For the last few years the 29 members of the Organisation of Economic Co-operation and Development (OECD) including Britain, have been secretly negotiating a Multilateral Agreement on Investment (MAI) which they hope to conlude by the end of April.
This treaty is ostensibly meant to provide a framework for international co-operation in protecting investments made by multinational and international corporations and institutions. The OECD will adopt the procedures of this treaty among its membership, which includes the most economically advanced states in the world. The plan is to extend it to all states, through pressure and the development of the idea of MAI being a hallmark of investment security. Once any state joins it will be bound to the treaty’s strictures for a minimum of twenty years (that being the time it takes to actually withdraw from the treaty).
The treaty seeks to protect international investment in two ways.
Firstly, it will forbid any member state from distinguishing between local capital and foreign capital (for instance this could forbid states from putting restrictions on media ownership by non-nationals, as is found currently in several states). This would extend towards the prevention of compulsory nationalisations and expropriations without compensation (as an example, Chancellor Brown’s windfall levy could have counted as an expropriation, which the British government would have had to compensate foreign investors for, had the treaty been in force then).
Secondly, it will for the first time give multinationals and investors rights under international law. The treaty will provide a set of provisions for punishments for infringing its strictures. Effectively this means that if a corporation does not like a law passed by a country, it can take that country to court to try to get the law changed. Of course, as usual when our corporate masters grant themselves rights, there are no corresponding duties–there is no commitment upon them to protect the welfare of their workers or the local environment.
The Green movement is mobilising to attack this treaty, on the grounds that it will damage the environment, and impede national sovereignty and restrict democracy by providing for unelected, unaccountable business elites to be able to change the laws of democratically elected governments, and by restricting the capacity of individual governments to stimulate their own economy or build a local economic base of their own. What, though, is really so new in this?
As far as socialists are concerned, states have always been in the pocket of unaccountable business cliques, and have always worked in their interest. Many of the states whose “sovereignty” will be infringed are already corrupt and toadying lackeys to our corporate masters, with despotic elites living the life of Riley out of ill-gotten plunder from environmental despoliation and pillage, wealth almost literally torn from the bodies of the world’s poor. A little more formalisation of this relationship, and a little extra protection for our masters can’t be such a bad thing, really? Can it?
This treaty is important because it means that for the first time our corporate elites are taking direct control of matters, instead of working through their state. One of the greatest threats to their own dominance of the world has been nationalist competitors, restricting their access to markets by asserting a claim to rights in a particular territory. Just look at how many wars have been fought these past fifty years by our imperial masters against nationalist upstarts: Suez, Vietnam, America’s dirty wars in South America; all in the name of keeping some particular territory within the web of international corporate capitalism. Having crushed most such opposition, all that remains for them now is to assert their authority within such territories and to lay claim to plunder of the world.
As the economic situation deteriorates, with the older capitalist states almost unable to sustain growth and the South Asian tigers suffering crises, our masters must desperately search around for new markets and sources of profit and new investment outlets. And they must seek to protect that investment, and make sure that every drop of wealth that they suck out of these areas will return to them, and not to some group of local rivals.
This treaty will strengthen the negotiating hand of multinationals against local power elites, enabling them to get even better returns on their profit than they could if they had to bribe the local rulers. It also makes it easier for them to try to force local governments to act against the workers, and write into law whatever is to the benefit of our international overlords.
As their position has become more precarious they have had to cut out any room for manoeuvre by states, and that includes the pressure release of even a moderately reform-minded government. By cutting off the route of reform in the way that this treaty does, our rulers are accentuating and revealing the truth about the class divide.
The MAI means making the strong even stronger and even more effective and efficient in the exploitation of the working class and the environment the world over. In their desperation our corporate masters are opening their greedy maw even wider, determined to swallow the world whole.
Crisis in Indonesia
In 1965, General Suharto came to power in a military coup in Indonesia that had the full backing of Britain and the US. During a Cold War arms build-up and a world focusing on the Vietnam War and the “communist threat”, Suharto became a welcome ally as he massacred 600,000 of his opponents. In the years that followed, Suharto would consolidate his power, corruption would take on a whole new meaning and Indonesia would become a by-word for human rights abuses, most notably following the annexation of East Timor and the massacre of a further 200,000. All the while, the West turned a blind eye, supplying him with arms and training his military staff–interested only in the vast oil reserves Indonesia straddles.
Western eyes are now looking cautiously at Indonesia. In July of last year, the economy began to collapse and reached real crisis point during January of this year. Inflation rocketed and bankruptcies followed. Basic foodstuffs have more than doubled in price and thousands have died of hunger.
That much of his happened during January–a month of self-restraint (Ramadan) for Indonesia’s moslems–perhaps explains why food riots born of country-wide discontent did not erupt fully until February, with Chinese food stores and restaurants taking much of the impact. The Chinese, who make up five percent of the population, were readily perceived as being the cause of the food shortages. That they own 70 percent of Indonesia’s wealth was reason enough to convince angry crowds that they had grown rich off the backs of the masses.
Media analysts fear more trouble ahead, indeed a total meltdown of the Indonesian economy within the next month, particularly in light of a recent IMF decision to delay disbursement of the next tranche of a $43 billion bailout.
The IMF agreed to the $43 billion lifeline on condition that Suharto reformed a structure of monopolies, tariffs and subsidies–in other words, the targeting of the interests of his cronies and six offspring.
Suharto accused the IMF of trying to impose a liberal economy on the country, which he claimed was not in line with Article 33 of the Indonesian constitution, which stipulates that the economy should be developed along “family principles and which stresses ‘regulated cooperatives’ rather than the ‘free market'”.
Back to basics
“Family principles” takes on a whole new meaning in Indonesia. Not only is nepotism rampant, with Suharto’s relatives up to their necks in all manner corruption, but Suharto himself is estimated to have assets worth over $40 billion (coincidentally the size of the IMF loan he is haggling over).
Having promised to give Indonesia’s central bank full autonomy over monetary policy, Suharto then sacked its governor and directors for objecting to his plans for an “IMF-plus measure”–the setting up of a currency board charged with pegging the Indonesian rupiah to the US dollar. Not only was this opposed by the IMF, the World Bank, the US and the EU, but his own critics in Indonesia lambasted it, pointing to the country’s limited foreign reserves and corrupt bureaucracy.
Having just been elected president for the seventh time, to rule for another five years, by a 1,000-member electoral assembly he vetted himself, Suharto is taking economic advice from his schoolfriend Professor Jusuf Habiba. Habiba’s economic competence has long been questioned–even by Western economists who still dream up futile models of how capitalism can best work–at least since his “zig-zag” theory which professed that rising inflation is best offset with low interest rates.
It is highly likely that a state of emergency will be declared shortly. Riots have been widespread, often urged on by students less inclined to the rhetoric of scape-goating. Panic buying has emptied shelves and forced many shops to close and the military is becoming edgy, fearful for its own interests. With a restless population of over 200 million, split into 300 ethnic groups, Indonesia faces a precarious next few months.
If the worst does come, we can well imagine the front page analysts pointing to Suharto’s corruption and poor economic insight as a cause, and others to the “bursting bubble” of the Asian economic miracle and its wider dimensions. None, we predict, will point out that this is how capitalism functions, that capitalism is an archaic, chaotic and ungovernable system. And we are not being churlish in suggesting that nothing out of the ordinary is happening Indonesia–for this is capitalism working normally, according to its own insane logic.
Our sympathies go out to the millions destined to suffer in the madness, the millions who will in fact lend their support to the same system that has impoverished them, and who will always suffer until it dawns on them there is an alternative and that it is they alone who can bring it about.