Monday, September 04, 2006
Yes, new economic measures of structural adjustment. Let's look to that old friend of the blogger, wikipedia, for more information:
On Thursday, the International Monetary Fund (IMF) said the damages could reach $3.5 billion or more for infrastructure alone.
"We have heard of preliminary estimates of $3.5 billion in infrastructure damage, to which one needs to add the impact of the massive displacement of the population, the exodus of many professionals, and possible private sector bankruptcies," the IMF's representative at the Stockholm meetings said in a statement.
At this rate, Beirut will most certainly continue to turn to international lenders and donors for help with reconstruction for a long time. And this, debt watchers say, will in turn plunge the country into greater debt.
World Bank figures show that Lebanon was already up to its neck in debt - some $22.2 billion - even before the war. For a country of only 3.5 million people, the smallest Arab nation, it is a colossal burden.
"What was already a difficult budgetary and debt situation has been made much more precarious by the conflict," the IMF said. Government debt stood at 175% of gross domestic product (GDP) at end-2005, one of the highest ratios in the world. "The conflict has made matters much worse," the IMF said.
The country's main creditors are Saudi Arabia and France. Both have pushed for a neo-liberal set of policies in Beirut that led to the privatization of pubic assets and, critics say, the empowerment of local elites and foreign companies at the expense of the middle classes and the poor.
The European-based Committee for the Abolition of Third World Debt (CADTM) notes that in 2004, Lebanon paid out $4.4 billion to service its external debt and warns that new borrowing will bring further pressure from rich nations and international financial institutions such as the IMF.
"This implies another increase in its debt and in new economic measures of structural adjustment which accompany it," said Éric Toussaint and Damien Millet of CADTM in a brief assessment of the country's new needs. "Therefore, the Lebanese people are going to have to pay very dearly, in the years to come, for consequences of this war inflicted by Israel in violation of international treaties governing relations between states."
Perhaps, wikipedia has a sense of humor, as it placed improving governance and fighting corruption at the bottom of the list. Certainly, this has never been a priority of foreign lenders in the past, if anything, they have preferred inept governance and pervasive corruption as a means of procuring assets at firesale prices, securitizing them and then transferring the proceeds out of the country, as they have done numerous times in countries like Mexico, Russia, Indonesia, Argentina and South Korea.
Structural Adjustment Programs (SAP) are loans from the IMF given to a nation with certain conditions. Nations are required to follow these conditions for approval of the loan. These conditions are technically known as "conditionalities".
Some of the conditions commonly are:
Cutting social expenditures, also known as austerity,
Implementing user fees in basic services such as education and health,
Focusing economic output on direct export and resource extraction,
Devaluation of overvalued currencies,
Trade liberalization, or lifting import and export restrictions,
Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets),
Balancing budgets and not overspending,
Removing price controls and state subsidies,
Privatization, or divestiture of all or part of state-owned enterprises,
Enhancing the rights of foreign investors vis-a-vis national laws,
Improving governance and fighting corruption.
In any event, it appears that Lebanon, like Iraq, constitutes a new model of primitive accumulation whereby lenders seize upon opportunities created by the destruction of countries through conflicts initiated by the United States or its allies, like Israel. With the depressed commodities prices of the 1980s and 1980s, and the economic distress that they generated around much of the world, a fond, distant memory for the loan officers of global finance capital, they are making the transition to something more straightforward and crude, military neo-liberalism, as described by the Retort collective. Meanwhile, Hizbollah, and, probably, in the background, Iran, rebuild homes, hospitals and schools.