Multinational Monitor

DEC 2000
VOL 21 No. 12


Enemies of the Future: The Ten Worst Corporations of 2000
by Russell Mokhiber and Robert Weissman

Raw Power: Plant-Closing Threats and the Threat to Union Organizing
by Kate Bronfenbrenner


Healthcare for All: The Campaign for Single-Payer Health Insurance in Massachusetts and the United States
an interview with David Himmelstein


Behind the Lines

Natural vs. Artificial "Persons"

The Front
Phasing Out User
Fees - Guatemalan Oil Debacle

The Lawrence Summers Memorial Award

Names In the News


The Front

Phasing Out User-Fees

The U.S. Congress in October made it official policy for the United States to oppose the inclusion of user fees for primary healthcare and education in International Monetary Fund (IMF) and World Bank loans and projects.

Immediately thereafter, the World Bank indicated that it was moving to abandon user fees.

User fees - charges for services that are also known as community financing, cost sharing or cost recovery - are often one part of the structural adjustment policy package, the set of market-oriented policy conditions attached to many loans from the IMF and World Bank. They are among the most heavily criticized of structural adjustment policies.

The foreign operations appropriations bill included language that requires the U.S. Treasury Secretary to instruct the U.S. executive director (country representatives) to the IMF and World Bank "to oppose any loan of these institutions that would require user fees or service charges on poor people for primary education or primary healthcare, including prevention and treatment efforts for HIV/AIDS, malaria, tuberculosis, and infant, child, and maternal well-being, in connection with the institutions’ lending programs."

"This is the first step toward eliminating one of the most destructive components of the austerity programs the IMF and World Bank impose on most of the countries of Africa, Asia, and Latin America," said Njoki Njehu, director of the 50 Years Is Enough Network." To deny the most basic services to the world’s most impoverished is what I would call sado-monetarism: submitting the very lives of the people of Africa (and elsewhere) to the whims of the market. Today the U.S. Congress has put these institutions on notice: the world knows what they are doing to the impoverished people of the world, and we will not stand for it any longer."

Fifty Years Is Enough was a member of a coalition of Washington, D.C.-based organizations that spearheaded the effort for adoption of the user fee language. Other coalition partners included Results, the Center for Economic and Policy Research, the Quixote Center and Essential Action, a project of Essential Information, the publisher of Multinational Monitor.

The same day the foreign operations appropriations bill passed, a World Bank representative said the Bank would move away from user fees.

"The bank has learned that barriers to access for health and education must be eliminated," Eduardo Doryan, a World Bank vice president, told Bloomberg News. "We are moving in the direction" of eliminating the imposition of fees for basic services from all lending programs, he said.

In July, the U.S. House of Representatives passed an appropriations amendment, initially introduced by Representative Jesse Jackson, Jr., that would have stopped future funding for the IMF and the World Bank if the two lending agencies failed to stop imposing user fees for basic healthcare and education services.

The Treasury Department, anxious to avoid any appropriations limitations for its dealings with the IMF and World Bank, worked to block inclusion of the amendment in the final foreign operations appropriations bill.

A growing U.S. coalition which eventually included the AFL-CIO and more than 100 non-governmental organizations, including Jubilee 2000/ USA, Friends of the Earth, Global Exchange and the Presbyterian Church USA, urged that strong user fee language be preserved.

"The evidence from the countries of Africa, Latin America and Asia demonstrates that these fees have had a catastrophic impact on the capacity of the world’s most impoverished people to obtain health care and send their children, especially girls, to school," wrote more than 100 organizations in an October letter to U.S. Treasury Secretary Lawrence Summers. "We strongly believe that moves to eliminate these fees are needed to realize the promise of debt relief: to relieve the heavy burdens on the world’s poor and increase their access to education and health services."

Representative Nancy Pelosi, D-California, the ranking Democrat on the foreign operations subcommittee of the House Appropriations Committee, negotiated for inclusion of the final language.

The user fee critics argued that evidence accumulated from around the world over the last decade shows that: user fees for education lower school attendance rates, especially among young girls; user fees for primary health services deny access to care and preventative treatment for the poor, leading to the spread of unnecessary and preventable death and disease; and user fee "exemptions" for the poor, or sliding payment scales, routinely fail due to administrative problems, corruption, inadequate notice to the poor or other difficulties.

Among the examples they highlighted:

  • In Gambia, in primary health care program villages with insecticide provided free of charge, bednet impregnation - for malaria prevention - was five times higher than in villages where charges were introduced. Households consistently cited lack of money as the main reason they chose not to dip bednets.

  • Introduction of a 33 cent fee for visits to Kenyan outpatient health centers led to a 52 percent reduction in outpatient visits. After the fee was suspended, visits rose 41 percent. In Papua New Guinea, the introduction of user fees led to a 30 percent decline in outpatient visits. Studies in Niger have found that user fees extend the period that patients wait before seeking outpatient care.

  • UNICEF reports that in Malawi, the elimination of modest school fees and uniform requirements in 1994 caused primary enrollment to increase by about 50 percent virtually overnight - from 1.9 million to 2.9 million. The main beneficiaries were girls. Malawi has been able to maintain near full enrollment since that time.

  • In India, reports Dr. Vineeta Gupta, general secretary of Insaaf International, a Punjab, India-based organization, a World Bank-inspired system which is supposed to exclude the poor from healthcare charges fails in practice due to corruption and administrative difficulties, denying the poorest Indians access to healthcare services.

The purported logic of education and healthcare user fees is that payments from children’s families and sick people will enable government service agencies to provide services to more people.

But user fee critics insisted that access to primary education and healthcare is a right that should not be conditioned on ability to pay, and that the real-world effect of user fees has been service denial, not expansion.

As Multinational Monitor went to press, the coalition against user fees was acting to ensure the U.S. executive directors to the IMF and World Bank would follow the law.

In late November and early December, the IMF and World Bank boards were taking up consideration of the Poverty Reduction Strategy Paper (PRSP) of Tanzania. PRSPs are an integral part of the IMF and World Bank’s revised procedures for lending - they are supposed to reflect the outcome of highly participatory civil society debates and to provide a framework for ensuring new loans help reduce poverty, though critics argue they are window dressing and fail on both counts.

Tanzania’s interim PRSP sought to impose user fees in the form of "cost-sharing to dispensaries and health centers."

Operating on brief notice, 17 Members of Congress, the AFL-CIO, and dozens of the U.S. non-governmental organizations sent letters reminding Secretary Summers of the mandatory opposition to any IMF/Bank programs that included such user fees.

The World Bank rushed to assure concerned groups that the PRSP did not include user fees, though the PRSP itself had not been made public at the press time, and though IMF/Bank programs in Tanzania promote user fees irrespective of what appears in the PRSP.

- Robert Weissman

Guatemalen Oil Debacle

The Houston-based oil exploration company Anadarko announced earlier this year that the company might expand its operations in Guatemala. What Anadarko's management did not explain was how serious the environmental costs of the expansion could be, although the destruction of vast areas of rainforest by past operations has led to condemnation by an international environmental tribunal, as well as a pending lawsuit before the country's Supreme Court.

Basic Resources International (BASIC), Anadarko's fully owned subsidiary, started drilling for oil in the Mayan Biosphere Reserve in northern Guatemala in 1985. Spanning nearly 2.1 million hectares, the reserve is an area of primary lowland tropical forests and expansive wetlands. It contains both important biological diversity and internationally renowned archeological treasures such as the Mayan Tikal ruins.

At the center of the reserve is the 340,000 hectare Laguna del Tigre National Park, established in 1990. The park contains the largest protected wetland in Central America and was recognized by the 1971 Ramsar Convention on Wetlands of International Importance, which the Guatemala government ratified in 1990.

Though oil drilling is not allowed in most parts of the Maya Biosphere Reserve, BASIC's 1985 contract was grandfathered into the reserve when it was created in 1990 and renewed in 1992.

The World Bank's corporate lending agency, the International Finance Corporation (IFC), has assisted Basic's expansion into the Biosphere Reserve, approving a $20 million loan to BASIC in 1993 to finance a 30 percent increase in oil production from the Reserve, as well as the construction of a pipeline.

BASIC argued that the pipeline would minimize the environmental impact of oil transportation, since it would not be subject to accidental spills and attacks from local guerillas the way oil trucks are. But environmental damage from the pipeline turned out to be extensive, environmentalists report. Built on a cement platform above ground, the pipeline was exposed to sabotage and failed to minimize spills.

The most severe environmental damage has followed from the clearcutting of primary rainforest to make room for the pipeline's maintenance road — a road that would not have been needed if the pipeline had been built along existing roads. BASIC's maintenance roads also have afforded increased access into the Reserve for settlements of landless peasants displaced by the recently ended civil war.

In 1996, BASIC asked for a second loan from the IFC for a second pipeline in the Reserve. By this time, the U.S.-based environmental group Conservation International (CI) had met several times with the IFC to protest the irregular approval process in connection with the first loan. The IFC had itself characterized the project as requiring a full environmental assessment by BASIC, as well as public participation in the planning and approval process. Yet according to CI, the environmental assessment carried out by BASIC was insufficient, and the IFC failed to guarantee adequate public consultation.

The IFC denied CI's allegations, but agreed to conduct a new joint field assessment (by BASIC, the IFC and CI) prior to approving the second loan. According to CI, the second assessment was also unsatisfactory, ignoring alternative routes for the new pipeline, and downplaying the adverse environmental impact of the increased access to the park.

CI asked the World Bank to postpone approval of the loan until it had fully assessed its likely consequences, or until BASIC agreed to fund environmental mitigation actions. However, after postponing twice without producing new assessment materials, the World Bank approved the new loan in July 1996.

According to the 1995 World Bank Natural Habitat Operational Policy, the Laguna del Tigre Park is a "critical natural habitat." The policy suggests that the Bank refrain from funding projects "involving the significant conversion of natural habitat," and that projects in general should not be funded unless "comprehensive analysis demonstrates that overall benefits from the project substantially outweigh the environmental costs."

By the time the IFC approved the loan for the second pipeline in 1996, BASIC had already started construction, essentially nullifying the World Bank's already dubious public consultation process.

In January 2000, the Guatemalan Human Rights Ombudsman denounced BASIC before the Guatemalan Supreme Court for violating the right to a clean environment by drilling in a protected area. In March, 50 citizens denounced BASIC before the Supreme Court for adversely affecting the rainforest and habitat in the reserve.

So far, neither of the cases has been ruled upon.

"I don't know if the courts are co-opted, corrupt or incompetent, but the fact of the matter is that BASIC's operations are illegal, and that the cases should have been ruled upon a long ago," says Magal" Rey Rosa of Madre Selva, a Guatemalan environmental group that has followed BASIC's operations from the beginning.

While the national cases have stalled, BASIC, Anadarko and the Guatemalan government became the subject of a Central American Water Tribunal case launched by Madre Selva in August. In September, the Tribunal called upon the Guatemalan government to immediately put a stop to BASIC's activities in the Maya Biosphere Reserve, and condemned Anadarko for ignoring the environmental consequences of its subsidiary's exploits. "Anadarko refused to be present at the hearing," says Magal" Rey Rosa. "This to me is not the action of a company that cares about the environment."

Perhaps anticipating that the Water Tribunal case would be taken seriously by the Guatemalan courts, a Bahamas-based branch of BASIC issued a response in which it claimed there was "no scientific basis" for the consideration of the Laguna del Tigre National Park as a site governed by the Ramsar Convention.

"Indeed, the interpretations on biological diversity are drawn from literature from regional studies and not specific studies of the area," the company contends. "Moreover, the Ramsar Convention Declaration establishes the sovereign right of the signatory States to decide on the use and management of the Ramsar site lands, as well as the States' right to substitute and/or modify the registered wetlands area, for reasons of public utility or need."

BASIC also downplays its contribution to opening up the reserve by pointing to other human activities and the fact that Texaco built the Naranjo-Xan highway through the reserve in 1980, five years before BASIC began operation.

BASIC's current contract will come up for renewal with the Guatemalan government in early 2001. Whether the mounting environmentalist and international pressure, and the growing evidence of the damage to the Biosphere, give government officials pause before renewing the contract remains to be seen.

- Marianne Mollman is the Director of the
Network in Solidarity with the People of Guatemala


The December 2000 Lawrence Summers Memorial Award* goes to administrators at Perrysburg Junior High School in Ohio. They earned the reward for sending two children, D.J. and Carlotta Maurer, to the Wood Juvenile Detention Center because they refused to watch Channel One and other television programming.

Channel One, owned by Primedia, donates televisions and other equipment to schools in exchange for a binding commitment by the schools to have their students watch a 12-minute Channel One show — replete with advertisements — every day.

Gary Ruskin, director of Commercial Alert and to whom credit is due for sending this item to Multinational Monitor, and Jim Metrock, president of Obligation, Inc. in an October 14 letter followed up the report on the detention of the children with a letter to Ohio Governor Robert Taft.

Noting that "when the government sends children to a juvenile detention center because they don't want to watch advertising, that is both Orwellian and more than a little sick," Ruskin and Metrock urged Taft to "take a stand for parents and remove Channel One from Ohio's schools."

"This would be a clarion call for those parents who wish their children to grow up free from the depradations and enticements of the media corporations and their advertisers.

*In a 1991 internal memorandum, then-World Bank economist and current Secretary of Treasury Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" Summers wrote. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.


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