C-FAR #320 February, 1998
Martin Boosts Foreign Aid
Finance Minister Paul Martin's February 24 budget
boosted foreign aid spending slightly. It "stabilizes foreign aid
spending at 0.26 per cent of GDP after years of decline. Budget documents
suggest it may be some time yet before there is progress toward achieving
the 0.7 per cent target." (Globe and Mail, February 25, 1998) This
was a target set years ago by the UN's bum-and-beggar nations for the productive
lands of the First World to meet, rather like a rubbie telling a working
stiff that he expects a $100 handout, rather than a quarter, A generation
of idiot politicians in Canada have subscribed to this blueprint for bankruptcy.
although the realities of the moment have frequently forced men, like Paul
Martin, to temporarily abandon the goal. "Mr. Martin found $90-million
more for the foreign aid budget for the 1997-98 fiscal year. It brings
the total to $2.15-billion, or $71 for every Canadian. In the new fiscal
year, Mr. Martin will restore $50-million from previous announced cuts.
That will put the total for 1998-99 at $1.96-billion -- still a cut, but
not as deep as the one he said he would have to make to fight the deficit
when he brought in the federal budget last year. When Prime Minister Jean
Chretien came to office in 1993, the annual foreign-aid budget was about
$1-billion more than it is now." C-FAR can take some satisfaction
in the modest drop in foreign aid spending over the past few years. Some
19 years of gentle lobbying seem to have paid off. Still, Canada, with
a huge debt and crushing unemployment, is a bigger spender than other major
economies: "The United States, Japan, Britian and Italy are among
the [OECD] countries that give even less in relation to their overall GDP."
(Globe and Mail, February 23, 1998)
Look East Young Man? The Mirage
of Booming Oriental Markets
Remember the ridiculous Team Canada junket to
the Far East in 1996? There was Chretien and the assorted hangers on posing
-- a deal a day. After all the fanfare and hoopla, it turned out that most
of the "deals" were only scrawls on fancy paper. "The government
proclaimed 194 deals or potential deals worth $8.72-billion. But, as of
last June, the government calculated only that $2.45-billion had either
been completed or were still under negotiation." (Globe and Mail,
January 14, 1998) Now the prize zircon in the tattered trade crown has
fallen. "Bell Canada International Inc. is pulling out of a $1.55-billion
joint venture to provide basic telephone services in ... the southeastern
[Indian] state of Andhra Pradesh.. ... [It] was the single biggest commercial
agreement signed during Prime Minister Jean Chretien's trade mission to
South Asia in January, 1996." Bell is pulling out because of crippling
licensing fees that must be paid to the Indian government and because the
huge consumer demand just hasn't materialized. "The high licence fees
were awarded mainly in 1994 and 1995 when many international telecom operators
considered India to be their industry's last great frontier, but the market
is proving to be much smaller than originally forecast. In Andhra Pradesh,
[the venture] has attracted 21,500 subscribers in little more than one
year. BCI's cell-phone operation in Colombia, a country of 35-million people,
has sold 400,000 subscriptions in three yeaars. ... For BCE Inc., which
controls Bell Canada International, the decision to pull out of the basic
telephone venture is not its first setback in India. The group's yellow
pages business run by Tele-Direct International Inc., left India in 1996
after losing $20-million over three years." (Globe and Mail, February
28, 1998)
Bankers Unload Bad Loans on Taxpayers
"The capacity of bankers to fold up their
high standards and head for the exits as soon as the going gets rough is
something to behold," wrote columnist Terence Corcoran (Globe and
Mail, January 14, 1998) Remember the Olympia & York crisis of 1992?
As the Reichmann TItanic tilted into vertical position, executives from
their prime Canadian bank, CIBC, dashed for the first-class lifeboats and
rowed all the way to Ottawa to plead for help During a secret meeting,
they asked Tory finance minister Don Mazankowski to come to the Reichmann's
rescue, a move that would transfer much of the risk on the Reichmann's
bank loans to the Canadian taxpayers. Much to the Tory government's credit,
the bankers' pleas were turned down. ... The banks, subsequently, took
huge writeoffs without benefit of taxpayer support. The real stunner was
that the banks had the gall to make a proposal in the first place."
Now, "the big name banks in New York, Frankfurt and other power banking
centres are scrambling to get out of their Asian loan meltdown by passing
the costs on to the world's taxpayers one way or another. In Frankurt [January
13], ... a gaggle of German banks announced that they have agreed to roll
over their Asian loans -- provided the South Korean government supplies
guarantees. New York bankers have similar solutions to bank lending problems
in Asia. J.P. Morgan & Co. proposed converting $15-billion ($U.S.)
in South Korean commercial bank debt into Government of South Korea bonds.
Another $10-billion in new bonds would be issued to the government to raise
its foreign exchange reserves.
A Wall Street Journal article pointed out that
converting private bank debt into government debt would be a double bonanza
for the private banks. Under international banking law, banks are required
to keep $1 of reserves on hand for each dollar of commercial loans. No
reserves are required for government-guaranteed bonds. Transferring the
risk and burden of bad loans from private creditor banks -- which have
billions outstanding following four years of irresponsible lending to corrupt
governments and their corporate cronies -- onto the shoulders of all taxpayers
is emerging as the grim consequence of the international rescue effort
now under way. From the International Monetary Fund to the World Bank and
other agencies, the cost of covering the debt burden is being passed to
the general public.
Citizens of the Asian countries will certainly
bear the major cost, in unemployment, lost wealth and reduced purchasing
power, but all the world's citizens will pay for the massive bailouts that
are being funnelled through the IMF into the coffers of destitute Asian
governments. There, the money will be used in a variety of ways, including
backstopping loans to the private sector banks and corporations that are
scrambling for cash. Canadian participation in the bailouts exceeds $2-billion,
allocated to the IMF and associated agencies. While the bankers and some
of the big corporate borrowers are rescued, the average citizen of the
troubled countries is being taken to the cleaners. In South Korea recently,
a national campaign prompted individual owners to sell their holdings of
jewelry and other items to help provide the government with hard currency
reserves. The effort -- at a time when gold is at a record low -- reportedly
raised $400-million, a drop in the financial bucket. In another instance
of public relations deception, Indonesia's finance minister and several
Jakarta tycoons staged a currency-buying event for television cameras,
thereby urging Indonesians to liquidate their U.S. dollar holdings at what
is likely to be the bottom of the market. These tragic instances of collective
manipulation reinforce the lie of collective responsibility for the reckless
lending and botched policies that have ended in financial chaos. Maintaining
a country's currency is not the responsibility of its individual citizens,
nor are the lending practices of foreign and domestic banks. By bailing
out banks and governments, the IMF and others are creating what economists
call a moral hazard. When governments reduce risk artificially, more people
are encouraged to take more risk. Past rescues -- Mexico, for example --
encourage bankers to indulge in high-risk behaviour, ... knowing that in
the extreme, the world's taxpayers will foot the bill."
Racial Animosity, Indonesian Style
The high priests of multicult feed us a steady
prison gruel of guilt: Canadians are so racist. We're admonished that we
have so much to learn from the diverse cultures that flood to our shores
and that we can thrive through some Mulligan'sStew of multiculturalism.
It's occasionally useful to touch down in the real world and discover that
many other nations eschew multicult and are distinctly leery of other races
in their midst. Indonesia is a good case in point.
"The overseas Chinese are often called the
Jews of Southeast Asia, resented for their success, victimized in times
of trouble. Nowhere is this more true than in Indonesia. As Indonesia's
economic crisis deepens, rioting directed at Chinese shopkeepers has broken
out in several parts of the archipelago. Shops, cars and houses have been
looted and burned. Threatening graffiti -- 'Destroy those damned Chinese'
'Money-hungry Chinese fools' -- have appeared. Other Indonesians speak
openly of their dislike of the Chinese who make up just 3 to 5 per cent
of the 200-million people but dominate the economy. 'We welcomed them to
come and share our country and eat our food,' one well-educated young tour
guide told a foreign visitor last month. 'Now they ignore us. It's humiliating.'
.... ... In 1959, the government of Indonesia's founder, Sukarno, issued
an edict banning Chinese from running shops in rural areas. More than 100,000
Chinese fled the country. Thousands more left in 1965 and 1966, when the
army took power after a failed coup for which the generals blamed the Communist
Party, then backed by China. But Suharto, the general who took over as
Indonesia's leader, realized he needed the Chinese to rebuild the economy.
He teamed up with leading Chinese businessmen to create privileged business
empires that are still dominant. Economists say four-fifths of Indonesian
business groups are run by Chinese tycoons. Reckless overborrowing and
over-expansion by those tycoons helped push the economy into crisis, driving
up prices and causing unemployment to soar. 'These people are becoming
richer and richer compared to ordinary Indonesians,' said Jakarta-based
human rights lawyer Mulya Lubis. 'So, it's easy for people to hate them.'"
(Globe and Mail, February 21, 1998)
As for multicult, the Indonesians insist on conformity
to the mainstream. No multicult grants there to pay newcomers not to assimilate.
No postage stamps commemorating the Year of the Tiger! "Most Chinese
families have lived in the country for generations. ...Yet, Indonesia treats
them as a people apart. Although some anti-Chinese regulations have been
loosened in recent years, it is still officially forbidden to own Chinese-language
books, magazines and newspapers. Even spoken Chinese is frowned upon. Since
1975, when the government closed the last Chinese schools, Chinese children
have been obliged to attend Indonesian-language schools. Chinese, who are
mostly Buddhist and Christian in a country that is 90 per cent Muslim,
are allowed to have their own temples and churches. [However,] the law
forbids them to celebrate traditional Chinese occasions such as the beginning
of the lunar new year. Last month, as Chinese in Hong Kong, Singapore and
Vancouver rang in the Year of the Tiger with fireworks and lion dances,
Jakarta's Chinatown was largely silent. ... Critics say the government
has not done its part to quell the anger against the Chinese. New York-based
Human Rights Watch said in a report [February 20] that officials had used
terms like 'rats' and 'traitors' in veiled references to Chinese business
leaders, blaming them for the economic crisis. ... 'Government leaders
are prepared to tolerate a degree of anti-Chinese hostility because it
takes the focus offf them,' siad Alan Dupont, an Asia scholar at the Australian
National University in Canberra."
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