An Alternative to Failed Foreign Aid
Direct Assistance Is Far More Effective
AUGUST 01, 2002 by DOUG BANDOW
LAHORE, Pakistan-One of Lahore’s small Christian communities sits on army land and thus constitutes an illegal occupation in the government’s view. Most homes have one room. The latrines are makeshift, and families are lucky to survive on $20 a month. These are “very difficult times,” one resident told me.
But these people have never seen a penny of the billions that Pakistan has received in foreign aid over the years. Real assistance only recently came from a small private group, which put money directly into the hands of the 60 families.
When government officials talk about foreign aid, they rarely use numbers less than a billion. As when a gaggle of world leaders, led by President George W. Bush, met in Monterrey, Mexico, in the spring. The politicians spent their time spouting platitudes and planning new ways to waste people’s money, as they do at most such gatherings.
Indeed, President Bush proposed a 50 percent hike in U.S. foreign aid. And he pledged to push Congress for more money immediately, rather than wait for 2004. But while engaged in a global struggle with hegemonic communism, Washington could argue that it had to buy friends throughout the Third World; today it no longer matters what happens in, say, Congo.
Some have pointed to the fight against terrorism to justify more aid. But global poverty has nothing to do with terrorism, else America would have been under siege for years from terrorists from Sub-Saharan Africa, India, and China.
Perhaps money can help prop up seemingly moderate Arab regimes in the face of Islamic fundamentalism, but we’ve long been doing that without an extra $5 billion. Anyway, far more effective would be relaxing trade barriers to exports from those nations, encouraging real economic growth from within.
Moreover, without economic, social, and political reform, no amount of outside money will yield stability. In fact, foreign aid risks reducing the incentive of despotic regimes to make their systems more responsive to their people.
To his credit, President Bush emphasized the importance of making aid effective. But 50 years of experience is against him. Foreign transfers will do nothing where the rule of law does not exist, property is not protected, and many if not most social institutions have collapsed.
Indeed, most government-to-government transfers benefit political elites, not common people. For decades aid agencies subsidized the worst collectivist autocracies, actually underwriting the statist policies responsible for Third World poverty.
Moreover, assistance was distributed by agencies that rarely exhibited the slightest accountability or creativity. Writes William Easterly, an economist with the Center for Global Development, “The resulting edifice of national and international bureaucracies has not provided services effectively to the world’s poor.”
Aid to Pakistan incorporates all of these failings. Overall, the country exhibits a prototypical overpoliticized state. First, it is a system where few are secure in their lives and property. In Lahore, McDonald’s employs a guard-armed with an automatic weapon. The Pizzeria Uno uses four guards, including a doorman with a shotgun.
Pakistan’s economic and political systems are unfree; important interest groups must be bought off to maintain regime support; entire segments of the population possess no influence. The latter is particularly obvious when viewing the status of Pakistan’s Christian community, which accounts for just 2 percent of the population. For instance, government employment is highly sought after in an economy largely bereft of good private opportunities. “We apply for the jobs,” even menial ones, and “we can’t get them,” one poor resident told me.
Desperate inhabitants of a tent city, displaced from their own homes by a flash flood, just down from government buildings in the capital of Islamabad, say the same thing: “we get nothing from the government.” One neighborhood sits astride electrical transmission lines, but the 70 or so families have been told they must pay $7,000 to connect-an impossible sum. Meanwhile, lights brightly shine in nearby Muslim areas, including a poultry farm and private mausoleum.
The government “doesn’t supply Christian people, poor people,” complained one resident. And this complaint is not peculiar to the current regime. “It doesn’t matter which government” is in power, Rev. Emanuel S. Khokha told me. “They are all the same.”
Foreign aid is distributed in the same way. “International agencies give money to the government,” the resident of one poor neighborhood complained. “But it doesn’t give the money to us.”
Even when money is supposed to be distributed to private groups, Christian agencies find themselves on the outside. Irene Samuel, general manager of a private aid group, says that “foreign aid doesn’t help us.” Lots of money comes in from overseas but “the government never gives us a clue how to get that funding. They won’t even give us forms to get it.”
Instead of government-to-government aid, “We need direct assistance,” one poor Pakistani told me. In such a case, great good can be done by small amounts-thousands and even hundreds of dollars.
For instance, I traveled with two members of Christian Freedom International (CFI; www.christianfreedom.org), visiting several cities in Pakistan and meeting with pastors in poor communities. The CFI staffers distributed small amounts of cash in two areas, paid the tuition for two children whose father, a house painter, had been injured, developed plans to employ teachers to begin schooling children in three neighborhoods, and hired a local pastor to monitor the programs. CFI is also working with Christian women to encourage development of local craft manufacturing in an attempt to make poor families self-sufficient. Private aid “is great and all that,” explained Jim Jacobson of CFI. “But they are excited by the handicrafts. They want to work. They don’t want a handout.”
Of course, efforts like these are only a small start in a world in which desperate poverty abounds. But one of the lessons of foreign aid is that government cash transfers accomplish little. It’s a lesson that CFI, a low-overhead operation that invests most of its money on the ground helping victims of religious oppression, well illustrates. The group is saving one family at a time.
Pakistani Pastor Javed John asked me to “please convey the message to the American people that there are so many problems here.” Tragedy in the Third World abounds, yet it seems so unnecessary in a world in which economic opportunities are exploding for the rest of us.
Government-to-government aid has failed for 50 years, and throwing good money after bad won’t change anything.
Doug Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books.