Fri, Jan 18, 2013 - Page 9 News List

Aid to developing countries can work

Far from creating dependency, strategic assistance from the West can help developing countries to help themselves

By Larry Elliott  /  The Guardian

Illustration:Mountain People

A lot of water has passed under the bridge since Britain hosted the G8 summit at Gleneagles in Scotland in July 2005. Life was sweet when the leaders of the world’s most powerful Western economies pledged themselves to debt relief and aid to help poor countries. Growth was strong, asset prices were rising and the financial crisis was two years away.

This year it will, once again, be Britain’s turn to chair the G8, but the mood will be quite different when leaders meet at Lough Erne in Northern Ireland this summer. The talk will be of “fiscal cliffs,” the euro’s struggle for survival, high energy prices and the struggle to ensure financial solvency. One thing is certain: There will be no repeat of the commitment to double aid within five years. Money is tight.

Back in 2005, the pressure on then British prime minister Tony Blair came from only one source: the Make Poverty History (MPH) coalition that saw Gleneagles as an opportunity to cajole the G8 into making binding pledges on development. British Prime Minister David Cameron has a more difficult task this year — for in addition to the lobbying by MPH2, he is coming under fire from aid skeptics who challenge the logic of a government that is cutting public spending at home and massively increasing public spending abroad.

The thrust of the argument from the anti-aid lobby is as follows: Aid does not work because it traps countries in a culture of dependency. Much of it is either wasted or siphoned off by corrupt regimes, so the taxes of poor people in rich countries ends up bankrolling the lavish lifestyles of rich people in poor countries.

In Britain, lobbying by powerful and arrogant charities has led to an increase in the aid budget so big that the Department for International Development (DFID) does not know what to do with its embarrassment of riches. Aid has become a gigantic racket and should be pared back to genuine humanitarian relief. That will leave space for the private sector to power development, the only sure way for countries to escape poverty.

The anti-aid lobby is livid that Cameron, British Chancellor of the Exchequer George Osborne and Secretary of State for International Development Justine Greening are making good on the promise made by the last Labour government to this year raise the aid budget to 0.7 percent of national income. Given the precarious state of the UK’s public finances, the assumption was that the prime minister and his cabinet colleagues would eventually renege on the pledge. They deserve credit for not doing so.

Here is why. First, the anti-aid brigade mounts what is largely a straw man argument. Nobody at the DFID, Oxfam, the World Bank or any other body involved in development would ever say that aid alone is the answer to tackling poverty. It has always been seen as part of the solution, along with the right macroeconomic policies, private sector investment, boosting trade and, in Africa, encouraging regional integration.

Second, both sides of the aid debate would agree on the need to tackle waste and corruption. Conservative ministers here have been acutely aware of the need to maintain public support for a rising aid budget during a period of austerity, which was why Greening’s predecessor, Andrew Mitchell, undertook reviews of bilateral and multilateral spending and insisted on better value for money.

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