AID & The Marketplace

"We know how to secure a more just and prosperous life for man on earth--through free markets, free speech, free elections, and the exercise of free will unhampered by the state." This was George Bush preaching to the converted as he repeated an axiom of his inaugural address to the annual meeting of the World Bank/lnternational Monetary Fund. The President's statement epitomizes the spurious correlation which guides U.S. policy toward the developing world, one which equates free and open markets with justice and human progress. Unfortunately, for the last 45 years the United States has spent tens of billions of taxpayer dollars to institute and maintain an international economic order conducive to corporate interests, often in contravention of the human rights espoused above. This situation has been exacerbated in the 1980s by the enshrinement of privatization as the prevailing shibboleth guiding U.S. policy.

With the advent of the Reagan administration, the privatization theme has reigned supreme in both U.S. bilateral aid and at the two main multilateral institutions, the IMF and the World Bank, where the United States exerts undue influence on policy formation. The blind allegiance to privatization has been reinforced by the recent orgy of self-congratulation on behalf of the capitalist West in its so-called victory over socialism. For the Third World, however, it has been a pyrrhic victory.

The West's rejoicing has obscured the gap between the rhetoric and reality of the U.S. aid program. Rhetorically, the U.S. policy has been to promote stability and economic prosperity in developing countries. In reality, U.S. policy has created and maintained regimes in developing countries hospitable to multinational corporations and amenable to the international economic order which disproportionately benefits the United States and other developed countries. Grafting Western precepts onto the developing countries subjugates the needs and desires of these nations to the West's own economic priorities, often based on corporate interests.

As this month's feature on Turkey illustrates, the model of U.S. intervention encompasses a broad spectrum of motivating factors. For example, Turkey's shared border with the Soviet Union allowed it to fit neatly into the United States' polarized, anticommunist geopolitical world view.

In addition, Turkey's responsiveness to IMF calls for structural adjustment--the IMF's euphemism for privatization and austerity- -beginning in 1980, resulted in Turkey receiving massive support from both the United States and the multilateral agencies. For instance, in June 1980 the IMF granted Turkey a three year standby loan totalling $1.65 billion. The military coup in September 1980 in no way diminished the IMF's support for Turkey. Between 1983 and 1985 the fund provided $429 million in special drawing rights to Turkey. These loans were extended well after the extent of the military's repression had been documented.

Unfortunately, like the IMF loans, U.S. bilateral aid to Turkey, which was almost 100 percent military hardware, increased in tandem with the military's heightened repression. In 1985, as leaders of the progressive trade union were on trial facing the death penalty, the United States was supplying Turkey with more than $800 million in military support. Supplying the police and military with weapons which are used primarily as tools of repression against their own people is an inexcusable practice. Nonetheless, the United States argued that Turkey's geopolitical setting and its shift to free market principles justified overlooking the widespread human rights abuses that were occurring in the country.

The elements of the rationale behind this support for Turkey deserve scrutiny. Anticommunism, in particular, has served most effectively to reconcile the contradictions between the rhetoric of purported purpose and the reality of U.S. support for corrupt and brutal regimes. The "perestroika" underway in international relations makes anticommunism obsolete. The whole structure of the East-West international order has collapsed. Just witness the amazingly rapid change underway in East Germany.

The next step in the reevaluation process is for the United States to end its zealous support for privatization. The United States interacts with many mixed economies: Sweden, France, Japan, China, India, and even the Soviet Union. Maintaining a double standard for the smaller and more dependent developing countries is wrong.

Moreover, unmitigated privatization very often is a particularly unsound policy for developing countries. Most Third World nations lack a developed entrepreneurial class. Consequently, the state often performs crucial economic functions. Privatization in such situations results in greater concentration of wealth in the hands of a tiny elite. It also increases the power of multinational corporations because they possess the capital required to takeover state run enterprises. The bottom line is that private investment is not a substitute for aid. Contrary to the prophets of privatization, profit maximization is not synonymous with widespread social and economic uplift.

Removing the structural inequities which plague the Third World requires governmental commitment. Presently, U.S. aid inhibits developing country governments from making such a commitment. Predicating U.S. aid on adherence to free market principles frequently places the United States against such positive developments as health care campaigns and equitable land distribution. Given the United States' system of government and rule of law, not to mention profligate state spending, it is unjust and hypocritical to fund repression and thwart much needed change in the developing world.