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Forum for the Future of Aid

Southern Voices for Change in the International Aid System Project

The Forum on the Future of Aid is an online community dedicated to research and opinions about how the international aid system currently works and where it should go next

organised by ODI

Responding to capitalist crisis – extending the debate

By Sunil Bastian

Not long ago we were told that cyclical crises of capitalism were a thing of the past. It was believed that in a period of globalisation, capitalism had found a way of avoiding these periodic downturns. Liberal mythology argued that if we organise our societies on the basis of liberal market policies and representative liberal democracy as found in the west, everybody would live happily ever after. These myths are exploding in front of our eyes.

The depression of 1929 had immediate repercussions in the west and later on for the colonised countries. It contributed to the consolidation of the power of national socialism in Germany and ultimately to the Second World War. As brilliantly analysed by Adam Tooze, in his recent book on economic history of the Third Reich, the collapse of the American economy and British decision to abandon gold standard undermined the position of those in Germany who looked towards the international system to solve the economic problems that Germany was facing. Given the global economic disaster, ‘ it appeared to many that international economic dependence was actually the problem. Nationalist visions, visions of a future in which global financial connections were not the determining influence in nation’s fate, now had greater plausibility.’ These ideas helped consolidate power of Nazism in Germany.

What is interesting in the case of the current crisis is the absence of such significant historical developments. What dominates at present is characterised by two ideas – a)The international system is intact and we can find answers to the current crisis within it. b) The most important thing to do is to rescue, support and rejuvenate capital. There is very little discussion of anything else. Especially the problems faced by the socially excluded in this crisis are forgotten.

Let me take my own country, Sri Lanka to illustrate these points. The social group that has been directly affected by this crisis is the working class in three sectors of the economy – plantations, garments and migrant labour. Plantations have an in-built system of managing the drop in labour demand. The entire production system that was established during the colonial period pays people only on the days that they get work. This labour regime has continued in the plantation system for more than a century and still serves the interest of capital when they want to lay off labour during slack times. The workers in the garment factories are simply laid off when there are no orders. Factories often maintain workers as casual labour so that they can lay off labour without being hindered by labour laws. Labour in the Middle East, who often work under medieval labour regimes without any rights, are simply sent home.

What is interesting to note is in all these sectors women form the bulk of the labour force. Bringing women into the work force in large numbers has been one of the biggest social impacts of opening up the economy three decades ago. A special feature in Sri Lanka is the labour of these women has carried a significant burden of an expensive war.

Despite these social repercussions affecting a significant section of the population, what dominates is a discourse that emphasises two issues – first how to support capital, and second how to continue with the war in the midst of the crisis. Although there are rumblings about reverting back to a closed economy and asserting economic nationalism it has not gained enough support. However if nationalists find that it is difficult to continue with the war because of the economic crisis, they would make use of nationalist arguments to promote autarkic answers. They would make use of the social impact of the crisis to promote such ideas.

It is necessary to extend the current debate on economic crisis to include the concerns of the socially excluded. However it is difficult to extend the current debate to include such issues if we base our analysis on totalising categories like the ‘global south’ and make relations between nation-states the key to our analysis. As critical theorist Robert Cox argues all theories are created for someone and for some purpose. In the current context the use of such generalisations in our analysis only serves the interests of capital. In many parts of the so-called ‘global south’ we are living in a context where there is rapid capitalist development. Supported by global structures, capital is changing social relations within our countries. Contrary to liberal mythology capitalism is bound to have cyclical crises. However if we do not have ideas to face these crises keeping in mind problems of the socially excluded, the political outcome can be the assertion of nationalist autarkies.

Opinion Piece on the Future of Aid

Chris Roche, Oxfam Australia

There is growing, or perhaps renewed, recognition that the quality of Aid and International Co-operation is, to a large degree, shaped by domestic political processes in donor countries. The Evaluation of the Implementation of the Paris Declaration, for example, notes “if the work of implementing Paris remains just a ‘dialogue among technocrats’ and is not built on growing political trust, the uneven pace of change and ’aid effectiveness fatigue’ may begin to undermine and sap the effort”.

In the context of the global financial crisis, climate change and recent high profile critiques of aid the task of building and sustaining domestic constituencies for international cooperation, and not just aid, is arguably critical. Furthermore this constituency needs to be able to make the links between human development, human security and climate change, and push for progressive foreign policies which also take a holistic view of these issues.

This constituency building needs to be part of a strategy which explores ways to improve aid quality - by simultaneously removing the political obstacles in ‘donor’ countries which make it less than effective, as well as locating aid within a broader paradigm of international co-operation - and at the same time strengthens the ability of communities in ’recipient’ countries to hold their governments, aid agencies and private sector actors to account. This of course means recognising, and attempting to address at least in some way, the power relations inherent between different actors.

I believe that the growing use of social accountability mechanisms combined with the imaginative use of social networking tools, and the generation of peer-to-peer communications is starting to play a transformatory role in developing a new future for Aid. Not least because this approach offers the potential to build more effective linkages between civil society organisations and community groups in both donor and recipient countries, thus shortening the accountability chain between, in old parlance, ‘tax-payers’ and ‘beneficiaries’. and in so doing build stronger international networks for change.

There are an increasing number of examples, such as the work of Global Voices on-line, Witness, and Ushahidi which illustrate the possibilities of providing groups and communities with the ability to tell and communicate their stories, provide feedback on elections, publish evidence of human rights abuses, empower female activists, debate how they might act as part of a diaspora, or monitor the performance of governments and aid agencies, through participatory processes and on public fora such as the web. This, in some contexts, can provide men and women who are often the ‘objects’ of development with the ability to become its subjects and to publicly sanction poor behaviour and performance of aid organisations and their governments. This provides them with what Albert Hirschman described as the ‘voice’ option which they so often lack.

Such social accountability mechanisms could also be complemented, for example, by new forms of resource transfer (see Kiva for example, or through remittances ); more accountable reporting of development processes (like the Katine project); direct community to community exchanges from North to South, and also South-South, including facilitating direct online communication between communities in different countries (see for example the Refugee Realities Uganda/Australia link up); and Fair Trade trading and campaigning.

It is however clear that if the public and parliamentarians are really to be engaged then this will require mass involvement in the same way that the abolition of the slave trade or land mines required wide public support. As such innovative ways will be required to engage people who don’t traditionally associate with aid, development and international issues. This might involve behavioural change models such as Refugee Realities, which have been recently trialled here in Australia, and the creation of ‘unlikely alliances’, perhaps – although this will be anathema to many - with private sector corporations, to create more powerful communication tools, like the girl effect, cartoons, or TV companies producing soap operas with a message like Soul City, which can reach millions. Furthermore, the success of agencies like Water Aid suggest how a more targeted approach could mobilise specific interest groups - for example, women’s organisations, public sector health and education professionals, local government officials - to mutually support each other within specific domains.

It is imperative that these types of links start to build social relations and constituencies for international development that are based not only on compassion but, also on social and economic ties that are less vulnerable to the vicissitudes of nature, politics or the latest media story. In so doing we can then envisage a Future For Aid that is in fact a Future of International Co-operation, and is fundamentally about how, in an inter-dependent world, those interested in social justice and sustainability will need to work together, and learn from each other. It is a shift away from concepts of aid being about the rich world sending money to ‘them’ so they can become more like ‘us’. Rather it is a move towards respectful mutual learning and exchange, and joining up the struggles for transparency and accountability, as the basis for renewed forms of co-operation and development.

The Dichotomy Between ‘Donor’ and ‘Beneficiary is a Lie

By Nora Lester Murad, Dalia Association, Palestine

The global aid system is predicated on the premise that there are givers and receivers. Their relationship is characterized by a one-way transfer of resources from donors to beneficiaries. The purpose of the transfer is to provide benefit to the receiver (“beneficiary”). Or is it?

Who is really benefiting from the international aid system?

-Donor countries decide how to allocate aid based on their own foreign policy objectives and in response to domestic pressure. Thus, aid is a mechanism for furthering their own interests as they see them.

-Donor countries, to varying extents, require that aid be spent in their countries, through their national organizations (for-profit or non-profit), or on their designated consultants. Thus, a significant percentage of aid resources are diverted back to the donors’ economies.

-Aid actors, as extensions of donors, build empire-like organizations in third world countries. These aid actors accumulate disproportionate power in relation to local actors by leveraging their power as 1) gatekeepers of resources, 2) power brokers, 3) purchasers, and 4) employers.

And who is really doing the giving?

-Third world countries provide the natural resources for development in the global north.

-Third world countries provide the labor for development in the global north.

-Third world countries provide the customers for sellers in the global north.

So, the international economy, including the international aid system, is one that perpetuates, not challenges, global inequalities. The donors are, in fact, the beneficiaries of the system. The recipients are actually the ones that give the most resources. Make sense of that!

The only way to make sense of the nonsensical situation is to recognize that money is only one currency for exchanging value. For example, if a donor pays for a poor person’s meal, this is considered “aid” and is accounted for in financial terms. If a poor person welcomes a poor neighbor for a meal, this is not recognized as a contribution nor granted any monetary value. Or, if an international organization hires a local to provide services, this is considered “aid” and is accounted for in financial terms. However, if a local person provides services on a voluntary basis, this is not recognized as a contribution or granted any monetary value.

Thus, in our current global financial system, the substantial resources of the third world are unvalued, while relatively minor contributions from the global north are given exaggerated value (even when they are wasted). While third world communities are the biggest givers, their giving is not recognized as having value, except when given in the currency valued by the global economic system – money.

Alternative economics offer great potential to displace money as the sole valued currency and to visibilize the value of third world resources. For example, today, a shared taxi may travel from city to city half empty while an old farmer walks the same distance carrying apples on her head. The driver arrives at his destination without having earned enough cash to purchase apples for his family. The farmer has to walk because she doesn’t have cash to pay her taxi fare. If the driver were willing to accept an apple for payment of the fare, the latent/unutilized resource (the empty taxi seat) would be converted into tangible value, with benefit for the driver, the farmer and the environment.

Obviously, this type of culture change does not occur easily, but there are some examples of alternative economies on a small scale, in both the global south and the global north. Alternative economies present a huge opportunity to southern actors to release themselves from the dominance of international monetary organizations and the global financial system in which they can never be winners, much less players on an equal field. Just alternative economies have the potential to emasculate the international monetary system by eliminating any residual logic to the donor-beneficiary dichotomy and giving fair value to the resources, capacities and accomplishments of southern actors. And creating just alternative economies is something that we can do ourselves – without any “aid” at all.

South Bulletin: Reflections and Foresights

South Centre, September 2008

This Issue of the South Bulletin reflects upon the Third High Level Forum on Aid Effectiveness that took place in Accra, Ghana from 2-4 September and prepares its readers for the upcoming Monterrey review conference on Financing for Development that takes place in Doha, Qatar in end-November.
On its editorial article Yash Tandon reflects upon the Third High Level Forum on Aid Effectiveness that took place in Accra from 2-4 September 2008 - the follow-up and evaluation of the Paris Declaration. He states that the present chaotic situation of the aid industry is a better option for the poor countries than the anticipated order of the AAA, while the best option is to get out of aid dependence.
Analysis and commentaries appearing in the Bulletin, include on Enhanced Financial Mechanism for UNFCCC: The G77 Proposal; Financing for Development from Monterrey to Doha; Keeping Developing Countries Hooked on the Aid Drug; Food Crisis in India; and Let us not Build the EPA in the Graveyard of Regionalism.

Internationally coordinated tax regimes

Interview with Antonio Tujan Jr.

[Introducction]: Ahead of the UN’s Financing for Development Review Conference in Doha, Antonio Tujan Jr. of the IBON Foundation, a non-governmental organisation based in Manila, assessed donors’ track record in an interview with Hans Dembowski. He demands more policy space for the governments of developing countries, and urges donors to expand debt relief.

To read the full interview, click here

Southern discomfort

By Yash Tandon

While the governments of rich nations want to streamline their global-development efforts in the OECD context, those of many developing countries are less enthusiastic. Some experts even view the Paris Declaration on Aid Effectiveness (PD) as a document of new colonialist aspirations, and doubt the OECD High Level Forum in Accra in September will achieve much good.
Along the article, Yash Tandon exposes the resons why developing countries are not at all exited about the PD. He stresses that while at first glance, the PD looks benign, underlying the PD could be another agenda not readily transparent at first reading

To read the full article, click here

Report from Roundtable 6: The Role Of Civil Society In Enhancing Aid Effectiveness

By The Advisory Group On Civil Society And Aid Effectiveness

This report presents the outputs of the Roundtable 6 (RT6) that took place on the second day of the High Level Forum of Aid Effectiveness (HLF) that took place in Accra, Ghana, in September 2008. It was to build upon the work of the Advisory Group on Civil Society and Aid Effectiveness (AG-CS) and was attended by an estimated 150 participants with approximately 55% CSOs, 25% donors, and 20% developing country governments.
The AG-CS, as a multi-stakeholder group reporting to the Working Party on Aid Effectiveness, led an extensive consultation process, analytical work, and case study work in the 18 months preceding the Accra HLF.

To read the full report, click here

Back to Doha: Financing for Development at stake

By By Henri Valot, CIVICUS

[Introduction]: Doha , Qatar will be soon again centre of attention for those of us working on development cooperation issues. It will host the upcoming “Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus” from 29 November to 2 December 2008 , which will be immediately preceded by the Doha Global Civil Society Forum from 26 to 27 November 2008 .
Doha is sadly known for having its name attached to the WTO Doha Development Round, the current trade-negotiation round of the World Trade Organisation (WTO) which commenced in November 2001. Its objective was to lower trade barriers around the world, which would allow countries to increase trade globally. As of 2008, talks have stalled over a divide on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. Major negotiations are not expected to resume until 2009.

To read the full article, click here

The myth of NGO superiority

By Peter Nunnenkamp

In this article, the author replies to Kishore Mahbubani’s article -The myth of western aid- by stressing that it is easy to lament the stinginess and selfishness of official donors. At the same time, he points out that there is also a myth around the performance of Non Guvernamental Organisations (NGOs).
’While donors provide critics with the data needed to expose the flaws of official development assistance (ODA), it is different with NGOs. Their aid is certainly relevant, but its allocation has hardly been mapped, let alone explained. The main reason is that sufficiently detailed data are hard to come by. After all, NGOs probably do not want critical analysis to tarnish their image of being superior donors.
Recent research suggests that non-governmental organisations (NGOs) do not provide better targeted or more efficient aid than state-run development agencies. They do not seem to even try to outperform the latter by focussing on the neediest or by working in particularly difficult environments.’

To read the full article, click here

The myth of western aid

By Kishore Mahbubani

Executive Summary: The story of Western aid to the Third World needs to be demystified. Western populations almost universally believe that the story of Western aid is of massive transfers of aid to poor Third World countries for purely altruistic reasons. They know that much of this aid has not resulted in successful development. But many believe that this is not the fault of the West. It is true that there is a huge scandal of corruption on Western aid that is waiting to be exposed. However, if and when this story is fully exposed, it is the West that will be deeply embarrassed. The full story will show that the wide-held belief of altruistic Western aid is nothing but a myth.

To read the full article, click here

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