Urgent calls for aid meet new challenges to its merits

Emile Hokayem, Political Editor

Last Updated: July 14. 2009 9:14PM UAE / July 14. 2009 5:14PM GMT

Armed with ambitious and well-meaning slogans like make poverty history, heads of state, CEOs and pop stars have mobilised a global campaign to promote sustainable development and reduce economic and social inequalities in the hope of lifting two billion individuals from absolute poverty. As defined by the UN, absolute poverty is a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. That nearly two billion people live in such conditions has shaken consciences around the world, prompting the UN to articulate its Millennium Development Goals, a comprehensive set of measures from debt reduction to improving access to health care. Rich nations are being urged to dedicate 0.7 per cent of their GDP to development assistance, a target still not met by most developed nations. But many of them appear to be responding to the call. Just last week, the G8 made a $20 billion pledge to secure food supplies and promote agriculture in developing nations suffering from rising food prices, a drop in food stocks and environmental factors threatening to diminish it further. This food crisis, combined with the global economic downturn, has reversed many of the gains made since the 1990s. The US House of Representatives just approved a massive $49 billion foreign aid bill that will allow the US State Department and its aid auxiliaries to fund overseas programmes. In the mixed legacy of George W Bush, the Presidents Emergency Plan For Aids Relief (Pepfar) stands out as a rare success. The initiative has been extended to 2013 including $48 billion in aid and expanded to include the fight against malaria and tuberculosis. European governments, with long historical ties to their former colonies, have also made new commitments. Much of this momentum comes from superstars like the rock star Bono, who have allied themselves with academics such as Columbia Universitys Jeffrey Sachs and African icons like Nelson Mandela to push for aid. Celebrity diplomacy has had an

incomparable way of forcing poverty reduction onto the international agenda even as economic conditions have made rich countries flirt with protectionism and spending cuts. But a profound critique of the merits and effectiveness of foreign aid as it is currently conducted has also emerged. An increasing number of economists and critics of all stripes, from both donor countries and recipient states, now argue that foreign aid is often an impediment rather than a catalyst for development. This perspective may be counterintuitive, but it has both freshness and some factual support at its side. One cannot expect recipient governments to suddenly reject aid and cut off a lifeline. And its also difficult to dismiss the notion that aid is inherently paternalistic and ignores Africas organic potential. Foreign aid is often regarded as a by-product of guilt for the centuries of colonialism and exploitation that made the Wests economic success possible. Still, the need to redress historical torts should not come at the expense of the more urgent imperative to help the poor. The plain reality is that countries like South Korea, China and India have pulled significant chunks of their population from poverty by adopting free market practices, promoting entrepreneurship and embracing globalisation, not by relying on foreign aid. Many critics of foreign aid argue that it has breed dependency, corruption and lethargy, helping to explain why large swathes of Africa lag behind many of the Asian nations that have joined the developing world but shared comparable conditions and income levels just 60 years ago. The New York University economist William Easterly and a Wall Street banker of Zambian origin, Dambisa Moyo, are the main proponents of this argument. Both Mr Easterly and Ms Moyo (who refers to it as dead aid, the provocative title of her controversial book), argue that aid seldom reaches its intended recipients, distorts local economies, and creates the wrong incentives. They particularly fault top-down initiatives that stifle entrepreneurship and create bloated bureaucracies, and instead advocate greater support for the private sector, liberalising trade and encouraging bottom-up initiatives. But their most radical recommendation is an end to foreign aid for African states within five years. Doing away with foreign aid is impossible for western governments to stomach. To start with, certain programmes aimed at specific outcomes have been successful, so cutting funding for Aids relief makes little sense. Second, western governments see foreign aid as an extension of their foreign policy. The UK has imposed a separation between its foreign office and its department for international development but most other countries havent. Aid also brings prestige, influence and reach. In places like Afghanistan or Iraq, it is also an essential element of post-conflict stabilisation.

As governments toy with new aid formulas, another example set by the Bush administration may be its creation of the Millennium Challenge Corporation (MCC), an organisation that distributes aid based on a set of political and economic criteria. Such strict conditions may be a response to western taxpayers suffering from compassion fatigue and also to certain constituencies in recipient nations demanding that aid not shore up ineffective or authoritarian regimes. When the president of Madagascar was ousted by a coup earlier this year, the MCC cut its programmes there. Powerful new distributors of foreign aid that carry none of the historical baggage of the West but have their own, not-so-altruistic motivations in mind, present their own challenges. China is the ultimate example: it supports its economic inroads in Africa with aid but its focus is more on the acquiescence of governments, not necessarily on helping their people. The Gulf states are another new player, with large aid budgets and motives ranging from dawa to securing food supplies and other political interests. Both China and the Gulf states have shown little interest in UN-co-ordinated multilateral aid, since in their view, doing so erodes their leverage and generates little return for everyone. Much is uncertain about the debate over foreign aid, but with so many lives and livelihoods at stake, it is possibly the most crucial one that the world faces.

ehokayem@thenational.ae Have your say Please log in to post a comment