Liberal Vision

Famine, like aid, is political

In today’s WSJ development economist and Aid Watch blogger, William Easterly, reviews Peter Gill’s new book on Ethiopia since Live Aid, “Famine and Foreigners”. Well worth reading if only for Easterly’s concise, but tragically accurate, summary of Ethiopia’s perpetual trouble with food insecurity over the last few decades:

“If it were possible to sum up in one sentence Ethiopia’s struggles with famine over the past quarter-century, I’d suggest this: It’s not the rains, it’s the rulers. As Peter Gill makes clear in his well-turned account of the country’s miseries since the 1984-85 famine and the Live Aid concert meant to relieve it, drought has not been as devastating to Ethiopians as their own autocratic governments.”

Unfortunately, many western NGOs find it inconvenient to recognise this fact and continue to tow the donor-friendly line of “climate change” as the primary causal factor for food shortages in the developing world. Great for western public relations, less helpful for the average Ethiopian, who would probably prefer to be given the opportunity to own land, trade freely and drag themselves out of poverty, than see foreign aid spent on useful projects like this, or this.

The last “naturally” caused famine in Northern Europe occurred in Finland in 1866–1868. The cause? Climate change, of course: unusually wet summer in ’66, then exceptionally harsh winter and spring in ’67. The actual cause: Poor infrastructure and communication linkages restricted trade and when it became evident a crisis was mounting the Finnish government refused to borrow money from abroad for fear of devaluing its newly introduced currency. By the time Rothschild’s came to the rescue with loans, it was too late and almost 15 per cent of the population was to perish.

Thankfully today, most of Europe has moved beyond oppressive systems of governance capable of starving entire populations for political reasons. The ability to exchange goods freely and the incentive, through ownership, to develop, improve and protect land helps to mitigate the effects of climatic fluctuations.  Ethiopians are intentionally prohibited  these luxuries. And their citizens are unlikely to benefit from the continued tunnel vision of western  NGOs, rock stars and governments intent upon perusing, and funding, their own agendas. Gill and Easterly recognise this: DfID, with its donation of £132m in bilateral aid to the Ethiopian government  in 2009, seems not to.

Shameful UN need reprimanding by the coalition

International development invariably raises some complex issues but periodically we come across an example of the international community acting in a totally indefensible manner. No shades of grey here- this is morally and politically abhorrent. I am referring to the United Nation’s decision to continue with a controversial prize established in “honour” of Equatorial Guinea’s notorious dictator Obiang Nguema.  If the government wants to get serious about development it must be seen to be outspoken and forthright about such travesties.  Furthermore, the Liberal Democrats must not shirk their responsibility to make their voices heard on issues like these across all departments during this coalition.

The UNESCO-Obiang Nguema Mbasogo International Prize for Research in the Life Sciences is supposed to be awarded “for scientific research in the life sciences leading to improving the quality of human life.”

The “quality of human life” under Obiang’s regime is a disgrace. According to the World Bank, GDP per capita is $28,103 (richer than Israel), but 77 per cent of the population still live below the poverty line. Part of the problem is that all funds received from the country’s extensive oil reserves pass through Obiang’s personal bank account to prevent “misallocation of funds”. Naturally he has invested wisely for the benefit of the people:  Global Witness report that his son purchased a $15,000,000 Californian mansion in 2006 and that the family owns three Bugatti Veyron cars (each retailing for over $1 million each) along with a healthy compliment of Ferraris, Maseratis, a Rolls or two and the obligatory presidential jet. Not a single free and fair election has taken place since he assumed power in 1979 (Africa’s second longest serving living dictator) and one in three Equato-Guineans  die before their 40th birthday. Corruption, human rights abuses and systemic torture by government officials are reported as being routine practice.

But none of this need concern the UNESCO bureaucrats in Paris who will take half of the dictator’s $3 million donation for “administrative fees” to help them identify worthy winners of this prize. It is perversely ironic that the United Nations, which claims to be in pursuit of  a “better world”, should explicitly endorse, and be in the pocket of, one of Africa’s most repressive and corrupt dictators. The Equato-Guineans suffering daily are unlikely to appreciate the irony.

The UK carries a lot of weight in the international development community and, while Andrew Mitchell controls the development portfolio, this is an issue that should transcends briefs and party divisions. Michael Moore and Norman Lamb  are among those on the Lib Dem benches who have been honourably outspoken about the scourge of corruption upon development before. It’s time for their voices to be heard again. Removing one prize fund won’t change the world overnight- but not doing so sends a terrible message to some of the world’s worst abusers of power.

Aid spending targets are simply wrong

Politicians generally disagree. Don’t be fooled by Brown’s recent nauseating sycophantism towards Clegg - in reality cross party consensus is very difficult to achieve. Banker-bashing aside, there are very few things that all three parties actually agree on and even fewer that they’d be prepared to admit.

But, there is one idea on which all three parties do agree on, and unfortunately it’s a shocker. All three parties have agreed in their manifestoes (Cons, Lab, Lib) to make it a legal obligation to spend 0.7% of national income upon foreign aid by 2013. This will cost an extra £2bn a year, according to the latest figures, and so nearly slipped under the election radar. However, thanks to The Times who picked up on report released today by International Policy Network, the stupidity of this proposal has now been exposed.

Now, before all the “pro-aiders” choke on their organic soup and reach for their recycled tissues, please wait. This isn’t an anti-aid rant. In fact the report doesn’t offer any recommendation on how much should be spent, but instead focuses on the stupidity of fixing aid spending to a specific target- any target.

It makes no sense whatsoever: Using input targets to determine spending is backwards. If a funding shortfall is the issue, it would be logical to look at how much money is needed rather than how much the UK can afford to give. As the The Times notes, “the oddity of deciding how much a poor country needs from the size of a rich one on the other side of the planet.”

What’s more, as the report comprehensively explains, the 0.7% target itself  was formulated as a lobbying tool almost half a century ago using now discredited methodology. The same method with today’s figures shows a capital “need” far below current UK spending on aid. And this highlights another problem with using targets- the developing world is always changing. Since this target was first proposed India and China have pulled half a billion people out of poverty, the economic landscape of the ex-Soviet republics has changed beyond recognition and Geldof has had at least one hair cut. Fixing aid spending denies the reality that people can, and do, pull themselves out of poverty and away from aid dependence.

Unfortunately it looks as though all three parties have neglected to scrutinise this particular lobbying tool, touted by that bellwether of bad ideas- Bono, and have blindly agreed to fix to an arbitrary target. At least one of them should know better.

EU to Africa: don’t develop, we’ll give you hand-outs instead

According to its website: “The EU provides over half of worldwide aid for development. It has committed to increasing this amount and ensuring it is efficient and effective.”

This all sounds very well and good, and certainly attempts to justify why the EU spends an amount equivalent to the total GDP of Croatia on aid every year. However, the Commission fails to document the many harmful measures it imposes on developing nations which perpetuate the impoverishment in the first place. Two of the more egregious examples I’ve come across this week:

1. Tariff escalation means that the more processed a product becomes, the higher the import tariff. This is designed to ensure that most imports into the EU are raw products like coffee or cocoa and most of the value-adding processes take place within the Union. If Arabica coffee is roasted in Africa, the import tariffs would be 100 or 120 percent. Great for European coffee roasting companies and confectioners who demand to be protected–not so great for developing world producers!
2. Secondly, EU countries refuse to allow African producers struggling with low yields to genetically modify their crops. Dr Sylvester Oikeh, manager of a drought-tolerant maize project for Africa, told a recent science workshop that EU countries opposed use of gene transfer technology to improve food production in Africa because Europe had enough food. “They (EU) tell African countries that export cotton to them that ‘if you grow genetically enhanced cotton, we will not buy [it]’.” Hardly seems fair, seeing as EU members are quick to adopt genetically modified medicines to help their aging populations.

EU trade policy is hugely damaging for markets in developing countries. From CAP subsidies to import tariffs and hypocritical production restrictions, the EU needs to get serious about allowing developing countries to develop–and not by giving money with one hand, and taking away trade with the other.

Gordon Brown: inputs = success

Rousing stuff from Gordon Brown in the Independent, where he announced draft legislation enforcing the UK to hit and maintain the United Nations target of 0.7 per cent of national income to be spent on aid each year:

“In conscience and in our own self-interest, for their sake and ours, we dare not fail. We must act now to give the entire world back its future and its hope.”

What he actually meant was:

“In the interests of DfID’s many conscientious bureaucrats, for their sake and mine, this government dare not fail. I must act now, to spend more tax payers’ money, giving hope to the legion of NGOs, charities, trade unions and self-interested government officials who rely on DfID for their future.”

If the past four decades of Overseas Development Assistance (ODA) have taught us anything, it is that it has been monstrously ineffective. No one is advocating scaling down emergency relief efforts (such as the Haitian response, which has prompted the latest bout of ministerial soul searching), nor are they advocating restricting private aid flows, such as remittance payments or charitable projects. What they are right to question is the efficacy of ODA, distributed by DfID to the tune of £6.3 billion in 2008, in tackling poverty in the developing world.

So far it has been a disaster: despite over $1 trillion in aid since 1960, Africans are poorer now, than they were forty years ago. The money simply does not reach those who need it. Worryingly it is estimated that 40 per cent of Africa’s military spending is inadvertently financed by aid (Collier: 2007). It seems unlikely that increasing aid flows to an arbitrary amount set by the UN in 1970 will change this–not to mention the oddity of linking aid expenditure to national productivity. It rather smacks of medieval church donations: “we don’t care how much you give–as long as it’s more than you can afford.”

The last forty years has demonstrated that pumping aid money into faltering economies simply doesn’t work. Brown and Cameron want to re-test this theory by throwing another £10 billion annually at the problem (0.7% of national). Not only will this not work, but it is a terrible idea to judge projects upon the size of their budgets rather than the outcome of their endeavour. Et tu, Clegg?

Africans: “We need trade not aid”

Africa remains the world’s poorest continent with the world’s worst employment opportunities. The International Labour Organisation estimates that up to 99 per cent of African employment is informal–outside of the fiscal system.

The situation is dire and imposes increasing  costs on taxpayers in donor states. In 2008 Labour spent £6.3 billion on Overseas Development Assistance and the Conservatives have pledged to increase this by almost £4 billion.

In times of economic hardship £10 billion spending pledges need to stand up to scrutiny. But this one does not. Four decades of development “assistance” and trillions of dollars in aid have done little to improve the situation in Africa. In fact, Africans are poorer now than they were forty years ago. Over 60 per cent survive on less than $1.25 a day, and one in four African children under the age of 5 are malnourished. Surely, by now it should be evident that this system of aid is not working? Money continues to be wasted on top down aid projects that, at best, do little to appease the underlying causes of the poverty. At worst they actually aggravate the situation by undermining local businesses and legitimising corrupt regimes.

There are a few dissenting voices. Outnumbered by well heeled NGO lobbyists, some economists are daring to incur the wrath of the Department for International Development’s (extensive) advocacy department and are speaking out. Articles like this recent editorial in the Kenyan Daily Nation reflect what many Africans are thinking; that freedom to trade is the surest route out of poverty. To borrow a phrase from another African tired of witnessing the futility of pumping good money after bad, Dambisa Moyo, “there is no doubt–we do want to help.” But help does not come in the form of DfID handouts; it comes from allowing Africans to do what has enriched the rest of the world–trade.

[For fuller accounts see 'The White Man's Burden' by William Easterly and 'Dead Aid' by Dambisa Moyo - Ed.]

Aid “for Trade” is pointless amid corruption

While funds continue to be pumped into Africa through Aid for Trade programmes (to the tune of $9.5 billion in 2007), African governments continue to stifle their own businesses by imposing restrictions upon the movement of goods through the region.

A recent article in the Vanguard News (Lagos) details how debilitating delays to traffic are caused by Nigerian government officials extorting money, in the form of taxes and fines, from traders. It’s a common story, has even become a stereotype of much of the continent, yet sadly remains true. This heavy handed government action renders Nigerian businesses uncompetitive–delaying their goods and increasing their costs compared to foreign competitors.

Historically, the response of the government in Nigeria has been to increase import duties to “protect” their domestic industries. This results in higher prices for the average Nigerian as they have to pay more for their goods and services. The sad irony is that the reason many Nigerian businesses aren’t competitive in the first place is because of these detrimental government interventions in their business activities. Thus the vicious cycle continues–businesses crippled by their own governments plead for further protection against competition from abroad.

African governments need to stop looking to aid agencies for hand-outs and start allowing domestic companies to do their good honest business.

This, Mr President, is how your government will “build a nation”

The story, in short:

A consultancy in London provided this nation-building plan to the Pentagon. Wonderfully it ended up online (still available, here).

A quick visual of the plan to build a new nation of Afghanistan…

STEP 1: Look for support! Yes, this is your “Popular Support”

Step 2: Ah, but these strange A-rab folk are a bit different to us, yes? What about their “Conditions, Beliefs & Structures”? Better shove them in.

Step 3: But ugh, the insurgents! And all those poppy fields. Better shove them in ‘n’ all…

Step 4: Right, there might economists in the room. Mention infrastructure and the economy and stuff…

Step 5: Not to mention the ‘public sector workers’. Fit them in somewhere…

Step 6: And the Brits, don’t forget them. You know, the ‘Coalition’, the other governments. Include the ‘Coalition’. Still following?

Step 7: Dammit, there’s still a gap left. Make something up…

Step 8: Add some colour. That’s better. But actually, what happens when all these things link together? Don’t we need to…

Step 9: …ah yes, that’s better. Everyone reading from the same hymn sheet now? Ladies and Gentlemen, the Development of Afghanistan Stability!

YES.

This will definitely work.

GOD BLESS AMERICA!

Hat-tip: Chris Coyne.