Western aid now does more harm than good

Published in the London Evening Standard (March 1st, 2011)

As Harry Truman’s team prepared his inaugural presidential address in late 1948, there was concern that the section on foreign affairs was boring. So at the last minute they threw in a short bit that became known as Point Four – a commitment to spend money on helping “more than half the people of the world living in conditions approaching misery”.

The President and his staff were amazed when, the day after the address, this “bold new programme” captured all the headlines. Point Four was a public relations gimmick, tacked on by a professional speechwriter to give a landmark speech more punch. But they quickly swung into action to turn their vague declaration into reality – and the era of foreign aid was born.

More than six decades later, overseas aid remains a popular gimmick for politicians. As the sheen came off Tony Blair, he tapped into the emotionalism of Live8 by promising to make poverty history. Gordon Brown sought to soften his image by saving Africa. And David Cameron shook off the “nasty party” brand with pledges to drive up spending on the world’s poor.

During the boom years, this was arguably an affordable luxury. But in an era when school-building programmes are being cancelled in Britain, domestic voters are infuriated to see all this extra money spent on schools from Afghanistan to Uganda. Andrew Mitchell, the International Development Secretary who today releases a review of his swelling budget, admits it drives constituents “ballistic”.

Mitchell is right to say Britain has a moral duty to help the developing world. But this is why voters are right to be annoyed by this use of their money at a time of spending cuts. The coalition government, just like its predecessors, is falling for simplistic solutions sold by rock stars and the aid lobby.

The sums spent on aid over the years are astronomical. Haiti, for example, was given official assistance in today’s sums of more than £6bn in the 50 years before that terrible earthquake last year – four times as much per capita as Europeans received under the post-war Marshall Plan. Additional cash came in private donations, with more charities working on the ground per head than any other place on earth. Yet people’s income fell by more than one-third over that period.

Haiti shares an island with the Dominican Republic, which had its own share of problems over the past half century with political assassinations, military invasion, despotic rulers and severe corruption. It received far less aid – and yet its per capita income more than tripled over those years, with life expectancy jumping by nearly two decades. Clearly aid is no panacea.

For all the noble intentions, the torrent of Western aid all too often erodes rather than builds civil society. It encourages corruption, fosters dependency, undermines innovation, reduces local investment and even boosts military spending. After all, a government handed huge chunks of revenue from abroad has less incentive to respond to the needs of its citizens at home.

A report from Harvard Medical School found that when health-related aid was given to governments in sub-Saharan Africa they often reduced spending on health. Politicians let aid pay for schools and hospitals, allowing them to steal money or spend it on security. Then they win elections using bribery or violence rather than by providing decent public services and being accountable to voters.

Development is founded on a bedrock of good governance. But British aid is even funding political repression. Human Rights Watch has brilliantly exposed how our money is used in countries such as Ethiopia and Rwanda to shore up autocratic regimes and quash dissent.

There have been successes, such as the immunisation programmes and fight against guinea worm, but there is too much profligacy and too many vainglorious projects. The aid lobby – and from the time it was created 14 years ago, the Department for International Development (DFID) has acted more like a charity than a government department – response is to keep switching tactics and promising to learn the lessons of the past. Today’s review has commendable aspects but it is merely the latest example of this.

It is little wonder that amid the grind of government in a climate of cuts, DFID is seen as the sexiest place to work in Whitehall, joining charities in a shared mission to fight global poverty. Its first budget, in 1997, was £2.6bn, which has now risen to £7.8bn and is set to keep on rising until Britain meets that sacred figure of spending 0.7 per cent of its gross national income on aid.

This target, invented more than four decades ago, is increasingly seen as arbitrary and outdated. But this surge of money must be spooned out, so staff are unlikely to win brownie points by finding reasons not to spend or pointing out wastage. And the number of staff employed has risen only marginally. Admirable productivity – but it leads inevitably to more reliance on charities and consultants and pressure to hand over aid directly.

As Richard Dowden, director of the Royal African Society, has pointed out, the most passionate advocates of aid are never African. Increasingly, however, the most vocal opponents are from the continent, such as the Zambian economist Dambisa Moyo and the Ugandan journalist Andrew Mwenda. On my own travels there, I have heard plenty of criticism of the paternalistic assumptions behind these vast handouts – often in contrast to the more robust and business-minded approach of the Chinese.

If we really want to tackle global poverty there are many things we can do. We should lift trade barriers, stop dumping cheap produce, stop arms sales to repressive regimes, crack down on British firms that use bribery and prosecute the pimps in pinstripes who live off the immoral earnings of despots who plunder their nations. We could even allow more immigration, since remittances are by far the most effective source of direct aid.

But one thing is clear: voters have good cause to go ballistic over the sums spent on overseas aid since it takes more than good intentions, glib soundbites and political gimmicks to help the poorest people in the world.

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