“Disaster capitalism:” Recovery by corporations

For more information on the growing trend toward corporate-based recovery efforts, see the Focus on the Global South website, www.focusweb.org.

Until the 1980s, the rebuilding of societies after large natural disasters or conflicts had been assumed principally by UN agencies and the Red Cross/Crescent. Their goals were simple – immediate medical help for victims, reduction of displacement of people, restoration of social structures and reconstruction of physical infrastructure. Since then, however, the U.S. government and the World Bank, heavily influenced by transnational corporations, have taken the lead role in disaster relief and post-conflict reconstruction with significantly different goals. Reconstruction has become the most recent method to force neoliberal economic changes on countries around the world. In her book, The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein identifies “the rise of a predatory form of disaster capitalism that uses the desperation and fear created by catastrophe to engage in radical social and economic engineering.” She calls it the Disaster Capitalism Complex. The final objective is no longer to return things to as they were before, but to make future foreign investments easier by removing people and/or legal barriers.

After the Sumatra tsunami of December 2004, most fishing villages on the coasts were destroyed, but instead of the government helping families move back to their homes, they have barred the repopulation of beaches and sold or given the land to hotels and shrimp fisheries. The Indonesian government passed a law banning people from rebuilding their beachside homes and has relocated them in military-like villages miles from the beach. In an article in The Nation magazine, Klein writes, “The coast is not being rebuilt as it was – dotted with fishing villages and beaches strewn with handmade nets. Instead, governments, corporations and foreign donors are teaming up to rebuild it as they would like it to be: the beaches as playgrounds for tourists, the oceans as watery mines for corporate fishing fleets, both services by privatized airports and highways built on borrowed money.” Public services are being privatized and turned over to international corporations and NGOs.

Most of the billions of dollars donated by people around the world to help the rebuilding after the tsunami flows in a “near-perfect circle, from Western treasury through Western aid agency/corporation to Western consultant, without ever even touching the people it is

allegedly being appropriated for,” writes Klein. “Foreign consultants live high on cost-plus expense accounts and thousand-dollar-a-day salaries, while locals are shut out of much-needed jobs, training and decision-making. Expert ‘democracy builders’ lecture governments on the importance of transparency and ‘good governance,’ yet most contractors and NGOs refuse to open their books to those same governments, let alone give them control over how their aid money is spent.”

The rebuilding of post-war Iraq is perhaps the best example of taking advantage of a hobbled society to bring about huge economic policy changes; what the Wall Street Journal called “one of the most audacious hostile takeovers ever.” When the U.S. turned over “sovereignty” to Iraq in the summer of 2003, it issued a series of orders called the Coalition Provisional Authority (CPA) Orders. In one of these orders, number 39 on foreign investment, the U.S. was able to impose investor protections (the “wish list of international investors” according to The Economist) that it has not been able to obtain through trade negotiations with any other country. Additional CPA Orders suspended tariffs and other taxes on imports; reduced tax rates on corporations and individuals from 40 percent to a flat rate of 15 percent (a worker will pay the same tax rate as multibillion dollar corporations); and introduced a very strong intellectual property regime completely different from what existed in Iraq before the war. At the same time, the U.S. adviser to the ministry of industry and minerals announced the privatization of 48 state-owned enterprises.

The experiences of Iraq and Indonesia are being repeated in the rebuilding efforts of countries from the Great Lakes region in Central Africa to Chad, Cameroon, Afghanistan, Tajikistan, Haiti, Nicaragua and many other countries. Often the local population is completely unaware of the power grab going on in its country. As Klein points out, “The reconstruction industry works so quickly and efficiently that the privatizations and land grabs are usually locked in before the local population knows what hit them.”

In order to assure that wars and natural disasters are not used by corporations to strengthen their position in rebuilding countries, all forms of disaster relief should be carried out by the Red Cross/Crescent and UN and must include those affected in the decision-making process about reconstruction. This will be a slower process, but one that will reult in more people and environment-friendly results.