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The common good of India and the Planning Commission of today

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Montek_Singh_questionThe Deputy Chairman of the Planning Commission, Government of India, has in an interview starkly emphasised the priorities for the current government, priorities which accord no importance whatsoever to the principles governing the work of the Planning Commission itself, principles that were clearly enunciated 63 years ago.

In the interview, titled ‘We can’t get on a 9% growth path if we underprice energy’, Montek Singh Ahluwalia, the Deputy Chairman of the Planning Commission, has been asked a series of questions by reporters of one of India’s English-language business and financial dailies.

Q 1. Of late, there have been moves to correct the under-pricing of energy. Is the government moving the way the 12th five-year Plan document wanted it to? [In this question the reporters provide as a given the idea of ‘under pricing’ of energy in India.]

A 1. If prices do not reflect the real cost of energy, why will anyone invest in energy-saving equipment? Also, if prices don’t reflect the marginal cost of supply, which is imports, why will people invest to produce energy? Our problem is that energy is generally under-priced. Diesel, cooking gas and kerosene are under-priced.
We need a complete rethink on energy prices and align close to world prices. We cannot close the gap at one go but phased adjustment is necessary. Nobody likes to pay a higher price but we must recognise that we cannot expect to get on a nine per cent growth path if we don’t align its energy prices with global prices.

Ahluwalia wants nine per cent annual growth of the Indian economy at all costs. That these costs are social, ecological and ruinous are of no concern to him. He is only interested in the ‘marginal cost of supply’ of energy, of investment to produce more energy. He has ignored the data from the Government of India (in fact the Central Electricity Authority) which shows that the transmission and distribution losses between power generation and consumption are still 24% averaged for the last five years. Ahluwalia is either ignorant of or unmindful of the steep rise in the ‘fuel and light’ sub-index of the All-India Consumer Price Index. Over a single month, from November to December 2012, the fuel and light index for agricultural labourers rose from 760 to 769 and for rural labourers it rose from 758 to 766. What will this index reach for these two groups if Ahluwalia (and his supporters) has his way? What fearful cost will be exacted from India’s agricultural and rural labourers when our prices are ‘aligned’ with global prices? For whose benefit is this alignment being promoted by Ahluwalia?

Q 2. What should be the direction in coal?

A 2. We need some difficult decisions there. In the Plan, we have clearly said the nationalisation of coal needs to be reconsidered. There is no economic logic in keeping the private sector out of coal if it is allowed in petroleum and natural gas. Why do we allow the private sector in these areas? Because we want to bring in as much investment as possible into energy production and we want new technology.

Ahluwalia is (a) contemptuous about the Planning Commission’s own ‘Low Carbon Strategies for Inclusive Growth’ direction paper, in which the adoption of renewable energy sources and the steady reduction of coal and oil as primary fuels is advocated, and (b) conceals the truth that in India there are 455 new coal-powered generation plants under construction or have been approved (who needs clearances from the castrated Ministry of Environment and Forests? who needs environment impact assessments, pesky things that hinder our gallop towards GDP growth rates? who needs public consultation when the Prime Minister’s Office itself rams through projects?) or being planned. These 455 coal burners are to generate some 519,396 megawatts. For whom? For those agricultural and rural labourers struggling to buy kerosene for a stove on which to cook their evening meals? No, for the urban middle classes  who are being gathered together by India’s unspoken social engineering project that herds the income-privileged into towns and cities.

Many of these new coal burners are private sector already. I mention coal burning power plants currently under construction in three states only to overturn Ahluwalia’s economy with the truth. In Andhra Pradesh who are VSF Projects, Thermal Powertech Corporation, Indu Projects Limited and Dr. RKP Power? In Bihar who are AES India, Mirach Power Pvt. Ltd, Triton Energy Ltd and Buxar Bijlee Company? In Maharashtra who are Indiabulls Power, Ideal Energy Projects, Mantri Power and Lenexis Energy? Who are they if not private?

The World Resources Institute’s Global Coal Risk Assessment explained: “International public financial institutions are important and long-time contributors to the coal industry. Since 1994, multilateral development banks (MDBs) and industrialised countries’ export credit agencies (ECAs) have helped finance 88 new and expanded coal plants in developing countries, as well as projects in Europe. Together, MDBs and ECAs have provided more than US$37 billion in direct and indirect financial support for new coal-fired power plants worldwide. The World Bank has actually increased lending for fossil fuel projects and coal plants in recent years. An analysis by the Environmental Defense Fund concludes that the lending strategies of MDBs and ECAs in the energy sector do not sufficiently consider the environmental harm wrought by fossil fuel projects.”

Q 3. There is a talk of a food security law and there is a five-year map for the fiscal deficit. Can both go hand in hand?

A 3. Yes. If food security is a critical programme, we can give it top priority and cut something else. We have talked about reducing subsidies from 2.4 per cent of GDP to 1.5 per cent. We have not said there should be no subsidy. There is enough room in the limit indicated to accommodate a sensible food security bill but it does mean other subsidies will have to be cut more.

Why is Ahluwalia using an ‘if’ to misqualify the need for the Republic of India to provide affordable food to its citizens? What is meant by “cut something else”? Who is to decide what essential programmes need support if not the citizens of India through their representatives and through public participation and consultation? Ahluwalia’s are the statements of a ruling regime that has abandoned every last shadow of democratic practice.

To turn to the Planning Commission itself. In its description of its functions the Planning Commission has provided this information:

“The 1950 resolution setting up the Planning Commission outlined its functions as to: (a) Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement; (b) Formulate a Plan for the most effective and balanced utilisation of country’s resources; (c) On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage;” [There are four other functions mentioned.]

Worryingly, what has been omitted is far more significant. What do these functions relate to? The answer can be found in the introduction to the First Five Year Plan:

“The Planning Commission was set up in March, 1950 by a Resolution of the Government of India which defined the scope of its work in the following terms:

‘The Constitution of India has guaranteed certain Fundamental Rights to the citizens of India and enunciated certain Directive Principles of State Policy, in particular, that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life, and shall direct its policy towards securing, among other things—

that the citizens, men and women equally, have the right to an adequate means of livelihood;
that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; and
that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.’ “

Citizens, welfare, people, social and economic and political justice, control by the people of the material resources of India, the common good, no concentration of wealth, no means of production to the common detriment. These have now been hidden by the Planning Commission of today, shamefully. And it is from that base act of concealment that Montek Singh Ahluwalia speaks.

Occupy the EU, and merry christmas

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TNI-map-of-EU-resistance-2012Let’s look at a few, very few, trifling almost, pieces of evidence. As austerity cuts swept Europe, the numbers of the wealthy in Europe with more than US$1 million (€772,000) in cash rose from 2.6 million in 2008 to 3.2 million people in 2011. Together they were worth US$10.1 trillion (€7.8 trillion) in 2011.

Don’t look away yet. The five biggest banks in Europe made profits of €34 billion in 2011. Executive pay for the CEOs of the 100 largest companies on the London stock exchange rose by 49% in 2010, compared with 2.7% for the average employee.

Yes, I’m coming to the Occupy anthem, but first: there are between 15,000 and 30,000 estimated lobbyists in Brussels – more than in Washington. Some operate as “professional consultants” and under other titles and relatively few have registered with the EC voluntary lobbyist register. 68% of European lobby groups represent business interests. Trade unions make up 1-2%.

This is courtesy the very excellent and incendiary update to the EU Crisis Pocket Guide, first brought out by the Transnational Institute. [The update is in English, and the pocket guide is also available in Italian and in Spanish.)

TNI-EU-banks_bailout-2012TNI’s EU Crisis Pocket Guide tells us: how a private debt crisis was turned into a public debt crisis and an excuse for austerity; the way the rich and bankers benefited while the vast majority lost out; the devastating social consequences of austerity; the European Union’s response to the crisis: more austerity, more privatisation, less democracy; and contains ten alternatives put forward by civil society groups to put people and the environment before corporate greed.

Indeed, as Triple Crisis has warned, the GDP figures published in the Eurostat press release on the 15th of November 2012 for the Economic and Monetary Union (euro area) marked the confirmation of a double-dipped recession (with negative growth in quarters 2 and 3 of 2012). Gross domestic product was 0.6 per cent lower in the third quarter of 2012 compared with 12 months earlier. The return of recession is symbolic of the failure of the austerity programmes, which have been striking down economic activity throughout the EU and EMU. It should give rise to some thoughts as to why the austerity programmes are not working to bring down budget deficits without damaging economic activity.

But back to TNI and the Pocket Guide, which has said that in spite of the crippling costs of bailing out the banks, the EU still has not agreed, let alone put into operation, any major bank reforms. Four years on, only a few new rules to reduce some particularly risky practices by banks and financial markets, exposed by the financial crisis, have become operational.

TNI-occupy_the_EU-2012What’s the remedy? There are a goodly number and here are but a few, as offered by the TNI’s very competent heads: (1) Bring the financial sector back under public control and do this by banning speculative financial instruments like Credit Default Swaps and food speculation, reintroduce rules that separate retail/utility banking from investment banking, impose size limits on banks so none can become “too big to fail”, stop new financial products unless proved safe and socially useful, ban hedge funds and other risky speculators who only make money from money, re-introduce controls on capital flows. (2) Tax the rich, the speculators and the polluters, impose tax on international financial transactions, increase taxes on the rich to at least the same as pre-1980 levels, end subsidies for fossil fuel industries, close down tax havens, establish a maximum pay ceiling and ban bonuses, introduce a Basic Income available to all.

Verso-Crisis_Eurozone_smFor more background, there is the book, ‘Crisis in the Eurozone’ (Verso), and this has described the credit crunch, which led (coaxed or demanded) that governments around the world step in to bail out the banks. “The sequel to that debacle is the sovereign debt crisis, which has hit the eurozone hard. The hour has come to pay the piper, and ordinary citizens across Europe are growing to realize that socialism for the wealthy means punching a few new holes in their already-tightened belts.”

In this book, a leading member of the Research on Money and Finance group, Costas Lapavitsas argues that European austerity is counterproductive. The book shows that cutbacks in public spending will mean a longer, deeper recession, worsen the burden of debt, further imperil banks, and may soon spell the end of monetary union itself.

The EU crisis pocket guide

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The Transnational Institute has produced a terrific pocket guide on the financial crisis in the European Union, called, not surprisingly, ‘The EU Crisis Pocket Guide’. It’s a very handy alternative to reading about 257,000 words of confusing and jargon-heavy tripe authoritative commentary written by hopelessly compromised economist-blokes commentators and observers of the financial scene.

‘The EU Crisis Pocket Guide’ tells you, as straight as a punch to the chin, how a crisis made in Wall Street was made worse by EU policies, how it has enriched the 1% to the detriment of the 99%. It doesn’t stop at that – quite unlike the boring and largely clueless economist blokes who take great delight in pointing out a problem but have little to say about how to solve it, keeping the 99% in mind.

In keeping with the civilised socialist tendency therefore, ‘The EU Crisis Pocket Guide’ outlines some possible solutions that prioritise people and the environment above corporate profits.

You are well encouraged to download the booklet from these links:
Pocket guide: 12 page (PDF, 403KB) or Pocket guide: 8 page (PDF, 399KB)

What ‘The EU Crisis Pocket Guide’ contains: How a private debt crisis was turned into a public debt crisis and an excuse for austerity; The way the rich and bankers benefited while the vast majority lost out; The devastating social consequences of austerity; The European Union’s response to the crisis: more austerity, more privatisation, less democracy; Ten alternatives put forward by civil society groups to put people and the environment before corporate greed; Resources for further information.

I am much obliged to the peerless Links International Journal of Socialist Renewal for calling our attention to this absolute gem of a guidebook. Links, if you didn’t already know, promotes the exchange of information, experience of struggle, theoretical analysis and views of political strategy and tactics within the international left. You are well advised to read it regularly.

Here are some of the eye-openers from this Pocket Guide, things we suspected but which the dibbly-dobbly economist blokes and their corporate sponsors never admitted:

Much of the so-called debt crisis was caused not by states spending too much, but because they bailed out the banks and speculators. European Union government debt had actually fallen from 72% of GDP in 1999 to 67% in 2007. It rose rapidly after they bailed out the banks in 2008. Ireland’s bank bailout cost them 30% of their national output (GDP) and pushed debts to record levels.

As austerity cuts swept Europe, the numbers of the wealthy in Europe with more than $1 million in cash actually rose in 2010 by 7.2% to 3.1 million people. Together they are worth US$10.2 trillion. The five biggest banks in Europe made profits of €28 billion in 2010. There are 15,000 professional lobbyists in Brussels, the vast majority of them representing big business.

European Union’s answers to the problem? More austerity. In the UK, 490,000 public sector jobs are being cut; in Ireland, wages for low paid workers have been reduced; in Lithuania the government plans to cut public spending by 30%. The EU is planning to impose requirements by 2013 that means that no European member state countries can have a budget deficit of more than 3% of GDP or a public debt of more than 60% of GDP which will mean even more austerity.

Alternatives from the 99% – Clearly, there is a strong need to break with the dangerous free market fundamentalism that has created and worsened a social crisis of vast proportions. Here are some proposals for alternatives – put forward by many civil society groups – that could create a fairer and more just world.

The IMF, its directeur général, and a New York hotel maid

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Friday afternoon, South Asia

"Do you really think I've nothing better to do?"

The business zine ‘Emerging Markets’ has reported that French finance minister Christine Lagarde “has emerged as the frontrunner to succeed Dominique Strauss-Kahn as IMF chief as the chances of former Turkish politician Kemal Dervis receded”. Apparently, there were hopes that Kemal Dervis would become the first emerging market politician to head the IMF, but these have faded Lagarde emerged as frontrunner to succeed DSK.

The zine has said that “senior policy officials” consulted by it said they were backing the French finance minister (pic left) in the wake of Strauss-Kahn’s dramatic resignation. A key ally of former Turkish economy minister Kemal Dervis, a leading contender for the role, acknowledged that his chances of clinching the top job had receded.

Asked whether Dervis woud become managing director Homi Kharas, a deputy to the former Turkish finance minister now at the Brookings Institution in Washington, told Emerging Markets: “Unfortunately I think it’s unlikely.” He said Lagarde’s appointment could undermine the IMF’s legitimacy if her candidacy is secured solely through a political deal among rich nations. “Major countries at the end of the day are prepared to forgo the principle of technocratic appointments for the short term expediency of having a politically trusted friend and that seems to be the way that the world is currently governed.”

The result will be a revolt against the Fund by developing countries, he added. “What we will see from the emerging nations is that they will vote with their feet. “Developing nations can make [international financial institutions] less relevant as global institutions and restrict them to being essentially institutions that play in the arena of the spheres of influence of the rich countries. That is what is happening more and more.”

Wednesday evening, South Asia

The IMF is obviously very slow to learn, or chooses not to, or has jettisoned Strauss-Kahn. Following its first bland, utterly non-committal and quite unconcerned statement about l’affaire DSK, it has come out with a second which, if possible, bests the first at idiocy in the face of a massive loss of moral face.

Here is the statement:

The IMF logo seen during a news conference in Bucharest, March 2009. Photo: Reuters/Bogdan Cristel/Files

“The following can be attributed to William Murray, an IMF spokesman, in response to questions regarding contact with the Managing Director and on speculation in media about his status: ‘We have not had contact with the Managing Director since his arrest in New York. Obviously, it will be important to be in contact with him in due course. We are aware of widespread speculation about the Managing Director’s status. We have no comment on this speculation, other than to note, as we did earlier this week, that the Executive Board was briefed informally on developments regarding his arrest in New York. We continue to monitor developments. Meanwhile, Mr. John Lipsky remains acting Managing Director, and the Fund continues its normal work’.”

This sounds a lot like the IMF is saying – “well it’s just one of those things, let’s just say not very much out of the ordinary is happening and let’s assure you that we’re still doing what we do best, which is wreck the lives of people in developing countries”.

Under Francois Mitterrand, Strauss-Kahn served as a minister, then became a corporate lobbyist in the 1990s. As finance minister in the 1997-2002 Jospin “Plural Left” government, Strauss-Kahn privatized several public firms—France Télécom, Crédit Lyonnais bank, and defense firm Thomson-CSF. After resigning as minister in 1999 in a bribery scandal, he remained a major figure inside the PS and corporate circles, taking the IMF post after being nominated by Sarkozy in 2007.

As IMF chief, he has overseen deep social cuts impoverishing workers in many indebted countries—Greece, Ireland, Latvia, Hungary, Romania, and Pakistan—in exchange for IMF loans. He recently oversaw financial negotiations with the military dictatorship in Egypt, as it tries to combat the resistance of the working class following the departure of Hosni Mubarak.

Zhu Min, Group Executive Vice-President, Bank of China, speaks during a session at the World Economic Forum Annual Meeting of the New Champions in Tianjin, China 28 September 2008. Photo: World Economic Forum

The ‘Letter from China’ blog in The New Yorker points to some of the turmoil over leadership of the IMF, and what is slowly being seen as Asian pressure over what has so far been Western dominance of the Fund and Bank senior positions.

As pressure builds on Strauss-Kahn, said the blog, today’s Huanqiu Shibao is decidedly less cautious: “If a Chinese person takes the post”—of managing director—“it will greatly promote economic exchange between China—the country with the largest trade volume and holdings of foreign reserves—and the international community.” Another Huanqiu article referred to speculation in the Western press that China’s top official at the IMF, Zhu Min, a Johns Hopkins-and-Princeton-trained economist, is among the oft-mentioned candidates. The story concluded gloomily that Western reports generally see Zhu as insufficiently experienced, and likely to reach only a deputy managing director “this time, in part because “Europe and America will oppose the appointment of a Chinese person to lead the IMF.”

Monday evening, South Asia

Dominique Strauss-Kahn, head of the International Monetary Fund, is lead from a police station Sunday, May 15, 2011 in New York where he was being held. Photo: AP

In Europe and in the multilateral financial institutions, positions are cautiously being taken over the Strauss-Kahn case. So far, the Euromedia has focused a great deal on the effect l’affaire DSK is having on the French presidential election and the challenge to Sarkozy. But what about the IMF and World Bank? Silence. What about the men and women who run these enormously powerful and influential organisations – what do they have to say about this case and its reflection on their collective values? More silence.

We have heard from The Economist, which has long been a staunch ally of the Fund and the Bank. “Whatever the fall-out on French politics, Mr Strauss-Kahn’s arrest has left the IMF reeling. One insider called it a ‘disaster’,” the commentary noted. “Although he had been expected to leave within a couple of months, Mr Strauss-Kahn, unless quickly exonerated, will now presumably be forced out far sooner. That leaves the fund without a political heavyweight at the top in the midst of important negotiations with European policymakers over Greece’s debt crisis.”

What is noteworthy is the ways in which these institutions are discussed by the biggies of global and international economics. Only 10 days ago, Joseph E Stiglitz is University Professor at Columbia University, a Nobel laureate in Economics, and the author of ‘Freefall: Free Markets and the Sinking of the Global Economy’, had this to say about the IMF and DSK.

“For progressives, these abysmal facts [growing inequality, recession, unemployment] are part of the standard litany of frustration and justified outrage,” wrote Stiglitz. “What is new is that the IMF has joined the chorus. As Strauss-Kahn concluded in his speech to the Brookings Institution shortly before the Fund’s recent meeting: ‘Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF’s mandate. It must be placed at the heart of the policy agenda.’ Strauss-Kahn is proving himself a sagacious leader of the IMF. We can only hope that governments and financial markets heed his words.”

I really wonder what Prof Stiglitz thinks of his encomiums now. Reality outside the cozy models of macroeconomics can be startlingly, starkly different.

Sunday evening, South Asia

Le Nouvel Observateur's website on Sunday was entirely Strauss-Kahn.

The Sunday lurched on about L’affaire DSK and in my view the most confused reactions have come from the media in France. They seem confused about what they ought to feel and say. There are some responses concerning the blow to the honour and prestige of France dealt by the sordid allegations, but there is also a sense of bemoaning the end of a challenger to Sarkozy, and quite a few mutterings that this is a dreadful plot to trap Strauss-Kahn.

Here is a selection of the reaction and early views on the impact of L’affaire DSK.

Euronews has reported that lawyers for Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Sunday that their client will plead not guilty to accusations of trying to rape a maid at a New York hotel. “A spokesman for the New York Police Department said Strauss-Kahn faces charges of a criminal sexual act, attempted rape and unlawful imprisonment. The IMF chief does not have diplomatic immunity and was set to appear in court later on Sunday.”

Business Insider has quite bluntly said that ‘IMF Throws Dominique Strauss-Kahn Under The Bus’. “The IMF is not exactly standing up for the man,” they wrote, referring to the bland and shifty IMF statement issued today. “The IMF has already had to investigate and apologize for one Strauss-Kahn sex scandal (an affair with a subordinate). Strauss-Kahn survived that one, after apologizing publicly to the IMF and his wife. His surviving this one, at least with his job intact, seems unlikely.”

The New York Times has pronounced in a headline, ‘Arrest Throws French Politics Into Disarray’. This is hardly so. What has thrown France and its suffering workers into disarray is not such conduct, but the imperial ambitions of Sarkozy in Africa and his government’s ramshackle social spending at home. “For months, France has been buzzing with speculation that Dominique Strauss-Kahn, the popular chief of the International Monetary Fund, would quit his job in Washington to take on President Nicolas Sarkozy in next year’s presidential elections,” the NYT said. “On Sunday, French politicians and media met news of his arrest in New York for alleged sexual aggression with stunned disbelief and expressions of national humiliation. The incident threw Mr. Strauss-Kahn’s political party, the Socialists, into confusion and set the stage for a new political calculus that could allow the National Front, the far-right party led by its founder’s daughter, Marine Le Pen, to become a more dominant force during the election campaign.”

The Guardian has got to the point. “The allegations threaten to severely damage the standing of the IMF, where Strauss-Kahn was leading the response to the global financial crisis.” The newspaper reported that Strauss-Kahn had been on his way to Europe to discuss the worsening European debt crisis. A meeting in Berlin with Angela Merkel scheduled for Sunday has been cancelled. He was also scheduled to meet European financial ministers on Monday and Tuesday and was to have discussed how best to tackle Greece’s debt crisis and finalise Portugal’s €78bn bailout package. The British newspaper also provided the information that the Sofitel hotel in New York where Strauss-Kahn was staying is in the heart of the theatre district, and he had a US$3,000 (£1,850) a night suite.

In Paris, France Soir asked in disbelief: “Accusé d’agression sexuelle, DSK est-il victime d’un complot? DSK est-il victime d’un complot, d’une manipulation? Quelques heures après le coup de tonnerre et l’annonce de l’arrestation du patron du FMI, les déclarations en ce sens sont de plus en plus nombreuses.” Melodrama apart, what this means is that France Soir has said that Strauss-Kahn could well be the ‘victim of a conspiracy’ and the ‘target of manipulation’.

A more bizarre response has come from Liberation, which usually seems to have its finger on the pulse of things. “Pour 2012, DSK semblait le mieux armé pour répondre au désarroi des Français, épuisés par la crise et désorientés par le règne foutraque de Sarkozy: l’expérience internationale, la crédibilité de l’économiste, la fibre sociale, le savoir-faire d’un négociateur hors pair leur laissaient penser qu’il saurait mieux que tout autre défendre leurs intérêts et ceux de la France.”

Roughly translated, this means: “For 2012, DSK seemed best equipped to respond to the distress of the French, who are exhausted by the financial and social crisis and disoriented in the reign of Sarkozy. With his international experience, the credibility of being an economist, his knowledge of the social fabric and negotiating skills left them thinking that he would defend their interests and those of France.” What exactly is Liberation talking about? Perhaps it’s not a good idea to get their writers to consider anything serious on a Sunday morning.

The New York Daily News on the IMF head

[Earlier post] It’s too early to tell the whys and wherefores, but here’s a small selection of reportage about the astounding Strauss-Kahn incident. The French media have lots to say too, since the IMF head is/was expected to run for president of France.

Update: The IMF has released a very short statement on the bizarre affair. Here is the text from the IMF website:

Ms. Caroline Atkinson, Director of External Relations at the International Monetary Fund (IMF), issued the following statement today: “IMF Managing Director Strauss-Kahn was arrested in New York City. Mr. Strauss-Kahn has retained legal counsel, and the IMF has no comment on the case; all inquiries will be referred to his personal lawyer and to the local authorities. The IMF remains fully functioning and operational.”

The Boston GlobeThe head of the International Monetary Fund was taken into custody and accused of a sexual assault yesterday, just before he was to fly to Paris from John F. Kennedy International Airport, authorities said. Dominique Strauss-Kahn was accused of attacking a maid earlier in the day at a Times Square hotel, authorities said.

WNYC News Blog – NYPD Deputy Commissioner Paul Browne confirmed that Strauss-Kahn, the 62-year-old managing director of the International Monetary Fund, was being questioned by detectives from Manhattan’s Special Victims unit about an alleged sexual assault said to have taken place around 1 p.m. Saturday at the Sofitel Hotel. “The 32-year-old maid reported that Strauss-Kahn emerged from the bathroom naked and sexually assaulted her,” said Browne.

Update: Al Jazeera has carried a brief and generally unflattering profile of the IMF head. It has called him an architect of France’s economic recovery in the late 1990s, Strauss-Kahn, popularly known in France as “DSK”, served in a Socialist government as finance minister between 1997 and 1999. He cut the public deficit to qualify France for the euro and took steps that led to the privatisation of some state firms.

The profile has said that Strauss-Kahn, 62, was forced to resign from Socialist prime minister Lionel Jospin’s government in 1999, after he was caught up in a corruption scandal, but a court later cleared him. A former professor of economics at the Institut d’Etudes Politiques de Paris, Strauss-Kahn has come in for criticism over his luxurious style, seen by some as inappropriate for someone who wants to become the leader of the French left. Despite being based in Washington, he has continued to spend a lot of time in France, and the New York Post newspaper reported that he had a deal with Air France to get on any flight. New York police pulled him off a Paris-bound flight on Sunday night.

Some early reactions from the press in France:

Dominique Strauss-Kahn, popularly known in France as 'DSK', served in a Socialist government as finance minister between 1997 and 1999. He cut the public deficit to qualify France for the euro and took steps that led to the privatisation of some state firms. Photo: Al Jazeera/AFP

Le Parisien – En Direct.  DSK arrêté à New York pour “tentative de viol” présumée – Dominique Strauss-Kahn était venu au siège du Parisien-Aujourd’hui en France pour y rencontrer des lecteurs. Le patron du FMI et favori des sondages pour la présidentielle 2012 en France.

Le Monde – Le directeur général du Fonds monétaire international (FMI), Dominique Strauss-Kahn, a été arrêté samedi 14 mai à l’aéroport JFK de New York et placé en garde à vue pour une agression sexuelle présumée dans un hôtel de la ville.

RTL.fr – Le mot utilisé et qui fait parler tout Internet est “sodomy”, qui signifie avant tout “agression sexuelle”. Le directeur général du FMI, Dominique Strauss-Kahn, 62 ans, a été placé en garde à vue samedi à l’aéroport JFK, à New York, où il est interrogé.

nouvelobs.com – Le directeur général de l’institution avait fait l’objet d’une enquête concernant une liaison qu’il avait eu avec une subordonnée. Le directeur général du FMI Dominique Strauss-Kahn, arrêté samedi à New York suite à des accusations d’agression sexuelle.

Le Monde – L’arrestation samedi 14 mai à New York de Dominique Strauss-Kahn, accusé d’agression sexuelle, pourrait donner un coup d’arrêt à la potentielle candidature à la primaire socialiste pour la présidentielle de 2012 du directeur général du FMI.

It looks very like prescience for, on 6 April, Bretton Woods Project published an article titled, ‘Heading for the right choice? A professional approach to selecting the IMF boss’. This said: “In 2009, the IMF agreed to ‘adopt an open, merit-based and transparent process for the selection of IMF management’. It was a commitment that was long overdue. The informal ‘gentlemen’s agreement’ made at the end of World War II that European governments could select the head of the IMF so long as the US got to choose the World Bank boss had long been regarded as outdated and illegitimate.”

The impression that the rich governments which have run the IMF have dragged their heels on this enormously important issue is hard to avoid. “It matters who the head of the IMF is, and it matters how they are chosen. It matters for the legitimacy of an organisation that, through the stringent conditions often attached to its loans, has a powerful hand in economic policy making – and hence politics – in many countries, particularly poorer ones.”

I am sure that those who have long been calling for IMF reform will be wondering about this week-end’s events concerning Strauss-Kahn. They are: ActionAid, Afrodad, Bond, Bretton Woods Project, Cafod, CRBM, Christian Aid, CIDSE, 11.11.11. Halifax Initiative, Eurodad, Jubilee Debt Campaign, Forum Syd, New Rules for Global Finance, The Norwegian Forum for Environment and Development, Oxfam, The Social Justice Committee of Montreal, SLUG, WDM, TWN and Weed.

The race to own India’s water

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Image courtesy 'UN-Water Global Annual Assessment of Sanitation and Drinking Water (GLAAS) 2010', World Health Organization (WHO) and UN-WaterWater privatisation in India today comes in a wide range of what are called “solutions” by the votaries of public-private partnerships. There is water-related engineering and construction (such as earth-moving activities, alteration of river courses, artificial linking of rivers, building of dams and pipelines, etc), water and wastewater services, and water treatment, which affect both nature and communities. What remains outside the ambit of “solutions” – only until the victims can be persuaded to pay – are the impacts of the micro-scale geoengineering. Every impact damages people and the environment. Impacts can be categorised as: ecological (effects on natural ecosystems), social (related to rights of human beings and communities, health, cultural norms, attitudes, belief systems), economic (affecting livelihoods, well-being, and access to basic services) and even legal and institutional.

We are now seeing increasing pressure for private sector development in India – and the rest of Asia-Pacific. Manthan Adhyayan Kendra, an independent research unit concerned with water in India (they are based in Madhya Pradesh) says that this pressure is being mounted mainly by two influential international financial institutions: the World Bank and its regional partner, the Asian Development Bank. The World Bank gives funds, advice, training and technical assistance to governments and the private sector to implement privatisation.

Courtesy, The Economist, special report on water, 22 May 2010Four entities allow the World Bank to undertake various functions. The International Finance Corporation (IFC) lends directly to the private sector and can even purchase equity in private companies. The Public Private Infrastructure Advisory Facility (PPIAF) seeks to improve the quality of infrastructure through private participation. The Multilateral Investment Guarantee Agency (MIGA) insures the private sector against commercial and political risk. The International Court for Settlement of Investment Disputes (ICSID) takes charge of disputes between investors and states. The Bank also has some other mechanisms that promote its activities in India including Water and Sanitation Program (WSP), Water and Sanitation for Urban Poor (WSUP), Water for Asian Cities (WAC) and others. The World Bank’s funding partners include the JBIC, AusAid, GTZ, USAID, DFID, UN-Habitat and the ADB.

More growth in large cities and towns, and urbanisation becoming a dominant land use pattern in more districts of India mean that the industrial, residential and municipal demands for water are rising quickly. India’s Central Pollution Control Board (an agency of the Ministry of Environment and Forests, Government of India) has released its ‘Observation on trend of Water Supply, Wastewater Generation in Cities and Towns’. Here are its main comments and highlights. I’ve left the language as it is – the import is what counts.

Courtesy, The Economist, special report on water, 22 May 2010

From The Economist's special report on water, 22 May 2010: Global water sources

“In decade of 90’s the growth of cities is observed is 33% while the growth of the decade in beginning of millennium is slowed down. Metropolitan cities is increased from 3 to 6 Nos. from 80’s to 2008. Class-I cities increase from 37 to 53 Nos. Class-II towns increase from 22 to 35. This trend indicates that all type of cities has grown in the decade of 90’s.”

Findings and Recommendations

  • Since the cities are growing, the population is enhanced from 30 million to 48 million.
  • Consequently water supply has been increased approximately twice in magnitude from 4,970 MLD (million litres per day) to 8,782 MLD.
  • Sewage generation has risen 38%.
  • Comparing the data of decades of 90’s to 2008, it is indicated that coastal cities and towns are not growing significantly.
  • Treatment capacity of sewage in comparison to decade of 80’s to until now has increased almost double (93%).
  • There are 498 Class-I Cities having population of 257 million and 410 Class-II Towns having population in India.
  • Total water supply including all class-I cities and class-II town in India is 48,093.88 MLD.

The CPCB says that wastewater generation from all class I cities and class II towns is 38,254 MLD whereas the installed treatment capacity is 11,787 MLD, which means that no more than a maximum of 31% of total sewage generated can be treated. (If the question is ‘where does the rest go?’, the CPCB answers that too in its report.) “This evidently indicates ominous position of sewage treatment, which is the main source of pollution of rivers and lakes,” warns the CPCB report. “To improve the water quality of rivers and lakes, there is an urgent need to increase sewage treatment capacity and its optimum utilisation.”

Image courtesy 'UN-Water Global Annual Assessment of Sanitation and Drinking Water (GLAAS) 2010', World Health Organization (WHO) and UN-WaterThe CPCB, which thankfully still has a reputation for straight talking, has advised India’s municipalities and town administrations to “set up a very thoughtful action plan to fill this gap in a minimum time frame”. The CPCB has suggested that large cities in which and from which the pollution problem is more severe, cities/towns whose effluents and sewage are polluting rivers and water bodies “will be required to be taken up on priority basis in first phase”. Why is the CPCB so insistent? Quite simply, it says there is an “urgency of preventing pollution of our water bodies and preserving our precious water resources”.

But even in the India of non-city and non-town landscapes, there are plans being hatched by the would-be water merchants. An indication of the mischief afoot comes from a report righteously entitled ‘Pro-Poor Financial Services for Rural Water: Linking the Water Sector to Rural Finance’. (If so many good deeds are ‘pro-poor’ nowadays how come the ranks of the do-gooders is only increasing?) Here is what it says: “Previous studies suggest that a considerable demand for pro-poor financial services for water in rural areas remains unmet. The number of potential microfinance clients in rural areas for investments in water supply is estimated to be 5.0 million in East/Southeast Asia, 10.3 million in South Asia, and 3.1 million in sub-Saharan Africa.” Those three numbers get to the heart of the matter.

The report continues: “Concerning microloans for rural sanitation, there are 17 million potential clients in East/ Southeast Asia, 30.8 million in South Asia, and 4.4 million in sub-Saharan Africa. In total, the potential demand for micro-loans in these three regions is estimated at US $ 1.5 billion in the case of rural water supply, and US $ 5 billion in the case of rural sanitation. The challenge is how to unlock this latent demand and turn it into an effective process.” The authors make no bones about it, the riches at the bottom of the water table is what they’re after. And who are the authors? The German Federal Ministry for Economic Cooperation and Development (BMZ), the Deutsche Gesellschaft für Technische Zusammenarbeit (well-known as GTZ in Asia, and which I was surprised to learn is a GmbH), the International Fund for Agricultural Development (IFAD) and of course the World Bank.

Courtesy, The Economist, special report on water, 22 May 2010

Cover of The Economist's special report on water, 22 May 2010

The water merchants have their cheerleading squad in place in the form of a pliant media, and The Economist has obliged by bringing out one of its typically characterless ‘surveys’, as it likes to call them. It is a special report on water (the 22 May 2010 issue) and the subject is dealt with in the sycophantic manner that the weekly reserves for the captains of industry. “Yet even if it takes two litres of groundwater to produce a litre of bottled water, companies like CocaCola and PepsiCo are hardly significant users compared with farmers and even many industrial producers.” (Hear, hear, who needs those pesky farmers anyway?) “PepsiCo has nevertheless become the first big company to declare its support for the human right to water. For its part, CocaCola is one of a consortium of companies that in 2008 formed the 2030 Water Resources Group, which strives to deal with the issue of water scarcity. Last year it commissioned a consultancy, McKinsey, to produce a report on the economics of a range of solutions.” This transatlantic weekly, once upon a time British, puts in a word for big dams too: “Dams and reservoirs certainly need constant repairs and careful maintenance and do not always get them, usually because the necessary institutions are not in place.”

Who are operating as water merchants and what do they want? There are several North American / West European companies now in India: Ondeo-Degrement, Veolia Environnement, Saur of France, RWE/Thames Water of Germany and the UK Bechtel, Enron (US), Compagnie Generale des Eaux (CGE). Indian companies are going to either compete with them, or join them – Tata subsidiary Jamshedpur Utilities and Services Company (JUSCO), IVRCL Infrastructures and Projects, Mahindra Infrastructure Ltd., IL&FS.

Surat, Gujarat, near the mouth of the Tapi river

Surat, Gujarat: Fishing boats near the mouth of the Tapi river

The foreign multinationals are involved in several projects across the country. Compagnie Generale des Eaux (CGE) is operating urban water supply project in Hubli-Dharwad in Karnataka. Veolia is operating water and wastewater plant in Nagpur in Maharashtra and it has also formed a joint venture with JUSCO. Ondeo-Degremont has won contracts to construct water treatment plants in Mumbai and Chennai and it is also operating a wastewater treatment plant in Delhi. Thames Water was involved in a leak reduction project in Bangalore while United Utilities and Bechtel are partners in the Tiruppur project. JUSCO has projects in Jamshedpur, Bhopal, Kolkata and Adityapur. IVRCL is working on a wastewater treatment project in Alandur, desalination in Chennai and solid waste management in Tiruppur. IL&FS is involved in various projects in Haldia, Tiruppur, Vishakhapatnam and municipal waste processing facilities in Delhi and Ajmer, Rajasthan.

The CPCB has outlined the water, sewage and pollution tasks for cities, but its worries are going to be transformed into “a challenge to unlock latent demand” by the multilateral lending organisations on the one hand and the global water merchants (together with their Indian partners). Already deficit in terms of civic infrastructure and struggling with yawning gaps in the provision of healthcare and education, India’s towns and small cities will pass the burden of water profiteering on to those who can’t afford it. They leave the rural districts to earn a living in the cities, when their water rupee gets squeezed down to the last drop, where will they go then?