Poverty in a time of empire: Why foreign aid can't "Make Poverty History"

Caleb Stewart Rossiter

April 2006

World Bank president Paul Wolfowitz and rock star Paul "Bono" Hewson, Iraq invader Tony Blair and invasion opponents Kofi Annan and his economic advisor Jeffrey Sachs, actress Angelina Jolie and Christian Coalition founder Pat Robertson, super-capitalist Bill Gates and quasi-socialist relief groups Oxfam and Save the Children. What do these strange bedfellows have in common? They all back the popular campaign to "make poverty history," particularly in sub-Saharan Africa, through a quadrupling of foreign aid.

The campaign is tinged with more than a shade of Dickens' Mrs. Jellyby, the do-gooder in Bleak House who neglects her own children as she raises money and colonist-teachers to aid the suffering children and child-like parents of the village of Borrioboola-Gha on the banks of the Niger. Like Mrs. Jellyby, today's campaigners hope to soften the effects of empire without abandoning it, but they will find that just as difficult under King George as it was under Queen Victoria.

Wide-spread poverty will remain an integral part of the world economy until the rich nations, and particularly the United States, stop propping up cooperative but repressive regimes who spur devastating civil wars, and stop blocking the poorest countries' transition from producing raw materials to refining, packaging, and retailing. Even then, as the persistence of poverty in the growing economies of China, India, and South Africa warns us, "making poverty history" will be largely a matter for each country to address with its own choices about sharing opportunity with the poor during the painful transition from a traditional to a modern economy. It also involves choices by the poor themselves. In the post-colonial world, not everyone wants to leave the traditional life, not everyone wants to work and save, and not everyone who does want to has the ability to do so. To talk of reducing poverty is fine, but to talk of ending it is silly.

The campaign is promoted by the Lords and Ladies of Poverty, the overseers of government and private foreign aid. They ought to know from experience that the primary purpose of foreign aid is to maintain the military and economic power of the rich nations, by buying cooperation and forestalling state failure and radical challenges, and that efforts to "end poverty" are just a small piece that must fit itself into that puzzle. Yet they play their part in the aid charade, appearing dutifully at concerts to declare that the World Bank exists to make the world "free of poverty," railing against recipients' sporadic rather than donors' systematic corruption, and holding weepy panels on "poverty reduction" at events, like the annual Davos and International Monetary Fund meetings, that are actually devoted to maximizing the economic returns of wealthy countries and their wealthiest citizens.

The sheer gall of the Lords and Ladies is captured in Wolfowitz's pledge to change Africa "from a place of despair to a place of hope." African commentators were bemused by this pledge, since most Africans live in modest but functional fashion, and much of what despair does exist can be traced to Wolfowitz's current and previous employers. The World Bank, controlled by its U.S. and European majority, helps trap Africa in its low-growth role as exporter of raw materials, and the worst poverty is found in refugee camps created by civil wars against thugs who were armed in return for cooperating with U.S. military, covert, and mineral operations: Savimbi in Angola, Mobutu in the Congo, Doe in Liberia, Barre in Somalia, and Nimeiry in the Sudan. Today's ubiquitous U.S. arms and training for regimes that cooperate with the "war on terrorism" are laying the seeds for the civil wars of the future.

The lobbyists for the campaign are the concert-givers and goers, whose white wrist bands ask developed nations to quadruple aid and end domestic farm subsidies that gut production in poorer countries, pleas that can be technically met and practically evaded at the same time. At the series of concerts in 2005 designed to prod the "Group of 8" industrial powers, the organizers applauded President Bush for roughly doubling economic aid, both globally and to Africa, during his tenure. However, the doublings do not come in long-term development accounts addressing poverty. Globally, the doubling comes from the U.S. occupation of Iraq and Afghanistan, paralleling the similar periods of charity when U.S. development aid shot up to subsidize counter-insurgency campaigns in Vietnam in the 1960's and El Salvador in the 1980's.

In Africa, the doubling comes not in development programs, but from the cancellation of long-unpaid and unpayable debts and from emergency food aid from American surpluses to countries experiencing drought or overwhelmed by refugees from civil wars. Even U.S. "humanitarian assistance" like food aid during a famine is usually a double-edged sword. It too promotes the U.S. political and economic purposes, such as buying cooperation from governments and promoting U.S. commercial food exports, so the repressive regime that caused the famine -- and it is always such a regime, and not drought, that is at the root of the problem -- is strengthened by controlling the sales and distribution of food aid, and local farmers are undercut by cheap imports.

In the few years following a "successful" distribution of relief food, many more can die from the continued conflict or domestic crop failures. In his brutal but brilliant 1997 book, The Road to Hell, aid worker Michael Maren showed how U.S. food aid helped destroy Somalia in the brief period from Carter's alliance with Barre in 1979 to Clinton's withdrawal in 1994. Even the boost in U.S. funding for prevention and treatment of AIDS in Africa should not be seen as long-term aid that can end poverty, since success would simply take matters back to where they stood before the epidemic struck. More importantly, there is no evidence that truly adhering to every demand of the aidists would reduce poverty, let alone end it.

An Apolitical Big Plan

What economist William Easterly, in his recent book The White Man's Burden, calls the aidists' Big Plan is described in the UN's Millennium Challenge Goals and a recent book by its adviser, Jeffrey Sachs, called The End of Poverty. The Big Plan is both ahistorical and apolitical. A strange mixture of Adam Smith and Chairman Mao, it would open the economies of poor countries to international competition while carrying out a massive "scaling up" of foreign aid projects. It treats poverty as a technical problem, and sidesteps the issue of power relations between and within countries. Poverty, though, is deeply political. In the last great foreign push for African development in the 1980's, both the IMF/World Bank "structural adjustment" of protected African economies and the Live Aid/We Are the World campaign for famine relief in Ethiopia probably did as much harm as good. Under the former, many countries' economies shrank, as foreign-fueled civil wars and institutional weakness left Africa unable to compete with developed nations. The latter had to put food aid and relief materials directly into the hands of the Mengistu regime, which had created the famine through civil war and forced relocation, and this helped the regime hold power for another six devastating years of civil war.

Another round of massive aid without fundamental changes in both the international political economy and domestic African politics is a fool's bet. More than $2 trillion in today's dollars in government foreign aid (and probably as much again in private donations) has been showered onto poor countries over the past 50 years, mostly as high-priced goods and services, rather than untied cash, from the donor nations. Why should another $2 trillion of the same over the next seven years, the quadrupling of aid to the famed one percent of developed nations' GNP the campaign hopes to achieve, be any less likely to disappear with little effect? The aidists say that poor countries need debt relief from low-interest loans for previous projects, and then call for many more projects in the same political and economic environment. The World Bank's analysts had predicted that the old projects would generate not just repayment but solid growth, and they'll probably make the same claims for the new projects as well. The fine print of the "debt relief" package imposes carries classic economic conditions, and transfers poor governments' dollar debts into local currency that are to be used for even more projects.

The Big Plan proposes credible solutions for none of these root causes of poverty and slow growth:

· dictatorships and the provision of weapons and training to them by the West and now China in return for military cooperation, minerals, and markets;

· the ethnic civil wars that result from undemocratic rule, and the massive migration from these conflicts and poorer regions in general toward pockets of growth;

· corruption in both donor and recipient governments, including the tying of aid to purchases from the donor's economy, such as development consultants and military hardware;

· the natural brain drain of talented and trained personnel from the low and inconsistently-paid civil service to higher-paying foreign aid projects such as AIDS clinics, to cities, and to the developed countries;

· the resistance by developed nations to refining, packaging, and retailing by poor countries, which keeps them in their colonial roles as producers of raw materials with deteriorating terms of trade;

· the inability of their governments, as a result, to generate foreign currencies for the small but crucial imports needed to sustain foreign aid projects, and to generate sufficient domestic growth to produce the tax revenues needed to keep colleges, schools, and clinics staffed and open, rather than on strike or functioning minimally;

· the foreign aid "transfer problem," which occurs when a flood of external demand for local currency for aid projects inflates the currency and depresses exports and growth; and

· the unavoidable dislocation of entire generations during the transition from traditional rural production to a modern urban economy.

Each of these problems has derailed previous grand development plans, and each will lie in wait for this new one.

The Big Plan's proponents note how small America's foreign aid is relative to its military spending, and claim that U.S. security against terrorism would be enhanced with more foreign aid. This theory assumes that U.S. domination and international development are complementary, rather than incompatible, and accepts the Bush administration's stand that the answer to 9/11 should be perpetual war, rather than an end to U.S. domination of the Middle East.

President Bush said of the Islamist attackers that "they hate us because of our freedoms," when in fact they hate us because we maintain cooperative dictators throughout the Muslim world, from Algeria to Pakistan, that they, and perhaps even a majority of all citizens there, oppose. Secretaries of State Colin Powell and more recently Condoleezza Rice join the aidists in arguing that foreign aid can reduce the hatred by providing social services for the poor and employment for the young. This trivializes the thousand-year struggle for control of the Middle East, which started with the first Crusade, into a push for better jobs. The Islamists are no more likely to trade the jihad for economic progress than Ho Chi Minh was to trade South Vietnam for the Mekong Valley Authority that Lyndon Johnson offered in 1965.

The Big Plan's Problems

The "end poverty" campaign could be called the London consensus, since it is part of the rehabilitation of Tony Blair, who talks about saving Africa whenever faced with questions about the tens of thousands of unnecessary deaths caused by the invasion of Iraq. This London consensus merges a Hollywood consensus, which holds that talking about and raising money for a problem somehow solves it, with the Washington consensus, which holds that opening the economies of poorer countries to competition with powerful ones will promote economic growth.

Economics is known as the dismal science, but the economists behind the Big Plan are regular Ross Perots, incurable optimists who will just get in there and fix it. They insist that now we know what to do, and all that is missing is the will to provide sufficient aid. In a more sophisticated version of Heritage Foundation studies that incorrectly interpret as causal the simple correlation of rich countries with open economies, Sachs conducts thoughtful statistical inquiries showing that open economies grow faster, even when a variety of intervening factors are controlled. However, he too then errs by seeing causation in the correlations found in these exploratory studies, which of necessity have weak data and dubious definitions, and by arguing that if the slow-growing countries would just open their economies, they would grow too.

By generalizing from the successful to the unsuccessful, and from Asia and Europe to Africa, this conclusion ignores not just the many other factors of slow growth, such as conflict, ethnic rivalry, and the distorted internal and international trading systems that have survived independence. It also overlooks the simple fact that many small and weak economies would be overwhelmed and buried by the openness on which larger and stronger ones thrive. Even the IMF does not expect the poorest countries to allow the free flow of exchange rates and fixed capital, since private investors could then snap them up, hold them hostage, and destroy them before tea-time.

The Big Plan includes dozens of intertwined technical strands, from education to foreign inputs, that are all said to be needed for success, but it never makes clear if success is to be defined as economic growth or a reduction in the share of people living in poverty. These are very different things, and nobody knows how to create either one consistently in the best of circumstances. In fact, the Londoners don't even know how to measure them. Their favored poverty variable is the percentage of people in a country that the World Bank says are living in "absolute poverty" on a dollar a day of local purchasing power. Updated from its 1985 beginnings the measure is actually $1.88 in today's dollars, or $3,431 a year for a family of five, which actually can provide quite a stable life in many poor communities. This variable is hopelessly confounded by infrequent measurements that cannot be meaningfully compared across economic classes or countries. It ignores government services, making it look like a South African in a cement house with free water, toilets, electricity, schools, and clinics is as poor as a Somali refugee in a Nairobi slum with none of those services.

The other commonly-used variable, gross domestic product per capita in purchasing power parity, is confounded by income inequality and by currency conversions that reflect the life of the average, rather than the poor, citizen. It also ignores the informal economy in which most poor people find their purchasing power. Poverty is like pornography: you know it when you see it, but it's difficult to define, especially across cultures. Many students of poverty have concluded that these "money metrics" should be discarded in favor of physical, verifiable indicators, such as infant mortality or the percentage of people with healthy caloric intake and access to clean water.

Any way they are measured, though, we do know that economic growth and reductions in poverty in the post-colonial era have often come in places where the main tenets of the Big Plan -- unprotected competition with foreign businesses, and a welfare-to-work state for the poor -- have been firmly rejected as impractical. China, Korea, India, and Singapore all used statist policies to protect local economies and build predatory export industries. They achieved growth rates that African countries can only dream of, and would have to achieve for decades to reach Asia's levels of average income today. Such policies are unlikely to spur similar growth in most Africa countries, because their domestic economy, business culture, and legal conditions, as well as the current international economic environment, are less hospitable than the conditions the Asian economies faced. Sill, their success in Asia should lead to caution about the likely success of the Big Plan.

If actually implemented, the Big Plan would undoubtedly fail, littering Africa in particular with more abandoned projects. In one of Hewson's previous excellent African adventures, he traveled in 2002 with Bush's first Treasury secretary Paul O'Neill to villages where people asked for wells to be dug so that they could have clean water. Hewson and O'Neill immediately turned to the assembled international reporters to make a plea for an Africa-wide project to put wells in every village. Standing with them, shaking his head as if to say, "been there, done that," was then-World Bank president James Wolfensohn, whose agency had seen many such wells dug, and then abandoned. The causes for the frequent deterioration of development projects are many and complex, and have to do with the social realities of ethnic identity, sense of ownership, and local economic interests. A constant problem putting pressure on the social realities, though, is that the villagers, and the government, cannot generate consistent domestic funding for the bureaucratic infrastructure and spare parts needed to maintain large-scale projects.

Fortunately, the aidists' proposed scale of resources simply cannot be transferred from wealthy northeners to impoverished southerners. The purported success of their own Borrioboola-Gha, the model UN Millennium Village in Sauri, Kenya, shows why. In this village of 4,000, massive and immediate foreign inputs are provided by large numbers of highly-skilled foreign and Kenyan personnel whenever a hitch develops in the effort to demonstrate that poverty can indeed be ended. If a truck, a road, an agronomist, foreign fertilizer and mosquito-repellent pyrethroid, a clinic with doctors, a school with teachers, food for the students, or cash for a small business investment are needed, they are provided. Cabinet ministers and foreign celebrities traipse through constantly to see what more is needed, and then rush back to Nairobi to make sure it is provided by the government or the donors.

The aidists cite Sauri's purported improvements as proof that the Big Plan can work. Sachs proudly admits to intervening personally to move up the villagers' planting date so that the results of the harvest could be publicized at the G-8 summit in 2005, encouraging a boost in aid so that the model can be replicated throughout Africa. But Kenya could never replicate this level of focus and support in another village, let alone in its tens of thousands of others. As is the case in the well-intentioned AIDS clinics being established in Southern Africa by Bill Gates and other donors, the aidists would find that despite their high pay attracting trained domestic personnel, the planned expansion would quickly grind to a halt by exhausting the meager supply that emigration of the educated has left behind.

In most African countries, which have far more conflict and far less industry and trained personnel than Kenya, the aidists' attempt to create hundreds of thousands of Sauris would stimulate a development meltdown. Uncountable numbers of trained local personnel would have to accompany the flood of foreign consultants, from agronomists to zoologists, disrupting the national development civil service in performing its prosaic but essential duties. The surge of foreign synthetic inputs like fertilizer and pyrethroid would destroy local investment and sales in natural but lower-quality domestic versions, just the way free foreign food aid destroys invectives for local farmers to plant the next year's crop. The Kenyan founder of the Development Medicine health network, Dr. Macharia Waruingi, summed up the problem with Sauri this way on a web forum, after an on-line debate with Sachs:

"Jeff is making a fundamental error here, by shifting the burden of rural development to himself or the international development community. The burden of development lies with the creative imagination of the people of Sauri and other villages. Foreign prescriptions, and imported fertilizers, only serve to disrupt the ecosystem. It is still not clear whom he is lifting out of poverty -- the fertilizer manufacturer in Europe who sells fertilizer to him, or the local biomass entrepreneur who is trying to make a living on biomass. This story is similar for pyrethrum. Getting imported pyrethroid will lift the Japanese out of poverty, and sink the local farmers who could sell it farther down into poverty."

Wealth cannot simply be transferred to an uncompetitive economy. If the foreign exchange is used for consumption, it quickly disappears; if it is used for investment, the foreign-based projects must be domestically sustainable. They generally are not in Africa, because the donor nations ignore its post-colonial weaknesses and block its drive for true competitiveness, which would displace some of their businesses. Foreign exchange can be flooded into an extractive economy, but it cannot create domestic productivity on its own. The African oil economies of Angola, Equatorial Guinea, Gabon, and Nigeria have been rightly criticized for failing to translate external revenue into poverty reduction, but even Saudi Arabia, with oil wealth far in excess per capita of those countries, saw income levels fall dramatically and slums develop over the past 20 years, as its debt has escalated to more than its GDP.

An anti-imperial approach: Decommissioning armed forces, renouncing economic advantage

Although the Londoners incorrectly characterize the entire African continent as living in despair, they are correct that there is a lot of suffering and life-shortening disease there, as in Asia and Latin America, especially in refugee camps, urban shanty towns, and make-shift AIDS clinics. Although they are wrong to assume that foreign aid can end poverty and spur growth, they are right to want to ameliorate the effects of disease and of the raw poverty that often accompanies the disintegration of the traditional economy. What should the truly benevolent in the North, as opposed to the imperial civil servants, do to support the poor in the South?

Above all, they must do no harm, which means taking on the tougher task of cleaning up their own houses, and tossing out the predatory, self-interested military and economic policies that their governments pursue. The five permanent members of the UN Security Council dominate the world trade in weapons and training with both repressive and responsive southern governments, with the United States well in the lead of the other four. Even in the best cases, where the recipient is democratic and not fomenting a civil war, this trade can devastate development. South Africa could hold on to its invaluable cadre of elite black school teachers and professors, rather than lose them to business, foreign-funded projects, and emigration, if it paid them just a fraction of the $10 billion it is wasting on arms deals aggressively promoted by those paragons of aid to education, Britain, Germany, and Sweden. Instead of singing, "we are the world," aidists should be asking, "why do we arm the world?"

Where arms trading and military training aren't sufficient to gain cooperation and market access in poor countries, the United States, France, and Britain threaten to intervene directly, and often do so. The "war on terrorism" has replaced the "Soviet threat" as the latest justification for the half-trillion dollar Pentagon budget, but it is the U.S. domination of the Islamic world from Senegal to Indonesia that the budget supports that spurs the sporadic armed protests by Islamists. The armed forces of the United States, France, and Britain function as the collection agencies of the northern economic empire, and their covert operatives are the paymasters of corruption. This armed diplomacy is incompatible with "making poverty history," because it sustains the very conflicts and regimes that hamper development.

Northern citizens hoping to create a system capable of reducing poverty in the South must remove the halter their military forces have placed on the South. They should burn into the public consciousness a vision of minimal military budgets that would decommission much of the fleets and air forces of the United States, France, and Britain, bring home their soldiers and covert operators, and end support for cooperative regimes. Such a vision will certainly be criticized, as the movement to ban the slave trade was in Britain, for violating the realpolitik imperative of protecting the donors' economies, in this case by maintaining access to cheap fuel. Like the opponents of the slave trade at its 18th century peak, opponents of northern domination can argue morality, since no country has the right to extract resources from others by force, holding the well-being of others' civilians hostage to the well-being of its own. Until Americans in particular can accept that statement as a principle of foreign relations, the national security state will remain acceptable, even at its increasing cost, to the public, and poverty will remain a structural part of the international economy.

Like the anti-slavery campaigners who were finally successful in the 19th century, when the industrial revolution and the rise of low-wage labor made slavery uneconomical, today's anti-imperial citizens can also argue practicality. The claim that military force is needed to gain access to fuel, which is used to justify the maintenance of large armed forces and of alliances with cooperative regimes, is largely false. Nobody can eat oil, natural gas, platinum, or cobalt. They must eventually wend their way to the world market, where anyone can buy them at prices that, historically, do not even keep up with inflation. Even in the unlikely event that enough of the disparate producers of a natural resource were able to form a cartel that controlled enough of the supply to boost prices artificially, those prices would be far less costly than the maintenance of the imperial forces that are ostensibly arrayed to guarantee access.

A more cogent criticism of the development of an anti-imperial attitude in the North is that the U.S. military withdrawal it entails might stimulate conflict for three American wards -- South Korea, Taiwan, and Israel. Iraq and Afghanistan, although actually occupied by the United States and Britain, do not fall into this category, because the foreign forces are occupying powers whose presence is already fueling civil war.

South Korea has developed more than sufficient means to deter and defeat a North Korean attack on its own, but the presence of a small U.S. force on the peninsula has also served to constrain South Korea from itself attacking the North. While Taiwan could bloody China's nose if it were invaded, just as Cuba's heavy investment in military power could take a toll on U.S. forces for a few weeks, China could regain the lost province if it truly wanted to, were the U.S. fleet not interposed. Both South Korea and Taiwan gave up plans to build nuclear weapons because of U.S. guarantees of defense, and would build them fairly quickly in response to the end of that guarantee. Finally, Israel clings to Europe's relic from the Crusades through its own military might and nuclear weapons, but an end to the symbolic $3 billion annual U.S. foreign aid check and to the concrete guarantee of mutual defense could encourage some of its neighbors to try once more to rid the region of this historical anomaly.

It has never been a matter of U.S. national security whether the Koreas reunite under either government, or China absorbs Taiwan, or if the experiment started by President Truman in 1948 of a Jewish, rather than Herzel's Jewish-friendly, state is ended. In each case, a strange brew of Cold War politics, imperial ambitions, and quirky local actors and actions led to 60-year American protectorates from which retreat is now problematic. Indeed, these three cases are examples of the larger problem of unpredictable responses to the end of U.S. military domination. The problem should not derail the anti-imperialist effort, but at times it certainly must require cautious implementation. As with the end of colonialism, the end of imperialism can be well-managed or chaotic. Portugal is rightly criticized not just for brutal colonial rule in Angola, but for rapid termination of it in 1975, both of which led to a devastating civil war from which Angola is still emerging.

No vision of a post-imperial policy is present in today's national security debate, perhaps because of these inevitable difficulties that would arise from the decommissioning of armed forces. In an understandable attempt to be relevant in Washington, even the most progressive of proposals from the most anti-imperialist of sources, such as the Congressional Black Caucus and the House Progressive Caucus, barely scratch the surface of the military budget, and of the issue of its role in empire.

Like the policies of the "cheap hawks" of the 1980's, who became the ruling Democratic national security elite of the 1990's, these proposals "support our men and women in uniform" with pay, training, and conventional weaponry, and cut only nuclear and space weapons, and a few high-profile combat systems. Even such modest proposals are supported by less than 20 percent of Congress. These progressive voices abhor the systematic torture built into the "war on terror" and call for withdrawal of troops, but not financial support, from Iraq. Anti-poverty activists have a long row to hoe in moving progressive opinion from those stands to confronting the fundamental cause of invasion and torture, as well a core component of the system of poverty: the U.S. policy of military domination of the former colonial world.

There is another northern barrier to southern growth, and the opportunities it can provide for the poor, that northern citizens must dismantle. This is the complex of subsidies, protections, and institutions that block poorer countries not only from producing and exporting raw materials, but more importantly from engaging in refining and light manufacturing at home and retailing in richer nations. These are so deeply embedded that only a national discussion and commitment, rather than the sort of porous, grudging changes sought by the Londoners, can do the job. Even a truly level trading field will often not be enough. Given the systematic weakness of their extractive economies after 500 years of underdevelopment by Europe, African countries in particular need domestic and international subsidies and protections so that they can build capacity in selected areas of domestic commerce and international competition.

A healthy supply of untied foreign exchange could certainly help with such a strategy, just as it could help a government that is serious about reducing suffering not just by solid growth, but also by maintaining basic health, sanitation, and educational services, which need small-scale but timely imports. There is no need to raise fresh cash from new taxes and government spending to subsidize the foreign aid industry, as the proposed "Tobin tax" on currency transactions, the EU airline ticket tax, Tony Blair's poverty bonds, or George Bush's budget deficits do. Instead, the foreign exchange for penetration of northern markets and attacking pockets of poverty can be generated by closing down the very institutions that the North created to guide the South.

The World Bank has long outlived its founding role as a big-item, big-picture lender to post-war Europe. Its hard-loan operations can be easily absorbed by commercial lenders, and its soft-loan operations in the poorest countries consistently perform far below projected returns. The Bank should simply forgive its debtors and shut down, apportioning among the governments of the poorest countries with the weakest exports, by population, whatever convertible currency remains after it pays off its bonds. Similarly, the IMF should terminate its bizarre anti-poverty role, revert to its original mission as a currency adviser and short-term adjuster, and distribute much of its reserves of gold or its own currency, the convertible Special Drawing Right, to poor countries.

Some pretty rotten governments would gain purchasing power from these payouts, and there is no guarantee that even the honest ones would choose their imports wisely. Distribution to all, though, is morally preferable in practice to having the donors pick winners and losers. In fact, the donors already appear to recognize this. While the new U.S. Millennium Challenge Corporation, the recent World Bank "anti-corruption" drive, and the fine print of the Londoners' plan all claim to rule out aid to countries with poor records on "governance," they don't really mean that any more than they do when they say that aid should be denied to countries whose governments abuse human rights. In the end, some and usually most of planned aid does flow, regardless of a government's behavior. This is for two reasons, one strategic and one humanitarian.

At the strategic level, as a U.S. official said at the dawn of the human rights era under President Carter, conditions are for the little countries and countries that don't matter, not for big countries or countries that do. China's domestic record on human and political rights is one of the worst in the world, ranking with America's international record of invasion, torture, and support for repression. Yet the World Bank begs China to accept billions of dollars in loans every year that it could well borrow commercially, since the Bank needs to move its money. Indonesia was famously corrupt under Suharto, with its armed forces controlling entire sectors of the economy, yet the United States and the Bank provided large-scale loans to a valued ally.

Even when human rights conditions affect the important countries, they are counter-balanced by other aid. President Carter had the United States vote against South Korea's loans in the World Bank because of human rights violations, even while he was funding its army. Today the United States withholds bits of bits of aid to Egypt aid over its rigged elections, even as it pours another $2 billion in annually in military and economic aid and "renders" prisoners to Egypt for torture. Similarly, President George H. W. Bush held up a smidgen of Israel's housing aid so as not to support permanent occupation of the West Bank, but didn't touch the $3 billion in annual aid used for U.S. weapons. It should be noted that he paid a stiff political price for even this symbolic gesture, and that because of Israel's special treatment under foreign aid laws, the American arms-dealers would have been paid from U.S. tax revenues.

At the humanitarian level, cutting aid to the dictator of a poor country has the effect of making poor people suffer twice for their governments' sins. The popular alternatives of directing funds through non-governmental bodies or controlling the government's budget are largely window-dressing. Funding non-governmental efforts effectively subsidizes and sustains the regime in power, and frees up its budget for more military spending. Foreign control of the recipient's budget, as the IMF learned in the 1980s when it insisted on taking over every possible level of government finance in Zaire for Mobutu, and as the World Bank is learning today as it tries to control Chad's new oil revenues, is problematic as well. Any government that requires outside policing is not going to conduct a coherent anti-poverty program in any event. A government that is determined to steal aid is always able to do so, either at the international front end with the foreign exchange or at the domestic back end with favoritism and payoffs on the projects.

As Northern activists work on getting their own citizenry to demand an end to military dominance and predatory economics, there is certainly a humanitarian argument for rich nations to continue research, exchanges, and small pilot projects in poor countries in the areas of agriculture, education, and the prevention and treatment of disease. However, there should be no disruptive "scaling up" to country-wide efforts before an infrastructure of personnel, plant, and culture has been created by long-term growth. A fundamental change in poverty will come only with a fundamental change in North-South power relations. What is needed is not a Big Plan, but a fair deal. The aidists might respond that the North will never renounce dominance, and that the London consensus is the best way to address poverty in a time of empire. Then they shouldn't talk about making poverty history, because empire keeps making more of it.

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About the author: Caleb Stewart Rossiter has studied and practiced the politics of U.S. foreign aid for 25 years. In his Ph.D. thesis and a subsequent book he examined the diplomatic uses of U.S. development aid in southern Africa during the liberation struggles of the 1970s and 1980s. In the early 1980s he wrote for the Center for International Policy a study of the Carter and Reagan administrations' implementation of the human rights laws enacted in the 1970's. He then worked for 15 years at the congressional Arms Control and Foreign Policy Caucus and the advocacy group Demilitarization for Democracy, promoting legislation to block financial and military assistance to repressive regimes such as El Salvador, Indonesia, Saudi Arabia, and Somalia. He currently teaches research methods and African studies at American University's School of International Service, in Washington, DC. He can be reached at rossiter@american.edu and 202-885-2460. Many of his writings are on-line at www.calebrossiter.com.