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Foreign Aid builds a New Trojan Horse

*Robert Carty* is a Canadian journalist and member of the Latin American Working Group.

Robert McNamara wants to start a new 'green revolution.'

The old one didn't quite turn out according to plan. Miracle strains of wheat and rice developed in the 1960s certainly increased Third World food production. But the rich harvested most of the benefits. They alone could afford the expensive seeds and costly fertilizers and equipment the wonder plants required. They owned the best land that suited green revolution technology. By monopolizing the first green revolution the already-rich were able to monopolize more land and become richer.

By the 1970s, the negative verdict on the experiment had come in. Over 70 million were still starving; another 500 million were chronically hungry. The overwhelming majority of the world's poor live as landless rural workers, squatters, share-croppers and small peas­ant farmers on plots of land of less than five hectares (one hectare equals 2.47 acres). Meanwhile, the wealthiest 20 per cent of landowners in the Third World control between 50 and 60 per cent of all crop-land.

That's when Robert McNamara - the American Defense Secretary during the buildup of the Vietnam war, born again as the development-prophet presi­dent of the World Bank - recognized a potentially explosive predicament. An 'increasingly inequitable situation will pose a growing threat to political stability,' he warned the governors of the World Bank meeting in Nairobi in 1973. Mindful that twentieth century up­heavals had frequently grown out of rural unrest, he insisted it was time the World Bank and Third World governments measured the 'risks of reform against the risks of revolution'.

In Nairobi, McNamara outlined a five­year strategy for assisting small peasant farmers: 'integrated rural development'. Small producers could increase food production with more credit and assis­tance in adopting modern agricultural techniques. As a result there would be less rural poverty, more rural employ­ment, less migration to urban slums, more food for domestic consumption, less need to import foodstuffs, and thus, more foreign exchange for urban and industrial development.

McNamara's Nairobi speech is now seen as a landmark - the beginning of what development pundits call the 'basic needs' phase of international develop­ment. The previous phases of 'reconstruc­tion' and 'development' had by-passed the poor. McNamara explained that traditional aid - the construction of economic infrastructure such as hydro­electric dams, roads, airports and communications networks - had 'aimed primarily at accelerating economic growth (which) benefitted mainly the upper 40 per cent of the population'.

In contrast, 'basic needs' aid - a term coined by the 1976 International Labour Office assembly on Employment, Growth and Basic Needs - tries to eliminate 'absolute poverty' by meeting the minimum needs of the most destitute. Programs to extend employment, education and basic health care supplement the linch-pin basic needs strategy of rural development, thus making the latter an 'integrated' approach.

Since the Nairobi speech, the World Bank's funding for rural development has quadrupled. Between 1974 and 1978 the bank made over $5.3 billion worth of loans compared to only $100 million spent annually on rural development in earlier years.

*Top billing*

Today the new concepts of rural development and 'basic needs' have top billing in the programs of regional development banks. Aid programs of the industrialized countries have also fallen quickly into the 'basic needs' approach.

Many Third World governments (even those perennially indifferent to their rural poor) go out of their way to shape rural development programs to fit the favoured funding criteria. In a few short years integrated rural development and the basic needs approach have become global development fads.

Aid-watchers in the developed countries hold high expectations that the lofty rhetoric of the new aid signi­fies a quantum advance in its quality; that commercial motives behind aid are being replaced by real concern for the poorest. Boiling down the rhetoric, however, there's little left to rejoice about.

In fact, not much has changed. Three­quarters of the World Bank's loans still go to commercial developments - (electric power, railroads, highways, mining and manufacturing projects) - which make investments by transnational corporations in the Third World both possible and profitable. The Bank now disguises some of these traditional programs under rural development headings. They are justified as necessary infrastructure for the development of the countryside.

Despite all the talk of aiding the small peasant farmer, 75 per cent of the World Bank's agricultural credit still goes to medium and large landowners. In Latin America that means that much of the bank's largesse supports the seven per cent of all landowners who possess 93 per cent of the arable land.

And substantial aid still flows to large­scale, export agriculture instead of small­scale, domestic food production. In 1978 alone, the World Bank extended $258.5 million in loans for non-food crops such as tea, tobacco, jute and rubber and an additional $221 million for food crops such as vegetables, sugar and cashews explicitly designated for export. In Latin America, a startling 70 percent of the bank's agricultural credit subsidizes livestock production to satisfy the tastes of local elites and serve rich world dinner tables.

Meanwhile, the funds remaining for small food producers will do nothing for the millions of landless peasants in the Third World. Although they are an estimated 35 per cent of the active agricultural population, the landless are written off as poor credit risks - and are excluded from rural development schemes because they lack the means of producing food.

Nor will the landless, or those peasants with subsistence-size parcels of land, gain greater access to the means of food production. While peasants want land reform, the new aid offers technique. As a World Bank policy paper on rural development explains, the new schemes 'put primary emphasis not on the redis­tribution of income and wealth ... but rather on increasing the productivity of the poor'. Measures such as land reform are downplayed because 'avoiding oppos­ition from powerful and influential sections of the rural community (read large landowners) is essential if the Bank's progress is not to be subverted from within'.

Small and medium-size peasant farmers who will receive rural development aid are spoken of in para­military terms as the 'target population'. They're never seen as participants, much less protagonists, of their own development. They are selected because they possess enough land to be integrated into a 'modernized and monetized' agricultural system as good credit risks. In other words, through the credit marketplace subsistence agriculture is to be transformed into commercial agricult­ure. The small producer is to become part of an 'agribusiness' system as a consumer of agricultural inputs (seed, fertilizer, chemicals, machinery, technology, etc.) and as a producer of crops suitable for further processing and national - and international - marketing.

In this way, new rural development schemes hope to cushion conflict in the countryside between the landless and the large landowners. According to Colombian economist Ernesto Parra, the plan is to create a class of 'little peasant capitalists' to act as a buffer between the impoverished many and the privileged few. Tied into the commercial agri­cultural system, the beneficiaries of the new aid will share a common interest with large landowners in increased mech­anization, the use of wage labour and the concentrated ownership of land.

In the words of a 1978 Cornell Univ­ersity study, they are 'likely to be assertive profit maximizers, politically active, determined in protecting their position'.

*Social control*

The harvest of the new aid is social control, not social progress. 'Rural development really aids agrarian capita­lists and landlords - politically, socially and economically,' concluded Rosemary Galli of Redlands University in her study of integrated rural development programs in Colombia.

But it also aids transnational agri­business corporations. Trends in develop­ment aid generally follow, not lead, the movements of private capital. Far from trail-blazing, the new aid is actually treading on the heels of an unprecedented expansion of agribusiness activity in the Third World since the 1960s. Attracted by cheap labour and land, transnational food corporations have created much of the problem that integrated rural develop­ment now proposes to solve. In Latin America, for example, per capita product­ion of subsistence crops decreased 10 per cent between 1964 and 1974 while per capita production of export crops - sector most controlled by large corpora­tions - increased by 27 per cent in the same period.

The 'modernization and monetization'' of Third World agriculture advanced by the World Bank fits nicely into agribusi­ness plans. Ready to benefit are bankers involved in rural credit services, agribusiness firms committed to the cultivation, processing and marketing of crops and livestock, and the manufactur­ers of agricultural machinery, fertilizers, pesticides, seed, feed and packaging materials. Social scientist Ernest Feder calculates that the World Bank's schemes alone will generate seven to ten billion dollars worth of sales for transnational corporations over the next few years. Once again the recipients of aid become the instruments of market expansion for developed economies.


For aid-giving nations, the rhetoric of basic needs also serves to blunt the criticism by Third World governments of injustices in the international economic system. Attention and debate are diverted from North-South issues of exploitation to the scandal of inequality within aid-receiving nations. In political terms, the basic needs approach has become a counter-offensive by the rich nations to the Third World's demand for a New International Economic Order.

After the attractive packaging of basic needs and integrated rural develop­ment is unravelled, the new aid looks very much like the old. While attempting to 'reduce unemployment, alleviate poverty and diminish inequality', it skirts the causes of underdevelopment, poverty and exploitation. In the case of land reform, for example, basic greed is the reason why basic needs will not be satisfied.

With an appearance of social progress masking a purpose of social control, the basic needs approach to rural devel­opment is the Trojan Horse of today's development aid.

*Robert Carty* is a Canadian journalist and member of the Latin American Working Group.

A Harvest of Discontent

rural development in Colombia

In the South American country of Colombia nutritional deficiencies ravage 60 per cent of all children. Here, an infant is more likely to die before the age of five than a North American adult before the age of sixty. Yet even as the country's poor go malnourished, Colombia's wealthy land­owners monopolize two-thirds of the cropland to produce coffee, sugar, cotton, beef and even marijuana for export.

In 1976, the government of President Alfonso Lopez Michelsen unveiled a program of integrated rural development (DRI) as a showcase solution to this classic rural crisis. Jointly financed by the World Bank, the Inter-American Development Bank and the Canadian International Development Agency, DRI is the largest project of its kind. The instigator of the program, Canada's International Development Research Centre (IDRC), calls DRI a 'multidisciplinary approach' to providing credit and marketing services to peasant farmers which 'could have appli­cations in other parts of the world, partic­ularly Latin America'. The World Bank views DRI as the project which most closely follows its own strategy for rural develop­ment in its 'basic needs phase.

It also most clearly reflects the pitfalls of the new aid panacea.

To begin with, DRI excludes a large segment of Colombia's rural poor. One million landless peasant families and another one-quarter million small producers are judged to be poor credit risks and unlikely generators of expanded food production. They get no DRI aid.

The integrated rural development program ignores (in fact substitutes for) land reform. It replaces a harmless twelve­year land reform program which redistributed only 1.6 per cent of the large estates. Instead of land reform, DRI expects three quarters of the rural population to improve its production while being content with a mere 7.2 per cent of the cropland.

But the peasantry is far from content. Throughout the 1960s, peasants supported rural guerrilla movements. In the 1970s, they formed strong peasant federations and between 1971 and 1974 saw 35,000 of their members imprisoned and over 200 assassinated by military authorities and large landowners in struggles for more land. They are unlikely to be content with a selective rural development program that perpetuates the kind of inequality where the cattle of the rich graze off twice as much land as the average peasant family tills for food.

Peasant leader Juan de Dios Torres says the DRI integrates 'the World Bank's interests with the interests of the latifund­istas (huge estate owners).' He charges that DRI seeks to protect Colombia's large land­owners and their export agriculture while co-opting some peasant farmers and under­mining the peasants independent organiz­ations. DRI is being applied specifically in regions with chronic political tensions, militant peasant organizations and sporadic guerrilla activity, But Torres claims the massive rural development plan will fail without land reform.

DRI's ultimate failure may not be so much in its planning as in its politics. Colombia's new president, Julio Cesar Turbay Alaya, has decided to stress energy and industrial progress instead of rural development. To contain the continuing political unrest he has turned from the politics of reform to the politics of respression.