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 Day 19

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The Least They Could Do

The Clinton Foundation Donors

by ROB LARSON

When president-elect Obama nominated Hillary Clinton for State Secretary, the Clintons agreed to release the donor lists of the Clinton Foundation, the global charity created by the former President. The Clintons agreed to air their laundry in a deal with the new Obama Administration. The donor list is extremely revealing, and not only for being “a who’s who of some of the world’s wealthiest people,” as the Wall Street Journal called it. The list also shows that the Foundation is funded by the people, governments, and companies that help create the problems that the charity seeks to address.

Take development. The Foundation has as  a priority of charitable giving and economic development, and recently began an initiative to encourage philanthropy in the Mideast and Africa. But one of the Foundation’s biggest donors, giving in excess of ten million dollars, is the Monarchy of the Kingdom of Saudi Arabia. In addition to the Kingdom itself, rich Saudis and the group Friends of Saudi Arabia gave several million more. The Royal Family of Saudi Arabia is reaching out to the struggling masses of the middle east.

But with a blindfold. BusinessWeek recently reported that “Saudi censorship is considered among the most restrictive in the world…the country blocks broad swaths of the Internet, from pornographic Web sites to calls for the overthrow of the government.” And Saudi subjects may have reason to throw out their Royal Family, such as the 2007 ruling by the Justice Ministry that sentenced a gang-rape victim to 200 lashes and six months in prison. The woman had been in a car with an unrelated man prior to the rape, and had appealed her original 90-lash sentence, leading the court to increase it and add a jail term “because of her attempt to aggravate and influence the judiciary through the media.”

But conditions can’t be that bad—King Fahd finally approved a Saudi human rights “watchdog,” but with members chosen only by the government, after having withheld approval for a citizen group to organize one. The business media describe the chance that the rights group would “openly embarrass” the Monarchy as “unlikely.”

So the Royal Family relaxes by plowing a few ten million bucks from its oil fortune into the Clinton Foundation, which accepts it in part to fund programs for the Monarchy’s own impoverished subjects. If the Royal Family really felt generous they could give their subjects the vote.

Or consider Lakshmi Mittal, the Indian steel magnate whose global conglomerate Arcelor-Mittal produces 10 per cent of the world’s steel output. Mittal built his industrial empire buying old plants and government sell-offs, with the view that becoming large and powerful was the key to “heavyweight profits.” The Lakshmi business plan was to grow “big enough to negotiate on an equal footing with suppliers of iron ore and coal and with customers such as automakers…In the long run Lakshmi’s vision is an industry dominated by a handful of powerful companies, strong enough to cut output rather than prices in a downturn.”

This is what economists call an “oligopoly,” and it doesn’t have much to do with the major Clinton Foundation goal of expanding economic opportunity. Once companies become large, they gain advantages against competitors, as Mittal describes: “as we are becoming more global…we are able to reduce our costs on a global basis. Like purchasing… [we] aggregate our demand. We are able to have stronger muscle power to negotiate with our suppliers.”

The scale of Mittal’s steel empire stacks the deck against smaller competitors and undermines a Clinton Foundation goal. But a nice seven-digit check to Clinton’s global charity levels the playing field enough to sleep at night. The Open Hand giveth, and the Invisible Hand taketh away.

Or take AIDS, often seen to be the Foundation’s core issue. The Foundation recently negotiated heavy price reductions for certain AIDS drugs sold in the developing world, and has come to partially support moves by Brazil and Thailand to break the patents on AIDS therapy drugs held by U.S. companies. This new policy has been pushed for by AIDS activists and groups like Doctors Without Borders, who have seen thousands of lives improved by cheap generics that violate patent rights. But only recently has the hand of the Foundation been forced by Brazil’s and Thailand’s patent-breaking, which is seen even by conservative observers like the Economist as successful in fighting the disease.

The business press describes the position of the most prominent AIDS activist in South Africa, Zackie Achmat: “Like many activists, he believes drug companies have been goaded into their recent donations…only by terrible publicity,” and that “contrary to what the industry said, patents were indeed an obstacle to affordable medicines.” Elsewhere, the Financial Times describes the pharmaceutical industry’s limited giveaways or price reductions of AIDS drugs as “part of public relations efforts by western companies to deal with an onslaught over the prices they charge for their drugs.”

So while the Clinton Foundation has gradually come to support production of some far-cheaper generics in the developing world, it took public and activist pressure, plus the growing independence of developing countries like Brazil, to bring them and the drug companies around. And some of the medicine can even be paid for with the hundreds of thousands of dollars donated to the Foundation by AIDS drug patent-mongers Pfizer and Ranbaxy, paying for a few generics to fight the disease they helped to spread.

While the Foundation’s work is clearly invaluable to the people and desperate communities it serves, the point is that its money comes directly from parties contributing heavily to the problems it’s fighting, from the brutal Saudi tyrants paying to encourage human development, to the global steel tycoon kicking in for classes on entrepreneurship, to the drug patent-owners grudgingly contributing to production of the generic drugs they fight against.

The Foundation would probably defend itself by saying that its median gift amount is just $45, from its thousands of small-scale donors, who are admirable, well-meaning people. But that doesn’t get you to the $492 million total the Foundation manages. That comes from Clinton’s big-ticket donors, which also include Victor Pinchuk, the Ukrainian steel “oligarch” who built his empire from the Soviet Union’s asset sell-off, and Blackwater, the U.S. mercenary company under legal sanction for its killings in Iraq. Blood money still spends.

In  a world of tyrannical regimes, powerful global corporations, and spreading disease among the poor, you can count on more ego-stroking from the guilty parties that keep the lights on at Big Charity.

ROB LARSON is charitably donating free crutches to everyone he runs over. He’s Assistant Professor of Economics at Ivy Tech Community College in Bloomington, Indiana, and can be reached at rlarson2@ivytech.edu

BusinessWeek, Internet Censorship, Saudi Style, November 13, 2008.