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Global Power Project, Part 9: Banking on Influence With Morgan Stanley
By: Andrew Gavin Marshall
Originally published at Occupy.com
Morgan Stanley, one of the largest banks in the United States, reported a 66% increase in earnings in July over the same period last year. Morgan Stanley had taken more than $107 billion of U.S. taxpayer money through the bailout programs in the wake of the financial crisis that it helped to create, making it the largest U.S. recipient of bailout funds.
Like the other big banks, Morgan Stanley had been busy paying settlements for the massive criminal fraud conspiracies it engaged in, particularly related to the housing crisis. In 2011, the banks came to a $40 million settlement with the state of Nevada over mortgage fraud.
In 2012, Morgan Stanley paid a settlement of $4.8 million regarding electricity price-fixing charges leveled against the bank in New York State, costing consumers roughly $300 million, after generating $22 million in revenue for the bank. In a settlement over foreclosure fraud in 2013, the bank along with Goldman Sachs agreed to pay $557 million to more than 200,000 homeowners who had been foreclosed on.
A former real estate executive for Morgan Stanley pleaded guilty in 2012 to violating anti-corruption laws, and was “charged with secretly acquiring millions of dollars’ worth of property investments for himself and a Chinese government official.” In 2012, one Morgan Stanley executive was charged with a hate crime for using racial slurs and stabbing a cab driver of Egyptian descent, after having refused to pay the cab fare.
And yet it’s not simply enough for this financial behemoth to defraud the American public and profit from the economic crisis it helped create. It has also managed to profit from increasing hunger and land grabs across the so-called Third World. As big banks speculate on food prices, they drive the costs of food up, sparking food riots and increasing hunger across much of the world while making banks a nice profit in the process.
The three financial institutions most active in food speculation are Barclays, Goldman Sachs and Morgan Stanley. Thus, as millions more people get pushed into hunger, rest assured: Morgan Stanley will be there to swoop up the profits, as untold numbers of people get displaced and foreign investors purchase their lands at giveaway prices. In just one example, Morgan Stanley bought 40,000 hectares of land in Ukraine.
Thus, based on mortgage fraud, the housing crisis, bailouts, the food crisis and the great global land grabs, it’s fair to say that Morgan Stanley is a bank seeking profits at the expense of people, the environment and the world at large. The Global Power Project investigated 24 individuals on both the executive committee and board of directors of Morgan Stanley. The most highly represented institution shared by elites at Morgan Stanley is the Council on Foreign Relations, with six individual affiliations between the two organizations.
It is followed by four mutual affiliations with McKinsey & Co., and three affiliations each between the bank and the former Merrill Lynch (now owned by Bank of America), Columbia University, the Brookings Institution, and the Peterson Institute for International Economics. Further, the bank has two individual affiliations with each of the following: the World Economic Forum, the Business Council, Merck & Co., President Obama’s Economic Recovery Advisory Board, PricewaterhouseCoopers (PwC), the Conference Board, the Bank of Tokyo-Mitsubishi UFJ, Mitsubishi UFJ Financial Group, Stanford University and Alcoa.
Meet the Elites
James P. Gorman is Chairman and CEO of Morgan Stanley, a former executive at Merrill Lynch, and a former Senior Partner at McKinsey & Co. He is a current member of the Board of Overseers of Columbia Business School, a member of the Business Council, the Partnership for New York City, the Financial Services Forum, the board of directors of the Institute of International Finance, and the International Advisory Panel of the Monetary Authority of Singapore.
Klaus Kleinfeld is on the board of directors of Morgan Stanley, and is Chairman and CEO of Alcoa, the world’s leading aluminum producer. Kleinfeld is also the former CEO of Siemens and a former director of Citigroup. He is a member of the Supervisory Board of Bayer AG, Chairman of the Board of the U.S.-Russia Business Council, a Trustee of the Conference Board, and a member of the Business Roundtable, the Board of Trustees of the Brookings Institution, the International Business Council of the World Economic Forum, the board of directors of the World Economic Forum USA, the board of directors of the U.S. Chamber of Commerce, and the Steering Committee of the Bilderberg Meetings.
Hutham S. Olayan is Senior Executive Director of the Olayan Group, President and CEO of Olayan America Corporation, and is a Trustee of the American University of Beirut. She is a member of the board of directors of the Peterson Institute for International Economics, a member of the International Board of the U.S.-Middle East Project, and a member of the International Advisory Council of the Brookings Institution. She is founding member of the Arab Bankers Association of North America, a member of the board of the MasterCard Foundation, a member of the International Advisory Board of the Blackstone Group, a member of the boards of Georgetown University and the Memorial Sloan-Kettering Cancer Center and is a Counselor of the Conference Board. Olayan is a member of the Advisory Council of the Carnegie Middle East Center and is a member of the Council on Foreign Relations.
James W. Owens is the former Chairman and CEO of Caterpillar, and a member of the board of directors of IBM, Alcoa and the Council on Foreign Relations. Owens is also Chairman of the Executive Committee of the Peterson Institute of International Economics, a Senior Advisor to Kohlberg Kravis Roberts & Co. (KKR), a former Chairman of the Executive Committee of the Business Council, and a former member of President Obama’s Economic Recovery Advisory Board. He is currently a member of the Board of Trustees of North Carolina State University.
Laura Tyson, who sits on the board of Morgan Stanley, is Professor of Global Management at the Walter A. Haas School of Business at the University of California Berkeley, and is former Dean of the London Business School and former Dean of Haas Business School. Tyson was the former National Economic Adviser to President Clinton from 1993 to 1996 and was a member of President Clinton’s National Security Council and Domestic Policy Council, as well as Chair of the White House Council of Economic Advisers. Tyson was director of the Council on Foreign Relations from 1997 to 2007, where she remains as a member, and is also a member of the MIT Corporation, as well as a former member of President Obama’s Economic Recovery Advisory Board. A Senior Advisor to McKinsey Global Institute, Credit Suisse Research Institute, The Rock Creek Group, and a Senior Fellow of the Center for American Progress, Tyson is currently a member of President Obama’s Council on Jobs and Competitiveness and has been a member of the Foreign Affairs Policy Board to the U.S. Secretary of State since 2011. She is also a member of the Advisory Council of the Brookings Institution Hamilton Project, a member of the board of AT&T, a former member of the board of Eastman Kodak Company from 1997 to 2011, and a member of the board of CB Richard Ellis and Silver Spring Network. Tyson is additionally a former director of New America Foundation, a former member of the board of the Peterson Institute of International Economics, and currently sits as a member of the Committee on Capital Markets Regulation, the Global Agenda Council of the World Economic Forum, the advisory board of Generation Investment Management and H&Q Asia Pacific, as well as a member of the National Academies’ Board on Science, Technology and Economic Policy and on the board of directors of the Committee for Responsible Federal Budget.
At Morgan Stanley, like elsewhere among the big Wall Street banks, an elite class of individuals connected through their institutional affiliations and social groups exert incredible influence over finance, corporations, the government, media, policy, educational institutions and global society at large. Regardless of the immense suffering that Morgan Stanley and its like institutions inflict on the world, so long as it is able to profit from that suffering, it considers itself safe and secure.
Too big to fail. Too big to jail. Too cancerous to care.
Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.
Meet the Next Country That Might Explode into Protests Against Corporate Plunder and Slave Labor Working Conditions
Meet the Next Country That Might Explode into Protests Against Corporate Plunder and Slave Labor Working Conditions
Will the wave of global unrest crash on Indonesia next?
By: Andrew Gavin Marshall
Originally published on AlterNet
Indonesia – a Southeast Asian archipelago that is home to the largest Muslim population on Earth – is a key global hot spot for corporate plundering, worker exploitation, land grabs and environmental devastation. Simultaneously, the country is becoming a tinderbox for militant labour unrest, peasant rebellion and indigenous resistance. After 500 years of domination by imperial powers, the population of Indonesia is organizing and resisting the ‘new order’ of global corporate colonization. Much like Brazil and Turkey, Indonesia has been praised by the imperial powers as a “model democracy” and the IMF hails its progress as an “emerging economy.” The illusions of Turkish and Brazilian state-capitalist ‘democracy’ have been revealed by massive urban uprisings. The conditions are present for Indonesia to become home to its own national uprising, the only question may be: what will be the spark?
Indonesia: A “Model Democracy” and “Emerging Economy”
Indonesia has been roundly praised by the major imperial powers as a “model democracy” – assuming they have any legitimacy to judge what that may be, with former World Bank president and Pentagon official in the Bush administration, Paul Wolfowitz, having written that Indonesia was “an example for other aspiring democracies,” having shown a “remarkable” achievement in “building democratic institutions.” Then-Secretary of State Hillary Clinton praised the “great transformation” of Indonesia since the dictatorship of Suharto, stating: “If you want to know if Islam, democracy, modernity and women’s rights can coexist, go to Indonesia.”
President Obama even praised Indonesia’s “extraordinary democratic transformation” which demonstrated “that democracy and development reinforce one another.” British Prime Minister David Cameron proclaimed that Indonesia could “inspire” young Muslims around the world “to choose democracy as their future.” German Chancellor Angela Merkel said that Germans “view Indonesia as a model of peaceful and tolerant development,” and even suggested that the way in which Indonesia tackled its debt was “an example of what can be achieved and what Europe has to achieve.” Perhaps, Greece and Spain – in time – could become what Merkel views as “model democracies” along the lines of Indonesia.
Indonesia is the largest economy in Southeast Asia and one of the top 20 economies in the world – listed among the major “emerging economies” – with one of the cheapest labour forces in Asia, which the New York Times explained was “a main reason [corporations] are attracted to Indonesia.” In 2013, Indonesia was listed as the world’s 12th largest exporter of textile products, with the minimum wage averaging $80-160 per month (as determined by local governments), compared with $75 in Cambodia and $37 in Bangladesh.
In a country of 240 million people, roughly 120 million live on less than $2 per day, though the government maintains that only 12% of the population – 30 million – live in poverty (which it defines as less than 86 cents U.S. per day), while 40% of children under the age of five suffer from moderate to severe ‘stunting’ due to malnutrition.
Despite the mass poverty and increasing growth of slums, a small section of Indonesian society has witnessed a remarkable growth in wealth, with the explosion of shopping malls, luxury cars and goods, and high-rise buildings. For Indonesia, “wealth and poverty are both on the rise.” The combined wealth of the country’s 40 richest individuals equaled that of its 60 million poorest citizens. Standard Chartered Bank noted that, “despite the rhetoric about middle classes contributing to growth in Indonesia, 82 percent of the population is living on less than four dollars a day.” Further, most of the economic ‘growth’ was experienced only by the consumer elite within the country.
A Pew Research Poll released in 2013 noted that only 37% of Indonesians felt their economy was “doing well,” with the number one concern needing to be addressed was that of rising prices, ranked above economic disparity, unemployment and sovereign debt. Roughly 75% of Indonesians felt that the economic system “generally favors the wealthy,” with 60% saying inequality had increased in recent years.
A Human Rights Watch researcher noted that with the “routine” trampling of rights for religious and ethnic minorities in Indonesia, along with brutal repression of peaceful protests, the imprisoning of political prisoners, along with torture and denial of medical care for prisoners, “the country is by no means a bastion of tolerance.” A former Indonesian economic minister recently noted that “the outlook for Indonesia becoming a well-functioning democracy is fast deteriorating,” with a tiny elite controlling the country while most people “have few prospects for improving their lives.” A former Indonesian foreign minister suggested that the country was fast in need of “a second wave of democratic reforms,” as when economic conditions worsen, “we will have a reaction on the street” since there existed within the country, a “dissatisfaction at a deeper level with the current state of democracy.” Even the Wall Street Journal noted that with the country’s continuous economic growth, “underneath lies a restlessness for real change that would affect the common person.”
But let’s not let facts get in the way of further praise; the IMF certainly doesn’t.
The Rising “Restlessness” from “Underneath”
The IMF has written in glowing terms of the success of Indonesia’s “structural reforms” which have led to “healthy” balance sheets for corporations and financial institutions. Growth forecasts remained above 6%, though more work could be done, noted the IMF: ending fuel subsidies, investing in infrastructure (meeting the demands of corporations), and to continue with “reforms” to labour laws, allowing for reduced wages, less benefits and protections for workers, and thus, attracting “foreign investment.”
In April of 2013, the IMF warned that “emerging Asia” needed to be careful about asset bubbles – like those that helped plunge the U.S. economy into crisis – and recommended the countries of the region “liberalize rigid labour and product markets,” thus allowing for cheaper labour in what is already a region for some of the cheapest labour on Earth.
Being the 12th largest exporter of textile products in the world, Indonesia is home to a significant sweatshop economy, marred by pervasive exploitation of labour. One Taiwanese-owned sweatshop employs nearly 10,000 people, mostly women, who work for 50 cents per hour making shoes for Nike, where the employees were verbally and physically abused. Indonesia is home to Nike’s third largest manufacturing base, following China and Vietnam, exploiting roughly 140,000 workers.
Indonesia’s ‘labour law’ – which was passed several years earlier – provided for slightly increased wages and severance pay in the event that a company decides to ‘downsize’ its workforce. Corporations have gotten around this law by hiring labour as ‘contract workers’ and firing them without benefits (what Indonesians call “outsourcing”). While corporations have been able to find legal loopholes – or simply ignore the law altogether – they have been facing increased pressure from labour unrest in recent years, and not merely in the textiles sector.
As the economy boomed in recent years, the labour force wanted a greater share of the benefits. Strikes had been increasing with demands for higher wages by mine workers, supermarket clerks, pilots and others who have “disrupted business operations – and could potentially deter foreign dollars.” The country had 53 strikes in the first seven months of 2010 alone, and they were continuing through subsequent years.
A strike took place at a plant owned by the French retail giant Carrefour in 2011 in protests against the company’s avoidance of adhering to Indonesia’s labour laws and in demand of higher wages. The strike was organized by one of the country’s largest trade unions – Kasbi – which represents 130,000 workers and has as its slogan, “Young, brave, militant.” Increasingly, labour organizers and workers have been connecting through social media, gaining access to more information than ever before and facilitating new ways to organize.
During the strike wave of 2011, Indonesia’s investment chief complained about the labour unrest in his country in an interview with the New York Timeswhere he expressed his fears that it would “reduce profit margins and competitiveness,” adding: “My concern is this will trigger a domino effect … it may trigger pressure for a rise in wages that not all companies can afford.” In May of 2013, Basri would go on to be appointed as the country’s finance minister.
In early 2012, Nike paid a $1 million out-of-court settlement for not having paid 4,500 workers at a factory for over 600,000 hours of overtime over the course of two years. The chairman of Indonesia’s trade union Serikat Pekerja National noted, “This has the potential to send shockwaves through the Indonesian labour movement… We have only just begun.”
In October of 2012, roughly 2.8 million factory workers across the country went on a one-day strike supported by several unions in 24 cities. In the capital of Jakarta, more than 700 companies were shut down for the day, while the government deployed 11,000 police officers and 4,000 military personnel to “secure” the rallies throughout the city. The mass protests were in opposition to companies hiring labour as “contract workers” and in demand of higher wages. Rallies were held across Jakarta and the country, where trade union leaders gave what the Financial Times referred to as “fiery speeches,” while the managing director of the American Chamber of Commerce in Indonesia complained that corporations viewed the existing labour laws as “counter-productive.”
The mass protests continued into November, at which point the government announced it was considering a minimum wage increase of up to 50%, though corporations were warning they would move their factories elsewhere. Following continued agitation over the course of the month, which saw demonstrators entering factories, urging workers to join them and shutting down production, the new governor of Jakarta approved a 44% increase in the province’s minimum wage. Tens of thousands of workers continued to protest, while business leaders complained that, “the minimum wage should be lower.” As the protests threatened the President’s major infrastructure development plans, one large corporate group warned: “The frequent protests are obstructive… They are getting to be too much and must be stopped.”
As the Asian Development Bank (ADB) warned earlier in 2012, while many governments in Asia had been experiencing rapid economic growth, rising inequality had become a major problem that could lead to social unrest and create “pressure to take on populist policies that are economically not very wise.” It advised Asian countries “to do something about it.”
In December, President Susilo Bambang Yudhoyono (commonly known as SBY) declared an end to the “era of cheap labour,” noting that wages were set to increase in a few provinces, though added that the government could not tolerate “disturbances in the production process.” A government economic minister stated in a speech that, “We should also take sides with businesses. Companies unable to comply with the minimum wage increases should immediately file a report with the government to demand a wage freeze. We will definitely facilitate them.” The threat of unrest and resistance had prompted several Asian countries – including Indonesia, Thailand, Vietnam, Malaysia and China – to begin increasing their minimum wages by the end of the year.
As 2013 arrived and the wage increases were set to take effect, companies were finding their way around the new laws. Several Nike plants hired police and military officials to intimidate workers into signing away their rights to higher wages. Even before the New Year, roughly a thousand companies were seeking exemptions from the government in paying the higher wages. By mid-January, 941 companies had sought exemptions, by which time the government had granted 47. Thousands of workers took to the streets in protest, often met with police brutality or violence from “organized thugs.”
By early February, the government announced that of the total of 941 companies wanting exemptions, “we will grant about 80 percent of them.” Instead, 500 companies were given a “delay” in paying higher wages, with more expected. Labour groups were increasingly threatening action and agitation in response. Tens of thousands of workers continued to take to the streets in protest, demanding companies adhere to the law, that the government enforce it, and requesting a health insurance and pension system. Business groups were threatening to layoff up to a million workers and close 1,300 factories if they were forced to follow the law. One business group complained that companies were “facing tough times.”
On May 1 – the international labour day known as ‘May Day’ – tens of thousands of workers in Jakarta went on a one-day strike and march, bringing the city to a “standstill.” Roughly 50,000 people protested outside the Presidential Palace, not only demanding better wages and conditions, but also opposing the government’s new plan to raise fuel prices (by cutting subsidies). The Indonesia press reported that roughly 135,000 workers joined the May Day marches, as business groups complained such protests were a threat to “economic growth.”
Like any good state-capitalist ‘democracy,’ Indonesia went on to ignore the will of the people and bow to the will of the IMF. Following the advice of the IMF and World Bank, the government of Indonesia passed a law in mid-June to reduce fuel subsidies and increase the cost of fuel by 44% over the coming weeks. Thousands of protesters took to the streets over several days, met with tens of thousands of police and security personnel. Students and other groups joined demonstrations across the country, noting that increased costs of fuel raise the prices of other goods and services, such as food, clothing and public transportation. The cut to subsidies was designed to “ease investor concerns” about Indonesia’s finances. During the protests, the police used excessive force – as well as hiring “local thugs” – to attack protesters, and arrested 229 students in 62 cities, with roughly 118 students injured during protests, often by being fired upon with rubber bullets.
Can it really be said that Indonesia is a “model democracy” when so much of its economic “growth” is built on the backs of the mass exploitation of workers, and for the benefit of undemocratic global corporations? Indonesia is a model, perhaps, but not of democracy: it is a model for the global corporate plutocracy.
Though it has been fifteen years since the end of dictatorship, Indonesia’s transition to democracy has barely begun. The democratic aspirations of Indonesians are not seen in the luxury cars, shopping malls or high-rises that span the cityscapes – as the idolatries of economic ‘growth’ – but rather, it is seen in the workers who emerge from the factory sweatshops and take to the streets en masse, demanding the promises of democracy and economic growth be realized at long last.
Extractive Industries and Exploited Communities
Suharto’s ‘New Order’ witnessed the carving up of much of Indonesia’s wealth for American, British, French, German, Japanese and other corporations from the powerful countries of the world. The neoliberal era – from the 1980s onward – witnessed an exponential increase in corporate colonization, a process that accelerated with Indonesia’s transition from dictatorship to ‘democracy.’
In the early 1970s, the American oil company Mobil Oil discovered one of the world’s largest natural gas fields at Arun, located in Aceh province. For three decades, the Indonesian military waged a battle against the Free Aceh Movement (GAM), which sought autonomy from the country, leaving 10-30,000 people killed. When Mobil merged with Exxon in 1999, it retained control of the Arun project, and the military continued to attack local villages with the direct support of ExxonMobil. A lawsuit against Exxon alleges that the company “supervised, controlled and directed” military personnel who committed major human rights abuses between 1999 and 2001.
The region of West Papua was not part of Indonesia, but was a separate Dutch colony struggling for independence in the early 1960s. The U.S. and U.N. negotiated an agreement in 1962 where West Papua would be under the “interim control” of Indonesia for six years, at which point the country would vote for independence or to be part of Indonesia. When Suharto took full power in 1967, he negotiated an agreement with Freeport to grant a mining concession in the region. When the election in 1969 saw overwhelming support for independence, Suharto declared the area “a military operation zone” and sent in the military to crush the people’s local movement. Repression was rampant for decades, with up to 100,000 West Papuans having been murdered since 1969 in what some have referred to as a “slow-motion genocide.” Despite the region’s immense natural wealth, it remains as Indonesia’s poorest province. The Freeport mine itself has created “irreversible ecological devastation” to the region, with hundreds of thousands of tons of waste dumped into waterways and valleys daily.
The U.S.-based Freeport mine in West Papua – the largest copper and gold reserves in the world – experienced a three-month strike in 2011, where workers were demanding higher wages. Workers were paid as low as $1.50 per hour, while the mine made the company $5 billion in 2010 alone. Eventually, after a great deal of violence and injuries, including one death, the workers agreed to a 37% wage increase (far from their demands for a five-fold increase), but one union official noted, “This is not the end of our struggle.” Freeport had been paying millions of dollars directly to the police which guard its facilities, who had – on occasion – opened fire on the workers as they were protesting against the mine. In the ten years between 2001 and 2011, Freeport had given $79.1 million to Indonesian police and military forces.
As Amnesty International has noted, the police and security forces in Indonesia were often implicated in “torture, excessive use of force and unlawful killings.” Freeport’s chairman in 2005 explained: “There is no alternative to our reliance on the Indonesian military and police… The need for this security… as well as the decisions regarding our relationships with the Indonesian government and its security institutions, are ordinary business activities.”
Tin mining on the Indonesian island of Bangka has been popular among imperialists since the Dutch colonized the country in the early 19th century. Combined with the neighbouring island, Belitung, tin mining on these islands accounts for 90% of Indonesia’s tin, with the country being the second-largest exporter of tin in the world, used largely for consumer electronics. Indonesia supplies companies such as Samsung, Foxconn, Apple, Sony and LG with tin from these islands. The miners get paid low wages and workplace injuries (and deaths) have been on the rise in recent years. Further, the “lucrative but destructive trade… has scarred the island’s landscape, bulldozed its farms and forests, [and] killed off its fish stocks and coral reefs.” This destruction has often resulted in protests, some numbering over tens of thousands of locals.
In November of 2012, the U.S. Undersecretary of Commerce for International Trade Francisco Sanchez, stated that the United States hoped to “double its trade with Indonesia over the next five years,” as U.S. corporations were getting “excited about the opportunities” in the country for ‘growth.’ Sanchez traveled to Indonesia to encourage more trade between the countries, and he was accompanied by a delegation of corporate leaders from Cisco Systems, General Electric, and Honeywell International, among others.
Among the “opportunities” for growth – inspiring the ‘excitement’ of multinational corporate plunderers – is the profit that can be extracted from partaking in major land grabs and the destruction of the environment, with the added bonus of displacing thousands of peasant and indigenous communities in the process.
Land Grabs Lay Waste to Indonesia
Massive land grabs have been accelerating around the world since 2009, driving Indigenous peoples and farming communities off the land as foreign investors lay waste to the environment and create cash crops for export to rich countries. Oxfam noted in 2011 that the global land grabs were “already leading to conflict, hunger and human rights abuses,” since the ‘investment’ deals ignore the rights of those who live on the land, “leaving them homeless and without land to grow enough food to eat and make a living.” Land grabbing has been encouraged by the World Bank and IMF, most aggressively in Africa, but have spread across the world, from Central America to Indonesia.
In April of 2013, a Canadian mining company – East Asia Minerals Corporation – announced that it was working with the Indonesian government to “re-zone” nearly 2 million hectares of protected forest in Aceh for “industrial activities,” including mining, logging, and palm oil plantations. The company announced in a press release that they were working with the government to reclassify zones from “protected forest” to “production forest.”
Environmental groups warned that the reclassification could put biodiversity at risk, including endangered rhinos, elephants, orangutans, and tigers. Scientists from the Asia chapter of the Association for Tropical Biology and Conservation released a declaration stating: “Aceh forests are essential for food security, regulating water flows in both the monsoon and drought seasons to irrigate rice fields and other cash crops… Forest disruption in Aceh’s upland areas will increase the risk of destructive flooding for people living downstream in the coastal lowlands.” Despite opposition from environmental groups, scientists, human rights groups and local communities, the “model democracy” government said it hoped to approve the plan “as soon as possible,” which the mining company said was “positive news.”
This “positive news” has the effect of not only destroying what’s left of the third largest rainforest on Earth – and causing irreversible harm to its biodiversity – but it is also displacing the Indigenous and small farmer communities that live off the land and forests, most of whom are not compensated and forced to either migrate to urban slums or work for minimal wages at the companies that stole their land. Many communities resist, but are met with the “heavy-handed security and paramilitary forces.” In the previous ten years, more than 10 million hectares of land was “given away and converted to plantations,” destroying thousands of communities and laying waste to the environment in the process.
Over 600 conflicts over land in Indonesia were reported in 2011, including 22 deaths and hundreds of injuries. A national human rights commission in Indonesia reported over 5,000 human rights violations in 2012, largely linked to companies involved in deforestation. The founder of the Indonesian Peasant Union – with a membership of 700,000 – noted that the rapid expansion of palm oil plantations “has spawned a new poverty and is triggering a crisis of landlessness and hunger,” marred by forced evictions, violence, torture and even death.
A director of Friends of the Earth in Indonesia noted: “Who controls the land in Indonesia controls the politics. Corruption is massive around natural resources. We are seeing a new corporate colonialism. In the Suharto era you were sent to prison for talking about the government. Now you can be sent there for talking about corporations.” The police presence around plantations has been increasing, as has violent repression as the government “is trying to clamp down on mass protests.”
In the span of thirty years, global agribusiness, pulp and paper companies have turned the islands of Sumatra and Borneo – the third and sixth largest islands in the world – into near wastelands, threatening the incredible biodiversity – including endangered tigers, rhinos and elephants – to develop biofuels, vegetable oil and toilet paper. Scientists and environmentalists recently warned that “one of the 21st century’s greatest ecological disasters is rapidly unfolding.” In a matter of years, more than half of the third largest rainforest on Earth has been destroyed, and 70% of what remains is marked for “transition” into plantations. Nearly one million hectares of rainforest are destroyed every year in Indonesia, with scientists suggesting the endangered wildlife on the region will be extinct within a couple decades.
One Greenpeace official in Indonesia explained: “This is the fastest, most comprehensive transformation of an entire landscape that has ever taken place anywhere in the world including the Amazon. If it continues at this rate all that will be left in 20 years is a few fragmented areas of natural forest surrounded by huge manmade plantations. There will be increased floods, fires and droughts but no animals.” A director of Indonesia’s largest environmental group, Walhi, noted, “The legacy of deforestation has been conflict, increased poverty, migration to the cities and erosion of habitat for animals. As the forests come down, social conflicts are exploding everywhere.” Coal, copper, and gold mining companies are moving into Sumatra and Kalimantan, causing widespread deforestation and violent conflicts with local communities. The rare of deforestation is also increasing rapidly in the poorest province of West Papua.
In May of 2013, the United Nations Development Program (UNDP) reported that Indonesia – with the third largest tropical forest coverage in the world – was “not doing enough to protect its forests.” While Indonesia passed a moratorium on deforestation in May of 2013, a number of loopholes make it almost meaningless.
Due to its rapid rate of deforestation and the draining of peatlands, Indonesia is one of the world’s largest emitters of greenhouse gasses, ahead of Saudi Arabia, Australia, Brazil and France. The large paper company – APRIL (Asia Pacific Resources International Holdings) – has come into conflict with multiple villages in Sumatra as it undertakes a project to destroy 450,000 hectares of rainforest, an area which holds roughly 1.5 billion tons of carbon. A local village leader noted: “We would die for this [forest] if necessary. This is a matter of life and death. The forest is our life. We depend on it when we want to build our houses or boats. We protect it. The permits were handed out illegally, but now we have no option but to work for the companies or hire ourselves out for pitiful wages.”
The devastation to rainforests has not merely been confined to Indonesia, but has spread at an alarming rate across much of Southeast Asia, including Vietnam, Thailand, Laos, Cambodia and Burma, largely being driven by export-led growth, monoculture plantations, and the construction of dams and other large-scale infrastructure projects. The increasing rates of deforestation are exacerbated by the global explosion in land grabs, with the World Bank and other financial institutions like Deutsche Bank funding land grabs across Southeast Asia in which Indigenous people “are bearing the brunt of the seizures.”
In late June, fires started on or near major palm oil plantations owned by large companies became so large that the pollution spread across Malaysia and Singapore, causing a “hazardous” pollution warning in Singapore in the “worst haze” the country ever faced. Soon after, the Indonesian government announced it was investigating eight companies that might have started the fires on Sumatra, though the companies immediately blamed small landholders. An official from the Rainforest Action Network noted, “This recent smog is just the most visible part of the serious deforestation and human rights crisis sweeping Indonesia… Widespread, illegal burning to clear rainforests and peatlands for palm oil and pulp and paper plantation expansion is unfortunately a well-established yearly ritual in Sumatra.”
Farmers, workers, Indigenous people, women, youth, students and NGOs have been forming groups in which they pledged “resistance” in an “alliance against land grabbing” by the government and international corporations. Police have been using excessive force against protesters and Indigenous communities, and several peaceful activists have been imprisoned for opposing land grabs, deforestation and the construction of plantations.
The Indonesian People’s Alliance (IPA) formed in 2013 as an alliance of dozens of civil society groups, seeking to unite forces across Indonesia and internationally to oppose trade “liberalization” and respect national sovereignty. An IPA coordinator declared: “We have been told to preserve our forests, but large industry continues to wreck our environment and marginalize our own people. We cannot continue washing their dirty laundry.”
In June, a “militant peasant organization” – the Alliance of Agrarian Reform Movement (AGRA) – protested in the thousands against land grabbing in Indonesia, stating that the land “needs to be distributed back to the peasantry through genuine agrarian reform.” An official from the Asian Peasant Coalition (APC) – a regional Asian alliance of peasant organizations – noted that resistance was growing not only within Indonesia, but across much of Asia, where peasants were working to launch an “anti land grabbing campaign.”
Is an Indonesian Revolution in the Making?
The circumstances certainly exist – with 120 million people living on less than $2 per day, mass exploitation of workers, labour unrest, violent state repression, land grabs and corporate plundering, peasant and indigenous resistance, environmental devastation, and political corruption – for Indonesia to potentially witness a mass uprising. Workers are organizing across the cities against labour exploitation, while peasants and indigenous communities are organizing across the countryside against land grabs and environmental degradation, and increasingly, they are organizing and working together.
While the leaders of the imperial powers and institutions of the world praise Indonesia as an “emerging economy” and “model democracy,” the population of Indonesia is rising up against the corrupt, plutocratic elites, violent repression, environmental devastation, widespread exploitation and plundering that comes with those buzzwords. In short, the people of Indonesia are struggling to turn their country into a real model for democracy, and for the economy to emerge in respect of that ideal, not against it.
The demolition of a park in Istanbul sparked the urban uprising in Turkey, and the plan to raise bus fare sparked the urban uprising in Brazil. So perhaps the question is not ifIndonesia will experience similar circumstances, but rather: when, and what will be the spark?
Only time will tell, and no doubt, the Indonesians will let us know when it has happened.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, head of the Geopolitics Division of the Hampton Institute, the research director of Occupy.com’s Global Power Project, and has a weekly podcast with BoilingFrogsPost.
“Human Beings Have No Right to Water” and other Words of Wisdom from Your Friendly Neighborhood Global Oligarch
“Human Beings Have No Right to Water” and other Words of Wisdom from Your Friendly Neighborhood Global Oligarch
By: Andrew Gavin Marshall
In the 2005 documentary, We Feed the World, then-CEO of Nestlé, the world’s largest foodstuff corporation, Peter Brabeck-Letmathe, shared some of his own views and ‘wisdom’ about the world and humanity. Brabeck believes that nature is not “good,” that there is nothing to worry about with GMO foods, that profits matter above all else, that people should work more, and that human beings do not have a right to water.
Today, he explained, “people believe that everything that comes from Nature is good,” marking a large change in perception, as previously, “we always learnt that Nature could be pitiless.” Humanity, Brabeck stated, “is now in the position of being able to provide some balance to Nature, but in spite of this we have something approaching a shibboleth that everything that comes from Nature is good.” He then referenced the “organic movement” as an example of this thinking, premising that “organic is best.” But rest assured, he corrected, “organic is not best.” In 15 years of GMO food consumption in the United States, “not one single case of illness has occurred.” In spite of this, he noted, “we’re all so uneasy about it in Europe, that something might happen to us.” This view, according to Brabeck, is “hypocrisy more than anything else.”
Water, Brabeck correctly pointed out, “is of course the most important raw material we have today in the world,” but added: “It’s a question of whether we should privatize the normal water supply for the population. And there are two different opinions on the matter. The one opinion, which I think is extreme, is represented by the NGOs, who bang on about declaring water a public right.” Brabeck elaborated on this “extreme” view: “That means that as a human being you should have a right to water. That’s an extreme solution.” The other view, and thus, the “less extreme” view, he explained, “says that water is a foodstuff like any other, and like any other foodstuff it should have a market value. Personally I believe it’s better to give a foodstuff a value so that we’re all aware that it has its price, and then that one should take specific measures for the part of the population that has no access to this water, and there are many different possibilities there.” The biggest social responsibility of any CEO, Brabeck explained:
is to maintain and ensure the successful and profitable future of his enterprise. For only if we can ensure our continued, long term existence will we be in the position to actively participate in the solution of the problems that exist in the world. We’re in the position of being able to create jobs… If you want to create work, you have to work yourself, not as it was in the past where existing work was distributed. If you remember the main argument for the 35-hour week was that there was a certain amount of work and it would be better if we worked less and distributed the work amongst more people. That has proved quite clearly to be wrong. If you want to create more work you have to work more yourself. And with that we’ve got to create a positive image of the world for people, and I see absolutely no reason why we shouldn’t be positive about the future. We’ve never had it so good, we’ve never had so much money, we’ve never been so healthy, we’ve never lived as long as we do today. We have everything we want and we still go around as if we were in mourning for something.
While watching a promotional video of a Nestlé factory in Japan, Brabeck commented, “You can see how modern these factories are; highly robotized, almost no people.” And of course, for someone claiming to be interested in creating jobs, there appears to be no glaring hypocrisy in praising factories with “almost no people.”
It’s important to note that this is not simply the personal view of some random corporate executive, but rather, that it reflects an institutional reality of corporations: the primary objective of a corporation – above all else – is to maximize short-term profits for shareholders. By definition, then, workers should work more and be paid less, the environment is only a concern so much as corporations have unhindered access to control and exploit the resources of the environment, and ultimately, it’s ‘good’ to replace workers with automation and robotics so that you don’t have to pay fewer or any workers, and thus, maximize profits. With this institutional – and ideological – structure (which was legally constructed by the state), concern for the environment, for water, for the world and for humanity can only be promoted if it can be used to advance corporate profits, or if it can be used for public relations purposes. Ultimately, it has to be hypocritical. A corporate executive cannot take an earnest concern in promoting the general welfare of the world, the environment, or humanity, because that it not the institutional function of a corporation, and no CEO that did such would be allowed to remain as CEO.
This is why it matters what Peter Brabeck thinks: he represents the type of individual – and the type of thinking – that is a product of and a requirement for running a successful multinational corporation, of the corporate culture itself. To the average person viewing his interview, it might come across as some sort of absurd tirade you’d expect from a Nightline interview with some infamous serial killer, if that killer had been put in charge of a multinational corporation:
People have a ‘right’ to water? What an absurd notion! Next thing you’ll say is that child labour is bad, polluting the environment is bad, or that people have some sort of ‘right’ to… life! Imagine the audacity! All that matters is ‘profits,’ and what a wonderful thing it would be to have less people and more profits! Water isn’t a right, it’s only a necessity, so naturally, it makes sense to privatize it so that large multinational corporations like Nestlé can own the world’s water and ensure that only those who can pay can drink. Problem solved!
Sadly, though intentionally satirical, this is the essential view of Brabeck and others like him. And disturbingly, Brabeck’s influence is not confined to the board of Nestlé. Brabeck became the CEO of Nestlé in 1997, a position he served until 2008, at which time he resigned as CEO but remained as chairman of the board of directors of Nestlé. Apart from Nestlé, Brabeck serves as vice chairman of the board of directors of L’Oréal, the world’s largest cosmetics and ‘beauty’ company; vice chairman of the board of Credit Suisse Group, one of the world’s largest banks; and is a member of the board of directors of Exxon Mobil, one of the world’s largest oil and energy conglomerates.
He was also a former board member of one of the world’s largest pharmaceutical conglomerates, Roche. Brabeck also serves as a member of the Foundation Board for the World Economic Forum (WEF), “the guardian of [the WEF’s] mission, values and brand… responsible for inspiring business and public confidence through an exemplary standard of governance.” Brabeck is also a member of the European Round Table of Industrialists (ERT), a group of European corporate CEOs which directly advise and help steer policy for the European Union and its member countries. He has also attended meetings of the Bilderberg group, an annual forum of 130 corporate, banking, media, political and military elites from Western Europe and North America.
Thus, through his multiple board memberships on some of the largest corporations on earth, as well as his leadership and participation in some of the leading international think tanks, forums and business associations, Brabeck has unhindered access to political and other elites around the world. When he speaks, powerful people listen.
Brabeck has become an influential voice on issues of food and water, and not surprisingly so, considering he is chairman of the largest food service corporation on earth. Brabeck’s career goes back to when he was working for Nestlé in Chile in the early 1970s, when the left-leaning democratically-elected president Salvador Allende was “threatening to nationalize milk production, and Nestlé’s Chilean operations along with it.” A 1973 Chilean military coup – with the support of the CIA – put an end to that “threat” by bringing in the military dictatorship of Augusto Pinochet, who murdered thousands of Chileans and established a ‘national security state’, imposing harsh economic measures to promote the interests of elite corporate and financial interests (what later became known as ‘neoliberalism’).
In a 2009 article for Foreign Policy magazine, Brabeck declared: “Water is the new gold, and a few savvy countries and companies are already banking on it.” In a 2010 article for the Guardian, Brabeck wrote that, “[w]hile our collective attention has been focused on depleting supplies of fossil fuels, we have been largely ignoring the simple fact that, unless radical changes are made, we will run out of water first, and soon.” What the world needs, according to Brabeck, is “to set a price that more accurately values our most precious commodity,” and that, [t]he era of water at throwaway prices is coming to an end.” In other words, water should become increasingly expensive, according to Brabeck. Countries, he wrote, should recognize “that not all water use should be regarded as equal.”
In a discussion with the Wall Street Journal in 2011, Brabeck spoke against the use of biofuels – converting food into fuel – and suggested that this was the primary cause of increased food prices (though in reality, food price increases are primarily the result of speculation by major banks like Goldman Sachs and JPMorgan Chase). Brabeck noted the relationship between his business – food – and major geopolitical issues, stating: “What we call today the Arab Spring… really started as a protest against ever-increasing food prices.” One “solution,” he suggested, was to provide a “market” for water as “the best guidance that you can have.” If water was a ‘market’ product, it wouldn’t be wasted on growing food for fuel, but focus on food for consumption – and preferably (in his view), genetically modified foods. After all, he said, “if the market forces are there the investments are going to be made.” Brabeck suggested that the world could “feed nine billion people,” providing them with water and fuel, but only on the condition that “we let the market do its thing.”
Brabeck co-authored a 2011 article for the Wall Street Journal in which he stated that in order to provide “universal access to clean water, there is simply no other choice but to price water at a reasonable rate,” and that roughly 1.8 billion people on earth lack access to clean drinking water “because of poor water management and governance practices, and the lack of political will.” Brabeck’s job then, as chairman of Nestlé, is to help create the “political will” to make water into a modern “market” product.
Now before praising Brabeck for his ‘enlightened’ activism on the issue of water scarcity and providing the world’s poor with access to clean drinking water (which are very real and urgent issues needing attention), Brabeck himself has stressed that his interest in the issue of water has nothing to do with actually addressing these issues in a meaningful way, or for the benefit of the earth and humanity. No, his motivation is much more simple than this.
In a 2010 interview for BigThink, Brabeck noted: “If Nestlé and myself have become very vocal in the area of water, it was not because of any philanthropic idea, it was very simple: by analyzing… what is the single most important factor for the sustainability of Nestlé, water came as [the] number one subject.” This is what led Brabeck and Nestlé into the issue of water “sustainability,” he explained. “I think this is part of a company’s responsibility,” and added: “Now, if I was in a different industry, I would have a different subject, certainly, that I would be focusing on.”
Brabeck was asked if industries should “have a role in finding solutions to environmental issues that affect their business,” to which he replied: “Yes, because it is in the interest of our shareholders… If I want to convince my shareholders that this industry is a long-term sustainable industry, I have to ensure that all aspects that are vital for this company are sustainable… When I see, like in our case, that one of the aspects – which is water, which is needed in order to produce the raw materials for our company – if this is not sustainable, then my enterprise is not sustainable. So therefore I have to do something about it. So shareholder interest and societal interest are common.”
Thus, when Brabeck and Nestlé promote “water sustainability,” what they are really promoting is the sustainability of Nestlé’s access to and control over water resources. How is that best achieved? Well, since Nestlé is a large multinational corporation, the natural solution is to promote ‘market’ control of water, which means privatization and monopolization of the world’s water supply into a few corporate hands.
In a 2011 conversation with the editor of Time Magazine at the Council on Foreign Relations, Brabeck referred to a recent World Economic Forum meeting where the issue of “corporate social responsibility” was the main subject of discussion, when corporate executives “started to talk about [how] we have to give back to society,” Brabeck spoke up and stated: “I don’t feel that we have to give back to society, because we have not been stealing from society.” Brabeck explained to the Council on Foreign Relations that he felt such a concept was the purview of philanthropy, and “this was a problem for the CEO of any public company, because I personally believe that no CEO of a public company should be allowed to make philanthropy… I think anybody who does philanthropy should do it with his own money and not the money of the shareholders.” Engaging in corporate social responsibility, Brabeck explained, “was an additional cost.”
At the 2008 World Economic Forum, a consortium of corporations and international organizations formed the 2030 Water Resources Group, chaired by Peter Brabeck. It was established in order to “shape the agenda” for the discussion of water resources, and to create “new models for collaboration” between public and private enterprises. The governing council of the 2030 WRG is chaired by Brabeck and includes the executive vice president and CEO of the International Finance Corporation (IFC), the investment arm of the World Bank, the administrator of the United Nations Development Programme (UNDP), the chief business officer and managing director of the World Economic Forum, the president of the African Development Bank, the chairman and CEO of The Coca-Cola Company, the president of the Asian Development Bank, the director-general of the World Wildlife Fund (WWF), the president of the Inter-American Development Bank, and the chairman and CEO of PepsiCo, among others.
At the World Water Forum in 2012 – an event largely attended by the global proponents of water privatization, Nestlé among their most enthusiastic supporters – Brabeck suggested that the 2030 Water Resources Group represents a “global public-private initiative” which could help in “providing tools and information on best practice” as well as “guidance and new policy ideas on water resource scarcity.”
Brabeck and Nestlé had been in talks with the Canadian provincial government of Alberta in planning for a potential “water exchange,” to – in the words of Maclean’s magazine – “turn water into money.” In 2012, the University of Alberta bestowed an honorary degree upon Peter Brabeck “for his work as a responsible steward for water around the world.” Protests were organized at the university to oppose the ‘honor,’ with a representative from the public interest group, the Council of Canadians, noting: “I’m afraid that the university is positioning themselves on the side of the commodifiers, the people who want to say that water is not a human right that everyone has the right to, but is just a product that can be bought and sold.” A professor at the university stated: “I’m ashamed at this point, about what the university is doing and I’m also very concerned about the way the president of the university has been demonizing people who oppose this.” As another U of A professor stated: “What Nestlé does is take what clean water there is in which poor people are relying on, bottle it and then sell it to wealthier people at an exorbitant profit.”
The Global Water Privatization Agenda
Water privatization is an extremely vicious operation, where the quality of – and access to – water resources diminishes or even vanishes, while the costs explode. When it comes to the privatization of water, there is no such thing as “competition” in how the word is generally interpreted: there are only a handful of global corporations that undertake massive water privatizations. The two most prominent are the French-based Suez Environment and Veolia Environment, but also include Thames Water, Nestlé, PepsiCo and Coca-Cola, among others. For a world in which food has already been turned into a “market commodity” and has been “financialized,” leading to massive food price increases, hunger riots, and immense profits for a few corporations and banks, the prospect of water privatization is even more disturbing.
The agenda of water privatization is organized at the international level, largely promoted through the World Water Forum and the World Water Council. The World Water Council (WWC) was established in 1996 as a French-based non-profit organization with over 400 members from intergovernmental organizations, government agencies, corporations, corporate-dominated NGOs and environmental organizations, water companies, international organizations and academic institutions.
Every three years, the WWC hosts a World Water Forum, the first of which took place in 1997, and the 6th conference in 2012 was attended by thousands of participants from countries and institutions all over the world get together to decide the future of water, and of course, promote the privatization of this essential resource to human life. The 6th World Water Forum, hosted in Marseilles, France, was primarily sponsored by the French government and the World Water Council, but included a number of other contributors, including: the African Development Bank, African Union Commission, Arab Water Council, Asian Development Bank, the Council of Europe, the European Commission, the European Investment Bank, the European Parliament, the European Water Association, the Food and Agricultural Organization, the Global Environment Facility, Inter-American Development Bank, Nature Conservancy, Organisation for Economic Co-operation and Development (OECD), Organization of American States (OAS), Oxfam, the World Bank, the World Business Council for Sustainable Development, the World Health Organization, the World Wildlife Fund; and a number of corporate sponsors, including: RioTinto Alcan, EDF, Suez Environment, Veolia, and HSBC. Clearly, they have human and environmental interests at heart.
The World Bank is a major promoter of water privatization, as much of its aid to ‘developing’ countries was earmarked for water privatization schemes which inevitably benefit major corporations, in co-operation with the International Monetary Fund (IMF), and the U.S. Treasury. One of the first major water privatization schemed funded by the World Bank was in Argentina, for which the Bank “advised” the government of Argentina in 1991 on the bidding and contracting of the water concession, setting a model for what would be promoted around the world. The World Bank’s investment arm, the International Finance Corporation (IFC), loaned roughly $1 billion to the Argentine government for three water and sewage projects in the country, and even bought a 5% stake in the concession, thus becoming a part owner. When the concession for Buenos Aires was opened up, the French sent representatives from Veolia and Suez, which formed the consortium Aguas Argentinas, and of course, the costs for water services went up. Between 1993, when the contract with the French companies was signed, and 1997, the Aguas Argentinas consortium gained more influence with Argentine President Carlos Menem and his Economy Minister Domingo Cavallo, who would hold meetings with the president of Suez as well as the President of France, Jacques Chirac. By 2002, the water rates (cost of water) in Buenos Aires had increased by 177% since the beginning of the concession.
In the 1990s, the amount of World Bank water privatization projects increased ten-fold, with 31% of World Bank water supply and sanitation projects between 1990 and 2001 including conditions of private-sector involvement, despite the fact that the projects consistently failed in terms of providing cheaper and better water to larger areas. But of course, they were highly profitable for large corporations, so naturally, they continued to be promoted and supported (and subsidized).
One of the most notable examples of water privatization schemes was in Bolivia, the poorest country in South America. In 1998, an IMF loan to Bolivia demanded conditions of “structural reform,” the selling off of “all remaining public enterprises,” including water. In 1999, the World Bank told the Bolivian government to end its subsidies for water services, and that same year, the government leased the Cochabamba Water System to a consortium of multinational corporations, Aguas del Tunari, which included the American corporation Bechtel. After granting the consortium a 40-year lease, the government passed a law which would make residents pay the full cost of water services. In January of 2000, protests in Cochabamba shut down the city for four days, striking and establishing roadblocks, mobilizing against the water price increases which doubled or tripled their water bills. Protests continued in February, met with riot police and tear gas, injuring 175 people.
By April, the protests began to spread to other Bolivian cities and rural communities, and during a “state of siege” (essentially martial law) declared by Bolivian president Hugo Banzer, a 17-year old boy, Victor Hugo Daza, was shot and killed by a Bolivian Army captain, who was trained as the U.S. military academy, the School of the Americas. As riot police continued to meet protesters with tear gas and live ammunition, more people were killed, and dozens more injured. On April 10, the government conceded to the people, ending the contract with the corporate consortium and granting the people to control their water system through a grassroots coalition led by the protest organizers.
Two days later, World Bank President James Wolfensohn stated that the people of Bolivia should pay for their water services. On August 6, 2001, the president of Bolivia resigned, and the Vice President Jorge Quiroga, a former IBM executive, was sworn in as the new president to serve the remainder of the term until August of 2002. Meanwhile, the water consortium, deeply offended at the prospect of people taking control of their own resources, attempted to take legal action against the government of Bolivia for violating the contract. Bechtel was seeking $25 million in compensation for its “losses,” while recording a yearly profit of $14 billion, whereas the national budget of Bolivia was a mere $2.7 billion. The situation ultimately led to a type of social revolution which brought to power the first indigenous Bolivian leader in the country’s history, Evo Morales.
This, of course, has not stopped the World Bank and IMF – and the imperial governments which finance them – from promoting water privatization around the world for the exclusive benefit of a handful of multinational corporations. The World Bank promotes water privatization across Africa in order to “ease the continent’s water crisis,” by making water more expensive and less accessible.
As the communications director of the World Bank in 2003, Paul Mitchell, explained, “Water is crucial to life – we have to get water to poor people,” adding: “There are a lot of myths about privatization.” I would agree. Though the myth that it ‘works’ is what I would propose, but Mitchell instead suggested that, “[p]rivate sector participation is simply to manage the asset to make it function for the people in the country.” Except that it doesn’t. But don’t worry, decreasing water standards, dismantling water distribution, and rapidly increasing the costs of water to the poorest regions on earth is good, according to Mitchell and the World Bank. He told the BBC that what the World Bank is most interested in is the “best way to get water to poor people.” Perhaps he misspoke and meant to say, “the best way to take water from poor people,” because that’s what actually happens.
In 2003, the World Bank funded a water privatization scheme in the country of Tanzania, supported by the British government, and granting the concession to a consortium called City Water, owned by the British company Biwater, which worked with a German engineering firm, Gauff, to provide water to the city of Dar es Salaam and the surrounding region. It was one of the most ambitious water privatization schemes in Africa, with $140 million in World Bank funding, and, wrote John Vidal in the Guardian, it “was intended to be a model for how the world’s poorest communities could be lifted out of poverty.”
The agreement included conditions for the consortium to install new pipelines for water distribution. The British government’s Department for International Development gave a 440,000-pound contract to the British neoliberal think tank, Adam Smith International, “to do public-relations work for the project.” Tanzania’s best-known gospel singer was hired to perform a pop song about the benefits of privatization, mentioning electricity, telephones, the ports, railways, and of course, water. Both the IMF and World Bank made the water scheme a condition for “aid” they gave to the country. Less than one year into the ten-year contract, the private consortium, City Water, stopped paying its monthly fee for leasing the government’s pipes and infrastructure provided by the public water company, Dawasa, while simultaneously insisting that its own fees be raised. An unpublished World Bank report even noted: “The primary assumption on the part of almost all involved, particularly on the donor side, was that it would be very hard, if not impossible, for the private operator [City Water] to perform worse than Dawasa. But that is what happened.” The World Bank as a whole, however, endorsed the program as “highly satisfactory,” and rightly so, because it was doing what it was intended to do: provide profits for private corporations at the expense of poor people.
By 2005, the company had not built any new pipes, it had not spent the meager investments it promised, and the water quality declined. As British government “aid” money was poured into privatization propaganda, a video was produced which included the phrase: “Our old industries are dry like crops and privatization brings the rain.” Actually, privatization attaches a price-tag to rain. Thus, in 2005, the government of Tanzania ended the contract with City Water, and arrested the three company executives, deporting them back to Britain. As is typical, the British company, Biwater, then began to file a lawsuit against the Tanzanian government for breach of contract, wanting to collect $20-25 million. A press release from Biwater at the time wrote: “We have been left with no choice… If a signal goes out that governments are free to expropriate foreign investments with impunity,” investors would flee, and this would, of course, “deal a massive blow to the development goals of Tanzania and other countries in Africa.”
The sixth World Water Forum in Marseilles in 2012 brought together some 19,000 participants, where the French Development Minister Henri de Raincourt proposed a “global water and environment management scheme,” adding: “The French government is not alone in its conviction that a global environment agency is needed more than ever.” A parallel conference was held – the Alternative World Water Forum – which featured critics of water privatization. Gustave Massiah, a representative of the anti-globalization group Attac, stated, “Should a global water fund be in control, giving concessions to multinational companies, then that’s not a solution for us. On the contrary, that would only add to the problems of the current system.”
Another member of Attac, Jacques Cambon, used to be the head of SAFEGE’s Africa branch, a subsidiary of the water conglomerate Suez. Cambon was critical of the idea of a global water fund, warning against centralization, and further explained that the World Bank “has almost always financed large-scale projects that were not in tune with local conditions.” Maria Theresa Lauron, a Philippine activist, shared the story of water privatization in the Philippines, saying, “Since 1997, prices went up by 450 to 800 percent… At the same time, the water quality has gone down. Many people get ill because of bad water; a year ago some 600 people died as a result of bacteria in the water because the private company didn’t do proper water checks.” But then, why would the company do such a thing? It’s not like it’s particularly profitable to be concerned with human welfare.
In Europe, the European Commission had been pushing water privatization as a condition for development funds between 2002 and 2010, specifically in several central and eastern European countries which were dependent upon EU grants. Since the European debt crisis, the European Commission had made water privatization a condition for Greece, Portugal, and Italy. Greece is privatizing its water companies, Portugal is being pressured to sell its national water company, Aguas do Portugal, and in Italy, the European Central Bank (ECB) and the Commission were pushing water privatization, even though a national referendum in July of 2011 saw the people of Italy reject such a scheme by 95%.
In this context, among the global institutions and corporations of power and influence, it is perhaps less surprising to imagine the chairman of Nestlé suggesting that human beings having a “right” to water is rather “extreme.” And for a very simple reason: that’s not profitable for Nestlé, even though it might be good for humanity and the earth. It’s about priorities, and in our world, priorities are set by multinational corporations, banks, and global oligarchs. As Nestlé would have us think, corporate and social interests are not opposed, as corporations – through their ‘enlightened’ self-interest and profit-seeking motives – will almost accidentally make the world a better place. Now, while neoliberal orthodoxy functions on the basis of people simply accepting this premise without investigation (like any religious belief), perhaps it would be worth looking at Nestlé as an example for corporate benefaction for the world and humanity.
Nestlé’s Corporate Social Responsibility: Making the World Safe for Nestlé… and Incidentally Destroying the World
As a major multinational corporation, Nestlé has a proven track record of exploiting labour, destroying the environment, engaging in human rights violations, but of course – and most importantly – it makes big profits. In 2012, Nestlé was taking in major profits from ‘emerging markets’ in Asia, Africa, and Latin America. However, some emerging market profits began to slow down in 2013. This was partly the result of a horsemeat scandal which required companies like Nestlé to intensify the screening of their food products.
Less than a year prior, Nestlé was complaining that “over-regulation” of the food industry was “undermining individual responsibility,” which is another way of saying that responsibility for products and their safety should be passed from the producer to the consumer. In other words, if you’re stupid enough to buy Nestlé products, it’s your fault if you get diabetes or eat horsemeat, and therefore, it’s your responsibility, not the responsibility of Nestlé. Fair enough! We’re stupid enough to accept corporations ruling over us, therefore, what right do we have to complain about all the horrendous crimes and destruction they cause? A cynic could perhaps argue such a point.
One of Nestlé’s most famous PR problems was that of marketing artificial baby milk, which sprung to headlines in the 1970s following the publication of “The Baby Killer,” accusing the company of getting Third World mothers hooked on formula. As research was proving that breastfeeding was healthier, Nestlé marketed its baby formula as a way for women to ‘Westernize’ and join the modern world, handing out pamphlets and promotional samples, with companies hiring “sales girls in nurses’ uniforms (sometimes qualified, sometimes not)” in order to drop by homes and sell formula. Women tried to save money on the formula by diluting it, often times with contaminated water. As the London-based organization War on Want noted: “The results can be seen in the clinics and hospitals, the slums and graveyards of the Third World… Children whose bodies have wasted away until all that is left is a big head on top of the shriveled body of an old man.” An official with the United States Agency for International Development (USAID) blamed baby formula for “a million infant deaths every year through malnutrition and diarrheal diseases.”
Mike Muller, the author of “The Baby Killer” back in 1974, wrote an article for the Guardian in 2013 in which he mentioned that he gave Peter Brabeck a “present” at the World Economic Forum, a signed copy of the report. The report had sparked a global boycott of Nestlé and the company responded with lawsuits.
Nestlé has also been implicated for its support of palm-oil plantations, which have led to increased deforestation and the destruction of orangutan habitats in Indonesia. A Greenpeace publication noted that, “at least 1500 orangutans died in 2006 as a result of deliberate attacks by plantation workers and loss of habitat due to the expansion of oil palm plantations.” A social media campaign was launched against Nestlé for its role in supporting palm oil plantations, deforestation, and the destruction of orangutan habitats and lives. The campaign pressured Nestlé to decrease its “deforestation footprint.”
As Nestlé has been expanding its presence in Africa, it has also aroused more controversy in its operations on the continent. Nestlé purchases one-tenth of the world’s cocoa, most of which comes from the Ivory Coast, where the company has been implicated in the use of child labour. In 2001, U.S. legislation required companies to engage in “self-regulation” which called for “slave free” labeling on all cocoa products. This “self regulation,” however, “failed to deliver” – imagine that! – as one study carried out by Tulane University with funding from the U.S. government revealed that roughly 2 million children were working on cocoa-related activities in both Ghana and the Ivory Coast. Even an internal audit carried out by the company found that Nestlé was guilty of “numerous” violations of child labour laws. Nestlé’s head of operations stated, “The use of child labor in our cocoa supply goes against everything we stand for.” So naturally, they will continue to use child labour.
Peter Brabeck stated that it’s “nearly impossible” to end the practice, and he compared the practice to that of farming in Switzerland: “You go to Switzerland… still today, in the month of September, schools have one week holiday so students can help in the wine harvesting… In those developing countries, this also happens,” he told the Council on Foreign Relations. While acknowledging that this “is basically child labor and slave labor in some African markets,” it is “a challenge which is not very easy to tackle,” noting that there is “a very fine edge” of what is acceptable regarding “child labor in [the] agricultural environment.” He added: “It’s almost natural.” Thus, Brabeck explained, “you have to look at it differently,” and that it was not the job of Nestlé to tell parents that their children can’t work on cocoa plantations/farms, “which is ridiculous,” he suggested: “But what we are saying is we will help you that your child has access for schooling.” So clearly there is no problem with using child slavery, just so long as the children get some schooling… presumably, in their ‘off-hours’ from slavery. Problem solved!
While Brabeck and Nestlé have made a big issue of water scarcity, which again, is an incredibly important issue, their solutions revolve around “pricing” water at a market value, and thus encouraging privatization. Indeed, a global water grab has been a defining feature of the past several years (coupled with a great global land grab), in which investors, countries, banks and corporations have been buying up vast tracts of land (primarily in sub-Saharan Africa) for virtually nothing, pushing off the populations which live off the land, taking all the resources, water, and clearing the land of towns and villages, to convert them into industrial agricultural plantations to develop food and other crops for export, while domestic populations are pushed deeper into poverty, hunger, and are deprived of access to water. Peter Brabeck has referred to the land grabs as really being about water: “For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be seen as the most valuable part of the deal.” This, noted Brabeck, is “the great water grab.”
And of course, Nestlé would know something about water grabs, as it has become very good at implementing them. In past years, the company has been increasingly buying land where it is taking the fresh water resources, bottling them in plastic bottles and selling them to the public at exorbitant prices. In 2008, as Nestlé was planning to build a bottling water plant in McCloud, California, the Attorney General opposed the plan, noting: “It takes massive quantities of oil to produce plastic water bottles and to ship them in diesel trucks across the United States… Nestlé will face swift legal challenge if it does not fully evaluate the environmental impact of diverting millions of gallons of spring water from the McCloud River into billions of plastic water bottles.” Nestlé already operated roughly 50 springs across the country, and was acquiring more, such as a plan to draw roughly 65 million gallons of water from a spring in Colorado, despite fierce opposition to the deal.
Years of opposition to the plans of Nestlé in McCloud finally resulted in the company giving up on its efforts there. However, the company quickly moved on to finding new locations to take water and make a profit while destroying the environment (just an added bonus, of course). The corporation controls one-third of the U.S. market in bottled water, selling it as 70 different brand names, including Perrier, Arrowhead, Deer Park and Poland Spring. The two other large bottled water companies are Coca-Cola and PepsiCo, though Nestlé had earned a reputation “in targeting rural communities for spring water, a move that has earned it fierce opposition across the U.S. from towns worried about losing their precious water resources.” And water grabs by Nestlé as well as opposition continue to engulf towns and states and cities across the country, with one more recent case in Oregon.
Nestlé has aroused controversy for its relations with labour, exploiting farmers, pollution, and human rights violations, among many other things. Nestlé has been implicated in the kidnapping and murder of a union activist and employee of the company’s subsidiary in Colombia, with a judge demanding the prosecutor to “investigate leading managers of Nestle-Cicolac to clarify their likely involvement and/or planning of the murder of union leader Luciano Enrique Romero Molina.” In 2012, a Colombian trade union and a human rights group filed charges against Nestlé for negligence over the murder of their former employee Romero.
More recently, Nestlé has been found liable over spying on NGOs, with the company hiring a private security company to infiltrate an anti-globalization group, and while a judge ordered the company to pay compensation, a Nestlé spokesperson stated that, “incitement to infiltration is against Nestlé’s corporate business principles.” Just like child slavery, presumably. But not to worry, the spokesman said, “we will take appropriate action.”
Peter Brabeck, who it should be noted, also sits on the boards of Exxon, L’Oréal, and the banking giant Credit Suisse, warned in 2009 that the global economic crisis would be “very deep” and that, “this crisis will go on for a long period.” On top of that, the food crisis would be “getting worse” over time, hitting poor people the hardest. However, propping up the financial sector through massive bailouts was, in his view, “absolutely essential.” But not to worry, as banks are bailed out by governments, who hand the bill to the population, which pays for the crisis through reduced standards of living and exploitation (which we call “austerity” and “structural reform” measures), Nestlé has been able to adapt to a new market of impoverished people, selling cheaper products to more people who now have less money. And better yet, it’s been making massive profits. And remember, according to Brabeck, isn’t that all that really matters?
This is the world according to corporations. Unfortunately, while it creates enormous wealth, it is also leading to the inevitable extinction of our species, and possibly all life on earth. But that’s not a concern of corporations, so it doesn’t concern those who run corporations, who make the important decisions, and pressure and purchase our politicians.
I wonder… what would the world be like if people were able to make decisions?
There’s only one way to know.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project, Research Director of Occupy.com’s Global Power Project, and has a weekly podcast show with BoilingFrogsPost.
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Corporate Culture and Global Empire: Food Crisis, Land Grabs, Poverty, Slums, Environmental Devastation and Resistance
Corporate Culture and Global Empire: Food Crisis, Land Grabs, Poverty, Slums, Environmental Devastation and Resistance
By: Andrew Gavin Marshall
Corporate power is immense. The world’s largest corporation is Royal Dutch Shell, surpassed in wealth only by the 24 largest countries on earth. Of the 150 largest economic entities in the world, 58% are corporations. Corporations are institutionally totalitarian, the result of power’s resistance to the democratic revolution, which was begrudgingly accepted in the political sphere, but denied the economic sphere, and thus was denied a truly democratic society. They are driven by a religion called “short-term profits.” Corporate society – a state-capitalist society – flourished in the United States, and managed the transition of American society in the early 20th century, just as Fascists and Communists were managing transitions across Europe. With each World War, American society – its political and economic power – grew in global influence, and with the end of World War II, that corporate society was exported globally.
This is empire. The American military, intelligence agencies, and national security apparatus operate with the intention of serving U.S. – and now increasingly global – state and corporate interests. Wars, coups, destabilization campaigns, support for dictators, tyrants, genocides and oppression are the products of Western interaction with the rest of the world.
In the same sense that “God made man in his own image,” corporations remade society in their own interest; and with equal arrogance. Corporations and banks created or took over think tanks, foundations, educational institutions, media, public relations, advertising, and other sectors of society. Through their control of other institutions, they extend their ideologies of power – and the variances between them – to the population, to other elites, the ‘educated’ class, middle class, the poor and working class. So long as the ideas expressed support power, it’s ‘acceptable.’ It can extend critiques, but institutional analysis is not permitted. Ideas which oppose institutional power are ‘ideological’, ‘idealist’, ‘utopian’, and ultimately, unacceptable.
Corporate culture dominates our society in the West. Being inherently totalitarian institutions, the culture – and its institutions – become increasingly totalitarian. This is the response by private economic power to undo the achievements in human history which came through increased democracy in the political sphere. Corporations and banks seek to control and consume all things, to dominate without end.
The only reason corporations were and are able to be the defining cultural institution of the 20th and now 21st century, is because of their economic power. This is derived from exploitation: of resources, the environment, labour, and consumers. It is enforced with repression: the job of the state in the state-capitalist society, along with massive subsidies and protectionist measures for corporate and financial interests. As corporate power extended around the world, the rapid destruction of the environment and resources accelerated, and Western powers ‘outsourced’ the environmental devastation our consumer societies ‘require’ to the so-called Third World. We consume, and they suffer; a marriage of inconvenience that we call “civilization.” Corporations and our state keep the rest of the world in a state of poverty and repression, eternally attempting to block the inevitable global revolution to create a human society that acts… humanely. We were busy buying things. Couldn’t be bothered.
Now what our societies have done to the people on whose land we now live, or everyone else in the world, is being done internally, to us. Everything is up for sale! Corporations make record profits, hoard billions and trillions in cash reserves, NOT being invested, but likely waiting until your standard of living is significantly reduced so that your labour and resources are cheaper, and thus, ultimately more profitable. This is called ‘austerity’ and ‘structural reform,’ political euphemisms for impoverishment and exploitation.
Corporations, banks and states have in recent years caused a massive global food crisis, driving food costs to record highs almost every subsequent year from 2007 onward. With billions of people in the world living on less than $2 per day, the majority of humanity spends most of their income on food. Price increases in food, caused primarily by financial speculation (big players include Goldman Sachs, Morgan Stanley, and Barclays), push tens of millions more people into poverty and hunger. Roughly one billion – 1/7th of the world’s population – live in slums. And they are growing rapidly. Massive urban slums were developed out of the imperialism Western states and corporations imposed upon the rest of the world, pushing people off the land and into the cities, whether induced by poverty or coerced by bombs and guns. All billed to the imperial Western state sponsors of terrorism. We supported (and support) ruthless and tiny elites in the countries we dominate[d] around the world, and now we are just beginning to realize the ruthless and tiny elite which rules over our own domestic lives. Their social function is that of a parasite: to suck the life blood out of all global society.
Food price increases have helped spur a massive global land grab, with Western (as well as Gulf and Asian powers) grabbing vast tracts of land – and water – around the world, for pennies on the dollar. This grab is most extensive in Africa, where in the past several years, mostly Western investors have grabbed land which amounts to an area roughly the size of Western Europe. The land not only contains extensive resource wealth, most importantly water (the Nile is up for sale!), but it is home to hundreds of millions of people, and globally, there are 2.5 billion poor people engaged in small-scale farming. This is primarily done through communal land ownership, something which Western society – with its ‘divine right’ of private property – does not understand. Thus, in international, state, and corporate law – which we designed – we deem communally owned and used land to be legally owned by the state. Our ‘investors’ – banks, hedge funds, pension funds, corporations and states – strike deals with corrupt states across the world to give us 40-100 year contracts for vast tracts of land, paying little or sometimes no rent. Then the “empty land” – as we call it – is cleared (of it’s “emptiness”, no doubt), evicting peoples who have been there for generations and beyond, who depend upon the land and the food it produces for their very lives. These people are being driven to cities, and ultimately, slums.
This is what we call “productive” use of land. So naturally, we then destroy it, eviscerate its environment, poison and pollute, extract, exploit, plunder and profit. Or we simply hold onto the land, not using it at all, just waiting until it goes up in profit. Even major American universities like Harvard are getting involved in the massive land grabs across Africa and elsewhere. This is the largest land grab in history since the late 19th century ‘Scramble for Africa’ where Europeans colonized almost the entire continent. When we do use the land for ‘productive use’, we say it will “help the climate” and “reduce hunger.” How? Because we will produce food and biofuels. And in doing so, we will use massive amounts of chemicals, pesticides, genetically modified organisms, deforestation, biodiversity destruction, highly mechanized and heavy fuel-use farming techniques. The food we produce – which is not much, we have more interest in things like biofuels, lumber, minerals, oil, cash-crops, etc. – is then exported to our countries, and away from the poor ones where hunger and poverty are so prevalent. They lose their land, gain more poverty, with the added bonus of extensive food insecurity, hunger, starvation, slum growth, increased mortality rates, disease, and violence. Poverty is violence.
This is how Western states, banks, corporations and international organizations address the issue of “hunger”: by creating more of it. And in a deeply disturbing irony, we call this moving towards “sustainability.” Little did we know that power interests have a different definition of “sustainability” than most people: they simply combined the words sustained and profitability, and called it “sustainability.” And coincidentally, that word already has a meaning to most people, so we simply misinterpreted the meaning. But there are people who take that concept seriously, those who experience the major costs of an unsustainable society.
We are witnessing a massive global resistance to these processes, largely driven by indigenous peoples – in Africa, Latin America, Asia, and now in North America. In Canada, the ‘Idle No More‘ movement began with four indigenous women in Saskatchewan deciding to meet up and discuss their concerns about Steven Harper’s “budget bill,” which, among other things, had reduced the amount of Canada’s protected rivers, lakes, and streams from roughly 2.5 million (as of Dec. 4, 2012) to somewhere around 62 (as of Dec. 5, 2012). Now a large, expanding, and increasingly international social movement led by indigenous peoples is taking place. Less than two months ago, it began with four women having a discussion.
Canada’s Indigenous peoples are showing Canadians – and others around the world – how to stand up against power. And they’ve had practice. For over 500 years, our societies have been oppressing and often eradicating indigenous populations at ‘home’ and abroad. Indigenous peoples, like other oppressed peoples, are at the front lines of the most oppressive nature of our society: they experience and have experienced exploitation, environmental devastation, domination and decimation. With the world’s Indigenous peoples speaking – not only in Canada, but across Latin America, Africa, and elsewhere – it is time that we in the West begin to listen. It is always important to listen to those who are most oppressed; the histories of our ‘victims’ are rarely written or known, at least not to us. Victims remember. And it matters that we begin to listen.
How can we expect to change – or know what and how to change – our societies if we do not listen and learn from those who have experienced the worst of our society? Indigenous people are now giving us a lesson in democratic struggle. If we continue on our current path, Indigenous communities will be completely wiped out; the powers that rule our society will have completed a 500-year genocide.
So we have to ask ourselves the question: should we now listen to, learn from, and join with these people in common struggle for justice and the idea of a humane society, or… are we still too busy buying things?
Perhaps it is time we all should be ‘Idle No More’.
The above was a short summary of roughly three separate chapters currently being researched and written as part of The People’s Book Project. To help the Project continue, please consider spreading the word, sharing articles, or donating.