Foreign aid: Cameron's cunning plan.............

Why is Cameron so wedded to his foreign aid policy? There is little in his life or career that suggests a dedication to helping the poor, the sick, the lame and the lazy. This must be a major vote-loser amongst a baffled public.

 

The aid budget has been ring-fenced, protected by statute so that the Chancellor can’t cut it. It has been increased by a massive 37% which DFID does not have the institutional capacity to spend and is parking funds with the World Bank, and all at a time when other budgets are suffering swingeing cuts.

 

Most worrying of all is the blood-letting at Defence.

 

We live in an increasingly dangerous world, one that is far more threatening than the Cold War because the enemies of the west are shadowy and widespread.

 

And yet the army is at its lowest ebb since before the Napoleonic War, the Royal Navy is the smallest since the far-off days of Henry VIII (for the first time in history we have no warship stationed in British waters), and important parts of the RAF strike force are grounded because so many technicians have been made redundant.

 

Aid is a stimulus for corruption and the public service in ‘developing’ countries is largely corrupt.

 

The cause is that they are badly paid. When I asked the Permanent Secretary of a major Ministry in Bangladesh why corruption was the order of the day, with ten stages of ‘rent-seeking’ to get a simple licence, he replied that he had an Oxford degree but his pay was only £150 a month. He owned a luxury house in the expat cantonment.

 

They are badly paid because tax revenues are low due to poor collection efficiency.

 

There is little incentive to improve because foreign aid provides the cash. In doing so, it severs the nexus between Government and taxpayer, so corruption is not the political issue it would have been if it was the voter whose pocket was being picked. It’s foreigners’ money, after all.

 

There is an apocryphal story about exchange visits by two African Presidents.

 

The host showed his guest a new freeway which finished in a dead end.

 

‘Why did you build a road to nowhere?’ asked the guest.

 

‘10%’ said the host, tapping his nose.

 

On the return visit, the host showed him his new road. It didn’t exist.

 

‘Why are you showing me a road that doesn’t exist?’ asked the guest.

 

‘100%’ replied the host, tapping his nose.

 

Quite so.

 

Donors do not seem overly concerned.

 

One of my Cabinet Office duties in a ‘developing’ country was to scrutinise financial proposals by consultants bidding for projects, and to appraise tenders on a ‘value for money’ basis.

 

Not only did the donor organisation never once make any inquiry about this, but never came to my office to have a look at the books. And despite have a large office in the capital, they had delegated the financial oversight to another country’s office (whom I never saw or spoke to).

 

Despite massive evidence to show that aid has failed except in creating kleptocracies, Cameron persists. There must be a discrete back-story here.

 

The first inference is that aid is not about development at all. It is about buying political influence. If aid accounts for 36% of total government revenues, as in Malawi, the donors can dictate.  Withdrawal of aid, as the UK government has done twice recently, will bring the country to a virtual standstill.

 

It is likely that Kaunda was forced into multi-party elections in Zambia by the threat of aid withdrawal at a time when the state of the economy was dire.

 

Kamuzu Banda similarly may have agreed to elections in Malawi that were ‘free and fair’ (which they were: I was a supervisor!) under the pressure of the donors.

 

Aid is a powerful instrument of foreign policy. If it doesn’t achieve its avowed objective of improving the lot of the poor, that is not of primary consequence.

 

At least not to Dave.