Archive 2001-2/2003 -- Click here for current ICP Global Inner Cities Report
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February 23, 2003
ICP's Fair Finance Watch has just filed 17-page challenges to the Feb. 20 proposal by HSBC Holdings plc to acquire the 40% of the shares of Equator Holdings Limited that are currently owned by Nedbank Africa Investments Limited. ICP filed with the banking regulators in all six countries in which Equator Bank has offices, and in seven additional countries which HSBC defines as Equator's "markets," see <www.equator-africa.com/content/Offices.htm>. HSBC has stated it would "export Household's model" all over the world, including into Africa. And so the Fair Finance Watch has raised these issues:
On behalf of the U.S.-based non-profit consumers' and human rights organization Inner City Press/Community on the Move and its affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a formal comment on the proposal by HSBC Holdings plc to acquire an additional 40% interest in Equator Bank, with specific reference to HSBC's proposed acquisition and export of the U.S.-based predatory lender Household International, Inc.. We urge you to closely scrutinize HSBC's proposals, and, as set forth below, to question why HSBC has not committed to any anti-predatory lending safeguards (or so-called "best practices") in connection with its proposal to export Household's business model into Africa.
First, Equator: on Feb. 20, 2003, HSBC in London announced a proposal to acquire the 40 per cent of the outstanding shares in Equator Holdings Limited that are currently owned by Nedbank Africa Investments Limited. HSBC's Web site states that your country is among Equator's "markets," see <www.equator-africa.com/content/Offices.htm>. As a bank supervisory matter, your agency should engage in pre-consummation scrutiny of this HSBC proposal. This is particularly true in light of HSBC's $14 billion proposal to acquire the scandal-plagued subprime lender Household, which proposal was announced on Nov. 14, 2002, but still pending shareholder and regulatory approval. As set forth below, HSBC's Household proposal raises the prospect not only of predatory lending, including in your country, but also certain financial and safety-and-soundness issues which should be considered before any ruling on HSBC's proposal to acquire 40% of Equator Bank.
We would like a copy of HSBC's filings with your agency, if any, with regards to Equator, and an explanation of how best to submit the supplemental comments we are preparing, which will include exhibits documenting the matters raised below. For now we note that HSBC has stated that it would use the deposits and profit in generates in the countries in which it does business, including in Africa, to fund Household's loans.
HSBC's target Household is the second-largest subprime (that is, high interest rate) lender in the United States; it also has operations in Canada, Britain, Ireland and Hungary, and is attempting to buy a bank charter in Poland. See, Warsaw Business Journal of Jan. 13, 2003: "ICP has reason for its distrust of the deals. In the US, Household agreed to pay $ 484 million in a multistate settlement of charges that it targeted low-income consumers with secured high interest rate loans." HSBC's chairman Sir John Bond said, in announcing his Household proposal, "[t]his is a business we could take to Japan. It's already an international business, but we think we could have opportunities in Brazil and Mexico. We haven't examined all the possibilities, but we think they could be extensive." Wall St. Journal, Nov. 15, 2002, which also notes the opposition of ICP and Fair Finance Watch. Below, we also cite human rights laws which we contend are applicable here and militate for the relief we are requesting. [Click here for ICP's (submitted) analysis). Among other things, we urge your agency to ask HSBC to what, if any, degree these "best practices" would apply to its operations in Africa.
In support of this request for a hearing and for other appropriate actions by the your agency, Household's predatory lending should be more than enough. While it should not be needed, consider that the Universal Declaration of Human Rights prohibits, in its Article 2, discrimination (or "distinction") by race, color, sex, language, political or other opinion, national or social origin, property, birth or other status; Article 7 requires "equal protection of the law." The Universal Declaration of Human Rights' preamble states that "every organ of society... shall strive... to promote these rights and freedoms and... to secure their universal and effective recognition and observance...". Your agency, beyond its other roles, is an "organ of society."
Even more specifically, the International Convention of Economic, Social and Cultural Rights, UN Doc. A / RES / 2200 A (XXI), (1966 -- since ratified by over 130 nations), recognizes, at Article 11, "the right of everyone to an adequate standard of living for him [/ her]self and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions." Household practices, which HSBC has proposed exporting to your country, are entirely inconsistent with this.
If you have any questions, please telephone the undersigned, in New York, at (718) 716-3540, or e-mail <mlee [at] innercitypress.org>. Thank you.
Matthew Lee, Esq.
Inner City Press/Community on the Move
& Fair Finance Watch
Note: ICP's HSBC (& Household) Watch will continue...
February 17, 2003
This week, Central Europe. The daily newspaper Pravo reported on Feb. 11 on a series of recent fires in half- abandoned apartment buildings in the towns of Litvinov, Most, and Chomutov. In Litvinov, twenty tenants were evacuated on January 11 from their building, which had been the target of arson. In the most recent case, shortly after midnight on February 9, a fire in Chomutov sent eighteen residents into freezing temperatures clad only in pajamas and slippers. The fire department is still investigating the cause, which could either have been faulty wiring, tenants overloading the electrical system, or an accident with open flames setting fire to rubbish. According to Pravo, by Feb. 10 the evacuees had been supplied with clothing, shoes, hygienic products, and a cash supplement of 1,000 crowns to all who were registered as unemployed. The city government has defended itself, saying that it found them shelter even though the destroyed building had been in private ownership, and provided them with cash - some of which was donated personally by Deputy Mayor Jan Matiko.
In the Philippines, a project to improve rail links between Manila and suburban industrial towns by adding tracks and starting new train services has been slowed by the "need" to relocate 170,000 "squatter" families living near the tracks. But to date, not a single family has been relocated. And given the government's poor finances, making any headway seems an unlikely possibility this year. The project was first proposed by then president Fidel Ramos in 1995, but successive governments have been unable to relocate the settlers. And so it goes...
February 10, 2003
Another take on last week's Brazil news: Rio state investigators barely penetrate the favelas, a water-by-the-pail world where PVC pipes jut from houses to carry raw sewage at least a few feet away. Garbage simply rots. On a hot day, the stench can dizzy a visitor. In March, da Silva's government will offer slum dwellers what sounds like a sweet deal: the chance to legitimize with land titles tens of thousands of homes built on federally owned land. Theoretically, land titles will enhance the homes' value, enable banks to make home mortgage loans and end fears that the government will forcibly relocate residents. Homeowners associations will be the link between residents and the federal government. "Lula (da Silva) is looking for trouble," warned Sebastiao Jose Filho, who was elected president of a homeowners group in Rochinha, Rio's largest hillside slum, with a population exceeding 160,000. Slum dwellers would rather see trash collection and public sewage, Filho said. The titling effort, he speculated, will be considered simply a way for the government to collect more taxes from the poor.
February 3, 2003
From Brazil, good news: a decree to be signed this week is at the heart of a pledge by Lula da Silva to tackle poverty and unequal wealth distribution. With 80 per cent of Brazil's wealth in the hands of the richest 10 per cent, it will be the biggest program of land and property redistribution in the country's history. The decree was announced by Justice Minister Marcio Thomas Bastos, who said the community organizations that act as de facto administrations in the favelas would be able to grant property rights to those who had occupied land or a home for at least a year. Most of the 120,000 people who live in the Cidade de Deus favela will be applying for property rights...
January 27, 2003
There have been land struggles for decades in Argentina's northeastern province of Misiones. Most of the land is technically owned by logging companies that have already culled the choice trees from the province's forest. But in recent years, a Government-promoted boom in the pine plantation industry has made every hectare of the province's fertile soil prime real estate. Latifundio owners are now calling for authorities to remove the squatters in the name of private property rights. The squatters are not going anywhere. Jobs as lumberjacks or as sawmill hands have grown scarce in recent years and in the province's growing urban shantytowns, economic prospects are as meager as in the rest of crisis-stricken Argentina. For the first time, the squatters have begun organizing and protesting, demanding title to the land they are occupying and a breaking up of the giant latifundios. According to Gustavo Weirich, who heads an office in the provincial Government dedicated to resolving the land disputes, the Government plans to resolve the disputes case by case, based on a law that allows for the Government to mediate land transfers from landowners to squatters who have occupied private property for more than eight years...
January 13, 2003
In Malaysia, "squatters," single mothers and retired policemen or army personnel in Subang Jaya can now buy a house on a 100 per cent housing loan. This Saturday, Subang Jaya State Assemblyman Datuk Lee Hwa Beng will be organiing a one-day campaign to help these people buy low-cost apartments in Putra Heights, Subang Jaya. The campaign will be held at the Petaling Land Office. "I was informed that many people, especially squatters and single mothers, are facing problems buying a house. They need to get bank loans approved and then there are problems dealing with the developers. This is why I planned such a campaign, the first in the country," said Lee. The low-cost apartments being developed by Sime UEP Bhd costs about RM42,000 per unit. There are three rooms with two bathrooms in each of the 650-sq feet units expected to be completed within the next two years. "About 600 units have been allocated for squatters in Subang. There another 400 units left and they are for sale to those eligible," he said. Well, alright...
January 6, 2003
From a report, in The Scotsman of Dec. 30, 2002, of a recent visit to Belo Horizonte in Brazil: Over the past 20 years rural poverty has seen thousands leave the hinterland and flock into the cities looking for work. Most end up squatting in precarious shacks on the outskirts. Brazil's cities are teeming with kids who flee all kinds of abusive situations for the freedom of the streets, where they then confront even greater horrors - on 23 July, 1993, for example, an extermination squad set up within the military police killed eight children at the door of what should have been a place of refuge - the Igreja de Candelaria, the church on Rio's Pope Pius X Square. It was such stories that galvanized the da Silvas... Now their charity looks after 38 former street kids at Mount Zion, supports the incredible Magna Silva and the 17 children she cares for and sponsors educational opportunities for countless children in Belo's most notorious favelas. Thus, children are being given hope for the future, and despite the huge problems that exist, I left feeling optimistic because of the individual successes I had seen." Well all right...
December 30, 2002
In the spirit of this Global Inner Cities report, on Dec. 27 ICP/Fair Finance Watch submitted a comment to the Monetary Authority of Singapore, opposing HSBC's proposal to acquire Keppel Insurance. Here's a summary of some of the issues raised (for the analysis of HSBC abridged from this summary, click here -- ICP's ongoing HSBC Watch Report).
On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a formal comment on the proposal by HSBC Holdings plc (along with its affiliates including HSBC Insurance (Asia-Pacific) Holdings Limited, "HSBC") to acquire Singapore-based Keppel Insurance, announced on December 20, 2002, in light of HSBC's even larger proposal of the previous month, to acquire the scandal-plagued high-rate lending Household International ("Household"). HSBC's Dec. 20 press release stated that its Keppel proposal, "which is subject to fulfillment of certain conditions precedent including obtaining approvals from the relevant regulatory authorities, is expected to be completed in the first quarter of 2003."
HSBC has stated a similar time-line for its proposal to acquire Household; as set forth below, HSBC's Household proposal raises the prospect not only of predatory lending, including in Singapore, but also certain financial and safety-and-soundness issues which should be considered before any ruling on HSBC's Keppel proposal. We note on your agency's Web site that "a copy of the scheme shall be lodged with the Authority together with copies of the actuarial and other reports, if any, upon which the scheme is founded," that " not earlier than one month after the copy is so lodged, notice of the intention to make the application (containing such particulars as are prescribed) shall be published in the Gazette and in not less than 2 newspapers approved by the Authority; and for a period of 15 days after the publication of the notice a copy of the scheme shall be kept at each office in Singapore of every insurer concerned, and shall be opened to inspection by all members and policy owners of such an insurer who are affected by the scheme." We would like a copy of HSBC's "scheme" with regards to Keppel, and an explanation of how best to submit the supplemental comments we are preparing. If necessary, we note that HSBC has stated that it would use the deposits and profit in generates in the countries in which it does business (including Singapore) to fund Household's loans.
HSBC's target Household is the second-largest subprime (that is, high interest rate) lender in the United States; it also has operations in Britain, Ireland, Hungary and Canada. We note that HSBC's chairman Sir John Bond said, in announcing the proposal, "[t]his is a business we could take to Japan. It's already an international business, but we think we could have opportunities in Brazil and Mexico. We haven't examined all the possibilities, but we think they could be extensive." Wall St. Journal, Nov. 15, 2002. [Abridgement] In the face of Household's above-summarized record, we wish to make your agency aware of the following recent statement by David Eldon, a "director of London-based HSBC Holdings," that "[w]e are satisfied with the way in which they have done their business in the past...". See, Reuters of December 3, 2002, "HSBC Says Hopes to Seal Household Deal as Planned." The "we" Mr. Eldon referred to is HSBC; the "they" is Household International. We note that Mr. Eldon is quoted in HSBC's Dec. 20, 2002, press release announcing HSBC's Keppel proposal.
...We note on your agency's Web site that "[a]n application to the High Court with respect to any matter connected with the scheme may, at any time before confirmation by the Court, be made by the Authority or by any person who, in the opinion of the Court, is likely to be affected by the scheme." As stated, ICP and its members stand to be affected, inter alia in that HSBC has stated that it would use the deposits and profit in generates in the countries in which it does business (including Singapore) to fund Household's loans. Additionally, for the reasons set forth, we urge the Authority to not deem HSBC's application / scheme complete, and we urge the Authority to make an application to the High Court raise these (and other) issues, in opposition to HSBC's proposed acquisition of Keppel...
For more on the campaign against HSBC - Household, click here. For a review of HSBC's board of directors, and conflicts of interest, click here. And... happy New Year! Until next time, for or with more information, contact us.
December 16, 2002
A brief and indicative tale from the South China Morning Post
of Dec. 14, 2002: "Po Wai-han's life was short and difficult. Born into a broken home
in a Wong Tai Sin squatter slum, she left school in Form Four to work as a salesgirl. Then
aged 15, she took a job in a boutique where she fell in love with a colleague. Five years
later, she became pregnant and refused to have an abortion. The father left her when their
daughter was born, but Po never thought of giving up her Down's Syndrome child and named
her Wing-yu, meaning 'singing joy.' In 1998, aged just 23, Po was diagnosed with bladder
cancer which spread rapidly to her bones and liver. Doctors told her she had only months
to live. Once she knew she was dying, she tried in vain to find adoptive parents for her
daughter. Wing-yu's father had gone and Po was not in contact with her family.
Although she felt frail, Po insisted on caring for Wing-yu, taking her on a bicycle to school and cooking her meals, until February last year when she became too weak. With no strength to even pick Wing-yu up, she placed her with a foster family, the Chengs. Living alone in public housing in Sha Tin, she could only see her child once a week. Yu-yu missed her mother so much she took to "talking" to her on her toy telephone. When they were together, each time Po told her to put on her shoes, she cried, afraid it was time to leave. Po's condition deteriorated last month. She became very thin, could not eat and had trouble speaking. "Most of the time she was semi-conscious and she passed away peacefully, as if she was sleeping," her boyfriend, Kenneth Soong, said." A memorial mass was held for Po on Dec. 14 in the 3rd floor church of St John the Baptist School, 29 Yee On Street, Kwun Tong at 6 p.m. All [we]re welcome.
All except, perhaps, HSBC. An inquiry that should be conducted: the history of the Hongkong & Shanghai Banking Corporation, starting in the days of the opium trade up to today's ill-conceived proposal to acquire and export the notorious U.S.-based predatory lender Household International -- click here for more on that. The past history will have to wait: the history of the future is in the balance right now..
December 2, 2002
We continue with our review of affordable housing, worldwide. This week: in Mexico and Malaysia. In Mexico City, unauthorized settlers on "ecological reserves" will find themselves with greater leeway due to gaping holes in the language of the city's new penal code, Reforma reported last week. In the capital, there are numerous "squatters" - or invasores, in Spanish - who have settled on public lands due to the lack of affordable housing. The new tax code, which came into effect this month, replaces the former term "invasion" with "clearing" of public lands. "In strict terms, the crime of invasion of reserve land has disappeared," said Miguel Angel Cancino, an official at the Environmental Prosecutor's Office. The new code stipulates only the owner of invaded land can make an official complaint to authorities, whereas, formerly, any concerned citizen could file a complaint, Cancino said. The issue of illegal settlement has become more salient in the past months with the forced removal of hundreds of squatters from the Xochimilco floating gardens reserve and the "discovery" of unauthorized settlements in Chapultepec Park.
In Malaysia, more than 100 people were made homeless when an early morning fire destroyed 20 houses at the Karamunting Baru unauthorized settlement, Jalan Batu Sapi on Nov. 28. State Fire and Rescue spokesman, Abdul Rasid Musi, said 15 firemen in two fire trucks rushed to the scene after they received a distress call at 1.35 a.m.. The firemen arrived at the scene minutes later only to find a number of the houses had been gutted by the blaze...
November 18, 2002
This is an experiment in a "themed" issue: we will return to broader coverage in the coming weeks. But on November 14, the London-based banking giant HSBC, chaired by "Sir" John Bond, announced it wants to buy the scandal-plagued predatory lender Household International, for $14.2 billion. Household charges interest rates over 20% on home equity loans, and nearly as high on first mortgage loans. Household mails out misleading "live checks" offering high-rate consumer loans, which it then seeks to convert into liens against the unsuspecting borrowers' homes. For these reasons, ICP is opposing, here, there and everywhere, HSBC's proposal. See, e.g., the Wall Street Journal of Nov. 15, 2002: this "consumer advocate already has issued a warning to Sir John... Inner City Press/Community on the Move and the Fair Finance Watch, a consumer organization based in the Bronx, N.Y., said the group intends to protest the deal." They got that right...
ICP and the Fair Finance Watch have today filed comments all over -- New York Banking Department, other states, federal regulators, and to Canada's OSFI and the U.K.'s FSA. ICP's comment to the FSA comment is summarized below (for more detail, click here) --
[Comment filed with the FSA:] Note: ICP's HSBC Watch will be updated weekly or more frequently. For or with more information, contact us.
November 11, 2002
Last week in the Philippines, Nathaniel von Einsiedel, regional coordinator for Asia and Pacific-United Nations Urban Management Program, said that "urban poor groups are should be empowered to help themselves... Some local government units provide some services, but many do not... the poor can take care of themselves as long as their actions are not deemed illegal," Urban poor groups, if they are empowered, they can help themselves," he said.
In South Africa, "mobilization of private sector funds for the low income housing finance market continues to elude the National Housing Finance Corporation after seven years of operation. The corporation was established in 1996 with a chief mandate of bolstering the low cost housing finance market partly by finding ways to involve the private sector lenders. The corporation's results for the year ended March show that the government agency is still entirely reliant on its limited financial resources. Moraba says with the community reinvestment act "in the pipeline" and the enacted home loan and mortgage disclosure act, the future for the low cost housing market is bright.
But given the banks' lobbying, it's not clear that the community reinvestment bill is "in the pipeline."
For more, see the Fair Finance Watch. Until next time, with more information, contact us.
September 30, 2002
In Sierra Leone last week, a court-ordered demolition on the Grammar School land took place. Bulldozers, despite all the pleas, tore down an unfinished house that sheltered some carpenters and tailors was transformed into rubbles in less than thirty minutes. Meanwhile, those residents of the area who have nowhere else to go, since their homes were pulled down, are still huddled up in some of the structures yet to be demolished. On September 24, there were thousands of people gathered by the un-demolished but deserted houses, with most of their worldly possessions....
Meanwhile in Malaysia, those whose homes were demolished in the on-going Ops Nyah II want the authorities to relocate them to new areas equipped with basic infrastructure such as roads and water supply. Some 4,000 homes at Kampung Puyut, Kampung Air and Kampung Singgah Mata were demolished in stages beginning in March. Former Lahad Datu Assemblyman Datuk Yusof Amat Jamlee said the Government must provide alternative housing or a site with basic infrastructure. "These people are poor. They need assistance. All they are asking for is that their rights as citizens be upheld" We'll see.
September 23, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week: Malaysia -- and The Bronx. In Malaysia, the Selangor Government says it has completed about 30 per cent of the 43,000 units of houses under the State public housing plans for "squatters." Selangor Menteri Besar Datuk Seri Dr Mohd Khir Toyo said in order to achieve the target of being a "squatter-free" State by 2004, all public housing projects must "take off" by November. Note: the projects are subsidized by either private owners of the land where the squatters once had their homes, the developers, or the State Government.
Click here for a new update on [ICP] homesteaders in NYC's East Harlem and South Bronx.
September 16, 2002
A South African law that some term "squatters' rights" -- the Prevention of Illegal Eviction from Unlawful Occupation of Land Act -- was recently interpreted by the country's Supreme Court of Appeals to also apply to former tenants and bond defaulters. The Act provides that no person may evict an unlawful occupier, except on the authority of an order of a court. Anyone in violation is subject to a fine or to imprisonment not exceeding two years. The judgment had been interpreted by some commentators as having the potential to create uncertainty in the housing market, the ministry said yesterday. "The minister (Sankie Mthembi-Mahanyele) has therefore called for a recommendation from government law advisors on whether Constitutional Court action is necessary to protect the integrity of the housing market." However, even landowners' lawyers admitted that the ruling makes provision for "urgent proceedings where a real danger of substantial injury or damage may result if the unlawful occupier was not immediately evicted, or where the likely hardship for the owner exceeded the likely hardship of the occupier." Nevertheless, South Africa Property Owners' Association (Sapoa) CE Brian Kirchmann said banks would be hesitant to grant substantial bonds on properties.
The backdrop: Year 2000. Some banks in South Africa find a "legal" way to evict poor people from their own houses so as to re-sell the land and properties. The government supports the banks. Profits before people, the same old story. A group of neighbors come together in Cape Town, and the Western Cape Anti-Eviction Campaign (AEC) is born. Through sit-ins in banks and other forms of direct action, the AEC has so far managed to stop a number of evictions...
August 19, 2002
In Malaysia last week, Housing and Local Government Minister Datuk Seri Ong Ka Ting said "We hope to eradicate the squatter problem in Kuala Lumpur by 2005 when all the projects are completed before then. By end of this year, 8,948 houses will be completed while more than 20,000 units are expected to be completed by end of 2003." Asked if the Ministry kept a record of genuine squatter residents, he said only those names recorded in City Hall's files were eligible for houses....
From Indonesia: "The U.S. corporate model has lost its legitimacy. It was not based on fairness, but one favoring the economic elite of the world," says Tito Soentoro, who heads Solidaritas Perempuan, a Jakarta-based women's human rights lobby...
August 12, 2002
In Cambodia, flood and drought victims have fled to Phnom Penh. At least 30,000 people are now living in squatter camps around the capital, Lim Phai, director of the Urban Sector Group, said. "The migrants have no adequate housing, and the city is not working to give them anything," Lim Phai said. The severe drought settling over much of Cambodia follows two years of heavy flooding and threatens to further damage already dwindling rice reserves, forcing rural Cambodians into Phnom Penh to look for help. Despite the influx, city officials say they will do little to assist the needy. Phnom Penh Governor Chea Sophara urged migrants to stay away. "If people need food, they should get it from their provincial officials," he said. The wave of weather-related refugees comes at a time when city planners are attempting to clear Phnom Penh's streets of squatters and the homeless. City officials have said they are already beginning to carry out Chea Sophara's order to move the homeless ahead of the annual conference for the 10-member Association of South East Asian Nations (ASEAN), to be held in Phnom Penh in November...
August 5, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week: Hanoi and Haiti. In Vietnam, people have settled on land set aside for the long-delayed Red River City project, the second largest planned property development in Hanoi. A number of families invaded more than 500 square metros of land, said local authorities. A fence has now been built to preclude further encroachment. The encroachers, however, have not been evicted. "We have told local people to stop moving in," said a local authority spokesman. A source from the investor, however, said that the joint venture could still face many difficulties if it failed to get the green light from city authorities to start the project...
The NYT's David Gonzalez (a Bronxite, we note with pride) reported last week (7/30) on " squatters inside the old Fort Dimanche Prison" -- " The poor cram themselves into the dingy cells and even inside the old sentry towers that look out over the surrounding shanties, where 2,000 more souls live without water, schools or electricity. Some are so desperate they eat pancakelike disks of bouillon-flavored clay. Poverty is the only jailer." His article notes that aid previously pledged to Haiti has been frozen. The article ends with a quote from " Lionel Agustain, a woodworker, sometimes earns two dollars a day, not enough to prevent him from losing his home a few years ago. A friend lets him sleep on a rickety cot inside a gym where the weights are improvised from gears and other car parts. The walls are tauntingly decorated with wrinkled posters of bodybuilders with bulging chests and biceps. Mr. Agustain is thin, and he sometimes eats only a bowl of rice. 'We don't know when they are going to fix things,' he said. 'We suffer. And when you suffer enough, you die'"...
Finally, for this week, a survey CRA-relevant developments in South Africa. Housing minister Sankie Mthembi-Mahanyele spoke last week on the proposed Community Reinvestment Bill and the already-passed Home Loan Disclosure Act, stating that "When they are at the bank's front desks applying for housing finance, we will be able to assess whether banks are unfairly discriminating against some people." The CR Bill The proposes fines of up to 500,000 Rand for institutions which fail to comply with the legislation. Banking Council of South Africa spokeswoman Claire GebhardtMann spun that the Council supports the principles of the reinvestment bill but hopes it will give banks an incentive, rather than penalize them. "We need carrots, not a stick," she said, referring to U.S. CRA's carrot-like structure... We'd say: it's time to experiment with the stick, there and here.
July 22, 2002
In Mexico last week, the head of the National Campesino Confederation (CNC), which represents Mexico's millions of small farmers, said that free trade treaties are harming the country's agriculture sector. CNC secretary general Heladio Ramirez said Mexican authorities must consider whether or not free trade creates unequal competition before enacting measures. He mentioned the North American Free Trade Agreement (NAFTA) as a prime example of free trade that has hurt Mexican farmers more than it has helped them. Ramirez said the subsidies cushion U.S. farmers even if their businesses are not profitable, while Mexican farmers have been losing money for years due to lack of access to credit and poor shipping infrastructure. "The protests in San Salvador Atenco should be a red light for the federal government," Ramirez Lopez said.
Similarly, China's entry into the WTO is displacing millions (and we mean millions) of farmers from the land. They travel to cities in search of work, but are treated as "illegal migrants" not entitled to government services. Ex-president Clinton's trade representatives says blithely that "some dislocation is to be expected." The question: how much?
July 15, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide, and how the press cover these issues. From Africa News of July 10, re Abuja in Nigeria: "The resultant effect is the development of squatter settlement. The low-income group affected by such a migration policy who, obviously, could not afford the few privately developed houses resorted to overcrowding of the few accommodation provided by government as well as squatter settlements. Migrants who could not afford the high rents ended up buying small plots of land within village settlements in proximity to the city and built makeshift houses in these villages with no plan for roads, water, electricity etc. Areas such as Nyanya, Karu and Kubwa are some of the fastest growing slums in Nigeria today and if left unchecked will probably out stage Ajegunle and Badiya in Lagos. Land speculation is one of the major problems which has emerged as result of the implementation of the master plan. Land prices have risen astronomically as a result of the land use pattern. The huge gap between the market price of the serviced plot and the fees paid on allocation makes it more profitable and attractive for an allottee to resell rather than develop." From the Malaysian New Straits Times of July 12: " The contributing factors to urban poverty are numerous. In part, it is due to rural-urban migration. And since urban poor are more likely to be concentrated in areas that are accessible, it is probably easier to tackle the problem and deal with. This is unlike the hardcore rural poor who are spread over a larger and increasingly remote area. Squatters are often viewed as eyesores and those living in these areas are considered poor. But as Datuk Dr Zainal Aznam of ISIS points out not all squatters are poor. Some of them are rich. Thus the policy to deal with hard-core urban poor, and especially those in the squatter areas, will have to be very finely tuned to ensure that the rich squatters do not take away from those who really deserve and need the assistance... The pockets of hardship and poverty amidst the skyscrapers and modern infrastructure in the IT and Internet era cannot be allowed to go unattended."
July 8, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, Nigeria: the population is now well over 120 million. The majority of those who migrate from the rural areas to the cities end up crowding themselves in what is popularly known as satellite towns. Coastal areas like Lagos and Port Harcourt are still battling with this environmental hazard, while newer hinterlands like Abuja have continued to register population influx. The consequences of this development, among others, is the growth of squatter settlements and slums which inevitably gives rise to side-by-side cohabitation with refuse dumps and unprotected sewage channels...
May 27, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week: Kenya and Mexico. At the National Civil Society conference in Kenya last week, the National Council of NGOs chairman, Oduor Ong'wen, urged "squatters" to use the Njonjo Commission and the Constitution of Kenya Review Commission to agitate for their rights. He urged banks and other financial institutions to consider other forms of collateral for loans instead of land.... Mexican overview: in Matamoros, between 30 or 40 percent of the "build-up area will be acquired illegally by low-income groups," says Peter Ward or University of Texas at Austin. Over the years the government has recognized this pattern of living and has tried to "regularize the land," a process whereby the government will expropriate and resell, or title, the land to the individual property owners already there, Dr. Ward said. "This is a fairly traditional way of acquiring land, and it doesn't usually end up problematically, because usually the government will legalize the land title," he said. "That would have secured the property rights of these individuals, but [the government] didn't do that for quite clear reasons." Witness the current fight in Matamoros, on land claimed by the Tamaulipas Institute for Housing and Urbanization, ITAVU. "This is an absurd relocation," said Rafaela Castro, a community leader helping the displaced residents. "This land can't be the government's because these people have lived on that land for many years. It's an ugly fraud by the governor."
May 20, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week: Malaysia, Brunei and Brazil. The "crackdown" in Malaysia continues. Last week in Malaysia's Sabah state on Borneo island has seen the arrest of about 100 people, the seizure of 105 "illegal" workers and the demolition of 155 squatter homes. Police reportedly aim to detain and deport up to 10,000 migrants, mainly Filipinos and Indonesians. "It is already the second day, the numbers are still quite small," said a police official from Ranau district, one of the areas where operations are being carried out. "The migrants are fleeing to different districts even before we start. They have been on alert and after everything quiets down, they just move back in again."
Corporate evictions: Brunei Shell Petroleum says it may be "forced" to take legal action to remove squatters staying in Badas if they do not move out voluntarily after being advised to do so several times. Government sources said that the District Office will cooperate with police to ensure that the "transfer" of Badas squatters will run smoothly if BSP eventually had to take legal action to evict the squatters....
In Brazil, Brazil's federal airport operator Infraero is having trouble convincing residents to make way for a third runway at the country's largest airport Guarulhos, in the southeast state of Sao Paulo, business daily Gazeta Mercantil reported. Neighborhood leaders said they are against Guarulhos expansion because "Infraero has never compensated anyone," one leader was quoted as saying. Infraero officials countered by saying the site is occupied by squatters. Guarulhos mayor Eloi Pieta said a complete analysis of the airport expansion remains to be done. "We cannot evaluate an incomplete study. All the elements of the question need to be analyzed at the same time," Pieta said....
April 22, 2002
This week, stepping back from unauthorized settlers to the world of banking, in Brazil. It's a market penetrated by banks from all over the world. On order of market share: Caixa; Banco de Brazil; Bradesco; Itau; Banespa (BSCH - Banco Santander Central Hispano - Spain); Nossa Caixa; Unibanco; HSBC (U.K.); ABN Amro (Holland); Banrisul; Citigroup (U.S.); Fleet Boston (U.S.); etc.. The Argentine crisis has led Fleet to announce a pull-back from Latin America; Citigroup has announced no such pull-back. Santander Central Hispano continues to expand in the region. Last week, it took majority ownership of Chile's Banco Santiago. It already owned 43.5 percent, and earlier this month received an option to buy HSBC's seven percent stake in Santiago for $131 million. On April 16 it bought $670 million of shares from the Chilean Central Bank, and now controls 78.95 percent of Banco Santiago... What are these banks doing in terms of the fairness of lending in these markets? That's our focus, going forward. For or with more, see the new Fair Finance Watch.
April 15, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, Uganda and Malaysia. In Uganda, Kitgum Diocese has ordered families occupying its land to vacate within a month or be prosecuted. The warning was contained in a letter to the affected households. The diocese lawyers, Odongo and Company Advocates, in a March 20 letter said, "By copy of this letter, you are advised to vacate the said land within one month or you will suffer the legal consequences." A diocesan official said the church land surrounds the All Saints Cathedral at Lamit, about 2km from Kitgum town on the Kitgum-Palabek road. A house belonging to the late Ugandan president, Gen. Tito Okello Lutwa, currently converted into Kitgum Central College, falls within the land. The letter said the Anglican diocese allowed the residents to temporarily settle on the land because they or their relatives were workers with the diocese. "We have been staying on this land for over 80 years and we do not have any other land. How can the church give us only one month to vacate? Where shall we go?" an angry resident said. A source said the church ordered the eviction because some residents had blocked the diocese from carrying out its projects. He cited the proposed extension of the Rev. Jabuloni Isoke Memorial College... In Malaysia, a study conducted by Universiti Teknologi Mara on squatter settlements in Selangor and a study conducted by Universiti Sains Malaysia covering other states combined report 581,188 squatters throughout the country. Selangor recorded a total of 171,396 squatters, the higher number, followed by Sabah (148,099) and the Federal Territory of Kuala Lumpur (134,345)....
April 8, 2002
This week, focus on Kenya. The Kenyan government intends to cut down 150,000 acres of the Mau forest, situated 200 kilometers northwest of Nairobi. The forest's 20,000 Ogiek inhabitants face forcible eviction from their ancestral land. One of the government's arguments is that the Ogiek need to be removed from the land because their way of life is unsustainable and harmful to the environment. But anthropologists dispute this. Aina Sering from Rostock University in Germany spent two years studying the Ogiek in the Mau forest. "These traditionalists are living in a perfectly harmonious relationship with their natural environment. All they want is to be left in peace in their ancestral homeland," she says. Kenya has around 1.7 percent of its land under tree cover, well below the 10 percent considered necessary for a regular water supply. Drought is already a reoccurring problem in the country, leading to chronic power and water rationing in 2000. The bulk of Kenya's electricity is generated from hydroelectric dams. The destruction of the Mau forest -- a vital water catchment area -- will worsen the problem. The Ogiek have protested against the government's plan. "The settlement of other people in our midst would mean that the Ogiek culture would cease. We will be wiped out," says Joseph Towett, the chairperson of the Ogiek Welfare Council. But the courts have not acted in their favor. Nairobi's High Court has rejected their case and approved their eviction from their ancestral home. "The eviction is for the purposes of saving the whole Kenya from a possible environmental disaster, and it is being carried out for the common good within statutory powers," said the judges, Samuel Oguk and Richard Kuloba. The Kenyan government says it is cutting down the woodland to give it to landless squatters. But Luling of Survival International says it makes no sense to settle one group of poor people by dispossessing another. There are also doubts as to whether the Kenyan government is telling the truth. Documents leaked to the local press show that some of the land has already been allocated to political heavyweights. "Squatters are just being used as an excuse, but the land is being used to buy political patronage. We know all forest excisions in Kenyan history have never benefited the so-called landless people," says Lumumba Odenda, coordinator of the Kenya Land Alliance...
April 1, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, a more positive overview. The UN's 1996 "Istanbul Declaration" on human settlements stated that in development projects where residents, including squatters, are evicted from their homes, governments must provide alternative settlements. 145 nations have signed the Declaration. A noteworthy development: in Karachi, a Pakistani NGO has transformed a squatter settlement into a viable community. One million settlers have moved to Orangi, a locality where they have been given leaseholds on government plots. The settlement now features low-cost multi-level brick houses with toilets, manufacturing units that employ local laborers, schools, micro-credit institutions and vocational training centers. In India in 1999-2000 the Andhra Pradesh government launched a massive, statewide highway project. This required the removal ("relocation") of several thousand squatters, especially in densely-populated urban areas. The Andhra government reportedly provided alternative land and housing to all affected squatters. In Kolkata, a project that will effect six canals will provide approximately 3,500 families with three- to five-year leaseholds on irrigation department land within two kilometers of the eviction site. Those evicted have been promised cash compensation to rebuild their shacks and for loss of income.
March 4, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, Indonesia, and a related story from Malaysia. In Jakarta on February 27, around 500 officials from the City Public Order Agency began demolishing at least 200 shanties along the West Flood Canal in Pejagalan subdistrict, North Jakarta. They changed the target after failing to demolish the remaining 400 permanent buildings at the Kalijodo brothel and gambling den complex, located 500 meters north of the shanties, a day earlier. One of the officials, Agus, said the eviction -- the fifth carried out by the agency since 2001 -- had to go on even though its target had changed. 'The officials have gathered here. If we don't demolish Kalijodo then we have to do something else -- demolishing the shanties,' he said. Eko, whose shanty dwelling has been cleared five times, condemned the demolition and said he had lost all hope of trying to keep his place intact or get compensation. 'I and 600 other residents will picket the Komnas HAM (National Commission for Human Rights) office tomorrow. We won't move until Komnas HAM manages to find a solution to our problem,' he said.
Meanwhile, Indonesian immigrants in Malaysia are facing evictions and deportations. Kuala Lumpur announced the clampdown after two riots by Indonesian textile and construction workers in January. Afterwards, Kuala Lumpur said that all the estimated 450,000 Indonesian illegal workers were to be arrested and deported. Police raids began early in the port city of Klang near Kuala Lumpur. Local media reported that six Indonesians drowned in a river as they tried to escape arrest, and more than 200 squatter homes of Indonesian workers were demolished. According to the Malaysian government, Indonesians make up 566,983 out of total 769,566 legal foreign workers, while 450,000 are categorized as illegal migrants. This month, the Jakarta-based Center for Labor and Development Studies (CLDS) said that the number of unemployed Indonesians is likely to increase from 40.2 million last year to 45.2 million in 2004. Last year, Malaysian police arrested 61,768 illegal workers from Indonesia -- nearly 70 percent of the number of illegal migrants detained. In January this year, 4,531 Indonesians have been arrested and deported...
February 4, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, Botswana and Hong Kong.
In Mogoditshane, Botswana, religious leaders including Botswana Christian Council's Letlhogile Lucas and Reverend Prince Dibeela are beginning to publicly question the Government's "inhuman" treatment of the squatters. But deputy permanent secretary at the Ministry of Lands, Housing and Environment, Victor Rantshabeng, who stood in for Minister Jacob Nkate, said the Government, was justified in its actions. "We are concerned with what is happening in Mogoditshane. We at BCC believe land belongs to all. Every Motswana should have access to land. Institutions should be able to facilitate smooth acquisition of land by Batswana," said Lucas.
Reverend Dibeela said before anything else, "we have to admit that there is a land crisis in this country, that there has been an unfair distribution of land. That is why some people decided to use illegal means to acquire the plots. But Government's approach to this issue has been too legalistic. Government has simply said: 'these are illegal squatters and we shall get rid of them' What happens to the children, the terminally ill as well as the general welfare of those that are being evicted?" Dibeela points out that the Government was ignoring the fact that there have been waiting lists for both Self-Help Housing Agency (SHHA) applicants and the Botswana Housing Corporation (BHC). "Now, we are being told that SHHA is having problems. BHC has also failed to provide housing to the country. This means Government has actually failed to provide houses for its citizens. Now it is punishing those people who acquired the plots out of desperation. This is not just demolition of structures. At the same time, this is destruction of people's aspirations and ideals," said Dibeela...
In Hong Kong, the government is being urged to drop public housing means tests for squatters who have their illegal dwellings demolished to make way for re-developments. But Joey Lam Kam-ping, Principal Assistant Secretary for Housing, said public housing was not intended as compensation for residents affected by developments. "If they own land, they can seek compensation according to related regulations," she said. While explaining that the government tried to ensure that no one became homeless because of slum clearances, she said the Public Housing Authority allocated public rental flats according to needs. Unionist legislator Leung Yiu-chung said the Government should revamp the existing system of compensation by taking the plight of squatters into account....
January 28, 2002
We continue with our review of unauthorized -- or, informal -- settlers, worldwide. This week, Malaysia, Kenya, Liberia and Jamaica.
In Malaysia, Kampung Seri Salim, one of the oldest unauthorized settlements in Subang Jaya, was demolished by the Subang Jaya Municipal Council last week. The colony had been home to 80 families for the past 20 years. According to the Straits Times, the State Government is out to make Selangor "squatter-free" by 2005. Any settlement built after January 1998 will be demolished. The demolition exercise involved 30 officers from MPSJ's enforcement and planning divisions, and 10 policemen. Council (MPSJ) president Ahmad Fuad Ismail, who oversaw the operation, said the next settlement to be demolished would be Kampung Baru Subang. The settlement is home to 100 families. Next on the list is a settlement in Batu Tiga which has 48 families. "Both the Kampung Baru Subang and Batu Tiga squatter areas will be demolished by April," he said.
In Jamaica, over100 eviction notices will be served this week on squatters occupying the Seville Great House property and Heritage Park, St. Ann, according to the Ministry of Water and Housing. Dr. Coy Grandison, Squatter Consultant in the Ministry of Water and Housing, made the disclosure on Thursday at a seminar organized by the Jamaica National Heritage Trust in collaboration with the Seville Management and Advisory Committee, Seville. The chief purpose of the meeting was to discuss plans for the development of the heritage site. We need to maintain Sevillel as a heritage site and so informal settlers need to be aware that the land is government-owned and this type of living will deteriorate their standard of living and the standard of living of the entire community, Dr. Grandison said. Emphasis added. A new term: "informal settlers." More to follow. For or with more, see the new Fair Finance Watch.
December 31, 2001
As turmoil continues in Argentina, we're shifting our lens this week to the portion of Pakistan known as Waziristan, variously describes as "ungoverned" or "ungovernable." The Boston Globe of December 26 calls it "a semi-autonomous tribal area outside the reach of Pakistani law." Newsday of December 28 is more detailed: "tribesmen also earned a special independent status within the British empire in 1901, and they were able to keep it after the subcontinent's partition in 1947. About 3.5 million people who live in the tribal areas are not required to follow Pakistani laws, just as they were exempt from British rule." It is suddenly on the (Western) map, due to reports that sponsors of terror have found refuge there. We have searched databases of Western and other English-language publications; the citations to Waziristan took over after 9/11/01. Similarly, the now-famous Tora Bora was hardly mentioned in the Western press from the Soviets' withdrawal from Afghanistan until the U.S. bombing began in October 2001. It is a very selective map with which the press provides us. In the times between media invasions and de-camping, the places and their residents continue to exist. These places will be our focus in 2002, with a variety of tools including our new Fair Finance Watch. Onwards and outwards...
December 24, 2001
Some fall-out of 9/11 is more attenuated. For example, in Cairo on December 19, it was announced that Egyptian American Bank is now supposedly off the market, no longer for sale. This announcement was made by American Express Bank which has a 40 percent stake in this EAB, and state-owned Bank of Alexandria, which holds about 32 percent. Standard Chartered said it did not want to invest in the Middle East because of "the current uncertain climate" -- an explicit reference to the effects of the 9/11 attacks on the M&A market, at least in the Middle East. From Reuters, more intrigue: "EAB's Managing Director James Vaughn said in the statement, which was dated Tuesday and released by the stock exchange on Wednesday, that Standard Chartered 'has decided not to pursue the acquisition of Egyptian American Bank.' A bank spokesman said Vaughn collapsed at a Cairo hotel and died of 'natural causes' on Tuesday evening after sending the statement." We're not touching that one.
Rather, consider the "footprint" of BNP Paribas in the region. In Egypt, it holds a majority stake in BNP Paribas Cairo. In Tunisia, BNP Paribas has a 50 per cent stake in Union Bancaire pour le Commerce & l'Industrie. In the summer of 2001, BNP Paribas acquired a 99.4 per cent stake in ABN AMRO Maroc, adding 20 offices based in 14 Moroccan cities, and 24,000 customers, making it the third- largest financial institution in the country. On the Arabian Gulf, BNP has a offshore banking unit in Bahrain; there are branches in Doha, Abu Dhabi and Dubai. BNP Paribas has a 20 per cent stake in Bank of Sharjah, which is supported by a management agreement, and an active representative office in Tehran. Can you say "corporate globalization"? We can... How can we not focus on Argentina this week? Regarding the demonstrations that led to the resignation of Economy Minister Domingo Cavallo, and then President de la Rua, much as been written (click here for a round-up). We'll focus, as is our wont, on the banking angle. Click here for our analysis. Onward and upwards (and outwards) in 2002. Happy holidays!
December 17, 2001
Still on the Arabian Gulf: in Abu Dhabi on December 12, Abdul Rahim al-Awadi, head of the UAE Central Bank's inspection department announced that his agency has frozen the assets of 14 people and institutions suspected of links with terrorist groups, out of a total of 128 suspects the Central Bank had ordered banks operating in the UAE to investigate. The U.S. Ambassador to the UAE, Marcelle Wahba, was effusing last week in her praise of the Emirates' assistance. Last week's indictment of Zacarias Moussaoui named multiple wire transfers between the 9/11 hijackers and the UAE, most but not all from a Standard Chartered branch in Dubai... Citigroup, however, was not named in the indictment. Click here for ICP's questions in this regard.
In other foggy news, five flights were diverted from the airport in the Emirate of Sharjah on December 10, due to thick fog. According to an official at the Meteorological Office at Sharjah Airport, more fog is expected this morning and in the next few days. "We normally have heavy fog during December," he said, adding that his office is also expecting rain this month. Now that will be news.
December 10, 2001
In Ecuador, a melange of privatization and corruption. On December 19, CONAM (the State Modernization Council) is slated to choose a bank to handle the bidding process for a concession for Guayaquil airport. This airport, and Quito's, were handed over to their respective local governments earlier this year on the proviso that "private capital" would be incorporated into them. Three banks have reportedly expressed interest in the contract: Deutsche Bank, Banco Bilbao Vizcaya Argentaria (BBVA), and a British-Mexican consortium led by the U.K.'s Rothchild.
In (other) corruption news, British insurer Heath and Lambert has been accused of overcharging Ecuador at least $4 million in premiums for aircraft insurance. Captain Rogelio Viteri, an Ecuadorian naval attache in London, last week unveiled the evidence he says supports this charge, including a 14-day European vacation paid for by the British firm for several Ecuadorian military leaders and their wives in February. The naval attache also accused Labor Minister Martin Insua, who insisted that although he took his wife and daughter with him to Britain to negotiate the insurance contract, the couple had paid their own way. Viteri has been summoned to appear before Ecuador's Congress. Developing...
In Abu Dhabi, companies from Michigan to London to Germany stand to benefit from a new power plant. Dearborn, Mich. -based CMS Energy and London-based International Power Plc will each own 20 percent of the 1,500 megawatt generating plan, known as the Shuweihat project, 250 kilometers west of Abu Dhabi City. It will be built by Siemens AG; lenders to the project include Barclays Capital, Citigroup, Credit Lyonnais SA and HSBC.
In grassroots hawala news, Andhra Bank on December 6 announced a "rupee drawing arrangement" with the UAE Exchange Centre LLC of Abu Dhabi for facilitating "private remittances" to India. According to the bank's press release, people in the UAE can now obtain drafts on Andhra Bank in Indian rupees from the UAE Exchange Centre. These rupee drafts would be paid at par by the designated branches of Andhra Bank in India, including 69 branches in Andhra Pradesh....
November 19, 2001
Again this week: Ecuador and the United Arab Emirates, in that order.
No drinking and no driving: while Ecuador's census is being taken on November 25, the Ecuadorian government has prohibited the consumption of alcohol and all forms of transportation. The decree, announced on November 15, prohibits "the sale, distribution and consumption of alcoholic beverages 12 hours before and after" the census has been completed on Sunday, Nov. 25. Additionally, "all forms of land transportation will be suspended between 4:00 a.m. and 5:00 p.m.," the decree states.
Cloak and dagger: Ecuadorian Energy Minister Pablo Teran claimed on November 15 that "private interests" are behind the union protests against the privatization of the electric industry announced by the government. "These mobilizations have an intimate relationship with very private interests. With the sale of these shares, a few people will lose immense privileges being paid for by 12 million Ecuadorians," Teran said....
Jumping across the globe, on November 13, the State Bank of Pakistan's Ishrat Hussain was in Abu Dhabi, meeting with UAE Central Bank Governor Al Suwaidi. After the meeting, Hussain went to "address workers" at a labor camp in Abu Dhabi's Mussafah Industrial Area; his speech inveighed that "it is the patriotic duty of all Pakistanis living abroad to shun the hundi (hawala) as this system is undermining the national economy." Click here for ICP's ongoing coverage of money laundering (and now hawala / hundi) issues.
It's beginning to appear that the United Arab Emirates will host U.N. talks about the future of Aghanistan. On November 14, U.S. State Department spokesman Richard Boucher told Abu Dhabi television that "we've seen the announcement from the Emirates and certainly we are pleased with their proposal to contribute to the success of this project,". The station announced Wednesday that the UAE had agreed to a UN request to host the conference. Boucher said other venues had been proposed: "I don't think the place and date of the conference have been decided." Diplomats said Qatar was also in the running as a venue...
November 12, 2001
From Ecuador to the United Arab Emirates, global finance and trade rules dictate developments. The International Monetary Fund announced last week it is reviewing Ecuador's compliance with IMF conditions for its loans. Ecuadorian Central Bank manager Leopoldo Baez noted hopefully that the nation's economy has performed "above expectations," with an annualized growth of 5 percent and inflation of 20 percent, down from 70 percent in December of last year. The same day, Ecuadorian Energy Minister Pablo Teran announced that "Occidental Petroleum has been hired to build a second pipeline in the Amazon jungle." Teran said Occidental was awarded the concession after Ecuador's armed forces issued a favorable security report. Work on the secondary pipeline, which will link Occidental's oilfields in northeastern Ecuador with the controversial OCP pipeline, has already begun, the minister said. The OCP pipeline is slated to run through several of Ecuador's most ecologically sensitive areas...
November 5, 2001
In the run-up to the World Trade Organization meeting slated for Doha, Qatar on November 9-13, we continue to focus on the region -- specifically, on the United Arab Emirates, where two of the September 11 hijackers maintained bank accounts (at Citibank and HSBC), and where hijacking-related money was wired, back and forth, in the days before September 11.
In a speech on October 28, Sultan Bin Nasir al Suwaidi, governor of the Central Bank of the United Arab Emirates, launched into a defense of the Emirates banking system. While acknowledging that at least two of the September 11 hijackers had bank accounts in the UAE, and wired money to a Florida bank [SunTrust] which was used to prepare for the hijacking, Suwaidi said that the wire transfers were done through and with the knowledge of U.S. banking institutions [Citibank and SunTrust]-- "Therefore, one can say that all these institutions are guilty," Suwaidi said. According to the WAM news agency in Abu Dhabi, Suwaidi stated that the UAE "had alerted the U.S. authorities about a big amount transferred a year ago but the US side didn't respond."
A day after this speech, Suwaidi met with the other governors of the Central Bank, including chairman Mohammed Eid Al Meraikhi, and afterwards issued a statement that the license of one money exchange house was being withdrawn, and that nine others are being investigated. "The board also decided to review lapses by nine money changers in the area of remittances and postponed a decision in respect thereof until the review process was completed," the statement said. None of the "money exchange houses" were named. Previously, Suwaidi acknowledged that three of the September 11 hijackers had wired a total of about $15,000 from the U.S. to Mustafa Ahmad at Al Ansari exchange house in Sharjah days before the attack. After the October 29 Central Bank meeting, a UAE news agency quoted Bashir Karuppamveettil, Al Ansari Exchanges operations manager, as saying that the Central Bank decision on the closure had nothing to do with it and that its branches are functioning normally. Developing...
Also in the UAE, on the evening of October 29 a fire in a Dubai police station killed 14 prisoners: seven UAE nationals, two Iranians and two Afghans - the other three prisoners were not immediately identified by authorities...
October 29, 2001
Last week in the northeast Ecuadorian province of Sucumbios, police seized a warehouse filled with chemicals allegedly used to process drugs. Ten people inside the warehouse were arrested. Police said that the chemicals were produced using byproducts taken from depots owned by Petroecuador, the state-owned oil company.
Meanwhile in Brussels, Ecuador was given a three-year, $266 million grant to try to promote alternatives to drug cultivation and production. Ecuador's foreign minister, Heinz Moeller, said the country would now need "to overcome a crisis of credibility" by showing its efficient management of the funds." According to the European Commission's press release, there will be funding for humanitarian / human rights monitoring. This... should be monitored...
October 22, 2001
This week: Ecuador update, and a look at the United Arab Emirates.
In Ecuador, the Manta airforce bases began accepting large military aircraft again on October 19, the day after opening the new, U.S.-funded landing strip (over 10,000 feet long and 115 feet wide). Former President Jamil Mahuad signed an agreement in November 1999 that allowed the United States to use the base for ten years... In further sell-off news, Ecuadorian bank regulators last week placed nationalized bank Banco del Pacifico under the administration of Spain's Interdin & Ahead Advisory Group...
Now, the UAE. The news hook: the Los Angeles Times of October 20 quotes the head of the central bank of the United Arab Emirates that September 11 hijacker Mohamed Atta maintained an account at a Citibank branch in Dubai, and that co-hijacker Marwan Al-Shehhi had an account at the Dubai branch of HSBC. The LAT also reports that the hijackers wired their left-over money to the "Al Ansari exchange in Sharja, the main city of one of the northern emirates... A manager at the exchange just off the main strip in a grimy section of Sharja declined comment." Click here for more.
Some might wonder about a "grimy" section in one of the richest (per-capita) nations in the world. But the reality is that much of the physical work in the UAE is done by immigrants, including from the Baluchi tribe in Pakistan, Iran and Afghanistan. For the proposition that "the inner city is everywhere," consider this Gulf News account of an eviction carried out in Sharja in July 2001:
Hundreds of residents of the Old Al Khan area have been evicted from their homes by the government which says it needs the land for a major development project. Although Sharjah served notice late last year, many residents remained until utilities were cut off last week. In the past six days, all shops and restaurants have closed, and about 90 per cent of the homes have been vacated. "This old area is being vacated for a big project planned by the Sharjah government," said an official who did not want to be named... Local residents developed the area at the beginning of the last century, but then they gradually drifted into the city in search of bigger, more modern homes. They began renting their houses to expatriates about 30 years ago. The majority of those living in the area were Pathans [ICP note: a/k/a Pashtuns], Baluchis and Bengalis who worked as taxi drivers, labourers and fishermen.
Sultan Ahmed of Karachi, who has lived in the area for 25 years, said landlords had assured them that they would not be evicted until next Ramadan. "But to everybody's surprise, the electricity was cut on July 15 and the water supply was disconnected the following day without warning," he said.
"I am a very poor man with eight children to support. I preferred to stay in the area despite the government notice because the rent was very low. I have been searching for a house, but rents are very high.
"Most people used to pay only Dh400 to Dh600 rent per month, but now we are not finding anything for less than Dh1,000 to Dh1,400 a month," he said. He called on the government to find them accommodation.
Bashir Ahmed from Baluchistan, who has also lived in the area for 25 years, said people started leaving their houses when the eviction notices were served a few months ago. "But the landlords assured us that we would not be asked to leave for at least a couple of years. They continued to receive rent from tenants."
Imdad Hussain, a 21-year-old Pakistani who was born in Al Khan, said he loves the area because he has spent his entire life there. "Although my family has shifted from here to another home, I go back every day and spend my day there," he said.
Not dissimilar to The Bronx, and its many dislocations...
October 15, 2001
On October 11, Ecuador's finance minister Jorge Gallardo was in Washington, trying to line up another condition-laden loan from the International Monetary Fund. Then, he was indicted in Quito, for "irregularities" during his tenure at Banco del Pacifico from 1999 to 2000, when he set up a $72 million trust fund for the bank's former shareholders.
The IMF quickly sung Gallardo's praises: The Fund's country director for Ecuador, John Thornton, told Reuters that "We had a very good working relationship with the minister... There are certain prior actions that need to be done before we get to the board and these will have to be taken whoever the minister of finance is."
Thursday night, Gallardo said he'd remain in Miami until he heard whether he'd be jailed pending trial. On Friday, the Ecuadorian Supreme Court ordered Gallardo's arrest. Gallardo quickly resigned, and added that he will not be returning to Ecuador. President Gustavo Noboa named economist Carlos Julio Emanuel, a former Central Bank president, to replace Gallardo. Whether the U.S. would extradite Gallardo remains to be seen....
Click here for ICP's continuing coverage of bank's money laundering and other connections brought into focus by September 11 and its aftermath.
October 8, 2001
The investigation of the September 11 plane-bombings in New York and Washington is global, and touches on Ecuador as well: in the Pacific coast town of Salinas, 200 miles southwest of Quito, six Iraqi nationals with expired visas have been arrested -- and then released.
In Geneva on October 4, a Swiss magistrate blocked two bank accounts linked to former Argentine President Carlos Menem as part of the ongoing investigations of alleged money laundering and illegal arms sales to Croatia-- and Ecuador. Claude Wenger, a Geneva investigating magistrate, said that the accounts were blocked last week after a request from Argentina for judicial assistance in its probe. "They were not held in Mr. Menem's name but in the name of people close to him," Wenger said.
Argentina asked Swiss authorities last month to help it find bank accounts held by Menem or other former officials in a probe into whether they took kickbacks for arms deals. Menem, 71, was arrested in June on suspicion of selling weapons to Croatia in the early 1990s in violation of a United Nations embargo, and to Ecuador during a border war with Peru in which Argentina was a peace mediator.
In a particularly timely post-September 11 protest, the organization ATTAC demonstrated on October 6 in Luxembourg, against tax havens and bank secrecy. Props included suitcases filled with symbolic "dirty money." ATTAC stated: "Switzerland and Luxembourg might look more respectable than other tax havens, but what happens inside the banks is just as dirty... Butchers and bakers who are Luxembourgers pay taxes, while foreign corporations with head offices in Luxembourg benefit from schemes that enable them to avoid taxes."
Meanwhile, Luxembourg Prime (and Finance) Minister Jean-Claude Juncker was quoted in the Welt am Sonntag newspaper: "When third (non-EU) countries like Switzerland and dependent territories such as the Isle of Man stick to their position (that they won't abandon bank secrecy), then there will not be any exchange of information in the EU... It's funny that when bin Laden funds are found in Paris, London or Frankfurt it is hailed as a success for investigators, whereas when money of criminal origin is found in Luxembourg we are accused of having a rotten financial industry."
He's right on one thing: the "rot" in the financial industry goes well beyond Luxembourg.... Click here to view ICP's third special report on certain timely manifestations of this "rot" in the financial industry. As we go to press, the bombing of Afghanistan has begun... For Yahoo's ongoing coverage and links (including to ICP), click here.
October 1, 2001
Given events in and around (that is, surrounding) Afghanistan, we'll turn this week to a consideration of some Afghan cities. Kabul has been a city since at least 1500 BC (when it appeared, called Kubha, in the Rigveda). In the second century AD, Ptolemy called it Kabura. It became an Islamic city in the 9th century; Genghis Khan attacked it in the 13th century, and it became the capital of a province of the Mongol empire. It passed to the Pashtuns in the mid-18th century. The British invaded, but were ousted in 1842. And of course, the Russians invaded in 1979, and left defeated in 1989. They left behind an East German-built prison, Pul-e-Charkhi. Still half of the buildings are uninhabitable; landmines remain. Darulaman Palace stands in ruins. The airport has been largely closed by sanctions. Still, on what was Airport Road, the headquarters of Radio Shariat sit across the street from the closed-down (and now torched) U.S. embassy. For some photographs of Kabul, click here. And click here to view ICP's Second Special Report on banks' money laundering, as relates to the September 11 plane-bombings.
September 24, 2001
The impacts of the September 11 plane-bombings of the World Trade Center in New York, and of the U.S. Pentagon in Washington, continue to be felt worldwide. Among those missing and presumed dead were, simply looking south, 17 people from Mexico, 5 from Guatemala, 4 from Belize, 72 from El Salvador, 1 from Costa Rica, 3 from Venezuela, 15 from Colombia, and 34 from Ecuador. Among the Ecuadorians are four members of the same family: Leonel Morocho, Blanca Morocho, Moises Rivas and Manuel Asistumbay. All of them worked in the Windows of the World restaurant on the 107th floor of One World Trade Center, where they had gone to work early on the day of the disaster, to prepare breakfast for 500 people...
On September 20, Ecuadorian Foreign Minister Heinz Moeller announced that he will ask the United States for humanitarian visas for the families of the Ecuadorian victims of last week's terrorist attacks on the United States. "We have taken the initiative, supported by some Latin American countries, in asking the U.S. government for humanitarian visas for the victims' families, who had clearly been economically supported from abroad. These people are now unable to provide for themselves," he said.
As another, less serious example, the Ecuadorian Export and Investment Promotion Corporation estimates that Ecuador lost $6.5 million in export revenues due to the post-September 11 air traffic restrictions. The flower and fishing industries were the worst-hit, because they had to store their goods at airports or in private warehouses...
In the aftermath of the September 11 plane-bombings of the World Trade Center and the U.S. Pentagon, Inner City / Finance Watch has prepared a report on bank links to Al Qaeda and other state- and non-state terrorist groups -- and on what the Federal Reserve and U.S. Treasury Department have done, and not done, in the recent past on this issue. While initial press accounts centered around Barclays Bank in London, there are many more connections: ABN Amro (owner of LaSalle Bank in the U.S. Midwest) held deposits of Al Qaeda conspirators in India; Deutsche Bank (which bought New York's Bankers Trust in 1999) held millions for a now-incarcerated Pakistani intelligence chief); Fleet is reported to channel money to the Chechen jihad. The financial regulators will have to take these issues more seriously. Click here to view the whole report.
September 17, 2001
In the wake of the September 11 plane-bombing of the World Trade Center and the U.S. Pentagon, Ecuadorian congressman Hugo Moreno condemned the attacks and called attention to the vulnerability of the port and airbase at Manta on the Pacific coast, which was ceded to the United States for its anti-drug operations, primarily in neighboring Colombia. "This is the time to review the agreement that leases the base to the U.S. armed forces," Moreno said in an interview with La Luna radio in Quito. "We must take care of the security of our country." On the other hand, Miguel Lluco, a leader of Ecuador's massive indigenous movement, called for the treaty to be annulled. The Manta base "not only involves Ecuador in the Colombian conflict, but also in a greater confrontation, one that transforms the country into a possible target for attacks," he warned.
For New York City-based coverage from September 12, 13 and 14, click here and scroll down the page.
Given the U.S. president's and secretary of state's identification of Afghanistan-based Osama bin Laden as the "prime suspect," we turn to a consideration of Afghanistan, where, after 22 years of continuous war, a drought is raging.
Due to its central location, Afghanistan has been called the "cockpit of Asia." Throughout the 1980s, the United States funded the mujahideen, described by the U.S. as freedom fighters, to push back the Soviet incursion. Through Pakistan's Inter Services Intelligence (ISI), the U.S. provided Stinger missiles and other armaments. After the Soviets had been expelled, and the U.S. began Operation Desert Storm against Iraq, the U.S. lost interest in Afghanistan. It is reported that the U.S. supported the Taliban in taking Kabul in 1996, in part to support a plan by U.S.-based Unocal to build a pipeline across Afghanistan.
The Taliban (literally, the Islamic Students Movement) subscribe to an extreme form of Islam. As widely reported, they require women to wear full-length burqas, and forbid them from working. Men must wear beards. Thieves have their hands cut off. They are without question a repressive regime.
In 1998, after the bombing of U.S. embassies in Kenya and Tanzania, the U.S. fired sixty Tomahawk cruise missiles at Afghanistan, trying to kill Osama bin Laden and to destroy his training camps. One of the missile landed in the Pakistani province of Baluchistan. The London Observer of December 13, 1998, reported the visit to Afghanistan of Mark Warner, a director with Barclays Private Bank Ltd., to drum up business... In 1999, the U.S. and the United Nations imposed sanctions on Afghanistan: currently, no commercial airline flies there. The Heritage Foundation has suggested that the U.S. "order" the International Monetary Fund to pressure Pakistan to break its ties with the Taliban. Pakistan on September 15 indicated that it will assist, if among other things it's national debt is reduced. Debt as discipline. It is reported that Taliban leader Mullah Omar has only met two non-Muslims in his lifetime. There is a drought. (Here are two photo galleries: flash and non-flash). The U.N. estimates that 5 million people -- a fifth of Afghanistan's population -- are starving. There have been few donations from the West. Entirely isolated from the world, further sanctions would have little effect on the Taliban regime.
Currently (September 16) in the United States, the Bush administration appears to be preparing the public (and NATO, and Pakistan) for a bombing campaign against Afghanistan. Many Afghans are fleeing the country. One wonders what might be the effects of a massive bombing campaign against such a relatively poor and underdeveloped country. And if such bombing involves -- as it would -- the killing of uninvolved civilians, how would it be qualitatively different than the September 11 plane bombing? Developing...
September 10, 2001
In Ecuador, President Naboa has proposed increasing fuel prices by 10 per cent. He says this is the only option, following the nation's Supreme Court's ruling that his proposal to raise the value-added tax from 12 to 14 percent is unconstitutional. Protests of the fuel price hike are expected.
Meanwhile in Argentina, protests of the terms of the IMF's new loans are in full-swing. Barricades and roadblocks have been erected from the border with Bolivia in the north to Tierra del Fuego in the south. The IMF has demanded, and the Argentine government has acceded to, slashing state salaries and some pensions by up to 13 percent, and imposing austerity measures, particularly on the nation's provinces. So who's running Argentina right now? Argentina's debt stands at $128 billion...
In the U.S. capital, George Washington University is taking the unprecedented step of ordering its more than 5,000 students to move out of their dormitories from September 27 to October 2, to leave the buildings empty during the IMF and World Bank meetings and demonstrations September 29-30. Easier to use tear gas, if the GWU campus is empty...[Superceded - see 9/17/01 Report, re 9/11/01...].
September 4, 2001
A meeting was held in Quito, Ecuador last week concerning the effects of privatization in Latin America and elsewhere. Former Costa Rican president Rodrigo Carazo said that privatization has led to "the globalization of poverty," and noted that "in Costa Rica, electrical services reach 97 percent of the population and communications services reach 96.5 percent. These are in the hands of the state, which has permitted greater efficiency and economic benefits for the country." The conference marked the kick-off of a roving anti-privatization committee dubbed the "Moral Tribunal." Members include Luis Alberto Luna Tobar, former archbishop of the Ecuadorian city of Cuenca, and Hebe de Bonafini, head of Argentina's Mothers of Plaza de Mayo Association. Civil society...
Meanwhile, in Ecuador's Sucumbios province, last week more than 300 Colombians arrived, driven out of their country by Plan Colombia. The refugees have gathered in the Pueblo Nuevo neighborhood in Dureno. Representatives of the United Nations High Commissioner for Refugees are working on a contingency plan to construct temporary shelters to house the families.
The IMF is planning a visit to Ecuador "to evaluate the government's economic program." IMF "Mission Chief" John Thornton will arrive in Quito next week to study Ecuador's compliance with fiscal goals set for August and several structural reforms -- that is, structural "adjustments." The mission's stamp of approval is required for Ecuador to receive a third disbursement of $48 million and continue its $300 million IMF program, due to expire at year's end. Get ready for hard-ball...
July 16, 2001
In Ecuador, 14 banks collapsed between 1998 and 2000. The largest of these, Banco del Pacifico, is now slated to transfer its bad-loans portfolio to the Ecuadorian Central Bank, BCE President Luis Ycaza announced on July 9. Banco del Pacifico has nine branches and 76 agencies in Ecuador, and representation in Miami, Panama and Curacao; its past due loans amount to up to 58 percent of its $329.2 million portfolio. Ycaza is promising more lawsuits to collect on these debts, telling reporters that "BCE will try to recover arrears through taking legal action against debtors... In many cases, a state bank's defaulters are in a very healthy position with private banks, but refuse to pay back state banks." Editorial note: Ecuador may need a "debtors' association," along the lines of El Barzon in Mexico...
Shifting one country north from Ecuador, to Colombia: while the U.S.-funded Plan Colombia gathers force (and forces Colombians, and the conflict, across the border into Ecuador), one U.S.-based bank is considering pulling out of the country, while another (Citigroup) continues to grow its operations.
In Bogota last week, BankAmerica local president Carlos Hoyos told Reuters that B of A is considering shutting down it operations in Colombia. He said that BankAmerica has been operating in Colombia for 33 years and posted a net profit there between January and April of $1.07 million, on a loan portfolio of $27.20 million. Overall in Colombia, 64 banks manage portfolios of $35 billion. Spain's BBVA is the largest foreign bank in the country, with a portfolio of $2.2 billion. Citigroup is the second largest foreign player, with $1.3 billion.
And, Morgan Chase was at it again last week, pontificating about the benefit of tax breaks in developing countries. Asia Pulse of July 13 reports on a J.P. Morgan Chase report on South Korea, which "pointed out that government support measures such as a waiving of real estate taxes have had positive effects." Nothing more positive, for developing countries, than cutting taxes (in Chase's view)....
July 9, 2001
While 16,000 public hospital doctors in Ecuador are on strike, due to low wages, Ecuadorian soldiers are being posted along the border with Colombia, figuratively plugging the dam against the spill-over of Plan Colombia into their country. The U.S., major funder of Plan Colombia, is encouraging these troop movements: "A presence is needed on the border. It does not imply conflict or an engaging of forces. But without a police or military presence, the various groups tend to operate with impunity," said Larry Palmer, deputy chief of mission at the US embassy in Quito. Invoking an interesting concept, Peter Pace, commander-in-chief of the US armed forces' southern command, said: "I think there is a relevant focus on the border area to make sure Ecuador is defending its own sovereignty."
Meanwhile -- jump cut -- China has not yet fully entered the World Trade Organization. The hang-up, at present, is language that the U.S. is demanding, that the U.S. admits would primarily benefit U.S.-based insurance company AIG. In its November 1999 agreements with the U.S. and the European Union, China promised that within two years of joining the WTO, it would allow foreign insurers to set up new insurance branches with "an equity ceiling of 100 per cent for non-life and 50 per cent for life insurance." Now the U.S. is demanding a special exception to this rule in the services text so that AIG could expand all its future activities in China on the basis of its existing 100 per cent equity cap both in life and non-life insurance activities. Opposing this is... the European Union, which says this would be "tantamount to discrimination and a lack of equal treatment for foreign insurers." What you have is a fight between the U.S. and the E.U., about how will be able to get into China faster. And the U.S. demand... would benefit only one company. Some company... On intra-U.S. issues, click here to view ICP's preliminary comments opposing AIG's applications to acquire American General, and its questionable subprime (high interest rate) lending units...
Financial globalization proceeds apace. A summary of the week's banking deals: in Argentina, Banco de Galicia is paying $50 million for ABN Amro's 26 retail branches and 200,000 bank accounts...In Brazil, Citigroup continues to move in on Banco Mercantil... In Indonesia, Bank Mandiri is acquiring Bank Internasional Indonesia, which is near failure due to its large exposure to Asia Pulp & Paper Company...In Turkey, BNP Paribas is buying Fiba Holding's financial units...
Finally, for this week, U.S.-based J.P. Morgan Chase's willingness to comment on the internal politics, budgets, and regulatory policies of "developing" countries continues to amaze. On U.S. Independence Day, July 4, the Business Recorder in Islamabad reported that "J.P. Morgan, the third largest financial services group in the world, in their analysis of the Pakistan Federal Budget 2001-02 commended the government for living up to its promise of announcing an investor-friendly budget... According to their assessment... a number of budgetary measures such as a three-year capital gain tax exemption, tax breaks on equity investment, and preferential tax treatment of dividend income for insurance sector will go a long way in attracting long-term capital flows to the equity market." Ah, capital gains tax exemptions, tax breaks on equity investments, and "preferential tax treatment" for the financial sector -- just what Doctor Chase ordered...
July 2, 2001
Voices from on high: last week, an executive of U.S.-based J.P. Morgan Chase, Luis Oganes, opined to the Quito newspaper El Universo that Ecuador shouldn't have bailed out its failing banks, particularly Filanbanco and Banco del Pacifico. "In a perfect world, those banks would have been closed," Chase's Oganes said. Of course, the U.S. bailed out its savings-and-loan industry and, more recently, its hedge fund Long Term Capital Management (bail-out accomplished with Chase's participation). But Morgan Chase apparently feels free to tell other countries, where it has (even) more leverage, what to do...
Meanwhile, a rag-tag ship carrying 160 prospective emigrants from Ecuador was intercepted last week, off the port of Manta. One hundred farmers abandoned their land in Northern Ecuador last week, as the effects of the U.S.-funded Plan Colombia begin to leak over the border. Within Colombia, the eradication of coca is being effectuated with the herbicide Glifosato, originally patented by Monsanto in the 1970s under the name Roundup -- it has been found to be toxic to humans, and to cause "acute irritation" to the eyes...
Indigenous organizations in Ecuador have begun demonstrations, setting a July 9 deadline for the government to comply with its previous commitments to lower public transportation fares and provide peasants with legal titles to their lands. Other goals include the payment of millions of dollars owed by the government to the peasants' social-security fund, capitalization of the national development bank, the sale of domestic gas at $1.60 per canister and an end to persecution of peasant leaders in the province of Guayas.... According to J.P. Morgan Chase, however, "perfect[ion]" in Ecuador would mean closing down the country's banks...
June 25, 2001
In Ecuador, the Sote oil pipeline, ruptured by floods and mudslide, has been pressed back into service, after spewing 10,000 barrels of crude oil onto surrounding land. Meanwhile, OCP Ecuador, the multinational conglomerate led by Spain's Repsol-YPF, says it will immediately begin construction on the new pipeline, though the cloud-rainforest in the Mindo region. Environmentalists and local residents say they'll be chaining themselves to trees, to block construction. Mount Tungurahua, 112 miles south of Quito, began spewing ash last week, four miles into the atmosphere...
In Rabat on June 19, ABN Amro announced it's selling its Moroccan operations to Banque Marocaine pour le Commerce et l'Industrie, BMCI, which is owned by BNP Paribas. It's a global chess game: ABN Amro says it plans to divest its operations in Bolivia, Ecuador, the Netherlands Antilles, Sri Lanka and Suriname. In the United States, ABN Amro's subsidiary Standard Federal Bank announced on June 20 that it would close 59 bank branches as part of its plan to merge with Michigan National Corp. this Fall....
While the World Bank speaks of poverty reduction, its ideological mission becomes ever more clear. Most recently, the World Bank has criticized -- and cut off loans to -- Uzbekistan, explicitly for its failure to "liberalize" its economy, and to privatize companies fast enough. The WB's resident representative in Tashkent, David Pearce, told reporters that "another reason why privatization is difficult in present circumstances is the government's reluctance to offer majority stakes to foreign... investors." The International Monetary Fund froze its lending program in 1996, cut cooperation to a minimum in March, and has sent no replacement for its outgoing resident representative...
May 29, 2001
This week: Ecuador, and Citigroup / Mexico:
Chaos reigned last week in Quito, as Ecuadorian president Gustavo Naboa denounced the mounting opposition to the proposed Crude Oil Pipeline (OCP) which would run 500 kilometers from the Ecuadorian Amazon to the Pacific Ocean, crossing 67 geological faults and passing near six volcanoes. "If the country is to overcome its economic crisis," argued Noboa, "as much petroleum as possible must be extracted, and this can only occur if the pipeline construction is completed." Translation? The "Paris Club," of the holders of Ecuador's sovereign debt, demand repayment in full, so it's time to drill and pump, whatever the costs. Noboa was more philosophical, chiding opponents as those who would rather would rather "defend the little butterflies, the hummingbirds, trees and forests," rather than human beings, who, Noboa pronounced, "are the king of creation and everything in its domain." Less philosophically, he called all opponents "idiots." CONAIE noted that the pipeline threatens the survival of several native populations in the Amazon, including the Zparo community: "President Noboa's defense of the petroleum business as beneficial for the country hides the fact that oil companies are exonerated from income tax and value added taxes for most of their transactions." Developing...
On May 17, the CEO of the United States' largest bank, Citigroup, appeared at a press conference in Mexico City, to announced Citigroup's proposal to acquire Banacci / Banamex, the second largest bank in Mexico. Combined with Citigroup's Confia operation, Citigroup would control 26.4% of the Mexican banking market, and over 21% of all Mexican bank accounts. This $12.5 billion proposal raises a slew of questions, about sovereignty, branch closings, the allocation of bail-outs, the spread of predatory lending, and the (in)adequacy of global bank regulation. Accordingly, we are today beginning a Citigroup - Banamex Watch (click here to view, and bookmark, if appropriate). ICP has written to the Mexican bank regulator, the National Commission on Banking and Securities, to request a copy of all applications filed by Citigroup. A portion of ICP's letter, in English, is here; we'll appreciate from readers of this page any further information about the regulatory process in Mexico (or, going forward, in other nations).
May 21, 2001
In Ecuador, utility workers went on strike last week, to protest the government's planned privatization of at least half of the country's utilities. "The National Modernization Council (Conam) is already preparing to sell the entire public utility industry at a time when such moves have failed in other countries such as Chile, Argentina, and recently Brazil," said union leader Edgar Ponce.
Meanwhile, the newspaper Hoy calculates that the Ecuadorian government owes $2.051 billion to the Ecuadorian Institute of Social Security. "The unpaid debt from Dec. 31, 2000, totals $ 2.051 billion," 15.15% of Ecuador's total foreign debt, estimated at more than $ 13 billion, the paper reports. Although Ecuadorian employees pay a social security tax from their wages every month, but the services they receive through the institution have deteriorated due to the lack of resources. Senior citizens continue to press the government to raise their pensions. Many currently receive only two to four dollars a month...
Finally, for this week, the Ecuadorian government has just suspended a United Nation's World Food Program (WFP) food distribution due to the presence of genetically engineered soybeans in the food to be distributed. The NGO Accion Ecologica reports that 55 percent of the ingredients used in the State's nutrition programs contain genetically engineered products, especially soybeans, adding that the consumption of genetically engineered products could cause side effects in humans, including hypersensitive allergies or genetic damage. WFP representative in Ecuador Hannah Laufer said that food provided by the two nutritional programs could contain genetically engineered soybeans. Great planning...
May 14, 2001
Showdown with the International Monetary Fund: in Quito on May 8, Defense Minister Hugo Unda called the situation in Ecuador "series," following the decision by the legislative majority to return the government's tax reform bill for further debate and new vote. Unda told reporters: "We understand that the situation is quite serious for our country. We are extremely concerned over the position of some sectors. We must be very responsible in the way we discuss the future of the country." On May 2, the congressmen who oppose the IMF-designed tax-raising bill obtained just 76 of the 82 votes needed to reject the bill, which aims to raise value-added tax (VAT) by two points from 12 to 14 per cent. But on May 7, by 79 aye votes against 37 nays and 2 abstentions, the congress annulled the measure. The ball's in the IMF's (and the mega-banks', and vulture-investors') court... The vote to reject the tax-hike was a democratic one, and the IMF often speaks of a need for "democratization" -- we'll see what it's approach to this particular democratization is...
Letter (counter-punch) of the week, from the Financial Times of May 9: "A report published by the World Development Movement last year documented that in the year between the 1999 World Trade Organization meeting in Seattle and the 2000 International Monetary Fund/World Bank meeting in Prague there were at least 50 outbreaks of civil unrest in 13 poor countries directed at IMF policies alone."
At the annual meeting of the Asian Development Bank held in Honolulu last week, several thousand activists marched down Kalakaua Avenue. Speakers from the organization ADBwatch said the "Development" Bank's aid policy has proved counterproductive, resulting in wanton development and aggravating poverty in Asia's developing countries...
The beat goes on: most recently, J.P. Morgan Chase is raising money for the government of the Philippines. The Philippine Daily Inquirer of May 11 reports that "a government source said the loan deal was supposed to be completed within May, but Chase Manhattan had requested that the fund-raising exercise be postponed because of what it perceived as mounting political tension running up to the May 14 elections."
May 7, 2001
While the International Monetary Fund continues to push Ecuador's congress to raise the value-added tax from 12 to 14 percent, here's the situation on the ground: unemployment stands at 12%, with fully 50% under-employed. In the last two years, one million of Ecuador's 13 million people have left the country, according to the National Institute of Statistics and Censuses. The lines outside the Ministry of Foreign Relations, of people seeking a passport, and outside the Spanish embassy in Quito, of those seeking to apply for an entry visa, continue to grow. Those who leave without documentation face danger: 450 Ecuadorians died in Central America in the last five months of 2000. 2,978 undocumented Ecuadorian emigrants have been captured by authorities in Guatemala, El Salvador, Mexico and the United States so far this year, according to data provided by the Ecuadorian consulates in these countries. The IMF's proposed solution is further cut-backs; the WTO's and (proposed) FTAA's solution is to open Ecuador ever more to imports from better-off countries. This is the face of corporate globalization, or of global corporatization....
In Washington, at World Bank's and IMF's Spring meeting, little was accomplished. U.S. Treasury Secretary Paul O'Neill spoke out against IMF "bail-outs," but the meeting was highlighted by the announcement of a $10 billion plan for Turkey. This money will not reach the poor and unemployed: it's a bail out of the Turkish banking system (and for foreign investors therein). Virtually no progress was made on debt-relief: the U.K. has dropped the issue...
Meanwhile, the mega-banks continue to trade global assets back and forth. In Australia, the Man Group announced that it has acquired Australian retail futures broker Ord Minnett Jardine Fleming and its over 4,500 retail client from JP Morgan Chase, which also last week sold Jardine Fleming Bank Ltd to South Africa's Standard Bank Investment Corp., for $120 million. Ord Minnett Jardine Fleming's New Zealand team also jumped ship (or was jettisoned), to Macquarie Bank. Bloomberg reported that J.P. Morgan said in March it would sell the business because it didn't fit with its plan. The business was acquired last year when Chase Manhattan Corp. bought Sydney-based Ord Minnett Ltd., which had a business in New Zealand. Chase's purchases of Jardine Fleming. and Ord Minnett, really worked out well, didn't they? And what will happen if and when J.P. Morgan Chase decides to jettison U.S. (prime rate) consumer business?
In Taipei on May 2, employees of Bank of Taiwan, the Land Bank of Taiwan and the Central Trust of China staged protests outside the Finance Ministry against the planned merger of the financial institutions and called on Finance Minister Yen Ching- chang to resign. In Seoul, Kookmin Bank (which has faced similar employee opposition to its merger) said it anticipates being able to float American Depository Receipts on the New York Stock Exchange by September of this year...
Let's go even more grassroots: in Papua New Guinea, the government has begun the IMF-ordered sale of its stake in Papua New Guinea Banking Corp. Bloomberg (5/3) had this to say (tongue-in-cheek, apparently): "Here's the hitch -- it's based in a nation that avoided a military coup in March and is plagued by roving bands of thugs called raskols." And some thought that the IMF and World Bank, with their privatization demands, were the rascals...
April 30, 2001
The International Monetary Fund conducted a tour of Ecuador last week, led by John Thorton. The purpose? To demand that the Ecuadorian congress pass a 12 to 14 percent value-added tax (VAT) as a condition for the disbursement of the loans to which the IMF had previously agreed. The Ecuadorian legislature already rejected the regressive VAT tax, in March of this year.
Meanwhile, Ecuador is petitioning the European Union to step back from its recent trade deal with the U.S., under which 83 percent of permits for imports of bananas from Latin America will go to the big transnational marketing firms. The Ecuadorian government is opposed to the new pact between the EU and the United States, and is urging the European bloc to respect the rules of free trade by allowing purchases on a first- come, first-served basis, as the EU had previously proposed.
We begin with these items, because they put the corporate media's presentation of the proposed Free Trade Area of the Americans, and of the protests thereto, in an interesting light. The New York Times' Tom Friedman claimed (April 24) that what Africans wants is more globalization, not less. This, Friedman says, explains the relative lack of " Africans joining the anti-globalization 'festival' in Quebec." Distance, and air fare costs, might have something to do with it, too... There have been demonstrations against the World Bank's and IMF's structural adjustment demands, for years, some of them reported below on this page. Friedman ignores that labor unions, which he denounces, have elections; he concludes by labeling those who question corporate-driven globalization as The Coalition to Keep Poor People Poor. Now we understand: the way to make poor people right is to impose a value-added tax on everything they buy! Maybe it's time for the Times to assign Mr. Friedman to a new beat; or maybe he should take a vacation. We prescribe a visit to Focus on the Global South, in Bangkok...
Newsweek (April 30, "World View") chimes in that "the anti-globalization crowd... is trying to achieve, through intimidation and scare tactics, what it has not been able to get through legislation." This ignores that the WTO rules, for example, override environmental laws that elected legislatures have passed, and that NAFTA allows corporations to sue governments for laws that they have passed. And where's the concern with democracy when, as just one example, the IMF demands that a country like Ecuador enact regressive tax increases?
April 23, 2001
While representatives of Ecuador, and 33 other nations of the Americas, were in Quebec City over the weekend (click here for some analysis), Ecuador got rebuffed by the European Union, on its complaints about the EU's April 11 banana deal with US Trade Representative Robert Zoellick. From Brussels, Gregor Kreuzhuber, spokesman for EU Agriculture Commissioner Franz Fischler, quipped that "the [EU-US] deal as it stands now is not a bad deal for Ecuador, in comparison to the existing situation." Under the EU-US deal, the EU will import bananas from July 1 under licenses distributed to producers on the basis of their export levels in 1994-1996. In exchange, the U.S. agreed to "suspend" $191.4 million in WTO-approved sanctions. Kreuzhuber acknowledged that the deal scraps a proposed "first come, first serve" import regime that had been favored by Quito. In a statement Tuesday, Ecuador's Foreign Minister Heinz Moeller and Agriculture Minister Galo Plaza said the EU-US deal would limit Ecuadorian producers' access to European markets.
So what was that, about "free trade" regimes helping less developed countries? While the U.S.'s position was largely at the behest of Chiquita and other mega-corporations, more than two million of Ecuador's 12.5 million people work in the banana industry...
At the Quebec City summit, the trade representatives met behind a 10--foot high chain link fence, which was repeatedly breached. The 6,700 police fired tear gas canisters, water cannons and rubber bullets into the crowd. CNN reports over 400 arrests, and 58 activists injured. The trade delegates on April 22 signed a "Quebec Accord," vowing to implement the FTAA by 2005, with the vague aim of "halving the number of people living in extreme poverty in the Americas by 2015." But consider the underlying trade agreement that's being negotiated: it would allow corporations to sue governments, if regulation cuts into their profits. (Click here to view the "Investments" section of the draft trade agreement; click here for a well-reasoned critique, "The Threat of NAFTA-style 'Investor-State' Rules").
Argentine president Fernando de la Rua said, "The next summit, which I will be honored to host in Argentina, will not require walls to keep those who come to protest, and there will be space for those who come to applaud when we work for the benefit and the progress of all peoples." We'll see...
April 16, 2001
Ecuador has continued to be drawn further into "Plan Colombia." On April 10, the U.N. High Commissioner for Refugees reported that over 600 Colombians had arrived in Ecuador in the past week, fleeing their country's armed conflict. "They are caught in the crossfire, because if they refuse to provide information about the presence of one or the other camp in the area, they risk falling victim to the paramilitaries or the rebels," said Fr. Edgar Pinos, a UNHCR representative assigned to Ecuador's Amazon region. Guayaquil's Expreso newspaper reports that the Colombian town of Pu ina Negra, on the border with Ecuador, is now deserted and residents only enter during the day to carry away belongings...
Meanwhile, April 12 saw the opening of a new U.S.-supported drug-trafficking monitoring center in the Amazon basin town of Baeza, east of Quito. The base, funded by a $1.5 million "grant" from the U.S., is staffed by 70 police officers who are part of the national police's "Gema" anti-drug unit, and who were trained by U.S. Drug Enforcement Administration personnel.
Finally, for this week's Ecuador update, Rodrigo Borja, who was president from 1992 to 1996, said in an interview with the Expreso newspaper that Ecuador should abandon "dollarization." Borja stated the obvious: that the policy of replacing the sucre with the dollar has not solved Ecuador's economic problems, which have only worsened. "I would recommend exploring the possibility of going back on the convertibility route, that is, the coexistence of two equal currencies, the U.S. dollar and a new Ecuadorian currency," Borja said.
April 2, 2001
The Ecuadorian Congress on March 29 voted down the increase in the Value-Added Tax (VAT) that the International Monetary Fund has demanded, as a condition for release its already-committed to loans. The IMF's demand -- to increase the tax on goods, across the board, in a country already suffering debt-induced economic chaos, is emblematic of the IMF's structural adjustment and austerity fever.
Ironically, this populist resistance to the IMF's demands come at a time when Ecuador is slated to take over the presidency of the proposed Free Trade Area of the Americas. Ecuador's term will least from May 2001 to April 2002. But even that's in chaos: on March 30, Ecuadorian Trade Minister Roberto Pe a resigned, after he was passed over for the position of Ecuador's representative to (and therefore president of) the FTAA. The previous day, Ecuadorian President Gustavo Noboa had announced that he would ask Foreign Minister Heinz Moeller, rather than Pe a, to travel to the Buenos Aires meeting, and presumably to Quebec City as well.
Whether the Naboa regime will last, during Ecuador's tenure as president of the FTAA, remains to be seen...
March 26, 2001
Quito, Ecuador last week saw riots, at Garcia Moreno prison. The stand-off ended when the government said it would be shortening some prison sentences. This announcement was made by the head of the national congress, Maximiliano Donoso, who said the legislature had approved a bill immediately shortening prison terms, one of the key prisoner grievances. The head of the national prison system, Luis Alfredo Munoz, said that fifty seven requests to shorten prison sentences were approved. "They had all fulfilled the legal requirements," he said. Munoz also said officials will be looking into another 100 cases...
In Buenos Aires, Argentina on March 21, unions staged to protest against a government austerity drive. The strikes were originally aimed at a defunct $4.45 billion cutback plan but have since been redirected at incoming Economy Minister Domingo Cavallo, the third such minister in as many weeks, who has vowed his own cutbacks but has given no details. "We see the new minister as very bad because he is the one responsible for the economic situation we are facing today of unemployment, poverty...and high debt," said Marta Maffei, head of the CTERA teachers' union.
HSBC is bidding on Turkey's Demirbank TAS, which was taken over by the government in December. Now that's what we call... capitalizing on a country's financial crisis. Similarly, in South Korea, (still) merging Kookmin Bank and H&CB plan to cut 10 percent of their staffs. Goldman Sachs Group owns 17 percent of Kookmin; ING Barings says it's interested in maintaining its 9 percent stake in the combined company, which would require an extra $500 million investment. Employees of Kookmin and H&CB have protested in Seoul -- but how to "reach" Goldman, or ING?
March 19, 2001
Ecuador: the new Panama. Work is continuing, preparing the base at Manta, Ecuador for the arrival of U.S. AWACS surveillance planes, and tankers to refuel them, later this year. While many Ecuadorians suspect that Manta will become the staging area for the U.S.'s anticipated intervention into Colombia, U.S. ambassador to Ecuador Gwen Clare characterizes it as a mere replacement: "The closing of Howard Air Force Base in Panama stopped the ability of the U.S. government to easily look at the movement of drugs from Latin America to the United States... Why would we put at risk this pearl that we have? Why would we put at risk this opportunity to see, as we have never seen before, what is going on in the transit zone?" Ecuadorian Congressman Antonio Posso, however, expresses a widely-shared skepticism: "the [Manta] base apparently is being used also to put together an operation to fight Colombia's guerrillas, which involves us in a conflict that is not Ecuador's."
From North to South in the Americas, corporate globalization is being contested. At this week's meeting of the governors of the Inter-American Development Bank in Santiago, Chile, grassroots community groups are protesting. More professionalized organizations, like the Institute of Political Ecology (IEP), say they're keeping their focus on the FTAA-related meetings scheduled for Buenos Aires, April 6-7 (see last week's report, below). In Quebec City, a ten-foot tall fence is going up around the historic Upper Town; the suburb of Sainte-Foy has passed an ordinance banning the wearing and possession of "a mask, hood, ski mask, or any other object of the same nature to cover one's face." In the sealed zone where the trade ministers will meet, to discuss FTAA drafts that have been withheld from the public, even the churches will be closed: parishioners of St. Pierre United Church will not be allowed to enter the Zone.
In Europe, a committee of the World Trade Organization is meeting to discuss the WTO's emerging "general agreement on trade in services" (GATS), which would further deregulate the world of finance (among other things), and would, despite the WTO's denials, increase the privatization of basic services. While the GATS draft purports to exclude "services supplied in the exercise of governmental authority," there are defined as services "supplied neither on a commercial basis nor in competition with one or more service suppliers." Translation: if it can be sold, it must be sold...
In the U.S. Senate last week, a pro-bank "Bankruptcy Reform Act" was passed, 83-15. Interestingly, a provision that would have eliminated certain U.S. investors' liabilities on Lloyds of London insurance policies they invested in was voted down. The reason? The U.S.'s even more overriding interest in corporate globalization, and unregulated investment in other countries. President Bush' Treasury secretary, Paul O'Neill, wrote a letter to Senators, stating that the provision had "the potential to undercut the rule of law as it applies across international borders today with serious consequences for U.S. interests." That is -- U.S. corporations' globalization interests...
March 12, 2001
From the world of finance: on March 5, the Hong Kong iMail reported that HSBC will be closing 70 bank branches in Hong Kong, while simultaneously expanding its "wealth management team." On March 8, ABN Amro, which is selling its New York bank to Citigroup, announced that it plans to cut 6,250 jobs at its retail bank in the Netherlands, closing 200 of 830 branches by 2004, "as profit in consumer and investment banking lags targets set by Chief Executive Rijkman Groenik." ANB Amro simultaneously announced that it will invest more than $300 million in privately held Japanese companies over the next three years. [On March 12, 2001, ICP filed comments with the U.S. Federal Reserve Board and others opposing Citigroup's applications to acquire ABN AMRO's "European American Bank" in New York - click here to view].
Bank of America's debt-collection lawsuit against Ecuador, which we reported last week, was withdrawn on March 8. Apparently, even B of A knew it didn't look right: "The suit was filed only to allow us the option of pursuing a claim, which we decided not to do," said Georgie Shields, a spokeswoman for Bank of America. Not that the Charlotte, N.C. titan is getting out of the speculation business: the same day, in Sao Paulo, Bank of America Brazil Holding announced the hiring of Amaury Junior to head "derivatives and structured transactions... a move to expand trading in the local fixed-income and currency markets." This is what the landless in Brazil need: Bank of America, arbitraging currency...
Speaking of which -- two weeks ago, Turkey "floated" its currency, the lira. Since then, there's been a frenzy of trading -- and chaos. J.P. Morgan Chase is one of (only) three main "custodian" banks in Turkey. Typically, it processes 100 to 150 trades daily, but volumes increased during the crisis to about 200 trades a day. Dom Piper, vice president of "network management" for J.P. Morgan Investor Services, said his bank's general policy in Istanbul has always been to ensure that cleared funds are received in the case of sales before releasing title to securities, and that good title to securities is received in the case of purchases before effecting payment. "This practice greatly reduced counterparty risk for clients," he said. The country's suffering, but Chase provides the plumbing...
In Brazil (itself a victim of a currency run, in January 1999), Chase's local chief economist is calling for ever greater "structural adjustment." Marcelo Carvalho, with Chase in Sao Paulo, was quoted last week: "Brazil still needs structural reforms to boost competitiveness, but we're seeing very little movement." Carvalho's (and many others') boss, Don Layton, visited Brazil recently, telling local reporters that Chase expects Brazil to face a "reduction in foreign direct investment, fewer bond issues on the international market and less credit from abroad." Unless, of course, there's more structural adjustment, to "boost competitiveness."
Where does Chase find the type of policies it likes? Well, J.P. Morgan Investor Services (f/k/a/ Chase Global Investor Services) just announced it will provide consultancy for custody as well as fund administration to the China Construction Bank. and Bank of Communications. It's geography and profits, not human rights (or anything else) that drives Chase's decisions. Agnes Ng, "vice president for North Asia" at J.P. Morgan Investor Services, said: "These two banks are leading in the development of China's financial services particularly within the respective geographical regions of Shanghai and eastern China in the case of the Bank of Communications and Beijing, and Northern China in the case of China Construction Bank."
Also last week, Liberty Mutual's Venezuelan unit, Seguros Caracas, acquired Seguros Panamerican for $56 million, and now controls the largest insurance company in Venezuela. And in Argentina, MetLife announced it has gotten regulatory approval for a new pension fund management company, to target that country's now-privatized social security system. Already there is Citigroup, which announced last month that it would buy the Generar AFJP SA pension fund and merge it with the group's Siembra AFJP SA, putting Citi among the three top pension fund managers in Argentina.
It takes lobbying, to make all these global deals (possible) -- not surprisingly, Citigroup, along with Deutsche Bank and Fleet / BankBoston , show up as sponsors of the Americas Business Forum meeting in Buenos Aires April 5-7, the mission of which is " contributing -from the business community perspective- consensus recommendations, on issues that have an impact on the official negotiations within the framework" of the (proposed) Free Trade Area of the Americas. The next meeting toward that continent-wide NAFTA is in Quebec City, April 17-21...
Is there fight-back? Yes. In Seoul, South Korea on March 8, more than a thousand insurance salespeople demonstrated outside the office of the Financial Supervisory Commission, opposing impending layoffs at Hyundai Marine & Fire Insurance Co., Hanil Life Insurance Co. and Samshin Life Insurance Co..
March 5, 2001
A main hypothesis of this Report -- analogizing predatory behavior by financial institutions in U.S. inner cities with the use of debt to control the "Global South" -- was starkly proved last week. On February 28, 2001, Bank of America, the third-largest U.S. bank, sued Ecuador, for past due interest on $5 million in Brady bonds. Bank of America filed the case in the U.S. District Court for the Southern District of New York, in lower Manhattan, a mile from Wall Street. In the same week, the U.S. press was full of reports of Bank of America's (and its affiliate, EquiCredit's) domestic predatory lending. U.S. News and World Report of March 5, 2001, has a detailed article that begins with a description of a mortgage broker for EquiCredit / Bank of America showing up for a closing in a consumer's house, " portable photocopier in tow." Here -- just sign this. On the resulting loan, the broker charged $9,100 in fees, and the borrower was left with monthly payment equaling 80% of her income. The Denver Post last week ran a series, reporting among other things an EquiCredit loan in which the borrower's income was fraudulently inflated, leading, quickly leading to foreclosure threats. The Post quotes Bank of America spokeswoman Jerri Franz that Equicredit had reviewed the loan and found nothing inappropriate; after being shown the forged papers, Franz added: "We clearly have fraud here in the documents you provided. We intend to take appropriate legal action and report this to the FBI." Don't hold your breath. And that's no longer an option for this borrower: he died, in November 2000...
At the World Economic Forum meeting in Cancun on February 27, while Mexican president Vicente Fox called for corporations to "put a human face on globalization," outside, police charged and beat protesters, including journalists. Another speaker inside the conference, Bank of Mexico president Bank of Mexico president Guillermo Ortiz, noted that the "volatile nature of international finance capital -- which has sparked economic crises in Mexico, Asia, Russia, Brazil and in recent days Turkey --is globalization's major challenge." Paradoxically, he rejected the calls of those outside to "transform the international economic architecture, instead coming out in favor of what he called more "prudence" on the part of the international finance sector.
Meanwhile, preparations for over-reaction continue in Quebec City, in the lead up to April's Free Trade Area of the Americas summit. We'll have more on that next week.
February 26, 2001
Ecuadorian foreign minister Heinz Moeller will travel to Washington on March 2 to meet with secretary of state Colin Powell, requesting that the U.S. follow through on its commitment to provide $40 million to Ecuador. Meanwhile, local opposition to the U.S.'s air base in Manta, Ecuador continues to grow. P-3 and EP-3 turboprops are already flying out of Manta -- but as the airstrip is widened, soon AWACS planes with wide-range radars will base themselves in Manta, playing their role in "Plan Colombia." Ex-president Mahuad signed the lease with the U.S., just before he was deposed...
A week in (financial) globalization: on February 20, Citigroup announced it has agreed to acquire Argentine pension fund Generar AFJP, for about $220 million. Citigroup already controls local fund Siembra AFJP...
On February 22, HSBC's French subsidiary, CCF, was declared the winner of the bidding-war for Banque Hervet, being re-privatized by the French government. HSBC's bid of $480 million beat out Parisbas, Credit du Nord - Dexia, and insurer Groupama. (In the U.S., HSBC has applied to close its branch in a low-income section of New Rochelle, New York).
According to Japan's Yomiuri newspaper, GE Capital Corp. is in final negotiations to take over Tokyo Mutual Life Insurance Co., aiming to complete the deal by the end of February...
Also on February 22, J.P. Morgan Chase announced that it acquired privately held financial record keeper and loan servicing company Colson Services Corp.; the terms of the deal were not disclosed. Colson services about 85,000 secondary-market loans with an outstanding value of more than $30 billion. "We have no plans for staff reductions, but never say never," J.P. Morgan Chase SVP Conrad Kozak said.
Downside of corporate globalization, Part 3,297: workers fired by the Taiwanese-run Chentex factory in the Nicaraguan "Free Trade Zone," which makes jeans for the U.S. military, say they have been blackballed by all of the other factories in the Zone. These and other allegations are made in a lawsuit recently filed against Chentex in U.S. District Court in Los Angeles. The spokesman for the U.S. Army and Air Force Exchange Service, meanwhile, claims that the allegations are unfounded: "We went down there, checked it out, and we was that things are up to par." The General Accounting Office is planning its own visit; meanwhile Taiwan, which gave Nicaragua $14 million to build its presidential palace and foreign ministry, in exchange for Nicaragua's votes against mainland China, and blind-eye to working conditions in Taiwanese-run factories in Nicaragua, is closely watching the Managua government's reactions. Reportedly, Chentex has threatened to cancel plans for a second factory, if the government insists it rehire the workers laid off in August 2000....
The Dayaks' massacre of Madurese "immigrants" on the island of Borneo has been allowed to proceed, unimpeded, by the Indonesian government. BBC News throughout last week ran footage, of Dayaks burning homes, brandishing machetes, in plain sight of Indonesian soldiers armed with automatic weapons. The government's response? To charter boats to take the surviving Madurese to Java. Clearly, "ethnic cleansing" is not limited to the Balkans, or to Africa. But will the Madurese ever receive justice, however delayed, in an international tribunal? This remains to be seen...
January 29, 2001
Ecuador: during demonstrations against (IMF) austerity on January 24 in Cotopaxi Province, 25 residents, primarily indigenous people, were wounded by gunfire from soldiers in the Patria Special Forces. Some of the wounded were hospitalized at the Latacunga hospital in Cotopaxi; at least one was transferred to Quito because he was in serious condition after being shot in the stomach.
In Riobamba, capital of Chimborazo, and Tulcan, on the border with Colombia, there were incidents that left several under arrest for stoning vehicular traffic on those roads. In Imbabura Province, there was sporadic closing of roads but these actions were controlled by the presence of soldiers. One person was seriously injured... accuse President Noboa is being accused of breaching judicial resolutions -- two judges of the Pichincha state had suspended the price hike in natural gas, oil and public transportation, but Naboa went forward anyway...
Meanwhile, at the World SOCIAL Forum in Porto Alegre, Brazil, attendees were welcomes by the governor of Rio Grande do Sul (in which Porto Alegre is located), who denounced the "Darwinist vision of human relations and of a society treated like a jungle." An (IPS) estimated 2,000 people crowded into the auditorium at the local Catholic University to attend the inaugural session. Speakers included Walden Bello of Focus on Global South, former Malian culture minister Aminata Traor, and activist Joao Pedro Stedile of Peasants Without Land...
In India, farmers' organizations, such as the All-India Kisan Sabha (Farmer's Forum) are planning to picket federal government offices in the capital city and other parts of the country beginning on February 7. According to former Indian premier H.D. Deve Gowda, a native of Karnataka and a farmer himself, the problem is the result of India's joining the World Trade Organization (WTO). Gowda blames Prime Minister Atal Bihari Vajpayee's coalition government of "mindlessly" pursuing globalization at the cost of small farmers in this majority rural nation. "Unfortunately the present...government is only interested in mindlessly furthering globalization at the cost of farmers who make 65 percent of the population," Gowda said.
As (dryly) reported by Agence France Presse, "the conservative Gulf Arab petro-monarchy of Qatar is set to host the next ministerial World Trade Organization (WTO) meeting in November, amid criticism that it is an inappropriate venue because of a ban on freedom of assembly." Qatar's Emir Sheikh Hamad bin Khalifa al-Thani, who is attending the WEF meeting in Davos, announced: "We will grant all member countries all the necessary facilities for the success of this important meeting." The WTO meeting is expected to take place Nov 5-9, ahead of Ramadan...
January 1, 2001
In Ecuador, eight oil workers are still being held hostage. They were kidnapped on October 12, 2000, from oil camps in the El Coca region, 150 miles northeast of Quito. The story's scarcely being reported in the U.S. press, other than in the cities where the oil workers' employers are based: the (Portland) Oregonian reported that among the hostages are Arnold Alford, Steve Derry, Jason Weber, employees of Erickson AirCrane Co., based in Central Point, Ore. The Tulsa World reported on Ron Sanders and David Bradley, employees of Oklahoma-based Helmerich & Payne, adding that "Helmerich & Payne has said that neither of the abducted workers was from Oklahoma." That's the spirit: nip a local interest story in the bud. And, at the federal level, keep pouring money into Plan Colombia...
We'll focus this week, as we plan to in 2001, on international fight-back to corporate globalization, particularly as related to the financial services industry, and predatory lending in all its forms.
In Seoul, the government set 8,000 riot police to break up a demonstration of the employees of Kookmin Bank -- controlled by Goldman Sachs -- which is moving to merge with Housing Bank, and lay off thousands of workers. "About 70,000 unionized workers at the banking sector are likely to go on a support strike," said Shin Dong-min, a spokesman for the Korean Federation of Trade Unions to which the financial sector unions group belongs. This will be a continuing story...
In Italy, the consumer group Adusbef denounced a government bailout of banks facing the prospect of reimbursing billions to mortgage holders who paid interest rates that amounted to usury. The government on Dec. 28 issued a decree that cuts the amount banks might have to refund to consumers from around 50 trillion lire to less than 3 trillion lire. The decree modifies a 1996 law, which Italy's highest appeal court ruled last month allows borrowers to seek refunds if their loan rates exceeded a certain rate. The decree also raised the cap on the rate from 9.95% to 12%.
In Sri Lanka, the "prime" interest rate hit 21.46 percent in the week ending December 29, that country's central bank said, adding that the average lending rate one year ago was 15.90 percent...
* * *
These are stories from the front line -- well wait to accumulate more (we're collecting below on this page) before venturing to theorize. Heres an overview:
We are now affected more, and more quickly, by global developments than at any earlier time in history. Unity based on geography appears less and less relevant. Stock traders and bankers on Wall Street in Manhattan are in more constant contact with, and are more similar to, their counterparts in Singapore, Mexico City, Tokyo and Brasilia than with the residents of the Bronx, barely eight miles from their networked skyscrapers.
The rise of the Internet, lower telecommunications costs, the collapse of the Soviet Union, the forced opening of all markets to the 24-hour flow of opportunistic capital -- all these forces converge in a process of globalization, at once homogenizing the world and making new distinctions. The communities cut off from the flow of money, from the high-speed wires, become a sort of disconnected Fourth World, theoretically united in their exclusion, but only unconsciously or potentially so. The communications and capital investments of others flow around them, over them, beneath them, but the connections remain to be made.
Inner City Press, headquartered in the South Bronx but looking outwards, launches this project, of and for Global Inner Cities. An incomplete roll call, or itinerary, begins to emerge, in concentric circles that soon run together:
Rio Piedras, Puerto Rico. San Pedro Macoris, Dominican Republic. Cite Soleil, Haiti. The shadow towns of la frontera, from which profit is squeezed: Matamoros, Nuevo Laredo, Juarez, Tijuana, Mexicali. Mexico City, Tegucigalpa, Managua. Caracas, Medellin, Sao Paulo, Rio, Bueno Aires. Gaza and Belgrade. Karachi, Calcutta and New Delhi. Soweto and Nairobi. Manila, Jakarta and the capital of post-modernism and disparities of wealth, Hong Kong. Where tenements tilt precariously while the Internet flows. Like here, in New York City and the Bronx.
Some common themes emerge. Environmental degradation. Land invasions, words re-coined by the United Nations as spontaneous settlements: homesteading, shantytowns, townships and favelas. The lack of access to credit for individuals, crushing debt on whole nations, the First World operating as a predatory lender.
Theorists can sketch abstract stages of development, but time has speeded up, and societies are segmented at different stages. England, Canada and South Africa are considering laws like the U.S. Community Reinvestment Act. Bank of Scotland applies to open a bank in the United States, with televangelist Pat Robertson, and Scottish activists fill the streets of Glasgow and Edinburg. The U.S. press barely notices. Chase Manhattan turns its eyes to emerging markets, ignoring the Bronx, Bridgeport and Houston. The rich create their own banks, accessible only over the Internet. There is talk of eliminating FDIC insurance on bank deposits, and of signing treaties, like the Multilateral Agreement on Investment, that would outlaw U.S. consumer protection laws, as restraints on trade.
To say that excluded communities oppose globalization misses the point -- they are victims of globalization. But as the Luddites could not stop the factories, this process will not slow. Inner cities must work for accountability, alternative information flows, counter-technologies. Non-Governmental Organizations. Adapt, and make use, or be left further behind. Somehow to balance localism and an effective, outward-looking view. To make connections, as those on top have been doing for years. These are the issues, and we will do our best, starting looking out from the South Bronx.
Globalization in the South Bronx
Jose Torres is a South Bronx resident who has worked for years in an iron works in Northern New Jersey, as a welder. In the Fall of 1998, he was told to begin only coming in to work three days a week. The reason? The company he works for has become increasingly dependent on sales to Asia, and purchase orders have slowed to a halt, given the economic crises in Asian countries. Mr. Torres in turn has less to spend on consumer goods at stores in the Bronx -- and on housing...
On East 185th Street between Washington and Park Avenues there is an abandoned house. The front door is closed with a chain and padlock; the basement door is covered with a clanging sheet of tin. Who owns this house? Deed research reveals it is owned by the supposedly wholesale Bankers Trust, which Frankfurt-based Deutsche Bank has now acquired. Bankers Trust works to help the high interest rate subprime lender Delta Funding turn its loans in the Bronx and Brooklyn into mortgage-backed securities; when homeowners cant pay, Bankers Trust forecloses. In the future, hard-pressed homeowners will have to direct their pleas to... Frankfurt. Good luck.
For other global institutions we cover (click to view): Citigroup J.P. Morgan Chase & Co. HSBC
Click here for current ICP Global Inner Cities Report
Click here to view ICP's Global Inner Cities Archive (2000)
Click here to view ICP's Global Inner Cities Archive (1999)
The theoretical pioneer in this field to date: sociologist Manuel Castells. Beginning in 1983 with "The City and the Grassroots," up to his recent trilogy, "The Information Age" (click here for a positive review; click here for a more critical review), Castells has zeroed in on, and documented, exclusion, opposition to globalization, the decline of the nation-state. Nearing the end of his career, Castells' renown with only grow. Click here to view one of Castells' relatively few articles currently available on the Internet: "The Rise of the Fourth World."
Recent books: "The Lexus and the Olive Tree" by Thomas Friedman (Farrar, Straus & Giroux, April 1999). An unabashed proponent of globalization, but at least one also favoring a social safety net. Anecdotal but on point.
"Turbo-Capitalism: Winners and Losers in the Global Economy" by Edward Luttwaf (HarperCollins, 1999).
"Globalization: The Human Consequences by Zygmunt Bauman (Polity Press, U.K., 1998). Emphasizes the dichotomy between the mobile and the immobile, the second intriguingly defined as localities (workforces, cultures, communities) whose engagement is controlled by the elites speedy and weightless business network. Castells-ian, if thats a word yet.
One World, Ready or Not: The Manic Logic of Global Capitalism by William Greider (Touchstone, 1998). By the author of one of the better books on the Federal Reserve, Secrets of the Temple, this more recent book, now out in paperback, details the human costs, especially to workers, of globalization. Case in point: the 1993 fire at the Kader Industrial Toy Company in Bangkok, Thailand, which received little attention from the press, buyers, or boycotters. A good starting place, though the elites Economist calls it pop economics.
Jihad versus McWorld by Benjamin Barber (Ballantine Books, 1995). Title (almost) says it all - Jihad as fight for local dignity, often seen as nationalistic or tribalist. Question: who has connected multi-culturalism in the U.S. with more far-flung attempts to assert and defend local identities versus McWorld?
Some articles available on the Web:
Managing Social Transformations in Cities, c/o UNESCO
Article comparing Chicago and Sao Paulo c/o ubc.ca
Article on successful community activism in Brazil
Report on the Right to Housing c/o U.N. Commission on Human Rights
Border Crossings: NAFTA, Regulatory Restructuring, and the Politics of Place, by Ruth Buchanan. Abstract:
Professor Buchanan begins her paper by questioning whether recent economic and political shifts towards notions of "globalization" (e.g., the NAFTA) have failed to consider the politics or economics of change in particular places. Her prime example of a "place" where integration is illogically forced against a background of differentiation is the U.S.-Mexico border region. Through the scope of a "regulatory complex" (a complex of legal, institutional, regulatory, and social orderings), she departs from the common view of the NAFTA as a productive tool of North American integration, and instead views the NAFTA as exacerbating "differences between localities, industries, and labor markets." She argues that the debate over the NAFTA underemphasized its different local, sectoral, and regional impacts. In places such as the U.S.-Mexico border region, the various forces of labor, capital, and regulation interact in complex ways; the complexities (and realities) of these interactions were perhaps overlooked during the NAFTA debates. The author briefly examines this growing region, focusing primarily on the social and economic aspects of the maquiladora industry, including labor migration into the United States and the potential for increased migration because of the NAFTA. She concludes by arguing for a shift in perspective from the outdated, territorial concept of "borders" to the richer, more complex concept of "borderlands."
Homelessness and Urban Restructuring (with example of Berlin)
A few selected news sources:
Brownsville (TX) Herald
Buenos Aires (Argentina) Herald (in English)
China News Digest
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