Wednesday, January 13, 2010

Chief judge Abutu's court says no vacuum in Aso Rock., Abuja.



Nigeria once more is haunted by the demons of deregulation, particularly of the downstream sector of the petroleum industry. Myths and a broad spectrum of ill-articulated “justifications” are being conjured for the umpteenth time by spokespersons of the Federal Government and the major oil dealers. Full deregulation by the Federal Government and a consequent skyrocketing of pump prices of petroleum products seem but a matter of time. The Nigeria Labour Congress, Independent Petroleum Marketers Association of Nigeria, civil society organisations and several eminent Nigerians including the Sultan of Sokoto and the President of the Christian Association of Nigeria have raised their voices, speaking out the minds of the immense majority of citizens, in opposition to the contemplated full deregulation.

This article considers the issues raised by the Federal Government to justify its intent of “deregulation”. These amount to repetitions of the same arguments the government has been making for the past twenty three years and which are shown as invalid by hard facts and serious analysis. The problem actually is not one particular to the petroleum industry, but goes deeper to the neoliberal ideology and corporate, for-profit interests behind deregulation. It is of the essence to clarify this point as several Nigerians who contest the deregulation of the downstream sector of the economy might see no problem with deregulation, in general, with the experience of the telecom industry in the past ten years often raised as a positive example of deregulation. One must point out though, that, the supposed magic of deregulation leading to telecommunication for millions of Nigerians is one of those myths used to justify neoliberalism –and a very degenerate one too, at that-, in Nigeria. On one hand, GSM was launched in the world for the first time only in 1991 its spread to Nigeria ten years later is a case of the diffusion of certain forms of technology with the information and communication technology, just as with the internet. On the other hand and more importantly, it was not during the Obasanjo regime which was inaugurated in 1999 that the telecommunication sector was deregulated. On the contrary the sector’s deregulation was initiated in 1992 with the instrument of Decree No. 75 of 1992, yet it took almost ten years for the supposed magic of deregulation to take effect!

Deregulation, as its proponents argue, is necessary for national economies to be more efficient, and productivity enhanced. The combination of these, they claim leads to greater wealth for the society and the reduction in prices of commodities. But what exactly does deregulation involve? It entails the reduction, simplification or even outright removal of government’s rules and regulations that in anyway control the financial market or trade. It “frees” enterprises and services to the unimpeded forces of demand and supply, giving Adam Smith’s “invisible hand”, the freest of hand in the allocation of resources within the process of production and exchange.

Indeed, advocates of deregulation paint the picture of a free market economy as both desirable and the natural state political-economy would take without the overbearing influence of government. Not surprisingly, privatization is an ever present companion of deregulation as part of economic reforms, which free market apostles have foisted on country after country across the world, in the last three decades. With deregulation and privatization, individual self-interest is supposed to reign and establish spontaneous order, which benefits the whole nation and through competition, spurs innovation and greater good of the larger number of persons, while reducing corruption. Opponents of the free market ideology are chastised as being utopian. Worse still, the free market ideology equates deregulation to an expansion of freedom and liberty; its opponents thus are supposed to be authoritarian and despotic.

To what extent does this construct of deregulation and its supposed redemptive value hold true in the face of concrete reality? An objective analysis cannot but lead to a refutation of the claims of deregulationists, and free marketers.

The myth of the public sector being more prone to corruption is one which time and again has been exploded by hard facts. The 2001 Enron scandal, after the prestigious Fortune magazine had declared the company as "America's Most Innovative Company", for six years running, is axiomatic of the glitz-coated-sleaze overlap of innovation and corruption which define corporate capitalism. Coming closer home: the continuity of plundering of banks in Nigeria, from the Abacha years to the present; bribery scandals involving multinational firms such as Halliburton and Wilbros and; the cooking of the books by Cadbury leading to Bunmi Oni’s resignation are examples which as the tip of the iceberg show the rot of corruption in the private sector. The simple fact of the matter is that in a capitalist system, corruption permeates both the public sphere and private sector of the economy. A close knitting of the two sectors in the parasitic droning of corruption is actually the norm. This self-reinforcing deepening of corruption is promoted rather than reduced by deregulation, as is obvious from how matters went from bad to worse in Nigeria after the advent of SAP.

The much maligned poverty of efficiency in the public sector is definitely something any discerning mind would agree holds more than a grain of truth in it. Inefficiency is however not a phenomenon that is naturally inherent in, or peculiar to the public sector. The extent of efficiency to be expected from public sector enterprise is partly a function of the depth of direct accountability of the public sphere of both economy and polity. It is participatory democracy that can ensure efficiency of the public sector. The capitalist system can at best give a limited caricature of such form of democracy. Another dimension of the efficiency argument raised by Izibili and Aiya (2007) is that: “the public enterprises are deliberately made inefficient, so that they could be sold as willed; most often, to themselves who are still in government”. It is interesting to also take note of the nonsense that inefficiency in Nigeria’s private sector makes of the tale of public sector inefficiency. In December the Central Bank informed the world that eight of the twenty four banks affected by the recent shake-up in the restructured banking sector alone, were owed non-performing loans to the tune of N1. 524 trillion by captains of the organised private sector! This was after over four hundred billion naira had been written off as bad debt and N650 billion injected into the banks by the Central Bank. One can not but wonder at what level of inefficiency could be worse than such expensive non-performance by private sector capitalists, which public funds are used to underwrite!

The greatest deregulationist myth of all is that of its end-goal; the unregulated “free market”. It is one of the most profound ironies of history that proponents of capitalism and its utopia of the free market would tongue-in-cheek call those who seek to build another possible world utopians. In the past five hundred years of capitalism’s evolution, a “free market” has never existed anywhere. There is no iota of truth in the assertion of the icons of the free market ideology -Ludwig von Mise, Frederick Hayek and Milton Friedman -, that the free market is the natural state an economy tends towards with cooperative or state regulation as an aberration. Their apostles in the Bretton Woods Institutions (World Bank and IMF), and in governments across the world have perpetuated this lie. They have pursued this lie at the costs of the murders, torture and disappearance of hundreds of thousands of; men, women and children, in countries that served as the laboratories for their inhuman social “experiments” (e.g. Indonesia, Brazil, Chile, Argentina and Uruguay). They have maintained their falsehood as truth even when it has rendered millions hungry, homeless, unemployed, hopeless and helpless. The truth though must be told and reiterated, tearing asunder the veil of deceits which the dons of capitalism try to cover our eyes with.

Infant capitalism was mercantilist in theory and in practice. Trade and colonization drove the ruling classes tied to their various crowns from Portugal, Spain, Netherlands, France and Britain in the pre-industrial revolution centuries of capitalism, across the globe amassing bullions of gold in the process. The nation-state which itself was being forged across Europe was at the heart of and the justification of the expansion of trade and production. Economic nationalism supplanted it after the industrial revolution in England and would be the driving force of the nineteenth century second industrial revolution on the European continent and in North America. Contrary to the wily distortions of history latent in the deregulationist argument of free marketers, it was the “great transformation” of and associated with liberalization that required and was wrought as a grand design by the same state which was being rolled back, in the end of the 19th Century into the era of world wars and the Great Depression. Capitalist elites that had thrived on the protected internal and/or colonial market now used their state to legislate anti-poor legislations, pursuing their utopia of free market with laissez faire economics, in defence of the interest of expanding profit.

This beautiful epoch of deregulated capitalism took humankind to the Great Depression bus stop. To save itself from the damnation of hell it had summoned on its own head, starting with Roosevelt in North America, which like now was most hit by the collapse deregulation brought, the capitalist elites gradually instituted a more regulated form of capitalism across the advanced capitalist world, in what would become the post-World War II era of the Keynesian Welfare Nation State. Decolonization of the Third World would ensure that nominally sovereign States in the underdeveloped part of the world like Africa evolved in the twilight of this era as interventionist States. Minimal development which compared to today’s situation in Nigeria and Africa as a whole make the 1960s “the good old days”, were recorded. The rise of Thatcher and Reagan to power in 1979 Britain and 1980 United States, respectively, signalled the beginning on a global scale of the era of deregulated capitalism or what amounts to the same things; neoliberal globalization of capitalism.

We could skip the details of how the capitalist State in advanced capitalist countries and the underdeveloped Global South respectively was used to enthrone a regime of deregulation in country after country, due to space. Naomi Klein’s Shock Doctrine the Rise of Disaster Capitalism, does however capture the siege mentality and gruesome methods including torture and murder with which deregulated capitalism decreed itself the only game in town, at least until September 15, 2008 when Lehman brothers collapse led the United States and Europe to devising new mixes of regulation and salvaging of corporations with taxpayers money, in defence of the fundamental interests of capital.

It suffices to say that in Nigeria as with most other countries, enthroning deregulation, privatisation and sharp cuts in social spending required some extent of restructuring of the economy. In “Third World” countries, this took the form of Structural Adjustment Programmes (SAPs). The Federal Military Government commenced with SAP in 1986. It is noteworthy that SAP, which was deceitfully presented to Nigerians as a home-grown development strategy, was one of the twin projects commenced by the IBB dictatorship. The other was the political transition programme which came to an inglorious end with the June 12 upsurge that consumed it in 1993. SAP however continued full steam, with the deregulation of the financial sector becoming ingrained on the repeal of the Exchange Control Act and institution in its place of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree of 1995, during the Abacha reign.

The policies of deregulation pursued since 1999 by the civilian politicians might not termed SAP, but they rest on the same principles as SAP. This is important to note for two fundamental reasons. First, it shows policy continuity between the ruling elites in the country -military and civilian alike-, in executing their anti-working people agendas. Second, we see both shame-faced deceit in the relations of Nigeria’s ruling elites to the people on one hand and their subordination of the Nigerian economy to the dictates of international finance capital as represented especially by the World Bank and IMF, on the other. IBB lied through his teeth about SAP being home-grown; Obasanjo swore and Yar’Adua after him that the National Poverty Eradication Programme and the National Economic Empowerment and Development Strategy (NEEDS) have domestic roots. But NAPEP and NEEDS are based on the Poverty Reduction Strategy of the World Bank which it drew up after accepting that its SAPs were failures, but based on exactly the same model of growth as the SAPs!

It is instructive that “the crises of pricing petroleum products in Nigeria” as Issa Aremu rightly puts it, commenced with SAP, after eighty years of oil exploration in Nigeria. The Nigeria Bitumen Corporation, a German oil company had in 1908 drilled fourteen oil wells prospecting for petroleum in the coastal region of Lagos. Actual oil production commenced in 1937 with Shell/D’Archy vested with monopoly interests by the British colonial overlords. It was however at Oloibiri in 1956 that Shell struck oil in commercial quantities and with this Nigeria entered the circle of oil-rich States. Until 1971 when Nigeria joined OPEC and formed the Nigeria National Oil Corporation (which with the effect of Decree 33 of 1977 became the Nigeria National Petroleum Corporation), there was no systematic regulation of the petroleum industry, yet petroleum products prices remained stable till General Obasanjo effected increments in 1978. This would be just a prologue to the era of deregulation which SAP was to later usher in and which like a bad dream still lives with us.

On April 10, 1988 the Nigeria National Petroleum Corporation (NNPC) announced the following increases: petrol (PMS), 39.5k to 42k; kerosene (DPK), 10k to 15k and; diesel (AGO), 29.3k to 35k. This was after a spate of propaganda since 1987 aimed at justifying the impending deregulation, or “removal of subsidy” which was the jargon used then for the same effect. Several jargons have subsequently been used by the IBB, Abacha and Obasanjo regimes to jack up fuel prices, including; “appropriate pricing” and “deregulation of the downstream sector of the petroleum industry”. The reasons given to justify the hike in fuel prices have remained quite disingenuously the same. These, in summary are: with the burden of “subsidy” removed, more funds would be available for developmental purposes; price deregulation would engender free competition and consequently eradicate market distortions across different zones of the country; it would lead to efficient use of resources by citizens and corporations; nipping the smuggling of petroleum products to neighbouring countries in West Africa, in the bud; solving the recurring problem of fuel shortages; exposing Nigerians to the price regime of petroleum products in the international market (prices in Nigeria used to be described as one of the lowest in the world).

Organized labour has mobilized the popular masses in resistance against the various fuel pump price hikes. Indeed as Obono Danielle rightly captures; the struggles over petroleum products pump prices between the State on one hand and civil society under the vanguardship of the working class on the other has become a major theatre and concrete manifestation of class struggle. The International Republican Institute’s declaration of organized labour as the only political opposition to the PDP-led State in 2004 was largely borne out of the leadership of the popular masses which organized labour provides time and again, against the deregulation of petroleum products prices.

In mobilizing the immense majority of Nigerians, organized labour - particular under the banner of Nigeria Labour Congress, the larger trade union centre in the country -, has marshalled facts and consistently articulated arguments which tear the contrived rationalization of the State to shreds.

“Subsidy”, labour points out is at best notional, since the prices of fuel pump prices are less than the unit cost of production would have been if locally refined; wages in Nigeria are some of the worst in the world, and fuel in Nigeria is not at all cheap (for example a litre of petrol which is N65.00 in the country is equivalent to; N49.30 in Algeria, N4.50 in Iraq, N34.80 in Kuwait, N20.30 in Libya, N31.90 in Qatar, N23.20 in South Africa, and N2.20 in Venezuela); efficiency is not merely a function of prices (Peter Esele of PENGASSAN/TUC recently for example raised the alarm that with continued importation of refined products – deregulation or no deregulation -, Nigerians would be paying higher than international rates due to the demurrage at the harbour); fuel prices increase aggravate the suffering of the masses, worsen inflation, and increase unemployment in the land; perfect competition does not exist in Nigeria (and one might add, anywhere), and the myth of prices reduction due to the market forces would be upturned by nine major petroleum multinational corporations in the country that constitute a cartel; the consequences of deregulation would hamper national development and not in anyway promote it. Despite the well argued points of labour which have been proven as correct, several times, the State has always turned a deaf ear and is now set for “full deregulation”.

The visible consequences of deregulation of the petroleum products prices in Nigeria since 1988 uphold this writer’s argument against deregulation in general. A number of anti-deregulationists are however not against deregulation of the downstream sector of the petroleum industry, in principle. The grouse they have is against deregulation before fixing the moribund refineries and building new ones. Alhaji Aminu Abdulkadir, President of the Independent Petroleum Marketers Association of Nigeria, which represents owners of about 78% of the distribution and sales network for petroleum products in the country has thrown his association’s weight behind the struggle against deregulation until the refineries are fixed. He thus calls for “phased deregulation” A similar position was recently canvassed by our esteemed spiritual fathers; the Sultan of Sokoto, Muhammad Sa’ad Abubakar and the President of the Christian Association of Nigeria, John Onaiyekan. This writer wholly supports the need for fixing the refineries and building new ones.

It is a shame that the Joint Task Force in the Niger Delta gleefully declared to the world that it had destroyed 600 out of about 1,000 mini-refineries built by militants and buccaneers in the creeks in the past few years when the Federal Government can not itself build new refineries in decades. Even if these were primitive, they show that with the resources and expertise available to it, the FGN has no justification for not building new refineries. This though might be the least of insights into the problems of refining crude oil in Nigeria. Billions of naira has been spent on various rounds of Turn Around Maintenance (TAM), to no effect. It also needs to be pointed out that de facto phased deregulation –in the midstream sector of the industry- had actually been initiated but without any results whatsoever. Eighteen licenses have been issued to private entrepreneurs to establish refineries, in the typical spirit of deregulation. But this has been to no avail for almost a decade.

The existing refineries need to be fixed and new ones built by the Federal Government in a process that would entail organised labour and the civil society monitoring execution to ensure transparency and accountability, within a year as demanded by Nigeria Labour Congress. This could be a point of departure for enthroning participatory democracy and building greater public involvement in the economy. It could also be a bastion of regulation against deregulation. We must however not be under illusions about regulation, in itself. With the global economic crisis of capitalism, more and more governments and captains of industry who just yesterday were the loudest apostles of deregulation have joined the chorus for more or “better regulation” as Bernanke, head of the US Federal Reserve bank puts it. Regulated capitalism as a policy or Keynesianism (with its various strands; neo-Keynesianism, post-Keynesianism) represent attempts at deflecting mass anger and workers’ power away from challenging capitalism and its evils of exploitation, oppression and marginalization of the immense majority of the population.

While an interventionist state under capitalist property relations could guarantee minimal social safety nets as a compromise between labour and capital, it still aims at ensuring that the capitalist elites appropriate the lion share of the social wealth, despite the fact that it is labour that creates wealth. The fundamental interests of workers can best be defended only with the socialisation of the economy. That is to say that the key aspects of the national economy shall be publicly owned and placed under the control of those who work in the concerned industries and some other representatives of the broader society. This would of course entail the fullest of political, social and economic democracy in which the creators of the social wealth shall wield the power to determine how it is distributed in their own interest. In short, it would entail a revolutionary struggle to build workers’ democracy on the ruins of liberal democracy.

In summing up, this article argues against the deregulation of the petroleum industry and the deregulation principle, as being against the interests of the working masses of Nigeria. Deregulation actually amounts really “re-regulation” with the intent of increasing the profits of the capitalist bosses. Regulated capitalism is not presented as an alternative. On the contrary, historically and contemporarily, regulation which upholds capitalist property relations have been and remain a strategy of stabilization to maintain the economic and political supremacy of the capitalist elites who constitute an insignificant percentage of the population, but who reap the bulk of social wealth while the creators of the wealth suffer poverty and deprivation. Another possible Nigeria, another possible world in which the benefits of society’s development would be accessible to all can be built only with the enthronement of participatory political, social, and economic democracy from the local grassroots to the global sphere. Planned development of the economy under the democratic control and management of workers and other toilers must be at the heart of the regulation which popular forces must aim for and struggle to establish.

The 21st Century shall witness the transformation of Nigeria and the world at large through struggle against deregulation and regulated capitalism alike, and for the building of socialist society

Baba Aye is Deputy National Secretary of the Labour Party.
http://www.saharareporters.com/articles/external-contrib/4819-deregulation-myths-and-discontents.html

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