Western Aid and First World Political Manipulation Essay

Introduction

The impact of foreign aid from Western nations to third-world countries has been under scrutiny for a while. The results have been varying but in generality, it has been agreed that foreign aid does not benefit the intended recipients. The main reason for this has been blamed on the practice of aid tying that will in turn benefit the donor nations and regions. Bilateral aid has been long suspected of being susceptible to manipulations from donors (Rodrik, 2009). Conversely, multilateral aid was thought to be helping the donor more. Through research, it has been found out that bilateral aid has more impact on the recipients when compared to multilateral aid. This essay will demonstrate how Western aid potentially exposes third-world countries to first-world political manipulation.

A Brief History of Aid

Cassen (1994) defined Aid, or Official Development Assistance (ODA) as “transfer of resources on a concessional term which is undertaken by official agencies; has the promotion of economic development and welfare as its main objectives, and has a grant element” (45). The notable pillars of the aid that is provided today came as a result of the Second World War. According to Rodrik (2009) “development works of the UN began when the United Nations Relief and Rehabilitation Agency (UNRRA) was founded during the Second World War” (p. 47). This and other international monetary organizations provided funds for the reconstruction of nations badly hit during the war.

By the early seventies, UN agencies had contributed more monies than any other developmental agencies combined; however, saw the rise of other institutions such as the World Bank and also regional banks such as the African Development Bank and the Asian Development Bank.

Implications of Western aid on Third World Countries

Some conditions that are tied to foreign aid at times benefit the donor states. Countries such as the United States are rewarding countries with foreign aid. A prime example is the former U.S. President Clinton. He introduced the Africa Conflict Resolution Act. The main aim of the Act was to promote good governance in exchange for funds and trade opportunities (Rodrik 2009). African states were given conditions that they had to achieve or adhere to before they were considered for grants and funding under the Act. This basically meant that the African states had to tow the line or lose out on much needed funds given that most of them rely on foreign aid even for their respective national budget (Jensen 2003).

International agencies such as the World Bank and IMF also arm twist developing countries into making reforms in exchange for some much needed loans, aid and at times guarantees. This is done by the donors pressing for changes in the main areas that they are going to fund such as structural changes in big organizations, import controls, promoting direct foreign investment, devaluing the currency (Jensen 2003). This might be very helpful to the third world countries but they are very susceptible to suit the donors more than the recipients.

Western donors have in the recent past been criticized of giving donations to the third world countries then demanding from the same nations that they spend a significant portion of the aid on goods and services produced by the donor nations (Cassen 1994). This practice does not really help to the third world countries as the donor nations at times offer the services at very high fees (Jensen 2003).

Tied aid is now more of a permanent feature of foreign aid. This is mostly common in bilateral aid whereby the donor has more control. This strategy is mainly geared to increasing jobs and export industry in their countries by securing contracts and increased trade to the recipient nations (Easterly 2001). This kind of conditional aid does not give the recipients control over the funds to do as they may propose. For example, US giving Kenya a grant to construct roads, the Kenyan government advertises the international tender for the road construction, a Chinese company bids lower by about thirty percent but at the end the tender goes to an American company at a cost which is higher than the reserve price simply because they were the donors (Jensen 2003).

Strategic political alignments, cheap natural resources, security and prestigious diplomatic ties have made Western countries to increase the funding to third world countries (Hallerberg & Marier 2004). On the surface this looks as aid or grants but they are tied to conditions known as ‘exchange conditions’. This is where aid is given in exchange for giving the donors privileges in trade commerce and natural resources that are available in the respective country. The aid given by the two super powers were meant to solidify their alliances and access to territories. Such political aid is seen when the US aided strategic third world countries in the early 1970’s and during the cold war and in turn set up permanent military bases in the countries (Jensen 2003).

Countries like Kenya have in the recent past been made to accept refugees from the neighboring Somalia in exchange for grants and aid. Even though this can be considered a humanitarian activity, when looked at on the wider scale, then the implications can be seen. The refugees arrive in large numbers almost daily; this in turn leads to over stretching of her meager resources and also raising concerns about her security given that most of the refugees pose a risk to her security. This is so because Somalia has been experiencing a civil war for around twenty years, therefore most young adults endured the war and along the way had to join militias in order to protect themselves. These refugees with a military background pose a great security threat. If it were up to Kenya probably she would have taken a different route in dealing with the situation. But since the aid is tied to them accepting refugees, then they have no choice but to accept (Easterly 2001).

General findings of the Implications

It has been established that most of the aid from Western nations to third world countries is tied aid (Easterly 2006). Tied aid has a tendency to reduce its effectiveness. Forcing aid money to be spent on the donors good and services eliminates competitive bidding. This might result in excess costs as high as 15-30% (Easterly 2001).

This means that the third world countries are being short changed for the money that they have borrowed and which they will repay at an interest albeit at low rates. These funds are then again channeled to the donor countries through awarding of contracts to interest groups from the donor countries. This aid will encourage dependency and wasteful spending while at the same time derailing the third world countries from their goals of becoming self-sufficient.

Conclusion

Foreign aid from Western countries to third world countries exposes the latter to political manipulation from the former because of three main reasons. First, third world governments have become over dependent on aid. This has left them at the mercy of western powers who will arm twist them to suit their needs first. Second, donor countries have tied aid to their own interest groups and to international politics and alignments with little interest in seeing how the recipient nations are using the funds. Finally, the very act of being a recipient makes the third world countries susceptible to being told what to do, when to do and how to do.

Reference List

Cassen, R. 1994. Does Aid Work, Second Edition. Oxford: Clarendon Press.

Easterly, W. 2001. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. Cambridge, MA: MIT Press.

Easterly, W. 2006. “Why Doesn’t Aid Work?” Cambridge, MA: MIT Press.

Hallerberg, M. & Marier, P. 2004. “Executive Authority, the Personal Vote, and Budget Discipline in Latin American and Caribbean Countries.” American Journal of Political Science, 48(3): 57-87.

Jensen, N. 2003. “Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment.” International Organization, 57(3): 587-616.

Rodrik, D. 2009. Growth after the crisis. Oxford: Oxford University Press.