The Multinational Monitor



Book Review

The Brandt Proposals: In Whose Interest?

North-South: A Program for Survival.
Report of the Independent Commission on
International Development Issues
Massachusetts Institute of Technology Press
304 pages, $4.95

In early 1977, Willy Brandt assembled an international commission of eminent persons (politicians more than economists) to study, certain world economic problems. After two years of work, the commission has reported to the public with the release of North-South: A Program for Survival. In the pages of its study, the Brandt Commission strikes a pose of sympathy for the developing world, and sides with the South in many of the standard North-South issues debated over the last ten years.

Brandt introduces the report by suggesting it may "contribute to the development of worldwide moral values." This moral posturing is also implicit in the terms of reference developed in 1977 to guide the commission. The first sentence reads: "The task of the Independent Commission on International Development Issues (the Brandt Commission) is to study the grave global issues arising from the economic and social disparities of the world community and to suggest ways of promoting adequate solutions to the problems involved in development and in attacking absolute poverty." The commission touts its recommendations as a "program for survival" that would begin to confront the threats of war and chaos, references to which are liberally scattered throughout the report.

It may be unfair to judge a commission by its official name or its terms of reference; in these troubled times one should probably be a little indulgent of moral posturing and eschatological innuendos. Nevertheless, we should also be suspicious of the camouflage of bombast and platitude. Specific recommendations of the Brandt commission need a closer look.

Despite the commission's promise to focus on absolute poverty in the world, a breakdown of its proposals for growth in foreign aid puts concern for the poorest nations on a level with increased energy production-both -recommended for an additional $4 billion per year, out of proposed annual aid increases of $30 billion by 1985 and $37 billion by 1990. Increased aid to the poorest developing countries would amount to about 15 percent of total growth in foreign assistance, a smaller percentage than the share currently flowing to the poorest countries.

Similarly, "survival" suggests food, and despite a chapter on hunger which states "millions will either die from the lack of food or have their physical development impaired," the commission proposes to redirect official assistance towards industry: "Most official aid has gone to such purposes as agriculture and infrastructure, and industry has not received adequate support." The report calls for an additional $13 billion to aid agriculture in low-income food deficit countries, while urging that between $15 billion and $25 billion be earmarked for industrialization.

After mentioning sums of $4 billion for the poorest and $13 billion for agriculture in food deficit countries, the Brandt Commission suggests "a major expansion of public lending" to help "middle-income and higher-income" developing countries borrow annually up to $455 billion by 1985 and $270 billion by 1990 on world capital markets. The primary vehicle for this massive lending increase would be a new World Development Fund, designed to make medium-term balance of payments loans to these wealthier Third World governments. Despite its moralistic bravado about inequality and survival, the Brandt Commission, in short, has accepted implicitly the logic of the market: the richer one is, the more one is given.

Indeed, serious shortcomings in the commission's discussion of poverty and rural development suggest these issues were not its key concern. Other concerns are evident. Recommendations in the report support efforts by the industrialized countries to stimulate their economies and to pay their large oil bills through expansion of exports.

Anticipated annual OPEC trade surpluses of more than $125 billion through 1985 will require balancing deficits of more than $C25 billion by non-OPEC nations. In other words, OPEC countries will sell more than they buy; other countries taken together will have to buy more than they sell. The fundamental question, however, is the distribution of the balancing deficits: which countries will be able to pay for oil with current exports, and which will have to borrow?

In the context of faltering economic growth in the industrialized world, and persistent reluctance to accept trade deficits, the Brandt Commission's support for a program of massive lending to better-off Third World countries-a key market for Western goods and services-looks more like a program to transfer oil-related deficits than an aid program aimed at the poor. To promote the growth of exports from the developed world, it is necessary to help developing countries-go further into debt.

Given the trade surpluses of the OPEC nations, deficits have to show up somewhere. A case could be made, however, that large trade deficits for industrialized countries would cause fewer strains in the world economy than an attempt to increase lending to less creditworthy countries. This has been a favorite proposal of the U.S. Treasury, repeated at .,every economic summit. The U.S. program would entail expansionary economic policies in Western Europe and Japan designed to increase their imports from the rest of the world. According to the plan, the Big Three, Japan, West Germany and the U.S., would collectively take enough of the balancing deficits - and buy enough imports so Third World countries could find markets for their goods and would not need such large loans.

The rejection of the trade-not-aid alternative (leading to increased Third World exports) reflects the European/ Japanese perspective of the Brandt Commission. West Germany and Japan, whose domestic economies rival the United States' in strength, have played a disproportionately limited role in the Third World, given traditional U.S. dominance in the field of direct foreign investment. Increased world trade would serve as a vehicle for expanding the influence of these export-oriented economies in developing countries. The U.S., on the other hand, can look, more favorably on the prospect of increased imports from the Third World, since a major share of these imports would be produced by subsidiaries of U.S. multinationals.

The commission's failure to seriously address the needs of the poorest countries belies the moral armor in which the report cloaks itself. So, too, does the commission's failure. to adequately address the question of human rights. The report recommends explicitly that lenders be blind to human rights violations by governments to whom they extend aid. This proposal, if implemented, would reverse a decade of successful effort by those in the U.S. and elsewhere who have diligently worked to force their governments to withhold aid from consistent human rights violators. Under current law, the U.S. executive, for example, must withhold significant categories of aid from violators of human rights, and must vote against World Bank aid to human rights violators.

The Brandt Commission speaks out on the general need for multilateral institutions to operate without imposing political considerations on aid. Such sentiments are coyly naive. Aid-giving is, by definition, a political act. If aid is not to be tied to specific projects (the World Bank pattern) and is not to be tied to changes in internal fiscal and monetary policies (the IMF pattern), we must not conclude the money can be given without political impact. However much aid there is in the kitty, it is still limited; donor agencies must still allocate aid amongst the recipients. Given the existing predilection of the West to support authoritarian Third World governments accountable to a narrow economic elite, one wonders if a shift towards more trust an(( fewer rules is a shift in the right direction.

The political and economic themes of the Brandt Commission report point to one central concern: control. In response to the energy crisis and related economic dislocation, industrialized nations, particularly those countries that until now have been frustrated in their efforts to develop more international economic and political clout, are seeking to further their influence in the Third World. If the greater capital flows envisaged in the Brandt report are realized, GNP growth will undoubtedly accelerate, at least over the short term, in some of the higher-income developing countries. But the proposal would do little to aid the world's poorest countries, and any potential benefit would be at the expense of massive new Third World debt. This could not help but add a note of tension to international economic affairs. If international economic stability, along with relief for all of the world's nations is the goal, the trade option may be better than aid. Can the World Development Fund be anything more than a bigger and better debt trap?

Reviewed by David Gisselquist, associate professor of economics at the University of Maryland at Baltimore. He is author of Oil Prices and Trade Deficits: U.S. Conflicts with Japan and West Germany (Praeger, 1979).


Transnational Corporations Research Project

Founded in 1975, this organization examines the activities of foreign-based multinationals in Australia. It is primarily research-oriented, although it does actively collaborate with Australian trade unions on educational projects.

The group has published bibliographies on foreign corporate activity in the country, as well as a directory of nominee owners of Australian manufacturing firms. Its analytical reports include a study of the social and cultural impact of multinationals, and an examination of international banks in the Australian economy.

The organization serves as a critical link between activists and researchers in Australia, and groups working on international economic issues in the U.S. and Europe.

For a publications list, and further information on the project, write:

Professor E.L. Wheelwright
TNC's Research Project
University of Sydney
Sydney, NS W 2006
Council on Hemispheric Affairs (COMA)

The Council on Hemispheric Affairs, founded in 1975, is a non-profit educational and research organization specializing in the full spectrum of U.S.Latin American relations. With the support of U.S. trade unions, civic, religious and minority organizations whose chief officers sit on its board of directors, COHA disseminates information about current political, social and economic trends in Latin America and the effects of U.S. involvement there.

COHA maintains an extensive collection of material on a wide variety of inter-American themes as well as comprehensive files on Latin American countries. It publishes periodic reports and analyses that are distributed to executive agencies, congressional offices and the media. COHA's up-to-the-minute information on hemispheric developments is relied upon by journalists and researchers. The organization monitors human rights, the status of press freedom, trade union liberties, and the growing political and social questions raised by the presence of U.S. multinational corporations in the economies of South and Central American countries and in the Caribbean.

For more information, write:

Council on Hemispheric Affairs
1201 16th Street N.W., Room 305
Washington, D.C. 20036


The Asia Record

Formerly the Southeast Asia Record, this newspaper begins monthly publication in April. For the past nine months it appeared as a weekly covering political and economic developments in Southeast Asia. Its new focus will include all of East Asia.

The Record will feature on-sight reports from all the countries in the area, including China, and will print translations of articles from Japan on issues of significance for Asia-North America relations.

In addition to on-sight reports, the newspaper will include stories from a number of news services. The Record subscribes to Reuters Asia Wire, New Asia News and the New China News Agency.

The subscription rate is $12 per year. To request a subscription or a copy of the April issue, write:

The Asia Record
580 College Ave., Suite 6
Palo Alto, CA 94306

Issues is a new monthly magazine published in, London that presents alternative analysis and reporting on current events in international politics and economics. Billing itself as a Le Monde Diplomatique equivalent for the English-speaking- world, the April 1980 issue contains a wide-ranging selection of articles, mainly by British and American authors, on subjects such as political developments in El Salvador and the forces governing the shifting price of gold.

Although somewhat sloppily edited, Issues does provide thought-provoking reading. Multinational corporate activity is an important focus of the journal; a regular monthly section profiles a major international corporation. A monthly commodity section provides a brief sketch of market trends for a particular raw material.

In the April issue, Issues profiled the British mining multinational Rio Tinto Zinc, and the commodity uranium.

Personal subscriptions cost �6.50 in the U.K., Ireland and Europe, U.S. $15 in North America and U.S. $20 in the rest of the :world. For more information, write:

96 Gillespie Rd.
London NS 1 LN.


Mozambique and Tanzania: Asking the Big Questions

Based on interviews with, political leaders and citizens in Mozambique and Tanzania, this 128-page report highlights differences between the agricultural policies of two self-described socialist nations. The report was written by noted food expert Frances Moore Lappe, co-founder of the Institute for Food and Development Policy, and Adele Beccaro Varela.

The authors probe the success of the two countries in combating hunger and promoting participatory development.

The case studies are important examples of rural development strategies that reject large-scale foreign agribusiness operations.

The report is the first publication of the Institute's Food Security Project, which will examine the efforts of specific Third World nations to achieve agricultural self-sufficiency.

The single copy price is $4.95. Bulk rates are available. For more information, write:

Institute for Food and Development Policy
2588 Mission St.
San Francisco, CA 941 10

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