The aid link
‘Foreign aid is a waste of time. Why should we keep pouring our hard-earned money down a bottomless pit?’ That’s one attitude to aid that many people in the West respond to with gut sympathy. Thirty years after de-colonization and billions of dollars of aid later, the Third World is still the same cauldron of poverty and hunger. Some Western governments, faced with snail’s-pace growth, runaway inflation and worrisome unemployment, know their electorate well enough to realize that hard times at home take precedence over hard times abroad. Accordingly, as a percentage of GNP, foreign aid from Western and Communist governments has fallen markedly over the last decade.
But this focus on quantity of aid has never been more than a distraction and a false starting point in the aid debate. Even if rich nations were providing two to three per cent of their total GNP in aid, as the US did during the Marshall Plan to reconstruct Europe after World War Two, the ultimate impact could still prove disastrous.
In a sense, the gut suspicions of the mythical Australian, American or Swede quoted above are on the right track. Foreign aid is a waste – for the poor in the Third World who it is supposedly designed to benefit and for those taxpayers in the West who believe it is helping the poor to become self-reliant.
‘Foreign aid,' said President Kennedy, 'is a method by which the United States maintains a position of influence and power around the world'
In practice, the humanitarian aims of aid are often usurped by more utilitarian political and commercial concerns. Despite heart-on-the-sleeve pledges to phase out aid ‘tied’ to the purchase of goods and services of the donor country, this brand of aid is becoming more predominant not less. For manufacturers and exporters in rich countries it’s a boon. Yet Third World nations are denied the option of choice when they can often get better and cheaper goods on the open market.
Government foreign aid programmes can open channels to new markets and suppliers of raw materials. And aid can be used to buy friends and create spheres of interest. Nearly 20 years ago US President Kennedy put the case bluntly. He said: ‘Foreign aid is a method by which the United States maintains a position of influence and power around the world, and sustains a good many countries which would definitely collapse, or pass into the Communist bloc.’
The amount of aid received by a poor country has less to do with poverty than with how much it is willing to accommodate itself to the current global economic system. And that is in itself a stunning contradiction; since on the surface, at least, aid stems from a recognition that the present economic order is terribly out-of-joint. If anything has emerged from various international conferences and North-South encounters over recent years, it is that something must be done to correct the unjust balance of wealth and power between rich and poor nations.
Jamaican Prime Minister Michael Manley describes the development process amidst this economic discrimination as ‘trying to walk up the down escalator’. He uses the example of deteriorating terms of trade between sugar and tractors. In 1965 it took 21 tons of Jamaican sugar exports to earn the dollars to buy one Ford tractor. By 1979, the equivalent tractor cost 58 tons of sugar.
As long as these basic structural inequalities characterize the relationship between the developed and the underdeveloped world no amount of aid can tip the balance. For aid is only one small link in a long chain of interdependence between fundamentally unequal partners. And the result of such a lopsided partnership is inevitable – the continued dependence of the weak on the strong.
The first principle of aid should be to create a world where it’s no longer necessary. So the critical question is whether government aid can change the existing inequalities of power. If not, the danger is that it will either exacerbate them or bypass them altogether. Tragically, foreign aid very often seems to do both.
Even though it is playing against impossible odds, the Third World already finances most of its own development – without aid. The underdeveloped nations earned $300 billion from exports in 1977 and received barely $20 billion from all forms of aid. Even the poorest nations are investing 15 per cent of their GNP in development – more than today’s rich countries did during their industrial heyday.
While aid and other flows of capital from North to South may be the extra fuel necessary to keep the world’s economic engines from sputtering to a halt, they are not the major source of power. In the end, no amount of aid can substitute for the tremendous social and political changes necessary to mobilize the energies and talents of the poor for themselves.
If with scrutiny and careful planning government aid can assist in that effort, so much the better. If it cannot, then it should be stopped.