Don't be fooled by debt relief: it's just another way of reshaping the third world to the demands of capital

The recent announcement by the British government that it is to "cancel third world debt" was a propaganda triumph. What a joy, sang the Guardian. Debt forgiveness, said Bob Geldof, was an "instinct" that was "deeply rooted" in Tony Blair's background.

A code word in Gordon Brown's statement ought to have been enough to alert even the gullible. Brown said that poor countries would have their debt forgiven if they used the relief "productively". Later, he wrote, "both the IMF and the World Bank will show how together macro-economic, structural reform and anti-poverty programmes can bring less poverty and more growth".

Not a single example exists where "macro- economic, structural reform" - he means laissez-faire capitalism imposed by the IMF and World Bank - has alleviated mass poverty. Throughout the developing world, especially Africa, "structural adjustment programmes" have destroyed jobs and public services, while shaping local economies to the demand of transnational capital. In the IMF's most "successful" countries in sub-Saharan Africa, 13 children die every minute from the likes of diarrhoea and malnutrition.

Far from changing this, Brown's "initiative" will reinforce it. To qualify, those countries that have been bled by British banks for 20 years will have to adhere to the "conditionality" of the World Bank's "Poverty Reduction and Growth Facility", which allows limited relief to highly visible projects in countries that have been awarded World Bank/ IMF brownie points for privatising and slashing jobs and services. The British Treasury will now have a fine excuse for not increasing Britain's scandalously mean aid programme.

There is a related hidden agenda here. This is the emergence, in another guise, of the discredited Multilateral Agreement on Investment (MAI). Had it not been for an international campaign against MAI, the "Paris club" of rich governments, notably the Blair regime, would have signed away, in effect, the sovereignty and independence of developing countries to transnational capital; for the power to override national environmental and employment laws was at the core of MAI. The campaign against it forced governments, notably the French, to break ranks. MAI died. Or so it seemed.

Those who follow the chameleon enthusiasms of Clare Short, Blair's Secretary of State for International Development and defender of globalisation and illegal bombing, will note her latest: "untying" British aid from trade deals with British companies. Her stated reasons seem so sensible. Why should poor countries, she says, be restricted to British commercial contracts? Surely that is "unfair"? What she omits to say is that the Blair government is at the forefront of "liberalising" the entire procurement and contracting system in the third world: booty worth three trillion dollars, more than international trade.

This "untying" will allow British and other rich-world transnational corporations eventually to secure contracts in domestic markets previously barred to them. By comparison, the 14 per cent of the British aid budget presently exploited by British companies is chicken feed. This was not debated at Seattle, and there is the danger of a behind-closed-doors fait accompli.

In Britain, one of the obstacles to mounting an opposition to this is the compliance of leading voluntary agencies, or non-government organisations. The "euphoria" of certain NGOs following Gordon Brown's "debt relief" announcement comes after a long seduction. NGOs represent the "civil society" courted by new Labour. Having become dependent on government funding and gone some of the way with the fakery of "productivity" linked to poverty relief, and having in recent years "restructured" their organisations right down to the use of claptrap market jargon, the more ambitious in the NGOs are in danger of slipping into bed with new Labour, the government of business. A few, such as Action Aid, remain unseduced, and there are those who clearly have serious doubts: witness the report by Louise Jury and Matthew Lockwood, Millennium Lottery: who lives, who dies in an age of third world debt? published last month by Christian Aid.

When Peter Mandelson and his co-author Roger Liddle outlined in their book one of the blueprints for new Labour, they identified Britain's "economic strengths" as the transnational corporations, the "aerospace" industry (arms) and the "pre- eminence of the City of London". The evidence is now irrefutable; new Labour is a major facilitator of capital and of the sinister changes planned for the world's economy as part of globalisation.

On the day Gordon Brown announced his "debt relief", this overshadowed the news that the Commons International Development Committee had discovered that a quarter of all export credit guarantees to poor countries were for the sale of weapons. Five days later, at the climax of the Hamilton and Fayed libel circus, the Trade Secretary, Stephen Byers, approved export credit guarantees worth £200 million to finance the huge Ilisu dam in Turkey that will assist in ethnically cleansing thousands of Kurds from their cultural heartland. No one wants it, apart from the repressive regime in Turkey, an arms client of the Blair government, and the British construction firm, Balfour Beatty, which stands to make a fortune. Does all this sound familiar? Recognise the name of the company from the Pergau dam scandal in Malaysia, the epitome of Tory corruption? Little has changed; and we ought not to be fooled a second time.