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A Conversation on Foreign Aid and Development

foreign aid and developmentIn a recent interview, The Borgen Project spoke to social and economic historian Dr. Richard Sheldon and Tessa Munt, former MP and current Liberal Democrat counselor, about foreign aid and development.

Foreign Aid

The British public is divided on foreign aid and development. There are those who celebrate the humanitarian achievements of foreign aid packages, there are some who decry foreign aid as “neo-colonial extraction” and there are others who consider it a waste on outsiders. Generally, the support trumps the critique. In fact, support is strengthened when one considers and reviews critique.

Tessa Munt and the Public Debate

ODA, or Official Developmental Assistance, is the vehicle for aid delivery in the U.K. ODA typically takes the form of all-in-one packages — funds, manpower and organizational assistance. The U.K. government is not currently meeting the U.N. target of 0.7% of GDP allocated for foreign aid. Set at 0.5%, the British government says it has no intention to restore foreign aid spending to the pre-pandemic levels of 0.7% until at least 2027/28. Tessa Munt and the Liberal Democrats are strong supporters of foreign aid and overseas development. Munt says, “the Liberal Democrats are the government of foreign aid” and the foreign aid target will return to 0.7% when the Liberal Democrats are in power.

Although public support of foreign aid is strong and sustained, public concerns over immigration and notions of free-riding may draw funds away from positive ODA programs toward initiatives designed to keep migration low. The Bibby Stockholm barge is one such example. Using foreign aid budgets, the U.K. has procured the engineless barge from the Netherlands at the cost of an estimated £18 million. The Bibby Stockholm is one of a number of sites the U.K. government is trying to set up to provide an alternative to housing migrants in hotels. The barge will house asylum seekers who are awaiting the outcome of their asylum applications. Its use has been criticized as inhumane and its ultimate purpose serves to deter asylum seekers from seeking illegal migration routes to safety in the U.K.

Stories like this and the recent attack on a hotel housing asylum seekers in Knowsley, Merseyside, dominate the headlines. As a result, foreign aid can be appropriated and its aims misunderstood. Munt offered a solution, arguing that the positive deployment of ODA programs weakens “the push factor that brings asylum-seekers to our shores.” Munt succinctly finishes the discussion on the xenophobic pushback to foreign aid with this: “Foreign aid is, or should be, at 0.7% – that leaves us with 99.3% to spend however we wish.”

Critique with Dr. Richard Sheldon

Dr. Sheldon explains to The Borgen Project his thoughts on whether or not foreign aid is beneficial and effective. “‘Generally, yes… I think it does work.” Not only does foreign aid work, according to Dr. Sheldon, but it is “very much in our interests to do it.” ODA and foreign aid hope to slow asylum channels by creating stability and reducing poverty in troubled regions and enabling opportunities for investment and trade. Dr. Sheldon goes further, by arguing that”‘we have an obligation and a duty” toward the poor across the globe and that there are “all sorts of places where advancement isn’t possible without some kind of external aid.”

The numbers appear to support Dr. Sheldon’s case. According to a Global Citizen article published in 2018, foreign aid and development financing has saved 700 million lives over the last 25 years. U.K. foreign aid, in particular, saved more than 990,000 lives between January 2015 and December 2017 by immunizing more than 56 million children across the world, according to Results.org.

In Syria, for example, the U.K. has provided a total of £3.8 billion worth of official development assistance from 2011 to 2022. Food aid and emergency assistance in Syria through U.K. aid “alleviated suffering and allowed recipients to use their own resources on housing and health care. It had enabled some families to send their children back to school. There was also evidence of positive outcomes at the community level, in the form of reduced incidence of local crime, fewer disputes and families having a more optimistic outlook about the future,” according to the Institute of Chartered Accountants of India (ICAI). Through foreign aid, the U.K. has saved the lives of thousands and averted much greater burdens of asylum.

Foreign Aid Issues

Foreign aid is not without its issues, however. Charges laid at the sector surround questions of power and wealth extraction. According to research in 2017 by a coalition of U.K. and African social justice campaigners, more than $40 billion leaves Africa each year through multinational corporations “repatriating profits and illegally moving money into tax havens.” Further still, countries have faced accusations of using foreign aid “as a weapon to boost trade and further political aims.”

Take the series of structural adjustments implemented in the 1980s by the International Monetary Fund (IMF), for example. During this period, the IMF placed conditions on aid packages that required the restructuring of a nation’s economic life. These conditions directed a reduction in state expenditure, and, state assets, like water gas and coal repositories, were to be privatized and bought by multinationals in the West. As a result, millions of people suffered unemployment and impoverishment at the same time social security systems weakened due to requirements to reduce state expenditure.

But, as Dr. Sheldon argues, the situation was complex. The IMF required governments to reduce state expenditures because of eye-watering levels of debt in the Global South and the risk of widespread defaulting.

Dr. Sheldon comments, “Yes, I think there were a lot of very harsh ideologically driven set of conditions [that] very much reflects the [late] Cold War and the triumphalism [of] the Reagan and Thatcher years.” Dr. Sheldon goes on to say that these issues “do matter – more rather than less,” but they need not diminish aid in its entirety. Foreign aid also “pushe[s] for political reform, accountability, democracy and human rights… [I’ve] been studying this for quite some time, and the time scale (for the 700 million lives saved) isn’t in the most generous time period,” Dr. Sheldon highlights.

Looking Ahead

If one looks at the reduction in extreme poverty from the 20th century, progress is remarkable. The percentage of those living in extreme poverty stood at 53% in the 1950s  — this percentage reduced to 9% in 2018. Dr. Sheldon argues that “capitalism, international aid, transport and humanitarianism have all [contributed] toward this.”

Ultimately, the emotive nature of this topic means that when individuals hear stories of misuse and misinformation about refugees and asylum seekers, they’re inclined to negatively perceive foreign aid as a whole. Dr. Sheldon argues that this is not correct; foreign aid is “part of the positive picture.” Despite the world population growing at a “rapid rate,” by most measures, poverty and extreme poverty have declined. As a result of this, the threat of global instability and concurrent issues of asylum have decreased. And, because of foreign aid, the U.K. has benefited from increased trade and increased stability.

– James Durbin
Photo: Flickr

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A Closer Look at Foreign Aid and Development

Foreign Aid and Development
A recent survey shows that 66% of Britons support foreign aid spending, but there is significant division regarding the specifics of aid, DEVEX notes. The British government is currently facing criticism as reports emerged that the government, in 2022, diverted £3.7 billion ($4.6 billion) from the foreign aid budget to domestic refugee programs. The act negatively impacted nearly all international humanitarian programs, according to Bond, a U.K. network of development organizations. Nonetheless, a British government representative highlights that Britain remains one of the largest foreign aid donors globally. A closer look at foreign aid and development illustrates the importance of aid to the world’s poorest.

Foreign Aid

Foreign aid remains elusive for many British citizens due to its complex network of donors and recipients. In essence, foreign aid involves the “transfer of capital, goods or services from one country or international organization to another for the benefit of the recipient country or population.” Its goal is to provide vital resources such as access to clean water, education, infrastructure and security.

Development

One should not mistake foreign aid as a mere wealth transfer or redistribution. Rather, it is an investment. A donor country in partnership with various private actors, provides financial resources or commodities: capital, credit, military and training, in return for preferential access to primary goods or capital returns on investments made in infrastructure or industry. Aid can be strategically deployed to ensure regional security, as investments in Libya, Somalia and Afghanistan exemplify.

As directed by the Marshall Plan of 1947, the U.S. sent complex aid packages made up of loans and goods to Europe to forestall the spread of communism and create a vast and dependable market for U.S. goods. This meant returns for both private and state investors and the recipient country.

Modern investments also have played a role in stabilizing regions. China, for example, has built 100 seaports in Africa to facilitate free trade and preferential access to goods. China built the Lekki Deep Sea Port in Nigeria. Costing the Chinese government $1 billion, it is one of the largest ports in West Africa.

The Chinese Ambassador to Nigeria Cui Jianchun says the project will create at least 200,000 jobs and will bring prosperity and security to the region. Of course, China, or the China Harbor Engineering Company Ltd (CHEC) specifically, owns 75% of the port and receives a fee on all goods entering and exiting. China has also provided humanitarian aid for disaster relief and refugee support globally.

Humanitarian Aid

Through foreign aid, countries and organizations are able to establish humanitarian assistance projects to help the most vulnerable people meet their basic needs. However, foreign aid primarily consists of comprehensive packages that include both development and humanitarian aid. Official Development Assistance (ODA) is a crucial aspect of this aid, designed to promote development and combat poverty. U.K.-funded ODA programs have achieved significant humanitarian milestones.

U.K.-funded ODA programs have, for example:

  • Immunized more than 56 million children between January 2015 and December 2017 saving 990,000 lives. An additional pledge will help immunize 75 million children over the next five years.
  • Made education accessible for 15.6 million people between 2015 and 2020.
  • Delivered nutrition programs for more than 50 million women and children.
  • Provided 365,000 vaccines in Syria and granted 1 million people access to clean drinking water.
  • Reached 300,000 women through the Work and Opportunities for Women programs.
  • Organized the “Better Work-Bangladesh” initiative, designed to improve the working conditions in the garments sector. More than 600,000 people labor in Better Work-registered factories in Bangladesh, with women accounting for 56% of this number.

Looking Ahead

During the U.K.-Africa Investment Summit in January 2020, the U.K. committed to investing an additional £1.6 billion in foreign aid and development projects to create jobs and foster growth. However, the U.K. falls short of the U.N. target of allocating 0.7% of GDP to ODA, currently spending 0.5%. The government suggests that financial constraints have affected meeting this target and it aims to return to it in the future. Global circumstances, such as the current focus on Ukraine, may redirect foreign aid budgets, raising concerns about neglecting other areas in equal need. 

The direction of Great Britain’s foreign aid and development strategy appears uncertain amidst the influence of COVID-19 and Brexit. These events have compelled the U.K. government to reevaluate its global stance, leading to budget reductions and altered spending priorities. However, as economic conditions improve, there is optimism that the U.K. will establish well-defined and impactful foreign aid strategies and objectives.

– James Durbin
Photo: Flickr