Features

The future of aid

Yash Tandon (2008-08-26)

http://www.pambazuka.org/en/category/features/50185

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The following is an excerpt from the concluding chapter of Yash Tandon's new book, Ending Aid Dependence, published by Fahamu Books, September 2008. For more information please visit, http://www.fahamu.org/publications.

For far too long the debate on development aid has been constrained by conceptual traps and the limitations of the definitions provided by the donors. If the recipients or beneficiaries of aid are to own the process, as present trends in the development literature suggest, then the conceptual reframing of the issues must itself change its location from the North to the South.

The conceptual starting point is not aid but development. The horse of development must be put before the cart of aid. Growth, admittedly, is an important aspect of development, and indeed there is no need to labour the point (as some orthodox economists and the World Bank attempt to do defensively). But growth is not the same as development. In this [book], we have defined development, following in the footsteps of Julius Nyerere, the founding president of Tanzania and the first chairman of the South Centre, as ‘a long democratic process, that starts “from within”, where people participate in the decisions that affect their lives, without imperial interference from outside, and aimed at improving the lives of the people and realisation of the potential for self support, free from fear of want and political, economic and social exploitation’. We put it as a formula: Development = SF + DF – IF, where SF is the social factor – the essential well-being of the people; DF is the democratic factor – the right of the people to participate in decision-making that affects their lives; and IF is the imperial factor – the right of nations to self-determination and liberation from imperial domination.

This is in sharp contrast to the mainstream orthodox economists’ definition as Development = Growth + Wealth accumulation, where Growth = Open markets + Foreign investments + Good governance (as defined by the West), and the wealth accumulation by the rich is assumed to ‘filter through’ to the poor by market- driven forces.

The most critical aspect of our definition of development is its political economy and historical context. The developing countries have gained their political independence, but in most cases they are still trapped in an asymmetrical economic, power and knowledge relationship with the former colonial powers that con- tinue to dominate the process of globalisation, and the institutions of global governance (the IMF, the World Bank, the WTO, WIPO, WCO, OECD, EU Commission, etc). The developing countries are making heroic efforts to disengage from this lock-in situation (demanding policy space, for example). Some of them (the so- called newly emerging industrialised countries of the South) have indeed succeeded or partly succeeded, but the bulk of the devel- oping countries are still trapped in the shackles of history. Africa, especially, is identified as a continent that has not fared well. From this trap, Africa and others can liberate themselves only if they take matters of development into their own hands – and do not leave it to aid and its delimiting and colonising conditionalities, such as the structural adjustment programmes of the IMF and the World Bank, and now the Paris Declaration on Aid Effectiveness.

In other words, the national project, the project for self-determination, is still on the agenda of political action for developing countries. Its counter, the imperial project, is also still alive, but gradually weakening. Its ideology – the Washington consensus and globalisation – crafted after the dominant paradigm of free market liberalism and Western systems of governance, democracy and the rule of law, has lost credibility and legitimacy. This is not to undervalue the importance of democracy or the rule of law. Without these there would be anarchy and oppression. But these values cannot be imposed on the developing countries from outside, and certainly not loaded on to the wagon called ‘development aid’, followed by sanctions against those who fall short of Western donor expectations. The experience of Zimbabwe, tragic in its consequences, is an example of the curse of Red Aid, swallowed by a government and a people who had sacrificed so much to win their political independence. It is for this reason that the case of Zimbabwe has been analysed in detail in this monograph.

The fundamental reason why the relationship between ‘aid’ and ‘development’ is not fully understood is because of the way both terms are defined in the OECD-DAC vocabulary, definitions which have also been adopted by the United Nations. These are self-serving, West-centric, value-loaded and arbitrary definitions. It is argued here, for example, that there is no good reason for excluding what I call Yellow Aid (or military and political aid) from the definition. This kind of arbitrary exclusion ignores the military and political assistance provided by countries in the South too, for example, the liberation of Southern Africa. Worse still, it places military aid under the carpet, outside of a rational discourse within its political and ethical context.

In this context, it is argued that the 0.7 per cent has acquired a ‘mythical’ status. It carries an ethical-moral dimension, and provokes a lot of passion, particularly among civil society and in the North. This is an understandable reaction from NGOs and civil society organisations that have a strong affinity with the South on grounds of solidarity, but they have an imperfect understanding of the structural problems with the aid architecture. For the developing countries, the 0.7 per cent is a weapon to hold the North to their promises, even when the last 40 years’ experience should have made them wiser. An extended and expanded version of the 0.7 per cent model is the ‘booster’ model of aid. This is based on the assumption that the resource gap in developing countries (in particular, Africa) should be filled by a massive dose of aid over a number of years until the countries take off, like an aeroplane. The proponents of both the 0.7 per cent and the booster models need to question the resource gap theory. They will then understand that the developing countries do not have a resource gap. It is a gap unwittingly or deliberately created, directly as a result of the activities of global corporations and the misdirected policies of the IMF and World Bank. The irony is that the booster aid is still packaged within the framework of the very conditionalities that are part of the problem and not the solution.

This monograph provides a new taxonomy for development aid – in five hues – in a more rational and comprehensive classification. Development aid is placed along a continuum from Purple Aid (based on solidarity) on the extreme left and Red Aid (ideological aid) on the extreme right. In between are Orange Aid (which is really not aid at all, and should simply be called commercial transactions); Yellow Aid (already explained above); and Green/Blue Aid (whose three components – the provision of global public goods, non-tied humanitarian and emergency aid, and compensatory finance – are segments of the totality of financial and technical and technological assistance that are genuinely developmental. These are part of the global good not only from the national (recipient) country’s perspective, but also from the global perspective. One implication of this classification, for example, is that global civil society in the North as well in the South might find they have more affinity with Purple Aid, and perhaps also with Green/Blue Aid, than with aid of the other three colours.

The body of the book consists of the seven steps that the developing countries need to take in order to exit aid dependence. The most difficult is the first step – the psychology of aid dependence. The dependence psychology has not only occupied the minds of leaders in many (if not most) developing countries, but it has also taken roots in mass psychology. It is not necessary to attempt to summarise the seven steps. Much more can be written on the subject than is contained in this monograph. The important point is that the process has to begin somewhere and very soon. It is an agenda that has to be captured by the people themselves at community and grassroots level. However, it also requires an enlightened and visionary leadership at national, regional, and continental levels.

It is argued here that the present aid and development architecture at the international level is an obstacle to the realisation of the national project. Three power asymmetries – economic power, political power and knowledge power – are deeply embedded in the existing structures. It is a continuing battle for the developing countries to try and secure policy space within the constraints imposed by these asymmetrical structures.

The present debate on the Paris Declaration on Aid Effectiveness (PDAE) is located in this larger context to explain the circumstances in which the OECD’s Development Assistance Committee (DAC) and the World Bank and IMF are trying to retain their relevancy and legitimacy, both of which have been severely eroded as a result of the changing geopolitical and economic realities of the last decade or so. If the OECD, the World Bank and the IMF do not achieve what they hope for at the Accra conference on aid effectiveness (September 2008) and the Doha Monterrey Review Process (November–December 2008), then they could face oblivion within the next decade. For the DAC its oblivion is a historical necessity in any event. At best, it should remain as a body to coordinate policies for OECD member countries. As for the World Bank and the IMF, they can salvage themselves if they pull out of Red Aid, withdraw to their original missions, and give voice to those who have suffered most from the developmental failure of their policies and the financial volatility of the last two decades.

In this broad historical and political perspective, the Development Cooperation Forum (DCF) of the UN and the fast evolving South–South relationship can play a very positive role. However, it faces many challenges, and its future is still largely uncertain.

At the end of the day, we need a truly heterogeneous, pluralistic global society that is based on the shared values of our civilisation, and the shared fruits of the historical development of the productive forces of science, technology and human ingenuity. Only on this basis can we build a global society that is free from want, exploitation, insecurity and injustice.

*Yash Tandon is the executive director of the South Centre, Geneva, an intergovernmental think tank of the developing countries. Dr Tandon’s long career in national and international development spans time as a policymaker, a political activist, a professor and a public intellectual. He has written over 100 scholarly articles and has authored and edited books on wide-ranging subjects from African politics to peace and security, trade and the WTO, international economics, South–South cooperation and human rights. He has also served on several advisory committees.

*Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/

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