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Another false dawn for overseas aid

Adam Parsons
06 April 2007

The latest overseas aid figures will be no suprise to the developing world. Broken promises will continue to make newspaper headlines until the deeper contradictions and biases of the current economic approach are addressed.

Headlines this week on the ‘lack of charity’ and ‘broken promises’ of rich countries on aid donations may be no surprise to the millions of impoverished families across the developing world. According to the publication of the 2006 overseas aid figures by the OECD, aid fell by nearly $6bn last year, overall aid decreased by more than 5 per cent, donations from the Group of 8 countries fell by almost 9 per cent compared with 2005, and aid is likely to decline further this year before rising once long-term pledges kick in.

An editorial in the Guardian UK called it the ‘false-dawn syndrome’ in the world of development; no sooner do politicians hail the reaching of a great milestone, it points out, than their referees in non-governmental organisations decry their failure to deliver. At best, the OECD labelled the figures last year as ‘static’, endangering the commitment to add $50bn a year to global aid by 2010. 

Whilst many campaigners warn that the G8 agreements made in 2005 are “rapidly unravelling”, many others are again questioning the broader ideology of a system driven by the blind pursuit of economic growth, by the global dominance of a handful of affluent nations, and by a lack of redistribution that sees more billionaires created this year than ever before, whilst 45% of the world’s population still struggle to survive on less than $2 per day.

The pledge to increase aid funding by $50bn over five years was made in Gleneagles, Scotland, in 2005, when British Prime Minister Tony Blair hosted a meeting with other leaders of the G8 – the United States, Japan, Germany, France, Italy, Canada and Russia. Half of the rise in aid, it was agreed, would go to Africa, with the aim of doubling the fund flow to the continent by the end of the decade. The proposals were part of the agreed Millennium Development Goals (MDGs) put forward by the economist Jeffrey Sachs, which included a global commitment to the eradication of extreme hunger by 2015. 

On Tuesday, however, the OECD reported that not only was African aid from rich countries ‘static’, but some of the richest countries were the stingiest of all, with the US – whose economic size ensures its contributions are the largest – cutting what it gives by a fifth. Far from the 0.7% of GNI needed to meet its Millennium Development Goals, aid now amounts to just 0.17% of America’s national income. Jeffrey Sachs, speaking to the Financial Times UK, said; “By design, to avoid accountability, the G8 refused to put forward clear and predictable year-by-year commitments towards 2010.”  

Meanwhile, many newspapers in London reported on the ‘good news’ of a 12.6% increase in UK aid to poor countries last year, the only G8 country that is likely to be on track to meet it’s promises – providing it continues to deliver similar increases over the coming three years. Even this amount, which now makes Britain the second biggest donor to overseas development aid, represents the equivalent of a cup of coffee a week for each person living in the UK. The announcement also comes just after the governments own figures show that overall poverty has risen in Britain for the first time since Tony Blair came to power in 1997, at a time when they plan to spend $150bn on the replacement of a nuclear missile system. 

“Aid works,” says Oxfam, citing the doubling of Tanzania’s education budget over the last four years and the substantial increase in its health spending. But could it be that the developmental plans for reaching the Millennium Development Goals are mired by the very system the goals exist within? Even if the goals are achieved within the given timeframe, 900 million people will still have an income of less than $1 a day by 2015. 

On the same day as the OECD figures were released, a report from the United Nations food agency put the world situation in context; despite projections of a bumper grain crop this year, thirty three countries will still not have enough food, with Iraq, Zimbabwe, and a majority of countries in Africa the hardest hit. The mentioning of Iraq was not without tragic irony; the aid total for 2006 included $14 of debt relief to Iraq and Nigeria, a sum that Oxfam calculates is really worth only $1bn. Debt relief – which in Iraq’s case means paying off loans that they are currently incapable of servicing – is only of questionable benefit to those who receive it, one of many examples of tied or ‘self serving’ aid. If debt relief had not been included in the OECD figures, a charge that was loudly rallied by campaigners upon the release of the figures last year, then the overall totals would have fallen even further.  

“No wonder that so many people have grown so sceptical of the aid business,” writes the Guardian. “Go to the development shelves in a local bookshop and you will find a host of new volumes by academics and practitioners questioning aid’s efficacy.” What few academics or practitioners really question, however, is how the current economic system, whose structure is increasingly organized around the profit motive, will ever be capable of alleviating extreme poverty, let alone the conditions of general poverty that afflicts almost half of humanity. 

Sometimes hope can come from the unlikeliest of places, such as a recent poll published in the Wall Street Journal. It discovered that only 35% of those with at least a four-year college degree believe “that the U.S. is benefiting from the global economy” – and these are the people most likely to be the ‘winners’ in an unequal world. “The issue, in this light, isn't whether trade makes the world as a whole richer,” wrote the Journal. “It does. The issue is the distribution of those gains.”