Far-reaching strategic debate is underway about how to respond to the global financial crisis, and indeed how the North's problems can be tied into a broader critique of capitalism.

At minimum, the ongoing chaos offers new ideological space and material justifications for African finance ministries to re-impose exchange controls and re-regulate finance, and to find sources of hard currency not connected to the Bretton Woods Institutions or Western donors.

The 2008 world financial meltdown has its roots in the neoliberal export-model (dominant in Africa since the Berg Report and onset of structural adjustment during the early 1980s) and even more deeply, in thirty-five years of world capitalist stagnation/volatility. As South Centre director (and Ugandan political economist) Yash Tandon put it: ‘The first lesson, surely, is that contrary to mainstream thinking, the market does not have a self-corrective mechanism.‘ Such disequilibration means that Africa receives sometimes too much and often too little in the way of financial flows, and the inexorable result during periods of turbulence is intensely amplified uneven development. Africa has always suffered a disproportionate share of pressure from the world economy, especially in the sphere of debt and financial outflows. But for those African countries that made themselves excessively vulnerable to global financial flows during the neoliberal era, the meltdown had a severe, adverse impact.

In Africa’s largest national economy, for example, South African finance minister Trevor Manuel had presided over steady erosion of exchange controls (with 26 consecutive relaxations from 1995-2008, according to the Reserve Bank) and the emergence of a massive current account deficit: nine percent in 2008, the second worst in the world. The latter was in large part due to a steady outflow of profits and dividends to corporations formerly based at the Johannesburg Stock Exchange but which re-listed in Britain, the USA or Australia during the 1990s (Anglo American, DeBeers, Old Mutual, Didata, Mondi, Liberty Life, BHP Billiton). In the second week of October 2008, South Africa’s stock market crashed 10 percent (on the worst day, shares worth $35 billion went up in smoke) and the currency declined by nine percent, while the second week witnessed a further 10 percent crash. The speculative real estate market had already begun a decline that might yet reach those of other hard-hit property sectors like the US, Denmark and Ireland, because South Africa’s early 2000s housing price rise far outstripped even these casino markets (200 percent from 1997-2004, compared to 60 percent in the US).

On the other hand, the cost of market failure could at least be offset, somewhat, by ideological advance. The main gains so far were in delegitimating the economic liberalisation philosophy adopted during the 1994-2008 governments of Nelson Mandela and Thabo Mbeki (presided over by Manuel). Indeed Mbeki’s dramatic September 2008 departure occurred partly because of substantially worsened inequality and unemployment since 1994, which in turn was responsible for thousands of social protests each year. When a solidarity letter Manuel wrote, resigning from Mbeki’s government on its second-last day, was released to the press (by Mbeki)) on 23 September, the stock and currency markets imposed a $6 billion punishment within an hour. The crash required incoming caretaker president Kgalema Motlanthe to immediately reappoint Manuel with great fanfare.

In the same spirit, Mbeki’s replacement as ruling party president, Jacob Zuma, had visited Davos and paid tribute to Merrill Lynch and Citibank in 2007-08 (ironically the latter two institutions insisted on having their jitters calmed). Zuma assured international financiers that Manuel’s economic policy would not change. Hence the opening of ideological space to contest neoliberalism in practice became a crucial struggle for the trade unions and SA Communist Party, which in mid-October held an Alliance Economic Summit that suggested Manuel make only marginal shifts at the edges of neoliberalism.

However, as the financial meltdown unfolded in the US and Europe, the merits of South Africa’s residual capital controls became clearer. As SA deputy trade minister Rob Davies wrote approvingly in the main Communist journal: ‘Interestingly, The Business Times of 21 September attributed this [safety from contagion] partly to “exchange control”’ which meant ‘there is a healthy degree of trapped liquidity within the financial system.’ Another factor was that many exotic financial products had been banned. As a leading official of the central bank, Brian Kahn, explained:

‘The interbank market is functioning normally and the Reserve Bank has not had to make any special liquidity provision. We have a relatively sophisticated and well-developed banking sector, and the question then is, what has saved us? (This may be tempting fate, so perhaps I should say what has saved us so far?) This all raises the old question whether or not exchange controls work. The conventional wisdom is that they do not, particularly when you need them to work. We seem to have been exception to this rule. It turns out that we were protected to some extent by prudent regulation by the Bank regulators, but more importantly, and perhaps ironically, from controls on capital movements of banks. Despite strong pressure to liberalise exchange controls completely, the Treasury has adopted a policy of gradual relaxation over the years. Controls on non-residents were lifted completely in 1996, but controls on residents, including banks and other institutions, were lifted gradually, mainly through raising limits over time. With respect to banks, there are restrictions in terms of the exchange control act, on the types of assets or asset classes they may get involved in (cross-border). These include leveraged products and certain hedging and derivative instruments. For example banks cannot hedge transactions that are not SA linked. Effectively it meant that our banks could not get involved in the toxic assets floating that others were scrambling into. They would have needed exchange control approval which would not have been granted, as they did not satisfy certain criteria. The regulators were often criticised for being behind the times, while others have argued that they don’t understand the products, but it seems there may be advantages to that! Our banks are finding it more difficult to access foreign funds and we have seen some spikes in overnight foreign exchange rates at times. But generally everything seems ‘normal’ on the banking front… Our insurance companies and institutional investors were also protected to some extent, in that there is a prudential limit on how much they can invest abroad (15 per cent of assets), and the regulator in this instance (the Financial Services Board) places constraints on the types of finds or products they can invest in. (Generally it appears that exotics are excluded). One large South Africa institution, Old Mutual, moved its primary listing to the UK a few years back (when controls were relaxed), and the plc has had fairly significant exposure in the US.’

Demands for deeper exchange controls were made by the South African Communist Party (SACP). And as Riaz Tayob of Third World Network points out, Manuel has been terribly irresponsible in pushing further financial services deregulation through the World Trade Organization (WTO).

As for the rest of Africa, similar opportunities to contest financial system orthodoxy now arise. At this stage, it is practically impossible for staff from the most powerful external force in African economic policy, the International Monetary Fund (IMF), to advise elites with any credibility. The IMF’s October 2006 Global Financial Stability Report, after all, claimed that global bankers had shown ‘resilience through several market corrections, with exceptionally low market volatility.’ Moreover, global economic growth ‘continued to become more balanced, providing a broad underpinning for financial markets.’ Because financial markets always price risk correctly, according to IMF dogma, investors could relax: ‘[D]efault risk in the financial and insurance sectors remains relatively low, and credit derivatives markets do not indicate any particular financial stability concerns.’ The derivatives and in particular mortgage-backed securities ‘have been developed and successfully implemented in U.S. and U.K. markets. They allow global investors to obtain broader credit exposures, while targeting their desired risk-reward trade-off.’ As for the rise of credit default swaps (the $56 trillion house of cards bringing down one bank after the other), the IMF was not worried, because ‘the widening of the credit default swaps spreads [i.e. the pricing in of higher risk] across mature markets was gradual and mild, and spreads remain near historic lows.’

Fast forward to the April 2008 launch of the IMF’s ‘Regional Economic Outlook for Sub-Saharan Africa’ study. IMF Africa staffer John Wakeman-Linn’s powerpoint slideshow, ‘Private Capital Flows to Sub-Saharan Africa: Financial Globalization’s Final Frontier?’, concluded that the vast rush of finance is generally good for Africa, but policies would have to be changed – making Africa more vulnerable to the international financial system – in order to take full advantage:

• More transparency and consistency: exchange controls in sub-Saharan Africa complex and difficult to implement.
• Gradual and well-sequenced liberalisation strategy can help limit risks associated with capital inflows.
• Accelerated liberalisation in the face of large inflows may help their monitoring (e.g. Tanzania); selective liberalisation of outflows may help relieve inflation and appreciation pressures, but further work needed on modalities.

The IMF proclaimed the merits of liberalisation and rising financial flows to Africa, especially portfolio funding (i.e., short-term hot money in the forms of stocks, shares and securities issued by companies and government in local currencies but readily convertible). Such ‘hot money’ - speculative positions by private-sector investors – flowed especially into South Africa’s stock exchange, and also to a lesser extent into share markets in Ghana, Kenya, Gabon, Togo, and Seychelles.

However, financial outflows continue apace. An updated report on capital flight by Leonce Ndikumana of the Economic Commission for Africa and James Boyce of the University of Massachusetts shows that thanks to corruption and the demise of most African countries’ exchange controls, the estimated capital flight from 40 sub-Saharan African countries from 1970-2004 was at least $420 billion (in 2004 dollars). The external debt owed by the same countries in 2004 was $227 billion. Using an imputed interest rate to calculate the real impact of flight capital, the accumulated stock rises to $607 billion. According to Ndikumana and Boyce:

‘Adding to the irony of SSA’s position as net creditor is the fact that a substantial fraction of the money that flowed out of the country as capital flight appears to have come to the subcontinent via external borrowing. Part of the proceeds of loans to African governments from official creditors and private banks has been diverted into private pockets – and foreign bank accounts – via bribes, kickbacks, contracts awarded to political cronies at inflated prices, and outright theft. Some African rulers, like Congo’s Mobutu and Nigeria’s Sani Abacha, became famous for such abuses. This phenomenon was not limited to a few rogue regimes. Statistical analysis suggests that across the subcontinent the sheer scale of debt-fueled capital flight has been staggering. For every dollar in external loans to Africa in the 1970-2004 period, roughly 60 cents left as capital flight in the same year. The close year-to-year correlation between flows of borrowing and capital flight suggests that large sums of money entered and exited the region through a financial “revolving door”.’

Where did this leave African debtors in 2008? According to the IMF, the ‘debt sustainability outlook’ of low-income African countries ‘has improved substantially, with 21 out of 34 countries classified on the basis of the Debt Sustainability Framework at a low or moderate risk of debt distress at end-2007.’ Yet the major lesson from the prior quarter-century of debt distress was not the abstract ratios, but instead, the ability to pay the debt in the context of pressing human needs. It was here, according to London-based Jubilee Research, that the Bretton Woods institutions had not accurately assessed the damage done by debt, or the injustice associated with repaying debt inherited from prior undemocratic governments:

‘Current [mid-2008] approaches to debt relief (HIPC and MDRI for poor countries, and Paris and London Club renegotiations for middle income countries) are not solving the problems of Third World indebtedness. HIPC and MDRI are reducing debt burdens but only for a small range of countries and after long delays, and at a high cost in terms of loss of policy space. While non-HIPC poor countries continue to have major debt problems and middle-income country indebtedness continues to grow. The present approach is marred by the involvement of creditors as judge, prosecution and jury in direct conflict with natural justice and by the failure to take into account either the human rights of the people of debtor nations or the moral obscenity of odious debt. It is all too little and too late… Even after the debt relief already granted under HIPC and MDRI, 47 countries need 100% debt cancellation on this basis and a further 34 to 58 need partial cancellation, amounting to $334 to $501 billion in net present value terms, if they are to get to a point where debt service does not seriously affect basic human rights.’

Hence the system of debt peonage remains, and the only prospect for its relief is the weakening of Washington’s power, along with the overhauling of the aid system that is so closely connected to debt (for the richest set of recommendations, see Yash Tandon's work). The Accra Agenda for Action (AAA) conference in September 2008 provided an opportunity to address the problems of donor/financier cross-conditionality, ‘phantom aid’ (including tied aid), corruption, waste, economic distortions and political manipulation, as well as to add the South’s demand for repayment of the North’s ecological debt to the South. But the opportunity was lost, and even mild-mannered NGOs realised they were wasting their time, as a staffer at Civicus, Nastasya Tay, revealed:

‘A colleague from a major international NGO gave an excellent summary of the whole High Level Forum process: “Why should I attend interminably long meetings, to passionately lobby for reform, when countries like the US and Japan are refusing to sign on because of some “language issues” with the AAA? In the end, we will have worked incredibly hard to, if we’re lucky, change a few words. And it’s just another document”.’

Hence, for some African countries, the solution lies in an alternative source of hard currency finance. It is not only China who provides condition-free loans to several of Africa’s most authoritarian regimes. More hopefully, Venezuela is considering a proposal to replace and displace the IMF, as happened in Argentina in 2006, in which case repaying the IMF early or even defaulting would be feasible. In other African countries, progressive social movements have argued for debt repudiation and are concerned about any further financial inflows beyond those required for trade financing of essential inputs. This would also entail inward-oriented light industrialisation oriented to basic needs (and not to luxury goods, a major problem that emerged in Africa’s settler colonial economies during the 1960s-70s).

The crucial ingredient for establishing an alternative African financing strategy from the Left is pressure from below. This means the strengthening, coordination and increased militancy of two kinds of civil society: those forces devoted to the debt relief cause, which have often come from what might be termed an excessively polite, civilised society based in internationally-linked NGOs which rarely if ever used ‘tree shaking’ in order to do ‘jam making’ and; those forces which react via short-term ‘IMF Riots’ against the system, in a manner best understood as uncivilised society. The IMF riots that shook African countries during the 1980s-90s often, unfortunately, rose up in fury and even shook loose some governments’ hold on power. When these, however, contributed to the fall of Kenneth Kaunda in Zambia (one of many examples), the man who replaced him as president in 1991, former trade unionist Frederick Chiluba, imposed even more decisive IMF policies. Most anti-IMF protest simply could not be sustained.

In contrast, the former organisations are increasingly networked, especially in the wake of 2005 activities associated with the Global Call to Action Against Poverty (GCAP), which generated (failed) strategies to support the Millennium Developmental Goals partly through white-headband consciousness raising, through appealing to national African elites and through joining a naïve appeal to the G8 Gleneagles meeting. Since then, networks tightened and became more substantive through two Nairobi events: the January 2007 World Social Forum and August 2008 launch of Jubilee South’s Africa network. These networks could return to the cul-de-sac of GCAP’s ‘reformist reforms’ – i.e., to recall Andre Gorz’s phrase, making demands squarely within the logic of the existing neoliberal system and its geopolitical power relations, in a manner that disempowers activists if they gain slight marginal changes.

Or they could embark upon ‘non-reformist reform’ challenges, by identifying sites where the logic of finance can be turned upside down. The most striking case might have been the South African ‘bond boycott’ campaign of the early 1990s, wherein activists in dozens of townships offered each other solidarity when collective refusal to repay housing mortgage bonds was the only logical reaction. This forewarned the 1995-96 ‘El Barzón’ (‘the yoke’) strategy of more than a million Mexicans who were in debt when interest rates soared from 14 to 120 percent over a few days in early 1995: they simply said, ‘can’t pay, won’t pay’. That slogan was also heard in Argentina in early 2002, following the evictions of four presidents in a single week due to popular protest. The ongoing pressure from below compelled the government to default on $140 billion in foreign debt so as to maintain some of the social wage, the largest such default in history.

At the time of writing, a November 2008 summit was called by the G8 in New York, to refashion the world’s financial architecture, likely adding China, India, Brazil and South Africa for legitimacy (and access to substantial dollar reserves). Activists began contemplating whether to ‘Seattle’ the event (shut it down with protest); African social movements and a few patriotic African trade ministers were, after all, not only present but instrumental in preventing the World Trade Organization’s Seattle summit from proceeding nine years earlier. A serious danger for civil society would be to settle for a UN-sponsored event full of reformist reforms. Enormous damage to Southern finances was caused by the 2002 precedent set in Monterrey at the UN Financing for Development conference, which had as key UN advisors Michel Camdessus (former IMF managing director) and Trevor Manuel.

Instead, much more forthright national action can be taken, spurred by far-seeing civil society activists, such as those who demand reparations for apartheid, colonialism, slavery and ‘ecological debt’ owed by the North to the South. Africa needs to re-impose national exchange controls and import controls (especially on luxury goods for the elites), as installed successfully by Malaysia, Chile and Venezuela in recent years.

As commodity prices plunge from their 2002-07 speculation-driven bubble prices, as trade deals with the North are unveiled as clearly disadvantageous and as trade finance becomes difficult as a result of bank mistrust of counterparty debt, and as the hot money portfolio flows dry up and new sources open for hard currency, the argument for what Samir Amin calls ‘delinking’ and Walden Bello terms ‘deglobalisation’ becomes all the more compelling. The evidence above suggests it is already beginning to happen, in no small part thanks to civil society advocacy.

* Patrick Bond is professor at the University of KwaZulu-Natal School of Development Studies where he directs the .
* Please send comments to [email protected] or comment online at http://www.pambazuka.org/

The past week has been a wild roller-coaster ride down the troughs of capitalism and up the peaks of radical social activism. Glancing around the world from those peaks, we can see quite a way further than usual.

First, look to Wall Street where Monday's stock market crash was worse than any since the terrorist attacks of September 11 2001, and where one investment bank after the other faces ruin or bale-out – three of the USA’s five largest flushed down the toilet.

Fourteen years ago, these same New York financiers put extreme pressure on Nelson Mandela’s new African National Congress government (a time I worked in his reconstruction and development program ministry and saw first hand). Mandela was defeated by neoliberal strategies - nicknamed ‘Freedom next Time’ and ‘Shock Doctrine’ by John Pilger and Naomi Klein, respectively, in their excellent South Africa chapters in recent books.

In response to the recent extract from William Gumede's book "Thabo Mbeki and the Battle for the Soul of the ANC" published by Zed Books (http://zedbooks.co.uk), Patrick Bond suggests that there is a need to go beyond the individual reasons and look at the structural forces that have informed Mbeki's AIDS policy such as international and domestic financial markets, pharmaceutical manufacturers and a large reserve army of labour.

With millions of South Africans dying early because of AIDS, the battle against the disease would become one of the most crucial tests of the post-apartheid government. Its systematic failure to address AIDS, and especially its ongoing sabotage of medicinal treatment for HIV+ patients, led to periodic charges of ‘genocide’ by authoritative figures such as the heads of the Medical Research Council (Malegapuru William Makgoba), SA Medical Association (Kgosi Letlape), and Pan Africanist Congress health desk (Costa Gazi), as well as leading public intellectual Sipho Seepe.

Aside from Mbeki, Pretoria’s main saboteurs were health minister Manto Tshabalala-Msimang and trade minister Erwin; the latter two were accused by the Treatment Action Campaign (TAC) of culpable homicide during a March 2003 civil disobedience campaign. Even in the weeks before the 2004 election, Mbeki and Tshabalala-Msimang continued to practice denialism, obfuscation, delays, bureaucratic manoeuvres, and withdrawal of resources for treatment. Educational campaigns like LoveLife’s were based upon fatuous marketing to hip-hop youth, and there was virtually nothing done to combat domestic violence, rape, multiple partners and patriarchy. Across Africa more generally, the ‘ABCs’ of abstinence, being loyal and condoms were particularly ineffectual within the confines of male-dominated marriage, leading to the tragedy that young women’s infection rate was twice as high as that of men.[1]

A great deal has been written about Pretoria’s malfeasance.[2] The point of revisiting it here while documenting South Africa’s elite transition is to provide a structural explanation for the crisis. Beyond the oft-cited peculiarities of the president himself, there are three deeper reasons why local and global power relationships mean that the battle against AIDS has to date mainly been lost.[3]

One reason is the pressure exerted by international and domestic financial markets to keep Pretoria’s state budget deficit to three per cent of GDP. Recall the telling remark of the late Parks Mankahlana, Mbeki’s main spokesperson, who in March 2000 justified to Science magazine why the government refused to provide relatively inexpensive antiretrovirals (ARVs) like Nevirapine to pregnant, HIV-positive women: ‘That mother is going to die and that HIV-negative child will be an orphan. That child must be brought up. Who is going to bring the child up? It’s the state, the state. That’s resources, you see.’[4] Instead of saving lives, Mbeki’s finance ministry adopted higher priorities: slashing corporate taxes, redeploying state resources to purchase high-tech arms, and repaying roughly $25 billion of apartheid-era foreign debt and a bit more in apartheid domestic debt, which could have been declared ‘odious’ in legal terms. Local and international bankers generally approved such examples of fiscal laxity, in contrast to expanding state health spending and other social budgets, which they have explicitly not supported.

The second structural reason is the residual power of pharmaceutical manufacturers to defend their rights to ‘intellectual property’, i.e. monopoly patents on life-saving medicines. This pressure did not end in April 2001 when the Pharmaceutical Manufacturers Association withdrew their notorious lawsuit against the South African Medicines Act of 1997. That Act allows for parallel import or local production, via ‘compulsory licences’, of generic substitutes for brand-name antiretroviral medicines. Big Pharma’s power was felt in the debate over essential drugs for public health emergencies at the November 2001 Doha World Trade Organisation summit, and ever since.

The third structural reason for the ongoing HIV/AIDS holocaust in South Africa is the vast size of the reserve army of labour, for this feature of capitalism allows companies to replace sick workers with desperate, unemployed people instead of providing them with treatment. The latter point deserves elaboration, simply because so many lives are at immediate risk, and so much evidence has mounted that corporate South Africa’s preferred approach has been, in essence, mass murder by denial of medical benefits.

This was the initial conclusion reached after a year of study at Africa’s largest company, Anglo American Corporation. Anglo has 160,000 employees, of whom 21 per cent are estimated to be HIV-positive. Once Big Pharma appeared to retreat from its lawsuit, the company announced that it would provide antiretroviral medicines to its workforce, which meant literally tens of thousands of lives might be saved in the short term. But in June 2001, the Financial Times reported on Anglo’s ‘plans to make special payments to miners suffering from HIV/AIDS, on condition they take voluntary retirement.’ However, in addition to bribing workers to go home and die, Anglo told the Financial Times, ‘treatment of employees with antiretrovirals can be cheaper than the costs incurred by leaving them untreated.’ In August, Anglo’s vice president for medicine, Brian Brink, bragged in Business Day about a ‘strategy [which] involved offering wellness programmes, including access to antiretroviral treatment.’ According to that report, ‘The company believed that the cost of its programmes would eventually be outweighed by the benefits its received in gradual gains in productivity, [Brink] concluded. Although it was indeed a risky strategy, it was the only one Anglo could pursue in the face of such human suffering.’

Then in October 2001, Anglo simply retracted its promise, once cost-benefit analysis showed that 146,000 workers just weren’t worth saving. According to the Financial Times, Brink ‘said the company’s 14,000 senior staff would receive antiretroviral treatment as part of their medical insurance, but that the provision of drug treatment for lower income employees was too expensive.’ Brink explained the criteria for the fatal analysis: ‘[Antiretrovirals] could save on absenteeism and improved productivity. The saving you achieve can be substantial, but we really don’t know how it will stack up. We feel that the cost will be greater than the saving.’ As the Wall Street Journal recorded:
‘In a controversial move that could have wide ramifications for how companies in poor countries handle AIDS, mining giant Anglo American PLC has put on hold a feasibility study to provide AIDS drugs to its African work force, according to people familiar with the situation. When it disclosed its plans for the study a year ago, Anglo garnered wide praise because it was one of the first major corporations to reveal measures aimed at treating AIDS cases among its rank and file African employees.’[5]

A few months later Anglo changed its mind once again, as AIDS ravaged the middle layer of the workforce, and the multi-class TAC raised consciousness sufficiently high as to get trades union support for members’ treatment. Indeed, in the cases of both Anglo and Coca Cola, the other factor that appeared in 2002 was the spectre of consumer protest over the firms’ refusal to treat employees. I was reliably informed by insiders that for Anglo, the prospect of demonstrators at the August 2002 World Summit on Sustainable Development dragging up many other bits of dirty laundry intimidated the company’s executives into taking pre-emptive action on the AIDS front. Coke’s main bottler in South Africa had also failed to insure two-thirds of its 4,000-strong workforce at a sufficient level to allow the HIV-positive workers access to ARVs, and was subject to international protest over African AIDS policies.

However, even though the costs of HIV/AIDS - absenteeism, declining productivity, payouts for early death - soared to as high as 25 per cent of payroll by 2003, according to the Financial Times, most employers are still hesitant to provide ARVs:

‘Untreated, HIV typically takes four to five years to manifest itself as full-blown AIDS, and companies are reluctant to pay for a risk that they cannot see… Persuading managers to part with fees [AIDS treatment programmes] today for costs that will hit company earnings years down the line has been a hard sell.’[6]

In sum, no matter the effectiveness of activism against government, Big Pharma and the corporate employers, all three structural factors are still deterrents to the provision of treatment. By late 2003, each was slightly mitigated, however, and that led to an ostensible change of policy by Pretoria. The budget deficit was projected to climb from just over one per cent of GDP during the early 2000s to nearly three per cent in 2004-05, allowing extra leeway for AIDS spending. Pharmacorps were cooperating more closely with the World Health Organisation, the Global Fund, the Clinton Foundation and governments to lower prices for Africa. Canada’s former prime minister Jean Chretien - spurred by the dynamic, outspoken UN advisor Stephen Lewis - even introduced path-breaking legislation to promote generics (although a sabotage clause was later included in the draft law to support patent rights, in turn attracting a new round of solidarity protests). And employers began waking up, in part because of the dramatic rise of AIDS-related disability claims as a percentage of all disability claims, from 18 per cent in 2001 to 31 per cent in 2002.

These factors converged in a November 2003 cabinet statement, finally endorsing a roll-out of antiretrovirals. Pretoria cited factors which included:

‘a fall in the prices of drugs over the past two years…new medicines and international and local experience in managing the utilisation of ARVs… [sufficient] health workers and scientists with skills and understanding… and the availability of fiscal resources to expand social expenditure in general, as a consequence of the prudent macro economic policies pursued by government.’

However, these factors were minor compared to intensive activist pressure, which Pretoria did not dare mention lest it encourage further protests. TAC’s victory statement was explicit: ‘The combination of the Constitutional Court decision on mother to child transmission prevention, the Stand Up for Our Lives march [of 15,000 people on parliament] in February, the civil disobedience campaign and the international protests around the world have convinced Cabinet to develop and implement an ARV roll-out plan.’

Another factor, of course, was the 2004 presidential election, which Mbeki would win easily but which would be characterised by high levels of apathy and no-vote campaigning by the Landless Peoples Movement. An AC Nielsen survey in November 2003 confirmed that Mbeki’s AIDS policy was hurting the chances of the ruling African National Congress of turning out the vote. The cabinet statement promised that ‘within a year, there will be at least one service point in every health district across the country and, within five years, one service point in every local municipality.’ In addition to medicines, the state would provide an education and community mobilisation programme, promotion of good nutrition and traditional health treatments such as herbal remedies, support for families affected by HIV and AIDS, and funds for upgrading health infrastructure. The health system was already massively overextended, with far too few essential medicines, much less ARVs, available in South Africa’s under-funded rural clinics.

As TAC was the first to concede, ARV availability could generate negative unintended consequences. One would be non-compliance with treatment regimes by poor people, and the concomitant emergence of drug-resistant strains. Another would be the black market smuggling of cheap drugs to Europe and North America which would reduce access in Africa. Another would be that, although stigmatisation would decline given the availability of hope-giving drugs, so too might the practice of safe sex. These would remain major challenges to TAC and other health-sector groups, although the Khayelitsha operation of Médecins Sans Frontières was already proving high levels of treatment compliance.

Moreover, the conflict between neo-liberalism and life, so explicit in the case of access to AIDS medicines, was severely compounded by patriarchy, traditional and modern sexual practices such as multiple partners for men, and domestic violence against women. Rape continued at scandalous levels.

But the primary contradiction involved the regime in Pretoria. In February 2004, TAC attacked President Thabo Mbeki in the wake of more government prevarication on AIDS treatment.[7] Claiming that Mbeki ‘misrepresented facts and once again caused confusion on HIV/AIDS’ on national television, TAC’s Zackie Achmat accused him of ‘denialism.’ Moreover, Pretoria had originally promised to distribute AIDS medicines to at least 50,000 people within a year, and to reach everyone in need of treatment within five years. Tshabalala-Msimang blamed slow drug procurement – Pretoria’s own fault – and the lack of qualified health personnel. TAC strategist Mark Heywood commented, ‘Many hospitals have the capacity, they just don’t have the medicines.’ The finance ministry also cut the budget dramatically for medicine purchases in February 2004.

At the same time, Tshabalala-Msimang suggested that while HIV-positive people waited for medicines, a diet of lemons, beetroot, (extremely expensive), olive oil and garlic would improve the body’s immune system. A week earlier, the minister had come under fire by the SA Medical Association, whose chairperson Dr Kgosi Letlape accused her of ‘dividing the profession when we have gone to great lengths to unite it.’ The minister unsuccessfully attempted to halt a protest march of 2,000 medics against poor conditions in public health facilities by implying that the demonstrating doctors were white, whereas black medics supported the government.

Mbeki continued supporting his minister, no matter how outrageous this became. He told the SA Broadcasting Corporation on 8 February 2004 that the major problem was inaccurate mortality statistics, which made it impossible to know whether AIDS was as fatal as claimed. According to Mbeki, his doctors informed him that diabetes is also an epidemic, and he questioned why no-one talks about diabetes. Achmat replied:

‘Drugs for treating diabetes are heavily overpriced; there should be a campaign for their reduction. But unlike HIV until November 2003, diabetes is treated in the public health sector. However, the President should be aware that according to an initial investigation into the burden of disease estimates in South Africa released in 2003 by the Medical Research Council, AIDS was responsible for 39 per cent of lost life-years in 2000 - more than the next 10 worst diseases. Diabetes is the 12th worst disease and is responsible for slightly more than one per cent of lost life-years. The two diseases are incomparable in scale.’

Achmat also ridiculed Mbeki’s claim that ‘few countries can hold a candle to South Africa’s HIV/AIDS programme.’ Achmat replied:

‘A number of developing countries do much better than South Africa when it comes to HIV prevention and treatment, often with far fewer resources. Currently, South Africa treats approximately 1,500 people in its public sector, who are not on drug trials, paying for their own medicines or being sponsored. By contrast, Brazil’s government treats over 100,000 people and has less than a quarter of South Africa’s HIV infections. Botswana is treating approximately 15,000 and Cameroon approximately 7,000 people.’

In March 2004 the need to harass Pretoria to ensure roll-out was confirmed again, when TAC was forced to threaten an urgent court interdict in order to permit the urgent acquisition of antiretroviral medicines consistent with the November 2003 cabinet decision. Tshabalala-Msimang was sufficiently threatened by yet more embarrassing court proceedings that she finally agreed, just before a deadline provided by TAC lawyers. TAC declared victory, though remarked that ‘by implementing the interim procurement mechanism and thereby avoiding a three-month delay of the treatment programme, approximately 6,000 excess deaths could be avoided.’ [8]

What is the way forward, given persistent presidential denial, state bureaucratic sabotage, and structural factors that mitigate against access to treatment? One major stumbling block would probably emerge in subsequent months and years: the nature of political alliances within South African politics. TAC had been effective in attracting support from the most forward-looking trades unions, the SA Communist Party, churches, NGO activists and technical supporters (lawyers, health workers, academics, journalists). Yet these alliances did not stray far from the ANC. Would TAC forge sufficient linkages to non-ANC communities, especially those devoted to building the new independent left? In coming years, would the myriad of problems that cause opportunistic infections, especially dirty water and air (thanks to coal/wood/paraffin), also be addressed? At a time that the South African government was disconnecting water and electricity at a lethal rate, alongside evictions for those who could not afford expensive rental and mortgage bond payments, the need to address the links between AIDS and the diseases of poverty/homelessness was obvious.

Moreover, would TAC and its allies make the case that access to ARVs is a human right and that people should not pay user-fees or partial cost-recovery for the medicines? By 2004 they were taking this position, but only in the event that people were too poor to pay for medicines. Yet means-testing of black South Africans with irregular informal incomes is notoriously difficult. In contrast, a more explicit ‘free lifeline’ strategy would parallel the demands of the water and electricity campaigners.

Nevertheless, whether or not TAC continues to tackle the three structural impediments to ARV access – neo-liberal fiscal policy, pharmacorps and corporate control of health perks - the immediate victory of November 2003 will potentially make a huge difference. For the half million South Africans who are symptomatic with AIDS or who have a CD4 blood count less than 200, there was suddenly hope. Across the world, for three million people who die each year of AIDS, and for 40 million others infected, the treatment activists and their international allies deserve a standing ovation.

* Patrick Bond directs the Centre for Civil Society at the University of KwaZulu-Natal in Durban. This article is an extract from his book 'Elite Transition: From Apartheid to Neoliberalism in South Africa'.

**Please send comments to or comment online at www.pambazuka.org

For additional notes, please follow this link:

http://www.pambazuka.org/images/articles/359/47087finger.jpgAs the world waits to see what will happen in Zimbabwe, Patrick Bond argues that lessons should be taught and retaught about the dangers of elite transition between a voracious, corrupt, violent and divisive set of rulers, and an incoming crew who might not withstand the blandishments of local power-sharing and global economic seduction.

Zimbabwe's March 29 election surprised many, because although it seemed President Robert Mugabe had the machinery in place to ensure a victory even by stealth, as has happened before, the groundswell of opposition was overwhelming. By late on April 3, we don't know how many votes he won, either in reality or in the cooked books of the Zimbabwe Electoral Commission (ZEC), but certainly fewer than 50%.

What is known, at this writing, is that a bare plurality of the 210 seats in the House of Assembly were won by Morgan Tsvangirai's Movement for Democratic Change: 99. This was two ahead of Mugabe's Zanu-PF, with Arthur Mutambara's MDC faction getting 10 and the independent Jonathan Moyo retaining his seat. (Three more seats will be fought for in by-elections due to the deaths of MDC candidates.)

But these are official statistics, and who knows what the actual votes were, once the multiple systems of rigging are exposed, if ever they are?

As for the presidential race – for which at this time no figures have been released by the ZEC - Tsvangirai says that based on polling place reportbacks, he received 1,171,079 votes, or about 49%, with Mugabe getting 44% and Makoni the balance. (Mutambara told his supporters to vote for Makoni.)

Senate and municipal election results are also not being released as we write. In any case, the official parliamentary results are so distorted that on Thursday morning the state-owned Herald newspaper claimed, “Zanu-PF had won 45,94 percent of the votes, MDC-Tsvangirai 42,88 percent, the MDC [Mutambaraba] 8,39 percent and the minor parties and independent candidates 2,79 percent.” The Herald even claimed Zanu-PF outpolled Tsvangirai's MDC in Matabeleland South.

Though Zanu-PF has definitely lost control of parliament, such numbers justify Mugabe potentially contesting a run-off, which would be held no more than 21 days after March 29. Tsvangirai and former finance Minister Simba Makoni had a pre-election pact to unite in such an event, and it is hard to imagine that if the pact holds, Tsvangirai would not beat Mugabe outright, one on one.

Makoni, who ran solo for president with no machine behind him, never gained the open public support of key military factions and of dissident Zanu-PF politicians that his main handler, Ibbo Mandaza, had predicted.

Makoni's arrogance in entering the race – probably drawing away roughly the same votes from each main party – was again witnessed this morning. His advisor, former Mugabe spokersperson Godfrey Chanetsa, now insists that in a new government in alliance with Tsvangirai, Makoni would not “play second fiddle. He came to lead.”

As reporter Fiona Forde put it, “frantic behind-the-scenes negotiations were laying the groundwork for a government of national unity that would include not only the opposition MDC but also Zanu-PF with Makoni taking on a senior role with extended executive powers.”

Here's Chanetsa's strange rationale: "Eight percent is an illusion. Many people were afraid to vote for Simba, afraid of letting Zanu in the back door and losing their chance of getting rid of Robert. But if they got rid of Robert, do you still think they would see Morgan as the right man for the job?"

Meanwhile, an ominous dance began between Tsvangirai and the forces of imperialism. According to a Reuters report today, the MDC would gain access to US$2 billion per year in 'aid and development' – which normally is top-heavy with foreign debt and chock-full of conditions. Amongst these, most likely, are dramatic cuts to the civil services, so that the Zimbabwe central bank stops printing so much money, fuelling inflation. But the downside is the potential deepening of the country's economic crisis in the short term, as effective demand falls while more luxury goods become available thanks to foreign exchange inflows.

The key players are the International Monetary Fund, World Bank, European Union and the United Nations. No doubt Bush's White House is also involved in negotiations, which, if Tsvangirai persuades Mugabe to depart, may even reach fruition next week at the IMF/Bank spring meetings in Washington.

Given that Tsvangirai has chosen advisors from the International Republican Institute and Cato Institute, such a process was anticipated. It simply means that the left-leaning civil society forces that backed Tsvangirai have a huge regroupment challenge. If after an April 21 victory, many progressive Zimbabwean organisations lose cadres into an expanded state, this may recall the liquidation of South Africa's Mass Democratic Movement into the African National Congress government.

At least in Kenya, reports from Tuesday's street battles between hundreds of protesters and police show that civil society will not necessarily accept a 'supersized state' as a gimmick to seduce contesting parties into a government of national unity. “No more than 24!” was the activists' demand for a slim state so that more social spending can be spent on ordinary people, not the bloated ministers' Mercedes.

In the same critical spirit, Kenya's National Civil society Congress and Kenyans for Peace with Truth and Justice offered wisdom and solidarity in a statement today. Amongst their concerns, were “That SADC should review their statement that concluded that elections were free and fair while closing their ears to the significance of the undemocratic practices of the Zanu-PF regime.”

Between Kenya's tragic election last December and Zimbabwe's uplifting experience last Saturday, lessons should be taught and retaught about the dangers of elite transition between a voracious, corrupt, violent and divisive set of rulers, and an incoming crew who might not withstand the blandishments of local power-sharing and global economic seduction.

*Professor Patrick Bond is the Director of the Durban based Centre for Civil Society.

**Please send comments to or comment online at www.pambazuka.org

Patrick Bond asks the question: With Jacob Zuma's election, shall we see a significant change in South African neoliberal policies?

Congratulations are due Jacob Zuma – apparently far more Machiavellian than even his arch-opponent since 2005, Thabo Mbeki – and the tireless band of warriors from the Congress of SA Trade Unions, SA Communist Party and African National Congress Youth League who kept his political life support on when everyone else declared him dead.

But after his election as ANC president on Tuesday, the disintegration of his voting bloc is not far off. As Brian Ashley of Amandla magazine explains, Zuma commands “a broad coalition of disgruntled elements within the ANC. A period of political instability awaits. The 'dreaded' two centres of power have materialised and given rise to a lame duck President.”

This is promising indeed, after 13.5 years of unrelenting neoliberalism mixed with triumphalist nationalism (often, in turn, flavoured with 'Breshnevite Marxism', as the ANC's left discourses have been termed in rare moments of autocritique). Indeed amongst the general public, there is a widespread conviction that a new balance of forces within the ANC presages a genuine left policy turn. To make this impression more palatable to bourgeois society and those near-mythical foreign investors, a seductive – yet incorrect - line of analysis also arises now to explain the logic behind Zuma's landslide victory. The first period of ANC rule (1994-2001) required 'macroeconomic stabilisation', so the argument goes, and subsequently a 'developmental state' with a strong welfarist bias has been under construction. Hence Zuma's victory will not change anything, really.

Actually, Zuma's huge (nearly 20%) margin reflected not a heroic new ruler, but rather a ruling regime out of touch with the misery experienced by its mass base, no one denies. The SA Police recently revealed that the rate of social protests has risen from 5800 in 2004-05 (when it would have been the world's highest per person, I reckon) to more than 10 000/year since, and no doubt even higher numbers will be released for 2007/08 given the long public workers' strike.

Zuma wasn't an instigator of more than a few of these, such as when disgracefully in May 2006 he let his rape trial devolve into an orgy of misogyny, with effigies of his victim burned outside the courthouse. No, indeed, the grassroots protests were largely against the ANC's neoliberal economic policies, prior to and after Zuma's firing as deputy president in mid-2005 in the wake of his friend Schabir Shaik's conviction on corruption charges.

Zuma was subsequently harrassed no end by Mbeki's vindictive state. This meant that at the ANC conference and in the words of commentators, the angry rumble from below was readily channeled away from structural critique of neoliberal nationalist rule, and into the song Umshini Wami ('Bring me my machine gun'). The prodigious venality of the Zuma-Mbeki squabble threw copious amounts of toxic dust high into the air, blinding most to what's really at stake here: class struggle, to borrow a worn but potent phrase.

Indeed the tone of the internecine battle with Mbeki was sufficiently vicious as to require cries of 'unity' immediately from both camps immediately afterwards, as well as from Zuma's speech on Thursday afternoon. But like much that happens in this party, the lovely rhetoric concealed yet more brutal power plays.

The other major ANC vote – for 80 positions on the ANC National Executive Committee – confirmed that the Zuma majority took no prisoners, leaving Mbeki's most trusted allies in the political wilderness. Although six cabinet ministers were elected in the top 20, those who lost their NEC places and are now ANC outsiders include some formidable names: Deputy President Phumzile Mlambo-Ngcuka (who replaced Zuma), Mbeki's top state official Frank Chikane, his top political advisor and hatchet man (and Minister in the Presidency) Essop Pahad, Intelligence Minister Ronnie Kasrils, the man who served as ANC chairperson until Monday, Terror Lekota, the head of the Mbeki's office at ANC headquarters Smuts Ngonyama, and Safety and Security Minister Charles Nqkula (formerly SACP chairperson).

The top vote-getter was veteran and often flamboyant populist Winnie Madikizela-Mandela (ex-wife of Nelson), who gets counted out as irrelevant by the mainstream media periodically and makes comebacks worthy of the Zuma camp.

There really has been a change of the guard. But is it a move left? SACP intellectual leader Jeremy Cronin - who was #5 in the ANC vote – offers this spin about the party's ideological direction. The ANC conference just complete witnessed a “deepening and consolidation” of the progressive trajectory already underway, says Cronin. Hence under a President Zuma, “There would be no dramatic U-turn” on matters already under contestation: Pretoria's tight monetary policy, chaotic credit market regulation, and the liberalised trade and industrial policies which have killed a million jobs. For those like Cronin, the recent revival of the “National Democratic Revolution” is already undermining the neoliberal bloc within the ANC.

Is it? In reality, many on the centre-left – Cronin too - have been rather lukewarm about the Zuma campaign, because as national deputy president starting in 1999, Zuma was nowhere visible with workers and the poor (or women, needless to say) pulling against Mbeki and the other weighty neoliberals: Trevor Manuel (finance), Alec Erwin (trade/privatisation), Tito Mboweni (central bank governor), Geraldine Fraser-Moleketi (public service) and Sydney Mufamadi (local government). Of these, only Manuel retained an NEC seat, voted in at #57 after having been #1 in the 2002 vote.

In his first speech to the ANC as its president, Zuma himself intoned that there was “no reason why the business or international community or any other sector should be uneasy.” Quite so; after all, a mealy-mouthed Zuma made this clear last month in closed-door meetings organised by officials of two New York banks, Citi and Merrill Lynch, which are themselves making the world markets rather uneasy with their financial shenanigans.

Still, even Manuel, in a Mail & Guardian interview last week, condemned the private outsourcing of state services, something he himself has promoted harder than anyone since 1996 as keeper of the ever-tightening SA fiscus, notwithstanding that this 'New Public Management' technique is the root cause of many a fierce protest. Bizarrely, Manuel even endorsed the core legal argument put forward by the Soweto left-left in constitutional case earlier this month against Johannesburg Water (whose policies were products of Paris-based Suez's eco-social engineering during a failed 2001-06 outsourcing), namely, that the key water problem for the poor is the inordinate access that rich people enjoy at a too-cheap price.

With such rhetoric in the air these last few days, South African society does indeed feel like a 'post-Washington' semi-liberated zone. Free marketeers, who still run many a Pretoria ministry's policy units and finance departments, have had to hunker down.

But like so much other 'talk left walk right' activity here, that's precisely where the problem of seduction emerges, in illusions that Zuma's long and winding road to the country's presidency in 2009 (when Mbeki must retire) will generate conditions for social change along the route. We all witnessed how most of the US progressive movement fell flat on its face in 1993, suckered by Bill 'Slick Willy' Clinton – whose defeat of an elite incumbent (George Bush Sr), rural roots, home-boy humility, traditions of Southern patriarchy (and promiscuity) and apparent empathy for ordinary people presaged Zuma's own character flaws – and I think this is probably going to be the fate of a large portion
of the SA centre-left.

South Africa's left-left forces don't buy it, though. No one from the new social movements believes that a small increase in anti-poverty grants and other social wage improvements – amounting to less than 3% of GDP over apartheid-era stats – represents more than tokenistic welfare. With a 14% increase in electricity prices set for next year, and privatisation of 30% of generation capacity also on the cards, any suggestion of expanding basic services runs up against a contrary, commodified logic.

And then looking at the vast ($60 billion) spending planned for what amounts to a small herd of white elephants – 2010 soccer stadiums, big dams largely for mining houses, dicey nuclear power plants, aluminum smelter co-investments, speedy trains for the rich (who won't use public transport) and the rearmaments craze replete with corrupting German, French and British weapons dealers – it is hard to see anything 'developmental' about this crony-capitalist state.

Because of this week's momentous events, though, the centre-left's hard reality check lies a couple of years away, after Zuma takes power (if he is not in prison for bribe-taking, a distinct possibility, according to the National Prosecuting Authority in a statement on Thursday) and reverts to his militarist roots. Those who are championing his cause now may have reason in 2009 to renew their disgust at what we thought was 'Mbekism' – as Ashwin Desai has termed local neoliberalism - but can soon be renamed Zumism. We could well see the deepening of macroeconomic policies that do not deliver 'stability' (the currency has crashed four times since 1996 after all) but instead one of the world's highest current account deficits (trade shortfalls and financial outflows) at 8% of GDP, and hence repeated hikes in interest rates to draw in global financial assets, which are in turn making the credit-saturated middle-class scream in pain.

Unless I'm mistaken (and I really hope I am), there's simply no basis for believing Zuma is lying to Citi, Merrill or his audience when he says none of Mbeki's economic policies will change. So the root cause of the rebellion against Mbeki's malgovernance of the ANC – which is described too often as haughty style but which is grounded in a commitment to a haughty new class apartheid socio-economic structure – will reassert itself within weeks or months.

Only then will South Africa enjoy the possibility of a fully liberatory, post-Mbeki set of politics, not personalities, as the far-sighted left-left makes common cause with serious comrades in labour and the Communist Party, egged on no doubt by increasingly angry feminists and other democrats. This week's Polokwane theatrics will be looked back upon as a bit of distraction, at that stage in the making of South Africa's real history.

* Patrick Bond directs the Centre for Civil Society at the University of KwaZulu-Natal:

* Please send comments to [email protected] or comment online at www.pambazuka.org

Patrick Bond assesses the aftermath of the World Social Forum, held from January 20-25 in Nairobi. There were some triumphs for social justice, but also some worrying trends that emerged from the forum. Bond examines what it means for the future of the WSF concept.

A mixed message - combining celebration and autocritique - is in order, in the wake of the Nairobi World Social Forum. From January 20-25, the 60,000 registered participants heard the triumph of radical rhetoric and yet, too, witnessed persistent defeats for social justice causes - especially within the WSF's own processes.

* Kenya Social Forum coordinator Onyango Oloo listed grievances that local activists put high atop the agenda: 'colonial era land edicts and policies which dispossessed their communities; the impact of mining and extraction activities on the environment and human livelihoods; discriminatory policies by successive governments that have guaranteed the stubborn survival of pre-colonial conditions of poverty and underdevelopment among many pastoralist and minority communities; the arrogant disregard for the concerns raised by Samburu women raped over the years by British soldiers dispatched on military exercises in those Kenyan communities; … and tensions persisting with neo-colonial-era settler farmers and indigenous Kenyan comprador businessmen in hiving off thousands of hectares of land while the pastoralists and minority communities are targets of state terror, evictions and denunciations.'

* WSF organiser Wahu Kaara: 'We are watching [global elites] and this time around they will not get away with it because we are saying they should cancel debts or we repudiate them. We refuse unjust trade. We are not going to take aid with conditionality. We in Africa refuse to be the continent identified as poor. We have hope and determination and everything to offer to the prosperity of the human race.'

* Firoze Manji, the Kenyan director of the Pambazuka (www.pambazuka.org) Africa news/analysis portal: 'This event had all the features of a trade fair - those with greater wealth had more events in the calendar, larger (and more comfortable) spaces, more propaganda - and therefore a larger voice. Thus the usual gaggle of quasi-donor and international NGOs claimed a greater presence than national organisations - not because what they had to say was more important or more relevant to the theme of the WSF, but because, essentially, they had greater budgets at their command.'

* Nairobi-based commentator Tajudeen Abdul-Raheem (also writing in Pambazuka): 'The WSFs show up Africa's weaknesses whether they are held outside or inside Africa. One of the critical areas is our level of participation and preparedness. A majority of the African participants - even many from Kenya itself - were brought by foreign paymasters or organisations funded by outsiders. Often they become prisoners of their sponsors. They must attend events organized or supported by their sponsors who need to put their "partners" on display, and the "partners" in turn need to show their loyalty to their masters.'

* New Internationalist editor Adam Ma'anit: 'The sight of Oxfam-branded 4x4s cruising around flauntingly, the many well-resourced charity and church groups decking out their stalls (and even their own office spaces) with glossies and branded goodies, all reinforce the suspicion that perhaps the WSF has become too institutionalized. Perhaps more worryingly has been the corporate sponsorship of the WSF. The Forum organizers proudly announced their partnership with Kenya Airways. The same company that has for years allegedly denied the right to assembly of its workers organized under the Aviation and Allied Workers Union.'

* Blogger Sokari Ekine ('Black Looks') on the final WSF event: 'Kasha, a Lesbian-Gay-Bisexual-Transgender and Intersex activist from Sexual Minorities Uganda, went up to the stage and asked to make a statement. She was asked for a copy of what she would be speaking about and gave them her piece. The organisers threw her piece on the floor and refused to allow her to speak. Kasha stood her ground saying she, like everyone else, had a right to speak here at the WSF. Despite the harassment by the MC and organisers, Kasha took the mic and spoke. She spoke about being a lesbian, about being a homosexual. She refuted the myth that homosexuality was un-African. She spoke about the punishment and criminalisation of homosexuals in Kenya, in Uganda, and in Nigeria. She said homosexuals in Africa were here to stay. Homosexuals have the same rights as everyone else and should be accepted and finally that even in Africa Another World is Possible for Homosexuals. Kasha was booed and the crowd shouted obscenities at her waving their hands screaming: "No! No! No!" But she persisted and said what needed to be said.'

These sobering observations were reflected in a statement by the Social Movements Assembly at a January 24 rally of more than 2000: 'We denounce tendencies towards commercialisation, privatisation and militarisation of the WSF space. Hundreds of our sisters and brothers who welcomed us to Nairobi have been excluded because of high costs of participation. We are also deeply concerned about the presence of organisations working against the rights of women, marginalised people, and against sexual rights and diversity, in contradiction to the WSF Charter of Principles.' (http://kenya.indymedia.org/news/2007/01/531.php)

Conflicts included arrests of a dozen low-income people who wanted to get into the event; protests to forcibly open the gates; and the destruction of the notoriously repressive Kenyan interior minister's makeshift restaurant which had monopolized key space within the Kasarani stadium's grounds.

Soweto activist Trevor Ngwane was a protest leader, but after the first successful break-in by poor Kenyans, reported stiff resistance: 'The next day we again planned to storm the gates but found police and army reinforcements at the gates. Those officers carried very big guns. Comrades decided to block the main road until the people were allowed in for free. This action took about half an hour and then the gates were opened. The crowd than marched to the Organising Committee's offices to demand a change of policy on the question of entrance. Another demand was added: free water inside the WSF precinct and cheaper food.'

Although that demand was not met, Oloo gracefully confessed the 'shame' of progressive Kenyans during the Social Movements Assembly rally. WSF logistical shortcomings reflected the Kenyan Left's lost struggles within the host committee, he said. The interior minister ('the crusher') snuck in at the last second, and the Kenya Airports Authority systematically diverted incoming visitors to hotels, away from home stays (2000 of which were arranged - only 18 actually materialized thanks to diversions).

Setting these flaws aside, consider a deeper political tension. For Oloo, 'These social movements, including dozens in Kenya, want to see the WSF being transformed into a space for organizing and mobilizing against the nefarious forces of international finance capital, neoliberalism and all its local neo-colonial and comprador collaborators.'

Can and should the 'openspace' concept be upgraded into something more coherent, either for mobilizing around special events (for instance, the June 2-8 summit of the G8 in Rostock, Germany) or establishing a bigger, universalist left-internationalist political project?

In South Africa, the Centre for Civil Society (CCS) has hosted several debates on this question, with at least four varying points of view emerging. Last July, for example, the great political economist Samir Amin presented the 'Bamako Appeal', a January 2006 manifesto which originated at the prior WSF polycentric event, and which combined, as Amin put it, the traditions of socialism, anti-racism/colonialism, and (national) development (http://www.forumtiersmonde.net/fren/forums/fsm/fsm_bamako/appel_bamako_e...).

In support was the leader of the Organisation of African Trade Union Unity, Hassan Sunmonu (also a WSF International Council member). Complaining that 'billions of ideas have been generated since 2001 up till the last Forum', Sunmonu found 'a lot of merit in that Bamako Appeal that we can use to transform the lives of ourselves, our organizations and our peoples.'

But reacting strongly against the Bamako Appeal, CCS student (and Johannesburg anti-privatization activist) Prishani Naidoo and three comrades criticized its 'last century' tone and content, which mirrored 'the mutation of the WSF from an arena of encounter for local social movements into an organized network of experts, academics and NGO practitioners.'

For Naidoo, 'It reassures us that documents like the Bamako Appeal will eventually prove totally irrelevant and inessential to struggles of communities in South Africa as elsewhere. Indeed, the WSF elite's cold institutional and technicist soup, occasionally warmed up by some hints of tired poeticism, can provide little nourishment for local subjectivities whose daily responses to neoliberalism face more urgent needs to turn everyday survival into sustained confrontations with an increasingly repressive state.'

In contrast, Nauvoo and the others, praise the 'powerful undercurrent of informality in the West’s proceedings [which] reveals the persistence of horizontal communication between movements, which is not based on mystical views of the revolutionary subject, or in the official discourse of the leaders, but in the life strategies of their participants.'

A third position on WSF politics is the classical socialist, party-building approach favoured by Ngwee and other revolutionary organizers. Ngwee fretted, on the one hand, about reformist projects that 'make us blind to recognize the struggles of ordinary people.' On the other hand, though, 'I think militancy alone at the local level and community level will not in itself answer questions of class and questions of power.' For that a self-conscious socialist cadre is needed, and the WSF is a critical site to transcend local political upsurges.

A fourth position, which I personally support, seeks the 21st century's anti-capitalist 'manifesto' in the existing social, labour and environmental movements that are already engaged in excellent transnational social justice struggle. The WSF's greatest potential - so far unrealized - is the possibility of linking dozens of radical movements in various sectors.

Instead, at each WSF the activists seem to disappear into their own workshops: silos with few or no interconnections. Before a Bamako Appeal or any other manifesto is parachuted into the WSF, we owe it to those activists to compile their existing grievances, analyses, strategies and tactics. Sometimes these are simple demands, but often they are also articulated as sectoral manifestos, like the very strong African Water Network of anti-privatisation militants from 40 countries formed in Nairobi (http://www.ipsterraviva.net/tv/nairobi/en/viewstory.asp?idnews=838).

These four positions are reflected in a new book released at the Nairobi WSF by the New Delhi-based Institute for Critical Action: Centre in Movement (CACIM) and CCS. The book, free to download at contains some older attempts at left internationalism, such as the Communist Manifesto (1848) and the Bandung Communiqué of the Asian-African Conference (1955), as well as the 'Call of Social Movements' at the second and third Porto Alegre WSF, the 2005 Porto Alegre Manifesto by the male-heavy Group of Nineteen, and the Bamako Appeal with sixteen critical replies.

There are also selections on global political party formations by Amin, analysis of the global labour movement by Peter Waterman, the Women's Global Charter for Humanity, and some old and newer Zapatista declarations. Jai Sen and Madhuresh Kumar of CACIM have worked hard to pull these ideas into 500 pages.

Lest too much energy is paid to these political scuffles at the expense of ongoing struggle, we might give the last word to Ngwane, who reported on his Nairobi debate with WSF founder Chico Whitaker at a CACIM/CCS workshop: 'Ordinary working class and poor people need and create and have a movement of resistance and struggle. They also need and create and have spaces for that movement to breathe and develop. The real question is what place will the WSF have in that reality. What space will there be for ordinary working class and poor people? Who will shape and drive and control the movement? Will it be a movement of NGO's and individual luminaries creating space for themselves to speak of their concern for the poor? Will it be undermined by collaboration with capitalist forces? I think what some of us saw happening in Nairobi posed some of these questions sharply and challenged some of the answers coming from many (but not all) of the prominent NGO's and luminaries in the WSF.'

* Patrick Bond directs the Centre for Civil Society: http://www.zmag.org/sustainers/content/2007-02/01bond.cfm and is reproduced here with the permission of the author.

* Please send comments to [email protected] or comment online at www.pambazuka.org

The South African government is channeling Africa’s largest-ever industrial subsidies into the Coega industrial zone complex and port, located in the country’s fourth largest city, the Nelson Mandela Metropole (better known by its apartheid-era name, Port Elizabeth). Government proponents say Coega represents sound industrial and development policy, but a growing legion of critics are labeling it a corporate welfare boondoggle in a country that does not have resources to spare.

Aside from tailor-made infrastructure, including a 20 meter deep port, the key attraction of Coega for foreign investors is super-cheap energy. Following a year of frequent brownouts in the two largest metropolitan areas, Johannesburg and Cape Town, a fierce debate has erupted over the idea of providing discounted electricity to industrial users when citizens cannot get a dependable supply at any price. Mismanagement of the state electricity company, Eskom, in the course of its corporatization has interfered with a steady supply.

The main beneficiary of Coega's cheap energy, the Canadian firm Alcan, agreed in early December to a quarter-century power supply agreement from Eskom -- the world’s fourth-largest power company -- at an extremely generous price, less than the $0.02 cents per hour that bulk industrial consumers pay. This is already the world’s cheapest electricity, but Alcan insisted on the subsidy due to volatile commodity prices, a factor that has caused consternation in prior deals the South African government made with large mining houses and metals smelters such as BHP Billiton, the Anglo American group and Mittal Steel.

Alcan and Eskom claim that the deal will bring job creation and foreign exchange earnings, and pay off for the country. Using imported bauxite, Coega’s $3 billion aluminum smelter could by 2014 produce 720,000 tons of the metal annually in one of the world’s biggest smelters. Fewer than 1,000 permanent jobs will be created in the process, however

Coega is one in a long list of post-apartheid megaprojects undertaken by the South African government. These include the Pebble Bed Nuclear Reactors (one of the first global deployments of a new nuclear energy technology that purports to offer new safety guarantees), the Lesotho Highlands Water Project (six vast dams under construction) which supplies Johannesburg its water [see "Making the Earth Rumble," Multinational Monitor, May 1996], and the "Gautrain" elite fast rail network that will link Johannesburg, Pretoria and the country’s largest airport. An impoverished South African majority, increasingly well organized and mobilized, is challenging these megaprojects and demanding instead that state resources be deployed to deliver basic services to the majority, on a more ecologically sustainable basis.

The costs of corporate welfare

Coega’s site will include a new port, container terminal and Industrial Development Zone (IDZ), utilizing vast public investments -- at least $1.5 billion, including a $300 million tax break for Alcan -- and enormous quantities of land, water and electricity. The new employment anticipated at the port/IDZ would be the most expensive, in terms of capital per job, of any major facility in Africa. Environmentally, the costs of the Coega projects in water consumption, air pollution, electricity usage and marine impacts are potentially immense.

The infrastructure under construction is unprecedented in Africa, and dwarfs the basic-needs development infrastructure required by deprived citizens of Mandela Metropole and across the Eastern Cape. Hence controversy has surrounded the decision-making process to construct the port and IDZ. Reports of conflicts of interest for key decision-makers cloud the project’s governance. Coega was also initially meant to represent a key site at which European industrial firms involved in arms sales to South Africa could make “offset” investments that would create jobs, so government could justify to the public its corruption-ridden $6 billion weapons purchase. These so far haven’t been forthcoming.

Socially, there are significant costs as well. Several hundred families were already displaced to build Coega’s infrastructure, and those in the area will bear the brunt of the environmental toll exacted by the project. The opportunity costs of Coega include as many as 10,000 jobs lost in economic sectors which either must close or cannot expand, including the existing salt works, mariculture, fisheries, agriculture and eco-tourism. Most importantly, community and environmental activists point to far better prospects for employment creation and socio-economic progress if resources were used elsewhere. Six years ago, the Mandela Metropole Sustainability Coalition proposed an alternative economic development scenario. The alternative strategy prioritizes basic-needs infrastructure investment throughout the Eastern Cape and, at Coega, the development of state-supported eco-tourism and black-owned small-scale agriculture and mariculture.

Of the many subsidy components of Coega, civic groups find Eskom’s new deal most worrying, given the persistent electricity shortage across South Africa and the problem of mass disconnections of poor people for whom electricity remains too expensive. Using roughly 1,300 MegaWatts, about 3 percent of the country’s total, Coega will constitute an enormous new drain, requiring expensive new transmission lines from Eskom’s coal-fired generators 1,000 kilometers away.

Moreover, South Africa’s carbon dioxide emissions are already running approximately 20 times higher than even the United States on a per capita income basis. Ironically, Environment Minister Martinus van Schalkwyk returned triumphant from the November climate change treaty renegotiations in Nairobi, claiming that "South Africa achieved most of its key objectives." Those included promoting "Clean Development Mechanisms."

By bringing the vast "ghost on the Coast" (the long-empty Coega’s nickname) to life through the new subsidies, the national government will substantially increase carbon emissions. Yet because Alcan promises to use relatively energy efficient technologies, the market-oriented New York-based group Environmental Defense has suggested that Coega be considered worthy of Clean Development Mechanism investments by large international polluters, which would permit them to continue present rates of emissions. In promoting these kinds of investments, Van Schalkvyk says that his government is sending "a clear signal to carbon markets of our common resolve to secure the future of the Kyoto regime." But there are vast problems with the new emissions trading system, and projects such as Coega show why this market should not be expanded in ways that generate new ecological problems without making a dent in overall emissions.

Captive regulation and revolving doors

From the standpoint of meeting basic needs for electricity, South Africa's regulation of Eskom and municipal distributors has not been successful. This is not only because of an extremely weak performance by the initial National Electricity Regulator -- Xolani Mkhwanazi, who subsequently became, tellingly, chief operating officer for BHP Billiton Aluminum Southern Africa -- but also because government policy has increasingly imposed "cost-reflective tariffs," as a 1995 document insisted. The key issue is whether all consumers must cover the costs of the electricity they use, or whether richer and industrial consumers pay higher rates to subsidize the poor.

The 1998 White Paper allowed for "moderately subsidised tariffs" for poor domestic consumers. (White Papers are formal governmental policy statements.) But it also stated, "cross-subsidies should have minimal impact on the price of electricity to consumers in the productive sectors of the economy," meaning industrial users should not subsidize costs for poor residential consumers.

In addition to Mkhwanazi, the man responsible for Eskom’s late-apartheid pricing -- Mick Davis -- left the parastatal’s treasury to become the London-based operating head of Billiton. Davis took the post after former Finance Minister Derek Keys gave permission for an Afrikaner-controlled industrial company (Gencor) to expatriate vast assets in order to buy Billiton from Shell. After apartheid ended, Keys became chief executive of Billiton.

Ironically, the deals that gave Billiton, Anglo American and other huge corporations the world’s lowest electricity prices came under attack in 2005 by Alec Erwin, the minister of public enterprises. The package Davis had given Billiton for smelters north of Durban and in Maputo, Mozambique, during the period when Eskom had extreme overcapacity, resulted in prices that often dropped below $0.01 per kiloWatt hour, when world aluminum prices fell. (Most households pay five times that amount.)

Erwin reportedly insisted on lower "financial-reporting volatility." Because the amount the foreign companies pay for energy changes with the value of the rand, every time the rand changes value by 10 percent, Eskom’s wins or loses $300 million. Erwin said the utility should work to escape from existing contracts. From Billiton’s side, Mkhwanazi replied that any change to the current contracts could be "a bit tricky for us. … We would adopt a pragmatic approach and, who knows, perhaps there will even be some sweeteners in it for us."

But the allegedly new approach was not applied at Coega, where Erwin as trade and industry minister from 1996 to 2004 had led negotiations for a new smelter. According to the chief executive of the parastatal Industrial Development Corporation (IDC), Geoffrey Qhena, "The main issue was the electricity price and that has been resolved. Alcan has put a lot of resources into this, which is why we are confident it will go ahead."

Meanwhile, however, to operate a new smelter at Coega, lubricated by at least 15 percent financing from the IDC, Alcan and other large aluminum firms were in the process of shutting European plants that produce 600,000 metric tonnes between 2006-09, simply "in search of cheaper power," according to industry analysts.

The main Alcan negotiator, 49-year-old Cynthia Carroll of the United States, was recognized for her skill in browbeating South African officials when in late 2006 she was named CEO-designate at Anglo American Corporation. Breaking the longstanding tradition, dating to the era of founder Ernest Oppenheimer, of giving the top job to insider elderly male candidates, Anglo’s offer was seen as a way to better position the firm -- South Africa’s largest even though its financial headquarters since 1999 is in London -- for further international metals deals.

Coal-fired power, climate change and carbon trading

The state’s decision to provide Alcan such vast subsidies at Coega comes amidst rising elite and popular consciousness about climate change problems. For years, global rulers have avoided action on CO2 emissions, as reflected in October in Monterrey, in the wake of the July St.Petersburg summit of the G8 group of rich countries, which ignored climate change. In Monterrey, the G8’s energy ministers were joined by 12 other major polluters, including South Africa, but again, no commitments were made to reduce greenhouse gas emissions.

Three weeks later, however, the British government released The Stern Review: The Economics of Climate Change, which estimates climate change costs of 5-20 percent of global GDP at current warming rates. Former World Bank chief economist Nick Stern calls for demand-reduction of emissions-intensive products (the opposite of Coega), energy efficiency, avoiding deforestation and new low-carbon technology.

The key problem is that Stern and the establishment want many of these improvements to be financed via carbon trading. Likewise, in 2002, Princeton University researcher Nipun Vats and Environmental Defense – through its “Partnership for Climate Action” relationship with French aluminum firm Pechiney (subsequently purchased by Alcan) – promoted Coega as eligible for subsidies under the Clean Development Mechanism. Coega could receive such subsidies if it can show its technology is cleaner than existing aluminum suppliers, and in turn that the energy-savings smelter technology can only be profitably financed through "additional" investment resources using carbon trading mechanisms like the World Bank’s Prototype Carbon Fund.

In November, Alcan said it would proceed with the $2.7 billion aluminum Coega smelter thanks to vast electricity subsidies from Eskom. Within days, University of Cape Town Environmental Studies Professor Richard Fuggle -- the country’s most respected environmentalist -- attacked the increase in CO2 emissions due to Coega in his retirement speech. He described Van Schalkwyk as a "political lightweight" who is "unable to press for environmental considerations to take precedence of “development."

According to Fuggle, "It is rather pathetic that van Schalkwyk has expounded the virtues of South Africa’s 13 small projects to garner carbon credits under the Kyoto Protocol’s CDM, but has not expressed dismay at Eskom selling 1360 megawatts a year of coal-derived electricity to a foreign aluminum company. We already have one of the world’s highest rates of carbon emissions per dollar of GDP. Adding the carbon that will be emitted to supply power to this single factory will make us number one on this dubious league table."

Civil society begins to react

In Mandela Metropole, emerging resistance to Coega’s guzzling of water and power will add to existing popular unrest. In South Africa during 2004-05, the police counted more than 5,800 protests against government, possibly the highest per-person rate in the world. In China, with 1.3 billion people, there were 87,000 mainly rural protests, while South Africa’s population is 45 million.

Thirty years ago, in the wake of the Soweto uprising near Johannesburg, the revitalized anti-apartheid social movements known as civic associations were founded in Port Elizabeth’s impoverished townships, thanks in part to the legacy of black consciousness and community empowerment activist Steve Biko, killed by the city’s police in 1979.

Twenty years later, the assistant city engineer for hydraulics wrote a blunt memo about the prospects for imposing a redistributive tariff to help poor consumers through cross-subsidization, funded by higher prices paid by large industrial users: If such a plan "were to be implemented for industry, Coega would not go ahead."

The redistributive scheme subsequently adopted by the city does not assure low-income citizens basic electricity and water access. In other words, the perceived need to pump cheap water and electricity into Coega industries will likely sabotage government’s objectives of social justice, public health, and economic growth via municipal services.

In all these respects, say critics, the Coega port and IDZ exacerbate the apartheid economic legacy of division, marginalization and grandiose, unworkable public-investment schemes. Such ventures were traditionally grounded not in a logic of development, but instead reflected the power of special interest groups.

Civil society resistance to this sort of maldistribution is already quite advanced, but often takes the form of illegal reconnections after prolific disconnections by municipalities and Eskom. To alter policy decisions, what is needed is a more sustained campaign for radically new industrial policies as well as tough state regulation of emissions. It may be inspired by the case of Coega, which stands out as a beacon of irresponsibility and corporate welfare.

• This article was originally commissioned by
and is reproduced here with kind permission of the author. Patrick Bond is director of the Centre for Civil Society at the University of KwaZulu-Natal in Durban: [email protected] or comment online at www.pambazuka.org

Muhammad Yunus is the founder of Grameen Bank which has promoted microcredit for millions, loans to women too poor to qualify for traditional bank loans. He is the 2006 Nobel Peace Prize for “…efforts to create economic and social development from below.” But there is more hype than substance, says Patrick Bond, behind the claim that micro-credit schemes have been effective in poverty alleviation. There is ample evidence to challenge the claims for the alleged benefits of micro-credit programmes.

What sort of dogmatic free-market ideologue would use poor people’s (often socially-constructed) desire for credit to justify shrinking the already beleaguered welfare policies of wretched Third World states?

Consider this outlandish claim: ‘I believe that “government”, as we know it today, should pull out of most things except for law enforcement and justice, national defense and foreign policy, and let the private sector, a “Grameenized private sector”, a social-consciousness-driven private sector, take over their other functions.’

Grameen is Bangladesh’s ‘barefoot bank’ specializing in group loans to low-income women. And the Vanderbilt University-trained economist who made that statement, Muhammad Yunus (in his autobiography Banker to the Poor), just won the Nobel Peace Prize.

Yunus immediately announced to a Dhaka press conference: ‘Now the war against poverty will be further intensified across the world. It will consolidate the struggle against poverty through microcredit in most of the countries.’

Yet this seemingly benign, three-decade old attempt to foster entrepreneurship amongst impoverished women has attracted intense grassroots – and also professional – criticism.

Not surprisingly, the establishment press loves Yunus, nearly as much as do Bill and Hillary Clinton. The Financial Times made this argument, backed by no evident research: ‘Microfinance has played a central part in Bangladesh's success in reducing poverty by almost 10 percentage points over the past five years, to 40%, a rate that puts Bangladesh on track to meet its Millennium Development Goal of halving poverty by 2015.’ Moreover, ‘Grameen's business model is in rude health.’

The Wall Street Journal profiled Yunus on its front page five years ago: ‘To many, Grameen proves that capitalism can work for the poor as well as the rich,’ having ‘helped inspire an estimated 7,000 so-called microlenders with 25 million poor clients worldwide.’

Yet looking more closely, the Journal’s reporters - including the late Daniel Pearl (senselessly beheaded by Islamic extremists) - conceded the prevalence of Enron-style accounting. A fifth of the bank’s loans in late 2001 were more than a year past-due: ‘Grameen would be showing steep losses if the bank followed the accounting practices recommended by institutions that help finance microlenders through low-interest loans and private investments.’

A typical Grameen gimmick is to reschedule short-term loans that are unpaid after as long as two years, instead of writing them off, letting borrowers accumulate interest through new loans simply to keep alive the fiction of repayments on the old loans.

Not even extreme pressure techniques - such as removing tin roofs from delinquent women’s houses, according to the Journal report - improved repayment rates in the most crucial areas, where Grameen had earlier won its global reputation amongst neoliberals who consider credit and entrepreneurship as prerequisites for development.

By then, even the huckster-filled microfinance industry felt betrayed: ‘Grameen Bank had been at best lax, and more likely at worst, deceptive in reporting its financial performance’, wrote leading microfinance promoter J. D. Von Pischke of the World Bank in reaction to the WSJ revelations. ‘Most of us in the trade probably had long suspected that something was fishy.’

Agreed Ross Croulet of the African Development Bank: ‘I myself have been suspicious for a long time about the true situation of Grameen so often disguised by Dr. Yunus’s global stellar status.’

Several years earlier, Yunus was weaned off the bulk of his international donor support, reportedly $5 million a year, which had until then reduced the interest rate he needed to charge borrowers and still make a profit. Grameen had become ‘sustainable,’ self-financing, with costs to be fully borne by borrowers.

He had also battled backward patriarchal and religious attitudes in Bangladesh, and his hard work extended credit to millions of people. The secret was that poor women were typically arranged in groups of five: two got the first tranche of credit, leaving the other three as ‘chasers’ to pressure repayment, so that they could in turn get the next loans.

But at a time of new competitors, adverse weather conditions (especially the 1998 floods) and a backlash by borrowers who used collective power of nonpayment, Grameen imposed dramatic increases in the price of repaying loans. And it is here that Grameen Bank’s main philosophical position – ‘We consider credit as a human right’ – was reduced merely to an argument for access, not affordability.

In that regard, Yunus is entirely different from all the rights-based social movements which have demanded ‘rights’ in terms of free lifeline access to healthcare, education, housing, land, water, electricity and the like.

‘Microcredit is an almost perfect case of a phenomenon that has come to characterise much of development assistance - a widening gap between reality and propaganda,’ argued microfinance consultant Thomas Dichter in a SA Institute for International Affairs publication, ‘Hype and Hope: The Worrisome State of the Microcredit Movement’: ‘Much of Africa offers an infertile context for borrowing as the only customers available to the poorest are other very poor people. In such infertile economic contexts, the people at the bottom are by definition the ones who “need” credit the most, but can do the least with it.’

Dichter continued, ‘In part because of what has been aptly called “microfinance evangelism”, the prospect of significant returns from microcredit made available to solid enterprises has become less likely. This is because those who can really leverage a small loan are not the poorest or the most destitute… An additional limitation is that many microcredit clients are reduced to “copycat” behaviour, everyone selling the same thing, and more sellers saturating the market as more microcredit is made available. In this sense, expanding microcredit can actually lower incomes.’

What about the impact Yunus has made on his home turf? In Bangladesh, according to Dichter, ‘Microcredit is such a common development intervention that many people borrow from one project to repay another. In that context, even if a woman borrower increases her volume of sales by 100% say from 10 bunches of bananas to 20, she is still limited by her inability to add any value to what she sells, limited by her low skills, and the copycat pattern that almost always prevails at the low end of the informal sector.’

Although criticism of Grameen ‘is still a minority view’ and Yunus performed ‘miracles’ in rolling out credit to the masses, according to Munir Quddus, who chairs the Department of Economics and Finance at the University of Southern Indiana, the hype needs more investigation than apparently was given by the Nobel committee: ‘The very nature of setting up groups leaves out the very poor who would be perceived by fellow members to have no ability to generate income and therefore high risk.’

Quddus continues: ‘Others have pointed out that micro-credit simply deepens the exploitation of the women since the rates of interest charged by the bank in real [after inflation] terms are quite high; consequently, credit often worsens the debt situation and gives the husbands even more leverage.’

Gaining leverage over women – instead of giving them economic liberation - is a familiar accusation. In 1995, New Internationalist magazine probed Yunus about the 16 ‘resolutions’ he required his borrowers to accept, including ‘smaller families’.

When New Internationalist suggested this ‘smacked of population control’, Yunus replied, ‘No, it is very easy to convince people to have fewer children. Now that the women are earners, having more children means losing money.’

In the same spirit of commodifying everything, Yunus set up a relationship with Monsanto to promote biotech and agrochemical products in 1998, which, New Internationalist reported, ‘was cancelled due to public pressure.’

As Sarah Blackstock reported in the same magazine the following year: ‘Away from their homes, husbands and the NGOs that disburse credit to them, the women feel safe to say the unmentionable in Bangladesh – micro-credit isn’t all it’s cracked up to be… What has really sold micro-credit is Yunus’s seductive oratorical skill.’

But that skill, Blackstock explains, allows Yunus and leading imitators ‘to ascribe poverty to a lack of inspiration and depoliticize it by refusing to look at its causes. Micro-credit propagators are always the first to advocate that poor people need to be able to help themselves. The kind of micro-credit they promote isn’t really about gaining control, but ensuring the key beneficiaries of global capitalism aren’t forced to take any responsibility for poverty.’

Though I have never been to Bangladesh and have only discussed these problems with Yunus once (more than a decade ago when he visited Johannesburg), microfinance gimmickry certainly did damage in Southern Africa.

For example, in 1998, when the emerging markets crisis raised interest rates across the Third World, a 7% increase imposed over two weeks as the local currency crashed drove many South African borrowers and their microlenders into bankruptcy.

The highest-profile local proponent of microcredit is First Lady Zanele Mbeki. But her Womens Development Banking project has not only financed rural women, according to the oil company BP, a supporter. It has also made ‘investments in high-growth businesses’ such as Ceasars Gauteng and ‘Siza Water Company, the first privatised water company’ in KwaZulu-Natal – both of which, arguably, are counter-examples of poverty eradication.

Next door in Zimbabwe, a $66 million flood of World Bank financing during the 1980s (in lieu of land reform) revitalised a rural microfinance sector initiated under late 1940s racist Rhodesian rule. The Bank program ultimately reached 94,000 households. But within a decade, the result was a peasant default rate of 80% in the impoverished ‘Communal Areas’ (equivalent to apartheid Bantustans).

Repayment affordability was a huge factor, since a typical lender’s overhead and collection costs represent 15-22% of the amount of a small loan, including incorporation of a 4% default rate. In Zimbabwe, servicing loans of even just a few hundred US dollars represented enormous burdens when, according to one Agriculture Ministry survey in 1989, the average net crop profit per hour of labour was just $0.15.

Michael Drinkwater’s detailed study of central Zimbabwe showed that ‘improving farmers’ access to credit has placed many of them in serious difficulties’ compounded by ‘an overzealous launching of a group credit scheme’ and the ‘doubtful viability of high cost fertiliser packages’ inappropriate for the erratic climate. ‘The increase in credit use means farmers have to market more to stay solvent... At the household level it is commonly debts not profits that are on the rise.’

To address the crisis, in 1991 the World Bank unsuccessfully promoted even more Grameen-style group credit, albeit with the caveat that ‘Zimbabwe’s experience to date with group lending has not been favourable. The organisation of groups is initially expensive and time-intensive’, and ‘major problems have become apparent.’

Not far away, in Lesotho, anthropologist James Ferguson studied a 1975 World Bank report that guided the country’s development strategy: ‘In a “Less Developed Country”, where the cash economy is on such a precarious basis, there must be [according to the Bank] “a conspicuous lack of credit for the purchase of farm inputs,” and it is obvious that “credit will play a critical role in all future major agricultural projects.”’

Rebutted Ferguson, ‘It is never explained exactly why the need for credit is so critical. It is true that most Basotho invest very little in agriculture probably due to their intelligent appreciation of the low potential and high risks of capital intensive farming in Lesotho but this is usually not a matter of being unable to obtain the cash to make such an investment. Most families have access to wage-earnings or remittances, and this money most commonly comes in large lumps which could easily be used for agricultural inputs, but for the most part is not. Yet in the “development” picture, the need for credit is almost an axiom.’

Ugandan political economist Dani Nabudere has also debunked ‘The argument which holds that the rural poor need credit which will enable them to improve their productivity and modernise production.’ For Nabudere, this ‘has to be repudiated for what it is ? a big lie.’

Even from inside the World Bank these lessons were by then obvious. Sababathy Thillairajah reviewed the Bank’s African peasant credit programmes in 1993 and advised colleagues: ‘Leave the people alone. When someone comes and asks you for money, the best favour you can give them is to say “no”... We are all learning at the Bank. Earlier we thought that by bringing in money, financial infrastructure and institutions would be built up ? which did not occur quickly.’

But not long afterwards, Yunus stepped in to help the Bank with ideological support, as it rejuvenated microfinance with a $200 million global line of credit aimed at poor women in August 1995, just prior to the Beijing gender conference.

The global justice movement’s Attac group has an excellent Oslo branch, which last week published a new book, Economic Apartheid. Its members pointed out to me that that Yunus was strongly supported by his friends in the Norwegian ruling class, including a former top finance ministry bureaucrat and leading officials of Telenor, Norway’s phone company. Telenor owns 62% of GrameenPhone, which controls 60% of Bangladesh’s cellphone market.

At a time when the centre-left Norwegian government has a high profile for partially cancelling illegitimate Third World debt and threatening to defund the World Bank, both of which are applauded by local activists, the people who make these decisions were conscious of how important it is for Norway to project the possibility of capitalism with a human face.

The question is whether they looked hard enough at conflicts generated by credit, thus negating the meaning of the Nobel Peace Prize – and not for the first time.

• Patrick Bond is director of the Centre for Civil Society at the University of KwaZulu-Natal. His most recent book is Looting Africa: The Economics of Exploitation, available from Zed Books and UKZN Press.)
• Please send comments to or comment online at www.pambazuka.org/

Patrick Bond argues that the assault against the international civil society has been devastating. He writes that nearly all the major multilateral institutions have been captured by hardliners over the past couple of years. Bond postulates that it is from this standpoint that “…We can understand not only the recent debacles of global governance: the inability to expand the UN Security Council in September 2005; the breakdown of the Doha Round of World Trade Organisation negotiations in July 2006; and the planned shrinkage of Africa’s voting power within the IMF board of governors, from 4% to 2%.”

The World Bank and International Monetary Fund (IMF) annual meetings just completed in Singapore were a disaster for the Third World, especially Africans who face a dramatic decline in voting shares on the IMF board, at the same time a few middle-income countries led by China recapitalise the institutions.

For civil society activists, the official welcome in Singapore may not have matched last week’s brutality by Robert Mugabe against Harare trade union leaders or Durban police against shackdwellers. But it more than confirmed Singapore’s reputation as an intolerant police state:

• the regime simply banned the arrival of dozens of social and environmental activists, including many with official Bank/IMF accreditation;
• others who got to the airport were immediately extradited;
• Singapore even asked neighbouring Indonesia to cancel a citizen’s conference critical of the Bank and IMF, held across the bay from the city-state.

Civil society activists replied with a boycott call. According to a petition by Jubilee South, the World Development Movement, Greenpeace, Friends of the Earth International, Oil Watch International and several other groups, ‘Knowing full well the authoritarian character of the Singaporean Government, the Bank and IMF appear to have picked Singapore as the site because they wanted to avoid legitimate and peaceful street protests.’

True, but consider the broader context for the assault on institutions of international civil society. Nearly all the major multilateral institutions have been captured by hardliners over the past couple of years:

• the European Union chose Spanish neoconservative Rodrigo Rato as IMF managing director in mid-2004;
• the new head of UNICEF, chosen in January 2005, was George Bush’s agriculture minister Ann Veneman, although the US and Somalia are the only two out of 191 countries which refused to ratify the United Nations Convention on the Rights of the Child;
• for another key UN post in February 2005, the outgoing head of the World Trade Organisation, Supachai Panitchpakdi from Thailand (who mainly served US and EU interests from 2003-05), was chosen to lead the United Nations Conference on Trade and Development;
• Paul Wolfowitz was appointed by Bush to head the World Bank in March 2005;
• the European Union’s trade negotiator Pascal Lamy won the directorship of the World Trade Organisation a few weeks after that; and
• to ensure that Washington’s directives to Kofi Annan continued to be as explicit as possible, Bush appointed John Bolton as US Ambassador to the UN.

Bolton is illustrative, for he was never confirmed by the US Congress since Bush gave him the job during a mid-2005 recess. As the once-powerful, pro-apartheid former US senator Jesse Helms put it, he is ‘the kind of man with whom I would want to stand at Armageddon.’

Coming from the State Department, Bolton’s main function beginning in 2001 when Bush captured the White House, was to disempower the UN. He also engineered Washington’s withdrawal from or weakening of the anti-ballistic missile treaty, a biological weapons convention protocal, the Organisation for the Prohibition of Chemical Weapons, the nuclear test ban treaty, the UN conference on the illicit trade in small arms and light weapons, and the International Criminal Court.

It is in this context that we can understand not only the recent debacles of global governance: the inability to expand the UN Security Council in September 2005; the breakdown of the Doha Round of World Trade Organisation negotiations in July 2006; and the planned shrinkage of Africa’s voting power within the IMF board of governors, from 4% to 2%.

In addition, at a time of fusion between ‘neoliberalism’ (promoting US/EU corporate and especially financial interests) and ‘neoconservativism’ (promoting US petromilitary profits and religious-extremist values) as the dominant bloc in global geopolitics, we must concede the utter futility of reform proposals being advanced by some in civil society, along with some governments, like Thabo Mbeki’s.

The neolib-neocon fusion is personified by Wolfowitz, close ally of the exceptionally corrupt, brutal Indonesian dictator Suharto during the 1980s and more recently, as deputy Pentagon leader, architect of and apologist for imperial theft and US corporate patronage associated with the illegal Iraq War.

Since January this year, Wolfowitz’s Bank has a new self-declared mission: to stem project graft, whose historical costs to the 62-year old institution are conservatively estimated at $100 billion. Wolfowitz is getting plenty of press ink for his anti-corruption plan by asking its contractors and staff to declare their knowledge of backhanders. If so, an amnesty will be granted and they won’t be prosecuted.

Patricia Adams from the Toronto NGO Probe International condemns Wolfowitz’s strategy because it ‘immunises bribers from debarment, allows the Bank to cover-up its own negligence or complicity, and undermines the administration of justice in countries where it is a criminal offence to bribe a foreign official.’

Lesotho is a good example, because the Maseru government is standing up to the ‘dirty dozen’ corrupt firms and consortiums which bribed top Highlands Development Authority officials – including one now in jail, and another in charge of water for the New Partnership for Africa’s Development.

After a key US Senator, Richard Lugar, supported Lesotho, the Bank finally began some limited debarment in 2004. Pretoria is yet to follow suit (perhaps because some local giants like LTA and Concor were implicated, which would throw off 2010 infrastucture construction timing.)

Civil society groups are used to the runaround. In the case of the Bank’s ill-fated 1998-2001 World Commission on Dams (WCD), chairperson Kader Asmal despaired at the follow-up findings of the (2002-03) World Panel on Financing Infrastructure, led by former IMF Managing Director Michel Camdessus. Asmal wrote: ‘For an esteemed panel to effectively write off the WCD, whose core recommendations have been endorsed by many of its member organisations, is quite remarkable and raises concerns about the value of the report. Failing to address this point effectively takes us back many years.’

Remarked activist Patrick McCully of International Rivers Network, ‘The World Bank’s singularly negative and non-committal response to the WCD Report means that the Bank will no longer be accepted as an honest broker in any further multi-stakeholder dialogues.’

Moreover, ubiquitous Bank/IMF Poverty Reduction Strategy Papers (1999-present) also proved to be a dead end, according to dozens of cases considered carefully by civil society and academic researchers.

Likewise, the (1999-2003) Structural Adjustment Participatory Review Initiative (Sapri) failed when Bank staff walked out of the process near its conclusion. Commented Richard Peet, author of a major book on the Bretton Woods Instituitons, ‘the President of the World Bank did not listen to Sapri, because he could not. For he would hear, and he even might learn, that his finest, most splendid ideas had produced the worst, most harmful effects.’

The crucial Extractive Industries Review (EIR) was similarly constructed as a multi-stakeholder project (2002-04). But the Bank was not serious about tackling problems caused by the mineral, petroleum and timber industries. According to analysts at Friends of the Earth, Environmental Defence and International Rivers, ‘One of the Bank’s most important environmental reforms of the 1990s was its more cautious approach to high-risk infrastructure and forestry projects. This policy is now being reversed.’

Specifically, the environmentalists complained, ‘The World Bank recently announced that it would re-engage in contentious water projects such as large dams in what it refers to as a “high risk/high reward” strategy. In 2002, the Bank dismissed its “risk-averse” approach to the forest sector when it approved a new forest policy. The World Bank is also considering support for new oil, mining, and gas projects in unstable and poorly governed countries, against the recommendations of its own evaluation unit.’

The EIR recommended a phasing out of all Bank fossil fuel investments in late 2003. In February 2004, SA’s then energy minister and now deputy president, Phumzile Mlambo-Ngcuka, explicitly advised the Bank to oppose the ‘green lobbyists’, and six months later the Bank board rejected the EIR’s main proposals.

Ultimately, nearly all civil society initiatives aimed at reforming the Bank and IMF have been disasters. The Civicus World Citizens Assembly withdrew from its controversial 2003-05 initiative to rebuild relations.

The boycott of Bank activities by most forces within civil society launched last week reminds of the calls to stigmatise South Africa before 1994. And why not? After all, Thabo Mbeki has popularized the term ‘global apartheid’ – and now the question is whether to polish the chains or break them.

* (On September 26, Bond – who directs the UKZN Centre for Civil Society – will lead a morning discussion about the Bank and IMF in Durban at Diakonia; two additional presentations will occur on 27 September at the Institute for Policy Studies in Washington from noon-2pm, and on 1 October at the Brecht Forum in New York City, noon-3pm.)

* Please send comments to or comment online at www.pambazuka.org