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Al-Ahram Weekly 1 - 7 April 1999 Issue No. 423 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 1 - 7 April 1999 Issue No. 423
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Interview Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Forbidden fruit
By Peter SnowdonIn the Windward Islands at the beginning of this month, all eyes were on Geneva. On Monday 8 March, the World Trade Organisation (WTO) convened in special session in the Swiss capital, where many hoped it would succeed in brokering a cease-fire between the EU and the US in their long-running "banana wars". No one from the Windwards was invited to the meeting, even though it was their livelihoods and their way of life that was at stake. "Every citizen of this country is concerned by this," Elias John, President of the National Farmers' Association of St Lucia, told Al-Ahram Weekly in a telephone interview from Castries. He added, philosophically, "We're like the sandwich between two slices of bread."
The long-smouldering dispute exploded into life three weeks ago as the US threatened to impose unilateral trade sanctions against Europe for failing to bring its protectionist licensing regime which governs the importing of bananas from a number of developing countries into line with WTO rules. The US is demanding the lodging of dollar bonds equivalent to 100 per cent tariffs on a range of selected goods, which will be implemented retroactively as of 5 March if and when they are approved by the WTO. The list of exports which will be hit appears to have been chosen by someone with a peculiarly surreal -- and cruel -- sense of humour: those singled out for retaliatory action include the pecorino cheese-makers of Italy, the Scottish cashmere sweater industry and German manufacturers of coffee-making machines. The total cost to affected European industries will be $520 million -- the amount Washington claims American banana distributors have lost due to the disputed EU measures.
The EU has refused to comply, and accuses the US of having acted illegally by ignoring the WTO disputes settlement mechanisms. Meanwhile, the Caribbean nations announced at their bi-annual meeting last Thursday that they would have to "review" the Barbados treaty of 1997 under which they agreed to cooperate with the US in its war on drugs, in return for preferential access to certain American markets -- a commitment they had previously adhered to, even though many of the US promises were later rescinded by Congress.
What banana wars? A Cairo vendor Ð unperturbed Ð draws on his shisha
photo: Sherif Sonbol
The Geneva meeting ended unsatisfactorily for all involved, as WTO officials declined to intervene, and the two sides seemed further apart than ever, exchanging recriminations in public. While intense transatlantic negotiations continue behind closed doors, further developments will probably have to await the decision of the 3-person WTO arbitration panel which is reviewing the US sanctions. The arbitrators are due to report on 12 April. Meanwhile, concern continues to mount in the North that a full-scale trade war which could endanger the very existence of the WTO system may be looming, and that the present lull may represent nothing more than the calm before the storm.
Part of the problem in achieving a simple solution is that, in their own ways, both the Europeans and the Americans are right. As Peter Davies, Professor of Economic History at Liverpool University and a specialist in international trade relations, told the Weekly: "The Americans are totally justified in their interpretation of the WTO regulations. But equally, it's a matter of common sense that if you don't give the Windward Islands and the Caribbean permission to continue with the trade, you're going to have a revolution."
The Caribbean industry is entirely independent on a complex system of tariffs, quotas and licensing which has grown up over the last decade to protect their European markets. Bananas from the West Indies typically cost more than twice as much to produce as "dollar bananas" from large Central American plantations. The trade is vital to the islands' economies: in the Windward Islands, bananas account for roughly half of all exports by value, and employ, directly or indirectly, up to 70 per cent of the labour force.
Very few bananas are grown in either the Europe or the US. But for the two parties to the present dispute, the issues at stake are amplified by the fact that this is the first real test of "muscle" to come before the WTO system. While it may seem unlikely that the EU would risk the result of decades of painstaking trade negotiations for the sake of the Caribbean banana industry, which provides only nine per cent of the bananas consumed in Europe, the outcome of the present confrontation is vitally important for the precedent it will set. There are much bigger battles just round the corner: in May, beef and dairy products containing bovine growth hormone are due to arrive in Europe, and by the year 2000, American soya production will be 100 per cent genetically modified. In the wake of the BSE epidemic and other food scandals, such novel foods are a highly sensitive issue with European consumers. Yet any attempt to further defer their introduction is likely to bring down the full weight of American corporate wrath upon those who dare to try. As one commentator observed, what the EU really wants from the banana wars is to find out whether it actually still has the power to resist anything the US wants to force on it, without effectively having to renege on its WTO commitments and walk out of the organisation.
In Europe, however, this trial of force is largely presented in the media as an ethical struggle, albeit one of a predictably paternalistic kind. It is up to the EU, we are told, to protect the defenceless small-holders of the Windward Islands -- where the vast majority of banana growers farm less than 10 acres of land -- against the vicious forces of American corporate capitalism. This perception is reinforced by the fact that the Americans' first move to contest the European banana regime in 1995 was instigated by a formal petition presented to the US Trade Representative by Chiquita Brands and the Hawaii Banana Industry Association. Chiquita, formerly United Brands, is one of the "Big Three" US-based multinational corporations, along with Dole and Del Monte, which together handle 64 per cent of world trade in bananas. As the modern incarnation of the United Fruit Company, Chiquita is also heir to a long tradition of corruption, brutality and exploitation which dates back to the last century.
By 1908, when United Fruit was taken to court in what proved to be merely the first of many anti-trust actions, it already provided a third of the bananas eaten in North America. Unabashed by attempts to restrain its operations, it continued to expand apace, and by 1954 owned 85 per cent of the land suitable for banana cultivation in the American tropics. In the same year, it used the CIA (Allen Dulles, the agency's director, and his brother John Foster, Eisenhower's secretary of state, were major UFC shareholders) to overthrow the progressive government of Jacobo Arbenz in Guatemala, after Arbenz tried to nationalise a large amount of land belonging to the corporation. More recently, Chiquita again demonstrated its capacity for lateral thinking in business matters when confronted with competition from the Irish Fyffes Group. Fyffes was a wholly-owned subsidiary of United Fruit from 1913 until 1986, and since being bought out has built up an effective monopoly on the Caribbean trade. However, it fell foul of its former master when it sought to diversify by sourcing bananas in Central America. Chiquita is accused of derailing Fyffes' trains, boarding Fyffes' boats with armed militia, and kidnapping the company's representative in Honduras, who has since started proceedings for attempted murder.
Chiquita's influence over US government policy owes much to the fact that, although it pays very little in tax on its banana operations -- most of the profits disappear through manipulation of internal pricing mechanisms or are declared in countries where the company has negotiated substantial tax breaks from the local government -- it has long been a substantial contributor to the coffers of the two establishment parties. In 1993-1995, the present owner, financier Carl Lindner, donated almost $1.5 million to the Republicans, and over $900,000 to the Democrats. In the 1996 presidential campaign, his contributions to each camp were more or less equal at around three-quarters of a million. After Bill Clinton was re-elected, Lindner was among the lucky few invited to spend a night in the Lincoln Bedroom at the White House.
In May 1998, the Cincinnati Enquirer printed a 20-page exposé by two reporters who had spent a year investigating Chiquita's operations at home and abroad. No sooner had the special edition appeared than Chiquita's lawyers sprang into action. Faced with the wrath of the city's largest corporation, the Enquirer performed a comprehensive auto-da-fe, withdrawing the supplement, sacking the lead writer, publishing a formal apology for having printed it in the first place and settling out of court with Chiquita for a sum well in excess of $20 million. Yet although one of the journalists involved later admitted illicitly obtaining private voice mail belonging to Chiquita executives, the company never sought to deny the litany of environmental abuse, illegal activity and human exploitation which the text detailed, and despite their demonstrative attempt to remove this information from the public domain, the articles are still readily accessible on a number of Internet sites.
None of this, however, explains why such a powerful organisation should be desperate to eliminate such an apparently insignificant competitor as the Caribbean producers. Part of the answer lies in prevailing industry conditions over the last decade. The 1990s saw intense competition between the Big Three for market share, against a backdrop of plummeting world commodity prices. With the implementation of the European banana regime in 1993, Chiquita's share of the German market collapsed from 40 per cent to an estimated 18 per cent in 1996. (The new regime rescinded the so-called "Adenauer Clause" in the 1951 Treaty of Rome, which had effectively given Germany free access to dollar bananas. Chiquita is a long-standing donor to the Christian Democrats, and despite the fall of the CDU government, Germany remains adamantly opposed to preferential terms for ACP fruit.). At the same time, the company had made a huge outlay establishing new plantations in Central America in order to supply the markets of Eastern Europe which were opening up after the fall of the Berlin Wall. This speculation, however, failed to pay off when the anticipated sales never materialised, and the company thus found itself with substantial excess capacity. Economies of scale only work when you have a mass market to sell your massed bananas to. During the 1990s, though Chiquita's sales to the European Union fell, it still managed to convert a net loss at the start of the decade into a respectable profit five years later. Nevertheless, prising open the gates of the EU, from which it felt it had been wrongly expelled, became a top political priority for its directors.
The demonisation of Chiquita by European politicians and campaigning groups, though richly deserved, has also been highly misleading. Chiquita's determination to be the "bad boy of the bunch", as Sue Townsend of the World Development Movement in London puts it, has left Dole and Del Monte with a public relations opportunity they have not been slow to grasp. Where Chiquita intimidates union organisers and refuses to meet with pro-union pressure groups, Dole and Del Monte have of late been making all the right noises. They have even come out in favour of the EU banana regime, which might seem to be putting justice for the weak before their own interests. Then again, it may have something to do with the fact that both companies have recently developed substantial plantations in Cameroon and the Ivory Coast which, as ACP nations, also enjoyed privileged access to European markets
Touris, white man, wipin his face,
Met me in Golden grove market place.
He looked at m'ol clothes brown wid stain,
An soaked right through wid de Portlan rain
He cas his eye, turned up his nose,
He says, 'You're a beggar man, I suppose?'
He says, 'Boy, get some occupation,
Be of some value to your nation.'I said, 'By God and dis big right han,
You mus recognise a banana man.'Evan Jones, "The Song of the Banana Man"
Moreover, while it is a matter of record that the conditions for Chiquita's plantation workers are often extraordinarily inhumane, and cannot be compared with the life, however precarious, of a self-employed West Indian small-holder, it is also a fact that the Caribbean banana trade is tilted just as much in favour of the multinational corporation which handles and distributes the produce as it is in Central America. Fyffes acquired its monopoly on the business when Geest, the company which had initiated the Windward Islands trade in the 1950s, sold out to them. Though long a wholly-owned subsidiary of United Fruit, Fyffes never adopted its parent-company's strong-arm methods -- arguably because, as part of the British colonial system, it didn't need to. By leaving the production to local landowners, small and large, it was able to let them carry the substantial environmental risks peculiar to the region, as well as passing on to them the principle costs of the "service" it provided in shipping and ripening the fruit. It was also the growers who had to bear the bulk of the currency risk involved in the trade. The result was that, of the retail price of bananas sold in British shops, only 10 per cent found its way into the pocket of the grower -- roughly half the profit which Fyffes regularly chalked up for the arduous work of letting the same fruit lie in its British depots until it ripened.
European NGOs and concerned parliamentarians also make much of the fact that most of Fyffes' suppliers are small farmers, many of whom own less than five acres of land. While it is true that these small-holders are especially vulnerable to international economic and political decisions, and that the removal of their privileged access to the European market would be a cataclysm for them personally, this argument does not tell us much about the underlying economics of the banana industry. In particular, it usefully elides the fact that while small-holders may predominate numerically, when taken altogether they still only represent a small fraction of the islands' annual production.
Thus in St Lucia, according to a 1980s survey, over 75 per cent of farmers worked holdings of less than 10 acres. But this does not mean that the "average" St Lucian banana was produced by a small farmer. All it means is that 82.1 per cent of the people were crowded onto one per cent of the land, the vast majority of which -- 67 per cent -- belonged to only one per cent of the farmers. Worse, seventeen individuals owned 47 per cent of all agricultural land. As a result, 1,500 farmers accounted for between 80 and 90 per cent of the bananas grown in an average year. Moreover, of the bigger farmers, many were absentees or foreigners. Of the eight estates which were over 2,000 acres, only two belonged to St Lucians, and 55 of the largest plantations were owned by joint stock companies.
These figures are over a decade old, but there is no reason to think that things have radically improved since then. The result is that the same statistics which were being used some fifteen years ago to attack the involvement of the big banana companies (Geest, Fyffes) in the region, are now being used to defend a system which effectively enshrines those companies' right to the lion's share of the profits. According to James Ferguson, researcher at the Latin America Bureau in London, it was the formation of the Single European Market in 1992 which acted as a trigger for this change of attitude. "When Geest pulled out, and the whole thing looked increasingly shaky, those who had criticised the dependency began to see it as a good thing," Ferguson told the Weekly. "They started seeing the company's interests as identical to those of the farmers." Yet if anything, Ferguson confirmed, the 1980s statistics would understate the concentration of land ownership and the acuteness of the growers' dependency. "The situation on the ground has got worse."
Moreover, Fyffes may be more of a gentleman employer than Chiquita ever was or will be, but that doesn't mean the company is run by angels. In October 1996, workers on 11 farms belonging to a Guatemalan subsidiary of Fyffes, the Corporacion Bananera, told human rights groups that they had been suffering persecution by the company's agents because of their union membership: many had lost their jobs, and others had received death threats or seen their houses demolished. Classic Chiquita diplomacy, if ever there was such a thing. Fortunately, the campaigners' obsession with a single company has meant such incidents are now largely forgotten. Meanwhile, Fyffes' earnings per share rose by 21.3 per cent in 1998. On 12 January, the company announced that it was forming an alliance with Capespan, the major South African distributor which owns the Outspan and Cape brands, with a view to a full merger at a future date. The alliance, according to the Irish Times, was intended to enable the Dublin-based company to "broaden its product range beyond the problematic banana market". This was precisely the kind of diversification which Geest engaged in just before it left the Windwards high and dry. Industry watchers with a sense of historic irony might wish to take note.
Of course, others may yet be all too happy to take their place. Chiquita tried to woo the Windward farmers away from their contract with Fyffes in 1996, but failed. When Vaughan Lewis was ousted as Prime Minister of St Lucia in June the following year, he accused the company of having funded his victorious Labour Party opponents. In James Ferguson's words, "If you assume that the EU quota system will remain, it's in Chiquita's interests to buy some of that quota."
Meanwhile, as Fyffes prepares for a graceful exit, if need be, the small farmers of the Windward Islands, whose interests the EU is determined to protect, do not have the same opportunities to "diversify" that are open to a well-capitalised multinational corporation. Although working parties and NGOs insist that they do not want the banana regime maintained indefinitely, but only until the economy of the Caribbean region can be restructured in a more various and less vulnerable way, the prospects of that happening in any meaningful sense seem slight. As St Lucia's Nobel literature laureate Derek Walcott told the London Independent recently: "Even if we have the trappings and ceremonies of independence, how real are they? Our future is dependent on tourism and we are ruled from the outside."
And there's the rub. The only "meaningful" diversification that is on offer, leaving aside the potentially lucrative trade in illicit drugs, is in an industry that will make the islands even more dependent on the US-led "global" economy than they were before. The real crisis of the Caribbean is not the imminent demise of an agricultural tariff system descended from the "imperial preference" introduced after the Second World War, when Britain was less interested in promoting economic independence in the Lesser Antilles, than in stemming the flow of dollar reserves that threatened to leak back across the Atlantic to the US -- via United Fruits, among other conduits. The real crisis is that the whole region is still locked into the same economic system -- whether in its aggressive American form, or the more elegant and discreet European version -- which had already largely reduced it to a barren wasteland by the end of the sixteenth century, and in which the essential decisions which determine the islands' fate are always made elsewhere.
No one really has a plan to change this. In a way, that is hardly surprising. As James Ferguson told the Weekly, "Any development plan which seriously tried to focus on meeting the needs of the Caribbean first would cause such convulsions in the present distorted economy that you'd be unelectable. The islands know their roles: they're tourist playgrounds and sources of primary produce."
To talk about "development" in such a context can sound like a bad joke. Yet the heritage of colonialism in the Caribbean raises questions not only about the expulsion of history from contemporary politics, but also about its ecological irreversibility. The terrifying pace and completeness with which the region's indigenous ecosystems and cultures were destroyed to make way for the colonial sugar cane plantations four hundred years ago is paralleled only by the speed with which a sparse population of slash-and-burn agriculturalists were displaced by vast cohorts of "expendable" slaves transported from West Africa along the Middle Passage. The legacy of these two interrelated events -- soils exhausted by centuries of unremitting industrial cultivation, and an introduced overpopulation -- continues to determine the real constraints of life in the islands today. Within thirty years of first European contact, the Arawaks and Caribs were in most places effectively exterminated. It took only a little longer for the forests to be destroyed. The bond of subsistence with the land was broken. Throughout most of the Caribbean, it has never been restored.
Bananas are no solution to that problem. "Uneconomic" by the criteria of world trade, they are also unecological, their shallow roots opening the soil up to further erosion, unable to return to it what has been taken out. At best, they bring a little prosperity, unevenly handed round, as in the periods of plenty, known as the times of "green gold". At worst, they simply accentuate the under-developed periphery's dependence on the over-developed centre, and continue the depletion of the land that began under the sugar cane.
"There will always be problems in bananas," Elias John told the Weekly, "because bananas is international politics. If everything goes well with the EU, then maybe there'll be some good days still to come. But if the US win the war, then it will be economic disaster for us."
The Cincinnati Enquirer articles on Chiquita Brands can be found at: www.islandnet.com/~ncfs/maisite/list.htm
