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Wednesday, May 14, 2008 07:04 am

The formula for global despair

Trade agreements, commodity speculators orchestrate food shortages

Untitled Document The International Monetary Fund and the World Trade Organization promised that more trade would help eradicate poverty and hunger. Food crops? Self-sufficiency in food? They had a better idea. Local farms would be closed down or encouraged to concentrate on exports. This would make the most not of natural conditions that might be good for growing tomatoes in Mexico or pineapples in the Philippines but of the fact that production costs are lower in Mexico and the Philippines than they are in Florida or California. Farmers in Mali would rely on more highly mechanized, more productive producers in U.S. and Europe for grain supplies. The farmers would pack up, move into town, and get jobs in some Western firm that had relocated to take advantage of cheaper labor than it could find at home. 
The countries on the East African seaboard would lighten their load of foreign debt by selling their fishing rights to the factory ships of wealthier countries. The Guineans would import tinned fish from Denmark or Portugal. 
Never mind the additional pollution generated by transporting all these goods. A life of bliss was guaranteed, and so were the profits of the middlemen — wholesalers, shippers, insurers, and advertisers.
The World Bank, prime promoter of this “development” model, now tells us that there may be food riots in 33 countries. And the WTO fears a resurgence of protectionism: Some food-exporting countries — India, Vietnam, Egypt, Kazakhstan — have decided to reduce exports so that they may feed their own people. What nerve! The North is easily upset by other people’s selfishness. The Chinese eat too much meat; that’s why the Egyptians are short of wheat. Some states have followed World Bank and IMF advice and turned over their food crops. They can no longer keep their produce for themselves. Well, of course they will pay for it — it’s the law of the market. According to U.N. Food and Agriculture Organisation figures, their bill for grain imports has already risen by a massive 56 percent in just one year. 
Correspondingly, the World Food Programme, which feeds 73 million people in 78 countries every year, has had to ask for a further $500 million. Someone must have decided that this was excessive, because it got only half that amount, even though the sum it sought was only what the war in Iraq costs every couple of hours, and it only cost a tiny fraction of what the subprime-mortgage crisis continues to cost the banking sector, which has been bailed out by the state. 
To look at it another way, the WFP asked — on behalf of millions of starving people — for 13.5 percent of the income earned last year by John Paulson, the astute New York hedge-fund manager, who realized that thousands of Americans are in negative equity and face ruin. 
No one knows, yet, how much the incipient famine will yield, or who will reap the profits, but nothing is ever lost in this modern economy. History repeats itself, one speculation after another. The Federal Reserve’s monetary policy encourages debt — first the Internet bubble, now the real-estate bubble. And just as in 2006, the IMF was still saying there was “every indication the mechanisms for granting loans on the U.S. property market were still relatively effective.” 
Market effective. Perhaps the two words should be welded together once and for all. The real-estate bubble has burst, so the speculators are resurrecting an old goldmine: the grain markets, purchasing contracts to deliver wheat or rice at a future date and counting on selling them at a higher price. And what ensures that prices will keep on rising? Famine. So what does the IMF do? The IMF — which has “the best economists in the world,” according to its managing director — explains that “one way to solve the problem of famine is to increase international trade.” 
The poet Léo Ferré once said that “all you need to sell despair is the right formula.” It looks as though they’ve found it.    

Serge Halimi is editor-in-chief of 
Le Monde diplomatique and the author of The Great Leap Backward.
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