Building Markets

Back to all blogs
5

Foreign Aid for Scoundrels: Perhaps, but is it that easy?

In the last edition of The New York Review of Books (November 25, 2010), William (Bill) Easterly strikes again with another compelling article, further probing and critiquing the international aid industry. The title of the article pretty much says it all –Foreign Aid for Scoundrels – and within Easterly reveals the international aid system’s “dirty secret”:  despite conventional wisdom that since the cold war aid has gone increasingly towards efforts aimed at promoting good governance, “dictators have received a remarkably constant share –around a third –of international aid expenditures since 1972,” while democratically elected regimes receive a paltry one fifth.

The article is filled with shocking statistics (he quickly reels off four “dictators” who have received cumulatively more than 50 billion in aid over the past 20 some odd years)[1] and colorful anecdotes including a compelling explanation of the “Gerund Defense” theory of aid in support of dictators, and a shocking exposure of the World Bank’s policies towards Rwanda prior to, and during the 1994 genocide. With all of that said, Easterly’s article falls short on three very important accounts (well two and a half to be exact):

  • In the article, Easterly claims that “aid increases the slush funds available to the government, financing more repression of democratic opposition.” This statement is too broad, and in many cases just plain wrong. YES, too often aid ends up lining the pockets of ruthless dictators, but if due attention is paid ODA (Official Development Assistance) can bypass government/dictator’s coffers and go directly to local organizations within society. International resources are often vital to the support of NGOs and civil society organizations which become the building blocks for vibrant democracies and the very mechanisms by which governments/dictators are held accountable.[2] Let’s play this out one step further, using Afghanistan and the Karzai regime as an example (surely Karzai would fall into Easterly’s definition of dictator due to recently disputed national elections). According to UNDP calculations, Canada gave over thirty five billion in ODA over a four year period (2002 and 2006) to Afghanistan. While it is likely that some of that money ended up in the pockets of Karzai cronies (along with unmarked plastic bags from Washington and the Kremlin), a good deal of the money went to fund earnest and successful development projects, like PDT’s Peace Dividend Market Marketplace (PDM) projects. Is aid which supports dictators a relatively bad thing? Yes. Does all aid going into countries of dictators go toward “financing more repression of democratic opposition”? No. But, can the system by which aid is allocated and disbursed be improved upon, so that it better supports human rights and accountable governments? Absolutely, let’s learn from some of the stellar examples that already exist.
  • Second, criticizing aid distributed to governments of non-democratically elected “dictators” (according to Easterly’s definition) sounds reasonable in print, but reality speaks other truths. Again, using Karzai as our example, what if the international community stopped all aid to the regime itself, instead opting to work only with local NGOs and civil society orgs in Afghanistan. Voilá, problem solved! Not exactly. Beyond being totally unrealistic, this would create two ancillary problems. First, presented with this alternative Karzai and his regime would boot all international aid organizations from the country faster than you can say, Kabul Conference. As a result, many vital programs that are currently providing life saving resources to innocent civilians within Afghanistan would be gone. At the same time, assuming for a moment that the Karzai regime goes along with such a plan, aid flowing directly into the private sector, sidestepping  public/government agencies runs the risk of creating a “shadow” institutional structure which competes directly with government organizations; further delegitimizing the government in the eyes of the people (as basic services like health, security and infrastructure are provided by international organizations and not the federal government); and plunging the country further into instability and conflict.[3]
  • Finally, a small point but important nonetheless, in the article Easterly claims that, “the idea of aid is that, along with the necessary funds, the donors have superior knowledge –about health, agriculture, technology, institutions –that they are conveying to their recipients.” This is overly cynical, and a cheap shot. Is this true in some cases? Yes. But landmark agreements like the Paris Declaration on Aid Effectiveness (2005) and the G20’s SME Finance Challenge (2010) speak to an international community that is making notable strides toward a more effective system of international aid, leaving antiquated dogmas like the one presented by Easterly in the past.

If Easterly’s point is that international aid going to support ruthless dictators is bad, then we are in agreement. Unfortunately, that does not say much, nor does it move the conversation forward in terms of how to help those civilians living under the rule of dictators. Not all aid increases the slush funds for dictators, and not all donors/aid organizations think they know best. There are many wonderful examples of international organizations who are reaching civilians, without lining the pockets of dictators. Perhaps we should spend more time and energy focusing on how and why foreign aid does work toward the promotion of human rights and development, even in the presence of dictators, so that these efforts may be emulated, as well as innovated.


[1] Mentioned are Iriss Déby of  Chad ($6 billion since 1990), Lansana Conté of Guinea ($11 billion from 1984 to his death in 2008), Paul Kagame of Rwanda ($10 billion between 1990 and present) and Yoweri Museveni of Uganda ($31 billion between 1996 and present).

[2] See Larry Diamond, Toward Democratic Consolidation (1994).

[3] See Roger C. Riddell, Does Foreign Aid Really Work (2007).

5 Comments

  1. Matt says:

    Just a couple of nagging points:

    #1. Even if aid doesn’t directly finance repression, aid still frees up resources to be used for repression. For example, imagine you want to go out and buy a gun, but you need to spend your $100 on food. Someone shows up and gives you a voucher for $60 on food (a voucher which is transparent, traceable and totally non-fungible). That assistance has freed up $40 that I can now use to buy the gun. Fungibility is a slippery concept.

    #2. You can’t confuse a public commitment like the Paris Declaration (which I wholly believe in) with actual action on its recommendations. Most donors don’t do it justice, some openly (DFID recently abandoned pursuit of it).

  2. Christian Denckla says:

    Matt, thanks for your comments.

    To #1, fair point, aid can absolutely “free up” resources available to dictators, no doubt. But to your illustration, if I was someone who is going to go out into society and perpetrate “repression”, than would I not just use my $100, buy a gun, and then use the gun to exploit defenseless people in society for said food provisions? In that case, so long as I could get the gun, the vouchers (aid) really make little difference -meaning aid is not going to necessarily increase or decrease my proclivity towards repression.

    And to #2, you are right public commitment, like pledges, do not always translate into actions on the ground. At the same time, I would contend that landmark commitments represent necessary shifts in political/public dialogue and a movement toward resolving the problems, even if they do not represent the end unto itself. And you would not be the first to call me a hopeless romantic in this regard.

  3. Hi Christian,

    Actually, to take your counter-example to Matt’s first point to task, you’re not giving enough agency to the ‘repressed’. Repression is a lot easier when people aren’t (as) desperate and starving. If you can buy a gun *and* spend $60 on food, you reduce resistance to your tendency to repression. History has shown that people will tolerate quite a lot until material conditions become intolerable. It may only affect the timing of open revolt, but it can delay revolt significantly.

  4. Christian Denckla says:

    Hi Ranil, and thanks for joining the discussion.

    I feel we might be going a little too far on this hypothetical, but to address your point, can aid provide access to a larger pot of resources whereby a dictator could quell public rebellion through the provision of life necessities, thus stay in power longer as a dictator? Yes, hypothetically this could happen. But left to their own devises, I believe history shows that dictators will use any and all resources to “pay-off” a small circle of elite cronies, which then ensures their seat of power (that and buying more tools of oppression), not spend on food for the marginalized (thus I am not sure I follow your logic). On the other hand, as I mentioned in my first point, aid given with necessary attention to detail, transparency and accountability can bypass government coffers and provide lifesaving assistance to the very poor and repressed that you speak of -the ones that live under a dictatorship with or without the aid. Is this system perfect? Absolutely not. In the end, could this mean that the dictator will be in power longer because international support is providing the services that should otherwise be provided by the state? Perhaps, but the alternative of no aid has far worse implications.

    I think an important question to ask is can we utilize our tools and resources, one of which is aid, to promote/ensure the greater protection of human rights and economic prosperity, both now and in the future? And I believe we can do this, and many people/organizations are doing this.

  5. I like this post….

    […] Even though this blog posting is not fresh this week, I enjoyed your writing and linked to it at my site. You might want to update it with a fresh video. […]…


Rss Feed Tweeter button Facebook button Youtube button