Britain and the G8: A champion of the world’s poor?
Chapter in Gill Hubbard and David Miller (eds), Arguments against G8, Pluto, London, 2005, available at http://www.plutobooks.com/cgi-local/nplutobrows.pl?chkisbn=0745324207&main=&second=&third=&foo=../ssi/ssfooter.ssi
In 2005, Britain is hosting (or by the time you read this book will have hosted) the summit meeting of the G8 countries in Gleneagles, Scotland. New Labour ministers have been clamouring to publicly demonstrate their commitment to global development issues. But how seriously should we take these public positions?
According to Prime Minister Tony 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’. This is Blair’s world – where the poor have no right to make demands on the rich. Yet this is a world where half the 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 Chancellor 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, after centuries of exploitation and enduring extreme poverty due partly to an international economic system that plainly disadvantages them. But no, 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’).
Yet Blair and Brown are regarded throughout the mainstream media and liberal political culture as champions of the world’s poor. Their policies on aid, Africa and even trade are routinely widely praised, as demonstrating that, more recently, even though they might be liars and criminals over Iraq, on global development they are committed internationalists. It is an extraordinary view. Because, putting the progressive rhetoric aside, government ministers have also made plain their other goals – which are more plausible and confirmed by their actual policies. This is easy to spot, if we bother to look.
The new liberalisation theologists
The basic fact is that Britain under New Labour is one of the world’s leading champions of the neo-liberal economic model that is essentially being imposed on the 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 recent books – is to aid British companies in getting their hands on other countries’ resources. The explicit goal is to break into foreign markets. Trade Secretary Patricia Hewitt has said that ‘we want to open up protected markets in developing countries’. A new World Trade Organisation 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. Similarly, Trade Minister Baroness Symons assured a big business lobby group on services that the government was committed ‘to work with you to bring those [trade] barriers down’. She said that ‘there is still a lot to be done in India – and other markets – to facilitate market access for industry’.
Former Trade Secretary Margaret Beckett wrote in the Financial Times that a key objective of the Department of Trade and Industry is: ‘to continue developing the conditions, at home and abroad, in which British business can thrive… Britain’s businesses need to be able to trade throughout the world’s markets as easily as they can in home markets without facing high tariffs, discriminatory regulations or unnecessarily burdensome procedures’.
Essentially the same goal was repeated in the government’s white paper on trade produced in July 2004: ‘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’. Under New Labour, Britain has been perhaps the world’s leading champion of trade ‘liberalisation, which it wants to see applied in all countries. 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-distorting’, in the theology). ‘Trade liberalisation is the only sure route’ to economic growth and prosperity for developing countries, Tony Blair says with religious conviction.
The rich North’s aim is to ‘lock in’ all countries to this agenda, while the WTO has become in effect an organising body for the global economy. Peter Sutherland, former Director-General of the WTO, for example, has said that an aim of the trade negotiations was to extend liberalisation ‘to most aspects of domestic policy-making’ affecting international trade and investment. The promotion of this one-size-fits-all economic ideology mainly benefits transnational corporations (TNCs). As the Chief Trade Economist of the World Bank has said: ‘The dynamic behind the WTO process has been the export interests of major enterprises in the advanced trading countries’. The purpose of global trade policy, explained Lawrence Summers, a former World Bank chief economist and Clinton administra¬tion official, is to ‘ensure viable investment opportunities for OECD companies’.
If a prize were to be given for exploiting September 11th for one’s own ends, then Trade Secretary Patricia Hewitt would surely be one of the front-runners. An aide to Transport Secretary Stephen Byers suggested in an internal memo that the government take advantage of September 11th to push through some unpopular policies; the aide and Byers were hounded by the media for weeks, contributing to Byers’ eventual resignation. By contrast, Hewitt said something worse openly – that the attack on the World Trade Centre ‘was also an attack on global trade’. ‘So we must respond by launching a new trade round’ and ‘fight terror with trade’ in the upcoming WTO negotiations, which were then two months away. Thus the dead of September 11th were being used to push further ‘liberalisation’ on the world’s poor.
At that WTO summit in Qatar, the British government led the way in pushing for a new trade round that would have added new issues – such as investment and procurement – to the WTO’s negotiating remit. This was opposed by developing countries, who by adopting a united stance just managed to prevent the rich countries’s securing this goal. Two years later, Britain and the EU continued to push these new issues in the run-up to the Cancun ministerial meeting in late 1993 – developing countries again remained united and eventually forced the EU to back down.
A key British aim in the WTO has been to secure a global agreement on investment that would require all govern¬ments to give ‘equal treatment’ to foreign as to domestic businesses in many important economic policy areas. This would be a disaster for many developing countries – all successful developers in the past have strongly discriminated in favour of their domestic companies, nurturing them to become competitive, to aid national development. If foreign companies are treated equally, an important development policy is removed and local markets can be dominated by foreign enterprises. In turn, profits can simply be repatriated back to the home country and poor countries drained of scarce resources.
Britain has been pushing for ‘treating inward investors exactly the same as domestic investors – ownership of the company should not be relevant to the application of national laws and regulations’. The aim of a global agreement, Baroness Symons explains, is to ‘help lock in individual countries’ own investment reform efforts’ – that is, ensure they promote the one-size-fits-all model.
Britain was one of the strongest supporters of the proposed Multilateral Agreement on Investment (MAI) that Northern countries tried to negotiate in the OECD, but which was eventually scuppered in 1998, partly due to an NGO campaign against it. If passed into law, the MAI would have massively increased the power of corporations over elected governments, greatly expanding their investment rights all over the world. After the talks collapsed, the British government immediately said that ‘it is better to start afresh in another forum’ than the OECD given its ‘long-standing objective’ of pursuing investment negotiations in the WTO.
Asked by a parliamentary committee whether an inter¬national investment agreement was needed, then Trade Minister Brian Wilson replied that:
‘As to whether there is a demand from UK companies for some such agreement, I can assure you that this is a subject that is raised with us very regularly by UK companies which invest abroad’.
The government has also consistently acted as an ally to big business in the ongoing WTO negotiations on services. Trade Minister Baroness Symons has told members of International Finance Services London – a big business pressure group – that Whitehall is seeking ‘an international trading environment in which UK business can compete and thrive’. She added: ‘I hope you will view this government as your greatest ally in moving that agenda forward’, including through the WTO. After the Qatar ministerial, Symons said that the WTO negotiations ‘offer a huge opportunity to European and British businesses’. In services, ‘we need to continue to ensure that the UK’s key offensive interests are reflected’.
Services are big business to Britain, which is the second largest exporter of services in the world, amounting to £67 billion in 2000, and the fourth largest importer. Symons notes that for Britain ‘trading services internationally is of far greater importance than it is to a number of countries’, which explains why to New Labour’s liberalisation theologists ‘open markets are a major economic interest and essential to our own economic performance’.
The importance of DFID
New Labour created a new instrument for promoting these interests – the Department for International Develop¬ment (DFID). Under the present government an extremist economic project is being pursued under a great moral pretext – that global ‘liberalisation’ will promote development and the eradication of poverty. A variety of initiatives have been established, and numerous ministerial speeches made, to reassure business of the benefits of New Labour’s policies, and emphasising that business is a ‘partner’ in development. Indeed, DFID has not hidden the fact that it acts as a high level global lobbyist for big business. Consider then 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’.
So, DFID is offering itself as an instrument for business to shape the policies of multilateral institutions and developing country governments. This is at least an honest admission, and has been the subject of various other speeches by DFID and DTI ministers.
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 is a first point of contact for business and looks at ‘ways in which DFID can improve the enabling environment for productive invest¬ment overseas and how we can contribute to the operation of the overseas financial sector”. DFID is also working with the World Bank’s Business Partners for Development programme, involving governments, businesses and some NGOs in the water, transport and extractive industries sectors. 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 not if the strategy is to act as a great protector of transnational business. 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. An obvious agenda for any British government concerned with promoting a positive development agenda would be to rein in the worst aspects of TNC activities. Labour has chosen the opposite route – working to empower TNCs and actively lobbying in their favour. I can find no statement where the government has even seriously criticised TNCs for the harmful effects they can have on the world’s poor.
Under New Labour the aid programme has been overtly used to push corporate globalisation, as the World Development Movement (WDM) is increasingly uncovering. 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 with¬holding £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. DFID had commissioned the Adam Smith Institute – a wholesale advocate of privatisation – to ‘advise’ the British government on restructuring the water sector in Ghana. British water and construction companies have been waiting in the wings to take advantage of privatisation.
A recent War on Want report reveals that the government has provided over £100 million of taxpayers aid money to consultancies such as the Adam Smith Institute, Halcrow and KPMG to push privatisation. The government is pressing for the privatisation of water supplies and other services across the planet. 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’.
The difference between developing countries choosing and being forced to accept the Northern countries’ agenda is often wafer thin. A number of levers are used by Northern countries to secure their goals. Indeed, even though the WTO agreement does not formally require developing countries to liberalise their services sectors, for example, this is in practice happening thanks to pressure outside the WTO, as in Ghana. As Baroness Symons explains, privatisation ‘is a growing phenomenon worldwide… This is occurring quite independently of the GATS negotiations’.
What of the government’s arguments that it is pursuing a positive development agenda? First, it should be said that this case can only be made by ignoring the wealth of evidence concerning the very clear 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. Not so, however; the government receives widespread praise, in some NGO circles as well as the mainstream media, for championing the cause of opening up 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, and the British government has been outspoken on this. But the reality is that the government sees market access for developing countries as a sweetener for poor countries to do likewise. 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 will benefit equally; rather, it is mainly TNCs who gain, poised as they are to take advantage of newly opened markets.
A second area where the government is often praised is in increasing overseas aid. 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, which can completely undermine the positive impact that better aid could have. For example, Gordon Brown’s widely praised flagship aid initiative – the International Finance Facility (IFF) – is billed by the government as doubling overseas aid. WDM’s analysis is 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 inmvestment’. 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.
The same goes for debt relief. In this area, Britain has a more positive record than other G8 governments. It was largely public pressure – notably through the Jubilee 2000 debt 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 – in effect, a reward for developing countries promoting policies that will further impoverish them, perhaps a bit like a doctor offering a patient an aspirin at the same time as injecting them with a deadly disease. 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 task of campaigners is to ensure that government rhetoric is exposed and that the public sees accurately what policies are being promoted in their name. In the short term, a more effective campaigning challenge needs to be mounted to government policies; in the long term, efforts need to be stepped up to enhance the global justice movement to reverse corporate globalisation and promote just alternatives.
Filed under: Africa, Development, UK foreign policy | 2 Comments