Michel Chossudovsky, May 23, 2014
The “economic therapy” imposed under IMF-World Bank jurisdiction is in large part responsible for triggering famine and social devastation in Ethiopia and the rest of sub-Saharan Africa, wreaking the peasant economy and impoverishing millions of people.
With the complicity of branches of the US government, it has also opened the door for the appropriation of traditional seeds and landraces by US biotech corporations, which behind the scenes have been peddling the adoption of their own genetically modified seeds under the disguise of emergency aid and famine relief.
Moreover, under WTO rules, the agri-biotech conglomerates can manipulate market forces to their advantage as well as exact royalties from farmers. The WTO provides legitimacy to the food giants to dismantle State programmes including emergency grain stocks, seed banks, extension services and agricultural credit, etc.), plunder peasant economies and trigger the outbreak of periodic famines.
Crisis in the Horn
More than 8 million people in Ethiopia – representing 15% of the country’s population – had been locked into “famine zones”. Urban wages have collapsed and unemployed seasonal farm workers and landless peasants have been driven into abysmal poverty. The international relief agencies concur without further examination that climatic factors are the sole and inevitable cause of crop failure and the ensuing humanitarian disaster. What the media tabloids fails to disclose is that – despite the drought and the border war with Eritrea – several million people in the most prosperous agricultural regions have also been driven into starvation. Their predicament is not the consequence of grain shortages but of “free markets” and “bitter economic medicine” imposed under the IMF-World Bank sponsored Structural Adjustment Programme (SAP).
Ethiopia produces more than 90% of its consumption needs. Yet at the height of the crisis, the nationwide food deficit for 2000 was estimated by the Food and Agriculture Organization (FAO) at 764,000 metric tons of grain representing a shortfall of 13 kilos per person per annum.1 In Amhara, grain production (1999-2000) was twenty percent in excess of consumption needs. Yet 2.8 million people in Amhara (representing 17% of the region’s population) became locked into famine zones and are “at risk” according to the FAO. 2 Whereas Amhara’s grain surpluses were in excess of 500,000 tons (1999-2000), its “relief food needs” had been tagged by the international community at close to 300,000 tons.3 A similar pattern prevailed in Oromiya, the country’s most populated state where 1.6 million people were classified “at risk”, despite the availability of more than 600,000 metric tons of surplus grain.4 In both these regions, which include more than 25% of the country’s population, scarcity of food was clearly not the cause of hunger, poverty and social destitution. Yet no explanations are given by the panoply of international relief agencies and agricultural research institutes.
The Promise of the “Free Market”
In Ethiopia, a transitional government came into power in 1991 in the wake of a protracted and destructive civil war. After the pro-Soviet Dergue regime of Colonel Mengistu Haile Mariam was unseated, a multi-donor financed Emergency Recovery and Reconstruction Project (ERRP) was hastily put in place to deal with an external debt of close to 9 billion dollars that had accumulated during the Mengistu government. Ethiopia’s outstanding debts with the Paris Club of official creditors were rescheduled in exchange for far-reaching macro-economic reforms. Upheld by US foreign policy, the usual doses of bitter IMF economic medicine were prescribed. Caught in the straightjacket of debt and structural adjustment, the new Transitional Government of Ethiopia (TGE), led by the Ethiopian People’s Revolutionary Democratic Front (EPRDF) – largely formed from the Tigrean People’s Liberation Front (PLF) – had committed itself to far-reaching “free market reforms”, despite its leaders’ Marxist leanings. Washington soon tagged Ethiopia alongside Uganda as Africa’s post Cold War free market showpiece.
While social budgets were slashed under the structural adjustment programme (SAP), military expenditure – in part financed by the gush of fresh development loans – quadrupled since 1989.5 With Washington supporting both sides in the Eritrea-Ethiopia border war, US arms sales spiralled. The bounty was being shared between the arms manufacturers and the agribusiness conglomerates. In the post-Cold War era, the latter positioned themselves in the lucrative procurement of emergency aid to war-torn countries. With mounting military spending financed on borrowed money, almost half of Ethiopia’s export revenues was earmarked to meet debt-servicing obligations.
A Policy Framework Paper (PFP) stipulating the precise changes to be carried out in Ethiopia had been carefully drafted in Washington by IMF and World Bank officials on behalf of the transitional government, and was forwarded to Addis Ababa for the signature of the Minister of Finance. The enforcement of severe austerity measures virtually foreclosed the possibility of a meaningful post-war reconstruction and the rebuilding of the country’s shattered infrastructure. The creditors demanded trade liberalization and the full-scale privatization of public utilities, financial institutions, State farms and factories. Civil servants including teachers and health workers were fired, wages were frozen and the labor laws were rescinded to enable State enterprises “to shed their surplus workers”. Meanwhile, corruption became rampant. State assets were auctioned off to foreign capital at bargain prices and Price Waterhouse Cooper was entrusted with the task of coordinating the sale of State property.
In turn, the reforms had led to the fracture of the federal fiscal system. Budget transfers to the State governments were slashed leaving the regions to their own devices. Supported by several donors, “regionalization” was heralded as a “devolution of powers from the federal to the regional governments”. The Bretton Woods institutions knew exactly what they were doing. In the words of the IMF, “[the regions] capacity to deliver effective and efficient development interventions varies widely, as does their capacity for revenue collection”. 6
Wrecking the Peasant Economy
Patterned on the reforms adopted in Kenya in 1991 (see Box 9.1 ), agricultural markets were wilfully manipulated on behalf of the agribusiness conglomerates. The World Bank demanded the rapid removal of price controls and all subsidies to farmers. Transportation and freight prices were deregulated serving to boost food prices in remote areas affected by drought. In turn, the markets for farm inputs including fertiliser and seeds were handed over to private traders including Pioneer Hi-Bred International which entered into a lucrative partnership with Ethiopia Seed Enterprise (ESE), the government’s seed monopoly.7
At the outset of the reforms in 1992, USAID under its Title III program “donated” large quantities of US fertilizer “in exchange for free market reforms”:
[V]arious agricultural commodities [will be provided] in exchange for reforms of grain marketing… and [the] elimination of food subsidies…The reform agenda focuses on liberalization and privatization in the fertilizer and transport sectors in return for financing fertilizer and truck imports…. These program initiatives have given us [an] “entrée” …in defining major [policy] issues… 8
While the stocks of donated US fertiliser were rapidly exhausted; the imported chemicals contributed to displacing local fertiliser producers. The same companies involved in the fertiliser import business were also in control of the domestic wholesale distribution of fertiliser using local level merchants as intermediaries.
Increased output was recorded in commercial farms and in irrigated areas (where fertilizer and high yielding seeds had been applied). The overall tendency, however, was towards greater economic and social polarisation in the countryside, marked by significantly lower yields in less productive marginal lands occupied by the poor peasantry. Even in areas where output had increased, farmers were caught in the clutch of the seed and fertilizer merchants.
In 1997, the Atlanta based Carter Center – which was actively promoting the use of biotechnology tools in maize breeding – proudly announced that “Ethiopia [had] become a food exporter for the first time”.9 Yet in a cruel irony, the donors ordered the dismantling of the emergency grain reserves (set up in the wake of the 1984-85 famine) and the authorities acquiesced.
Instead of replenishing the country’s emergency food stocks, grain was exported to meet Ethiopia’s debt servicing obligations. Close to one million tons of the 1996 harvest was exported, an amount which would have been amply sufficient (according to FAO figures) to meet the 1999-2000 emergency. In fact the same food staple which had been exported (namely maize) was re-imported barely a few months later. The world market had confiscated Ethiopia’s grain reserves.
In return, US surpluses of genetically engineered maize (banned by the European Union) were being dumped on the horn of Africa in the form of emergency aid. The US had found a convenient mechanism for “laundering its stocks of dirty grain”. The agribusiness conglomerates not only cornered Ethiopia’s commodity exports, they were also involved in the procurement of emergency shipments of grain back into Ethiopia. During the 1998-2000 famine, lucrative maize contracts were awarded to giant grain merchants such as Archer Daniels Midland (ADM) and Cargill Inc.
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