The myth of western aid

Kishore Mahbubani

It should be stressed upfront that there have been some beneficial effects of Western aid. Considering the huge sums involved, even if only a trickle did good the results would still be significant. Hence, the West can legitimately point to a university in Lahore (LUMS), a bridge in Bhutan, a road in Laos or Colombo Plan Scholars in Singapore. But these are the exceptions. The vast majority of Western aid is as good as wasted.
   Or perhaps, wasted is not the correct word. It has been used – but it has been used to help the donor countries, not the poor developing countries. My rough guess is that out of every US$10 of Western aid that is allegedly spent in the Third World, $8 returns to the donor country in the form of administration expenses, consultancy fees and contracts for donor country corporations. In short, there is very little actual transfer of aid to the developing countries.
   
   Sunset OECD
   The Organisation of Economic Cooperation and Development (OECD) was set up in 1961 to assist countries in economic development and sustainable economic growth. By any objective standards, the OECD has failed in its mission. Still, the West continues to spend € 342.9 million a year maintaining an expensive secretariat in Paris, which produces excellent research papers but achieves little in delivering results on its core mission. More critically, the OECD happily provides estimates of the total amount of Official Development Assistance (ODA) provided by the West. Recent estimates show that the OECD members gave approximately $104.4 billion to the developing world.
   However, what is missing from this massive OECD estimate is how much of it actually reaches the developing countries and how much of it is effectively recycled back into the donor countries. The OECD has more than enough bureaucratic and academic resources to carry out such an audit. But it would not even dream of doing so for it will be killed by its own Western paymasters for attempting such an audit. Nor will anyone in the West have the courage to state another obvious truth: after having failed in its core mission, the OECD has clearly become a “sunset” organisation. Its disappearance will have no impact on the developing world.
   There are many other distortions in the provision of Western aid; indeed too many to be documented in a brief article like this.
   
   Few examples
   Western aid does not go to the poorest or neediest countries. It goes to those countries which support the foreign-policy agendas of the donor countries. Take American aid, for example. OECD estimates show that on a per capita basis, American aid is the lowest among the OECD countries. But even the relatively little amount that America gives goes only to select countries, like Israel or Egypt even though Israel is a developed country. In recent years, Israel has received between $ 2.5 to $3 billion annually in US aid (Sharp, 2007) – and that is more than what all of sub-Saharan Africa gets.
   Western countries do not hesitate to pull the plug if any recipient country fails to support their foreign policy agenda. Many African countries signed on to the International Criminal Court (ICC) statute because Africa clearly needed the ICC process. But when some African countries took a principled stand and refused to sign the side agreement to exempt American nationals from ICC prosecution, America threatened to cut off, and in some cases actually withheld, foreign aid. Altruism never featured in these deliberations.
   Much of the aid given could be nullified by other hugely damaging actions of the donor countries. Take the case of the European Union. In 2003, Johan Norberg wrote: “According to the United Nations Conference on Trade and Development, EU protectionism deprives developing countries of nearly $700 billion in export income a year. That’s almost 14 times more than poor countries receive in foreign aid”. 14 times! Much will have to be done to correct that distortion.
   In 1969, the OECD countries pledged to raise ODA to 0.7 per cent of their gross national incomes (GNI). Yet very few OECD members have honoured this pledge. In 2006, the actual ODA flows amounted to 0.31 per cent of member countries’ GNI (OECD, 2007). The difference between 0.31 per cent and 0.7 per cent amounted to approximately $ 134.7 billion. Even if only 20 per cent of this would have actually reached the developing countries, this amounted to a real loss of $ 26.9 billion. Compare theses figures with the total GNI of Least Developed Countries, which, according to UN statistics, was approximately $148 billion in 2006. Does anyone really expect the people in the developing world to be impressed by the West’s repeated pledge that the 0.7 per cent threshold will finally be met in 2015?
   Even aid channelled through multilateral organisations is not immune from these distortions. The donor countries are often able to control the agenda of the multilateral aid organisations and also ensure that the budgets of these organisations are used in favour of their countries. When Australia “donates” scholarships through the Asian Development Bank (ADB) most of them have to be used in Australian universities or on services provided by Australian academics. Undoubtedly, some good comes from these scholarships. But if someone from Papua New Guinea could find a degree or more relevant course in another developing country institution, the scholarship cannot be used.
   
   Donor sensitivities
   The multilateral aid organisations also know that they pay a price if they ignore the wishes of the donor countries. The Scandinavian countries enjoy the reputation of being most generous in the provision of aid (in 2006, three out of four Scandinavian countries met the pledge of giving ODA up to 0.7 per cent of GNI). But they too are not immune from applying pressures.
   In 1999, then UN Secretary-General Kofi Annan decided to choose the new Administrator of UNDP on merit and not select the candidates traditionally imposed on the UN by the EU. The EU had nominated Poul Nielsen, the Danish Development Minister at the time. On the basis of merit, Kofi Annan chose Mark Malloch Brown, a British national, instead. The Danish government retaliated by slashing Danish aid to UNDP by 23 per cent. No one knows how many poor Africans or Asians suffered because Danish national pride had been wounded.
   The real tragedy of this whole story is that the West could have actually accomplished its ostensibly altruistic goals in the developing world if it focused its efforts on helping the recipient countries, instead of ensuring that most of the ODA was used to secure their own interests. And it could have accomplished this with a fraction of the money that has been ostensibly transferred to the Third World.
   This is what the real story of the Asian economic miracle is all about. The Asian countries that have succeeded are those who took charge of their development agenda and used the ODA given to them to develop the capabilities that they really needed, not those that the donor countries were pushing on them. The biggest success story for UNDP is probably Singapore. Two UNDP consultants, in particular who were sent to Singapore, made a huge difference: They were Albert Winsemius, a Dutch national, and I.F. Tang, a Chinese national. They developed good relationships with the architect of Singapore’s economic miracle, Dr. Goh Keng Swee. They worked together as a team and Singapore took off.
   
   Depressing realities
   Contrast the Singapore experience with two real-life stories of how aid was distorted. In 1973/74, I served as the Charge d’Affaires of the Singapore Embassy in Phnom Penh, a war-torn capital, which was being shelled everyday by the Khmer Rouge. I was 25 years old then. I met another 25-year-old female diplomat from the American Embassy. The Lon Nol regime then in power was being kept afloat by American aid. Each day, this young American diplomat would call on the Cambodian Minister of Economic Affairs and instruct him on what measures to implement.
   She was a good person and well intentioned. But she, not the minister, was running the Cambodian economy. It is no wonder that the Lon Nol regime collapsed. No foreign aid succeeds if there is no sense of ownership of the development process by the recipient country. While OECD rhetoric has become aware of this fact for some time, it is doubtful, to say the least, that Western donors really accept the principle of national ownership.
   There is another similar horror story, a story which is worse in some ways because it was carried out not by the “hegemonic” American power but by a respected multilateral institution, the International Monetary Fund (IMF). Joseph Stiglitz (2002) recounts this story well, it concerns Ethiopia, one of the poorest countries in the world.
   Ethiopia’s leaders tried to take charge of their own development agenda, and yet, received no support from the IMF in doing so. In 1997, the lending programme to Ethiopia was suspended ostensibly on the grounds that the Fund was concerned about the country’s budgetary position. Ethiopia was pressured to limit expenditure on development to only money from tax revenues, instead of relying on international assistance, which was deemed less stable. Actual statistics showed the IMF assumption to be untrue. When Ethiopia repaid an American bank loan early using its reserves so as to be free from the high interest rates, the country faced strong objections from the IMF and the United States, despite the sound economic move, as prior approval had not been obtained from the IMF. It is evident that neither the sovereignty of the country nor its right to formulate its own development strategy was respected in both cases.
   I end this article with these stories to illustrate how sadly distorted the Western aid project has become. The real tragedy is that given the overwhelming amount of goodwill among Western populations towards the poor developing countries, so much could have been done with the money approved by Western taxpayers for the aid budgets. Unknown to these Western populations, very little of the money reached the Third World or was actually used to help the poor developing countries. The Western populations deserve to be told what really happened to their money. The time to tell the truth has come.
   —Third World Network Features
   Sources:
   OECD, 2007: Final ODA flows in 2006,
   Norberg, Johan, 2003: American and European protectionism is killing poor countries and their people, CATO Journal, 4 September.
   Sharp, Jeremy M., 2007: CRS report for Congress: U.S. foreign aid to Israel, 25 April 2007.
   Stiglitz, Joseph E., 2002: Globalisation and its discontents, New York: Norton & Company.
   United Nations, 2007: “The list of least developed countries (2006 Review): Key indicators”, retrieved from http://www.un.org/esa/policy/devplan/ldc06list.pdf on 2 January 2008. http://www.un.org/esa/policy/devplan/ldc06list.pdf

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Dr. Habib Siddiqui

America goes to the poll in November of this year to elect its president. While in recent weeks the list of candidates from the two major political parties has narrowed down significantly it is not yet clear as to which party will eventually capture the citadel of power. One thing is, however, clear: for the first time in the last half a century a senator (and not a governor) will head for the White House.
   Notwithstanding all the excitement generated by the coming election, one should not lose thought of the bigger reality that there is a deep disquieting deterioration of democratic powers in America today.
   In 1980 the right-wing coalition of Christian Conservatives (whom Professor Cornel West of Princeton University calls the Constantinian Christians) and Jewish neoconservatives (the modern-day Judean High Priests) helped to elect Ronald Reagan. The fact that 35 per cent of the most liberal group — American Jews — voted for Reagan was a discerning moment in American history forewarning what was to expect later. When the Bible-thumping Christian fundamentalist reverend Jerry Falwell of the Moral Majority received the Jabotinsky Award in 1981 in Israel, it should have been a sufficient eye-opener to realise that “imperial” Constantinian (and not “prophetic”) Christianity had arrived on the international stage, albeit with Jewish neocons as their powerful allies. In the following decades with targeted campaigns to unseat daring voices - Paul Findley, Earl Hillard and Cynthia McKinney, we also witnessed how improbable it had become for anyone to win either a congressional or a senatorial race when the “alliance” (with all its powerful lobby groups like the AIPAC and CUFI, and media outlets like the Fox News and TV) is opposed to that candidate. With George W. Bush’s repeat wins in 2000 and 2004 the hideous face of that unholy alliance is visible for all to see. Over the last eight years, the more we looked at that imperial face the uglier and demonic it looked; the more we heard its haughty, blasphemous Pharaohnic utterances the scarier we got of a coming Armageddon; and the more we saw its Hamanic displays against unarmed civilians – home and abroad — the more we got convinced of its evil nature.
   The problem with this resurgent imperial democracy is that it breeds nihilism at all strata of the American society – from a desperate housewife to a debauch president, from an unemployed worker to a greedy corporate tycoon, from poverty-stricken inner cities to wealthy Beverly Hills, from chartered schools in Philadelphia to Columbine School in Missouri, from a co-ed residence hall in Virginia Tech to a lecture hall in Northern Illinois University, from streets in Harlem to corporate headquarters in Manhattan, from Enron to Halliburton, from penthouse to fortified Pentagon and majestic White House. It values power over logic and follows the paranoia: “my way or highway” and “you are either with us or against us”. Not surprisingly, it incites gangsters’ mania from street corners in inner cities to corporate boardrooms to the WTO.
   The most frightening feature of this deadening nihilism at the state level is that it breeds ‘noble’ lies — from Johnson’s Gulf of Tonkin to Bush’s WMDs - that demand blood — tons and tons of it - to appease the nihilist Dracula (sitting in the Oval Office). Fashioned out of Texan cowboy mentality, it prefers settling conflict via show of force and employs “spare-no-enemies” tactics, i.e., aggression over negotiation, unilateralism over multilateralism. In that process, it totally disregards human lives – their pains and sufferings, as we have witnessed time and again from the killing fields in Vietnam, Afghanistan, Iraq and the Occupied Palestine to the gruesome prison camps in the Guantanamo Bay and Abu Ghraib. Naively, it forgets that its very gangsters’ mania invites terrorism at home that it claims to be fighting in a never-ending vicious war.
   In political nihilism, there is no room for Socratic probing and dissenting, but only unquestioning confirmation and compliance. There is no place for either Denis Kucinich or Ron Paul. They can say what is right and just, but they are deemed un-Caesar-like. Anyone sounding less imperial is, thus, considered outside the mainstream - weak and, by default, unfit to rule America.
   So pervasive is this culture that the Senators John Kerry and Hillary Clinton had to join the club of believing the scripts prepared by the nihilists within the Republican Party in favour of going to war against Iraq. Even after all these years, when Bush, Cheney, Powell, Rumsfeld and Rice have been found to have deliberately lied and deceived America, the paternalistic nihilists within the Democratic Party have to behave like the evangelical nihilists within the Republican Party. Thus, when it comes to furthering the imperial ambition of America, there is virtually no difference between any of the major candidates – John McCain, Hillary Clinton and Barack Obama – each one trying to sound more hawkish than the other. Obama wants to bomb Pakistan, Clinton wants to invade Iran and McCain wants to occupy Iraq for a hundred years! What audacity!
   The other worrisome matter is that imperial democracy inevitably promotes and in turn draws its strength from sentimental nihilists – the publicity agents or propaganda machines that are unwilling to probe. They hinder coverage of hard facts that may not be politically correct, thereby polarising and balkanising citizenry and contributing much to the decline of public trust in political discourse. Not surprisingly, the American media accepted and spread imperial lies about WMDs. They became ‘embedded’ journalists covering the war – providing views that were approved by their masters.
   Truly, in America today media are becoming mere parasites on their evangelical and paternalistic nihilist hosts. In contrast, genuine democracy thrives on a free and frank press that is willing to speak out painful truths about the society. When the so-called free press lacks the autonomy or courage to inspire democratic energies, democracy is in danger. America is in danger.
   But with a functioning liberal democracy, things are not supposed to be this menacing. As hinted above, the change in America did not happen overnight. It took years for the rise of an ugly imperialism that has been steered by an unholy coalition of plutocratic elites, Jewish neoconservatives and the Christian Right, and aided by a massive disaffection of many voters who see no difference between the two major political parties.
   One can only wonder how America – the country that still attracts and retains the most talented minds - ends up electing mediocre and milquetoast leaders in the top public office! It is as if the brightest citizens boycott elected public offices, while the most ambitious go to the private sector. Those who want to be elected need millions of dollars to campaign for election. However, few are blessed like Ross Perot or Mitt Romney to spend their own money. Guess: who provides that ‘needed’ campaign money? It is the lobby groups, special interests and corporations. It would be foolish to imagine that they provide such funds for free.
   It is not difficult, therefore, to understand why the majority of American voters don’t vote. They know that political leadership is confined to two parties that are both parasitic on corporate money and interests. The illicit marriage of corporate and political elites has undermined trust of informed citizens in those who rule over them.
   Political leaders sound like as if they still believe in democratic principles. But the reality is that they are too willing to sacrifice those principles to gain and retain power. Sadly, thus, politicians have bastardised and pulverised the word “democracy” as they fail to respect and act on real democratic ideals, but act what their financiers dictate.
   The situation is bleak in the private sector, too. Our corporate leaders continue to sacrifice their integrity on the altar of profits while our media watchdogs sacrifice the voice of the dissent on the altar of audience competition, the Nielsen Ratings. (more)
   The author is a human rights activist and lives in Pennsylvania. He has authored six books.

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