Why being kind may be cruel to poor countries

Article by John Blundell in The Scotsman

NO DOUBT Saddam Hussein will lose much in the next few days and weeks. Yet I see another tragedy about to be imposed on the people of his blighted country. They are going to be engulfed in "aid". Kindness can be pernicious.

What Baghdad needs is what all cities need: the rule of law and functioning markets. Afghanistan's economy has been stalled by the aid agencies' benevolence - but property rights have not yet been secured in Afghanistan let alone freedom of contract.

The Heritage Foundation, the Washington policy brokerage, publishes an annual report in collaboration with the Wall Street Journal which I might hope would get on every college's reading lists. The Index of Economic Freedom calibrates the free market virtues of every nation. It is a fascinating study. It reveals the recipe that makes for the Wealth of Nations. It is very much as Adam Smith prescribed.

You might guess that Hong Kong and Singapore come out top - ahead of even the US. Both are anomalies. Hong Kong is now only an autonomous zone of China. Singapore is an island swamp that seceded from Malaya only a generation ago. It is easy to see why they prosper so mightily. Both have nearly total free trade ... minimal tariff barriers. Both have secure and just legal systems. It is a curiosity that while the preponderant populations are Chinese, their institutions are a sort of 18th century Scots ideal.

Admirably, amazingly, audaciously, Estonia, the tiny Baltic state that was a part of the dead Soviet economy only 12 years ago now rates sixth in this league table.

Sadly it will be downgraded on joining the European Union next year as the European Commission in Brussels operates its semi-criminal common agricultural policy and its directives fail any normal test of the rule of law. In every assessment of EU member states, this study's cool analysis is open to criticism. It agrees the CAP is a poisonous nonsense and increases the cost of our groceries, but it omits the vast damage it imposes on food exporters.

One side-effect of the Iraq debacle may be that the US State Department will wean itself off its stale assumption that the CAP may be squalid but it is in some unexplained sense "a bulwark" against communism.

The Index of Economic Freedom offers a snapshot of statelets I admit I was ignorant of. Djibouti, home of the largest German naval base, north of Somalia? Sao Tome, the most oil rich per capita spot on the planet yet enduring the bleakest poverty?

It might be agreeable to claim that the English speaking nations have fared better than those territories once under French or Spanish or Portuguese rule. In fact, Zimbabwe and Burma are down in the relegation zone competing with basket cases such as North Korea and Cuba.

These two last redoubts of Marxism and Leninism offer a model of how not to run an economy.

North Korea is perhaps more compelling because it inherited an identical set of people as South Korea, ranked 52nd in this league table and climbing every year against North Korea's 156th place.

A community such as Surinam was bequeathed Dutch institutions but it has decayed rapidly into corruption and brutality.

I find it difficult to imagine what goes on in the head of a man such as Robert Mugabe, president of Zimbabwe. Why not let his people prosper? He could bask in their success, harvest far more tax, and worry more about immigration than the present mass emigration. Is suppression and torture that much fun? Does Fidel Castro really think Cuba will advance under lawless one-party rule? Is it possible the next generation of leaders, probably attending graduate classes in Edinburgh even now, will be weary of the constant penury induced by regimes that suppress laws and markets ?

Which is the priority - the rule of law or free trade? They seem both to be prerequisites. One asset na