Dutch Good Growth Fund 'getting to Zero'

source: thezeronauts.com

The new Minister and her newly set-up Trade and Development Cooperation department at the Ministry of Foreign Affairs in the Netherlands, has finally published her plans for the coming years shaping Dutch international trade and development relations. 

Minister Ploumen's ambitions, that she formulates at the beginning of the document, seem to indicate a prioritization. First and foremost the new policy seeks to eradicate extreme poverty within one generation named ‘getting to zero’, language probably borrowed from thought leader John Elkington, who introduced the concept of zeronauts at a Delloitte meeting last year, and reiterated it at the National Sustainability Congress. The second ambition Mrs. Ploumen formulated is sustainable and inclusive growth everywhere and the third and final ambition: international success for Dutch companies. The prioritization however seems to be flawed as the document does not reflect the anger that confrontation with extreme poverty is able to bring to the surface, realizing how much injustice is done to so many people.

Dutch Good Growth Fund
The Dutch economy is facing some fierce challenges these days, and it seems that as a result the third ambition became the first priority. Dutch Good Growth Fund is the new flagship instrument, representing a budget of 250 million on annual basis which should help achieve these ambitions. As the new fund potentially also provides for export financing the name of the fund may be rightly chosen aiming at Dutch growth: Presumably good for us and hopefully also good for them. This Minister is at least honest about it: “Trade should first and foremost benefit our own economy.”

Free trade agreements
What is also good about the name of the fund is that it acknowledges the fact that not every growth is good. The examples of too much growth and resulting spillover from European economies into weaker economies in Africa and Asia are well-known. It is not for no reason that the Economic Partnership Agreements (EPAs) that Europe tries to broker with regions in Africa are met with some suspicion. Only one EPA has been concluded yet, covering 'island' countries like Madagascar, Maurities the Seychelles and Zimbabwe, which can also be considered an 'island' within the region. Though import barriers to enter into agreements may have been reduced (the abandoning of tariff walls around Europe), quality requirements of the European consumption industries still prevent African producers to access the European market, unless they receive technical support or industries are led and profits are made by foreign investors. Hence these free trade zones are less free then they seem to be. 

As stated above the arrangements are clearly serving Dutch interest. It should enable Dutch entrepreneurs and exporters to penetrate markets in emerging economies, with the aim to benefit from the growth scenarios. Questions about how this growth is realized and whether the local population also benefits are left to the local dynamics to sort out. It can be questioned whether countries have the responsibilities to know the motives of their ‘business’ partners at bilateral level in what is called 'economic diplomacy'. However, elevating the ability to trade to a ‘global public good’ seems to me too much weight for global market mechanisms that have not necessarily contributed to 'good'.

Country categories
After a reasonable context analysis, pointing to the rising inequalities within countries as a major cause of poverty, the Minister still takes the slippery road of country categories as if country classification systems based on economic growth figures still matter. The Ministers' own context analysis already showed that the Gini-coefficient indicates glaring gaps between rich and poor within these so called emerging economies. Instead of addressing these inequalities supporting the most disadvantaged groups, this Minister apparently prefers to work with those in power selling Dutch expertise (even to the extend of brokering international contracts). Initially this may contribute to a rising Gini figure. What receives appreciation is that along with these investments still come rules of due diligence. What remains unclear is how much emphasis will be put on auditing firms on their rules of engagement and CSR strategies according to OECD guidelines. 

Accountability Fund
However, instead of getting tough on businesses the new funding sheme for NGOs post 2015 will be called Accountability Fund, requiring NGOs to check on businesses while their budget is further cut with 50% to 230 million in 2017. In real terms this means that whatever NGOs currently still do in terms of basic service provision will not only be reduced but replaced by a watchdog role they did not ask for or have not taken upon themselves. As a result new organizations will take up this role while the much needed basic service delivery will come to a stand-still (as far as Dutch government funding for NGOs is concerned). If this trend persists I should even hope Dutch influence in the global development landscape will quickly dwindle. Actually I am convinced it surely will if this Minister pursues her current plans.

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