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AID?
Patrick wilmot
Saturday, December 27, 2008
<span style="font-weight: bold">Some estimates put the "aid' received by poor countries at over half a trillion dollars in the past 30 years</span>. Yet the history of development over that period shows that poor countries have got poorer, especially in Africa. <span style="font-weight: bold">What explains this apparent paradox where such "generosity" has worked in reverse?</span>
Analysis of the phenomenon reveals that "aid" contributes little to wealth creation and in many cases leads to impoverishment. "Aid" often takes the form of goods which the donor cannot use or sell; drug companies give expired medicines to countries in need; much "aid" is tied to goods and services from the donor and never leaves that country; consultants are paid at exorbitant rates.
The structure of the present global system means that many experts in poor countries, trained at great expense, leave for the rich countries in "brain drain" because their home nations cannot employ them. In the "aid" industry rich countries send their unemployed and unemployable "experts" to poor countries to show them how to become "modern" and "civilised". "Aid" may also be a form of dumping in which goods are exported below cost to undermine local industries.
In political terms "aid" is tied to certain "conditionalities" as defined by the IMF, World Bank, and other agencies controlled by the USA and Western Europe. In the Cold War period receivers of Western "aid" could not have relations with countries from the Socialist Bloc: now they have lists of undesirable countries such as Cuba, Iran, North Korea and in Bush's "axis of evil". As part of the "aid" package, the Fund and Bank send "experts" to the Ministry of Finance and the Central Bank to ensure that policies favourable to the dominant powers are implemented.
By coincidence, these are the former colonial powers such as England and France and the "victor" of the Cold War, the United States of America. Leaders of the poor countries forget the independence struggles of their countries in which many took the extreme resort of wars of National Liberation, and cannot see that "aid" now performs the same functions once achieved by tanks, aircraft and machineguns.
Ending Aid Dependence by Yash Tandon takes a critical look at the "aid" industry with a view of freeing poor countries from addiction to it. Although Tandon is from the left, the recognition of the ideological nature of the concept is not a left-wing position.
When asked by a supporter why America was wasting its "aid" on poor countries which did not support his country, the very right-wing Nixon explained that "aid" was not for the benefit of the poor but for a very rich America which used it to keep the poor in line.
Tandon starts by defining "aid" so it could be analysed in a scientific manner. He follows this with a classification of different forms of "aid" so that scholars and policymakers could determine which "aid" was beneficial and which was harmful. While snow shoes and overcoats were of no use in tropical countries in crisis, food aid for starving people were okay as long as it did not undermine local food production as surplus grain and meat - from Western subsidised production - did in many African and Caribbean countries.
"Aid" which was tied to advice was pernicious. Whenever poor countries experienced financial crises, the IMF and World Bank offered "assistance" on condition that they raised interest rates, devalued their currencies and deregulated their financial systems. The result was increased poverty and the purchase of their companies by Western corporations at giveaway prices. Under no circumstances should governments assist their companies to stay afloat.
In the current "financial crunch" in the West, the advice is the exact opposite: the dollar has risen against most other currencies, interest rates have been dramatically reduced, and trillions have been given to prop up banks, mortgage and insurance companies. Regulation has been increased and the nationalisation prohibited in the poor countries resorted to with a vengeance. China and India which resisted Western advice because they did not need "aid" emerged relatively strong compared to the USA and Europe.
Countries in Africa and the Caribbean which have gone backwards because of addiction to "aid" should consider the harm the users of heroin and cocaine experience because of their "need".
To wean themselves of their "need", drugs addicts must cut themselves off and build up their mental and physical resistance. For Tandon the cure for "aid" is the cultivation of reliance on the people, democratic politics which is of the people, by the people, and for the people. Leaders of poor countries who tell their people to accept subsistence wages to attract "investments", need to ask these people if such "investments" are worthwhile.
Patrick Wilmot writes from London. A Jamaican, he's a a visiting professor at Ahmadu Bello and Jos universities in Nigeria and the author of Seeing Double.
Patrick wilmot
Saturday, December 27, 2008
<span style="font-weight: bold">Some estimates put the "aid' received by poor countries at over half a trillion dollars in the past 30 years</span>. Yet the history of development over that period shows that poor countries have got poorer, especially in Africa. <span style="font-weight: bold">What explains this apparent paradox where such "generosity" has worked in reverse?</span>
Analysis of the phenomenon reveals that "aid" contributes little to wealth creation and in many cases leads to impoverishment. "Aid" often takes the form of goods which the donor cannot use or sell; drug companies give expired medicines to countries in need; much "aid" is tied to goods and services from the donor and never leaves that country; consultants are paid at exorbitant rates.
The structure of the present global system means that many experts in poor countries, trained at great expense, leave for the rich countries in "brain drain" because their home nations cannot employ them. In the "aid" industry rich countries send their unemployed and unemployable "experts" to poor countries to show them how to become "modern" and "civilised". "Aid" may also be a form of dumping in which goods are exported below cost to undermine local industries.
In political terms "aid" is tied to certain "conditionalities" as defined by the IMF, World Bank, and other agencies controlled by the USA and Western Europe. In the Cold War period receivers of Western "aid" could not have relations with countries from the Socialist Bloc: now they have lists of undesirable countries such as Cuba, Iran, North Korea and in Bush's "axis of evil". As part of the "aid" package, the Fund and Bank send "experts" to the Ministry of Finance and the Central Bank to ensure that policies favourable to the dominant powers are implemented.
By coincidence, these are the former colonial powers such as England and France and the "victor" of the Cold War, the United States of America. Leaders of the poor countries forget the independence struggles of their countries in which many took the extreme resort of wars of National Liberation, and cannot see that "aid" now performs the same functions once achieved by tanks, aircraft and machineguns.
Ending Aid Dependence by Yash Tandon takes a critical look at the "aid" industry with a view of freeing poor countries from addiction to it. Although Tandon is from the left, the recognition of the ideological nature of the concept is not a left-wing position.
When asked by a supporter why America was wasting its "aid" on poor countries which did not support his country, the very right-wing Nixon explained that "aid" was not for the benefit of the poor but for a very rich America which used it to keep the poor in line.
Tandon starts by defining "aid" so it could be analysed in a scientific manner. He follows this with a classification of different forms of "aid" so that scholars and policymakers could determine which "aid" was beneficial and which was harmful. While snow shoes and overcoats were of no use in tropical countries in crisis, food aid for starving people were okay as long as it did not undermine local food production as surplus grain and meat - from Western subsidised production - did in many African and Caribbean countries.
"Aid" which was tied to advice was pernicious. Whenever poor countries experienced financial crises, the IMF and World Bank offered "assistance" on condition that they raised interest rates, devalued their currencies and deregulated their financial systems. The result was increased poverty and the purchase of their companies by Western corporations at giveaway prices. Under no circumstances should governments assist their companies to stay afloat.
In the current "financial crunch" in the West, the advice is the exact opposite: the dollar has risen against most other currencies, interest rates have been dramatically reduced, and trillions have been given to prop up banks, mortgage and insurance companies. Regulation has been increased and the nationalisation prohibited in the poor countries resorted to with a vengeance. China and India which resisted Western advice because they did not need "aid" emerged relatively strong compared to the USA and Europe.
Countries in Africa and the Caribbean which have gone backwards because of addiction to "aid" should consider the harm the users of heroin and cocaine experience because of their "need".
To wean themselves of their "need", drugs addicts must cut themselves off and build up their mental and physical resistance. For Tandon the cure for "aid" is the cultivation of reliance on the people, democratic politics which is of the people, by the people, and for the people. Leaders of poor countries who tell their people to accept subsistence wages to attract "investments", need to ask these people if such "investments" are worthwhile.
Patrick Wilmot writes from London. A Jamaican, he's a a visiting professor at Ahmadu Bello and Jos universities in Nigeria and the author of Seeing Double.