by Guy Arnold
The story of the New International Economic Order is especially interesting because at the time and for a few years afterwards it became a point of reference for all the reasons for confrontation between rich and poor while also, briefly, raising hopes that somehow it would bring about substantial changes in the world power system. The idea of an NIEO was important, therefore, not because it succeeded – it did not – but because it helped emphasize the principal problems that surrounded all North-South issues. These are not questions of compassion, equity or justice, though each has its place, but questions of power. The countries of the North, then and later, wielded approximately 90 per cent of the world’s power in terms of the decisions they took and enforced and they did so because they controlled the world economy. And that was why the NIEO failed, because to ask the rich to surrender this power was unrealistic.
The roots of the NIEO idea can be traced back to the writings of Raoul Prebisch, the Argentinian economist whose name was well known in UN circles during the organization’s early days. In Towards a New Trade Policy for Development, he attacked the old concept of comparative advantage so much favoured by the capitalist West both then and later, to argue instead that this kept developing countries permanently underdeveloped because it meant that they remained producers of raw materials or one or two commodities. He advocated interventionist policies, which would alter the balance in favour of the developing world. An NIEO would do what Prebisch had advocated. The idea of an NIEO was born in the changed atmosphere of 1973–74 when OPEC briefly threatened to turn the accepted world hierarchy on its head. Even so, the concept of an NIEO was flawed from the beginning, because self-interest does not work towards a one-world community despite all the rhetoric that is paid to the idea. In the initial demands for an NIEO, there was implicit the more realistic threat that the OPEC countries would use the oil weapon to force the advanced economies to make substantial economic concessions to the Third World. These were seen to be in terms of trade and the structure of the international bodies that control the world economy, so that Third World members would have a greater say in the decision-making process. As a result, so the theory went, some of the advantages enjoyed by the advanced economies would be surrendered, or at any rate reduced, in favour of the Third World. Such demands for change – unless backed by oil or other weapons, which the advanced economies cannot ignore – really amounted to a demand for the rich North to show greater generosity in its dealings with the poor South.
In the broadest sense the concept of an NIEO was essentially socialist. It assumed that the better off would, in statesmanlike fashion, surrender advantage for the sake of a wider world harmony and international – as opposed to national – interests. There was, however, little evidence to suggest that the rich North (including the USSR) was prepared to make any such surrender of advantages that were the source of its hegemony, and a great deal of evidence to the contrary. An NIEO, if it were to amount to anything, meant the termination of the existing order of the world economy and its replacement by a new order that had quite different priorities. The concept suffered from the further disadvantage that it was too all-embracing. Demands for an NIEO were on behalf of the oil-rich countries of OPEC; the poor nations of Africa; huge, newly industrializing countries such as Brazil, Argentina and Mexico; small, newly industrializing countries, such as Singapore or Taiwan; as well as the giant India. It was unreasonable to suppose that all their varying needs could be accommodated in the new dispensation. Any demand for redress of an unfair balance by a disadvantaged group is essentially revolutionary. In consequence it is only likely to succeed if accompanied by pressure – ‘out of the barrel of a gun’ to quote Mao’s phrase – and in this case by the sustained pressure of OPEC. In the event the pressure was not, and could not be, maintained long enough to bring about any major changes and, not surprisingly, little came of the demands for an NIEO.
The calls for an NIEO, which became so insistent in the mid-1970s, were based upon two unstated assumptions. The first, that the rich North was heavily dependent upon resources controlled by the poor South (OPEC’s exercise of oil power was behind this assumption) and that these resources, therefore, could and, if necessary, would be withheld in order to force the North to agree to a NIEO. The second, that OPEC (which had made the entire dialogue possible in the first place) would maintain its solidarity with the rest of the Third World and continue to use its economic strength as a weapon to force concessions from the North on behalf of the Third World.
Although no NIEO came into being, the dialogue between rich and poor that took place in the mid-1970s set the parameters for all the future North-South dialogues to the end of the century. It also made plain to the developing world that any concessions from the developed nations could only be won by insistent pressures and that gains would be matched, always, by some form of return. Nothing would be conceded simply on the basis of creating a more equitable world system. Africa learnt some harsh lessons at this time: both in its relations with the Arabs; and in the struggle for an NIEO, and these were reflected in the OAU document What kind of Africa by the year 2000 (see below, chapter 17).
CHAPTER SEVENTEEN
The Growth of Aid
The 1970s witnessed a rapid growth of aid to Africa, almost a competition: between the Western donors, especially Britain and France, to demonstrate their concern for the world’s poorest continent; between the West and the Communist powers as part of the Cold War; and between the USSR and China whose ideological quarrel sustained their antagonism. In addition, the multilateral agencies, and especially the World Bank, had become leading players in what by this time had developed into a major aspect of international relations. It is worth examining the aid efforts of these various donors, less in terms of the quantity and kind of aid they dispersed, important as this was, than for the ideology behind it.
WESTERN AID
In the middle of the decade (1976), Britain was providing a total of 0.38 per cent of GNP in aid (the average figure for the Development Assistance Committee [DAC] countries was then 0.33 per cent of GNP), and this was a very small total and only just over half the Conference on International Economic Cooperation (CIEC) target of 0.7 per cent. In 1977 gross British Official Development Assistance (ODA) came to £582 million and net transfers to £486 million and of this net total 28 per cent went to Africa. In addition, of 10,000 students and 4,000 trainees in Britain, 49 per cent came from Africa. The greater part of all British aid to Africa went to Commonwealth countries and in the case of a number of small countries, such as The Gambia, Sierra Leone or Malawi, British aid was an essential component of their budgets. Sixty-eight per cent of British personnel working overseas under the auspices of the Ministry of Overseas Development were in Africa. The question of where aid is directed is crucial to an understanding of donor policies. All aid activities should be examined in the light of whether or not they help to bring the recipient to the point at which it can – or at least can begin to – solve its own problems. In these terms, the most constructive aid is that which transfers as much technology as fast as the recipient is able to absorb and use it; or which rapidly boosts a particular sector of the economy to the point at which that sector makes a significantly improved addition to the country’s total resources, some of which can then be diverted to other developments. Aid, which, all too often, serves to undermine development, is that with the highest ‘humanitarian’ content. During the decade the West demonstrated much concern for the poorest or most disadvantaged groups and though this concern sounded constructive it did least to transfer technology and equip the recipient to manage its own affairs.
The basic British strategy, laid down in the 1975 White Paper More Help for the Poorest, was to increase the emphasis in favour of the poorest people in the poorest countries.1 It was a classic example of the humanitarian approach (a sound capitalist policy) and one designed to prolong indefinitely the development assistance needs of the recipients. Now the provision of basic needs
may be a worthwhile activity in itself; it does not ensure that the country so assisted will break free from the need for aid. Britain also pushed the concept of appropriate technology, an approach which all too easily degenerated into a question of stimulating British industry to produce simple technological material for use in developing countries instead of demonstrating how these countries could do it on their own. One of the most revealing statements on British aid at this time was the Overseas Development Paper (No. 17) entitled The Industrial Strategy: The Contribution of the Ministry of Overseas Development, which was produced by the Ministry and written by the Minister, Judith Hart, in 1978. It begins:
The purpose of the aid programme is to promote the economic and social development of the developing countries… UK official development assistance (ODA) is being increasingly directed to the poorest people in the poorest countries.
This, as we have already seen, is more likely to prevent a country from making development breakthroughs than achieving them. Paper 17 was clearly intended for British audiences rather than those at the receiving end of British aid. The paper continues:
There are two basic ways in which the aid programme helps British industry. By helping foster income creation and widely-distributed economic growth in the developing countries, it increases the overseas markets for British goods. In the process it also provides opportunities for aid-financed exports both under bilateral and multilateral aid arrangements.
The Minister could not have been more explicit. After detailing the size of developing country markets, the Paper continues:
Although developing countries took only 14 per cent of the exports from industrial countries in 1976, they accounted for 64 per cent of the world’s population. So a vast expansion of the world market ought to be possible if only the incomes of the people in these countries can be raised. The scope for improving incomes is greatest in the poorest countries, not only because of their poverty (their average GNP per capita was only US$167 in 1976) but also because of their size (they contain 1,290 million people).
The purpose of concentrating upon the needs of the poorest thus becomes clear: it is the potential market they offer the West. Though the phrase had yet to come into common usage, what Judith Hart was propounding was laissez-faire market forces rather than development aid. One more quote from the Paper deserves attention.
In addition, the various untied funds, such as the Arab funds, now present possibilities of triangular deals in which aid finance additional to our own is provided to a recipient from which a UK firm can secure orders. We are already co-financing, with various OPEC funds, projects in the poorer Middle East countries, and we are seeking further triangular deals which present a commercial opportunity to British firms.
What these triangular arrangements did for development was less clear. The paper is worth quoting at length because it is one of the most revealing public documents about British aid concepts to have been published. One may admire the Minister for her frankness: it made plain how aid benefited Britain. Whether it developed Africa or other recipients was another question. The only certain conclusion that can be reached about such an aid programme is that it tied the recipient economies even more closely into those of the donors who, in the main, already controlled their ‘development’. At this time the flow of British private capital into Africa was eight or nine times as great as the flow of ODA and Britain was concerned, first and foremost, to safeguard and enhance its investments and markets and that was the principal objective of its aid programme.
French aid to Africa was more concentrated than that of the British and more overtly designed to perpetuate France’s grip on the economies of its former colonial empire. Moreover, with the exclusion of Britain from the EEC throughout the de Gaulle years and into the 1970s, France had effectively ensured its control of the European Development Fund (EDF), which became an extra arm of French aid to Africa. Indeed, in the early 1960s the openly expressed French attitude towards Africa was that it represented the natural economic hinterland to Europe. In May 1978 the foreign ministers of 20 African countries met in Paris at a preparatory conference for what was to be a Franco-African summit. The French foreign minister, Louis de Guiringaud, told the conference:
My country is convinced that peace is indispensable to the development of your continent. But, whatever the consequences, sometimes difficult, France has decided to come to the aid of those who, under trial, ask for its help to preserve their independence and their sovereignty, in conformity with agreements that have been concluded.
Although France had no agreement with Zaïre it had just intervened on behalf of Mobutu in the second Shaba war to preserve that province’s minerals for the West. What was fascinating about this particular conference was the fact that Mobutu attended the closing session. Zaïre, increasingly, was coming to be regarded in Paris as a part of Francophone Africa. Even in the late 1970s the official French language in relation to Africa has an unmistakable flavour of colonialism about it. An official information document of the time spells out the justification for France’s considerable aid programme:
The clearest commercial advantage that can be evoked by the industrialized nations is that co-operation is a ‘good investment’, in that it combats world economic imbalances, and strengthens interdependence to everyone’s advantage.
The relationship between France and Africa – as between the West generally and Africa – resolved itself primarily into a question of that continent’s mineral and other resources. The same document continues:
There is perhaps not yet sufficient awareness of the food resources offered by vast areas of the uncultivated lands in tropical Africa and which in the future the world economy will urgently need.
The political and cultural advantages of co-operation must not be neglected, even if here discretion is the wisest course if one does not wish to risk rejection; yes, France’s weight in the concert of nations can only be increased by the responsibilities of dialogue offered by her friendly relations and her linguistic and cultural links with this group (Francophone states) of nations: in no way do these hinder assertion of the African or Malagasy identities.
The neo-colonial arrogance and assumptions of superiority – and still more of control – are hard to escape. This same remarkable information document describes co-operation in far more precise terms (in relation to French activities) than is apparent in comparable British documents:
…co-operation covers the special relations that have developed between France and a specific area – coloured pink in our old atlases – consisting of 14 states of Africa and the Indian Ocean that became independent around 1959–60, where French is the official language and where decolonization has taken the shape of co-operation. To these republics are now added Mauritius, Zaïre, Rwanda, Burundi…
This astonishing official statement, understandably, infuriated the Belgians since their three ex-African territories – Zaïre, Rwanda and Burundi – had been incorporated into the French area of ‘co-operation’ just as though the old ‘Scramble for Africa’ were still on, while from Britain they had ‘co-opted’ Mauritius (which the British once took from France). In economic terms Francophone Africa had not achieved independence but ‘co-operation’. The general level of French aid to Africa was more concentrated than that of the other major donors and unlike Britain, with many more commitments to Commonwealth countries in both Asia and the Caribbean, the overwhelming bulk of French assistance went to countries on the African continent.
Both Britain and France concentrated their aid upon their ex-colonies. Both used their residual imperial connections as the link between themselves and the economies they would ‘assist’. Both regarded private investment as aid – the French more or less absolutely, the British with certain reservations although speaking more and more of private flows as though these were designed first to help development in the recipient country rather than earn profit for the source country.
The other most important Eur
opean donors at this time were West Germany, Belgium, the Netherlands and the Scandinavian countries. West Germany’s basic interest in Africa was one of trade and investment; it was unhampered by any recent residual hangovers of empire. In the 1960s West Germany had decided to concentrate its aid efforts upon Tanganyika, formerly German East Africa. A damaging argument had soon developed, following the revolution in Zanzibar and the subsequent union of the mainland and the island to form the United Republic of Tanzania. At the time Bonn had diplomatic representation in Dar es Salaam while East Germany had a Consulate in Zanzibar. Bonn’s heavy-handed attempt to apply the Hallstein Doctrine – that a country that had diplomatic relations with West Germany could not also have them with East Germany – was rejected by President Nyerere with the result that Germany suspended its aid offer. It was an inauspicious beginning to West German aid activities in Africa. Although West German aid became a substantial proportion of the total aid flow to Africa, the country’s close relations with South Africa became a bone of contention, especially with Nigeria. In June 1978 the West German Chancellor, Herr Schmidt, made his first official visit to Africa; in Nigeria, a country of West German concentration for trade, he failed to agree with his hosts about curtailing West German trade with South Africa and insisted that trading links with the Republic would continue. In Zambia he was again taken to task for West German opposition to UN sanctions against South Africa and his denials of military support given to Pretoria were not believed. The stands taken by West Germany in Africa at this time were among the most conservative and least conducive to change on the continent.