The New Deal
issue 262 - December 1994
The new deal
Mahbub ul-Haq is the closest thing to a visionary that the UN system possesses. Cutting through the bureaucracy and conservatism of the UN Development Programme, he has launched the Human Development Report, which annually criticizes both governments and agencies like the World Bank for their neglect of the key elements of human well-being – health, education and a decent living wage. Chris Brazier listens to his ideas for remaking the world.
HAQ: The UN needs to fundamentally redefine its mandate and Charter for the future. When the UN was set up in 1945 it had two mandates. One was political security: maintaining peace. The second was socio-economic security. Even at that time the US Secretary of State said the battle for peace has to be fought on two fronts: freedom from fear and freedom from want.
BRAZIER: At that time he wasn’t thinking the whole world was going to come under the aegis of the UN...
That’s right – at the time the UN had only 51 members – now it has 184. It was a time when the Cold War was starting and the first pillar of security seemed the more important. Still the vision was clear: ‘No provisions that can be written in the Charter will enable the Security Council to make the world free from war if men and women have no security in their homes and in their jobs.’
In its first 50 years a lot of the UN’s attention went on political security. In the next 50 years a lot more attention is going to have to be paid to the security of people in their homes and jobs, their streets and their communities. In the last three years we have had 82 conflicts – defining conflicts as ones in which more than 1,000 lives were lost. And out of those 82 conflicts, 79 were within nations and only three between nations. These are conflicts between people and ethnic groups rather than between countries.
Doesn’t that indicate the collapse of the nation-state?
It indicates failing states with failed development strategies and rising socio-economic disparities. These ‘ethnic’ struggles are not over ethnic values – they are struggles over limited jobs, declining opportunities and who is getting them. At heart the struggles are socio-economic.
So you think that if we address the socio-economic needs of those people we can carry on living with the concept of the nation-state? That concept is pretty fundamental to the way the UN is structured at the moment...
That is true. Of course the character of nation-states has changed – their power is a lot more decentralized. The days of very centralized nation-states in the developing world – which could only be maintained through a good deal of authoritarianism – are over. There are so many ethnic groups, regional tensions and fights for resources that probably government can only succeed if it is taken closer to the people.
In many ways I see the current situation, which is generally seen as collapse in Africa and elsewhere, not as dreadful but as a healthy sign of democratic change. There’ll be tremendous trauma because unfortunately the change is coming at a time of declining incomes, fewer jobs, limited opportunities, tremendous fights over resources. But I don’t think these countries were in a better state ten years ago just because some authoritarian ruler was able to suppress all social movements.
It’s been worse this year in Rwanda than it was ten years ago...
Yes, there will always be places like that. But in most cases the situation has moved towards pluralism and democracy. Take Latin America – ten years ago you could hardly find a country in which there was not a military dictator. Now you can barely find a country in which elections have not been held. Take Asia. Ten years ago many of these countries were under martial law – the Philippines, Bangladesh, my own country Pakistan. Democracy is a struggle for them but at least the checks and balances are emerging and accountability is coming slowly.
This has taken us some distance from the United Nations...
I think the UN has to do a number of things. First, it has to recognize conceptually that the security of people is just as important as the security of nations, that the conflicts now are within nations rather than between them. Second, it must develop an early-warning system of preventive development and preventive diplomacy. The UN cannot prevent these disasters unless it can forecast five, ten years earlier what is going to be a future Somalia, Rwanda or Bosnia. Otherwise it will always be too late and the costs of being too late are very high.
The third thing the UN will have to develop is new guidelines for intervention. At the moment intervention is largely decided by superpower whims – whether to intervene in Somalia and not in Bosnia, whether the French should go to Rwanda. If the UN is not to become a new multilateral imperialism invoked by superpowers I think new guidelines have to be discussed by the Security Council. When to intervene, how to intervene and for how long. Otherwise we’re back to the whole philosophy of colonialism which was ‘the natives can’t handle it, let’s go in and teach them’.
Fourth, the UN must move aggressively on disarmament in the developing world. Since 1987 global military spending has gone down – but not in the developing world. The two regions where it has gone up rather than down are the poorest – sub-Saharan Africa and South Asia. In South Asia alone, my own region, Pakistan and India spend 20 billion dollars a year on defence but people are sleeping on the pavement. India and Pakistan in the last four years bought twice as many arms as Saudi Arabia, even though Saudi Arabia is 20 times richer. And who sold them? The five permanent members of the Security Council supplied 86 per cent of them.
Disarmament has missed out the Third World and yet that is where the wars have recently taken place. There have been 120 conflicts, major and minor in the Third World since the Second World War and 22 million people have died – more Third World people than ever died in the Second World War. And we call it an era of unprecedented peace: that’s because the blood spilt was Third World blood and not European and American blood.
I’m interested that these key points of your vision of what the UN can be and do are so related to the security situation rather than to a new international economic order...
I think if the new international economic order comes it will be through the strength of the developing world, not through charity. The objective of the 1970s was not wrong – of course we need more equity between nations and between people. But the tactics were wrong. Developing countries reached out for international justice while denying economic justice to their own people. That was hypocritical. Indeed they were buying arms with one hand from the very countries from whom they were demanding economic concessions with the other.
The vision of the 1990s is totally different from that of the 1970s. Basically aid is going to be phased out – it’s a reality of the past and not of the future; you can’t base the future of nations on charity. So I don’t think aid, dialogue or some tremendous transfer of concessional resources, which was the vision of the 1970s, is pertinent.
The dialogue of the future is about more access to global opportunities for trade and investment and migration and the free movement of the market. I believe that applying market principles internationally would favour developing countries.
You do? They might not agree with you...
The advantage of the market is with the developing world because they have much cheaper and increasingly more skilled labour. Whether it is computer technologies or other technologies of the future they can master them because there is six times more educated output in the developing world than in the industrial world. If intelligence is randomly distributed in the world there is no reason to believe that they can’t outcompete the industrial world despite the advantage of capital.
Basically capital will have to move towards these developing countries to combine with their labour because of the demographic revolution. Last year 95 per cent of the new babies were born in the Third World and only 5 per cent in industrial countries. Once world population stabilizes this will be the reality of the late twenty-first century. And as such the advantage will shift towards the developing countries if they can get people educated and give them skills. That is what East Asia has done and it has taken only a short time for countries like Thailand to be just dancing around investing in people – this is the real human-development model.
How does this faith in the free market differ from what the World Bank or the IMF might say?
Because I would then say you have to be consistent. Any countries which violate market principles and erect trade barriers should compensate; any countries which erect migration barriers should compensate; any countries which harm the environment should compensate. Just as polluters pay domestically so polluting nations should pay internationally. If you apply market principles in this way then developing countries could gain a five to ten per cent transfer of resources. They have been fighting for 0.7 per cent of aid for so long as a charity principle – they should chance the market principle.
But aren’t developing countries going to have to fight for this too? It seems very optimistic to think that all will come right if the market is allowed to operate freely. It’s the kind of view one might find coming out of an extreme right-wing thinktank.
The markets at the moment are being allowed to work only where they favour the rich, not the poor. Just think about the implications of an environmental market. Nobody can pollute the global environment without having to pay for it – and rich countries produce 80 per cent of global emissions. That principle is going to come sooner or later – there’s no other way to end pollution. It’s not going to be done by treaties or by agreements because they don’t have any force. Ultimately it’s going to be done by the price mechanism.
And is the UN going to be the agent of that?
Unfortunately no industrial country talked about this kind of market mechanism at the time of the Earth Summit. But now let’s take the migration market. Milton Friedman and the Chicago School argued that labour should be totally free, should be globalized. If people were allowed to work anywhere then developing countries could gain today between 300 and 500 billion dollars a year in transfers compared to the 60 billion dollars they get in aid. In India, Pakistan and Bangladesh the remittances they’re getting in even today from workers abroad are larger than their development assistance – and these are untied and don’t have to be repaid.
Can we come back to the UN specifically?
The UN has to be more active on disarmament in the Third World. One of the indicators of potential trouble spots is the ratio of military expenditure to social spending – how much a country spends on armies and how much on the health and education of its people. We looked back at 1980 to see which countries had the highest ratio. Number one was Iraq – eight times more on military than on education and health. Number two was Somalia – five times more. Number three was Nicaragua, three-and-a-half times more. Within a decade these countries could neither protect their national security, for which they were getting all these arms, nor their human security. And the countries that supplied their weapons in 1980 were itching to get in a decade later to collect them. Now surely some action could be taken at the Social Summit [next year in Copenhagen] to keep arms out of the most vulnerable countries. If nothing else they should agree to stop arms shipments to Africa.
Would you like to see UN development work more centralized?
Yes. I have been advocating an integrated UN development authority. If we were setting things up now we would unquestionably have one strong UN development authority with a strong human-development message and more than five billion a year in grant money, not in loans. Yet we’ve split it up into five development funds and many specialized agencies. I would like to see how efficient the World Bank would be if it were split into 20 agencies – one for population, one for education and so on, in 20 different cities with 20 different governing councils and 20 different leaders.
But at least when there are so many agencies some of them can do good work while others are going down the pan. If you merged them it might all go bad.
I’m not so sure – that depends entirely on the leadership. Of course from the Secretary-General down the methods of choosing leaders are very politicized. And certainly if there were one UN development authority then you would need a very powerful leader. But I believe in institutions. Institutions can survive and can be strong even when they are at times not blessed with the best leaders. The World Bank has always remained strong whether it had McNamara or Clausen at the top. But you can’t have 20 different agencies fighting for turf with very little money and different guidelines. We need one development message, one development office, one field office.
We’ve got to get our act together. Even if we don’t integrate we have to have much better policy co-ordination and work under the same umbrella rather than amid the current confusion.
Would you want to be head of a new centralized development agency? I’ve heard rumours that you’ve been angling for the directorship of a specialized agency...
No. I want to get home next year. My objective in the UN was to create a ferment of ideas and to make policy-makers uncomfortable. Basically I’ve enjoyed myself thoroughly over the last five years. I don’t think the international world has enjoyed it so much – they’ve been extremely uncomfortable at times. But I wouldn’t accept any institutional position now. I want now to see what I can do for my own country and that’s where the real test will come, whether I can apply any of my ideas.
Are you planning to go back to being Finance Minister in Pakistan? What do you say to the charge that you failed to put your human-development principles into practice when you had that role before?
Yes, many people think I’m only producing the Human Development Report in order to atone for my failure with this human-development business as a minister. I’ve been asked several times in the last five years to go back as Finance Minister. I didn’t want to do that – I lived through that experience for eight years and I was not able to do very much. I did accomplish some things but I was part of a very élitist system dominated by landlords in the Assembly, by élitist groups in the Government, and by the Army, which would not let any trade-off take place between military and social expenditure. So the options were really hemmed in. While I can and might go back to the Cabinet I want to keep a good deal of independence this time.
I want to see if I can bring some pressure to bear in South Asia for a new deal. Things have been happening all over the world – even the IRA may be giving up arms and looking for a political settlement. Why not India and Pakistan? Why not a farewell to arms and more human development? The stakes are very high and my feeling is that the time is coming when there will be a new deal for the billion people in South Asia. That’s what I want to commit myself to for the next five years.