Disaster Capitalism

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.

Reconstruction colonialism. Coming to a devastated country near you.

China and Japan. India and Pakistan.

When war breaks out, who always seems to profit?