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Where should foreign aid go?

The latest World Development Report, the flagship annual publication of the World Bank, proposes that from now on, a much bigger proportion of foreign aid should focus on issues of political conflict and justice.

This might seem natural, given all the wars, violence, terrorism, and displacement around. And political considerations have always influenced aid.

But putting political risk as the central purpose of aid is a sea change.

When the World Bank and other Bretton Woods institutions came about after the Second World War, the initial focus of multilateral aid was infrastructure. After Europe was rebuilt, attention shifted to the “Third World” under the guise of development.

This aid, all the way through the 1980s, strengthened the state much more than the society. There were two reasons for this. First, the Cold War meant that much of multilateral aid really went to prop allies and their offices, even if they were corrupt and brutal dictators. Second, the entire “development project” pushed by the West saw the state as the key dispenser of “development,” be it the provision of healthcare or education or employment.

In the 1990s, large states crumbled under people power, from Berlin to Manila, and donors shifted to the private provision of development. Human development, highlighting individual empowerment, took the scene; NGOs like Brac and Grameen expanded.

The 2000s saw an intensification of the privatization of development to a new level. “Development” was to be achieved through globalization, i.e., foreign trade and investment [1]. This was trickle-down at a world-scale: the state became detached from both planning and provision. Development goals were planned at the international level, and the grand blueprint was set by the UN’s Millennium Development Goals.

In this approach, although implementation was said to be national, the state’s role was mainly at the regulatory level: open up borders and promote an environment conducive to free global enterprise. India in the last decade was the poster child of this approach.

Now we’re back to the future. On the one hand, if conflict is the focus, then multilateral aid will become as political as it was in the height of the Cold War. Even though the potential exists for aid to be distributed on a non-partisan basis to the most conflict-prone parts of the world, history squarely contradicts that promise. Most recently, aid was suspended in Ivory Coast, as a way to punish the autocrat Gbagbo, even though a bloody civil war was raging in the country. The dispensing of aid on political grounds will never be easy.

On the other hand, a conflict focus reinforces the neoliberal idea of development as a global private enterprise. Aid will aim to bring political peace. Once that happens, the hope is that all else will fall in place: MDGs will determine overall targets, the state will (de)regulate to allow private trade and investment to flourish, and development will be the by-product of growth.

The overall logic of conflict and security makes sense. Neither state-led nor private-led development can take place under high political risk. A main challenge will be to ensure that aid is non-political, even though aimed at politically combustive situations. Over the next few blog posts, I will discuss some of the specific challenges and opportunities of targeting foreign aid at reducing political risk.

Notes
1. Philip McMichael discusses this changeover from development to globalization in Development and Social Change: A Global Perspective (Pine Forge Press, 2007). Highly recommended.

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