Instead of providing bailouts, governments would do well to follow the Bankwatch example
By Dan Swartz
The recent multi-billion dollar US government handout to failing financial giants is not the first occasion in which US taxpayers have come to the rescue (however unwittingly or grudgingly) for irresponsible lending practices. The firms in question, on both occasions, made poor business decisions, made bad business plans, and their businesses deservedly went under. In the earlier instance, the US government decision to reward incompetence by gifting billions and billions of dollars merely postponed the inevitable for a couple of decades. For example, Citigroup, the biggest bank in the world, has just received USD 20 billion for being a bunch of royal idiots twice running.
Consider also that the same airline companies which receive huge annual government subsidies, free land for airports, no tax on airplane fuel (kerosene), and which failed to provide proper airport security, significantly contributing to the deaths of thousands of people on September 11, 2001, were rewarded for their oversight and mismanagement with over USD 7 billion of taxpayers money. This is the United States, world trumpeter of the free market and Darwinist economics?
Now US, French and German automakers are crying for help, and governments are rushing to their aid. Honestly, I think it would be much better if the car companies were allowed a quick death. The savings could then be applied toward environmentally sustainable public transport systems, national health care and alternative energy systems.
I never thought that I would be expressing free market capitalist ideology in my old age; but yes, let the banks, car and airline companies rot. How many schoolbooks could this wasted money have bought? How many mosquito nets, or HIV medicines, or water filters? Mismanaged companies should be allowed to simply fail and vanish. Meanwhile, those which are well managed won't require taxpayer bailouts and billions in handouts to continue to provide bad loans and manufacture unsustainable, planet-destroying products. But, it seems safe to say that they will continue to do so because we'll just bail them out again.
While no one seems to be monitoring our savings and loan institutions, at least someone is monitoring the loans and projects of international financial institutions (IFIs). The CEE Bankwatch Network (www.bankwatch.org), an international NGO with member organisations from 12 countries across the Central and Eastern European region (CEE), has been doing good work since 1995. The aim of the network is to monitor the activities of IFIs which operate in the region, and to propose constructive alternatives to their policies and projects. Bankwatch focuses mainly on energy, transport and EU enlargement, while working at the same time to promote public participation and access to information about the activities of IFIs across our region.
At first glance, this sort of activity seems drastically different from the kind of monitoring that should guide the activities of local and national banks; but all too often, poorly considered international loans affect just as many people at the local level. Consider a mammoth construction such as China's Three Gorges Dam which, with the help of international bank financing, displaced 1.24 million people and completely obliterated the local environment. Or think about the continued interest of IFIs such as the EBRD in the funding of nuclear power plants in the CEE region; or the 'brilliant' World Bank project in Gracanice, Kosovo to clean up the local river while cutting all the reeds along the banks, simultaneously increasing erosion and removing the river's ability to clean itself.
Bankwatch offers comprehensive citizens' guides on the World Bank Group, the European Investment Bank, and the European Bank for Reconstruction and Development, explaining bank decision, operations and EIA procedures, providing tips on how to negotiate with banks, and detailing criticisms from citizens groups. Furthermore, Bankwatch has made its extensive photo archive available for free, full of good action photos and a detailed search engine. Although I've often struck out with the keywords I select, I'm sure that some tweaking and patience will result in a truly superb resource.
