Saturday, April 3, 2010

The Pretence of Aid

Some of the issues this blog is particularly concerned with include unfair trade policies that aim to keep developing countries in their current state of underdevelopment, the use of developing countries to produce low value goods and raw materials, but not high value goods, which they have to import from rich countries, and the use of developing countries for growing monocultures and single resources that are often processed in rich countries, earning poorer countries very little.

Economic Partnership Agreements (EPA) are, to a large extent, behind these and other issues. Rich countries have been busy for a long time trying to persuade African countries to sign up to these EPAs, without much success, yet. But as the number of poor people in African continues to rise, mostly as a result of the 'pro-poor' policies of rich countries, it should be possible to persuade more countries to put the noose around their neck in return for some short term handouts that they need for an emergency.

Perhaps Kenyans think there is no alternative, perhaps there is no alternative for them, but they seem to be getting further and further into the noose of producing cheap primary goods for export. Huge areas of land are being diverted to use for biofuels and other things that people here are not in great need of. At the same time, small farmers, who produce the bulk of what Kenyans eat, are slowly losing access to land as they are pushed off by rich industrial scale agricultural interests and as the prices rise to levels they will never be able to afford.

Rich countries used trade tariffs to get to the position they are in today. Now they want poor countries to remove their tariffs so that the rich countries can expand their markets and compete, under completely skewed conditions, against the poor countries' markets. EPAs are dressed up as being advantageous to African countries but so far, most African leaders have not been fooled.

The East African press generally seem uninterested in non-national matters, so I was surprised to come across an article that discusses the difficult area of EPAs in simple language for a non-political economist like myself to understand. This article sees EPAs as the wrong kind of development model and discusses a number of key points. One of these concerns EPA provisions that are highly detrimental to African countries' development. The EU claims that dismantling tariffs will promote growth, despite the fact that this has never been the case, in any country, or at any time in history. On the contrary, tariff cuts have taken countries in the oppostie direction, leading to stagnation and de-industrialization.

Kenya is typical of the countries who will suffer if they sign up to an EPA. They depend on a handful of low value primary goods that are often produced by farmers at an extremely small profit, even at a loss: sugar, sisal, coffee, tea, fruit, vegetables and the like. It would be extremely advantageous to Kenya to use those primary goods to supply an industrial sector, if they had an industrial sector. But much of the industry they do have is owned by foreigners from rich countries, who are effectively subsidized to be here. They get tax breaks and other incentives so that Kenyan industrialists have no chance of competing with them.

Of course, the EU would not want Kenya to develop an industrial sector, not an indigenous one, anyhow. Their economies depend on cheap goods and cheap labour from developing countries. So they dress  up their policies and 'contributions' as 'aid' and they talk the talk of development. And for the EU and other rich parties, African countries are not just sources of cheap goods and labour, they are also important markets, where very expensive goods, often made with cheap African raw materials and labour, are either sold or dumped on the African market.

It's a disgusting thought, but all the land that has long been used to produce non-food or non-essential food products in developing countries could have been producing food for starving people here in Africa. Instead, starving Africans get a pat on the head and a hand-out from the rich world. Now that some rich countries are unable to produce enough food for themselves, they are buying up African land. Others are buying up African land to produce biofuels. Africans can expect more pats on the head and more hand-outs whenever enough Western attention is drawn to some drought, flood or other 'natural' disaster.

And don't be fooled into thinking that most of the disasters that strike poor countries are wholly natural. Many are not in any sense natural. People starve, become sick and die during what are referred to as disasters, usually, because they don't have access to the food or the water that is being extracted by foreign interests. The 'shortages' of food that Kenya has experienced recently and will continue to experience into the future have been manufactured. The bulk of land, and therefore water, in Kenya is devoted to producing goods for export. Even those goods that consist of food items are destined for Europeans who can afford it, not Kenyans, whose buying power is undermined by various agreements with the EU and other rich countries and zones.


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