Eurozone crisis causes aid cuts to poor, report says
The European debt crisis has led to cuts in government development aid to poor countries, says a new report by the aid watchdog Data.
It is the first significant reduction in Europe-wide aid budgets for a decade.
The biggest percentage cuts in the year 2010/11 were made by two of the states worst affected by the debt crisis - Spain and Greece.
But overall European development aid was also down by 1.5%.
The report says the new figures “reveal that those bearing the brunt of Europe’s economic crisis include some of the world’s poorest people”.
“As austerity bites across Europe, we can now see the impact it is having on life-saving aid programmes,” it adds.
In the United States, this kind of subsidy trimming has long been a political taboo — but in a season of obsessive budget-cutting, it may no longer be. During negotiations over the deficit in July, the While House and Congress were close to agreeing on agriculture subsidy cuts worth around $35 billion over 10 years, and nearly $5 billion in direct payments to farmers may be cut in the 2012 farm bill.
And then, of course, there’s migration. The CDI reports that migration from poor countries to the United States each year amounts to one-third of 1 percent of the U.S. population — that puts it in 15th place out of 22 rich countries. So much for “Give me your tired, your poor, your huddled masses.” Yet it is increasingly clear that the movement of people is a considerable boon to the economies of both origin and destination countries. So more open borders are another area where rich countries including the United States could benefit considerably from greater generosity to the world’s poorest. Even on this contentious issue, there are signs of some movement on Capitol Hill toward immigration reform, as members of Congress hear from farmers whose crops are rotting in fields as supplies of undocumented labor dry up and firms who can’t find skilled applicants for their jobs. Republican Sen. Marco Rubio has suggested new visa programs for both high-skilled and agricultural workers, for example. And presidential candidate Mitt Romney has called for a green card to be stapled to the front of every college diploma awarded to a foreigner.”
Republican politicians in the United States are hellbent on axing international development assistance. But Congress’s budget-cutting mania might actually improve it in other ways.
As Egypt crisis continues, would US cut foreign aid? Unlikely.
…Also, aid to Egypt (exceeded only by aid to Israel, Afghanistan, and Pakistan) is a politically entrenched part of the “military-industrial complex” and high-powered lobbying.
“It’s worth noting that [Egypt] employs some of the most powerful and high-profile lobbyists in the District of Columbia,” writes Chris Good, associated editor at The Atlantic. “Since 2007, the government of Egypt has contracted Tony Podesta, president of the Podesta Group and brother of former Bill Clinton chief of staff John Podesta; former representative Bob Livingston (R) of Louisiana, who nearly succeeded Newt Gingrich as speaker of the House [but for a sex scandal]; and former representative Toby Moffett (D) of Connecticut.”
“All remain active agents for Egypt, according to the US Department of Justice,” writes Good. “Among the top lobbyists in D.C., the three signed a one-year contract to work for Egypt through their joint venture, the PLM lobbying group, in October 2007. That contract had the option of a one-year extension, and the three went on to register independently as foreign-agent lobbyists for Egypt in March 2009.”
“Egypt agreed to pay them a total of $1.1 million per year to ‘provide assistance and advice, as requested, to the Embassy in the task of securing and further enhancing the interests of Egypt in the United States in the political, economic, military and other fields’…,” according to the contract cited by Good. “The three were employed to give Egypt strategic advice, assist with requests for military aid, make contacts with US government officials, assist in Egyptian officials’ visits to the US, utilize corporate contacts, and work within the US business community’s Washington offices to improve Egypt’s image for investment.”
What is foreign aid for?
Foreign aid is once again under fire. Every so often a few politicians — usually Republicans — get up in arms about our government’s gift of large amounts of money to other countries. Equally often, media stories appear detailing how ineffective aid supposedly is. The picture emerges that foreign aid is unnecessary, ineffective, and wasteful.
For example, the Republican Study Committee (RSC) released a proposal last week to cut the budget for the U.S. Agency for International Development (USAID) by $1.39 billion as part of a broader package of deficit-reduction proposals. (Hat tip to our friends at The Cable for their poston the subject.) There were similar rumblings after the Republican takeover in 1994. Republicans seem to have an inborn suspicion — usually dormant, but one that fitfully flares up once per decade — that aid is just a handout from rich countries to poor ones to help the former ease their consciences.
Or take the lengthy Wall Street Journal story last week that declares, “A massive U.S. aid program that has made Pakistan the world’s second-largest recipient of American economic and development assistance is facing serious challenges, people involved in the effort say. The ambitious civilian-aid program is intended in part to bolster support for the U.S. in the volatile and strategically vital nation. But a host of problems on the ground are hampering the initiative.” Despite billions of aid, the United States remains unpopular in Pakistan; thus, the article implies, aid is ineffective.
These criticisms of foreign aid rest on faulty notions of what aid is and what it is supposed to accomplish. There are two views of aid reflected here, neither of which are helpful.
- National bribery. Some people think that the United States gives money to other countries to be popular. On this view, if the United States lavishes the Pakistanis with enough money, they will respect the United States. The problem is that if someone did this on an individual level, the United States would call it craven, insecure, and insulting — which is probably how it is perceived by the Pakistanis. Aid as bribery doesn’t work. Money can’t buy me love — not individually, and not between states.
- Charity. Others seem to think that the United States gives money out of the pure, unalloyed goodness of our hearts. Foreign aid is an extension of private goodness. Individually, we give money to the Salvation Army or World Vision so they can help our fellow man on the far side of the world. Foreign aid is functionally the same thing: the United States gives our tax dollars to USAID to do the same kind of charity work as NGOs. But why should the U.S. be charitable to someone in Nepal just because they live in an exotic country when there are Americans who need help? Additionally, there is no logical limit to how far the United States’s charity could extend. The United States could bankrupt itself trying to save the world.
I propose a third view of foreign aid.
- Strategic investment. Foreign aid helps countries whose interests align with our own increase their capacities. The United States gives money to help select countries — not the entire world — improve specific abilities, like their ability to provide public security, defend their borders, or buy and sell goods.
The advantage of this view is that it is realistic. The United States can actually do this. The U.S. is not trying to change people’s heart or minds, contrary to the bribery view. It is only trying to change their capacity. Additionally, this view helps the U.S. prioritize which countries should get aid, and what kind, contrary to the charity view. Giving billions to Tuvalu would be a commendable act of charity for the Salvation Army, but it would be folly for USAID because Tuvalu is not a strategic priority for the United States.
(I am not arguing that we should never be charitable. Rather, every possible foreign aid program is an act of charity. Charity by itself cannot help us decide which charitable programs to undertake. The United States either has to flip a coin to allocate our charity randomly, or consult our own interests to allocate it strategically.)
The Marshall Plan is a good model. The United States gave something like $25 billion (in today’s dollars) per year to Western Europe after World War II. It was undoubtedly an act of charity. The money helped the Europeans rebuild their economies and saved tens of millions of people from poverty or even starvation. But it was also a strategic investment. Policymakers at the time worried about a return of the Great Depression following demobilization and the Marshall Plan helped Europe become a strong trading partner for the United States. Most importantly, U.S. officials feared the rise of Soviet power and hoped the Plan would bolster European governments’ stability and prevent the spread of communism.
This view of foreign aid would help protect it from the kind of cuts the congressional Republicans are proposing. Aid is hard power. It is a weapon the United States uses to strengthen allies and, thus, ourselves. But this view would also help save it from the kind of limitless, grandiose visions Democrats sometimes seem to have for it. This is the sort of view that I hoped Secretary of State Clinton would incorporate in the recent Quadrennial Diplomacy and Development Review. But despite the document’s many strengths it did not seem to offer a framework for prioritizing among the Unites States’ many foreign aid opportunities.
(Source: foreignpolicy.com)
Aid is not just complicated; it’s complex
One of the points that we try to make on this blog is that aid, planned from an ultra high level and driven to alleviate just the symptoms of poverty, doesn’t realistically address the complex problems of international development. We understand that our own economies are complex and require complex allocation mechanisms (i.e. markets; see also “failure of the U.S.S.R.”) but this thinking doesn’t hold when it comes to helping the poor. So consequently we come up with overly simple solutions to far more difficult puzzles.
Ben Ramalingam, author of the blog (and forthcoming book) Aid on the Edge of Chaos, explains this another way in an interview with Dennis Whittle:
[I]nternational aid has been built on a very particular way of looking at the world, and this continues to dog its efforts. As a senior USAID colleague put it, because of our urgency to end poverty, we act as if development is a construction, a matter of planning and engineering, rather the complex and often opaque set of interactions that we know it to be.
…The whole system disguises rather than navigates complexity, and it does so at various levels – in developing countries and within the aid system. This maintains a series of collective illusions and overly simplistic assumptions about the nature of systems, about the nature of change, and about the nature of human actors.
So the end result of all of this is that poverty, vulnerability, disease are all treated as if are simple puzzles. Aid, and aid agencies are then presented as the missing pieces to complete the puzzle. This not only gives aid a greater importance than perhaps it is due, but it also misrepresents the nature of the problems we face, and the also presents aid flow as very simple.
Instead of engaging with complexity, it is dismissed, or relegated to an afterthought, and the tools and techniques we employ make it easy for us to do this. We treat complex things as if they were merely complicated.
What is the difference? As Ben goes on to explain, complicated systems can be modeled mathematically, but complex systems cannot.
[For complex systems,] there is no mathematical model which can say, if X is the situation then do Y. Sustainability, healthy communities, raising families have all been given as examples of such complex systems and processes. Peacebuilding would be another, women’s empowerment, natural resource management, capacity building initiatives, innovation systems, the list goes on and on. Complexity science pulls back the curtain on these processes and it can force you to think about the world you live in in a different way.
Thanks to Dennis for this pointer to Ben’s work. (See also Nancy Birdsall’s blog post about Dennis on the occasion of his retirement from GlobalGiving.)
Why millions in US aid may help few Iraqi refugees in the end
Jordan, one of two main destinations for Iraqis displaced by the US-led war, has received nearly $400 million in aid designed to help as many as 1 million Iraqis reported to have fled there. Much of the aid came from the United States and went to the Jordanian government directly.
The idea was that donors would help Jordan, and Jordan would help the Iraqis.
But it’s now widely recognized that the actual number of Iraqis in Jordan is vastly smaller than originally thought. The inflated numbers mean more aid went to the Jordanian government, and some argue that that prevented the Iraqis from getting effective assistance.
“We could have dealt with 50,000 refugees, who had very little, much more effectively, provided the funding had been appropriate,” says Harriet Dodd, who was country director for CARE International in Jordan during the crisis.
Indeed, many nongovernmental organization workers, academics, and independent researchers now say that the aid has failed to provide the help Iraqis needed, while significant funding went to programs that suited Jordan’s national priorities – and thus, some argue, it aided Jordanians more than Iraqis.
Officials from the US Agency for International Development (USAID) counter that building up local institutions like schools, hospitals, and water systems is the only effective and fair way to help the Iraqis.
Americans appalled at how much we spend on aid, want to spend 10 times more
This chart is courtesy of Ezra Klein (h/t @viewfromthecave and @laurenist), who summarizes the results from a new World Opinion Poll. The 848 Americans polled guessed, on average, that the US spends 25 percent of the budget on foreign aid, but opined that the figure should be about 10 percent. The actual number, as you Aid Watch readers probably know, is less than 1 percent.
The chart will also be interpreted by many as showing that the US should spend more, since many citizens – who have just demonstrated they have no clue what we are currently doing – theoretically have a tolerance for more spending.
I suspect these polls just suggest that most people have a hard time comprehending very large numbers. In fact, public opinion figures on foreign aid correspond closely to another maligned area of federal spending: space exploration. In a 2007 poll, respondents apparently thought 24 percent of federal spending went to NASA, while the real number is also…less than 1 percent.
If this bit of innumeracy is just a natural human failing, perhaps it is related to what’s known in psychological research as the availability heuristic: when a rare event makes a vivid impression, we overestimate its likelihood. Maybe powerful images of earthquake survivors receiving aid in Haiti or a rocket launch remembered from childhood bias us to think these types of events are more frequent, more costly, or more significant in the context of overall spending, than they really are.
Questions About U.N.’s Poverty Goals
“Progress always starts with the people who are easiest to reach,” said Rudolf Knippenberg, a principal health adviser at Unicef, suggesting like many experts that the United Nations goals had generally not been met because they focused more on numerical averages than on the most destitute.
“The best way to pursue the goals is to start with the most difficult people,” Mr. Knippenberg said. “You have to take the lower 50 to 60 percent of the population. The groups reached last are the groups with the highest number of deaths.”
Many experts place blame for such disparities on the lack of a blueprint. Like most United Nations documents, the latest agreement involved weeks of wrangling. For example, Syria wanted to insert five mentions of Israeli occupation of the West Bank and Gaza Strip since 1967 having seriously slowed Palestinian development there, diplomats said, which the United States sought to block. In the end, one paragraph referred to it in a generic manner.
“There is no plan of action to complement what will be agreed upon,” said Jeffrey Sachs, the Columbia University economist who, as the special adviser to the United Nations secretary general on the goals, serves as the chief global cheerleader for them. “There is a difference between lurching forward on good intentions and a range of unconnected initiatives versus having a high priority plan.”
Mr. Sachs is particularly scathing about the lack of new aid money from the Obama administration to meet the goals, accusing the president of promising as a candidate to make the goals American policy and basically ignoring them ever since.
“To spend $100 billion on Afghanistan this year and at the outside $10 billion for 800 million people in Africa is a serious foreign policy mistake,” Mr. Sachs said.
This is all well and good, and I know a lot of people really like to think of Jeffrey Sachs as the economic messiah, but I do have to take issue with the way development issues are presented. We keep bringing up how much money is being set aside for development, but not how the money is used and what organizations on the ground are going to have control over it.
I’m reminded of something I read in The Invisible Cure: “At least 60 percent of US foreign-aid funding never leaves the United States, but is instead spent on overhead, travel, and procurement of American-made cars, computers and other equipment, as well as salary-and-benefit packages so generous that just one of them would be enough to feed, clothe and educate hundreds of African children for years. Some of the money that arrives in Africa is well spent, but much of it is wasted on ill-conceived projects designed by foreign technocrats with little sense of African realities. In the high-stakes scramble for funding, the best projects—those that truly meet the needs of local people so that they can eventually support themselves—are often overlooked.”
South Sudan: Pointing Fingers, Placing Blame
From Reuters Alertnet, excerpt:
The Financial Times headline sounds the alarm: “Fury at unspent funds for Sudan.” It seems that donor governments are furious at the World Bank for spending only $181 million out of the $524 million in donated funds from the fund it manages to support the recovery and development of local communities in south Sudan. After twenty years of war and five years of relative peace, the failure to provide adequate assistance to refugees and internally displaced people as they return to their war-torn villages, is one of the primary reasons why south Sudan remains one of the poorest and most vulnerable places on the planet.
But let’s probe a little further here. Beating up on the World Bank is probably quite satisfying, but the donor governments involved need to hold up a mirror to themselves. First, expecting the World Bank to disburse funds for local development quickly is the equivalent of expecting an elephant to ice skate; it’s just not built to do that. Second, if donors are so anxious to see funds spent quickly, why didn’t they commit their own funds to aid groups and local governments, where the capacity exists, to respond to the needs of people as they begin to re-build their communities? Establishing the World Bank managed Multi-Donor Trust Fund in the first place, was a cop-out to cover up the donors’ own collective lack of institutional means and capacity to make a smooth transition from emergency funding to support for recovery and long-term development.
world aid to haiti, bubble size is dollars per capita GDP. click thru for interactive version.
