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During the last three decades Bangladesh has experienced several economic reforms which have privatized much of the country. However, despite these changes, it remains one of the poorest countries in the developing world, argues Professor Anu Muhammad. 

During the last three decades Bangladesh experienced several `reforms? which have made the country more privatized, more marketized, more connected, more open and highly integrated with the global economy. The reforms and coordinated supplementary policies have increased international trade manifold, although more import than export. Export oriented manufacturing units and activities have grown as a direct result of incentives and supports although many other productive units faced closure or downsizing. Urbanization expanded and skyline of Dhaka turned shining with big billboards and high rise buildings, roads become overflowed with beautiful imported cars. Expensive private schools-universities, clinics have taken a larger area in Dhaka. Moreover, glittering supermarkets full of imported goods, mobile-computer-food shops, parties, shows, fairs have given the Dhaka life a globalized look.

But at the same time Dhaka remains a city of millions of people who sleep every night under the sky or polythine. All statistics confirm that despite several changes Bangladesh remains a poverty stricken country, country experiences erosion in big and basic manufacturing units, dismantling of public institutions including provider of health and education services make people vulnerable before market, increasing pollution and environmental degradation put people in a deadly state. Growth of super rich and uprooted people is taking place simultaneously. Dominant process of resource and power accumulation has caused crime and corruption to grow in unprecedented scale, the ?primitive accumulation of capital? has become the main mode. Violence and grabbing of common properties have risen with the rise of GDP growth.

From different direct and indirect estimates we have the idea that, illegal money and assets make the single largest sector in Bangladesh today, size of which (known as ?black?, i.e., economy based on crime and corruption) has grown to nearly 50 per cent of the economy. It is not difficult to realize its influence and assertion on the economy and peoples lives. Violence and insecurity is inseparable with that economy.

It is therefore important to look at the nature of reforms and development that produces and reproduces ?poverty crime corruption environment degradation? trap.

'Reform' and the twin power

In fact the present market friendly concept of reform has lost human meanings and gradually reduced to policy prescriptions provided by the global and regional funding agencies wrongly known as 'donor' agencies. Media, academics, experts and think tanks now refer their policy prescriptions as reform programmes. The present exercises attempt to erase the rich and multidimensional ideas on reforms, i.e., reform to unlock potential of productive forces through changes in ownership and administrative system, to expand education and health opportunities, to curb and suppress economic and political power of rent seekers and above all to carry vision and planning to develop human society.

The World Bank (WB), after initial humiliation, managed to reappear in Bangladesh in late 1972 as an integral part of its development process. Relationship with the International Monetary Fund (IMF) is closely linked with that of the World Bank. Bangladesh became a member of the IMF before that of the WB. It was in 1973 when Bangladesh had its first experience with policy dialogue with the IMF. The World Bank, in any request for loan or grant, was likely to see the results of the negotiations with the IMF. This cross conditionality became stronger since 1974, the twin powers, became the friend, philosopher and guide of successive regimes.

The two phases of reform packages provided by these institutions are well known: first, Structural Adjustment Programme (SAP) since 80s, and second, Poverty Reduction Strategy Paper (PRSP) since 1999. Two points are important to note here. Number one, different reform programmes, pursued prior to formulate SAP package, were common with SAP in essence; and number two, the PRSP is fundamentally a continuity of SAP. Therefore we have been going through a linear reform bundles, past present future, periodically appeared as new initiative though.

Recalling own experiences during early 70s, Nurul Islam, the first deputy Chairman of the Planning Commission said, ?at that time there was no structural adjustment loans from the Bank or the Fund, but there was loans, both bilateral and multilateral, which were tied to domestic policy reform. For example, commodity or sector loans from the Bank and drawings on IMF credit trenches were linked to policy reforms, as well as pricing policies or subsidies bearing not only on agricultural outputs/inputs but also consumer goods such as edible oils and sugar or intermediate inputs like fuel?. Sayeduzzaman, former Secretary and Finance minister, pointed out several reform measures sponsored by the agencies long before the SAP, which included: liberalization of imports, gradual reduction in subsidy on food grains and agricultural inputs, abolition of minimum prices of jute and privatization.

Adjustment with what?

Structural Adjustment Program (SAP), the term coined by WB President Robert McNamara, also known as Washington Consensus the term coined by John Williamson of the Bank, has been a package program for redirection of public expenditure, tax reform, interest rate liberalization, money devaluation, trade liberalization, liberalization of inflows of FDI, privatization etc.

In addition to own funding business the World Bank also plays the role of a functional catalyst by virtue of its position of the coordinator of aid consortium, that influences other bilateral loans, it also influences foreign direct investment through, International Finance Corporation(IFC) and Multilateral Investment Guarantee Agency (MIGA).

Bangladesh had been one of the first countries (among a total of 36) to resort to the Structural Adjustment Facilities (SAF) set up by the International Monetary Fund (IMF)?. Debapriya Bhattacharya, local think tank organizer further notes, Bangladesh was also among the forerunners (among a total of 29 countries) to make use of the Enhanced Structural Adjustment Facility (ESAF) which was launched by IMF in December 1987. Under the two sets of three successive annual programs, during the last seven years (1986/87-1992/93), the country's economy was subordinated to the guidelines and targets laid down in the Policy Framework Paper (PFP) prepared by IMF and the World Bank.

Since 1992 World Bank has used Country Assistance Strategy (CAS) process to set lending levels for a country and periodically reassess them on a well-reasoned basis. The CAS was followed by Policy Framework Paper (PFP) and finally Poverty Reduction Strategy Paper (PRSP).

Privatization: 'Briberaization' or 'Lootpatization'?

The reform agenda of the World Bank, IMF, ADB and like others always put emphasis on two actions from the governments. These are: import liberalization and privatization (or downsizing or closure) of public sector enterprises (no matter its social necessity or economic rational). The Bank, therefore, from the very beginning has been emphasizing policies to ensure expansion of import. According to Sayeduzzaman, the Bank had been supporting Bangladesh with an annual import programme credit (IPC) since 1973...The IPCs, under decision of IDA's Board, were related to various types of policy reforms which, in fact, meant sectoral adjustments policies of various kinds...IPCs XII and XIII made it obligatory for the government to send a Development Policy Letter (DPL) to the President of the World Bank like the letter of Intent sent to the Managing Director of IMF in connection with stand-by agreements. The DPL was meant for putting Government's policy reform commitments on record. There was thus, a qualitative change in processing of import programme credits, reflecting the strong emphasis affected by the World Bank on structural adjustment measures.

In the peripheral countries like Bangladesh, the Bank consistently advocates and pressurizes for privatization in almost all sectors. The local elite, big business and bureaucrats, ministers, after building their fortunes through the loss making procedure and than dismantling of public enterprises and finally seizing public resources, hide behind the shield of the global agencies. The governments take loans and approve development projects to operate reform to privatize in favour of powerful and to deprive people from many opportunities.

How government policies, the development projects and reform programmes of the above agencies ruin big and basic industrial units of the country that has been well described in events with the closure of Bangladesh Machine Tools Factory, Chittagong Steel Mills and Adamjee Jute Mills. The beneficiaries of these programmes consist of local and foreign parties, some of whom were also the beneficiaries of loss making or system loss process. So, here we find the unity of before and after.

Joseph Stiglitz, a professor of Economics at Columbia University, had insider experiences in both White House (as economic adviser to the President) and in the World Bank (as the chief economist) termed the whole sale privatization programme as ?bribarization?; in Bangladesh, from our experiences, we can call it lootpatization. Stiglitz from his own experiences, indicated the host country ministers and bureaucrats as active in the process, whose ?eyes got widen at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets?. We find more.

Stiglitz also termed ?free trade? compulsion introduced under the banner ?reform? as a new form of Opium War strategy of mid 19th century, kicking down barriers to sales in Asia Latin America and Africa while keeping the colonial centre well protected. During Opium wars the colonial powers used military means to ensure their access and domination. Now it is reform package.

FDI and global grabbing

The field making for super profit making foreign direct investment (FDI) has always been a priority agenda of the agencies. In the line of the ?reforms? described above, all subsequent governments of Bangladesh have given multiple benefits, cash and other subsidies, different forms of supports to attract this. The World Bank in particular categorically advocates for dismantling of state agency to give the space to International corporate bodies in oil, gas, power, telecommunication and water sector in particular. The step by step policy study of the World Bank et al in this regard can enlighten us about the process of how assets become liability for the people, how potential become a garbage and how so-called development partners become masters in a country like Bangladesh.

This also shows that the FDI per se cannot ensure productive investment. Due to space problem it is not possible to go into details. Let me mention a segment of only one case, the production sharing contracts (PSCs) in oil and gas with the multinational companies. After PSCs and power projects started giving results, fiscal deficit increased and foreign reserves became threatened, World Bank realized that the nature of FDI in Bangladesh has implied little augmentation of foreign exchange reserves and have also bad effects on fiscal deficit. In order to solve the problem it recommended for routine rising price of gas and it also prescribed for gas exports to earn foreign currency. It is important to note that, initially the PSCs, supported by the agencies, have created a mess, forced state agency to buy country's own gas by the price three times of local price and also with foreign currency, and in order to overcome that mess suggestions have come to raise prices and exporting gas! The consequences for the people of Bangladesh are nothing but a more costly life and economy, to see turning asset into liability.

Ignoring or hiding past results are the rules of the game

Facing increasing agitation against the devastating effects of Structural Adjustment Programmes the World Bank agreed to participate in reviewing the whole program in the late 90s. The Bank essentially tried to pacify critiques with a program to review its projects in different countries. This global review program, Structural Adjustment Program Review Initiative (SAPRI), also had a Bangladesh chapter, which looked into mostly SAP experience and consequence in various sectors of the country. The World Bank, however, did not endorse the findings, that showed devastated results of the reforms. Findings of the study include: stagnation in industrial growth and in some cases deindustrialization, sharp reduction of industrial employment, declining terms of trade, increasing trade deficit, rising incentive to trade and service compared to agriculture and manufacturing, concentration of bank resources in few hands (largest 1 percent borrowers got 76 percent of total advances), increase of bank default, increase in landless people, nearly 2 hundred thousand of workers lost their jobs because of reforms, where 42 per cent are skilled, 22.5 percent semi-skilled.

Ignoring the affects of the ?reforms?, without revising the essence, global-local combine attempted to continue all in the new name.

Locking the potential

PRSP is the generic name of a policy-product marketed by the twin powers as a latest reform package. Its birth year is 1999. The years before were not friendly for the global marketing-management-lobbying agencies representing corporate interests, since global protests were rising against them. IMF-World Bank were badly looking for a new banner to hide the old one because of worldwide criticism, opposition and exposure of their reform programmes under the SAP. They were looking for new banner also to advance the old programmes at a faster rate to mould economies according to the needs of the big corporate interests. That is PRSP. Bangladesh became a forerunner also in this phase.

Prepared by the Bangladeshi consultants, the brand name for Bangladesh PRSP is ?Unlocking the Potential: National Strategy for Accelerated Poverty Reduction?. But if we go by the text and experiences, we realize certain things. First of all, it is not national; it is called national because the agencies want it. They are to formulate essence of the strategy, they are to monitor its implementation, they make the avenues to use the document to manipulate things but they don?t want to own it because of their experience with the SAP, its disaster and peoples anger all over the world. It is a strategy to pick the fruits without owning the responsibility.

Secondly, no explanation is given how it is superior to national five year plans, why the plan process was replaced by the PRSP and what were the causes behind the emergency shift. Poverty reduction had always been the declared objectives of the plan documents full with projects sponsored by global agencies. The same and similar process is continuing with the same objective! How can results be the different?

Thirdly, for reasons quite understandable, this package strategy does not want to stand on the evaluation of the past experiences of the projects, programmes, plans and promises formulated or supported by the same agencies. The Bangladesh brand is quite happy with past performance. Anybody can guess the future.

Kumirer chana

If people's collective initiatives do not rise to bring all these drama before trial, the same thing will soon repeat. After some years of implementation, i.e., grabbing, waste, leakage, this document will be abandoned, the beneficiaries of home and abroad of this continued drama will appear again on the stage with a new document. The local parties of the game will make hurrah to see the old kumirer chana in a new mask. Another drama of development reform will appear in the stage. Grabbing and destruction will continue.

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