American empire and ‘excluded states’: the millennium challenge account and the shift to pre-emptive development

Abstract

In March 2002 President George W Bush announced the creation of what many insiders have heralded as a revolutionary development initiative: the Millennium Challenge Account (mca). The latter seeks to provide assistance to 79 of the world's poorest countries—many of which have been often equated with the term ‘failed states’—so that they may reap the benefits of neoliberal-led globalisation. One of the most novel, and coercive, features of this development compact is the ‘pre-emptive’ method in which it will administer aid. Under the mca, only countries that govern justly, invest in their people, and open their economies to foreign enterprise and entrepreneurship will qualify for funding. To this end the Bush administration has devised 16 eligibility criteria—ranging from civil liberties to ‘days to start a business’—that each country must successfully pass before receiving aid. Despite its impact on normalising, and thus legitimating, the tendency towards the privatisation of aid and militarisation of development, there has been very little critical work on the mca. This paper sets out to fill this gap in the literature by attempting to understand historically the mca as a moment of American empire.1 In doing so, I suggest that, while the form of the mca represents an unabashed articulation of US-led imperialism vis-a`-vis the poorest regions in the South, the content of this allegedly novel strategy reflects the same goals and interests that underlie the neoliberal agenda, namely, that the path to increased growth and prosperity lies in countries' willingness and ability to adopt policies that promote economic freedom and the rule of law.

Notes

Susanne Soederberg is an Associate Professor in Devolpment Studies at Queen's University, Kingston, Ontario (effective 1 July 2004).

This article builds on the wider arguments developed in my forthcoming book, Contesting Global Governance: Empire, Class, and the New Common Sense in Managing Globalisation, London: Pluto Press.

Paul Kagan, Of Paradise and Power: America and Europe in the New World Order, New York: Alfred Knopf, 2003.

As of 18 June 2003 the Senate Foreign Relations Committee and the House International Relations Committee have reported out bills to authorise the creation of the mca.

It should be highlighted that the amount of spending put forward by the Bush Administration is contingent on budgetary approval by the US Congress. At the time of writing, both House and Senate Budget Committees have cut ambitious amounts. This will be discussed in more detail in the second half of the paper. For now, suffice it to say that, viewed from a wider lens, US levels of developmental aid, broadly defined, have been decreasing since the 1960s. Seen from this angle, the spending levels of the mca are not as dramatic as the Bush administration makes them out to be. What concerns us here, however, is not the amount of aid, but the pre-emptive form in which this aid is distributed and, in turn, its disciplinary characteristics. Quote from IH Daalder et al, ‘The Bush National Security Strategy: an evaluation’, Policy Brief No 109, Washington, DC: Brookings Institution, October 2002, p 5.

Anthony Wayne, ‘The mca promotes sound economic policies’, in Economic Perspectives, Washington, DC: US State Department, March 2003, p 5.

The Project for the New American Century is a non-profit organisation that is dedicated to promoting a ‘few fundamental propositions: that American leadership is good both for America and for the world; that such leadership requires military strength, diplomatic energy and commitment to moral principle; and that too few political leaders today are making the case for global leadership’. For more information see http://www.newamericancentury.org/.

‘National Security Strategy of the United States of America’, Washington, DC: The White House, September 2002, at http://www.whitehouse.gov/nsc/nss1.html.

As many commentators have noted, the similarities between the second Bush administration's nss and Deputy Secretary of Defense Paul Wolfowitz's 1992 Draft of the Defence Planning Guidance document are uncanny. See, for example, pbs Frontline, at http://www.pbs.org/wgbh/pages/frontline/shows/iraq/etc/wolf.html.

‘Terrorism’ is a highly contested term. Its subjective meaning is largely determined by who is doing the defining. ‘Terrorist’, for example is considered to be a term of abuse generally used against groups who engage in violent behaviour, by people who oppose the goals of the group. It carries the connotation that suffering has been caused to helpless victims. As Peter Willetts rightly notes, the term terrorist ‘might be more appropriately applied to those, including governments, who use indiscriminate violence for the purpose of political intimidation’. P Willetts, ‘Actors in global politics’, in J Baylis & S Smith (eds), The Globalization of World Politics: An Introduction to International Relations, Oxford: Oxford University Press, 1999, p 297.

Toby Dodge, ‘Iraq and the Bush doctrine’, Observer, 24 March 2002, at http://www.observer.co.uk/worldview/story/0,11581,672584,00.html.

In proportion to its size, the USA spends the least of all the wealthy countries. In 2002, for example, it spent only 0.12% of its gdp. To put this in perspective, Denmark donated almost 1% of gdp in bilateral aid. Quoted in ‘The solidarite´ summit’, The Economist, 30 May 2003.

United States Agency for International Development, ‘Millennium Challenge Account update’, 3 June 2002, at http://usinfo.state.gov/journals/ites/0303/ijee/usaidfs/htm.

Cf the excellent essays by Leo Panitch & Sam Gindin, ‘Global capitalism and American Empire’, pp 1–42; Gregory Albo, ‘The old and new economics of imperialism’, pp 88–113; and David Harvey, ‘The “new” imperialism: accumulation by dispossession’, pp 63–87, all in L Panitch & C Leys (eds), Socialist Register: The New Imperial Challenge, London: Merlin Press, 2003.

Panitch & Gindin, ‘Global capitalism and American Empire’, p 28. Samir Amin refers to the trifurcation of the South into: emerging markets, marginalised states and excluded states. S Amin, ‘For progressive and democratic new world order’, in Francis Adams et al (eds), Globalization and the Dilemmas of the State in the South, London: Macmillan, 1999, pp 17–32. The term ‘the non-integrating Gap’ is taken from a quote by a US Naval War College professor advising the Secretary of Defense in Panitch & Gindin, ‘Global capitalism and American empire’, p 31.

Ben Fine, ‘Making the post-Washington consensus’, in Fine et al (eds), Development Policy in the Twenty-first Century: Beyond the post-Washington Consensus, London: Routledge, 2001, p 134.

Thomas Friedman, The Lexus and the Olive Tree, London: HarperCollins, 1999. For an excellent critique of Friedman's work, see Mark Rupert's url, ‘The anti-Friedman page’, at http://www.maxwell.syr.edu/maxpages/faculty/merupert/Anti-Friedman.htm.

Stanley Hoffman, ‘Clash of globalizations’, Foreign Affairs, 81 (4), 2002, p 106.

Janine Brodie, ‘Globalization, in/security, and the paradoxes of the social’, in Isabella Bakker & Stephen Gill (eds), Power, Production, and Social Reproduction, London: Palgrave, 2004, forthcoming.

Elmar Altvater, ‘The growth obsession’, in Leo Panitch & Colin Leys, Socialist Register, London: Merlin Press, 2002, p 75.

In the early 1980s, for example, low income countries experienced a decline in per capita income of 1.4%, the number of people living on less than $1 a day increased from 1197 million in 1987 to 1214 million in 1998, and the 1999 undp Human Development Report notes that, whereas the income gap between the 20% of the richest people in the wealthiest countries in the world and the 20% of the poorest was 30:1 in 1960, the gap was 74:1 in 1997. undp, Human Development Report 1999: Globalization with a Human Face, at http://hdr.undp.org/reports/global/1999/en/.

These results were reported at the 2003 meeting of the World Economic Forum. The poll conducted by Gallup International and Environics included 34 000 people from 46 countries. See www.weforum.org, accessed 25 January 2003.

Aside from the more liberal voices of Joseph Stiglitz, Ravi Kanbur and Jeffrey Sachs, the voices of conservative dissenters in Washington, who have long argued for the abolition of the imf and World Bank, were not only become becoming louder but also had a growing and sympathetic audience. The Heritage Foundation (now a key player in the mca) and the Cato Institute, for example, have charged the imf with eliminating the discipline of risk in private markets (moral hazard) by interfering in the ‘natural rationality’ of markets through bailouts and aid packages. See, for example, Alan Reynolds of the Cato Institute, ‘The imf’s suffocating embrace', at http://www.worldtrademag.com/CDA/ArticleInformation/features/BNP_Features_Item/0,3483,91669,00.html; Edwin J Feulner, Jr, ‘The imf needs real reforms, not more money’, Heritage Foundation Backgrounder, 9 May 1998; and B T Johnson and B Schaefer, ‘No new funding for the imf’, Heritage Foundation Backgrounder Update, 23 September 1997.

See, for example, S Soederberg, The Politics of the New International Financial Architecture: Reimposing Neoliberal Domination in the Global South, London: Zed Books, 2004.

JA Ocampo, ‘A broad agenda for international financial reform’, in Ocampo et al (eds), Financial Globalization and the Emerging Economies, Santiago: United Nations Economic Commission for Latin American and the Caribbean, 2000, p 43.

It should be noted that the ‘share of US resources devoted to development, humanitarian or economic aid for other countries has generally fallen since the mid-1960s. The overall decline has been substantial, reducing such spending to exceptionally low levels for the United States. The share of national resources the United States contributes in aid to the world’s poorest nations is now far lower than the share that any other industrialized country contributes, and is at one of the lowest levels in the post-World War II era'. The figures stated here are expressed in 2000 dollars and adjusted for inflation. Quoted in Isaac Shapiro, ‘Trends in US development aid and the current budget debate’, Washington, DC: Centre on Budget and Policy Priorities', September 2000.

Caroline Thomas, ‘Global governance and human security’, in R Wilkinson & S Hughes (eds), Global Governance: Critical Perspectives, London: Routledge, p 114. See also undp, Human Development Report, Oxford: Oxford University Press, 1994.

This term describes the many civil wars which are being fought around the world and which feed off of three sources: drugs, black money and arms. See M Kaldor, New and Old Wars: Organised Violence in a Global Era, Cambridge: Polity Press/Stanford University Press, 1999.

The term ‘global governance’ is notoriously imprecise and woolly. The definition that most closely resembles the usage by the Clinton administration is found in the text of the Report of the Commission on Global Governance, Our Global Neighbourhood, Oxford: Oxford University Press, 1995.

Robert S Litwak, Rogue States and US Foreign Policy: Containment after the Cold War, Washington, DC: Woodrow Wilson International Centre for Scholars, 2000, p 49.

William J Clinton, ‘Remarks by the President to Opening Ceremony of the 1998 International Monetary Fund/World Bank Annual Meeting’, 6 October 1998, at http://www.usconsulate.org.hk/gf/1998/1006a.htm.

David Kotz, ‘Neoliberalism and the US economic expansion of the 90s’, Monthly Review, April 2003, p 16.

World Bank, ‘Four elements of empowerment’, PovertyNet, at http://www.worldbank.org/poverty/empowerment/whatis/incl.htm.

Carol Graham & Paul Masson, ‘The imf’s dilemma in Argentina: time for a new approach to lending?', Policy Brief 111, Brookings Institution Policy Brief, Washington, DC: Brookings Institution, November 2002.

Fine, ‘Making the post-Washington consensus’.

imf, ‘Poverty Reduction Strategy Papers’, 26 June 2003, at http://www.imf.org/external/np/prsp/prsp.asp.

S Gill and D Law, ‘Global Hegemony and the structural power of capital’ in S Gill (ed), Gramsci, Historical Materialism and International Relations, Cambridge: Cambridge University Press, 1993.

imf, ‘The imf’s Poverty Reduction and Growth Facility (prgf)', at http://www.imf.org/external/np/exr/facts/prgf.htm, accessed 20 April 2002.

See, for example, imf, ‘Reports on the Observances of Standards and Codes’, 15 April 2003, at http://www.imf.org/external/np/rosc/rosc.asp?sort=date.

imf Survey, 30 (7), 2001, p 104.

Janine Brodie's work on the ‘social’ vis-a`-vis neoliberal globalism takes us further into the paradox brought about by disciplinary neoliberalism. As she argues, ‘neoliberal globalism simultaneously minimizes spaces and strategies for social intervention and maximizes the need for it’. Brodie, ‘Globalization, governance and gender: rethinking the agenda for the 21st century’, remarks prepared for the Inaugural Panel ‘World and Regional Contexts’ at the Central American and Caribbean Regional Conference, ‘Poverty Reduction, Good Governance, and Gender Equality’, Managua, 28–30 August 2002, mimeo.

Kotz, ‘Neoliberalism and the US economic expansion of the 90s’, p 21.

Robert J Shiller, Irrational Exuberance, New York: Broadway Books, 2000.

Kotz, ‘Neoliberalism and the US economic expansion of the 90s’, p 21.

Ibid, p 26.

‘Bush goes for broke’, The Economist, 8 January 2003. According to the US Labour Department, the unemployment rate rose in May to 6.1%—its highest level since July 1994. ‘Unemployment up to 6.1 per cent in May’, Financial Times, 6 June 2003.

‘Economic snapshots’, at http://www.epinet.org/index.html, accessed 1 August 2002.

‘O’Neill set to prevent federal default', Guardian Unlimited, 19 March 2002, at http://www.guardian.co.uk/uslatest/story/0,1282,-1595956,00.html, accessed 19 March 2002.

‘Dollar’s fall giving investors the jitters', Financial Times, 12 May 2003.

‘The O’Neill doctrine', The Economist, 27 April 2002, p 12.

Editorial, ‘What recovery?’, Monthly Review, 54 (11), 2002, p 26.

‘US economic growth will slow in 2003; globalization may be stagnating’, The Conference Board, 3 April 2003, at http://www.conference-board.org/economics/press.cfm?press_ID=2115.

World Bank, Global Development Finance: Striving for Stability in Development Finance, Washington, DC: World Bank Group, 2003, p 7.

M Morrissey & D Baker, ‘When rivers flow upstream: international capital movements in the era of globalization’, Issue Brief, Washington, DC: Centre for Economic and Policy Research, 22 March 2003, pp 1–21.

Kotz, ‘Neoliberalism and the US economic expansion of the 90s’, p 16.

Sheldon Rampton & John Stauber, ‘Trading on fear’, Guardian, 12 July 2003, at http://www.guardian.co.uk/usa/story/0,12271,995669,00.html.

Rahul Mahajan, The New Crusade: America's War on Terrorism, New York: Monthly Review Press, 2002, p 22.

Condaleeza Rice, ‘Promoting the national interest’, Foreign Affairs, 79 (1), 2000, pp 45–63.

Kagan, 2003, p 88.

‘Unprecedented power, colliding ambitions’, The Economist, 28 September 2002, p 27.

Office of Management and Budget,⁵⁹Charting a course for the federal budget', ⁶⁰Washington, DC, 15 June 2003, at http://www.whitehouse.gov/omb/budget/fy2004/charting.html.61

‘FY04 budget request’, Centre for Defence Information, at http://www.cdi.org/budget/2004/.

Cf ‘Doubts arise over scope for US reforms’, Financial Times, 13 February 2003.

Tony Platt, ‘The state of welfare: United States 2003’, Monthly Review, 55 (5), 2003, pp 13–27.

These two indictors are defined and quantitatively measured by the Freedom House. For more information, see the Freedom House's 2003 Freedom in the World: Country and Territory Report, at http://www.freedomhouse.org/research/freeworld/2003/countries.htm.

Rampton & Stauber, ‘Trading on fear’.

More information about the American Enterprise Institute is available at http://www.aei.org.

Saskia Sassen, ‘New lords of Africa’, Guardian, 9 July 2003.

‘UN laments development goal failure’, Financial Times, 2 October 2002.

Susan E Rice, ‘The new National Security Strategy: focus on failed states’, Policy Brief No 116, Washington, DC: Brookings Institution, February 2003.

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Of course, the highly subjective and self-serving aspects of this notion are not called into question by the US government. For a critical assessment, see Martin Khor, ‘Failed states theory can cause global anarchy’, Third World Network, 4 March 2002, at http://www.twnside.org.sg/title/et0125.htm.

Of course, the exploitative and repressive nature of centuries of imperial and colonial rule are not brought into the official explanation as to why these states have ‘failed’ to serve dominant capital interests properly.

Daalder et al, ‘The Bush National Security Strategy’.

See, for example, Jonathan R Pincus & Jeffrey A Winters, ‘Reinventing the World Bank’, in Pincus & Winters (eds), Reinventing the World Bank, Ithaca, NY: Cornell University Press, 2002, pp 1–25. More information about the ida is available at http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,pagePK:118644∼theSitePK:73154,00.html.

It should be mentioned that from the early 1980s onwards the USA began to exercise its muscle in a much more unilateral and pre-emptory manner vis-a`-vis the ida. Devesh Kapur, ‘The changing anatomy of governance of the World Bank’, in Pincus & Winters, Reinventing the World Bank, pp 54–75.

John B Taylor, ‘Improving the Bretton Woods Financial Institutions’, speech by the Under Secretary of Treasury for International Affairs at the Annual Mid-Winter Strategic Issues Conference of the Bankers Association for Finance and Trade, 7 February 7 2002, at http://www.challengeglobalization.org/html/econ_lit/treasury_feb02.shtml (emphasis added).

See, for example, BD Schaefer, ‘Real help for poor nations: President Bush’s World Bank grant proposal', Backgrounder, 1466, Washington, DC: Heritage Foundation, 2001, at http://www.heritage.org/Research/TradeandForeignAid/BG1466.cfm.

A Lerrick & AH Meltzer, ‘Grants: a better way to deliver aid’, Quarterly International Economics Report, Pittsburgh, PA: Gailliot Center for Public Policy, Carnegie Mellon, 2002, at http://www.house.gov/jec/imf/grant.pdf.

JE Sanford, ‘World Bank: ida grants or ida loans’, Washington, DC: Bank Information Centre, 8 February 2002, at http://www.bicusa.org/usgovtoversight/Sanford%20_IDA_loans_grants.pdf.

Office of Public Affairs of the US Treasury Department, ‘Treasury Secretary John Snow announces request of an additional $100 million for the International Development Association, affirms progress on goals and measurable results’, 13 April 2003, at http://www.ustreas.gov/press/releases/js186.htm.

For more details on the Millennium Declaration, see the United Nations website at http://www.un.org/millennium/declaration/ares552e.htm.

US Agency for International Development, ‘Millennium Challenge Account update’.

US Department of State, ‘House panel approves $17.1 billion foreign spending bill’, 11 July 2003, Washington, DC, at http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2003&m= July&x=20030711103326emmoccmk7.867068e-02&t=usinfo/wf-latest.html.

G W Bush, ‘The US’s Millennium Challenge Account: new paradigm for development assistance?' News & Notices for IMF and World Bank Watchers, 2 (8), 2003, at http://www.challengeglobalization.org/html/news_notices/spring2003/INTRO.

Ibid.

Edward Said, Orientalism, New York: Vintage Books, 1979.

B Schaefer, ‘The Millennium Challenge Account: An opportunity to advance development’, Heritage Lectures, Washington DC: Heritage Foundation, No 753, delivered 27 June 2002, p. 5.

Said, Orientalism.