How Do We Help?: The Free Market in Development Aid

Cooperation means partners

85 Cooperation means partners Inevitably, national donors have also been greatly influenced by the international trends in development thinking and practice outlined above. Starting out as a neo-colonial project, development cooperation has gradually evolved into a tool which is used to a significant degree for combating poverty. We would even support the contention that the international framework is increasingly determining the standards of national development policy. At any rate, this is certainly true for those, such as the ministries of development cooperation, who started development cooperation as specialists. National development agencies now have to take account of standards, benchmarks and agreements which have been established at international level. They are increasingly in contact with their counterparts in other countries and with international institutions. But to reduce national donors to a national version or a branch of an international cooperative alliance of donors for development would be to distort the picture. Earlier, we pointed out that each national system has its own way of working. It has its own subculture, its own controversial issues and its own distinctive national power relations. In addition, we observed, it can be regarded as a national marketplace. Internationally: among specialists Studies of development aid constantly revive a polemic between the so-called realists and idealists.19 The former group stresses that bilateral aid is primarily used to support the donor’s own foreign-policy interests. The idealistic school points to donors’ humanitarian motives. Schraeder, Hook and Taylor (1998) investigated the aid policy of the USA, Japan, Sweden and France in Africa in the 1980-1989 period. Altruism, it was found, was not a decisive element in aid policy, despite the donor countries’ humanitarian rhetoric. What they did find was a clear link between the African states’ ideological position and the volume of aid they received. Trade relations were very closely correlated with How do we help? 86 aid flows. This was a remarkable observation, particularly for a country such as Sweden which has always prided itself on its untied generosity. Omoruyi (2001) has adapted the study and considered the motivations behind the aid given by the USA, Japan, Norway and France. He also included the post-Cold War period in his study. He found that poorer African countries had more chance of getting a slice of the aid pie from the USA, Japan and Norway. This was not the case for France.20 He concluded that a kind of international aid regime has arisen which determines the principles and standards by which donors must abide. Even an idiosyncratic donor such as the USA, he argued, has internalised these principles and standards. However, he added that it was not just France that took its own interests into account. Although in the case of Norway poorer countries were treated preferentially, there was still a positive correlation between the volume of aid that they received and their place on the index of strategic minerals and the value of their imports from Norway. So what makes up the current aid regime or paradigm? And is it true that the donor countries are increasingly falling into line with this aid regime? Earlier we discussed the Paris Declaration, which was signed in 2005. This refers to the need for ownership, alignment, harmonisation, a results focus and mutual accountability. The donor community has also been singing from the same hymn-sheet for years regarding the preferred destinations for aid. They should be the Least Developed Countries, it is argued. To this can be added the point that virtually everyone in the traditional development community is convinced that it is preferable to opt for projects in countries which are institutionally weak and for programmes in stronger countries. Larger projects and programmes are preferred, because large numbers of small projects overwhelm the recipients and saddle them with countless administrative and other burdens. The recipients, it is also said, need to know where they stand. That means that aid must be predictable and not constantly fluctuating. Untied aid is not just more productive, it is also better than tied aid, which obliges recipient countries to use the aid (often a loan that has to be repaid) for purchases in the donor country (which may be too expensive and not always the most sensible choice). In recent years, there has been a conviction that giving budget support is a better form of aid than project or programme support. With budget support, a direct financial injection is provided into the budget of the government or the...