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Romney Plan: Outsourcing International Development to Big Business

Not mentioned in Romney's big VMI foreign policy speech was his plan to make foreign aid the province of corporations -- a plan that could be disastrous in a place like Libya.
 
 
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In the first major foreign policy address of his campaign, Republican presidential candidate Mitt Romney, speaking to an audience of cadets at the Virginia Military Institute, accused the Obama administration of weak leadership in the volatile Middle East. Yet if the Romney foreign aid plan had been in effect at the time of the attack on the U.S. consulate in Benghazi, Libya, the U.S. effort would have focused on Libyan CEOs, leaving the majority pro-U.S. Libyans struggling on their own, and at risk to radicalization. 
 
Not highlighted in Romney's Virginia speech was a promise he made, only weeks ago, to reshape U.S. development aid into a program designed around business interests. That could mean the end of U.S. government engaging with help to Libyans who are building the very social structures that made such a free-speech response possible.
 
At the Clinton Global Initiative Annual General Meeting in New York last month, Romney broadly described how he would, as president, define development. While proclaiming the value of disparate interests working together for development. Romney’s plan, based around business-friendly “Prosperity Pacts,” defers development responsibility to businesses, assuming they will deliver the greater interest of the host nations and the United States through economic development in the free market.
 
Romney’s core concept is that employment, especially as delivered to developing nations by U.S. corporations, will lift individuals, their communities and countries.  Romney leaves aside all consideration of broader development aims to create just societies with access to health and education, free expression, food security and clean air and water.  Romney’s development universe consists of emergency humanitarian aid, aid that advances U.S. interests and aid in the form of jobs in developing countries.  His oversimplification ignores vast areas of development and the needs of people in the developing and third world as much as it oversimplifies work as always dignifying.
 
Romney’s plan, broadly stated, is to allow the free market to supplant the international development traditionally undertaken by the U.S. government.  His evidence to prove that this will work is a false equivalence he likens assistance dollars targeted at specific outcomes, and private capital, which aims simply to make more money. “Foreign aid efforts were designed at a time when government development assistance accounted for roughly 70 percent of all resources flowing to developing nations,” Romney said in his CGI speech. “Today, 82 percent of the resources flowing into the developing world come from the private sector.”  
 
Apples to iPods
 
By equating the two forms of investment -- development aid and commercial resources -- Romney compares apples with iPods.  At its best, the former measures the magnitude of donor nations’ optimistic engagement; in other cases, it stems from colonial guilt or to persuade votes at the UN. The latter number -- representing the flow of private capital -- is merely a testament to recent patterns of economic growth.  The shift from aid resources to capital as the primary source of investment in developing nations is more an indication of globalization and greater global wealth, as reflected in the emergence of the “BRIC” nations: Brazil, Russia, India and China.
 
In Romney’s development program, there appear to be no targeted outcomes other than those that will help business -- especially multinational corporations. “Working with the private sector, the program will identify the barriers to investment and trade and entrepreneurialism in developing nations,” Romney said of his so-called Prosperity Pacts. “In exchange for removing those barriers and opening their markets to U.S. investment and trade,” he continued,  “developing nations will receive U.S. assistance packages focused on developing the institutions of liberty, the rule of law, and property rights.”
 
Romney’s notion that development has few other aims than making the economies of developing nations friendly to foreign business investment suggests that his notion of property rights is more for the protection of companies and factories than for ordinary people.
 
Given the rest of his economic agenda, one would expect Romney’s  idea of the rule of law is unfettered business from regulation and the enforcement of business contracts. Justice for the people? It’s hard to see that being a priority in the Romney scheme.
 
And what of Romney’s “institutions of liberty”? Liberty for whom? It’s not a stretch to surmise that those institutions, in the Romney scheme, are more likely chambers of commerce than trade unions.
 
No value beyond profit 
 
It is no surprise that a business buyout specialist would design development entirely around business development; it is also no surprise that such a businessman would ignore development aid’s value beyond financial profit. So food security, as well as access to education and health care, have no place in Romney’s business-only development plan, as they are long-term net expenditures that cut into the bottom line. The same goes for clean air and water, the sustainable value of which is only measurable over years than the last fiscal quarter, not to mention the value of democratic and social development overall.
 
Romney voiced his frustration with limited results from what he sees as the huge expense of development aid. “We wonder why years of aid and relief seem never to extinguish the hardship, why the suffering persists decade after decade,” he told the audience of world leaders and business executives who gathered at the CGI. His words reveal how unaware he is of the very nature of international development: to think broadly, take calculated risks and embrace small victories.  Our aid works to help our partners grow out of dependency. We hope that our efforts will cure endemic problems, but have to also appreciate the enormity of the world and our minuscule development budget -- which, despite Romney’s complaint, represents less than 1 percent of the federal budget. Ending development aid in the way that Romney laid out would be a policy decision -- not an economic one.
 
At their best, aid programs introduce new or improved practices (teach man to fish) while also  improving immediate conditions (give a man a fish). Expecting aid to feed everyone, cure all illness, educate every child and electrify every house is naïve to the depth of conditions in the developing world and the destruction wrought by war and neglect.
 
Following the money
 
In his New York speech, Romney thrice referenced government corruption in nations that receive U.S. aid.  Aid effectiveness, however, is only tempered by -- not defined by -- corruption. The work of the United States Agency for International Development is conducted under the aegis the State Department and is part of the U.S. diplomatic effort. Our aid is often our main tool to improve transparency and decrease corruption. To diminish aid simply because we disapprove of the recipient’s accountability efforts is to weaken one of the few levers we have to make improvements. We need not give blindly.  As Romney pointed out, the U.S. private sector is much larger than the government sector.  Corruption follows money; to assume that privatizing aid would eliminate corruption presumes the best intentions of the business and the purity of the people who run them.  We also can not be blind to business’ corrupting effects in the developing world.
 
Romney comment that corruption could not flourish in societies where there is work, is blind to reality in the developing world. Often where people are working themselves to death in mines and other dangerous occupations, because they have no options other than to feed a corrupt system that has no social justice or regulatory fairness.
 
In his comments to the CGI meeting, Romney’s comments cheapened the purpose international aid and belittled its recipients, who understand that receipt of U.S. aid entails a partnership. Further Romney, stated his belief that poverty is borne as shameful by all who experience it. The young people of the Middle East, he said, were “humiliated by poverty.”
 
In the developing world this couldn’t be further from the truth; revolutionaries wear their poverty as a badge of credibility qualifying them as part of the future solution not the established problem. Surely Muhammad Bouazizi, the Tunisian fruit vendor whose public suicide set off the Arab Spring, did not sacrifice himself from humiliation; he did so in protest -- to amplify his frustration and perhaps to embolden others to act in his memory.
 
Pulling the corporate cart
 
Development aid is a way we can engage to shape events and a way for us to respond to them. The counter-demonstrations in support of the United States in Libya and the Middle East are a result of diplomatic engagement through development and are the expression of the larger national sentiment there. Foreign policy is and always has been at the mercy of events; Roman emperors were at the mercy of the Huns, George III was at the mercy of the revolutionary tax objectors, Presidents Saleh and Mubarak were at the mercy of Twitter and Facebook. The difference being that it took George and Augustus months to find out their realms were crumbling. The recently deposed presidents didn't recognize trends and social change as they were happening.
 
Diplomacy is based on awareness of the events and ability to understand them; development programs are vital in these efforts because they engage societies beyond boardrooms and banks by working with civil society, on the streets and the the villages to better know and understand the entire country.
 
International development efforts reflect society, not only business. A society won’t develop equitably if the workplace perpetuates the degradation of the employee. National prosperity is measured by more than gross domestic product and corporate value. The people’s financial worth and sense of self value add to that formula.
 
Romney said: "[Aid] can’t sustain an economy -- not for long. It can’t pull the whole cart -- because at some point, the money runs out.” Under Romney’s plan the horse, cart and road they’re on will have a corporate logo, and our partners will be expected to ride in that cart.

Bradley J. Austin is a multi-sectorial development expert and consultant with field and headquarters experience for a range of donors, including private and public development interests.

 
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