Web Of Deceit: Britain's Real Foreign Policy

by Mark Curtis

  The basic goal is to break into foreign markets. Trade Secretary Patricia Hewitt says that ‘we want to open up protected markets in developing countries’. Referring to India and China’s emergence as among the biggest economies in the world in the next twenty years, she says that ‘we must be in there’. A new WTO round of international trade negotiations ‘is the best way of ensuring that our businesses can benefit from, and contribute to, future economic growth anywhere in the world’.4

  ‘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.’5

  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.’6

  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.7

  The rich North’s aim is to ‘lock in’ all countries to the global, legally binding WTO agreements that require countries to promote economic ‘liberalisation’. The WTO has become in effect an organising body for the global economy. Northern countries have succeeded in adding to the WTO’s remit issues – like investment, services, intellectual property rights and agriculture – that go well beyond trade and which aim to make domestic economic policy-making subject to global rules. 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.8

  The promotion of this ‘one-size-fits-all’ economic ideology mainly benefits transnational corporations (TNCs). One of the sacred principles of WTO agreements is that they require governments to give equal treatment to foreign as to domestic companies in increasing areas of domestic economic policy. TNCs benefit most from the easiest access to markets and the lightest government regulation of their activities, precisely the British government’s main aims in its global economic policies. 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 administration official, is to ‘ensure viable investment opportunities for OECD companies’.9

  New Labour’s project goes much deeper even than global trade ‘liberalisation’. Essentially, only minimal government regulation should be allowed to interrupt the free flow of capital around the world which, the argument goes, is good both for business and for ‘development’. Thus Britain – while stressing its intention to simply ‘manage’ globalisation better – is actually promoting a much grander project. It has been a leading advocate of the WTO setting rules in new areas of domestic policy-making, and is actively seeking to deepen globalisation to an extreme form of worldwide economic ‘liberalisation’ that will turn the global economy into a playground for corporations. In alliance with like-minded governments, like the US, this amounts to a reshaping of the global economy based on a fundamentalist economic ideology. It is also a major attack on democratic decision-making since the WTO rules massively restrict the ability of governments to promote policies in their own national interests.

  TNCs and big business pressure groups have long lobbied for rules enabling them to act globally with the fewest restrictions. Many WTO agreements, like the agreement on services (GATS) and on intellectual property (TRIPS), would not be in the WTO at all without lobbying by big business. The US company Cargill, the world’s largest agribusiness corporation, reputedly wrote the first draft of the US government’s negotiating position on agriculture, which turned into the WTO’s agreement on agriculture.10

  A great myth is that this is a ‘free trade’ agenda. ‘Free trade’ is a gross misnomer, and really means ‘corporate control’. Global markets in most commodities and many industries are controlled by a handful of corporations. ‘Free trade’ means freedom for them to control these markets even more tightly. Trade ‘liberalisation’ generally means other countries opening up their economies to be dominated by transnational business interests.

  British elites have been using propaganda on free trade for centuries. In the Elizabethan era, the argument for ‘free trade’ was made wherever English shipping called. According to the text of Queen Elizabeth I’s standard letter of introduction to Eastern princes, God had so ordained matters that no nation was self-sufficient and that ‘out of the abundance of ffruit which some regions enjoyeth, the necessitie or wante of others should be supplied’. Thus ‘several and ffar remote countries’ should have ‘traffique’ with one another and ‘by their interchange of commodities’ become friends. ‘The Spaniard and the Portingal’, on the other hand, prohibited multilateral exchange and insisted on exclusive trading rights.11

  New Labour has created a new instrument for promoting these interests – the Department for International Development (DFID). Established from the old Overseas Development Administration, which was part of the Foreign Office, DFID was given full Cabinet status with Clare Short as International Development Secretary. In designing and managing aid projects, it seems that DFID has somewhat better focused British aid on poverty eradication, with more and better aid going to the poorest countries. But DFID’s role in the international institutions goes beyond a narrow focus on aid and includes a strong influence on Britain’s global economic policies and on its overall policy towards developing countries, which have far greater impact than its aid programme. The great change brought about by New Labour is that an extremist economic project is being pursued under a great moral pretext – that global ‘liberalisation’ will promote ‘development’ and ‘poverty eradication’. This is not a government conspiracy to mislead the world – the new liberalisation theologists actually appear to believe it.

  To some, the fact that DFID and the DTI agree on promoting this project is evidence of ‘joined up government’. This is true in the sense that DFID is promoting the DTI’s agenda for it, and is an equally strong advocate of ‘liberalisation’ across the global economy. If the Conservatives ever achieve government again, they would be wise to retain this new department – it is simply too useful in serving elite purposes.

  DFID has in effect become big business’s biggest ally. A variety of initiatives have been established, and numerous speeches made, to reassure business of the benefits of 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 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.12

  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.13

  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’. DFID’s new 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 investment 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.14

  Domestically and internationally, the government is actively campaigning for the minimum regulation of business. Clare Short says 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.15

  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. Britain is home to many of the world’s biggest TNCs, many of which have been implicated in the worst cases of human rights abuse, environmental degradation and undermining workers’ rights. The wide range of TNC abuses that are occurring in the New Labour years include Premier Oil’s involvement in forced labour with the Burmese junta; BP’s financial stake in Sudan, where the army is burning down villages and killing thousands to facilitate oil production; and British American Tobacco’s use of ‘contract farmers’ in Brazil, involving unsafe use of pesticides and farmers’ virtual bondage to the company. Yet the government rejects legally binding international regulation to ensure that companies abide by the minimum ethical standards in their overseas operations. Trade minister Stephen Byers has referred to the government’s ‘presumption against regulation’; ‘regulation will only be introduced where absolutely necessary and where all other avenues have been pursued.’16

  Labour’s rejection of legally binding regulation to protect people contrasts starkly with its vociferous support for legally binding WTO rules that benefit business – a sure sign of where its priorities lie. An obvious agenda for any British government remotely concerned with development 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 seriously criticised TNCs for the harmful effects they have on the world’s poor. Addressing poverty eradication without tackling big business is a bit like addressing malaria without mentioning mosquitoes. Labour’s promotion of big business interests in Britain has provoked some (justified) media coverage. Its far more serious capitulation to big business globally has gone virtually unnoticed.

  The link between Labour’s domestic and global agendas seems to be to ‘liberalise’ economic policy-making from the nasty interference of democratic politics. ‘I believe it is right to take these decisions out of politics’, said Chancellor Gordon Brown, on making the Bank of England ‘independent’ (that is, no longer subject to political control) a few days after coming into office. In November 2001 Brown spoke of introducing a new domestic competition regime ‘with decisions taken out of the hands of politicians and truly independent of the political process’. ‘Monetary policy run independently of government’ is how Blair put it. Labour leaders here are boasting about removing democratic control over decisions on economic policy.17

  ‘I want Britain to be the best competitive environment for business in the world,’ Brown has said, boasting of cutting corporation tax to the lowest rate of ‘any major industrialised economy’. The government is committed to ‘labour market flexibility’, no return to ‘old fashioned attitudes, no protectionism’ and ‘no outdated restrictive practices’. ‘Britain still has one of the most lightly regulated labour markets in the world’, Blair happily told the Confederation of British Industry.18

  While New Labour has sought to remove political control over economic policy, it has been happy to put business leaders in charge of political matters. Head of BP, Sir David Simon, for example, became Minister for European Competition and Martin Taylor, head of Barclays Bank, became head of Gordon Brown’s welfare reform task force.

  Britain’s biggest businesses have won huge government contracts while donating employees to work in government departments. In March 2000, the Observer reported that BAE Systems, which is winning multi-billion military contracts from the MoD, had eight staff working for free inside the MoD; construction giants Kvaerner, Ove Arup and Bovis, which stood to make millions from roadbuilding programmes after a change in government transport policy, all had key staff working in the Department of Transport; BP had paid for British employees to work in the British embassy in Washington and on the Foreign Office’s Middle East desk; and British Telecom, which successfully lobbied to be removed from tighter regulation under the Utilities Bill, had two staff inside the DTI. Price Waterhouse Coopers had staff in the Foreign Office, the DTI, the MoD, the Cabinet Office and the Department of Health. The Treasury employed the ‘free’ services of Price Waterhouse Coopers, Ernst and Young and Pannell Kerr Forster, all of whom have earned huge consultancy contracts from the department. In 1998, the Foreign Office revealed in an answer to a parliamentary question that it currently had seconded staff from BP, British Nuclear Fuels, Standard Chartered Bank, Taylor Woodrow, Brown and Root, Barclays, BT, Nat West, Ernst and Young, HSBC and Rolls Royce, and many others.19

  None of my analysis is from an ‘anti-business’ perspective per se. Certainly, small-scale business plays a vital role in local economies and in my view is central to democratic society because a proliferation of smaller enterprises means that economic power is more widely dispersed. But New Labour’s agenda is very different, amounting to the unprecedented empowerment of transnational big business, through reshaping the rules of the global economy. British governments have always worked in alliance with big business, but the Blair government’s domestic and global priorities take this alliance to new heights.

  This is what Thomas Frank has called ‘market populism’, where businessmen are seen as public servants and the box office as a voting booth. The corporatisation of society is leaving almost every sector of life open to control by profit-making companies that lack any real accountability to the public and are outside of democratic control.20 So in Britain, so throughout the world.

  The scale of corporate power is shown by the fact that the world’s largest 200 corporations control a full quarter of global wealth. Never before in human history has such a small number of private corporations wielded so much power. Increasingly, whole economies – in the North as well as the South – are being geared to cater to the demands of transnational capital. Ministers see their role simply as administering these demands, while preparing their citizens for the cut-throat international competition ahead through �
�education’. Politicians aid this attack on democracy by removing many instruments they could use to control it.

  In some ways we are witnessing the re-emergence of the ‘chartered government’ of the colonial period. In the seventeenth century a number of English colonies were founded by private companies, who were given full control over the area they occupied subject to the authority of the Crown. These companies were pretty much free to exploit the resources of the territory as they wanted. In many countries, corporate power is so great that they resemble these chartered governments.

  The chief enforcer of this project is no longer Western armies but the various levers Northern governments use and especially the WTO, using not military power but legally binding agreements that it will be almost impossible to reverse. We are in danger of entering – if we have not already – an era of Corporate Absolutism, a modern variant of absolute monarchy in the past.

  The predictable effects

  What have been the effects so far of the global ‘liberalisation’ project that Britain is championing?

  Let us take the example of Haiti. There, thousands of poor rice farmers have been put out of business and thrown further into poverty by subsidised rice from the US entering the local market. One rice farmer interviewed by the development NGO Christian Aid, Fenol Leon, said that ‘unless something is done to protect us from cheap rice imports, I don’t think there’s a future for us – we’ll all be wiped out’. Farmers have been forced to leave their land and many have become economic migrants, some trying to find work in neighbouring Dominican Republic, others fleeing to the US. Philippe Michel, the head of a local NGO, said; ‘You wake up in the morning hungry. You’ve got nothing for your children to eat. What do you do? Some people have taken to the boats, others have committed suicide.’21