ADB's "inclusive growth": of the 1%, by the 1%, for the 1% - FDC

[Jofti Villena]

Dear FDC members and partners,

Sharing with you FDC's statement and news release for the People's Forum Against ADB yesterday, May 2 at Malate Catholic Church. Our action together with allies -- Philippine Working Group (PWG) on ADB, NGO Forum on ADB, Jubilee South Asia Pacific Movement on Debt & Development, Asia Pacific Network on Food Sovereignty have been covered by the media -- TV5, GMA7, ABS-CBN, Reuters, Radio Veritas, etc.

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Freedom from Debt Coalition

#11 Matimpiin St., Brgy. Pinyahan, Quezon City 1100, NCR, Philippines

Phone: : (+632) 9211985 * Telefax: (+632) 9246399

Website: www.fdc.ph * Email: ma...@fdc.ph

ADB's "inclusive growth": of the 1%, by the 1%, for the 1% - FDC

Activists hit "Anti-Development Bank" on ADB's Annual Governors Meeting

 

 

On its Annual Governors Meeting (AGM) this year, the Freedom from Debt Coalition holds the Asian Development Bank (ADB) accountable for the Philippine’s  and most of Asia’s development crisis and poverty.

 

ADB’s theme is centered on promoting “inclusive growth” – the flavor of the month in international capitalist financial institutions’ circles like those of the IMF-World Bank – through what they call better governance and partnerships.

 

Truth is, “inclusive growth” is a recycled version of the “ rapid growth with trickle down approach “ which global capitalist powers and IFIs have pushed in the 1980s to the 1990s  in most countries of the South along with the principle of neo-liberalism following the political and economic reversals of countries and movements promoting social and economic redistribution as the way forward.

 

 Now this formula is a massive pile of economic and theoretical rubbish, an utter failure in lifting most countries of the South from poverty, indebtedness, maldevelopment and unceasing internal political conflicts.  Neo-liberalism, the dogma of free market and minimal state, is likewise in crisis in the wake of the most serious financial and economic crisis hitting the heartland of global capitalism – the US and Europe, since the 1930s.

 

How is ADB’s “inclusive growth” not actually “inclusive”? First, ADB’s “inclusive growth”  calls for the aggressive removal of all constraints to growth like freeing up the market from the distortions created by corruption and rent-seeking practices in government.  Yet, it turns a blind eye to the much larger constraints created by ADB and IMF-WB debt conditionalities which stunt agriculture and industry by imposing privatization in economies where long-entrenched monopolistic oligarchs and their global partners could easily gobble up capital and markets to the exclusion of the rest of the population including the small and medium scale entrepreneurs.  Because these economies cannot develop in a sustained way, they are led to a condition of inexhaustible indebtedness—incurring more debts , through bonds or institutional debts – to repay old debts and finance the investment needs of global capital inside their countries.

 

Second,  ADB’s “ inclusive growth “ discredits income and asset redistribution to favor what it calls “ productive employment “ through rapid growth.  While growth can reduce unemployment, it  can also create more unemployment. It really depends on what kind of growth is being promoted.  By focusing on the growth of  BPOs and other external market-driven services and mining,  jobs in industry and agriculture are destroyed without a corresponding employment generation and development.  This is a Philippine experience which produces massive unemployment and underemployment.   

 

Third,   ADB’s “inclusive growth”  seeks to coopt a component of the pro-poor strategies which are critical of the” rapid growth with trickle down “ approach.

That component is direct measures of welfare and distribution.  However, the  the kind of direct measure that is promoted remains to be perverse. In the Philippines for instance, the  poverty intervention of this  financed by ADB would be the Conditional Cash Transfer (CCT) programs mutated from its original form.  CCT is not unconditional and universal – two basic requirements for being Rights-based. Instead,  it downgrades the self-worth of its beneficiaries and makes them vulnerable to more patronage and manipulation by the powerful. 

 

Worse, it is not even redistributive: it is not linked to any asset reform program because it is not financed through progressive taxation. There is no net transfer of wealth from the rich to the poor. In fact, being debt-financed, it merely transfers wealth from the future poor – if regressive taxation policies are not removed – to the poor now. As a social justice mechanism, CCT as ADB's instrument for inclusive growth fails in this respect.

 

Bad history

 

If ADB’s current “inclusive growth” policy is not actually inclusive, then why should anyone subscribe to its prescriptions? No one should. In fact, ADB's policy prescriptions have resulted to an ever-widening gap between the rich and the poor via giving the rich access to utilities previously owned by governments – utilities that allow them to extract rent from natural monopolies and oligopolies. It simply has no moral ascendancy on promoting anything “inclusive”.

 

In power, for instance, ADB approved in 1998 a US$300-million loan for Power Sector Restructuring Program (PSRP) in the Philippines to address the heavy indebtedness of NPC, rising cost of electricity and inefficient delivery of electricity service. In return, PSRP gave a big push for the enactment of the Electric Power Industry Reform Act (EPIRA) to privatize the debt-ridden NPC and restructure the power industry. More than a decade after, the Philippines is facing the highest power rates in Asia, with the sector now under the tight grip of  an entrenched oligopoly that EPIRA is supposedly against: the Lopez and Aboitiz families who reaped super-profit bonanzas from the cross-ownership of power generation and distribution. Manny V. Pangilinan controls ownership of Meralco, the distribution super-monopoly of Luzon.  Danding Cojuangco  grabbed 30 percent of power generation in Luzon.  Henry Sy effectively controls the country’s transmission line along with the Government of China.  Inclusive growth, anyone?

 

In food, ADB's Grain Sector Development Program (GSDP) irresponsibly pushed for the privatization of the National Food Authority (NFA) and the liberalization of grain trading, in the process encouraging greater private investment in the sector. Years later, we have the previously rice-exporting Philippines emerging as the top importer of rice, blamed by the world for causing the worldwide rice crisis. Who gains from high rice prices? Rice traders like the Binondo 7 and emerging cartels in Visayas and Mindanao reaped windfall profits. Inclusive growth?  

 

“Anti-Development Bank”

 

And the list goes on and on for the water, climate, and public finance sectors. In the end, ADB has no moral ascendancy to claim that it can  work for “inclusive growth”.  ADB has worked for and continues to work for the rich, powerful 1% - and like the Goldman Sachs had been in the United States, it has denied the 99% access to welfare and real opportunities to live decent and secure human lives.

 

ADB is clearly anti-development: its’ wrong prescriptions led to high power and food prices which continue to erode Filipino’s purchasing power and sabotage our attempts to create a robust domestic market which can promote a sustainable industrial, agricultural and service development.  ADB is clearly anti-poor: its’ policies resulted to oligopolies entrenched in various economic and social sectors, increasing the inequality in Asian nations already suffering from the mal-governance of its respective elites.

 

ADB is a failure.  Only by recognizing the fact that ADB has lost its legitimacy as a supposedly instrument for development and shunning its interventions that impoverished Asian countries like the Philippines can chart a truly strategic pathways to real humane development.

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Freedom from Debt Coalition

#11 Matimpiin St., Brgy. Pinyahan, Quezon City 1100, NCR, Philippines

Phone: : (+632) 9211985 * Telefax: (+632) 9246399

Website: www.fdc.ph * Email: ma...@fdc.ph

Contact persons: Agee Linan, FDC Campaigner, +63.932.872.6168 Bobby Diciembre, FDC Communication Officer, +63.932.872.6162

NEWS RELEASE 02 May 2012

 

Protest greets ADB’s annual meeting

 

MANILA, Philippines – As the Asian Development Bank’s (ADB) 45^th Annual Meeting of the Board of Governors commenced here Wednesday, various cause-oriented groups, led by the Freedom from Debt Coalition (FDC), trooped to the Philippine International Convention Center, the venue of the ADB meeting, to protest the Bank’s role in the privatization of the energy and water sectors and in pushing coal and other dirty technologies in Asia and the Pacific.

 

Bearing signs such as “ADB: Serving the rich since 1966,” “Anti-Development Bank: of the 1%, by the 1%, for the 1%” and “Our power, water: not for sale,” the protesters lambasted ADB for coming out with another mantra, called “inclusive growth,” to cover up its failure to accomplish its declared objective of freeing Asia from poverty. They added that ADB only advanced the “corporate greed” of the United States, Japan and other global corporations, at the expense of the people and the environment.

 

The protesters also staged a satirical Flores de Mayo (Flowers of May)-inspired action, dubbed as "ADB de Delubyo (Disaster): A Parade of Protest." In Philippine culture, "Flores de Mayo" is a flower festival celebrated in the month of May, in honor of the Virgin Mary. The highlight of the festival is a colorful pageant parade known as "Santacruzan," which commemorates the search of the Holy Cross by Queen Helena and her son, the newly converted emperor Constantine.

 

Featured during the protest were “Queen of High Power Rates,” who represented the burden of Filipino people as having the highest power rates in Asia; “Queen of Thirst,” representing ADB’s push for privatizing the country’s potable and irrigation water; “Mother of Degraded Environment,” representing the effect of climate change and ADB’s callous support of dirty energy; and, “King of Indebtedness,” representing the social and economic cost of being highly-indebted.

 

Privatization

 

Lidy Nacpil, coordinator of Jubilee South-Asia/Pacific Movement on Debt and Development (JSAPMDD), said that ADB bears a large share of the responsibility for the privatization of water and power services in Asia.

 

“There is no doubt that privatization of these services cause harm to peoples and the environment as shown by the experiences of communities and peoples in Asia. Because of privatization of these basic services, millions of impoverished and marginalized have much less access to safe and clean fresh water with the deterioration of the quality of service and the sharp increases in the cost of service,” stressed Nacpil, also FDC vice president.

The ADB has been involved in privatizing water services in the Philippines, Indonesia, India, Pakistan, South Korea, Nepal, and Sri Lanka.  It is also involved in power privatization-related projects in the Philippines, Bangladesh, Thailand, Pakistan, Indonesia, and at least nine states in India received financing from ADB. 

 

EPIRA

 

Ricardo B. Reyes, FDC president, said that one concrete example of an ADB-finance program was the Philippines’ Power Sector Restructuring Program that led to the legislation of the Electric Power Industry Reform Act (EPIRA).

 

This has compelled the government to increase the generation rates to attract more investors to participate in the privatization of government’s generation assets. It also legitimized the debts arising from and payments to expensive and onerous contracts of National Power Corporation with independent power producers.

 

According to FDC, EPIRA failed to achieve its two categorical promises to the Filipino consumers – clean, accessible and reliable power supply to all and affordable electricity rates.

 

“After more than 10 years of EPIRA implementation, the Philippines now has the most expensive electricity rates in Asia. Mindanao, the southern part of the country, is still experiencing rotational blackouts. Worse, the Philippine government is holding people hostage: pay more for electricity and accept coal,” stressed Reyes.

 

Water

 

According to FDC, privatization of water services, in effect, contradicts and cannot co-exist with the people’s human right to water. On 28 July 2010, the United Nations General Assembly had declared that safe and clean drinking water and sanitation is a human right essential to the full enjoyment of life and all other human rights, expressing deep concern that an estimated 884 million people lack access to safe drinking water and a total of more than 2.6 billion people do not have access to basic sanitation.

 

Citing the privatization of the Metropolitan Waterworks and Sewerage System (MWSS) as example, FDC said that water distribution under corporate control has negatively affected Metro Manila residents, especially the urban poor communities. 

 

“Contrary to the positive promises of water privatization, what we experienced is the opposite. In just 12 years, water tariffs have risen exponentially by almost 1000%. Water lost to leakages in the West zone is higher than pre-privatization levels. The MWSS has still continued to incur more debts,” FDC said.

 

Arze Glipo, convenor of the Asia Pacific Network for Food Sovereignty (APNFS), said there is an urgent need to expose the flawed logic behind the current drive to transform water into a source of profit and to assert our people’s basic right to water.

 

“We need to assert our right to water, our right to life. We need to expose ADB and World Bank’s promotion of a host of programs and policy reforms aimed at de-emphasizing the traditional view of water as a right and a common resource and its replacement with the concept of water as a tradable commodity,” stressed Glipo, also FDC vice president.

 

People’s Forum

 

The protest is part of the People’s Forum against the ADB, which is a parallel event to the ADB's 45th Annual Meeting and is being held at the Bayview Park Hotel and Malate Catholic Church.

 

Topics discussed at the parallel event were ADB’s “Inclusive Growth” theme, Energy for All policy, Water for All policy which include Framework and Policy on Integrated Water Resources Management (IWRM) and Water in Agriculture, and the Bank’s investments in coal and technologies that aggravate climate change.

 

Organizers of the People's Forum include the Philippine Working Group (PWG) on the ADB, NGO Forum on ADB, JS-APMDD and APNFS.

 

Aside from FDC and JS-APMDD, those who joined the protest were leaders and members of, Faith-based Congress against Immoral Debts (FCAID), Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML), Matinik, Akbayan, Koalisyong Pabahay sa Pilipinas (KPP), Sanlakas and Philippine Movement for Climate Justice (PMCJ). -30-

 

Jofti Villena Delizo
FDC Staff & FCAID Coordinator
Mobile No.: +639088945174
Office Nos.: +632-9246399 (telefax) / +632-9211985
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