As US President Donald Trump puts American foreign aid through the wood chipper, is this the opportunity to re-set aid?
My own ambivalence towards aid goes back to growing up in hunger-prone 1960s India. I recall our ration packs adorned with the slogan: “from the American people”. I learnt English from books gifted by the British Council, and enjoyed the adventures of Young Pioneers, thanks to the library sponsored by the Soviet Union. Body nourished but mind confused, the battle for my heart continued with scholarship offers from Britain and Russia.
However, my enduring memory is not of gratitude but shame because my great India – as indoctrinated in school – depended on foreigners. I questioned their motives and resented our benefactors because their showy patronage humiliated us.
My teenage ruminations were set against the Cold War, when western and communist blocs competed for India. India played both sides pragmatically, but less confident countries were squeezed between superpowers wielding aid overtly and covertly.
In due course, I entered a 30-year aid career spanning the heyday of liberal globalism. Its central notion was that the rich are duty-bound to help the poor.
We debated alternative socio-economic approaches. An expanding multilateral system mediated between rival models to reach consensus around the Millennium Development Goals, and now Sustainable Development Goals (SDGs). The cardinal principle of aid’s organising framework is that the neediest are prioritised while none are excluded.
Official development assistance (ODA) from rich western donors swelled from $83.6 billion in 1990 to $214 billion in 2023. Others, especially China, UAE, Saudi Arabia, and philanthropies such as the Gates Foundation, joined the scene to disburse upwards of $9 billion annually.
Good people generally agree that poverty, illiteracy, hunger and disease are indecent in our plentiful world, where global GDP has nearly trebled from $34 trillion at the millennium to $115 trillion today. But as consensus decayed on how to tackle deprivation and inequality, foreign aid became divisive. Why?
It started with linking aid to human rights. Some see poverty simply as requiring redoubled charity. Others challenge the oppression created by a skewed world order where the poorest half get two per cent of global wealth while the richest 10 per cent own more than three-quarters.
Therefore, is aid for mitigating human misery or for correcting underlying unfairness – through transforming social organisation and governance? The former is humanitarian assistance that reached $26.1 billion or 11.6 per cent of ODA in 2023. The rest is development assistance.
But in our era of multiple and endless crises, the humanitarian-development distinction is moot. The former is supposedly unconditional in accord with the principles of humanity, impartiality and neutrality. In practice, however, donors confer favours according to political affinity. This is problematic when humanitarian aid is toxified in Gaza, attacked in Sudan, minimised in Burkina Faso, or overlooked in Afghanistan.
Surveys indicate that two thirds of humanitarian beneficiaries consider help received as inadequate or irrelevant. They also resent not being involved and the perceived arbitrariness of top-down benevolence creates disrespect. Is this a factor in the five-fold increase in violence against aid workers over the past quarter century?
Meanwhile, development aid is strongly conditioned towards political, social and institutional re-engineering in receiving nations. Even more so by dominant international financial institutions where big western shareholders hold sway. When emerging economies push back, disagreement follows.
Further polarisation comes from frustrated developing nations demanding aid as restitution for historic wrongs such as slavery and colonialism. Reparations for Transatlantic Chattel Slavery are calculated at $107.8 trillion, setting African and Caribbean claimants against European and American donors.
Neither is China moved by calls for compensation for the $8.5 trillion global economic losses incurred during Covid-19. Co-operation on future pandemic prevention has stalled. And $192 trillion is calculated to be owed to the global South by the global North’s disproportionate carbon use since industrialisation. This irritates rather than facilitates increased financing to combat climate breakdown.
Weaponising aid undermines the solidarity essential to tackling shared problems. That is further compounded when aid is inaccurately prescribed. For example, with migration – a concern everywhere.
Cynicism is further fuelled when foreign assistance budgets are raided for domestic spending on asylum seekers. Donor meanness includes charging interest on concessional loans and linking aid to the purchase of donor products and services or forcing preferential trade agreements. Such aid "tying" increased from 10 per cent in 2012 to 20 per cent in 2022.
Overall, at least one in three aid dollars never leaves donor countries or returns to them. Take sub-Saharan Africa, which annually receives over $60 billion ODA – but $90 billion left the continent in illicit capital flows in 2020.
How much aid is lost to waste, fraud and corruption? Critics quote 20-30 per cent, though with little evidence for this statistic. But with many documented examples of spectacular leakage in some countries, large aid providers and users – especially some governments and multilateral agencies – appear reluctant to improve accountability and transparency.
Against that context, how do we assess the impact of aid? The conventional narrative celebrates moving one billion people out of extreme poverty (those below the International Poverty Line of $2.15 daily in 2017 international dollars) this century. It is arguable if this abysmally low benchmark can keep anyone’s body and soul together. In comparison, the US poverty line is $24.55.
Can international aid be credited for enhancing development? Perhaps so with specific interventions on child mortality, HIV, cereal yields, water, sanitation and energy. That is laudable but the evidence attributing whole scale progress to aid is weak. Countries lifting most people out of poverty, such as China and India, have done so due to their own policies on economic growth, distribution and “frugal innovation”.
Elsewhere progress has stalled. Seventy per cent of those in extreme poverty live in 75 countries that receive grants and loans from the World Bank. Sub-Saharan Africans living in extreme poverty increased from 282 million in 1990 to 464 million in 2024 even as the continent received five times per capita assistance that Europe received after the Second World War.
Complex explanations include persistent conflicts, natural disasters, and corruption, with the Covid-19 alibi being evoked for far too long. Nevertheless, the legacy is a crippling subjugation to aid dependency.
Africans lamenting the hardship caused by Mr Trump’s shuttering of American-funded clinics and warehouses ask why they became so dependent, despite their continent’s riches, talents, potential and their leaders’ rhetoric on self-determination.
In summary, none of the 17 Sustainable Development Goals are likely to be achieved by 2030, and 83 per cent of SDG targets are static or regressing. Development is not achieved by aid but by investment where the gap across SDGs has widened from $2.5 trillion in 2015 to $4 trillion in 2023.
Proposed reforms tinker at the edges of financing architecture with perverse impacts that allowed rich countries to print money to mitigate Covid-19 effects, while constraining developing countries from doing so.
Meanwhile, public perceptions are unhelpfully skewed. Some Americans tend to think that 25 per cent of their federal budget goes on foreign aid when the true figure is one per cent. Well-meaning advocates trying to reverse Mr Trump’s policy play straight into the “America First” camp by arguing that reducing food assistance harms farmers in Iowa and Kansas. Or that reducing aid harms US influence and advances rival China.
Technocratic and bureaucratic reforms to improve efficiency are of little use when “my country first” attitudes instrumentalise aid. Not only by Americans but by most donors.
Correction demands restoring the moral justification for aid as selfless outreach to the needy – anywhere and everywhere. That appears idealistic under the current scenario, but the long journey must start.
