ADB and Epira
| DIE HARD III |
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| Herman Tiu Laurel |
A lot of hype and drumbeating for the Asian Development Bank (ADB) meet is in the air this week, but we must remember that this is still a financial institution set up by the Western powers to control and exploit the direction of economic development in Asia even if it is delegated for the US’ surrogate in the region — Japan.
Highlighting the ADB’s exploitative role is the Electric Power Industry Reform Act (Epira), passed under duress from the Western multilateral financial institutions, i.e., the International Monetary Fund (IMF), the World Bank (WB) and the ADB — which all made the passage of the power privatization law a condition for the release of loans. The ADB released the second tranche of its Power Sector Restructuring loan of $400 million upon the signing of the Epira — a law that is now causing the sucking sound we hear on the Philippines’ financial and economic resources, transferring massive wealth to foreign financial predators and local comprador oligarchs.
Nations and governments do not need these multilateral financial agencies if they want truly sovereign, independent and progressive growth. Although China is now a prominent and powerful member of the ADB, it didn’t rely on the lending institution to build up the foundations of its economy and national development.
When Mao Zedong established the People’s Republic of China in 1949, the ADB still hadn’t been born. Yet even at that time, China was able to extend Official Development Assistance (ODA) loans to its ideologically-kindred countries the world over.
The ADB was only established in 1966 as an extension of the IMF-WB network. These multilateral financial agencies can be helpful to a nation only when that nation clearly knows what financial commitments are really in its interests and is capable of obtaining the just and beneficial terms, where privatization of public utilities, which is never beneficial to any nation and its people, is not included.
The Epira was a historic debacle for the Philippines, making the country the economic basket case of Asia. It destroyed productive industries; dashed employment generation hopes; and spread the kind of poverty that was recently highlighted in CNN’s reportage on “pagpag,” where people were seen eating and even selling food from garbage bins of fast food restaurants and hotels.
From the “leftover” debt the power privatization program has placed on the shoulders of the Filipino people, we can already see how much has been siphoned out thanks to the Epira: The power sector debt of P1 trillion still has to be paid to Independent Power Producers (IPPs) and creditors after more than a decade.
The profits carted away by the IPPs are humongous. Mirant, which sold off its Philippine IPP operations five years after it started in 2001, is estimated to have carted out $10 billion in profits. Then, in the IPP’s transfer to Marubeni and Tepco, the global banks and investment houses earned a huge sum again in securitizing and financing the deal. Now, after five years, the same thing is to be repeated.
An alternative to the IMF-WB-ADB that developing nations may look forward to is the recently announced banking concept that was a fruit of the last meeting of the quintet of emerging world and regional economic powers (Brazil, Russia, India, China and South Africa). The Brics bank, a brainchild of the new alliance in its New Delhi meet, naturally elicited knee-jerk reactions from the IMF-WB.
WB Chief Robert Zoellick, for one, dismissed the idea perfunctorily as difficult to implement, unnecessary, and rivaling Western-dominated banks, only to reverse himself three days later, probably realizing the futility of his condescending attitude.
The Brics bank will be a reality a few years from today, and it will signal the end of Western and Japanese domination of the global financial and credit system. It will allow an alternative for developing nations to run to for development assistance without the usual onerous terms.
Some quarters make a big deal of the ADB being located in the Philippines. These quarters claim that the country benefits economically from the expenditures of the lender in the country. And in the case of the ADB’s conference here in Manila, the spending for its 4,000 participants is being touted as a great boon.
The fact is, no matter where the ADB is located, it would still do the same thing — extend exploitative instead of genuinely developmental credit to developing countries.
The kind of economics these “ADB-philes” pursue is the same type we saw during the IMF meeting in the Philippines in 1976 that caused a mushrooming of hotels that subsequently should have boosted tourism but never did in the 40 years that followed — because hotels are a wrong infrastructure for a developing nation like ours.
Truly, there is no durable and long-term benefit from such evanescent “junket” economics. Genuine development requires us to first be sovereign to build national “hard industries,” which have all been junked today.
ADB Chief Haruhiko Kuroda announced a $12-billion Special Drawing Rights (SDRs), or money created out of thin air, to be lent out to “Asia’s Poorest;” but in exchange for what? Invariably, it will be in exchange for one form of economic subservience of the debtor countries: Privatization; opening up of markets; opening up to genetically modified organisms (GMOs), large scale mining, etc.
With SDRs created out of thin air, they will have nations turn over their physical, material, tangible, and operational assets to foreign corporations. Ultimately, as we have seen in this country, the chances are that loan recipient countries will become poorer and poorer, salvageable only if militantly pro-people and nationalist governments take over — as we are learning from Latin America these days, where privatized state assets, such as Spain’s Repsol Oil in Argentina and Red Electrica Plc. in Bolivia, are being restored through nationalization, allowing people to recover just living standards.
(Tune in to 1098AM, dwAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on “Tampakan anti-large scale mining updates;” visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives).
Source: The Daily Tribune
URL: http://www.tribuneonline.org/commentary/20120504com5.html
