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Extinguishing the Post Cold War Dream

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  • Extinguishing the Post Cold War Dream

    Extinguishing the Post Cold War Dream

    World Bank-Mandated Energy Privatization Taxes
    Armenia's Poor

    Grassroots National Newspaper
    Canada
    by Rob Maguire

    Late last month, an independent Armenia became a teenager. Food,
    fireworks and a festive atmosphere commemorated the 13th anniversary
    of its independence, declared on September 21, 1991. As the first
    Soviet republic to proclaim sovereignty during the collapse of the
    USSR, Armenians have reason to rejoice - after decades of cultural and
    political oppression they may finally flout their language, heritage
    and national identity without fear of reprisal.


    A boy heading home from school in Karabagh, Armenia.
    photo: Rob Maguire

    Many in this tiny republic, however, have little else to
    celebrate. While civil liberties were subject to Soviet-style
    constraints, the Armenia of the 1980s enjoyed a strong economy, a
    healthy and highly educated public, and one of the most egalitarian
    distributions of wealth in the USSR. Once the newly independent
    government began to adopt market reforms and neoliberal values, gross
    domestic product plummeted, prices for basic needs such as food and
    water increased dramatically, while public goods like health care
    and education began to crumble.

    Over a decade later, GDP has finally returned to pre-reform levels. Who
    has benefited from renewed economic growth, however, is not so
    clear. Spending on education and health remains low. Real wages are
    less than one-eighth of what they were in 1990, and economic inequality
    in Armenia has become extreme. In Yerevan, Armenia's capital, the
    number of BMWs seen rolling along city streets has mushroomed; and so
    have the ranks of panhandlers roaming those very same urban boulevards.

    Poverty has indeed become widespread in Armenia. Affecting roughly
    fifty percent of the population, it has quickly become an epidemic
    that shows little sign of subsiding.

    An old man in Yerevan, Armenia. photo: Rob Maguire

    Living on less than two dollars a day, the poor are
    particularly vulnerable to increases in the price of basic
    commodities. Privatization within the energy sector, however, has
    preyed upon this very weakness. Imposed by the World Bank through
    loan conditions, reforms designed to make electric utilities more
    attractive to foreign takeover left people paying more than twice as
    much for electricity then they were in the mid-1990s.

    Furthermore, inability to pay these inflated rates now results in
    disconnection. This strict marketplace logic is expressed by Andrei
    Rappaport, a senior official for Unified Energy System of Russia, and
    the new owner of several Armenian generating facilities: "If you want
    energy pay for it, and if there is not any money to pay, then goodbye."

    Not unsurprisingly, these new conditions led to a serious decline in
    household energy consumption. The poor in particular were forced to cut
    electricity use considerably, by twenty percent on average. According
    to a World Bank report, the typical household barely has enough
    electricity to power a refrigerator and a handful of light bulbs.

    Despite the decline in consumption, increased energy costs now account
    for approximately thirty percent of all household expenditures, with
    electricity making up the bulk of these payments. A related concern
    is the move towards greater wood consumption. While this reduces the
    reliance on costly electric power, it has also contributed to higher
    levels of indoor air pollution and accelerated deforestation.

    Energy - widely recognized as a fundamental need for human development
    - has become increasingly inaccessible in Armenia. At the insistence of
    the World Bank, control over this precious commodity has been handed
    over to foreign interests, where social priorities are sacrificed in
    the name of corporate profit and capitalist ethos.

    The picture is similar in much of the former Soviet Union:
    increases in cultural and, to a lesser degree, political freedoms
    have been overshadowed by a sharp decline in the freedom to meet
    basic human needs. This failure is directly related to the "shock
    therapy" imposition of market capitalism on countries with centralized
    economies - a prescription borne more of ideological zeal than sound
    economic principles.

    Soviet leftovers. photo: Rob Maguire

    Joseph Stiglitz, former Chief Economist of the World Bank, explains:
    "From this cold-war perspective, those who showed any sympathy to
    transitional forms that had evolved out of the communist past and
    still bore traces of that evolution must themselves be guilty of
    'communist sympathies.' Only a blitzkrieg approach during the
    'window of opportunity' provided by the 'fog of transition' would
    get the changes made before the population had a chance to organize
    to protect its previous vested interests."

    Poverty and inequality remain Armenia's greatest challenges, and
    some question whether the political will exists to tackle these vital
    problems. This is true for the Armenian government, but perhaps more
    importantly, for the World Bank and related organizations such as
    the International Monetary Fund and the United States Agency for
    International Development. The coercive pressure these institutions
    place upon governments to engage in fire sale privatisation tactics
    could be redirected to produce publicly owned utilities that are
    transparent, efficient, and designed to serve the public good.

    Unfortunately, these institutions appear more concerned with
    ideological imperialism and creating profit opportunities for Western
    corporations than they are with promoting sustainable economics,
    accountable governance, and poverty reduction - all of which are
    necessary for human beings to truly prosper.

    Rob Maguire is a Canadian activist and graduate student living in
    Yerevan, Armenia. He can be found online at www.projectcommunis.org

    From: Emil Lazarian | Ararat NewsPress
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