Bangladesh: Keeping the Neoliberal Brand Alive (Tarif Rahman, Lecturer, North South University)
আমি তারিফ || Sunday 13 May 2012
Just a few weeks ago we saw the demolition of the shanties of Karail. A High Court order in 2008 stated clearly that such actions are prohibited until the people in those shanties are rehabilitated. [1] However, another High court bench in January 2012 ordered the eviction of the shanties and after about three months, that order was put into action. Within those three months we did not see a single organization appeal against the ruling; not even the National Human Rights Commission raised its voice against the ruling or the consequent demolition of the shanties. The demolition of the shanties, division of Dhaka, the rise in food prices and cuts in fuel subsidies are evident that the public institutions of Bangladesh are being transformed into symbols of futility when it comes to attaining the public good. On the contrary it is principles of neoliberalism or neoliberal economics that seems to be the order of the day which serves none other but the donor agencies along with the big corporations both at home and abroad in coordination with the imperialist nations.
The Karail shanty town stretched from Mohakhali all the way to Gulshan Lake sandwiched between two of the wealthiest towns in the country. Karail is not the first shanty to be demolished and it will not be the last. The shanties are destroyed all in the name of “image building” or “branding” using the excuse that these places harbor criminals and they need to be removed from the frame of society. Within corporate structures and mainstream academia there is an obsession that Bangladesh needs to “clean itself” such that it can be some sort of brand just like any other commodity as Nike, Zappos, GAP, and etc.
The argument for promoting “branding” or “image building” has always been that such actions will attract foreign investors and that will bring more foreign currency into the foreign exchange reserve and thus our economy will become stronger. In 2010 “Bangladesh Brand Forum” [2] was successful in bringing powerful people in industry and government of Bangladesh at a gathering in the UK and promoting such economic arguments. However, the premise of such arguments are flawed and have been used as a basis to dictate economic policies of poor countries like Bangladesh in adopting measures that are counter to the good of the general people.
Examples of “branding” are quite evident; if we look at the advertisement by Robi Axiata where a young man returns to his own village to see his father trying to give up the jamdani saree business. However, the young man has other ideas where he thinks that making western cloths using the jamdani material as an alternative. Eventually, he sends the design to a western fashion house. The people adjudicating the designs at the western fashion houses see different designs, one from Africa and the next one being the jamdani from Bangladesh. Already we can feel the clutches of colonialism and the sense of inferior complexity. For starters we can see that the jamdani is competing with designs from Africa, the question is: Why Africa? Is it because they are poorer such that it gives us a sense that we are better? Why not compete with designs from Europe or the United States? The commercial also reminds us that former colonial territories like Africa and countries like ours must keep the corporations in the Anglo-sphere satisfied and to this date it is still the case.
On state run BTV, a programme called “BBC Janala: Mojai Mojai Shekha” is being televised having the stated goal of promoting the learning of English throughout the country such that Bangladesh can realize its true potential in the world economy. As noble as it may sound it is quite ludicrous to believe that the learning of English can be done through a television show. After all this is a country where 77% of the population earns less than $2 a day [8] and most social programs are being dismantled in the name of liberalization as advised by our donor agencies . Simultaneously, cost of food and fuel are increasing, thanks to subsidy minimization and it would be very imaginative that someone within that income bracket would be able to afford to watch the television programme.
Therefore, it shouldn’t be a surprise that “BBC Janala: Mojai Mojai Shekha” [3] is being funded by the UK government’s (Department For Foreign and International Development) DFID (a major donor agency in the country) through the English in Action (EIA) programme [4]. The television programme is part of a wider BBC Janala initiative that promotes English learning through different mediums which include television, internet and mobile phones. BBC Janala’s initiative through mobile phones happens to be three minute lessons over the phone but these lessons come at a cost. Sara Chamberlain the originator of BBC Janala writes in the Telegraph [5] that she had to negotiate between six phone operators and BTRC to reduce the phone tariffs for those who were taking BBC Janala lessons. Eventually, she credits the six phone companies for reducing their phone tariffs by 50% but it is very implausible that the phone companies are subsidizing the other half. Rather you have to ask whether the BTRC the regulator had decided to reduce the tariffs with the phone companies maintaining their profits. Hence, the idea of BBC Janala’s being a promoter of education rather than a business venture is highly questionable.
What is more disturbing is the fact that BBC Janala has been implemented at the request of the Bangladesh government under the banner of “Digital Bangladesh” [6,7] which shows another attempt of branding the nation. Make no mistake there is nothing wrong in promoting the learning of certain skills but when such programs are undertaken by giving tax breaks to foreign companies, it is simply hypocritical. Such methods cause a reduction in public sector budgets with a likely consequence of reduction in public sector spending such as education and consequences such as non-governmental primary school teachers going on a hunger strike just a few months ago because of low salaries will become ever so prevalent [23]. DFID’s funding for such programs will have to be paid back by the Bangladeshi public one day and as we know that donor agencies put a lot of strings attached to such funds.
Whatever one might think of “branding”, be it good or bad there is a huge economic argument that drives such “branding” programs and their apologists. The rationale behind all of this is neoliberal economics which is an extreme form of capitalism. This concept was formalized into policy initiatives for Washington based institutions such as the IMF and World Bank for implementation in Latin American countries and it was known as the “Washington Consensus” [9]. However, the concepts of neoliberalism existed and practiced long before the Washington Consensus came into being but the ideas of neoliberalism have remained pretty much the same. The core ideas are to lift taxes and tariffs to encourage free trade and open markets, privatization of public sector service institutions, vigorous deregulation by government oversight agencies and the free movement of capital from one place to another without any prior warning. It is quite evident that such measures make the role of the people’s representative government impotent. Instead it is a mechanism for the already wealthy to consolidate more wealth. Therefore, for “branding” apologists who are the elites, it is nothing strange that they would advocate for such policies as it would allow them to consolidate more wealth at the expense of disenfranchising the majority who are poor by making state institutions impotent.
Bangladesh’s state mechanisms for delivering public services in most part have been useless due to the lack of funding combined with corruption and cronyism. The hartals by the opposition and the counter action by the ruling party are all a fight for power among the ruling elites and their cronies. Even though both parties may not look at each other eye to eye but their economic and foreign policies have been fairly the same. Bangladesh has been a true follower of neoliberal policies and you can look at the Asian Development Bank Institute (ADBI) report by Pravakar Sahoo [10] written back in 2006. The report states foreign companies are given import duty exemptions for export processing and mechanisms exist for the full repatriation of invested capital, profit and dividend. The conclusion of the report is pretty clear as it goes on to state that Bangladesh has liberalized all its economic policies including FDI and is very attractive for foreign companies as it has no exit or entry restrictions. The beginning of the report is interesting when it states that the liberalization process was started in the late eighties and carried on to this date. The period that has been mentioned in the ADBI report is pretty much Bangladesh’s democratic era but not democratic to the majority but rather to those oligarchs that have benefited from these liberalized policies.
Now the question is if foreign companies don’t have to pay any taxes and can recover all their profits then how does Bangladesh gain any foreign currency from FDI? The next question is how do foreign companies send their profits back to their home nations if Bangladesh has no foreign currency at all? The answer is simple, all the money they earn in this country is converted to dollars and sent back. However, the conversion is not a simple process of changing from one unit to another unit rather whatever amount of dollars they intend to send is sent from Bangladesh’s foreign currency reserve that mostly consists of the foreign currency that is earned by Bangladeshi workers that live overseas and work in the worst possible conditions. Time and time again we hear how Bangladeshi workers are convicted without a fair trial and then executed with the foreign ministry sitting in the chairs of impotence. We saw how the Bangladeshi workers in Libya were left stranded in the middle of a war zone whereas Bangladeshi troops were stationed all around Africa. Our foreign ministry was giving the excuse that we do not have enough funds yet we were hosting a multi-million dollar sporting event during that same period. At the same time we see this same foreign ministry sing the songs of jingoism about the ITLOS ruling which means nothing for the average person.
People may think that the recent ruling by the ITLOS (International Tribunal for the Law of the Sea) on the maritime boundary as a win-win situation for both Bangladesh and Burma but rather it is the opposite. The biggest losers are the people of both nations. The main reason behind Bangladesh going to court was simply to award the disputed sea blocks to the US multinational ConocoPhillips. Because if we remember when the tender process for the sea blocks began, the Government of Bangladesh put forward 28 sea blocks for bidding. However, due to objections by India and Burma, Bangladesh was only able to award two blocks partially (70% of DS-08-10 and 85% of DS-08-11) [12,13] both awarded to ConocoPhillips which prompted Bangladesh to take the matter to court and it’s obvious that it had the backing of the United States as they lobbied for ConocoPhillips as we know from Wikileaks [11]. As a result of the ruling, the disputed block DS-08-11 fell within Bangladesh’s legal maritime borders of Bangladesh according to PetroBangla’s Chairman [12]. He wasted no time in announcing that DS-08-11 can now be explored entirely by ConocoPhillips and its interest to explore an additional six more blocks. Whatever is the situation of the maritime boundaries the Bangladeshi people will lose the majority of the natural resources from these blocks thanks to PSC-2008 [14] which effectively gives 80% of the gas and other fuel resources to ConocoPhillips and on top of that there is the cost recovery issue in the agreement which allows a company to recover as much resources as possible such that their supposed costs are covered leaving the people with nothing.
The ITLOS ruling has trivial value for the Burmese people. In the past few months we have seen leaders from the Western capitals march one by one into Burma with the most eye-catching being the visit of the British PM David Cameron who became the first British PM to visit the nation since its independence from Britain in 1948 [15]. Even though the narrative behind all the softening has been the instituting of democratic reforms, but there is more to the story than that. One has to remember that the same generals are in power in Burma and there has not been a “revolution” of any sort such that the generals were forced to institute such reforms. Rather these changes are cosmetic because the current Burmese constitution allocates a quarter of the parliament seats to members of the military. The arguments by the West about Burma’s democratic reforms are disingenuous. If we look into the US congressional report [16] on the Burmese sanctions we will see US and French multinationals UNOCAL and TOTAL were exempt from the US imposed sanctions and were involved in various gas projects doing business with the same generals which proves that nobody really cares about democracy its just used as a diplomatic cover to promote imperialist interests.
The change that has taken place in Burma can be found in Simon Montlake’s piece in Forbes Magazine; a publication which is a stern believer in neoliberal economics. Montlake’s piece entitled “Burma Opens for Business” [17] states clearly that President Thein Sein a former general who has come to power has started implementing policies that would be FDI friendly by appointing businessmen as ministers and independent minded economists as advisors. Thein Sein’s profile [18] on New York Times, you will see that he is credited with liberalizing the state-controlled economy which is very much in line with the Forbes’ magazine story. These neoliberal policies has made Burma a very attractive destination for foreign companies since it is very rich in natural resources such as gas, timber, ruby stones and etc. The same phenomenon happened with Libya, where Col. Gaddafi was once an enemy but became a “friend” when he allowed foreign companies to have a share in the state run oil industry and made similar economic liberalization gestures. Therefore, the gas within the maritime boundaries of Burma would very likely be sold to foreign companies just like Bangladesh has done.
Bangladesh’s disbursement of loans from the IMF is another form of imposed neoliberal economics. Even though the loan is interest free, it has stringent conditions such as the reduction of fuel subsidies and relaxing conditions on foreign companies investing in the country by reducing trade barriers [19]. All these will lead to the reduced public spending and greater suffering on the people through greater inflation and more pressure on the foreign exchange reserve in the long run. Already we can see the rise in gas prices even though gas is our own natural resource whose rightful owners are its people but we are making it cost dearly for our own people to access and at the same time we are selling it off to foreign companies.
Jagannath University [20] became the first casualty in the public education sector to have its fees increased and another attempt to prevent the people from attaining their basic rights. Such increase in fees will slowly seep into other public institutions. Already we see ADB [21] proposing such measures if Bangladesh is to get one of its future loans. Private hospitals in Bangladesh have thrived from liberalized policies as state hospitals are under funded and marred with corruption leading automatically for the common person to pay huge sums of money for healthcare from private hospitals.
[22] In 1997 we saw the Asian Financial Crisis take place in the ASEAN region. All the countries in the region pursued strong economic liberalization policies. As a result, foreign currency and foreign capital flew out of their respective nations and the rate of flow was so such that the foreign currency reserves were depleting leading to these nations to fall into a liquidity crisis. Many of these nations looked to the IMF and the World Bank (WB) for a solution and all were given typical neoliberal recommendations with one such measure was to increase their central bank’s cost of borrowing. In return for implementing such policies the IMF and WB would issue loans to these countries to temporarily weather off the foreign currency reserve deficit. Increasing the cost of borrowing is counter to economic growth and leads to local industries going bankrupt as they are discouraged from taking loans and this reduces exports and foreign currencies don’t rise in the long run. Consequently, unemployment increases with the likelihood of increased social problems. However, there was one country that didn’t follow such recommendations and refused the loans from the IMF and WB, it was Malaysia. Malaysia pegged its currency as low as possible to boost exports and simultaneously put in place very tight capital controls by banning the flow of foreign currency out of Malaysia by making the Malaysian ringgit inconvertible and introduced high tariffs. Malaysia’s measures paid off; their exports were on the rise with their foreign currency reserves increasing. After Malaysia’s economy was blooming the IMF reluctantly admitted that Malaysia’s economic policy measures were correct.
Bangladesh is currently going through a liquidity crisis. As a policy measure we took measures that were diametrically opposite to what Malaysia took i.e. by taking a loan from the IMF and adhering to its tough conditions. The typical neoliberal thesis in handling such crises is to cut public spending whereas there is never any talk of clamping down on foreign currency outflows that are caused by foreign companies sending their profits back to their home countries or corrupt and wealthy people stashing their millions in foreign banks or investing in foreign goods and services. If Bangladesh keeps on following this neoliberal path, “Sonar Bangladesh” will simply be a delusional dream.
References:
[1] Article on Karail Shanty Demolition:
http://www.thedailystar.net/newDesign/news-details.php?nid=229335
[2] News Item of Bangladesh Brand Forum Meeting in the UK
http://www.demotix.com/news/520581/bangladesh-brand-forum-asias-next-big-opportunity
[3] http://www.bbcjanala.com/ (BBC Janala Website)
[4] http://www.eiabd.com/eia/ (English in Action Website)
[5] http://www.telegraph.co.uk/education/expateducation/6609440/From-London-to-Bangladesh-by-mobile-phone.html (Sara Chamberlain’s Article)
[6]http://www.a2i.pmo.gov.bd/tempdoc/Strategic_Priorities_of_Digital_Bangladesh_Jan_2011.pdf
[7]http://www.eiabd.com/eia/index.php?option=com_content&view=article&id=47&Itemid=53 (English in Action “About Us” Section)
[8]http://data.worldbank.org/indicator/SI.POV.2DAY (World Bank Income Statistics of Bangladesh)
[9]http://www.who.int/trade/glossary/story094/en/index.html (Washington Consensus Definition and Policy Directives)
[10]http://www.adbi.org/discussion-paper/2006/11/28/2066.fdi.south.asia.policy.trends/fdi.policy.in.south.asia/ (Pravakar Sahoo’s Report on FDI policy in South Asia)
[11] http://46.59.1.2/cable/2009/07/09DHAKA741.html (Wikileaks cable about Lobbying by US Ambassador)
[12]http://www.banglanews24.com/English/detailsnews.php?nssl=2fba9547f91cd8d8bf0601fb2cb61dff&nttl=2012040437732 (Article on ConocoPhillips’ interest in exploring more gas blocks after ITLOS ruling)
[13]http://articles.economictimes.indiatimes.com/2008-02-15/news/27729790_1_global-bids-oil-and-gas-blocks-shallow-water-blocks (Bangladesh opens bidding for offshore gas blocks)
[14]http://www.petrobangla.org.bd/MODEL%20PRODUCTION%20SHARING%20CONTRACT%202008-FEBRUARY.pdf (PSC-2008 Document)
[15] http://www.bbc.co.uk/news/uk-politics-17698526 (British PM’s visit to Burma)
[16] http://fpc.state.gov/documents/organization/94113.pdf (Congressional Report on Burma Sanctions)
[17]http://www.forbes.com/global/2011/0926/focus-entrepreneur-burma-opens-modified-montlake.html (Simon Montlake’s article on Burma)
[18]http://topics.nytimes.com/top/reference/timestopics/people/t/u_thein_sein/index.html (NYT profile about Thein Sein)
[19]http://www.financialexpress.com/news/imf-offers-usd-1-bn-credit-to-bangladesh/936020/ (IMF $1b loan to Bangladesh)
[20]http://www.theindependentbd.com/paper-edition/metropolitan/dhaka/88744-jagannath-university-charges-excess-admission-fees.html (Jagannath University Increase in Fees)
[21] http://newagebd.com/newspaper1/archive_details.php?arcid=36911 (Article on ADB proposal on tuition fee increase)
[22] John Ralston Saul, “The Collapse of Globalism and the Reinvention of the World”, 2005 (Book on Neoliberlaism with excerpts on Malaysia policy measures during the ’97 Asian Financial Crisis)
[23] http://www.teachersolidarity.com/blog/bangladeshi-teachers-on-strike/ (Article on Teachers’ Strike)
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