‘Tied aid’ is better than no aid

Published: February 26, 2016
The writer holds a PhD from the University of Melbourne and is the author of Development, Poverty and Power in Pakistan, available from Routledge

The writer holds a PhD from the University of Melbourne and is the author of Development, Poverty and Power in Pakistan, available from Routledge

The shortest answer to the question of whether it is a good idea for European nations to scale back their international aid commitments to meet the costs of hosting the influx of refugees into their countries from conflict-torn countries like Syria or Iraq, is ‘no’. To help better understand why any scaling back of existing international aid commitments will be bad news for not only countries which are recipients, but also for those who are major aid donors, requires us to step back and think of the bigger picture. Before commenting on rechannelling aid to address the refugee crisis, one needs to understand how the use of international aid works, or doesn’t.

For  decades, increasing amounts of foreign aid has been allocated for the purpose of achieving the goal of development across countries in Asia, Africa and South America. Despite the more recent entrants to the international development arena, such as China or the Gulf states, the most prominent international aid donors include European nations, Japan and the US (leaving aside the Soviet bilateral aid to its allies within the Cold War context). Billions in development aid is still channelled annually to different developing countries through the bilateral commitments of major donor agencies such as the United States Agency for International Development, the UK’s Department for International Development, the Japanese International Corporation Agency, and the Canadian International Development Agency.

While in dollar terms the amount of international aid seems impressive, rich countries allocate a meagre proportion of their wealth. In fact, most wealthy countries, with the exception of Scandinavian countries and the UAE, in recent years, have not been able to keep their pledges (some of which were made back in the 1970s) to dedicate 0.7 per cent of their annual national income to providing aid to countries which need it.

Still, at least, international aid contributions have been growing in recent years. In 2014, the total amount of aid contributions by the world’s richest states increased to an all-time high of $135 billion. While one would imagine that this upward trend in aid contributions is great news for alleviating poverty and deprivation around the globe, such an assumption would be misleading. Although 2014 saw international aid contributions grow to a record level, the annual contributions to the least-developed countries actually fell by 16 per cent from the year before.

While the provision of international aid is accompanied by much rhetoric of goodwill, the reality of aid provision is tied to several vested interests. Rather than being disbursed on the basis of humanitarian need alone, it is more often used to influence developing countries to achieve the geo-strategic interests of donor nations and also to compel them to undertake economic reforms such as opening up their markets to an established international economic order.

Another major problem with international aid is that rich countries often allocate a substantial amount of their foreign aid budgets to stimulate their own economies by purchasing expensively sourced goods and services for development projects from within their own countries. There have been demands to move away from this concept of ‘tied aid’, but doing so in practice has not been easy.

Given this scenario, it is now easier to understand the current compulsion of European nations to cut back their existing international aid commitments and to divert these funds to meet the cost of the ongoing refugee crises.

International civil society organisations are protesting signals from within the European community to deflect aid meant for poor countries to host refugees who have managed to cross their domestic borders. They are rightly warning that such a move would be a big blow to the global fight against poverty and inequality. Moreover, any decrease in aid commitments under an already flawed aid system will make achieving global development goals more difficult and exacerbate not only human suffering, but also conflicts and economic desperation, which in this globalised world, will only lead to an increase in not only refugees but also economic migrants, desperate to get across into the richer countries of the world.

Published in The Express Tribune, February 26th,  2016.

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