The Iceberg

With kind permission from Peter Rosset of the Institute for Food and Development Policy (or FoodFirst.org as it is also known), chapter 10 of World Hunger: 12 Myths, 2nd Edition, by Frances Moore Lappé, Joseph Collins and Peter Rosset, with Luis Esparza (fully revised and updated, Grove/Atlantic and Food First Books, Oct. 1998) has been reproduced and posted here. Due to the length of the chapter, it has been split into sub pages on this site.

Focusing only on official aid can blind us to many other ways we citizens of the United States are linked to the lives-and hopes-of the hungry. We need to take responsibility not just for what our government does in the name of aid and otherwise-but also for what corporations and other institutions based in our country do (often supported directly or indirectly by our aid and other subsidies).

The iceberg is the action of the private sector-transnational corporations, investors, and currency speculators-and the less visible actions of the United States and other Northern governments to support their free rein in the third world. Some forty thousand corporations control two-thirds of global trade in goods and services, and most of that is in the hands of only a few hundred corporate giants.⁵⁷ In 1995, for example, General Motors’ sales were greater than the gross national product of 169 countries, including Saudi Arabia, South Africa, Malaysia, and Norway.⁵⁸

In the last few years, there has been a tremendous increase in private foreign investment, concentrated in the wealthier developing countries. The World Bank reports that the overall volume of private-capital flows to developing countries quadrupled in the first half of the 1990s, accounting for three-quarters of all long-term flows to developing countries.⁵⁹ While governments are backing out, private investors are taking their place. Private investment has become the main source of external financing for many middle-income countries, though the majority of low-income countries still rely primarily on official sources of financing.⁶⁰ That may yet change as corporations seek virgin territory for new investments.

In 1996 the Clinton administration announced plans to boost the 8 percent U.S. share of the sub-Saharan Africa market, meager in comparison to Europe’s 40 percent share.⁶¹ The United States is using free-trade language to argue that Africa, the last frontier of American business,⁶² should open up to greater U.S. trade and investment.⁶³ Key, high-profit sectors of African economies, such as infrastructure (roads, telecommunications) and mining are targeted.⁶⁴ In June of 1997, at the G-8 Africa Summit in Denver, reminiscent of the famous 1883 Berlin Conference scramble for Africa, the future of African trade was discussed by the Northern countries, in the conspicuous absence of African delegates.⁶⁵

Over and above its foreign aid program, through numerous other public channels (not to mention covert ones like the CIA), the U.S. government supports policies that promote business interests, often in ways diametrically opposed to the interests of the hungry.

U.S. government agencies like the Export-Import Bank (EXIMBANK) and the Overseas Private Investment Corporation (OPIC) can have a greater impact on the economy and policies of a third world country than official U.S. foreign aid, although few Americans have ever heard of them. Both offer financing and loan guarantees-backed by U.S. taxpayers-to finance exports of goods and services. In accordance with the turn toward greater private capital flows relative to official aid, EXIMBANK loans, guarantees, and insurance rose from $12 billion in 1980 to $53 billion in 1995,⁶⁶ more than five times greater than total U.S. foreign assistance.⁶⁷ In more than one case of corporate welfare, EXIMBANK largely backs the efforts of transnational corporations like Boeing, General Electric, and Westinghouse to penetrate overseas markets and outcompete local companies. Small U.S.-based businesses receive only 12-15 percent of EXIMBANK financing.⁶⁸ In the mid-1990s OPIC supported $84 billion of investments by U.S. corporations in 140 countries and played a key role in the corporate takeover of the former Soviet bloc countries in Eastern Europe.⁶⁹