Who benefits from Australian foreign aid?
The report of the committee to review Australia's overseas aid program was presented to foreign minister Alexander Downer in May by former Woolworth's executive Paul Simons, the chair of the committee. Receiving Simons' report, Downer stated that the government considered this document the most important contribution in over a decade to the public policy debate on the nature and role of Australia's aid program. CATE KENNEDY, a community artist working with a rural cooperative in Mexico, comments on the report.
The report states that AusAID suffers from having no clear objective. Simons provides one: to assist developing countries to reduce poverty through sustainable economic and social development.
Simons does not define sustainable development. He does, however, make it perfectly clear that the path to success is economic growth: "Economic growth is central to sustainable poverty reduction; but growth alone is not sufficient. The pattern and quality of economic growth are also important ...
"In most developing countries, it is the private sector which has the greatest potential to advance development. Aid can be very effective when it is directed to building an environment conducive to private sector development."
Aid to the developing world, it would seem, is profit oriented. AusAID's priorities are about to be sharpened: namely, making money out of the money we purport to give away. Aid is just another kind of trade, and AusAID already boasts a 77% return.
Remote experts tout blueprints for development which, with increasing frequency, cause rather than remedy the poverty, dislocation and social instability of the people they are intended for. The growth-at-all-costs model of global macro-economics is shaping up to be a textbook example of non-sustainability.
Theory and reality
The recommended "geographical focus" of the Australian aid program, for all its cost-effective reasoning, strays a long way from the objective of humanitarian-based poverty alleviation. It claims to give less emphasis to economic and commercial priorities and more to the principles of sustainable development.
The criteria for the allocation of aid money, says Simons, should be good governance, i.e. demonstrably effective government policies and administration, respect for human rights, the rule of law and participatory development.
Therefore AusAID should give high priority to activities that will bring about improvements in governance. The report emphasises that assistance should not be provided to countries with policies inimical to sustainable development.
Given all this, the inclusion in the aid program of China and Indonesia (to name but two) seems mystifying. These countries maintain political repression, the chief cause of regional poverty and the loss of livelihood, social and natural resources and cultural identity. It is hard to see how any of the comforting objectives of the report have any relevance.
Why are Burma and North Korea excluded from our list of aid recipients? Or come to that, East Timor? Simons' geographical criteria ban many developing nations from participating in the outcome of reduced poverty, which the report states is our fundamental aim, while public money aids countries which blatantly flout the most basic of human rights.
It is no wonder AusAID's public image is so poor. It continues to justify financial support for political regimes which routinely evict, destabilise and makes refugees of their poorest members, while persecuting those in neighbouring countries who desire sustainable independence.
AusAID continues to defend foreign trade agreements which amount to little more than the plundering and exploitation of both natural resources and a vastly impoverished, dependent work force.
To offset recommendations for a narrower Asia-Pacific focus to country-to-county aid programs, Simons recommends maintenance of contributions to multilateral organisations like the World Bank.
The World Bank operates on strategies and mandates which are instrumental in maintaining inequities between the developed and developing world. This makes it a highly effective and efficient banking organisation, but that is hardly a desirable qualification when the aim is the eradication of poverty.
Mexico, for example, was offered rescue packages by the World Bank and the IMF after its economic crisis in 1994, in order to maintain its crippling debt repayment obligations (US$124 billion at the time). This resulted in an inflation rate of around 50% and interest rates which brought about a second crisis of loan defaults.
Private sector
Simons states that aid can be very effective when it is directed to building an environment conducive to private sector development. However, he cautions, aid programs will need to adjust their policy frameworks in order to best help the experts in the private sector.
Our best option, he advises, is to devote more resources to encourage competition and free trade.
We need to remind ourselves here that Simons is meant to be talking about aid. Yet he couldn't be clearer that he believes AusAID should devote its budget to making it easier for private business to step in, supposedly to create the prosperity economists keep promising is just around the corner for impoverished nations.
He says, "Private sector development is crucial to sustainable economic and social development".
We need to ask: economic development for whom? The free market private sector, by its very nature, concentrates economic power in very few corporate hands. Leaving development in the hands of the private sector (and therefore the world market) never has and never will stimulate community or local development which can begin to alleviate poverty.
On the contrary, it will dictate, with more and more rigidity, what a manufacturer should produce, what it will cost, and what technology and resources it will use.
In a system which is dependent on constantly increasing international competitiveness, industry finds a wonderful home in the developing world where it can base itself on low wages, poor working conditions, lax environmental regulations and a work force desperate enough to agree to all of these.
The system which Simons claims is crucial to sustainability almost invariably involves unregulated foreign investment in labour-intensive, export-oriented and geared industries which profit from a stream of impoverished, cheap, exploitable labour.
The priorities that Simons' glibly lists as essential prerequisites to development — education, health, solid infrastructure, rural support — are precisely the things his economic growth model ignores and destroys.
Private sector investment has no interest in providing regional schools, hospitals or sustainable small-scale agricultural support. Examples of what really occurs are all around us: in the forests of Brazil, the ghettos of Mumbai and the child sweatshops of Manila.
It is no coincidence that attractive investments like these need to repress independent trade unions to maintain their competitive advantage. It is well documented, for example, that victims of human rights violations in Latin America are often individuals who have tried to secure union rights or form independent labour unions to improve the abhorrent working conditions.
Simons reinforces this by describing the activities of private sector industries as development work. Rather than suggesting that aid funding would be better spent subsidising emerging domestic producers facing competition, Simons states that AusAID should not interfere with the workings of the competitive free market, creating "inefficiency".
Environment
The report does not address the environment. While it pays lip service to the problem, it states: "The aid program has limited scope to address global environmental issues. AusAID should rationalise its support for environmental activities to ensure that its funds are directed only to activities which have close links with poverty reduction in developing countries."
This is a non sequitur. Simons is suggesting that when push comes to shove, you support clear-fell logging in the Philippines, which offers employment, rather than dealing with environmental degradation.
Environmental destruction is one of the key causes of global poverty. It destroys health, livelihood, future resources and infrastructure, self-reliant small-scale agriculture, forestry and fishing. There are abundant examples of unregulated trade and industry plundering and degrading the environment.
The deregulated free market economic model, which encourages corporate interests to move south, allows them to flout lax environmental laws, resulting in the reduction of environmental regulations to the lowest possible standards (what the market will allow, to use the expression so beloved of economists). Restrictions on imports or exports on environmental grounds are designated a barrier to trade.
Simons is scrupulous about not wasting money, yet he advocates a model whose impacts will be inconceivably costly. It can't possibly make sense to spend aid money in a way that exacerbates problems, then spend more to trying to rectify them.
[The report is available from AusAID's internet site at www.ausaid.gov.au. Feedback on the report can be sent to: The Corporate Strategies Team, AusAID, GPO Box 887, Canberra ACT 2601.]