Balance the Budget, Prune Development Aid

The Dutch Leftist flagship newspaper De Volkskrant recently published a series of proposals by writers considered experts in their fields, how to balance the budget. Here's development aid specialist Arend Jan Boekestijn's contribution (original article).

"Cutting Back on Development Aid"

Stop exporting good governance and nation building, and start supporting private enterprise!

It hurts having to make cut backs. Yet there are policy areas in which millions of people could benefit from it. Development aid is an example. Imagine these programs did not yet exist. As these aid programs really hurt poor countries, surely we wouldn't set them up like they are today. There are five problem areas.

- Caption: theme of Ending Poverty and Inequality - 

Aid addiction
First, there's aid addiction. If security is outsourced to the UN, and donor countries take care of education and health care, what do African governments have left to do for themselves? An average developing country is receiving hundreds of delegations each and every year offering money, and each making different demands in return.

How can recipient countries learn to accomplish anything by themselves? This problem can only be solved by extensive cut backs on development aid expenditure. The Netherlands, the Scandinavian countries and Luxembourg together spend twice the EU average. If we truly want to promote self reliance we shall have to make cut backs.

Secondly, donor money has the effect of appreciating the local currency; as a consequence it undercuts exports and trade - the last thing these countries need.

Negative
In the third place development aid has a negative effect on democratization. Third world countries are suffering from a Boston Tea Party in reverse. In 18th Century America the maxim was "no taxation without representation". Recipient countries get so much donor money that there's no incentive to raise taxes. As a consequence there's also no trigger for representation. Only if we make cut backs democracy stands a chance.

In the fourth place, there's an unclear corrolation between aid and development. Aid per se doesn't lead to growth. That's a very good reason to rethink how we organize these programs.

Good governance
Also we have not been able to establish good governance. Most third world countries are closed societies. According to Nobel Laureate Douglass North these governments are primarily occupied with violence control, not with their country's development (read also by this author "How To Put Development Aid to Work"). North posits that features of open societies, such as democracy, the rule of law and civic society cannot be exported one on one to closed societies.

Even worse, enforcing these elements may even be counter productive. For example, if elections are being held in Afghanistan, a country without strong institutions, this leads to vote rigging. Good governance just cannot be exported.

The present Dutch policy, as well as the EU's and the World Bank's, do not take these considerations into account. Budget assistance consolidates evil regimes and fosters aid addiction. Good governance fails. And the ballot box grows corruption.

So should we abolish development aid, as Dambisa Moyo proposes? No, it's an illusion to think that third world countries will be able to procure loans for their investments on the regular capital market. So what can we do?

The only way to foster growth is to concentrate on private enterprise. No one ever got rich off of charity. Stop funneling aid to dubious regimes, but invest in private citizens with knowledge and expertise so as to empower them to earn a living. Also in the field of agriculture much can be done. So let's  reorganize the Ministry. Stop exporting good governance and stop nation building - concentrate on private enterprise.

Market access
Reforming EU agricultural policy by bringing it back to the level of member countries will open up European markets. NGOs are often led by people with very little notion of private enterprise. Audits and evaluations are being side-stepped. So  force them to work more efficiently by dismantling the present edifice of subsidies. Fund some twenty procent on a case by case basis and let them fend for themselves in the charity market.

Enforce independent policy evaluation on all activities. See to it that climate change policies do not lead to a fresh multi billion dollar stream to developing countries they cannot absorb. Recognize that the top-down approach of the Millennium Development Goals project is bankrupt. Replace it with bottom-up, independently evaluated projects.

Be critical of plans such as Paul Collier's to militarize aid. From our own history we know that conflict constitutes nations. Nation building is precisely what Africa needs.

In short, private enterprise will foster sustainable growth which will eventually produce a middle class that will demand good governance.

Related:

- Arend Jan Boekestijn's page
- "How To Put Development Aid to Work"

How to Put Development Aid to Work

"The Price of a Bad Conscience"

by Arend Jan Boekestijn (original post in Dutch)

A comedy of errors. Time: one Saturday in the year 2009. Setting: the palace of President Kagame of Rwanda. Characters: President Kagame of Rwanda and Dutch Minister for Development Cooperation Bert Koenders. Subject: Koenders' wish to save the development cooperation with Rwanda and Kagame's wish to severe all ties with the Netherlands.

Koenders has had better times. Lumbered with a predecessor's feelings of guilt  - why didn't we stop the genocide? - Koenders finds himself caught up in a relationship with the victims of that tragic event. But regretably they aren't angels either. Kagame and his good, old buddy Museveni of Uganda have effortlessly swapped  the role of victims for the one of perpetrators.  In the war in Eastern Congo five times as many people lost their lives as in the genocides of Rwanda and Darfur combined. Small wonder tax payers and politicians in the Netherlands, the UK and Sweden are questioning the ongoing need to subsidize Kagame.

Couldn't Koenders' predecessors have seen this coming? Not quite. Politicians aren't clairvoyants. Should the victims have been left to fend for themselves?

It's much more interesting to draw lessons from the demise. Why did the Netherlands, the UK and the US believe that they could control Kagame? The answer is astonishingly simple. Our Governments are guilty of an unhistorical approach to the Rwandan question.

For proper comprehension one must study the new approach laid out by Nobel Prize Laureate and Economic Historian Douglass C. North in cooperation J.J. Wallis, S.B. Webb and B.R. Weingast in a World Bank Paper (4359), suitably entitled 'Limited Access Orders in the Developing World: a new approach to the problems of Development'. Development aid workers of all countries, pay attention now: you are on the verge of experiencing a paradigm shift.

North et al. posit that societies will develop various strategies of reducing violence; and how they are coping is of great influence on their potential for growth and development. Elite infighting has negative economic effects on everyone. In primitive societies of hunter gatherers there's a distinct lack of specialization, but an abundance of violence. That's a drag on a man in the long run.

One needs to give it a rest every once in a while; a good night's sleep in indispensable to that effect. This is how 'primitive societies' develop into' limited access societies'; violence is brought under control by violence specialists contracting not to use force against each other.

How do they do this? There's a measure of stability as long as the division of the spoils is reflecting the balance of power; vassals may be thrown a trinket or two. As long as the elite is able to keep up this system there's no reason for conflict. That was the way in Tudor England and Carolingian France, and so it is in African Rwanda.

Kagame is the leader of the Tutsi elite; not only do they consistently exclude Hutus (the odd Kabinet member notwithstanding), they also exclude their own fellow peasant Tutsis. Rwanda is a special kind of limited access society. Half of the Kigali budget consists of foreign aid. That is pleasant for the elite. Besides - enabled by sympathetic local Tutsi populations - the elite is also moonlighting in looting the minerals from the neighboring mines in Eastern Congo. That's not bad either.

At this point representatives of Western, open societies are arriving on the scene in order to pay off their bad consciences with development aid. Open societies are much more pleasant places to live in than societies with limited access. The rule of law enables fair competition for economic and political power. This ensures the production of wealth.

And what do the representatives of open societies tell those they've come to help in limited access societies? Be like us. Concentrate on good governance and democracy, and all will be well.

Limited access elitists can't believe what they're hearing. Democracy? You must be joking! That may well endanger their position and that can never be the natural order of things. No wonder Kagame is tapping phones, has spies everywhere, and is manipulating the elections.

Nevertheless, Rwanda is developing, is building schools, roads, hospitals and does not have more than its fair share of corruption, at least on the national level. But it comes at the price of freedom. There isn't any. It's a dictatorship by a Tutsi elite propped up with our money. It's the result of unhistorical thinking. Rudimentary awareness of our own feudal history might have giving us reason for pause.

Word has it that this unholy concoction of African autocrats, donor money and Congolese incompetence is on the verge of collapse. The English, Swedish and Dutch Parliaments are reconsidering their position. The Rwandese elite is well aware of the critical UN report on Kagame's involvement in atrocities in Eastern Congo and that it is jeopardizing the free flow of donor money.

Kagame hastened to clinch a deal with the Democratic Republic of the Congo (DRC): he would arrest Nkunda, if Kabila would deal with the Hutu perpetrators of the genocide.What a masterly coup. Kagame of course wouldn't dream of extraditing Nkunda to the DRC or the International Criminal Court (ICC); his powerplay in the Eastern Congo would come to light.

The deal gave Nkunda's successors the option of continuing the profitable mineral looting. Rwandan customs statistics indicate the country is exporting tons of minerals of foreign origin. It's a great deal!

Yet the equilibrium has become fragile. Grease is dripping from the political system: mineral prices have plummeted, donor funds may well dry up. Even Kagame's most loyal allies are getting nervous: French and Spanish indictments name Kagame himself as having shot down the Presidential airplane that led to the genocide. The elite's privileges are no longer reflecting the shifting balance of power.

Kagame's recent sneer that he doesn't need the Dutch aid, and that it never led to anything positive, is baloney. In reality Kagame needs Koenders as much as he needs Louis Michel, Lord Malloch-Brown and Obama. The question is, why would tax payers want to subsidize an African dictator? To what moral avail? Let's hope Koenders will remember that at dinner in Kagame's spy-bug ridden Presidential palace.

When the entire power edifice comes crashing down to earth and new atrocities ensue, will somebody recognize that unhistorical, Western makeability illusions aren't always a blessing? And will we, like in 1994, look the other way?

Also by this author:

- "De Prijs van een Slecht Geweten", book only available in Dutch (via Van Stockum)
- "Losing the War is Not an Option", part I of a series on "Afghanistan: the Road to Nationhood"

Related:

- "The Perversion of Developent Aid" (dossier)
- Angelina Jolie's journal "Ripples of Genocide" (site)

Afghanistan: the Road to Nationhood - Part I

Image via Wikipedia

"Losing the war is not an option"

by Arend Jan Boekestijn (original article in Dutch)

Pundits are fond to cite George Orwell lately: the fastest way to end a war is to lose it. Afghanistan has divided the West. We have acted so recklessly that it appeared at times as if losing the war was indeed the object. But it would have dire consequences for Western security.

For those who are taking pleasure in debunking Obama: losing the war in Afghanistan is no option. As long as Europe seeks strength in diversity, appeasement and cashing in on peace divident we shall have to settle for Obama. Defeat is nothing less than an affirmation of the jihadists' view that the decadent West has no staying power.

Failure would be a colossal encouragement to even widen the front. In case you're not so sure: defeat in Afghanistan means that the Pakistani jihadists, who won't rest until they've appropriated the national nuclear arsenal, will be able to use Afghanistan as a hide out. To use the word defeat in such a situation, reveals a shocking deficit in responsibility.

It is wiser to learn of ones mistakes. In Afghanistan the US and NATO have chosen for a light military presence. This forced the Afghan President Hamid Karzai into making deals with warlords that were in their economic tribal interests. Some were even included in the Government: keep your friends close, but your enemies closer.

Like half a century ago in South Vietnam, when President Ngo Dinh Diem was given to understand that he must democratize, Karzai was driven to an act of similar political suicide given the lack of a loyal opposition. This weakened his position even further. Karzai is quite literally consumed by paranoia. At night he rides his chauffeur driven car through Kabul, hoping to discover what is really going on.

Finally Karzai's political system was made to absorb such insane amounts of aid, that corruption, endemic in this patrimonial system, rose to alarming levels. In Africa many political systems have been corrupted by development aid, but that is insignificant compared to the intervention in Afghanistan. The mistakes in Africa were multiplied hundred fold.

And yet, in all this gloom over this fest of follies and flubs there's some reason for optimism. First of all, it is encouraging that Obama, like his predecessor George Bush, albeit reluctantly, chose for a surge. Admittedly, 30,000 extra troops is minimal, and half of what General McCrystal's requested, but Obama has come through in spite of severe opposition in his own party.

It is very well possible that 30,000 troops are too few to force a breakthrough in the war, but that sounds hollow from the mouth of an inhabitant of a continent whose contribution is only minimal compared to the American effort. Why doesn't Europe do more?

Secondly, Secretary of Defense Robert Gates has shaded somewhat Obama's assurance that withdrawal would go ahead in the summer 2011. That will only happen if the circumstances allow. This is not without significance, because the famous 3-D approach - Defense, Diplomacy and Development - can only succed if the West shows fortitude.

We are talking here of a decades long involvement, not just a few years. Anyone who believes the West will never be able to muster the staying power may be right, but should stop complaining about severe damage to the alliance and a potentially fatal defeat in the fight against political Islam. It's not an attractive perspective. Moreover, alternative presence on the ground, like cruise missiles and drones, offer even less chance of success. Whether we like it or not, we won't fix this problem without boots on the ground.

The question is also if the economic crisis will allow America the cost of a major contingent after 2011. If not, we're in deep trouble as the EU is still unable to act militarily. The word 'still' reflects politeness rather than realism. There is no cause for joy over the economic resilience of Obama's country either.

Neither is there about Obama's inquisitiveness. But he steered wisely clear of mentioning democratization in the same breath as failing states. That's a bonus. Anyone who witnessed the blood-curdling spectacle of the Afghan election can rest assured. Ballots without functioning institutions and a loyal opposition - in other words, without a civil society - are a recipe for instability and in-fights.

Elections in closed societies are of a different nature than we're accustomed to. In civil societies temperatures may rise, but they lead to legitimization because the new Government reflects the results of the ballot box, irrespective how disastrously difficult a governing coalition may be formed.

In the absence of a civil society the dynamics of the ballot box potentially undercut the understanding between the leaders of the oligarchy not to use force. As a result few can resist the temptation of vote-rigging. And that is precisely what happened in Afghanistan. When the second candidate withdrew, the Americans had no choice but to endorse Karzai. His legitimacy is at an all time low.

Above anything else Afghanistan needs stability and order. Only then there's the chance of a meaningful relationship between the center and the periphery. It is up to us to shield the Afghan regime from becoming a safe-house for those who wish to destroy Western civilization. Jihadists from Pakistan using Afghanistan as a launching pad to topple the regime in Islamabad, is also a hazard that must also be averted.

Before we can safely speak of stability we need to ask ourselves why we're training an Afghan standing army. For Karzai? I don't think so. He's a dead man walking. A military corps will only bring stability if it reflects the existing balance of power, giving it legitimacy in the 19th Century meaning of the word. This will not enthuse everyone in the West.

The American proposal to finance tribal militias is very dangerous, but not inept. A tribal balance of power at the provincial and central level is not trivial. The alternative, training Afghan armed forces, is not without its problems either. The current army is tribally unbalanced and it is no wonder upto a third has deserted. It's fairly easy for the Taliban to infiltrate such an artificial construct.

Stability will only be possible in Afghanistan if the Westminster model is neatly tucked away, to gather dust somewhere in a nondescript drawer. Think tribal, practical, undeterred, and bide your time. All other options, democratization, abandonment or just providing development aid, will lead to an instable order, at odds with vital Western interests.

What should the Netherlands do? Forget about being a leading ISAF nation, but recoup, and go back to the area where vital interests are at stake: the Greater Middle East. And to those who think that the West lacks the political will to endure this fight over longer stretches of time, I can only advise you to seek refuge under the bed.

Arend Jan Boekestijn is a historian, associated with the University of Utrecht, the Netherlands. His book "De Prijs van een Slecht Geweten" (The Price of a Bad Conscience") (Uitgeverij Aspekt) will hit the bookstores today.

NRC: "Dutch politician asks if aid really aids"

In a new book, former politican Arend Jan Boekestijn joins the choir of people challenging the usefulness of development aid. >>>

Read also part II in this series, "Of Development Aid, Nation-Building and Unification", by Dr Sam Holliday

Related dossiers:

- "The Afghan Front"
- "Pakistan's Double Bubble"
- "The Finer Points of Warfare"
- "The Propaganda Hirabah"
- "Narco Wars"

Related:

- Pat Dollard
- Michael Yon

- The Armiger Cromwell Center (click Afghanistan*New)

- ISAF (NATO) Official Page