90% of ‘aid’ ends up in the pockets of US companies

As George Bush visits Africa to big up his aid profile, SchNEWS reveals how 90% of that ‘aid’ ends up in the pockets of US companies…

“I’ve got a firm, heartfelt commitment to the continent of Africa and have ever since I became president.” - George Bush.

George Bush finished his six day tour of Africa on Wednesday (20th). The White House spin doctors told the media how his tour was aimed at combating malaria and HIV/AIDS. But behind the moralistic posturing about AIDS (he will only fund abstinence groups and refuses to help anyone trying to help sex workers), comes the usual array of economic bribery as the US attempts to carve out African markets for its own businesses ends regardless of the consequences for local people.

The tour came with the announcement of millions of dollars of economic assistance from the Overseas Private Investment Corporation (OPIC) and the Millennium Challenge Corporation (MCC). But the reality is that the economic aid is flowing in the direction of a small number of US companies rather than the countries on Bush’s glossy itinerary. Almost 90% of all OPIC aid goes to ten US-based recipient firms including Caterpillar, Citibank and the Bechtel corporation. Before the lid was blown on corruption at the firm, Enron was one of the biggest recipients of this corporate welfare handout.

And here’s a few examples of Bush’s favourite companies in action: Bechtel whacked up prices so much in a water infrastructure project it resulted in a civilian uprising in the Bolivian city of Cochabamba and they were booted out (see SchNEWS 611 for an update on Bolivian resistance). In a great “aid” package to Turkey £25m was given to the Ritz-Carlton corporation for the construction, operation, and maintenance of their Hotel in Istanbul. Another £7m was spent mining offshore diamond deposits in Namibia - no doubt just what the country needs when only a quarter of the population have access to clean drinking water.
Bush started with a visit to the tiny country of Benin, where one third of the population live in absolute poverty – yet the country spends almost 10% of its income servicing foreign debt. Some of that debt is being written off under the Heavily Indebted Poor Countries Initiative, but only because Benin has agreed to adopt neo-liberal economic policies.

W.T. EAU

Tanzania have been given a handout of £400m for transport, energy and water to “stimulate economic growth”, but have a guess whose pockets most of that booty will flow into. Certainly not Tanzania’a population, 60% of whom live on less than £1 a day - while the country spends a fifth of its income to repay a £4bn debt. For every £10 spent on health, in a country where about half of all malaria hospital admissions and deaths are in children under 12 months, Tanzania forks out another £6 on debt repayments. It’s true that there is some real aid behind Bush’s visit, to tackle HIV / AIDS and malaria – but unless a country plays the ‘free market’ game, they’re not going to see a penny.

World Trade Organisation rules, which are also enforced by the US, IMF and World Bank, make countries open up their infrastructure to foreign competition (See SchNEWS 524). Water companies, gas, oil and any remnants of a welfare state must be available for purchase by those corporations receiving a helping hand from the US treasury. Sadly, the largest helping hand seems to be to consultants who dream up and promote the corporate rape and pillage schemes. The big con was highlighted only last month when the government of Tanzania won more than £3m from a subsidiary of British company Biwater following a disputed and controversial contract to run the water system of Dar es Salaam (see SchNEWS 499 and 611). Biwater had merely whacked up prices while failing to install any pipes or deliver any improvement to water provision - but at least project partners - the Adam Smith Institute - did manage to spend nearly £300,000 on a pop-aganda video extolling the virtues of privatisation!

DRAGONS DEN

Of course, as well as the stated benevolent humanitarian desires to help the continent exploited for centuries by the West – or, alternatively, the desire to open up their economic markets for the more sophisticated but ultimately similar type of plundering of their resources as in Colonial times - there’s also the question of the looming influence of new superpower on the block, China. They’ve been out liberally dishing out dosh and investing in Africa – and with no reform strings attached. The US is naturally out to preserve its influence and keep ahead of the new ‘red menace’ for as long as possible.
But US businesses are often reluctant to take too many risks when it comes to investing abroad. Africa is seen as a bad place to do business because of the level of political instability. We don’t want some revolution redistributing our honestly earned profits now do we?

In essence the ‘aid’ offered by Bush pays the companies to take these risks, encouraging them to do business in places they might otherwise be reluctant to bother with. That’s why each of countries visited by Bush are the seen as the continent’s model market democracies and the most stable for wannabe shareholders who might be looking for government subsidised investments.

But government subsidies have always been a necessary way of a country protecting emerging or temporarily struggling industries. Unfair competition by a rival willing to sell at a loss, for example, could put the industry out of business only for the rival then to whack prices sky high (practices US corporations know nothing about obviously!) The lesson was well learnt in Britain during its ‘golden’ era rise to global industrial dominance, and is still well appreciated in er, America where major US industries like cotton, steel, farming and aviation all receive generous handouts to protect them from oversees competition. In fact, US domestic subsidies are worth around 25% of the earnings of the 500 biggest US firms combined!

But what’s good for the goose is no good for Uganda – or any other African country. If a country wants its foreign debt written off, or any other type of Western investment then these subsidies must go - even though they may be needed to keep the price of essential items, such as bread, below the cost of production so that they are within the reach of the poorest people. As the cost of once-subsidised housing and food rises – so does poverty and hunger. Local factories find they are suddenly competing with technologically advanced corporations and they go bust, leading to unemployment, poverty and ever more reliance on costly imported goods from places like, er, the USA. An African clothing company could never compete with corporations like Gap which spend billions on research, design and marketing while outsourcing all their labour costs to wherever the wages are at their lowest. By taking the aid smaller nations are signing away their right to do anything other than follow the path of neoliberalism and are committing their countries to years of economic dependence on the whim and will of the richer nations.

Privatisation doesn’t work. Free trade ruins small economies. Wherever the IMF and World Bank tread, poverty, hunger and inequality soon follow. There’s no way that western countries are going to write off third world debt without some kind of kickback for its corporations and that’s where the welfare state for business comes in.

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