Robert I. Rotberg

Foreign aid business

At last, new US guidelines will focus on accountability

By Robert I. Rotberg
October 3, 2010

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‘WE JUST gave out 1,000 kites in 20 minutes,’’ a US aid contractor in Kabul recently reported. He claimed success, not because of what the kite-giving may or may not have achieved to strengthen friendship between Americans and Afghans, but simply because his mission was to toss kites to a crowd.

The same can be said for global foreign aid. The donor community has long relied on the amounts spent — a giving nation’s generosity — not on whether a recipient society benefited. As a result, studies show, the massive monies spent by the World Bank and European and American donors have brought about almost zero net growth in the developing world since 1960.

Now, according to President Obama’s recent speech at the UN, giving US aid will be carefully tailored to a host country’s needs, and not Washington’s ideas about what those needs are. Obama said that Washington wished to partner with poor and deserving countries, not to impose notions from outside. If he can really bring about such a change in contemporary practice and bureaucratic routine, it would revolutionize the way in which aid is distributed, and to whom.

Rather than finding worthy projects and funding them — the current method — Obama said that US aid would now be strategic. It would take into account the quality of a poor country’s governance — its delivery of services to its citizens, its presumed positive battle against corruption, and its adherence to the rule of law. Additionally, recipient countries would be asked to open their economies to foreign investment and trade, and be friendly to local entrepreneurialism.

But the most important shift that Obama mandated was a radical move from counting the kites as they fly out the door to actually certifying that distributing kites had led to improved living standards and growth prospects for ordinary villagers. Until now, no one has been measuring outputs. No one has been paying attention to the good, or lack of good, that came from aid to the poor.

Have African, Asian, and Caribbean nations been able to make use of all the money that has flowed to them? Have they used those funds to enrich their leaders or to better the lives of their citizens? Are maternal mortality rates going down and life expectancies up as a direct result of medical assistance from abroad, or not? Are citizens of poor countries more literate and generally better educated thanks to inputs of foreign cash, or not? Those are the kinds of questions that need to be answered.

Obama spoke about how Washington would alter its own global development strategy. But he said nothing about how those changes would be delivered. He did not promise to make USAID, the agency in the US government that delivers most foreign assistance to developing nations, independent once again. It now operates as a unit under the State Department. In earlier decades, when USAID was more robust, it was a separate agency. If Obama gives USAID back its independence, his new global initiative might just have a chance to work. Without that change, the likelihood is small, no matter how his new approach appeals to critics of foreign aid.

Washington needs to stop lending to recipient countries, too, and to switch its foreign assistance to making grants. For decades nearly all donors (including the World Bank) have allowed deserving countries to borrow on generous terms to improve their prospects for growth. But that added to a poor nation’s debt burden.

Moreover, donors were always prepared to lend more if a project were not carried out well, or if problems arose. The better method, not addressed by Obama, would be to make only grants and condition their renewal on accomplishing the goals of the grant. That is positive reinforcement. For too many decades now, leaders in the developing world have been able to keep borrowing, no matter the result — a case of negative reinforcement.

As Obama said, we have a moral obligation to assist poor countries and peoples. Doing so also has a strategic benefit for our own security. But without serious reform, foreign assistance will continue to accomplish less than it should.

Robert I. Rotberg’s latest book is “Mass Atrocity Crimes: Preventing Future Outrages.’’

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