Military Juntas of the Twenty-First Century: Bangladesh

The secular Awami League, led by Sheikh Hasina, has won the recent Bangladeshi parliamentary elections in a landslide. Although the opposition Bangladesh Nationalist Party, led by Khaleda Zia, has challenged the election, the results seem clear and the elections were declared free and fair by international obeservers. This new parliament is set to take control of the impoverished nation from the military junta which had ruled for two years. The military junta (benignly known as the "caretaker government") began in early 2007, after the previous electoral battle between the Awami League and the BNP turned into a bloody and chaotic street war.

The results of 2008 are a big shift from the results of the last standing election in 2001. That election saw the right-wing BNP win 193 seats to Awami's 62, and the main Islamist party take 17 seats. In contrast, the 2008 elections see the Awami-led coalition take more than 260 to BNP's 31, and the Islamist party "almost wiped out". Note that there are 300 seats in the Bangladeshi parliament.

Between floods, poverty, cyclones, and military intrusions into politics, it seems unlikely that Bangladesh would be able to sustain democracy. And there certainly remains a possibility that the opposition parties will cause a ruckus and incite more violence. Hopefully the will of the people will be respected, and the "caretakers" will step aside as planned.

Hot off the presses: Uh-oh.



Bangladeshis line up to vote (courtesy of the CBC)

Ecuador Drops the D-Bomb

Ecuadorean President Rafael "The Mentalist" Correa announced Saturday that his country will be defaulting on an upcoming payment for "illegitimate" loans made by previous administrations. Ecuador was supposed to be making a $30 million dollar interest payment (and you thought your API was bad!), mostly to international banks and foreign governments. The power to default on foreign loans was given to El Presidente by the massive, Chavez-style referendum which was approved (64%) by the voters back in September. Correa made it clear that despite the global economic ice storm, Ecuador retained enough capital to make these payments -- but that it chose not to, based on a recent internal audit which found that these loans were illegitimate under Ecuadorean law.

This was a minor story carried by most MSM under the auspices of the global economic ice storm. However a story from everyone's favorite journalistic go-getter, McClatchy Newspapers, points out that this is the first time a country has defaulted on foreign debt simply out of choice. This is certainly a significant step towards a more level playing field in international debt financing. I believe Correa's action here fits under the general theme of the Great Financial Finger-Pointing of 2009. In this economic crisis, villains are easy to cast, and Correa has cast his finger, rightly so, at the Global South loan-peddlers and their financial enablers. Other countries and foreign affairs blog editors may also take this time to default on loans. It's like karaoke Thursday at the local bar -- everyone's already drunk and singing Marvin Gaye songs off-key, so what the hell, give me the microphone and shot of cheap whiskey.

Correa is already pretty popular, and this D-bomb can only add to his appeal. He will encounter problems if the price of oil keeps dropping, as this industry represents a good chunk (around 40%) of his economy. For now foreign investors will probably resort to some pushy lawsuits and threats to cut off foreign financing. These tactics are nearly moot. Correa has already contracted the massive Boston law firm of Foley & Hoag (Fox News "expert" talking point #1: Foley & Hoag also represents some detainees at Guantanamo Bay) to sue some of the original investors in the "illegitimate" loans. Threats to cut off foreign financing are basically toothless at a time when insolvency is the new black for practically every international financial institution -- the money's not coming, whether it's "cut off" or not.

Interesting soap-opera side note: The same day Correa made his announcement, his foreign minister resigned. Maria Isabel Salvador had only been in office for a year. Are these events related, or is her family just that cool?

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Addendum (12/16/08)

The collective mouth of the Western financial world opens in shock and horror. A Third World country defaulting on foreign loans -- and this time it's not because their coffers have been licked dry by a corrupt banana dictator! A puny wanna-be socialist telling Wall Street bankers he's got better things to do with his money then pay them exorbitant interest rates! What nerve! We must teach him a lesson!

The Fitch Rating Agency slaps Ecuador with an across-the-board investment downgrade. Portfolio.com declares Correa "idiotic". Seeking Alpha ties the decision to an anti-imperialist 'Bolivarian' ideology. So this default decision was short-sighted and lacked pragmatism...right?

Wrong. Rafael Correa is no short-sighted populist. He has a PhD in Economics from the University of Illinois. His new foreign minister, Fander Falconi, has a doctorate in economics from la Universidad Autonoma de Barcelona. These are not men who lack awareness of the consequences of their actions. Correa's administration has been threatening to default on this "illegitimate" debt for over a year, and specifically included the power to do so in their September referendum. Everyone agrees the country retained, and retains, the ability to make these payments, as they have been doing for decades under both leftists and military juntas.

The debt default is part of a well-planned and forward-thinking economic policy. One goal of this policy seems to be the end of dollarization in Ecuador. Ecuador has used the dollar since 2000, when its local currency, the sucre, spiralled out of control. The dollar is no longer the monetary heavyweight it once was, and Ecuador is not alone in trying to escape the Dollar Zone. Another part of this policy is the assertion of a precedent in international North-South lending: Don't make deals with illegitimate governments, because those deals can be thrown out later.

I think Correa is also betting on a lot of the investors to bite on debt renegotiation. This debt has already been renegotiated twice before. However many of these investors are short on capital given the current climate, and Ecuador's ability to pay make renegotiation, even on very pro-Ecuador terms, much more attractive than any attempt to seize assets through the courts. So in this way Correa can take advantage of the economic glo-pocalypse to rid himself of burdensome debt servicing, set a strong precedent for poor debtor nations weaning themselves off the Washington Consensus, and all the while increase his local and regional popularity.

Progressive Challenge for the 21st Century, Part I

We won! We ended eight years of tyrannical idiocy, we elected the nation's first African-American president, we organized a tremendous grassroots effort and overcame the two most powerful political machines in recent history and by doing so turned a new, brighter page in our history. Yes we could and Yes we did! Now what?

There are many challenges that lie ahead -- the ultimate over-stated understatement for this last leg of 2008. As a progressive, I look at how our current economic crisis intersects with our longer-lasting crises in health care, education, and affordable housing to cause and portend ruin for masses of working families. I shudder when I see unemployment rates rising, and can only imagine how many desperate people aren't even included in the already horrific figures because they have either stopped trying to find work, or are stringing enough out of part-time minimum wage jobs so that the ends of their economic belt might occasionally meet before rent is due. I burn to hear of top CEOs flying corporate jets to Washington to beg for bailout money, blaming unions for their troubles while laid-off autoworkers sit down with their spouses late at night, forced to choose between heating their homes and buying Christmas presents for their kids. And after I think of these things, I tend to remember who our next President is, and it gives me some relief from my anxiety. But I am not satisfied, because I am a progressive, and it is not in our nature to be satisfied.

The progressive movement stands for decency and fairness above all. It stands for a government which protects all its people, not just from military attack, but as well from hunger and illness. Progressives believe that government can serve as a force for good in society when it is led by those who will fight for the common good. We believe that a rising tide lifts all boats, and not that bigger boats will somehow lift the tide. The progressive movement has a vital role to play in this new century, not only to counter the influence of those jet-setting beggar executives and their pocket politicians, but to craft a whole new vision for how the world economy should function.

To do that we need passion, intelligence, and unity. But we also need honesty. It is easy to criticize the profit-idolaters and religious zealots. It is more difficult to point that same lens back at our own history and ideas. The progressive movement may have lofty ideals, but we have not always chosen the best means to reach them.

For nearly a century many progressives pushed Communism and Socialism as the answer to the problems of modern society. We advocated for Stalin and Mao even when we knew, or should have known, about their totalitarian madness. As an interlude, I urge readers to resist becoming defensive at this point. We must admit our weaknesses in order to understand them, and to not repeat the mistakes of the past. We celebrate(d) Castro and Che, Lenin and Trotsky, and countless Third World revolutionaries for their gall to fight against evil capitalists. We decided that governments, well-run, could fix all of our problems through legislation. We danced in the streets for the New Deal and the Great Society programs. When a problem arose, we applied our magic cure: more government spending. We demonized globalization and Wall Street. Now, wait just one second, you say -- this author calls himself a "progressive"? Sounds more like a Fox News pundit! The point I am trying to make here is that we were wrong to believe that government could solve our problems, and we were wrong to believe that the capitalist system is inherently evil. Government should be limited and capitalism is okay...Rush Limbaugh is popping pills and nodding his head. What is this madness?

TWTW Episode 3 -- August 26, 2008

TWTW Episode 2!