A while ago I promised myself that I would avoid discussing the upcoming presidential election as it seems that everyone, and I mean e v e r y o n e is already saying too much. However, after McCain selected Sarah Palin to be his vice presidential running mate, I decided that I too must beat the dead horse. Is McCain serious? Is this a sick joke? These were just two of the many questions that I began asking myself when first heard of his VP pick. I then thought of my mother, my aunt, and women everywhere; wont they be insulted by this obvious political ploy? The Republican’s attempt to put forth a female candidate not because of her qualifications (as she has very little) but simply because she is a woman should infuriate the intelligent, hard-working women of our country. How can she possibly be considered qualified to lead the most powerful country in the world if she’s never even been outside of its borders? A foreign policy background based solely upon the fact that Alaska is close to Russia (as discussed by McCain’s wife, Cindy) is laughable and, at least in my mind, very disturbing. Twenty months as the Governor of a non-contiguous state with a population of 670,053 does not seem like the appropriate background for someone who is to represent a country of 300 million+…not to mention that the hockey-mom married to a snowmobile racer contingent represents a very small portion of the US population. Yet another issue i have concerns the fact that Palin’s beliefs have already come into conflict with her personal life. How can a proponent of abstinence teaching in high schools stay true to that (BS) belief when their own teen-age daughter is pregnant? If the Mccain-Palin ticket wins this election, I’m moving to Tibet…
In the late 1960s, significant oil deposits were discovered beneath the Ecuadorian Amazon Basin. By 1972, these deposits had begun to provide a steady flow of petrodollars into the country’s struggling economy. Aided by significant positive shocks to the international market, this influx of oil-revenues, which continued throughout most of the decade, effectively facilitated the largest economic boom in Ecuador’s history; an unprecedented upward surge in (short-term) economic prosperity that fostered high hopes for long-term, sustained development. However, only a decade later, it became apparent that such faith in the boom’s longevity had been deceiving. Though oil had allowed for economic self-sufficiency, instead of creating policies promoting long-term economic development, the government began a period of massive public spending. Ecuador’s short-sightedness (reflected in the government’s economic policies) allowed the country to extend beyond the means of its petrodollars. Overspending soon necessitated massive borrowing from international lenders. The re-allocation of oil-revenues towards serving debt, coupled with significant drops in the price of oil, sent Ecuador into a state of economic crisis eventually forcing it into the hands of the International Monetary Fund (IMF). A further decade of IMF-imposed economic austerity only worsened Ecuador’s situation, pushing the country to the very brink of total collapse. In 2000, Dollarization saved Ecuador from certain doom. The linking of the Ecuadorian economy to that of the US (through shared use of the US Dollar) had a stabilizing effect, putting an end to the debilitating economic issues of the 80s that had been exacerbated by IMF policies.
This paper will discuss in detail, characteristics of the Ecuadorian economy and historic developments in the country’s political landscape, as well as the Oil Crisis of the early 1970s and IMF policy of the 1980s and 1990s. The intent of providing such information is to facilitate an understanding of the true causes of Ecuador’s post-colonial history of increasingly-worse economic crises, culminating at the end of the 20th century with the country’s official dollarization. Though certainly exacerbated by the neo-liberal policies of the IMF, the roots of Ecuador’s pattern of recurrent crises are found early in its history, with the emergence of populism in the late 1930s. José Maria Velasco Ibarra, Ecuador’s first proponent of populism, instilled within the country’s political system a weakly-rooted, unstable, clientelist, corrupt form of governance. Carried on by his successors, Ibarra’s brand of Latin American populism has effectively discouraged policies promoting sustained long-term economic development. Such politics have facilitated the persistent inability of Ecuador’s leaders to decrease the country’s dependency on Commodity-exports because of the political-necessity to maintain popular support. Thus, Ecuadorian populism serves as the primary cause of Ecuador’s economic issues throughout the 20th century.
Since the beginning of the 20th century, the Ecuadorian economy has been heavily reliant on a limited number of export-commodities, though it has tended to become overly-dependent on the export-revenues accrued from its one, most profitable good. Over time, the country’s chief export has changed; beginning with Cacao (the source of cocoa) in the late 19th century, shifting to bananas in the 1950s, and then to oil from the late 60s to early 70s. Its history of ‘reliance on primary commodity exports has subjected Ecuador, like many other Latin American economies, to debilitating boom-and-bust cycles.’ Fluctuations in, and shocks to the international market price of one or more of its limited exports (primarily its chief export) dramatically affect its economic prosperity. The volatility of Ecuador’s economy is not limited to changes in world commodity markets; nature also plays a significant role in the country’s success and failure. Ecuador “is prone to earthquakes, landslides, volcanic eruptions, and extended periods of both drought and excessive rain” In the 1990s, both economic (drop in the price of oil) and natural (El Niño’s destruction of the coast) shocks contributed to pushing the Ecuadorian economy into a tailspin ending in 2000, with the country’s official dollarization.
The Great Depression also emphasized the susceptibility of Ecuador’s commodity-dependent economy to both world market fluctuations and acts of nature. Ecuador, due to its limited methods of economic production, was hit particularly hard as “the country’s major exports experienced a dramatic decline in terms of both demand and international market prices.” The revenues from the country’s (then) chief-export, Cacao, “fell from US $15 million in 1928, to US $7 million in 1931, and US $5 million in 1932;” its fall rising not only from decreased demand in the ailing global economy, but also from the destruction of half the exportable quantity by a rare fungus. Substantially-decreased economic production led to massive wage decreases and soaring levels of unemployment, casting the vast majority of the Ecuador’s labor and peasantry into lives of abject poverty and life-threatening malnutrition. “The economic crisis and widespread popular mobilization sparked off during the early and mid-1930s provided the opportunity for a charismatic populist leader to emerge.” The election of José Maria Velasco Ibarra in 1934 marked the rise of a new political ideology. Appealing to and garnering the support of Ecuador’s poor, Ibarra was the first in a series of leaders to espouse populism and its ideals as a means of gaining power through mass-mobilization.
Classic Latin American populist politics is based on the mass-appeal of charismatic leaders. As described by Carlos de la Torre, Populist leaders identify themselves with the people through “a rhetoric that constructs politics as the moral and ethical struggle between el pueblo and the oligarchy.” Such rhetoric identifies ‘el pueblo’ as everyone and everything other than the oligarchy; everything that is good, moral, and just. The success of populist leaders comes not from logically-sound arguments, but from their ability to appeal to popular emotions; espousing a shared hatred of the liberal oligarchy and its marginalization of the people as means of mobilizing the masses in their support. Frequently assuming Authoritarian roles, leaders use their popularity amongst the masses as a method of political intimidation, sometimes encouraging mob-rule and street violence to ensure continued state control.
A regimes control over the state is also largely dependent on the continued support of the people. Populists form alliances between the state and various social organizations through clientelist systems, which can be best be described as mechanisms (bureaucracies) that facilitate the exchange of state-funds or beneficial policies in return for votes and political allegiance. Though Ecuador’s case is arguably unique , Latin American populism (in general), can be related to and explained by the growth strategy of Import-substitution Industrialization (ISI). Similar to the central ideal of populism, ISI calls for a strong and interventionist state. Its inward-facing policies promote the development of domestic “infant” industries through protectionist measures (i.e. tariffs and subsidies) intended to prevent foreign competition. Ideally, this allows domestic industries to develop local substitutes for previously imported items. Its promotion of domestic economic activity makes ISI attractive to populist leaders who can use it to garner increased support.
In May 1944, José Maria Velasco Ibarra reentered Ecuadorian politics on the back of revolution. Having been ousted from his first presidential term, “La Revolución Gloriosa” facilitated Ibarra’s rise to power as Ecuador’s first populist president. Embodying the characteristics of classic populism, his rhetoric personalized the struggle of the people (el pueblo) against the liberal oligarchs (a battle of good versus evil) and presented Ibarra as the embodiment of redemption over the corrupt, fraudulent liberal political system. His encompassment of the “will of the people” made him unaccountable to any political system, institutions for which he showed great contempt; sometimes dismissing competition altogether through rejection of the constitution and assumption of dictatorial powers.
Though Ibarra’s movement was responsible for the introduction of politics of mass-incorporation in Ecuador, “Velasquismo” (the political movement that was to carry on his style of leadership), espoused “a political style that could provide only weak, unstable, and ineffective governance for Ecuador.” From Ibarra’s rise, the country would see a system of government characterized by corrupt practices and overwhelming dependence on mass-support; this political dependency would play a significant role in the country’s future economic crises.
In 1971, The US took the Dollar off the Gold Standard (which had pegged the value of the Dollar to the price of gold), allowing it to “float;” signifying that the market would be a large determinant of a currency’s value in relation to other currencies. Too much strain had been put on the previous system of fixed exchange rates that did not allow currencies sufficient movement to adjust for value fluctuations in the global economy. Ideally, a system of floating exchange rates would allow currencies to adjust “frequently in response to market conditions as well as to government intervention.” Other Industrialized nations soon followed suit. Anticipating great fluctuations in the value of their currencies as they moved to re-stabilize against each other, these countries moved to increase their level of reserves in US dollars. The massive buy up of dollars by developed nations caused depreciation in the currency’s value.
Because oil was priced in dollars, depreciation in the dollar signified less “real” income for the exports of oil-producing nations. In response to decreased oil-revenues, the support of Israel (during the Yom Kippur War) by the United States and other Western nations, and a desire to regain control of their exports, on October 16th, 1973, the major members of OAPEC (Organization of Arab Petroleum Exporting Countries) declared massive reductions in oil-production as well as embargos on the export of oil to Israel’s supporters. OAPEC successfully facilitated a substantial increase in the price of oil (rising from $2.48 in October, to $11.65 in December), and created massive shortages throughout much of the West. In doing so, Arab oil-producers successfully caused world-wide economic turmoil, and the creation of the first global oil crisis. Because oil-related issues were rooted in the Persian Gulf, there was a surge in demand for the petroleum exports of countries outside the region. This all but guaranteed that Ecuador, having seen the successful completion of its first pipeline a year earlier, would soon experience an unprecedented economic boom as the “black gold” of the Amazon proved far more lucrative than any of the country’s previous exports.
Ecuador’s military had been largely responsible for the concessions granted to Texaco, which had led to the discovery of the country’s oil-reserves. The generals were aware of the great quantities of oil that were going to be exported from the country during the 1970s as well as the incredible flow of petrodollars into Ecuador; “80% of which, would fall under state control.” Members of the military feared that the country’s petrodollars, if left in the hands of populists like Ibarra, “would disappear in a whirlwind of corruption, incompetence, and clientelism.” In February of 1972, with the aim of preventing oil-revenues from falling into the hands of Ecuador’s corrupt leader, the military carried out a coup d’état, successfully forcing the despotic president from power and allowing a new nationalist military tribunal to take control of the state.
By the early 1970s, the failure of ISI to generate sustained long-term economic growth as well as Ecuador’s ever-increasing stockpile of oil-revenues encouraged the military-led government to shift the focus of the country’s development towards the export of petroleum. The theory behind this shift was Export-oriented growth, which suggested that the best method of stimulating growth was through the investment of revenues accrued from the export of a good or goods for which a country has the comparative advantage. It promoted the elimination of trade barriers and the opening of the domestic economy to foreign investment and competition in return for access to foreign markets (to which goods could be exported). Although Ecuador moved to re-orient its economy around the export of oil, the government continued to play a strong, active role in the economy, facilitating the continued existence of protectionist economic policies left over from ISI.
In 1973, Ecuador became a member-nation of OPEC. With a firm belief that the country’s new economic boom was to continue indefinitely, the newly-appointed nationalist military junta began to use oil-revenues to facilitate massive public spending. Petrodollars were allocated towards the development of infrastructure, with the aim of encouraging foreign investment outside of the agricultural sector and extractive industries. The government was successful in facilitating increased foreign investment in non-agricultural/extractive sectors, the level of which increased from $60 million in 1970, to $250 million by 1976. However, poor management, a small domestic demand, and the capital-intensive nature of new manufacturing activities, limited the positive effects. Mounting pressure was put on the government by special-interest groups and the urban poor (who had grown accustomed to the spoils of populism) to increase public social spending. In fear of alienating the easily-mobilized masses, the state gave in to populist sentiment and began channeling funds to various lobbies as well as to the formation of substantial subsidies on basic food items and energy, targeted at benefiting the country’s poorest inhabitants.
By the mid-1970s, it was apparent that the governments massive spending on infrastructure was seeing little positive results. The middle and upper classes were the benefactors of increased economic activity, using their new-found wealth to facilitate increased imports of luxury items. Meanwhile, the level of poverty amongst the country’s poor continued to rise. Three-quarters of the rural population was living under the poverty line while the urban informal sector saw an increase from 45% to 55% during military control. The government’s support of its ineffective and increasingly-expensive subsidization programs (50% of government Budget by 1978), in addition to the vast amount of finances it dedicated to satisfying various unions and other civil organizations, increased public expenditure to such an extent that the country’s substantial oil-revenues were no longer sufficient to finance it. To continue its expensive social-initiatives, Ecuador was forced to seek loans from international lenders. The country’s debt service on external loans, given as a percentage of export revenues, grew from 10% in 1971 to 60% in 1979; by 1982, 90% of Ecuador’s export-revenues (primarily in petrodollars) were allocated towards servicing its massive debt. In 1979, its popularity eroded by the gradual breakdown of the economy, Ecuador’s military regime put power back in civilian hands.
Ecuador’s oil-boom, constituting the brief period between 1972 and 1979, effectively illustrates the enduring influence of Ibarra’s populist rhetoric on the country’s economic development. Ibarra delegated to the military-led government, the responsibility of appeasing the popular will of an urban population that had grown accustomed to his gross-misappropriation of state funds to serving their interests. Though the military regime had entered the decade on the promise of significant reform and development, funding for infrastructure and non-agricultural/extractive foreign investment was cut short by increasing pressures from organizations that had previously been the beneficiaries of the clientelist system under populist leadership. This prevented the government from further investment into the means of production, which might have provided for decreased costs and increased efficiency in new manufacturing activities. The ineffectiveness of public spending to create successful new industries effectively prevented the government from facilitating diversification of the domestic economy and decreased dependence on the export of the country’s volatile commodities. In actuality, Ecuador’s commodity-dependence (specifically in regards to oil) increased, as revenues used to finance the government’s substantial public expenditure were reallocated to servicing the country’s increasing debt.
In 1979, Jaime Roldós, representing the last leader to embody classic populism in Ecuador, won the presidency on a platform of social reform. His first year coincided with the last year of Ecuador’s oil-boom. As a result of dramatic increases in the price of oil, Roldós’ regime experienced initial success. He was able to garner support by using the country’s final high oil-revenues to finance wage increases and subsidize domestic industries. However, despite early success, growing economic instability prevented Roldós from creating alliances in support of his further political agenda. His early death in an airplane crash in 1981 marked the beginning of a shift in Ecuadorian politics. Subsequent drops in the price of oil between 1982 and 1984, combined with Ecuador’s massive debt-service requirements and the reality that non-oil exports provided only very modest revenues, the country was left without the financial resources necessary to foster a domestic resolution to the emerging economic crisis. Left with no other alternative, Ecuador was forced to seek loans from the IMF. The adoption of the IMF’s austerity measures or, “structural adjustments” and their collision with the country’s historically-rooted populist political ideology had important implications for the country’s future.
As the world entered the 1980s, Ronald Reagan and Margaret Thatcher, the industrialized world’s new leaders and major proponents of “free-market” economics, promoted the ideals of neo-liberalism as the solution to the developing-world’s economic woes. The IMF of the 1980s became the catalyst for the spread of free-market ideology throughout all corners of the globe; liberal policies became preconditions for IMF loans to indebted Third World countries. These “structural adjustments” promoted austere fiscal and monetary practices designed to, “generate savings and foreign exchange with which to bring countries’ internal and external accounts into balance and facilitate the repayment of their foreign creditors.” The IMF promoted economic liberalization through the elimination of tariffs, subsidies, and other barriers to trade (such as price controls); deregulation, privatization of state-owned enterprises and utilities, and substantially-decreased public social-spending. Great contradiction rose between the “minimalist” state promoted by these policies and the strong, interventionist state that was central to Ecuador’s populist Ideology. As subsequent leaders attempted to combine the IMF’s contradictory neo-liberal policies with Ecuador’s populist traditions, great issues emerged.
The inherent weakness of the country’s brand of populism (inspired by Velasco Ibarra) was derived from the severe domestic limitations associated with the system. Ecuador’s populism lacked any-semblance of a strong ideology, and progress was often hampered by struggle between factions within the party itself (primarily between those in the coast and those in the sierra). This combined “with increasing mobilization of the popular sectors” whom the populist system relied on for support, “generated a permanent crisis of governance.”
Leaders were unable to garner adequate support for their agendas even from within their own parties. Elected largely due to their promises to revive populist social programs (such as basic subsidies on food and cooking-fuel), regimes were forced to walk a thin line between maintaining the popular-support they were dependent on and achieving the reductions in public expenditure required by the IMF. Though Ecuador was obligated to re-allocate all of its finances towards ongoing economic liberalization and debt service, the country’s populace, accustomed to a populist system, felt abandoned. Frequent eruptions of widespread popular-protest forced the government to abandon the macroeconomic policies that it had agreed to abide by. This inability to adequately address any of the country’s social or macroeconomic issues served as fuel for the growing disillusionment of the masses with the country’s elected officials; disillusionment which led to increased unrest and popular-protest; at of the frequent coups of the late-1990s and early 2000s.
Throughout the 1980s and 1990s, the rhetoric of populism contributed significantly to its continued existence in Ecuadorian politics despite the contradictory nature presented in the neo-liberal policies that the country’s leaders attempted to mesh with the imbedded ideology. In 1984, Leon Febres Cordero, among others, used strong rhetoric during his presidential campaign promising “Techo, Comida, y Trabajo” , (Shelter, Food, and Work) to the poor, despite the fact that he would fail to provide them any of the three. The brunt of the social costs incurred from neo-liberal economic transformation was experienced by Ecuador’s poorest citizens; the massive rise in unemployment caused by the elimination of barriers that had previously (under ISI) protected domestic manufacturing and from the loss of 35,000 public jobs (under subsequent administrations), result of legislation making the privatization of state-enterprises possible; and the sharp rise in food and fuel prices after the removal of long-existing and essential price controls.
In addition to fueling the rapid degradation of the lives of the country’s poor, Ecuador’s economic liberalization increased its dependency on volatile commodity-exports. After a sustained period of relative economic diversification (compared to years prior and after) during the oil-boom of the 1970s, “free-market” policies effectively caused a, “reprimarization” of the economy; a return to over-dependence on primary exports after the country had experienced some success in its state-protected domestic manufacturing. Between 1980 and 1990, export-revenues from manufactured goods declined more than 40%, from US$626 million to US$367 million. During the same period, commodity exports increased 2.7%, from US$1.85 billion to US$2.34 billion. This fall in manufacture exports and rise in commodity exports occurred at a time when world trade of manufactured goods was growing three times as fast as trade in primary goods. Ecuador’s pattern of trade facilitated intensified exploitation of the country’s natural resources. The ratio of debt to total export-revenues rose from 183% in 1980 to 490% in 1990. The regression of the Ecuadorian economy towards commodity-based, export-led growth produced restraints on small- and medium-scale business, while it strengthened large enterprises whose investment per worker increased 50% from 1992 to 1997; large export-based firms consolidated finances and failed to generate increased employment opportunities. The same period saw the closer of massive amounts of micro, small, and medium-sized businesses. From 1990-1996, 4,600 businesses went bankrupt. By 1999, Ecuador’s level of unemployment reached 14.4%, though it was less than 5% for the richest 20 percent of the population, and 24% for the poorest 20 percent. At the same time, underemployment stood at 50%.
The dramatic effects of IMF-imposed macroeconomic austerity made it increasingly difficult for Ecuador’s populist leaders to remain in good favor with an evermore-impoverished popular sector. As the data illustrates, nearly all costs associated with neo-liberal transitions towards a “free-market” were borne by Ecuador’s middle- and lower-classes. This facilitated an even greater disparity in the concentration of wealth. In 1999, Ecuador had the thirteenth-worst distribution of wealth of the 97 countries in the World Bank’s World Development Report 1999. Strong rhetoric of popular-reform consolidated presidential administrations into the mid-1990s, though the permanent and worsening economic-crisis prevented any social reform from taking place. The gap between the populist ideology espoused by Ecuador’s leaders and the lack of results they produced became increasingly-apparent. Disenchantment with the empty words of the country’s leadership and increasingly-impoverished living conditions led to a sharp rise in popular-mobilization towards the end of the decade as the country neared economic collapse.
On January 9th 2000, Ecuador adopted the US dollar as the national currency. By 1999, the countries (then) national currency, the sucre, had reached a state of hyperinflation. Years of poor economic policy and weak governance at the hands of the International Monetary Fund and its tools of “stabilization” had left Ecuador near disrepair. Rampant inflation, soaring interest rates, the collapse of the banking sector, the ever-increasing ratio of debt-service to total export-revenues; causes of the massive economic transition, were all facilitated by the IMF and its near-twenty year stranglehold on the country. However, similar to the other causes of dollarization, specifically: the domestic market’s dependence on the export of primary commodities (it experienced significant drops in the international-market price of oil) and its susceptibility to natural disasters (the devastation of El Niño in 1997); the causes of Ecuador’s economic woes were not the result of the IMF’s neo-liberal presence. The roots of the pre-dollarization crisis are found much earlier in the country’s history, with the rise of populism and the politics of mass-incorporation.
Coming to power for a brief period in the late-1930s and rising to prominence in 1944, José Maria Velasco Ibarra introduced his personal interpretation of Latin American populism into Ecuador’s political landscape. Using his strong charisma, he mobilized the masses in his support. He embodied their struggle against the corrupt Liberal oligarchy, which had to that point maintained a stranglehold on Ecuador’s political system; a system that had been based upon the mass-exclusion and marginalization of the popular masses. Embodying “el pueblo” the people, representing all that was good, honest, and just; Ibarra declared to his followers that he would rise above the political system and would lead the country as the will of the people dictated. Assuming authoritarian powers, Ibarra facilitated the mass-mobilization of the people, the first politician to address them in public spaces; he used them as means of intimidating the opposition, asserting dominance over the political system for nearly forty years. Though he was ousted in 1972 by a Military junta, tired of his brand of leadership; Velasquismo, the embodiment of his political ideology, would be instilled in Ecuadorian politics throughout the rest of the 20th century. Velasquismo represented a largely corrupt political style, based on the ability to appeal to and gain the support of the masses. Continued allegiance was facilitated through a clientelist system, which exchanged votes and political support in return for the support (whether monetarily or through policy) of the state. Lacking a true ideological-basis, the populism espoused by Velasquismo necessitated the successful continuation of clientelist relations with the popular masses. Throughout Ibarra’s reign, Ecuador’s populace would grow accustomed to the spoils of such a system; manifesting in a continued demand for the misappropriation of funds towards meeting popular goals, a mainstay of future Ecuadorian politics.
Ibarra’s populism had great effect on the leadership of his military ousters. Presiding over Ecuador during its ten year oil-boom, the military junta would be remembered for its massive public expenditure, which by mid-decade extended beyond the great financial capability offered by Ecuador’s inflow of petrodollars. The junta borrowed heavily from international lenders to finance its increasingly-expensive political agenda. State funds were reallocated to servicing the country’s increasing level of debt. Because of the country’s overwhelming dependence on commodity-exports, drops in the price of oil made it increasingly-difficult to repay its lenders, and by 1984, Ecuador was forced to turn to the IMF for help. The 1980s and 1990s were characterized by subsequent political regimes and their attempts to combine the neo-liberal policies of the IMF with the country’s historically-rooted populist-practices. The contradictory nature of politics emerging from this marriage of strange bedfellows prevented the government from either, responding to Ecuador’s myriad social issues, or achieving the austere “structural adjustments” of the IMF. These neo-liberal policies only exacerbated the economic crisis that had begun with the military’s overspending in the 1970s, overspending necessitated to maintain the continued support of the popular sector; a compulsory process instilled in Ecuador’s political system by the country’s first proponent of populism, José Maria Velasco Ibarra.
Ecuador now stands at an important juncture. Years after the US invasion of Iraq, the world is again seeing a steady increase in the price of oil. Ecuador, ever-more dependent upon the export of its prized natural resource and chief commodity, is enjoying an increase in export-revenues. Having recently elected a Socialist regime under president, Rafael Correa, the country has stated that it no longer intends to repay- or, impose the neo-liberal policies of- the IMF. Having failed, in the 1970s, to design policies reflecting goals of sustainable, long-term economic development, the Ecuadorian government now has the responsibility of “atoning” for past mistakes. The susceptibility of the economy to both international economic shocks and natural disasters necessitates that Ecuador move quickly towards economic diversification. If sustained development is to be achieved, the government can not give in to the same, deep-rooted populist ideology that doomed its predecessors. If Ecuador is to become less dependent on commodity export-revenues, its now increasing reserve of petrodollars must be used to facilitate the diversification of the economy. It must provide prolonged-sustainable levels of public revenues, before it can begin allocating substantial revenues to social needs. If Ecuador is truly intent on defying the International Monetary Fund and creating the means to achieve goals of self-development, policies drafted in the near future will be of utmost importance to the country’s success.
Notes
Paul Beckerman, Andrés Solimano, Crisis and Dollarization in Ecuador (Washington DC: The World Bank, 2002), p. 22.
Ibid, p. 25.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 133.
Paul Beckerman, Andrés Solimano, Crisis and Dollarization in Ecuador (Washington DC: The World Bank, 2002), p. 23.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 134.
Carlos de la Torre, Populist Seduction in Latin America: The Ecuadorian Experience, (Ohio: Ohio University 2000), p. 4.
Ibid, p. 15, 17, 20.
Carlos de la Torre argues that there is no direct correlation between the rise of populism in Ecuador and the first period of Import-Substitution Industrialization (Torre: 2000).
Jolle Demmers, Alex E. Fernández Jilberto, and Barbara Hogenboom, The Transformation of Latin American Populism: Regional and Global Dimensions (London: Zed Books, 2001), p. 4.
Carlos de la Torre, Populist Seduction in Latin America: The Ecuadorian Experience, (Ohio: Ohio University 2000), p. 28, 53, 78-79.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 133.
Joan E. Spero and Jeffrey Hart, The Politics of International Economic Relations (California: Wadsworth, 2003), p. 13.
Ibid, p. 306.
Leslie Jermun, Ecuadorian oil, debt, and poverty: A True Story, http://www.globalaware.org/introduction_print.htm (December 2002).
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 135.
Ibid, p. 136.
Ibid.
Ibid, p. 137.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 136.
Ibid, p. 138.
Paul Beckerman, Andrés Solimano, Crisis and Dollarization in Ecuador (Washington DC: The World Bank, 2002), p. 41.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 140.
Ibid.
SAPRIN, Structural Adjustment: Policy Roots of Economic Crisis, Poverty, and Inequality (New York: Zed Books, 2004), p. 1-2.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 146.
Jean Carrière, Neoliberalism, Economic Crisis and Popular Mobilization in Ecuador, ed. J Demmers, AE Fernandez Jilberto, and B Hogenboom (London: Zed Books LTD, 2001), p. 146.
Ibid, p. 140, 143.
Ibid, p. 142.
Saprin, Structural Adjustment: The Policy Roots of Economic Crisis, Poverty, and Inequality, (New York: Zed Books, 2004), p. 50.
Ibid.
Ibid, p. 93.
Ibid, p. 98.
Ibid, p. 90.
Paul Beckerman, Andrés Solimano, Crisis and Dollarization in Ecuador (Washington DC: The World Bank, 2002), p. 3.
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SAPRIN. Structural Adjustment: Policy Roots of Economic Crisis, Poverty, and Inequality. New York: Zed Books, 2004
“Millions of innocent men, women, and children, since the introduction of Christianity, have been burnt, tortured, fined, and imprisoned; yet we have not advanced one inch toward uniformity. What has been the effect of coercion? To make one-half the world fools and the other half hypocrites.” – Thomas Jefferson
Since the Jeffersonian Democrats and the Federalists rose in opposition to create this country’s first party system, the United States has maintained a political landscape characterized by the dominance of two major political parties. Though various, smaller “third” parties have significantly influenced the nation’s political arena, only few have enjoyed any real power, and even less have been able to effectively challenge the two dominant powers (Ross Perot’s Reform Party being a possible exception). What barriers exist that account for the inability of third parties to gain significant strength in the US political system and from drawing votes from a larger percentage of the electorate? When a third party is able to exert influence over US politics, how do they succeed and what are the circumstances that have allowed for that success? What role do third parties play in US politics? Through discussion of the US electoral process, institutional barriers, and through the example of Ralph Nader’s 2000 and Ross Perot’s 1992 presidential bid, this paper will explore and attempt to answer these questions in hopes of fostering an idea of what it is to be a third party in the United States.
The vast majority of politicians in the United States are elected through a “first-past-the-post” or plurality voting system, in which a single candidate wins by garnering the most votes, regardless of whether or not they hold the majority. Differing greatly from a system of proportional representation, in which candidates or parties are allotted representation in government directly proportional to the percentage of the vote that they have won, a plurality voting system gives the candidate or party holding the largest percentage complete representation. The “first-past-the-post” characteristic of the US voting system poses a major hindrance to third parties as they attempt to gain prevalence in the political sector.
“By depriving minor parties of seats in congress or state legislatures, ensuring that few of their members become presidents or governors, and depriving their supporters of judgeships, cabinet posts, and other forms of patronage, the electoral system discourages their institutional development and growth”
(Herrnson, p.12).
Regardless of whether a third party manages to draw in a significant percentage of votes (as in Perot’s ’92 campaign when he garnered approximately 19% of the popular vote); they are neglected by the electoral system and prevented from holding any office or formal position of influence.
Institutional recognition of the two major parties also proves detrimental to minority challengers. Because they are already established, the major parties are automatically placed on ballots in all 50 states and the District of Columbia, leaving their time open for campaigning. Minority parties on the other hand must first win a certain number of votes within a state to be placed on the state’s ballot. Should they not meet this percentage, they are often required to collect a certain number of signatures or pay a filing fee. This is made even more difficult by the fact that these regulations differ from state to state. “In New Jersey, a minor-party candidate needs to collect only 800 signatures to qualify as a candidate for the Senate, whereas in Florida, one needs 196,788” (Herrnson, p.13). This often results in third party candidates being unable to appear on every ballot, significantly reducing their potential vote share.
A third barrier comes in the form of Federal subsidies toward major-party campaigns. If a campaign adheres to the campaign finance laws established by the Federal Election Campaign Act it qualifies for matching funds from the Federal Government. Third parties are eligible for this, though, as they are not well-established like the major parties and do not have the luxury of a well-established voting base from which to draw proper contributions, achieving the federal requirements becomes a much greater challenge. Major parties also “automatically receive funds to help them pay for their national conventions…minor parties can also qualify…but only if their presidential nominee garnered 5% or more of the popular vote in the previous presidential campaign” (Herrnson, p.13). Though third parties are “entitled” to the same privileges as major parties, the road to attaining those privileges is a long and rocky one.
The media plays a role in the struggle of third parties. Coverage of minor parties, especially their specific policies, by the media is rather sporadic. Candidates of third parties are, “routinely excluded from the (presidential) debates, even when they are prominent (such as Perot in 1996 and Nader in 2000…), while their conventions are rarely covered at all” (Dwyre, p. 169-70). Less prominent candidates are neglected by news outfits that tend to focus on poll results, ad campaigns, and the follies of candidates rather than important policy issues, a pattern which shifts focus to the major parties. This creates a lack of knowledge amongst the electorate concerning the values and motives of third parties, which in turn fosters misunderstanding, leading voters towards a negative view of minor-party politics, and a re-affirmation of the existing system.
The final major impediment comes not from the electoral system, or the media, but rather from those who make up the electorate, the voters themselves. Though it has declined in recent years, partisan identification still plays a major role in the inability of third parties to gain significant strength in US politics. “Most voters’ socialization to politics encourages them to consider minor parties outside the mainstream and unworthy of support” (Herrnson, p.16). The vast majority of the electorate adheres to the notion of a two-party system, “so they have a strong incentive to work within it…The two-party system manages some political discontent reasonably well. The major parties are highly permeable and internally diverse, giving voters…an opportunity to influence platforms and…candidates” (Dwyre, p.162). Especially prevalent in presidential elections, is the belief that voting for “the lesser of two evils” (whether Democrat or Republican) is better than risking a vote for a third party. This is rationalized through the theory that votes taken in by a third party could allow the less-desired (major-party) candidate to reach office as those votes would have normally gone to the candidate deemed a “lesser evil.” This leads many voters to regard third party candidates as “spoilers,” or to view votes for minor party candidates as “wasted votes.”
A Good example of this comes from Ralph Nader’s 2000 presidential campaign. In the incredibly close race between (then) Vice President, Al Gore and Republican candidate, George W. Bush, Nader’s presence evoked a great deal of fear from within the Democratic party. Many party members feared that votes for Nader would be taken from Gore which, in such a hotly contested election, had the potential to be disastrous. The ever-growing resentment of Nader was reflected in the rest of Gore’s campaign, as the incumbent Vice President and his Vice Presidential candidate Joe Lieberman played up the idea of a “wasted vote.” The media produced scathing articles proclaiming the potential danger that Nader posed to the Democratic Party. Even liberal interest groups began campaigning against him, “the National Abortion and Reproductive Rights Action League ran ads in battleground areas…that claimed ‘voting for Ralph Nader helps elect George W. Bush’” (Collet, p.130). Rather than accepting Nader’s campaign as legitimate, much of the electorate came to view him as a serious problem, showing disrespect for the US political system by hindering the campaign of a major-party candidate (Gore). Even members of the Green Party (whom he was representing) turned their backs and announced their support for Gore.
This example presents one manner through which minor parties have the ability to influence major-party politics, though this form of influence is viewed by many (generally the loser of the two major parties) to be a negative phenomenon. Nader’s 2000 campaign evoked anger and disappointment from within many Democrats, and may have cast a dark shadow over many people’s perception of minor-party politics as a whole. However, perhaps the most important mode of influence maintained by minor parties is through the adoption of a third party’s policies or initiatives by one, or both of the major parties, in an attempt to gain the support of the third party’s constituency.
The rise of a third party signifies that certain issues have not been adequately addressed by the two existing parties and though they may never rise to prominence, third parties have great potential to effect change in major-party policies.
“Thus the power of third parties lies in their capacity to affect the content and range of political discourse, and ultimately public policy, by raising issues and options that the two major parties have ignored. In so doing, they not only promote their cause but affect the very character of the two-party system. When a third party compels a major party to adopt policies it otherwise may not have, it stimulates a redrawing of the political battle lines and a reshuffling of the major party coalitions”
(Rosenstone, 1996).
From this, one might surmise that the true strength of a third party lies in its ability to appeal to those issues neglected by the major parties. Though they may not gain (through election) the ability to personally exercise their agenda, the policies and issues represented by a minor party, having been brought to attention, are adopted by major parties and their candidates; in hopes of gaining the support of that part of the population which thereto had been represented by the minor party. One must question however, as to what the underlying circumstances are, that allow a third party to strike as such and leave a permanent mark on the political landscape of the United States. This is best explained through the theory of “convergence.”
“Convergence” is a scenario is in which the ideological positions of the major parties become similar to the point that they, “…do not offer a clear choice…party activists see relatively little difference between the major parties and their candidates, and divisions between the major-party activists themselves should be muted” (Rapoport, p.79). In other words, there remains no definite argument for voting one way or the other, as either side is likely to produce the same result. Further, party activists become unable to discern solid ideological differences on which to base their promotion of a particular major party. This lack of competition presents an opportunity for a third party to appeal those voters and activists who’s positions diverge from that of the general consensus between the dominant parties. A third party or candidate could, in a “convergence” scenario, emerge with an alternative position and strengthen their argument by pointing out the absence of choice between the two major parties. This scenario provides guidance when looking at real-world examples of third-party influence. In order to better understand the rise of actual third parties, the1992 presidential campaign of Ross Perot shall be used as an example.
There were several key factors that allowed for the relatively successful 1992 presidential campaign of Ross Perot. The US was in a recession, the level of unemployment had reached a nine-year high (7.8%), and the federal government’s deficit was growing at a rapid rate, reaching, by the end of Bush’s term, an appalling $3 trillion dollars (roughly one half of the US gross national product). In light of these economic woes, Bush’s approval rating (which had been high following Desert Storm) plummeted to 25 percent. The nation became disillusioned by the inability of either party to draft effective legislation pertaining to the weakening economy, “During those four years, neither Bush nor the democratically controlled Congress proposed– let alone produced– a balanced federal budget” (Rapoport, 49). This disillusionment in effect, created a door way for the entrance of a third party riding on a ticket of economic and political reform.
Ross Perot and his Reform Party rose to prominence by stressing the importance of the economic issues what had thereto been ineffectively combated by the either major party. According to Rapoport, “the budget deficit and the need for reform to deal with the lack of accountability in government were centerpiece issues (of Perot’s campaign), with concerns about trade (including NAFTA), jobs, and economic recovery also prominent” (Rapoport, p.56). Perot promoted first and foremost, a balanced budget amendment, stressing the necessity of reviving the economy. Believing that economic recovery would come from the growth, he pointed to the failure of Bush’s tax hikes and program cuts. He spoke against the outsourcing of US jobs, pointing to the high level of unemployment a voicing what he perceived to be dangers of NAFTA as it threatened to increase the trend.
If one relates this to the models presented earlier, Perot’s campaign seems to fit best within the “convergence” scenario. The Democrats and Republicans had converged, not necessarily on their ideological standpoints, but rather, on their mutual inability to respond to the issues in any effective way. This allowed Perot to emerge, promoting his agenda of reform while simultaneously pointing out the failures of the major parties. In doing so, Perot drew the support of those who felt that neither Bush nor Clinton had the ability to improve the country. A situation in which the most pressing issues of the day remain unaddressed or ineffectively resolved by the major-party system presents the greatest opportunity for the entrance of a third party into the political arena. As people lose faith in the ability of the current parties to effect change, they begin to look elsewhere. By maintaining a strong and decisive stance on rebuilding the economy, balancing the federal budget, and preserving US jobs, and by emphasizing the impotence of major-party actions, Perot gained a significant level of popularity (he received 27% of the popular vote in April, ’92) and successfully drew from the electorate many of those who had become disillusioned with the (then) current system.
What is it then, to be a third party? It would seem that third parties lead very tumultuous existences. The road that they must take into political participation is not an easy one. Government institutions, the media, and even the voting process itself, all act to prevent hopeful third parties from mounting successful campaigns. The success of minor parties is also determined by the amount of legitimacy that they can find from within the electorate. As revealed through the vastly different campaigns of Ralph Nader in 2000 and Ross Perot in 1992, legitimacy is largely determined by the context of the election. Because the 2000 election was so polarized, Nader was viewed as a spoiler, potentially ruinous to the presidential bid of Al Gore, and was not viewed highly by the vast majority of the electorate. While in 1992, there existed a bipartisan disillusionment with the US government which fostered a much friendlier atmosphere for the entrance of a new voice. Though third parties lead strenuous and difficult existences, with little or no hope of effecting change to the major-party domination of politics, the policies and issues of a third party platform are usually adopted into the major-parties. As such, third parties have the ability to effectively promote permanent change to major-party platforms, proving to be integral to US politics.
Bibliography
Rapoport, Ronald B. Stone, Walter J. Three’s a Crowd. Michigan: University of Michigan Press, 2005.
Herrnson, Paul S. Green, John C. Multiparty Politics in America. Maryland: Rowman & Littlefield Publishers, INC. 2002.
Rosenstone, Steven J. Behr, Roy L. Lazarus, Edward H. Third Parties in America: Citizen response to a major party failure. New York: Macmillan
Collete, Christian. Hanson, Jerrold R. Sharing the Spoils: Ralph Nader, the Green Party, and the Elections of 2000. Maryland: Rowman & Littlefield Publishers, INC. 2002.
Dwyre, Diana. Kolodny, Robin. Barriers to Minor-party Success and Prospects for Change. Maryland: Rowman & Littlefield Publishers, INC. 2002.
Since its inception under the Nixon Administration and its intensification and solidification during the reign of subsequent American regimes, the modern day “War on Drugs” has seen billions upon billions of US dollars allocated for the purpose of funding counter-narcotics operations world-wide. As of late, much controversy has risen concerning the overall effectiveness of these programs as well as the impact and consequences of US actions abroad, as it has been seen that the US has often, adversely to its supposed goals, caused the increase of global drug production. In addition to this, questions have been raised as to the complicity of the United States with the major drug lords throughout the world, as we have come to see that it has often allied itself with such individuals when deemed beneficial. Through focus on Afghanistan and Pakistan, this paper will explore the ways in which the United States has addressed its War on Drugs. By exploring its policy decisions towards the two countries, addressing notions of complicity with respective drug lords, and illustrating the idea that its counter-narcotics initiatives have been consistently undermined by shoddy war policy, this paper will put forth that the United States, in its “War on Drugs,” has effectively promoted global drug production and thus, has revealed itself to be trite and pointless.
In the late 1970s, Central Asia became the focus of US anti-heroin and anti-Soviet expansion efforts. In 1979, the Ayatollah Khomeini came to power in Iran, then the key target of US counter-narcotics operations in the Middle East. His overthrow of the Shah initiated a series of events which soon refuted the notion that Iran was the center of Middle East heroin production by effectively paving the way for Afghanistan and Pakistan to take its place. Under the Ayatollah’s Islamist state, drug dealers were declared traitors and a danger to society, though opium was not placed in the same category as alcohol, which is strictly forbidden under Islamic law. This ‘loophole’ created a situation in which poppy production flourished, “Since the regime had banned most entertainment, ‘drug use skyrocketed amongst the youth’ and the country now had some two million addicts, a historic high” (McCoy, p.471). Iran’s addict population grew until the country became the sole consumer of its poppy and expanded its operations to become wholly self-sufficient, shifting all of its efforts from export to the domestic market. This expansion eliminated the need for Afghan imports and allowed Afghanistan to shift its focus to international markets in Europe and the United States. Though the leader, General Zia-ul-haq, would later be linked to the heroin trade, the other major producer in the Region, Pakistan, under intense US pressure, imposed a suppression in an attempt to reduce its opium production. Because of this, Pakistan’s poppy refineries became linked with Afghan producers, allowing for even further increases in the production by Afghani guerilla forces and, “thus by 1981-1982, Afghanistan’s poppy fields were linked with the laboratories on the Pakistan border in the production of high-grade heroin exports that supplied over half the American and European markets” (McCoy, p.472).In a matter of months, Afghanistan and Pakistan had replaced Iran as the key exporters of heroin, thanks to the rule of the Ayatollah Khomeini and the actions and misinterpretations of the US.
The emergence of Afghanistan and Pakistan as the key heroin exporting countries in the region was not the only result of Iran’s revolution. With the overthrow of the Shah, the United States had lost a key ally and what was essentially its surrogate military in the Middle East. With its military presence eliminated, the US focused on Afghanistan which stood as a key strategic point not only in the war on drugs, but also in the prevention of Soviet expansion. In April of 1978, Mohammed Daude, president of the Republic of Afghanistan, was killed in a communist-led coup d’état, and a new socialist government was installed under the PDPA, the People’s Democratic Party of Afghanistan. However, infighting soon broke out between the parties three factions resulting in the Maoist branch, the Sholai Jawaid (Eternal Flame), defecting from the government altogether. The pro-soviet Parcham and the independent Kahlq factions remained. Though as months passed, unrest rose with the new government and fighting soon broke out between the regime and guerillas known as the Mujahideen. The US, under the Carter Administration, secretly began to arm and support the Mujahideen in their resistance against the communists, hoping to cause massive destabilization of the country.
Fearing that this instability might cross borders into Soviet territory, the U.S.S.R. invaded Afghanistan in December of 1979, further escalating the anti-communist, anti-soviet resolve of the United States. US support of the guerillas increased following the Soviet invasion as, “Carter reacted with ill-concealed rage, denouncing the Soviet leader Leonid Brezhnev as a liar…more importantly, Carter used his diplomatic and covert resources to mobilize military aid for Afghanistan’s Mujahideen guerillas” (McCoy, p.473). The Soviet invasion and instillation of a new pro-soviet leader caused an large increase in US aid to the guerilla forces, most of which was funneled through the hands of the Pakistani Secret Service (ISI), and as such was going to those in cahoots with the Pakistani regime. It was this funding that resulted in the complete revocation of the purported goals Of the US’ War on Drugs as it was the ISI favored Mujahideen factions that were largely responsible for the country’s heroin trade. As it did not control the allocation of its aid, the US had no way of choosing the recipients, thus paving way for the rise of Gulbuddin Hekmatyar. Hekmatyar, leader of the fundamentalist Hezbi Islami (Islamist Party), was a creation of the repressive Pakistani government whom they hoped to place in power after the defeat of Soviet forces and at their hands, quickly became the major recipient of US money and arms. This relationship would soon be regretted as Hekmatyar’s drug connections and brutality as a leader became known.
Though the US government publicly retained a hard-line stance on the global drug trade, closer examination of its involvement in Central Asia in the late 1970s and through the 1980s will reveal that anti-drug initiatives took back seat to the United States’ anti-Soviet resolve. By working closely with a corrupt Pakistani regime and funding ISI-picked Mujahideen forces (Hekmatyar) in order to end the Soviet occupation of Afghanistan, The US effectively caused a boom in heroin production in the area responsible for the major export into the America’s marketplace. Though made easier by a virtual silence in mass media throughout the 80s concerning Afghanistan’s heroin trade, this was largely possible thanks to the government’s unwillingness to investigate claims linking its allies with the heroin trade. The country’s decision to let the Cold War take precedence over the War on Drugs is reflected in the words of the chair of the House Foreign affairs Committee, Steven Solarz, who said: “Considering the fact that 60 to 70 percent of the heroin in the streets of our country reportedly comes from Pakistan, have you ever considered the political implications of my voting several billion dollars for Pakistan when my constituents are plagued by drug addiction and the Pakistanis do not appear on their way to solving the problem?” (McCoy, p.481). Though links between Pakistan’s government and many Mujahideen leaders with the heroin trade were well-founded and abundant, the US government vehemently denied such accusations stating that the countries was actively fighting the problem, often citing Pakistan’s ‘official ban’ on poppy as evidence.
Change occurred during the period surrounding the Soviet withdraw in February, 1989. Chief ally to the US and drug kingpin, General Zia, died in the previous year. The subsequent leader of Pakistan, Prime Minister Benazir Bhutto quickly called for an all-out war on the nation’s drug traffickers. However, this effort was largely in vain, as ten years of US support for the previous regime had caused such a growth in Pakistan’s heroin trade that it overtaken much of the nation’s political and economic sectors making any drastic change extremely difficult to enact. Simultaneously, US support of Mujahideen forces began to decrease, facilitating increased poppy production in Afghanistan as well. The various factions, now supported chiefly by their own poppy cultivation, began warring as there ensued a mad scramble for additional farm land. This did however, create an opportunity for the United States to decrease trafficking in Central Asia. If the US approached these factions offering aid in return for reductions in poppy cultivation, it had the potential to affect a great decrease in the import of heroin to the American market. Though such methods were attempted by the US embassy within Afghanistan, the hard-line stance of Washington, manifested in a prohibition on dealing with drug traffickers, prohibited the embassy’s interactions with Mujahideen leaders from succeeding. The situation was summed up in the words of Mujahideen leader, Mohammed Rasul, who said, “We haven’t been able to provide for our Mujahideen…If the Americans don’t provide assistance, the cultivation of opium will have to begin again” (McCoy, p.485). This provided yet another instance in which US drug policy worked counter-intuitively to its goals. Though Mujahideen leaders were willing to work with international interests to cut major percentages of their harvest, America maintained its position and pressed it upon other potential aid donors, forcing rebel leaders to rely heavily on drug profits, thus effectively paving way for a drastic increase in opium production where there could have been a major cutback.
The 1980s had left Afghanistan with no central government; Mujahideen warlords now controlled the country’s various provinces. Made possible by the subordination of counter-narcotics activity to the defeat of the Soviets, these groups, first wholly supported and then abandoned by the US government had become some of the largest heroin traffickers in the world. Farmers whose land had been ravaged by a decade of war found opium to be the return of their livelihood. Whether working for or with Mujahideen leaders, villages throughout Afghanistan were transformed by the drug. As the country had no central government to negotiate foreign aid or trade agreements, opium was grown in even greater quantities as it was essentially the sole supporting aspect of the nation’s economy. In Pakistan, drug money had invaded politics. Even though drug king General Zia had died and democracy had been restored, the parties involved were just as culpable, consistently condemning the traffic of illicit substances while simultaneously receiving enormous gains from it. The ISI, which had to that point been concerned with the allocation of US funds into the hands of self-chosen Mujahideen factions, had by this time profited enough from heroin that it was able to break away from the Pakistani government, becoming an independent political institution. Because of its absolute focus on defeating Soviet forces throughout the 1980s, America had in the process caused chaos to erupt in Central Asia. Though it had great opportunity and potential to slow the production of opium in Afghanistan and Pakistan, the poor policy decisions of the United States instead allowed trafficking to flourish. While major mistakes had been made on the part of the United States in the 1980s, the following decade would see its own series of miscalculated US attempts at waging its War on Drugs.
It was the division of the Afghan countryside, collapsing under the weight of perpetual warfare between the various Mujahideen and tribal factions that made possible the rise of the Taliban. “Afghanistan was in a state of virtual disintegration just before the Taliban emerged at the end of 1994. The country was divided into warlord fiefdoms and all the warlords had fought, switched sides and fought again in a bewildering array of alliances, betrayals and bloodshed” ( Rashid, p.20). Thus the Taliban rose in response to Afghanistan’s impending crisis. An Islamist Nationalist movement, the Taliban sought to “restore peace, disarm the population, enforce Sharia (Islamic) law and defend the integrity and Islamic character of Afghanistan” (Rashid, p.22). Those who joined had been born during the war of the previous decade and had become severely disillusioned with the factionalized corrupt Mujahideen leaders of their country. The majority of these individuals however, had spent most of their life across the border in Pakistan, being groomed by the Mujahideen groups based within the country and as such, had come to reflect their rabid fundamentalism and vision of the ideal Islamic society. Though the now independent ISI continued its support of Hekmatyar, the Pakistani government, in conjunction with the radical fundamentalist group Jamiat-e-Ulema Islam (JUI) whom had educated many members of the Taliban, began to back the emerging Islamist force, effectively facilitating its rise to prominence.
The initial leadership exhibited by the Taliban as they gained influence over Afghanistan seemed to many, a positive turn of events, especially concerning the America’s War on Drugs. The Taliban promised to impose a total ban on all poppy production within the country, and so encouraged initial diplomatic relations with the United States. This would soon change however, as the Taliban realized the necessity of opium production to the survival of the economy and as it began to impose the strictest interpretation of Islamist law that the world had ever experienced. This combination effectively prevented the country from being recognized internationally. Exemplified through the words of the head of the Taliban’s anti-drugs control force Abdul Rashid and Governor Mohammed Hassan, the situation was revealed to be quite profound.
“[E]ven though the Koran forbids Muslims from producing or imbibing intoxicants…He (Rashid) is authorized to impose a strict ban on the growing of hashish, ‘because it is consumed by Afghans and Muslims’. But…’Opium is permissible because it is consumed by Kafirs [unbelievers] in the West and not by Muslims or Afghans’…(according to Hassan),’Drugs are evil and we would like to substitute poppies with another cash crop, but it is not possible at the moment, because we do not have international recognition’” (Rashid, p.118).
From these words it can be seen that the Taliban justified their opium production as the result of severed relations with the US and other world nations. Through this and several self-created loopholes, they were able to harness the control of Afghanistan’s poppy production, effectively becoming the new leaders of the country’s opium trafficking.
In Pakistan, the opening years of the 1990s brought increasing pressure from the US to reduce its heroin production. In a complete policy reversal, “[W]ashington pressed Islamabad for narcotics suppression in the 1990s…In addition to diplomatic pressure, the United States financed the Pakistani army’s Antinarcotics Force in 1995 and supported passage of the harsh Control of Narcotics Substances act in 1997” (McCoy, p.505). These actions effectively caused a reduction in the country’s heroin trade, seeming to represent a victory for the War on Drugs. However, the slack was soon picked up by Afghanistan as Pakistani refineries were moved kilometers over the Afghan border and into Taliban control. Though the US’ policy towards Pakistan had proven successful in the eradication of the country’s heroin export, its failure to exert any influence over the Taliban’s trafficking meant that little to none of the world’s overall supply had been affected. As Pakistan exports dwindled, Taliban-led Afghanistan emerged as the world’s majority supplier of heroin.
The regime strengthened that position throughout the rest of the decade. By 1996, the Taliban had extended its control to approximately ninety percent of Afghanistan, forcing the few remaining warlord factions to the northeast where they formed the Northern Alliance. It was in this area that fighting took place over the remaining arable land for opium cultivation, resulting in the displacement of over 100,000 refugees and an even greater economic dependence on drug revenues. The Taliban’s power was maintained through taxation on a crop that, according to a United Nations report culminated in, “a record harvest of 4,000 tons of Opium from Afghanistan in 2000, or approximately 75 percent of the world supply” (Vellinga, p.214).
Though some attempts were made to slow the country’s trafficking, the actions of United States and its partners in the War on Drugs only worsened Afghanistan’s future prospects. In 1997, a crop eradication plan was initiated by the UN Drug Control Program (UNDCP). However, the US and other major donors did not put forth the amount of funds that they had promised and rendered the project essentially useless. In 1998, the US launched missile attacks on supposed Taliban-connected ’terrorist’ sites, resulting in the deaths of many civilians and further stress onto an Afghan economy that had already been ravaged by earthquakes, floods, and massive starvation. Having frown tired of giving aid to the region without seeing improvement, major donors used the US attacks as an opportunity to withdraw from Afghanistan, leaving behind a population that had grown entirely dependent on this aid, with no means of survival. Throughout the 90s, US actions worked to not only diminish the level of much needed foreign aid in Afghanistan, but also to create greater stress on an economy that was already heavily dependent on opium production, in effect causing that dependency to increase even further.
An interesting change of events took place at the beginning of the new millennium: “In July 2000, Mulla Omar, leader of the Taliban, ordered the complete eradication of poppy crops” (Vellinga, p. 297). This resulted in the first meaningful decrease of Afghan opium trafficking since the withdraw of Soviet troops, as the Afghan leader was desperate for international aid in order to combat a severe drought. However, it was soon revealed that the ban on poppy production was also an attempt to keep the market price of heroin high after the country’s record harvest. Even so, the Taliban-initiated ban, whether legitimate of not, proved more effective than decades of US policy which had, opposite to the nation‘s purported goals, effectively facilitated and promoted the solidification of heroin trafficking in Central Asia.
Not surprisingly, the US invasion of Afghanistan in October of 2001 completely reversed the decline in opium cultivation seen the previous year. In the shadow of ensuing conflict with the United States, the Taliban lifted its ban on opium, flooding the market and allowing for an immediate resumption in cultivation. The defeat of the Taliban saw the return of warlords to Afghanistan. With funding coming again from Washington and the CIA, the various factions resumed their battle against the remnants of the Taliban and of course, their roles in drug trafficking: “[N]ow the CIA offered ruthless warlords arms, cash, and air power, both in the north and the Pashtun southeast…Across Afghanistan, brutal commanders suddenly re-emerged to battle for territory, seize food shipments, and smuggle drugs” (McCoy, p.522). The Invasion of Afghanistan effectively caused a return to the chaos that followed the Soviet occupation two decades earlier. The power of the government-elect extends no further than the outskirts of Kabul and as such, renders it, close ally of the US, completely powerless to effect any influence over Afghanistan’s drug trade in the faction-controlled regions beyond the capital city. Current US policy towards Central Asia is eerily similar to the devastating policy witnessed in the previous two decades. “The War on Terror” has worked in the same fashion as the Cold War did in the 80s, to effectively undermine US counter-narcotics initiatives by funding the very same groups and individuals responsible for the global traffic of illegal substances.
Since the late 70s, US anti-heroin actions in Central Asia have played second fiddle to its military goals in the region. From the support of Mujahideen forces and a corrupt Pakistani regime in the fight against Soviet occupation to the “War on Terror” and the re-emergence of factional rule in the Afghan countryside, the decision to subvert anti-drug actions to wartime interests has been disastrous. Creating repeated situations in which the United States had lent heavy support to the very same people responsible for the mass export of heroin into the international marketplace, The ridiculous policy decisions of the US, coupled with an inability to act effectively at pivotal moments, have rendered the War on Drugs a worthless concept, as the US has proven unable to successfully achieve any of its anti-drug objectives. US action has instead acted as fuel to the fire, since global drug production has only been stimulated by the presence of an adversary. The whole experience raises questions as to the purpose of waging a war on the world’s most lucrative business, and further, to the purpose of drug criminalization. It’s possible that the legalization of the drug trade would prove extremely beneficial in bringing many peoples of the world out of poverty. However, with the circumstances surrounding the issue as convoluted as they are now, it will likely be a very long time before the thought of legalization is discussed in any serious context. The US and its allies must first come to the realization that illicit substances are well-established in the world; both in the global economy as well as in the society of every nation and that the very notion of eradication is delusional. Only when the world is able to overcome this idea, will any major strides have been taken in addressing the drug issue.
Bibliography
McCoy, Alfred W. The Politics of Heroin: CIA Complicity in the Global Drug Trade. Chicago: Lawrence Hill Books, 2003.
Vellinga, Menno. The Political Economy of the Drug Industry. Florida, University Press, 2004.
Rashid, Ahmed. Taliban. United Kingdom: I.B. Tauris & CO Ltd, 2000.
As World War Two neared its end, representatives of the world’s Western industrialized nations met in Bretton Woods, Massachusetts to discuss the future of international economic affairs. Their meeting resulted in the formation of the “Bretton-Woods system,” which created a set of guidelines and established the institutions (IMF and World Bank) intended to promote the liberalization of all future international monetary and trade relations. Since their inception, these policies and institutions have had a significant impact on the modern world; an impact, which has resulted in the economic “globalization” that we experience today. Many critics globalization have pointed to historic trends, which suggest that the international system (as it is so constructed) has benefited rich countries at the expense of the less-developed. If this is true, why then, has the world seen increasing numbers of Second and Third World countries open their markets to the encroaching threat of globalization, abandoning protectionist measures in favor of policies facilitating greater economic liberalization? Why have certain regions experienced successful integration into the global economy while others have experienced great economic crises? Through the comparison of several Second and Third world nation-states, this paper will contend that liberal transformation throughout the ex-soviet/developing economies took place for one, or two primary reasons. The first, as an act of desperation and necessity, for example, if a country accepted an IMF loan and had to comply with structural adjustment policies and/or desired to remain on good terms with the fear of being cut off from monetary aid of such institutions; and the second, as part of a well-planned gradual process intended to facilitate greater access to the industrialized markets of the First World. The success and failure of economic liberalization under these contexts was determined largely by the situation in which the process was introduced and by the style of government that existed in a country attempting economic transformation.
Entering the 1980s, Ecuador’s independent political history had been characterized by a strong populist movement, which had been deeply imbedded since the late 1930s. The nature of the country’s populism was such, that it formed a dependency between the state and the newly-incorporated masses that were its base of support. The state, whose existence was dependent on the continued allegiance of Ecuador’s popular-masses, maintained support by using government funds to serve the immediate interests of special interests and labor unions, and to finance subsidies and price controls intended to benefit the poor. At the same time, the success of special interests and unions, and the livelihood of the country’s popular sector depended on the state’s continued social interaction; as a result, they were more than willing to supply their votes in gratitude. This inter-dependent relationship placed great constraint on state-action, limiting the focus of policies and public finances to the maintenance of costly and largely-unsustainable short-term programs often at the expense of neglected goals of long-term development. Increasing foreign debt at the end of the 1970s (result of increased public spending from petrodollar reserves) and substantial drops in the price of oil during the early 1980s led to crisis in the Ecuadorian economy.
By 1984, the country’s situation became so dire, that it was forced to seek a bail-out from the IMF. Through the various “structural adjustments” that came with its loans, the IMF promoted rapid “shock therapy” transformation of the domestic economy, a process that carried with it great social implications. Policies called for public expenditure to be reallocated towards the facilitation of foreign investment and debt-service; a process capping the government’s already-weakened ability to provide for social welfare. The privatization of state-owned industries caused massive increases in Ecuador’s level of unemployment, and contributed to the rapid degradation of the lives of the poor. Increased foreign investment had the effect of out-competing and destroying much of the country’s fledging manufacturing industries, which further contributed to the increasing number of unemployed Ecuadorians. While the growing unrest amongst the increasingly- impoverished popular sector placed further restriction on the state’s actions, increasing pressure also came from the IMF, calling for Ecuador to comply with the Washington Consensus. The Ecuadorian government found itself sandwiched and in a stalemate; movement in either direction drew harsh criticism and threats from the opposite side, making it so that Ecuador could neither respond to the needs of its people, nor successfully implement any IMF-imposed austerity measures.
Ecuador’s failed attempt at liberalization can be clearly viewed as the result of two important factors; first, the state’s inability to adequately respond to the country’s great social and economic issues and second, the IMF’s forced-imposition of the liberal model and its “shock-therapy” method of rapid compliance. The depredated lives of Ecuador’s poor led to increasing unrest amongst the masses, which effectively forced the country’s government to abandon liberalization measures. From this example, one can see precisely how not to go about the process of economic liberalization. No pre-existing conditions where present in Ecuador that might have facilitated even limited success in market liberalization. The country’s experience is testament to the failure of the IMF’s one-size-fits all solution to the significant issues faced by developing markets. A similar experience of failed “overnight” liberalization was that of Russia, emerging from decades of soviet dominance in the early 1990s. In Russia, shock-therapy was also implemented as means of achieving an “overnight transformation” of the economic system. The results were quite similar to those in Ecuador as Russia also lacked the proper infrastructure to facilitate such an extreme process. The rapid liberalization of price controls brought hyperinflation to both economies and the austere policies intended to bring levels down, “also brought down the economies” (Stiglitz 36).
Rapid liberalization brought new crisis to the Russian economy and further worsened that already being experienced by Ecuador. In the case of the latter, as well as many other Latin American countries, one might infer that the movement towards a liberal economic system was based largely on necessity. Entering the 1980s, Ecuador complied with the IMF’s structural adjustments because they were in desperate need of its financial support. Aware that it was wholly unprepared to implement even the most gradual liberal transition let alone the rapid process that was forced upon it, Ecuador’s failed liberal transformation can be seen as the result of an act of desperation. Instead of achieving success as the result of a well-planned economic reformation, when faced with expanding crisis, Ecuador, like many other country’s in similar situations, was forced accept the money and control of the IMF. It is likely that Ecuador’s compliance also came from a fear of losing the institution’s support as well as future support from similar organizations. Russia’s swift economic transformation was fueled by a shared-desire to abandon the soviet economic model. It was widely believed that quick liberal transformation was necessary to provide the immediate eradication of the remaining vestiges of Soviet control. Though necessity and desperation may help to explain the liberalization attempts countries in South America and the former USSR, they cannot explain the great success found in other parts of the world.
The primary reason for the success of economic liberalization in East-Asian countries was that the process was carried out in a slow, deliberate manner. Led by the four “East Asian Tigers” (Taiwan, Singapore, Hong Kong and South Korea), these countries made the process of globalization work to their benefit by transitioning to liberal-markets in measured, planned increments, which gave the domestic economy time to adjust. This gradual process was facilitated through authoritarian leadership. In sharp contrast to the stance of the IMF and the policies of the Washington Consensus, governments in East Asia continued to play key roles in economic activity. They provided necessary infrastructure, expanded education, and targeted specific economic sectors for development. As Stiglitz puts forth, “all these countries believed in the importance of markets, but they realized that markets had to be created and governed, and that sometimes private firms might not do what needs to be done” (Stiglitz 32). Though they embraced globalization, East-Asian states maintained non-liberal, protectionist policies that helped to foster domestic industry. Because they were never forced to abandon the programs and policies that benefited their people, these countries, through strong state-leadership, were able to expand social welfare; rather than proving social unrest and political instability, the Tigers worked towards goals of sustained development as means of enfranchising the people and strengthening the economic system.
The East Asian experience serves as the antithesis to that of countries like Russia and Ecuador. While the latter opted (though sometimes forced) for the rapid adoption of liberal economic policies, the East Asian Tigers implemented a series of precise, gradual shifts towards the end-goal of a liberal-market. Rapid transformation led to great economic crisis while state-led gradualism facilitated successful integration into the international economy. East Asia’s embracement of the processes of globalization was defiantly not spurred by necessity. The Tigers did not seek, in periods of desperation, the help of the all-powerful IMF, and as such, never suffered the loss of economic-sovereignty experienced by many countries in situations like that of Ecuador. In light of this, one can see that the developing and post-soviet rush to adopt liberal market-economies was also caused by the belief that success was in fact, possible. Countries that did not transition out of fear or necessity, found it easier to embrace liberalism because examples of success did actually exist.
This paper has attempted to convey that the rush, beginning in the 1980s, of ex-soviet and developing nations to embrace liberal economic principals was the combined result of their often extremely different experiences with liberalization processes. Some countries embraced globalization out of necessity or in fear of the repercussions resulting from non-compliance while many others embraced the system because they saw within it, great opportunity for national development. Success and failure of liberalization outside the First World, under these pretexts was also influenced by a nation’s style of government. History has shown that, countries under authoritarian leadership experience much higher levels of success that those governed by populist-leaning regimes. The former serve as the promoters of gradual state-led transitions while the latter, provide example of the almost certain-failure that comes from “shock treatment” approaches of rapid liberalization. The successful future integration of ex-soviet and developing countries into the international economic system will likely be determined by their ability to reflect the success-stories of the past and prevent economic crisis from eroding hopes o continued development.
Bibliography
Stiglitz, Joseph E. Making Globalization Work.
New York: W.W. Norton & Company, 2006
Following the Second World War, delegates of the Allied-nations convened in Bretton Woods New Hampshire in order to discuss the future of international monetary and financial regulation. From this conference emerged, the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD, which later became part of the World Bank Group), and the General Agreement on Tariffs and Trade (GATT, replaced in 1995 by the WTO); international monetary institutions and trade agreements focused upon the liberalization of the international (non-Soviet) economy. Led by the United States, the Western Powers of the world have since used these institutions to shape and mold the global economy in their continual push to establish an international “free market.” Depending upon ones ideological standpoint, the creation of the Bretton Woods Institutions and their evolution over the past fifty years can be explained very differently. This paper will use a Marxist model of international political economy to convey the idea that dominant (Western) market economies cooperate in the joint exploitation of weaker (Third World) economies throughout the world, and will use this concept to explain the institutionalization and promotion of liberal economics by the West.
The Marxist interpretation of Capitalism states that it is based upon private ownership of the means of production and wage-labor. Capitalists (those who own the means of production) are constantly striving for profit and capital accumulation in a competitive market. Wage-earning laborers are commodities and are subject to the price mechanism (which determines the equilibrium price at which consumers are willing to buy a good and at which producers are willing to sell it). The constant drive of capitalists to earn profits and accumulate capital in order to re-invest and continue the profit-earning cycle necessitates that they outperform the competition. In order to do this they must continually make their operations more efficient (lower expenditures) and increase their investment, causing the accumulation of wealth into the hands of capitalists and greater impoverishment within the labor class (as wages fall). However, more importantly (more important in the context of international economics), “the accumulating capital of individual capitalists leads to the periodic overproduction of goods, surplus capital, and the disappearance of investment incentives” (Gilpen 37). As incentives to invest within the national market decrease, producers must search out new markets beyond national borders in which to invest their surplus capital; revealing the expansionist nature of the capitalist market system.
The Marxist model emphasizes the role of this Capitalist Imperialism in the formation of the global market economy, “as profit rates fall, the capitalist economies are compelled to seize colonies and create dependencies to serve as markets, investment outlets, and sources of food and raw materials” (Gilpen 39). Facilitated by banks, as they oversee the flow of capital between dominant Capitalist economies and new markets, the exploitation of the underdeveloped economies, natural resources, and cheap labor of Third World markets simultaneously increases the competitiveness of foreign investing firms (moving the competition between firms to an international level) and decreases prospects for successful development of domestic economies. The control of the international market by banking and investment firms in developed capitalist countries “leads to declining prices for the raw materials produced by the South (Third World) and rising prices for the industrial products produced by the North (First World). The terms of trade—export prices divided by import prices—are biased against the south.” Trade and investment also remove capital from Third World nations and “necessitate(s) Southern borrowing from Northern financial institutions…but debt service and repayment further drain Third World wealth” (Spero, Hart 176). Institutionally-allocated Foreign aid only magnifies the issue by promoting foreign investment (at the expense of domestic development) and extracting wealth through debt service. Marxists see this institutionalized cycle of forced underdevelopment and dependency as fuel for the continually expanding international Capitalist “free-market” system.
By 1947, the war had destroyed the European economic system. The United States took the lead role in the reconstruction of the European continent and the resurrection of its economies. Under the Marshal Plan, “which from 1948 to 1952 gave sixteen Western European countries $17 billion in outright grants” (Spero, Hart 16), the US sought to bring new life to its former trading partners. It was essential to reestablish Europe as a powerful Western economic force; a healthy European economy meant a healthy US economy. So, the United States began to manage the international monetary system by providing liquidity and adjustment. The meeting in Bretton Woods had established a modified fixed rate of exchange in which, countries had to adopt the gold standard (a country’s currency had to be valued in terms of gold) and had to maintain their currency’s exchange rate plus or minus one percent of parity by buying and selling other (foreign) currencies(class notes 9/25/07). The weakness of the British Pound (the pre-war reserve currency) and the insufficient world supply of gold, coupled with the post-war strength of and confidence in the US economy led to the establishment of the US Dollar as the official currency of international trade. The great outflow of US Dollars in the form of aid provided liquidity to the recuperating markets of Europe and Japan and, “in the long run, US leaders expected, such European and Japanese recovery would benefit the United States By widening markets for US exports” (Spero, Hart 17). By enabling and helping to revive the Western European economy, the US was ensuring not only valuable trading partners but also powerful allies for the future push towards an international Free Market system. It is here, that one can begin to see the collaboration of First World capitalist economies.
Though the system was clearly led by the United States (in order to broaden its markets), economic sacrifices were made by the country to ensure that Europe would regain a powerful economic position in the world. The US-funded reconstruction of the Western half of the continent also signified future support (of the returning economic power) for the liberal economic trade policies embodied in the GATT. The GATT “reflected two components of the prevailing agreement on open trade: the economic consensus that open trade would allow countries to specialize according to the principal of comparative advantage…and the political consensus that a liberal trading regime would promote not only prosperity but also peace” (Spero, Hart 69). Comparative advantage is highlighted in order to signify its importance within the Marxist model of international political economy. Comparative advantage refers to the concept that every country has a “comparative advantage” in the production of a good. Rather than having two countries produce the same two goods, each country should produce that which it are most efficient at producing and trade it with the other country. Comparative advantage might arise from a difference in the levels of technology between countries or from a country’s particular abundance of some natural resource. According to the theory, “preferences for domestic consumption are likely to influence both production and tradable surplus.” If a country prefers good A over good B, it is more likely that it will import A and export B. However, the source of comparative advantage most important to the argument of the Marxist model comes from “Economies of Scale.” Economies of scale “imply that the costs of producing a good will decrease as the volume produced increases” (Kambhampati 108,109). The liberal economic principals of the GATT were protected by the Principal of Most Favored Nation status (MFN), which maintained that every country would treat all if its trading partners as it treated its best trading partner (class notes 9/27/07).
The Marxist model argues that the principal of comparative advantage serves to hide the true desire of those who espouse liberalism and free-trade “to maintain an international division of labor that is unfavorable” to the Third World (Spero, Hart 176). The term is used to legitimize the unfair terms of trade between strong and weak markets (spoken of earlier) as well as the discrepancy between the low price of raw materials from developing markets and the high price of industrialized goods from developed markets. In the context of Economies of Scale, an increase in the level of exploitation (by a Capitalist foreign investor) of a poor country’s natural resource signifies a decrease in the cost of using that natural resource in the production of an industrial product. The comparative advantage of the Capitalist then, comes from his ability to import inexpensive raw materials and export a more expensive finished product. This causes a “net outflow” of capital from underdeveloped to developed countries. Underdeveloped countries export their product at a low price but are forced to import the finished goods from developed countries at much higher prices, a cycle which steadily enlarges the gap between rich and poor nations, and perpetuates Capitalist expansion.
The liberalism at the heart of the GATT also served as the foundation for the Institutions coming out of Bretton Woods, namely the IMF and World Bank (IBRD). “The IMF was founded on the belief that there was a need for collective action at the global level for economic stability” because the actions of one country spill over onto others (Stiglitz 12). In a liberal international economy, the economic downturn of one nation would have negative effects in the markets of other nations. The major goal of the IMF is to provide liquidity to governments who did not have the financial ability to bail out their national economy in times of hardship. This liquidity is offered in the form of loans carrying with them specific “conditionalities.” These loans deal largely with macroeconomic issues such as budget deficits and inflationary issues. The issue is that these loans are made only upon the acceptance of certain “conditions” by the recipient country. The acceptance of the conditionalities of an IMF loan is essentially a promise (made by a recipient nation) to adhere to the liberal economic policies of the IMF which often focus on government deregulation and cutting subsidies to domestic industries and/or agriculture (Stiglitz 2002).
Though the World Bank was initially created to finance the reconstruction of the war-torn countries of Europe, its overwhelming mission over the past sixty years has been to provide aid to developing countries. Whereas the IMF considers macroeconomic issues, the World Bank is focused on structural issues such as the creation of infrastructure and the development of financial systems. Similarly to the IMF, the World Bank promotes liberal policy as the solution to such issues. However, it maintains a greater focus on increasing economic activity within domestic markets, often devising projects which encourage foreign investment by private international firms. Funds from the World Bank are given through what are called Structural Adjustment loans. Similarly to the conditionalities of the IMF, Structural Adjustment loans necessitate that the recipient country agree to privatize its economy in order to allow for the creation of new domestic firms as well as the influx and investment of foreign capital. The IMF and World Bank fit well within a Marxist model of international political economy.
As was stated earlier, institutionally-allocated foreign aid only acts to further Capitalist expansion into developing markets. The IMF and World Bank serve as perfect examples of this. The IMF and World Bank embody the liberal economic ideology of the GATT and its creators, the world’s developed Capitalist Market economies. After power had been restored to the economies of Western Europe, the following decades saw the focus of the IMF and World Bank shift to the further expansion of the reestablished liberal economic oligarchy, now led by the United States. Great wealth was offered to developing countries if they were willing to adopt the liberal policies of the donors. Policies of government deregulation and market privatization allowed for the entrance of foreign capital and investment. This investment was made by firms in the dominant Capitalist economies of the US and Western Europe. The IMF and World Bank are in essence the institutionalization of the expansionist characteristic inherent in the Capitalist system. They are the tools of neocolonialism.
The Marxist model offers the best explanation of the meeting at Bretton Woods and the formation of the post war international economic system. In order to assert the dominance of the (liberal) Capitalist free-market system and facilitate its need for expansion throughout the world’s untapped markets, the United States necessitated a powerful ally. After restoring power to the economies of Western Europe, The two Capitalist economic powers were then able to shift their focus to the spread of liberal economic policy throughout the undeveloped markets of the Third World. The ideals embodied in the GATT, calling for the reduction and elimination of tariffs and other barriers of trade, had to be adopted by the governments of these new markets in order to allow for an influx of capital and investment from firms in the US and Western Europe. In order to speed this process, they turned to the institutions that had initially been used to reconstruct war-torn Europe, the IMF and World Bank. Under the guise of massive loans providing governments with liquidity (IMF) and foreign aid (World Bank), these institutions were able to force developing nations to adopt the liberal ideology which they embody, an ideology which serves the interests of their creators, the developed Capitalist economies of the north. Thus, over the last sixty years we have seen the continued development of the First World, facilitated by the forced underdevelopment and dependency of the Third.
Bibliography
Gilpen, Robert. The Political Economy of International Relations.
Princeton University Press: New Jersey, 1987
Spero, Joan E. Hart, Jeffrey A. The Politics of International Economic Relations.
Thompson Learning: California, 2003
Kambhampati, Uma S. Development and the Developing World.
Blackwell Publishing: Massachusetts, 2004
Stiglitz, Joseph E. Globalization and its Discontents.
W.W. Norton: New York, 2003
Following the signing of the Treaty of Paris in 1783, the Founding Fathers of the United States of America met to create a constitution which was to serve as the fledgling nation’s backbone. Though previously unified under the Articles of Confederation, the thirteen articles failed to effectively facilitate cooperation between the individual states; the creation of a new governing document was essential if the newly-independent United States was to succeed as a sovereign country. Though the revolution had been fought to free the colonies from the misrule of a king and the tyranny of a centralized monarchy, the drafters of the Constitution recognized that successful unification of the thirteen states would require that some of their sovereignty be relinquished to a centralized governing body with sufficient power to influence state actions. However, the organization of the national state apparatus and the extent of its powers would have to be re-envisioned in order to prevent the US government from mirroring the body which it was to replace. It was decided that the national government would be split into three separate branches: one legislative, one judicial, and one executive. The US Constitution put forth a system of checks and balances intended to ensure the rights of individual states and to set the limitations of the powers that would be granted to the three branches of the federal government. This essay will focus on those powers granted to the executive by the Constitution, the rational behind their formation, and the theories of presidential power that attempt to explain the significant expansion of presidential powers that has taken place since the documents creation.
Section one of Article II of the US Constitution sets presidential and vice-presidential term limits at four years and states the manner through which they are to be elected. It also requires a fixed presidential salary which cannot be changed during a presidential term (Library of Congress). As James Wilson argued in the Pennsylvania ratifying debates, an income free from congressional influence would make it so that, “the President of the United States could shield himself, and refuse to carry into effect an act that violates the constitution” (Amar 181). In other words, the President’s decision making process would be free from the influence of potential increases or decreases to their salary imposed by Congress. It was also argued that the creation of a presidential salary would make every male US citizen eligible for election to the presidency; without the provision of a salary, only the wealthy would have the means to assume office (Amar 181). Thus, the stipulation of a presidential salary in the US Constitution also served as an effort to prevent aristocratic control of the nation.
Section seven of Article I stipulates that all bills, once passed by both Houses, be presented to the president for consideration. The President can then sign the bill into law, return the bill to House in which it originated, or allow the bill to pass without their signature (Library of Congress). Though presidents prior to the Civil War tended to exercise their veto-power solely to raise constitutional objections to questionable bills, the Constitution itself does not expressly obligate the President to veto any bill deemed unconstitutional. If an unconstitutional provision was merely a small detail in a large piece of legislation, a President could simply choose to allow the bill to pass without their signature; they might also sign their name to a generally sound and desperately needed bill which contained only a minor constitutional flaw. However, “as an officer oath-bound to champion the constitution, the president would also be free to take up his veto pen in defense of the document, in an effort to appeal directly to the American public and to induce Congress to re-pass the bill without the offending details” (Amar 184).
Section two of Article II establishes the President as the “Commander and Chief” of the army and navy, as well as the militias of the original thirteen states, though only when they are called into service of the United States. They are given the right to ask for the opinion, in writing, of the principal officer of each of executive department, on anything pertaining to that department’s specific duties. The President is also given the power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment (Library of Congress). Though section two granted the President with significant powers, it also placed restrictions upon the position so as to ensure that the US executive would not come to mirror the British Monarchy. Unlike the king, who maintained control over all of Britain’s military forces, the president could only exert control over state militias in order to “execute the Laws of the Union, suppress Insurrections, and repel Invasions” (Amar 187). While the British monarch could pardon whoever he wished, the US president could only pardon federal offenses, and was restricted from the ability to use their pardoning power to negate impeachment charges.
Section two goes on to describe several areas in which the president is to share power with Congress. Though the president is granted the ability to make treaties and to nominate members to the executive branch, Supreme Court, and other offices not expressly provided for in the Constitution, agreement and consent of two thirds of the Senate is necessary for any treaty or nomination to become effective. This broke the US Constitution from the British Model of unilateral control under the king by “giving the Senate a portion of traditionally executive authority—- much as Article I gave the president some legislative power via the veto clause” (Amar 190).
Section 3 of Article II obligates the president to inform Congress of the state of the union and to recommend measures which they feel are necessary and expedient; “to convene Congress in emergencies; to receive foreign diplomats; to ‘take care that laws are faithfully executed;’ and to commission all executive and judicial officers” (Amar 195).
The final section of Article II provides the most significant check to presidential power, “The President, Vice-President, and all civil officers of the United States, shall be removed from office, on impeachment for and conviction of treason, bribery, or other high crimes and misdemeanors” (Library of Congress). While British law lacked any mechanisms to oust a bad king, American-style impeachment made the president, as well as his cabinet members, responsible for any personal misconduct while serving as the nation’s leaders. Though entrusted with great powers, the president “would nonetheless be checked by the House and Senate, as the American people looked on, poised to render ultimate political judgment on all concerned” (Amar 204).
Since the creation and ratification of the United States Constitution, the scope of presidential powers has changed dramatically. Not surprisingly, considering the brevity of Article II of the US Constitution. Though rather precise limits are set on legislative and judicial power, no such limits govern the executive. It is within this vague constitutional description that “lay the seeds of a far more powerful position, one that has grown through elaboration of its explicit enumerated powers as well as the interpretation of its implied and inherent powers” (Pika Maltese 3). The Constitution’s ambiguity concerning the limitations of presidential action has led to several contrasting theories of presidential power: the constitutional theory, they stewardship theory, and the prerogative theory.
Proponents of the constitutional theory of presidential power argue that presidential power is strictly limited. They believe the powers of the executive to consist only of those specifically enumerated in the constitution or granted through an act of Congress. According to William Howard Taft, “there is no undefined residuum of power that he can exercise because it seems to him to be in the public interest…[presidential power] must be justified and vindicated by affirmative constitutional …provision” (Pika Maltese 13). The actions of US presidents up to the Civil War convey a shared desire to uphold such a literal interpretation of presidential power as stipulated by the Constitution.
Teddy Roosevelt serves as a fine example of someone who subscribed to the stewardship theory. He maintained the belief that a president of the US could do anything that was not expressly forbidden in the Constitution or by laws passed by Congress working within its constitutional authority. As Roosevelt stated in his autobiography, “I did and caused to be done many things not previously done by the President…I did not usurp power, but I did greatly broaden the use of executive power” (Pika Maltese 14). As these words suggest, the intent of a presidential steward is to leave the office in a better condition than when they assumed power.
It is the prerogative theory however, which extends the broadest range of powers to the president. In his essay “The Second Treatise of Government,” John Locke defines the concept of prerogative power as the power “to act according to discretion for the public good, without the prescription of the law, and sometimes even against it.” (Pika Maltese 14). The prerogative theory increases presidential powers to include the ability to carry out actions which are explicitly forbidden, should they be deemed to be in the national interest. Such power was exercised by Abraham Lincoln during the Civil War, “he appealed to military necessity, asserting that the Constitution’s Commander-in-Chief Clause…and its Take-Care Clause…combined to create a ‘war power’ for the president that was virtually unlimited;” and taken even further a century later when Richard Nixon claimed “[W]hen the President does it, that means that it is not illegal” (Pika Maltese 15).
The ambiguity of Article II of the US Constitution made possible such reinterpretations of presidential power; reinterpretations which have lead to a substantially expanded modern presidency. As the responsibilities of the president have increased significantly since the birth of the nation, some reinterpretation of the Constitutional limitations placed on the office’s power has been necessary. However, like Nixon, various presidents have taken their “reinterpretation” beyond what might be considered legitimate. It is these individuals which force one to question whether it was wise to leave the parameters of the presidential role so open to interpretation. Though the Constitution was created with the goal of uniting the nation while preventing the national government from coming to resemble that of the British Empire, the continuous expansion of the presidency and presidential powers, especially of late, pushes the United States ever closer to becoming like the despotic empire its forefathers fought so valiantly to be freed from.
References
The Library of Congress (1787). The United States Constitution. April 21st, 2008.
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Amar, Akhil Reed. America’s Constitution: A Biography. New York: Random House Trade Paperbacks 2005.
Pika, Joseph A. Maltese, John Anthony. The Politics of the Presidency. Washington D.C.: CQ Press 2006.
The Politics of Empire 