PHM-Exch> AN INDICTMENT OF FOREIGN AID: IS IT TOO LATE?

[Claudio Schuftan]

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*AN INDICTMENT OF FOREIGN AID: IS IT TOO LATE?*



States do not have friends, only interests. (Charles de Gaulle)



1. As we have it now, foreign aid is instrumental in decreasing constructive
social, economic, and political tensions and internal contradictions that
would tend, sooner or later,  redress or resolve the growing imbalances and
injustices of the prevailing internal exploitative system in many a
recipient country.



2. In the best of cases, donors give their aid in a well-intentioned, but
nevertheless vain and futile attempt to mitigate or remedy this ongoing
internal economic exploitation.



3. In the worst of cases, as we all know, donors channel their aid through
ruling national elites, most often fully aware of how these elites are
instrumental in perpetuating this state of affairs: therefore, do the donors
become accomplices in the process of exploitation?



4. Local governments channel their own development funds often to urban and
more prestigious projects, resting assured that foreign aid will assume a
sizable fraction of rural development costs for them.



5. To top things off, foreign aid often attempts to impose Western
(Northern) models of development, e.g. cash-crop support or large irrigation
schemes, which carry not only the seeds of the further exploitation of those
supposedly aided, but also the continuing enrichment of the ruling elites.



6. The difficult to take truth is that, if current type Western (Northern)
foreign aid does not cease or is drastically reoriented, it will never
achieve its stated aims and objectives - a fact that is already widely
recognized, but for which all kinds of excuses are found. If donors do not
begin to look at macro-economic parameters, their "good will" will be used
facetiously to perpetuate the status quo. (Chances are strong that many of
the donor countries would not mind being used in such a way, as long as
their public image looks good to the rest of the world, especially to the
other members of the club of donors).



7. Most countries face quite a number of problems in managing to absorb all
the foreign aid efficiently and clearly lag behind in that task. The
bottlenecks that explain this are related among other factors, to shortages
of trained manpower, serious limitations in infrastructure, and a slow-paced
bureaucracy.



8. Instead of asking ourselves how much foreign aid poor people need, we
must ask ourselves whether  Western (Northern) tax dollars are being used to
shore up the economic and political power of a few who make the
powerlessness of the many inevitable. Do these tax dollars go to regimes who
sustain themselves in power by repression against the poor? Statistics
cannot help us answer such questions. Only identifying with needless human
suffering will.



9. Foreign aid is rightly accused of many things: being based on a false
logic: doing more harm than good; maintaining (and protecting) the status-
quo in Third World countries; undermining food autonomy; being a political
weapon of the rich countries; perpetuating underdevelopment.  There is no
indication that policies regarding this aid  --both in donor and recipient
countries-- are changing drastically despite mounting evidence for the above
claims.



10. Short of a call for an overall discontinuation of all aid, foreign aid
can play a role in fostering development, but not just any kind of aid. In
this context, it is important to determine which kind of aid would be
needed, for whom, and under what circumstances.



11. But foreign aid has its own politics. Simply denouncing its deleterious
effects is not enough. Some political actions need to be taken.



12. The mere thought that foreign aid can automatically bring mutual
benefits is simply a political fiction. Moreover, the assumption that this
aid can be neutral is as shaky as the now-discredited notion of a value-free
education. Present day aid policy makers, therefore, have to be confronted
with the pressing questions regarding the relevance of their own work.
Development assistance cannot automatically be considered as well-suited to
developing countries. In the international development community, it has
actually gotten a rather bad image as a resource that has been poorly used.
Mostly, the way it has been used is what has given it its bad reputation.



13. The fact that most formulas for using aid moneys were actually developed
to expedite rapid disposal with minimal financial and political costs has
conditioned the current drawbacks that have been pointed out. The result is
that there are serious deficiencies in the operation and theoretical
foundation of Northern foreign aid projects. These projects are often not
implemented as planned and ultimate impacts remain unrealized.



14. Aid is extremely vulnerable to political pressures and is an area in
which
‘politics-literally-stands-directly-between-the-life-and-death-of-millions’.




15. Some seem to believe that without foreign aid, the present development
crises would be even worse. If this view were correct, there would be no
reason to alter present development strategies and one should simply spend a
great deal more money on them. The basic problem, however, is that these
present strategies do not adequately address the issue of Human Rights
violations, the issue of redistribution of assets and income, the issue of
income generation for the poor and of adequate expenditures for public
services for the poor.



16. Therefore, for alternative development strategies to become a
cornerstone of genuine development (such as the Human Rights-based
approach), policy cannot be usefully discussed outside a broader
geo-political and socio-economic framework.  Much more far-reaching steps
must be taken to avoid the catastrophic failures of the past.



17. Moreover, the sad reality is that aid given with one hand as a soft loan
is actually being taken away with the other. The debt trap in which many a
developing country is caught makes it necessary to service the debt in hard
currency, this directly undermining the whole idea of foreign aid.



18. Another valid criticism voiced about aid is that it gets too involved in
looking at improving the system's management, ignoring the need for the
system’s drastic reform. Donor agencies somehow avoid raising the issues of
structural changes, because of the conflict of interests this inherently
raises for them. For many, aid is actually still coupled with a strong
belief in the (discredited) trickle-down process despite the evidence that
the actual value of the net transfers from most foreign-funded development
projects is often less than 30% of the budgeted funds; a big proportion of
it, donors spend at home in procuring goods and in expensive consultants
(the latter often far removed from the realities in the South).



19. Further, there has also been a trend away from aid to the lower-income
countries. The concentration of US aid on only a few countries, for example,
shows that its objectives are strategic rather than humanitarian. But the US
is not alone in this.



20. On another political note, donors actually agree that aid can discourage
local production, increase dependency, alter people’s habits, encourage
corruption, and does not reach the more needy. Nevertheless, they contend
that none of these problems need happen under ‘proper’ safeguards. They
genuinely seem to believe that aid, when used for ‘strict’ developmental
purposes, can be made to have none of the above drawbacks. How this is going
to come about is seldom elaborated upon.



21. In addition, the same aid often causes severe budgetary and logistic
problems to the recipient countries since donors often pay for only some (or
none) of the local recurrent costs.



22. According to Susan George, the following postulates are generally true
for most countries receiving foreign aid:

- A strategy that benefits the least well-off groups will not be acceptable
to the dominant groups unless their own interests are also substantially
served.

- A strategy that benefits only poor classes will be ignored, sabotaged, or
otherwise suppressed by the powerful, insofar as possible.

-       A strategy that serves the interests of elites, while doing positive
harm to the poor, will still be put into practice and, if necessary,
maintained by violence so long as no change occurs in the balance of social
and political forces.



23. So, to be more effective, foreign aid should:



-generate a multiplier effect on the amount of resources allocated for other
disparity-reduction programs in the recipient country;

-primarily meet the transitional needs and costs of such disparity-reduction
policy adjustments, acting mainly as a catalyst; aid is good only when used
as a vehicle of transition;

-in some way, help increase the bargaining power of the poor and the
politically marginalized. For this to occur, peasants, workers and women
must be helped to form or strengthen their own representative associations.



24. If a recipient government cannot agree to these basic conditions  --which
will necessarily alter the internal balance of power--  a simple syllogism
would indicate that it would be better for the donor to withhold aid.



25. But perhaps aid needs to be rethought and restructured, not necessarily
withdrawn. Centering it around the human rights-based framework is an option
rapidly gaining ground. That will require fostering the political and
economic changes necessary in the recipient country to make it possible for
aid to really make a difference. The risk is for the latter effort to become
another area for the donors being (rightly or wrongly) accused of
neo-colonial interference.



26. The real commitment to the eradication of Human Rights violations, such
as hunger, malnutrition, ill-health plus all the other, implies a massive
assault on the roots of underdevelopment and poverty  Foreign aid thus only
adds false hopes to the prospects of poverty alleviation. At best, aid
treats the symptoms of poverty, not its causes.



Anybody moved to react?



Claudio Schuftan, Ho Chi Minh City

cschuftan at phmovement.org
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