Shock Therapy: Fuel Subsidy Removal

Understanding and Assumption

There has been much discussions and threats of revolution around the removal of fuel subsidy; in Nigeria. There has been claim that governors are advocating it to compensate for the reduction in state funds due to the recent pressure to increase minimum wage. I am neither qualified nor have sufficient information to speculate on the legitmacy of this matter. I also don’t want to repeat what so many critics have been saying. But I criticize based on simple maths of the situation; by estimating how much cost of living will increase in a country without safety nets.

The cartoon below is my un-artistic attempt to portray my understanding of the Fuel Subsidy Removal Issue.

The starting point is that the Fuel Subsidy Removal is a “shock therapy” or at least a bad attempt at “shock therapy”.

Shock Therapy

Shock therapy is the treatment administered after a shock. Who administers it? policy makers. What is the shock? shock can be a disturbance that disorients the senses and mental faculties of its victims. Who are the victims? a governed people. Shock therapy, as put by Naomi Klein, is a sinister ideology that lurks for a shock and takes advantage of the resulting disorientaion in order to change government policies that could not have been possible before the shock; without much resistance. This is different from non self profiting policy changes or planned (in case of shocks) policy changes which are decided and reserved as contingency plan for when a shock occurs. Unfortunately there are too many forms shock can manifest that it is impossible to anticipate each one.

Shock could be in form of “terrorist” attacks, epidemic, natural disasters, political instability or plain old brutal dictator regimes. The precursor for shock therapy is a shock. The rise of shock therapy in the past century is inseparable from an economic school of thought that holds privatisation of the public sphere as sacred. Examples of countries where shock therapy was administered are Chile under Pinochet, Polland after recessing from the Soviet , Iraq under US invasion, England during Margareth Thatcher’s easily-avoidable war and the Argentinian counterpart. New Orleans of the USA also fell victim to shock therapy after the epic privatisation campaigns after Hurricane Katrina.

The main function of the shock is to give the leader (policy makers) the license to make changes to policy without rejection through public debates. Therefore, a dictator doesn’t really need a shock since no one will oppose him (and succeed to tell about it).
In summary, the requirement for a successful shock therapy is a shock. Shock can come as a dictatorship or physical disaster.

In Nigeria

Shock therapy has left its signatures in Nigeria; need I say more? During Obasanjo’s regime, there was hardly any effective opposition to his whims. The corruption is widely acknowledge even by Obasanjo’s partners that fell off with him. Obasanjo enjoyed atleast a quasi dictatorship through his far reaching money-generous tentacles and also having the the judiciary and much of the legislature in his pocket. Functionally, Obasanjo was a dictator because policies went his way even if official stakeholders put forward more reasonable solutions.Being a quasi-dictator, Obasanjo fulfilled the requirement for administering shock therapy. His quasi status limits the drastic changes he had power to effect but it nonetheless allowed him to do things his way.

The second signature during Obasanjo’s regime is that of privatisation. I am not aware of much opposition to the privitisation of public enteprises, the significance of privatisation is a telling sign of the narrow-minded privatisation-driven nature of the econmic model that goes with shock therapy. The brazen corruption that accompanied the privatisation confirms that the regime had a dictator-type free rein to do as it wanted. The most telling clue is when public-owned basic amenities companies like water and security are privatised. Water companies were proposed for privatisation. Although the police was not privatised, there was a boom in the private security industry even though some of them are mere “gate-men” with uniforms who deceptively project an air of security. You need to ask, who owns these security companies and what is their relationship to the government?

The ultimate aim (especially in the Nigerian version) is to make as much pocket-money for the policy makers. It is a known truth in Nigeria that as long as money exists as accessible to the government, then government officials will make the most of out it (or more correctly: the least out of it). In regards to the recent fuel subsidy removal, removing the subsidy leaves all that money (in Trillions of Naira) formerly used for subsidy at the mercy of the government. Nigerians have little faith trusting the government officials to handle such a juicy trust. Why give a alcoholic an opened bottle of alcohol to keep for you.

If subsidy removal is the shock therapy, then what is the shock you ask? It is acknowledged that the president (Goodluck) hardly has the character of a dictator as he himself admitted in a church speech likening himself to David not Goliath (Nigeria has a sling but I dont think he knows how to use it). I continue… the shocks are three:

  1. MEND attacks,
  2. Boko Haram attacks
  3. and the 2011 post election carnage.

Will the Shock Therapy be Successful?

While refraining from speculation about the future, the present state of affairs is not promising for supporters of the removal. May be there is truth in the accusations that this government is incompetent, if it can’t administer shock therapy as successful as other unfortunate countries given opportunities of three major shocks. But why hasn’t the shock therapy succeeded? Iraq provides us with the answer.

After 9/11, America saw the window of opportunity to invade a middle eastern country for infiltration and genesis of privatisation crusades. After deliberation, Iraq was selected for three reasons; Iraqis didn’t like Saddam, Saddam wasn’t suppressing any “terrorist” group for the USA and Iraq is familiar territory for the USA. Since desert storm was a documented war, the Americans knew what mistakes to avoid. The invasion was quick and easy. But not in the long run, as a US official said “Our invasion of Iraq was successful but our occupation of it is a disaster”. The main reason, Naomi Klein points out, is that the quick victory didn’t allow for enough shock to shake the people. Iraqis were in a sound psychological state to be militant against the invadors. Iraq shock was not like Chile’s; where Pinochet attacked the presidential building with heavy weaponry even though those inside were not armed, and also ; his purpose was to create shock in the country and he succeeded.

Nigerians, as it turns out, have a stubborn psychological state that has been trained to stay sane after so many ethnic crisis and carnages. It is like someone who thinks they had drugged you walks in to your room casually as you lay in the dark, then tries to steal your wrist watch. When you catch them, they insist on saying that it is better for you to be asleep as if repeating it will hipnotize you to sleep. I think it would ve been more successful if the policy change was to do with security (which is at the fore of the three Nigerian shocks), then it will be relevant. In the analogy, it will be like the theif trying to take your helmet off; even if you catch the theif you may be persuaded by his argument that it is better for your head with the helmet off.

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