Avoiding Neoliberalisation

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by Jill, from Aberdeen Against Austerity
Edited version of a speech from RIC Aberdeen’s launch event in May 2013

Aberdeen Against Austerity does not have a position on independence, but we certainly have radical ideas about how we would build a better world. And whether our members would vote for it or not, an independent Scotland is somewhere we can all imagine being the start of that better world.

But perhaps more importantly, we want to ensure that an independent Scotland is not screwed over, asset stripped and sold to the highest bidder. We want to ensure that an independent Scotland is not just a smaller version of what we already have, and the biggest missed opportunity of a lifetime.

Much of the public debate — and I mean that in the sense of what is covered in the mainstream media — has so far centred around oil: who owns it, what it is worth and when it will run out.

There are the issues of currency and banking. George Osborne says that an independent Scotland could not use sterling, yet Alex Salmond asserts that not only would we use sterling, we would also continue to use the Bank of England as our central bank.

There are the issues of an independent Scotland’s membership of international bodies such as the EU, WTO and NATO. Would we need to reapply for everything from scratch, or would we have an automatic place at the table?

Then there are the issues surrounding Scotland’s rejection of nuclear weapons.

The more radical, and sadly not so public debate includes issues like the redistribution of wealth, participative democracy, the environment and sustainability.

Unfortunately I don’t have time to talk about any of those things in the next 10 minutes.

Instead I would like to spend my time looking at some examples from around the world; examples that highlight the pitfalls and consequences of asserting your sovereignty as a nation. And if we take heed of these examples, hopefully we can avoid falling into the same traps. Forewarned is forearmed, as they say.

So what happens when you want to take control of your oil?

In 1951 Iran’s secular government under Prime Minister Mohammed Mossadeq introduced a wide range of progressive social and political reforms including nationalization of the oil industry from the Anglo Persian Oil Company (later to become BP).

Britain imposed a worldwide embargo on the purchase of Iranian oil. They froze Iran’s sterling assets and banned export of goods to Iran. They challenged the legality of the oil nationalization in the International Court of Justice at The Hague and lost. Mosaddegh was removed from power in a coup in 1953, organised and carried out by the CIA at the request of the British.

But that was all a long time ago. Surely stuff like that would never happen nowadays?

Fast forward to 2003 and the illegal war on Iraq. Oil was not the only goal of the Iraq War, but it was certainly the central one, as top U.S. military and political figures have attested to in the years following the invasion. In 2007 the former head of U.S. Military Operations in Iraq, said, “Of course it’s about oil; we can’t really deny that.”

Former Federal Reserve Chairman Alan Greenspan agreed, writing in his memoir, “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”

Defence Secretary Chuck Hagel said, “People say we’re not fighting for oil. Of course we are.”

Before the 2003 invasion, Iraq’s domestic oil industry was fully nationalized and closed to Western oil companies. A decade of war later, it is largely privatized and utterly dominated by foreign firms. And what did Saddam Hussein do to bring this war upon his country? Arguably it was his decision to start trading oil in Euros.

Someone else who proposed to stop selling oil in dollars was Libya’s Colonel Gadaffi…

These are extreme examples, where military might has been brought to bear.

I’d like to talk about a subtler case now — that of South Africa.

The African National Congress adopted its Freedom Charter in 1955. Amongst the Freedom Charter’s many demands were the right to work, to decent housing, to freedom of thought and most radically, the right to a share in the wealth of the richest country in Africa.

The Freedom Charter states, “The national wealth of our country shall be restored to the people; the mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole; all other industry and trade shall be controlled to assist the wellbeing of the people.”

In 1990 Nelson Mandela confirmed from his prison cell that “The nationalisation of the banks, mines and monopoly industries remains the policy of the ANC,” yet today South Africa has surpassed Brazil as the most unequal society in the world. So what happened?

Politically, the people of South Africa have the right to vote, civil liberties and majority rule.

And therein lies the problem. While the ANC were preoccupied with winning the battle to control parliament, South Africa’s white elite were cleverly negotiating the handover of trade policy and the central bank to the control of the “impartial” experts of the IMF, World Bank and General Agreement on Tariffs and Trade (now WTO).

The ANC wanted to create jobs for the millions of unemployed workers, but couldn’t because they had signed the GATT which made it illegal to subsidise domestic industries. They wanted to get free AIDS drugs to the townships, but couldn’t because that violated WTO commitments to intellectual property rights. They wanted to spend money building houses for the poor and bringing electricity to the townships, but couldn’t because they were servicing a massive debt quietly passed on by the white elite. There was also the $850 million IMF deal, signed just before the elections, with all its attendant conditions.

And I’m sure we’re all aware of what happens when a country gets a loan from the IMF or the World Bank.

The loan comes with conditions: currency devaluation, austerity measures, trade liberalisation, reducing tax on high earners, wage suppression, removal of price controls and state subsidies, enhancing the rights of foreign investors and privatisation of all state owned industries and services.

Like schools and health care in sub-saharan Africa. Or water in Bolivia. Or more recently the Greek gas, petroleum and mining industries.
It’s not hard to see who a loan from the IMF benefits, and it certainly isn’t the people of the impoverished nation.

The neoliberal free-market policies of the World Bank and IMF are backed up by the WTO and the International Centre for the Settlement of Investment Disputes.

The WTO allows companies, through lobbying their own Governments, to challenge the policies of other Governments, and have those policies scrapped or watered down by a WTO tribunal if they are deemed “barriers to trade.” These “barriers to trade” often include labour and environmental protection laws, such as the USA’s Clean Air Act which recently had all its teeth removed by the WTO.

The International Center for the Settlement of Investment Disputes (ICSID), part of the World Bank Group, is an arbitration forum between governments and foreign investors to settle investment disputes. There is no appeals process.

Many companies have revenues that exceed the GDP of the country they are bringing a case against. The legal fees and arbitration costs are borne by the losing party, so the implications for small countries can be massive. Needless to say, most cases have favoured the investor.

So, do you see why Aberdeen Against Austerity worry about Scotland being screwed over, asset stripped and sold to the highest bidder?

Why we worry that nationalising oil and getting rid of Trident are impossible dreams?

To avoid neoliberalisation, we need to know how and where they will try to catch us and be one step ahead.

And if we do manage to avoid neoliberalisation, we run the risk of repeating Iceland’s mistakes and allowing a golden opportunity to effect real social change slip through our fingers.

In the wake of the 2009 financial collapse the Icelandic people managed to sack the head of their central bank, the head of the banking regulator and their government.

Pretty good going, you might think, but MP Brigitta Jonsdottir disagrees.

The tragedy of the Icelandic revolution was that their innovative crowd-sourced constitution was not ratified in time by parliament, and now stands very little chance of being passed as new MPs have been elected. Unfortunately while the electorate punished the left for failing to ratify the constitution in time, the right have gained power and the people’s constitution now has little chance of survival.

The Icelandic People missed their opportunity, as Brigitta Jonsdottir puts it, to decide what sort of society they wanted to be.

We must not let the same thing happen in Scotland!

In order to decide what sort of society we would like to be, we must look far and wide to see all the different ways there are of being and we must look to the past as well as the present.

We must look at Nordic and Germanic models of society, as the Common Weal document from the Jimmy Reid Foundation does, but we must also look at what is happening in Latin America.

Latin American countries are showing that you do not have to accept the established world order. Bolivia, Venezuela, Ecuador and, soon, Argentina have left ICSID. They have set up an alternative to the IMF and the World Bank called Banco del Sur (Bank of the South) and they have established a trading bloc called ALBA, excluding USA and Canada.

They even made up their own currency, the sucre, so the dollar can’t influence their fair trade and exchange!

And once we have studied, we need to come up with a plan.

We must be able to present a coherent and comprehensive vision of our Scotland as soon as the referendum results are in or we’ll miss the boat.

We will only have one chance to create the Scotland we want to be, and we must be ready to grab it with both hands.

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About RIC Aberdeen

The Radical Independence Campaign sees Scottish independence as the first step towards creating a fairer, greener, more democratic place. RIC Aberdeen are a local campaigning group, ordinary people who want to make a difference. We do canvassing every Wednesday night, along with other events. Please get in touch for more info.

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