by Mark Curtis
There are several ways in which the New Labour government claims it is making globalisation work for the poor (wits with somewhat greater insight suggest it could be described as ‘making the poor work for globalisation’). One is by ‘opening up our markets’ – championing the removal of the EU’s trade barriers to exports from poor countries. Certainly, blocking these exports at the same time as forcing open their markets is gross hypocrisy, and Britain has been outspoken on this. But the reality is that this ‘market access’ is being offered as a sweetener for poor countries to do likewise – open their markets even further to exporters from the North. For example, 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.44 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 will gain, poised as they are to take advantage of newly opened markets.
There are two camps among Northern governments. In the first are those pressing economic liberalisation for others while practising protection themselves. These countries, like France and Ireland who defend the big farm subsidies in the EU’s Common Agricultural Policy, could be termed the ‘hypocrites’. In the second camp are those pressing for ‘liberalisation’ everywhere – the ‘extremists’. Britain is one of the leading voices in this camp.
Another way in which Britain claims to be helping developing countries is by ‘capacity building’ aid to help developing countries better participate in the trade negotiations. But the small amount of aid Britain gives is mainly to help those countries implement agreements they have opposed in the first place. The government says this aid is given ‘in order to help them understand their rights and implement their commitments under international trade agreements’ and to enable them ‘to adjust to any social and economic changes which further liberalisation may bring’. Of a recent £20 million package in such aid to developing countries, £6.5 million was specifically earmarked to help them negotiate the new issues that they opposed including in the WTO.45
A third area where the government is often praised is in the area of increases in overseas aid. New Labour has increased the aid budget significantly, from a low point at the end of Conservative rule. But aid is still being used to press developing country governments into promoting the ‘correct’ macroeconomic policies, which can completely undermine the positive impact that better aid could have. For example, Gordon Brown’s widely praised aid initiative in December 2001 – for rich countries to increase their aid by $50 billion a year – is conditional on developing countries pursuing trade ‘liberalisation’ and ‘creating a favourable climate for investment’.46 The government has abolished formal tied aid – aid given on the specific condition that it is used to buy goods from the donor – which is a positive step; but as the Ghana water privatisation case shows, the imposition of its priorities continues using various other levers.
On debt relief, Britain has a more positive record than most other creditor governments. It was largely public pressure – notably through the Jubilee 2000 debt campaign – that pushed the government into its more progressive stance. But its record is not as fantastic as many believe. First, debt relief is also conditional on countries pursuing policies under the global liberalisation project – a reward for developing countries promoting policies that will further impoverish them, and 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 plausibly offers one explanation for why New Labour has become keen on it.
Second, not much debt relief has actually been granted. Britain’s agreement to write off the bilateral debt owed to it by the poorest highly indebted countries was a very small step. These countries were paying Britain only around £40 million in debt service in 1999. (This decision, announced with great fanfare, was much praised – it was reported on the front page of the Guardian under the heading ‘Britain ends third world debt’!)
The G7 countries promised at the Cologne summit in 1999 to cancel $100 billion in debt; only around a third of this has been cancelled, while Africa continues to pay back $15 billion a year in debt service, about the same as it receives in aid. Meanwhile, some countries are expected to pay higher interest rates under the World Bank’s much-vaunted current debt relief scheme than before. For Zambia, one of the world’s poorest countries, this amounts to twice as much in debt repayments as it spends on health.47
Even if we accept that there are some positive aspects to these policies, they are completely dwarfed by the wider government agenda. The same goes for the role of Clare Short in government. It is true that in some debates between government departments, Short has spoken out against several of Blair’s and the DTI’s policies, such as on a few proposed arms exports. But these are minor in the big picture where DFID, and Short personally, have been leading champions of the global ‘liberalisation’ project.
Outside any effective media and parliamentary scrutiny, the British government is pursuing a set of policies affecting the lives of hundreds of millions of people in a project to reshape the global economy for many decades to come. Its extremist economic policies in support of the WTO fly directly in the face of UN agencies, not to mention a multitude of civil society organisations and people around the world. The UN is highlighting the serious adverse effects of these policies, and calling for fundamental changes, such as the removal of the WTO’s policy restrictions and holding impact assessments, before further liberalisation goes ahead. These are being rejected by New Labour, while it professes an unadulterated commitment to international development. This is a further example of the contempt with which British elites in reality view the concept of multilateral cooperation and the UN, except when they can use it to achieve their fundamental priorities.
10
THE THREAT OF DEMOCRACY
We have to devise techniques for bringing influence to bear upon other countries’ internal decisions.
Treasury memorandum, 1945
MY VIEW IS that the ‘war against terrorism’ and the project to promote global economic ‘liberalisation’ are two sides of the same coin. Western elites’ main enemies in both strategies are independent forces outside of Western control, some malign, some benign. To illustrate this, it is important to see that the roots of current globalisation lie in US, and British, economic planning following the end of the Second World War. Elite goals were crystal clear, and we would be wise to understand them if we are concerned about peering through current rhetoric.
The roots of globalisation
US leaders incessantly outlined their global economic goals during, and following the end of, the Second World War. The basic goal of US foreign policy was to create an ‘open door’ in trade and investment where US companies were to be able to secure access to other countries’ markets. The State Department noted that ‘our foreign policy is aimed at achieving the kind of world community in which trade and investment can move with a minimum of restrictions and a maximum of security and confidence’. This meant that ‘efforts should be made to develop climates attractive to private investment’. Given massive US power in the early postwar years, US plans were for nothing less than control of the world economy.1
The economies of key countries and regions were to be organised to benefit Western, primarily US, business interests. The key regions for the US were Latin America; areas under European colonial control – such as Africa and Southeast Asia; and the Middle East, due to the importance of oil in the global economy, and the interests of US oil corporations. The overarching goal was – and remains, as noted in the previous chapter – for business to secure access to and control over other countries’ resources.
A 1950 British Foreign Office document noted that Africa ‘is an important source of raw materials in peace and war’ that
enables the UK to ‘both earn and save dollars’. Southeast Asia was ‘a substantial economic asset and a net earner of dollars’, with the colony of Malaya alone having a surplus of $145 million in 1948. In the Middle East, British officials recognised that ‘United Kingdom oil companies have made large net profits since the war’, with £50 million by the Anglo-Iranian Oil Corporation in Iran in 1948.2
The first postwar Labour administration under Clement Attlee is adulated by many Labour supporters as the most radical and successful Labour government. The reality is that in foreign policy, it continued the imperialist policies of its predecessors, sometimes deepening them under the guise of its ‘internationalist’ rhetoric. Attlee and his Foreign Secretary, Ernest Bevin, initially conceived the idea of establishing Britain as a ‘third force’ between the United States and the USSR. This involved a vast scheme for joint Western European exploitation of resources in the colonies. It aimed at establishing ‘an African Union under European auspices’ in which, Bevin observed, ‘it would be necessary to mobilise the resources of Africa in support of West European Union’. He said in 1948 that the need was ‘to develop the African continent and to make its resources available to all’ (that is, us). The US ‘is very barren of essential minerals and in Africa we have them all’. Bevin’s aim for the Middle East, meanwhile, was to develop ‘a prosperous producing area which would assist the British economy and replace India as an important market for British goods’.3
This plan was supported by the Chancellor of the Exchequer, Stafford Cripps, who noted that ‘the development of our African resources in particular is … of prime importance and must be a major consideration in planning our economic activities’. Field Marshal Montgomery claimed that British living standards could be maintained by Africa’s minerals, raw materials, land and cheap coal. The only problem was that the African was ‘a complete savage’ incapable of developing these resources himself.4
The ‘third force’ idea was formally abandoned by 1949 when it had become obvious that Britain and Europe could offer no such counter to the US and USSR. But the basic strategy of using colonial resources to benefit Britain remained and became standard practice.
The declassified files of the early post-war years show that Colonial Office planners were aware that they were grossly exploiting the colonies: ‘the Colonial territories are helping so much on [Britain’s] balance of payments’, one file from 1951 reads. The Attlee government drained the then colonies of millions to help Britain’s post-war economic recovery. Bevin believed that the possibility of presenting (naturally, unfairly) British policy as exploitation was ‘almost endless’. So he suggested that ‘care and preparation’ would be needed to present British policies as promoting development. Clare Short and other ministers have taken up this baton today.5
The US backed the continuation of European colonial rule and exploitation in Africa. In 1948, the US Policy Planning Staff said that Britain’s plan for ‘the economic development and exploitation’ of colonial Africa ‘has much to recommend it’. This was because ‘the United States realises the importance to her own economy, in peace and war, of many British colonial resources and the possibilities of their further development’. The US did expect, however, that ‘equal economic treatment will be given to American capital and American nationals who engage in trade in the African colonial areas’. The countries of Southeast Asia were also recognised as ‘rich in natural resources and certain countries in the area at present produce surplus foodstuffs’. Indochina, US planners noted, could be a ‘most lucrative economy’.6
These early postwar priorities were pursued throughout the postwar period. Britain’s aim under ‘decolonisation’ – a misleading term, implying that Britain voluntarily gave up formal control over its colonies, when the reality was that it was forced out of many – was to ensure that ‘independent’ countries continued to allow British companies to exploit their economic resources, as shown in the chapters on Malaya, Kenya and British Guiana. Rich pickings could be had – provided ultimate control over key countries and regions, and the international economy as a whole, could be maintained, by military interventions or covert operations if necessary. British military and covert interventions in Kuwait (1961), Egypt (1956), Iran (1953), Oman (1957 and 1964), North Yemen (1960s), for example, as described in other chapters, were all intended to keep resources in the correct hands. Similarly, the host of US interventions since 1945 served mainly to defend business interests and to ensure that other governments pursued pro-Western economic strategies. As noted elsewhere, Soviet policy was sometimes a factor but the Soviet threat was generally exaggerated or fabricated in order to justify interventions which would achieve these other goals.
Current globalisation, including especially the agreements of the World Trade Organisation, is in many ways the fruition of this long-standing foreign policy goal. The WTO agreements are novel in that they are global and legally binding, essentially requiring all countries to pursue a ‘neo-liberal’ economic model. By so doing, they increasingly obviate the need for Western military intervention or covert action in as many countries as previously. Throughout the postwar period, both Soviet power and the strength of nationalist voices in the Third World made such far-reaching global agreements impossible. Under globalisation, Third World elites have mainly thrown in their lot with their Northern counterparts.
The threat of independent development
The major forces previously opposing these Western economic goals in the Third World were nationalist, often popular forces. They were sometimes allied or sympathetic to the USSR and China, but just as much, not. The chapters on Iran, Indonesia, British Guiana and Kenya show that British governments clearly saw threats to their interests as arising from nationalist groups opposed to continued British exploitation of resources. They offered popular alternatives to address the grinding poverty in which most people lived. These policies usually included land reform to benefit the rural poor, economic reforms to tax the rich more, greater regulation of, and sometimes takeovers of, foreign enterprises and more resources devoted to health and education services for the poor. Nationalist forces were surely not always benign, but in many cases they did offer alternative development paths that generally would have been better for most people than the British-backed strategies.
British planners usually presented these as ‘Communist’ threats, often as part of Moscow’s grand design. I do not believe this was usually a planned conspiracy as such; rather, such propaganda came from an unconscious internalisation by planners of ‘what works best’ in achieving their objectives.
A Foreign Office paper from 1952 – called ‘The problem of nationalism’ – articulated the primary threat. It noted two kinds of nationalism – ‘intelligent and satisfied nationalism’ and ‘exploited and dissatisfied nationalism’. The wrong nationalism is likely to ‘undermine us politically’ and undermine the UK’s position as a world power. Specifically it means:
(i) insistence on managing their own affairs without the means or ability to do so, including the dismissal of British advisers; (ii) expropriation of British assets; (iii) unilateral denunciation of treaties with the UK; (iv) claims on British possessions; (v) ganging up against the UK (and the Western powers) in the United Nations.7
The threat is therefore of countries ‘managing their own affairs’. One US State Department adviser, referring to Latin America, once said: ‘economic nationalism is the common denominator of the new aspirations for industrialisation. Latin Americans are convinced that the first beneficiaries of the development of a country’s resources should be the people of that country’.8
Now, in British (and US) doctrine, it is simply not on that a country’s resources primarily benefit the people of that country. The world’s resources are to primarily benefit commercial elites, not people. This aim is clearly shown both in the formerly secret documents and in current plans for the WTO, outlined in the previous chapter.
For example, a Treasury memoran
dum of 1945 stated that Britain should ensure a ‘rapid and non-autarkic economic growth’ in the middle and low income countries, since this would expand world trade. It then warned of ‘the danger to us of autarkic industrialisation undertaken for its own sake’. But there was a ‘real difficulty’ of avoiding this since it depended on ‘decisions on internal policy in the countries concerned’. Therefore, ‘we have to devise techniques for bringing influence to bear upon other countries’ internal decisions’.9
Thus the danger was of development for national purposes over which Britain would have no control. British strategy was to counter this, and instead promote trade that would benefit British commercial interests. The ‘internal decisions’ upon which it all depended are now increasingly made under the global rules of the WTO, thus achieving a long-standing aim.
The US documentary record is also rich in showing the threat of independent development to US elites. For example, a 1949 National Security Council study stated that the US should find ways of ‘exerting economic pressures’ on countries that do not accept their role as suppliers of ‘strategic commodities and other basic materials’. In 1954 a State Department official warned that Guatemala:
has become an increasing threat to the stability of Honduras and El Salvador. Its agrarian reform is a powerful propaganda weapon; its broad social program of aiding the workers and peasants in a victorious struggle against the upper classes and large foreign enterprises has a strong appeal to the populations of central American neighbours where similar conditions prevail.
