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Neo-liberalism v2.0 - the rebranding of the anti-development agenda
Steve Tibbett
War on Want
25 June 2003

They are all at it these days. George Bush wants to "attack global poverty",
Tony Blair is up for "attacking the causes of global poverty" and the
remaining G8 leaders are apparently engaged in "the fight against global
poverty". Meanwhile, the World Bank is "fighting grinding poverty", the World
Trade Organisation is "reducing poverty on a worldwide basis", and the
International Monetary Fund, bailiff to the developing world, is "actively
combating world poverty".

The everyday language of radical NGOs and campaigners has suddenly become the
preserve of global policymaking and politics. And it's not just the lingo that
appears to be changing. Rich countries are falling over themselves to cough up
new money for HIV/AIDS relief, while institutions such as the World Bank and
IMF have undergone some collective soul searching and are now putting aside
their differences to co-ordinate the joint battle for a better, fairer world.

But does this newfound interest in reducing poverty really reflect a sea
change in the way things are being done? Not likely. If the most powerful
people and institutions in the world wanted to drastically reduce poverty they
could do so in a flash. But historically falling aid contributions, rising
global inequality, and stalled trade negotiations mired in self-interest,
suggest the great and the good aren't trying too hard.

Talk is cheap
Traditionally, campaigners and NGOs have put all this down to the fabled lack
of political will. In short, talk is cheap in the sphere of development and
few governments and institutions are willing to walk the walk. There's little
point scoring or election capital to be made out of trying too hard to remedy
the fact that 291 million Africans are living on less than $1 a day.

On closer inspection, however, the picture is far scarier. The policies and
conditions set down by the people in charge of development and the global
economy are doing the opposite of what they claim - they are in fact
anti-developmental.

Far from breaking free from the neo-liberal paradigm of the last 25 years, the
likes of the World Bank, IMF and WTO are in fact giving it a facelift. Along
with the world's leading donors, they are applying the same pro-poverty,
pro-inequality, one-size-fits-all development straitjacket sported by a string
of least developed countries the world over.

Pilloried institutions such as the World Bank and the IMF have realised the
importance of PR and marketing of late and have become extremely good at
cloaking their intentions with the language of their opponents. Behind the
mask, these people are working tirelessly to make countries conform to a
narrow, dogmatic development model that has consistently failed to life
nations out of poverty.

Economic freedoms, with strings attached
Take, for example, George Bush's multi-billion dollar aid plan, announced in
Mexico last year. The Millennium Challenge Account, as it is called, will
eventually oversee some £5 billion extra in aid spending. The initiative is
hailed by some in the Bush administration as evidence of a genuine,
pro-development stance. Not so fast. The money being pledged comes with
strings attached. In short, if you don't pursue the requisite 'economic
freedoms' such as low trade barriers and exchange controls as dictated by
rightwing UK think tanks such as the Heritage Foundation, you simply won't get
the money, no matter how desperate you may be for support.

It's not much better at the IMF or the World Bank. The IMF's hated Structural
Adjustment Facility loans of the 1990s came with so many disastrous conditions
that many countries could rightfully claim that the cure was more deadly than
the disease. Mercifully, the programme has been replaced by the nicer sounding
Poverty Reduction and Growth Facility. To access these funds a country is
asked to write its own poverty reduction strategy. This is intended to ensure
that a country's strategy for development adequately addresses poverty.

Now, what's wrong with that you might say? Well, beneath the veneer of
bottom-up legitimacy lies an altogether murkier truth. Firstly, the strategy
has to be OK'd by a joint World Bank-IMF board before any money changes hands.
Not surprisingly, the board has very strict views and guidelines about what
constitutes 'good development'.

Secondly, the two organisations carry out their own country assessments. A
poor assessment means far less money, and since other big donors look at these
assessments too, the stakes are understandably high. The World Bank assessment
includes looking at an incredibly wide range of areas covering economic,
social, political and financial sectors. And such assessments are not the only
way of cajoling cash hungry governments to toe the line. With over 100,000
foreign consultants roaming Africa doing IMF and World Bank related work, the
two big multilateral lenders have ample men and women on hand should local
policy makers need 'advice'.

Coherence
The very latest bit of neo-liberal sleight of hand is a policy called
"Coherence". All the big 'players' (WTO, World Bank and the IMF) got together
last month in a bid to make their policies more consistent and harmonious. In
theory, this is of course a good thing. But when the policies they are merging
are at best unproven and at worst anti-developmental, opponents find
themselves pining for the prior state of self-confessed "incoherence".

To various degrees all these institutions lack democratic credentials and the
danger is that coherence will just mean more of the same. When all the bullies
get together it's not coherence, it's just ganging-up.

Elsewhere, the tentacles of the WTO are threatening to encompass new issues
such as foreign investment and government procurement. The process is already
underway given the ambitions of the General Agreement on Trade and Services
(GATS). The latter is all about trading services and is a classic example of a
"we're-not-forcing-you-to-do-anything-you-don't-want-to" initiative.

But as prospects for multilateral agreement have hardened, attention has
turned to countless bilateral and regional trade agreements such as the
US-backed Free Trade Area of the Americas (FTAA) that carry even greater
demands than the WTO. The US Africa Growth and Opportunity Act, for example,
claims to help African countries access North American markets but whose
website Q&A kicks off with "How does the act help US firms?" and goes on to
list numerous conditions for entry such as elimination of barriers to US trade
and investment.

And most recently, the US has foisted financial provisions upon new bilateral
trade partners that actually ban the use of capital controls used to regulate
currency flows in times of volatility.

This surely cannot be tolerated in the name of development. Trade negotiations
and the distribution of official development assistance by rich industrialised
countries are tools of foreign policy used to further national self-interest.

One type of development?
>From Iraq to the Ivory Coast, we are led to believe that only one type of
development is possible. That model is the same as before: open your markets,
increase your exports, privatise everything, liberalise your financial system
and the rest will follow. Such fundamentalism elevates liberalisation as an
end its self - the holy grail of economic progress.

What's new is the outer casing. Warm phrases such as 'ownership',
'partnership' and 'fighting poverty' are there to make the bad medicine go
down.

If we are all agreed that the scandal of global poverty in a world of plenty
needs to be addressed, then the failed policies of the past must be struck out
and reformed - not spun out in a different way.

Steve Tibbett is head of policy and campaigns at War on Want