Wednesday, June 18, 2008

Who is Rich? What is Aid?

This morning I read the following report, which Ben Hall filed from Paris for the Financial Times:

Rich countries have so far given only one-seventh of the extra aid they promised to Africa three years ago, with France particularly off-track, according to a report published on Wednesday.

The G8 group of industrialised countries in 2005 promised to increase their combined aid to Africa to $50bn a year by 2010. But so far they have provided only $3bn of the extra $22bn required to meet the target, said DATA, the aid campaign group supported by rockstars Bob Geldof and Bono.

Launching the DATA study in Paris, Mr Geldof rounded on G8 governments, saying the promises they made at the Gleneagles summit were a “great lie”. “It’s grotesque,” he added.

The report said Italy was “hugely off track”, Germany would need to make bigger increases, and that Japan and Canada actually cut aid to Africa in 2007.

The US and UK come out relatively well in the report. It said that while Washington was not on track to meet its pledge to increase total development aid to 0.7 per cent of gross domestic product by 2012, “it has sufficient increases in the pipeline” to meet its 2010 promise for Africa.

The UK, which had done more than any other country to increase aid to Africa “will come close” to meeting its 2010 target.

But France is criticised for having actually cut aid to sub-Saharan Africa by $66m in 2007 even though its total aid budget excluding debt relief increased. The government of President Nicolas Sarkozy has also quietly changed France’s 0.7 per cent target, saying it will meet this goal only in 2015 rather than 2012.

“France has given only 6.7 per cent of its promise,” said Mr Geldof. “That’s a measure of the failure of the political classes in this country.”

Far be it from me to make excuses for the G8 governments; but, if the primary function of DATA is, as its acronym (explained on its Web site) implies, to deal with issues of debt, AIDS, and trade with a focus on Africa, then it may be time for its spokespersons, such as Geldof and Bono, to take a broader view of those questions in my title. Who really controls the wealth that can be applied to the serious economic needs of sub-Saharan Africa; and how may that wealth best be applied?

It cannot have escaped Geldof and Bono that all G8 governments are currently in a state of major economic crisis. This does not refute the proposition that, when developed nations take to bed with the flu, most of the developing world is contracting double pneumonia. However, if we pursue this analogy, then it would be fair to say that, when those developed nations are doped up on Robitussin, their decision-making acumen is not in the best of shape for confronting accusations about broken pledges.

Now, since it is clear that wealth that could have (and was supposed to have) been applied to the DATA mission has not vanished into thin air, Geldof and Bono might do better to figure out "where the money is" (as Willie Sutton put it) and tap into those that have it, rather than castigating those who have less than they did when they made those promises. To write this mess off as a "failure of the political classes" in France or any other country amounts to exchanging the pulpit for foreign aid for a political agenda. Were DATA to do this as an institution, it would seriously damage public perception of their mission; and that, in turn, would make it even harder for them to raise the funds their beneficiaries in Africa so urgently need. It is not that DATA has encountered a "failure of the political classes" as much as it has been forced to recognize that governments are not particularly efficient institutions (and most of the time their performance is not as effective as anyone would like it to be). So where is the money these days? At a national level, we cannot ignore how much of it China controls; but we also have to recognize that China has been and will be plowing a lot of its wealth into the welfare of the victims of its recent internal catastrophe. Then there are those private sector institutions that always seem to increase their resources, regardless of whether times or good or bad. However, before DATA shifts its fund-raising targets, it would be well to consider that second question that I posed.

Institutions that amass large quantities of wealth tend not to part with any of it without first addressing the what's-in-it-for-me question. The problem in this case is that the most obvious answer would entail the resources that can still be found in sub-Saharan Africa. This is why China has been investing heavily in Africa, as well as South American countries, such as Peru, as the BBC reported yesterday. My point is that, if the growth of wealth is the highest priority, then the drive to accumulate resources will probably displace, if not totally eliminate, any more "humanitarian" goals, such as improving public welfare through better health care, education, or job opportunities. This is why I keep returning to the hypothesis that wealthy institutions, public or private, seem to have committed themselves to a War Against the Poor, whose ultimate goal is likely to be the creation of a new class of slaves. To the extent that private institutions are, at least at present, better equipped to wage such a war, we may very well see that today's multinational corporations will become tomorrow's empires, that, through the lack of both efficiency and effectiveness in governmental institutions, the very domain of geopolitics will shift from those governmental institutions to the strongest of the corporate institutions. This is, to say the least, a bleak state of affairs; but, when we see it at the end of what may be the only path towards aiding the welfare of disadvantaged countries, it becomes downright tragic.

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