Development and policy on nation's strategic resources: A response
Tuesday, 31 July 2007
Hasan Mahmud
ONE of the editorial pieces of The Financial Express in its issue on July 25 addressed the issue of natural resources policy of Bangladesh. There has been a heated debate over it for several years. The debate has even become more frequent recently during the previous government and the incumbent emergency government. It seemingly stands in favour of extraction and export of mineral resources with an aim to help promote rapid national economic growth. Specialists, politicians and some civil society activists demand a prudent determination of the national interest before going into any operation in the field. The column titled "Policy on nation's strategic resources" sounds supporting the government's position while criticising the opposition's as espousing "ultra-nationalistic politics".
Respected columnist Syed Fattahul Alim has vividly made his arguments with reference to natural resources and its role in the economic development in Japan. He is enchanted with the spectacular human capital of Japanese people that has enabled Japan to experience the fastest economic growth despite the fact that nature has least endowed Japan with necessary resources. He is indisputably true at this point. However, to my understanding he has missed some crucial aspects of the history of Japan's miraculous economic development that would lead to different conclusions than what he proposes.
Japanese's perseverance is well-known to all for years. But what did they do in the stages of the emergence of their economic growth? Did they exert themselves to the innovation and improvement of productive technologies that led them grow? Or, did they do something other than what we now assume about their specific efforts towards economic growth? It has been well-established by now that Japan started growing during the second half of the 1960s and that growth performance of its economy reached its peak during the first half of the 1980s. What happened during that period in the world in general and Japan in particular? These questions are of crucial importance while thinking of the relationship of natural resources and national economic growth.
Japan's magnificent economic growth is never a miracle, but rather the result of a concrete historical process of colonialism and its continuation in the contemporary world economy. It is specifically through this process that Japan has become the owner of the majority share of the natural resources in Africa that sustains Japan's economic hegemony today.
The World War-II has shifted the balance of power in the colonial world order. The USA emerged as the new hegemonic power with leverage over the whole world replacing the European colonial powers in the Africa and Asia, and also colonial Japan in the East Asia. For Japan, the US direct occupation over following five years and the stronghold over its foreign and military policies over the following decades (in fact still present) have foiled Japan's further imperial aspirations. What was of particular significance was the opening up of the US market for Japanese products during the cold war between the US on one hand and the USSR and China on the other starting mainly from the 1960s. This offered a novel opportunity for Japan to aspire economic growth in place of military ascendancy. The politically captivated Japanese government started focusing more on economic activities and supporting its strongest economic sectors with all sorts of state assistance while discouraging the weakest sectors with the aim to channel maximum potentials in the booming sectors -- shipping, electronics, automobile, etc.
At the same time with the purported demise of colonialism, Africa had been restructured politically and divided into several nation states. Historically, Africa never had the experience of European nation state, which is also true for almost all other non-European countries. The arbitrary unification of the traditional ethnic community-based political organisations into modern nation states has engendered severe tension and power politics within every African country. The ethnic groups that replaced the previous colonial masters had become the new masters over all other ethnic groups in each country, and they required arms and ammunition to sustain their political dominance. Hence the African governments strode towards building huge arsenal. The monetary economy was largely absent in Africa, yet the nature has slavishly endowed them with resources. Therefore, they started selling out the resources to earn money by which they could pay the bills for weapons.
Any circumspect student of development would find here two business interests: one is the business of resources where African countries sell out their resources and earn money, and the other, the business of war technologies where African countries buy weapons. Now the quest is -- who are the other parties involved in these business with the artificially created African countries consisted of combating so-called militant groups? They are Japan and the US (previously countered by the USSR in some countries).
After the World War-II, Japan lost all its colonies in the East Asia, but it had much of the capital acquired through colonial plundering. So, beheaded by the US in the military field, it started conventional business and entered Africa with huge money to buy the natural resources. And due to the continued internal political conflict in African countries over respective territories, all the ethnic groups started buying weapon from the US (and some pro-socialist groups from the then USSR) with the money they earned through the selling of their natural resources. This is the process that has enabled Japan own the lion's share of the natural resources in Africa.
The analytical relationship between natural resources and national economic development drawn above applies to Bangladesh, too. A large part of common people naively support the policy to extract and export natural resources so that national economic growth can be attained. But this requires considering the issue from several points of view. We must think about the resultant loss of land and other resources due to the excavation for minerals. Which one is greater -- the government's share of the minerals or the loss of land? As we know, the government is entitled to own only 6.0 per cent of the coal that would be extracted in Fulbaria, according to the contract with Asia Energy. Does that 6.0 per cent compensates for the damage of land and other environmental hazards? Even the most crucial aspect is -- how the government would compensate those farmers to be uprooted from their agricultural lands and homesteads?
Since Bangladesh is densely populated, and literally every single inch of land is arable, how and where would the government rehabilitate those affected farmers? We must not forget that rehabilitation of the farmers does not simply mean paying them a lump-sum amount in cash as a compensation for their land. They must be rehabilitated into the same environment with same lifestyle somewhere else, which is practically impossible in the country. Eventually there arises the question -- doesn't the government realise this danger of excavation for resources without considering people's interest? It does. But there is no way open to the government for sustaining its income for regular expenses.
The government has to spend a huge sum for its bureaucratic and administrative functions. Therefore, it requires a consistent supply of money. Previously the state-owned industries and the service sectors provided the fund. But in this age of "Neo-liberal Globalisation" the state has to suspend ownership and thus direct intervention in the market. This drastically reduces the government earnings. Therefore, the government has to apply any alternative means at hand to keep up the supply of fund. Hence, the expansion of taxed sectors and extraction of natural resources. But very often this does not generate the necessary amount. So, the government borrows from multilateral and bilateral agencies like the World Bank, IMF, ADB, USAid, AusAiD, SIDA, JICE, etc. This loan also does not rescue the government from the deficit budget. Yet instalment for repayment of the foreign loans compels the government to try harder and harder to squeeze domestic resources (known as Tightening the Belt in contemporary development discourse) to increase income so that it can repay loan along with its own regular expenses.
Thus, the government becomes doubly burdened conceding to a vicious trap.
We believe that there is no single interest we call national interest in the formulation of our state policy for natural resources. But the issue includes various contradictory interest groups -- government and bureaucracy, ruling political elite and non-ruling elite, multilateral donor agencies, multinational corporations, and most importantly, the local people. So, arguing with the government for a prudent consideration in policy formation is never a simple "ultra-nationalistic politics", instead a far-sighted suggestion. And it is certainly inhuman and atrocious to ask the local inhabitants to go away to somewhere else in the name of national interest, whereas the state has no plan to take care of them.
The writer is a Monbusho Scholar in the Global Studies Programme, Sophia University, Japan.
He may be reached at
'mahmud735@gmail.com'
ONE of the editorial pieces of The Financial Express in its issue on July 25 addressed the issue of natural resources policy of Bangladesh. There has been a heated debate over it for several years. The debate has even become more frequent recently during the previous government and the incumbent emergency government. It seemingly stands in favour of extraction and export of mineral resources with an aim to help promote rapid national economic growth. Specialists, politicians and some civil society activists demand a prudent determination of the national interest before going into any operation in the field. The column titled "Policy on nation's strategic resources" sounds supporting the government's position while criticising the opposition's as espousing "ultra-nationalistic politics".
Respected columnist Syed Fattahul Alim has vividly made his arguments with reference to natural resources and its role in the economic development in Japan. He is enchanted with the spectacular human capital of Japanese people that has enabled Japan to experience the fastest economic growth despite the fact that nature has least endowed Japan with necessary resources. He is indisputably true at this point. However, to my understanding he has missed some crucial aspects of the history of Japan's miraculous economic development that would lead to different conclusions than what he proposes.
Japanese's perseverance is well-known to all for years. But what did they do in the stages of the emergence of their economic growth? Did they exert themselves to the innovation and improvement of productive technologies that led them grow? Or, did they do something other than what we now assume about their specific efforts towards economic growth? It has been well-established by now that Japan started growing during the second half of the 1960s and that growth performance of its economy reached its peak during the first half of the 1980s. What happened during that period in the world in general and Japan in particular? These questions are of crucial importance while thinking of the relationship of natural resources and national economic growth.
Japan's magnificent economic growth is never a miracle, but rather the result of a concrete historical process of colonialism and its continuation in the contemporary world economy. It is specifically through this process that Japan has become the owner of the majority share of the natural resources in Africa that sustains Japan's economic hegemony today.
The World War-II has shifted the balance of power in the colonial world order. The USA emerged as the new hegemonic power with leverage over the whole world replacing the European colonial powers in the Africa and Asia, and also colonial Japan in the East Asia. For Japan, the US direct occupation over following five years and the stronghold over its foreign and military policies over the following decades (in fact still present) have foiled Japan's further imperial aspirations. What was of particular significance was the opening up of the US market for Japanese products during the cold war between the US on one hand and the USSR and China on the other starting mainly from the 1960s. This offered a novel opportunity for Japan to aspire economic growth in place of military ascendancy. The politically captivated Japanese government started focusing more on economic activities and supporting its strongest economic sectors with all sorts of state assistance while discouraging the weakest sectors with the aim to channel maximum potentials in the booming sectors -- shipping, electronics, automobile, etc.
At the same time with the purported demise of colonialism, Africa had been restructured politically and divided into several nation states. Historically, Africa never had the experience of European nation state, which is also true for almost all other non-European countries. The arbitrary unification of the traditional ethnic community-based political organisations into modern nation states has engendered severe tension and power politics within every African country. The ethnic groups that replaced the previous colonial masters had become the new masters over all other ethnic groups in each country, and they required arms and ammunition to sustain their political dominance. Hence the African governments strode towards building huge arsenal. The monetary economy was largely absent in Africa, yet the nature has slavishly endowed them with resources. Therefore, they started selling out the resources to earn money by which they could pay the bills for weapons.
Any circumspect student of development would find here two business interests: one is the business of resources where African countries sell out their resources and earn money, and the other, the business of war technologies where African countries buy weapons. Now the quest is -- who are the other parties involved in these business with the artificially created African countries consisted of combating so-called militant groups? They are Japan and the US (previously countered by the USSR in some countries).
After the World War-II, Japan lost all its colonies in the East Asia, but it had much of the capital acquired through colonial plundering. So, beheaded by the US in the military field, it started conventional business and entered Africa with huge money to buy the natural resources. And due to the continued internal political conflict in African countries over respective territories, all the ethnic groups started buying weapon from the US (and some pro-socialist groups from the then USSR) with the money they earned through the selling of their natural resources. This is the process that has enabled Japan own the lion's share of the natural resources in Africa.
The analytical relationship between natural resources and national economic development drawn above applies to Bangladesh, too. A large part of common people naively support the policy to extract and export natural resources so that national economic growth can be attained. But this requires considering the issue from several points of view. We must think about the resultant loss of land and other resources due to the excavation for minerals. Which one is greater -- the government's share of the minerals or the loss of land? As we know, the government is entitled to own only 6.0 per cent of the coal that would be extracted in Fulbaria, according to the contract with Asia Energy. Does that 6.0 per cent compensates for the damage of land and other environmental hazards? Even the most crucial aspect is -- how the government would compensate those farmers to be uprooted from their agricultural lands and homesteads?
Since Bangladesh is densely populated, and literally every single inch of land is arable, how and where would the government rehabilitate those affected farmers? We must not forget that rehabilitation of the farmers does not simply mean paying them a lump-sum amount in cash as a compensation for their land. They must be rehabilitated into the same environment with same lifestyle somewhere else, which is practically impossible in the country. Eventually there arises the question -- doesn't the government realise this danger of excavation for resources without considering people's interest? It does. But there is no way open to the government for sustaining its income for regular expenses.
The government has to spend a huge sum for its bureaucratic and administrative functions. Therefore, it requires a consistent supply of money. Previously the state-owned industries and the service sectors provided the fund. But in this age of "Neo-liberal Globalisation" the state has to suspend ownership and thus direct intervention in the market. This drastically reduces the government earnings. Therefore, the government has to apply any alternative means at hand to keep up the supply of fund. Hence, the expansion of taxed sectors and extraction of natural resources. But very often this does not generate the necessary amount. So, the government borrows from multilateral and bilateral agencies like the World Bank, IMF, ADB, USAid, AusAiD, SIDA, JICE, etc. This loan also does not rescue the government from the deficit budget. Yet instalment for repayment of the foreign loans compels the government to try harder and harder to squeeze domestic resources (known as Tightening the Belt in contemporary development discourse) to increase income so that it can repay loan along with its own regular expenses.
Thus, the government becomes doubly burdened conceding to a vicious trap.
We believe that there is no single interest we call national interest in the formulation of our state policy for natural resources. But the issue includes various contradictory interest groups -- government and bureaucracy, ruling political elite and non-ruling elite, multilateral donor agencies, multinational corporations, and most importantly, the local people. So, arguing with the government for a prudent consideration in policy formation is never a simple "ultra-nationalistic politics", instead a far-sighted suggestion. And it is certainly inhuman and atrocious to ask the local inhabitants to go away to somewhere else in the name of national interest, whereas the state has no plan to take care of them.
The writer is a Monbusho Scholar in the Global Studies Programme, Sophia University, Japan.
He may be reached at
'mahmud735@gmail.com'