Development aid, corruption and the taxpayer
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Recently the prime minister of a so called developing country visited a friend who was minister in another developing country. The friend lived in a very beautiful villa on the top of a hill.

After having made himself comfortable on one of the luxurious sofas, the visitor complimented his friend on the very nice venue.

“How did you pay for it?”, he asked.

His friend then brought him to the window which overlooked the country side and a river which could be crossed by means of a newly constructed bridge.

“Do you see that bridge?”, asked the host.

“Sure , it is a nice bridge.”

“Twenty percent was for me”, the host declared proudly.

The next month the receiving friend paid a counter visit to the country of his colleague. He was received in a villa of magnificent splendour and asked his friend how he had paid for it.

He was brought to the main window overlooking the country side.

“Look to the bridge across the river”, he said.

“But I see no bridge, there isn’t any bridge there.”

“Exactly my friend, 100 per cent was for me!”

In their book “Perpetuating poverty: the World Bank, the IMF and the developing world“, Ian Vasquez and Doug Bandow of the Cato Institute analyse the history of decades of development aid. No country receiving development aid during the last 20, 30 or 40 years has made any progress as a result of this aid. On the contrary : the countries receiving the aid, have been accommodated and encouraged to continue the operation of a vast bureaucracy with a host of red tape, an intricate system of permits and licenses, impeding export and import and the development of free market industry, trade and enterprise in general. This suffocating system is in place to enrich high and low officials whose salaries during the last 30 years have declined in real terms and who are dependent upon the receipt of bribes and gifts to feed their often large and extended families.

Last month on the island of Bali I met Wayan. Wayan is a painter who has discovered that small postcard size paintings with Balinese landscapes and Balinese people sell very fast. Wayan had started to produce large numbers of such paintings and was operating a thriving business. Wayan did not need a consultant of the Asian Development Bank to advise him. Wayan had looked to the market and discovered that he could make money with the production and sale of small sized paintings. Wayan’s business is growing and the government can certainly contribute to his enterprise and other ones which are smaller or larger : the government can contribute to these enterprises by staying entirely out of the way. How damaging interference by a government can be? Let me provide you with an example. A large and well known firm in the Netherlands was on the verge of obtaining a contract for the printing of paper money of Namibia. The price was low and competitive. Nevertheless the complete order was lost because the government of Sweden intervened and supplied the whole order with development aid at zero cost.

Other printers in the Netherlands lost many large orders, because the Dutch government started to hand out large subsidies to printers in the north of the country, bankrupting printers in other parts of the Netherlands in the process. When the World Bank, IMF or Asian Development Bank start to interfere in a country, how does the procedure begin? These institutes allocate funds to a country as a gift, a soft loan with very low interest rate or a hard loan with a higher interest rate for a large , a medium sized or a small project.

Apparently these banks do not make much difference between socialist and capitalistic countries giving their money and granting their loans. All of us here are aware , that during the past century many countries were ruined by socialism. Socialism was the longest horror story of the twentieth century. When finally the curtain came down, seventy three years had passed and two generations were wasted. Still in some countries the story continues. Are the World Bank, the IMF and the ADB not aware of the failure of socialism? Are they not aware that socialism has killed millions of people : the national socialists six million and other socialists such as China, Russia, Cambodia combined ,a total of more than one hundred million people ? In China this killing continues up to to-day, albeit on a smaller scale than before. At this very moment it is late in the afternoon in China. In the eastern part Tibetan men and women are preparing themselves to start their journey across the mountains to Kathmandu and Pokhara in Nepal and Dharamsala in India. Hopefully most of them will be successful when they cross the border and bribe the Nepalese police who will allow them to continue their journey to Kathmandu, but some of them might be shot by Chinese police men and border guards. Their crime? Craving for freedom and escaping from occupied Tibet.

Is it not unbelievable that the Asian Development Bank advances hundreds of millions of dollars to a government which is shooting its own, purposely undocumented , citizens for crossing the border to freedom?

And doesn’t it defy common sense that to-day there are still countries such as China , Sri Lanka, Myanmar, Laos and others which still embrace wholly or partly a communist or socialist system and that the World Bank, the IMF and the ADB continue to give their stamp of approval to economic policies which have already failed since 1917?

Loan proposals are usually approved after the production of reports with overly optimistic figures, showing that the money to be supplied will deliver a good return and result in a fantastic growth rate.

Officials in the receiving countries start to prepare themselves to receive the money and to embezzle as large a percentage as possible from the loan.

These officials look to the loan as follows. The loan is theirs and every dollar not reaching their own pockets they consider as lost.

When the money finally arrives at the destination, typically 50 tot 90 percent has vanished into the pockets of advisors, consultants, project developers, brokers , politicians, banks , regulators and other participants in this game. From the start everybody knows that this is going to happen, that it happens, that it has happened and then wait for the next loan.

Often such a project starts with a study. The Asian Development Bank allocates for instance half a million dollars for a study about improvement of transport between Pacific Islands.

Everybody knows that such a study can be produced for five thousand dollars or less, but the amount allocated for the study is and stays half a million dollars. Bank officials to whom I have spoken about the enormous waste , misappropriation and theft which has become an integral part of the system which is conducive to the spending of such large sums of money for superfluous reports of which the only purpose is to facilitate pick pocketing and outright theft, openly admit what is happening. But being part of the system, isolated in large buildings where the average tax payer is not able to observe what they are doing, it is not in their interest to reverse the trend and to halt an inherently corrupt and immoral system.

The consultant who has to produce the report is happy. He takes from his drawer a report he has already produced for another country. Some names are changed, some figures adjusted and after a decent time the report is ready. The first half million dollars have been cashed in.

After a positive advice from the consultant, advisors and supervisors for the implementation of the projects are appointed. An American gentleman who found himself on the seat next to me on the Druk air flight out of mountainous Bhutan, told me that he had been appointed in such a function and was residing in a villa overlooking the valley in which Bhutan’s airport is situated. For the garden in front if his villa an amount of half a million dollars had been spent: in this case ,as he told me, at the expense of the Japanese tax payer. I made a fast calculation.

Half a million dollars is the equivalent of the cost of two million man hours in Bhutan : an amount which is very difficult to spend and, if really spent , basically would completely disrupt the economy of the surrounding villages. What happens in such a case is that $490.000 lands in the pockets of a few officials and that $10.000 is left for the garden. One day before leaving Bhutan I came back from a journey through the interior of the country. My last stop before reaching the capital had been at a huge government complex which included a school for hundreds of pupils. The place was utterly filthy and radiated sickness and decay. All the pupils were suffering from scabies and spending most of their time scratching themselves. I could not help to contemplate about the bizarre and almost criminal allocation of resources : half a million dollars for a garden for some developers and not one thousand dollars available to install a number of showers and purchase disinfectants and soap to clean a complete complex. At the airport I stepped into a passenger jet : one of the twenty three million dollar babies which the Kingdom possessed, financed by the World Bank and delivering big operational losses because of underutilisation.

Everybody involved in the reporting industry knows about the waste and that this money finds its way into the pockets of the happy few. I have personally experienced how a friend of mine received twenty five thousand guilders to write a report about the reopening of an abandoned gold mine on the island of Aruba. The report was sold and invoiced to the government of Aruba for the sum of three million guilders and paid out of development aid allocated by the Netherlands. Thereupon the three million guilders were most probably divided between three persons: a prominent politician in the Netherlands, the organiser in the Netherlands and a politician in Aruba.

Such reports of course are highly optimistic about the projected profits. The project will undoubtedly provide the country with a return of nineteen percent during the first ten years, sixteen percent during the next ten years and fifteen percent per annum during the remaining five years. A consultant predicting less rosy figures is not likely to receive an order for the next report.

The naive observer might pause here to ask a question : if the project is so enormously profitable, why nobody proposes that the capital needed for the project is raised in the private capital market?

Are investors not queuing to participate in this project which offers a rate of return they can only dream about? The actual return on money invested through such schemes is much lower than we read in the official projections. It is also much lower than return on capital investment by private parties. And how could it be different ? If a foreign agency sends one million dollars and fifty percent is skimmed off for a few officials, then the remaining sum of $500.000 has to provide an enormous yield which of course cannot be realised. Taking into regard the horrendous inefficiencies and bureaucracy with which government projects are surrounded, the reaching of any reasonable yield is a fata morgana. Why do the tax payers in the United States of America , the European Union and Japan have to raise this money?

The realistic truth is that nobody expects the project to be a success, that everybody knows the project will not produce a reasonable return. But the project will start nevertheless, even if it is utterly clear from the beginning that all the money will be wasted.

Do I exaggerate here ?

Unfortunately not.

Everybody who travels business class to any small country in the Pacific or elsewhere, only has to speak to the passenger seated next to him. There is a good chance that he is part of the development industry, carrying tax payers money to other countries to distribute it among people the tax payer does not know for purposes the tax payer does not agree with. A few years back I landed in a very small country in the Pacific. The passenger next to me was going to build there for seven million guilders an traffic control tower which was not needed in the first place: compliments of the European Union and financed by its tax payers.

I would like to go back to the year 1975, when Surinam was pushed into independence by the Netherlands. Surinam was willing to declare independence under condition that it would receive two billion guilders, at that time the equivalent of less than one billion dollars, in development aid.

In those days when I entered the opulent Torarica hotel in Surinam’s capital Paramaribo, the coffee shop was bustling with activity. At every table there were people producing plans and reports for the future development of the country, resulting in projects of which one surpassed the other in vision, imagination and courage. I could not help to remember the words of advice which Mr. Van Leeuwen, our teacher in Latin , gave us when I found myself in 1958 in the final class of my school in Amsterdam, the Netherlands, These words were :

“ Boys, girls, go into development aid. That is the future !” When we received the advice, I did not give it much significance, but then , seventeen years later, in 1975 , I realised how visionary and true these words had been !” One of the visionary projects in Surinam consisted of the railway from nowhere to nowhere as it was named from the beginning. The railway was literally constructed from nowhere to nowhere and never carried a train with a useful load. Its only purpose was to legitimate the spending of hundreds of millions of guilders : one large money laundering scheme, misappropriating the money of the Dutch tax payer and transferring it to the pockets of project developers, consultants and politicians. Nowadays the railway tracks of this project are rusting away inside the forest as an everlasting memory of governmental incompetence.

An important role in such money laundering schemes is played by the so called economic hit men.

The economic hit man has two primary objectives. I now recite from the memoirs of John Perkins who has written a book with the title “ Confessions of an economic hit man.”

Perkins tells in his book on page fifteen that his work had two main objectives:

the first objective was to justify huge international loans that would funnel money back to American companies such as Bechtel, Haliburton and Stone and Webster through massive engineering and construction projects.

The second objective was that the receiving countries would for ever be beholden to their creditors and that they would present easy targets when favours were needed including , but not limited to military bases, United Nation votes and access to oil and other natural resources.

The job of an economic hit man is to forecast the effects of the investment of billions of dollars in a country.

Specifically John Perkins had to provide studies which projected economic growth twenty to twenty five years into the future and to evaluate the impacts of a variety of projects. The country might for instance be offered the opportunity to receive a modern electric utility system and it was up to John Perkins as an economic hit man to demonstrate that such a system would result in sufficient economic growth to justify the loan. The critical factor ,in every case, was gross national product. The project that resulted in the highest average national growth of GNP won. If only one project was under consideration, Perkins would need to demonstrate that developing it would bring superior benefits to the GNP. The unspoken benefit of every one of these projects was, that they were intended to create large profits for the contractors and to make a handful of wealthy and influential families in the receiving countries very happy, while assuring the long term financial dependence and therefore the political loyalty of governments around the world.

The growth of GDP can be deceptive. A growth of GDP may result even when it profits only one person in a country, even if the majority of the population is burdened with debt. From the statistical point of view this is recorded as economic progress.

Is there then nobody of the thousands of functionaries inside the developing institutes who opens his mouth and protests when the next half million dollars is wasted for an expensive and may be completely superfluous report ? Is there nobody who tells a country on which the next hundred million dollar is bestowed : “Please clean up your bureaucracy first, close it down. “? I can provide you with the answer to this question immediately : “There is nobody.”

Sometimes however ,all of a sudden , some measure is taken which is a shining example of efficiency. Approximately 1975 President Suharto of Indonesia closed down the department of currency control. The department was a building where many hundreds of employees were working. Their only job had been the impediment of free trade, the issuing of permits to transfer money out of the country.

Since 1975 a period of thirty years has lapsed. And surprisingly - or not surprisingly, depending how you view this- in a number of countries such departments still exist , for instance in India , Sri Lanka, Nepal and Bangladesh. In such countries , when I walk, as I use to do, through the corridors of the Central Banks, I see stacks of old files up to the ceiling: papers, one by one painstakingly produced by persons who all together have invested millions of man hours in such work: all in vain, all not only superfluous , but utterly counterproductive and harmful. These millions of man hours certainly were used to work. To work very slowly of course, with government speed, but still to work: to work, but not to produce. All these millions of men hours went to waste, where as they could have been used to clean streets, to produce chairs, computers, radios or television sets, to work in a shop, to repair motorcycles, to teach, you name it. No foreign aid agency during the last twenty, thirty or forty years has had the courage to tell Bangladesh, Sri Lanka, Nepal or Laos:” Stop this waste of resources , any future aid will be dependent upon the closure of your harmful and counterproductive departments.”

Such damaging inefficiency is not only tolerated, but frequently even encouraged , keeping the pauper client nations in a perpetual state of poverty.

Once a country or group of countries has been mismanaged for a number of years and arrived at the brink of bankruptcy, the IMF is ready for a bail out.

Such a bail out has already been granted to a number of countries such as Mexico and several countries in South East Asia.

Every bail out provides the seed for the next crisis, because the bail out is interpreted as a license to get into the same dire situation again.

Such bail outs often reduce the willingness of authorities to make necessary but painful changes in their economic policies.

Summarising the adverse effects resulting from development aid, it should be stated that development aid: - distorts the allocation of scarce capital by avoiding the free market during the allocation process - accommodates inefficient and corrupt governments, keeping the people of the undeveloped countries tied up in the vicious circle of red tape and poverty - forces Western tax payers to work more hours for the same amount of remuneration

A better policy would be : - to stop all forms of development aid immediately - close down the IMF, the World Bank and the Asian Development Bank which continue to exist because of the tyranny of the status quo. - provide the developing world with a serious signal, that with immediate effect a capitalistic free market system should be established which will hopefully result in a better governance , radical cutting of red tape, the lifting of import- and export restrictions and sending home all employees impeding the functioning of private enterprise: employees whose minds have been poisoned with the socialist virus.

In case a country is struck by a natural disaster such as a tsunami or an epidemy , the sending of assistance could make sense. Help reaching the Netherlands after the big flood in 1953 was really reaching the victims. In the case of such a calamity taking place in a developing country, sadly most or even all of the assistance sent is embezzled or stolen. We see this clearly during the aftermath of the tsunami, where very little of the help sent through government channels reached the victims. The president of Sri Lanka announced two weeks ago that she had not received one dollar from abroad. Assistance sent to Sumatra in Indonesia is stolen by the military or other authorities.

When I was in Sri Lanka a few weeks ago, I found a population which was feeling hopeless about a government largely consisting of thieves where only sixteen out of eighty ministers are under investigation for corruption. One can wonder of course, why a modestly sized country such as Sri Lanka needs eighty ministers. In the harbour of Colombo more than one hundred containers were detained by the Customs. To a large extent the contents of these containers consisted of old cloth for which the government wanted an import duty of thirty percent ad valorem. As a consequence of this policy many of the containers were auctioned off by the government and many people in need of some clothes were prevented from receiving them. So is the sad reality in the third world, where it becomes clear to large segments of the population that the independence which seemed so desirable half a century ago, has resulted in the creation of a kleptocracy which keeps the country in a state of perpetual poverty.

I spoke about corruption and would like to say something more about it.

Corruption and development aid are very closely connected, associated and intertwined.

Not in every corrupt country is there development aid, but in all countries which receive development aid, there is corruption. Development aid induces, causes , fosters and encourages corruption in numerous forms.

Probably the majority of us here are not familiar with corruption in their daily life and therefore I would like to elaborate here on some forms of corruption like they exist in many countries.

I will give here examples from three different countries and for those examples I have chosen countries which I am very familiar with : Nepal, Sri Lanka and Indonesia.

Nepal was until the nineteen sixties a very peaceful country where corruption did not exist and where one could leave a bag full of money over night in the middle of the main square of Kathmandu. Nobody would touch it. When development aid started to arrive, the Nepalese officials became greedy: first the high officials, later also the lower ones. Nowadays a government minister in Nepal , before attending a meeting about the distribution of development aid, might first want to know, how much he will receive for attending the meeting. Development aid reaching Nepal for certain projects is officially protected with all kinds of safe guards, but it is still more the rule than the exception that only ten to fifteen percent of such aid reaches its destination. Corrupt custom officials in Nepal severely hamper and impede export and import. Shipments out of Nepal are regularly turned upside down by custom agents and reach the importer in a ruined state.

The increasing corruption in Nepal has undoubtedly been a factor which contributed to the creation of a Maoist movement . This movement started in 1996 and now poses a major threat not only to law and order, but also to the political and economical stability of the country.

My next example is Sri Lanka. During colonial times, corruption existed on a very small scale. The colonising power occasionally brought presents for local kings to keep these kings happy.

As soon as Sri Lanka obtained independence, corruption started. Development aid put oil on the fire and corruption increased. Now corruption exists in all segments of the government.

Let me now deal with Indonesia, where incidentally hardly any of the huge amounts of tsunami aid has reached the victims. Independence has been Indonesia’s biggest tragedy. With the independence a well organised governmental system collapsed and was replaced by a group of persons who were only interested in filling their own pockets at the expense of the general population. With independence corruption arrived, in low and high circles.

After independence it happened numerous times that a pilot of Garuda Indonesia was only willing to fly if he could load on to the plane his private merchandise, the bus driver wanted to start his bus only after having collected the proper amount of pocket money, the immigration official only wanted to put his stamp after having received a bill of ten dollars, the doctor in the government hospital started to treat the patient only after having received an up front bribe. Corruption entered all segments of the society, but increased steeply once again after President Suharto had lost power and stepped down. At that moment the fear of an authority was lost. In 1997 law and order collapsed and corruption expanded to the lower regions of the government.

What are the consequences of such wide spread corruption? Who benefits and who pays? Who enjoys it and who is suffering ?

Corruption is extremely costly for the producer as well as the consumer.

If the export of a commodity is surrounded with all kinds of paperwork, licenses, visits to government offices, long waiting times, bribes which have to dropped at the private residences of officials or into their office drawers, somebody has to pay for these bribes. In last instance that is the producer. Because of the bribing system the price he receives for his products is lower. Or he has to add the price of the paid bribe to the production costs in which case he becomes less competitive. He might even loose the order, because he cannot compete with a country where the bribes for export formalities are lower or non existent.

So we see, that this bribing system can be extremely damaging for the export position of a country.

The same thing is valid for the consumers. If the producer is not able to absorb the bribe, the bribe will undoubtedly result in a higher price for the consumer. The consumer might for this reason opt for a product from a different country where lower bribes or no bribes were paid.

In the years I was importing merchandise from Indonesia, I had to spend long periods in Indonesian government offices and customs offices. This added to my costs. The bribes were paid openly and blatantly , nobody tried to hide the bribes he paid or received. One time when I had a large export shipment and carried the papers into the custom’s office in Jakarta airport, I entered an office which was filled with customers and a few employees. I went to the desk of the customs official and gave him an envelope filled with money. He accepted my envelope, kept it up so that everyone could see it and announced: “You see what I received? This gentleman”( pointing to me))“knows how to behave !”

Such blatant behaviour also occurs in Indonesian court rooms, where the outcome of the case is not decided by the merit of judicial arguments but by the amount of money one pays.

A couple of years ago there was a court case in Jakarta and the judge asked for an imprisonment of one year; the wife of the accused stood up from the public tribune , took off one of her high heeled shoes and threw this at the judge, shouting : “We gave you twenty million rupiah and agreed that you would ask for three months. Why do you now ask for one year ?”

The next morning the story was in the national newspaper Kompas, but nothing happened , because corruption was and is the standard in Indonesian courts. The public would only be utterly surprised if corruption was not there.

In 1996 Wolfensohn, the president of the World Bank and president Suharto of Indonesia both attended a trade summit in Indonesia. During a gap in the proceedings Suharto, China’s vice premier Zhu Rongji and Wolfensohn had tea together, Suharto was talking to Zhu and then asked Wolfensohn to join them. The latest corruption ranking by Transparency International, Suharto declared, had upset him, because now Indonesia was listed as less corrupt than China. “You know’’, Suharto told Wolfensohn, “what you call corruption, we regard as family values.” But the World Bank continued as usual to throw hundreds of millions of dollars into Indonesia’s corrupt system.

Recapitulating and concluding we can see how the creation of independent states has replaced colonising power by corrupting development money, bringing the concerned countries into a permanent state of dependency on aid.

In principle independence for many countries seems to be a great idea, but experience shows that for most countries independence is the start of a host of problems and difficulties of which the most important ones are lack of good governance, corruption and the absence of rule of law and an effective legal system.

Independence for many countries has created chaos, injustice and a break down of law and order and serious friction or even civil war between people of different ethnic back grounds or origins. But in many cases the most serious consequence of independence seems to be the start of a severe, unstoppable erosion which has two components: a physical one and a moral one. The moral erosion is usually even stronger than the physical one and nobody has the power to stop either of them. In Indonesia the utter lack of any serious forest management has caused many negative effects for which future generations will have to pay. The irresistible attraction of money on the table to-day- not to-morrow- for people who traditionally are not used to managing even small amounts of cash, combined with the inability to plan for anything which is more than one month away, often proves fatal and catastrophic.

Development aid often is spent very ineffectively and in all cases leads to thirst for more of the same. Exactly like the drunk man who needs more drinks all the time to arrive in a satisfied condition, the developing country needs more and more money to satisfy the needs of those who have developed a dependence upon this money. This dependence often goes from father to son, from mother to daughter. Once when I arrived at the house of a government employee in Jakarta to give him some money, his small son was at the entrance. He apparently was aware of the purpose I came for, because he shouted out to me : “Kasih uang, kasih uang!” This meant:” Give money, give money!”

Another time, when I told my driver to bring a gift parcel to the residence of an employee of the department for foreign trade, the door was opened by a small boy. When my driver handed over the parcel, the boy said : “We have already a whole room filled with such goods.” So is the practice of bribery: we come, we bribe and we go : the small boys who will , as is the custom in Indonesia, once replace their fathers in the same offices sitting in the same chairs, were born corrupt and educated to be bribed. For our own convenience we are helping and accommodating them.

Summarising I can only conclude that the independence has induced, encouraged and boosted corruption and that development aid, continued for considerable time, is elevating this corruption to higher and more sophisticated levels. Producers suffer from it and so do consumers.

Independence has been a catastrophe for nearly all countries which obtained it.

Both the producer and the consumer often hope and pray that independence will quickly be replaced by something better or like one of my Indonesian friends always wonders in anger and disgust: “Kemerdekaan, kemerdekaan, kapan habis kemerdekaan itu ?” That means: “ Independence, independence, when will it finally come to an end?”

That is a question which I hear more and more: recently in Solomon Islands, in Papua New Guinea, in Western Samoa. In the Philippines those who want the Philippines to become part of the United States of America have even formed a political party. This party has one million members. The party however constantly looses members because they emigrate to the United States of America. In the same way a considerable percentage of the population of Indonesia would like to emigrate to the Netherlands.

Everywhere men, women and children are wondering when and how they will be able to get rid of and escape from the grip of their corrupt politicians and start to harvest the full fruits of their own work.

Are there no exceptions ?

Fortunately there are a few !

Two weeks ago I found myself in the United Arab Emirates. In this country oil was discovered in 1968. It obtained independence in 1971 and since then the United Arab Emirates are one long success story. Dubai has been developing into a big shopping mall, its airport is busy for 24 hours per day. Limousines of Emirates Airlines carry all business and first class passengers free of charge to any place of their choice inside the United Arab Emirates. Now Dubai and Abu Dhabi have a population of which 75 percent are foreigners, taxes are low and the crime rate is practically zero.

For departing passengers the first class lounge of Emirates Airlines looks like the opulent dining room of a palace. 40.000 rooms in Dubai welcome the foreign visitor. Soon the number of rooms will surpass the available capacity in Athens. It might reach the capacity of Paris or London.

Is there a lesson to be learnt for the west and another lesson for the developing countries ? Probably there is !

Foreign aid has proven to be extremely harmful : to disrupt and corrupt well functioning systems in countries which learn that laziness and inefficiency is accommodated and encouraged. Foreign aid should be stopped now!

Hugo J. van Reijen is an economist and businessman with a long experience dealing with many different countries, having visited in person approximately 150 different ones, most of them a number of times. He operates his business from the Bailiwick of Guernsey, as anybody who types his name into a search engine will find out instantly. Guernsey is an autonomous entity which is neither part of the United Kingdom, nor of Great Britain, although it uses postal area codes of Great Britain. Great Britain however is doing defense and foreign affairs for Guernsey. Guernsey is not governed according to British law, but Normandic law.