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Pulling The Plug


Illustration by VLADO PALANKOV
the plug
Canadians have long been exemplary donors – the ‘Scandinavians of North America’.
Mark Fried watches as the Government changes course and aims to hit rock bottom.

[image, unknown] Aid has been drained of its ability to combat poverty, by being used for other purposes altogether.

On 19 August last year, deep in Guyana’s tropical rainforest, an earth dam collapsed at the Omai gold mine operated by a Canad-ian company, Cambior. Several hundred-million gallons of cyanide-laced water poured from a tailings pond into the mighty Essequibo River, the source of most of the country’s drinking water and site of its principal fishery. It was Guyana’s worst public-health disaster and one that was entirely predictable. In fact, Guyanese activists had predicted it five months earlier.

The Canadian High Commission in Georgetown was quick off the mark with a flurry of public-relations manoeuvres that included flying in government water-quality specialists from Ottawa. In Canada the story lasted two days before being relegated to the inside of the business pages. But in the sudden rush of attention, reporters uncovered a curious fact: the Canadian International Development Agency (CIDA) had picked up the tab for training Omai’s workers.

Here is the sort of revealing detail journalists seek: precious aid dollars used to subsidize the profits of a predatory corporation. Promotion of mining technology is a key plank in Ottawa’s export-oriented economic strategy; but why would Canada, with its enviable reputation as the enlightened ‘Scandinavia of North America’, be a party to such a venture?

Pierre Pettigrew shed some light on this question when he addressed parliamentarians for the first time on 13 June. Pettigrew is Canada’s minister for international co-operation, a cabinet-level post created in January in a move that development workers hope will raise the profile of the aid portfolio. A long-time Liberal Party advisor plucked out of a Montreal investment firm, Pettigrew made an impassioned pitch for the generous internationalist spirit that has guided Canadian policy toward the developing world since 1969. That was the year Prime Minister Lester Pearson set the UN-sanctioned goal for wealthy countries of contributing 0.7 per cent of their GNP to development assistance.

‘Those of us who are turning inwards,’ Pettigrew warned, ‘who want Canada to stop helping others, forget that our prosperity depends on a stable international environment... The best way to jeopardize all that we have is to abandon the rest of the world to its fate.’ Then came the line reporters were waiting for: aid would not be exempt from ‘contributing to the Government’s deficit-reduction efforts’. Over the coming two years, he said, CIDA would lose an additional 11.5 per cent from its budget, after suffering a 15.5 per cent cut in 1995. By 1998 total aid spending would be a full 45 per cent below the level of 1991. Pearson’s 0.7-per-cent benchmark is receding so far into the distance it seems ludicrous: in 1998 Canada will contribute 0.24 per cent of GNP to development assistance, its puniest effort since 1965.

Pettigrew did not dwell on the numbers. He pointed to the improved economies of developing countries, improvements Canadian aid helped create – and the opportunities this presents for Canadian business. He echoed the Government’s 1995 white paper, Canada in the World, which names ‘the promotion of prosperity and employment’ in Canada as the first objective for Canadian foreign policy, and justifies foreign assistance because ‘it connects the Canadian economy to some of the fastest-growing markets of the world’.

Pettigrew praised the high percentage of Canadian aid spent in Canada – nearly 70 cents in the dollar – boasted that 85 per cent of this year’s aid programmes will be delivered by private firms, and cited the profitable spin-offs for the private sector from development projects. In this regard, he mentioned the Montreal-based Bom-bardier Inc which participated in a CIDA-funded programme to train Romanian officials to privatize state enterprises, and then won a contract to sell aircraft to the privatized companies.

Business-promotion justifications for aid are a logical answer to attacks from the deficit hawks. But has the domestic justification taken on a life of its own? Looking at Guyana the answer seems as clear as the Essequibo River used to be. But once you dive below the surface, other facts complicate the picture. CIDA’s grant to Cambior was just a tiny portion of its Guyana programme, which also funds the country’s indigenous-rights organizations, including some of the very activists who predicted and denounced the mining disaster. Trade promotion may threaten to swamp other aid objectives, as some critics claim, but the story is far from simple.

Canada received kudos from aid workers when it reinstated official development assistance to Cuba in 1994, much to the chagrin of the United States. The first shipments to arrive in Havana consisted of desperately needed food, medicine and vitamins. In the two years since, however, nearly half of Canada’s assistance has gone to Canadian companies seeking to do business on the island: paying for feasibility studies for ventures suggested by Canadian firms, training workers or providing social or environmental assessments for ventures already underway.

CIDA classifies this aid as ‘private-sector development’, and it follows from the enthusiastic embrace given by certain top bureaucrats to the neo-liberal notion that the market ought to replace the state as the engine of development. Of CIDA’s six broad goals, private-sector development received the largest share of the bilateral budget last year, while suffering the least in cuts. The other five are: basic human needs; human rights, good governance and democratic development; the participation of women; environmental sustainability; and public participation. Citing corporate Canada’s expertise in rural electricity, energy and telecommunications, the Government also added a seventh goal – building infrastructure – despite CIDA’s own conclusion that such projects rarely contribute to the reduction of poverty.

Certainly not all of CIDA’s trade-promotion is as overt as the Romanian or Guyanese examples. Much of its efforts seek to create ‘an enabling environment’ for the private sector. For example, the modest bilateral package soon to be announced for Cuba will help design a new tax system and reform of the central bank to ‘assist the transition to a market economy’. Similarly a portion of aid to South Africa, where Canadian business is anxious to make inroads, funds macro-economic policy development so the country can better meet the requirements of the inter-national financial community.

Getting free-market policies right, these aid officials believe, will do more to relieve poverty than either funding social services or community-based production, even while, officially, CIDA is critical of structural-adjustment policies for the inequities they engender. That private-sector development also provides a helping hand to Canadian companies is simply evidence of the happy marriage of development assistance and business promotion.

The pro-business bent has other implications where the largest chunk of Canada’s aid (41.3 per cent) is spent, in sub-Saharan Africa. Outside South Africa, trade potential is nil and countries risk falling off the map. Namibia for example was promised a five-year, $10 million package following independence in 1989. Two years later, when trade promotion was elevated to a key foreign-policy goal, Namibia was declared not to be a priority and the programme was axed. Only after intense lobbying by Canadian NGOs was some assistance reinstated, amounting to $0.5 million for 1997.

Though vocal and politically powerful, market ideologues are still a minority at CIDA. The Government’s pro-business drift has not stopped the Agency from adopting some of the world’s most forward-looking development policies. Canada supports dynamic human-rights work in Indonesia, Guatemala, South Africa and elsewhere, programmes that challenge the status quo in ways unimaginable a few years back. All CIDA programmes are now required to include a gender analysis and strategy.

The Government has instructed CIDA to increase its spending on basic human needs to 25 per cent of the total budget. According to the independent North-South Institute, such spending now accounts for just over 10 per cent of the budget (CIDA claims 20 per cent), about half of which goes through Canadian non-governmental organizations (NGOs). The marketeers don’t oppose such spending, but tend to view it as a safety net to prevent the inevitable negative consequences of market-led growth, rather than a catalyst in the development process. Scrambling to meet the 25-per-cent target, CIDA statisticians are counting the mushrooming category of emergency relief, which may alleviate suffering but is hardly a contribution to long-term development. Spending on disaster relief (now 9.1 per cent of the total aid budget, the third largest category) is rising not only because there are more disasters to attend to, but because it is readily saleable to the Canadian public. In addition, food and other emergency assistance can easily be tied to purchases in Canada; indeed food aid is nearly always ‘tied’ aid.

What threatens to denigrate Canada’s assistance programme is less the size of the pie than the ideological drift of trade-crazed politicians and their counterparts in the aid bureaucracy. Most CIDA personnel are defensively focused on providing evidence of ‘effectiveness’ – a lot of evaluations of progress with little attention to the goals sought – leaving the battle over how to distribute the cuts to be fought out between the coterie that views the market as saviour, and the quieter but more numerous officials who favour an equilibrium between state, market and civil society.

By now the chemicals spilled in Guyana’s rainforest have broken down or been absorbed into the food chain. Since Omai is the largest employer in Guyana, poisoning the river system did not prevent the mine from reopening a few months later with no change to the disastrous technology in use. Gold exports are again defraying the country’s crushing debt load and several hundred people have steady work. Downstream from the mine, where villagers have no choice but to drink the water and eat the fish, the fallout from Canada’s trade-promotion aid is only just beginning.

Mark Fried is a writer and translator living in Ottawa. His day job is at OXFAM-Canada.

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©Copyright: New Internationalist 1996

New Internationalist issue 285 magazine cover This article is from the November 1996 issue of New Internationalist.
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