Beirut, Friday, August 9, 2002

There was a time in the 1950s and 1960s when the Second- and Third-World countries lived in some kind of euphoria prompted for the most part by the end of colonialism and the general sentiment that, with the indigenous people having taken control of their own destiny, social, economic and political progress were all on their way. Various schemes of development competed among one another. Thus, while some were highly protectionist favoring high tariffs in order to protect the nascent industries promoted by some kind of state "socialism" the east European way, others favored more liberal models with open borders, lower taxes, and competitive industrial and banking sectors.

By the 1980s, if not before, most of this euphoria had already vanished and given way to a total pessimism among the African, Middle Eastern, Asiatic élites, not to mention what Latin America had to go through in the 1970s in terms of civil wars, military dictatorships, drug cartels and the various militias of rural origins whose financing came from the surpluses of the drug trade. But with the end of most of the dictatorships, the big Latin American nations like Brazil, Argentina, Venezuela and Chili (not to mention Mexico, a de facto protégé of the US) shared an optimistic outlook, and, indeed, they started doing quite well. With the end of the cold war, the World Bank, International Monetary Fund, and more recently, the World Trade Organization, began, under the general supervision of the US --the largest shareholder of such institutions-- to be more aggressive in their monetary policies towards the developing nations. Some, like Russia, which are perceived to be totally lacking of modern taxation and banking systems, and full of corruption at all levels, had to be coached from scratch. It was nation-building from top-to-bottom. By contrast, many of the Latin American countries were seen as quite feasible experiments of gradual liberalization of the productive forces. A set of principles became predominant among World Bank and IMF bureaucrats: the opening of borders for the free circulation of persons and goods, low tariffs on imports, low inflation and unemployment rates, and a stabilization (or pegging) of the local currency vis-à-vis the dollar as a way to stabilize inflation and make the markets more predictable to investors (whether foreign or local). Curiously though, and considering that one would expect full liberalization recommendations form US institutions, the IMF did not generally recommend the lowering of interest rates to levels similar to those in the US. It was thus thought that the national currency would be damped if the interest rates were not high enough to attract local and international depositors. Why would someone deposit in the peso if the same rate is given for the dollar?

Eventually, the contradictions of such policies were belittled in light of what was perceived as the successful progressive liberalization of the big Latin American economies. A first warning came late last year with the Argentinean monetary collapse, and the refusal of the IMF to provide emergency loans because the government at the time had defaulted on its national debt, but what is now even more troubling is the Brazilian bailout, which took place this past Wednesday, and which will eventually cost the IMF $30 billion --the largest ever in its history. Moreover, and considering that Uruguay received $1.2 billion this past week, and that more is yet to come (the domino effect), the Latin American continent might be heading towards a crisis similar to the Asian one in 1998. In light of such global financial disasters one has the right to ask --in particular American taxpayers who will be paying all those bills-- What exactly went wrong? Why do Second- and Third-World countries encounter enormous difficulties in improving their infrastructures? Where do those financial debacles fit in light of the newly ascribed hegemonic US role in nation-building?

To begin, a $30 billion bailout means that the failure of the Brazilian system is paid by American taxpayers, even if that implies protecting the lending activities of American banks and corporations (which are much larger for Brazil than Argentina or the rest of the continent), hence indirectly the American consumer. If Brazil has a global debt worth at least $250 billion it simply means that it is unable to generate enough capital from the inside to finance public projects. Moreover, in periods of uncertainty --created in this case by the Argentinean fallout and the presidential election due next October-- more indigenous capital leaves to the outside --"to Swiss accounts," as treasury secretary O'Neill remarked only 48 hours prior to the bailout-- thus leaving the local currency under enormous strains. But under the strict IMF orthodoxy of pegging local currencies to the dollar, billions have to be spent only to keep up with an artificial parity. In the meantime, other countries having their currencies freely floating, albeit with enormous inflations (e.g. Turkey), will nevertheless sell their products at more competitive prices to the international markets. In short, a country like Brazil finds itself hurt twice: its local capitals have fled to "Swiss accounts," and its products have become uncompetitive because highly priced relative to freely floating currencies.

But besides the financial equations and the losses that most of these societies have incurred as a combination of local incompetence and corruption, and the turbulent international financial scene, figures of per capita income and GDPs show that Latin American societies barely improved since the 1980s. In effect, and considering that large segments of their urban and rural populations have become poorer in the last two decades, it is safe to assume that there has been a general decline in their standards of living. The sight of talented young men and women from Chili or Argentina serving cappuccinos at the big megastores in US cities has become all too familiar: such rudimentary tasks would give higher revenues than a "nice" job in Santiago or Buenos Aires. Moreover, financial pitfalls are only an abstraction of what is lurking in the backyard of each one of those economies. Is the financial stress an indication that the economic infrastructures are in poor shape also? Is it possible to imagine a country with a healthy economic infrastructure but whose finances have been mismanaged? In effect, and even though the link is not necessarily causal, the infrastructures of Latin American societies are not modern enough to make them competitive on the world market without the all too common financial pitfalls. For example, both Argentina and Brazil have developed since World War II sophisticated rural and industrial sectors, but they remain poorly integrated amid divided élite groups who prefer to exclude rather than integrate.

But if many Latin American countries have been under the protection of the World Bank and the IMF, it is because such societies are generally perceived on the verge of creating more dynamic economies. For most of the world, the IMF would not know what to say and would not dare propose anything. To take one example, the sub-Saharan region is probably now among the worst in the world in terms of standard of living, production, health and mortality, and has seen all its economic indicators decline since the 1980s by 15%. It is plagued by dozens of civil wars which no one even bothers to mention in the media. Looking further north, the twenty-four Arab states are only slightly better, and most of them have seen a decline in per-capita income and an annihilation of their middle classes. In such societies, the élite entrepreneurial groups are notorious for their low-risk and short-term investments and their "Swiss accounts."

Such sporadic remarks only point to a general truth long known in the social sciences for the likes of Max Weber: namely, that every social phenomenon is total and cannot be dissociated from all the rest, so that an economic restructuring cannot take independently from the religious, political and anthropological. For example, a contract is not simply a tool for exchange, but points to a total social phenomenon that encompasses the religious, legal, moral and anthropological dimensions in society. It is therefore difficult to see how a society is restructuring simply from a set of economic indicators: interest rates, per capita income, global debt, etc. Those might be helpful for decision making at the institutional level but are hardly enough to understand what is going on in a society.

The United States is today exercising a full-fledge imperialism at several levels --and I'm not using that term pejoratively in any way-- which worries a lot of Americans and others around the world. In any case, one must be totally naïve to believe that societies could or should progress on their own and autonomously from one another, and in accordance with the beliefs of their own cultural norms; or that the subordination to an imperial power must come with the consensus of those who are dominated --the colonized. If we take out of the picture such scholastic matters, the imperial power of the US becomes undeniable, and it is regrettable that it has to be represented in so many euphemisms. Thus, the US presence in Afghanistan is an experience of nation-building from scratch for one of the most impoverished societies in the world, and implies anything from training a national army and police force to restructuring the economy. Similarly, the Brazilian bailout is another imperial experience but much softer --and much costlier. In effect, if the Tokyo promises would hold for a while, it would mean that the Afghanis should receive by next year $1.8 billion from a combination of Japanese, European and American funds. Then, whatever we add of the American war effort, it would never top the $30 billion promised to Brazil in a single day. The same imperial power is acting differently towards differently structured societies, and hence not only the bills are of different proportions, but more importantly, the nature of the involvement varies greatly. Thus, to be sure, Iraq will be very different from Afghanistan.

It is therefore ironic that an administration and a president (and vice-president) who came on the basis of smaller government, lower taxes and more power to the states and the people, should find themselves in exactly the reverse position. In effect, either Bush II is fully incompetent not to realize that a full-fledged imperialism requires big state budgets, hence higher taxes, coordinated decisions at the top, and a large high-tech military, or else he is betting on the ignorance of the average layman. Europe went through a different imperialism, one whose tasks were shared mostly between British and French, and with a much more impressive presence on the ground. Such policies have, for better or worse, shaped the world for a couple of centuries. But to day, and among all Europeans, only the British have a quasi-viable army --together with the Israelis on the other side of the Mediterranean-- but which cannot act on its own. As to the other Europeans, they are left with charity work in Kabul.

If therefore the Americans are left for the most part on their own --and even England seems to be much more cautious on Iraq this time-- it's probably because they've got a view of the world that is their own. In effect, and in the wake of 9/11 the general feeling in Europe was one of total sympathy, but it then gradually gave way to something else, in particular from the old "left" that is trying to revamp itself. Part of the problem lies in the perception that with globalization even the larger and old colonialist European powers (England, France and Germany) have now become secondary regional powers (no better than Italy and Spain) whose role is one of ideological support to the big brother. More importantly, however, are different notions of democracy and perceptions of the so-called non-democratic nations and societies. Thus far, and since the end of the Second World War, the US has been following British advice on how to handle the Arabian peninsula, Egypt, India and Pakistan. The British view is that such societies have political systems based on a "sharing" of complex power-relations between various groups, some of which have ultimately dominated the state apparatus for long enough and do not manifest signs of relinquishing power. As a result of the non-existence of "civil society," what stands for the "state" is a conglomeration of various social groups who cannot stand at a distance from social conflicts and interests. Europe, amid the failures of colonialism, has therefore nurtured a pessimistic view towards such societies, one that has been lately reinforced by the stalemate that the end of the cold war has created in Middle Eastern countries. In short, such societies --and no society worthy of that name-- could be revamped from scratch.

For reasons already fully expanded by Tocqueville the American democratic experience cannot accept those "decadent" European views. No society cannot have a "fresh beginning": a view contrary to that one must by its very nature be "aristocratic," meaning that it would like to endlessly propound the ancien régime. We tend to forget that the American experience of "liberating" the world goes back to World War II when Italy, Germany and France, and Japan were liberated from fascism and totalitarianism. The de-Nazification of Germany and the "secularization" of Japan's constitution transformed them into world economic powers, while the Marshall Plan rejuvenated Europe and made Italy the sixth industrial nation. In the 1950s the division of Korea liberated the south from the north and transformed it into an aggressive economy. The Vietnam fiasco had frozen the US for two decades, and then in the 1990s foreign interventionism was back in Iraq (and Kuwait), Somalia, Kosovo, and more recently, Afghanistan. In the meantime, a number of countries have been receiving World Bank and IMF loans (or submitting to the authority of the WTO) --a parallel system of economic expansionism and imperialism-- such as Turkey (which, with $30 billion to date, has neither been able to curb inflation and stabilize its currency, nor to provide for a viable banking sector), Russia (a complete failure thus far), Mexico, Brazil, Uruguay and Argentina. Since that pattern of combined military might and financial aid packages has only been inaugurated since the Second War, it is still of courte durée, which makes it even harder to assess. However, it is worth noting --and that's my main point-- that the early successes of that combined development in Europe has expanded in the last couple of decades far beyond its limits to include many countries whose modus operandi and infrastructures are far remote from both Europe and the US. Needless to say, the latest such development in Afghanistan is a quintessential aspect of the subordination of a society with no substantial capitalist infrastructures: What do the Americans hope to achieve under such circumstances?

If we consider politics and economics as total social phenomena, it is then inconceivable that reforms --in their imperialist flair or otherwise-- be reduced to few variables: privatization, low budget deficits, low interest rates and unemployment, not to mention the traditional suspicion towards the public sector. That presupposes that democracy and laissez-faire capitalism must be universal experiences. To begin, nothing is more remote from the truth than representing liberal democracies (in their European and North American variants) as autonomous "human-rights" experiences for the sake of the free circulation of ideas and as a personal expression of freedom. In effect, we know historically that liberal democracy and laissez-faire capitalism go hand-in-hand. Secundo, the term "laissez-faire" is only very relative since capitalism assumes a large public sector regulated by the state. That's pretty much obvious in Europe, but it's becoming even more visible in the US. It would be hard to foresee how an aggressive imperialism might be pursued without much state intervention. Moreover, the US has tied its future --meaning its political and economic well being-- to a form of imperialism. Looked upon in a longue durée perspective, there's nothing radically new in a dominant super-power exercising a regional and/or world hegemony. However, each period came up with its own specific imperial centers, and at present the US is the imperial center. That is, for better or for worse, imperium dominium is its historical fate.
copyright © 2002 zouhair ghazzal