The Case Against Foreign Aid

When we see millions of displaced Syrians in the Middle East, or when we saw thousands of Pakistanis devastated by flooding several years ago, our gut response is to send aid - send all the aid we can, all the money and resources possible to make these vulnerable peoples’ lives better. While, this is a reasonable response, unfortunately it’s the wrong one. Not only is aid often ineffective in making these people’s lives better bur moreover, even when we send aid, it is often sent with ulterior motives.

One of the first problems with aid is that often the people who need aid most are in countries with dubious regimes. In these cases, the leaders often use aid to shore up their regimes. During Samuel Doe’s period of leadership in Liberia, he took over 500 million dollars of US aid and kept it for himself and his cronies. Furthering this point, Cambodia, which ranks 156th out of 175 on the corruption perceptions index1, is said to have half of its budget consist of foreign aid. This point becomes even clearer when we look at the example of Pakistan; after flooding during the 1970s aid, as one would expect it to, flowed into Pakistan. This money was then used to create dikes, however, they were only created in areas that were wealthy and had low concentrations of minorities. Often times when we tried tied aid, it is too unsuccessful because the countries where this kind of aid is needed the most, such as North Korea, often have little transparency and thus we never see where the aid actually goes.

Beyond that, financial aid in particular is of little help even when it gets there and isn’t taken by the government of a country. While aid, if successful, can potentially save lives; it fails to create long term change and thus doesn’t make a platform for future development. When governments send aid it is often reactionary, a natural disaster or something terrible just happened. While this is all well and good, the assistance of these people needs to be proactive. In many countries, basic needs such as clean drinking water are continually not met and people’s economic and social development is stifled. Even if money is sent to the government, bureaucratic mismanagement often always means effective or efficient infrastructure isn’t created; it is very difficult for a government to target development in a small rural community no matter how well intentioned they may be.

Perhaps, what is more appalling are the motives of aid; when we see our own governments sending aid we perceive them to be benevolent, however in the vast majority of cases they are simply acting in their own self-interest. Let’s return to the example of Liberia, see the US government was acutely aware that Doe was taking the funds and pocketing it, however, they didn’t care – the reason being they felt Doe was an important regional ally. A senior policymaker at the time said “we were getting fabulous support from him on international issues. He never wavered his support for us against Libya and Iran. All our interests were impeccably protected by Doe”. To put things into context, the US willing handed over 500 million dollars of aid that never reached the devastatingly impoverished people it was supposed to go to, to have Liberia as an ally. At this time, the US was a definitive superpower – there is no real reason why it would need to even have Liberia as an ally, yet they chose to support an oppressive regime under the guise of foreign aid. Another pertinent example is the rise of US poverty assistance to Pakistan from early 2001 to 2002. In 2001 the US gave Pakistan 5.3 million dollars, in 2002 they gave them over 800 million dollars. There was no marked increase in poverty in Pakistan during the time, yet the US felt it would be important to have Pakistan as a regional ally. We can safely conclude that no matter how well intentioned foreign aid may seem, it is not a tool of economic development in poor and impoverished nations. Rather it is at best a reactive policy that doesn’t create a meaningful place from which to develop, and at worst it is a façade used to support regimes that a country sees as a necessary ally.

By,

Peter Koczanski

 

Works Cited:

http://www.transparency.org/country#KHM

The Dictator’s Handbook – Bruce Bueno de Mesquita

The Liberian Civil War – Mark Huband