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Development (Aid)
Sri Lanka

new internationalist
issue 183 - May 1988

The term development covers everything from providing
clean water to building luxury apartments. The orthodox view is
that big development projects with big money behind them are
the best way to i
mprove the lot of a large number of people at once.
But a close look at these mega-projects raises the question
of just who they are intended to help.

BRAZIL: Polonoroeste Project
Project Goal: The Polonoroeste Project, started in 1982, is Brazil's largest experiment in land reform. It involves plowing a 1500 km highway plus dozens of access roads through the heart of the Amazon Basin. A massive advertising campaign offering free lands and support services attracted tens of thousands of Brazilians to this new frontier. Polonoroeste was designed to relieve population pressures in Brazil's crowded cities and to provide land to migrants from the south who had been displaced by new farm machinery.

Costs and Donors: The World Bank committed $443 million in loans to Brazil for the project. The Inter-American Development Bank also promised funds, but cut back under pressure from environmental groups.

Winners: Large landowners bought massive deforested parcels of land from the impoverished migrants and converted them to cattle pastures. Some industries found the denuded forests suitable locations for factories. The Brazilian government temporarily relieved growing popular pressure for land reform in the south by opening new lands for agriculture.

Losers: The migrants who were lured to the area soon found the lands to be unsuitable for settlement and agriculture. After one harvest season, the cleared rainforest lands ceased to produce and thousands were forced to abandon their plots and turn to wage labour in local factories or on cattle farms. In the worst hit areas, as many as 80 per cent of the migrants sold their lands and pulled up stakes. To date Folonoroeste has destroyed an area of tropical forest the size of Britain with incalculable costs to people and the environment. The 34 indigenous tribes native in the area have been hard hit by exposure to disease and the loss of their traditional style of life. Also threatened are hundreds of plant and animal species unique to the rich rainforest eco-system.


SRI LANKA: Mahaveli Irrigation Program
Project Goal: Launched in 1978, the irrigation scheme was designed to help modernize agriculture and manufacturing in Sri Lanka. The project involved building three dams along Sri Lanka's 300-kilometer Mahaveli River and constructing power stations to triple the country's energy-generating capacity. The program also involved irrigating 120,000 hectares of new land and the resettling of 1.5 million people.

Costs and Donors: The program is financed primarily by Great Britain, Sweden and West Germany, each giving around $100 million. Much of the financing came in grants, but large sums also had to be borrowed on soft' commercial terms to make up the difference. The program has been plagued with financial problems and the budget has nearly doubled to $14 billion. To meet the spiraling costs the Sri Lankan government has raised taxes and cut food subsidies.

Winners: Most construction contracts were awarded to companies in the donor countries who employ expensive foreign personnel and machinery. Most of the newly-irrigated land was leased to foreign companies using expensive imported machinery and very little Sri Lankan labour.

Losers: Small farmers are being forced off their land as thousands of acres are lost to make way for dams and reservoirs. Nearly 1.5 million people have been forced to resettle on small plots of forested land 90 km away from their homelands. The meagre compensation for lost crops and the cost of land-clearing and new houses has already been cut by a third by the financially-stretched government. The scheme threatens the habitat of many rare animals (the Indian elephant and the leopard) as well as 35 plant species native to the river valley. Already two of the three dams have had to undergo frequent repairs.


SUDAN: The Gezira Agricultural Project
Project Goal: Gezira is the Sudan's prime cotton-producing area covering two million acres and accounting for most of the nation's export earnings. A multi-million dollar World Bank project was designed to modernise cotton production and reverse falling yields and low productivity that have plagued the Gezira.

Costs and Donors: The World Bank lent $50 million to Sudan to finance the purchase of pesticides and herbicides for one season. The Bank of Sudan put up millions for heavy machinery, fuel and repair work.

Winners: The contracts to supply the pesticides and herbicides went to multinational chemical companies. Some of these products were selling poorly on the international market due to restrictions limiting their use because of the health risks. The project has given at least a temporary boost to cotton production.

Losers: The heavy promotion of pesticides by the chemical industry undermined the government's pursuit of alternative pest management schemes. Farmers spent large amounts of money (25 to 30 per cent of the total production costs) for chemical inputs and have become increasingly dependent on these chemicals to combat infestation. The DDT and Malathion applied to cotton fields by aircraft has drifted into mosquito-breeding habitats, creating strains of malaria-carrying mosquitoes resistant to conventional treatment.


BANGLADESH: Food Aid Program
Project Goal: As part of the US government Food Aid Program, tons of imported food was sold at a very low price to the Bangladeshi government. The food was supposed to alleviate widespread malnutrition and unload surplus wheat from US grain reserves. About 1.6 million tons have been sent under the program.

Costs and Donors: About one quarter of Bangladesh's foreign aid comes as food aid. The US is the leading donor and spends approximately $200 million per year on subsidizing food sales. About 60 per cent of all food aid is bought by the Bangladeshi government at extremely low cost. The government in turn sells the food to its supporters at subsidized prices through its ration system.

Winners: Members of the civil service, police force and the military receive a disproportionate amount of the rationed food with more than 50 per cent of the total going to the urban middle-class who hold ration cards. The government maintains support in the cities by keeping food prices low for working class people. The US government and farmers benefit by unloading grain surpluses and by keeping prices artificially high.

Losers: Ninety per cent of Bangladesh's population, including the most malnourished, live in the countryside. But only 22 per cent of the rationed food reaches them. Food donations have also undercut the demand for locally-grown food and lowered prices received by farmers. The introduction of wheat as food aid has shifted local consumer habits to new products which are not produced locally.


GUATEMALA: Alimentos Congelados Monte Bella, S.A. (ALCOSA)
Project Goal: A subsidiary of the US multinational, Hanover Brands, contracted with small farmers to grow broccoli, cauliflower and several other vegetables. The project was intended to increase local food production and establish stable markets for small farmers. ALCOSA provided farmers with credit, technical assistance and an assured price in exchange for the exclusive right to buy their harvest.

Costs and Donors: ALCOSA, owned by US-based Hanover Brands and operated by Guatemalans, received US Agency for International Development (AID) funding through an intermediary agency, the Latin American Agribusiness Development Corporation (LAAD).

Winners: ALCOSA and Hanover Brands gained a steady source of low-cost produce for export. The contracts required farmers to sell their entire harvest to ALCOSA, but ALCOSA was not obligated to buy everything the farmers produced.

Losers: Guatemalan farmers took land out of corn and other local food crops to grow the ALCOSA contract products. The farmers' production potential was underestimated by ALCOSA and a sudden glut of cauliflower forced ALCOSA to stop buying the product. Farmers were forced to sell on local markets which were soon flooded with the vegetable. Prices plummeted and participating farmers lost an average of $177 each - a good part of a year's income. The cash-poor farmers were in no position to switch back to local food crops.

Sources: Guatemala, Aid as Obstacle, Food First, J. Collins et al.; Bangladesh, The Ecologist, Vol 15 #5/6 1985, A Quiet Violence, Betsy Hartman et al., Brazil, New York Times, Oct 17, 1984; Sudan, Cultural Survival Vol 10 #1 1986.

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New Internationalist issue 183 magazine cover This article is from the May 1988 issue of New Internationalist.
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