Asia Times Online World on Fire by Amy Chua Review by Sreeram Chaulia Can two seemingly unrelated issues like globalization and violent ethnonationalism actually have a priori linkages? Yale University professor Amy Chua's new book takes the globalization debate into uncharted territory via myriad comparative examples to show the explosive collision between free market democracy and ethnic hatred. Chua begins with the murder of her Chinese Filipina aunt in Manila, an expression of the extreme frustration and anger of the indigenous majority towards Chinese "outsiders" who dominate key sectors of the Philippines' increasingly globalized economy. Plutocrats of Chinese descent, whose fortunes have ballooned due to free market economic policies, appear "to the vast majority of Filipinos as exploiters, as foreign intruders, their wealth inexplicable, their superiority intolerable". (p 4) The same story is being replayed in many other parts of Southeast Asia. In Burma's new liberalized economy, Sino-Burmese minorities have been transformed into a garishly prosperous business community that monopolizes the gem, teak wood and light consumer industries. "Today, ordinary Burmans speak of 'the Chinese invasion' or 'recolonization by the Chinese'." Vietnam's post-1988 pro-market reforms have also marked the resurgence of Chinese commercial dominance at the expense of the impoverished locals. Here too, there is a bitter outcry against "the Chinese stranglehold". In Thailand, all but three of the most powerful business groups are owned by Thai Chinese. In Malaysia, Chinese minorities comprise a third of the population but account for 70 percent of the country's market capitalization. In Indonesia, which has witnessed bloody anti-Chinese riots, the 3 percent Chinese minority controls 70 percent of the private economy. Throughout the region, "there festers among the indigenous majorities deep anti-Chinese resentment, rooted not just in poverty but feelings of envy, insecurity and exploitation". (p 47) Moving to South America, Chua finds the same pattern of a "market-dominant minority" from outside grabbing the lion's portion of globalization's benefits and stoking ethnonationalist fires. Bolivia's Amerindian majority is largely excluded from the modern economy, while the white capitalists originating from Europe and North America own the most valuable natural resources and the most advanced economic sectors. "Global markets have intensified the economic dominance of Bolivia's white elite over the country's growth-stunted, impoverished indigenous majority." (p 56) In Peru, Guatemala and Ecuador too, Amerindians represent a mass underclass being bossed around by the light-skinned rich. All of Mexico's lucrative corporate sectors are concentrated in the exclusive hands of a small clubby white market-dominant minority. The latifundia feudal land ownership system, dominated by Spanish-blooded families, is booming further with each new round of pro-globalization reforms. Other outsider minorities making hay under the neo-liberal economic order in Latin America include Lebanese, Jewish and Palestinian businessmen, who corner enormous profits in Brazil, Panama, Argentina, Belize and Honduras. All over the region, traditionally soft in ethnic identity assertion, "distinctively ethnic resentment against market-dominant light-skinned elites is on the rise." (p 73) In post-Communist Russia, six out of the seven wealthiest and most powerful oligarchs, wielding mind-boggling political and economic leverage, are Jewish. Owing to the virulent history of Russian anti-Semitism, this racial profile of the nouveau riche has not gone unnoticed. How, it is being asked on the streets, did members of a minuscule "outsider" ethnic minority come to wield unimaginable might since 1991? Chua notes that political anti-Semitism is on the rise, as a majority of ordinary Russians believe "they have been impoverished at the expense of rich Jews." References to "Zioncrats" and "bloodsucking Yids" who hijacked privatization and stole the wealth of the Russian people are commonplace. In southern Africa, English-speaking whites, thanks to the gargantuan head start of colonialism, lord over lucrative industries like gold, platinum, diamond mining, finance, insurance and technology. Namibia, Zimbabwe and South Africa have market-dominant white minorities that are stretching this historical lead longer due to laissez-faire market conditions. Kenya has an inordinately prosperous, disproportionately skilled white minority that cavorts in colonial fashion in country clubs and golf courses, while the 31 million blacks survive on less than two dollars per day. Indigenous Kenyan market-dominant minorities, the Kikuyu, are seen by the toilers as accomplices of these white "rulers". Nigeria's Ibo community is another indigenous market-dominant minority that dominates key sectors and is enriching itself in the globalized economy due to its long experience of manipulating markets. The Bamileke of Cameroon and the Susu of Guinea are other indigenous minorities subject to widespread resentment by the masses. Besides whites, the other non-indigenous market dominant minorities in Africa are Indian and Lebanese merchants. Indian Kenyans, less than 2 percent of the population, "benefit extremely disproportionately from globalization and market liberalization because of their international connections" and access to capital. (p 113) Lebanese market dominance in Sierra Leone, Gambia, Cote d'Ivoire, Benin, Ghana and Liberia is astounding, encompassing fields like diamonds and gold, finance, retail, construction and real estate. Lebanese entrepreneurs, together with a handful of native politicians and foreign investors, are the principal beneficiaries of globalization in West Africa. Chua's second part of the thesis relates to raw majoritarian democracy which, when added to markets, cooks a recipe for upheaval and ethnic conflagration. "As markets enrich the market-dominant minority, democratization increases the political voice and power of the frustrated majority." (p 124) The violence directed at Zimbabwe's white farmers and their black farmhands is "an anarchy born of democracy", ie Robert Mugabe's vote hankering and reduction of democracy to bare minimum electoral connotation. Nationalization of "foreign-owned property" is the result of this sort of lopsided democracy that is being imposed on the third world. Confiscations and expropriations in developing countries have explicitly and exclusively targeted assets and industries of the hated market-dominant minorities, giving an outlet to the popular frustration and vengeance demanded by the majority population. Demagogues promising to restore the honor and possessions of the majority are supported with wild enthusiasm, be it in post-Suharto Indonesia, which embarked on an anti-Chinese business pogrom, or Putin's Russia, which is turning on Jewish media moguls. Hugo Chavez came to power in Venezuela by attacking "rotten white elites", and the mysterious right-wing coup against him in April 2002 failed because the new leadership excluded the Pardos majority from power entirely. To preempt confiscations, market-dominant minorities sometimes enter into symbiotic alliances with corrupt indigenous politicians, better known as crony capitalism. Sierra Leone under Siaka Stevens saw Lebanese magnate Jamil Mohammed become a shadow "co-president", with "global markets generally approving of these arrangements". (p 150) Kenya's Daniel Arap Moi concluded a network of deals with a coterie of Indian businessmen in 1978. Suharto's Chinese-friendly autocracy in Indonesia was similarly a backlash by market-dominant minorities after Sukarno's nationalizations. Marcos' crony capitalist empire with the Chinese business community in Philippines was a payback for Ramon Magsaysay's anti-Chinese drive of the fifties. Some market-dominant minorities do not rest at crony capitalism or rent seeking and seize power directly. Apartheid South Africa and the whole of Latin America bear testimony. The most horrific outcome of free market democracy in the face of a market-dominant minority is government-sponsored attempts to "cleanse" the outsiders. Non-Russian former Soviet Republics cleansed and drove out 2 million ethnic Russians after 1991. Russia, Ukraine and Belarus upped anti-Jewish violence and expelled nearly 1 million "shylocks" in 1999. Ethiopia deported 50,000 Eritrean-Ethiopians who used to dominate commerce in the last few years. An estimated 110,000 Chinese families fled Indonesia around the same period. Hutu Power advocates in Rwanda called for "majority rule" and "democratic revolution," only to mastermind a bloodcurdling genocide against Tutsi "invaders" in 1994. In the Balkans, Croat and Slovene minorities that were disproportionately prosperous vis-a-vis the more populous Serbs faced the deadly fate of mass expulsions and genocidal violence. Extending the theory of market-dominant minorities beyond the confines of the nation-state, Chua argues that in the Middle East as a region, "globalization has wildly disproportionately benefited an 'outsider'- Israeli Jews - fuelling ethnic resentment and hatred among a massive Arab population that considers itself the 'indigenous' true owner of the land". (p 211) Besides cultural and historical enmities, the Middle East is a conflict between 221 million, largely poor Arabs, against Israel's starkly prosperous 5.2 million Jews. Arab squalor and mass frustration runs headlong into Israel's highly educated, skilled and Westernized Jews. That is why "one often hears half-admiring, half-contemptuous grumblings about Jewish wealth, greed and moneymaking tendencies" among common Arabs. (p 222) Rapid democratization of the Arab states, being pushed by the US government as a cure-all, will exacerbate ethnonationalist hatred for the market-dominant Jews and fuel even greater bloodshed. Chua's piece de resistance is the idea that "America today has become the world's market-dominant minority." The principal beneficiary of globalization and spread of free markets, the United States, has attained heights of global economic power that are wildly disproportionate to its tiny numbers. "Our extraordinary market dominance, our global invincibility have earned the envy, fear and resentment of much of the rest of the world." (p 231) American products, companies, investors, entertainment, cuisine and culture are viewed as "outsider" threats to legitimate "indigenous" society all over the third world. Anti-Americanism is a form of "frustration heightened by access to images and information about how much better Americans live"/ (p 246) Anti-American investor confiscations and expulsions have occurred in Mexico, Argentina, Chile and Uruguay before the era of globalization, but countries daring to expropriate American property today risk serious consequences, a fact that heightens suppressed fury. The September 11, 2001 terror attacks, reminds Chua, prompted "momentary jubilation of millions of poor and exploited people around the world", not just in Muslim countries. It was a reflection of the crushing humiliation perceived to be inflicted by the US on the Third World. Chua concludes with recommendations to prevent ethnic hatred from devouring the globalizing South. Educational reform and equalization of opportunities for poor indigenous-blooded majorities are imperative. Strong redistributive measures - progressive taxation, social security, unemployment insurance, antitrust regulation, affirmative action, dispersed capital market ownership - need to be implemented in Asia, Africa and South America. The precedent of Malaysian Prime Minister Mahathir Mohamad's ethnic quotas for bumiputra Malays could be worth emulating. Market-dominant minorities themselves should eliminate corrupt and illicit business practices that enrage the majority community, and invest in the local economies in which they thrive. Corporate responsibility by Indian firms in East Africa and Roman Abramovich in Russia are current instances of softening the ethnic fault lines that have been opened by global markets. Washington "should not promote unrestrained, overnight majority rule" by shipping out ballot boxes for national elections in countries that have market-dominant minority problems. It must also improve its dismal foreign aid record (the US has the lowest aid budget among advanced economies, viz 0.1 percent of GDP). Chua fails to add that the vice-like grip of the United States on global financial institutions is a major source of anti-Americanism that also needs restructuring. For those countries that ill-fit her model, Chua has an escape clause disclaimer to the thesis that free market democracy, as is being vigorously exported by globalization advocates, aggravates ethnic imbalances and distrust in the developing world. "This book is not proposing a universal theory applicable to every developing country." (p 15) She cautions against misappropriating her thesis to cases that are exceptions and outliers. As a result, she leaves scant room for disagreement or criticism. Marxists will dislike this book since it complicates the simplistic class struggle blueprint by introducing the ethnicity card. Thomas Friedman and other globalization honchos will also dislike it for questioning their core tenets of "trickle down effect" and "lifting all boats". For those not married to ideology, Chua's sui generis theory will make a lot of sense. World on Fire: How exporting free market democracy breeds ethnic hatred and global instability by Amy Chua, Doubleday, New York, 2003. ISBN: 0-385-50302-4. Price: US$26. 340 Pages

June 6 (<a href=quote.bloomberg.com>Bloomberg) -- Oil ministers from Saudi Arabia, Venezuela and Mexico are gathering today in Madrid for a meeting to discuss crude oil prices and consider the return of Iraqi crude to world markets.

The meeting precedes a gathering Wednesday of OPEC in Doha, Qatar, to consider whether to reduce supply. Crude oil in New York has risen 20 percent in the past month to more than $30 a barrel, reducing expectations of a cut. Saudi Oil Minister Ali al-Naimi, in Madrid today, wouldn't comment on the meeting.

Saudi Arabia, Venezuela and Mexico, which isn't a member of the Organization of Petroleum Exporting Countries, have consulted on oil policy since 1998, helping to lift prices from $10 a barrel in December of that year. They are usually among the top five suppliers to the U.S., the world's biggest oil consumer.

Venezuelan oil minister Rafael Ramirez said the meeting in Spain would ``establish cooperation in case there is an oil cut,'' Venezuela's state news agency Venpres reported yesterday. According to Venpres, the meeting was scheduled for Monday.

Ten OPEC members, all except Iraq, agree to restrain oil output to bolster prices. OPEC's oil benchmark last went for $26.77 a barrel, toward the upper end of the group's target range of $22 and $28 a barrel.

Meetings between Saudi Arabia, Venezuela and Mexico have sometimes led to pledges to cut supplies from OPEC and outside producers. The trio met in April 2002 to discuss the oil market in the Mexican coastal resort of Puerto Vallarta. That meeting didn't result in any output-cut pledges.

Mexico's energy minister, Ernesto Martens, said on May 29 that his country will announce on July 15 whether it will increase or reduce oil exports, El Financiero newspaper reported. There are signs demand may decline, the minister said.

OPEC, which pumps a third of the world's oil, has already agreed to lower supply by 2 million barrels a day to 25.4 million barrels a day starting June 1.

Reuters, 06.06.03, 5:32 AM ET  By Tom Ashby MADRID, June 6 (Reuters) - OPEC producers Saudi Arabia and Venezuela were due to start talks with non-aligned Mexico on Friday to seek its contribution to future output restraints as Iraq returns to world markets, oil officials in Madrid said. Saudi Oil Minister Ali al-Naimi and Mexico's Ernesto Martens were awaiting the arrival of Venezuela's Rafael Ramirez for an afternoon meeting, they said. "These talks are about keeping non-OPEC on board. We want their participation in any future cuts should prices fall," said one official. No firm agreement on output is expected from Friday's talks. But Riyadh and Caracas will want to lay the groundwork for contributions from non-OPEC should the return of Iraq push prices down later this year, the officials said. "This is a sign that OPEC is saying: 'Either we go together or there is nothing'," an official from one of the countries said. In late 2001, OPEC agreed to a hefty output cut on condition that rival exporters Mexico, Norway and Russia contribute. All three joined the plan when prices started falling. The Madrid meeting comes ahead of next week's OPEC gathering in Qatar to decide third quarter cartel production. With oil prices near the top end of OPEC's $22-$28 a barrel band, traders say there appears no need for OPEC to cut supply immediately. Non-OPEC producers have been invited as observers in Qatar. The alliance between Saudi, Mexico and Venezuela dates back to the drastic output curbs of 1998 and 1999 that since have pushed prices above $25 a barrel on average for Brent. Saudi's Naimi fired a warning shot to non-OPEC this week at a conference in Azerbaijan where he called on emerging Caspian producers to cooperate on output policy or risk $10 crude. Iraq, recovering from the U.S.-led war, announced earlier on Thursday it would resume oil exports in the middle of the month. Mexico has been walking a tightrope between cooperating with OPEC to keep prices and revenues buoyant, and not upsetting the United States or hurting the world's largest economy. Foreign Minister Luis Ernesto Derbez said last month that Mexico's link with OPEC would weaken as North America becomes more of a single energy market. The message sent ripples of concern through OPEC. Venezuela's Ramirez plans to visit non-OPEC Norway to discuss output cooperation before arriving in Qatar for the June 11 OPEC meeting.

<a href=cities.expressindia.com>mumbai.expressindia.com Pranati Mehra Mumbai, June 5: The Directorate of Revenue Intelligence (DRI) last week arrested Subhash Dube, a mastermind behind several export frauds also sought by customs agents.

Though Dube owns neither a company nor a customs house agency, he is the suspected ‘organiser’ of exports that were grossly overvalued in order to skim off duty drawback and Duty Entitlement Pass Book schemes for duty-free imports.

Sources say that the customs department’s Central Intelligence Unit (CIU) has also been investigating Dube’s role in a fraud identified last year. The duty involved in the cases detected so far totals over Rs 1 crore.

Dube had been evading a CIU summons since February and could not be found at his known address. He was finally cornered by the DRI last Thursday at the domestic airport before he could board a flight out of the city. He is now in judicial custody.

The DRI is trying to untangle the maze of firms that exported the goods, mostly garments and carpets, which were highly overvalued and sometimes useless rags.

The firms either have fictitious addresses or disappear before the investigators reach them. Custom house agents may also have had a role in the fraud, either as unknowing dupes or by conniving with Dube.

The DRI began hunting Dube after seizing a series of consignments in Nhava Sheva in April. Exports of readymade garments to Dubai, declared to be worth Rs 83 lakh, were found to contain used material and rags. The total duty drawback sought from the consignments was Rs 60 lakh.

The CIU identified several similar exports to Venezuela and Singapore in August and November 2002. The total drawback claimed in these cases was Rs 22 lakh.

Three people were arrested in the case, including a customs house agent, P D Manjrekar. Dube had been operating behind the scenes and the details of his role are yet to emerge.

By Bradley Brooks The Washington Times-UPI Business Correspondent

RIO DE JANEIRO, Brazil, June 5 (UPI) -- Stocks were generally up across Latin America this week with local news mostly moving markets.

The biggest driver in the short to medium term for Brazil -- the region's biggest economy -- will be the fate of badly needed reforms to the country's pension, tax and legal systems.

Foreign and domestic investors are closely watching whether President Luiz Inacio Lula da Silva has the strength to power the reforms through a dizzying array of parties in Congress.

Leaders from Lula's Workers' Party in the lower house of Congress said Wednesday they had the votes needed to push the pension reform bill through the Chamber of Deputies.

According to Lula's economic team, the pension reform they're proposing would save the country nearly $20 billion over the next 30 years.

The momentum to get reforms through Congress is being aided by the mandate that voters gave Lula in his overwhelming electoral win, and the support they are still sending his way.

On Wednesday, a poll gave the leader a 78 percent personal approval rating, despite his having made little economic headway in his first five months in office.

Optimism is building on the economy as well, with foreign investors being lured back to the country.

On Tuesday, Fitch Ratings upped Brazil's debt to "positive" from "stable."

That is a remarkable transition for a country that six months ago was thought to be heading toward the world's largest sovereign default, a distinction still held by neighboring Argentina.

"The performance of President Lula's administration since taking office on January 1, 2003, has been supportive of sovereign creditworthiness and has eased one of Latin America's most marked political transitions from the center-right to a coalition dominated by the left," Fitch reported in a statement.

Meanwhile, over in Argentina, investors continue to keep tabs on new President Nestor Kirchner, whose economic ideas remain murky at best.

On the corporate front, telecommunications giant Argentina Telecom said Wednesday it will only buy back $290 million of debt, about half of what it wanted to purchase before a debt restructuring plan was frowned on by investors.

On Wednesday, Telecom Argentina's shares dropped 3.8 percent in Buenos Aires.

The company -- majority owned by Telecom Italia and France Telecom -- defaulted on some $3 billion after Argentina's peso was devalued in January 2002.

Some analysts said the paltry buyback may hurt the company's shares in coming days. But others argue investors have priced the poor buyback showing into the company's stock already.

Telecom Argentina was arguably the corporation hurt most when Argentina defaulted on its debt in December 2001, and many investors are watching the company's progress, trying to gauge how the business climate in Argentina might pan out in coming years.

Investors are also keeping a close eye on Telecom Argentina as the government decides if the sector can begin hiking prices.

Telecoms and utilities in Argentina are suffering badly, after the devaluation knocked more than 60 percent off the peso's worth, while the companies are stuck holding debt in dollars.

As for the markets, Brazil's Bovespa stock index ended last Thursday up 0.83 percent at 13,405, its third straight winning session. Investors were generally cheered by chances for having reforms pushed through Congress. Long-distance carrier Embratel rose 6.3 percent.

The index ticked up to 13,422 Friday, wrapping up a May that saw a gain of 7 percent and adding on to the nearly 20-percent rise in the Bovespa since Jan. 1. Analysts say June should be another solid month for investors, with an expected interest-rate cut likely to spark market action.

Monday brought a 1.4 percent loss to 13,229 for the index, with a retreat on Wall Street weighing. Fixed-line phone company Telemar fell 3.4 percent as the government signaled changes in pricing policies for the sector could be upcoming.

The Bovespa rose nearly 1 percent to 13,350 Tuesday. Investors were cheered by a Fitch report raising Brazil's credit rating to positive from stable. Banco do Brasil gained nearly 5 percent.

On Wednesday the index gained 2.76 percent to 13,718. Oil giant Petrobras gained 3 percent after announcing a big oil find. Aircraft maker Embraer rose more than 4 percent, and Telemar added 4.3 percent.

In Mexico, the IPC index fell 0.3 percent to 6,648. Analysts said profit-taking was seen after recent gains. Shipping company TMM fell 15 percent as the outfit faces legal woes and concerns on its debt.

Friday brought a 0.77 percent gain to 6,699 for the index. Investors tracked nice gains on Wall Street. Fixed-line phone company Telmex added 1.7 percent.

The index rose to 6,722 Monday. Broadcaster Televisa gained 1.8 percent, while America Movil, Latin America's biggest wireless company, tacked on 1.6 percent.

On Tuesday the IPC ticked up to 6,739, with blue chips leading the day. Telmex gained 1.27 percent while the country's biggest retailer, Wal-Mart de Mexico, added 0.6 percent.

The IPC rose 2.24 percent Wednesday to 6,890. Industrial group Alfa gained 2 percent, Telmex added 3.5 percent, and America Movil rose 1.76 percent.

In Argentina, the Merval stock index closed Thursday down 0.54 percent at 674.3, as investors took profits. Losses were across the board. Telecom Argentina gained 2.8 percent, though, as investors approved of its efforts on restructuring debt.

On Friday, the index gained to 678.3 as investors were mostly sidelined, playing a wait-and-see with new president Kirchner's economic game plan.

The Merval hit a five-year high Monday, rising 3.6 percent to 702.8. Utilities and banks led the way, with the latter aided by a bill to restructure the sector being sent to Congress by Kirchner. Banco Frances gained 8.4 percent.

Tuesday saw a 0.7 percent gain to 707.8, with banks again leading the way. Banco Bansud gained 4.6 percent, while Grupo Financiero Galicia -- which controls the country's largest private bank -- added 1.1 percent.

The Merval slipped 0.85 percent Wednesday to end at 701.8. Steelmaker Acindar lost 2.85 percent and Telecom Argentina dropped 3.8 percent.

In Chile, the IPSA index gained 0.44 to 1,230 last Thursday, its highest mark this year. Investors were buoyed by the soon-to-be-signed free trade deal with the United States. Fertilizer maker SQM gained 2.1 percent.

Friday brought a flat session with the IPSA gaining 1 point.

On Monday, the index added 0.9 percent to 1,242. General optimism on Chile's economic direction buoyed investors. Retailers did well, with Falabella gaining 8.6 percent and Almacenes Paris tacking on 5.4 percent.

The inevitable profit taking took its toll Tuesday, with the IPSA easing to 1,240. Falabella lost 3.7 percent.

Wednesday saw a gain of 0.56 percent to 1,247 in uneventful trade.

In Venezuela, the IBC index continued to hit historic highs as tight capital controls prompted investors to dump available cash into the stock market.

Last Thursday, the index jumped 6.66 percent to end at 12,301, a new high. Telecom giant CANTV, which makes up 40 percent of the index, rose 8.3 percent.

On Friday, the IBC rose more than 4 percent to close at 12,800. CANTV rose 1.2 percent. The index gained a staggering 48 percent in May alone, as tight restrictions on the buying of dollars sent cash into blue chips.

The market was closed Monday for a holiday. Tuesday brought profit taking a loss of 0.8 percent to 12,692.

The IBC ended Wednesday down 0.6 percent at 12,616, with profit taking again to blame.