Adam Smith Institute

The Adam Smith Institute (ASI) is a Westminster based "free-market" think tank which wants to dismantle the NHS, sack civil servants and council workers and slash income tax. It received Labour government funding of almost £8m in 2003. It is a former member of the Stockholm Network (membership was current in the years 2006-7 and 2007-8).

ASI is involved in funding the Palestinian negotiations unit, but its actions in vetoing or determining the nature of the negotiations/negotiators suggest that ASI has a strong Zionist influence which also may determine ASI's budget.

In a March 2009 presentation Tim Montgomerie and Matthew Elliott described ASI as part of the infrastructure of the conservative movement in Britain.

History

ASI founders and principals, Madsen Pirie, Eamonn Butler and Stuart Butler were students together at University of St Andrews, Scotland. In 1973, they left Scotland to work with Edwin Feulner, who became co-founder of the free-market think tank the Heritage Foundation, in 1973. Edwin J. Feulner is a founder and current President of the Heritage Foundation and was a recipient of the Presidential Citizens Medal in 1989. The Heritage Foundation located in Washington, DC, is widely regarded as one of the world's most influential public policy research institutes.

After their apprenticeship in America, Eamonn Butler and Pirie returned to Scotland in 1977 to found the Adam Smith Institute, set up with the help of Antony Fisher of the Institute of Economic Affairs, one of the British think tanks associated with the Mont Pelerin Society.

Relationship with Adam Smith International

In 1992, the Institute founded a consulting company, Adam Smith International Ltd, which was "charged with overseeing the overseas work of the institute... [in] an attempt to capitalise on the growing international trend towards economic liberalization and marketization". Eamonn Butler and Madsen Pirie were, as of 1998, members of the management board of both organisations, but as of 2010 the management teams of Adam Smith International and the Adam Smith Institute are now separate.

In 2004, Baroness Amos described Adam Smith International as "affiliated" with the Adam Smith Institute but financially independent from it:

Adam Smith International Limited, which is the consultancy arm of the institute, is a separate organisation. It is affiliated to the institute as a self-financing commercial organisation.

DfID overseas aid money

Baroness Amos's attempt at clarification of the relationship between the Adam Smith Institute and Adam Smith International came in answer to a question to the government in the House of Lords from Baroness Northover, as to:

What criteria they considered before giving the Adam Smith Institute £7.6 million in aid money last year for consultancy work? ... Is she content that the Adam Smith Institute has sufficient expertise in development issues to justify giving it such a large sum?

Baroness Amos defended the grant as follows:

the Department for International Development awarded three contracts to the Adam Smith Institute worth a total of £7.7 million in the past financial year. Each was awarded following open international competition on the basis of published evaluation criteria.

Amos added:

The work that has been carried out is significant. The three contracts awarded last year included one for support services for public enterprise restructuring in South Africa; one in Afghanistan to provide support in capacity building for the Ministry of Finance and the central bank; and one in the Kyrgyz Republic for pilot training and capacity building in international waterhouse law. There is a range of projects.

Funding

In 1993 the Guardian reported:

The Institute itself stays relatively lean. 'Not more than eight full timers' was the plan and it has been kept to. But work has been done by 300 outside contractors, a long list of professors, and one pamphlet from an unknown Michael Portillo. The funding is unsinister, a budget of £350,000, just under half coming from sales of publications and quite profitable conferences: the rest from business. However, no one gives 10% of the total. What if they got such an offer? "No one turns away money, but we'd try to have it spread over a number of years." The Institute is now approached by civil servants, and is busily thinking strategically across Eastern Europe. Its director admired the prime minister, and that matters to Major.

Government Ties

The British Government has been paying ASI up to £9m a year to oversee privatisation programmes in developing countries. In the six years alone till 2004, ASI's consultancy arm received $34m from the UK aid budget. In 2004, Britain's Department for International Development (DFID) gave ASI £6.3 million for "public sector reform" in South Africa. The Institute has also been given "its own budget - £5m of British aid money - to disburse as it pleases". This lets DFID generate "the support it likes for privatization and public-private partnerships, while avoiding direct responsibility for the decisions the institute makes". In this DFID is clearly breaking the law since the International Development Act forbids it from spending money for any purpose other than the elimination of poverty not to mention the rules forbidding it to "link aid money to deals for specific British businesses". The "implementation secretariat" for the Indian State of Andhra Pradesh's privatization program, funded by DFID and overseeing the privatization of the state's power sector, was also being run by ASI at the British Government's insistence with the money, once again, coming out of Britain's foreign aid budget.

Blair's government has financed the state's economic reform programme, its privatisation of the power sector and its "centre for good governance" (which means as little governance as possible).

Funding the Palestinian negotiating unit

Most official and semi-official Palestinian organizations depend on foreign funding, and the key Negotiations Support Unit (NSU) which is a support group to the Palestinian Negotiations Affairs Department is funded indirectly by the British government via ASI (the government funds ASI). Khaled Amayreh, an eminent Palestinian journalist, writes:

Palestinian mediocrity, or even incompetence, in negotiations with Israel, is not imputed to lack of financial and human resources. The main reason may well lie in corruption at the highest levels and virtual absence of accountability. The PLO Negotiations Affairs Department (NAD) has at its disposal the services of the Negotiations Support Unit (NSU), which has received tens of million of dollars of funds, but has done very little to make Palestinian negotiators better equipped to face their Israeli counterparts.
Just take a look at the document formulated jointly between Israel and the PA at the last minute at the Annapolis conference. This document, which the NSU helped formulate, was completely void of any call for ending the manifestly criminal blockade of Gaza, the removal of Israeli checkpoints and roadblocks in the West Bank or release of Palestinian prisoners from Israeli dungeons and detention camps. Moreover, not a word was mentioned about freezing Israeli settlement expansions. The NSU is funded and effectively controlled by the Adam Smith Institute (ASI), a think-tank based in London which is vulnerable to pressure from pro- Israeli circles. For example, two years ago, the ASI forced the NSU to fire two highly-qualified Palestinian-American lawyers, Michael Tarazi and Diana Butto, for going too far in defending Palestinian rights, especially during TV debates with Israeli spokesmen. According to inside sources, one of the persons who pushed for firing the two Palestinian-American lawyers is Glenn Robinson, the author or co-author of the controversial RAND project "The Arc: A Formal Structure for a Palestinian State". Eventually, Tarazi and Butto were accused by pro-Israeli lobbyists, including some British MPs, of hindering the development of the Palestinian Ministry of Information and of not ensuring sufficient coordination with the PLO. Of course, these accusations were merely red herrings.
ASI defines itself as the UK's leading innovator of practical market economic policies. The institute's main focus is on reforming governments and state enterprises in order to promote choice, competition, and user-focus. It works through research, reports, conferences, advice and media debate. Since 1999, ASI relegated nearly $50 million to the Ramallah-based NSU despite the fact that NSU staff and employees were sitting in their homes, doing nothing, since the peace process was paralysed.
A British diplomat based in Israel explained why the British government, which pays the lion's share of the NSU budget, and other donors, continued to pay all these millions to the ASI and NSU, despite the international boycott of the Palestinians from March 2006 to June 2007. "We were hoping that negotiations would be resumed anytime." But, the main problem lies with the Palestinian Authority itself and its relations with the NSU, mostly based on cronyism and nepotism. The author sought to contact the NSU in Ramallah, but received a hostile response. One lady told me "why don't you go and negotiate with Israel. Maybe you could do a better job."

Observations from a Palestinian who for some time was associated with the NUS (email dated 11 December 2007):

Regarding ASI, I cannot say that they vetoed Palestinian positions when I was there - that was not the problem. The problem is that ASI is a FOR PROFIT organization that runs the NSU. It received funds from the donors (remember, this is money that is earmarked for the Palestinians) and ASI receives a cut of these funds. When [...] the donors decide that they do not want a certain activity to be carried out, it is not in ASI's interest to go against the dictates of the donors because doing so will mean that its funds (and profits) will be diminished.
[...] When the donors determined that they did not want the NSU to be engaged in public communications activities (owing to pressure from the pro-Israel lobby), it was not in ASI's interest to come to our defence or to demand otherwise. Why? Because coming to our defence would mean the potential for ASI's funds and profits to be diminished if they are seen as going against the will of the donors. ASI feared that the entire project would be cut by the donors if they took a principled stance against the donors.
[...] I did see direct donor interference as regarded the communications work that was done. They also expressed their discontent regarding the work that we did on the Wall (the ICJ ruling).
Again, the problem is that Palestinian national interests are subject to the will of "for profit" organizations. If negotiations are so vital to Palestinian national interests, I am not sure why the PLO allows outside organizations to either (a) control our negotiations or (b) make profit off of our negotiations.

Key proposals

• ASI is a key proponent of privatization both at home and abroad.
• ASI was in the vanguard of replacing central planning and state controls by "incentives, market opportunities and an entrepreneurial culture".
• ASI advocacy has led to cuts in the top rates of taxation to "create a business-friendly climate"
• ASI has oft likened government regulation of business and enterprise with totalitarianism while arguing that less regulation means lowers costs and opens opportunities for the development of innovative ideas.
• ASI is also at the forefront of a campaign to private educational institutions

UK government funding

The British government has funded ASI with millions of pounds for various "consulting" activities around the world, and it certainly is curious that a Labour government would pass many such contracts to an avowedly right-wing/neoliberal insitution. The House of Commons hearings revealed the following funding for international operations:

Year	Project title	Current value (£) (original contract value plus cost of any increases or extensions)	Country
1999	PR Unit Support for Parastatal Sector Reform Commission (PSRC)	430,625	Tanzania
1999	Privatisation Project Phase 3 and 4 Managing Consultant	1,718,736	Guyana
1999	Privatisation Agency Support Project Consultancy	560,752	Zimbabwe
1999	Technical Assistance for Public Enterprise Reform in Orissa	3,667,571	India
1999	Assistance to the Palestinian Negotiations Affairs Department	9,131,555	West Bank and Gaza
1999	Additional Support to the Privatisation Board	106,241	Bangladesh
1999	UK-Ireland Privatisation and Regulation Study Tour	11,145	Tanzania
1999	Medium Term Programme of Capacity Building for PURC	1,559,960	Ghana
1999	Initital Support to the Budgetary Processes of the Government of Macedonia	44,315	Macedonia
2000	Rehabilitation of Cyclone Damaged Lift Irrigation Points in Orissa	1,296,327	India
2000	Seminar on Export Credits and Developing Countries	102,594	United Kingdom
2000	Lead Adviser to Parastatal Sector Reform Commission (PSCR)	229,966	Tanzania
2000	Russia Trade Policy Project	1,199,986	Russia
2001	Conference on Disinvestment	70,000	India
2001	Support for Public Sector Undertaking Reforms & Social Safety Net in Madhya Pradesh	80,000	India
2001	PSCR: Water Privatisation and Regulation Study Tour	54,924	Tanzania
2001	Communications Film for Department of Disinvestment	89,500	India
2001	Consultants for Standards, Technical Regulatory Barriers Programme	92,870	Global (non project specific)
2002	Trade Training for DFID Staff	20,075	United Kingdom
2002	Pilot Training and Capacity Building in International Watercourse Law	151,008	Kyrgyz Republic
2002	Trade Training for DFID Staff-Bangkok	32,328	United Kingdom
2002	Support for Capacity-building in the Ministry of Finance and Central Bank	3,277,815	Afghanistan
2003	Support Services for Public Enterprise Restructuring in South Africa	6,363,435	South Africa, Republic of
2003	Support to Water Sector Regulation by PURC-Ghana	1,079,100	Ghana
2003	Andhra Pradesh Economic Restructuring Programme-Public Enterprise Reforms, Phase II	416,435	India
2003	Economic Support within 1st Military Division HQ Basra.	55,510	Iraq
2003	Economic Development within 1st Military Division HQ Basra.	119,848	Iraq
2003	Support to the Office of the Prime Minister and to the Cabinet Office.	100,400	West Bank and Gaza
2003	ITD-DFID Staff Training	288,685	Global (non project specific)
2003	Asia Trade Consultancy	44,200	United Kingdom
2003	International Lawyer within 1st Military Division HQ Basra.	131,868	Iraq
2003	Economic Support to Coalition Provisional Authority South (CPAS)	111,255	Iraq
2003	Secondment of Negotiations Support Staff to the Office of Prime Minister.	75,800	West Bank and Gaza
2003	Legal Adviser within Coalition Provisional Authority South (CPAS)	72,925	Iraq
Source

Publications

The ASI published a report recently called 'Privatisation Reviving the Momentum'. In it they argue for a return to the vigorous pursuit of privatisation. Targets include Scottish Water, Northern Irish Water Glas Cymru, Royal Mail, Channel 4 and BBC Worldwide. The author, Nigel Hawkins is a senior fellow at the Adam Smith Institue, he is also an investment banker in the City of London.

Activities

Targeting youth

ASI specifically targets youth through its "seminar on the Open Society" where school students are indoctrinated in "free-market" ideas. The Next Generation meeting is another forum to get 18 to 33-year-olds together.

Weblogs

ASI's blog gets over 3,000 hits a day and according to the Daily Telegraph, their "most refreshing commentary on policy" is read by all political parties. They also issue a regular email bulletin to subscibers detailing their current preoccupations. These tend to be informal in tone at the level of "all politicians are useless" (as the issue of 1/8/2007 concludes - which could be seen as slightly ungrateful considering the level of funding noted above).

Key Personnel

• Madsen Pirie – President
• Eamonn Butler – Director:
• Matthew Young – Director of special projects:

Affiliations

• Adam Smith International – related think-tank and consulting group (there is overlap)
• Stockholm Network - The ASI was a member of the SN in the years 2006-7 and 2007-8.
• University of St Andrews Liberty Club

References, Resources and Contact

Contact

Address: 23 Great Smith Street

London SW1P 3BL

Telephone: 020 7222 4995

Fax: 020 7222 7544

Email: info@adamsmith.org

Website: www.adamsmith.org

Related Articles

• George Monbiot, "Exploitation on tap", The Guardian, 19 October 2004.
• George Monbiot, "This is what we paid for", The Guardian, 18 May 2004.
• "Tanked Up", The Evening Standard (London), 29 April 2005.
• "Campaign features web of intrigue INTERNET", The Daily Telegraph, 6 April 2005.