'All in World Bank': Manipulation in the Name of Deregulation

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Dec 19, 2015 Tunisia
'All in World Bank': Manipulation in the Name of Deregulation

'All in World Bank': Manipulation in the Name of Deregulation

By : The Tunisian Observatory of Economy (TOE)

In November 2015, the Tunisian Observatory of Economic (TOE) published a critical analysis of a recent World Bank report, the latter of which is entitled "All in the Family: State Capture in Tunisia." What follows is a summarized version of the TOE`s critical analysis

I - General Frame

1.1. On the 27 March 2014, World Bank researchers published the study "All in the Family: State Capture in Tunisia." The conclusions of this study demonstrated how Ben Ali used the Investment Incentives Code for his own profit and to promote his clan`s interests. According to the study, the state`s interventions, through a protectionist regulatory framework, permitted the clan to capture certain sectors of the economy and protect themselves from competition.

1.2. This study comes in the context of attempts to reform the Investment Incentives Code. Since 2012, the IFC (International Finance Corporation), the financial instrument of the World Bank, has financed, written, and promoted these efforts. This reform aims to suppress all levers by which the state can regulate investment.

1.3. This study has been conveniently timed to support the aims of the World Bank to deregulate the investment framework in Tunisia. For this purpose, it focuses on the excesses of regulation that characterized the Ben Ali clan`s style of corruption, or "crony capitalism." Antonio Nucifora, Chief Economist for the MENA region, has affirmed that the legal framework inherited from Ben Ali favors corruption. However, in doing so, the World Bank overlooks its own complicity in the promulgation of this legal framework. It must be remembered that the World Bank conditioned its 1991 loan (the Economic and Financial Reform Support Loan) on the adoption of the current Investment Incentives Code. It even congratulated itself for the adoption of this code in 1993 under the reign of Ben Ali.

2. The Dubious Methodology of the World Bank

2.1. In order to demonstrate the link between the investment regulatory framework and capture of sectors by the Ben Ali clan, the researchers proceeded in the following way:

  • They identified the sectors in which the Ben Ali clan`s companies were present
  • They compared the financial results of these companies with those of their competitors in order to examine to what extent the regulatory barriers (permissions, FDI restrictions) caused these differences
  • Finally, they examined the extent to which the clan`s companies benefited more from new restrictions, that is to say to measure "State Capture."

2.2. However, this methodology is not scientifically impartial. To understand this, one has to bear in mind that the Investment Incentives Code is composed of four lists: two regulatory lists (permissions, restrictions to FDI) and two incentivizing lists (general and specific to the agricultural sector). The researchers of the World Bank have deliberately chosen to focus on the link between capture and regulation (regulatory lists) while ignoring the link between capture and incentives (incentivizing lists), in order to present regulation as the “cause” of corruption. Thus they weakened the impartiality of the study.

2.3. After having intentionally drawn attention to the regulatory lists of the Investment Incentives Code, the researchers used a very wide definition of what a regulated sector means. Instead of considering a sector regulated when the majority of the activities are regulated, they admitted that any sector with at least one regulated activity can be considered regulated. Thus, with this subterfuge, they deliberately inflated the number of regulated sectors, in order to support their pre-established conclusion.

3. The Shameful Falsification by the World Bank

3.1. To measure the state capture, the researchers listed the new activity regulations (permissions or restrictions of the FDI) and established connections between these and the Ben Ali clan companies. To illustrate their argument, the researchers gave the example of a company that belongs to the uncle of Slim Chiboub. The company reportedly benefited from adding the activity of red meat transportation to the list of activities subject to restrictions, as it was able to invest in this sector and protect itself from competition. However, when we verified the list, it emerged that the activity was not added to the regulatory list of FDI. In reality, it was added to the incentivizing list specific to the agricultural sector. Hence, the researchers falsified the decree to demonstrate a fact that supports their argument.

3.2. This falsification is not isolated, it is generalized. When we verified, year by year, activity by activity, the presidential decrees by Ben Ali who supposedly added activities on regulatory lists to protect his clan, it comes out that several decrees have literally been falsified by the World Bank researchers:

  • The number of activities added to the list of activities subject to permission (Article II of the IIC): Out of the fifty-one activities counted by the World Bank, only twenty-eight were actually added and twenty-three were falsified. The falsification rate is forty-five percent.
  • The number of activities added to the list of activities subject to the FDI restriction (Article III of the IIC): Out of the thirty-eight activities counted by the World Bank, only four were actually added and thirty-four were falsified. The falsification rate is eighty-nine percent.

3.3. For the majority of cases, the falsification consists in counting activities on the regulatory list when they were not actually added to this list, or when they were, in reality, added to the incentivizing list. The roughest falsification concerns the decree 1997-503. The researchers counted twenty-three activities added to the list of activities subject to the FDI restrictions, whereas the decree stipulates clearly that they were suppressed from the list. Those falsifications put a question mark on the whole study and its conclusions.

4. Conclusions to be drawn from this study:

4.1. The first conclusion to be drawn from these manipulations and falsifications is that, contrary to what researchers of the World Bank have argued, what attracted the Ben Ali clan was the bait of easy gain, made possible by the incentives, and not by the possibility of using restrictions to get protection from competition. The entire logic behind the World Bank’s deregulation agenda collapses in light of such a conclusion.

4.2. The second conclusion, which is more important, concerns the ethics and credibility of the World Bank. Our investigation into the “All in the Family” report provides evidence on how the World Bank uses subjective methodology, as well as falsifications and subterfuge to inflate the number of regulated sectors.The suspect methods used by the researchers of the World Bank bring into question the impartiality and the scientific credibility of its studies. It appears that the researchers start first by establishing conclusions then adapt their methodologies accordingly, and regardless of the code of ethics they are bound to respect.

4.3. As in the Lafontaine`s Fables, there is always a moral to be drawn from the story. When trying to demonstrate that Ben Ali manipulated the use of regulations, the World Bank itself tried to manipulate the opinion by a study using falsified datas. The biter bit.


[The full version of the Tunisian Observatory on Economy report can be found here.]

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Feb 16, 2011 Lebanon
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Jadaliyya Reports

Past is Present: Settler Colonialism Matters!

On 5-6 March 2011, the Palestine Society at the School of Oriental and African Studies (SOAS) in London will hold its seventh annual conference, "Past is Present: Settler Colonialism in Palestine." This year`s conference aims to understand Zionism as a settler colonial project which has, for more than a century, subjected Palestine and Palestinians to a structural and violent form of destruction, dispossession, land appropriation and erasure in the pursuit of a new Jewish Israeli society. By organizing this conference, we hope to reclaim and revive the settler colonial paradigm and to outline its potential to inform and guide political strategy and mobilization.

The Israeli-Palestinian conflict is often described as unique and exceptional with little resemblance to other historical or ongoing colonial conflicts. Yet, for Zionism, like other settler colonial projects such as the British colonization of Ireland or European settlement of North America, South Africa or Australia, the imperative is to control the land and its resources -- and to displace the original inhabitants. Indeed, as conference keynote speaker Patrick Wolfe, one of the foremost scholars on settler colonialism and professor at La Trobe University in Victoria, Australia, argues, "the logic of this project, a sustained institutional tendency to eliminate the Indigenous population, informs a range of historical practices that might otherwise appear distinct--invasion is a structure not an event."[i]

Therefore, the classification of the Zionist movement as a settler colonial project, and the Israeli state as its manifestation, is not merely intended as a statement on the historical origins of Israel, nor as a rhetorical or polemical device. Rather, the aim is to highlight Zionism`s structural continuities and the ideology which informs Israeli policies and practices in Palestine and toward Palestinians everywhere. Thus, the Nakba -- whether viewed as a spontaneous, violent episode in war, or the implementation of a preconceived master plan -- should be understood as both the precondition for the creation of Israel and the logical outcome of Zionist settlement in Palestine.

Moreover, it is this same logic that sustains the continuation of the Nakba today. As remarked by Benny Morris, “had he [David Ben Gurion] carried out full expulsion--rather than partial--he would have stabilised the State of Israel for generations.”[ii] Yet, plagued by an “instability”--defined by the very existence of the Palestinian nation--Israel continues its daily state practices in its quest to fulfill Zionism’s logic to maximize the amount of land under its control with the minimum number of Palestinians on it. These practices take a painful array of manifestations: aerial and maritime bombardment, massacre and invasion, house demolitions, land theft, identity card confiscation, racist laws and loyalty tests, the wall, the siege on Gaza, cultural appropriation, and the dependence on willing (or unwilling) native collaboration and security arrangements, all with the continued support and backing of imperial power. 

Despite these enduring practices however, the settler colonial paradigm has largely fallen into disuse. As a paradigm, it once served as a primary ideological and political framework for all Palestinian political factions and trends, and informed the intellectual work of committed academics and revolutionary scholars, both Palestinians and Jews.

The conference thus asks where and why the settler colonial paradigm was lost, both in scholarship on Palestine and in politics; how do current analyses and theoretical trends that have arisen in its place address present and historical realities? While acknowledging the creativity of these new interpretations, we must nonetheless ask: when exactly did Palestinian natives find themselves in a "post-colonial" condition? When did the ongoing struggle over land become a "post-conflict" situation? When did Israel become a "post-Zionist" society? And when did the fortification of Palestinian ghettos and reservations become "state-building"?

In outlining settler colonialism as a central paradigm from which to understand Palestine, this conference re-invigorates it as a tool by which to analyze the present situation. In doing so, it contests solutions which accommodate Zionism, and more significantly, builds settler colonialism as a political analysis that can embolden and inform a strategy of active, mutual, and principled Palestinian alignment with the Arab struggle for self-determination, and indigenous struggles in the US, Latin America, Oceania, and elsewhere.

Such an alignment would expand the tools available to Palestinians and their solidarity movement, and reconnect the struggle to its own history of anti-colonial internationalism. At its core, this internationalism asserts that the Palestinian struggle against Zionist settler colonialism can only be won when it is embedded within, and empowered by, the broader Arab movement for emancipation and the indigenous, anti-racist and anti-colonial movement--from Arizona to Auckland.

SOAS Palestine Society invites everyone to join us at what promises to be a significant intervention in Palestine activism and scholarship.

For over 30 years, SOAS Palestine Society has heightened awareness and understanding of the Palestinian people, their rights, culture, and struggle for self-determination, amongst students, faculty, staff, and the broader public. SOAS Palestine society aims to continuously push the frontiers of discourse in an effort to make provocative arguments and to stimulate debate and organizing for justice in Palestine through relevant conferences, and events ranging from the intellectual and political impact of Edward Said`s life and work (2004), international law and the Palestine question (2005), the economy of Palestine and its occupation (2006), the one state (2007), 60 Years of Nakba, 60 Years of Resistance (2009), and most recently, the Left in Palestine (2010).

For more information on the SOAS Palestine Society 7th annual conference, Past is Present: Settler Colonialism in Palestine: www.soaspalsoc.org

SOAS Palestine Society Organizing Collective is a group of committed students that has undertaken to organize annual academic conferences on Palestine since 2003.

 

[i] Patrick Wolfe, Settler Colonialism and the Transformation of Anthropology: The Politics and Poetics of an Ethnographic Event, Cassell, London, p. 163

[ii] Interview with Benny Morris, Survival of the Fittest, Haaretz, 9. January 2004, http://cosmos.ucc.ie/cs1064/jabowen/IPSC/php/art.php?aid=5412