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With
the Cancun trade talks buried, the United States and
the European Union are busy forcing through preferential
bilateral and regional trade deals. These deals will
pre-empt moves by developing countries to get some
justice out of the World Trade Organization and its
fellow enforcers of global "free trade"
pillage, the World Bank and the International Monetary
Fund. Central America is among the first to savour
the bitter taste of the post-Cancun ground rules as
the United States hastens to close its grip even tighter
on the strategic prize of the isthmus.
The
Central American Free Trade Agreement (CAFTA) is inseparable
from Plan Puebla Panama[1] in
the US hemispheric strategy to consolidate regional
political and economic dominance. Large scale investment
envisaged under Plan Puebla Panama involves linking
Mexico to Panama through Central America. CAFTA is
also a necessary step towards creating a Free Trade
Area of the Americas. Central America will be crossed
by north-south road and maritime links to move goods
more quickly east-west across the isthmus via road
and rail corridors.
The
energy imperative
As
usual energy is the key. In 2002, around 600,000 barrels
a day of crude oil and petroleum products passed through
the Panama Canal. Of that around 63% was moving from
the Atlantic to the Pacific. Crude oil made up about
44% of the oil moving from the Pacific to the Atlantic.
As energy needs increase and oil reserves elsewhere
diminish, the influence of energy transnationals is
increasingly driving US and European policy in Latin
America.
The
first stage of Plan Puebla Panama is the Central American
Electrical Interconnection System (SIEPAC). Due for
completion in 2006, SIEPAC will install power lines
connecting 37 million consumers in Panama, Costa Rica,
Honduras, Nicaragua, El Salvador, and Guatemala. The
cost is an estimated $320 million. Subsequent stages
will develop power links between Guatemala and Mexico
and also integrate Belize into the system. A long
term objective is to provide a market for gas and
oil exploited by multinational energy companies in
Ecuador, Colombia, Venezuela and Mexico.
The
wider effects of Plan Puebla Panama will damage local
fisheries and agriculture, destroy the already fragile
biodiverse environment and multiply maquila sweatshop
"free trade" light industrial zones. Political
implications of the strategy are profoundly anti-democratic.
The constantly encroaching demands of multinational
business will mean persistent denial of local people's
rights and interests.
Already
devastated, the region's remaining precious forestry
reserves like the Bosawas reserve in Nicaragua will
virtually disappear. Water resources will be ruthlessly
exploited by the multinational corporations that take
them over. Weak central governments will be unable
to control pollution as oil and gas exploration and
exploitation increase.
The
US and the old colonials
European
and US corporate investment buzzards have already
landed. They include among many others, International
Paper, Monsanto, Coastal Power, Enron, Teco Energy,
Duke Energy, Harken Energy through its links with
MKJ Exploration and Global Energy Development, Applied
Energy Services, Spain's ENDESA, Union Fenosa and
Iberdrola, Portugal's Eletricidade de Portugal, the
SIT Global dry canal consortium, Bell South, European
exploration firm Perenco, Scudder Latin American Power
Fund, Sweden's Telia Swedcom and the Dutch ING Bank.
Their operations in the region are accompanied and
facilitated strategically by the Inter-American Development
Bank and the World Bank through straitjacket conditional
loans to governments, further increasing the region's
external debt.
So
people in Central America continue to lose the benefits
of their natural resources and infrastructure to multinationals
from Europe and the United States. Their governments
are coaxed or coerced into taking loans from the World
Bank, the Inter-American Development Bank and the
IMF to subsidise processes and infrastructure needed
to facilitate the multinational jamboree. The multinationals
pick up cut-price concessions and preferential investment
deals so as to cream off exorbitant profits. The Central
American peoples pick up the tab in higher utility
bills, public service cutbacks and escalating debt
repayment, decade after decade.
CAFTA
- the Nicaraguan experience[2]
CAFTA
itself involves a tiny proportion of US trade in Latin
America and only 0.8% of overall US trade. But it
is a vital precedent for the US to carry into future
deals with larger blocs like Mercosur, made up of
Brazil, Uruguay, Paraguay and Argentina. As ever,
by virtue of its position, Nicaragua is a prime target.
Its experience is emblematic for the region as a whole.
It
may cost Nicaragua as much as US$1 billion to implement
all the provisions of the final CAFTA package. That
money will come from loans that will add to the country's
already crippling debt. One simple example of this
is the introduction of new requirements for farm produce
under the US Anti Bio-Terrorism law. Central American
produce will have to satisfy stringent inspection,
registration and certification requirements before
being allowed into the US. That administrative burden
will be borne by the region's governments and passed
on to producers, cutting their margins even more.
Nicaragua's experience of the US CAFTA approach is
a touchstone for any country facing US trade negotiators.
US
strategy in the CAFTA talks with Nicaragua has been
to press for haste and then paradoxically postpone
vital issues until the latest moment possible. This
maximises the pressure on Nicaraguan negotiators to
agree to the deal on offer from the US in order to
make the agreed deadline for the whole package. The
US team has deployed sharp tactical moves within that
general strategy, for example switching negotiating
personnel without notice so as to disorientate their
Nicaraguan counterparts - a kind of good cop-bad cop
psychological warfare.
Another
favorite has been to present new undiscussed proposals
long prepared by the US team but completely new to
the under-resourced Nicaraguans. The Nicaraguans then
have to patch up a position in short order with no
time to work out in detail the consequences of what
they end up agreeing. Ecological issues are almost
entirely absent from the substance of the talks. This
frees up the option for multinationals to sue Nicaragua
for indemnity should it subsequently attempt to cancel
CAFTA provisions so as to protect the country's already
ravaged natural environment.
In
the background lies the anxiety of the Nicaraguan
government to qualify for the Highly Indebted Poor
Countries (HIPC) debt relief initiative. To do so
they have to meet conditions imposed by the World
Bank and the IMF. As usual the requirements include
privatization and interference in the country's domestic
legislation. In this case the privatization bazaar
includes completion of sale of the public telephone
utility ENITEL [3] and the public
energy company Hidrogesa. A favorable report from
the US CAFTA trade representatives will help Nicaragua's
case with the IMF and World Bank HIPC pawnbrokers.
"Free
market" intervention
These
pressures are compounded by bullying from individual
US companies. The intervention of Bell South in Nicaraguan
telecommunications policies is a typical example of
a multinational pressuring a weak national government.
The Nicaraguan communications regulator Telcor had
accepted market proposals from former state owned
phone utility Enitel, still not entirely privatized.
Bell South disliked the deal and went crying to US
Trade Representatives Robert Zoellick and Gloria Blue
asking the US government to refuse further concessionary
trade deals with Nicaragua until Bell South's interests
were satisfied.
Nicaragua
is ill-placed to resist these strongarm tactics. It
loses out across the board. In terms of public health,
environmental pollution, agriculture, CAFTA is the
worst of all worlds. But Nicaragua is in deep economic
crisis and has few options. The Ministry of Labour
announced in September this year that umemployment
and underemployment is now at 45% with over 50% of
economically active people working in the informal
sector. These official statistics certainly understate
the reality.
Against
that background, pro-business negotiators gush positive
about CAFTA's ability to attract investors. Trade
officials enthuse that at least four textile companies
are interested in moving to Nicaragua as well as a
US company considering whether to base its prefabricated
housing production in the country. Chiquita (United
Brands) has said it is interested in moving its pineapple
production to Nicaragua. These are the pathetic employment
incentives on offer to justify the CAFTA package.
That
kind of investment can only bode ill for Nicaraguan
workers. Even now, lock outs and arbitrary dismissals
of unionised workers are common in Nicaragua's free
trade zones. CAFTA will make things worse. Trade negotiators
have referred ominously to US concerns about the Nicaraguan
labor code pointing out that CAFTA has made available
over US$6 million for regional "improvements"
to local employment law.
Public
interest and economic policy - a seamless web
In
health policy CAFTA will make it harder for Nicaragua
to produce or import generic medicines to meet its
health needs. The US wants to increase the life of
patent controls from 20 to 25 years. No concession
is being made to exempt medicines for epidemic illnesses
like AIDS, tuberculosis, malaria or other worldwide
diseases. Like so much else vital to ordinary people
in Nicaragua, the CAFTA talks assign a low priority
to public health and the implications for it of economic
policy.
Mountain
leprosy or leishmaniasis has now become endemic in
Nicaragua in the so called "mining triangle"
between the towns of Jinotega and Matagalpa and the
northern Atlantic Coast. But cases are also appearing
in the west of the country. 2200 cases were reported
in 2002. Medical observers believe the increase is
due to increased migration of rural families to mountain
areas in search of land. Rural migration patterns
have changed over the last year. Rather than move
to the capital Managua as in the past, rural families
are moving to local urban centres and settling humid
inland areas of the Atlantic Coast.
This
migration is closely linked to the crisis in production
of maize, rice and beans and the climate change that
has made subsistence farming on the increasingly dry
Pacific Coast untenable for thousands of smallholders.
Finance available nationally for basic grain production
is less than US$1 per manzana (1.4 acres). At a time
when Nicaragua needs to double its basic grain production
to be self sufficient in those foods, commercial banks
no longer offer finance to basic grain producers.
What finance exists comes almost entirely from non-governmental
organizations. While basic grain production is left
to wither away, Nicaraguan trade negotiators argue
for even more development of resource-wasteful cattle
farming.
The
encroaching desertification of north west and north
central Nicaragua, (and the bordering regions in neighbouring
El Salvador and Honduras) makes water policy for the
area of crucial importance. With water next up for
privatization, consumer organizations and environmental
groups in Nicaragua are pressing for an independent
water authority to protect the public interest. But
despite their calls being backed by the Natural Resources
Ministry, the draft legislation promoted by the Ministry
of Trade and Commerce contemplates handing Nicaragua's
water resources wholesale to private companies with
only notional regulation.
The
argument offered against an independent water authority
is that financing it would be too costly. That may
well be the case on current trends. In September this
year the Natural Resources Ministry declared it could
not do its job for lack of funds. The budget assigned
to the Ministry makes it impossible to carry out the
environmental impact studies necessary to control
industrial polluters.
"Disappeared"
states unable to protect their peoples
The
fundamental weakness of Nicaragua's government after
over a decade of abject loyalty to neo-liberal economic
recipes is evident from the budgetary cuts planned
for 2004. Average cuts across all Ministries will
be around 10% on the already meagre and inadequate
allocations through 2003. Plans to cut spending on
health, education and social services have already
been announced. All the Central American countries
except Costa Rica face the same dilemma with CAFTA.
Under-resourced,
weak central governments of countries debilitated
by decades of war and regional economic crisis find
themselves negotiating against the clock facing a
ruthless, well-prepared US team who have all the resources
they need. The outcome will be a debacle for people
in Central America on every front. It may well be
true that CAFTA will create wealth for a small elite
and for foreign businesses. But even that wealth will
be spirited out of the region leaving governments
weaker than ever and even more unable to meet the
basic needs of their peoples.
CAFTA
- a portcullis for "Fortress Western Hemisphere"?
One
good way to understand the vision driving US policy
in Latin America is to visit the web site of Global
Energy Development Plc. [4]
This company, quoted on the London Stock Exchange,
is a subsidiary of Harken Energy, the vehicle George
W. Bush used to dodge and deal his way into big business
before the first Gulf War."Global Energy Development
shares the same address as Harken Energy in Houston,
Texas. All but one of its directors are Harken insiders,
all long time cronies of George W. Bush."President
Bush has still to shake off suggestions of insider
dealing while a Harken director back in 1990.
The
site uses an interesting graphic to explain its strategic
vision. Entitled "Fortress Western Hemisphere"
the graphic is a map of the Americas from Alaska to
Tierra del Fuego. One arrow curls around from north
to south somewhere in the Atlantic. Another curls
up south to north somewhere in the Pacific. The label
explaining these arrows says succinctly, "Latin
American resources will supply North American demand".
The language is self-explanatory.
They
mean what they say.
Global
Energy Development Plc operates mainly in Colombia
[5] and Panama but has interests
in Peru and Costa Rica. Right now, Harken Energy's
long time partner MKJ [6] exploration
is about to sign a deal for exploration rights in
the most promising area of Nicaragua, 8000 square
kilometres off the country's Atlantic Coast. Harken
and MKJ are moving into Nicaragua after having their
hopes dashed on developing a similar field in Costa
Rica.
The
Costa Rican government cancelled development of the
field following a negative environmental impact report.
Harken initially sued Costa Rica under the rules of
the International Center for the Settlement of Investment
Disputes, a Washington based institution associated
with the World Bank. Harken sought an astonishing
US$57 billion indemnity (4 times Costa Rica's GDP)
to compensate an investment of scarcely US$15 million.
Then,
at the start of October this year Harken dropped its
claim pending further action in the Costa Rican courts
and more negotiations with the Costa Rican government.
It is a fair surmise that Harken dropped its high
profile case against the Costa Rican government so
as to mollify opposition in Nicaragua to its presence
there.
Once
countries like Nicaragua sign up to the CAFTA agreement,
Munchausen-syndrome claims like those from George
W. Bush's business associates in Harken Energy will
be yet another weapon to intimidate impoverished national
governments into giving multinationals what they want,
backed up with the political, economic and military
might of the United States.
Finding
focus on the wider picture
Harken
Energy and Global Energy Development merit careful
monitoring. Earlier this year cash-strapped Harken
nearly lost its AMEX stock exchange rating as a redemption
deadline loomed for a term note.[7]
Another shady Bush associate, Alan Quasha, also a
former director of Harken, mobilised the family's
Virgin Island based Lyford Investments to save Harken's
skin.
After
suspiciously complicated buy-back manoeuvres, Lyford
now owns 62% of Harken. Quasha's intervention saved
the day. Now with the deal in Nicaragua, signs of
a possible settlement between Harken and Costa Rica,
and reasonable exploitation news from Colombia and
Panama, Harken's share price is edging up. Various
factors will affect the market prices of Harken Energy
and Global Energy Development.
Ratification
of the CAFTA deal whose final details will be worked
out in December this year is vital for US multinationals
to be able to compete on preferential terms against
their European rivals. Increased US support for Colombian
President Uribe's neutering of state-owned petroleum
company ECOPETROL and the terror campaign against
rural families and trades unionists in oil and gas
development areas will be seen as protecting foreign
oil investments.
Markets
will also view positively continued efforts by State
Department regional policy hitmen, Otto Reich, John
Maisto and Roger Noriega, [8]
to overthrow Hugo Chavez's democratically elected
government in Venezuela. In Ecuador and Bolivia, the
success of popular resistance to government attempts
to sell off national resources hangs in the balance.
CAFTA is an integral part of these wider events. Harken's
and Global Energy Deveopment's share prices make an
excellent barometer to see how well the Bush regime
think they are progressing towards "Fortress
Western Hemisphere".
(Toni
Solo is an activist based in Central America.)
NOTES
1.
For Plan Puebla Panama see www.mesoamericaresiste.org/primeras/segundas/terceras/cuartas/rimbid.html;
http://www.eia.doe.gov
(US Government's Energy Information Administration)
2.
Information on CAFTA and Nicaragua is drawn from
reports through 2003 in the Nicaraguan dailies :
- El
Nuevo Diario
- La Prensa
with supplementary material on CAFTA from the NicaNet
newsletter
3.
Honduran power company Emce and Swedish telecommunications
company Telia Swedtel, bid US$33mn to win the first
40% of the privatization. Enitel employees hold
the remaining 11%.
4.
Information on Global Energy Development Plc is
from their web site:- www.petroassist.com/Oil&Gas/
jump.asp?Group=G&ContactID=1317
5.
For Harken Energy in Colombia see: -http://www.soberania.info/Articulos/articulo_028.htm
- Sean Donahue: The
Other Harken Energy Scandal
6.
Information on Harken Energy and MKJ exploration
dealings in Nicaragua from El Nuevo Diario, La Prensa,
and in Costa Rica in:-
- Tico Times
- Costa
Rica AM news
7.
For Harken Energy and Global Energy Development
stock and share information and analysis try the
following:-
- www.stockgroup.com;
- www.stockselector.com;
- http://finance.yahoo.com;
- http://cnbc.multexinvestor.com;
- http://www.bizjournals.com;
- http://www.theaxcess.com:
8.
John Maisto is US representative to the Organization
of American States. Roger Noriega is Assistant Secretary
of State for Western Hemisphere Affairs. Otto Reich
is US Special Envoy for Western Hemisphere Initiatives.
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