The ACP and the philosophy of development (extracts)

The relations between the African, Caribbean and Pacific (ACP) countries and the European Union (EU) are governed by the 'Cotonou Agreement', which was signed in 2000.

In 1996, prior to the conclusion of this Agreement, and in an attempt to set the stage for the negotiations leading to this Agreement, the EU published a "Green Paper on relations between the European Union and the ACP countries."

Given the strength of the EU and the relative weakness of the ACP countries, it was inevitable that these countries would have no choice but to accept the new "philosophy of development" to which the EU Green paper referred.

To prepare for the negotiations of the Cotonou Agreement, a preparatory Summit Meeting of the ACP countries was held in Libreville, Gabon in November 1997. This meeting, also attended by members of the European Commission, adopted a 'Libreville Declaration' which, inter alia, said: "We acknowledge the need to foster a culture of private enterprise and strengthen the institutions of a market economy. We therefore commit our governments to promote the development of a socially responsible private sector and encourage its participation in the development process. We intend to continue our efforts to create the kind of environment that attracts foreign direct investment including the appropriate incentive measures. To support these efforts we call on the EU to provide the necessary resources and give incentives to their private sector to ensure that investment is directed to ACP countries, especially by guaranteeing foreign investment. We further call on the EU to support the ACP initiatives to develop dynamic private sector institutions."

The then European Commissioner for Development Cooperation and Humanitarian Aid, Poul Nielson, spoke at the signing ceremony in Cotonou, Benin, which concluded the negotiations leading to the adoption of the Cotonou Agreement. Among other things, he said:

"Under the Lomé Convention, trade co-operation largely took the form of preferential tariffs. In future, our economic and trade co-operation will consist of a more comprehensive set of arrangements. The new process approach aiming at establishing new trading arrangements is crucial to improving the ACP countries' capacity to trade and to attract international private investment. It will be accompanied by appropriate support with a view to easing the transition and to prepare for a more dynamic and equitable participation in the international economic system.

"There are many sceptics watching what we are doing. The short version is that it simply doesn't work. This is wrong. I came to Benin a few days early for this meeting in order to see for myself what we are doing here with our partner. I saw road construction in progress, hospitals, new born babies in small clinics, people giving blood in safe and controlled operations and I saw a local market where 47 women are now in control of their own business -and prospering. I am confident that this is also what I could see in other ACP countries. Our partnership works, even if we all know it can be improved and will be improved.

The Concord Working Group Report we have cited went on to say that because of this "free market" model of development: "There will also be little incentive for ACP producers to diversify into more 'value-added' products, or for investors to put money in to developing new capacity, given uncertain domestic and regional markets for products competing with EU imports. This could lead to a 'glass-ceiling' being placed on ACP countries' development, an increased dependence on the production and export of primary products and possible deindustrialisation with associated job losses."

Contrary to this perspective, when he addressed the meeting in Windhoek, Namibia, in July 2004, to begin the SADC-EU EPA negotiations, the EU Development Commissioner, Poul Nielson, said: "I would like to explain what we mean by 'integrating the ACP in the world economy'. They have always been there but in a role that is not satisfactory, mainly as providers of raw materials and commodities. What we wish to do is to assist you in playing a more interesting and equitable role in the global economy, to increase the added value, to diversify your economies and, by leaving the long hangover of colonial economic relationships, to become fully equal partners.We are trying to do something new."

Speaking at the 1997 Libreville ACP Summit meeting, Poul Nielson's Portuguese predecessor as EU Development Commissioner had also spoken about the ACP countries "leaving the long hangover of colonial economic relationships, to become fully equal partners". He said that "the post-colonial period is over", and that the new (Cotonou) agreement would have to be based on reciprocal and mutually beneficial arrangements between the ACP and EU countries.

Feeling no obligation to be as diplomatic as the Danish Poul Nielson, he communicated the unequivocal message that the former European colonial powers felt that they had paid their debt to their former colonies. In future, the former colonies had to relate to their erstwhile colonisers as more or least equal economic partners and competitors. The colonial debt had been paid, in full!

From the foregoing we can draw the following conclusions:

  • In the post-Cold War period, the developed countries are ready to respond to the challenge of poverty and underdevelopment in the countries of the South as a moral rather than a strategic imperative that is necessitated by a threat to their survival;

  • They believe that the development of these countries should be financed through private capital, rather than public sector funds;

  • They work to ensure minimal state intervention in the economies of the South and therefore reliance on "the market" and the private sector to achieve the development goals of these countries;

  • They believe that these developing countries must be fully integrated within the global economy, interacting with all other countries through free trade and reliance on the global capital markets and global investors for the investment funds they need;

  • Critically, they believe that the developing countries should be obliged to participate in reciprocal "free trade" arrangements, insisting that it is such "free trade" rather than "aid" that will catapult the developing countries to reach their "take off" levels of development;

  • They are convinced that such economic assistance as they extend to the developing countries should act as a catalyst towards the achievement of the central goal of creating "investor friendly" conditions that would enable the developing countries to attract the requisite volumes of domestic and foreign private investment, creating the capacity for recipient countries of this investment to expand the space for these investors freely to trade their products;

  • They are determined to ensure that except for developing countries with domestic economies so large that their investors cannot ignore them, all others must meet such political and governance standards as they set, to reassure especially the foreign investors;

  • They are unwilling to provide sufficient public sector funds to enable the developing countries to reach their takeoff point, and do not pursue this objective, leaving it to the private sector;

  • This development model has not produced any success with regard to sustained development that does not require exceptional external intervention, despite all efforts by the developing countries to create the political, policy and other conditions the developed countries set as pre-conditions for the sustained development of the countries of the South.

None of these are natural, God-given results. They reflect the ideological dominance of a development paradigm described as "the Washington Consensus" that represents what has been described as "market fundamentalism".

This paradigm reflects a number of global developments to which there has as yet been no successful concerted response of benefit to the poor of the world.

These are:

  • the collapse of the Soviet Union and the prospect of the emergence of socialism as a world socio-economic system, leading to the capitalist system establishing itself as the only viable condition for human existence;

  • the elimination of all fears within the capitalist world that failure to reform itself to become responsive to the needs of the ordinary people, it would be replaced by an alternative socio-economic system;

  • the growth of the global transnational corporations and financial capital, creating the need for them to operate in global conditions that allow them to operate as freely as possible within the context of a liberalised and deregulated global economy; and,

  • the elimination of the fear by the developed capitalist countries that any rebellion by the poor of the world would threaten their stability, growth and continued prosperity.

Responding to all this, the dominant ruling groups in the developed capitalist countries have adopted a development model driven by the imperatives of capitalist development in the post-Cold War period.

This is part five in a special series of articles about global approaches to poverty eradication and economic development. Next week: 'Despair and the Washington Consensus '.

From ANC Today, 12/11/2004