If you want to be rid of aid that advances US interests, don’t celebrate now: that aid isn’t going anywhere, says Terence Wood.
Donald Trump is in the process of dismantling US aid. Aid has always had critics who have argued that it does more harm than good. If they’re right, perhaps Trump’s attack on aid will be great for global development?
Some critiques of aid come from predictable places: wealthy conservatives have often been opposed to aid giving. I’m not going to focus on those critiques in this post. Rather, I’m going to look at a more interesting type of critique, one that’s usually associated with the political left.
Critique from the left often focus on the claim that aid is given to advance donors’ own interests and, as a result, does little to help poorer countries become less poor, better educated and healthier.
Economists have been studying aid’s effects as well as why it is given for decades. It’s not easy. The data are poor: even the most sophisticated regressions, the standard tool of analysis in this work, struggle to separate cause and effect. But, for what it’s worth, it appears that – on average – aid has a small positive impact on economic development, education and health. “Small positive” may seem underwhelming – but as far as global capital flows go, aid itself is very small. It would be unfair to expect much more.
‘The whole point of the Trump pause and review is to identify aid that is not advancing US interests, and cutting it. The worst types of aid will remain’
Nevertheless, it’s easy to find examples of donors giving aid to advance their own interests. Sometimes this is harmless, or even beneficial. If donors want their aid to bring soft-power by winning hearts and minds, they’ll only do so if their aid actually helps (this blog neatly summarises the evidence on aid and soft-power).
However, there are many examples of aid being used badly by donors and causing harm as a result, particularly during the Cold War. (The example I usually give in class is aid given to Mobutu to make sure he didn’t turn to the Soviets. He was a ruthless dictator, aid helped prop up his regime and he stole much of the aid money while he was at it.)
Beyond individual cases, there is reasonable econometric evidence that aid given to advance donors’ interests is less effective on average (this summary of the econometric evidence is good).
So the left critique of aid is right then?
Not really. Aid certainly isn’t perfect, but sweeping claims about aid obscure the fact that aid varies a lot. In reality, aid is given in many different ways (see the graphic below, from one of my slides in a course I teach) and many different actors (academics, civil society, campaigners, foreign policy hawks, churches, Bono…) have some influence on how aid is given.
The end result is that aid varies a lot. Some organisations and countries give aid a lot more effectively than others. Even in the Cold War, when aid was at its worst, some aid still helped (a lot in the case of the eradication of Small Pox and the Green Revolution).
Focusing on the US alone, indeed the George W Bush administration alone, some US aid, such as that to Iraq, was given for the wrong reasons, and may well have done harm (a lot less harm than sanctions, missiles and IEDs though). But other aid, particularly PEPFAR, which began under Bush, has saved many lives.
Aid isn’t a panacea, aid is complex, but aid can help. When it is given with the right motives it is more likely to help.
And that brings me to Donald hat Trump. His aid cuts are the worst of all worlds for aid. Aid infrastructure is complex and inter-dependent, an overnight freeze has caused a lot of it to fall apart meaning that the supposed humanitarian exemptions to the freeze aren’t working. As a result, vulnerable people — people who need medications, people in refugee camps, people dependent on food aid — will die. Are dying. And as the dismantling of aid agencies in New Zealand, Australia and the UK has shown, the end of USAID will lead to the loss of the expertise needed to give aid well.
Some US aid is given for nakedly geostrategic reasons. And some of that aid does harm. But the whole point of the Trump pause and review is to identify aid that is not advancing US interests, and cutting it. The worst types of aid will remain.
If you want to be rid of aid given to advance US interests, don’t celebrate now, that aid isn’t going anywhere. If you’re concerned about poor and vulnerable people, the Trump administration and its aid policies are a disaster.
Terence Wood is a researcher at the Australian National University’s Development Policy Centre. This post is adapted for FP2P from a post written on his personal blog.
A note on what I mean by “aid”…
This post is not about military aid, it’s about development aid, or “Official Development Assistance” (ODA). USAID delivers ODA. ODA is what Trump has put a halt to (not military aid). Only poorer countries are eligible for ODA (the official OECD list is here.) People often say Israel is the largest recipient of US aid. It gets a lot of military aid, but no ODA. In the above post I use the word “aid” out of habit but, strictly speaking, my focus is on ODA.
More links on the USAID cuts…
The claim that only 10% of US aid reaches its intended recipients is completely wrong.
The White House press release attempting to justify the demise of USAID and the aid freeze is profoundly misleading.
To the author: To what extent you agree with this hypothesis: “Taxing poor people in rich countries to support rich people in poor countries”.
I don’t agree with it. It is right-wing cant. Aid spending is about 1% of government spending in most OECD countries. Therefore its effects on tax rates are trivial. What is more, all OECD countries have progressive tax systems, and many have tax free thresholds, which means that the tax revenue in question primarily does not come from the poor. And while some aid, particularly aid given for geostrategic reasons, is captured by the wealthy in developing countries, not all is captured and there is reasonable evidence that overall aid spending brings broad-based, albeit small, benefits to recipient countries.