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In the words of Rene Dumont, a former French Minister, ‘We are first and foremost exploiters of the poor, because of an economic system based on dominance that has been cunningly devised by and for the rich nations’. (Stranglehold in Africa). This statement encapsulates the currently followed paradigm for development. 
Food production – essential for Third World self- sufficiency When the newly independent Third World countries in their quest for achieving economic development and full employment, commenced action through various programs designed with guidance and advice from the United Natis, with the help of Developed Countries and the cream of academia at leading universities and were achieving some success, the Developed Countries found that they were losing markets for their agricultural produce and manufactures. Something had to be done and they resorted to subversive methods of neocolonialism. This took on a multi-pronged form. The USA came up with the PL 480 Program, whereby the excess wheat produced in the USA was dumped on the developing countries. The wheat was offered at low prices undermining the local production. This was the ‘bread trap’ to which many countries have fallen: ‘We taught people to eat wheat who did not eat it before’. While PL480 can be utilized to help crisis situations and support Third World development, today it is used purely to create markets for U.S. produce. Consequently many countries like Mexico that formerly exported food became importers. Then the World Bank and the International Monetary Fund came up with the Structural Adjustment Program(SAP), which comprise a number of policies that when implemented together inevitably cause poverty within any country. The SAP provisions include: * The country should follow a high interest rate policy. This makes local manufacturers and producers obtain money at high interest rates while competitors from abroad can obtain loans at very cheap rates. This causes the death knell of local production and causes unemployment. The country has to follow free trade policies and reduce import tariffs. When import tariffs are reduced local producers cannot compete and give up production for the market. Free market policies mean that imports cannot be restricted and this amounts to create an Import and Sell Economy which leads to increased prices. Every Developed Country has used tariffs on imports in their formative years to boost their local production. Third World leaders are brain washed to think of Free Trade Agreements as achievements; in actual practice local production is sacrificed and unemployment increases. * Removal of subsidies are insisted on, while the superpowers can continue with subsidies. What is not well-known is that the subsidies offered to producers in developing countries is based on the cost of production while the subsidies offered in Developed Countries is based on the premise of enabling the farmer to live a life of affluence. Privatization of national assets is insisted upon. When assets are privatized it gets into the hands of the private sector where the aim is not national development. The aim of the private sector is to make profits fast and ultimately the asset ends up in the hands of foreigners, where goals of national development, creation of employment are all secondary concerns. Then the prime aim is to make profits for the shareholders in the mother country. It is a well-known strategy of foreign corporations to control raw material assets and manage it not in the national interest but in the company’s interest to bolster the sale of items manufactured in the Developed Countries. Devaluation of local currencies is advocated on the grounds that the local currency should find its correct value in terms of supply and demand. Next, the IMF advises countries to Free Float the currencies. Free Floating means that the State- the Central Bank has no control over the foreign exchange that comes in and allow the commercial banks to determine the exchange rate. The modus operandi is to privatize the State Banks, get foreign banks in so that the currency can be controlled by foreign banks. In reality, the foreign banks hoard foreign currency collections and bid the foreign exchange value upwards when a large bill has to be paid in foreign currency. This happened in Sri Lanka in January 2001, when the Rupee was free floated and the Rupee plummeted. When the Turkish Lira was freefloated in 2001, the Lira suffered a devaluation of 36 percent. In 2003, the USA pressurized China to free float the Yuan but the Chinese were not gullible. The Sri Lankan Rupee has plummeted in value from Rs 15.70 to the Ao in 1977, (when Sri Lanka started following the IMF advice) to Rs 35 to the Ao in 1983 to Rs. 180 to the Ao in 2003, marking a drop of 1046 percent in 1977 to 2003 and a drop of 415 percent in the period 1983 to 2003. In Indonesia the Rupiah has been devalued from Rs 1330 to the Ao in 1983 to Rs. 14,575 to the Ao in 2003, a drop of 996 percent. The Turkish Lira has dropped in value from Lira 336 to the Ao in 1983 to Lira 2,395,000 to the Ao in 2003, marking a devaluation of 712,000 percent. The Ghanian Cedi has been devalued from 5.7 Cedi to the Ao in 1983 to 15,711 Cedi to the Ao in 2003, a devaluation of 275,000 percent. The Nigerian Naira has been devalued from Naira 1.11 to the Ao in 1983 to Naira 240 to the Ao in 2003- a drop in value of 21,800 percent. This devaluation of currencies is done by induced supply and induced demand- all designed to trash the value of the currencies. Increasing the demand happens when foreign exchange is liberalized as insisted by the IMF, while restricting the supply is automatic because no economy can earn endless foreign exchange to support unrestricted imports and liberal use. In addition the supply is further restricted by foreign banks that hoard the foreign currency it can get hold of. The IMF plan is to privatize local banks so that foreign banks can act undeterred in their manipulations. The effect of these devaluations on any economy has to be assessed against the fact that under the terms of the SAP, the economies have become an Import and Sell economy because many consumer items are imported and the prices of all imports have skyrocketed because of the devaluation itself, making them beyond the reach of the people, whose incomes are stagnant. Though meagre wage increases are given the value of wages dwindle in real terms. Abject poverty, unemployment and high inflation is the inevitable result. It is important to note that through this process of Devaluation all exports are automatically discounted which enables the Developed Countries to obtain imports at very low prices and this helps them to keep the inflation in their countries at a very low level. I served as a member of the Sri Lanka Administrative Service for 18 years and have worked at first as an Assistant Commissioner and finally at Head of Department level being in charge of a major District in charge of social and economic development. I worked in Bangladesh for two years as the Commonwealth Fund Advisor to the Ministry of Labour and Manpower. Bangladesh is the most fertile country I have ever seen. In my experience, there is no problem of these two countries achieving development- self sufficiency in food and small consumer goods within a few years. I can make this statement without reservation. I have traveled widely in Mexico, Turkey, Indonesia and Thailand and can state that there is no necessity for these countries to be indebted or to have their currencies trashed. All these countries have a tremendous potential, with ample land resources. Indonesia too has been advancing in development till the IMF forced them to dismantle the infrastructure the countries had built up to help the peasants to become productive farmers. However these countries can develop only if the Developed Countries and their protages the World Bank and the IMF stop their manipulations. It has to be stated that almost all the work of these two Bretton Woods Institutions since the mid Seventies has been schrewdly designed to sabotage development in the Third World countries. The current paradigm of development has totally failed in developing the Third World. Though this process has enabled the development of the Developed Countries, it has caused poverty, untold misery and sheer deprivation in the Third World. It is time that the Third World countries take a hard look at countries like India and Malaysia where they have managed to follow strict tariff controls and develop their agriculture and industries and keep their currencies intact in value. Mahatir Muhammed showed the entire world that in order to bring Malaysia out of the East Asian Crisis in 1997/98 he had to follow the obverse of the SAP provisions. Malaysia succeeded and that offers hope to every Third World country. In the Sixties the United States was genuinely interested in finding out how development can be brought about. They selected a poverty stricken Thana (area of 102 square miles) in Comilla, Bangladesh, funded Programs for development with the help of expertise from Michigan State University. This was the Comilla Program of Rural Development. The aim was self sufficiency in food, full employment, the development of agriculture and industries in both the private and cooperative sectors. The method was to use community development and non-formal education techniques to ‘build people’ in the words of its legendary director, Dr Akhter Hameed Khan. In less than nine years the yield of paddy was more than doubled, full employment achieved and the employment created spilled over into adjoining areas. It is an achievement without any parallel in the annals of development. Despite the intrinsic success, the WB and the IMF in drafting the Structural Adjustment Program, ignored the strategies that were instrumental in enabling development in this Program. In 1982, the Ministry of Youth Development of Bangladesh commenced a Youth Self Employment Program, in order to combat the growing tide of youth unemployment. It was based on the development of agriculture, poultry, dairy products and industries. The core elements were: to teach vocational trainees basic elements of economics, encourage trainees to prepare a project to be self employed and start implementing the project, not to offer any subsidies but to offer free training and a fast and efficient extension service- remedial action- technical assistance at the doorstep of the project and all training institutes had to provide extension services when any trainee commences self employment. The thrust was on non-formal education where the capacities of the youths were built up as they engaged in commercial activities aimed at making them self reliant entrepreneurs. This Program has by November 2002 enabled 709,993 persons to become self employed- derive incomes by creating production. Since 1997, annually 160,000 youths are given intensive training and guidance to become self employed. This is easily the largest self employment program the world has seen. I designed and established this Program when I worked there as a consultant in 1982 and 1983. Both the Comilla Program of Rural Development and the Youth Self Employment Program of Bangladesh have stood the test of time and stand as a beacon of hope for prospective developers. There was once a time when the premier universities concentrated on teaching disciplines- strategies to bring about development viz., community development and non-formal education. The Universities even directed projects to develop the Third World. I functioned myself as a Research Associate on the Michigan State University Non-Formal Education Project in Indonesia. This was funded by the U.S. Agency for International Development. The earlier mentioned Comilla Program of Rural Development was another such attempt. These were genuine attempts of the excellence in academia. The thrust was not only at providing Aid, but to explore ways and means of utilizing the Aid to bring about development. These studies and projects were stopped and universities were given second place to Non Governmental Organizations- the latter working on a profit basis while the Universities went bent on providing a service. In the Business Schools the concentration was on methods to make profits, how to get workers to work more, methods of hiring and firing workers, how companies can show profits by selling assets – even by retrenching staff- the aim was to grope for methods to enable profits for the shareholders and in this craze, the aim of rounded development – creating local production – self sufficiency, looking after the interests of the country, the people – their well-being and employment was totally sacrificed. In agricultural economics, management techniques and financial analysis were used to enable farmers to become profitable, how small industries could be developed, how cooperatives and marketing systems could be designed and implemented to help a peasant economy. Community Development techniques were used to enable people to become partners in development and for communities to take charge of development. Non Formal Education was taught to equip professionals to guide and enable people to develop their capacities and become self-reliant. The Business & Management Studies that rapidly gained ground had no place for these concepts. Instead financial analysis and management techniques were devoted to amass profits for the shareholders. It may be worthwhile if the Business Schools could address their minds to the development of entrepreneurs in peasant economies and the building up of the commercial infrastructure to enable peasants to march from production in their subsistence economies towards production in a market economy. It is not the creation of mega entrepreneurs, but the idea of enabling a bold peasantry to succeed. It would behove of the Developed Countries to listen to the words of Joseph Stiglitz, the Chief Economist of the World Bank when he tried to correct the IMF in Indonesia. In his own words: “I suggested that the excessively contractionary monetary and fiscal program could lead to political and social turmoil in Indonesia. The IMF pressed ahead, demanding reductions in government spending. And so, subsidies for basic necessities like food and fuel were eliminated at the very time when contractionary policies made these subsidies more desperately needed than ever.” Indonesia blew up in riots deposing Suharto and the flames are yet taking their toll in human misery, easily evident when I visited in 2003. Stiglitz was actually thrown out of the World Bank for his words of wisdom. Even the ‘Wall Street Journal’ has been extremely critical of the IMF. In their words: “The IMF Drill is as follows. A Third World poor country with a pegged currency is working towards taming its inflation. Instead of a growth formulae, it gets the IMF’s old austerity dosage which slows down the economy. The Banks begin to falter in paying their old debts. The currency slumps and the banks are now in real trouble?. Is this any way to run an international monetary system” (Feb 22, 2001). Once when Robert McNamara assumed duties as the President of the World Bank he said that the World Bank had been going on the wrong track. He tried to correct it but miserably failed. The latter part of his tenure is noted for creating indebtedness among the Third World countries. It is time that the World Bank, the IMF and the Developed Countries do understand what is really happening in the Third World and instead of engaging in further exploiting the Third World, commence groping for a paradigm that will usher in development first in their own countries by arresting the recessions that scourge their economies, eliminating poverty and finally bring about development in the entire world. They have the ability and the strength to attend to this task. Today the attempt of the Developed Countries is to squeeze the assets of the Third World and thereby usher development in their countries. A paradigm for development based on the tears and tribulations of the people in the Third World is unethical. Let that not continue. Surely there is a paradigm by which development can be ushered in the First, Second and Third Worlds. Let us hope that the leaders of the Developed Countries, the World Bank and the IMF, the Presidents and Vice Chancellors of the premier Universities – the depositories of academic excellence, may take on this challenge in the name of humanity. |
