Inside the alms trade
19 May 2011
Melbourne: For the first time in 15 years, Australia is rethinking its foreign aid program to make it more effective. How can we make our aid dollars work better? THE word ''effectiveness'' appears four times in the five-paragraph press release Foreign Minister Kevin Rudd issued late last year trumpeting the first independent review of Australia's foreign aid program since 1996. When the 2011 Independent Review of Aid Effectiveness is released some time in the next month, the word will again get a hammering. Closer scrutiny of Australian spending on foreign aid is unsurprising given the budget has doubled in the past five years, and will double again in the next five to reach about $9 billion a year - assuming Labor and the Coalition stick to a bipartisan pledge to increase donations to 0.5 per cent of gross national income.
Oxfam chief executive Andrew Hewett says the review - headed by former senior bureaucrat and chief of the organising committee for the Sydney Olympic Games, Sandy Hollway - is critical ''to ensure some kind of strategic coherence, to assist people have confidence that those dollars are being well spent'', a view widely shared across the development sector.
But there are a couple of very big problems around discussions of aid ''effectiveness'', cautions economist and former deputy director general of the Australian aid agency AusAID Professor Peter McCawley, a member of the Jackson Committee that reviewed foreign aid back in 1984. ''The first is that - whisper it - there is really not much agreement as to what the word means,'' says McCawley, now a visiting fellow at Australian National University's Crawford School of Economics and Government.
Is it about ''effectively'' tackling humanitarian objectives such as alleviating poverty and suffering, saving and improving lives? ''Call this the NGO [non-government organisation] view'', he says, one leveraged on moral and ethical concerns, the kind of things many citizens probably presume underwrite the foreign aid agenda.
Or is it about ''effectively'' meeting foreign policy objectives such as increasing national security, enhancing strategic relationships, bolstering potential markets, building influence? ''Call this the 'Kissinger' view.''
The realpolitik philosophy of former US Secretary of State Henry Kissinger endures powerfully today in the ''diplomacy and development'' mantra that underpins evolving US aid policy, with President Barack Obama last year identifying global development as a ''core pillar of American power'', vital to national security, and a ''strategic, economic and moral imperative''.
The British are also moving to more closely integrate aid and security objectives, says a recent report by the Australian Strategic Policy Institute. The report urges that the same happen same here. It sees aid as ''a strategic investment; it strengthens our security by assisting friendly states that we believe are important to us''.
Such self-interest has always been ''very real'', if unrecognised, in shaping the Australian aid program, McCawley says. The AusAID mission directs it to help developing countries reduce poverty and achieve sustainable development ''in line with Australia's national interest'' - a caveat open to broad interpretation, and one that makes aid players on the humanitarian end of the spectrum uncomfortable. ''In public, governments in their rhetoric tend to play up the development objectives,'' says McCawley. ''But in the cabinet room, diplomacy and commercial pressures are always fairly important.''
Between these extremes of soft hearts and hard heads are various schools of thought in the broad church of the aid community.
''Aid, trade, investment - all are important in helping development occur, and it is in Australia's interest to see development occur,'' says Marc Purcell, head of the Australian Council for International Development , which represents about 70 not-for-profit aid agencies. But ''national interest'' has been used ''too loosely'', he says, not always delivering claimed benefits.
''On the securitisation of aid, we have major concerns that it is skewing the development agenda,'' Purcell says. But, with Afghanistan now the fourth-largest recipient of Australian official development assistance, there's a recognition that security and strategic interests are in the ascendancy, like it or not. This mirrors the international story: one-fifth of the United Nations development budget goes to Afghanistan, prompting agencies such as Oxfam to campaign hard for the idea that politicising aid undermines its effectiveness, as well as endangering personnel in the field.
Tensions between the pragmatic Kissinger camp and the idealist NGOs have come into stark relief in debate around the latest review. A Lowy Institute discussion blog was dominated by questions of geographic reach - do we ramp up in Africa, and is that at the expense of the Pacific? - and defining the national interest rather than the usual health and education.
Many submissions to the review panel seek a more explicit identification of the beneficiaries of Australian aid - are they the most vulnerable poor, or the poor who are most aligned to Australian interests?
A second problem with ''effectiveness'', McCawley says, is the gaping void between the laudable idea of being effective, and how to realise an ambition. How is progress on humanitarian ideals measured? And how can prescriptive process and risk avoidance work in the kind of chaotic places where help is most needed? ''Unfortunately, too often effectiveness equals more and more bureaucracy,'' he says. This means stretched aid workers in the field, struggling recipient governments and fragile community organisations find their time and energy consumed by paperwork.
While aid funding, from governments and private donations, has grown massively in the past decade - it's now a $200 billion a year industry, according to estimates published by the US Brookings Institution - the accompanying red tape is widely seen as strangling it.
This has become such a problem in aid circles that the former head of USAid, Andrew Natsios, recently wrote an exasperated critique arguing that the tension between the compliance side of programs and the people on the ground had become so skewed that sensible aid efforts were being fatally compromised.
Regulators failed to see that the programs that most profoundly change lives are often the least measurable.
The catch-22 is that, without rigorous scrutiny of programs, public confidence in them is vulnerable. In a post-GFC world, taxpayers in donor countries feeling the pain of domestic cuts are not quite as enthusiastic as they were five years ago to ''Make Poverty History'', and certainly won't tolerate the notion their dollars might be poorly spent overseas.
While the Gillard government in last week's federal budget stuck to commitments to increase aid - as did Britain - despite domestic pressures, fragile public support for overseas assistance is vulnerable to perceptions it misses the mark.
Bipartisan political commitment has also appeared sporadically shaky, most recently with shadow treasurer Joe Hockey last week slamming the the extra billions earmarked for aid as ''not the major priority at the moment''. He was countered by opposition foreign affairs spokeswoman Julie Bishop reaffirming the Coalition's commitment to the ramping up of aid.
Joel Negin, a senior lecturer in development from the University of Sydney, says that as individuals, Australians recognise the disparity between the top-ranked living conditions they enjoy in a world where more than 2 billion people survive on less than $US2.50 a day. As a result they are recognised as among the world's most generous donors to charities, giving about $900 million privately each year, and generally supporting a moral imperative for foreign aid.
''The idea that we should be supporting poor countries around the world, and that ultimately helps Australia and Australian business and the Australian economy, is something agreed by all sides of government, Negin says. ''But aid is always going to be controversial because it is a hard, hard business. If development was easy, we would have done it a long time ago. But fundamentally we recognise it is something that needs to be done.''
Australia is rethinking its aid program in a volatile geopolitical landscape. Armed soldiers deliver emergency rations and build hospitals. Donations come with a quid pro quo in the form of access to resources. Relief operations are big business and fiercely competitive, their best intentions vulnerable to hijack by malign interests.
Humanitarian catastrophes are amplified by urbanisation, population growth, political instability, terrorism, and the violent extremities of shifting climate. Growing inequality locates most of the neediest people not in the poorest nations, but in the slums and villages of middle-ranking economies.
The continuing fallout from the financial crisis has nations that only five years ago were pledging big money to end poverty reneging on their promises. Nations are re-engineering their aid programs to recognise these changes.
Negin points out that in recent times Britain and Canada, while increasing their aid budgets, have narrowed the list of nations to which they donate as well as the sphere of their operations, to try to gain depth rather than breadth.
Sometimes the choices are altruistic - ''places where they can make a difference, where there are large numbers of people in poverty''. And in some instances, aid goes where there might achieve a strategic payoff.
''I think, the question of the national interest will be one of the things the panel will be considering,'' says Negin.
''In a globalised world, national interest can be defined quite broadly - in terms of poverty, security, instability. I think there are ways that a humanitarian need and national interest actually merge together. I don't see them as mutually exclusive parts of the aid program. ''The national interest goal just shouldn't be the overriding one that dominates all other discussions.''
THE discussion that has most preoccupied development players in the past decade turns on yet another big problem - that of effectiveness. Does aid work? This question was contemplated at length recently by one of the members of the Australian review team, Professor Stephen Howes, a development specialist at ANU's Crawford School and a former lead economist with the World Bank.
Just as he vanished into the cloistered deliberations of the new inquiry Howes published a paper laying out the the landscape of evolving aid. He plotted the shifts to more co-ordination by agencies, more partnership with recipient governments, and summarised some of the various ''gospels'' of development - aid works, given enough of it (Jeffrey Sachs), it might work, depending on who gives and receives (Paul Collier), it hardly ever works, and indeed does harm (William Easterly).
To judge effectiveness, he argues, you must first define your objective. Is it about progress on the Millennium Development Goals, humanitarian targets? Is the objective commercial, political and diplomatic, security (McCawley's ''Kissinger'' agenda).
Howes goes on to try to assess effectiveness in terms of poverty reduction, and concludes that ''it is impossible to give a definitive answer to the question: is aid effective''. In any scenario, whether a program achieves tangible results will depend on the performance of the recipient government, of the donor, and the interaction between the two.
He does not pose this as an argument against aid, or efforts to improve it. Indeed, he couches it as a powerful argument for more energised pursuit of the elusive bang for your development buck. ''There are certainly many productive ways to spend additional aid, and aid volumes are likely to continue to rise,'' Howes says. ''This in turn makes the question of improving aid effectiveness all the more important.''
Peter McCawley hopes that, 25 years down the track, some of the problems his review team wrestled with might finally become clearer. ''I think it would be useful to distinguish between real and nominal policy. Often the nominal policy with foreign aid is development objectives, whereas the real objectives are much more hard-nosed. This divergence does not contribute to a healthy public debate.''
But his greatest wish is for recognition, in both public discussion and political debate, of the impossibly complex nature of the international aid agenda. ''Some call it mission creep: the agenda has widened and widened'' - managing everything from climate fallout to corruption to banking crises.
''I would like to see the committee squarely address the problem of the mismatch between the entirely unrealistic expectations of foreign aid agencies, and their relatively limited capacity to respond with the resources that are available.''
* Jo Chandler is a senior writer.
Read more: http://www.theage.com.au/national/inside-the-alms-trade-20110518-1et30.html#ixzz1MnhP92fk
Keywords: donor aid, aid effectiveness, foreign policy, Australia