4. Some Free Market Successes

It would only be fair to add that the IMF-World Bank recipe now being imposed upon the former Soviet empire has its successes. Bolivia is a highly-touted triumph, its economy rescued from disaster by the 1985 New Economic Policy prescribed by the expert advisers now plying their craft in Eastern Europe. Public employment was sharply cut, the national mining company was sold off leading to massive unemployment of miners, real wages dropped, rural teachers quit in droves, regressive taxes were introduced, the economy shrank along with productive investment, while inequality increased. In the capital, Melvin Burke writes, "street vendors and beggars contrast with the fancy boutiques, posh hotels and Mercedes-Benzes." Real per capita GNP is three-fourths what it was in 1980, and foreign debt absorbs 30 percent of export earnings. As a reward for this economic miracle, the IMF, Interamerican Development Bank, and the G-7 Paris Club offered Bolivia extensive financial assistance, including secret payments to government ministers.

The miracle that is so admired is that prices stabilized and exports are booming. About two-thirds of export earnings are now derived from coca production and trade, Burke estimates. The drug money explains the stabilization of currency and price levels, he concludes. About 80 percent of the $3 billion in annual drug profits is spent and banked abroad, mainly in the US, providing a lift to the US economy as well. This profitable export business "obviously serves the interests of the new illegitimate bourgeoisie and the `narco-generals' of Bolivia," Burke continues, and "also apparently serves the United States national interest, inasmuch as money laundering has not only been tolerated by the United States but has, in fact, been encouraged." It is "the poor peasant coca growers" who "struggle to survive against the combined armed might of the United States and the Bolivian military," Burke writes. There are always plenty more to ensure that the economic miracle will continue, eliciting much praise.

Confirming these figures, Waltrad Morales estimates that about 20 percent of the labor force depends for a livelihood on coca/cocaine production and trade, which amounts to about half of Bolivia's GDP. The export miracle has disrupted land prices and agricultural development, "and as a consequence Bolivians can no longer feed themselves." Malnutrition for children under 5 is over 50 percent higher than the (awful) regional average. A third of the country's food must be imported. "This `national food crisis' -- further aggravated by the neoliberal economic model -- has contributed to the marginalisation of the peasantry, which has forced many of them to grow coca leaf in order to survive," in a downward cycle.²⁴

On to Poland.

Achievements have also been recorded elsewhere, thanks to timely US intervention and expert management. Take Grenada. After its liberation in 1983 -- following several years of US economic warfare and intimidation that have been effectively barred from history -- it became the largest per capita recipient of US aid (after Israel, a special case). The Reagan Administration proceeded to make it a "showcase for capitalism," the conventional formula as a country is rescued from its population and set on the right course by its benefactors; Guatemala in 1954 is another announced "showcase" that should be famous (see chapter 7.7). The reform programs, which brought the usual social and economic disaster, are condemned even by the private sector they were designed to benefit. Furthermore, "the invasion has had the long-term effect of neutering the island's political life," Carter Special Assistant Peter Bourne reports from Grenada where he is teaching at the Medical School whose students were "rescued": "No creative vision aimed at plans for solving Grenada's social and economic ills has emerged from the lackluster and pliantly pro-American leaders" as the island suffers from record levels of alcoholism and drug abuse, and "crippling social malaise," while much of the population can only "flee their beautiful country."

There is, however, one bright spot, Ron Suskind reports in a front-page Wall Street Journal article headlined "Made Safe by Marines, Grenada Now is Haven for Offshore Banks." The economy may be "in terrible economic shape," as the head of a local investment firm and member of Parliament observes -- thanks to USAID-run structural adjustment programs, the Journal fails to add. But the capital "has become the Casablanca of the Caribbean, a fast-growing haven for money laundering, tax evasion and assorted financial fraud," with 118 offshore banks, one for every 64 residents. Lawyers, accountants, and some businessmen are doing well; as, doubtless, are the foreign bankers, money launderers, and drug lords, safe from the clutches of the carefully crafted "drug war."²⁵

The US liberation of Panama recorded a similar triumph. The poverty level has increased from 40 percent to 54 percent since the 1989 invasion. Guillermo Endara, sworn in as President at a US military base on the day of the invasion, would receive 2.4 percent of the vote if an election were held, according to 1992 polls. His government designated the second anniversary of the US invasion a "national day of reflection." Thousands of Panamanians "marked the day with a `black march' through the streets of this capital to denounce the US invasion and the Endara economic policies," the French press agency reported. Marchers claimed that US troops had killed 3000 people and buried many corpses in mass graves or thrown them into the sea. The economy has not recovered from the battering it received from the US embargo and the invasion. A leader of the Civic Crusade, which led the middle-class opposition to Noriega, told Chicago Tribune reporter Nathaniel Sheppard that "Economic sanctions imposed by the U.S. against our will in 1987 to oust Noriega did nothing to hurt him but ruined our economy. Now we believe the sanctions may have been part of a plan to destroy our economy in such a way that we would not have strong ground to demand dignity and better treatment from the US." George Bush's June 1992 visit, which ended quickly in a well-publicized fiasco, "focused attention on long-simmering animosity toward Bush" for the invasion, Sheppard reported; the "rifle-toting American troops" in residential neighborhoods are a particular irritant, and the mood was not improved when security forces accompanied by "about eight American personnel" invaded the home of a National Assembly member, rifling through papers, taking passports, firing shots, and intimidating his wife, who was home alone, he alleged.

²⁴ Burke, Current History, Feb. 1991; Morales, Third World Quarterly, vol. 13.2, 1992. See also Peter Andreas et al., "Dead-End Drug Wars," Foreign Policy, Winter 1991-92.

²⁵ McAfee, Storm Signals, ch. 7. Bourne, Orlando Sentinel, April 12, 1992. Suskind, WSJ, Oct. 29, 1991. DD, 162. On the suppressed history, see NI, 177f.