July 21, 2011 | Commentary

It’s Madness to Raise Foreign Aid While Cutting Back At Home

Foreign aid is often counter-productive. But why on earth are we increasing it while preaching austerity at home.
July 21, 2011 | Commentary

It’s Madness to Raise Foreign Aid While Cutting Back At Home

Foreign aid is often counter-productive. But why on earth are we increasing it while preaching austerity at home.

The recent announcement by British Prime Minister, David Cameron, that Great Britain was pledging an extra £110 million in foreign aid to North Africa got him on the wrong side of several British tabloids, including the Daily Mail and the Daily Express. Why increase foreign aid while welfare at home is being slashed?

It is very good question, and one that we need to keep asking, not just in Great Britain.

Seven years ago, Prospect Magazine’s David Goodheart asked a similar question in The Guardian. In his essay, Discomfort with Strangers, Goodheart spoke of a “progressive dilemma”, namely, the tension between solidarity (an umbrella concept that includes redistributive justice, equal opportunities and development aid) and diversity (the familiarity we feel towards the recipients of our solidarity, which, in turn, makes us more inclined to give).

Though his concern was primarily with integration in Britain, Goodheart’s argument applies to foreign aid as well, since the tension between the progressive value of solidarity is under increasing assault by the painful fact of limited and diminishing resources available for redistributive justice, both home and abroad. If, as Goodheart put it, the “liberal universalist” view “sees us in some sense equally obligated to all human beings, from Bolton to Burundi” when we give less to Bolton, should we still give the same – or more – to Burundi?

Our societies are inching towards economic default because we have been living above our means for far too long and have borrowed too much money we cannot pay back to afford the difference. This is true of America’s mortgage crisis as much as it is the case of Europe’s sovereign debt crisis.

Across Europe, governments are brutally cutting spending and increasing taxes – and so, apparently, will the U.S. Economists and politicians will argue how to balance the two – and disagree about the wisdom of such balance.

Citizens, meanwhile, must deal with a new landscape where everyone gets less – less free education, less free health care, less in unemployment benefits, less in family allowances, and higher taxes on commodities and utilities. For Goodheart, the progressive dilemma question hinged upon whether a multicultural society could remain cohesive and afford generous welfare to all – but especially to immigrants – when it lacked shared values.

For Western societies in 2011 the question is less about the extent of welfare provided to other citizens and residents living within our borders. Rather, the question is: should we continue to generously finance foreign nations through our diminishing national budgets, when those resources could instead be devoted to financing our own debt, or ensuring that the welfare state that sustained us for so long is slashed rather more gently?

This is not to say that Western nations should not be charitable. But there is no compelling moral argument for financing poverty relief abroad when we spend less on more unemployed people at home.

Supporters of foreign aid will surely point out that in terms of GDP, foreign aid is but a small percentage – a negligible amount of money. Yet, OECD countries donated record high levels of Official Development Aid in 2010, a total of $129 billion representing an increase of 6.5 per cent from the previous year.

This is a remarkable figure, considering that most of these countries were either in the midst of or on the verge of a financial crisis. It is even more remarkable, given the mounting evidence that foreign aid yields the opposite outcome of what one desires – foreign aid often stifles entrepreneurship, makes governments unaccountable, distorts competition and promotes a culture of subsistence that makes it impossible to wean aid recipients off the aid – an argument persuasively made by Dambisa Moyo in her recent book, Dead Aid.

Foreign aid should be tied to clear rules and made conditional upon transparency and accountability; it should not be open-ended; it should go to specific projects and be tied to performance benchmarks; it should be subject to frequent reviews; it should not go to repressive regimes; it should be made conditional on the achievement of political, not just economic goals; and it should not provide an excuse to other countries with bigger interests at stake not to donate.

Prime minister Cameron has drawn the understandable ire of the tabloids because much of Europe’s and Britain’s aid to the Middle East and North Africa region, which he decided to increase, has yielded little tangible benefit over the years, has not improved either governance or transparency and has often benefited the very same rulers who are now being challenged and toppled by their impoverished people.

Aid to the Palestinian Authority tops the embarrassment chart – with European Union money and European and other Western donors giving more than the entire Arab League combined.

With deep cuts curtailing public spending in all sectors, it is high time that Western governments agreed to review foreign aid as well. One cannot preach austerity at home while disbursing foreign aid as if there were no financial crisis.

Emanuele Ottolenghi is a Senior Fellow at the Foundation for Defense of Democracies

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