The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer

by John C. Mutter

  The reformist current president of Myanmar, Thein Sein, was born in a small village in the Irrawaddy Delta, and at the time Cyclone Nargis hit, he was the head of the country’s disaster preparedness committee. It is not very clear what Sein’s committee actually did in the years prior to Nargis.

  An article about Thein Sein in the New York Times under the headline “A Most Unlikely Liberator” tells of how he visited the region of his youth after the storm and was appalled at the scale of devastation. According to U Tin Maung Thann, the head of the NGO Myanmar Egress, Nargis “was a mental trigger. It made him [Thein Sein] realize the limitations of the old regime.”16 Thein Sein has not openly admitted this, but I heard it said several times while I was in Myanmar.

  The limitations of the operational capacity of the Myanmar government to carry out relief work were starkly evident in the days after Nargis. The inaction stemmed from a deadly mixture of indifference, incapacity, anxiety, and outright cunning. The junta running the government was made up mostly of senior army commanders—the navy and air force are small in comparison to the army and mainly provide support for army actions against insurgents and in securing the country’s borders. The Myanmar Police Force, formerly independent of the army, is now an auxiliary military service. Myanmar spends almost 25 percent of its revenues on the military.17 (The equivalent figure for the United States is 20 percent.18) The army has a reputation for being one of the best trained and having the toughest fighters in the region.

  The army did not prove to be tough when it came to rescue and relief operations, however. Once the generals found it necessary to act, they did so in what appeared to be an almost random and erratic way. No doubt it was complicated and difficult; the delta region is hard to access at the best of times. There are few roads and transportation is often by small boats, so even a well-organized relief effort would have faced problems. An evacuation would have been difficult and could have achieved only partial success, even if a timely and well-distributed warning had been issued. The situation must have been akin to the fog of war, in which harrowing circumstances make it all but impossible for people, even well-seasoned commanders, to make good decisions. With winds blowing well over 100 mph and water rising, it is surely difficult to make decisions in the fog of disaster.

  What I heard from a large number of people was that those in the cyclone-affected region for the most part helped themselves. That included local soldiers based in the region who acted on impulse, without waiting for orders from the top that they may have expected would not come. The local NGOs, often with ethnic roots, were able to provide some measure of relief for their people. In fact, I heard that the ability of these NGOs to act without the usual constraints and oversight by government gave them a sense of empowerment they had not experienced before. Many told me that the storm gave them a way of proving to themselves and to others that they had an important and effective role in Myanmar’s civil society.

  But the generals seemed to want to do as little as possible for the people of the delta. In fact, they refused offers of aid from foreign nations. The generals sought to give the appearance that they were in control and didn’t need help. One way they did this was by trying to diminish the problem to something relatively small scale and manageable. To “prove” this, they went ahead with a national constitutional referendum just eight days after the cyclone hit. Some people in the delta region during or immediately after the cyclone said they never saw any evidence of relief operations from the military. And very little has happened since then.

  All one can do is speculate about what was in the minds of the generals in those days. Perhaps in years to come someone will tell the story from the inside. People who make devastatingly bad decisions about the numerical denomination of their currency and move their capital city on a whim should not be expected to make brilliant decisions during a disaster.

  The morally reprehensible generals latched onto the opportunity to gain advantage by doing nothing, and they almost got away with it.

  But why do nothing? One reason is to hide incompetence. Members of the Myanmar military are not experienced in civil search and rescue. What they do is more or less the opposite. The military controls all economic activity in the country, funneling the benefits to themselves and their cronies. That is not a military action but a political one. Their primary military function is to suppress insurgents so they can hold onto political power. The government’s capacity to act in response to the cyclone was weak, and no one in government wanted that weakness to be exposed. In the tortured logic of the generals, doing nothing made it appear as if nothing needed to be done. By the time the cyclone struck, Myanmar’s relationship with China had begun to collapse, so the generals could not rely on a capable ally for assistance, and they were on poor terms with all their neighbors to the east and west.

  Why thwart others who are trying to help? Part of the reason relates to the first. If you allow people in, it will become clear that something does need to be done, and the ruse that things were not so bad and that everything was under control would be exposed. The generals would have had to explain why they did nothing.

  But mainly, bizarre as it may seem to people outside Myanmar, the generals did fear an invasion. In a very insightful article in the journal Contemporary Southeast Asia, Andrew Selth reminds us that Myanmar had been invaded numerous times in its history.19 In fact, the three most recent invasions occurred within living memory. Myanmar is subject to severe international sanctions, and those imposing the sanctions couch their rhetoric in terms of the desire for regime change. The generals believed outside influences determined to overthrow the government fueled the riots of 1988, and they earnestly believed that a flood of international aid workers would be nothing more than a pretext for a US invasion. (Selth says they had watched the US invasion of Iraq closely.) They were aware that the French minister for foreign and European affairs, Bernard Kouchner, had called for coercive humanitarian intervention after the cyclone under “the responsibility to protect,”20 an action that would amount, in the generals’ thinking, to invasion under a humanitarian pretext. The arrival of US warships (to lend humanitarian support) off their coast would only have supported that belief.

  The generals resisted what they genuinely believed was imminent invasion, and the international community should have realized that would be their reaction. Instead, the international community rebuked the generals, making a difficult situation even worse. Whether a different approach might have been more successful cannot be known, but it now seems to me that the reactions by the international community did nothing but exacerbate the tragedy.

  The area damaged in the cyclone was of little importance to the country’s economy, and, furthermore, the region supported armed opponents of the government. The generals may have felt that the region just didn’t matter very much. Since the people who lived there included their enemies, why help them? We will see this logic emerge again in New Orleans after Hurricane Katrina.

  As far as anyone can tell, Cyclone Nargis made no difference at all to the economy of Myanmar. Schumpeter’s gale didn’t bring creative destruction, at least for most of the delta residents.

  If you have read anything unbiased about the history of Myanmar, you’d know that grabbing land has been the norm for many decades. In fact, the British colonization of Myanmar was more capture than colonization; it was a blatant land grab. What happened after Cyclone Nargis was entirely to be expected. Once the winds stopped blowing, the rain stopped falling, the storm surge had retreated, and the sea level was back to normal, a rich opportunity for gain presented itself—and the generals finally became involved. To benefit from the land acquisition that followed, you just needed to be part of the military or closely connected to the military.

  And this remains true today, despite the strong move in Myanmar toward democracy. The country is democratic enough that international sanctions have been lifted, and
the country is on a strong trajectory toward democratization and growth. What has replaced the old land grab by armed force is a new form of quasi-legal land takeover—“legal land grabs,” as Kevin Woods at the University of California, Berkeley, has put it.21 The new government came to power in 2010 with new laws, some of which—the Farmland Law, for instance—sound as if they are meant to protect farmers. But, in fact, the laws allow land to be expropriated by the state if the property is needed “for the national interest.” And it requires no imagination at all to guess who it is who decides what is, or is not, in the national interest. In fact, it is very much the same people who made the decisions before the new form of government came into being.

  What has emerged in Myanmar is a sort of elite alliance among military and business interests in a nominal democracy with laws that assist the elite and disengage almost everyone else. I heard on many occasions that nothing is different in terms of who really holds sway in the country; there still exists a deep suspicion of the military. Several people told me that the “democratization” came about because it was in the generals’ interests to have it come about. They have lost nothing. In fact, they have gained by selling off state assets, such as land, to foreign businesses that now can operate in Myanmar—businesses to which the generals have very close ties.

  After Cyclone Nargis, many in the Irrawaddy Delta fell victim to the Vacant, Fallow and Virgin Lands Management Act. The land that Cyclone Nargis’s storm surge inundated could be plausibly declared vacant and fallow by courts working in conjunction with the military-business network that is blossoming in Myanmar and is hungry for land. The Myanmar lands management act operates something like eminent domain in the United States, which grants the government the right to take private land for public use (or for use by a third party in government or civic interest) if the original owners of the land are fairly compensated.22 Likewise, in Myanmar, people are supposed to be fairly compensated when the government takes land under the management act, but that is not what has happened. Furious complaints and protests claim that compensation, if it happens at all, is trivial and nowhere near the actual value of the land. Displaced farmers are forced to become landless laborers and work for a pittance on other people’s farms.

  Land is very valuable capital in Myanmar today, and the powerful have no issue with taking it from the weak.

  Echoes of the same kind of malfeasance can be heard today in the Philippines following the devastation wrought by Typhoon Haiyan: “Build Back Better is nothing but a legal corporate land grab in the guise of a rehabilitation program.” That’s the claim of the Philippine youth group Anakbayan in response to the business-led rehabilitation strategy of restoration following Haiyan, known locally as Yolanda. That strategy, under the program name Recovery Assistance for Yolanda (RAY), includes the allocation of state funds and internationally donated resources to establish public-private projects in twenty-four areas devastated by Yolanda that are now described as “development areas or clusters.” Nine of the country’s largest corporations have claimed sixteen of these areas. Their plans are for tourism, property development, mining, and so on. Their plans are not for the rehabilitation of the livelihoods of those trampled by the storm.

  The president of the Philippines, Benigno Simeon Aquino III, claims that everything is going well in the recovery despite noisy “human wave” protests by survivors. He also caused distress and anger by suggesting that the casualty figure should really have been zero and would have been had local officials conducted evacuations properly. Yolanda was well predicted. It made close to a straight-line path into the islands and traveled at high speed across the islands. The speed at which it moved actually helped to limit the damage—if a storm moves slowly, the associated rainfall lasts longer and flooding becomes more likely.

  The finger-pointing between the central government and regional and local governments reads so much like that between President George W. Bush, Governor Kathleen Blanco and Mayor Ray Nagin after Hurricane Katrina it is unsettling. Aquino’s presidential rehabilitation assistant, Panfilo Lacson, has even described protesting survivors as lazy and leftists—in his view, apparently, the survivors are nuisances because they should have evacuated and didn’t, making trouble for the government.

  It is far too early to say how events will play out in the Philippines. Transparency International ranks the Philippines as a corrupt country—94th out of 177 countries in 2013—but not a completely corrupt country. That level of corruption, combined with the tight intertwining of business interests and government, appears destined to ensure that the beneficiaries of any land redistribution will be the wealthy elite, and the losers will be those already at the bottom of the economic pecking order.

  Disasters present too much temptation to many in power. Like so much else in society, disasters are to be manipulated for social, political, and/or financial gain. The type of government and stage of development don’t appear to matter very much: they just provide different tools for different actors and different methods to achieve gain. And the type of disaster isn’t very important either. Whether cyclone or earthquake, expected or unexpected, the aftermath presents the same temptations.

  Despite the repressive nature of the Myanmar government and its many bizarre actions, the narrative of Cyclone Nargis is by no means an anomaly. The government’s reaction to the storm, while marked by the junta’s anxiety, is not unique and can be found in many parts of the world. As we have seen in Haiti and will see again and again, it is all too easy to declare the destruction wrought by a disaster as blight and the blighted areas as vulnerable, as places where people shouldn’t be living. Governments and private actors (or the two in partnership) then have the chance to grab land for their own purposes. Nature has unwittingly helped the transfer of property from the poor to the rich.

  Chapter 6

  Struck Dumb in New Orleans

  The disasters in Myanmar and Haiti are similar to those in New York and New Orleans in that each was worse than it should have been. This chapter discusses why they were so bad and who made them that way.

  Unlike in Myanmar or Haiti, in New Orleans there is a middle class with many vibrant businesses, especially around tourism and entertainment, and some of the people who run them are quite prosperous. Tulane University, Loyola University, and the University of New Orleans are major employers, as are hospitals, the port facility, and the petrochemical industry. But a great majority of those who live in New Orleans are stuck fast in a poverty trap: unemployed, undereducated, and unhealthy, with little hope of progress and mobility. The majority of those who live in New Orleans were born there. For some, evacuation from the city in the face of a hurricane means going somewhere very unfamiliar.

  New Orleans is the largest city in the second-poorest state in the United States. (Mississippi, the state immediately adjacent to the east, ranks the poorest.)1 Household income inequality in New Orleans is also the second highest in the country, behind Atlanta, Georgia.2 The American Human Development Project calculated a Human Development Index (using a different formula from that used by the United Nations Development Program) that places Louisiana third from the bottom, with Mississippi again coming in last.3

  Poverty is deeply racial in Louisiana. Twenty-five percent of white families have incomes over $100,000, and only 7 percent have incomes less than $15,000. For African Americans, those figures are exactly reversed—only 7 percent have incomes over $100,000, and 25 percent have incomes below $15,000.4

  The geographic setting of New Orleans is not unlike that of Yangon in Myanmar. Both lie in the sweeping bend of a river—the Mississippi and Yangon Rivers respectively—that flows in complex meanders into fertile deltas immediately to their south. Both are major centers for shipping, and both export products from their country’s interior.

  Poverty reflects geography in New Orleans. It is quite literally invisible to the tourists on Bourbon Street who a
re so important to the city’s economy, because it is confined to distinct regions where there are no tourist attractions, notably the Lower Ninth Ward and Gentilly. According to Alan Berube and Bruce Katz of the Brookings Institution:

  These neighborhoods did not appear by accident. They emerged in part due to decades of policies that confined poor households, especially poor black ones, to these economically isolated areas. And despite New Orleans’ reputation for fine food, these areas are food deserts as well, relying on small bodegas with limited selections. The federal government concentrated public housing in segregated inner-city neighborhoods, subsidized metropolitan sprawl, and failed to create affordable housing for low-income families and minorities in rapidly developing suburbs, cutting them off from decent housing, educational, and economic opportunities.5

  The Lower Ninth Ward of New Orleans looks nothing like the Cité Soleil slum of Port-au-Prince, but functionally the two are essentially the same. They are both geographically restricted areas that concentrate the poorest people—who are also the most unhealthy and underserved—and are the most dangerous places in those cities. In Myanmar, the generals don’t like to see evidence of poverty so they forcibly evicted millions of inner-city slum dwellers in Yangon and Mandalay to peripheral areas where they would not be seen by the tourists the generals hoped to attract. Motorcycles are also banned in central Yangon. If forcible slum clearing sounds horrifying, remember that the US Housing Act of 1949 permits the use of eminent domain to clear blighted areas and “revitalize” them. Most cities around the world have engaged in slum clearing at some point in their development, usually describing it as “urban renewal.”