Has the IMF renounced neoliberalism? Well, not really.

Sound the alarms! Could the International Monetary Fund be reconsidering neoliberalism? Sadly, no, once we actually read the short document “Neoliberalism: Oversold?

The title certainly does grab our attention, and on the very first page, there is this highlighted passage: “Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.”

Ah, but disappointment quickly sets in while reading the first paragraph, which purports to hold up Pinochet-era Chile as model “widely emulated across the globe,” including a mention of Chicago School godfather Milton Friedman proclaiming Chile an “economic miracle” in 1982. The actual record is not mentioned, nor is the little matter of military dictator Augusto Pinochet’s wave of terror that killed, imprisoned, tortured and imprisoned tens of thousands mentioned. Details in the eyes of the IMF, we presume.

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

In reality, Chile’s poverty rate skyrocketed to 40 percent under Pinochet, while real wages had declined by a third and one-third of Chileans were unemployed during the last years of the dictatorship. Unemployment figures do not include the many urban Chileans who worked as “car minders” earning small tips from waving orange rags at motorists pulling into parking spaces and taking the motorists’ coins to insert into parking meters, which Pinochet’s planning minister, a Friedman disciple, declared to be “a good living.” Lavish subsidies were given to large corporations, public spending was slashed and the social security system was privatized. The privatized social security system was so bad for Chilean working people that someone retiring in 2005 received less than half of what he or she would have received had they been in the old government system.

Let us not forget the humanity of those whose lives were crushed by Pinochet and Friedman.

Pinochet's soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Pinochet’s soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Back to the IMF paper, which defines neoliberalism blandly as “deregulation” and “a smaller role for the state.” A far better definition of neoliberalism is provided by Henry Giroux:

“As an ideology, it construes profit-making as the essence of democracy, consuming as the only operable form of citizenship, and an irrational belief in the market to solve all problems and serve as a model for structuring all social relations.”

The authors of the IMF paper gingerly work themselves up to some mild critiques, lamenting that “The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries” and that “The costs in terms of increased inequality are prominent.” Furthermore, the odds of an economic crash are raised, among other problems:

“Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. … [I]n practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of [gross domestic product] increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality.”

Decades of stagnant wages, hollowing out of manufacturing bases and steadily increasing inequality, augmented by unsustainable stock-market bubbles and capped by eight years and counting of economic downturn and stagnation, and that is the best the IMF can do? The paper concludes with this passage: “Policymakers, and institutions like the IMF that advise them, must be guided not by faith, but by evidence of what has worked.”

The belief in neoliberalism and austerity, or supply-side economics, or Reaganism, or Thatcherism (whatever we want to call it) has always been based on faith, at least on the part of some of those who promote it. For many other financiers and industrialists, it surely is the case is they knew just what was going to happen and cheered it all the way because they were going to benefit handsomely. Economics may be the dismal science, but dismal though classical economics is, it is far more art than science, as in the art of fleecing.

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The humanity of resistance can’t be erased by a Pinochet or a Friedman

I have long felt haunted by the fate of Chile. I can’t help but feel a strong attachment because the people who were involved, and “disappeared,” tortured and killed, were me and many of my friends and fellow activists.

Not literally, for I was a boy in 1973 and lived on another continent. But if I were then, and there, who I am now, I would have shared the fate of Chileans who believed a better world was possible.

Today is the 40th anniversary of the Pinochet coup. The first “9/11.”

La Moneda 9-11-73I continue to be struck by the fact that participants in the government of Salvador Allende freely apologize for their mistakes. It is no revelation to say President Allende’s Popular Unity government was not perfect. It was full of people who previously had been shut out of political participation — is it reasonable to expect perfection from them? But contrast their thoughtful reflection with the behavior of the coup plotters and those who took up posts in Augusto Pinochet’s murderous 16-year reign.

No apologies. Nothing.

It is to the credit of those who reflect on what they could have done better, who are moved to publicly acknowledge mistakes, particularly in actions or speeches that, intentionally or not, served to throw up barriers to participation by those in mild opposition or sitting on the fence. Their humanity is there for us to see. Where is the humanity of those who killed, those who tortured, those who willingly served a régime that inflicted casualties in massive numbers and hurled millions more into poverty?

The Pinochet coup was the first application of “shock therapy.” The intellectual author of this shock, Milton Friedman, repeatedly used the word “shock” in advising General Pinochet to apply a maximum of pressure, helpfully reprinting a letter he sent to the dictator in his book, Two Lucky People: Memoirs.

Friedman needed believers just as he needed the dictator to implement his ideas. That such ideas need force is exemplified in a revealing interview conducted by Patricia Politzer in her book Fear in Chile: Lives Under Pinochet. In a 1984 interview, an enthusiastic supporter of the régime and self-proclaimed “Chicago Boy” estimated that 80,000 to 100,000 had been killed — a figure, amazingly, he found acceptable because of the dictatorship’s “honest principles that I shared.” This Pinochet supporter declared that “sometimes democratic regimes suffer from too much freedom” in explaining why he applauded the ouster of the elected Allende government, later saying that “freedom ought to be restricted.”

Let us not dishonor those to whom the shock was applied by forgetting. Another story told by Ms. Politzer is that of a communist woman repeatedly arrested, beaten and tortured, as was her husband. One day in prison she was dragged into a torture room, where her husband had cold water thrown on him so that he would regain consciousness and the torture could be resumed. She recounts these grisly details from one session:

“They applied the electric prod to [her husband’s] penis, to his anus, to his eyes. … it was terrible. I knew what was happening from his awful screams and the way he was moving … every scream went straight to my soul. But I didn’t move or express anything. I was suffering enormously, as if they had my heart and they were squeezing and squeezing it. … The only prayer I had was that they wouldn’t go too far with the torture. That he wouldn’t die.”

The authorities had concocted false charges against the couple; the torture was intended to force a false confession.

The obligation of a poet

Let us remember Pablo Neruda, whose house at Isla Negra was ransacked by soldiers and some of his manuscripts destroyed immediately following the coup. He died only two weeks later, apparently silenced via a poison administered by an agent posing as a doctor. The opening of his poem, “Poet’s Obligation,” perhaps provides us one clue as to why the great poet was seen as a danger:

“To whoever is not listening to the sea
this Friday morning, to whoever is cooped up
in house or office, factory or woman
or street or mine or harsh prison cell;
to him I come, and, without speaking or looking,
I arrive and open the door of his prison,
and a vibration starts up, vague and insistent,
a great fragment of thunder sets in motion
the rumble of the planet and the foam,
the raucous rivers of the ocean flood,
the star vibrates swiftly in its corona,
and the sea is beating, dying and continuing.”

Let us remember Victor Jara. The popular singer and songwriter suffered repeated beatings in a sports stadium turned into a concentration camp, then had his hands mangled and his guitar thrown at him by the guards as they sneered “Let’s see you play now.” He did play, so enraging the ignorant shock troops of fascism that they killed him with dozens of machine-gun rounds. He could do nothing else but play. From the last song he wrote before he was murdered:

“Yes, my guitar is a worker
shining and smelling of spring
my guitar is not for killers
greedy for money and power
but for the people who labour
so that the future may flower.
For a song takes on a meaning
when its own heart beat is strong
sung by a man who will die singing
truthfully singing his song.”

Victor Jara’s songs live on. The singer and songwriter Holly Near celebrated his memory in her song “It Could Have Been Me”:

“The junta broke the fingers on Victor Jara’s hands
They said to the gentle poet ‘play your guitar now if you can’
Victor started singing but they brought his body down
You can kill that man but not his song
When it’s sung the whole world round.”

The spirit of life in the face of death

Salvador Allende captured that essence in his last speech. Speaking at the La Moneda presidential palace on the morning of September 11, the coup in progress and not in doubt of what his fate would be, he said:

“Placed in a historic transition, I will pay for loyalty to the people with my life. And I say to them that I am certain that the seed which we have planted in the good conscience of thousands and thousands of Chileans will not be shriveled forever. They have strength and will be able to dominate us, but social processes can be arrested neither by crime nor force. History is ours, and people make history. …

Workers of my country, I have faith in Chile and its destiny. Other men will overcome this dark and bitter moment when treason seeks to prevail. Go forward knowing that, sooner rather than later, the great avenues will open again where free men will walk to build a better society.”

Of what were the rulers of capitalist societies — those in the U.S., those in Chile, those elsewhere — so afraid? Why would an elected government determined to provide concrete reality to the word “democracy” by enabling all citizens to become real participants in the functioning of their society engender such frenzied reactions? Ariel Dorfman, in his memoir Heading South, Looking North: A Bilingual Journey, told the story of “Juan,” a factory worker who was being driven out of the country into exile with him in the aftermath of the Pinochet coup:

“[Allende’s] policies had created an economic boom: increased salaries and benefits led to skyrocketing consumption and that led, in turn, to a major increment in production. So, more goods sold and a better life for Juan and his co-workers, right? Not at all. The owner of the factory, opposed to the revolution, even if it did not threaten his property, had decided to sabotage production. … The workers had watched this class warfare patiently for months and, finally, when the owner had announced he was shutting down the whole operation, they had taken over the premises. It was the only way to save their jobs and keep producing the food that Chile needed. Allende’s government intervened in the conflict, negotiated compensation for the owner, and put the workers in control. Juan had been elected to head the council that, for a couple of years, ran that factory, and in spite of inevitable mistakes, it had been a successful venture.”

Professor Dorfman’s conclusion?

“[T]he Chilean revolution had given him a chance to prove his dignity as a full human being, had dared to conceive through him and millions of others the pale possibility of a world where things did not have to be the way they had always been. That is why the rulers of the world had reacted with such ferocity.”

Equality or dominance. The ability of everybody to develop their full potential and be full participants in societal decision-making or a minuscule elite hoarding wealth and dictating to everyone else.

Which do you want?

Hints of official Trans-Pacific Partnership resistance

A shroud of secrecy, by design, continues to envelop the Trans-Pacific Partnership negotiations. The latest statements from participating governments as usual offer nothing of substance, but that rebellion might be afoot is intimated in an article by Chile’s former chief TPP negotiator, who recently resigned his posts.

The article, published in the Peruvian magazine Caretas, did not contain any thundering denunciations; expecting such from someone who had been the director of Multilateral and Bilateral Economic Affairs for the Chilean Foreign Ministry would not be realistic. The ex-director, Rodrigo Contreras, quietly resigned recently without a public statement, but he did summarize his thinking in the Caretas article.

Codelco lands in Chile's Atacama desert. (Photo by Gerard Prins)

Codelco lands in Chile’s Atacama desert. (Photo by Gerard Prins)

Interspersed among two pages of soft language in which he praised the concept of trade agreements, he explicitly opposed Internet restrictions, expanding copyright terms, extending drug patent terms, restrictions on financial regulations and losing the ability to preserve biological and cultural diversity. Mr. Contreras wrote:

“The extension of drug patent protections beyond the current terms, or the restriction of challenges to frivolous patent applications, would delay the availability of generic drugs and increase the cost of medicines. Public health budgets and access to health services for the most vulnerable would be affected in our countries.”

Smaller countries such as Chile would be particularly vulnerable to corporate plunder as multi-national corporations would be allowed unfettered access to the resources of TPP signatories. Chile’s former chief TPP negotiator concluded his article with these words, likely as firm as anyone who had been a direct participant is likely to issue:

“It is critical to reject the imposition of a model designed according to realities of high-income countries, which are very different from the other participating countries. Otherwise, this agreement will become a threat for our countries: it will restrict our development options in health and education, in biological and cultural diversity, and in the design of public policies and the transformation of our economies. It will also generate pressures from increasingly active social movements, who are not willing to grant a pass to governments that accept an outcome of the TPP negotiations that limits possibilities to increase the prosperity and well-being of our countries.”

A secret, unless you are a corporate executive

It is precisely to minimize potential pressures from social movements that the TPP is being negotiated in complete secrecy, with no text publicly available. Not even the national legislatures of the 11 countries now involved in the Trans-Pacific Partnership know what is in it, even though many must vote on it. (By contrast, corporate executives do have access to the text and have significant influence in shaping it.)

The United States Congress, for instance, must approve the TPP for it to become effective in the U.S., and the Obama administration, which is pushing the most draconian rules, seeks a congressional vote on a “fast-track” basis — a straight yes-or-no vote with no amendments or changes allowed to the text. The reason for a fast-track vote is to increase the odds of passage — the vote happens far quicker than under normal rules, and no “free trade” agreement has been been voted down in the U.S. Congress under fast-track rules.

Following the latest round of negotiations, held earlier in May in Lima, Peru, once again no information was forthcoming. The Office of the United States Trade Representative issued its usual boilerplate language:

“[O]fficials reported that they continued to forge ahead toward their goal of concluding an ambitious 21st-century agreement in the timeframe envisioned by President Obama and the Leaders of the other ten TPP countries. … [T]he negotiators made progress across the agreement. The negotiating groups covering services, government procurement, sanitary and phytosanitary standards, trade remedies, labor, and dispute settlement moved their work forward significantly. The TPP countries also successfully advanced work on the other legal texts, including technical barriers to trade, e-commerce, rules of origin, investment, financial services, intellectual property, transparency, competition, environment and other issues.”

The Australian government’s report was almost word-for-word the same. In a similar Orwellian vein, Canada’s minister of international trade, Ed Fast, was quoted by the Canadian government as saying:

“The TPP is a key part of our government’s pro-trade plan to create jobs, growth and long-term prosperity in every region of the country.”

No details on what these agreements might be were offered, nor how eliminating workplace safety, labor and environmental regulations as part of an accelerated race to the bottom will create “prosperity.” Governments stripping themselves of sovereignty and allowing multi-national corporations to dictate laws and regulations, elevating corporate profits above all other human concerns, constitutes a perverse neoliberal definition of “prosperity.”

Swatting aside pesky notions of democracy

That anything at all is known about the TPP is because of leaks. Among the provisions under negotiation previously reported on the Systemic Disorder blog are:

  • Taxation and regulation constitute “indirect expropriation” mandating compensation (an asserted reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property).
  • An expansion of who or what constitutes an “investor” — extending those eligible to file a claim to anyone who applies for a permit or license, or who “channels” resources or capital to set up a business, without placing any limits on what qualifies for such a status.
  • The U.S. is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full face value of government bonds bought at discounted prices.
  • Significantly tighten corporate control of the Internet and force service providers to hand over personal data.
  • Energy export infrastructure projects, such as liquefied natural gas facilities, would be automatically approved as a matter of “right.”

The Trans-Pacific Partnership will go beyond, and supersede, the North American Free Trade Agreement and existing bi-lateral trade agreements, themselves already severely one-sided. The first dispute brought by a corporation against a government under the U.S.-Peru Free Trade Agreement, for instance, was by a mining company that demanded US$800 million from the Peruvian government because Peru refused to grant it a third extension of a deadline to install equipment to mitigate the toxic effects of a metal smelter that the company agreed to perform under a signed contract. Public Citizen reports:

“Renco v. Peru is a particularly egregious case, pitting one of the world’s wealthiest men, [U.S. multi-billionaire] Ira Rennert, on one side, and children in a poor and polluted community on the other. The case illustrates two deeply worrying implications of investor-state arbitration. First, it shows that corporations will use investor-state cases to put pressure on governments to weaken environment and health policies. Second, corporations are increasingly attempting to evade justice in domestic courts through the investor-state mechanism. And, if Peru loses the case, its taxpayers must compensate Renco. Governments have already been ordered to pay more than $2.5 billion in taxpayer funds to corporations in investor-state disputes under U.S. [free-trade agreements] and bilateral investment treaties.”

Disputes raised by corporations are heard in secret tribunals in which the judges are often corporate lawyers who specialize in representing companies in disputes with governments; each decision become a new standard leading to ever more one-sided results.

“Free trade” agreements don’t have anything to do with trade; they have everything to do with tightening the grip of corporate dominance over every aspect of life. Alisa Simmons of Global Trade Watch, speaking at a May 28 forum in New York City, said only five of the 29 TPP chapters concern traditional trade issues; the remainder cover other issues and three of the chapters are unknown because negotiators refuse to divulge the titles of the chapters.

Trade agreements like the TPP are specifically designed to override national laws by allowing corporations to sue in secret corporate-controlled tribunals empowered to order governments to do as corporate executives demand. Labor and environmental laws would be outlawed as fetters on the right to maximum profits; national sovereignty would be a relic of the past; and smaller countries would have no control over the plunder of their resources by the larger countries’ multi-national corporations. Links hands across borders before it is too late.

Trans-Pacific Partnership trade pact more draconian than NAFTA

By Pete Dolack

Imagine a world in which which labor safeguards, safety rules and environmental regulations will be struck down because a multi-national corporation’s profits might be affected. A world in which measures to reign in financial speculation are illegal. A world in which the task of governments, codified in law, is to maximize corporate profits.

Imagine a world in which corporations can bypass national laws and courts when they are in a dispute with a government, and instead can have their dispute adjudicated by a closed tribunal controlled by their lawyers.

Unfortunately, the above is not dystopian science fiction; it is the reality of the top-secret Trans-Pacific Partnership. If you like NAFTA, you will love the TPP.

Haven’t heard of the Trans-Pacific Partnership? There is good reason. It is a proposed trade agreement being secretly negotiated that would not only codify the one-sided rules heavily favoring corporate interests exemplified in the North American Free Trade Agreement, it would go beyond them. And many of the harshest rules proposed to be included in the TPP are being pushed by the Obama administration.

Nine countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States — have negotiated for four years. No text has ever been released to the public, and even the U.S. Congress has been left in the dark as to the TPP’s contents. That we know anything at all about it is due to leaks. A portion of the text, the chapter covering investment rules, is posted at http://tinyurl.com/tppinvestment.

What the TPP represents is multi-national corporations going beyond lobbying for deregulation, bending rules and decisively influencing government policy to having their interests in profit maximization regardless of impact written into international law and controlling the tribunals that will adjudicate corporation/government disputes. “Free trade” agreements have become a favored route toward this corporate goal. In the nearly two decades that NAFTA has been in force among Canada, Mexico and the United States, there has been a steady procession of corporations filing complaints alleging that regulations “harm” them.

Thus we have had the spectacle of a U.S. corporate parcel-delivery service suing Canada in an attempt to have the Canadian postal system dismantled and chemical companies suing because a chemical they produce has been banned because it is poisoning water supplies. The key NAFTA provision is Chapter 11, which codifies the “equal treatment” of business interests in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit.

The usual result is either the complaining corporation wins its case or the defendant government settles on terms advantageous to the corporation to avoid a worse result. Multi-national corporations don’t win every time — for instance, Canada was graciously allowed to retain its postal service. The TPP is designed to tilt the scales still more heavily in favor of “investors” — not only via rules granting more “rights” to multi-national corporations, but further expanding the definition of “investor.” There are extensive rules governing the “right” to an near guarantee of profits, but no rules concerning labor, environment, public health or safety.

NAFTA, as draconian as it is, is a starting point. The TPP’s extraordinarily one-sided rules, which go beyond NAFTA in several ways, are intended to be a new floor in the ongoing effort to lock in the domination of industrialists and financiers through the multi-national corporations that they control. The TPP is intended to be “scalable” — that is, other countries can join but are forbidden to oppose any measure already agreed upon. Just two months ago, Canada and Mexico accepted invitations to join, so it is quite conceivable that TPP may supplant NAFTA.

The U.S. watchdog group Public Citizen issued an analysis of the leaked TPP investor chapter earlier this summer. Sounding the alarm, Public Citizen said:

“Over $350 million has been paid to investors by governments under the investor-state provisions in NAFTA alone over toxic waste dump permits, logging rules, bans of toxic substances and more. Currently, there are over $13 billion in pending corporate “investor-state” trade pact attacks on domestic environmental, public health and transportation policy. And, mere threats of such cases have repeatedly resulted in countries dropping important public interest initiatives, exposing their populations to harm that could have been avoided. Yet the leaked text shows that while TPP countries have agreed to impose binding obligations on themselves to provide foreign investors an array of extraordinary new privileges, the TPP countries have not agreed to health, labor or environmental obligations to be required of investors.”

The Public Citizen report notes that the use of international tribunals to overturn regulations has increased dramatically in the past decade:

“Over $719 million has been paid out under U.S. Free Trade Agreements and Bilateral Investment Treaties alone — 70 percent which are from challenges to natural resource and environmental policies, not traditional expropriations. Tobacco firms are using the regime to challenge tobacco control policies, including a case by Phillip Morris against Australia. Absent substantial changes to the leaked text, TPP would greatly increase the number of investor-state attacks on public interest policies and would expose governments to massive new financial liabilities.”

The use of international tribunals is an aspect of bi-lateral and multi-lateral trade agreements often overlooked. The TPP would require the use of the International Centre for Settlement of Investor Disputes (ICSID) — an arbitration board that is an arm of, and controlled by, the World Bank. Cases that go before one of the Centre’s tribunals are decided by a panel of three judges that are selected from a roster. The judges are appointed by the national governments that have signed on to ICSID, which are most of the world’s countries.

Eight of the judges have been appointed by the United States. Each is a lawyer whose career has been spent in the service of large corporations. Six are currently partners in some of the world’s most formidable corporate law firms, one is an academic who formerly was a corporate lawyer and one is a lobbyist for a business group that seeks to codify pro-corporate trade rules under law. Five of the eight U.S.-named lawyers have been counsel to various Republican Party administrations and several of the eight specialize in representing corporations before international arbitration boards.

These are the U.S. panelists who are among those judging the merits of corporate claims against government regulations:

  • Fred Fielding: An attorney who bounces back and forth between Republican administrations and corporate law firms; among his clients has been the mercenary military contractor Blackwater.
  • William Park: Currently a law school professor but has practiced with three corporate law firms and has been an arbitrator on many business-arbitration boards.
  • Daniel Price: A corporate lawyer who represents companies in international arbitration and a former economic adviser to George W. Bush.
  • John M. Townsend: A corporate lawyer who represents pharmaceutical companies and specializes in representing companies in arbitrations against governments; he is also a trustee of a business lobbying group.
  • J. Caleb Boggs III: A corporate lawyer who specializes in representing financial institutions and other clients before regulators and helped write a law deregulating banks while a Senate aide.
  • William A. Burck: A corporate lawyer who specializes in representing companies and corporate officers in disputes with U.S. and other governments; he is a former legal adviser to George W. Bush.
  • Ronald A. Cass: The chair of a lobbying group that seeks to tilt international trade law further in favor of business; he was a trade representative for two Republican administrations.
  • Emmet Flood: A corporate lawyer who represents companies in disputes against government regulations and a former counsel to George W. Bush; among his past clients are the Koch brothers.

The rules that panelists will adjudicate would supersede national laws. Article 12.7 of the TPP, for instance, provides a long list of prohibitions against government actions; under it, laws imposing capital controls (even to ameliorate a crisis), rules governing domestic content of products or any protections of any domestic industry would be illegal. It then provides a generic exception allowing environmental or other measures “that are not inconsistent with the Agreement; necessary to protect human, animal, or plant life or health; or related to the conservation of living or non-living exhaustible natural resources.”

That exception, however, is meaningless. It specifically requires that excepted rules must be “not inconsistent with the Agreement” — and that is the towering thorn sticking out of the minuscule rose. The key sentence opens Article 12.6: “Each Party shall accord to covered investments treatment in accordance with customary international law.” The “Party” here are national governments, and the “customary international law” is that already established by NAFTA and the decisions made by ICSID and similar arbitration bodies concerning disputes under NAFTA and other trade agreements. Those decisions skew heavily toward corporate complainants.

Venezuela recently became the third South American country to withdraw from ICSID; in doing so, the country’s foreign ministry said ICSID “has ruled 232 times in favor of transnational interests out of 234 lawsuits received throughout its history.” A 2007 report issued by the Institute for Policy Studies and Food and Water Watch, “Challenging Corporate Investor Rule,” said multi-national corporations have won 70 percent of the cases (it did not specify how many of the remainder were a loss for the corporation nor how many were not decided or withdrawn). These tribunals are conducted in secret; only two ICSID cases have been conducted with public attendance in its history.

The World Bank is one of the principal bodies imposing austerity on countries around the world; it routinely conditions loans to governments of developing countries on the swift privatization of state-owned enterprises and public utilities, typically conducted at fire-sale prices as salivating corporate executives are aware of the hammer being held over the selling government. When the buying corporation decides it has not made the profits it expected, it can file a claim heard by ICSID, which is controlled by the very same World Bank.

In one notorious case, the World Bank forced the privatization of the water system in the Bolivian city of Cochabamba. Bechtel, the company that was handed the water system as the sole bidder in a secret process, charged a sum equal to one-quarter of city residents’ average household income and imposed a contract provision banning the collection of rainwater. After massive local protests backed by a global campaign forced it to leave the city, Bechtel sued Bolivia for US$50 million in damages and lost profits although its investment is believed to have been less than $1 million and Bechtel’s revenues are six times the size of Bolivia’s gross domestic product.

Bechtel settled without receiving a payment only because of massive international pressure and because Bolivians continued to resist in large numbers despite being repeatedly fired upon. That pressure was necessary as, according to Earthjustice, World Bank officials refused to disclose when or where the first hearing in the case would take place.

That is a very rare ending. Although developing countries are most often the targets of ICSID actions, regulations anywhere can be overturned. For instance, Canada was sued under the provisions of NAFTA by a U.S.-based chemical company after it banned the use of a gasoline additive already banned in the U.S. because it is a known toxic agent. Thanks to ICSID, Canada had to reverse its ban, pay millions of dollars to cover the company’s “lost profits” and issue an apology to the chemical company.

Among the features of NAFTA to be replicated in the TPP are that:

  • Governments pay attorney costs, win or lose, in addition to paying judgments.
  • Taxation and regulation constitute “indirect expropriation” mandating compensation (a reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property as required under U.S. law).
  • Older decisions become precedents for further expansions of investor “rights” and will be read as the “evolving standard of investor rights” required under the TPP.
  • No mention of labor rights, nor any standards for environmental, health or safety that must be met.

A London Court of International Arbitration panel, ruling in July 2005 for a unit of the Occidental Petroleum Corp. in a case heard under the U.S.-Ecuador bi-lateral investment treaty, declared that any change in business conditions constitutes a violation of “investor rights.” If such a ruling is accepted as precedent, any attempt at regulation is potentially illegal.

Among the features of the TPP that go beyond NAFTA are:

  • An expansion of who or what constitutes an “investor” — extending those eligible to file a claim to anyone who applies for a permit or license, or who “channels” resources or capital to set up a business, without placing any limits on what qualifies for such a status.
  • No language to block frivolous claims.
  • The U.S. is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full value of government bonds bought at discounted prices.
  • Requiring new intellectual property laws that would criminalize many acts not currently classified as such.
  • Significantly tighten corporate control of the Internet and force service providers to hand over personal data.

A separately leaked section of the TPP, covering pharmaceutical products, contains this interesting item on its cover page: “Declassify on: Four years from entry into force of the TPP agreement or, if no agreement enters into force, four years from the close of the negotiations.” What is being hidden? New monopoly rights for pharmaceutical companies and the ability to overturn the policies of countries such as Australia and New Zealand that force much lower prices on drugs, policies that U.S.-based pharmaceutical companies wish to overturn. In addition, Citizens Trade Campaign reports:

“This U.S. intellectual property proposal, which rolls back initial reforms made in a trade pact that the Bush administration signed with Peru only four years ago, would lengthen pharmaceutical monopolies, eliminate safeguards against patent abuse, grant additional exclusive controls over clinical trial data and favor the giant pharmaceutical companies’ monopoly interests at every stage.”

Médecins Sans Frontières/Doctors Without Borders similarly reports that:

“The Obama administration is walking away from previous efforts to ensure that developing countries can access affordable medicines, setting a dangerous new standard that will likely be replicated in future trade agreements with developing nations. The administration is touting a so-called ‘access window’ as a mechanism to boost access to medicines. In fact, the administration is confusing access with affordability. The ‘access window’ is all about getting brand-name drugs to market faster, and giving their producers longer monopoly rights that prevent price-lowering competition and keeping medicines out of the hands of the millions of people who need them.”

The White House claims that “The Obama Administration has been working in partnership with Congress and consulting closely with stakeholders around the country to ensure TPP addresses the issues that American businesses and workers are facing today, and may confront in the future.” That clearly is not true, as senators and representatives are demanding disclosure. Nor does any of the agreement’s text appear on the Web page dedicated to the TPP.

Executives and lobbyists from some of the largest corporations on the planet — commanding revenues much larger than the gross domestic products of the smaller TPP countries — are meeting in secret with government officials to give themselves yet more power and control.

Corporate-written rules for self-benefit are intimately connected with financiers manipulating markets and benefiting from the austerity they insist governments impose. Industrialists extract the surplus value from their from their workers that becomes profit and financiers provide the whip that intensifies the process and create the speculative instruments that profits are poured into. We can have corporate dictatorship, or democracy. But not both.