1. HS4331 – International Health Theory Oct 6, 2008 - The Nature of Foreign Aid. Classes.deonandan.com

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3. AID Two kinds of foreign aid: – Humanitarian aid: primarily for emergency relief – Development aid: aims to create long term improvement in… Health Economic wealth Other indicators of development – Eg, human rights – Eg, education levels – Eg, government stability

4. AID Two distribution models: – Bilateral aid: given by the government of one country directly to another. – Multilateral aid: given from the government of a country to an international agency.

5. AID mediumWhat type of aid is this? World Bank CIDA IMF USAID multilateral bilateral multilateral bilateral Note: The term “aid” is misleading, because almost all the World Bank and IMF “aid” is in the form of loans

6. Terminology ODA = Official Development Assistance – It’s what we usually mean by official foreign aid GDP = Gross Domestic Product – total market value of all final goods and services produced in a country in a year – Traditional way to measure the size of an economy GNI = Gross National Income – GDP + [income received from abroad, e.g. investment interest] – [similar payments made to other countries]

7. Other (Debatable) Aid Categories Private aid – Money given by private citizens to charities, which then effect aid Remittances – Money sent home by foreign workers – World Bank estimates $1.2 billion transferred to developing world via remittances in 2004 -free of government political agenda -may reflect personal agendas (eg religious) -IMF thinks this may have neg. effect on economies -remittances used by private families, not countries

8. Specific Types of Aid Project aid: given for a specific purpose e.g. building materials for a new school. Programme aid: given for a specific sector e.g. funding of the education or health sector of a country. Budget support: A form of Programme Aid that is directly channelled into the financial system Sectorwide Approaches (SWAPs): A combination of Project aid and Programme aid/Budget Support e.g. support for the education sector in a country will include both funding of education projects (like school buildings) and provide funds to maintain them (like school books). Food aid: Food is given to countries in urgent need of food supplies, especially if they have just experienced a natural disaster. United Aid: The country receiving the aid can spend the money as they chose. Tied Aid: The aid is used by the country donating it to build infrastructure, purchase goods etc. Technical assistance: Educated personnel, such as doctors are moved into developing countries to assist with a program of development. Can be both programme and project aid. Emergency aid: This is given to countries in the event of a natural disaster or human event, like war, and includes basic food supplies, clothing and shelter.

9. Humanitarian Aid Humanitarian aid is material or logistical assistance provided for humanitarian purposes, typically in response to humanitarian crises The primary objectives of humanitarian aid are to save lives, alleviate suffering, and maintain human dignity. – (c.f. development aid, which seeks to address the conditions that may have brought about the crisis)

10. Humanitarian Aid The Sphere Project was launched in 1997 to define a minimum set of standards for humanitarian assistance – Care International – Caritas Internationalis – International Committee of the Red Cross – International Federation of the Red Cross – Oxfam – MSF – Etc

11. Humanitarian Aid Sphere Project – produced the handbook, Humanitarian Charter and Minimum Standards in Disaster Response – Download it from here: www.sphereproject.orgwww.sphereproject.org Decided upon 3 fundamental principles of humanitarian assistance: – The right to life with dignity – The distinction between combatant and non- combatants – The principle of “non-refoulement”

12. Humanitarian Aid Sphere Project – “non-refoulement” A principle in international law –specifically refugee law– which concerns the protection of refugees from being returned to places where their lives or freedoms could be threatened. Not the same as “political asylum”, which is the idea of protecting individuals with proven threats to their safety; rather, it involves large populations, generally in war zones or after disasters Essentially, it forbids the repatriation of people to a place where they will again be subjected to persecution

13. Development Aid Origins: – Harry Truman, at end of WWII: “...In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people.“

14. The previous speech was given at the founding of NATO (North Atlantic Treaty Organization). What does this suggest? Aid is often linked to other foreign policy agendas, including security

15. Let’s not forget… Canada’s #1 recipient of foreign aid is: The USA’s #1 recipient of foreign aid is: Afghanistan Iraq

16. Criticism of Aid Criticisms of intent: Aid is seldom given for reasons of pure altruism Often given as a means of supporting an ally Often given as a means of influencing the political process in a recipient country Aid by capitalistic organizations, like the World Bank and IMF, seen as only meant to open up new markets for Northern countries

17. Criticism of Aid Criticism of effectiveness: Much foreign aid is “stolen” by corrupt bureaucrats in recipient country Much foreign aid is “stolen” by corrupt bureaucrats in donor country – Too much aid is absorbed by administration in donor country No evaluation process, so we don’t know what “good” we’re actually doing Are we getting enough “bang” for our buck?

18. More Criticism of Aid Ideology – Many aid programmes are ideologically driven, and not scientifically based Focus on faith-based interventions Focus on free market economics Debt – Because so much aid is given in the form of debt, it actually causes more damage in the long term by increasing the indebtedness of recipient country

19. Example of Agenda-Stricken Aid The Marshall Plan -post WWII (1947) -named for US Secretary of State George Marshall -plan for the US to fund the rebuilding of Europe, to make her profitable and better able to fend off Communism in the future -resulted in a very strong and wealthy Western Europe Criticism: -not altruistic, but an attempt to gain control over Western Europe, as the Soviets gained control over Eastern Europe -not effective, since nations with biggest investments (Britain, Sweden, Greece) saw least growth, while those with smallest investments (Austria) saw most growth

20. More Criticism of Aid James Shikwati (Kenyan economist): – Aid is ultimately damaging since in almost all cases of bilateral aid, the money is given to corrupt leaders to disburse, resulting in skewed distribution and damage to the local economy – Aid used by (African) politicians to manipulate people and influence votes – Food aid dumped at low cost on peasants, killing the indigenous food industry – Libertarian – Believes more trade is best way to alleviate poverty

21. Opposing View Jeffery Sachs (American economist): – “Africa’s governance is poor because Africa is poor” – 2005 report (hwww.unmillenniumproject.org/reports/fullreport.htm) Calls for increased development aid Calls for reallocation of aid priorities – Essentially opposite view to Shikwati’s: that we need to overwhelm poverty with serious aid commitments – Read interview with him here: www.motherjones.com/news/qa/2005/05/jeffrey_sachs.html www.motherjones.com/news/qa/2005/05/jeffrey_sachs.html

22. Opposing View To The Opposing View William Easterly (another American economist): – Read his response to Sachs’ plan here: www.washingtonpost.com/wp-dyn/articles/A25562- 2005Mar10.html – Read his on-going correspondence war with Sachs here: www.nyu.edu/fas/institute/dri/Easterly/SachsDebates.htm – “Poverty never has been ended and never will be ended by foreign experts or foreign aid. Poverty will end as it has ended everywhere else, by home grown political, economic, and social reformers and entrepreneurs that unleash the power of democracy and free markets.”

23. Why Do We Have Aid? Is it for altruistic purposes? – We want to do good in the world Is it for strategic purposes? – We want to develop foreign markets for our products – We want to bribe foreign governments to obey our wishes – Reward our friends, punish our enemies – Prevent the creation of refugees, terrorists, disease Is it for image purposes? – No one wants to look cheap Is it for domestic purposes? – International development is a multimillion dollar industry – Keep highly paid consulting firms in business

24. Foreign Aid per capita, 2007 (from nationmaster.com) -government aid only

25. Foreign Aid per GDP, 2007 (from nationmaster.com) -government aid only

26. 0.7% In 1969, Prime Minister Lester Pearson wrote a report for the World Bank called “Partners in Development” Recommended that all developed nations should give 0.7% of GNI as foreign aid (ODA) In 1970, the UN passed a resolution under which almost all developed nations agreed to the 0.7% commitment

27. 0.7% cont’d By 2005, the average committed nation was donating 0.47% of GNI Canada was donating 0.34% Canada’s highest donation was in 1975, when we gave 0.53% Countries who have met their commitments: – Denmark (0.85%) – Luxembourg (0.83%) – Netherlands (0.73%) – Norway (0.87%) – Sweden (0.78%)

28. From: www.tbs-sct.gc.ca