Liberalization is very much the flavor of the day. Even the former prime minister says he is for it. The new prime minister seems to favor it. Elites in the media argue liberalizing the economy creates more employment, more foreign currency, more prosperity, more of everything. They say ‘Liberalize…’ and you will see ‘heaven and earth will conspire to deliver the bounty to the people of Ethiopia’. Yet there is little in economic theory or the empirical evidence on privatization that lends support to such a simplistic belief.
By the way, those who think ‘liberalizing the economy’ means a general ‘Retreat of the state”, have wrong perceptions of the evidence. The state in a “liberalized regime” acts almost exclusively in the interests of global capital and the domestic oligarchy that gets integrated with it, which means inter alia a withdrawal of state support from traditional petty production, including subsistence farming.
In his Project Syndicate piece ‘The False Promise of Financial Liberalization ‘Dani Rodrik of Harvard argues that there is little evidence that financial liberalization is beneficial for developing countries.
Here is an extract of that article:
Freeing up capital flows had an inexorable logic – or so it seemed. Developing nations, the argument went, have plenty of investment opportunities, but are short of savings. Foreign capital inflows would allow them to draw on the savings of rich countries, increase their investment rates, and stimulate growth. In addition, financial globalization would allow poor nations to smooth out the boom-and-bust cycles associated with temporary terms-of-trade shocks and other bouts of bad luck. Finally, exposure to the discipline of financial markets would make it harder for profligate governments to misbehave.
But things have not worked out according to plan. Research at the IMF, of all places, as well as by independent scholars documents a number of puzzles and paradoxes. For example, it is difficult to find evidence that countries that freed up capital flows have experienced sustained economic growth as a result. In fact, many emerging markets experienced declines in investment rates. Nor, on balance, has liberalization of capital flows stabilized consumption.
Most intriguingly, the countries that have done the best in recent years are those that relied the least on foreign financing.
In other words what Rodrick is saying is that global corporations’ aim is not to develop countries but to exploit profitable opportunities.
The developmental state model currently implemented in Ethiopia has in a way failed to gain the full support of citizens despite all the hype that was created around it and the ‘positive’ growth it recorded in the last two decades. This can be explained by a sad story of inexperience, incompetence, failure to mobilize the mass, corruption, growing bureaucratization, ethnic antagonism, decline, indebtedness. Under liberalism, the future prospect of Ethiopia may be even bleaker.
By the way, such predicament persists across the continent; not even the World Bank’s experts pretend otherwise for most African countries. Without a change in World Bank/IMF policy on debt relief, without the end of dogmatic market liberalism as a condition of aid, without a clampdown on predatory outside forces, without protection of all sorts, Africa seems doomed to stay marginalized. Yet many of our elites advocate blindly for market-oriented policies.
Let me conclude by simply reminding readers that Ethiopia’s growth rates, (as far as official national or UN figures can be trusted) are today about four and a half times those in the eighties. What more could anyone ask for from a ‘non liberalized’ Ethiopia, apart from more of the same?
Well, I suppose one could ask for much more progress in establishing an enabling business environment, reforming the financial sector and state enterprises, and improving infrastructure. But for this to happen the new prime minister and his team need to discard the current Ethiopia’s dysfunctional state development model, and start from scratch to build an inclusive democratic political system whose character is developmental in nature, while at the same time secure the support of citizens to make it a success.
The odds may look uncertain, but I don’t see any alternative.
CAREFUL WITH WHAT YOU FANCY
PLASTIC POLLUTION
Amongst many of the disastrous human concoctions, borne from shortsighted manipulation of nature, plastic articles (to facilitate more consumption) rank high on the list. Plastics are essentially by-products of fossil fuel. Plastics do not exist in nature. Adjoining other chemicals to fossil fuel compounds, in modern industrial processes, is what creates plastics. Plastics are slow to decompose and are not biodegradable. That means, they do not degrade to become part of the natural milieu. Most plastics can be pulverized to a microscopic size, but they hardly change their actual chemical composition. These make them dangerous to life and life support systems. Today plastic products in the form of micro-plastics are found in the bodies of land as well as sea based life of all sorts! See the article on page 26.
Nowadays, domesticated and wild animals routinely die as a result of ingested plastic articles. It is routine to see sea creatures get entangled with all sorts of plastic litter. Even the giant creatures-the corals are not spared from plastic pollution. Plastic bags, bottles, straws, etc. are amongst the most used articles in our consumption-oriented world system. These products regularly block waterways, sewage systems, etc. and have been known to cause flooding in many countries; India, Bangladesh, etc. Given the massive harm these products inflict on our environment, it is imperative that humanity deals with this catastrophe in a decisive manner. For instance, plastic bags can be outlawed without much difficulty. A number of countries have done so and the resultant dislocation, economic or otherwise, has been manageable. In this regard, the case of Kenya is instructive and is something most countries, including Ethiopia, can easily replicate. See the article next column.
The diversity of ocean life is decreasing at an alarming rate and dead zones (without life) continue to expand. Besides oceanic acidification, due to chemically polluted run off water from land (chemical fertilizers, etc.), plastic is another major cause of ocean pollution. Plastic garbage has been forming ‘trash islands’ (some as big as the size of Texas) in all the oceans of the planet. Even the icy continents of the Arctic and Antarctic are not spared. These continents contain plenty of micro-plastics within their ice and snow! Here is a recommendation from Oceanic Society: ‘Avoid Microbeads.
Tiny plastic particles, called microbeads, have become a growing source of ocean plastic pollution in recent years. Microbeads are found in some face scrubs, toothpastes, and bodywashes, and they readily enter our oceans and waterways through our sewer systems, and affect hundreds of marine species. Avoid products containing plastic microbeads by looking for ‘polythelene’ and ‘polypropylene’ on the ingredient labels of your cosmetic products (find a list of products containing microbeads here)’.
Many countries have started to implement legislations to reduce the consumption of single-use plastics. If truth be told, ‘use and throw’ is outmoded, a model of a bygone era. Today reducing consumption, recycling, banning, clean- up, etc., have become vital necessities. As we have seen elsewhere, plastic bags can go out anytime, while flasks of durable quality can replace plastic bottles, though they might not be as convenient. We should recognize that life is always a trade off and there is nothing we can do about it. In this case punitive taxation might be appropriate to drastically reduce/discourage the use of plastic bottles. Human societies must be consciously operated. Blindly succumbing to the logic of the market without scrutinizing consequences will only lead to disasters. We admit, the global economic system or what we regularly call the global greed system is at the heart of such destructive pursuits and might not want to relent easily, but the fight has to go on, until sanity prevails! In fact, the system has been adamant to accept the most obvious scientific facts about the damages to the planet by the continuous use of plastic products as well as other major pollutants.
Ethiopia should embark on all major initiatives that are trying to save the planet from excessive abuse. Succumbing to the relentless and temporal logic of the market is not healthy to life on this precarious planet. Unfortunately and like many of our considered opinions, a strategy of systemically curtailing the use of plastic products, as well as unnecessary frivolous consumption, was not heeded. The ‘Pachamama Alliance’ advise: “Look squarely at the state of the world-where we are and how we got here-and then explore what role you can play in bringing forth an environmentally sustainable, spiritually fulfilling, socially just human presence on this planet.” Good Day!
The 77th anniversary of Patriots’ Victory Day
The 77th anniversary of Patriots’ Victory Day, a holiday that marks the end of the Italian occupation was celebrated in the presence of President Mulatu Teshome (Phd) and Addis Ababa Mayor Driba Kuma.
With the strong lust to colonize Ethiopia, which was the only sovereign African country, Italy started war against Ethiopia in October 1935, through the Northern part of the country. The war, referred as the second Italo-Ethiopian war, ended in May 1936 with the victory of Ethiopian forces.
The victory of Ethiopian patriots over fascist Italy forces is an inspiration for the young generation and taught a lesson for the need to engage in activities that will contribute towards nation building.
Patriots, higher-level government officials, representatives of various international and regional organizations were also present to commemorate the day.
Lege Dambi Gold Mine under fire over chemical use
The Ministry of Mines, Petroleum and Natural Gas (MMPNG) has renewed the license of Midroc Gold Mine for Lege Dambi gold field by another decade after the first deal for developing the mine ends after 20 years. However the community living around there are protesting the renewal of the contract saying that the mine is affecting children around there.
The company owned by Sheik Mohammed Al-Amoudi requested the license renewal at the end of last budget year.
People living near the gold mine in have also demonstrated for a couple of days against the extension of contracts for MIDROC Gold, a company that has been extracting gold for the last two decades. The residents say chemicals released from the gold mine have posed health hazards and are responsible for many ailments including birth defects and disabilities.
Tewodros Gebreegziabher, State Minister of MMPNG, told the media that the ministry started discussions with the community in the area on how to continue the mining without affecting the area. He said that the concern and problem will be solved in collaboration with the community.
He further said that MIDROC, MMPNG and Addis Ababa University undertook the environmental impact assessment before the renewal.
Currently, Ethiopia has a single large-scale gold mine, the Midroc Gold Mine at Lega Dembi, Shakisso, Oromia Regional State, which is an operating open pit mine in Ethiopia.
The mine was privatized and awarded to Midroc Ethiopia in 1997. A mining license was awarded and a new company – Midroc Legadembi Gold Mine Share Company (Midroc Gold) commenced production in August 1998. It averages a yearly production totaling 4.5 tons. The Lega Dembi deposit is the largest gold producer in Ethiopia. It is situated in a late-Precambrian metamorphosed sediment of the N-S trending, volcano-sedimentary Megado belt, which forms part of the late-Proterozoic Adola granite-greenstone terrane in southern Ethiopia.
