UK: Foreign Aid Goes to Neoliberal Recipients

Publisher Name: 
Guardian (London)

Spare a thought this bleak new year for all those who rely on charity.
Open your hearts, for example, to a group of people who, though they live
in London, are in such desperate need of handouts that last year they
received 7.6m in foreign aid. The Adam Smith Institute, the
ultra-rightwing lobby group, now receives more money from Britain's
Department for International Development (DfID) than Liberia or Somalia,
two of the most desperate nations on Earth.

Are the members of the Adam Smith Institute starving? Hardly. They work in
plush offices in Great Smith Street, just around the corner from the
Houses of Parliament. They hold lavish receptions and bring in speakers
from all over the world. Big business already contributes generously to
this good cause.

It gets what it pays for. The institute's purpose is to devise new means
for corporations to grab the resources that belong to the public realm.
Its president, Madsen Pirie, claims to have invented the word
privatisation. His was the organisation that persuaded the Conservative
government to sell off the railways, deregulate the buses, introduce the
poll tax, cut the top rates of income tax, outsource local government
services and start to part-privatise the national health service and the
education system. "We propose things," Pirie once boasted, "which people
regard as being on the edge of lunacy. The next thing you know, they're on
the edge of policy." In this spirit, his institute now calls for the
privatisation of social security, the dismantling of the NHS and a shift
from public to private education. It opposes government spending on
everything, in other words, except the Adam Smith Institute.

So what on earth is going on? Why are swivel-eyed ideologues in London a
more deserving cause than starving refugees in Somalia? To understand what
is happening, we must first revise our conception of what foreign aid is

Aid has always been an instrument of foreign policy. During the cold war,
it was used to buy the loyalties of states that might otherwise have
crossed to the other side. Even today, the countries that receive the most
money tend to be those that are of greatest strategic use to the donor
nation, which is why the US gives more to Israel than it does to
sub-Saharan Africa.

But foreign policy is also driven by commerce, and in particular by the
needs of domestic exporters. Aid goes to countries that can buy our
manufacturers' products. Sometimes it doesn't go to countries at all, but
straight to the manufacturers. A US government website boasts that "the
principal beneficiary of America's foreign assistance programs has always
been the United States. Close to 80% of the US Agency for International
Development's contracts and grants go directly to American firms."

A doctor working in Gondar hospital in Ethiopia wrote to me recently to
spell out what this means. The hospital has none of the basic textbooks on
tropical diseases it needs. But it does have 21 copies of an 800-page
volume called Aesthetic Facial Surgery and 24 volumes of a book called
Opthalmic Pathology. There is no opthalmic pathologist in training in
Ethiopia. The poorest nation on Earth, unsurprisingly, has no aesthetic
plastic surgeons. The US had spent $2m on medical textbooks that American
publishers hadn't been able to sell at home, called them aid and dumped
them in Ethiopia.

In Britain the Labour government claims to have abandoned such practices,
though only because they infringe European rules on competition. But now
it has found a far more effective means of helping the rich while
pretending to help the poor. It is spending its money on projects that
hand public goods to corporations.

It is now giving, for example, 342m to the Indian state of Andhra
Pradesh. This is a staggering amount of money, 15 times what it spent last
year on the famine in Ethiopia. Why is Andhra Pradesh so lucky? Because
its chief minister, or "chief executive" as he now likes to be known, is
doing to his state what Pinochet did to Chile: handing everything that
isn't nailed down, and quite a lot that is, to big business. Most of the
money DfID is giving him is being used to "restructure" and "reform" the
state and its utilities.

His programme will dispossess 20 million people from the land and
contribute massively to poverty. DfID's own report on the biggest of the
schemes it is funding in the state reveals that it suffers from "major
failings", has "negative consequences on food security" and does "nothing
about providing alternative income for those displaced". But it permits
Andhra Pradesh to become a laboratory for the kind of mass privatisation
the department is seeking to encourage all over the world.

In Zambia, DfID is spending just 700,000 on improving nutrition, but 56m
on privatising the copper mines. In Ghana, the department made its aid
payments for upgrading the water system conditional on partial
privatisation. Foreign aid from Britain now means giving to the rich the
resources that keep the poor alive.

So there are rich pickings for organisations like the Adam Smith
Institute. It is being hired by DfID as a consultancy, telling countries
like South Africa how to flog off the family silver. It is hard to see how
this helps the poor. The South African government's preparations for
privatisation, according to a study by the Municipal Services Project, led
to almost 10 million people having their water cut off, 10 million people
having their electricity cut off, and over 2 million people being evicted
from their homes for non-payment of bills.

What we see here, in other words, is a revival of an ancient British
charitable tradition. During the Irish potato famine, the British
government made famine relief available to the starving, but only if they
agreed to lose their tenancies on the land. The 1847 Poor Law Extension
Act cleared Ireland for the landlords. Today, the British government is
helping the corporations to seize not only the land from the poor, but
also the water, the utilities, the mines, the schools, the health services
and anything else they might find profitable. And you and I are paying for

All this was pioneered by the sainted Clare Short. Short's trick was to
retain her radical credentials by publicly criticising the work of other
departments, while retaining her job by pursuing in her own department
policies that were far more vicious and destructive than those she
attacked. Blair's trick was to keep her there, to assure old Labour voters
that they still had a voice in government, while ensuring that Short did
precisely what his corporate backers wanted.

I never thought I would hear myself saying this, and I recognise that in
doing so I may be handing ammunition to the rightwing lobby groups
campaigning for a reduction in government spending, such as, for example,
the Adam Smith Institute. But if this is what foreign aid amounts to, it
seems to me that there is too much of it, rather than too little.
Britain's Department for International Development is beginning to do more
harm than good.

AMP Section Name:Money & Politics