Africa's False Friends

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Mark Curtis condemns the neo-liberal assumptions of New Labour's development agenda.

The New Labour government has had an amazingly good press on development issues. Tony Blair and Gordon Brown are regarded throughout the mainstream media and liberal political culture as little short of champions of global poverty eradication. Their policies on aid, Africa and trade are routinely praised as demonstrating that, even though they might be liars and criminals over Iraq, on global development they are committed internationalists. It is an extraordinary view. Putting the progressive rhetoric aside, ministers have also made plain their other goals - which are more plausible and confirmed by their actual policies.

According to Blair, 'Real development can only come through partnership. Not the rich dictating to the poor. Not the poor demanding from the rich. But matching rights and responsibilities.' Thus the poor have no right to make demands on the rich. Yet half the world's population lives in poverty, on an average of $2 a day, while the richest few dozen individuals command more wealth than hundreds of millions of people. In this situation, are the poor really not entitled to be 'demanding from the rich' rather than simply 'matching rights and responsibilities'?

Blair's view is echoed by Gordon Brown, who has outlined a 'global new deal' based on the poorest and richest countries 'each meeting our obligations'. The poorest countries' 'obligations' are 'to pursue stability and create the conditions for new investment'. The richest countries' obligations are 'to open our markets and to transfer resources'. One might think that the world's poorest countries have no obligations to the rich. But those with few schools, health services and safe water are deemed by New Labour to have 'obligations' to us concerning helping our companies to make more profits (creating 'the conditions for new investment').

The basic fact is that Britain under Blair and Brown is one of the world's leading champions of the neo-liberal economic model that is essentially being imposed on much of the rest of the world, and which is generally increasing poverty and inequality. Britain's basic priority - which I have tried to document in my books Web of Deceit and Unpeople - is to aid British companies in getting their hands on other countries' resources and breaking into foreign markets. Former trade secretary Patricia Hewitt has said that 'we want to open up protected markets in developing countries'. A new World Trade Organisation (WTO) round of negotiations 'is the best way of ensuring that our businesses can benefit from, and contribute to, future economic growth anywhere in the world', she stated in July 2001. 'Opening up markets and cutting duties around the world' will 'create new opportunities for our service sectors', Hewitt adds.

Consider also a crucial passage in the government's white paper on trade of July last year: 'The UK government has a key role to play at the international policy level to ensure that any distortions created by other government interventions are minimised so that the UK can compete in global markets, while deriving the maximum benefit from competition from increased imports.'

Securing business access into foreign markets is the aim of economic 'liberalisation'. Policies like import tariffs and subsidies, raised by governments to protect their markets from competition that can undermine domestic industry or agriculture, are seen as essentially heretical for developing countries. 'Trade liberalisation is the only sure route' to economic growth and prosperity for developing countries, Tony Blair says with religious conviction.

The government has also consistently acted as an ally to big business in the ongoing WTO negotiations on services. Services are big business to Britain, the fourth largest importer of services in the world and the second largest exporter. Trade minister Baroness Symons once told members of International Finance Services London - a big business pressure group - that 'I hope you will view this government as your greatest ally in moving that agenda forward', including through the WTO. WTO negotiations 'offer a huge opportunity to European and British businesses', she noted.

The importance of DFID

New Labour created a new instrument for promoting these interests - the Department for International Development (DFID). An extremist economic project is being pursued under a great moral pretext - that global 'liberalisation' will promote development and eradicate poverty. A variety of initiatives have been established to reassure business of the benefits of New Labour's policies, and emphasising that business is a 'partner' in development. Consider then former international development secretary Clare Short's speech to business leaders at Lancaster House in April 1999: 'The assumption that our moral duties and business interests are in conflict is now demonstrably false... I am very keen that we maximise the impact of our shared interest in business and development by working together in partnership... We bring access to other governments and influence in the multilateral system - such as the World Bank and IMF... You are well aware of the constraints business faces in the regulatory environment for investment in any country... Your ideas on overcoming these constraints can be invaluable when we develop our country strategies. We can use this understanding to inform our dialogue with governments and the multilateral institutions on the reform agenda.'

DFID is here offering itself to business as an instrument to shape the policies of multilateral institutions and developing country governments.

DFID policy is to help minimise the risks for private investors in developing countries and 'to develop an investor friendly environment' and 'a more favourable business environment'. Its Business Partnership Unit looks at 'ways in which DFID can improve the enabling environment for productive investment overseas and how we can contribute to the operation of the overseas financial sector'. Its bilateral aid programmes 'provide governments of developing countries with the advice and expertise to help attract private finance'. It also supports the World Bank's Private-Public Infrastructure Advisory Facility, which provides 'advice' on regulatory frameworks to attract foreign investment.

Domestically and internationally, the government is actively campaigning for the minimum regulation of business. Clare Short said that 'by far the best approach is for enterprises themselves to ensure that they respect the rights of workers, protect their health and safety and offer satisfactory conditions of employment... Voluntary codes... are often more effective than regulation.'

It might be thought astonishing that a Labour leader believes that businesses should be left to themselves to ensure they respect the rights of workers! But New Labour's consistent rejection of proposals for legally binding regulation of corporations to protect people contrasts starkly with its vociferous support for legally binding WTO rules that benefit business. I can find no statement where the government has even seriously criticised transnational corporations (TNCs) for the harmful effects they can have on the world's poor.

The aid programme has been overtly used to push corporate globalisation. Christian Aid found that in Ghana the British government was in effect tying the release of British aid to Ghana's government privatising water services. DFID was withholding £10 million in aid for the expansion of water supply in the city of Kumasi until company bids for the leases of Ghana's urban water supplies had been received.

Recent reports by War on Want and the World Development Movement reveal that the government has provided tens of millions of pounds of 'aid' to companies such as the Adam Smith Institute, Halcrow and KPMG to push privatisation, notably of water. DFID's chief civil servant notes that 'we are... extending our support for privatisation in the poorest countries from the power sector in India to the tea industry in Nepal'.

Government arguments

What of the government's - and media's - arguments that it is pursuing a positive development agenda? First, this case can only be made by ignoring the strategy of promoting corporate globalisation and the empowerment of business outlined above. Yet three cases in particular are still routinely made: on trade, aid and debt.

On trade, the government's slogan is that it is promoting 'free and fair trade' - a conflation of two generally conflicting policies that, one might think, would generally be ridiculed. Yet the government receives widespread praise for championing the opening up of EU markets to developing countries by removing trade barriers. Certainly, the EU's blocking such market access at the same time as forcing open developing country markets is gross hypocrisy. But the government sees market access for developing countries as the quid pro quo for poor countries to do likewise - a strategy it is vociferously pushing while offering only longer 'transition periods' for developing countries to open up to full 'free trade'. According to former trade minister Richard Caborn, access to EU markets 'is the message we need to hammer home if we are to get the developing world to agree to another round of WTO talks', that is, further liberalisation. It is a myth that mutual liberalisation creates a level playing field from which all countries benefit equally; rather, it is mainly TNCs who gain, poised as they are to take advantage of newly opened markets.

Second, New Labour has increased the aid budget significantly, from a low point at the end of Conservative rule. But, as noted above, aid is routinely used to press developing country governments into promoting neo-liberal economic policies. Gordon Brown's flagship aid initiative - the International Finance Facility (IFF) - is billed by the government as doubling overseas aid. An analysis by the World Development Movement shows that the IFF will actually result in less aid over the long term; moreover, such aid remains conditional on developing countries 'opening up to trade and investment'. The government has abolished formal tied aid - aid given on the specific condition that it is used to buy goods from the donor - but the use of such 'globalised aid' has been increasing. Under pressure from campaigners, the government has recently announced it will no longer use aid for such purposes (having consistently denied doing so). This remains to be seen, but there are informal as well as formal means of so doing.

On debt relief, Britain is viewed as having a more positive record than other G8 governments. It was largely public pressure - notably the Jubilee 2000 campaign - that pushed the government into its more progressive stance. Yet debt relief is also only provided on condition that countries implement World Bank/IMF programmes that require policies of economic liberalisation. The fact that debt relief is such a lever over developing countries - a tool in the armoury of promoting corporate globalisation - plausibly offers one explanation for why New Labour has become keen on it.

In this context, the immediate task of campaigners is to ensure that government rhetoric is exposed and that the public see accurately what policies are being promoted in their name.


Mark Curtis's latest book is Unpeople: Britain's Secret Human Rights Abuses (Vintage, 2004). He was until recently director of the World Development Movement: www.markcurtis.info; mcurtis30@aol.com