The Pathway of Good Intentions

Ghana: A Case Study

Cold War (1947-1991) Lessons for Today’s World

An eighteen month contract in Ghana with Kaiser Engineers International, Inc. in 1966, marked the beginnings of my life-long quest for understanding. My 19 year old brain knew

Port at Tema, Ghana

Port at Tema, Ghana

only that Kaiser was building an aluminum plant at Tema, Ghana and I was going to live a tantalizing adventure.  While Sgt. Barry Sadler sang The Ballad of the Green Berets, The Righteous Brothers crooned You’re My Soul and Inspiration, The Monkees caught the Last Train to Clarksville, The Mama’s and The Papa’s harmonized to bring us Monday, Monday, Johnny Rivers lamented The Poor Side of Town, and Nancy Sinatra shared that her Boots Are Made for Walkin’, little did I know that I was running headlong and as fast I could to become a dust mote on the Cold War’s economic stage.

Kaiser had a cost plus contract, which I knew provided for my very important job, running PequodCutawaythe swimming pool, snooker room, bar and other recreational facilities for the ex-patriots who did the real work. In addition to U.S. citizens, Greeks, Germans, Indians, Lebanese, Scots from the Outer Hebrides, Canadians, and others filled the ranks of Kaiser, Chicago Bridge and Iron, and their subcontractors.  Moby Dick was fresh in my mind and I always referred to the ex-patriot compound as the Pequod; a microcosm of the ‘free’ world. Kaiser and the subcontractors were burning their foreign currency reserves from other jobs.  The Pequod provided an accelerated learning environment for a 19 year old discovering the adult geopolitical world, and the job provided the prototypical water cooler around which gossip spread. Perfect.

Eight Ghanaians headed by an old man named Hammond comprised my staff. Hammond was an amazing human being. He was a wise and honorable Juju man, a religious elder, from Ghana’s northern regions. Hammond was a devout Christian whose Christianity was integrated with the old ways of his people. He had worked in the goldfields and had watched his country transition from colony to nation. He folded me into his life and taught me. Eventually I would work in his village for an old Dutch bush doctor. Hammond could take the edge off my youthful arrogance with a word or a look. He forced introspective journeys through my soul; he took the circle of geopolitics and, magically, a sphere appeared in its place. Over the course of the next 47 years, the sphere within me would self-populate with ideas and changes, awakenings, understandings  and awareness.

Kwame Nkrumah was Ghana’s president in 1966 as I took the reins of the recreational facilitydefault in Tema in the hot steamy tropics that is June there.  Nkrumah was an engaging leader. He was a brilliant, charismatic orator who was educated in Great Britain and the United States. Had Nkrumah not chosen to worship in his own temple, he could have become Africa’s greatest leader.  By 1964, however, Nkrumah had gotten rid of the Supreme Court and created a one-party state. The chatter in the Kaiser Snooker room was that Kwame Nkrumah was playing the United States off against the Soviet Union. Rumors of Chinese military training camps in the north abounded. Being a mother, apple pie and flag American, I found this to be an enigma. Kwame Nkrumah had been educated in the U.S., right? How could he even think about engaging the Soviet Union? How could he allow a Chinese base? It agitated my core being, but Hammond said to keep the information in my heart and when the time was right, the answers would appear. And they did.

Kwame Nkrumah married a beautiful Egyptian lady, Fathia Rizk, at the height of his political power. He remains a part of the Ghanaian political landscape through his daughter, Samia

Henry J. Kaiser was featured as "Shipbuilder No. 1" in a 1943 Real Heroes comic book.

Henry J. Kaiser was featured as “Shipbuilder No. 1” in a 1943 Real Heroes comic book.

Yaba Christina Nkrumah, who is very active in the parliament. Nkrumah was well versed in Cold War economics and played the game to get a break-even hydroelectric dam built on the Volta River. He knew that Khushchev had provided funding for a similar project in Egypt, the Aswan Dam, as a gambit for Soviet penetration into the Arab world. President Nkrumah asked President Eisenhower for a favor[1] and another piece of the Volta dam deal was placed in the puzzle. President Eisenhower spoke with his friend, Henry Kaiser, who put together a consortium to deepen the Tema Harbor and build an aluminum plant as a primary customer for the Volta dam that would now be built. Neat and clean! President Kennedy inked the deal. There was nothing like a little Cold War economic competition between the U.S. and the Soviet Union to start the money spigot flowing.

Somewhere between the idealism of Cold War Economics and the ridiculous lies the truth.  In February 2008, Harvard’s Richard Cooper published the Economic Aspects of the Cold War, 1962-1975, which states that:

US objectives during the Cold War were to prevent Soviet attacks on the United States and its allies and to prevent the spread of communism as a political and economic system to other countries, whether by force or by threat, subversion, persuasion, or bribery.”

The United States used a carrot and stick approach with economics. The U.S. government sent a goodly amount of money and support to governments that behaved appropriately for its purposes and quickly engaged economic sanctions when they did not do as the government wanted. This approach impressed the leadership of other countries with its get rich quick opportunities, which suited one objective of the aid: to promote the short-term political and strategic interests of the U.S. It was a standing joke while I was in Ghana that the African leaders’ bank accounts matched well with the World Bank funding for their respective countries. Unfortunately the policies did little to help the Ghanaian people. The aid failed miserably in promoting long-term growth and reducing poverty in Ghana, or anywhere else. The idea was engaging. It seemed a no brainer that if poor countries grew economically strong, U.S. economic and political security would benefit.  It is always ridiculous when governments think they can conduct effective, hard-nosed business. It simply never works and it is clear that the federal government remains conflicted about its economic acumen and role.

In the beginning, it all seemed so logical. Kwame Nkrumah would be a hit at home once his aluminum plant was processing bauxite from his mineral rich provinces using cheap

Akosombo Dam

Akosombo Dam

electricity from his Volta River hydo project. The Ghanaian people would be productive, busy, and living well and his role as Ghana’s savior would be solidified. The U.S. government was happy that one more country was firmly, so they thought, on their side of the Cold War ledger sheet. Henry Kaiser was happy, too. He had negotiated a sweet deal that included up to fifty years of cheap electricity, great tax benefits, and lots of money. Kaiser put up $32 million for his aluminum plant and the Export-Import Bank and the Agency for International Development (USAID) put up $140 million. USAID is We, The People, the taxpayers.

What about the Ghanaian people? Well, they did not fare so well. The Ghanaian government now owns the aluminum plant through a company called Valco. Valco was originally a joint venture with Alcoa but Ghana bought out most of Alcoa’s stake in Valco in 2004 and bought the last 10% for $2 million in 2008. The Jun 23, 2008 published statement by the presidency revealed the Ghanaian government’s vision. “The Government has proposed a concept of an integrated aluminium industry in which the country’s bauxite will be mined, refined and processed to near-end or end products here in Ghana.[2]

The up to fifty years of cheap power was re-negotiated not so favorably in 1985, about twenty years after the plant was commissioned.  Valco closed the plant completely in 2003, partly because of low water conditions at the Volta River dam. The plant did re-open in 2006 then was closed from 2007 through 2010. Since its re-opening in 2011, it produces a paltry 20% of its 200,000 metric ton capacity. The hydroelectric dam on the Volta River resulted in a stagnant lake, which increased the pain and suffering of the people through disease. The dam was built at the right place. Proper siting of dams is very important and must be done by scientists and engineers experienced in such things, not by politicians.

So, what is the tally? Kwame Nkrumah was ousted by his people and died in Bucharest, Romania in 1972. The people are not substantively better off. One could make the case that for all the U.S. money injected, the suffering of the Ghanaian people increased.

Once, in frustration I asked Hammond, “Why, why won’t you change?” He just looked at me, foreign-aid-definition-wiley1smiled and calmly said “Because, young one, you will leave and I will still be here.” The idea of foreign aid in all of its many cloaks grew out of the reconstruction of Europe after WWII. In the U.S., it expanded as a political weapon used during the Cold War. Most of the recipients of foreign aid are worse off rather than better off; Africa is much worse off. But we insanely continue the program. Asia grew its infrastructure mostly without the benefit of such aid and has continued to develop to become our equals and better in the world marketplace. Perhaps the time is right to openly debate whether or not free and open markets make more sense than a dole that ends up in the hands of dictators and cronies. The stated objectives of foreign aid are filled with good intentions. As Hammond would say, “Good intentions, my young friend, take you straight to hell.”

[1] The Volta River Project in Ghana, West Africa: SAN JOSÉ STATE UNIVERSITY ECONOMICS DEPARTMENT: Thayer Watkins

[2] New bauxite mine and alumina refinery for Ghana as it buys Alcoa stake in VALCO