Ministry Ajay Shankar and Chairman of these companies Shyam Wadehra said that this is only a beginning of the process of broad-basing shell companies for other ultra mega power projects including Krishnapatnam in Andhra, IB Valley in Orissa and Girye in Maharashtra.

The other three mega projects are also progressing and would be awarded before mid-2007.

Shankar said that the government has received a recquest for establishment of a similar ultra mega project in Tamil Nadu and the request is currently being looked into by the Central Electricity Authority (CEA) for identifying suitable sites.

Action will be initiated on this project shortly, he said.