Is international development doing the right thing?

‘Working in international development is often associated with ‘doing good’. A closer look at what international cooperation has achieved in Vietnam suggests that doing good requires more than simply working in a developing country.

Although I was aware of the perversion of international cooperation due to literature that I have read since I was a teenager, my insights and understanding of the dimensions of this perversion have particularly grown over the past six years while working and living in Southeast Asia. In Vietnam, a country that is mostly known for the Vietnam War[0], the contradiction of international cooperation couldn’t be any more grotesque. Contrary to what some might think, Vietnam is and has always been a rich country and therefore the political interests in Vietnam have ever since been in exploiting its resources. The Chinese have tried to occupy the country for more than thousand years, while the French did so for roughly sixty. Not surprisingly, when Ho Chi Minh asked for international cooperation in the 1940s, he did so with the idea to liberate the country from foreign occupants. However, what he got in return was two different groups of allies fighting a cold war in his own country.

By and large, the Vietnamese people have been victims of decades of international cooperation, without benefiting much from it. The only international supports that deserve respect are some private initiatives working with and helping Vietnamese citizens. For example, although it is understandable that Ho Chi Minh and others wanted to liberate their country from foreign powers, it must be acknowledged that the South of Vietnam had prospered due to the support of the French. In fact, when the South eventually capitulated in light of the bloody and barbaric killings of the communist North in 1975, Saigon[1] was a city that reflected the wealth of the country and its citizens, as can be witnessed watching footage in the documentary “Last Days in Vietnam”. Forty years later, the city is a mess dominated by air and noise pollution, cramped with people and marked by inequality. One can’t help asking: ‘So what exactly has gone wrong in Vietnam over the past forty years?’

Well, first of all it was surely an internal affair when the communists destroyed most of the wealth and made many of the most competent individuals flee the country[2]. Once the new regime had taken whatever they could and had changed the rules that govern resources distribution, they linked themselves back into global markets. This was a masterpiece of manipulation and the West promptly fell for it. The Doi Moi, which came into effect in 1986 was not only the opening of the country to a market economy, but it was at the same time an instrument that would in continuation allow the elites to cash in all on transactions based on the communist rule that “all property belongs to the peoples”, which in practice was translated as “we, the party and friends, will take whatever we can, because it is our right to do so.” The communist elite had introduced what for them resulted in the most perfect market economy. It was efficient to the point that they combined the power of global market dynamics to magnify the country’s profits with abusing the power of communist rule to constantly adapt national conditions such as to channel all benefits into their own hands.

In other words, Vietnam is the best example of how wealth and development are being influenced by the outcomes of rent-seeking processes and rent distribution. The communist regime has had a decade to set up the rules that would control the rent outcomes of foreign investments, before such investments were possible. Under this light it is easy understandable why there are so many examples of Vietnamese citizens who have made it from ‘apparent poor farmers’ or ‘street sellers’ to multimillionaires in less than two decades. The many tales talking of such sudden wealth and adored by many in Vietnam as the hope to one day stand atop of it all in reality are not that much miracle based on individual capacity. Critical Vietnamese know that for example the wealth of multimillionaire Doan Nguyen Duc, head of the HAGL group, is not based on his brilliant business instincts. Instead, his wealth started with the illegal deforestation of the most precious forests in Vietnam, while access was granted by officials. The accumulated wealth was quickly expanded into other sectors such as mining, rubber, real estate and energy – all sectors that require most of all access to land. That is not a problem in Vietnam given you have the right “uncle”. Under communist rule, land belongs to the peoples and henceforth, the government can take from parties B to Z and assign the same plot of land to party A, without properly compensating parties B to Z. Land expropriation is a daily practice that seldom results in protests[3]. Another common source of quick and huge profits is “overpricing of large infrastructure developments”. Experts working in the infrastructure sector report that in bigger projects it is common practice to overestimate the project costs by factor three with the idea to split the 200% benefits equal between the developer and representatives from the competent authorities signing the deal. This practice together with the one mentioned above might explain why the only Vietnamese billionaire on the Forbes’ billionaires list Pham Nhat Vuong plus two more among the five richest persons in Vietnam are all shareholders of the same company and members of one family.

Particularly disturbing in light of the present discussion is that foreign investors and governments never really seemed to care about such practices. Although the land grabs of HAGL group and others have long become public, IFC and Deutsche Bank nevertheless supported the company to expand their illegal practices from Vietnam into Cambodia and Laos, as a report by Global Witness in 2013 revealed[4]. Within the timber sector—Vietnam being the sixth largest exporter worldwide, the sector employs over 300’000 workers— it is an open secret that today, FSC-labelled furniture from Vietnam is mostly made out of (il)legally logged timber from Cambodia, Laos and elsewhere. Reason is another loophole in the Vietnamese system. Vietnam disposes of large areas of FSC certified plantations, as WWF explains. What the dubious NGO backing the FSC doesn’t tell us is that with an accordant FSC certificate from timber products destined for the paper industries coming out of short-circle rotation plantations, illegally logged tropical timber can be ‘green-washed’ to FSC grade by simply swapping the licenses between similar volumes of timber and maybe facilitating the transfer with a small bribe to the auditor – deal done. It has also been pointed out that initiatives such as REDD have significant potential to marginalize traditional land owners and landless peoples. However, regardless of such observations and in spite of the enormous risks of land grabs and other externalities, Vietnam’s forests and the timber sector keep being subject to huge foreign investments from governments and the private sector abroad. Vietnam is also participating as one of the pilot countries for REDD. Not that timber is the only sector benefiting from ‘wrought’ certification. In Vietnam everything can be certified at almost no cost. Therefore, rather than paying experts and truly improve practices and conditions, foreign corporations producing their goods in Vietnam such as Nike, Adidas, IKEA & Co. hire unqualified local staff who ‘develop’ the health, safety and environmental conditions of their Vietnamese contractors. It is much cheaper for them to pay local staff and bribe an auditor than having a real expert in place. No one here needs expert knowledge, if a bribe can do. Innovation in a market driven society means economic efficiency and latter can only be achieved by obtaining what is needed—namely the certificate and ‘clean hands in light of a potential future catastrophe’—at the least possible cost.

The whole ‘certification business’ brings another weakness of international development into spotlight: corruption. In light of corruption, certification is probably one of the weakest instruments of development, although it is often chosen as a tool for improvement. In Vietnam, where money can buy everything from police officers to members of courts, certification is nothing more but a piece of paper. It is established knowledge that corruption hinders fair development or more equal access for all. Corruption is the enemy of development[5]. The consequence of corruption for international trade is that fair play by market actors in other countries will be punished by lower prices due to lower production costs by the wrong-player. The result of such distortions is that market mechanisms initiate a race to the bottom. In Vietnam, where according to Transparency International corruption is omnipresent, everyone is confronted with bribery sooner or later. While tourists might get away without recognizing it, no person working here can deny or neglect corruption. Nevertheless, the c-word is not something that governments or representatives from NGOs like to talk about. Corruption contradicts with our understanding of doing the right thing and it also reads very badly in official reports. When in 2007 a bridge in Can Tho collapsed most likely due to corruption, no official source discussed it nor was there any independent investigation, regardless of all the Vietnamese peoples being convinced that some misconduct had led to the tragedy. Eventually, proof was buried together with the 52 workers who had lost their lives. Today, Western representatives cross the bridge in a rush to strike business deals in the Mekong Delta knowing that bribery promises fast and clean business while the costs of corruption will be paid by others. Knowing that corruption is the biggest hindrance to development[5] and considering that in Vietnam it is omnipresent, why has international development never addressed it?

Probably the most obvious explanation is that ‘development’ often requires significant innovation. However, skills for innovation is not something we receive together with academic credentials. As Prof. Mustaq Khan has shown[6], development trajectories are largely influenced by the outcomes of rent-seeking processes. In Vietnam, where key positions in the public sector are generally ‘bought’ and not assigned due to personal merits, officials tend to be rather under-skilled for the positions they hold, while rents are generated by the abuse of power. When Vietnam was linked back into global markets in the early 1990s, western nations had less of a problem with the policies of a communist regime than an urge to find new employment for their own workforce. Vietnam, which has always been rich in resources was a real paradise for plunderers and pseudo-innovators, while international development has often served itself by copy-pasting worn-out ideas rather than coming up with innovative solutions that are adequate for the respective situation. The recovery of Vietnam—praised by institutions such as the World Bank as a development success story—was mainly due to cheap labor and abundant resources that could be exploited at almost no cost due to access rights which were controlled by elites. Rather than a success story, Vietnam’s recent development trajectory is a disaster, fostered by poor copy-paste practices of international plunderers together with even poorer public governance.

International development has hardly ever been innovative. Nor has it been free from national interests. In fact, international development as Vietnam has experienced it until today is a prolongation of the Cold War. It is the fight between foreign nations over access to resources in a resource rich county. Reflecting on whether this can be right, one statement by a gentleman in the documentary mentioned above comes to my mind. “Doing the right thing”, he said, “often requires a judgement between ‘doing good’ and ‘doing wrong’ and not whether one follows protocol or not”. It is this judgement that people working in international development all too often struggle with, particularly when they grew up in an elitist environment, generally a prerequisite for an employment in one of the UN bodies or in the diplomatic corps of many countries. An elitist treatment such as business-class airfare and accommodation in exquisite hotels in the best places of town separates these international experts from the peoples in the country they work and their realities. Doing good in the experts eyes might thus not reflect the necessities of the peoples for whom they elaborate their projects and policies. ‘Doing good’ can also mean that one has to oppose established institutions, particularly in light of corruption. However, opposing elites is not something that comes easy, less so, if one is used to talk sweet words.

Furthermore, corruption is hardly mentioned by foreign parties, because it is a practice that facilitates a lot of work. Corruption can serve as a substitute for lack of skills and it can bring huge benefits for foreign investors. Another reason, why some prefer to work in countries reigned by corruption and absolute regimes is that it is much harder for dirty deals to come alight. In Vietnam, where websites such as those by Human Rights Watch and BBC are banned, where citizens regularly get jailed for expressing their views, and where judges are simply a longer arm of corruption, scandals as the recent ones under the former Spanish government or those within the Swiss SECO[7] would never be punished, no matter how hard idealists try. At the same time, such discoveries also confirm that at least some representatives from our governments are inclined to engage in corrupt practices if what they can gain is promising. Where the risks of being caught are low, this tendency will be stronger.

‘Doing right’ or ‘doing wrong’ cannot be measured by simplified and poor indicators such as the GDP or GDP per capita postulated by the World Bank. However, such indicators help to blur the actual impacts of international development, which in case of Vietnam is not as heroic as foreign governments and the UN generally claim. Doing the right thing in a developing context requires much more toughness than simply contributing to development. International support as Vietnam has received it over the past two decades certainly doesn’t reflect the ideals of people like Ho Chi Minh who were fighting for independence and justice in their country. International development in Vietnam has achieved the opposite: today, the majority of Vietnamese citizens are the slaves of their country’s wealth. In a country such as Vietnam where rents are controlled by a small elite, foreign investment without first addressing corruption does not only come at huge social and environmental costs, it also discriminates against workers and tax payers in the countries investing, who struggle with employment due to the austerity politics of our governments back home.

With respect to the Vietnamese peoples and all those Vietnamese who had to abandon their beautiful and loved country due to the terrors of a communist regime that only survives thanks to the support of foreign governments, we must conclude that international development in Vietnam has not done the right thing .

[0] Or American War, depending on which side you ask.

[1] Today officially called ‘Ho Chi Minh City’, although the name persists with citizens in the South of Vietnam.

[2] In other times this is often called ‘brain drain‘, but in times of terror nobody thinks about the consequences of the mass-exodus of the intellectual and professionally skilled elite.

[3] Because people are aware of their consequences.

[4] To read the report click here. To watch the documentary, click here.

[5] An established fact also recognized by then World Bank country director of Sri Lanka, Peter Harrold who in an interview with the media in 2006 said that “corruption is the biggest enemy of the poor.”

[6] Khan M (2000a) Rent-seeking as process. In: Khan M, Jomo K (eds) Rents, Rent-Seeking and Economic Development: Theory and Evidence in Asia. Cambridge University Press, Cambridge, pp. 89–104.

[7] SECO = State Secretariat for Economic Affairs, the “Confederation’s competence centre for all core issues relating to economic policy”, which is the body representing Switzerland in development issues and facilitating trade related support and payments.