A core element of U.S. anti-drugs policy in Colombia has been the destruction of coca fields by aerial chemical fumigation thus impacting the cocaine trade at its source. The continuation of this policy is based on three core myths: (1) That fumigation can target coca fields with pinpoint accuracy; (2) That the chemical used is harmless to humans and the environment; and (3) that aerial chemical fumigation is an effective method of eradicating coca cultivation.

Does Aerial Fumigation Accurately Target Coca Crops?

It is claimed that aerial fumigation uses satellite and computer technology to target coca cultivation with pinpoint accuracy. This has been disputed by international NGOs, indigenous leaders and the National Environmental Justice Advisory Council (a Federal Advisory Committee to the U.S. Environmental Protection Agency) who have stated that subsistence crops, livestock, villages and sometimes even schools and churches have been sprayed with chemicals during the fumigation process.

One almost unbelievable event occurred in December 2000 when the late Senator Paul Wellstone, a democrat from Minnesota and a fierce opponent of Plan Colombia, was invited by the U.S. embassy in Bogota to witness the accuracy of aerial fumigation in person. When the planes flew overhead Wellstone, the lieutenant colonel of the Colombian National Police, the US ambassador to Colombia, and other embassy and congressional staff were drenched with the chemical spray. After this PR disaster Wellstone’s spokesperson, Jim Farrell, noted; “Imagine what is happening when a high-level congressional delegation is not present.”

Is Aerial Fumigation Safe for Humans and the Environment?

The herbicide used for aerial fumigation of coca is called Roundup, originally patented and produced by controversial U.S. agri-corporation; Monsanto. Monsanto has always maintained that Roundup is a mild herbicide that is “biodegradable” and of no risk to human health or the environment. In 2009, however, a French court ruled that Monsanto had been lying when making these claims in its advertisements for the herbicide.

The active ingredient in Roundup is a chemical called glyphosate that is classed as “dangerous to the environment” and “toxic for aquatic organisms” by the European Union. Independent scientific studies have shown that low levels of glyphosate exposure causes human DNA and Cell damage,  kills human placental, umbilical and embryonic cells in less than 24 hours and causes liver damage and large tumours in rats. In Argentina a study demonstrated that glyphosate based herbicides caused the same specific neural birth defects and craniofacial malformations in chickens and amphibians as those complained about by people most exposed to crop spraying. This prompted the Chaco Government to investigate and in 2010 their report found that since the use of glyphosate based herbicides began in 2002 the communities most exposed had experienced an alarming increase in birth defects, spontaneous abortion and leukaemia, brain tumours and lymphomas in children under the age of 15. Two separate studies in Sweden have linked Hairy Cell Leukaemia and Non Hodgkins Lymphoma to Glyphosate exposure. In the Western world, Non-Hodgkins lymphoma is the most rapidly increasing cancer and in the U.S. it has risen by 73% since 1973, three years after Roundup was first introduced to the market.

In the production of glyphosate herbicides (of which Roundup is by far the most common) other ingredients are added to increase their effectiveness and it is claimed that these additives are harmless and inert. It has been discovered, however, that Roundup is far more toxic to human cells and DNA than its active ingredient alone. In fact, the toxicity of Roundup’s various varieties does not directly correlate to the amount of Glyphosate they contain meaning that the apparently ‘inert’ additives must include toxins. These additives often come under far less scrutiny and testing than glyphosate alone and often they are protected as “trade secrets”.

The adverse health effects uncovered in the studies mentioned above were based on concentrations of glyphosate based herbicides far below the levels used in U.S. agricultural production. In Colombia, however, the strength of the herbicide used for spraying is far beyond normal agriculture use. This is because two specific additives (Cosmo-Flux 411 and Cosmo InD) are added increasing Roundup’s toxicity four-fold. In addition, the concentrations in the mixtures prepared by the Colombian military (under the guidance of their US colleagues) are five times higher than is recognised as safe for aerial application by the US Environmental Protection Agency.

Given these facts, it is not surprising that people have started to call Roundup ‘Colombia’s Agent Orange.’ After all it was Monsanto that created and produced the defoliant Agent Orange that was sprayed on civilians, Vietcong and U.S. soldiers during the Vietnam War. Agent Orange, like Roundup, could strip jungles to the ground but was still marketed as safe to humans by its main distributer; Monsanto. In fact, it later emerged that Monsanto had known of Agent Orange’s toxicity years before but had covered it up.

In Colombia the symptoms complained about by people affected by aerial fumigation are worryingly similar to the initial symptoms of Agent Orange exposure; acute respiratory problems, conjunctivitis and other eye infections, miscarriage, dizziness, headaches, rashes, dermatitis, impetigo, abscesses, abdominal pain, diarrhoea and vomiting and the fact that children seem to be particularly effected. The gradual emergence of evidence linking glyphosate based herbicides, particularly Roundup, to various forms of cancer, birth defects and foetal malformations arouses an uncomfortable sense of déjà vu and raises serious concerns regarding the yet unknown human health and environmental implications of aerial chemical fumigation in Colombia.

Is Aerial Fumigation Effective in Eradicating Coca Cultivation?

As well as the clear human health and environmental risks involved in the fumigation campaign, it has also been a massive failure in achieving its stated goal; the eradication of the coca crop. Few government resources are channelled into helping farmers raise legal crops and as their subsistence crops are destroyed by chemical spraying many poor farmers are forced into some element of the drug trade. According to U.S. NGO Witness for Peace, fumigation has even destroyed U.S. Aid and U.N. funded development projects aimed at providing farmers with alternatives to coca cultivation. Coca, unlike most other food crops, is actually quite resistant to aerial spraying of glyphosate and is often seen growing back after chemical spraying where other crops will not. Therefore many farmers who have their food crops destroyed are left with few options when coca is all that will grow on their land. The result of the fumigation campaign therefore has actually been a marked increase in coca cultivation.

On Thursday 6th September the President of Colombia – Juan Manuel Santos – rejected a proposed bilateral ceasefire by FARC (Revolutionary Armed Forces of Colombia) rebels aimed at bringing an end to Colombia’s armed conflict. He declared that he had asked operations to be intensified and stated that “there will be no ceasefire of any kind.”¹ These comments bear reflection upon Colombia’s half century dirty war, the actors involved and the motives behind U.S. policies that have merely served to worsen the conflict.

Today Colombia is one of the largest recipients of U.S. military training and aid in the world. Although the U.S was involved in counterinsurgency operations in Colombia during the Cold War the continued flow of military funding and training occurred as a result of Bill Clinton’s “Plan Colombia” (2000-2006) and George W Bush’s “Andean Regional Initiative” (2008-2010) both of which were aimed at the forced eradication of coca and fighting Colombia’s left-wing guerrillas due to their involvement in terrorism and the international drugs trade. Through these initiatives billions of dollars have been spent fighting a war on drugs followed by a war on terror. Coca production in Colombia, however, has increased as has the intensity of the internal armed conflict with both FARC and right-wing paramilitary groups growing in size and strength.

Despite numerous studies concluding that the cheapest and most effective way to deal with the drug situation is to redirect funds from law enforcement and forced eradication into treatment and prevention,² the U.S. government has maintained its militaristic approach to the so called ‘war on drugs’ both at home and abroad. Given the resounding failure to achieve the stated objectives of these initiatives one must ask; is there an alternative objective, one that the current strategy achieves sufficiently?

The Neo-Liberal Effect

The U.S. has long held a policy of pushing neoliberal economic polices in Latin America. This has been achieved through NGO activity, strategically allocated aid, coercive interventions, conditions attached to IMF and World Bank loans and bi-lateral and multi-lateral free trade agreements. There is a substantial literature exposing the resultant social stratification these policies have caused in Latin America,³ but there is one particular effect of neoliberalism that has directly resulted in increased cultivation of coca for export.

The neoliberal model aims to re-orientate agricultural production to the export market. While neoliberal policies remove protective tariff barriers on agricultural goods, subsidised U.S. agricultural imports undermine the price received for locally produced crops. Larger farms and ranches with sufficient resources can move into growing export crops such as coffee but these crops are more labour intensive, require more land and cost more to transport. Many small farmers and peasants therefore find that the only area in which they can maintain a competitive advantage is in the cultivation of coca. This was evident in Mexico after the signing of NAFTA (the North American Free Trade Agreement). U.S. subsidised corn imports destroyed Mexico’s domestic production and those who could not afford to invest in the production of other export crops either switched to cultivating illicit drugs or left their land for the city where a lack of employment opportunities pushed many rural immigrants into other elements of the drug trade.

It is clear that if the U.S. wished to reduce the cultivation of coca in Colombia the most effective policy would be to redirect military aid into funding government subsidisation of legal crops. Yet the US-Colombia Trade Promotion Agreement actually prohibits such action. Under the agreement, that was signed in 2006 and came into affect in May of this year, Colombia is obliged to dismantle all of her domestic protections while the U.S. is permitted to maintain her own agricultural subsidies and thus an unfair advantage in the trade of agricultural produce. In 2010 Oxfam International commissioned a study which revealed the unequal terms of this trade agreement. It demonstrated that the agreement would lower the prices local farmers would receive for major crops such as corn and beans which, in turn, would reduce domestic cultivation of these crops and substantially impact the income and livelihood of hundreds of thousands of Colombia’s peasant farmers.⁴

Biological warfare

One major part of both Plan Colombia and the Merida initiative has been the destruction of coca fields by aerial chemical fumigation thus impacting the cocaine trade at it’s source. Glyphosate, the chemical substance used to fumigate illicit crops and known by its brand name Roundup, was originally patented and produced by the most notorious of US agricultural corporations; Monsanto. Glyphosate is classified by Monsanto as a “mild” herbicide but by the World Health Organisation as “extremely poisonous.”⁵ Roundup is sold over the counter in the US as a herbicide and there it carries these warnings: “Roundup will kill almost any green plant that is actively growing. Roundup should not be applied to bodies of water such as ponds, lakes or streams…. After an area has been sprayed with Roundup, people and pets (such as cats and dogs) should stay out of the area until it is thoroughly dry… If Roundup is used to control undesirable plants around fruit or nut trees, or grapevines, allow twenty-one days before eating the fruits or nuts.”⁶

In Colombia however, two additives — Cosmo-Flux 411 and Cosmo InD — are added increasing the toxicity four-fold and producing what is known as Roundup Ultra, or as some call it; “Colombia’s Agent Orange.”⁶,⁷ In addition, the concentrations in the mixtures prepared by the Colombian military (under the guidance of their US colleagues) are five times higher than is recognised as safe for aerial application by the US Environmental Protection Agency.⁶ This product is regularly sprayed over inhabited areas, farmland, livestock and areas of invaluable biodiversity.⁸ The National Environmental Justice Advisory Council, a Federal Advisory Committee to the U.S. Environmental Protection Agency, issued a letter on July 19 2001 stating that; “Aerial spraying of the herbicide has caused eye, respiratory, skin and digestive ailments; destroyed subsistence crops; sickened domestic animals; and contaminated water supplies.⁸ Even anti-drug development projects, including ones funded by U.S. Aid, the UN, the Colombian government and international NGOs, have been destroyed by fumigation. One of many examples is that of CORCUSA, an organic coffee cooperative founded to provide peasant farmers with an alternative to coca cultivation. CORCUSA was fumigated in 2005 and again in 2007 destroying the coffee crop and the project’s organic certification for future crops.⁹

As well as the clear human health, food security and environmental risks involved in the fumigation campaign, it has also been a massive failure in achieving its stated goal; the eradication of the coca crop. Coca, unlike most other food crops, is actually quite resistant to aerial spraying of glyphosate. Many farmers who have their food crops destroyed are left with few options when coca is all that will grow on their land after the spraying of glyphosate so the result of the fumigation campaign has been a marked increase in coca cultivation.⁹

Militarisation of the War on Drugs

The militaristic approach to fighting the drug war has intensified the conflict in Colombia. The result has been mass displacement and disenfranchisement of people which, in turn, has pushed more people into some area of the drug trade. What’s more, numerous studies dating back to the 1980’s have mutually concluded that militarising the drug war would have little to no effect on the consumption of illicit drugs in the United States.¹⁰ The effect of the militarised strategy has been a marked increase in drug related violence wherever it is initiated and there is not a more clear-cut example of this than Mexico. Before Calderon militarised Mexico’s drug war the violent crime rate was actually falling. Since this approach has been adopted, with avid U.S. support including the allocation of 1.4 billion dollars over a three year period (2008-2010) through the Mérida Initiative, the homicide rate has more than doubled, the violent crime rate has increased by more than 200% and the number of human rights abuses committed by the military in their attempts to reign in the drugs cartels have increased six-fold.¹¹

In terms of preventing the flow of drugs into the U.S. the militarised approach has one simple economic paradox at its core: by disproportionally tackling production and distribution (the supply side of the equation) without equally tackling consumption (the demand side of the equation), the price of the product is increased thus providing a greater profit incentive for people to take the involved risks in trafficking and producing illicit drugs.

War on Narcoguerrillas?

As previously stated, Plan Colombia’s original objective was the eradication of coca plantations by targeting left-wing ‘narcoguerrillas’ (FARC) who, it was explicitly claimed, were directly involved in the drug trade. Evidence of a direct link between the FARC and the illicit drug trade, however, did not emerge until the early 2000’s after Plan Colombia had been instigated. In fact, into the late 1990s, there was little evidence to suggest that the FARC’s involvement in the production and distribution of drugs extended beyond the taxation of coca cultivation in the regions it controlled. In 1997 Donnie Marshall, Chief of Operations for the Drug Enforcement Administration admitted this in a DEA congressional testimony stating that “there is little to indicate the insurgent groups are trafficking in cocaine themselves, either by producing cocaine HCL and selling it to Mexican syndicates, or by establishing their own distribution networks in the United States.”¹²

Plan Colombia, while stating the pursuit of left-wing ‘narcoguerrillas’ as an objective, did not equally target right-wing Colombian paramilitaries. While a few high profile cases of paramilitaries being tried and convicted on drug trafficking charges have occurred, on the whole, the focus remains principally on the FARC. This is despite the fact that at least as early as 1997 the DEA were aware of their involvement in narcotics trafficking. In the same congressional testimony quoted above Marshal stated that the AUC (United Self-Defence Forces of Colombia), the largest Colombian right-wing paramilitary group, has been “closely linked” to the Henao Montoya organisation; “the most powerful of the various independent trafficking groups that comprise the North Valle drug mafia” and that the AUC’s leader, Carlos Castano, is “a major cocaine trafficker in his own right.” Fumigation too has been concentrated mainly in FARC strongholds in the South East despite the fact that right-wing paramilitaries are known to be involved in cocaine production and trafficking in the north of the country. Suspicions have thus emerged that the real aim of the fumigation campaign is to remove one of the FARC’s key revenue streams (the taxation of coca cultivation in areas they control) rather than coca cultivation in general.

The disparity in treatment between right and left-wing groups has also led many critics to suggest that the U.S. tolerate and even support right-wing paramilitary activities due to their ideological alliance with U.S. economic interests in the country. In 2001 an investigation by Amnesty International led to a lawsuit to obtain CIA records of ‘Los Pepes’, a vigilante organisation set up by Carlos Castano. Its findings revealed “an extremely suspect relationship between the U.S. government and the Castano family — at a time when the U.S. Government was well aware of that family’s involvement with paramilitary violence and narcotics trafficking.”¹³

War on Drugs/War on Terror

Colombia was one of the largest recipients of U.S. military aid and training throughout the Cold War. In the Cold War era the communist threat was used to justify counterinsurgency operations against the FARC rebels whose communist/socialist roots posed a particular threat to U.S. economic interests due to Colombia’s extensive natural resources and strategic geographical location. Today, even if the idea of the FARC gaining control over the Colombian state has diminished in credibility, the rebels regularly attack U.S. interests including the infrastructure (railways, pipelines etc.) of U.S. energy and mining multinationals in Colombia. As Marc Grossman, former U.S. undersecretary of state for political affairs put it; “[Colombian insurgents] represent a danger to the $4.3 billion in direct U.S. investment in Colombia…. Colombia supplied three per cent of U.S. oil imports in 2001, and possesses substantial potential oil and natural gas reserves.”¹⁴

After the Cold War and the fall of the Soviet Union the communist threat no longer justified U.S. counterinsurgency operations in Colombia or elsewhere in Latin America. The US Military’s Southern Command (SOUTHCOM) therefore welcomed the drug war as a new justification for maintaining the same levels of military spending and counterinsurgency training of Latin American militaries and “low intensity warfare strategies employed in Central America were easily adopted to fight a war on drugs.”¹⁵ In Colombia, the FARC, previously labelled “Communist” became “narcoguerrillas” and, post-9/11, this morphed again into “terrorists.” President Bush utilised the war on terror to redefine the Colombian conflict and continue counter-insurgency operations against the FARC. Again, the target of this campaign remained the FARC despite the fact that the Colombian Army and closely linked armed right-wing paramilitary groups have been responsible for countless grave human rights abuses.¹⁶

The Historic Importance of Military Training to U.S. Foreign Policy

Military training and the cultivation of allied militaries whose interests and ideologies would reflect those of Washington has, historically, been one of the main methods of U.S. control in Latin America. Several Spanish language schools were established specifically for training Latin American officers including the notorious School of the Americas (SOA) which trained nearly every officer involved in the 1973 Chilean coup and where many members of the Colombian Army continue to train today. As well as training these officers in counter-insurgency, counter terrorism and unconventional warfare (among other forms of attack) the SOA intentionally cultivates a glorified image of “privileged capitalist modernity and a strong belief in the right-wing capitalist model.”¹⁵

What resulted from such instruction in the past was the creation of highly politicised right-wing military entities which remained allied to the state only insofar as the government in power reflected a similar ideology. Throughout the 1970’s and 1980’s this resulted in military coups overthrowing left-wing governments throughout Latin American and the Caribbean. As Latin American states transitioned to democracy the strength of these staunchly right-wing militaries (as well as well-grounded fears of U.S. military intervention) led to the establishment of ‘pacted democracies’ whereby elite and military support for the democratic transition was conditioned on the formation of certain economic parameters to be enshrined into the constitution. Despite the fact that many democratic movements mobilised on the basis of wealth redistribution these pacts generally guaranteed the continued presence of foreign multinationals in the extractive industries as well as ruling out the nationalisation of resources and the socialisation of land as policy options regardless of electoral outcomes.¹⁷ Where specific pacts did not exist left leaning elected governments remained very wary of their right-wing militaries when making policy decisions. In Chile, one of the more modern examples, even though the Concertación (Chile’s democratic movement) opposed neoliberalism, the intimidating power of the right-wing military caused them to accept a moderately reformed version of Pinochet’s 1980 constitution which enshrined the neoliberal model as well as a number of authoritarian enclaves with a bias to the political right.¹⁸

This is also the reason why very few Latin American countries, with the notable exception of Argentina, have managed to hold military personal accountable for atrocities of the past. Indeed, in many places, army personal who took part in grave atrocities continue to hold high ranking positions in the military. In Colombia this is particularly so and, as military abuses continue to this day, a culture of impunity has been created which remains a hindering factor to any potential for peace and reconciliation.¹⁹ What’s more, many high ranking members of the Colombian military trained in the U.S. as counter-insurgents during the Cold War and were then thought by their U.S. instructors to define a number activities normally associated with a healthy democracy as “Insurgent Activity Indicators.” Such ‘indicators’ listed in Manuals used by U.S. trainers included; “Characterization of the armed forces as the enemy of the people… Increased unrest amongst labourers… Increased number of articles or advertisements in newspapers criticizing the government. Strikes or work stoppages… Increase of petitions demanding government redress of grievance” and “Initiation of letter-writing campaigns to newspapers and government officials deploring undesirable conditions and blaming individuals in power.”¹⁴

The more recent move to the left in Latin America has been a success, in part, because the new generation of left wing leaders are acutely aware of the dangers the military pose. In Bolivia one of Morales’ acts as President was to raise military wages and the recent police strikes (so severe some called them a police mutiny) were partly based on the fact that police wages were roughly half those received by similar ranking military officers. In Venezuela, Chavez holds tight to his military image and many critics have used this to claim he is merely another ‘generalissimo.’ This criticism fails to realise, however, the great political importance in Chavez’s realignment of the Venezuelan military with the democratically elected government of the state rather than outside forces and ideologies. His success in this endeavour was demonstrated when soldiers loyal to him reversed a military coup that displaced him briefly from power in 2002. Both Chavez and Morales, due to their opposition to drug war policies and the imperialist undertones they carry, have driven the DEA out of their respective countries.

The stability of instability

It is clear that the war on drugs and the subsequent war on terror in Colombia have been used as fronts to justify the continued counterinsurgency war against the FARC. Or, as Stan Goff – a retired US Army Special Forces officer for counterinsurgency operations and former military advisor to Colombia – put it: “the ‘war on drugs’ is simply a propaganda ploy… We were briefed by the Public Affairs Officers that counter-narcotics was a cover story… that our mission, in fact, was to further develop Colombians’ capacity for counterinsurgency operations.”²⁰

U.S. and Colombian government anti-terror and anti-drug policy, however, has actually swelled the ranks of the FARC. Peasant farmers who depend on coca for their livelihoods are forced to rely on the armed guerrillas to protect their crop from planes spraying chemicals. The displacement and terrorisation of people and the destruction of subsistence crops in rural areas due to fumigation and military and paramilitary activity have created a large amount of unemployed, disenfranchised and angry young people who gravitate towards the guerrilla movement due to the impunity of the armed forces and the perceived inability of the Colombian justice and democratic political systems to hear their grievances or reflect their interests. The fact that the Colombian army and paramilitary groups continue to see coca growing peasants as guerrilla collaborators and therefore legitimate military targets (due to the taxes they are forced to pay the FARC on their coca crops) merely exacerbates the divide between the military and the peasantry.

Some have been led to argue that the real aim in Colombia is, in fact, to maintain a state of constant conflict. One in which there is sufficient order to protect investments and transport links but, also, sufficient disorder and terror so as to maintain a subservient and flexible workforce and an economic system which allows only a small local elite and foreign multinationals to benefit from the country’s resources.²¹ The official military protect investments and transport links important to the extractive industries while paramilitaries closely linked to the official army, and revealed to be linked to the U.S. government, sufficiently intimidate any move towards reform of the system. This is achieved through a policy of assassination, suppression and terrorisation of the political left, human rights activists, trade unionists and peasant and indigenous movements.

Economic Imperialism

In 1996 four years before Plan Colombia was passed by Congress, the U.S.-Colombia Business Partnership, representing U.S. companies with interests in Colombia, was founded. This organisation launched a well financed lobbying effort for U.S. intervention in the resource rich Andean state. Among the companies represented in this Business Partnership were Occidental Petroleum, Enron, Texaco, and BP.²² A survey released just months prior to the passage of Plan Colombia in the U.S. congress indicated that there were a large number of commercially viable and unexploited oil fields in the Putumayo region of Colombia,²² incidentally, the same area that experiences the highest intensity of paramilitary activity and aerial fumigation.

This correlation has aroused suspicion that these policies are actually aimed at displacing local people from their land in order to open it up to speculation by foreign multinationals²³ while simultaneously clearing the dense rainforest that makes identifying and pinpointing the location of oilfields difficult.²² This seems to be a recurrent theme in local impressions of the U.S. war on drugs in a number of different countries. In Guatemala, for example, locals have criticised militarisation of the resource-rich north eastern province of Petén. While it is known that this area is used to transport drugs to Mexico locals suspect the heavy military presence is more to do with oil interests in the region.²⁴ Similar complaints have emerged from the Moskitia region of eastern Honduras which has experienced increased militarisation in recent years, particularly so since the 2009 coup. According to Norvin Goff Salinas, president of an indigenous Miskitu federation; “More than anything else, they’re militarizing because of the natural resources that are in the Moskitia, especially the strategic spots where there is oil.”²⁵

Foreign direct Investment (FDI) flows into Colombia rose from $2.4 billion at the outset of Plan Colombia to $14.4 billion by 2011. In the mid 90s oil and gas constituted only 10% of all FDI in Colombia but by 2010 this had increased to almost one third.²⁴ Colombia, however, remains the most dangerous country in the world to be a trade unionist and one of the most unequal countries in the world with the top 10% of the population controlling nearly half of the country’s wealth.²⁶

Conclusions

It is evident that in the stated objective of eradicating coca cultivation and narcotrafficking in Colombia the U.S.’ anti-drug strategy has been a resounding failure. From the perspective of the U.S. State Department, however, Plan Colombia was not a failure at all but instead “allowed for the creation of an effective new model for U.S. intervention.”²⁴ As the U.S. Government Accountability Office’s director of international affairs and trade put it; “international programs face significant challenges reducing the supply of illegal drugs but support broad US foreign policy objectives.”²⁷ These objectives, throughout the period of U.S. hegemony, have remained the same. U.S. imperialism is not based on territorial control but on economic control. The adoption of the neoliberal capitalist model across Latin America greatly benefited U.S. companies by making resource extraction cheaper (due to reduced corporate tax), labour cheaper (due to labour flexiblisation practices) and domestic markets easier to dominate (due to the removal of all state subsidies and the breakup of state owned companies). The last point holds a particular level of hypocrisy because, while other countries must abandon all state subsidies, the U.S. maintains high levels of protectionism in the one area that developing countries would hold a competitive advantage in a free market system; agriculture.

The difficulty lies in maintaining a system in which the main beneficiaries of economic production in a country are a tiny local elite and foreign multinationals. This, historically, has been achieved through substantial repression. Throughout the Cold War such repression was justified by labelling as communist any movement or political party whose views fell outside of radical right-wing capitalism. One crucial method of ensuring the maintenance of this economic model in Latin America has always been the cultivation of allied militaries whose ideological beliefs fall exactly in line with those of Washington. The end of the Cold war necessitated a new justification for the continuation of this practice and thus, the war on drugs was born. After the 9/11 attacks this evolved into a war on terrorism.

It is established that U.S. ‘war on terrorism’ policies in Colombia and beyond further alienate the populations of countries where they are implemented and swell the ranks of the militarised ‘terrorist’ forces the U.S. claims to be fighting. The purpose of this war however, like the war on drugs and the war on communism before it, is the creation of a façade that justifies U.S. economic imperialism. The ‘terrorists’ therefore, like the ‘narcoguerrillas’, play a crucial role in maintaining this façade. While the U.S.’ Colombia policy is certainly aimed at making sure the FARC never gain the strength or political unity necessary to overthrow the state, the FARC are also a necessary enemy, just as the continuation of the internal conflict is necessary, to justify continued U.S. military training, aid and intrusion in the affairs of the strategically located, oil and resource rich Andean state.

1. Reuters, Colombia’s Santos Rejects FARC call for Ceasefire, 7th September 2012.
2. See for example, C. Peter Rydell (1994), Controlling Cocaine: Supply Versus Demand Programs, Rand Drug Policy Research Center.
3. See for example: Stokes, Susan C. (2001), Mandates and Democracy: Neoliberalism by Surprise in Latin America, Cambridge University Press; Weyland, Kurt (2004), Neoliberalism and Democracy in Latin America: A Mixed Record, Latin America politics and Society. 46(1): p. 135-157; Gwynne, Robert N. and Cristóbal Kay (2000), Views from the Periphery: Futures of Neoliberalism in Latin America, Third World Quarterly. 21(1): p. 141-156.
4. Carnegie Endowment for International Peace (2010), Will the U.S.–Colombia Free Trade Agreement Help Colombia’s Small Farmers? March 10.
5. Bigwood, Jeremy (2001), Toxic Drift: Monsanto and the Drug War in Colombia.
6. Robin, Marie-Monique (2010), The World According to Monsanto: Pollution, Corruption and the Control of our Food Supply, p 138.
7. This nickname no doubt originates from the fact that Monsanto produced the chemical Agent Orange which was used for aerial fumigation during the Vietnam War resulting in birth defects, poisoning of land and outbreaks of cancer. After the war it emerged that Monsanto had known of Agent Orange’s toxicity years before but had tried to cover it up. Due to the side affects seen in Colombians living in areas that have been sprayed with Roundup Ultra, and Monstanto’s less than savoury record, many fear that, like Agent Orange, Roundup Ultra will hold future health implications yet unknown.
8. Chemical War: Herbicides, drug crops and collateral damage in Colombia. After the Fact (a publication of the Institute for Science and Interdisciplinary Studies), Winter 2001.
9. U.S. based NGO Witness for Peace.
10. See for example: RAND Corporation, Sealing the Borders; The Effects of Increased Military Participation in Drug Interdiction. The study also noted that seven prior studies on the same topic over the preceding nine years had resulted in similar conclusions, including one done by the Center for Naval Research and the Office of Technology Assessment.
11. Upside Down World, Interview with Peter Watt. ‘The drug war in Mexico; politics, violence and neo-liberalism in the new narco-economy’.
12. DEA Congressional testimony July 9, 1997. Statement by Donnie Marshall, Chief of Operations of the Drug Enforcement Administration, before the Subcommittee on National Security, International Affairs and Criminal Justice.
13. Villar, Olivar (2011), Cocaine, Death Squads and the War on Terror: U.S. Imperialism and Class Struggle in Colombia, p. 79.
14. Stokes, Doug (2005), America’s Other War: Terrorising Colombia, Canadian Dimension Vol. 39, No. 4; p. 26.
15. Gill, Lesley (2004), The School of the Americas: Military Training and Political Violence in the Americas. p. 10.
16. Human Rights Watch, (2011), World Report 2012.
17. Karl, Terry L. (1987), Petroleum and Political Pacts: The Transition to Democracy in Venezuela, Latin American Research Review. pg82.
18. These enclaves include an electoral law that results in overrepresentation of rightwing parties, nonelected senators and institutions with veto power over the legislator. Olavarría, Margot (2003). “Protected Neoliberalism: Perverse Institutionalization and the Crisis of Representation in Postdictatorship Chile”. Chile since 1990: The Contradictions of Neoliberal Democratization, Part 2. Latin American Perspectives. 30 (6): p. 10-38.
19. European Commission, Colombia Country Strategy Paper 2007-2013.
20. Feinberg, Leslie (2003), War in Colombia: Made in the U.S.A, International Action Center p. 81.
21. Klein, Naomi (2007), The Shock Doctrine: The Rise of Disaster Capitalism.
22. Gorman, Peter (2003), Plan Colombia: The Pentagon’s Shell Game, From the Wilderness.
23. Craig-Best, Liam and Shingler, Rowan, Cultivation of Illicit Crops, Spectrozine.
24. Paley, Dawn (2012), Guatemala: The Spoils of Undeclared War. Upside Down World.
25. Cuffe, Sandra and Spring, Karen (2012) “Botched DEA Raid in Honduras Exposes How Militarization Terrorizes Communities Around the World,” AlterNet.
26. World Bank
27. Ford, Jess T. (2012), Drug Control: International programs face significant challenges reducing the supply of illegal drugs but support broad US foreign policy objectives, Testimony Before the Subcommittee on Domestic Policy, Committee on Oversight and Government Reform.

A major qualm many have with the Fiscal Compact is the implication underlying it that sensible and frugal wealthy European countries such as Germany must get the irresponsible and spendthrift indebted countries to sign up to a set of guarantees before handing them more money.

Like the Fiscal Compact Treaty the Maastricht Treaty also lays out a number of fiscal rules one of which stipulates that the ratio of gross government debt to GDP must not exceed 60%. From 2004 to 2007 Ireland’s debt to GDP ratio fell from 29.4% to 24.8% and Spain’s gross government debt to GDP fell from 46.3% to 36.3%. Germany and France on the other hand, in the same period, failed to comply with the 60% of GDP gross debt limit every single year. When the crisis hit in 2008 the gross debt of nearly every EU country rose, and Ireland’s nearly doubled, yet Irish gross debt as a percentage of GDP did not overtake Germany’s until 2010[1].

While Germany herself did not manage to keep to the rules laid out in the Maastricht Treaty she now insists that Eurozone countries in severe crisis must abide by an even more stringent set of fiscal rules in order to receive future bailout money. It can be argued that it is fair for Germany to demand certain guarantees before she uses more of her money to bail them out, yet this argument assumes that German bailout money is some sort of charitable donation.

A very large proportion of the Eurozone bailouts were for the purpose of servicing debts created by private banks which borrowed excessive amounts from private (and some public) banks in France, Germany, the UK and Belgium (in that order)[2]. According to Bloomberg ”irresponsible borrowers can’t exist without irresponsible lenders” and by December 2009 German banks had lent $704 billion (more than the German banks’ aggregate capital) to Greece, Ireland, Italy, Portugal and Spain[3].

German funded bailouts to states that owe excessive amounts to German banks for the purpose of debt repayment can hardly be seen as German charity. These bailouts are pre-emptive interventions to avoid the far more costly interventions that would be necessary to re-stabilise the European financial sector (particularly German, French, Belgian and British banks) if Eurozone countries began to default on their debts. Economic advisor to the German government, Peter Böfinger, summed it up when he stated that the bailouts “are first and foremost not about the problem countries but about our own banks, which hold high amounts of credit there.“[4]

ECB bailouts are three year loans based on the premise that the economies of borrowing countries will have recovered sufficiently to be able to return to the bond markets and also repay their debts over time. As a solution to the crisis this approach is highly risky. This is particularly so as the time scale of debt repayment and conditions attached to these loans critically undermine the capacity of these domestic economies to recover. As Hollande argued; “I am in favour of meeting our (deficit) targets. But it’s because I am in favour of serious budget policies that I am in favour of growth because if there is no growth then no matter what we do we will not meet our debt and deficit reduction targets.”[5]

What are the alternatives to austerity?

The main alternative proposed to the imposition of austerity regimes in order to balance state budget deficits is to reduce debt through inflation. This, however, is impossible unilaterally within the common currency. Collectively it is also impossible because, for very solid historical reasons, it is unthinkable for Germany. But Germany has offered few alternative solutions beyond fiscal austerity and borrowing to pay off debt, demanding of other countries adherence to fiscal rules she has a record of not adhering to herself. Eamon Dyas, writing recently in the Irish Political Review, noted that Germany’s Europe policy in reaction to the crisis demonstrates no trace of what we have come to understand as the German social model.[6]

The German rational for this austerity driven recovery strategy is that austerity played a crucial role in rebuilding post-war Germany, particularly East Germany after the fall of the Berlin Wall. But this argument fails to remember one extremely important fact; that West Germany was only in a position to develop East Germany because of a number of injections of external capital and easily available and cheap credit. While it is true that austerity was a tool used in East Germany, this was done alongside an extensive privatisation campaign beyond any that would be possible in a modern capitalist state. This meant that a vast amount of foreign capital was injected into Germany from the early 1990s through the sale of East German property and businesses to foreign investors. It is fictitious to assume that privatisation in currently indebted countries could result in such an inflow of foreign capital as these states hold a minute proportion of the country’s property and wealth compared to East Germany’s communist economy before the 1990s.

Of the $13 billion (about $100 billion in today’s value) that the United States pledged to the Marshall plan from 1948-1951 Germany was the second largest recipient after France. This money was received in the form of grants (that did not have to be repaid) and, at the same time, the Export-Import Bank provided long-term low interest loans. These funds were handed over to governments rather than banks and the cooperation of different relevant groups such as labour leaders, government representatives and business people, was encouraged in their allocation. 

A large contributory factor to German post-war reindustrialisation were counterpart funds which used Marshall Plan aid money to establish government administered funds in each country’s local currency, the majority of which had to be invested in industry. The German government lent these funds to the private sector for rebuilding and, as the money was paid back, further loans could be issued for the same purposes. In this way the funds were repeatedly recycled and by 1996 the German ERP fund had reached a value of 23 billion Deutche Mark[7]. This system would be a very good fiscal stimulus model for Europe’s currently struggling economies rather than throwing all allocated funds into a debt pit. Maintaining a government administered fund for the purpose of providing sensible loans to small businesses, entrepreneurs and other private sector players could kick start credit starved economies in Europe. As all loans are paid back this sustainable system could use the same funds for business loans and industry development for years to come.

Reduced spending is of course necessary in a crisis, particularly in a country like Ireland where spending skyrocketed while the economy boomed. It is unrealistic to think that Ireland can maintain boom era spending in the depths of crisis but austerity alone will not alleviate the crisis. Crisis stricken European countries require similar capital injections as those received by post-war Germany in order to grow and meet their deficit targets without allowing their social systems and domestic economies to be strangled by the burden of debt repayment.

Some of these issues can be tackled politically with limited capital investment and in this lessons can be learnt from Germany’s internal social system. As consumption continues to fall across the Eurozone perhaps governments should move away from tax systems which follow the Anglo-American model of supplementing low PRSI, income and corporate taxes with high VAT rates. While VAT has been proven more often than not to act as a regressive tax, high yields of this type of tax are heavily dependent on a high level of consumer activity which is unrealistic to expect in these economic times.

The German apprenticeship model is a way in which struggling European countries could tackle unemployment, particularly youth unemployment, with little cost to the state. While it is not necessarily an easy system to introduce the moves to be made are political not financial. This would require an agreement between the private, public and education sectors and a system whereby apprenticeships across a wide range of disciplines are made available each year as an alternative to purely academic based systems of higher education. Attaching long-term internships to university courses would also greatly reduce the number of young adults graduating with no relevant work experience and therefore few relevant job prospects.

Conclusions 

“Austerity” and “Growth” have become buzz words with little meaning. Pro-growth policies mean different things to people of different political stripes and economic ideologies. To some, pro-growth means labour flexibilisation and low corporation tax and to others it means higher wages and increased social spending to spur the internal consumer market.

Those who advocate a pure austerity line in the recovery strategy view those on the growth side as unrealistic. Those who advocate a pure anti-austerity line are unrealistic as spending cuts are an unfortunate necessity. The growth movement in Europe, however, is not against fiscal discipline but, rather, they oppose the premise that fiscal discipline alone will alleviate the crisis. What we need is to develop a healthy combination of austerity and growth orientated policies that simultaneously tackle the human cost of the crisis, the consumer spending capacity deficit, unemployment, the debt issue, industrialisation to reform economies with an unhealthy dependence on the financial sector while also developing practical apprenticeship-based vocational training systems akin to those in Germany.

Pro-growth does not necessarily mean throwing money at the situation but realising the core obstacles to recovery and tackling them with directed policies. This can include allocating a certain amount of bailout money to the creation of government administered funds for the purpose of sensible business lending as was so successfully implemented in post-war Germany but other growth orientated policies require political will rather than financial investment.

Germany seriously needs to add some of its own social policy successes to the recovery plan, including elements of its domestic social model rather than insisting purely on a policy of austerity and debt repayment. Germany’s reconstruction and reindustrialisation was based not solely on austerity but also on large injections of foreign capital into the country. This capital was used very sensibly and an extremely efficient, stable and more or less socially equitable system of capitalism was created. Germany has a lot to offer in pro-growth policies from her own history and domestic model yet so far these elements have remained absent from the debate creating the impression abroad that the aim of German policy is merely to ensure her banks are repaid. One can understand why Merkel cannot advocate costly pro-growth policies in the Eurozone as her electorate would not stand for it. But there are many growth orientated policies within the German social model that cost very little to implement and lending these elements to the discussion would serve to soften Europe’s growing distaste for German leadership as well as reminding the austerity purists that pro-growth does not always mean spending money you do not have.

Massive cuts in state spending to pay off debts incurred by private banks is a recipe for serious political and social unrest. The Marshall plan alleviated such issues in post-war Europe by allowing governments to relax their austerity policies. The motive behind this aid package was to quell the rising support for communism in war torn Europe but the effect cannot be denied. The people of Europe embraced the free market economic model in exchange for increased social spending and the creation of the welfare state. Economic stimulus based on grants and long term low interest loans created the fastest period of growth in European history thus allowing the continuation of the welfare state and general acceptance of the market economic model. If we allow the current recovery strategy to hollow out the European welfare state, civil unrest and radicalised politics are sure to follow, on both the left and right of the political spectrum. The beginning of this process at its extreme end can be viewed in the recent Greek elections but the recent rise in radical left and right wing parties since the beginning of the crisis is evident across Europe from Finland and France to the Netherlands.

Given the interdependence and common interests of the Eurozone member states, those states with the economic power, credit and capital capacity should not have to wait for a new political spectre to emerge from the chaos before they start resourcing programmes for the economic revival of the Eurozone and the securing of the European social model.  

Notes.

Would Ireland be able to secure a second bailout?

The Yes campaign claim that, in the event of a No vote, Ireland would be denied EU funding should she require a second bailout. The No campaign claim that a second bailout could be secured elsewhere, often citing the IMF as a likely source.

However the IMF’s previously endless coffers are drying up. The US Congress recently blocked further US IMF funding and, with Japan still rebuilding after a devastating Earthquake and Europe is in crisis, there are few sources left capable of (or willing to) donate the necessary funds for future EU bailouts.

Secondly, it is incorrect to assume that an IMF bailout would result in less austerity and more economic independence than the Fiscal Compact Treaty. IMF loans demand the implementation of strict fiscal and monetary reforms that take a large amount of economic decision making power away from national governments. Conditions attached to IMF loans regularly include sweeping privatisation programmes (including public services such as education, healthcare and water), labour flexibilisation policies (which have eroded workers rights, lowered wages, made it easier for employers to fire at will and degraded the power of trade unions) and harsh austerity regimes which advocate radical cuts in social spending for the purposes of debt repayment. These conditions are far harsher than anything outlined in the Fiscal Compact and we must remember that it was Ireland’s IMF/troika bailout that spearheaded her austerity regime.

Ireland could borrow the necessary funds from international private banks, that is, if any would be willing to lend the amount required. We have recently entered a new era in which banks no longer view loans to EU countries as secure guarantees and Greece recently demonstrated how democracy can undermine the willingness of a country to pay back her debt if things go particularly awry. Regardless of these obstacles, if Ireland could secure such a loan, the interest rates would certainly be far higher than the current 1% offered by the ECB. This option, therefore, is definitely more costly. It is also riskier as any future rise in interest rates could send Irish debt spiralling out of control.

Whether we vote Yes or No in the upcoming referendum, In the event of Ireland needing a second bailout to service her debt, Europe will get involved. A large amount of Irish debt is owed to European banks. A disorderly default on Ireland’s debt would impact an already shaky European financial sector and this is a situation that Europe, and especially Germany, wants to avoid. As Terrence McDonough – professor of economics at NUI Galway – correctly argued; a second bailout for Ireland would be significantly less expensive than an intervention to re-stabilise the European banking system. In such an eventuality, he suggests; “It is highly unlikely Europe would ignore its self-interest in order to spite the Irish electorate“.

Would Ireland be expelled from the Euro/EU?

In both the Nice and Lisbon Treaty referendums in Ireland one scare tactic that was repeatedly used was the threat that Ireland would be kicked out of the EU. This did not happen then and it will not happen now. The UK was not kicked out after Cameron’s veto and Ireland will not be kicked out if the people vote No. Forcing a country out of the EU would require changing the EU treaties and this would necessitate a unanimous vote of all EU members over which Ireland would have veto power.

Regardless of how many experts and commentators suggest that Greece will leave the Euro the fact of the matter is that the Greek people have no desire to do so and nobody can force them to even if the state defaults on its debt. There is no legal basis to force a country out of the common currency, the only way a country can leave is if it chooses to do so, Ireland included.

Would the Eurozone move ahead without Ireland?

It was easy for the Eurozone to move ahead without the UK after David Cameron adopted an unmoving stance, threatening to oppose the Treaty unless a number of purely self-interested, ‘not open to negotiation’ demands were met. The Eurozone would have liked to have the UK on board and if Cameron had been open to negotiation a negotiation probably would have occurred, however, he was not. It is more difficult, but certainly not impossible, to go ahead without Ireland as she is a member of the common currency. Unlike the Nice and Lisbon treaties which were postponed and renegotiated due to negative results in Irish referendums the Fiscal Compact is not an EU treaty and therefore does not require unanimity. But the Fiscal Compact is a treaty aimed at saving the Euro and restoring confidence in Eurozone economies and going ahead without the involvement of one of the riskier Eurozone countries would defy the purpose of the whole project.

A negative result in the referendum will cause the Irish Government to go to the EU saying ‘we did not manage to secure a Yes vote so what can we do to fix this’? This can not be equated to Cameron announcing an unacceptable ultimatum backed with the threat of veto.

Could a tactical No vote secure concessions?

Éamon Ó Cuív recently broke from Fine Fail party ranks to advocate a tactical No vote in the Treaty referendum. He argued that a tactical No vote from Ireland“would probably prompt a renegotiation of the Fiscal Compact and ESM Treaties to be more favourable towards smaller [EU countries]” and perhaps he is right.

The Irish Government supports the Treaty and, as was the case in previous EU referendums, if it is not passed the first time round they will probably hold a second referendum. In this situation Ireland will not have the same leverage she enjoyed after negative referendum results on previous EU treaties but it may open space for negotiation. If the Eurozone thinks that a small bit of negotiation on the Treaty will secure a Yes vote in a second referendum this may appear more favourable than thundering ahead without Irish involvement.

Some argue that Ireland is not in a position to renegotiate anything but that the referendum date is too early because France’s new Socialist President François Hollande may change the Treaty after we vote on it. Hollande seems pretty adamant that Europe does not merely pay lip service to growth and stimulus (as was the case in the Stability and Growth Pact when the word ‘Growth’ was added because of French demands but no concrete structures were included that would see the growth element realised). Commenting to the press after his first presidential meeting with Merkel, Hollande stated; ”I want growth to be not only a word but backed by tangible actions that are made a reality… I want to put growth at the heart of our debate…I said it during my election campaign and I say it again now as president that I want to renegotiate what was has been agreed to include a growth dimension.”

Angela Merkel, while clearly wishing to work together with Hollande and find common ground, has made it clear that the Fiscal Compact Treaty is not open to negotiation. It appears that Hollande’s anti-austerity demands will be met, not by reopening the Fiscal Compact, but by complimenting it with a separate “growth pact”. If France cannot renegotiate the Treaty then Ireland may have to accept that she will not be able to either but, after the recent anti-austerity vote in Greece, a No vote from Ireland would put another major dent in Europe’s austerity driven recovery strategy to date.

In the event of a No vote in the referendum Ireland will not be kicked out of the EU or the common currency and it is highly unlikely that European countries would deny Ireland a second bailout in order to finance debt owed to European banks. If Ireland votes No the Irish government will not deliver unreasonable ultimatums like David Cameron did in December. They will try to resolve the issue. This may mean concessions in advance of a second referendum or it may mean a second referendum with no change to the Treaty whatsoever. If the people vote No a second time and Ireland fully rejects the Treaty but decides at a later date that it is in her best interests to join the Fiscal Compact Article 15 allows her to do so; “The Treaty shall be open to accession by Member States of the European Union other than the Contracting Parties“.

In a previous article I outlined how a number of the Treaty provisions are vague and ill-defined. Based on the content of the Treaty itself I concluded that; “the vague nature of the definitions and procedures laid out in the treaty are clearly intended to prevent a complete loss of budgetary sovereignty, while also allowing for a justifiable opt-out clause should a contracting party need to deviate from the fiscal rule for economic reasons. The effect, however, is that it is very difficult to tell how the measures referred to in the treaty will pan out in reality“. Given that Ireland is permitted, by the provisions of the Treaty itself, to join at a later date then perhaps it would be wise to stand back and see what effect the Treaty has in other countries before deciding if we want to be a part of it or not.

Therefore there is little to lose in voting No. It may not result in concessions but there is the chance that it might and this, perhaps, is a chance worth taking. Only a few months ago it appeared that a No vote in the Irish referendum would isolate her in Europe. This is no longer the case and now a No vote would merely add an Irish voice to the anti-austerity movement that is gaining force across Europe at the local, national, and now even regional level.

The debate on the Fiscal Compact Treaty in Ireland has been dominated by duel scaremongering arguments; the threat of institutionalised austerity on one side and the threat of discontinued ECB funding on the other. The result has been a complete lack of debate on the actual content of the Treaty.

The Yes side claim that it will bring stability. The No side claim that it would enshrine austerity into the Irish constitution and allow the EU to dictate our national budget. But what does the treaty actually say?

Article 3(1b) of the Treaty is very clear that the maximum limit of structural deficit will be 0.5% of GDP but it gets much more vague when describing how this measure would be enforced.

Article 3(1c) states that in “exceptional circumstances” a contracting party may deviate temporarily from the fiscal objective without repercussions. Article 3(3b) defines such “exceptional circumstances” as “an unusual event outside the control of the Contracting Party concerned which has a major impact on the financial position of the general government or to periods of severe economic downturn“. This could include a wide variety of circumstances and thus is very open to legal interpretation. It would allow Ireland to break the rules provided she could justify that any outside event had had a major impact on her economy. Similarly, if economic downturn makes it impossible for Ireland to keep to the fiscal rule, she would be given a temporary break from working towards this objective.

If Ireland should significantly break the fiscal rule, and cannot use the above mentioned clause as justification, the necessary follow up action according to the Article 3(1e) is to automatically trigger a “correction mechanism“. But what is this mechanism? According to Article 3(2) the mechanism will be “on the basis of common principles to be proposed by the European Commission“. Therefore it is not yet decided what this budgetary mechanism will be but, as stated later in the same paragraph, the creation of this mechanism “shall fully respect the prerogatives of national Parliaments”.

Therefore the Treaty will not condemn Ireland to perpetual austerity regardless of circumstances because periods of severe economic downturn and vaguely defined “exceptional circumstances” permit temporary deviation from the fiscal objective. The Treaty will not hand all national budget making decisions over to outside powers. Rather, if a contracting party significantly breaks the fiscal rule without managing to interpret “exceptional circumstances” as being applicable, they will merely have to implement a “corrective mechanism” that will respect the prerogatives of national parliaments when it is decided upon.

A Yes vote will sign Ireland up to treaty that is not as demonic as some would have us believe. It leaves a lot of room for legal interpretation and national sovereignty but it’s lack of clarity creates a murky view of what is to come. The vague nature of the definitions and procedures laid out in the Treaty are clearly intended to prevent a complete loss of budgetary sovereignty while also allowing for a justifiable opt-out clause should a contracting party need to deviate from the fiscal rule for economic reasons. The effect, however, is that it is very difficult to tell how the measures referred to in the Treaty will pan out in reality and this is a point that seriously requires some clarification within the Irish referendum debate.

In December Egyptian prosecutors and police raided 17 offices of 10 groups identifying themselves as “pro-democracy” NGOs, including 4 US based agencies. Fourty three people, including 16 US citizens, were accused of failing to register with the government and financing the April 6th protest movement with illicit funds in a manner that detracted from the sovereignty of the Egyptian state.

The US applied massive pressure on Egypt to drop the case, sending high-level officials to Cairo for intense discussions and threatened to cut off up to $1.3bn in military aid and $250m in economic assistance if the US citizens were tried. A travel ban was imposed on seven of them by Egypt’s Attorney General, including Sam LaHood, son of Obama’s Transportation Secretary. By the first day of the case all but the seven with travel restrictions had left the country and those who remained did not even attend court. A day after the ban was lifted a military plane removed the remaining 7 US citizens from Egypt after the US government provided nearly $5m in bail.

The Egyptian authorities stated that the matter was firmly in the hands of the judiciary and out of control of government and accused the US of unacceptable meddling. The international community expressed its outrage at the affair and accused the Egyptian military of inciting paranoia of foreign interference so as to deflect attention from the slow pace of political and democratic reform a year after the revolution. Amid the high-profile diplomatic strife there was an almost total global journalistic silence on the nature and funding of these ‘NGOs’, rarely even mentioning them by name.

State sponsored organisations, not NGOs

The people who stood trial were repeatedly referred to by governments and the media as ‘NGO workers’. The 43 defendants worked for five specific organisations; Freedom House; the National Democratic Institute (NDI); the International Republican Institute (IRI); the International Center for Journalists (ICFJ) and the Konrad Adenauer Stiftung. Only one of these organisations, the ICFJ, does not receive the majority of its funding either directly or indirectly from a government, but it does regularly receive large grants from US government sources.

The NDI, chaired by Madeline Albright, and the IRI, chaired by Senator John McCain, represent the US Democratic and Republican political parties. The NDI and IRI, together with the Center for International Private Enterprise, which represents the US Chamber of Commerce, and the Solidarity Centre, which represents the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), make up the four “core institutions” of the National Endowment for Democracy (NED). NED is a non-profit, grant-making institution that receives more than 90% of its annual budget from the US government. While Freedom House claims to be independent it regularly receives the majority of its funding from the NED and the ICFJ regularly receives large NED grants. The Konrad Adenauer Stiftung, sometimes referred to as the German NED, is a non-profit foundation associated with the Christian Democratic Union. It receives over 90% of its funding from the German government. This means that the IRI, the NDI, the Konrad Adenauer Stifung and, to a lesser extent, Freedom House and the ICFJ- are state sponsored institutions and can not be defined as NGOs.

Freedom House has long been criticised for its rightwing bias, favouring free markets and US foreign policy interests when assessing civil liberty and political freedom ‘scores’ in countries around the world. Freedom House statistics for 2011 claim that Venezuelans had the same level of political rights as Iraqis. Bolivia’s overall score was reduced from “Free” to “Partially Free” after mass protests removed American-educated millionaire Gonzalo Sanchez de Losada from power after he initiated a sweeping privatization program. Now, under the first government in her history to really recognise the rights of the indigenous majority, Bolivia is still rated by Freedom House as only partially free and received a lower overall score than Botswana where one party (the BDP) has been in power since the first elections were held there in 1965. Freedom House has also been accused of running programmes of regime destabilisation in US “enemy states” and a 1996 Financial Times article revealed that Freedom House was one of several organisations selected by the State Department to receive funding for “clandestine activities” inside Iran including training and funding groups seeking regime change, an act that received criticism from Iranian grass roots pro-democracy groups.

The most nefarious of these organisations by far, however, are the IRI and the NDI. They receive NED grants “for work abroad to foster the growth of political parties, electoral processes and institutions, free trade unions, and free markets and business organizations.” On March 6th a protest march was organised by American civil society organisations at the offices of the NED in Washington, demanding; “NO ATTACKS ON DEMOCRACY ANYWHERE! CLOSE THE NED”. Union members and labor activists have protested and campaigned for years demanding that the AFL-CIO’s Solidarity Center break all ties to the NED.

Board of Directors

Chaired by Richard Gephardt – former Democratic Representative, now CEO of his own corporate consultancy and lobbying firm – the NED’s board of directors consists of a collection of corporate lobbyists, advisors and consultants, former U.S congressmen, senators, ambassadors and military and senior fellows of think tanks. For example John A. Bohn, a former high level international banker and former President and Chief Executive Officer of Moody’s Investors Service, is now Commissioner of the California Public Utilities Commission, a principal in a global corporate advisory and consulting firm and Executive Chairman of an internet based trading exchange for petrochemicals. Kenneth Duberstein, former White House Deputy Chief of Staff under Reagan, is now Chairman and CEO of his own corporate lobbying firm. He also sits on the Board of Governors of the American Stock Exchange and NASD and serves on the Boards of Directors of numerous conglomerates including The Boeing Company, ConocoPhilips and Fannie Mae. Martin Frost is a former congressman who was involved in writing the 1999 ‘Gramm-Leach-Bliley Act’ also known as the ‘Citigroup Relief Act’, and William Galston, former student of Leo Strauss, is a US Marine Corp veteran.

The Board also contains four of the founding members of ultra-conservative think tank Project for a New American Century; Francis Fukyama (author of ‘The End of History’), Will Marshall (founder of the ‘New Democrats’, an organisation that aimed to move Democratic Party policies to the right) former congressman Vin Weber (who retired from Congress in 1992 as a result of the House Banking Scandal and is now managing partner of a corporate lobbying firm) and Zalmay Khalilzad. Under George Bush Jnr., Khalilzad served as US Ambassador to Iraq, Afghanistan and the UN.  He is now President and CEO of his own international corporate advisory firm which advises clients – mainly in the energy, construction, education, and infrastructure sectors – wishing to do business in the Middle East, particularly in Iraq and Afghanistan. He also briefly consulted for Cambridge Energy Research Associates while they were conducting a risk analysis for the proposed Trans-Afghanistan gas pipeline.

History

The NED was founded in 1983 when Washington was embroiled in numerous controversies relating to covert military operations and the training and funding of paramilitaries and death squads in Central and South America. The NED was formed to create an open and legal avenue for the US Government to channel funds to opposition groups against unfavourable regimes around the world, thus removing the political stigma associated with covert CIA funding. In a 1991 Washington Post article, ‘Innocence Abroad: The New World of Spyless Coups’, Allen Weinstein (who helped draft the legislation that established the NED) declared; “A lot of what we [the NED] do today was done covertly 25 years ago by the CIA”.

In 1996 the Heritage Foundation published an article in defence of continued NED congressional funding which accurately summed up the NED as a US foreign policy tool; “The NED is a valuable weapon in the international war of ideas. It advances American national interests by promoting the development of stable democracies friendly to the U.S. in strategically important parts of the world. The U.S. cannot afford to discard such an effective instrument of foreign policy…Although the Cold War has ended, the global war of ideas continues to rage”.

As well as ongoing campaigns of regime destabilisation in undemocratic US enemy states such as Cuba and China, and its well known funding of “colour” revolutionaries in the former Soviet space, the NED has been repeatedly involved in influencing elections and overthrowing governments in left-leaning and anti-US democratic regimes around the world. This is achieved by providing funding and/or training and strategic advice to opposition groups, political parties, journalists and media outlets. As Barbara Conry of the Cato Institute wrote; “Through the Endowment, the American taxpayer has paid for special-interest groups to harass the duly elected governments of friendly countries, interfere in foreign elections, and foster the corruption of democratic movements”.

From 1986 to 1988 the NED funded the right-wing political opposition to Nobel Peace Price winner, President Oscar Arias, in democratic Costa Rica because he was outspokenly critical of Reagan’s violent policies in Central America. During the 1980s the NED was even active in ‘defending democracy’ in France due to the dangerous rise in communist influence perceived as occurring under the elected socialist government of Francois Mitterrand. Money was channelled into opposition groups including extreme right-wing organisations such as the National Inter-University Union. In 1990 the NED provided funding and support to right wing groups in Nicaragua, and Daniel Ortega and the Sandinistas were removed from power in an election described by Professor William I. Robinson as an event in which “massive foreign interference completely distorted an endogenous political process and undermined the ability of the elections to be a free choice”.

In the late 1990s the NED provided funding and support to the US backed right-wing opposition against the election campaign of progressive former president, and first democratically elected leader of Haiti, Jean-Betrand Aristide. When a coup removed Aristide from power for the second time in 2004 it was revealed that the NED had provided funding and strategic advice to the principal organizations involved in his ousting. The involvement of the NED in the 2002 attempted coup against President Hugo Chavez in Venezuela has been well researched and documented. Immediately after the coup, however, the then president of the IRI, George Folsom, revealed the institute’s role in the endeavour when he sent out a press release celebrating Chavez’s ousting; “The Institute has served as a bridge between the nation’s political parties and all civil society groups to help Venezuelans forge a new democratic future…”.

The IRI was also implicated in the 2009 Honduran coup amid claims that the organisation had supported the ousting of democratically elected leader Manuel Zelaya because of his support of the Bolivarian Alternative for the Americas (an anti-free trade pact including Honduras, Venezuela, Bolivia and Cuba) and his refusal to privatise telecommunications. According to the Council on Hemispheric Affairs AT&T – an American telecommunications giant – has provided significant funding to both the IRI and Senator John McCain (its chairman) in order to target Latin American states that refuse to privatize their telecommunications industry.

Influence in Egypt and the Arab Spring

The NED works in democratic Turkey but does not provide “democratisation grants” to civil society organisations in Western allied absolute monarchies such as Qatar, Saudi Arabia or Oman. A number of NED backed activists have taken centre stage in the Arab Spring struggles and U.S. supported candidates have risen to occupy leading positions in newly established transitional governments. The most glaring example of this is Libya’s transitional Prime Minister, Dr. Abdurrahim El-Keib, who holds dual U.S./Libyan citizenship and is former Chairman of the EE Department of the Petroleum Institute sponsored by British Petroleum, Shell, Total and the Japan Oil Development Company. He handed the job of running Libya’s oil and gas supply to a technocrat and, according to the Guardian, has passed over Islamists expected to make the cabinet in order “to please Western backers”.  Tawakkul Karman too, of Yemmen, who became the youngest ever recipient of a Nobel Peace Price in 2011, was leader of a NED grantee organisation; “Women Journalists without Chains”.

In 2009 sixteen young Egyptian activists completed a two-month Freedom House ‘New Generation Fellowship’ in Washington. The activists received training in advocacy and met with U.S. government officials, members of Congress, media outlets and think tanks. As far back as 2008, members of the April 6th Movement attended the inaugural summit of the Association of Youth Movements (AYM) in New York, where they networked with other movements, attended workshops on the use of new and social media and learned about technical upgrades, such as consistently alternating computer simcards, which help to evade state internet surveillance. AYM is sponsored by Pepsi, YouTube and MTV and amongst the luminaries who participated in the 2008 Summit, which focused on training activists in the use of Facebook and Twitter, were James Glassman of the State Department, Sherif Mansour of Freedom House, National Security Advisor Shaarik Zafar and Larry Diamond of the NED. This is rather ironic considering that in September 2009 the US authorities arrested Elliot Madison (a US citizen and full-time social worker) for using Twitter to disseminate information about police movements to G20 Summit street protesters in Pittsburgh. Madison, apparently in violation of a loosely defined federal anti-rioting law, was accused of “criminal use of a communication facility,” “possessing instruments of crime,” and “hindering apprehension”. Given that heavily armed police officers were using tear gas, sonic weapons and rubber bullets on protesters Madison’s actions were hardly unjustified. Further demonstrating the hypocrisy of Madison’s arrest is the fact that in June 2009 the State Department had requested Twitter delay a planned upgrade so that Iranian protesters’ tweets would not be interrupted. Twitter Inc subsequently stated in a blog post that it had delayed the upgrade because of its role as an “important communication tool in Iran”.

A leaked 2008 cable from the Cairo US Embassy, entitled “April 6 activist on his US visit and regime change in Egypt”, showed that the US was in dialogue with an April 6th youth activist about his attendance at the AYM Summit. The cable revealed that the activist tried to convince his Washington interlocutors that the US Government and the International Community should pressure the Egyptian government into implementing reforms by freezing the off-shore bank accounts of Egyptian Government officials. He also detailed the youth movement’s plans to remove Mubarak from power and hold representative elections before the September 2011 presidential election. While the cable revealed that the US deemed this plan “highly unrealistic”, the dialogue proves that the funding of any youth organisation associated with the April 6th movement by a US organisation since December 2008 had been done with Washington and the US embassy in Cairo being fully aware that the movement’s aim was regime change in Egypt. Yet in April 2011 the New York Times published an article entitled ‘U.S. Groups Helped Nurture Arab Uprisings’ in which it openly stated that; “A number of the groups and individuals directly involved in the revolts and reforms sweeping the region, including the April 6th Youth Movement in Egypt, the Bahrain Center for Human Rights and grass-roots activists like Entsar Qadhi, a youth leader in Yemen, received training and financing from groups like the IRI, the NDI and Freedom House”.

The NED officially states that “an open market economy is a prerequisite of a democratic political system”. This stance demonstrates that democratisation grants are only issued to organisations that would not be fundamentally opposed to such an economic model. According to the NED’s 2009 Annual Report, $1,419,426 worth of grants was doled out to civil society organisations in Egypt that year. In 2010, the year preceding the January – February 2011 revolution, this funding massively increased to $2,497,457. Nearly half of this sum, $1,146,903, was allocated to the Center for International Private Enterprise for activates such as conducting workshops at governate level “to promote corporate citizenship” and engaging civil society organizations “to participate in the democratic process by strengthening their capacity to advo¬cate for free market legislative reform on behalf of their members”. Freedom House also received $89,000 to “strengthen cooperation among a network of local activists and bloggers”.

According to the same 2010 report, various youth organisations and youth orientated projects received a total of $370,954 for activities such as expanding the use of new media and social advertising campaigns among young activists, training and providing ongoing support in “the production and targeted dissemination of social advertisement campaigns”, building the leadership skills of political party youth, strengthening and supporting “a cadre of young civic and political activists . . . well positioned to mobilize and engage their communities”, and providing youth  training workshops in “professional media skills as well as online and social networking media tools”.

But this is just the funding that is transparently made known to us on the NED’s official website. After the revolution, the NDI and IRI massively expanded their operations in Egypt, opening five new offices between them and hiring large numbers of new staff. The Egyptian authorities claim that they have found these organisations’ finances very difficult to trace. According to Dawlat Eissa – a 27-year-old Egyptian-American and former IRI employee – the IRI used employees’ private bank accounts to channel money covertly from Washington, and an IRI accountant stated that directors used their personal credit cards for expenses. Eissa and a number of her colleagues resigned from their posts with the IRI in October, and Eissa filed a complaint with the government after director Sam LaHood reportedly told employees to collect all of the organisation’s work related paperwork for scanning and shipping to the US.

It is clear that NDI, IRI and Freedom House were training and funding the youth movement in Egypt while the US Government and its Cairo Embassy were fully aware that the youth movement aimed to remove Mubarak from power. Critics claim that the defendants are being charged with a law that is a “relic of the Mubarak era”. But, it may be replied, in what country does the law allow foreign governments to fund and train opposition groups with a stated goal of regime change? It is common sense to assume that if China or Cuba were funding similar oppositionist groups in the US, those involved would be facing far harsher sentences than the 43 accused of these activities in Egypt. Yet they continue to hide behind the tattered guise of being ‘NGO’ employees, claiming independence because their US government funding is channelled through the National Endowment for Democracy.

This by no means suggests that the US were attempting to topple Mubarak. Mubarak had long served as an important regional ally for his role in maintaining the Egypt-Israel peace treaty and his support and implementation of the neoliberal economic model within Egypt. Rather, the US strategy was to prop up the dictatorship while simultaneously attempting to influence any resistance to the regime that might emerge. By selectively choosing civil society organisations more open to (or more easily influenced towards) a free-market economic model for funding and, by taking a leadership role in the training of possible future leaders, the US aimed to ensure that any possible democratic transition would continue to serve her regional interests. This strategy of course intensified as soon as the revolution began to look more like a reality than a pipe dream.

Although the April 6th movement is certainly not overtly neoliberal it was the least likely of the various oppositionist forces in Egypt to demand radical economic restructuring or Islamist social and foreign policy. The youthfulness and loose organising structure of the movement also made them an easier entity to influence towards a more positive view of the US, including a US based political and economic system. These factors, however, also hindered the movement’s ability to organise into real political parties capable of winning elections after the revolution when compared to more entrenched and organised entities such as the Muslim Brotherhood. But, by demonstrating support for the youth movement, the US also managed to avoid any large scale anti-American sentiment among the Egyptian resistance; a rather large accomplishment considering her continued provision of millions of dollars in military aid to Mubarak while he was attacking protesters in the streets.

The term ‘NGO’ is regularly used deliberately to create an illusion of innocent philanthropic activity. In this case the Egyptian government was investigating the operations of organisations in receipt of US state funding which have a proven history of covertly funding political parties, influencing elections and aiding coups against both autocratic and democratic non-compliant and left-leaning governments around the world. Yet one mention of the Egyptian government’s raid on the offices of so-called ‘pro-democracy NGOs’ in Cairo was enough to spark an international outcry. The result was an almost complete failure by the Western press to investigate at all the history of the organisations involved or the validity of the charges being brought against them.

Jeffrey Sachs’ bid for the Presidency of the World Bank was backed by progressive publications from the Huffington Post to the Guardian and by the governments of a number of developing countries.

This support is understandable given his current positions on financial assistance and debt relief, and his occasional anti-neoliberal rhetoric. There is also a sense that he was the ‘best of a bad crowd’ and that if he had succeeded in his bid this would have broken the undemocratic top-down practice of Washington appointed leaders to date.

His supporters, however, seemed to forget his long history of promoting neoliberal ‘shock therapy’ across the developing world. Sachs’ recommendations in the past included promoting the reform agenda regularly imposed by the IMF since the 1980s, such as the freezing of wages, the removal of state subsidies and price controls on oil and food, the downsizing and privatisation of state companies, drastic cuts in government social spending and the dismantling of tariff barriers to trade. The only divergence in Sachs’ recommendations from his more neoliberal Harvard colleagues during his government advisory years was his advocacy of debt relief and increased economic aid alongside neoliberal structural reforms. But the result of the neoliberal policies Sachs recommended around the world created what Naomi Klein described as a “gaping wound” for which increased aid served as little more than a “band aid”.

Also, unlike many of his neoliberal colleagues, and apparently as a matter of principle, Sachs refused to advise unelected governments. But he had no problem advising and supporting policies implemented by governments for which they had absolutely no electoral mandate. Thus in the 1980s and 1990s he either personally recommended or praised from afar policies implemented by the so called ‘bait and switch’ leaders of a number of Latin American governments.

What became known as the ‘bait and switch’ phenomenon was the strategy whereby leaders (usually with a track record of left-wing polices) ran for government on an anti-neoliberal platform in order to ‘bait’ the electorate but once in government ‘switched’ to enact deep cutting neoliberal reforms, for example in Argentina, Bolivia, Venezuela, Peru and Brazil. The degradation of democratic legitimacy in Latin America as a result of the ‘bait and switch’ strategy has been far-reaching, resulting in some cases in the collapse of the party political system, the rise of political populism and a steep decline in electoral participation. Yet Sachs was still being praised years later by the New York Times as an “evangelist for democratic capitalism”.

Bolivia

The role Jeffrey Sachs played in curbing hyperinflation in Bolivia is regarded as one of his greatest achievements. This was during his period as an official economic advisor to the first ‘bait and switch’ leader, President Víctor Paz Estenssoro, in 1985-6. Paz had been re-elected because of the legacy of his first term as President, when he had started to redistribute land to Bolivia’s indigenous peasants and nationalised the tin mines. But once returned to power he proceeded to enact the most radical neoliberal restructuring programme ever attempted in a democracy.

Hyperinflation was successfully tackled but the social costs of the reform period were very high. Sachs’ advised removal of government subsidies sparked a crisis in Bolivia’s small business sector. Nationalised companies were downsized and thousands of public sector jobs cut. The cumulative result was a drastic increase in unemployment. Just two years after the reforms were initiated the informal sector had mushroomed to embrace 70% of the entire urban workforce . For those still in employment, wages remained at third world levels while the prices of food and basic amenities soured thanks to Sachs’ advised removal of price controls. Labour flexibilisation eroded long fought for workers rights as well as weakening Bolivia’s once strong trade unions.

Naturally, the poorest elements of society were hit hardest, and it is estimated that the unemployment crisis forced one in ten workers into some involvement in the cocaine industry. In their book, Unsettling Statecraft: Democracy and Neoliberalism in the Central Andes, Catherine Conaghan and James Malloy claim that this boost to the cocaine industry helped stabilise the Bolivian economy: “in addition to generating income, the injection of ‘coca-dollars’ into the banking system is believed to have helped stabilize the currency”. This is an issue on which proponents of Sachs’ shock therapy maintain a conspicuous silence.

A leaked US diplomatic cable revealed that even the US believed that neoliberal reforms in Bolivia had “clearly failed to meet public expectations for increased incomes and jobs”. The cable referred to the rise in inequality, particularly between those of European and indigenous decent,stating that “race-based social and economic differences have exacerbated the sense of racial separation, and amount, in the view of some critics, to a kind of de facto economic apartheid”.

The neoliberal reform period in Latin America was characterised by a great increase in inequality and poverty, a sharp decline in real wages, labour rights and job security and a rise in living costs, the degradation of democratic legitimacy and the exclusion of large groups of society from basic health care and education services. Even in countries that achieved economic growth and decreased inflation over this period, such as Chile and Argentina, the social costs were immense due to the negative effects of economic reform falling disproportionately on the poor. Yet Sachs went on in the 1990s to advise precisely the same policy prescriptions (accompanied by the ‘band aid’ of Western aid packages) to transitioning post-Soviet states, prioritising monetary stability over basic standards of living.

Russia

The most spectacular failure of Sachs’ advisory missions in the former Soviet republics was the case of Russia itself, where his neoliberal ideology led him simply to dismiss the advice of numerous international economists who advocated supporting a gradual transition to capitalism with an emphasis on democratic consensus building. The impatient approach supported by Sachs’ ultimately led to the collapse of the Russian economy, the transfer of Russia’s vast state owned recourses into the hands of a corrupt oligarchy, and the plummeting of real wages, life expectancy, GDP and industrial output. Even the US Government Accountability Office found itself forced to investigate if the Harvard Institute for International Development (HIID) had acted in breach of US law by channeling hundreds of millions of USAID money to corrupt privatizers, and to what extent Harvard advisors had personally profited from the process. The conclusions of the report led to the firing of Jonathan Hay (HIID’s General Director in Moscow) and Andrei Schleifer (Director of HIID’s Russia Project). This followed the withdrawal of millions in USAID funding amid allegations that the HIID had “abused the trust of the United States Government by using personal relationships…for private gain”.

Jeffrey Sachs, reformed man?

Sachs has since moved on from neoliberal reform to become an advocate of aid and debt relief. He even appeared to a cheering crowd (and a small number of outraged Latin American activists) at the Occupy Wall Street protest, decrying the greed of bankers and handing out free copies of his book. Much to the dismay of the Occupy Nigeria Movement, however, Sachs has openly praised the Nigerian neoliberal economic reform agenda which is being led by the IMF and Finance Minister Ngozi Okonjo-Iweala, himself fresh from a top post at the World Bank. “If the president and his team carry through on their plans for bold, honest, equitable and transparent reforms, they are well placed to usher in a new day for Nigeria”, he wrote. His praise extended to President Goodluck Jonathon’s unexpected removal of oil subsidies in January, a decision that sparked mass strikes and demonstrations as the immediate doubling of fuel costs inevitably hit the poorest hardest.

Most worrying, however, is his total failure to acknowledge any of his past interventions as mistaken. In fact, he continues to boast about the purely monetary successes of these interventions, rarely referring to their social consequences which he is now so quick to identify in the actions of others. Sachs’ simplistic ideological conviction was that the same policy formula would work in virtually any situation, regardless of acute political, historical and socially diverse environments.

This is the same simplistic and destructive approach to development economics that has led to a global counter-movement demanding reform of world financial institutions. To assume, therefore, that Sachs would have represented some radically different future for the World Bank is misguided. At best, his history and current views on development economics demonstrate that he remains firmly within the post-Washington consensus, advocating what has been coined ‘neo-liberalism with a human face’; the same old unequal system with a bit more financial assistance and a bit less debt to lessen the effects of the wrecking ball.

Lessons for the Future

As Broad and Cavanagh of the Institute for Policy Studies argue, the progressives of the world should have backed the best progressive candidate for the job of heading the World Bank rather than promoting Jeffrey Sachs’ bid, on the simplistic basis that he represents the lesser of two evils. They highlight not only the consequences of Sachs’ history of neoliberal shock therapy but also his present day “top-down and formulaic” approach to development.

A more suitable candidate would have garnered a far greater support base in the global South and the result would have been a more global push to reform the current system of Washington appointed World Bank leaders. Suggested candidates have included former President of Brazil Luiz Inácio Lula de Silva for his efforts to unite the global South to push for World Bank, IMF and WTO policies that reflect the needs of both developed and developing countries, former head of the United Nations Development Programme, Gus Speth, and  Nobel Prize winning economist Amartya Sen. Instead, the progressive Western press and a handful of countries backed the bid of a man who the majority of the developing world still see as a leading architect of the doctrines of economic reform that caused such serious hardship among many of the poorest societies on earth. A great opportunity to open a real global debate on democratic reform of the financial institutions has been lost but perhaps lessons have been learned for the future.

Ever since the Egyptian authorities raided the offices of a number of Western “non-profit organisations” in December, there has been consternation in the Western press. The 43 people accused of failing to register with the government and of financing the 6 April protest movement with illicit funds have been referred to repeatedly in the Western press as ‘NGO’ workers. This has served successfully to deflect the media from examining whether in fact there was some basis to Egypt’s claims that these people had been acting illegally.

As regards the accused organisations in Egypt, “NGO” might seem a strange term given that four of the five accused organisations receive the majority of their funding directly or indirectly from “their” governments. The Konrad Adenauer Stiftung is a German non-profit that receives 90 per cent of its funding from the German government. The International Republican Institute (IRI) and the National Democratic Institute (NDI) are two of the four core institutions of the grant-making institution the National Endowment for Democracy (NED).

NED was created as an act of Congress and receives more than 90 per cent of its budget from the US government. Freedom House, while not one of its core institutions, also regularly receives the majority of its funding from NED. Chaired by Richard Gephardt – former Democratic Representative, now CEO of his own corporate consultancy and lobbying firm – the NED’s Board of Directors consists of a collection of corporate lobbyists, advisors and consultants, former U.S congressmen, senators, ambassadors and military staff, as well as senior fellows of highly political “think tanks”.

NED and its affiliates (particularly IRI) have been implicated in funding groups involved in organising coups against democratically elected leaders such as Hugo Chavez of Venezuela (2002), Jean-Betrand Aristide of Haiti (2004) and Manuel Zelaya of Honduras (2009). NED massively funded the political opposition to democratically elected Nobel Peace Price winner President Oscar Arias of Costa Rica (1986-1988) and, during the 1980s, NED poured funding into the cause of ‘defending democracy’ in France against her elected government, under Francois Mitterrand, which it regarded as dangerously socialist. As Barbara Conry of the right leaning Cato Institute once wrote: “Through the Endowment, the American taxpayer has paid for special-interest groups to harass the duly elected governments of friendly countries, interfere in foreign elections, and foster the corruption of democratic movements.”

On 14 April 2011, the New York Times published an article entitled “U.S. Groups Helped Nurture Arab Uprisings” in which it stated that: “A number of the groups and individuals directly involved in the revolts and reforms sweeping the region, including the April 6 Youth Movement in Egypt, the Bahrain Center for Human Rights and grass-roots activists like Entsar Qadhi, a youth leader in Yemen, received training and financing from groups like the IRI, the NDI and Freedom House”.

One need only look at NED’s official website to see that it is pushing a right-wing agenda in Egypt, with nearly half of the $2,497,457 allocated to Egypt in 2010 going to the Center for International Private Enterprise for actions such as strengthening civil society’s “capacity to advocate for free market legislative reform” and other large grants awarded to youth organisations for training and mobilising activists in the use of new and social media.

But this is just the funding that is openly boasted of and the Egyptian authorities are finding it difficult, apparently, to trace the organisation’s funding. Dawlat Eissa – a 27-year-old Egyptian-American and former IRI employee – claimed that that the IRI was using employee’s private bank accounts to channel funding into IRI covertly from Washington.

A leaked Cairo US embassy cable from 2008, entitled “April 6 activist on his US visit and regime change in Egypt”, revealed how the US were in dialogue with one April 6 youth activist about his attendance at the 2008 Alliance of Youth Movements Summit in Washington. The cable also detailed the youth movement’s goal to remove Mubarak from power before 2011. The activist called Mubarak “the head of the snake” saying that it must be removed before democracy could take root.

While the Embassy, deemed this plan “highly unrealistic”, the dialogue shows that from as early as December 2008 Washington was fully aware of the movement’s aim to remove the Mubarak regime from power. Critics claim that the defendants in the ‘NGO’ trial are being charged with a law that is a “relic of the Mubarak era”. But in what country does the law tolerate foreign governments funding and training opposition group activists aiming for regime change? The US?

The term ‘NGO’ is used deliberately to create an illusion of innocent philanthropic activity. In this case the Egyptian government is investigating the operations of US state funded organisations which have a proven history of covertly funding political parties, influencing elections and aiding coups. Yet one mention of the Egyptian government’s raid on the offices of so-called ‘pro-democracy NGOs’ in Cairo was enough to spark an international outcry. There was an almost complete failure by the Western press to highlight at all the history of the organisations involved or the potential validity of the charges being brought against them.