Charity must not stop at home

The International Development Secretary, Andrew Mitchell, defends the decision to ring-fence oversea

Andrew Mitchell may seem an unlikely Secretary of State for International Development. A supporter of William Hague for the Conservative Party leadership in 1997 and a friend of the maverick MP David Davis, Mitchell has long been seen as firmly on the right of his party. But look closely at this well-groomed Tory and you will see that he is wearing two coloured wristbands, one for Darfur and one for Rwanda, the latter marked: "Genocide: never again". The bands hint at the passions of a politician who is emerging as one of the most thoughtful members of the coalition.

Speaking to the New Statesman in his new office at the Department for International Development (DfID), Mitchell is impatient to make progress. "There's nothing to be said for opposition," he says. "You can only talk about things and you can lay your plans. You can't ­actually achieve very much; you have to be in government for that."

Now finally in office, Mitchell finds himself in the eye of a political storm, thanks to the decision of Tory high command to ring-fence ­development spending - a move aimed at aiding the "modernisation" of the once-toxic Tory brand. Despite the deficit, DfID's budget is set to rise by 63 per cent by 2013, and some commentators on the right have objected, citing the "age of austerity" and arguing that "charity starts at home".

Mitchell defends the funding pledge. "My ­argument is that charity does indeed start at home, but it doesn't stop there," he says. As well as reducing adminstration costs by a third, the new UK Aid Transparency Guarantee, he points out, will ensure independent assessment of development spending: "The ring-fencing imposes on all of us a double duty to make sure that for every pound that is spent on the development budget from hard-pressed taxpayers, we really get 100 pence of value."

But, surprisingly, he also concedes that the promise has not made his life easy: "It is quite a testing pledge - it's the sort of thing you make in opposition, then rather regret in government. But we've made it absolutely clear that that is what we are going to do." Given the obligation, he points to the "moral" case for increased aid, mentioning the 4,000 people who die from malaria each day, of whom 75 per cent are children under five.

Miracle worker

Mitchell also argues that development "is in our national interest". He cites Paul Collier, the Oxford University economist and author of The Bottom Billion, as he describes how the world's poorest people are "often trapped in conflict-ridden, insecure, badly governed states". Here he is at his most animated: "These are countries that export people . . . who put themselves into the hands of the modern-day equivalent of the slave trader, into a leaky boat, and cross hundreds of miles of ocean in the hope of tipping up on a European shore - these are not feckless benefit seekers . . . They are often the brightest and the best in those societies, who are seeking a better life for themselves and their families. How much better to persuade them, with international ­development and international support [for] their own country, that there's a future for them there?"

In addition, "the fact is that aid, where it is spent well, achieves miracles," says Mitchell. For him, there is one key statistic that demonstrates the aid budget's efficiency: "Britain, today, educates 4.8 million primary school children in Britain. And we educate five million primary school children around the developing world, at a cost of 2.5 per cent of what we spend on British children."

However, there are further controversies, including the coalition's decision to increase aid to Afghanistan by up to 40 per cent despite the well-documented corruption of Hamid Karzai's regime. Mitchell recalls a recent visit to a village near Kabul where he witnessed DfID accountability projects, and emphasises that "much of our money goes through the World Bank Trust Funds, which means it is only paid out on the basis of reimbursable receipts", giving the British taxpayer "some confidence that the money is being properly spent".

Then, there is the question of why the government is giving the tiny South Atlantic island of St Helena, populated by 4,000 people, a new airport - a project championed by Michael Ashcroft, the Tory donor. "We are doing it, first, because we have an obligation to the people of St Helena and, second, because it is in the interests of the British taxpayer," Mitchell says. Asked about Labour whispers that he was leant on by Ashcroft, he says: "Lord Ashcroft is a sort of Lord Voldemort [from Harry Potter] figure for the Labour Party - they think he is ­behind everything. He's got nothing to do with the decision on St Helena."

Compared to some of his colleagues, Mitchell - who describes himself as not "a particularly tribal beast" - is generous to his predecessors. He pays tribute to two former secretaries of state, Clare Short and Hilary Benn, while mysteriously omitting the most recent, Douglas Alexander. Short was a "brilliant development minister [who] advanced the cause of development", while Benn "was an absolute nightmare to shadow because he was extremely good at the job and a very nice guy".

He even adds, unprompted, that what Gordon Brown said at the AU summit in Kampala recently, about smart aid and IT investment, "was extremely sensible". However, he notes that the UN-endorsed pledge to spend 0.7 per cent of GDP enjoys cross-party support, which "takes development out of party politics".

Break with China

Under Mitchell, DfID is going back to the drawing board and considering the necessity of its presence in every country. The government has already announced that it will stop aid to China and to Russia. Aside from this, he presents two priorities. The first is the pledge to spend £500m a year on tackling malaria, though critics argue this is disproportionate in an overall health aid budget of less than £1bn. The second is improving access to contraception, which Mitchell has spoken about at the UN: "We will embed greater choice for women over whether and when they have children."

Overall, Mitchell appears at home at DfID, a department he forcefully defends, and where civil servants seem to have unusually high morale. Some senior Tories, including John Major and Douglas Hurd, have argued that it should be merged with the Foreign Office. Mitchell says the two departments should work closely together but adds: "It is sensible that development should be done by the development specialists and there is a very, very powerful argument for keeping the two departments separate - it's part of the reason why DfID has an excellent reputation around the world."

Mitchell slogged round 38 countries, working out a plan for government. Now, he is eager to get on with the job: "We've hit the ground running . . . and the lights have been burning late here as we implement our agenda."

Read an extended transcript of the Andrew Mitchell interview here.

Relations with Rwanda

It is telling that Andrew Mitchell was wearing a Rwanda wristband. The UK is Rwanda's largest bilateral donor, giving around £380m since the genocide in 1994. In the two countries' "memorandum of understanding", support is concentrated on three areas: public financial management, human rights and international obligations, and poverty reduction.

For DfID, Rwanda has become a key success story. The country has achieved the second-highest growth rates in Africa, averaging 10 per cent from 1994 to 2000, and 6 per cent since then. In tandem, poverty has decreased, from 70 per cent in 1994 to 57 per cent
in 2007.

But despite this progress, there are serious and growing concerns about the nature of the Rwandan government - led by the soldier-president Paul Kagame, an ethnic Tutsi.

Kagame has become increasingly autocratic, closing down newspapers and preventing the registration of opposition parties. Journalists and political activists have been murdered.

Rwanda will go to the polls on 9 August and Kagame will win, remaining in power for another seven years. The question, then, is whether he will change the rules that limit Rwandan presidents to two terms in order to hold on to power beyond 2017.

Sophie Elmhirst.

James Macintyre is political correspondent for the New Statesman.

This article first appeared in the 02 August 2010 issue of the New Statesman, Politics and comedy

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 02 August 2010 issue of the New Statesman, Politics and comedy