Web Of Deceit: Britain's Real Foreign Policy

by Mark Curtis

  In Haiti’s case, the global trade rules allow the people of the Western hemisphere’s poorest country to be made poorer by the trade policy of the hemisphere’s richest country. WTO rules and other agreements that the Haitian government has been obliged to sign, along with a sheer lack of resources, make it extremely difficult to raise barriers to protect farmers from the devastation wrought by these subsidised exports from the US.

  This story is repeated all over the world. Cheap food imports are undermining poor farmers’ food security and livelihoods in Mexico, Gambia, Brazil, the Philippines, Guyana, Sri Lanka and many other countries, affecting untold millions of poor people. Although urban consumers can gain from cheap food imports, the costs to the poorest farmers are often devastatingly greater.

  These impacts are entirely predictable, and have been occurring for centuries, as when colonial Britain ensured that cheaper goods from Lancashire destroyed the Indian hand-looms industry, causing starvation and untold misery for millions of poor Indians. Then, as now, British governments champion the so-called ‘free trade’ agenda.

  Various UN reports show the effects of the WTO agreements. The United Nations Development Programme calculated that the least developed countries would be worse off by $600 million a year as a result of the Uruguay round of trade negotiations concluded in 1994. A UN General Assembly report states that ‘cheap food imports are threatening local food production’ and that in the majority of least developed countries ‘there are no safeguards to protect fragile industries from abusive competition, and this has resulted in the closure of many domestic industries, worsening the situation of unemployment.’22

  The UN Sub-Commission on the Promotion and Protection of Human Rights has called the WTO ‘a veritable nightmare’ for developing countries. In its view:

  The assumptions on which the rules of WTO are based are grossly unfair and even prejudiced. Those rules reflect an agenda that serves only to promote dominant corporatist interests that already monopolise the arena of international trade.23

  Even Clare Short admitted that the world’s poorest continent – sub-Saharan Africa – would face ‘a small welfare loss’ as a result of the Uruguay Round agreements.24 But this has not stopped Britain arguing for more of the same policies.

  The previous phase of the ‘liberalisation’ project was in the 1980s and 1990s, when the ‘structural adjustment programmes’ of the World Bank and IMF imposed trade liberalisation and privatisation on most of the planet. The results were often devastating, with health and education services collapsing in many countries, farmers being forced into deeper poverty through price falls and the urban poor being made increasingly desperate by cuts in food subsidies. It is no coincidence that the HIV/AIDS pandemic swept through the poor world during this period, as cutbacks in government health spending left many countries unable to cope with the disease. The same period also saw the world’s poorest countries’ share of world trade halve from an already minuscule 0.8 per cent in 1980 to 0.4 per cent in 2000.

  The prices of many food and agricultural commodities, on which many countries depend for their survival, declined to their lowest level for decades, some to their lowest level for 150 years. Much of this was due to the World Bank’s insistence on countries pursuing export-oriented strategies that increased global competition and pushed prices down. Devastation has been wrought in many communities dependent on the production and export of these commodities.

  The South Commission has noted that globalisation ‘is proceeding largely for the benefit of the dynamic and powerful countries’. In twenty-two of the forty-nine least developed countries – the poorest countries on the planet, where 600 million people live – national wealth per person either declined or was stagnant through the 1990s. Between 1988 and 1993 (according to the most recent available figures) the incomes of the poorest 80 per cent of the world’s population fell; while the richest 20 per cent saw their incomes increase. The richest 1 per cent saw their incomes rise the fastest. In Africa, the poorest half of the population became even poorer in 1988–93, according to the World Bank. This is increasing poverty and inequality on a very large scale. Not all can be laid at the door of global ‘liberalisation’ – many populations in developing countries are also victims of their own governments – but much surely can.25

  It is clear that the very richest are becoming richer and the very poorest are becoming poorer. Meanwhile, hundreds of millions of people in both North and South are experiencing much greater job insecurity (and stress) and worsening public health and education services, even as incomes rise for many. There are certainly many people benefiting from ever-deepening global ‘liberalisation’ and life is not exactly all doom and gloom for many people in richer countries. But the principal beneficiaries tend to be the already wealthy, especially the super-wealthy, and those in senior positions within, or associated with, transnational business.

  We do not need to look far for the impact of structural adjustment programmes, since the Thatcher government effectively imposed one on Britain. One result was the astounding rise in child poverty. A UNICEF study in 2000 noted that the number of children in Britain living in poverty rose from 1.4 million twenty years ago to more than three million now. Nearly 33 per cent of children live in poor households – where weekly income is less than half the national average.26

  Two decades of Conservative rule left Britain with the worst poverty record in the developed world, according to the OECD. Poverty affected 20 per cent of the population between 1991 and 1996. This was a worse record than even the US – where 14 per cent were affected – and compares with 10 per cent in Germany and 7 per cent in Sweden. A UN report found that a fifth of adults in Britain were functionally illiterate and that 13.5 per cent were permanently living in poverty, a worse record than all other developed countries except the US and Ireland.27

  In the winter of 2000/1, more than 20,000 old people died of cold-related illness in England and Wales, according to Help the Aged. This was the number of excess deaths compared to the average for the summer and autumn months and followed an estimated 26,000 deaths in the winter of 1990/1.28 These are Third World-scale deaths that are due considerably to poor, inaccessible public services and low incomes of the most vulnerable – partly the result of government economic priorities under the same model foisted on developing countries.

  According to UNCTAD, the UN’s trade body, ‘the efficacy of the economic reforms on which so many lives and livelihoods now hang, is, and must remain, an act of faith’.29 Unfortunately, it is one that Labour’s liberalisation theologists are pursuing with real vigour.

  The ‘veritable nightmare’ of the future?

  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 Center ‘was also an attack on global trade’. ‘So we must respond by launching a new trade round’ and ‘fight terror with trade’.30 Thus the dead of September 11th were being used to push further ‘liberalisation’ on the world’s poor.

  At the WTO’s ministerial summit two months after September 11th, in Doha, Qatar, the British government led the way in pushing for a ‘new trade round’. Britain had a tricky task to perform. On the one hand it was continuing the line of wanting to ‘make trade work for the poor’. At the same time, it arrived in Qatar determined to force developing countries to ‘agree’ to add new issues, such as investment and government procurement, on to the WTO agenda – something to which almost all were completely opposed. The problem is that the natives just don’t see what’s good for them. As Clare Short said before Doha, ‘much remains to be done in order to secure developi
ng country support to launch a new Round’.31 Developing countries were clearly right in arguing that agreements in these areas would benefit only the rich countries and their corporations. And that they lacked the capacity to negotiate new agreements when they were already so overstretched in trying (largely in vain) to defend their interests in the existing negotiations.

  It was a hard act of double-think to perform but the government managed, aided by the fact that there were virtually no mentions in the media of the government’s strategy and why it might be important to the world’s poor. Rather, the media preferred to parrot the government’s line – by now, embarrassingly absurd – about ‘making trade work for the poor’. At public meetings in Doha, meanwhile, Clare Short managed to vilify those who failed to accept total ‘liberalisation’ by saying they were supporters of Burma and North Korea.

  Post-Doha, and in the run-up to the next WTO meeting in Cancun, Mexico in 2003, British planners have a definite agenda for the future. A key British aim in the WTO is to secure a global agreement on investment that would require all governments 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 is 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’. This is, of course, exactly what Britain’s businesses want – unfettered access to the world’s markets for investment. 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.32

  Britain was one of the strongest supporters of the proposed Multilateral Agreement on Investment (MAI) that Northern countries tried to negotiate in the OECD. 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. Most worryingly, the MAI would have given companies the power to sue governments for the loss of profits if governments enacted laws discriminating against them, and to be compensated for any losses. Despite this, Clare Short told parliament that a report commissioned by DFID ‘concluded that the MAI could have a positive developmental impact’.33 The MAI proposal was eventually scuppered in 1998, partly due to an NGO campaign against it.

  The government did not give up, however. After the talks collapsed, it 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.34

  Asked by a parliamentary committee whether an international investment agreement was needed, 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.35

  The government is also acting 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’.36

  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’.37

  Campaigners have forced some attention on the scandal of GATS, the WTO’s General Agreement on Trade in Services. Supporters of the global ‘liberalisation’ project would ultimately like to require all countries to allow foreign business equal access to all domestic markets for services – including health and education, as well as tourism and financial services. The European Commission has described GATS as ‘first and foremost, an instrument for the benefit of business’. A British government memo leaked in 2001 showed a DTI official complaining that the case for GATS was ‘vulnerable’ when campaigners asked for ‘proof of where the economic benefits lay’ for developing countries.38

  Currently, the WTO rules do not formally require developing countries to ‘liberalise’ their services sectors; each country is technically free to decide for itself whether or not to do this. The British government says that: ‘Naturally, looking at our own export interests, we would hope that countries could be persuaded to liberalise their services markets through negotiation of balanced benefits’. On this matter ‘governments with export interests such as the UK will often be guided by the advice they receive from business’.39

  What being ‘persuaded’ actually means was discovered by Christian Aid. It found that in Ghana, the British government was in effect tying the release of British aid to Ghana’s government privatising its water services. DFID was withholding £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 as a whole had been received. DFID had commissioned the Adam Smith Institute – a wholesale supporter 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.40

  The difference between developing countries ‘choosing’ and ‘being forced’ to accept the Northern countries’ agenda is wafer thin. A huge number of levers are used by Northern countries to secure their goals. Indeed, by the time that the WTO formally requires developing countries to liberalise all services sectors, this may have already happened in practice, 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’.41

  And this is just in Ghana. 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’.42 A new trilateralism of government, business and NGOs is being established to push this agenda. DFID, for example, has established a group involving British water companies and some development NGOs to press for global water privatisation. The NGOs are being seriously co-opted, in my view, in a process aimed at private companies getting their hands on critical public infrastructure. It is not that major reforms of such services are often not needed in developing countries, just that handing over effective control to foreign multinationals – as is often occurring – is a very particular strategy with obvious beneficiaries.

  The drive for worldwide privatisation includes, of course, Britain. Here, the Private Finance Initiative – involving ‘public-private partnerships’ – is transferring ownership and control of much of the economy’s infrastructure, including schools and hospitals, to private business, a key aspect of what George Monbiot calls ‘the corporate takeover of Britain’. The same is happening g
lobally.

  Another ‘new issue’ to look out for in the future is ‘public procurement’, that is, government spending. Depending on the country, this amounts to between 3 and 12 per cent of GDP, so is a massive market that transnational business is keen to access. Britain notes that ‘government procurement represents a sizeable slice of economic activity’ and ‘this in itself is a strong argument for including purchases by governments in the multilateral rules system’. If public procurement were ‘liberalised’, all governments could be required to give equal treatment to foreign companies in government spending contracts, thus removing an important tool to promote national development.43

  The high-point of propaganda on ‘development’ has come following the Doha ministerial. Ministers now refer to the outcome of the summit as the ‘Doha Development Agenda’ – a description of global liberalisers’ plans for total control of the world economy while offering a few scraps to the poor. In Doha, developing countries had to fight the EU and the US hard to only just manage to delay (until the next summit) ‘agreement’ on adding the new issues on to the WTO’s remit. One or two important gains were made by developing countries since they remained united in the face of an onslaught by the liberalisation theologists, including the British government. But the declaration at the end of the summit simply calls for the ever onward march of more liberalisation, with no acknowledgement of any adverse impacts on anyone. The phrase ‘Doha Development Agenda’ has now entered the lexicon and is regularly used without speech marks, not only by ministers but also in the media, and even by some NGOs. It has become a Fact, since it has been so designated. In reality, it shows that ‘development’ can largely be translated as ‘corporate control’.