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Open purses with strings
attached
By Alan Boyd
SYDNEY - Stung by United Nations criticism
and eclipsed by a global outpouring of private
aid, the world's wealthiest nations on Thursday
assembled a massive financial package for the 5
million victims of South Asia's tsunami.
Meeting with their Asian counterparts in
Jakarta, leaders of the United States, Japan,
Australia and Western Europe pledged US$3.7
billion in immediate help and reconstruction funds
for 13 affected countries. And more is expected as
development needs are assessed.
The
biggest contributors were Australia and Germany,
with pledges of $764 million and $674 million
respectively. Canberra will split its aid between
emergency relief and long-term development
assistance, while Berlin's package will be spread
over three to five years.
Washington
earlier pledged $350 million, and has also
committed 13,000 armed forces personnel and an
armada of naval vessels and helicopters for
emergency operations.
But suspicions
linger over the motivations of the US and its
allies, which were collectively labeled "stingy"
by UN relief coordinator Jan Egeland last week
because of their slow response to the tsunami
calamity. Comments by US Secretary of State Colin
Powell and Australian Prime Minister John Howard
reinforced the notion that while humanitarianism
undoubtedly has played a part in shaping relief
policies, it probably comes second to the
time-honored practice of peddling influence.
So extravagant have been some of the aid
pledges that European Development Commissioner
Louis Michel cautioned the Jakarta participants
against making promises that might not be
delivered. "We have to be careful and not
participate in a beauty contest where we are
competing to give higher figures," he said.
Even the recipients, who are mostly in no
position to refuse the offered cash, privately
acknowledged that foreign-policy objectives - in
particular the alliance against terrorism - had
helped to loosen the purse-strings.
Relief
organizations have calculated that as much as 75%
of foreign aid is directly tied to trade access or
other economic and political strategies. Some
comes with so many strings attached, including
preferential tendering on contracts and the hiring
of consultants, that only 30-40% of dollar value
is ever realized.
US policy dictates that
much foreign aid be spent on costly imported
medicines, weapons, agricultural produce or
manufactured goods. Some European nations have a
similar approach.
In the US, it was
counter-terrorism activities and military
cooperation that consumed most offshore funding
through the first term of President George W Bush,
in a period when other foreign development
assistance from Washington stagnated.
As a
proportion of gross national product (GNP), the US
was the lowest aid contributor among the
industrialized nations in 2001-03, allocating only
0.12% of total income in this period. Although
Washington paradoxically displaced Japan as the
largest donor in dollar terms, this was primarily
due to its terrorism response.
"Most of
the United States' increase in 2001 was due to a
$600 million disbursement to Pakistan for economic
support in the September 11 aftermath," the
Organization for Economic Cooperation and
Development (OECD) noted in a study of foreign-aid
commitments.
Bush has requested an
increased foreign-aid budget in the current
financial year, but mostly to cover security
upgrades at embassies and other overseas missions.
Untied aid will account for only 5% of combined
military requests.
While the tsunami
victims have to make do with $350 million worth of
assistance from Washington, at least until the US
comes up with a better offer, there is so much
money swilling around in Iraq that $18 billion
tailored for "reconstruction aid" is still
unspent.
According to the US Agency for
International Development (USAID), "US foreign
assistance has always had the twofold purpose of
furthering America's foreign-policy interests in
expanding democracy and free markets while
improving the lives of the citizens of the
developing world."
However, the balance
has shifted as conservatives, convinced that
official development assistance (ODA) has little
or no impact on improving livelihoods or opening
new export markets, have seized the budgeting
agenda in Washington.
Private donations
abroad by Americans, including pledges to
charities and churches and disbursements from
corporate foundations, now are three times as
large as the ODA contribution of $16 billion, and
there is every indication this trend will
continue.
Washington's contribution looks even
more miserly when the ODA data are broken down.
Most goes to loyal Middle East allies Israel and
Egypt, with Indonesia the only significant
recipient among the tsunami victims.
Not
that most other countries are doing any better.
The British-based relief agency Oxfam reported
last month that the foreign-aid budgets of wealthy
countries had been falling since the mid-1960s,
and that at current spending levels it would take
more than 50 years to make any impression on
global poverty.
Last year only five of the
22 countries classed as industrialized - Norway,
Denmark, the Netherlands, Luxembourg and Sweden -
achieved the donor benchmark of allocating 0.7% of
GNP to ODA. The benchmark was adopted at the Earth
Summit in Rio de Janeiro in 1992 under the UN
Agenda 21 program for eradicating poverty through
development assistance. No other countries have
even come close to meeting the target.
France managed 0.41% of GNP last year, the
United Kingdom 0.34%, Germany 0.28%, Canada 0.26%,
Spain 0.25% and Australia 0.25%. Japan, the only
Asian participant, came in a lowly 19th with a
paltry 0.2%, maintaining a reduced ODA commitment
that dates back to 2001.
"With the added
dollars, Thailand, Indonesia and the other
tsunami-ravaged countries could have developed
their own early-warning systems. They would have
the means to provide speedier and greater relief
and emergency services when disasters strike,"
said American analyst Earl Ofari Hutchinson, a
longtime critic of foreign-aid policies. "The
United States and other rich nations must be
applauded for their outpouring of dollars for
food, medical supplies and support teams for the
tsunami-stricken countries. But it shouldn't take
a tragedy, or the eyes of the world, for wealthy
nations to do more to alleviate human suffering."
Tokyo may be able to make amends with a
separate call for creditor nations to freeze the
debt obligations of countries hit by the tsunami.
The UK, France and Germany have agreed but several
others - including Australia, a close economic
partner - have refused, putting the initiative in
doubt. Freezing up to $3 billion a year from debt
payments would ease the reconstruction burden,
which the UN expects to cost at least $14 billion,
though other studies suggest it could be as high
as $20 billion.
The proposal did not make
the agenda in Jakarta, but it is due to come up
for discussion at next week's meeting of creditors
known as the Paris Club, which links the Group of
Seven industrialized nations.
Alan
Boyd, now based in Sydney, has reported on
Asia for more than two decades.
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