Impacts, Local and Global

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Policies of imperialism have impacts at local, regional, state, national and international levels. This section includes an array of reports about environmental and social justice problems that are exacerbated by corporate globalization and imperialism.

Environment and Economy

11-1 Page 19 Image 1 Analysis of local development and global trade policies that deepen poverty and endanger environments

Subsidizing Sprawl

Economic Development policies that deprive the poor of transit and jobs.

Economic development subsidy programs—such as property tax abatements, corporate income tax credits and low-interest loans—were originally justified in the name of poverty reduction. Initiated as far back as the 1930s and accelerated in the 1950s, many of these programs were targeted to older areas and pockets of poverty that needed revitalization.

But over time, more and more of the 1,500 development subsidy programs nationwide have become part of the problem instead of the solution. Subsidies originally meant to rebuild older urban areas are being perverted into subsidies for suburban sprawl. Wal-Mart and other big box retailers are getting subsidies that allow them to simply pirate sales from existing merchants. Upscale residential and golf course projects are getting subsidies from programs originally designed to serve low-income neighborhoods.

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 The net effect has been to worsen sprawl and all of its disparate harms to communities of color: the out-migration of urban jobs, the growth of jobs in areas that are not accessible by public transportation, and the resulting concentration of unemployment and poverty.
 
Deconstructing Sprawl Development “Suburban sprawl” usually refers to development characterized by low density, a lack of transportation options, strict separation of residential from non-residential property, and job growth in newer suburbs with job decline in older areas. Sprawl causes increased dependence on automobiles and longer average commuting times, deteriorating air quality, and rapid consumption of open space in outlying areas. It also results in disinvestment of central city infrastructure and services, and strains city budgets at the core (due to a declining tax base) and in some suburbs.

The decentralization of jobs means work becomes scarce for low-skilled workers who are concentrated at the core. Many suburbs lack affordable housing and many suburban jobs are not accessible by public transit—either because a suburb has opposed the entry of transit lines or because jobs are thinly spread out far from transit routes. So sprawl effectively cuts central city residents off from regional labor markets. That means greater poverty for residents of core areas, who are disproportionately people of color.

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What causes sprawl? Urban experts cite many factors, including: some people’s preference for low-density housing; white flight; lack of effective regional planning; competition between cities for jobs and tax base; “redlining” or geographic and racial discrimination against older areas by banks and insurance companies; crime and perceptions of crime; declining quality of central city schools; contaminated land or “brownfields;” exclusionary suburban zoning that blocks apartment construction; federal capital gains rules that encourage people to buy ever-larger homes; the historically low price of gasoline; and federal highway spending that far exceeds public transportation spending.

 

But another important factor is economic development subsidies like tax increment financing (TIF) and enterprise zones that have gone awry and are being abused in ways their creators never intended.

Sprawl Subsidy #1: TIF
Originally conceived to help revitalize depressed inner-city areas, tax increment financing, or TIF, allows a city to designate a small TIF district and say that the area will get redeveloped so property values will go up and property taxes will rise. When that happens, the tax revenue gets split into two streams. The first stream, set at the “base value” before redevelopment, continues to go where it always has: to schools, police, fire departments and other public services.  The second stream is diverted back into the TIF district to subsidize the redevelopment. This diversion can last 15, 23, even 40 years—i.e., a lot of money for a long time.

Many states originally restricted TIF to truly needy areas with high rates of distress such as property abandonment, building code violations or poverty. Today TIF is allowed in 47 states and Washington, D.C. Over the years, about a third of the states have loosened their TIF rules so that even affluent areas qualify.  The wealthy Chicago suburb of Lake Forest, for example, has a TIF district—and a Ferrari dealership. Pennsylvania’s TIF statute allows a trout stream near Pittsburgh called Deer Creek to be TIFed because the land has “economically or socially undesirable land uses.” 

Worse still, a few states allow the sales tax increment to be “TIFed” on top of the property tax increment. That results in a perverse incentive to overbuild sprawling retail. A study by PriceWaterhouseCoopers about “greyfields”—the euphemism for dead malls—found that 7 percent of regional malls were already greyfields, and another 12 percent are “potentially moving towards greyfield status in the next five years.” That would mean 389 dead malls by 2009.

Missouri, which allows sales tax TIF, is learning this lesson the hard way. The state has had a raging four-year debate about how to reform its TIF program before it subsidizes any more unnecessary new stores.  State Senator Wayne Goode, D-St. Louis County, is the primary sponsor of a reform bill. “Putting public money into retail in a big metropolitan area doesn’t make any sense at all,” Goode says. “It just moves retail sales around.” About one-third of the 90-odd municipalities in St. Louis County collect “point of sale” sales tax, he explains. In other words, cities get to keep a portion of the sales tax if a purchase happens within their borders. The other two thirds of cities in the county pool their revenue. So the one- third fight each other for sales—and pirate sales from the two-thirds—often using TIF. Area developers go to great lengths to block reforms because the TIF is so lucrative.

As the St. Louis Post-Dispatch editorialized: “With towns handing out TIF like bubble gum, St. Louis may be getting over-stored, while developments are under-taxed. Projects that make no sense get built because of tax breaks.”

Subsidizing new retail is almost always bad economics, and terrible public policy. Retail packs a lousy bang for the buck compared to manufacturing or almost any other activity. The “upstream” inputs do little for the local economy (think of all those goods from China at Wal-Mart), and the “downstream” ripple effects are terrible because retail jobs are overwhelmingly part-time and poverty-wage, with no health care.

Suburban areas with the greatest numbers of high-income households will always have plenty of shopping opportunities. Supply chases demand. The only situation where retail can be legitimately called economic development—and therefore deserving of a subsidy—is in an older, disinvested neighborhood that is demonstrably underserved, and lacking basic retail amenities such a groceries, drugs and clothing.

Sprawl Subsidy #2: Enterprise Zones
Enterprise zones, another geographically targeted program intended to help poor inner-city areas, have also been weakened in many states so that affluent areas get multiple zone subsidies.

New York, for example, allows zones to be gerrymandered non-contiguously. So Buffalo’s two original enterprise zones have morphed into more than 130 non-contiguous areas, raising questions about political favoritism. A scathing Buffalo News investigative series found that “[t]he program, crafted to create business in distressed areas and jobs for the down-and-out, has transmuted here into a subsidy program for the up-and-in”—including even downtown law firms.

In an episode that gives new meaning to the term “Philadelphia lawyer,” law firms there are moving a few blocks into a “Keystone Opportunity Zone,” which will make the law firm partners exempt from state income tax! Meanwhile, the city’s African-American and Latino neighborhoods continue to suffer catastrophic rates of abandonment and unemployment.

Ohio has a large number of enterprise zones and they have a controversial history. A study from Policy Matters Ohio found that “[t]he very areas [that zones were] initially designed to help are now disadvantaged by the program. An aging infrastructure, a low tax base, weak education systems, and numerous costly social challenges place poor urban areas in a weak position relative to their wealthier suburban neighbors. Ohio's [zone program] has succeeded in making the playing field even more tilted against urban areas by extending to wealthier suburbs an additional fiscal tool with which to compete for firms.”

Discriminatory Development
TIF and enterprise zones are just the tip of the iceberg when it comes to explaining how pro-sprawl development subsidies undermine jobs for the truly needy. A recent study by Good Jobs First, Missing the Bus, finds that not one of the 1,500 total state development programs nationwide requires—or even encourages—a company getting a subsidy in a metro area to locate the jobs at a site served by public transportation.

In other words, despite all the anti-poverty rhetoric that most programs come draped in, states are typically indifferent to whether they create jobs that low-income people can get to. Research has shown that African-American households are about three and a half times more likely than white families to not own a car, and Latino households are about two and a half times more likely. Given those facts, the discriminatory bias of economic development in the United States today could not be clearer.

Greg LeRoy directs Good Jobs First, a national resource center for corporate and government accountability in economic development (http://www.goodjobsfirst.org).

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Beyond Trade: The WTO’s expansive agenda and impact (2004)

In the late 1980s, corporate leaders and their backers in the U.S. and British governments launched a campaign to transform the General Agreement on Tariffs and Trade (GATT), a narrowly-cast, 20-page trade pact, into a powerful new system of global governance. The GATT, which cut tariffs and quotas on trade in goods, and the overall notion of trade both enjoyed broad support, making these obscure negotiations an ideal Trojan horse within which to conceal an expansive non-trade policy agenda.

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What emerged from the GATT talks, completed in 1994, was a powerful new global commerce agency called the World Trade Organization (WTO), which now operates as the only binding system of global governance.

The WTO enforces 900 pages of one-size-fits-all rules pertaining to global policies on food, health, safety, the environment, social services and service sector regulation, investment, intellectual property, and government procurement. The agency’s expansive powers over the regulatory authority of WTO member nations are enforced by a binding dispute resolution system unlike any system existing in environmental, human rights or other treaties. A key WTO provision requires all signatory nations to “conform their laws, regulations and administrative procedures” to the WTO’s terms.

Any national or local policy of a WTO member nation that falls outside the WTO’s terms is challengeable as an “illegal trade barrier” before a WTO tribunal comprised of three trade officials who meet behind closed doors. Unlike domestic courts, the WTO tribunals have no basic due process protections: all documents and proceedings are secret and there is no appeal outside of the WTO system. The three officials deciding the cases are not judges, but rather private trade attorneys and government officials who have represented countries at GATT or WTO hearings. These tribunalists are not subject to conflict-of-interest disqualification. Nations whose policies are judged by the kangaroo court not to conform to WTO rules are ordered to eliminate the policy—or face permanent trade sanctions. Under WTO operations, it is irrelevant if the policy in question was passed by democratically elected parliaments, supported by domestic Supreme Courts, or established by public referendum. It is irrelevant if the law in question is unrelated to trade or if it treats domestic and foreign goods and companies the same. If the policy is ruled to be outside the constraints set by the WTO, it must go.

Because the WTO’s substantive rules are extremely biased against governments’ power to regulate markets, WTO enforcement tribunals have ruled in nearly every case to eliminate the policy in question. After nine years and nearly 90 cases decided, there is only one instance of a member refusing to comply with WTO rules: the European Union (E.U.), which banned meat containing artificial growth hormones, faces over $100 million in trade sanctions annually for the privilege of maintaining its ban. Most members cannot afford to take such a course of action. Indeed, now the mere threat of a WTO challenge often causes countries to change their laws to conform to WTO rules.

False Promises of Free Trade
WTO proponents and defenders continue to posit that governments and populations benefit because, according to them, reorganizing countries’ laws and economies to conform with the one-size-fits all model will ensure economic growth. However, the economic data—including data provided by the World Bank and other supporters of this model—prove the opposite: countries that have most strictly complied have suffered from dramatically slowed growth in per capita income, while countries remaining outside the rules have enjoyed the highest rates of poverty reduction. Nations such as Argentina and Thailand were touted as the poster children of the WTO model for other countries to emulate—until their economies crashed and burned. As the economies of country after compliant country in Asia, Latin America and Africa tanked and millions of their inhabitants suffered from the consequences of this failed social experiment, the high priests of the WTO suddenly claimed that the countries—not the model they had all followed—were themselves to blame for their economic problems.

Countries such as China and Vietnam—who were originally outside of the WTO system—implemented many of the investment, capital and import-control policies that the WTO forbids, yet have had stunning growth rates that lifted millions from poverty. If one excludes these countries and only considers those complying with WTO rules, the number—as well as the percentage—of people living in abject poverty (defined as $1 per day) has increased during the WTO era. Moreover, in the era of the WTO—and following the imposition of the same package of policies by the International Monetary Fund (IMF)*—income inequality between nations and within nations has increased dramatically. For instance, income inequality in the United States is at its highest since the age of the robber barons at the turn of the century.

But despite this track record, some interests—including the U.S. and E.U. trade agencies and the corporations they serve—have been pushing for negotiations to broaden the WTO’s scope and power even further. They seek to add to WTO rules certain outrageous terms now found in the IMF’s bilateral Structural Adjustment Programs (SAPs) with poor countries and in the North American Free Trade Agreement (NAFTA). Through NAFTA, for example, foreign corporations and investors are empowered to privately enforce new privileges and rights by suing governments for cash compensation based on allegations that government policy undermines expected profits. A string of these cases have already been decided. For instance, Mexico has paid a U.S. toxic waste company $18 million in damages after a NAFTA tribunal ruled that Mexico’s zoning laws barring toxic waste treatment in an environmental preserve violated the company’s investor rights. Not even international environmental and human rights treaties are free from these attacks: in another case, a corporation received compensation because Canada’s implementation of the Basel Convention (governing trade in hazardous waste) had limited its business opportunities in PCB trade.

Neoliberalism’s Next Phase
The world is living with the threat of WTO and NAFTA in part because the voices of those who would be most affected were locked out of the discussions. This dichotomy, combined with nearly ten years of dismal results, led to the collapse of talks at the WTO’s Cancun Ministerial in September 2003. Social movements, labor unions and a diverse array of other civil society forces from around the world have run effective campaigns in scores of countries to inform citizens and demand a more equitable trade system. The result was a setback to the corporate globalization agenda pushed by the Bush administration, some European countries, and WTO promoters in Geneva and in corporate boardrooms.

The Bush administration and its corporate funders suffered yet another blow two months later in Miami when a strong bloc of Caribbean and South American countries resisted plans to expand the NAFTA model to 31 more countries through a proposed Free Trade Area of the Americas (FTAA). The United States demanded an all-encompassing treaty with NAFTA’s extreme corporate investor protections; patent rules that limit access to seeds and essential medicines; and procurement rules that trump any local, state or federal government’s ability to use its tax dollars to employ local workers, or for “green” policies. In Miami, the United States was faced with a stark choice: no FTAA or a limited agreement that would not pass muster with its corporate backers. The United States settled for a basic framework that does not go beyond the WTO rules and to which all countries would be bound, and an “a la carte” system on other issues. However, the United States did succeed in keeping the more controversial issues on the table—i.e., FTAA rules that countries can opt into or out of are included in the framework.

Since the NAFTA model was implemented, and similar Wall Street-promoted IMF deals have caused social and economic chaos in developing countries, various governments in the hemisphere have changed from neoliberal cheerleaders to skeptics. This includes Brazil, Argentina, Venezuela, Paraguay and, most recently, Bolivia. Mass demonstrations in Peru and Bolivia have reversed plans to privatize basic public services. The same month as the Miami FTAA meeting, six people were killed in demonstrations in the Dominican Republic over new demands being made by the IMF. Public opinion polls throughout the region indicate a complete loss of faith in the “free trade” model.

This sentiment is also shared in the United States as public concern over trade policy and corporate globalization’s winners and losers has already made trade a central issue in the upcoming general election in November.

Lori Wallach is executive director of Public Citizen, a national non-profit consumer advocacy organization. Wallach is also the author, with Patrick Woodall, of Whose Trade Organization? A Comprehensive Guide to the WTO (The New Press). For more information, visit www.tradewatch.org.


* The International Monetary Fund (IMF) is the international organization originally established to help nations with short-term cash crunches relating to trade financing and to manage the gold-standard currency valuation system. In recent decades, the IMF has morphed into providing long-term loans to developing countries on the condition that these countries reorganize their laws and economies to prioritize servicing debt, for instance, by cutting government budgets, such as health and education spending, liberalizing trade and investment policies, and providing new intellectual property and investor protections.

Originally uploaded on: 2005-10-10 14:41:12 -0700

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From the Archives RP&E Vol.11 in 2004 — Under WTO operations, it is irrelevant if the policy in question was passed by democratically elected parliaments...

Trading Human Rights for Corporate Profits

Global trade policy weakens protections for health, the environment

In 1995, a small town in central Mexico refused to allow the California-based Metalclad Corporation to build a hazardous waste landfill that studies showed could have contaminated local groundwater and jeopardized a fragile ecosystem. The following year, the company sued Mexico, claiming that special rules under the North American Free Trade Agreement (NAFTA) entitled it to millions of dollars in compensation for its lost business opportunity. Although the Mexican government had approved the project, it also acknowledged in the NAFTA proceedings that local communities have the right under Mexican law to oppose hazardous waste facilities. A NAFTA tribunal disagreed, holding that Mexico had violated Metalclad’s rights and owed the company almost $17 million.

This ruling made clear that international trade rules have become a weapon to undermine the health and environmental sovereignty of nations and local governments. How did such an injustice come to be?

Enshrined in international human rights law is the notion that people everywhere have intrinsic rights to life and health, and to a healthy environment. It is the responsibility of governments at all levels to protect these fundamental human rights. Recently, however, the United States and other nations have relinquished much of their power to protect such rights when doing so would interfere with corporate profits.

This abdication of responsibility is occurring in international trade agreements that give foreign corporations the right to compensation for profits lost as a result of government regulations. Companies have already used rules to challenge protections for drinking water, health and the sacred sites of Native Americans. Multimillion dollar awards in several cases create a strong disincentive to new government regulations, substantially reducing human rights protections around the world.

Trade Rules Trump Rights
Most of the late–twentieth-century wave of trade liberalization focused on facilitating the movement of goods—from plastic toys to commercial aircraft—around the world. With the success of this effort, multinational corporations sought to expand their geographic and economic reach by moving operations overseas to exploit cheap labor and materials. To strengthen their position, corporations began to demand special rules guaranteeing the profitability of their investments in foreign countries. Their first major success was NAFTA, which devotes an entire chapter to guaranteeing foreign profits irrespective of government regulations. Subsequent trade agreements have applied the same rules to more nations, and efforts are underway to make them apply throughout the Americas and around the world.

Under the provisions of NAFTA’s Chapter 11 and its progeny in other international agreements, foreign investors can sue governments in special international tribunals when they believe a government action has treated their investment unfairly or otherwise interfered with their investment. The judges are private lawyers, and the proceedings are frequently closed to the public. The tribunals’ decisions are automatically binding on the governments and generally cannot be appealed. Because each tribunal’s interpretation of the investment rules influences subsequent tribunals, each decision sets a precedent that may apply worldwide.

Corporations’ interpretation of these investment rules establishes a system akin to legalized extortion: governments can only protect against an environmental or health threat posed by the activities of a foreign investor if they are willing to pay the investor to remove the threat. Even defending the most frivolous claim—which usually requires hiring private U.S. or European lawyers—can be beyond the means of many developing countries, dooming many regulations before they are even implemented.

Threats to Water, Sacred Sites
The growing influence of international investment rules presents a particular threat to the human right to water. United Nations agencies have recognized that access to clean water is fundamental to the fulfillment of all human rights, including the right to life. Yet as worldwide demand for fresh water rises, more and more governments are succumbing to pressure to grant water privatization contracts to multinational corporations. The international investment rules are already working to undermine the ability of governments to protect freshwater resources.

For example, in the late 1990s, the World Bank pressured the government of Bolivia to privatize the water system in the nation’s second-largest city, Cochabamba. A subsidiary of U.S.-based Bechtel Corporation signed a contract to provide the water, and immediately raised rates until some residents were paying 20 percent of their average monthly income just for water. Widespread protest ensued, resulting in one death, numerous injuries, and the eventual termination of the water services contract. The company is now using international investment rules to demand that Bolivia pay the $25 million (more than one percent of Bolivia’s gross domestic product) that the company claims to have invested in its failed enterprise.

 

A second case directly challenges governments’ ability to protect the quality of drinking water. In 1999, California ordered a phase-out of MTBE, a toxic gasoline additive that has contaminated groundwater in hundreds of locations throughout the state. Methanex Corporation, a Canadian manufacturer of one of the chemicals in MTBE, has brought a claim against the United States for nearly $1 billion in compensation for the impacts of California’s measure on the company’s future profits. The outcome of this case will set a powerful precedent by determining whether state (or local or national) governments have the right to protect drinking water, and other public interests, without the fear of investor challenges.


These international investment rules do not only interfere with government action to protect health and the environment, but also with efforts to protect the right of Indigenous communities to their cultural heritage. Another NAFTA case demonstrates this threat. A Canadian gold-mining company, Glamis Gold Ltd., holds a mining claim in a pristine desert ecosystem in Southern California’s Imperial County. The company planned to exploit its claim with an open-pit gold mine less than a mile from several sites sacred to the Quechan Indians. During the Clinton administration, the U.S. Department of Interior denied a permit for the mine based on a federal historic preservation agency’s finding that the project would irreparably damage the tribe’s sacred sites. In 2001, President Bush’s Interior Secretary, Gale Norton, rescinded the decision based on her agency’s determination that U.S. law does not allow the government to deny a mining permit on the basis of cultural concerns.

In the meantime, however, California passed two measures requiring mine operators to refill open pit mines when they complete operations, particularly if the mines are near Native American cultural sites. Such backfilling is one of the best-known methods of preventing the massive toxic contamination that can accompany open-pit mines. Glamis argues that the actions of the United States (in delaying the permit) and California (in requiring backfilling) violate its rights under NAFTA and is using the investment rules to demand $50 million in compensation. If Glamis’s claim is successful, it would set a dangerous precedent that corporate profits take precedence over the rights of Indigenous communities.

Undemocratic Decisions
The threat posed by international investment rules is not limited to the special protections they give multinational corporations. The processes by which the cases are resolved also undermine many traditional safeguards against abuse.

Before the new investment rules came into effect, investors could not sue governments directly for violations of international agreements; an investor would have to convince its government to bring a challenge on its behalf. This practice allowed governments to filter out challenges that could undermine rights considered important to protecting the public interest. Thus Glamis’s claim might have been prevented because Canada, Glamis’s home nation, might have been unwilling to support a challenge establishing a precedent that would undermine its ability to protect the rights of its large Indigenous population.

International law also generally requires claimants to take their claims to national courts before using international ones. As in the Glamis and Metalclad cases, disputes about domestic law often underlie investment challenges. National courts are much better qualified to resolve such questions than international tribunals made up of foreign lawyers.

Domestic courts also provide an important element of democratic legitimacy to disputes. Domestic judges have a much better understanding than international tribunals of the public policy concerns underlying government actions. Because their processes are generally open to public scrutiny and participation, concerned individuals and organizations can ensure that the courts do not ignore important points. However, the protections provided by public participation are unavailable in international investment disputes, which are often resolved in secrecy and have only permitted minimal public participation.

Future of Free Trade
Decisions ordering governments to pay millions of dollars to foreign corporations have not stemmed the tide of nations adopting these investment rules. To the contrary, the United States and other governments are pressing for the inclusion of the rules in numerous new free trade agreements, including the Free Trade Area of the Americas agreement, which would apply to every nation of the Western Hemisphere but Cuba.

Foreign investment can play a valuable role in the sustainable development of nations around the globe. According to World Bank economists, developing nations can attract foreign investment without accepting the rules presently being advocated by multinational corporations. Nations must adopt investment rules that explicitly guarantee their ability to protect the environment and other fundamental public values. Human rights should always take precedence over corporate profit.

Martin Wagner is managing attorney for the International Program at Earthjustice (www.earthjustice.org), a public-interest environmental law firm. Alyssa Johl is the Program’s research associate. The International Program has been instrumental in opening international investment disputes to participation by environmentalists and other advocates of the public interest.

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Food and Agriculture

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Reports on food dumping, genetically engineered foods and biopiracy

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Corn Crisis

The impact of U.S. food policy on Mexican farmers

By Oxfam International

Corn is the basis of our culture, our identity, adaptability and diversity. Corn created us, and we created corn.”
Exhibition Sin maí­z, no hay paí­s, or Without corn, there is no country

Mexico City, 2003

“We are only able to subsidize Mexican corn with the lives of the people that produce it. The only way we can compete with North American prices is to give up the basic necessities.”
 Ví­ctor Suí¡rez, executive director of the National Association of Rural Producers’ Enterprises (ANEC)

José Guadalupe Rodríguez is a corn producer in the Mexican state of Chiapas. Until recently, his corn crop guaranteed his family a minimum income and allowed them to store part of the harvest for the family’s consumption throughout the year. They could pay for food and education, and for treatments when the children fell ill. However, in the last few years the situation has changed: “While the price of corn has fallen, the cost of producing it has hit the roof,” says José. “We no longer have enough for our family.”

José is just one of nearly three million corn producers in Mexico for whom the drop in prices since 1994 has had a devastating impact on their livelihoods, and that of their families. Corn also has huge symbolic significance in Mexico: the country was the birthplace of corn, and hundreds of varieties have been grown in Mexico for 10,000 years. The impoverishment of the Mexican countryside, and the corn crisis, have mobilized large elements of Mexican civil society. In January 2003, the protest movement “El Campo No Aguanta Más” (“The Countryside Can’t Take It Any More”) organized a march of more than 100,000 rural workers in Mexico City.

At the heart of the corn crisis is an influx of corn imports from the United States at artificially low prices. The trigger for this was the North American Free Trade Agreement (NAFTA) of 1994, which opened up Mexican markets for U.S. goods. Yet a suggestion by the Mexican government that it might re-impose tariffs on products such as corn has provoked some heavy-handed language from the United States. Various members of the U.S. Congress have warned Mexico that any attempt to renegotiate NAFTA would be unacceptable. A complaint has been brought against Mexico in the World Trade Organization for bringing anti-dumping measures in the rice and beef sectors. Such bullying makes it all the more imperative that the WTO agrees to multilateral trade rules which work for poor rural producers across the world. It should eliminate agricultural dumping and guarantee developing countries a right to protect key sectors of their economy such as agriculture.

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Dumping on Farmers
The village of Comalapas, in the southern Mexican state of Chiapas, is one of the poorest in the country. Over the last few years, travel agencies have sprung up on its main street, offering just one destination: northern states such as Tijuana, which borders the United States. Such “agencies” offer a range of services, from a bus ticket to the border to a plane ticket with a job in the United States thrown in.

 

Comalapas exemplifies a shocking national reality: at least 300,000 Mexican workers are forced to immigrate to the United States every year.  Many of them come from the rural sector, where recent trade policies have devastated rural livelihoods. One in two Mexicans in rural areas lives in extreme poverty. In the southern states—Chiapas, Oaxaca and Guerrero, where many families depend on corn—70 percent live in extreme poverty (Wodon, López-Acevedo, and Siaens, 2003).

 

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The falling income of Mexican corn producers in the 1990s has undermined the food security of the rural population and their access to basic social services such as health care and education. Despite the fact that most rural families eat mainly corn and black beans, the fall in prices is forcing them to sell all their corn harvest, whereas they would usually keep some back for their own consumption. Eating meat and fish is exceptional. Occasionally some families supplement their diet with chicken and vegetables that they grow themselves.

 

 

The collapse in prices has affected the diet of poor communities in another way: women now have to work outside the home to top up their family’s income, which means that they cannot grind home-grown corn to make tortillas (the staple element of the local diet) in the way they used to. As a result, many families eat tortillas made from corn flour sold by large companies, which is often made from imported grain. The flour is widely available, but of poor quality. A typical complaint is that “this corn…doesn’t fill me up. Even a kilo of tortillas for lunch isn’t enough” (Alfonso, a laborer from Guadalupe Victoria (Puebla)).

The crisis in the corn sector has pushed health care further out of reach for many poor families. Simply treating a child with bronchitis can cost one third of a family’s annual earnings from the sale of corn. As public health centers are scarce and badly equipped, many producers turn to private treatment, even though it is more expensive.

Although education is free, most families cannot meet the cost of basic equipment such as stationery and uniforms, and children, especially girls, leave after completing primary school to work.

As a result of these social pressures, many choose to leave their villages, and often their families, in search of work in other parts of Mexico, or in the United States. One of the effects in the communities they leave behind is that land is becoming increasingly concentrated in the hands of a few owners. The municipality of Nueva Linda, in Chiapas, divided up its 300 hectares among its members, following land reform in 1992. Today, 90 percent of its members, many forced to immigrate, have sold their lands to the local political bosses.

The pressure on producers to compete with subsidized corn imports, and the increased penetration of large companies in the Mexican corn sector, has also had serious environmental consequences. Farmers have traditionally used locally adapted strains of corn seed, or “criolla” seeds, bred over generations, to ensure that the plant is well suited to native growing conditions. However, the Mexican government has supported companies such as Monsanto to distribute “hybrid” seeds, which they claim give higher yields. The government-sponsored “kilo for kilo” program encouraged corn producers to trade in a kilo of their criolla seeds for a kilo of hybrid seeds. But the benefits are largely illusory: farmers must purchase hybrid seeds every planting season, as the seeds are much less productive after the first year, unlike criolla seeds, which can be saved and used from year to year.

In addition, hybrid seeds require more fertilizers and other chemicals. In Chiapas, the intensive use of insecticides without training, instructions, or protective clothing has led to severe health problems. According to Nino, a member of the Carranza group of producers in southern Chiapas, “before, there weren’t even any pests. Now people are ill the whole time due to these liquids.” Often the seeds are provided mixed in with a powdered insecticide which it is difficult to wash off, and which then contaminates the farmer’s food.

Distorting the Competition
The United States is the largest exporter of corn both globally and to Mexico. For most Mexican producers, it is an uphill battle to compete with the influx of cheap corn from their powerful neighbor. Such producers are pitted against a sector, which receives huge payments from the U.S. government, and is controlled by just a handful of agribusiness companies.

Corn is the United States’ leading crop, both in terms of the area that is planted and the value of production. Production has risen steadily over the past 30 years, aided by an array of factors including scientific and technological innovations. However, the sector is distinctive in that it is the largest single recipient of U.S. government payments,  and is heavily dominated by a few agribusiness giants, such as Cargill and Archer Daniels Midland (ADM). While government support measures are not the only influence on corn production and prices, this issue is most pertinent in the international arena, where reductions in government payments to agriculture are up for discussion at the WTO.

U.S. agricultural policy has been deliberately tailored over the last twenty years to generate a surplus for export, and to provide adequate incomes for U.S. farmers. However, the export of corn at artificially low prices is destroying the livelihoods of small farmers in developing countries. Meanwhile, the benefits of the U.S. subsidies system go disproportionately to very large farmers, while small U.S. farmers lose out.

Excerpted with permission from “Dumping Without Borders: How US agricultural policies are destroying the livelihoods of Mexican corn farmers,” Oxfam International, 2003.  

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Corporate Crops

Planting the seeds of health, environmental and economic hazards

By Don Fitz

As drought plagued southern Africa in summer 2002, biotech companies lost no time in exploiting hunger for profit. The United States offered to “help” by donating food from crops containing GMOs (genetically modified organisms). But African scientists knew there was a catch. They had seen demonstrations showing that Europe wanted no part of the technology. They knew that GMOs were associated with health and environmental dangers. Worst of all, they were aware that if genetically modified (GM) seed was planted in Africa, the next generation of GM plants could result in farmers owing “technology fees” to biomaster Monsanto.

 Countries throughout Africa denounced the food-for-control ploy. But U.S. spokespersons brayed that African leaders were letting their people starve. After massive U.S. bullying, most African countries agreed to accept GM corn if it was milled (ground so that seeds could not be planted). But Zambia refused GM food of any kind. The conflict scored a tremendous moral victory in exposing the cynical complicity of the U.S. government in fronting for corporate greed.

Opposing GMOs
For decades, biologists have known that a gene can be removed from a cell, modified, and reinserted into the same cell or into a different cell from another species. As the technology developed rapidly during the 1980s and 1990s, scientists warned that the process was inherently risky. Critics spelled out in detail the range of health, environmental and social problems that genetic “engineering” could bring.

In 1998, many of those critics came together for “The First Grassroots Gathering on Biodevastation: Genetic Engineering.” The gathering was in St. Louis, the hometown of Monsanto. Monsanto is the world’s most aggressive proponent of GMOs. The company’s spokespeople claim that genetic engineering is necessary to feed the world’s growing population.

At the 1998 meeting, researchers explained how shooting a gene into an inexact location in a foreign species produces unpredictable results. Farm advocates spoke of how genetic engineering produces lower yield, not the higher yield promised by Monsanto. Health experts warned that genetic engineering is used to allow greater quantities of herbicides, which affects the health of farm workers. Genetically engineered foods produce toxic reactions as well as food allergies, which are most serious in children.

Those at the event learned how genes can escape from domestic crops to their wild relatives, giving weeds immunity to herbicides. Genetically engineered microorganisms can unpredictably kill crops and genetically engineered plants can harm wildlife.

Vandana Shiva [of the Foundation for Science, Technology & Ecology] pulled the diverse knowledge together, explaining the way genetic engineering is used by corporations to monopolize the seed supply and raise the cost of farming so that agribusiness can consolidate its control worldwide.

Biotech Backlash
Biotech proponents have frenetically sought to silence criticism as they shriek that corporate-funded research is the only road to scientific truth. When he began his investigations, Arpad Pusztai of the Rowett Research Institute in Scotland was neither for nor against genetic engineering. But when results of his own studies showed that rats fed genetically engineered potatoes had damaged internal organs, he felt compelled in 1998 to warn the public. He was involuntarily retired from his position and condemned in a report by the British Royal Society.

In 2001, the journal Nature published findings of University of California researcher Ignacio Chapela showing that genetically contaminated corn cross-pollinated with native Mexican species hundreds of miles away. For the first time in its distinguished history, Nature bowed so low to corporate greed that it printed a retraction of Chapela’s article (based on methodological disagreements which did not challenge the finding of cross-pollination).

About the same time, the world became aware of the plight of Saskatchewan farmer Percy Schmeiser. Monsanto’s corporate police had trespassed on Schmeiser’s fields to steal canola plants for testing. Monsanto sued Schmeiser for patent violations when genetic testing showed the presence of Roundup Ready Canola DNA. The court ruled in Monsanto’s favor, declaring irrelevant Schmeiser’s testimony that he never used the Monsanto product and that wind-blown pollen had contaminated his fields. [That decision was recently upheld by Canada’s Supreme Court.]

Fostering Food Dependency 
These events set the stage for countries of southern Africa saying “No GMOs” in the summer of 2002. One of the most eloquent spokespersons on the dangers of GMOs to Africa has been Ethiopia’s Dr. Tewolde Berhan Gebre Egziabher, a winner of a Right Livelihood Award in 2000. Egziabher believes that, even though global warming is making droughts more frequent, Ethiopia is able to feed itself by storing surplus food during bumper harvests. Hunger is due to the country’s being too poor to ship stored food from one location to another. International food aid agencies could assist impoverished African countries with cash donations that would help develop their transportation systems as well as strengthen local farms.

Egziabher fears that economic dependency on GM food from the United States is fraught with health, environmental and patent dangers. One of the main GM crops is corn. Donated GM food could become the entire diet of starving people, as opposed to only a portion of food eaten by those in other parts of the world. This means that any long-term effects of allergenicity, cancer, or birth defects (which have not been adequately studied), could be multiplied for victims of famine.

What would happen if African farmers saved GM seed and replanted it? GM pollen is known to kill butterflies, which are important pollinators for African crops. GM crops have lower yield, since they are designed for farmers who can afford large amounts of pesticides. Many animals refuse to eat stems and leaves of GM corn. If pigs eat GM food, their reproductive capacity can be reduced.

Despite the treatment of Chapela by Nature, African scientists know that wind can spread GM pollen across the continent. If that contaminates enough African crops, Europe would not buy them, leaving desperate farmers crushed.

African governments also know of the Percy Schmeiser case. If fields are contaminated by GM pollen and the next generation of corn tests positive for GMOs, farmers would become patent violators and owe technology fees to Monsanto and other biomasters. Massive impoverishment could cause the transfer of land throughout Africa.

A Growing Movement
The 1998 Biodevastation Gathering sparked subsequent events in Seattle, New Delhi, Boston, San Diego and Toronto. The anti-genetic-engineering  (GE) movement has won the hearts and minds of Europe and India, and support from governments in southern Africa. In the United States, there’s a strong alliance between anti-GE activists, farm organizations, and the anti-globalization movement. Now is the time for the anti-GE movement to reach out to social justice, peace and environmental movements. 

Don Fitz is editor of Synthesis/Regeneration: A Magazine of Green Social Thought. This article is excerpted, with permission from the author, from the article, “Genetic Engineering and Environmental Racism,” Synthesis/Regeneration, No. 31, Spring 2003.

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Predatory Patents

Biopiracy and the privatization of global resources

By Hope Shand

The primary stewards of the world’s biodiversity are the farmers, Indigenous peoples and local communities, primarily in the global South, who developed, nurtured and continue to use these resources today. Rural poor people in the global South rely on biological products (i.e., derived from plants, animals and microorganism) for an estimated 85 to 90 percent of their livelihood needs. More than 1.4 billion rural people depend on farm-saved seeds and local plant breeding as their primary seed source. More than three-quarters of the world’s population rely on traditional medicines for their primary health needs.

Given that the majority of livelihoods in the global South are dependent on biodiversity, losing control over these resources is one of the biggest threats to Indigenous peoples and traditional communities. This loss is occurring through a phenomenon known as biopiracy.

What is Biopiracy? 
Biopiracy refers to the privatization of genetic resources—whether derived from plants, animals, microorganisms or humans—or related knowledge. Individuals and corporations are using intellectual property laws, which include trademarks, patents and Plant Breeders’ Rights, to gain monopoly control over such resources. The privatization of biological resources and related knowledge constitutes biopiracy, even though this process may be legal under national law, and even if it includes a so-called “benefit sharing” agreement. (Benefit-sharing typically means that providers of genetic resources get a portion of the benefits, monetary and non-monetary, resulting from the use of their resources.)

The rights of farmers and Indigenous peoples are eroding as biological products and processes become subject to exclusive monopoly control under intellectual property systems. Both industrial patents and Plant Breeders’ Rights, for example, increasingly criminalize seed saving; prohibit research using proprietary seeds; and restrict access to and exchange of seeds, plants or breeding materials. Worse still, once a resource is privatized, it is likely that a community will no longer have the legal right to use it, may no longer be able to afford to buy it, and may lose the power to decide how it is used.

Case in Point: Mexican Yellow Bean
In 1994, Larry Proctor, the owner of a U.S.-based seed company, purchased a bag of commercial bean seeds in Sonora, Mexico.  He carried the beans back to the United States, where he picked out the yellow-colored beans, planted them and allowed them to self-pollinate. Two years later, Proctor applied for and won a U.S. patent on any dry bean (Phaseolus vulgaris) having a seed color of a particular shade of yellow.  He also obtained a plant variety protection certificate on the yellow bean variety he called “Enola.” In late 1999, armed with the patent and breeders’ right certificate, Proctor sued two companies that sell Mexican beans in the United States, charging that they were infringing upon his patent monopoly. As a result, shipments of Mexican yellow beans have been routinely stopped at the U.S. border, forcing Mexican bean farmers to forfeit valuable export income. In November 2001, Proctor also filed a suit against 16 small bean seed companies and farmers in Colorado.

Proctor’s yellow bean patent has not gone unchallenged, however. In December 2000 the International Center for Tropical Agriculture (CIAT) filed a formal request for re-examination of U.S. patent no. 5,894,079—also known as the yellow bean or “Enola bean” patent—with the U.S. Patent & Trademark Office (PTO) in Washington, D.C. CIAT is an international plant breeding institute that maintains a gene bank containing more than 27,000 samples of Phaseolus seeds collected from farmers’ fields, including beans that are identical to Proctor’s patented yellow bean. CIAT legally challenged the patent to keep these beans in the public domain.

Furthermore, plant geneticists recently performed genetic fingerprinting of Proctor’s patented yellow bean and found that it is identical to a bean variety of Mexican origin.  Nevertheless, more than three years since the patent was challenged, the PTO has not issued a final ruling. And even if the PTO decides to overturn the patent, the Patent Office makes no provision to compensate Mexican or U.S. farmers who suffered damages as a result of the unjust monopoly.

Patents and Monopoly Power
The yellow bean controversy starkly illustrates the power of exclusive monopoly patents to block agricultural imports, to disrupt or destroy export markets for Third World farmers, and to legally appropriate staple food crops or sacred medicinal plants. But it’s only one example: South Asian basmati, Bolivian quinoa, Amazonian ayahuasca, Peruvian maca and Indian chickpeas have all been subject to intellectual property claims that are predatory on the knowledge and genetic resources of Indigenous peoples and farming communities.

The 10-year-old United Nations Convention on Biological Diversity (CBD)—a treaty created to conserve biodiversity and promote fair and equitable benefit sharing—has failed to adopt meaningful regulations to stop biopiracy. By encouraging bilateral deals and contracts (often called “bioprospecting” agreements) that are linked to intellectual property and the concept of benefit sharing, the CBD has essentially facilitated the monopolization of biological resources. According to Alejandro Argumedo of the Indigenous Peoples Biodiversity Network, “Equitable benefit sharing is not achievable in the context of predatory patent regimes and in the absence of regulatory mechanisms that safeguard the rights and interests of farmers, Indigenous peoples and local communities.”

Battling Biopiracy
Fortunately, there is a global movement of resistance to biopiracy. A growing number of people’s organizations, institutions and governments have condemned biopiracy, defeated predatory patents, and defended the intellectual integrity of farmers and Indigenous peoples. At the last three meetings of the U.N. Convention on Biological Diversity, civil society and Indigenous people’s organizations hosted the “Captain Hook Awards” ceremony (www.captainhookawards.org) to highlight the most egregious cases of biopiracy, and to demonstrate that the CBD has done nothing to stop it.

The ceremony has also celebrated peoples’ organizations and others who have resisted biopiracy. For example, Indigenous peoples in Mexico were recognized in 2002 for defeating the U.S. government's $2.5 million bioprospecting project in Chiapas. And a coalition of Peruvian farmer and Indigenous people’s organizations were honored this year for opposing patent claims by U.S.-based PureWorld, Inc., on maca, a traditional Andean food and medicinal crop.

At the international level there is also growing recognition that patent regimes require urgent societal review, and that property “rights” must not be allowed to trample human rights. The U.N. Human Rights Commission has identified intellectual property as an obstacle to the rights of poor people in the global South. In 2002, an independent commission in the United Kingdom concluded that intellectual property rights impose costs on most developing countries—and do not reduce poverty.

Ultimately, the most important way to stop biopiracy is to strengthen and protect the control of local communities over the biodiversity they nurture, and to resist legal systems, international treaties or contract agreements that seek to privatize our rich biodiversity. 

Hope Shand is research director of the ETC Group (formerly known as RAFI) , an international civil society organization that is dedicated to the conservation and sustainable advancement of cultural and ecological diversity and human rights (www.etcgroup.org).

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Water Services


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How the false promises of water privatization harm the poor in the United States and in South Africa

Blue Gold Rush

Water privatization imperils low-income communities in the United States

When most people think of families without water, they picture people in impoverished countries in Africa or Latin America. But right here in the United States, dozens of communities are struggling for access to clean, affordable water. In 2001, the city of Detroit introduced an aggressive debt collection plan that threatened to suspend water services if residents could not pay the quarterly charges. Within a year after the plan was introduced, more than 40,000 residents of Detroit had their water cut off. Today, many of these families—mostly low-income and black—are still without water, relying on the kindness of neighbors willing to share their hoses.

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 Also in 2001, the city council in Laredo, Texas, hired a private water company to run their water system. United Water, a subsidiary of the French multinational corporation, Suez, promised the city that under the five-year contract, the company would save money, expand services and improve efficiency.  But their services have not been extended to the informal settlements on the edge of town—known as colonias—where Rosalia Guerrero works with a community development agency called Centro Aztlán. “There is no running water or paved road in these communities,” says Guerrero. “The nearest spigot is seven to ten miles away. The county has been promising us water for over ten years, but the end of the year always comes and there’s no water.”   In response, Guerrero and her neighbors organized a water cooperative that delivers 300 gallons of water trucked in from prepaid meters to 125 families each week. That’s approximately the same amount of water the average American family uses every day.

The struggle for clean and accessible water in these communities illustrates the growing economic value of water in today’s economy. Sometimes referred to as “blue gold,” water will likely define the next century in many of the same ways that oil, and the conflicts over it, have defined recent times.  Corporations, teamed up with pro-privatization government officials, are already making plans to bottle, export, deplete, pollute and otherwise consolidate control over this essential resource. 

In contrast, the environmental justice movement has been working for decades to ensure that local and state governments provide universal access to clean, affordable water while also addressing historic inequities in service, water quality and access that often afflict poor communities. Now many of these communities are faced with the threat of privatization, making the struggle for accountability and affordability even more difficult.

Global Water Barons
Historically, cities created municipal water and sewage utilities to prevent the spread of communicable diseases such as cholera. After more than a century of massive public investment, approximately 85 percent of the people in the United States receive their water from a publicly owned water utility. However, as old water infrastructure crumbles and the federal government cuts funding, cash-strapped local governments are turning to private companies to remedy their water problems. 

Masquerading as knights in shining armor coming to solve cities’ water woes, the same multinational corporations that have taken over the management of public water services around the world are now targeting the lucrative U.S. “market”—one of the world’s largest with potential annual revenues estimated at $90 billion. Three giant European-based multinationals—Suez, Veolia (formerly Vivendi), and RWE Thames Water—currently monopolize the private water sector. In the United States, Vivendi now owns USFilter; Suez operates through its subsidiary United Water; and RWE Thames bought up American Water Works, the largest investor-owned water company in the United States.

Private companies often promise to increase access and improve service to impoverished communities. But the real-life experience of privatization is often disastrous for consumers and adds new hurdles for low-income families. According to research conducted by Public Citizen and other public interest organizations, privatization often leads to a weakening of democratic institutions and increased corruption; layoffs of public sector jobs; higher rates and cutoffs; and lower water quality standards.

Municipalities that hoped to save money are finding that privatization can be a costly experiment that drains money out of the community and can leave cities heavily in debt. Suez’s first major contract in the United States was recently terminated by the city of Atlanta after the company fired half the workers, created a backlog of service and debt collection problems, and billed the city for work it didn’t perform. In 2002, Suez delivered brown water to residents, forcing the state Environmental Protection Agency to issue boiled-water alerts. Atlanta officials estimate that the cost of transitioning the water system back to public control will top $10 million.

The Price of Privatization
A number of cities, including New Orleans, Detroit, Indianapolis, and Stockton and Richmond, California, have also contracted the management of their water and/or sewage utilities to private corporations; many more cities are flirting with the idea. However, municipal governments should not be duped into thinking the only way to save money is through privatization, because private companies incur a number of costs that cities don’t, including shareholder dividends, high executive pay and corporate taxes.

Furthermore, corporations that exist to make a profit are less likely to consider the needs of low-income communities. In Detroit, the “debt collection” program was the idea of Victor Mercado, the new director of the Detroit Water and Sewerage Department (DWSD). Mercado, who worked for two private water companies (British-based Thames Water, and United Water) before heading up DWSD, has a hard-line, pro-business approach. He runs the DWSD like a profit-making corporation, cutting costs by eliminating services to the poor, and even going so far as to cement areas around the valves to prevent desperate residents from turning the water back on. In 2003, Detroit water rates rose 9 percent and they are scheduled to increase 16.9 percent this year. Some residents suspect that after years of starving city services, Mercado is setting up Detroit for privatization.

“When you have 40,752 people with no water and over 100,000 with no health care, you have a human rights crisis of epic proportions,” said Maureen Taylor, director of the Michigan Welfare Rights Organization, a group that is mobilizing against privatization. “But because it is affecting low-income and poor people, most folks can simply choose to ignore it.” 

Ironically, in November 2002, the same month that DWSD decided to cement shut the water valves, the United Nations Committee on Economic, Social and Cultural Rights adopted a new amendment on water, stating that: "The human right to drinking water is fundamental for life and health. Sufficient and safe drinking water is a precondition for the realization of all human rights." The debt collection policies of DWSD defied even United Nations’ standards.

Water Justice
The solutions to the world’s water scarcity crisis are multiple. They include expanding public and community controlled water utilities; repairing dilapidated water systems through public funding; saving water by installing drip irrigation systems; enhancing water reclamation and conservation programs by installing low-flow toilets and showers; and improving watershed management, to name a few. But the push for increased corporate control of the global water commons undermines these community-based, commonsense solutions. 

If the threat of privatization to low-income communities of color is to be stopped, people of color in particular need to be included in water governance decisions. A recent study of water issues facing Latinos in California found “a chronic and pervasive lack of representation of Latinos and other people of color at every level of water policy planning and decision making.” The report, written by Paola Ramos of the Latino Issues Forum, concluded that “[i]t is important for the regional water quality control boards, local water agencies and other bodies to be representative of the populations they serve, in order to understand constituents’ needs and be better prepared to respond to their concerns.”

To fight privatization, grassroots water justice activists are also reaching out across borders to learn from communities in the global South that have been battling privatization for years. Participants in the People’s World Water Forum, held in January 2004, called for solidarity in the fight against privatization by Suez and Coca-Cola’s bottled water operations (see www.wateractivist.org for more information).

In the United States, Public Citizen, Michigan Welfare Rights Organization, Centro Aztlán, the Alliance for Democracy, the Indigenous Environmental Network, and other organizations committed to environmental justice have created the Water Allies Network. To find out about their activities, help build a movement to safeguard our water heritage, and spawn a new legacy of responsible, ecologically and socially sustainable stewardship of our precious watersheds, go to www.waterallies.org. The network is also sponsoring many events at the Boston Social Forum (July 23-25), a regional forum within the World Social Forum process and a first in North America. Join with them in repeating the call, “Water for Life, Not for Profit!” 

Juliette Beck is the California coordinator of Public Citizen’s Water for All campaign, based in Oakland (www.wateractivist.org).



Article Sources

Currents newsletter, Public Citizen's Water for All Campaign, January, 2003, www.citizen.org/cmep/ Water/new/currents/articles.cfm?ID=8850.

Rosalia Guerrero, personal interview, March 23, 2004.

Maude Barlow and Tony Clarke, Blue Gold: the Fight to Stop the Theft of the World’s Water, April, 2003.

Maude Barlow, Blue Gold: The Global Water Crisis and the Commodification of the World’s Water Supply, a special report issued by the International Forum on Globalization, Spring 2001.

Water Privatization: A Broken Promise, Public Citizen’s Critical Mass Energy and Environment Program, October, 2001, Washington, D.C.

Maureen Taylor, personal interview, March 23, 2004.

Paola Ramos, Promoting Quality, Equity, and Latino Leadership in California Water Policy, Latino Issues Forum, June, 2003.

 

Running Dry

South Africa’s water policy results in cutoffs, evictions and disease

In 1955, the African National Congress (ANC) adopted the Freedom Charter as a popular expression of the desires of the majority of South Africans. One of the most important clauses in the Charter—which the present-day ANC government still claims as their guiding manifesto—states that “the national wealth of our country, the heritage of all South Africans, shall be restored to the people.”

When the vast majority of South Africans, made up of the poor and working class, gave political victory to the ANC in 1994, they were also giving the new government the power to fulfill the Charter and ensure that natural resources like water would be accessible to all citizens, irrespective of race or class. Despite this popular mandate, the ANC unilaterally decided to pursue a water policy that has produced the opposite result.

In 1996, the ANC adopted the “Growth, Employment and Redistribution Programme” (GEAR), the government’s macro-economic policy framework. GEAR effectively turned water—a resource essential to all life—into a market commodity to be bought and sold for profit. Since then, South Africans have witnessed the gradual commercialization and privatization of water, a development that has increasingly been met with mass, organized resistance.

Cutoffs and Cholera
The privatization of water in South Africa began in earnest when the ANC—under pressure by multinational water companies and the World Bank—halted subsidies and other financial support to local governing councils. Previously, governing councils had received the vast majority of their revenue from the central government. When the ANC took over in 1994, their challenge was to redistribute these subsidies to benefit the black majority. Suspension of the subsidies, however, forced the councils, with Johannesburg at the forefront, to turn toward commercialization and privatization of basic services to generate the revenue that was no longer provided by the state.

The immediate result was massive increases in the price of water that hit poor communities hardest. The price increases were exacerbated by the government’s goal to “recover” additional costs associated with the World Bank-funded Lesotho Highlands Water Project, which included dams built to provide water to the Greater Johannesburg area. The first price hike instituted by the newly privatized water service in Johannesburg was an astronomical 55 percent. 

Following the World Bank’s advice to introduce a "credible threat of cutting service," the Johannesburg council began cutting water supplies to tens of thousands of people who couldn't afford the increased prices. The “full cost recovery” model—including an International Monetary Fund-promoted legal process to recover debt from “customers”—has also resulted in the forced evictions of tens of thousands of poor people across South Africa. In Johannesburg alone, nearly 100,000 people suffered from water and electricity cutoffs during the first half of 2002. Nationally, the privatization program has imposed water cutoffs on more than 10 million South Africans as well as evictions on more than 2 million. Both the urban and rural poor have suffered tremendously as a result.

In addition to the cutoffs and evictions, privatization has triggered several outbreaks of cholera. Not long after Suez, a French multinational corporation, took over Johannesburg’s water supply in 2001, a cholera outbreak sickened thousands of poor families who had resorted to drinking from polluted streams in the Johannesburg township of Alexandra. The same year, more than 200 people from the province of Kwa-Zulu Natal died of cholera. The epidemic was brought under control only after community mobilization forced the national government to step in. 

Despite these problems, the latest weapon in the arsenal of water privatizers has been the widespread introduction of pre-paid water meters, devices that are installed on an individual’s property. To access water, residents must buy tokens, of varying values, to insert in the meters. The amount of water they get depends on the value of the token inserted. As soon as the value is spent, the meter automatically shuts off. Most recently, the privatized Johannesburg Water Company embarked on the installation of pre-paid water meters in the sprawling settlement of Orange Farm (south of Johannesburg), as well as in the Phiri section of Soweto.

Water as a Human Right
In response to these water privatization measures, poor communities in Johannesburg, Durban, Cape Town and other smaller towns and peri-urban areas across South Africa have responded with active resistance. One of the new social movements that has emerged is the Anti-Privatisation Forum (APF), an umbrella organization for grassroots community groups in the Gauteng Province, which includes Johannesburg and Pretoria. Formed in 2000, the APF’s guiding principle has been that basic needs, such as water, are fundamental human rights, not privileges to be enjoyed only by those who can afford them.

With the assistance of the APF and other progressive organizations, township residents have launched a campaign called Operation Vulamanzi (Water for All). The campaign has helped residents defy certain privatized water “control” measures, such as trickler systems, or devices that severely limit the amount of water flowing from a tap, and rerouted piping. Residents bypass these controls by tampering with the trickler systems or by laying pipes to access water from central mains. Led by the APF, residents in Orange Farm and Phiri communities have destroyed the pre-paid meters.

Yet, ANC politicians and government bureaucrats have publicly labeled community residents who resist privatization as “criminals” and “anarchists” trying to institutionalize a “culture of non-payment.” These attacks have been accompanied by a large-scale crackdown on dissent. Over the last three years, hundreds of activists and community members have been arrested and imprisoned. While repression has not prevented continued resistance in poor communities, the resistance has also not stopped the ANC government, along with the privatized water entities, from continuing their onslaught.

While anti-privatization struggles have not yet succeeded in reversing the privatization process, popular pressure forced the ANC to announce, in late 2002, a partial free water policy plan. However, the plan to allocate 6,000 liters of free water per household, per month, comes nowhere close to meeting even the basic sanitation requirements of the average poor household in South Africa. The World Health Organization has set a minimum standard of 100 liters of water per person, per day. That means that for the average South African household (black urban or rural), which includes eight people, the minimum would be at least 24,000 liters per month. 

For these reason, the APF continues to intensify the campaign against privatization in all its forms. Through the APF and other groups, the poor majority in South Africa has once again moved to the forefront of the struggle to reclaim basic human rights and dignity. Water is life and life can never be a privilege. 

Dale T. McKinley is media/information officer and spokesperson for the Anti-Privatisation Forum in South Africa.

Health, Labor, Human Rights


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The struggle for good jobs and health care in the United States, and a report on the lack of labor and human rights in Iraq.

Health Care Hazard

What the California grocery war means for the future of labor and health insurance

The end of February 2004 also saw the end of the 141-day Southern California grocery war. It started on October 11, 2003, when members of the United Food and Commercial Workers (UFCW) union at Vons and Pavilions—both supermarket chains owned by the Safeway Corporation—went on strike. In an act of business-class solidarity, two other grocery chains, Ralphs (owned by Kroger) and Albertsons, locked out their union employees.

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The central issue during the dispute was the rising cost of health care and the question of who should bear the burden—grocery chain owners or employees. This battle over health care drew national attention to the larger struggle over spiraling health care costs; the erosion of employer-based health insurance; and the specter of large-scale retail business based on low-wage employment and low-cost manufacturing.

The Strike
At the time of the strike/lockout, the UFCW in Southern California represented 59,000 workers at the major grocery chains. Their existing contract with the grocers guaranteed a single-tier workforce and company contributions to a health care fund that would maintain an adequate level of health benefits.

In 2003, the grocers entered into negotiations with the goal of reducing their labor costs in two ways: by instituting a two-tier workforce; and shifting part of the burden of the health care fund to workers. The two-tier workforce would create a system that pays new employees substantially less than existing employees for doing the same work. The shift in the health care costs would force employees to pay a weekly premium for their health insurance, while allowing the companies to cap their contributions to the health care fund—with no guarantee that existing benefits would be maintained. 

Despite the solidarity among UFCW members, assistance from other unions (notably the Teamsters), and community support and boycotts (the grocers lost approximately $1 billion in sales), the final settlement favored the companies’ demands.  While not as onerous as the original offer, the settlement established a two-tier system with no guarantee of health benefits.  In the prior contract, wages ranged from $9.80 to $17.90 per hour; in the new contract, the lower tier will be paid as little as $8.90 to $15.10 per hour.  In addition, while the union was able to protect the existing health care coverage for two years, it is expected that in the third year, that will change. Upper-tier workers may be forced to choose between a substantial increase in premiums or a radical reduction in coverage; lower-tier workers will likely be able to afford only a bare-boned insurance plan, or no plan at all.

Labor, Health Care and Globalization
The Southern California grocery war symbolized key features characterizing labor strife throughout the United States today. Prior to the new contract, unionized supermarkets offered decent salaries and good health benefits.  It was one of the few industries where working people from communities of color could make a living.  Now, the supermarket chains are taking steps to transform these good jobs into bad jobs. Newly hired workers will find themselves with lower wages and virtually no health benefits; existing employees will face lower living standards because of less health insurance coverage or higher premiums (and therefore, less income to spend on other necessities).

These trends toward low-wage employment and few benefits are spreading, and labor battles are predicted in industries ranging from hotel chains to hospitals. During 2003, health care was the dominant issue in half of the major labor negotiations in California. For a variety of reasons, the old health insurance system, which was a patch quilt of employer-based coverage and government-provided coverage, has broken down.  Any attempt to reconstruct the system based principally on individual coverage tied to individual jobs fails because, today, most jobs do not provide health insurance and few workers have long-term relationships with a single firm. With no viable single-payer alternative, attempts by businesses to further privatize health care provisions dominate.  This forces unions, who have won excellent coverage for their members, into defensive battles with aggressive employers.

Throughout contract negotiations, grocers in Southern California evoked the shadowy image of Wal-Mart as the rationale for their actions—despite the fact that Wal-Mart does not operate a supercenter in the region. Wal-Mart is both a symbol for the low-road economic path—low wages, few benefits, no career ladder—and a model of retail organization in the era of corporate globalization.  As a symbol, Wal-Mart represents large-scale retail development that eliminates small businesses domestically and is based upon low-cost manufacturing internationally. 

However, Wal-Mart is not the only retail company that uses this business model. Target and K-Mart also have supercenters. Many of the factors that turned Wal-Mart into the world’s largest corporation are available to its competitors. These factors include the technology that allowed Wal-Mart to grow rapidly in low-density areas (the South, rural America); low-cost manufacturing that Wal-Mart uses to supply cheap products to its stores; and a low-wage labor force.
 
Challenges Ahead
The Southern California grocery strike was not the first battle against the low-road economic path and corporate globalization, nor will it be the last.  Contracts for UFCW members in Northern California expire this summer (Sacramento Valley) and fall (the Bay Area). These negotiations will cover approximately 55,000 workers. It is likely that grocers will attempt to bring the elements contained in the Southern California contracts to these bargaining sessions. 

To fight these trends, progressives need to mount campaigns that provide an alternative vision of economic development. Union and community activists need to join together to wage an effective defensive battle to preserve the real buying power of workers, and to fight the attempt to either reduce health care coverage or shift a disproportionate share of the cost to employees. At the same time, this labor-community alliance needs to wage a proactive campaign to transform the nation’s health care delivery system as well as the economic development systems. 

A better health care system would be patient-centered (instead of profit-centered) and grant full access to health care. A better path to economic development would establish basic labor standards; facilitate unionization; provide social insurance to workers during periods of economic change; link education and job training to existing good jobs; encourage high-density economic development; and promote community-based ownership of economic assets. 

Steven Pitts is an economist at the University of Calfornia-Berkeley’s Center for Labor Research and Education.

Privatized Iraq

Imposed economic and social policies raise human rights questions


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The disaster that is the ongoing occupation of Iraq is much more than the war that plays nightly across U.S. television screens. The violence of grinding poverty, exacerbated by economic sanctions after the first Gulf War, has been deepened by the U.S. invasion. Every day the economic policies of the occupying authorities—which remain in effect despite the appointment of an interim goverment—create more hunger among Iraq's working people, transforming them into a pool of low-wage, semi-employed labor, desperate for jobs at almost any price.

While the effects of U.S. policy on daily life go largely unseen in the U.S. media, anyone walking the streets of Baghdad can witness them. Children sleep on sidewalks. Buildings that once housed many of the city's four million residents remain burned-out ruins.  Rubble fills the broad boulevards, while the air turns gritty and brown as thousands of vehicles kick up the resulting dust. Sewage still pours into the Tigris River, and those who must depend on it for drinking or cooking continue to get sick.

These conditions are the symptoms of an occupation policy with an economic purpose: the free-market transformation of Iraq. While most Iraqis view this as a basic violation of human rights, the United States does not even recognize that human rights include these economic and social conditions.

Occupation and Privatization
Iraqis have lost control of their own economy and country. This is far more than a symbolic loss. Yet symbols are an important element in understanding this reality, and nothing could have been more symbolic than how the occupation authorities treated the legacy of Iraq's nationalist, progressive and anti-colonial past.

Since 1958, July 14 has been Iraq's National Day.  Last year, under the occupation, it was declared a "Saddam-era holiday" and banned. Occupation authorities stated that the people of Iraq should instead celebrate the day of the fall of the Hussein regime, which is also the day the occupation began. While most Iraqis were glad to see Saddam go, many view the banning of National Day as not just an insult but a sign of the occupier's true intentions.

For progressive Iraqis, June 14 recalls their anti-colonial history. Nineteen fifty-eight was the year nationalists and radicals threw out the monarchy imposed by the British after World War One. Over the next five years of relative freedom and democracy, Iraqis began building a nationalized, planned economy, based on its oil wealth. Hundreds of factories were built, making it the most industrialized country in the Middle East. The Iraqi government organized a national health care system and treated education as a right. Women were represented in professions in percentages larger than in any other Middle Eastern country. Even after that government was overthrown in 1963 (by a coup in which the Central Intelligence Agency played a role), those popular reforms were continued under the Baathist regimes that followed.

A lynchpin in that reform plan was a new deepwater port, Umm Qasr, constructed on the Persian Gulf. From the piers of Umm Qasr, Iraq began to ship the goods from factories to buyers throughout the region. The port became a symbol of progress and independence.

Today Umm Qasr is war booty. It was the first Iraqi enterprise to be turned over, not just to a private owner but to a foreign one. Even before U.S. troops reached Baghdad, the Bush administration gave a $4.8 million contract for operating the port to Stevedoring Services of America (now known as SSA Marine), a politically connected firm handling cargo around the world.  Privatizing Umm Qasr was a step in the transformation of the Iraqi economy, from one based on nationalization and production for an internal domestic market to one based on ownership by transnational corporations. To Iraqis, instead of a symbol of national pride, Umm Qasr now represents a new era of foreign domination.

Following the revolution of 1958, a thousand long-shore workers labored on Umm Qasr's docks. Even in the heady days of Arab nationalism, however, they still had no guarantees for their rights and jobs.  At first, subcontracting companies were allowed to hire dockers out of a crowd in a daily shapeup. But workers rebelled. After winning recognition for their union, they demanded and won a hiring system under their control, and a daily guaranteed wage.

Today, those achievements seem like a distant dream. Umm Qasr is an object lesson in the privatization of Iraq.  Its fate will have a profound effect on the degree to which any future Iraqi government will be able to control the country’s economy.  It is a bellwether for the destiny of hundreds of thousands of other workers in formerly state-owned enterprises throughout Iraq’s economy.

The free trade ideology of the Bush administration sees the occupation of Iraq as a beachhead into the Middle East and south Asia.  Its first objective is the transformation of the state-dominated economy of what was once one of the region’s wealthiest countries. A free-market Iraq will then set new ground rules for the rest of the region.

On September 19, 2003, the Coalition Provisional Authority (CPA) published Order No. 39, which permits 100 percent foreign ownership of businesses (except for the oil industry) and repatriation of profits. Iraqi workers look at the prospect of such privatization with dread. "A worker starting here today has a job for life, under the old system," says Dathar Al-Kashab, manager of Baghdad's Al Daura oil refinery, "and there's no law which permits me to lay him off. But if I put on the hat of privatization, I'll have to fire 1,500 [of the refinery's 3,000] workers.  In America when a company lays people off, there's unemployment insurance, and they won't die from hunger. If I dismiss employees now, I'm killing them and their families."

Loss of Jobs, Worker Rights
Unemployment in Iraq hovers around 70 percent, according to the country's new unions. There is no unemployment benefit or welfare system. There is a Union of the Unemployed, which has held marches and demonstrations demanding jobs and benefits. Its leader, Qasim Hadi, has been repeatedly arrested by the occupation troops. Meanwhile, the CPA set a new salary schedule for Iraqi workers. Order No. 30 on Reform of Salaries and Employment Conditions of State Employees lowered the bottom wage rate from $60 a month to $40, and eliminated all previous housing, food, family, risk and location subsidies.


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The U.S. occupation authority also maintained a 1987 law declaring that workers in state-owned enterprises (which included most Iraqi workers) had no right to organize unions or bargain. This is another gift to prospective new private owners of Iraqi enterprises. If workers there have no legal union, no right to bargain, and no contracts, then privatization and the huge job losses coming with it will face much less organized resistance.

On June 5, 2003, CPA head Paul Bremer put another weapon into the anti-union arsenal—Public Notice Number One, which prohibits "pronouncements and material that incite civil disorder, rioting or damage to property." The phrase can easily be interpreted to mean strikes or other organized labor protests. Anyone who violates the decree "will be subject to immediate detention by Coalition security forces and held as a security internee under the Fourth Geneva Convention of 1949"—in other words, as a prisoner of war.

On December 6, U.S. occupation forces arrested eight members of the executive committee of the Iraqi Federation of Trade Unions (IFTU), and took them into detention. Although they were released the following day, the organization was expelled from the building where they had their offices.

Jassim Mashkoul, director for internal communications for the IFTU, says that, "at the beginning, we thought our situation might be better after we got rid of Saddam Hussein. But it hasn't been." Many factory workers are less diplomatic. One worker at the state leather goods factory in Baghdad explained that, "we must change this law that says we don't have to right to a union. If the law doesn't change, we'll change it anyway, like it or not. We are the people."
 
Human Rights Violations
Many of these CPA decrees violate international human rights standards.  Conventions 87 and 98 of the International Labor Organization, guaranteeing freedom of association, makes the continued enforcement of the 1987 ban on unions illegal.  Convention 135, preventing retaliation against workers for union activity, makes the arrests of union leaders, and their expulsion from their offices, illegal as well.  The CPA refuses to comment on these violations. Yet in an especially Orwellian moment, George Bush declared in his January 2004 State of the Union speech that U.S. intervention in Iraq would promote the formation of “free trade unions” in the Middle East.


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Denying union rights are not the only way in which the economic rights of Iraqi people have come into question.  Protecting free universal health care and education, even if they were guaranteed only on paper for the last 20 years, is a critical human rights question to many workers. By pulling apart this system, and installing a free market system in its place, the occupation is demonstrating clearly that these collective rights, held by Iraqis as a people, are not human rights as it defines them.

But beyond the question of social benefits looms the even larger one about the nature of the Iraqi economy itself—who controls it and who will benefit from it.  When the port of Umm Qasr was turned over to Stevedoring Services of America, it was not viewed as a human rights question by many in the United States. Contracting out public services for the enrichment of private businesses, while bitterly opposed by U.S. public workers and those dependent on them, has only recently been defined by U.S. labor and anti-poverty activists in human rights terms.

In Iraq, where Umm Qasr was the nation's pride and a source of its wealth for decades, its conversion into a business for the benefit of a Seattle firm and its stockholders was a fundamental human rights violation.  By extension, so was the occupation itself, which has enforced privatization at gunpoint.

The United States does not recognize that human rights include economic and social rights, in part, because they are collective rights of groups, social classes and even nations. U.S. accusations against the regime of Saddam Hussein focus on his violation of the human rights of individuals—the assassination of the regime’s enemies, and the prohibition on political activity by individuals who dissented from its policies.  Most popular organizations in Iraq, whether on the Left or the Right, religious or secular, make the same accusations.  But they don’t confine the discussion of human rights within those limits.  For them, the occupation and the social conditions it imposes are human rights abuses as well.

For the Bush administration, limiting the discussion of human rights to the rights of individuals allows it to enforce in Iraq an economic model of its choosing, without acknowledging the consequences as potential violations of human rights. While U.S. contractors get rich from the billions of taxpayer dollars appropriated supposedly for Iraq’s reconstruction, the country’s national wealth—factories, refineries, mines, docks and other industrial facilities—has been readied for sale by the occupation bureaucracy, which has treated democracy and the unrestrained free market as one in the same. 

David Bacon is a writer and photographer specializing in labor and globalization issues. His book, The Children of NAFTA, was recently published by the University of California Press. He’s also completed a photodocumentary project on migration for the Rockefeller Foundation.