Last Updated: Friday - 09/24/2010

Foreign aid slashed as exploitation grows

Foreign policy is a statement of our relationship with the rest of the world. It is customary that governments initiate regular policy reviews and invite public input, by soliciting briefs from NGOs, the business community, churches and other sectors of civil society.

It is obvious at such inquests that opinions vary widely and that I represent a minority view. But that could change.

I have argued on such occasions that the poor are better served by abolishing the IMF's draconian structural adjustment programs than by increasing foreign aid. For every dollar in aid we sent to the Majority World, six come back our way in the form of debt service charges. What the poor need is not more aid, but less exploitation.

Well, in the last few years aid has been cut back and exploitation in the name of development has been stepped up.

There are three basic political viewpoints with regards to economic development. The first opinion emphasizes that economic prosperity is the result of the unregulated functioning of the market mechanism. The free interaction of supply and demand guarantees prosperity for those who produce and sell at the lowest price.

The theory is that the profits thus made will trickle down through all the layers of society. In this view poor countries can best develop themselves by attracting foreign capital and improving their competitive position in the world market by selling below cost.

This is the concept held by the IMF. It believes in a natural tendency of market to regulate itself. A shortage on the balance of payment, in its view, is only a temporary aberration which can be remedied with a short-term loan. The natural forces only need a little boost now and then.

In practice, new loans to pay off old loans drive countries deeper into debt.

The second position argues that the free market mechanism will, after a certain period of growth, result in a recession. A certain measure of government intervention is necessary to regulate the market. This may include policies to stimulate certain sectors of the economy, restrict imports or control multinational operations.

The IMF plays such a powerful role precisely because the absence of regulations has led to the global debt crisis.

This was more or less the Canadian government's position, but its strong promotion of MAI, NAFTA and wholesale downsizing would place Canada in the first category.

There is a glimmer of hope. The signing of MAI has been delayed and the bank mergers have been postponed. Finance Minister Paul Martin seems to have had a conversion experience and is now listening to the ecumenical demands to forgive the debt of the poorest nations.

The third view emphasizes unjust social structures. Its

proponents argue that the privatization of the means of production contributes to the concentration of wealth in the hands of the few which results in widespread poverty for the many.

The solution is a more regulated economy which considers the common good and a fair distribution of the wealth. This requires a radical overhaul of the present system which is only possible if there is a critical mass to influence the political will.

The third view is closest to the position of the Church. In 1996 the Canadian bishops' social affairs commission: "The end of this century's reigning ideology is profitability before dignity, profits before people, and competition before solidarity."

"Business as usual is not good enough," said the bishops, "you can't wait for market forces to create suitable jobs." The IMF policies promote cheap labour and massive unemployment.

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