New Strategies for Helping Third World

At a conference in Monterrey, Mexico, last month, the United Nations implored rich countries to raise the amount they spent on overseas aid each year to avoid creating future Afghanistans.

In the course of the conference, President Bush announced the creation of the Millennium Challenge Account, a program that will increase the U.S. foreign aid budget by 50 percent, bringing it to $15 billion by 2006.

Conscious of the criticisms of foreign aid in the past though, the president said his boost would be closely tied to results.

"Pouring money into a failed status quo does little to help the poor," he said. Success had too long been measured, he said, "only in the resources spent, not the results achieved."

A Change in Priorities

Experts say Bush's announcement is only the latest sign of the change under way in the development community.

The World Bank and the International Monetary Fund, two of the most important organizations in the aid community, had long been criticized for setting standards for aid that worsened the situation in developing countries instead of bettering them.

"These institutions have a political purpose," said Mark Weisbrot, co-director of the Center for Economic and Policy Research. "Poverty, that's way down on their list of priorities."

Bill Murray, deputy chief of the IMF's press office, recognizes that much of the money given in the past wasn't effective because it came with reams of stipulations. "The donor countries concerned did not want to give a blank check. That thing kind of snowballed over time.

"There was a degree of truth [in the criticism of foreign aid] a few years ago," Murray said — but he said things have changed, and are still misperceived.

As an example, he recalled a convention of trade unionists who last year declared the IMF anti-education because it denied salary increases for Kenyan teachers.

But the IMF diverted the money to constructing more schools — and there was a good reason for doing so, he said. "In Kenya, [among teachers] there are rampant no-show jobs," he said. "No-show jobs" are when wages are paid to fictitious people.

Interactive: Click to learn about where American aid dollars go

A Better Approach

"A lot of people realize the old system does not work anymore," said Gerald O'Driscoll, director of the Center for International Trade and Economics at the Heritage Foundation.

As a result, the international donor community is now taking a more "holistic" approach, concentrating on reducing debt, building up national institutions and lowering trade barriers, said Damian Milverton, a communications officer at the World Bank.

The end of the Cold War changed the reasons why people gave aid, he said. During the Cold War, he said, "there was not a great focus on results. It was a political tool."

The new policies are less paternalistic, Van Leeuwen said. "Before, donor countries used to decide where to spend money from the outside. They didn't always have the sexiest priorities."

A lot of foreign aid in the past was spent on showcase projects like huge dams, experts said, instead of concentrating on programs that had an effect, like disease prevention.

Organizations like Drop the Debt and Oxfam, and figures as varied as pop singer Bono and notoriously isolationist Sen. Jesse Helms, have also given momentum to a reconsideration of foreign aid — especially debt relief.

"They're coming together and the timing is right," said Milverton.

As a part of debt relief, the aid community is also moving from loans, which have in the past tended to hamstring countries, to grants. Grants give the donor community "less ability to force countries to do bad things," Weisbrot said.

And that's certainly fine for Jean-Paul Safari. He's already applied to Trickle Up for a fresh infusion of cash to buy a motorcycle, Van Leeuwen said.

He wants it so he can expand, he told her, and he said he's confident this business plan will succeed — boding well for him, his family, and his country.

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