U.S.A.: A Form of Disaster Capitalism is Reshaping Societies to Its Own Design

Last summer, in the lull of the August media doze, the Bush administration's doctrine of preventive war took a major leap forward. On August 5 the White House created the office of the coordinator for reconstruction and stabilisation, headed by Carlos Pascual, the former ambassador to Ukraine. Its mandate is to draw up elaborate "post-conflict" plans for up to 25 countries that are not, as yet, in conflict. According to Pascual, it will also be able to coordinate three full-scale reconstruction operations in different countries "at the same time", each lasting "five to seven years".

Fittingly, a government devoted to perpetual pre-emptive deconstruction now has a standing office of perpetual pre-emptive reconstruction. Gone are the days of waiting for wars to break out and drawing up plans to pick up the pieces. Pascual's office keeps "high risk" countries on a "watch list" and assembles rapid-response teams made up of private companies, NGOs and members of thinktanks - some, Pascual told an audience at the Centre for Strategic and International Studies, will have "pre-completed" contracts to rebuild countries that are not yet broken.

The plans Pascual's teams have been drawing up in his office in the state department are about changing "the very social fabric of a nation", he told CSIS. The office's mandate is not to rebuild any old states, you see, but to create "democratic and market-oriented" ones. So his reconstructors might help sell off "state-owned enterprises that created a nonviable economy". Sometimes rebuilding, he explained, means tearing apart the old.

Few ideologues can resist the allure of a blank slate - that was colonialism's seductive promise: discovering wide-open new lands where utopia seemed possible. Now there are no new places to discover, no terra nullius, but there are many countries smashed to rubble, whether by acts of God or Bush; there is a chance to grab hold of "the terrible barrenness", as a UN official described the devastation in Aceh, and fill it with the most perfect plans.

"We used to have vulgar colonialism," says Shalmali Guttal, a Bangalore-based researcher with Focus on the Global South. "Now we have sophisticated colonialism, and they call it 'reconstruction'." It certainly seems that ever larger portions of the globe are under active reconstruction by a familiar cast of consulting firms, engineering companies, mega-NGOs, government and UN aid agencies and financial institutions. From Iraq to Aceh, Afghanistan to Haiti, a similar chorus of complaints can be heard: the work is far too slow, if it is happening at all; foreign consultants live high on expense accounts and thousand-dollar-a-day salaries, while locals are shut out of jobs, training and decision-making; "democracy builders" lecture governments on transparency and "good governance", yet most contractors and NGOs refuse to open their books to those same governments, let alone give them control over how their aid money is spent.

Three months after the tsunami hit Aceh, the New York Times reported that "almost nothing seems to have been done to begin repairs and rebuilding". The dispatch could have come from Iraq, where, as the Los Angeles Times has reported, all Bechtel's allegedly rebuilt water plants have started to break down, one more in a litany of reconstruction screw-ups. It could have come from Afghanistan, where President Karzai blasted "corrupt, wasteful and unaccountable" foreign contractors for "squandering the precious resources that Afghanistan received in aid".

But if the reconstruction industry is stunningly inept at rebuilding, that may be because rebuilding is not its purpose. According to Guttal: "It's not reconstruction at all - it's about reshaping everything." The stories of corruption and incompetence mask this deeper scandal: the rise of a predatory form of disaster capitalism that uses the desperation created by catastrophe to engage in radical social and economic engineering. On this front, the reconstruction industry works so efficiently that the privatisations and land grabs are usually locked in before local people know what hit them. Herman Kumara, of the National Fisheries Solidarity Movement in Negombo, Sri Lanka, sent an email to colleagues around the world warning that Sri Lanka is facing "a second tsunami of corporate globalisation and militarisation ... We see this as a plan... to hand over the sea and the coast to foreign corporations ... with military assistance from the US marines."

Paul Wolfowitz, the US deputy defence secretary, oversaw a similar project in Iraq: the fires were still burning when US officials announced that the country's state-owned companies would be privatised. Some argue that Wolfowitz is unfit to lead the World Bank; in fact, nothing could have prepared him better.

'Post-conflict" countries now receive 20-25 % of the World Bank's lending, up from 16% in 1998. Rapid response to disaster has traditionally been the domain of UN agencies. But today, with reconstruction revealed as tremendously lucrative, the World Bank leads the charge. There are massive engineering and supplies contracts ($10bn to Halliburton in Iraq and Afghanistan alone); "democracy building" has exploded into a $2bn industry; and times have never been better for the private firms that advise governments on selling off their assets. (Bearing Point, the favoured of these firms in the US, reported that revenues for its "public services" division "had quadrupled in five years".)

But shattered countries are attractive to the World Bank for another reason: They take orders well and will usually do whatever it takes to get aid dollars - even if it means racking up huge debts and agreeing to sweeping policy reforms. Even better, many war-ravaged countries are in states of "limited sovereignty" and considered too unstable to manage aid money, which is often put in a trust fund managed by the World Bank - in East Timor, the bank doles out money to the government as long as it shows it is spending responsibly. Apparently, this means slashing public-sector jobs (the government is half the size it was under Indonesian occupation) but lavishing aid money on foreign consultants. In Afghanistan, the World Bank mandated "an increased role for the private sector" in water, telecommunications, oil, gas and mining and directed the government to leave electricity to foreign investors. Few outside the bank knew of these changes, as they were buried in a "technical annex" attached to an emergency-aid grant.

It has been the same story in Haiti. In exchange for a $61m loan, the bank requires that private companies run schools and hospitals - extremely controversial given Haiti's socialist base. The bank admits that, with Haiti under what approaches military rule, there is "a window of opportunity for reforms that may be hard for a future government to undo".

Now the bank is using the December 26 tsunami to push through its favoured policies. The most devastated countries have seen almost no debt relief, and most of the bank's aid has come in the form of loans, not grants. The bank is pushing for expansion of tourism and industrial fish farms, rather than rebuilding small-boat fisheries. As for roads and schools, bank documents recognise that rebuilding "may strain public finances" and suggest that governments consider privatisation (yes, they have only one idea).

In January Condoleezza Rice horrified many by describing the tsunami as "a wonderful opportunity" that "has paid great dividends for us". If anything, she was understating the case. A group calling itself Thailand Tsunami Survivors and Supporters says that for "businessmen-politicians, the tsunami was the answer to their prayers, since it wiped these coastal areas clean of the communities that had stood in the way of resorts, hotels, casinos and shrimp farms". Disaster, it seems, is the new terra nullius.

· A longer version of this article is published in the Nation; additional research by Aaron Maté and Debra Levy

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