The Social Impact Economy: “No equivalent in Europe”

That’s the assertion being made by European Civil  Society Leaders following the Global Impact Economy forum last month where Hillary Clinton offered a vision of  a Social Impact Economy, smart power and “breaking down silos”.

In 1996, it was Bill Clinton who was first to be introduced to the concept of business with a social objective, in the P-CED white paper written by a a member of the steering group of the committee to re-elect him to President. This led on to the author investing in researching and sourcing an experimental development initiative in Russia which was to become the Tomsk Regional Initiative.  It was 1999, when the Russian economy was in crisis and widespread poverty created an uneasy scenario in a centre for nuclear research, like Tomsk .

In 2002, following on from the success of Tomsk which was replicated in several other cities, focus moves on to Crimea and the repatriated Tatar community, who faced widespread homelessness. The Crimea proposal concluded:

“Just as the US now heavily uses smart bombs in warfare, it is becoming increasingly apparent that the equivalent is needed in aid efforts. It is not enough to spend, say, US$ 7 million dollars for five Tomahawk cruise missiles and then spend a fraction of that amount in building a peaceful community which does not merit targeting by missiles. Yet, that is what we have in this case.

It might be argued that the US and other wealthy nations have spent billions of dollars in aid to foreign countries just in the past decade. This is true, but hardly a good point. We need look no further than the example of Russia to understand how billions can be spent and almost completely wasted, for nothing. In fact, nearly US$ 20 billion in aid from the US to Russia disappeared in the mid-1990s and has yet to be accounted for. The only thing that is clear is most of the money vanished in Moscow, despite the fact that the money was intended for use by regions in all of Russia. Consequently, in 1998, Washington abandoned this big-money, top-down approach and began to focus on much smaller amounts to specific regions which demonstrated commitment to democratic principles and market reforms. This is what is needed now for the Crimean Tatar community.”

Research on the ‘Marshall Plan’ for Ukraine began in 2004 and by 2006, the strategy paper was circulating government channels. It called for social investment of 1.5 billion dollars, the equivalent of what was then being spent in Iraq each week:

“It is proposed that the United States of America be actively engaged in supporting this project, financially and any other way possible. Ukraine has clearly demonstrated common will for democracy. Ukraine has also unilaterally taken the first critical step to fulfill this program, thus clearly demonstrating initiative and commitment to participation required in the original Marshall Plan sixty years ago. The US side is presumably attempting to foster democracy in another country, which never expressed much interest and shows little real interest now. That of course is Iraq, where recent estimates indicate a cost of $1.5 billion per week.

That same amount of money, spread over five years instead of one week, would more than cover the investment cost of the initial components of this project, and allow a reserve fund for creating new projects as Ukraine’s intelligentsia invents them in the Center for Social Enterprise. It is proposed that Ukraine and the US provide equal portions of this amount. Ukraine is certainly able to provide that level of funding, given that projects are designed with the same fiscal discipline employed in the traditional business sector. That means they pay for themselves, one way or another.”

The ‘Marshall Plan’ was published and widely read online, from August 2007

In 2007, Richard Armitage and Joseph Nye launched the Smart Power Initiative within  the  Center forStrategic and International Studies and in October 2007, USAID announced the creation of the East Europe Foundation, which was seen as a response to the 2006 strategy paper.

In February 2008, USAID’s Henrietta Fore described their intention to ‘break down silos’ to which Terry Hallman responded with the aptly titled ‘Genesis letter, introducing USAID and the US Senate Committee on Foreign Relations to our social business strategy, describing conditions for children and the need for investment in social business saying:

There is increasing congruence and synchronicity in play now, to the point of attunement.  What Ms. Fore is describing has been central to P-CED’s main message, advocacy and activity for a decade.  That, and helping establish an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people.  The paper on which that is based is in Clinton’s library, dated September 16, 1996, author yours’ truly.  That is reflected in P-CED’s home page and history section.  In fact, you might notice a number of ideas and writings there that have now made their way into the mainstream of economics and aid thinking, how to make business and aid work smarter and more effectively in relieving poverty and the misery and risks that result.  Bill Gates – as hard-edged a capitalist as has ever existed – reiterated the same things in Wall Street Journal a couple of weeks ago (ref below.)  It sounds as though Ms. Fore’s remarks very much reflect this sort of thinking.  Now it’s time to move forward and get it done.

“Thank you for your time and attention to this.  I and others will look forward to hearing from you.  I hope we continue to realize ever more fully that outside the box and inside the box have only a box in the way.  We outside the box know quite a bit of what’s going on, many times in exquisite detail, perhaps in ways that those inside the box can’t quite as easily access if at all.  We are grossly underfunded in favor of missiles, bombs, and ordnance, which is about 100% backwards.  Now, with even the US Pentagon stating that they’ve learned their lesson in Iraq and realize (so says top US general in Iraq ten days or so ago) that winning hearts and minds is the best option,  I and others shall continue to think positive and look for aid budgets and funding spigots to be opened much more for people and NGOs in silos, foxholes and  trenches, insisting on better than ordnance, and who understand things and how to fix them.  We can do that.  We can even do it cost-effectively and with far better efficiency than the ordnance route.  Welcome to our brave new world.  Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest.  There aren’t other more important things to do first.  This message has been around for at least two thousand years.  How difficult is it for us to understand?’

The response from USAID stated they had insufficient budget for these “retarded children”.  They suggest that the government of Yulia Tymoshenko will fix the problem. It had been the Tymoshenko government which responded to P-CED’s advocacy for increased adoption allowances leading to the ‘overlooked success story’  of an increase of 40% in domestic adoption.  In 2011, it was Terry Hallman  who’d called on the US Ambassador for a stronger stance on the imprisonment of this former government.

In 2010, however they were to launch their own social enterprise initiative with The British Council, such that the primary focus on disenfranchised children was removed.

When David Cameron was elected to Prime Minister , he too was invited to support social business.

The social business concept had also been placed in front of the EU in the 2008 EU Citizens Consultation and in 2011 the Social Business Consultation was announced.  I pointed out the likeness of the conclusions to Euro MP Sir Graham Watson, to whom EU Commissioner Michel Barnier then responded, saying that he was unaware of our work.

In recent weeks, writer Marcel Theroux delivered a TV documentary on Ukraine’s street children and the spread of HIV among them, as we had done to the EU in 2008. He asked why more isn’t being done.

We begin to see why there’s no equivalent in Europe, in spite of the influence created from within Europe.


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