'Aid' - country-control through other means;
now being reformed for the global good?

Najma Sadeque

One of the complaints that ordinary civil society everywhere in the developing world has about the business and industrial communities in their own countries that because they are well-off and comfortable, they don't bother to be informed or involved about economic, financial and social issues that affect the entire country and economy and thereby tend to be elitist and to alienate themselves from matters of the public interest and the sovereignty of the country. This includes issue of foreign aid and how it is utilised, or rather misused to benefit the few at the cost of the majority.
The criticism is a valid one. The natural resources of a country and the decisions for the well-being of all citizens are not supposed to be the ownership or monopoly or exclusive domain of any one sector alone. They are meant for three purposes generally in the following order of priority, and later in tandem - first to ensure basic food needs for all citizens; second for development and/or maintenance of public services, and infrastructure for domestic commerce at every level; and lastly for foreign trade - but only when the country has reached the level of serving the fundamental needs of all citizens and reached an acceptable level of development to be simultaneously able to continue to do so as well as produce sufficient surplus for foreign trade without depriving domestic need. That is exactly how the Asian Tigers became Asian Tigers, by practicing egalitarianism and strict protectionism for years, before they partly opened their borders, unlike Pakistan and others that sold out on people's resources and rights to benefit the few.
Social conscience is not only a matter of human rights or religious injunction; it makes the best business sense. Poor people can never become consumers in the markets that business and industry seek; they are also needed to the labour-intensive work, especially in agriculture, that business and industry do not want to do - although they wrongly want to control it. Consequently the poor fight back and ignorantly latch on to any ideology that promises them relief but may be less than honest in its own intentions. Since business and industry constitute much of the middle and upper classes, they have more clout with government, and therefore would have more power if they used it for the public benefit, it is essential that they use it.
But after almost six decades of aid, the experience has been a dubious one. It turned out that the richer a country in natural resources, or the greater the amount of aid it received, the poorer and more conflict-ridden it became. What most people don't know is that lenders are making far more money through recurring interest than they are actually lending out. The result has been wars and mass inhumanity before the belated realisation came in the 21st century that the deprived will ultimately resort to violence when they can endure no more. However political opportunists and warmongers and arms manufacturers will invariably join the fray, and keep the world in an unending cycle of violence and dog-eat-dog cut-throat competition that does not allow universal winners, only a majority of losers.
Over the past couple of years, the European countries have been making slow but steady moves to make it a fair and just world; something that was promised by the United Nations, but eventually did not transpire because it was hijacked by the US, using the World Bank and IMF for its own ends. Even if it is very late in the day while billions starve and suffer as a direct consequence of misused debt, new voices - both official and of civil society - from Europe, although not yet from US officialdom - have begun to be raised against the negative use and consequences of aid, and demanding that it be ensured that genuine aid be dispersed directly to those who really need it and in the form they can really use it in.
Last week, on behalf of the Commonwealth Secretariat, UK's Overseas Development Institute (ODI) held a consultative workshop on the 'Reform of International Aid Architecture' in Dhaka, Bangladesh, meeting with both NGOs, and government representatives at a senior level from South Asia - but without donor reps present - so that participants could express themselves and their criticisms freely - to draw recommendations for a more transparent, accountable, representative and people-oriented global aid regime. The series of consultations are taking place on a continental basis, and the Dhaka meeting was the second one, another one following soon in Africa.
Earlier this month, Hilary Benn, Secretary of State for International Development, in her sixth and final White Paper speech to parliament, stated with some illuminating examples, that:-
"Huge variations is wealth are giving rise to global inequality, and in the influence different countries have on global decisions….. the EU is now the world's largest donor and largest trader - not the US as the impression that most people have arising from USA's military might, and bully-influence.
"… the structures we created after the Second World War are NOT able to deal with these changes as well they might. And yet we need the international system to become better at responding to them - because each of us can't do it alone. And that can't mean adding yet more institutions to a system that may crumble under its own weight …. by making the institutions work better.
"I want to illustrate this by looking at natural resources. In Liberia, timber from forests is a very important natural resource. Charles Taylor used earnings from illegal logging to finance his military activities, as well as funding RUF rebels in Sierra Leone. And remember that the specialty of the RUF was to go round cutting off peoples' limbs with machetes. In 2000, of the $106 million income from the timber trade, only $6 million went into the Liberian treasury. $100 billion went somewhere else. Much of this was about bad governance, but its made easier because tyrants and greedy elites can transfer illicit earnings in seconds through electronic accounts, and because there is no global framework for controlling illicit trade such as this. … So how is the international system responding?"
Timber, like oil, gas, water, and coltan, a mineral which is vital for cell phones, is what is known as a "conflict resource' - something vested interests will fight and commit bloodshed for, to control and make profits from whether they are foreign or national - usually dictatorship or authoritarian -- governments, multinational corporations or politically-funded 'rebel' and terrorist groups. In the best of times, unaccountable, non-transparent governments misuse aid to strengthen their own positions and line their pockets; but under the above circumstances, they turn into national-scale mafia, serving only the interests of the global profiteerers and their own. In Pakistan, we have a privatisation minister especially entrusted to sell off the people's property, and in the process, the country's sovereignty. By the time such practice is stopped, it may be too late, with nothing left to lose."
Hilary Benn takes hope from another source which our government has probably not heard of yet:-
"The EU Forest Law Enforcement, Governance and Trade action plan - which bars illegal timber from entering the EU - will help to control illegal logging in countries that join in ….. But it only works for the EU. An agreed UN definition of conflict is needed to help create an international framework to better control illegal trade and the flows of conflict finance. In Liberia, when timber was defined as a conflict resource in 2003, sanctions were imposed, denying the warring parties an important source of money, Charles Taylor fell from power later that year." Not that this solved all of Liberia's problems.
She added : "The Extractive Industries Transparency Initiative, created by the UK and now led by the International Financial Institutions, with over twenty countries involved and most of the major oil and mining companies, has meant that in Nigeria the results of the first audit of oil and gas accounts was published last month (February 2006). For the first time, Nigerians now know how much money their government received from sales of oil. And if you know how much money is coming in then you can ask the next question. - What have you done with the money?"
Certainly Pakistanis, like citizens of many other developing countries, would like to ask the same question. Not just what the successive governments did with the money, but every detail of which foreign government gave how much in grants and exactly what they were all spent on; about which international bank lent how much and on what terms, what the interest payments have accrued to, and at what cost in local resources, sweat and tears, has it cost us to pay back. It must be remembered that most debt today for Pakistan and all other developing countries, account for interest payments and interest accrued on interest as a result of loans from the predatory international lenders, namely IMF, World Bank, Asian Development Bank and other regional development banks. These were created under the understanding of the United Nations, to help the poor, former colonies, develop through soft loans; they were never supposed to behave like commercial banks, to be in the business of lending for the purpose of profits.
But that is exactly what they did. They do not generally use the money that governments contribute as their share: that serves as a reserve and a guarantee. The World Bank and IMF and other international banks, borrow money from the global capital markets, and then lend out to countries at higher interest so as to repay the interest as well as to make some money for themselves. That happens to come to well over a billion dollars a year for the World Bank and IMF alone, which is how they have throughout paid themselves princely salaries, earning on average in a single day as much as a poor Third-Worlder earns in one, or even two, years. These so-called "aid" givers are not very different from commercial banks, and are in fact worse because they are not subject to audits. They were in fact the very first ones to widen inequality through such indecent disparities of income, and then to institutionalise and legitimise it.
The history of aid has been a sorry one indeed. Not subjected to accountability to the citizens in whose name aid has been taken, aid has been used by governments to enrich themselves and to reward supporters and cronies so as to maintain that status quo. In this, donors were as culpable by very knowingly not demanding transparency and accountability, because they have often worked for the vested interests of the industrialised countries and northern multinational corporations, and have not hesitated to using aid as a bribe or a carrot to make borrowing governments do their bidding and turning a blind eye when such governments suppressed and oppressed their own citizens.
For those of us in the Asian continent, it would be of interest to note the following :-
Asia's share of global aid varied between 25 and 30% during the period 1995-2003;
Aid calculated per capita comes to a mere 6 US cents in Asia, whereas the global average is 14 cents, and for Africa is 31 cents;
Aid as a share of GDP varies widely, from 0.1% or 0.2% in the cases of better-off countries such as India, China and Malaysia, to between 10 and 20% in some poorer countries. A few go as high as over 40%.
The top ten donors for Asia in 2003 were US, Japan, IDA, EC, UK, ADB, Germany, France, Netherlands and UNRWA; note that World Bank is not among the top ten, even as lender.
The top ten recipients in 2003 were Iraq, Vietnam, Indonesia, Afghanistan, Bangladesh, China, Jordan, Pakistan, Palestine, India. But as is plain for all of us to see, whoever profited, it was not the majority of citizens who are worse than ever before. Generally speaking, aid in Asia focuses - very shamefully - far less on health and education than the average, and more on economic infrastructure.
Aid for Asia would have been far less if it had not been for the tsumani in South Asia, and later the earthquake that struck India and Pakistan which was the worse hit of the two. But much of this was charity needed for saving the survivors and helping to give them a new start to those who had lost everything, and does not really count as development aid, and therefore should not be included in that account.
Aid plays a key role in affecting the rights and opportunities of national businesses and industries especially small and medium-sized ones and agriculture, which together hold up the economy and a country's main markets and production. The sooner that the business and industrial community understand this and meet with the rest of civil society on common ground, the more likely that national commerce can maintain its independence and strength without having to be constantly at risk as temporary sub-contractors of the narrower interests of the North.