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IT’S the time of the year when pundits put on their thinking caps, mull over the events of the year about to end, and try and make educated guesses about what lies ahead. The defining event of 2017 was Trump’s decision to declare Jerusalem the capital of Israel, and the pronouncement that he would move the US embassy there from Tel Aviv. This was the culmination of Trump’s bizarre moves in world affairs that featured his infantile comments of the North Korean dictator Kim Jong-il.
And when Muslim countries in the UN General Assembly voted on the proposition that the ancient city of Jerusalem would be the capital of Palestine whenever a state was achieved, Trump threatened those voting for the motion with financial pain. Specifically, he promised to cut aid to the offending countries. His UN Rottweiler, Nikki Halley, sounded even scarier. All this from a country that has long preached democracy to the rest of the world.
However, Trump does have a point: there is no such thing as a free lunch. Countries give aid to gain influence, and not out of a generosity of spirit. True, some emergency assistance is provided because people are moved by images of hunger and poverty. Natural disasters often provoke sympathy. But state-to-state aid is usually calculated.
Many countries become addicted to this annual bonanza, and expect it almost as a right. Had this assistance been put to proper use, perhaps it could have benefited ordinary people, and raised living standards. But in most recipients, aid is used on public projects, education and health, while the funds raised by taxation go to the military and for vanity projects. By this substitution, the economy is sustained at a low level without completely collapsing.
The arms received permit the recipient to adopt a far more aggressive posture than would have been possible if indigenous funds had to be used to buy arms. But the flip side to accepting modern weapons systems from a single source is that dependence builds up on ammunition and spare parts.
Rentier countries like Pakistan and Egypt have, over the years, received scores of billions of dollars in aid, most of it in the form of weaponry. Decades of this dependence later, poverty, hunger and illiteracy still stalk both countries. So where did all this money go? Meanwhile, coming generations have been saddled with the crushing burden of servicing the loans and repaying them.
Once a country is caught in the aid trap, there is no escape. It’s an easy way to balance the budget and get access to shiny new toys for the boys. As time goes by, fresh aid is indirectly used to service old loans. And every year, the amount to be paid as interest, and the tranches to be repaid on the capital, goes up. While China and Saudi Arabia are important donors to Pakistan, the US is by far the biggest, having provided $78.3 billion since 1948. Overall, we shell out some $6bn annually for servicing our debt.
While we are the largest aid recipient in the region, we are well behind our neighbours in terms of virtually all social indicators and economic growth. Egypt, too, is mired in a morass of subsidies that have virtually bankrupted it. Both Egypt and Pakistan were co-sponsors of the recent UN resolution on Jerusalem, and might now face American retaliation in the shape of reduced aid flows.
And it’s not just American aid that could be affected as the country has a powerful voice in IMF and World Bank decision-making. So clearly, there’s a lot at stake here: adjusting to a world of falling economic assistance will be hard and painful. Countries like ours had fooled ourselves into thinking that we could have our sovereignty as well as an open-ended supply of overseas aid that would be written off in the distant future, or paid off by our descendants long after we had enjoyed spending the cash.
Sadly, the real world doesn’t work that way. Every dollar we receive means a slight loss of our freedom to act. And if we don’t dance to our donor’s tune, we get punished by a cut in aid. Of course it’s a bit more subtle than that: we will get told about resource constraints, or that voters are not receptive to foreign aid, or, simply, that we aren’t “doing enough”.
As it is, the world is in turmoil, especially from Morocco to Indonesia. Part of the conflict is being caused by the ongoing face-off between the proxy forces of Iran and Saudi Arabia. Then there is the confrontation between North Korea and the United States that might easily turn into a nuclear war. China’s aggressive posture in the South China Sea also has the potential of spiralling out of control. Russia’s role in Ukraine has not been conducive to peace and tranquillity in the region. Pakistan and India’s continuing refusal to sort out the confrontation over Kashmir could also escalate.
So all in all, our planet is a far from peaceful place currently. An economic meltdown in a large number of recipients of US aid will create further turmoil. While I am no advocate of aid dependency, I do think the removal of this crutch needs time and careful management. The addiction in many countries is too deep-rooted to eliminate abruptly.
But a serious rethink of the relationship between donors and recipients needs to begin so that we can envisage a world where nobody gets any free lunch.
Published in Dawn, December 25th, 2017
