Sunday, April 27, 2008

The Tragedy of Aid to the Third World

From The Tragedy of Afghan Aid at
by Andy Rowell

... in September 2002, the United States launched what would become an aggressive effort to build or refurbish as many as 1,000 schools and clinics by the end of 2004. However, Congressional figures showed that they managed to finish and hand back to the Afghan government only 40 schools by late 2005.

As Ben Jackson wrote in his book Poverty and the Planet published in 1990, “Aid is commonly thought of as handing over money to Third World governments for development. In fact, aid largely consists of funding from Western governments for services, machines, technical experts and consultants to be supplied by companies in rich countries, frequently their own.” The bottom line was that “most aid money is actually spent in the rich world.” Of the $20 billion the World Bank handed out in 1988, $15 billion went to its own contractors or consultants.

... there is a huge disparity between what America spends on war and what the international community spends on aid. The US military currently spends nearly $36 billion a year in the country, some $100 million a day; yet the average volume of aid spending by all donors since 2001 is just $7 million per day. Whilst the military budget is vast, 2.5 million Afghans face severe food insecurity, and one in five children still dies before five. Life expectancy is woefully low at 45 years. Thirdly, over half of all aid to Afghanistan is tied, by which donors often require procurement of services or resources from their own countries. Rather than go to help Afghanistan, the money just lines the pockets of Western contractors and companies. So of the aid actually spent, a staggering 40% has returned to donor countries in corporate profits and consultant salaries.

The report notes: “Vast sums of aid are lost in corporate profits of contractors and sub-contractors, which can be as high as 50% on a single contract … A vast amount of aid is absorbed by high salaries, with generous allowances, and other costs of expatriates working for consulting firms and contractors — each of whom costs $250,000-$500,000 a year.” In contrast, an Afghan civil servant is paid less than $1000 per year.

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