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Rogue Aid

February 20, 2007


I have noted before that one way alleged terrorist groups curry favor with local populations and garner their protection is by providing social services in areas where legitimate governments have fallen short. Al Qaeda followed this pattern when it was based in Afghanistan. Hamas used this strategy to gain political influence in Palestine and Hezbollah used it in Lebanon. The aid they provide (or provided) was considered rogue aid by the legitimate governments and most of the international community, but it was welcomed by those who benefited from the aid. There is a different kind of rogue aid now being offered that has more to do with international politics than local politics. This rogue aid is the subject of a New York Times op-ed piece by Moises Naim [“Help Not Wanted,” 15 February 2007]. Naim begins his piece by recalling the laments of an acquaintance who had just lost a project to the Chinese. Naim continues:

“There’s nothing surprising about that, of course; manufacturing jobs are lost to China every day. But my friend is not in manufacturing. He works in foreign aid.”

Last month I wrote about Chinese interest in Africa [Enmity or Engagement in Africa?]. In that post, I wrote: “Both the U.S. and China will eventually learn that the only way to truly help Africa is through development [not aid]. African countries cannot sustain a decent standard of living for their populations with a resource-centric economy. Establishing the conditions necessary to attract foreign direct investment, not just aid, begins with the Africans themselves. They have to rid the continent of corruption, take advantage of financial aid to improve education, and embrace health programs aimed at ridding the continent of the many diseases that now plague it. When African countries start seeing their people as their greatest resources, real change has a chance.” My point was that the world’s nations need to work together to make things better in Africa. Naim’s friend was lamenting the fact that such cooperation is not occurring and that China is actually undermining cooperative international efforts — hence, China is providing rogue aid. The project that Naim’s friend lost to China dealt with Nigeria’s rail system.

“The Nigerian government operates three railways, which are notoriously corrupt and inefficient. They are also falling apart. The World Bank — where my friend works — proposed a project based on the commonsense observation that there was no point in lending the Nigerians money without also tackling the corruption that had crippled the railways. After months of negotiation, the bank and Nigeria’s government agreed on a $5 million project that would allow private companies to come in and help clean up the railways. But just as the deal was about to be signed, the Chinese government offered Nigeria $9 billion to rebuild the entire rail network — no bids, no conditions and no need to reform. That was when my friend packed his suitcase and went to the airport. It is not an isolated case. In recent years, wealthy nondemocratic regimes have begun to undermine development policy through their own activist aid programs. Call it rogue aid. It is development assistance that is nondemocratic in origin and nontransparent in practice, and its effect is typically to stifle real progress while hurting ordinary citizens.”

This is a new twist on Tom Barnett’s mantra that “disconnectedness defines danger.” When proffered aid is disconnected from other ongoing development programs, it can create unhelpful if not dangerous conditions. China, with very deep pockets, is the principal source of such aid, but it is not alone. Naim also points a finger at Venezuela’s Hugo Chavez and at Saudi Arabia and how they are spending oil revenues abroad. When it comes to the amount of money available for such aid, however, no country comes close to China.

“China is actively backing such deals throughout Africa; its financing of roads, electrical plants, ports and the like boomed from $700 million in 2003 to nearly $3 billion for each of the past two years. Indeed, it is a worldwide strategy. Beijing has agreed to expand Indonesia’s electrical grid in a matter of months. Too bad the deal calls for building several plants that use a highly polluting, coal-based Chinese technology. No international agency would have signed off on such an environmentally unfriendly deal. In the Philippines, the Asian Development Bank, which lends money at low interest rates to poor countries, had agreed to finance Manila’s new aqueduct. It, too, was suddenly told that its money was no longer needed. China was offering cheaper rates, faster approval and fewer questions. What’s behind this sudden Chinese drive to do good around the world? The three short answers are money, international politics and access to raw materials. China’s central bank has the world’s largest foreign exchange reserves, totaling $1.06 trillion. Beijing is increasingly leveraging this cash to ensure its access to raw materials and to advance China’s growing global influence. What better than a generous foreign-aid program to ensure the good will of a petro-power like Nigeria or a natural-resource-rich neighbor like Indonesia?”

Lest one think that America’s hands are clean, Naim points out that during the Cold War both the United States and the Soviet Union used foreign aid for political purposes — often keeping nefarious leaders in power. Since the end of Cold War, great strides have been made in how developmental aid is offered, used, and monitored. It’s not perfect, but it is much better than it has been in the past. Rogue aid is threatening to derail this progress. Naim concludes:

“Because of Mr. Chávez’s artificial lifeline, Cubans will be forced to wait even longer for the indispensable reforms that will bring their society opportunities for true prosperity and freedom. Iranian aid to Hamas in Palestine and Hezbollah in Lebanon may have increased Iran’s influence in the region, but it is damaging to the people in those countries for the same reason that Venezuelan aid hurts Cubans. The same can be said of Saudi Arabia’s sponsorship, in countries like Pakistan, of religious schools that fail to equip students with the skills they need to get jobs. One could argue that students are surely better off going to any school than being in the streets. But why should these be the only options? Why can’t the Saudis finance education, the Chinese pay for railroads and electric grids, and the Venezuelans help Cuba’s economy without also hurting poor Pakistanis, Nigerians and Cubans? Because the goal of these donors is not to help other countries develop. Rather, they seek to further their own national interests, advance an ideological agenda or even line their own pockets. Rogue aid providers couldn’t care less about the long-term well-being of the population of the countries they aid. States like China, Iran, Saudi Arabia and Venezuela have the cash and the will to reshape the world into a place very unlike the one where we want to live. By pushing their alternative development model, such states effectively price responsible aid programs out of the market exactly where they are needed most. In place of those programs, rogue donors offer to underwrite a world that is more corrupt, chaotic and authoritarian. That sort of aid is in no one’s interest, except the rogues.”

The international community does not pursue development for purely altruistic reasons (although altruism plays a role). Developed countries understand that helping developing nations to improve the quality of life of their people also helps the international economy to grow — which benefits developed as well as developing nations. China will eventually understand that its interests are better served cooperating (rather than being in competition) with the rest of the developed world. At that point, it will stop providing rogue aid and take a leadership role in providing cooperative developmental aid.

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