This is what we paid for

An article by George Monbiot in the Guardian ‘This Is What We Paid For’, which one can read here

This Is What We Paid For

Britain’s foreign aid has been used to bankroll a programme for mass
By George Monbiot. Published in the Guardian 18th May 2004

Tony Blair has lost the election. It’s true he wasn’t standing, but we won’t
split hairs. His policies have just been put to the test by an electorate
blessed with a viable opposition, and crushed. In throwing him out of their
lives, the voters of the Indian state of Andhra Pradesh may have destroyed
the world’s most dangerous economic experiment.

Chandrababu Naidu, the state’s chief minister, was the West’s favourite
Indian. Tony Blair and Bill Clinton both visited him in Hyderabad, the state
capital. Time magazine named him South Asian of the Year; the governor of
Illinois created a Naidu Day in his honour, and the British government and
the World Bank flooded his state with money. They loved him because he did
what he was told.

Naidu realised that to sustain power he must surrender it. He knew that as
long as he gave the global powers what they wanted, he would receive the
money and stature which count for so much in Indian politics. So instead of
devising his own programme, he handed the job to the US consultancy company

McKinsey’s scheme, “Vision 2020”, is one of those documents whose summary
says one thing and whose contents quite another.(1) It begins, for example,
by insisting that education and healthcare must be made available to
everyone. Only later do you discover that the state’s hospitals and
universities are to be privatised and funded by “user charges”.(2) It extols
small businesses but, way beyond the point at which most people stop
reading, reveals that it intends to “eliminate” the laws which defend
them,(3) and replace small investors, who “lack motivation”, with “large
corporations”.(4) It claims it will “generate employment” in the
countryside, and goes on to insist that over 20 million people should be
thrown off the land.(5)

Put all these – and the other proposals for privatisation, deregulation and
the shrinking of the state – together, and you see that McKinsey has
unwittingly developed a blueprint for mass starvation. You dispossess 20
million farmers from the land just as the state is reducing the number of
its employees and foreign corporations are “rationalising” the rest of the
workforce, and you end up with millions without work or state support. “The
State’s people,” McKinsey warns, “will need to be enlightened about the
benefits of change.”(6)

McKinsey’s vision was not confined to Naidu’s government. Once he had
implemented these policies, Andhra Pradesh “should seize opportunities to
lead other states in such reform, becoming, in the process, the benchmark
state.”(7) Foreign donors would pay for the experiment, then seek to
persuade other parts of the developing world to follow Naidu’s example.

There is something familiar about all this, and McKinsey have been kind
enough to jog our memories. Vision 2020 contains 11 glowing references to
Chile’s experiment in the 1980s. General Pinochet handed the economic
management of his country to a group of neoliberal economists known as the
Chicago Boys. They privatised social provision, tore up the laws protecting
workers and the environment and handed the economy to multinational
companies. The result was a bonanza for big business, and a staggering
growth in debt, unemployment, homelessness and malnutrition.(8) The plan was
funded by the United States in the hope that it could be rolled out around
the world.

Pinochet’s understudy was bankrolled by Britain. In July 2001 Clare Short,
then secretary of state for development, finally admitted to parliament
that, despite numerous official denials, Britain was funding Vision 2020.(9)
Blair’s government has financed the state’s economic reform programme, its
privatisation of the power sector and its “centre for good governance”
(which means as little governance as possible).(10) Our taxes also fund the
“implementation secretariat” for the state’s privatisation programme. The
secretariat is run, at Britain’s insistence, by the far-right business lobby
group the Adam Smith Institute.(11) The money for all this comes out of
Britain’s foreign aid budget.

It is not hard to see why Blair’s government is doing this. As Stephen Byers
revealed when he was secretary of state for trade and industry, “the UK
Government has designated India as one of the UK’s 15 campaign markets.”(12)
The campaign is to expand the opportunities for British capital. The people
of Andhra Pradesh know what this means: they call it “the return of the East
India Company”.

This isn’t the only aspect of British history which is being repeated in
Andhra Pradesh. There’s something uncanny about the way in which the
scandals that surrounded Tony Blair during his first term in office are
recurring there. Bernie Ecclestone, the Formula 1 boss who gave Labour
pounds1 million and later received an exemption from the ban on tobacco
advertising, was negotiating with Naidu to bring his sport to Hyderabad. I
have been shown the leaked minutes of a state cabinet meeting on January
10th this year.(13) McKinsey, they reveal, instructed the cabinet that
Hyderabad should be a “world class futuristic city with Formula 1 as a core
component.” To make it viable, however, there would be a “state support
requirement of Rs400-600 crs”(4 billion to 6 billion rupees).(14) This means
a state subsidy for Formula 1 of pounds50million to pounds75m a year. It is
worth noting that thousands of people in Andhra Pradesh now die of
malnutrition-related diseases because Naidu h!
ad previously cut the subsidy for food.

Then the minutes become even more interesting. Ecclestone’s Formula 1, they
note, should be exempted from the Indian ban on tobacco advertising. Mr
Naidu had already “addressed the PM as well as the Health Minister in this
regard” and was hoping to enact “state legislation creating an exemption to
the Act”. (15)

The Hinduja brothers, the businessmen facing criminal charges in India who
were given British passports after Peter Mandelson intervened on their
behalf, have also been sniffing round Vision 2020. Another set of leaked
minutes I have obtained shows that in 1999 their representatives held a
secret meeting in London with the Indian attorney-general and the British
government’s export credit guarantee department, to help them obtain the
backing required to build a power station under Naidu’s privatisation
programme.(16) When the attorney-general began lobbying the Indian
government on their behalf, this caused yet another Hinduja scandal.

The results of the programme we have been funding are plain to see. During
the hungry season, hundreds of thousands of people in Andhra Pradesh are now
kept alive on gruel supplied by charities.(17) Last year hundreds of
children died in an encephalitis outbreak because of the shortage of
state-run hospitals.(18) The state government’s own figures suggest that 77%
of the population has fallen below the poverty line.(19) The measurement
criteria are not consistent, but this appears to be a massive rise. In 1993
there was one bus a week taking migrant workers from a depot in Andhra
Pradesh to Mumbai. Today there are 34. (20) The dispossessed must reduce
themselves to the transplanted coolies of Blair’s new empire.

Luckily, democracy still functions in India. In 1999, Naidu’s party won 29
seats, leaving Congress with five. Last week those results were precisely
reversed. We can’t yet vote Tony Blair out of office in Britain, but in
Andhra Pradesh they have done the job on our behalf.

1. Vision 2020 can be read at

2. Vision 2020, Page 96.

3. Vision 2020, page 42.

4. Vision 2020, page 195.

5. Vision 2020, page 170. This is worded as follows: “However, agriculture’s
share of employment will actually reduce, from the current 70 per cent [of
the population of 76 million] to 40-45 per cent”.

6. Vision 2020, page 158.

7. Vision 2020, page 333.

8. The figures have been tabulated by Tom Huppi in the document Chile: the
Laboratory Test, which can be found at

9. Clare Short, 20th July 2001. Parliamentary answer to Alan Simpson MP.
Hansard Column 475W.

10. The full list can be read at

11. Government of Andhra Pradesh, ?2002. Strategy Paper on Public Sector
Reform and Privatisation of State Owned Enterprises.

12. Department of Trade and Industry, 6th January 2000. Byers to Help UK
SMEs Foster Export Links with India. Press release.

13. Government of Andhra Pradesh. Minutes of Cabinet sub-committee meeting
on 10th January 2004.

14. ibid.

15. ibid.

16. Clifford Chance solicitors, 3rd June 1999. Vizag – Meeting with the
Attorney-General. Fax transmission.

17. Eg P. Sainath, 15th June 2003. The politics of free lunches. The Hindu.

18. Eg K.G. Kannabiran and K. Balagopal, 14th December 2003. Governance &
Police impunity in Andhra Pradesh: World Bank urged not to make loan.
Peoples’ Union for Civil Liberties and Human Rights Forum, Andhra Pradesh.

19. Government of Andhra Pradesh. Draft Report of the Rural Poverty
Reduction Task Force. Cited in D. Bandyopadhyay, March 17th 2001. Andhra
Pradesh: Looking Beyond Vision 2020. Economic and Political Weekly.

20. P Sainath, June 2003. The Bus to Mumbai.


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