7 Canada in the Third World: The Political Economy of Intervention t odd go r d o n This chapter starts from a premise that may not seem obvious to many observers of Canada’s role in Afghanistan: the Canadian intervention needs to be understood within the broader dynamics of Canada’s po- litical and economic relationship to the Third World. To be more pre- cise, at a considerable human and ecological cost, Canadian capital is engaged in the systematic exploitation of the wealth and resources of Third World economies, and this relationship is actively facilitated by the diplomatic and security policies of the state. Canada is, in a word, an imperialist power. It is not a superpower, but that does not deny the relationship of domination and subordination it pursues with Third World nations. Current scholarship on Canadian foreign policy leaves us ill equipped to make sense of Canada’s role in either the Third World more gen- erally or in Afghanistan in particular. For one thing, two of the more influential foreign policy frameworks, the Middle Power and depen- dency approaches, offer little in the way of systematic investigation of Canada’s relations with the Third World. This gap in these bodies of lit- erature is significant given how extensive Canada’s economic interests in the Third World have become and, concomitantly, how important the Third World is to the Department of Foreign Affairs and International Trade (DFAIT) and the Department of National Defence (DND). Perhaps historically the most influential in the study of Canadian foreign policy, the Middle Power framework includes several schools of thought, including realists who stress the anarchic context of interna- tional relations and the pursuit of power by self-interested states; liberal internationalists who focus on Canada’s supposed efforts to mediate tensions between contending superpowers or between superpowers Klassen 4007_6208-072-P2-007-r02.indd 211 7/18/2012 4:52:23 PM  212 Empire’s Ally and smaller powers; and global governance theorists who look at the need for and efforts to develop international institutions and frame- works for a stable and transparent world order (for example, Cooper, Higgott, and Nossal 1993; Cooper 1997; David and Roussel 1998; Clarke 2005; Bernard 2006). Yet the Middle Power perspective offers little in the way of a political-economic analysis of Canada’s position in the world system. It tends to proceed methodologically from Canada’s spe- cific relations – diplomatic, political, and geostrategic – with the United States and/or transnational institutions such as the United Nations or the North Atlantic Treaty Organization (NATO), instead of from the broader dynamics of global political economy. The dynamics of capital accumulation on a global scale, and the systemic relations of power and inequality between the First and Third Worlds, are rarely if ever anal- ysed. Instead this framework tends to highlight the ‘niche’ diplomacy of the Canadian state in, for example, peacekeeping, human rights, and international cooperation and security. More recently writers in this tra- dition have focused on how Canada might meet these objectives in the context of dwindling public resources and US unilateralism. With little analysis of the global political economy and Canada’s po- sition within it, writers in this tradition often rely on the default as- sumption about Canada’s Middle Power status. Canada’s role as one of the wealthiest nations in the world economy seldom rates any mention at all. Moreover, for a writer like Hart (2008), the possibility of Canada’s playing an imperialist role in the global order is not fathomable. He la- ments the ‘depressing number of academics who seek inspiration from the paranoia of people such as Noam Chomsky,’ but happily notes that ‘most of them no longer consider Canadian foreign policy to be central to their interests’ (2008, 49). Thus the logic of aid and security policies, among others, is often misunderstood in the Middle Power literature, while Canada’s economic and military push into the Third World is ignored. The dependency approach is more attentive to dynamics of the global political economy (Clarkson 2002; McQuaig 2007; Laxer 2008). This perspective argues that Canadian foreign policy is an expression of continental forms of economic dependence. However, it has not ana- lysed Canada’s penetration of Third World economies and the way in which Canadian foreign policy reflects this intervention. Instead de- pendency writers tend to focus more narrowly on the continental rela- tionship between Canada and the United States, and often argue that US capital has stunted capitalist development in Canada. As a result Klassen 4007_6208-072-P2-007-r02.indd 212 7/18/2012 4:52:23 PM  Canada in the Third World 213 they underestimate the agency of the Canadian state, and often argue that Canadian foreign policy is a product of US economic domination. In other words they downplay the ability of the Canadian state to func- tion and operate as a global power in its own right, reflecting the inde- pendent interests of Canadian capital. The one framework that does situate Canada near the top of the hier- archy of nations and offers some analysis of Canada’s role in the Third World is the Principal Power theory (Lyon and Ismael 1976; Lyon and Tomlin 1979; Dewitt and Kirton 1983). However, this perspective has never gained traction among students of Canadian foreign policy and has not framed a major study in more than two decades. While chal- lenging the idea that Canada is a mere Middle Power, it too fails to theorize adequately Canada’s role within the unequal power dynamics of the global political economy. In recent years, however, a new body of critical research has emerged on Canada’s role in Third World economies (North, Clarke, and Pa- troni 2006; Gordon and Webber 2008, 2011; Gordon 2010). This research focuses on the social, economic, political, and environmental impacts of Canadian corporate expansion into Third World countries. Most of this analysis, however, falls outside academic boundaries and has been conducted in non-governmental organizations such as Mining Watch, Rights Action, and the Halifax Initiative or in alternative media. It also does not typically account for Canada’s asymmetrical relationship with the Third World as a whole.1 In fact the analysis consists primarily of case studies of corporate malfeasance. As a result it expands our under- standing of Canadian corporate activity in the Third World, but fails to raise the level of analysis beyond the actions of particular corporations. As an alternative, the Marxist theory of international political econ- omy begins with the recognition that global capitalism is shaped by im- perialist relations through which countries of the First World – operating bilaterally and multilaterally – systematically drain the wealth and re- sources of the Third World via economic, political, and military means. The period of formal empire is long gone, but the capitalist world mar- ket still generates uneven development on a systematic basis between the North and the South (Harvey 2005). According to Ellen Meiksins Wood (2003) the period of neoliberalism has produced the most de- veloped form of capitalist imperialism, as corporate interests based in the North, with support of their respective nation-states and transna- tional bodies such as the International Monetary Fund (IMF) and the World Bank, exploit the resources and labour supplies of Third World Klassen 4007_6208-072-P2-007-r02.indd 213 7/18/2012 4:52:23 PM  214 Empire’s Ally countries. In place of territorial conquest and direct colonization, then, is economic exploitation through ‘free market’ exchanges. As I argue below, a key expression of the new imperialism is the massive growth of foreign direct investment (FDI) in markets of the Global South and the corresponding transfer of wealth from Third World economies to First World capital (Harvey 2005; McNally 2006). With a highly advanced economy, Canada operates within the core group of states in this new system of imperialism. Canadian capital, like US capital, participates in the competition for profits and market shares, and, in the past two decades, it has developed an extensive set of economic interests in the Third World and encouraged a more ag- gressive military and security policy from the state. The geographic expansion of Canadian capital into Third World markets and the mili- tarization of Canadian foreign policy towards ‘rogue’ and ‘failed’ states in the Third Word are closely linked and set the structural context in which Canada is currently waging war in Afghanistan. To present this argument, this chapter extends and contributes to the existing literature on imperialism and the Canadian state developed by Moore and Wells (1975), Carroll (1986), Burgess (2000), and Klassen (2009). In particular it maps the structure of economic relations between Canada and the Third World and the impact of this relationship on the foreign policies of the state. The fundamental argument is that Cana- dian capital and the Canadian state are linked in a process of imperial- ist exploitation, and that the war in Afghanistan must be viewed in this context. The first section maps the expansion of Canadian capital into the Third World during the period of neoliberalism. The second and third sections analyse the new foreign policy agenda vis-à-vis Third World countries. The fourth section considers a number of case studies, including recent policies towards Latin America. The final section then offers a reinterpretation of the war in Afghanistan as a further instance of Canada’s new imperialism in the Third World. The Expansion of Canadian Capital into the Third World It is important to grasp how significant the international expansion of Canadian capital has been over the past two decades. The neoliberal period, which began roughly in the late 1970s and early 1980s, has been witness to profound changes in Canadian capitalism. The goal of neo- liberalism has been the restoration of capitalist profitability through the Klassen 4007_6208-072-P2-007-r02.indd 214 7/18/2012 4:52:23 PM  Canada in the Third World 215 unleashing of free market forces and increasing the rights of corpora- tions. It has entailed a reduction of working-class living standards, a criminalization of immigrants and tighter border controls, a rollback of labour rights, severe cuts to the welfare state, and integration with world markets. In the Canadian context neoliberalism is associated with new forms of continental convergence and with economic expan- sion into First Nations’ territories, especially for the purpose of access- ing resources (Gordon 2006). The net result has been a massive transfer of wealth from the bottom to the top of the economic pyramid (Jackson 2007). But neoliberalism has not just transformed Canadian capital on the domestic front; key developments in the international sphere have given Canadian capital a new orientation. As foreign ownership in the Canadian economy decreased after the peak year of 1971, Cana- dian ownership of assets abroad increased. Canada is now one of the world’s leading sources of FDI, which, as mentioned, is a driving force behind economic globalization. For McNally (2006, 37–42), it is FDI, not trade, that has increased most significantly over the past twenty years. For example, global FDI has increased more rapidly than the world economy as a whole, surpassing the trillion-dollar mark in the early 2000s. Because FDI confers some measure of managerial control, it is one of the principal ways by which capital from the North has gained economic power and influence in the Third World during the period of neoliberalism. Canadian direct investment (CDI) abroad has increased sharply since the early 1990s – indeed, Canada has been a net exporter of direct in- vestment since 1997 – and by 2007 the cumulative stock of CDI reached C$514.5 billion. Measured in annual investment flows Canada ranked eighth in the world in 2007, and has consistently ranked in the top ten in the past several years, with direct investments in 150 different coun- tries, including thirty with at least $1 billion in CDI stock (Statistics Canada 2008; UNCTAD 2008, 76). Among the Group of Eight large industrial economies, Canada has the fourth-highest ratio of outward direct investment stock to gross domestic product (GDP) (UNCTAD, World Investment Directory On-line, ‘Key Data,’ table 23). Perhaps the most interesting development here, however, is Canada’s economic penetration of Third World markets. As the global debt crisis hit the Third World in the early 1980s, the advanced capitalist coun- tries used the IMF and the World Bank to alter radically the political and economic landscape of the Third World. In return for much-needed Klassen 4007_6208-072-P2-007-r02.indd 215 7/18/2012 4:52:23 PM  216 Empire’s Ally loans, the IMF and World Bank imposed free market reforms on poor countries. Markets were opened to First World capital, public utilities and land privatized, social spending and subsidies cut, currencies de- valued, and natural resources commodified, all of which sparked an investment wave in pursuit of natural resources, cheap labour supplies, and fire-sale assets. Canadian corporations have since been among the most assertive in penetrating Third World markets. In the early 1950s the Third World received approximately 10 per cent of total CDI stock, but this has in- creased sharply since the early 1990s, reaching more than 27 per cent by 2007. The increase in CDI in developing economies corresponds to the decrease of CDI, as a proportion of the total, flowing to advanced capitalist countries. While the United States is still the biggest desti- nation for CDI, its share of the total has declined considerably, from 60 per cent in 1990 to 44 per cent in 2007, even though Canadian as- sets in the United States tripled in absolute terms.2 Among the Group of Seven (G7) countries, Canada had the second-highest flows of FDI to Third World countries as a proportion of GDP in 2007.3 At the same time, income from direct investment in the Third World as a propor- tion of total investment income earned abroad has risen significantly, from just under 25 per cent for the years from 1973 to 1979 to more than 45 per cent for the 2000–7 period. Income from the Third World, then, has actually increased at a much faster pace than has direct investment in the region as a proportion of total CDI. Direct investment income from the Third World rose from C$1.1 billion in 1990 to $17.9 billion in 2007.4 Total foreign investment income reached C$23.6 billion after tax by 2007, an increase of 535 per cent from 1980, which is greater than the increase in profits earned at home over the same period of time.5 Canadian investment in the Third World is led by the ‘finance and insurance’ and the ‘energy and metallic minerals’ sectors, which, in 2007, together accounted for just over 78 per cent of CDI stock in Third World countries (57.1 per cent and 21.1 per cent, or C$77.6 billion and C$28.7 billion, respectively), with ‘services and retailing’ accounting for 11.5 per cent and ‘other’ 7.4 per cent (Statistics Canada, CANSIM da- tabase, table 376–0053). However, the growing importance of the Third World as a destination for Canadian direct investment has occurred across most sectors. Canadian banks and insurance companies have increasingly estab- lished themselves in Third World offshore financial centres (OFCs), which are a draw for Canadian investors because of their low taxation Klassen 4007_6208-072-P2-007-r02.indd 216 7/18/2012 4:52:23 PM  Canada in the Third World 217 rates, limited regulations, and secrecy. From 1990 to 2003 Canadian assets in OFCs grew eightfold from C$11 billion to C$88 billion, and by 2003 accounted for a remarkable one-fifth of all CDI – double the share of thirteen years earlier. Since 1996 OFCs have been the most popular destination for CDI in the financial sector, accounting for two-thirds of this measure. Of the forty-two OFC jurisdictions identified by the IMF, Canadian corporations held assets in twenty-five of them in 2003. The largest growth of CDI in OFCs has been in Barbados, Bermuda, the Cayman Islands, and the Bahamas, with Singapore, Hong Kong, and Malaysia also being significant destinations (Lavoie 2005).6 While OFCs are key destinations for capital investment, banking sec- tor liberalization has occurred across the South in the past two decades. These reforms have allowed for more foreign competition and fewer controls on credit, interest rates, and international transactions, lead- ing to an increase in speculative inflows, unstable asset bubbles, and spectacular meltdowns. While banks based in the First World tradi- tionally have invested in Third World financial markets to assist mul- tinational corporations, since the 1990s these same banks have tried to access local credit markets and to purchase failed firms. From 1990 to 2003 there was a sharp increase in FDI to developing countries, the majority of which – US$46 billion – targeted Latin America. Over this period, Canadian firms were the fourth-largest financial sector inves- tors in the region (BIS 2004, 6). For example, between 2003 and 2006 Scotiabank spent nearly C$2 billion in acquisitions in Latin America, in- cluding the purchase of thirty-nine branches in the Dominican Repub- lic, adding to an existing twenty-branch network in the country; it has also acquired banks in Peru, Costa Rica, Chile, Uruguay, and the Cay- man Islands in recent years, and in 2011 purchased Colombian Banco Colpatria for C$1 billion following the implementation of the Canada- Colombia Free Trade Agreement (Globe and Mail 2010; Investment Ex- ecutive 2003; Waldie 2006; Silcoff 2007; Robertson 2011). Scotiabank is not the only bank expanding in the region, however. In 2007 the Cana- dian Imperial Bank of Commerce (CIBC) became the majority owner of FirstCaribbean International Bank, and in 2010 bought part of Ber- muda’s largest independent bank, N.T. Butterfield and Son (Willis 2007; Perkins 2010). Canadian banks control the three largest banks in the English-speaking Caribbean. Their C$42 billion in assets in this region is four times what the approximately forty locally owned banks con- trol (Economist 2008). More broadly it is estimated that Canadian banks now earn approximately 40 per cent of their revenues abroad, especially Klassen 4007_6208-072-P2-007-r02.indd 217 7/18/2012 4:52:23 PM  218 Empire’s Ally from Latin America (Willis 2007). Given their strong balance sheets, the international expansion of Canadian banks, particularly in the Third World, is likely to continue. For example, Scotiabank has voiced its in- tention to increase acquisitions in Latin America and Asia. According to CIBC chief executive officer, Gerry McCaughey, his bank’s purchase of FirstCaribbean is one step of an expansionary plan: ‘From a First Caribbean viewpoint, we will continue to look at opportunities within the region, and we think growing within the region is of interest’ (ibid.). Canadian companies also have a strong presence in Third World oil and gas development, dam-building projects, and sweatshop manufac- turing – Montreal’s Gildan Activewear is a dominant player in the lat- ter market. But Canada’s greatest international presence is in mining. Canada’s mining industry is the largest in the world, and the Toronto Stock Exchange is the most important market for raising investment capital in the mining sector. Canadian-based mining companies com- prise 60 per cent of all mining companies (of a total of 1,138) in the world that spend more than C$133,000 on exploration, account for more than 40 per cent of all worldwide exploration activity, and conduct ap- proximately 30 per cent of all mining investment worldwide (Canada 2004). Canadian mining companies are most active in Latin America, but there are many signs of expansion on a global scale. In 2009, the last year for which data are available, Canadian mining companies owned more than C$109 billion in assets in more than ninety foreign countries; $56.1 billion were held in Latin America, $20 billion in Africa, $6 bil- lion in Asia, and $4.7 billion in Oceania. While the expansion of Cana- dian mining capital is broad and far reaching, it is also concentrated: in twenty-one countries, nine of them in Latin America, Canadian mining assets exceeded $1 billion (Canada 2011). In terms of overall investment patterns, Latin America and the Ca- ribbean are the destinations of the largest amounts of CDI in the Third World, accounting for more than 70 per cent of total CDI to Third World economies since 1996 and for more than 80 per cent in 2007 alone – the Caribbean, in particular, has received just under 50 per cent over that period (Statistics Canada, CANSIM database, tables 376–0051, 376–0053). The growth in these regions’ share of total CDI in the Third World is related to the liberalization trend of the 1980s and 1990s, es- pecially in the financial services and natural resources sectors, and has fostered a new ambition in Canada for greater political and economic influence there. Not surprisingly, then, nine of the ten fastest-growing CDI destinations from 1987 to 2007 were in this region and eight of Klassen 4007_6208-072-P2-007-r02.indd 218 7/18/2012 4:52:23 PM  Canada in the Third World 219 the top ten Third World recipients of CDI stock in 2007 were in Latin America and the Caribbean (four in the Caribbean and four in Latin America).7 By 2006 Canada had actually become the third-largest in- vestor in the region. From 1996 to 2006 Canada was the largest investor in Ecuador, second in Honduras, third in Chile and the Dominican Re- public, and fifth in Mexico, El Salvador, and Costa Rica; in 2007 Canada was the fourth-largest investor in Peru (ECLAC 2003, 2006). Canadian investment in Africa, dominated by natural resources development, is small compared with that in other regions, but it in- creased from C$268 million in 1990 to C$4 billion in 2008 (Statistics Canada, CANSIM database, table 376–0051). While data for Africa are uneven, Canadian investments tend to be concentrated in a relatively small number of countries, including Ghana and Tanzania. In the Asia- Pacific region, the share of CDI growth declined over this period as investment to Latin America and the Caribbean took off, but in absolute terms it increased from C$4.1 billion in 1990 to C$19.3 billion in 2007. As a result Canadian companies have a not-insignificant presence in the Pacific: Canada was the tenth-largest foreign investor in Indonesia in 2006 (with more than C$2 billion by 2008) and in Malaysia in 2007 (with more than C$1 billion by 2008); and the eleventh-largest in the Philippines in 2007 (with C$671 million in 2008).8 The presence of Canadian capital in Central Asia is less clear, as there are gaps in Statistics Canada’s records for several countries. For instance, despite Canada’s diplomatic, military, and developmental role in Afghanistan, Statistics Canada has no publicly disclosed data for the presence of Canadian capital in the country. The government of Afghanistan offers no such information either. We know that Can- ada has made efforts to open up Afghanistan for business (Warnock 2007), and that the Karzai government is actively courting Canadian and other western investors with their market-friendly regulations and ample supply of cheap labour. The Afghanistan Investment Support Agency, a government office promoting foreign investment, declares that ‘Afghanistan offers a pro-business minded environment with leg- islation favourable to private investments,’ and that Afghanistan ‘is rich in natural resources’ and ‘is keen on establishing a low-cost, labor- intensive manufacturing sector which absorbs the many unemployed Afghans.’9 Afghan officials have tempted Canadian companies with their claim that only 5 per cent of the country’s rich mineral deposits have been explored because of decades of war. Ibrahim Adel, Afghani- stan’s minister of mines, is a regular attendee at the annual gatherings Klassen 4007_6208-072-P2-007-r02.indd 219 7/18/2012 4:52:23 PM  220 Empire’s Ally of the Prospectors and Developers Association of Canada. He has been supported by DFAIT, which has set up roundtables between Adel and Canadian mining executives at the meetings. During his sojourns to Canada Adel has also enjoyed the hospitality of David Emerson and Gary Lunn, former ministers of international trade and natural re- sources, respectively, in the Harper government (Hoffman 2007; Cher- nos 2008, 16). Canada’s presence is certainly felt in the nearby former Soviet re- publics. In Kazakhstan Canada was the fifth-largest foreign investor in 2008, with US$945 million invested, most of it in mining (National Bank of Kazakhstan 2009; Canada 2007a). In Kyrgyzstan Canada was the sixth-largest investor in 2007, with US$500 million in assets, much of it also in mining (National Bank of the Kyrgyz Republic 2008). In Tajikistan, meanwhile, Canada ranked lower, as the tenth-largest for- eign investor in 2007, with US$1.4 million invested (National Bank of Tajikistan 2009). Canadian oil and gas companies have also shown in- terest in the region. Buried Hill Energy won a licence to explore and develop a gas field in Turkmenistan in the winter of 2008. This was followed shortly after by the signing of formal agreements between the four participating countries in the Trans-Afghan Pipeline (TAP) project in April 2008. The 1,680-kilometre pipeline will start in the Turkmen city of Dauletabad and pass through the Afghan cities of Herat and Kandahar, where Canadian forces are heavily concentrated, before en- tering Pakistan and India (Foster 2008; McCarthy 2008; Pannier 2008). In these ways Canadian capital has expanded throughout the Third World during the period of neoliberalism. It is strongest in Latin Amer- ica and the Caribbean, but is quickly establishing global interests in Af- rica, the Asia-Pacific, and Central Asia. Canada has become one of the largest investors in Global South markets, and competes successfully with other rich nations for natural resources and cheap labour supplies. Promoting Canadian Capital’s Penetration of the Third World The global expansion of Canadian capital has been made possible by new Canadian foreign policy strategies. Indeed, imposing liberalized market relations and exploiting the Third World are central goals of Canadian foreign policy planners. While support for the expansion of Canadian capital is certainly not new to either DFAIT officials or po- litical leaders, it has nevertheless received significant attention since the 1990s. As Canadian capital has penetrated Third World markets, Klassen 4007_6208-072-P2-007-r02.indd 220 7/18/2012 4:52:23 PM  Canada in the Third World 221 corporate leaders and the state have placed a new premium on free market policies. In this context the Canadian state has increasingly in- tervened in the international arena to protect the global interests of Ca- nadian firms. These interventions have come in many forms, including trade and investment agreements and foreign aid policy. Free trade deals and investment treaties have been critical for secur- ing Canadian capital’s access to the Third World. Trade and investment deals are designed to lock in market access for capital by establishing a strong investor rights regime, including most-favoured-nation and na- tional treatment clauses, and dispute settlement mechanisms that allow non-parties (corporations) to sue governments. Such mechanisms first appeared in Chapter 11 of the North American Free Trade Agreement (NAFTA), and have since been included in all subsequent trade agree- ments and bilateral investment treaties Canada has pursued, most of which are with Third World governments. Governments weakened by either debt or trade deficits have been willing to abandon national tar- iffs, environmental protections, and reasonable royalty rates in order to access new loans and foreign investment. Since the signing of NAFTA, Canada has actively pursued bilateral and multilateral treaties with Third World countries. Multilaterally Canada was a major proponent of the Free Trade Area of the Americas (FTAA) – perhaps more so than George Bush’s administration after it lost fast-track negotiation authority – until negotiations stalled in the face of Brazilian opposition and the election of left-leaning governments in South America. Canada is currently a strong proponent of a World Trade Organization (WTO) investment treaty, which is modelled in part on NAFTA and has received lukewarm reception from many Third World countries (Canada 1999, 2005c, n.d.). While Canada may prefer to negotiate large multilateral agreements because of their broad scope, it recently turned its attention to smaller regional and bilateral agree- ments after the failure of the FTAA and the WTO investment agreement. As of spring 2009 Canada had signed nine trade agreements: NAFTA (with the United States and Mexico), the Canada-European Free Trade Association Agreement (involving Iceland, Liechtenstein, Norway, and Switzerland), and bilateral agreements with Israel, Chile, Costa Rica, Peru, Colombia, Panama, and Jordan. At the time of writing, it has con- cluded, though not officially implemented, deals with Colombia and Panama. Canada also has twenty post-NAFTA foreign investment pro- tection agreements in force and several others ‘pending,’ all with Third World countries.10 Klassen 4007_6208-072-P2-007-r02.indd 221 7/18/2012 4:52:23 PM  222 Empire’s Ally Aid policy represents another method by which the Canadian state facilitates economic expansion into developing countries. Both Conser- vative and Liberal governments highlight foreign aid contributions as a sign of Canada’s progressive internationalism, but this perspective is short sighted (Morrison 1998). In reality the Canadian government commits a pitiful amount to aid, both absolutely and relatively in terms of the budget. Following drastic cuts to overseas development assis- tance (ODA) in the late 1980s and 1990s – 33 per cent in real terms – Canada’s ratio of ODA to gross national income (GNI) fell to a mere 0.28 per cent in fiscal year 2007/8, ranking it fourteenth out of twenty- two Development Assistance Committee members. At its current rate of spending Canada will not come close to reaching the United Nations’ Millennium Development Goal of 0.7 per cent of GNI by 2015 (Morri- son 1998; Tomlinson 2000–1; Black 2005; CIDA 2009). Indeed, Canada spends more on agricultural subsidies – assisting its own producers against foreign competitors from Third World countries – than it does on international aid, while Canada’s military budget is more than three times that of ODA. The total investment income earned by Canadian capital in the Third World is nearly six times what Canada offers in aid, and represents the primary means by which Canada extracts value from poor countries (Canada 2005a; Economist 2006). In short, Canada draws more wealth from Third World economies than it spends on aid and development assistance. Troubling the matter further, Canada attaches ‘structural adjustment conditionalities’ to aid disbursements: in order for a country to receive aid, it must liberalize and restructure domestic markets in the inter- ests of foreign capital. Structural adjustment has been a condition of Canadian aid policy since Marcel Massé’s tenure as president of the Canadian International Development Agency (CIDA) in the 1980s (Pratt 1994). Opposition to structural adjustment policies – which have been widely critiqued for worsening Third World poverty in the 1980s and 1990s – led Canada and other wealthy nations to change the name of conditionality programs to Poverty Reduction Strategies (or Poverty Reduction Growth Facility). But the change of name has not altered the general thrust of policy. Canada still imposes neoliberal restructur- ing on poor countries (including Afghanistan), even if it now gives na- tional governments the opportunity to devise their own restructuring strategy (known as the Poverty Reduction Strategy Paper process) (IMF 2004). As a result markets have been liberalized and the rights of for- eign investors strengthened considerably. Klassen 4007_6208-072-P2-007-r02.indd 222 7/18/2012 4:52:23 PM  Canada in the Third World 223 Canadian governments also like to boast of their commitment to Af- rican development and Third World debt forgiveness. But here again these efforts are trumped by the globalizing agenda of capital. There are a number of ways in which the Canadian government is worsen- ing an already tragic situation in Africa. Canada’s role in the Heavily Indebted Poor Country (HIPC) Initiative, which is targeted primarily at African nations, is a good example. The IMF created the HIPC process as a debt-rescheduling strategy in 1996. The idea was for multilateral donor agencies such as the IMF and regional development banks to write off the debts of some of the world’s poorest countries.11 But in order to be eligible for the write-off, the heavily indebted country must first endure six years of structural adjustment to prove its commitment to neoliberal principles. Yet for most of the poor countries participating in the initiative, the debt written off is only a small portion of their total international debt and does not cover most of what they owe to private financial institutions. It is also debt they have actually stopped servic- ing, so creditor nations are only writing off debt they know will never be paid back (Canada 2005d; Bond 2006). At the end of 2005 Canada supported an IMF plan to delay a debt-relief package for six countries to which some G7 members initially had discussed granting non-con- ditional relief. IMF leaders, backed by Canada, opposed the G7 plan, delayed relief, and imposed new austerity measures as a precondition for any future debt forgiveness (Social Justice Committee 2005). Much of Canadian aid money is focused, furthermore, on infra- structural development to support foreign investment, particularly in resources extraction. This is clearly the case with CIDA’s ‘enhanced’ aid partnerships, as Campbell (2004, 104–6) points out with respect to Africa. Announced in 2002 and again in 2005, the enhanced aid part- nerships were promoted as focused and more meaningful aid dis- bursements to smaller groups of countries. However, the program targeted countries with which Canadian companies have investment relations (typically in mining) or which are rich in natural resources. CIDA declares that it will focus on countries with ‘good governance’ potential, which entails a liberal climate for foreign investment. This program was replaced in 2009 with the new ‘Countries of Focus’ pro- gram, which concentrates 80 per cent of bilateral aid on twenty coun- tries, seven of which are in Africa – though the program reflects the Harper government’s increased interest in the Americas, with six coun- tries (one is actually the Caribbean Regional Program) included from the region. Canada has concluded trade agreements with two of those Klassen 4007_6208-072-P2-007-r02.indd 223 7/18/2012 4:52:23 PM  224 Empire’s Ally countries (Colombia and Peru), is actively pursuing agreements with two others (Honduras and the Caribbean region), and has supported coups in two (Haiti and Honduras). A key determinant of Canadian foreign policy today, then, is the globalization of Canadian capital. Through trade, investment, and aid policies, the Canadian state is securing access for Canadian firms to exploit the wealth and resources of developing countries. Promoting liberalized markets and investor rights, while reinforcing debt bond- age, has expanded the international footprint of Canadian capital. It has also led to increasing conflicts with local communities. Political Resistance and Security Policy Canada’s asymmetrical relationship with the Third World has come at considerable cost to the region’s workers, indigenous peoples, and peasants. The toll of global capitalism and market liberalization on the Third World over the past twenty-five years has been well documented: a staggering billion people have been dispossessed of their land, in- equality between the richest and poorest countries has increased, and poverty has dramatically intensified, particularly in Africa (Bond 2006; Davis 2006; McNally 2006). If gains have been made for some of the poorest in Latin America in recent years (at least, before the 2008 eco- nomic meltdown), it is because of a commodities-boom driven by over- heated economies in the First World and the redistribution policies of left-of-centre governments. As a member of the G7, Canada bears its share of responsibility for this unjust state of affairs. At the same time Canadian investment itself is often directly based on extracting as much value as possible, regard- less of the consequences of displacement, economic exploitation, and ecological degradation. As a result Canadian capital in the Third World is commonly met by popular resistance and sometimes by government opposition to neoliberal restructuring. Whether it is strikes in Colombo against Bata, community resistance to Barrick Gold in the Philippines, mass strikes and road blockades in Ecuador against EnCana, or the de- nial of mineral exploration permits by the Venezuelan and Honduran governments, Canadian companies face growing resistance in develop- ing countries. With opposition mounting to Canadian corporate activity, new de- velopments in Canadian security strategy have emerged to protect in- vestor interests. The war in Afghanistan is the most prominent example Klassen 4007_6208-072-P2-007-r02.indd 224 7/18/2012 4:52:23 PM  Canada in the Third World 225 of this strategy, but it should be viewed as part of a wider approach to security and military intervention in the Third World. For the past two decades military leaders, defence ministers, and DND policy documents have warned repeatedly of new dangers in the global system and of new threats emanating from the Third World (Hooey 1994; Couture 1998; Canada 2007b). As early as 1994 a DND White Paper argued that ‘Cold War stability has given way to insta- bility and uncertainty – the world is in many ways a more dangerous place than it has been for the past 40 years . . . If anything, we are in a more unstable and unpredictable international environment [than the] balance of terror that has hung over the world since 1950’ (quoted in Hooey 1994, 469). Likewise Canada’s 2005 International Policy State- ment refers to the dangers of ‘regional flashpoints’ in the Third World (Canada 2005b, 5–6). It would be a mistake to ignore the links between Canadian security policies and the global expansion of Canadian capital. Indeed, it is telling that many of the speeches and documents prepared by the defence apparatus employ very similar language to those produced by DFAIT, dwelling as they do on the perceived lack of ‘stability’ and ‘unpredictability’ in Third World nations. In some cases military leaders make the link clearly between the global interests of Canadian capital and security policy. While chief of the defence staff, General Maurice Baril noted quite clearly that ‘[o]ur economic future depends on the global stability required to trade freely with other na- tions. As a major trading nation, we are therefore compelled by interest to protect and promote international peace and security’ (Baril 1999). The ‘war on terror’ and the current occupation of Afghanistan have allowed both Liberal and Conservative governments to ramp up mili- tary spending. Canada’s military spending increased by C$31 billion from 2001 to 2010 alone (with incremental increases devoted to the Afghan war accounting for approximately half of that), and a total of approximately C$400 billion (in 2010 dollars) in spending is projected between 2008 and 2027 under the Conservative’s Defence First plan, which does not include spending on future missions (Robinson 2011). This spending is on top of the $8 billion given recently to other secu- rity agencies, including the Canadian Security Intelligence Service, the Royal Canadian Mounted Police, and the Canada Border Services Agency (Bell 2004; Chase 2008). Canada ranked thirteenth among the world’s top military spenders and the sixth-largest in NATO in 2009, and its rate of spending increase from 2000 to 2007 was the third- highest in NATO (Robinson 2011; SIPI 2008). Klassen 4007_6208-072-P2-007-r02.indd 225 7/18/2012 4:52:23 PM  226 Empire’s Ally The occupation of Afghanistan is not Canada’s only major foreign intervention of note – indeed, such interventions are increasingly com- monplace, with the 2011 Libyan campaign being the most recent. In the process Canada is developing a flexible toolkit with which to ad- vance its interests. The full spectrum of Canadian foreign policy tactics are not elaborated in security doctrines, but appear clearly enough in recent foreign policy engagements. Certainly both Liberal and Conser- vative governments have placed considerable stress on the promotion of democracy and human rights in their foreign policy initiatives of recent years, as the Harper government has made clear in its aid pol- icy towards the Americas.12 While such goals appear benign, they are often a cover for destabilizing left-leaning governments.13 At the same time Canada has been at the forefront of efforts to rewrite international law by establishing more flexible justifications for military invasions of ‘failed states.’ Canada played a critical role (with Michael Ignatieff as co-author) in developing and promoting the ‘responsibility to protect’ (R2P) doctrine at the United Nations, which was used informally to justify the coup against Haitian president Jean-Bertrand Aristide (In- ternational Commission on Intervention and State Sovereignty 2006). Canada has also developed a new counterinsurgency manual for its military forces. Among other things, the manual distills lessons from the intervention in Haiti for pacifying civilian populations and possible insurgents, and is premised on the assumption that future counterin- surgency efforts against asymmetrical opponents in the Third World will be a focus of the military (Canada 2007b). While the form of intervention changes from case to case, the im- perialist goal of policy-makers is to ‘open’ and ‘stabilize’ developing countries for transnational capital. Canada’s new security doctrine is imperialist in the way it constructs an image of the South as a danger- ous zone in need of military intervention and neoliberal development. The road to stability, in the eyes of Canadian policy-makers, is economic advancement through liberalized markets with strong protections for corporate investors. If states fail to support this agenda, they face a real possibility of military intervention by Canada and its western allies. The Coup in Haiti The military intervention in Haiti in 2004 provides an early example of Canada’s new security policy. In February that year the popular and dem- ocratically elected president, Jean-Bertrand Aristide, was overthrown in Klassen 4007_6208-072-P2-007-r02.indd 226 7/18/2012 4:52:23 PM  Canada in the Third World 227 a coup and forcefully removed from the country. Aristide was a left- of-centre politician with a history of links to liberation theology, and had been previously removed from office in a coup in 1991. After his re- election in November 2000 Aristide raised the minimum wage, intro- duced literacy programs, built new health clinics and hospitals, in- creased taxes on the rich and subsidies on price-sensitive consumer goods, and publicly criticized the IMF, all of which failed to endear him to the country’s wealthy elite or to the Canadian, US, or French states (Engler and Fenton 2005; Hallward 2008). The coup was led by the country’s business elite and paramilitary forces featuring ex-army officers and death squad members from pre- vious dictatorships (Hallward 2008, 75ff). Canada, the US, and France supported these forces diplomatically and militarily. Prior to the coup Canada engaged in a destabilization campaign against the Aristide government. Along with France, the United States, and the World Bank, Canada cut off aid to the Haitian government following Aristide’s elec- tion in 2000, precipitating a sharp drop in the GDP of what was al- ready the poorest country in the hemisphere. CIDA directly funded many opposition groups with very poor human rights records as well as anti-Aristide media (Engler and Fenton 2005, 50ff). Canadian gov- ernment officials also participated at least twice in high-level meetings with their French and US counterparts to develop a coordinated strat- egy to undermine Aristide’s government. As early as 2000 then Liberal foreign affairs minister Lloyd Axworthy travelled to Washington for a ‘Friends of Haiti’ meeting. Fenton (2005–6, 18) argues that ‘[t]hese ‘friends’ of Haiti feared that, unless Aristide’s Lavalas Party was reined in, the neoliberal vision for that country was in dire jeopardy.’ In 2003 Denis Paradis, who later became the Liberal government’s secretary of state for Latin America and the Caribbean and minister responsible for La Francophonie, hosted a high-level meeting called the Ottawa Ini- tiative on Haiti in the government’s conference centre at Meech Lake, Quebec, with representatives from the United States and France. While the federal government has refused to disclose details of that meeting, Montreal-based newspaper L’Actualite reports that participants dis- cussed – approximately one year before Aristide’s ouster – the need to remove Aristide and place Haiti under the control of the United Na- tions (Engler and Fenton 2005, 41–3; Hallward 2008, 106). In support of the actual coup members of Canada’s Joint Task Force 2 reportedly secured the airport for Aristide’s removal. Canadian Forces members then worked with their French and US allies and the Haitian Klassen 4007_6208-072-P2-007-r02.indd 227 7/18/2012 4:52:23 PM  228 Empire’s Ally National Police (HNP) to violently pacify the slums where Aristide’s support was strongest. Slum residents reported violent reprisals by the HNP and Canadian military, including the shooting of demonstrators. Upwards of a thousand Haitians were killed in the first few days fol- lowing the coup, while as many as four thousand died during the reign of coup leader Gérard Latortue. Most of those killed were supporters of Aristide’s Lavalas party (Fenton 2005–6, 18; Hallward 2008, 147, 249). The HNP, which was led by a Canadian, waged a campaign of repres- sion through 2005. Through CIDA’s Interim Cooperation Framework (CIDA 2006), Canada spent C$20 million on the establishment and train- ing of the HNP. One hundred RCMP officers were also sent to Haiti to help train and integrate ex-soldiers into the new police force. The effort to train the HNP to make Haiti ‘more secure’ included working on pa- trols, crowd control, and intelligence. CIDA also spent $800,000 on the correctional system. With CIDA funding, a Port-au-Prince prison, built to hold five hundred people, held more than two thousand in squalid conditions by the spring of 2006, only eighty-one of whom had been convicted of a crime. This was all done under the watch of Haiti’s CIDA- paid deputy minister of justice, Philippe Vixamar (Engler and Fenton 2005, 52–3; Hallward 2008, 253–4, 271). CIDA also helped the Latortue regime prepare its Poverty Reduction Strategy Paper. As a CIDA docu- ment stated at the time, the Haitian government ‘has achieved the zero- deficit objectives of the International Monetary Fund’ (CIDA 2006). Canada cloaked its role in the Haitian coup in a humanitarian guise, with Paradis invoking the R2P doctrine to justify Canada’s interven- tion (Engler and Fenton 2005, 41–3). But the use of R2P in the Haitian context only shows the shallow and ideological nature of such justifi- cations. Aristide’s government was democratically elected and had a relatively strong human rights record, particularly when compared to the slaughter that followed the coup. What Canada did accomplish, however, was the removal of a government that sought an indepen- dent development path, the rollback of workers’ rights and regulations on mining and sweatshop manufacturing in Haiti’s export-processing zones, and the projection of diplomatic and military power in a region in which it has long-standing economic interests. Destabilizing Democracy in the Andes and Honduras Canada also worked to destabilize the governments of Hugo Chávez in Venezuela and Manuel Zelaya in Honduras. In Venezuela CIDA funded groups, including Sumate A.C. and Fundación Justicia de Klassen 4007_6208-072-P2-007-r02.indd 228 7/18/2012 4:52:23 PM  Canada in the Third World 229 Paz Monagas, that participated in the 2002 attempted coup (Golinger 2007).14 At the same time, DFAIT has funded the Justice and Devel- opment Consortium, another far-right organization, and brought Sumate’s Maria Corina Machado to Ottawa, where she spoke with government officials and politicians about political rights in Venezu- ela (Fenton 2009). Funding for these organizations is part of the Canadian state’s agenda of ‘democracy promotion’ in the Andes, which the Harper gov- ernment has declared a key component of Canadian foreign policy in the Americas. Canada’s support for Colombia, a country with one of the worst human rights records in the world and whose recent leader, Álvaro Uribe, had links to paramilitary death squads, should be seen in this light. While the country is rich in natural resources, the Colombian government also proudly aligns itself with imperial interests and main- tains antagonistic relations with Chávez and the moderately left-wing president of Ecuador, Rafael Correa. Thus, Canada has sought to isolate Venezuela by branding it as authoritarian, while openly supporting Co- lombia through military exports. During his state visit to Colombia in summer 2007, Prime Minister Harper dismissed the country’s human rights problems and instead made a point of distinguishing countries, such as Colombia, that pursue strong free markets from the ‘economic nationalism, political authoritarianism and class warfare’ taking hold in other parts of the Andes (quoted in Freeman 2007). In Honduras, President Manuel Zelaya was overthrown in a mili- tary coup on 28 June 2009 and forced into exile. Zelaya had raised the minimum wage, announced a moratorium on new mining concessions, sought to nationalize energy generating plants and the telephone sys- tem, entered the Bolivarian Alternative for the Americas, and called a vote for 28 June on whether or not to hold a referendum in November on calling a constitutional assembly to discuss Honduras’s constitution, which had been adopted in 1982 by a military dictatorship. As the second-largest foreign investor in the country, Canada had cause for concern about Honduras’s leftward tilt. Thus, when the first rumblings of a coup were heard two days before it eventually took place, Canada said nothing. In contrast, DFAIT had issued three press releases in a two-week span earlier in the month condemning the Ira- nian government’s clampdown on protests following that country’s presidential election.15 The Organization of American States (OAS) did pass a resolution on 26 June calling for the maintenance of democracy and the rule of law. Yet in the special session of the OAS Permanent Council on the situation in Honduras held that same day, the Canadian Klassen 4007_6208-072-P2-007-r02.indd 229 7/18/2012 4:52:23 PM  230 Empire’s Ally representative remained silent (OAS 2009). Finally, very late in the eve- ning of 28 June, more than twelve hours after the coup became known outside Honduras, Peter Kent, minister of state for the Americas, is- sued a press release. While Kent condemned the coup d’état, he called ‘on all parties to show restraint and to seek a peaceful resolution’ to the crisis, as if all parties, including Zelaya and his supporters, were responsible for the military coup or were equally unrestrained in their actions (Kent 2009a). This position was echoed in the Canadian rep- resentative’s statement to the OAS Permanent Council following the coup. As the OAS president was planning a trip to Honduras to press for Zelaya’s return, Kent argued that the international community had been too one-sided in its approach, and that ‘[t]he coup was certainly an affront to the region, but there is a context in which these events happened . . . There has to be an appreciation of the events that led up to the coup’ (Lacey and Thompson 2009). Along with the United States, Canada worked against the imposition of OAS sanctions on Honduras and called instead for a weaker review of diplomatic relations (Markey and Rosenberg 2009). When mediation talks between Zelaya and coup leader Roberto Michelleti broke down several weeks later, Kent abruptly declared that Zelaya should return only after a negotiated settlement had been achieved and when the risk of violence had passed (Kent 2009b). Kent failed to mention, however, that the violence that followed the coup had been perpetrated by the military, not by Zelaya’s supporters. By making Zelaya’s return conditional on a settlement, Canada lent cred- ibility to an undemocratic government and put pressure on Zelaya to make major concessions to Michelleti. While Canada did not openly support the coup, it did little to challenge the military government and worked instead to undermine Zelaya’s claim to power. Canada subse- quently has become one of the biggest allies of the post-coup govern- ment of Porfirio Lobo, even though his election took place in a context of repression against anti-coup forces and the refusal of international election observers to participate.16 Afghanistan Given the international interests of Canadian capital and the wider militarization of Canadian foreign policy, Canada’s intervention in Afghanistan should be viewed in terms of imperialism, not dependency or Middle Power internationalism. The United States certainly exerts in- fluence over policy-makers and political leaders in Canada, but other, Klassen 4007_6208-072-P2-007-r02.indd 230 7/18/2012 4:52:23 PM  Canada in the Third World 231 more powerful structural features of Canadian capitalism shape and determine Canada’s role in the Third World. As we have seen, these variables include the economic and political relations through which Canadian firms and the Canadian state exploit the periphery. As Kolhatkar and Ingalls (2006) and Ali (2008) point out, the invasion and subsequent occupation of Afghanistan is not just a matter of US strategic interests; NATO has been centrally involved in the Afghanistan campaign from the beginning. The Afghan mission reflects an ongoing effort by the transatlantic alliance to recast itself as an organization with not only the ability but also the right to project collective military power in circumstances where common interests are threatened. It is also an attempt by the United States and NATO to secure a military foothold in a geopolitically important region. Developments in the region – no- tably the belligerence of Russia and the competitive rise of China – are viewed as security matters by the transatlantic alliance. As a long-time member of the G7 and NATO, the Canadian state has identified the oc- cupation of Afghanistan as an important, if costly, endeavour. The occupation of Afghanistan also gives hawkish elements among political leaders and policy-makers ammunition against the resonant, if mythical, claim that Canada is first and foremost a peacekeeping na- tion. The notion of Canada as a peacemaker is the basis for challenges to Canadian militarism by the New Democratic Party and the Council of Canadians, but the war in Afghanistan makes this form of antimili- tarism difficult to sustain. As Colonel D. Craig Hilton (2007) argues, ‘[w]hile the clear articulation of military roles and missions defined in both the International Policy Statement 2005 and its Defence coun- terpart put a formal end to any suggestion of a peacekeeping raison d’être for Canada’s military, it is the evolution of Canada’s mission in Afghanistan . . . that has utterly shattered the widely-accepted myth of Canada as benign peacekeeper.’ It should be clear from the preceding discussion that Canada’s in- tervention in Afghanistan is not an isolated endeavour, but part of a broader shift in Canadian foreign policy. Along with its allies, Canada supports a global system of imperialism that reproduces economic and political inequalities between the First and Third Worlds. As Can- ada’s political and economic interests in poor countries have grown, the perceived dangers and insecurities of ‘failed states,’ ‘rogue states,’ and ‘insurgencies’ have become the ideological lenses through which policy-makers engage the world. Canada, in this respect, is not qualitatively different from other im- perialist countries. It seeks actively to subordinate the Third World Klassen 4007_6208-072-P2-007-r02.indd 231 7/18/2012 4:52:23 PM  232 Empire’s Ally politically and economically, and is not beyond employing state vio- lence to achieve these goals. Outside its own borders Canada may be less experienced than some of its allies at the conquest, occupation, and re-engineering of economic and political structures of foreign nations. But its military interventions in Haiti and Afghanistan reflect Canada’s increasing experience in the exercise of imperial domination. As Cana- da’s political, military, and corporate elites have been insisting, Canada needs, in this regard, to be taken seriously on the international stage. Prime Minister Harper has asserted quite plainly that, unless Canada is willing to participate in military actions abroad, it will fail to earn international respect and leadership roles in global politics: ‘Countries that cannot or will not make real contributions to global security are not regarded as serious players’ (Clark 2008). The war in Afghanistan needs to be understood in the context of Canada’s changing economic relationship with the Third World, and not foremost as a war against terrorism or an attempt to foster lib- eral forces for human development. The war is a testing ground for the new Canadian imperialism, and is connected to the economic and geopolitical interests of Canadian capital abroad. For this reason, the anti-war movement must address the capitalist nature of Canadian for- eign policy if it wants to end the current war of empire and prevent future ones. NOTES 1 My book Imperialist Canada (2010) represents an attempt at such an analysis. 2 These figures on CDI to the Third World are from Canada (2003) and Statis- tics Canada, CANSIM database, tables 376–0051 (a country-specific break- down of CDI) and 376–0053 (aggregated data for regions). Total CDI in the Third World is taken from the latter table; however, the category that most closely corresponds in the table to the Third World is ‘all other foreign countries’ – namely, all countries not in the European Union or the Organi- zation for Economic Co-operation and Development (OECD) – and so it is an imperfect account of investment in the Third World. CANSIM table 376–0051 does have specific data for Mexico, which is a member of the OECD, so I added Mexican data to that of table 376–0053’s ‘all other foreign countries’ to get the Third World totals. 3 Data on FDI stock to developing countries is from OECD, International Di- rect Investment Statistics, ‘Direct Investment By Country,’ using the ‘Total Klassen 4007_6208-072-P2-007-r02.indd 232 7/18/2012 4:52:23 PM  Canada in the Third World 233 World, excluding-OECD’ and ‘Mexico’ data sets. Data on GDP are from OECD, ‘Stat Extracts,’ http://stats.oecd.org/WBOS/index.aspx (accessed October 2008). 4 Third World data are from the ‘all other countries’ category in Statistics Canada, CANSIM database, table 376–0001, which excludes OECD and EU nations. The estimate of Third World investment income as a proportion of total foreign investment income is conservative, as Mexico, which is an OECD member and a major destination for CDI, is not included. 5 Third World profits are from Statistics Canada, CANSIM database, table 376–0001, ‘investment income,’ which includes direct, portfolio, and ‘other’ earnings for countries not in the OECD or European Union. Canadian-based profits are from CANSIM table 187–0001, operating prof- its, ‘total all industries, after tax.’ Third World earnings are after tax as well. The comparison is imperfect, as the operating profit methodology includes some writedowns, such as for inventory, while the foreign invest- ment profits, collected on a GDP basis, do not. Canadian-based profits collected on a GDP basis are not after tax. 6 It should be noted that many of these countries have seen significant improvements in national income (if not always a corresponding decline in inequality), and the financial flows to these centres do not simply con- stitute a drain of wealth from the Third World. For some of these desti- nations, however, financial capital is then reinvested in other economic developments (such as mining) within the local region. 7 The ten fastest-growing destinations over the period from 1987 to 2007 were, in order, China, Peru, Chile, the Cayman Islands, Barbados, the Bahamas, Colombia, Costa Rica, Mexico, and Argentina. 8 Central Bank of Malaysia, http://www.bnm.gov.my/index.php?ch=109& pg=249&mth=8&yr=2008 (accessed 30 October 2008); Central Bank of the Philippines, http://www.bsp.gov.ph/statistics/spei_new/tab22.htm (accessed October 2008); and Indonesian Central Bank, http://www.bi.go. id/biweb/html/sekiTxt/T3x805.txt (accessed 15 October 2008). 9 See the web site of the Afghanistan Investment Support Agency, http:// www.aisa.org.af. 10 The list of free trade and foreign investment protection agreements is available on the DFAIT web site, http://www.international.gc.ca/trade- agreements-accords-commerciaux/agr-acc/neg_country-pays_region. aspx?lang=eng&view=d. 11 Countries qualify for HIPC relief as a result of arbitrary determinations by the IMF and World Bank of whether or not their debt is ‘sustainable.’ A country’s debt is sustainable if the net present value of the debt is less than Klassen 4007_6208-072-P2-007-r02.indd 233 7/18/2012 4:52:24 PM  234 Empire’s Ally twice as large as the country’s export earnings or if annual debt-service payments are less than 20 per cent of export earnings. 12 See the Americas section of CIDA’s web site, http://www.acdi-cida.gc.ca. 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