On Sunday, I was on OBETV, an Africa-focused channel broadcast on satellite. It was a recording of an Economist newspaper debate with His Excellency Isaac Osei (Ghana’s High Commissioner to the UK), Oxfam’s Phil Bloomer, and Professor Shujie Yao, Chair of Economics at Middlesex University. I argued that human rights are consequences of economic development, and that sanctions, by depressing economic development, tend to also damage greater recognition of human rights:
Between 1914 and 1990, there were economic sanctions imposed in 116 cases by various countries. They totally failed to achieve their stated objectives in 66 percent of those cases and were at best only partially successful in most of the rest. Since 1973, the success ratio for economic sanctions has fallen to 24 percent for all cases.
In 1962 the United States imposed sanctions against Cuba. JFK bought dozens of boxes of Cuban cigars before he signed the Cuban embargo.
Forty-three years later, Fidel Castro is still in power, freedom of expression and association is still restricted, and Castro gets to blame his country’s poverty on the Americans. American sanctions have reduced investment into Cuba, hindering living standards there, but of course Cuba has trading relationships with the rest of the world, so they are a rather weak form of sanction.
Yet multilateral UN sanctions seem to fare little better. Sanctions against Iraq are widely said to have caused hundreds of thousands of deaths of children. Were they worth it? They did not bring forth democracy, they did not get Saddam Hussein’s co-operation with weapons inspectors, they did not cause Saddam any suffering whatsoever. They solely hurt the ordinary people. “Economic embargoes,” said the late Pope John Paul II, “are always deplorable because they hurt the most needy.”
Protectionism and export subsidies help specific producers, but do not help society as a whole. So the World Trade Organization’s ruling that the European Union’s subsidies to sugar producers are currently in breach of WTO agreements is good news. It’s good for European taxpayers and it’s good news for excluded producers.
According to The Hindu (India):
Phil Bloomer, head of Oxfam’s make trade fair campaign, said: “Today’s ruling confirms that the EU has been breaking WTO law and seriously harming developing countries in the process.”
Sugar group Tate & Lyle saw its share price fall 15.5p to close at 453p despite saying the ruling had no direct impact on its business…
Michael Mann, the [European] commission’s agriculture spokesman, said: “Obviously we’re not happy with what they found against us on these two points but we will of course comply with our international obligations.”
According to figures released under Britain’s Freedom of Information Act, the biggest winner of Europe’s current farm protectionism has been Tate & Lyle which received £233m in export subsidies over a two year period.
The following is a speech delivered at a debate organized by Christian Aid and Oxfam to an audience of 700 in St Margaret’s Church, Westminster. It was part of the Trade Justice Movement’s “Wake up to Trade Justice” night. The debate featured speakers from the Globalisation Institute, Libertarian Alliance, Oxfam and the Third World Network.
This debate is supposed to be between we who support free trade, and they who support fair trade. This is actually a caricature. I believe in fair trade. I believe that trade should be a way for the poor in the world to become rich. I believe that trade should be just.
Like Christian Aid and Oxfam, I believe that Europe and America often talk the talk but don’t walk the walk. They talk about the need for free trade, but in many areas they don’t do it. The reason of course is simple: in agriculture, especially, there are powerful lobbies in favour of protectionism. Farmers write to the US Congress or the French parliament demanding to be protected. Politicians are afraid of losing power and so they cower away from dropping protectionism. If Europe’s agricultural protection ended tomorrow – something all of us here would celebrate – farmers would probably riot on the streets of Paris.
You may have noticed that I have started using free trade and fair trade interchangeably. That is because fair trade and free trade are the same thing. Free trade is fair trade.
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The International Monetary Fund has released figures showing that economic growth in sub-Saharan Africa reached an eight-year high and inflation has fallen to a 25-year low. Real GDP per capita increased by 2.7 percent. This is excellent news. Still, there is a long way to go. As the IMF’s Africa Director says, 16 out of the world’s worst 20 countries for business conditions are in sub-Saharan Africa.
On Friday, I debated with Oxfam and the Third World Network at an event run during a London vigil for trade justice. The man from Oxfam claimed that, because of opening up, Ghana had been getting poorer over the last 20 years. I explained in response that Ghana had been growing steadily and faster than any other West African country. Then the man from Oxfam said that poverty had been increasing. I responded by pointing to a Department for International Development (UK) report which shows that poverty in Ghana has been declining.
Oxfam is a very important institution which does a great deal of good around the world. The man from Oxfam’s genuine belief that Ghana was getting poorer shows why it is so important that aggregate figures for African economies get good coverage. Anecdotal evidence is moving and personal, but it needs to be combined with the big picture. Only with the big picture can real lessons be learnt.
The front page of today’s London Metro features a new Oxfam and ActionAid report. The headline is: “Why 80% of global aid goes missing”. Donor bureaucracy and linking aid to the donor country’s industries are particularly criticised. The report, Millstone or Milestone?, makes a number of interesting points.
Oxfam and ActionAid say that 80 official agencies and 35,000 aid transactions a year impose a huge administrative burden on poor countries.
The report attacks the practice of “round-tripping” aid. This is where countries link aid to the purchase of products from companies at home. This wastes aid money and constitutes corporate welfare.
But then the report says that procurement should be biased towards local producers in the recipient countries. These local producers should be decided by the recipients. This would be a mistake. Bringing in overseas expertise is in and of itself highly valuable. Moreover, such a local producer bias would mean many such contracts would be awarded to politically-powerful friends of the state, rather than in an open procurement process. Similarly, the report says aid should use a recipient country’s own administrative infrastructure. There may be a case for this, but where there is a high level of corruption in a country’s civil service, it is not clear that this would be a sensible move.
The report is also mistaken when it says that aid should not be tied to specific projects. Untying aid would lead to more aid being wasted, not less. Tying aid to specific projects has helped move away from money disappearing into Swiss bank accounts or being used for the purchase of arms.
But, criticisms aside, this report is an important contribution to the debate on aid. Intentionally or not, it reinforces the case why trade, rather than aid, is key to improving the living standards of poor countries.