Moral Dilemmas in International Investment: Whose Morals? Whose Dilemmas?
A Political Economy of Ethics in the Export Credit Debate

by Nicholas Hildyard

first published 2 June 2000


“Moral dilemmas” are not unattached to political, bureaucratic, social and economic interests. They are deeply political and are products of everyday conflicts over meaning, resources and ways of living and power. Who raises a particular moral dilemma and why is thus of critical importance.

This is a talk given at a Wilton Park Conference addressing, "International Investment and the Environment -- What Role for Governments?" held from 30 May to 2 June 2000.



Prologue - A Tragi-Comedy in Four Acts and 8 Short Paragraphs

Scene 1 - Press Conference, The Foreign Office, May 2nd 1997

A press conference in the magnificently-appointed function rooms of the Foreign Office. It is the day after New Labour's election victory. Robin Cook, the new Foreign Secretary, is keen to 'hit the ground running'. He mounts the podium, against the backdrop of a spectacular audio-visual display showing the work of the foreign office around the world - the emphasis is addressing on human rights abuses.

Cook: "Britain will once again be a force for good in the world. Our foreign policy must have an ethical dimension ... Ethics will be at the heart of our policy ... The Labour government will put human rights at the heart of our foreign policy."

Scene 2 - The Foreign Office, A date undetermined

A neon-lit office. A civil servant is preparing the Foreign Office's input into a UK government review of an obscure - but increasingly criticised - Whitehall agency: the UK Export Credits Guarantee Department. What should the ECGD take account of when assessing whether or not to support an application for an export credit?

Civil servant: "We support the notion that the core criteria should be financial because of the need to protect the taxpayer. But there is scope at the margin for introducing other considerations."

Scene 3 - Flashback to Scene 1

Cook: "The Labour government will put human rights at the heart of our foreign policy."

The phrase "at the heart of our foreign policy" is repeated several times - like Banquo's Ghost, Cook's words will not go away

Scene 4 - The House of Commons, 1 February 2000

The Select Committee for International Development is holding an inquiry into the ECGD's possible support for a $200 million export credit to Balfour Beatty for the Ilisu Dam in S.E. Turkey, a region currently devastated by an armed conflict between the Kurdish Workers' party and the Turkish state. Torture and disappearances are common. After many questions about human rights abuses have been raised, Mr. Caborn, Minister for Trade, is giving evidence. What assessment has the Department of Trade and Industry (DTI) made of the impact of the dam on the conflict in the region?

Caborn: "We take human rights very seriously indeed. In fact, the people who disabuse human rights, the record is there that we would not be supporting that type of regime. Clearly the criteria is laid down for that..."

30 second pass. Caborn continues

Caborn: "Nobody has raised a question as far as ECGD cover is concerned. Remember, that is the point we are dealing with ... There is nobody who has come back and raised the human rights questions in terms of this dam and the awarding of ECGD cover."

15 seconds pass. Caborn continues

Caborn: "In terms of human rights, you have asked me a question and I have given you the answer. The DTI is not responsible for human rights."

Scene 5 - Singapore Airport

A weary traveller is browsing the bookshelves at a kiosk at Singapore airport, looking for some light reading for the long flight back to the UK. He picks up the latest novel by Gerald Seymour. He lights upon a passage where an MI5 officer is discussing with a colleague:

Officer 1: "The prime objective of an intelligence agent is to further by clandestine means the objectives of the taxpayers who put food in his gut and a roof over his head."

Officer 2: "I believe in morality"

Officer 1: "If we all talked about morality, Mr. Markham, we'd none of us finish a day's work."

Morals and Politics

With the exception of the last set of quotations, this script is drawn entirely from official documents, although some are more publicly available than others.

I have drawn them together for two reasons. First, because they throw up questions about the UK government's commitment to an ethical foreign policy and about its handling of the Ilisu Dam affair - how does one reconcile Cook's statement that ethics will be at the heart of foreign policy with his departments recommendation that it should be at the margins? why, when numerous representations were made to the Foreign Office by NGOs over the human rights implications of backing Ilisu was no mention made of these concerns by in the department's brief to the Department of Trade and Industry? Or was Mr. Caborn being economical with the "actualites"? And what do both these possibilities tell us about the morals of Whitehall? And, second, to give some political and institutional context to the question we have been asked to consider this evening - namely, that of "Moral Dilemmas in Overseas Investment".

Understanding that context is important, for "moral dilemmas" do not float unattached from political, bureaucratic, social and economic interests. They are not "things" that are "out there" just waiting for us hapless humans to bump into them. Nor are they amenable to being resolved by abstract, philosophical debate - however helpful this may be in teasing out their complexities. On the contrary, moral dilemmas are deeply political; they are products of everyday conflicts over meaning, resources and ways of living - and as such over power.

Who raises a particular moral dilemma and why is thus of critical importance. Accusations of "green colonialism", for example, have a strikingly different political content when raised by different people. Say, a local forest community seeks to defend itself against plans its own national government has developed, under the tutelage of western environmentalists and backed by international funding agencies, to make its forests conform to what western environmentalist mythology assumes to be their "state of wilderness" by clearing them of people who have lived there for generations. This community's use of the phrase "green colonialism" will have a different ring from when, say, a southern government raises the same charge in response to criticisms made in the West by Western environmentalists of Western companies receiving Western taxpayers money to construct projects which would not be sanctioned, let alone contemplated, in their own countries. In the one case, the challenge is to the imposition of an ahistorical, western view of nature ("pristine", "untouched", "unpopulated") on communities in the South: in the other, the challenge is to the legitimate right of western citizens to scrutinise the use to which their taxpayers' money is put and to insist that western companies operate abroad as they would at home.

Politics by Other Means

To view "moral dilemmas" as politically neutral - as many would have us do - is to render invisible the key role that moral debate plays in policing social, economic and institutional boundaries. Indeed, much of what passes for "moral debate" in bureaucratic institutions isn't about morals at all: it is about seeing off potential threats to particular interests, defusing resistance, blurring issues and ensuring that "things get done" - preferably as they have always been done. To paraphrase Clauswitz, moral debate becomes the continuation of politics by other means.

If this sounds cynical, consider the advice given by US public relations firm, Mongoven, Biscoe and Duchin, to a client concerned about countering growing environmental activism. Opponents, it suggests, should be divided into four categories: "opportunists", "realists", "radicals" and "idealists".

"Opportunists", it argues, are relatively easy to deal with. All that is needed is to give them "the perception of a partial victory" so that it looks good on their CVs.

Likewise so-called "realists". Often inexperienced in the workings of power, they are particularly susceptible to industry's claim to be the "only show in town". For them the "real world" is the corporate world. They are already primed for what they see and the inevitable "trade off".

But the group that bears most directly on our discussions tonight are the "idealists". They want to change the world. So the recommended tactic for "dealing with them" is to cast doubt on the ethics of their position. They can then be "educated" into a more "realistic" position. If they are concerned about GE foods, raise the spectre that their opposition may cause the hungry to starve. If they are worried about arms sales abroad, raise the issue of unemployment at home. And so on. Sow moral confusion, raise "moral dilemmas" - and then divide and rule.

Whose Morals Count?

Mongoven, Biscoe and Duchin's proactive use of "moral dilemmas" to ward off critics offers a useful insight into the political economy of ethics.

It is, however, a high risk strategy, since it opens up a debate on issues - the causes of hunger, for example, - where the client (particularly if it is an agribusiness company) may be on weak ground. Unsurprisingly, the first instinct of a company or institution is to argue that the moral dilemmas raised by its critics are not its concern. Caborn's denial that human rights within the remit of the DTI - despite government policy binding all departments to sustainable development objectives - is a case in point. So too the plea by the UK Export Credits Guarantee Department (ECGD) that environment and development NGOs should stop criticising its activities since "we are not a development agency".

Even where moral culpability is accepted, the tendency is to slice it as thin as possible. Export credit agencies (ECAs), for example, regularly underwrite commissions as part of the contracts they support: privately it is often accepted that such commissions are nothing more than bribes. The only moral issue for ECAs, however, would appear to be whether or not the commission exceeds the norm. Likewise, for the Inland Revenue, the issue is not whether a bribe was paid but whether it was effective: if it wasn't, then it is not considered eligible as a tax deduction. In neither instance are the moral issues raised by the mass of anti-corruption movements in the South - where contrary to Western myth, corruption is not part of many peoples' "culture" - deemed relevant. On the contrary, they are effectively excluded from consideration by institutional rules, which are solely concerned with judging what is or what is not an "acceptable" bribe.

Other rules and bureaucratic practices similarly serve to limit or erase the moral dilemmas raised by critics. For example, by insisting that everything have a monetary value, cost benefit analysis leaves no room for a morality that refuses to put a price on everything. If something can't be valued, then it either has no value or is ascribed a meaningless "infinite value". And those who refuse to put a value on, say, ancestral graves that might be flooded by a dam are simply being curmudgeonly or irrational or both. The moral basis of their objections are obliterated by the analysis - as is the immorality of forcing people to price their grandparents, parents, children and homelands.

Moral Plaudits for the Rich, Dumped Technologies for the Poor

Grounding "moral dilemmas" in an analysis of the political, institutional and economic interests of those who are voicing them reveals the self-serving nature of many of the "ethical" arguments put forward by those resisting more equitable and sustainable approaches to development.

On the face of it, for example, the argument that the South cannot afford to be choosy about the technologies it imports is a strong one. But reveal the marketing techniques and the political pressure used by northern companies to sell outdated, and even banned, technologies in the South and the "moral" argument for continuing such sales - aiding development - begins to tarnish. As Peter Bosshard of the Berne Declaration, a Swiss NGO, recently reflected in a talk to the World Commission on Dams:

"Should Southern governments care less about the economics of their power projects because they are poor? Can they better afford to waste resources on a dam which is more expensive than, say, increasing the efficiency of the transmission system? Certainly not.

Should Southern governments care less about the social impacts of their projects? Are their industrial and urban consumers so poor that they need to be subsidized by the even poorer dam-affected people? Again -- certainly not. After all, it is the affected people who pay for the so-called external costs, and not the North, or outer space.

Finally, should Southern governments care less about environmental costs? Here even more than in the North, natural resources are not a luxury concern, but support the economic livelihood of millions of people.

So our Southern partners argue that dam projects in the South should fulfil the same basic conditions as dams in the North, and I agree with them."

Look into the Face of the Poorest Person

Revealing the politics behind moral dilemmas also provides a guide to future policy - for it helps us to weigh up such dilemmas not on the basis of whether or not they can be translated into pounds and pence but on the basis of the relative privilege and power of their exponents. Here Ghandi's advice is helpful: "Whenever you are in dilemma, remember the face of the poorest, the weakest person in society and ask yourself what impact the action you are about to take will have on that person."

It is advice that cuts to the nub of the issue. Moral choices are political choices: and the key political choice in the context of international investment is between a politics that favours the already privileged and a politics that favours the underprivileged. To place human rights and sustainable development at the heart of foreign and overseas investment policy is not, pace Gerald Seymour's MI5 officer, a recipe for doing nothing - but doing for nothing that would benefit the already privileged at the expense of the poor and their environment.

In the case of export credit agencies, it is the rich and powerful, not the poor, who have dominated decision-making - and it is their (often dubious) "moral dilemmas" which have been most frequently trumpeted in defence of contested policy decisions. To correct this will require more than visualising "the poorest people" in the abstract. It will require consulting directly with those affected by ECA-backed projects - something the agencies are proving extremely reluctant to do. It will also require decision-making processes that are open, transparent and accountable - and which give project-affected people the right of redress. And it will mean placing their ethics at the heart of policy.