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The Tsunami's Aftermath: Reconstruction or Economic Opportunism? |
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FPIF Commentary
The Tsunami's Aftermath: Reconstruction or Economic Opportunism?
By Debayani Kar | June 23, 2005
Editor: Emily Schwartz Greco, Institute for Policy Studies, (IPS)
Foreign Policy In Focus www.fpif.org
"How agonised we are about how people die. How untroubled we are by how they
live." – P. Sainath,"The Unbearable Lightness of Seeing," The Hindu, Feb. 10,
2005
Six months after the tsunami that struck the coastal communities of the Indian
Ocean in December, affected people all over South and Southeast Asia continue
the process of rebuilding their lives, their property and their communities.
Despite the generous worldwide outpouring of solidarity and assistance, there is
a risk that in the coming months and years, reconstruction, especially in
Indonesia and Sri Lanka, will be conducted in an undemocratic and unsustainable
manner that will only add to the devastation. Detrimental economic policies such
as increased trade liberalization, cutbacks in government spending, and
privatization, which were being challenged by civil society groups before the
tsunami, are on the post-tsunami reconstruction agenda of tsunami-country
governments and international financial institutions
Indonesia and Sri Lanka were hardest hit by the tidal wave. The tsunami killed
almost 300,000 people, including more than an estimated 200,000 in Indonesia
alone and displaced more than one million people in the region.
The main international actors in tsunami relief and reconstruction efforts are
the International Monetary Fund (IMF), World Bank, Asian Development Bank, and
the governments of the eight richest industrialized nations, known as the Group
of Eight (G-8).
The IMF, World Bank, and Asian Development Bank announced more than $2 billion
primarily in new loans and some grants. The G-8 governments pledged between $3
and $4 billion (whether these pledges will be delivered remains to be seen) and
their Paris Club of creditors announced a debt payment moratorium for 2005
though interest on this debt will still come due next year. To put this in
perspective, consider that the tsunami-affected countries made $38 billion in
debt payments to their creditors last year. G-8 governments must expand their
June 100% debt cancellation agreement to include the tsunami-affected countries
that have substantial debt burdens.
Much of the aid pledged by international donors has failed to reach its intended
recipients; as an example, the Financial Times reported in May that many
shipments of physical aid donations have remained at ports in Indonesia and Sri
Lanka, due to confusion over paperwork. A May UN conference calculated that of
the $6.7 billion in aid pledged globally, just $2.5 billion had so far been
actually committed or paid.
International Financial Institutions
Beyond the issue of aid delivery, there is concern over the role of
international financial institutions in tsunami reconstruction efforts. The
IMF, World Bank, and Asian Development Bank were already troubling Indonesian
and Sri Lankan civil society groups before the tsunami. In both countries,
there is widespread opposition to the economic policies of these institutions
due to their flawed and unsustainable polices, such as weaker labor market
protections and privatization of necessary government services. Farmers'
organizations, women's groups, fisherfolk, and trade unionists also oppose the
undemocratic means by which those policies have attempted to be carried out by
their governments under pressure from international institutions.
It's unclear what useful role the IMF in particular can play in this situation.
Its economic policy prescriptions are especially ill-suited for emergencies
given that their overarching economic advice is always one of limited
government spending and low inflation through high interest rates. This is
evidenced by a recent IMF staff report: "[IMF] Staff has advised the
authorities to be mindful of the limits to implementation capacity and
potential inflationary pressures as reconstruction efforts proceed." In other
words, in the midst of this immense tragedy the IMF is warning against higher
levels of government spending because this may lead to increased inflation in
the future.
The combination of misguided policy and undemocratic implementation explain why
civil society coalitions have long opposed IMF, World Bank, and Asian
Development Bank policy in Indonesia and Sri Lanka. These policies have
encouraged cuts in government spending on health care, education, and food and
farm subsidies, privatization of essential services including water, and
reduction of government revenue from tariffs. In Indonesia, the civil society
alliance, the Anti-Debt Coalition, has been campaigning to compel their
government to not continue with IMF programs.
According to recent reports by the Movement for National Land and Agricultural
Reform (MONLAR) and Alliance for Protection of National Resources and Human
Rights in Sri Lanka, since the disaster, policies that were already being
pushed for by the government and international institutions beforehand amid
public opposition are now being rushed through.
Water Privatization
The Sri Lankan government intends to include the construction of a highway
between Colombo and Matara opposed by affected communities in its rebuilding
program. According to those affected communities, the proposed route will run
through productive small-scale farmers' lands, displaces more than a thousand
families, and has had many cost overruns. A water privatization bill that had
previously been withdrawn due to public opposition was reintroduced on December
30 (four days after the tsunami struck, to comply with an Asian Development Bank
deadline) and approved by the cabinet. Similar stories abound in Indonesia,
Thailand, and India.
Movements in Sri Lanka and elsewhere in Asia, where the Asian Development Bank
is financing water privatization, are concerned about increased costs resulting
from private companies getting involved in water marketing and delivery.
MONLAR finds that "about 1.2 million families in Sri Lanka have incomes of less
than $15 per month. Almost all small farmers in Sri Lanka are extremely poor
and indebted. The overwhelming majority of the fisherpeople whose lives were
completely washed out by the tsunami and must therefore now begin their lives
again, are also extremely poor. In the city of Colombo, 52% of the population
live in slums and shanties." It is highly unlikely that these segments of the
population will be able to afford the cost of privatized water.
The Sri Lankan government has so far prevented fisherfolk from returning to
their coastal living areas. Instead there has been government discussion of
building tourist hotels in their communities. Thomas Kocherry of the World
Forum of Fisher People said: " Yes we agree that the victims have to be shifted
to safer places beyond 200-300 (meters) away from the high tide line. … But
please do not bring tourism hotels instead of us. We will not allow this to
happen any where in Asia where the tsunami disaster took place." A February
conference in Medan, Indonesia reaffirmed fisherfolks' commitment to moving
forward pro-people policies and blocking any efforts to usurp their land for
other purposes.
U.S. Response
The U.S. approach to tsunami relief and reconstruction also merits monitoring.
The approach, as laid out in Congressional hearings on January 26, entails two
new factors outside the traditional aid route: use of the
U.S. military and
trade-based aid.
The U.S. initially deployed its military to Indonesia, Sri Lanka, and Thailand
to deliver relief supplies and perform medical and other services. U.S.
Assistant Defense Secretary Paul Wolfowitz (now World Bank president) announced
at the end of January that the U.S. military's tsunami relief efforts had led to
their decision to re-engage with the Indonesian military, despite their
continuing offensive against separatists in Aceh, where the tsunami hit
hardest. Thus it seems likely that the continuing presence of the U.S. military
will exacerbate the Aceh conflict and interfere with sustainable and democratic
reconstruction efforts. This is a concern in the current post-civil war climate
in Sri Lanka as well, where the central government based in the South is facing
opposition to its tsunami aid sharing deal with the Tamil-controlled North.
The U.S. intends to use trade as another form of assistance. This entails
relaxing tariffs and increasing market access for tsunami-affected countries.
It is unclear the extent to which this will be beneficial. Trade liberalization
policies have not been proven to improve per capita incomes as evidenced by the
lack of growth in much of the global South and so any trade-based "aid" should
be taken with a grain of salt.
Deliberate policy decisions encouraging tourism, aquaculture, and
industrial-scale fishing, had the impact of destroying the region's mangrove
forests, tidal marshes, and coral reefs, which would have acted as natural
buffers against tidal surges. As the months go by and reconstruction efforts
continue, affected populations will work to ensure that future policy decisions
take their needs and such environmental assessments into account. Activists in
the North should pressure their own governments to allow for the necessary
political space for tsunami country civil society to have a voice in their own
reconstruction and rehabilitation efforts.
International institutions need to listen to the voices of those affected
peoples and formulate policies based on their needs assessments, not the needs
assessments of Northern donor governments interested in entering new markets.
The slow progress being made in aid delivery combined with the lack of full
participation of the communities most affected by the tsunami, demonstrate the
undemocratic and unsustainable manner in which reconstruction efforts are being
carried out, six months after a devastating tsunami ravaged the coastal
communities of South and Southeast Asia. The main concerns regarding
international financial institution efforts, U.S. military presence, use of
trade assistance, and canceling foreign debt burdens, are relevant for all
global South countries, not just those affected by the tsunami. Moving forward,
activists should continue to monitor these processes and be active in solidarity
efforts. Any public events or media commemorating the disaster must be informed
by the struggles of those communities directly affected, whose voices are not
being adequately heard thus far.
For more information:
http://www.viacampesina.org/
http://www.wffp.org/
http://www.geocities.com/monlarslk/
http://www.foei.org/tsunami/index.html
http://www.jubileesouth.org
--
"I am not bound to win but I am bound to be true, I am not bound to succeed but I am bound to live up to the light I have "
-Abraham Lincoln |
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