Latin American Report


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7 April 1999


"Banana Republic" used to refer to poor, developing countries that relied on a single cash crop -- typically bananas -- and were ruled by corrupt governments. Now the term seems singularly appropriate to the United States, even though the U.S. relies neither on bananas nor any other single cash crop.

Operating at the behest of banana magnate Carl Lindner -- the CEO of Chiquita -- the United States for years has complained about the European Union's policy of importing its bananas from former colonies in the Eastern Caribbean (tiny countries like Dominica).

To guarantee continued support for the Eastern Caribbean banana producers, the European Union gives them preferential treatment through a quota system. "Dollar bananas" from Central American countries -- controlled by U.S. marketing companies -- are cheaper than those from the Eastern Caribbean, which has inferior land.

The United States pursued its campaign against the EU system at the World Trade Organization (WTO). The United States won the claim, because in fact the EU policy does violate WTO norms: it is illegal under WTO rules to place a quota on imports from one region.

Under the WTO rules, as manipulated by the United States, it is largely irrelevant that the purpose of the EU's preference for the Eastern Caribbean is for beneficent reasons -- to provide some minimal remedial support for its extremely poor former colonies. It doesn't matter than some 200,000 farmers plus many others stand to lose their livelihoods -- in countries where 30 to 50 percent unemployment is the norm -- if the EU abandons its banana system.

Under the WTO rules, it is irrelevant if the Eastern Caribbean bananas are produced in a relatively more socially just way -- on many small farms, mostly headed by women -- as opposed to the giant Chiquita plantations in Central America, where unions are routinely smashed and workers underpaid and exposed to serious pesticide and other chemical hazards.

The International Confederation of Free Trade Unions explains:

"Central American bananas are produced on large 'industrial' scale plantations employing large numbers of relatively poorly paid workers. Few workers have been able to win recognition for their unions in the face of the deep hostility of the companies, governments, the military and in some countries para-military gangsters."

After a long series of back-and-forth negotiations and further pro-U.S. rulings from the WTO, the United States has now announced $520 million in sanctions against Europe in connection with the banana case.

Under WTO rules, the United States has the right to impose countervailing sanctions against European imports in industries totally unrelated to the dispute. The United States has chosen to impose 100 percent tariffs on a range of European luxury imports -- ranging from Italian pecorino cheese to Scottish cashmere sweaters -- hoping that these industries will become internal lobbyists in the EU for a change in Europe's banana policy.

Of course, despite the degree of importance the U.S. government places on its banana interests, the United States differs in one remarkable way from the Banana Republics of old -- it does not produce any bananas.

Why then, one may reasonably ask, is the United States launching what is commonly labeled a "trade war" against Europe? The answer: Carl Lindner, and his money. Chiquita CEO Carl Lindner has poured money into the political system. Lindner and wife Edyth donated more than half a million dollars in 1998 in political contributions. That's standard for the banana titan, who contributes generously to both major parties.

Lindner's mega-contributions to former Senate Majority Leader, former presidential candidate, current Viagra pitchman and aspiring First Husband Bob Dole helped Dole see the importance of the banana issue to the U.S. economy. He pushed various legislative proposals designed to force changes in the EU banana preference system, and deserves some credit for the Clinton administration's decision to take up the case.

Greased by campaign money, the Clinton administration has chosen to identify the national interest with Carl Lindner and Chiquita. The U.S. Trade Representative humorously asserts that "the U.S. economic stake in this case is clear" -- even though virtually no U.S. jobs are at stake, and even though it is widely understood that displacing the Eastern Caribbean banana farmers will push many of them into the illegal drug trade.

It is hard to imagine a more outlandish case to illustrate the flaws in the WTO-governed global trading system or in U.S. campaign finance rules. Unfortunately, there are serious consequences to the U.S. buffoonery, and it is innocent parties in the Eastern Caribbean who will pay the price for the Clinton administration decision to convert the United States into a Banana Republic.


Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter.

Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor.

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100 Years of United Fruit

By Nefer Munoz

SAN JOSE, Mar 29 (IPS) - The United Fruit Company was born one hundred years ago, on Mar 30, 1899. Its presence in Latin America ushered in a period of social tension and political unrest, and marked the era of the greatest ''Yankee expansion'' in the region.

Benefitting from enormous land concessions, privileges, tax exemptions and cheap labour, in just a few years United Fruit consolidated its monopoly over banana production. The company's greatest influence was exercised over four Central American countries: Guatemala, Honduras, Costa Rica and Panama.

In the Caribbean, the end of the 19th century witnessed the emergence of a vast landscape of banana trees, and the start of what would become a new order of social relations for thousands of workers.

Like other banana companies, United Fruit grew as the railways expanded, and the extent of its social impact has been depicted - and denounced - in a wide number of books.

''At that time, the imperialist phase of the expansion of capitalism was being experienced,'' recalls historian Virginia Mora at the University of Costa Rica. She pointed out that the spread of United Fruit and other companies was favoured by the facilities granted by governments in the area.

In Costa Rica alone, United Fruit leased 148 kms of railway and was granted a concession for 334,000 hectares of land, when it acquired the business concerns of U.S. entrepreneur Minor Keith.

Summing up United Fruit's 100 years of history, Mora said that although the banana company brought the region jobs and comparatively higher wages, in the end the damages outweighed the benefits for the countries where the company set up shop.

None of the revenues generated by the company ended up in the local economy. ''The workers received their pay, but they had to shop in the company store, which was located on the plantation,'' said Mora.

The huge privileges granted by the governments through so-called ''contract-laws'' were thus only partially compensated. Honduras and Costa Rica yielded United Fruit enormous tracts of land in exchange for the construction of railways, while Guatemala and Panama were satisfied with the development of the banana-growing sector.

Among the privileges enjoyed by the company were wide-ranging rights to extract and exploit natural resources in the area and total exemption from import duties on capital goods and inputs.

In his book ''Banana Transnationals in Central America'', published in 1983, Frank Ellis stated that in exchange for such privileges, United Fruit only paid a duty on exports - the only tax local governments were able to impose on banana production - from 1910 to 1930.

Throughout Central America, that tax was held steady at 1.5 to two cents of a dollar per bunch of grapes. In the meantime, United Fruits' assets ballooned. In 1910, the company owned - in the four abovementioned countries - 601 kms of railways and 194,392 hectares of land, which included 30,544 hectares of banana plantations. By 1930, those figures had climbed to 2,467 hectares of railway, 1.4 million hectares of land and 76,553 hectares of plantations.

The difference between the total quantity of land available and the cultivated area allowed the company to shift to new areas once land fertility on plantations began to wane.

In the book ''The United Fruit Company in Latin America'', Stacy May showed how the company started out with an initial capital of 20 million dollars, surprising when compared to the economic power it achieved half a century later. In 1947 the company accounted for 16.5, 22.7, 38 and 12.3 percent of Gross Domestic Product (GDP) in Costa Rica, Guatemala, Honduras and Panama, respectively.

But the banana plantations brought new social woes such as alcoholism, prostitution and ethnic clashes. ''The banana companies found the way to exacerbate the differences between black and white workers,'' said Mora. ''That was their strategy to prevent the union movement from taking a united stand.''

In spite of that ''divide and conquer'' strategy, however, the banana plantations became the cradles of strong trade union and political movements, like the Communist Party in Costa Rica. Discontent over working and living conditions was expressed in a number of strikes, the most memorable of which took place in 1934 in Costa Rica and 1954 in Honduras. Around 10,000 workers from around the country took part in the 1934 strike in Costa Rica. Although in 1942 things began to change in the country dubbed the ''Switzerland of Central America'', when the government established social guarantees for all workers, little change was seen in the rest of the region.

The ''contract-laws'' continued protecting the interests of banana companies. But in 1974 the so-called ''banana war'' broke out between local governments and United Fruit, due to the low prices that the company paid local producers, and its refusal to pay taxes. Out of the tension arose the currently inactive Union of Banana Exporting Countries (UBEC) in September 1974, made up of Costa Rica, Colombia, the Dominican Republic, Guatemala, Honduras Nicaragua, Panama and Venezuela. Besides providing information on the earnings of transnationals like United Fruit, Standard Fruit, Dole and Del Monte, UBEC set a one-dollar tax on each box of bananas exported from the region with the exception of Nicaragua and Colombia, where sales were in the hands of local firms. Up to the early 1990s, state coffers in the countries that levied the tax saw an influx of more than 1.2 billion dollars thanks to the duty - which was later suspended, nevertheless, by most of the countries.

United Fruit is now known as Chiquita Brands, and although it still has banana plantations - around 12,000 hectares in Panama - it is mainly involved in the export business.

In a number of countries, the shift of banana companies from the Atlantic to the Pacific coast, where better ports and still-fertile land were available, left behind entire towns that were completely dependent on the plantations for jobs. Describing what occurred in the province of Limon, along Costa Rica's Caribbean coast, historian Victor Hugo Acuna once wrote that the town had become ''a cemetery of banana trees.''

The suffering, discrimination, poverty and every other aspect of the living conditions on and around banana plantations in Costa Rica were brought to life by Communist leader Carlos Luis Fallas. ''The dollars of the United Fruit Company worked miracles in Costa Rica,'' Fallas wrote in his book ''Mamita Yunai''. ''The most influential political leaders of the bourgeoisie sang the praises of the civilising works of United. Writers and journalists, with very few exceptions, presented United as the loving mother of Costa Ricans.''

InterPress Third World News Agency (IPS)