Another Perspective
Stop Giving Money to the Third World
Foreign aid is counterproductive madness.
By Hal G.P. Colebatch – 11.25.14
Consider the following two statements: First, in Britain this winter, one old-age pensioner will die of cold about every five minutes—roughly 30,000 total for the season—because pensions are not large enough to allow both heating and eating. Second, this year, the British government will give $450 million in foreign aid to Argentina.
Yes, Argentina, which launched an unprovoked war against Britain over the Falkland Islands in which hundreds of Her Majesty’s soldiers and sailors died or were mutilated, which still refers to Britain as an enemy, and whose official rhetoric and policies suggest it may have another go as soon as it judges the time to be ripe. Britain still has only minimal forces (four aircraft) defending the Falklands. What sort of moral or political sense does this make?
Britain’s official foreign aid budget, which the strange quasi-Tory Prime Minister David Cameron claims is his proudest achievement, comes to about $22 billion. This would pay the heating bills of a lot of pensioners.
The aid budget amounts to 0.7 percent of Britain’s GDP, a target set by Cameron. The largest recipient ($2.8 billion) is Pakistan, with more than twice what it received in 2010. The attitude of the Pakistani government toward Islamic terrorism is at best ambiguous (remember it gave shelter to bin Laden), and Pakistan has spent a goodly portion of its national budget on nuclear missiles. Christian women are hanged there for drinking out of Moslem cups (a politician who tried to save a woman sentenced under the blasphemy laws for this crime was assassinated by his own bodyguard who became an instant popular hero).
India, another major aid recipient, has not only nuclear weapons, but also a space program in some ways ahead of Britain’s own.
Money is being poured into ineffective multilateral bodies, too, such as a billion dollars going into a new United Nations “climate fund.”
All while the British people are suffering cuts to public services. Despite commendable economic growth, Britain is unable to find the money to meet its primary obligations towards its own people of adequate national defence. The Royal Navy, for example, is down to just nineteen surface combatants, and the other services are in comparably sorry states.
A succession of coroner’s inquests into the loss of Army personnel in the Iraq/Afghan wars have put the blame for lethal disasters on poor and skimped equipment, including unarmoured snatch land-rovers that offer no protection from hidden roadside mines, and ancient and notoriously unreliable radios. Australians who served with British personnel garrisoning oil platforms in the gulf have told me— too often and consistently to be merely the grousing of soldiers—of proverbially poor and skimped British food rations.
Britain increased its spending on overseas aid by more than $20 billion in 2013, an increase of 28 percent on the previous year. “Because they are so determined to meet the 0.7 per cent target, there has been no time to hand out money based on need,” British Conservative MP Peter Bone has said. “So they have been in a rush to give it to organizations that are below value for money—and that’s just crazy.”
A 2012 survey by the respected study group Transparency International found $1 billion of British aid had gone to the ten most corrupt countries in the world, including warlord-ruled Somalia.
However, the biggest beneficiary of Britain’s aid budget is the European Commission, which has been given £2.4 billion in the past three years—and which competes directly with British industry, fisheries, and agriculture. Last year Aid Minister Alan Duncan said Britain was “forced” to give a sixth of its aid budget to the EU and was powerless over how it was spent. No wonder the Tories were wiped out by the United Kingdom Independence Party in last week’s by-election!
The counter-productive effects of much aid (apart from disaster relief), particularly government-to-government transfers, have been documented by economists such as P.T. Bauer at the London School of Economics, to the point of being beyond question by competent professionals. Philip Booth, editorial and program director of the Institute of Economic Affairs and professor of insurance and risk management at the Sir John Cass Business School, has written that it is hard to find any positive relationship between aid and growth; indeed, there appears to be a negative relationship. He has written that it does not follow that a negative relationship between aid and economic growth implies cause and effect, but it should, at least, lead us to reconsider whether we should regard aid as a moral imperative.
After the late 1970s, aid to Africa grew rapidly, yet GDP growth there collapsed and was close to zero or negative for over a decade from 1984. Growth did not start to pick up again until aid levels fell in the early to mid 1990s. In East Asia, South Asia, and the Pacific, one finds a similar trend. Booth quotes F. Erixon’s Aid and Development: Will It Work This Time? published by the International Policy Network in 2005, which cites a number of detailed studies that find no benefit from aid whatsoever across a range of periods and a large number of countries. In total, in the thirty years from 1970, Africa received $400 billion of aid, under different regimes, tied to different forms of economic policy and reform, yet there was no evidence it helped a single country develop.
The Economist wrote in 2004 that for every dollar northerners lent Africa between 1970 and 1996, 80 cents left as capital flight in the same year, typically into Swiss bank accounts or mansions for dictators on the Cote D’Azur. Leading African economist George Ayittey, president of the Free Africa Foundation, has said: “Africa doesn’t need aid…its begging bowl leaks horribly.” Aid was attacked in the strongest terms by the Kenyan economist James Shikwati when interviewed by Der Spiegel in 2005:
SPIEGEL: Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…
Shikwati: …for God's sake, please just stop.
SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.
Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.
SPIEGEL: Do you have an explanation for this paradox?
Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need…
Aid has helped finance the endemic wars of Africa. The dollars donated in the West have often subsidized re-primitivization, made a market economy impossible, or underwritten starvation, torture, disease, squalor, and death. This is especially so, it appears, in the case of large-scale government-to-government transfers and some heavily-bureaucratized and politicized non-government agencies. Time to give the idea a rest.
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