SALIAGUA
A Training Exercise on the International Economy
Based on a Skit Created by the Center for Ethics and Economic Policy
Adapted by Erbin Crowell, Interfaith Program Coordinator, Equal Exchange
Further adapted by Newell Hendricks, Boston Fair Trade Action, 617 876-5038
Facilitator: When people have gathered, assign parts. Some of the more complicated parts can be assigned ahead of time, but that is not necessary. Seat players in a semicircle in the following order, and give them the following props.
Facilitator: LUCKY BEANO CAN @ 2 PESOS, LUCKY CORNO CAN @ 4 PESOS, 10 GREEN DOLLARS, CHART 1(What Happened to the $$), COFFEE BAG, CHART 2 (SAP Chart), BUNCH OF FLOWERS, PRIVATE HOSPITAL SIGN, PEOPLE’S PARTY SIGN.
Grandmother: Some kind of clothing like a SHAWL to indicate her character
Campesino #1: STRAW HAT, BASKET with 5 EAR OF CORN
Campesino #2 (female) 5 TROWELS,
Campesino #3 (female) NOTEBOOK
Campesino #4 STRAW HAT
Campesino #5 STRAW HAT, BANDANA
Landowner: FANCY STRAW HAT, 5 PESOS
Doctor DOTOR SIGN, ASPIRIN BOTTLE,
La Presidente: PRESIDENTE SASH, HAT WITH $1 DOLLAR TUCKED INSIDE, LIGHTBULB, IOU $1 BILLION AT 5% (20% underneath) SIGN, 2 COFFEE BAGS, POWER PLANT SIGN.
Saliagua Central Bank: BANK OF SALIAGUA SIGN, PESOS, IOU’S, COINS
MegaBank MEGABANK SIGN, 2 GREEN DOLLARS, TIMER
AgroChem: AGROCHEM SIGN, FLOWER SEEDS, PESTICIDE CAN, 2 GREEN DOLLARS, CAN OF LUCKY BEANOS @ 1PESO, CAN OF LUCKY CORNOS @ 1PESO, BOX OF FORMULA
Generally Electric: GENERALLY ELECTRIC SIGN, SIGN WITH PICTURE OF NUCLEAR POWER PLAN
Rambo Arms ‘R’ Us RAMBO ARMS ‘R’ US SIGN, TOY GUN
International Monetary Fund (IMF): IMF SIGN. IMF DOLLARS
INDRODUCTIONS
Facilitator: The following drama is an exercise illustrating how the Neo Liberal economic policies of the last thirty years have affected the poorer countries in the Southern Hemisphere. The drama begins in the 1960’s. Here to introduce you to the setting is a woman I call Grandmother.
Grandmother: I would like to introduce you to our country. It’s called “Saliagua.” Like the name says, sal y agua—“salt and water”—we are a simple country, most of us just have the bare basics in life. I can remember when all this land used to be ours; we knew how to live off it. Then the Spanish came, took over much of the land, and we were forced onto this little plot of land here on the mountainside. These are my neighbors, fellow campesinos.
Campesino #1: We are peasants in Saliagua like the majority of Saliaguans. We grow everything that we need to eat, but mostly corn and beans – plus some cash crops like coffee for other needs such as clothing and medicine. Place basket with 5 ear of corn in the middle of the Campesinos.
Campesino #2: A few of us here own our land, but many people rent from the landowner sitting over there. These farm tools represent people who own a small piece of land. Place a trowel in front of each campesino.
Campesino #3: We have access to electricity, healthcare and education because it is subsidized by the government. It is very important to all of us that our children can attend school. I never had this opportunity. Place the NOTEBOOK in the middle of the campesinos.
Campesino #4: Recently two of us lost our land to the large landowner because there was a bad harvest and we couldn’t pay back the money we had borrowed to plant. Give your TROWEL to landowner.
Campesion #5: Give your TROWEL and 1 EAR OF CORN to the landowner.
Grandmother: This is the local plantation owner from down the road.
Landowner: I come from a well-established, influential land-owning family that has been growing coffee for many generations in Saliagua.
Facilitator: How did you get your land?
Landowner: Over the years we have gradually acquired more and more. Our family has been friends with the ruling government and at times that has helped. More recently, we have tried to help the campesinos by loaning them the money to plant their harvests, but when there is a bad harvest and they can’t pay, we have to take their land to get our money back.
Grandmother: This is our local Doctor. We have a public health clinic in the town which isn’t too far away.
Doctor: This medicine represents the public health clinic in the village. Placee the ASPIRIN bottle in the middle of the Campesinos.
Grandmother: This is our esteemed Presidente. It took us years to get electricity here in the campo. Now that he wants to get re-elected, he claims he is responsible for everything.
Presidente: I am the president of Saliagua. I’m seeking re-election next year. “Lights for All” is my campaign slogan. We promise affordable electricity to the whole country through the state-owned electric plant where many urban middle class fathers work. Give the campesinos the LIGHT BULB in exchange for an EAR OF CORN.
Grandmother: This is the Central Banker, controller of the national currency. Besides being family of the Presidente, I’m not sure what he does. Tell us again.
Saliagua Central Bank Banker: I am the head of the Central Bank; responsible for maintaining the national currency, pesos, strong and stable. International currencies are exchanged with me. All government payments, subsidies, bills, and checks come from me, and loan payments are collected from me.
Grandmother: to MegaBanker These people are new to our country. Before we never saw Bank of America, Citicorp, or Fleet Bank. I have no idea what they are doing here. We don’t have any money to deposit.
MegaBank Banker: We are a U.S., private, commercial bank like Bank of America or Citicorp.
Facilitator: What are you doing here in Saliagua?
MegaBank Banker: We are interested in the possibilities of loaning and investing money in Third World countries. They are the new growth areas, otherwise called “emerging economies.” This is where we can really make money.
Facilitator: And what is that timer for?
MegaBank Banker: We have a timer because, for banks, “Time is Money.” We need to know when to collect interest payments.
Grandmother: to AgroChem These people we have seen too much of. We see their imported seeds, their imported fertilizer, their fancy pesticides, even their imported cow manure. Everything at that big coffee farm has their toxic logo on it.
AgroChem Corporation: We are the #1 multi-national agro-chemical company in the Americas; combining the best aspects of agriculture and chemical world. We have 3 main divisions to our company:
1. Flowerama: which sells seeds and buys and sells fresh flowers. Hold up the FLOWER SEEDS.
2. No More Pests: which sells pesticide and fertilizer. Hold up the PESTICIDE CAN.
3. Lucky Grub: a large agribusiness company that produces processed foods like these. Hold up the cans of LUCKY BEANOS, and LUCKY CORNOS.
Facilitator: Why have you targeted Saliagua as a place to do business?
AgroChem: Third world countries are great for us because we can sell out-dated pesticides like DDT which have long since been banned in the U.S. and Europe. Also we like to work where we can sell the complete package; we’re especially looking for new markets for our Lucky Grub products.
Grandmother: To Generally Electric These people are from lands far away. We never see them, but the people say they go to visit the Presidente.
Generally Electric: We are a U.S. based company that builds and sells energy plants.
Facilitator: And why are you here in Saliagua?
Generally Electric: We are looking for new, untapped markets where we can promote nuclear power and sell more plants.
Grandmother: To Rambo These people are from lands far away. We never see them, but the people say they go to visit the Presidente.
Rambo Arms ‘R’ Us: We are an international weapons manufacturer.
Facilitator: Why are you here in Saliagua?
Rambo Arms ‘R’ Us: We are actively seeking new buyers for our products. The Third World looks to be a promising market as civil unrest and armed conflict is on the rise.
Facilitator: There is one more character in our story, but they are not yet in Saliagua. We will meet them in the 1980s. These, then, are the characters in our story.
Part I: The 1970’s GROWING DEBT
Facilitator: The big debt crisis began in the 1970s. It was at this time that OPEC raised oil prices. That meant two things;
1. the cost of “development” or industrialization, would go up, and
2. the OPEC countries deposited lots of money in U.S. Banks. Deposit 10 GREEN DOLLARS in MegaBank. Banks have to pay interest on money deposited with them, so US Banks suddenly had to find a place to loan out large sums of money.
Presidente: Our country has had a healthy economy this past decade but we are still not a “developed” country. I have big plans, I just need capital.
MegaBank: Take 4 DOLLARS, and go to president of Saliagua: We want to help you ”develop”. We will loan you money; as much as you want. The current rate is only 5%. Here is One Billion Dollars. Give 4 GREEN DOLLARS to Presidente.
Presidente: Give IOU $1BILLION AT 5% SIGN to MegaBank, and the 4 BILLS to Saliagua Ceentral Bank.
Saliagua Central Banker: Receive the 4 BILLS. At some point, hide one of the Bills. This is represented by the one that turns up in the Presidents’ hat.
Facilitator: Just like you see here in Saliagua, hundreds of billions of dollars, more than ever before, flowed from North to South in loans. Many of the loans came from the World Bank, as well as private banks as depicted in this exercise. So why, within a decade did a safe, low-interest loan of a billion dollars, cause Saliagua to end up bankrupt and in enormous debt? Here is a chart that will help us understand what happened to the money:
WHAT HAPPENED TO THE $$$$$?1. Development Projects Didn’t meet expectations
2. White Elephants
3. Corruption
4. Capital Flight
5. Military Build-up
6. Interest Rates Rose
Facilitator: Referring to the chart 1. Development Projects didn’t meet expectations: Because the banks were desperate to loan out money, they weren’t very careful about the kind of projects that the money financed.
Presidente: Because of our Colonized background, we do not have the technology, trained labor, or access to materials to compete in the area of manufactured products, so I think we will keep investing in raw material exports like sugar and coffee.
Landowner: I am will grow coffee if you will give me some of the money.
Presidente: Take 2 PESOS out of the Central Bank and give them and a COFFEE BAG to the Landowner.
Campesino #5: We wish we could get some money or assistance from your government to help with our small farms, but since the emphasis is on export corps, we have received nothing.
Facilitator: So, how did exporting raw materials work out?
Landowner: In the 1970s there was a global recession. The prices of things we produce in Latin America, declined to 1930 levels, but the price of manufactured goods that we need to produce them, like machines and fertilizer, things produced in the North, rose. It used to take the sale of 4 tons of coffee to buy one tractor. Now it takes 11 tons to buy the same tractor.
Facilitator: Another problem was that countries which invested heavily in one crop were vulnerable to market changes. Chile, which had invested heavily in copper production, had great losses when fiber optics replaced copper wire.
Landowner: Our sugar industry suffered when Coca Cola started using corn syrup instead of sugar.
I need more land and cheaper labor to keep my costs down. The campesinos have lost money as well so it will be easy to get more land from them. Take TROWELS from Campesinos 2 & 3.
Facilitator: Referring to the chart, #2 White Elephants: Some development projects were just shams and billions of dollars went up in smoke.
Presidente: I need to make good on my “Lights for All” campaign promise.
Generally Electric: We can help you modernize your country with one of our new nuclear power plants.
Presidente: I’ll take one. Get 1 DOLLAR from Central Bank and give to GE in return for a NUCLEAR POWER PLANT SIGN.
Generally Electric: Give Presidente the NUCLEAR POWER PLANT SIGN. Uh-oh. We built the nuclear plant on a fault and near a volcano.
Facilitator: Needless to say, it never opened, but the people of Saliagua are stuck with the debt payments. This may sound ridiculous but this in fact did happen in the Philippines when Marcos paid Westinghouse $2 Billion (2 times the going price) to build a nuclear plant that never opened, and the Philippine people are still paying back the debt.
Referring to the Chart, #3. Corruption: All of this money which the banks were pushing as loans for projects in poor countries created a perfect recipe for corruption. Look under PRESIDENTE’S HAT. Look! El Presidente slipped some of the loan money under his/her hat. And where does El Presidente keep all this money? What bank would he/she put it into?
Presidente: Who will offer me a safe place for my money with the best interest rates? Open an account with MegaBank, throw the DOLLAR toward MegaBank.
Facilitator: Referring to the Chart #4: That’s called capital flight. Capital flight refers to what happens when individuals within a country take their money out of their own country and move it to another country. So money that could have been used for investment and development in Saliagua, flew out of the country and into MegaBank in the U.S. Mexico’s capital flight is about $56 billion, half of its foreign debt. Now MegaBank is making double profits on its money – it makes interest on the loan to Saliagua and it gets to lend that money a second time so it earns interest twice!