130508 - Humanity is undergoing in
the post-Cold War era an economic and social crisis of
unprecedented scale leading to the rapid impoverishment of large
sectors of the World population. National economies are
collapsing, unemployment is rampant. Local level famines have
erupted in Sub-Saharan Africa, South Asia and parts of Latin
America. This "globalization of poverty" --which has largely
reversed the achievements of post-war decolonization-- was
initiated in the Third World coinciding with the debt crisis of
the early 1980s and the imposition of the IMF's deadly economic
The New World Order feeds on human poverty and the destruction
of the natural environment. It generates social apartheid,
encourages racism and ethnic strife, undermines the rights of
women and often precipitates countries into destructive
confrontations between nationalities. Since the 1990s, it has
extended its grip to all major regions of the World including
North America, Western Europe, the countries of the former
Soviet block and the "Newly Industrialized Countries" (NICs) of
South East Asia and the Far East.
This Worldwide crisis is more devastating than the Great
Depression of the 1930s. It has far-reaching geo-political
implications; economic dislocation has also been accompanied by
the outbreak of regional wars, the fracturing of national
societies and in some cases the destruction of entire countries.
By far this is the most serious economic crisis in modern
history. (Michel Chossudovsky, The
Globalization of Poverty, First Edition, 1997)
Famine is the result of a process of
"free market" restructuring of the global economy which has its roots in
the debt crisis of the early 1980s. It is not a recent phenomenon as
suggested by several Western media reports, narrowly focusing on short-term
supply and demand for agricultural staples.
Poverty and chronic undernourishment is a
pre-existing condition, prior to the recent hikes in food prices. The
latter are hitting an impoverished population, which has barely the
means to survive.
Food riots have erupted almost
simultaneously in all major regions of the World:
"Food prices in Haiti had risen on
average by 40 percent in less than a year, with the cost of staples
such as rice doubling.... In Bangladesh, [in late April 2008] some
20,000 textile workers took to the streets to denounce soaring food
prices and demand higher wages. The price of rice in the country has
doubled over the past year, threatening the workers, who earn a
monthly salary of just $25, with hunger. In Egypt, protests by
workers over food prices rocked the textile center of Mahalla al-Kobra,
north of Cairo, for two days last week, with two people shot dead by
security forces. Hundreds were arrested, and the government sent
plainclothes police into the factories to force workers to work.
Food prices in Egypt have risen by 40 percent in the past year...
Earlier this month, in the Ivory Coast, thousands marched on the
home of President Laurent Gbagbo, chanting “we are hungry” and “life
is too expensive, you are going to kill us.
Similar demonstrations, strikes and
clashes have taken place in Bolivia, Peru, Mexico, Indonesia, the
Philippines, Pakistan, Uzbekistan, Thailand, Yemen, Ethiopia, and
throughout most of sub-Saharan Africa." (Bill
Van Auken, Amid mounting food crisis, governments fear revolution of
the hungry, Global Research, April 2008)
With large sectors of the World
population already well below the poverty line, the short-term hike in
the prices of food staples is devastating. Millions of people around the
World are unable to purchase food for their survival
These hikes are contributing in a very
real sense to "eliminating the poor" through "starvation deaths". In the
words of Henry Kissinger: "Control oil and you
control nations; control food and you control the people."
In this regard, Kissinger had intimated
in the context of the 1974 National Security Study Memorandum 200:
Implications of Worldwide Population Growth for U.S. Security and
Overseas Interests". that the recurrence of famines could constitute
a de facto instrument of population control.
According to the FAO, the price of grain
staples has increased by 88% since March 2007. The price of wheat has
increased by 181% over a three year period. The price of rice has
increased by 50% over the last three months (See
Ian Angus, Food Crisis: "The greatest demonstration of the historical
failure of the capitalist model", Global Research, April 2008):
"The most popular grade of Thailand
rice sold for $198 a ton, five years ago and $323 a ton a year ago.
In April 2008, the price hit $1,000. Increases are even greater on
local markets — in Haiti, the market price of a 50 kilo bag of rice
doubled in one week at the end of March 2008. These increases
are catastrophic for the 2.6 billion people around the world who
live on less than US$2 a day and spend 60% to 80% of their incomes
on food. Hundreds of millions cannot afford to eat" (Ibid)
Two Interrelated Dimensions
There are two interrelated dimensions to
the ongoing global food crisis, which has spearheaded millions of people
around the World into starvation and chronic deprivation, where people
no longer have the means to purchase food.
First, there is a long term historical
process of macroeconomic policy reform and global economic restructuring
which has contributed to depressing the standard living Worldwide in
both the developing and developed countries.
Second, these preexisting historical
conditions of mass poverty have been exacerbated and aggravated by the
recent surge in grain prices, which have led in some cases to the
doubling of the retail price of food staples. These price hikes are in
large part the result of speculative trade in food staples.
Speculative Surge in Grain Prices
The media has casually misled public
opinion on the causes of these price hikes, focusing almost exclusively
on issues of costs of production, climate and other factors which result
in reduced supply and which might contribute to boosting the price of
food staples. While these factors may come into play, they are of
limited relevance in explaining the impressive and dramatic surge in
Spiraling food prices are in large part
the result of market manipulation. They are largely attributable to
speculative trade on the commodity markets. Grain prices are boosted
artificially by large scale speculative operations on the New York and
Chicago mercantile exchanges. It is worth noting that in 2007, the
Chicago Board of Trade (CBOT), merged with the Chicago Mercantile
Exchange, forming the largest Worldwide entity dealing in commodity
trade including a wide range of speculative instruments (options,
options on futures, index funds, etc).
Speculative trade in wheat or corn, can
occur without the occurrence of real commodity transactions.
The institutions speculating in the grain
market are not necessarily involved in the actual selling or delivery of
grain. The transactions may use commodity index funds which are bets on
the general upward or downward movement of commodity prices.
A "put option" is a bet that the
price will go down, a "call option" is a bet that the price will go up.
Through concerted manipulation, institutional traders and financial
institutions make the price go up and then place their bets on an upward
movement in the price of a particular commodity. Speculation generates
market volatility. In turn, the resulting instability encourages further
Profits are made when the price goes up.
Conversely, if the speculator is short-selling the market, money will be
made when the price collapses.
This recent speculative surge in food
prices has been conducive to a Worldwide process of famine formation on
an unprecedented scale.
These speculative operations do not
purposely trigger famine. What triggers famine is the absence of
regulatory procedures pertaining to speculative trade (options, options
on futures, commodity index funds). In the present context, a freeze of
speculative trade in food staples, taken as apolitical decision, would
immediately contribute to lower food prices.
Nothing prevents these transactions from
being neutralized and defused through a set of carefully devised
Visibly, this is not what is being
proposed by the World Bank and the International Monetary Fund.
Role of the IMF and the World Bank
The World Bank and the IMF have come
forth with an emergency plan, to boost agriculture in response to the "food
crisis". The causes of this crisis, however, are not addressed.
The World Bank's president Mr Zoellick
describes this initiative as a "new deal" action plan "for a long-term
boost to agricultural production.", which consists inter alia in a
doubling of agricultural loans to African farmers.
"We have to put our money where our
mouth is now so that we can put food into hungry mouths Robert
Zoellick World Bank head" (BBC, 2 May 2008)
IMF/World Bank "economic medicine" is not
the "solution" but in large part the "cause" of famine in developing
countries. More IMF-World Bank lending "to boost agriculture" will serve
to increase the levels of indebtedness.
World Bank "policy based loans" are
granted on condition the countries abide by the neoliberal policy agenda
which, since the early 1980s, has been conducive to the collapse of
local level food agriculture.
"Macro-economic stabilization" and
structural adjustment programs imposed by the IMF and the World Bank on
developing countries (as a condition for the renegotiation of their
external debt) have led to the impoverishment of hundreds of millions of
The harsh economic and social realities
underlying IMF intervention are soaring food prices, local-level famines,
massive lay-offs of urban workers and civil servants and the destruction
of social programs. Internal purchasing power has collapsed, famines
health clinics and schools have been closed down, hundreds of millions
of children have been denied the right to primary education.
Historically, spiraling food prices at
the retail level have been triggered by currency devaluations, which
have invariably result in a hyperinflationary situation. In Peru in
1990, for instance, on the orders of the IMF, fuel prices increased by
30 times and the price of bread increased twelve times overnight:
"Throughout the Third World, the
situation is one of social desperation and the hopelessness of a
population impoverished by the interplay of market forces. Anti-SAP
riots and popular uprisings are brutally repressed: Caracas, 1989.
President Carlos Andres Perez after having rhetorically denounced
the IMF of practicing "an economic totalitarianism which kills not
with bullets but with famine", declares a state of emergency and
sends regular units of the infantry and the marines into the slum
areas (barrios de ranchos) on the hills overlooking the
capital. The Caracas anti-IMF riots had been sparked off as a result
of a 200 per cent increase in the price of bread. Men, women and
children were fired upon indiscriminately: "The Caracas morgue was
reported to have up to 200 bodies of people killed in the first
three days ... and warned that it was running out of coffins".
Unofficially more than a thousand people were killed. Tunis, January
1984: the bread riots instigated largely by unemployed youth
protesting the rise of food prices; Nigeria, 1989: the anti-SAP
student riots leading to the closing of six of the country’s
universities by the Armed Forces Ruling Council; Morocco, 1990: a
general strike and a popular uprising against the government’s IMF-sponsored
reforms." (Michel Chossudovsky, op cit.)
The Deregulation of Grain Markets
Since the 1980s, grain markets have been
deregulated under the supervision of the World Bank and US/EU grain
surpluses are used systematically to destroy the peasantry and
destabilize national food agriculture. In this regard, World Bank
lending requires the lifting of trade barriers on imported agricultural
staples, leading to the dumping of US/EU grain surpluses onto local
market. These and other measures have spearheaded local agricultural
producers into bankruptcy.
A "free market" in grain --imposed by the
IMF and the World Bank-- destroys the peasant economy and undermines "food
security". Malawi and Zimbabwe were once prosperous grain surplus
countries, Rwanda was virtually self-sufficient in food until 1990 when
the IMF ordered the dumping of EU and US grain surpluses on the domestic
market precipitating small farmers into bankruptcy. In 1991-92, famine
had hit Kenya, East Africa's most successful bread-basket economy. The
Nairobi government had been previously placed on a black list for not
having obeyed IMF prescriptions. The deregulation of the grain market
had been demanded as one of the conditions for the rescheduling of
Nairobi's external debt with the Paris Club of official creditors. (Michel
Chossudovsky, The Globalization of Poverty and the New World Order,
Second Edition, Montreal 2003)
Throughout Africa, as well as in
Southeast Asia and Latin America, the pattern of "sectoral adjustment"
in agriculture under the custody of the Bretton Woods institutions has
been unequivocally towards the destruction of food security. Dependency
vis-à-vis the world market has been reinforced leading to a boost in
commercial grain imports as well as an increase in the influx of "food
Agricultural producers were encouraged to
abandon food farming and switch into "high value" export crops. often to
the detriment of food self-sufficiency. The high value products as well
as the cash crops for export were supported by World Bank loans.
Famines in the age of globalization are
the result of policy. Famine is not the consequence of a scarcity of
food but in fact quite the opposite: global food surpluses are used to
destabilize agricultural production in developing countries.
Tightly regulated and controlled by
international agro-business, this oversupply is ultimately conducive to
the stagnation of both production and consumption of essential food
staples and the impoverishment of farmers throughout the world. Moreover,
in the era of globalization, the IMF-World Bank structural adjustment
program bears a direct relationship to the process of famine formation
because it systematically undermines all categories of economic activity,
whether urban or rural, which do not directly serve the interests of the
global market system.
The earnings of farmers in rich and poor
countries alike are squeezed by a handful of global agro-industrial
enterprises which simultaneously control the markets for grain, farm
inputs, seeds and processed foods. One giant firm Cargill Inc. with more
than 140 affiliates and subsidiaries around the World controls a large
share of the international trade in grain. Since the 1950s, Cargill
became the main contractor of US "food aid" funded under Public Law 480
World agriculture has for the first time
in history the capacity to satisfy the food requirements of the entire
planet, yet the very nature of the global market system prevents this
from occurring. The capacity to produce food is immense yet the levels
of food consumption remain exceedingly low because a large share of the
World's population lives in conditions of abject poverty and deprivation.
Moreover, the process of "modernization" of agriculture has led to the
dispossession of the peasantry, increased landlessness and environmental
degradation. In other words, the very forces which encourage global food
production to expand are also conducive antithetically to a contraction
in the standard of living and a decline in the demand for food.
Genetically Modified Seeds
Coinciding with the establishment the
World Trade Organization (WTO) in 1995, another important historical
change has occurred in the structure of global agriculture.
Under the articles of agreement of the
World Trade Organization (WTO)), the food giants will have unrestricted
freedom to enter the seeds markets of developing countries. The
acquisition of exclusive "intellectual property rights" over plant
varieties by international agro-industrial interests, also favors the
destruction of bio-diversity.
Acting on behalf of a handful of biotech
conglomerates, GMO seeds have been imposed on farmers, often in the
context of "food aid programs". In Ethiopia, for instance, kits of GMO
seeds were handed out to impoverished farmers with a view to
rehabilitating agricultural production in the wake of a major drought .
The GMO seeds were planted, yielding a harvest. But then the farmer came
to realize that the GMO seeds could not be replanted without paying
royalties to Monsanto, Arch Daniel Midland et al. Then, the farmers
discovered that the seeds would harvest only if they used the farm
inputs including the fertilizer, insecticide and herbicide, produced and
distributed by the biotech agribusiness companies. Entire peasant
economies were locked into the grip of the agribusiness conglomerates.
With the widespread adoption of GMO seeds,
a major transition has occurred in the structure and history of settled
agriculture since its inception 10,000 years ago.
The reproduction of seeds at the village
level in local nurseries has been disrupted by the use of genetically
modified seeds. The agricultural cycle, which enables farmers to store
their organic seeds and plant them to reap the next harvest has been
broken. This destructive pattern – invariably resulting in famine – is
replicated in country after country leading to the Worldwide demise of
the peasant economy.
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