"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Saturday, August 11, 2012

Another Reason To End Foreign Aid

A colleague was about to travel to Zimbabwe for an American NGO (Non-Governmental Organization) to develop programs of child welfare.  Why, he was asked, would he want to provide support to one of the world’s most corrupt and destructive dictators, Robert Mugabe?  “For the sake of the children”, he responded.

When an NGO opened an office in Burma, an employee protested to the CEO, asking why he would want to provide support to one of the world’s most corrupt and destructive regimes?  “For the sake of the children”, he responded.

In both cases the political and financial dimensions of the decision were staggering.  Under the guise of good works, these companies were expanding their geographic range, tapping into the generosity of well-meaning but ill-informed donors, and positioning themselves with USAID as organizations at the vanguard of international development.  They ignored the fact that these corrupt regimes would use the aid either to line their own pockets or to provide the social welfare programs they should be providing.

Workers at  NGOs when disaster has hit someplace in the world are as excited as children at Christmas.  The enthusiasm, the glee of being able to swing into action to provide help to the unfortunate was impressive.  While there is no doubt that the tents, bottled water, food and medicines were necessary, there is also no doubt that the United States saw these disasters as a means of getting their foot in the door.  The persistent and debilitating droughts of East Africa provided the United States an ideal opportunity of showing ‘the generosity of the American people’, introducing American food products, and winning the hearts and minds of citizens who had been numbed by years of dictatorship.

Of course none of this ever comes to pass.  Ethiopia – a country which receives a disproportionate amount of USAID grants – is as mired in ethnic, regional, and political conflict as ever.  Ethiopia not only receives periodic humanitarian assistance but is the recipient of standard US Government program grants. 

No one in the ‘development’ business has ever doubted the political nature of foreign aid.  It was designed for promote the United States, its principles, and its products; to position itself advantageously in the constantly-changing geo-political world, and to be at the head of the queue to buy the abundant natural resources available in many Third World countries.  While the US has been more indirect in its support of dictatorships (as above, through USAID largesse) and no longer trains law enforcement (as it did in Brazil in the Sixties), nor provides military and security assistance (as it did in Chile to protect US mining interests), its political-economic interests are paramount. 
The United States has a long history of providing police aid to Latin American countries. In the 1960s USAID’s Office of Public Safety (OPS) provided Latin American police forces with millions of dollars worth of weapons and trained thousands of Latin American police officers. In the late 1960s, such programs came under media and congressional scrutiny because the U.S.-provided equipment and personnel were linked to cases of torture, murder and "disappearances" in Argentina, Brazil, and Uruguay.
In Washington, D.C., the Office of Public Safety had remained immune to public embarrassment as it went about two of its chief functions: allowing the CIA to plant men with the local police in sensitive places around the world; and after careful observation on their home territory, bringing to the United States prime candidates for enrollment as CIA employees. The OPS's director in Washington, Byron Engle, was close to the CIA.  (Wikipedia)
If children are benefitted from an investment in corrupt oil-rich Angola, so much the better; but the purpose of the aid is to counter the growing influence of China and its access to Angolan oil.  If Nigerian children are benefitted from US taxpayer dollars, this is a by-product of exerting regional influence in a large, unruly, populous, and resource-rich   country.

William Easterly has written an article for the New York Review of Books entitled Foreign Aid for Scoundrels in which he criticizes the international foreign assistance establishment and that of the United States in particular, for continuing to support corrupt dictators and to ignore their abuses of human and civil rights.  He refers to a seminal book by Dambisa Moyo:
Faced with this indifference to tyranny of even the most lethal kind, African intellectuals are increasingly beginning to protest. In her book Dead Aid, Dambisa Moyo struck a nerve because she protested so eloquently against the paternalism, presumption, and double standards of the donor countries’ aid agencies. In many cases, foreign aid, as a review of her book put it, “fostered dependency, encouraged corruption and ultimately perpetuated poor governance and poverty.”
Paul Collier, writing in The Independent focuses on Moyo’s observation that foreign aid disenfranchises the very citizens it is designed to help:
One of her (Moyo’s) central points is that aid can, in effect, disenfranchise Africans, since the population cannot “hold its government accountable. The first stage in her argument is that aid is easy money. If governments had to rely upon private financial markets they would become accountable to lenders, and if they had to rely upon taxation they would become accountable to voters. Aid is like oil, enabling powerful elites to embezzle public revenues.
Easterly has collected data on the amount and proportion of US foreign assistance to dictators:
The proportion of aid received by democracies has remained stuck at about one fifth (the rest are in a purgatory called “Partly Free” by Freedom House). As for US foreign aid, despite all the brave pronouncements such as the ones I’ve quoted, more than half the aid budget still went to dictators during the most recent five years for which figures are available (2004–2008).
Paul Biya, the dictator of Cameroon has been in power for 28 years and has been known for his brutal rule.  Yet, he has received over $35 billion during his reign:
In February 2008, Biya’s security forces killed one hundred people during a demonstration against food price increases and also against a constitutional amendment that will extend his rule to 2018. Many of the victims were “apparently shot in the head at point-blank range.” The IMF justification for the newest loan in June 2009 noted laconically that these “social tensions” have not recurred and “the political situation is stable”. (Easterly)
Biya is not the only dictator to have so benefitted:
Helen Epstein recently described in these pages the support that aid donors give to Ethiopia’s tyrant Meles Zenawi, who has roughly matched Biya in aid receipts in a shorter period of time. Peter Gill in his excellent recent book Famine and Foreigners: Ethiopia Since Live Aid (2010) documents Meles’s misdeeds further, which rise to the level of war crimes in his counterinsurgency in Ethiopia’s Somali region (I reviewed the book for The Wall Street Journal on September 7, 2010).
Other long-serving aid-receiving dictators include Idriss Déby in Chad ($6 billion in aid between 1990 and the present), Lansana Conté in Guinea ($11 billion between 1984 and his death in 2008), Paul Kagame in Rwanda ($10 billion between 1994 and the present), and Yoweri Museveni in Uganda ($31 billion between 1986 and the present).

The issue is why such aid continues especially since the Cold War is well past.  In addition to flying the flag, geopolitical positioning, and the spread of the US’s exceptional principles, the ‘war on terror’ has replaced Cold War ideology and investment.  Countries that never should be receiving aid because of their corruption, inefficiency, and inability to use it properly are given millions to promote stability. 

As US funds flowed into Mali because it was heralded as one of the gemstones of Africa’s new democracies, the simmering revolt of the Tuareg in the North boiled over into full-fledged war; and despite the health, welfare, and agricultural programs supported by USAID, the country began to fall apart.  The recent coup in which the plotters used the turmoil in the North to their advantage has sealed the deal.  Mali is no longer America’s sweetheart.

Easterly points to an even more important reason why aid money continues to flow:
Aid agencies exist to give aid, so they must keep the money flowing. The department of an aid agency assigned to help a country may not get a budget next year if its officials don’t disburse to the country’s ruler this year; so they hand out funds no matter how autocratic he is. (The autocratic recipients know this and know they can ignore any “raised concerns” about democracy, including human rights.) Only the most well-publicized and egregious violators of democratic principles—like Robert Mugabe—get cut off.
The project officers of the World Bank have always been judged on their ability to move money out the door; and have consistently rescheduled potentially delinquent loans to deadbeat countries.  For those contractors who receive USAID money, funds not spent are funds lost.  Countries of course know that donors want to give them money more than they want to receive it (in the case of Angola for example, the potential for skimming billions of oil revenues beggars any pittance of any US foreign assistance).

A colleague in the development business who worked for a non-profit company which received USAID financing said that it never mattered if his projects succeeded or not, for all he had to do was to tell his handlers that he would do better next time and he would get another grant.  “I have evaluated the (failing) project”, he told them, “and we have identified all the obstacles to success.  In the next phase of funding, we will remove them and be successful”.  He always got the money.
Donor agencies will go out of their way to justify this continuing flow of money to recipients who will use it badly:
The concept of development helps rationalize the position of autocrats by postulating an unstoppable transition toward a bright future. This is why donors call all poor countries “developing.” Once the donors started paying lip service to democracy, they could label undemocratic aid recipients as “democratizing.” Let’s call this the Gerund Defense for supporting dictators. Thomas Carothers, an expert on the connections between aid and democracy, described the Gerund Defense in a classic article. He quoted a USAID description of the Democratic Republic of the Congo in 2001 as a country in “transition to a democratic, free market society.” (Such “democratizing” is still notably weak in 2010.)
Others have worked in ‘development’ for over 40 years and labored under a system which has not changed in all that time.  Since foreign assistance has always been considered by corrupt governments as an entitlement, they had no interest in using the money wisely or well.  If USAID-funding projects happened to work, it was because they were implemented well out of the orbit of government, benefited from far more money than any public agency could ever envisage, and were managed by a legion of expatriates.  Although the implementing NGOs trumpeted their success, most critics realized that it was an illusory victory.

In conclusion, there are many reasons to end foreign assistance, and as Dambisa Moyo said above, so doing would force countries to borrow from the international capital markets.  Governments would then have to choose carefully and select only those projects which would produce a return.  No private bank would tolerate default.  Adopting this non-intervention strategy would ultimately ‘help the children’ far more than any entitlement program to a corrupt regime would.  It might take time, but countries would have to reform, be more responsible and accountable to their citizens.
Recognizing the double standards in aid, perhaps also speaking for the opposition leader who was a victim of “a new generation of democratic leaders,” Mo Ibrahim said:
All Africans have a right to live in freedom and prosperity and to select their leaders through fair and democratic elections, and the time has come when Africans are no longer willing to accept lower standards of governance than those in the rest of the world.
He knows that recognition of democratic values eventually leads to their realization; lack of recognition continues the subjugation of the poor.

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