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The Neo-Liberal Model And Its Sycophants

By Anu Muhammad

30 June, 2014
Countercurrents.org

The Parliament of Bangladesh has passed the budget of 2014-15 on 29 June. Every year the budget episode appears as source of fear for the people in general. There is tension about another wave of price rise, along with the rise of tax burden. This year was no exception. Although there have always been complaints about government's general inefficiency, data shows that they have developed its enough skill to increase revenue income, specially by expanding vat net and other taxes. Although people of limited and low income pay increased taxes with implementation of budget every year, little appempts are there to bring the most wealthy people under tax net. Therefore the questions remain, who pays and who gains? People are paying increased taxes in many forms but what are they getting in return? Better security? Better access to public education, healthcare, public transport? Clean water, playing field, open spaces? NO.

AMA Muhit has been performing as the finance minister with this government since 2009. This ministry has an adviser too, Dr. Mashiur Rahman. This year Mr. Muhit as usual had to hide many facts and use rhetoric on different issues including mentioned above. He also talked long about power and energy sector. A lion share of government expenditure, loans and subsidies involve this sector. The key person of this sector has been another adviser, Dr. Towfiq Elahi Chowdhury. All of these three influential policy makers are ex-bureaucrat.

Mr. Muhit must be a happy man with highly successful career all along his life. H e had been a man of administration cadre, served many governments as bureaucrat. He started his post-bureaucrat ministerial career during military regime under General Ershad in the early years of 1980s.

The model that made the roadmap

In the 1980s neo-liberal model of capitalism started rolling in many peripheral countries, including Bangladesh, in the form of implementing structural adjustment programmes prescribed by the World Bank and the International Monetary Fund (IMF). This model got momentum after its ‘successful implementation' in Chile, over thousands killed and many more disappeared, under killer Pinochet regime.

Millton Friedman, the guru of neo-liberal (conservative) economics from Chicago University, served as special adviser to this military dictator. Naomi Klein in her Shock Doctrine vividly showed the nature of implementation of this model in different parts of the world that created ‘disaster capitalism'. Based on research in different regions for four years she revealed how war, genocide, occupation, militarization and privatization go together to give corporate world a big success.

The neo-liberal model, i.e., orthodox version of ‘free market' capitalism, has actually been playing as a theoretical tool to rationalize aggressive mode of capital accumulation in the phase of ‘late capitalism', as coined by Ernest Mandel. This model asks for privatizing and corporatizing everything under (and including) the sun: education, health care, water, river, forest...making everything for market, bringing everything under corporate greed. Public services, state responsibility for providing health care, education, child and mother care, pure drinking water, public transport, security are not recognized as people's right in this model. People must have money to buy everything they need, as citizens they cannot expect any right!

Therefore though we had many changes in governments in Bangladesh in the last few decades, this model kept running with increasing strength. Beneficiaries of this model include multinationals, big business, bureaucrats, consultants, contractors, ministers, MPs, local grabbers.

Money and muscle

It is no wonder that, grabbing of public resources and common properties have become dominant economic activity in the country. Therefore huge wealth in the form of ‘black' money has been generated in the economy. These huge resources accumulated in few hands, those who are obviously powerful, well connected to or part of the government, and have blessings from global agencies as well. Illicit money flows from countries like Bangladesh actually a good thing for global financial industry. A partial figure has recently been exposed by the ‘Banks in Switzerland 2013' that said Bangladeshis have US$414 million there, 60% increased from earlier year (Prothom Alo, June 20, 2014). A Washington based think tank reported that illicit financial flows from Bangladesh reached on average US$ 1.2 billion a year (Dev Kar and Brian Le Blanc, 2013)!

Sources of this big underground or ‘black' economy include: bribing, commissions from different bad deals, over and under invoicing, grabbing of public resources, fraud transfer, sex trade, women and child trafficking, drug business, smuggling, tax evasion, illegal transfer from MLM-Destiny-Share market money, usurpation of public money. Well connected persons start with grabbing wealth beyond legal means and end up with multiplying that asset. They dictate politics, law, government agencies. Recent horrified incidences exposed that they can hire Police or Rab to kill people too.

The mere size of this accumulated underground money is self explanatory, the logical consequence is its further expansion through similar activities and investment. These produce and reproduce violence, crime, hooliganism and extreme insecurity in the society and environmental destruction.

Government legalizing grabbing

When the government decided to identify ‘unutilized land of the state-owned entities' for their privatization, Dr. Mashiur Rahman, the economic adviser of the Prime Minister, was leading this mission, to make big land grabbers happy.

Occasionally along with another adviser Dr. Gowhar Rizvi, Mashiur speaks in public for defending Tipaimukh dam or Transit with India. He is also a strong advocate/lobbyist for coal fired power plant with India that would destroy Sundarbans, the last forests of the country, and the nuclear power plant deal with Russia without doing any serious EIA. He took the responsibility of the chair of a high-powered committee to identify ‘extra' public land to deliver it to some chosen private hands in the name of ‘development'. We have bitter experience of privatization of the state-owned entities, where in many cases private owners closed down the running state-owned mills, and turned the land into shopping mall or real estates. This latest plan of the government was nothing but to create opportunities for the same encroachers to grab public lands.

Within three days of the declaration of Budget for New Year (2014-15), the inter-ministerial committee reviewed the detailed area plan of the Dhaka city and took decision to allow building construction of buildings on water bodies and open spaces by changing the area plan. As it is reported, the committee is ready to approve 19 housing plots and projects that include projects of Bashundhara Housing at Badda, cantonment and Gulshan, Hamid Real Estate and others. Approval for the 19 projects will call for a change in the land use plan mostly from ‘flood flow zone,' ‘water body' and ‘water retention area' to ‘urban residential zone' or ‘institutional zone.' (New Age, June 9, 2014)

Guarding the Black holes

We have another ‘famous' adviser Dr. Towfiq Elahi Chowdhury, who had been energy secretary for many years, played a crucial role in facilitating entry of multinationals in energy sector, protecting their interest including non-payment of compensation for blowout in Magurchara and Tengratila. He has been one of the key players behind privatization of power and energy sector in favour of multinational capital and few local groups and turning gas and electricity into costly commodity, and increasing subsidy for the corporate interest. Consequences include consistent price rise for the people and its devastating effects on the productive sectors of the economy.

After making power sector a lucrative field for few and a constant pain for the majority people, we are hearing about the government's efforts and commitments at ‘prioritising' the sector. It is true that huge amount of public money has already been spent in this sector, government borrowed money at unprecedented level, that the allocation in the sector in terms of money has been increased, subsidy has been skyrocketing. But where has this money gone?

Simple answer is: to the black holes. What are these black holes? Rental and quick-rental power plants, the multinationals, vested interest groups, lobbyists and commission agents. Wrong policy and corruption are draining out a major portion of the public money.

Strengthening mineral resources division, building national capacity for increasing power generation, efficient mix of renewable and non renewable energy resources, expanding exploration and extraction activities by the national organisations are the minimum requirements to ensure energy security. But the policy has been the opposite. Therefore no money was available for doing most important things. The model asks for borrowing and spending more money to create more burdens!

In the apparent anarchy, inefficiency, indecision or sometimes abrupt decisions, careful scrutiny may find a well organized roadmap for the sector. The roadmap is to turn power and energy sector an open space for big business –local and global, at the cost of people, environment and the national economy. Erosion of national authority over its own resources and continuous price rise of gas, electricity and oil has really been a success of that roadmap. All these three ex-bureaucrats deserve high credit for this success against people!

I conclude by citing a letter from Davison Budhoo, a senior economist with the International Monetary Fund (IMF) for more than 12 years. He received his degree from the London School of Economics and joined the staff of the World Bank in 1966 and later shifted to the IMF, where he was responsible for designing and implementing Structural Adjustment Programmes for different countries, the same we have been experiencing for few decades. In his 100-plus pages open letter to Michel Camdessus, managing director of the IMF, titled "Enough is Enough" he said, “ Today I resigned from the staff of the International Monetary Fund after over 12 years, and after 1000 days of official Fund work in the field, hawking your medicine and your bag of tricks to governments and peoples in Latin America and the Caribbean and Africa. To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving people”. ( http://www.thirdworldtraveler.com/IMF_WB/Budhoo_IMF.html )

We know very well that other blood soaked hands still remain active!

Anu Muhammad is Professor of Economics, Jahangirnagar University, Dhaka, Bangladesh Email: [email protected]

 

 




 

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