Rosemary Righter
Times Online (UK)
December 14, 2004

With messianic zeal, Gordon Brown delivered the most dogmatic, overblown speech of his career and the least progressive. The occasion was last week’s Pope Paul VI Memorial Lecture at Cafod, the Catholic development charity that champions Drop the Debt Now, a cause he has unreservedly and unwisely championed. His theme (it figured in his Pre-Budget Report, too) was “doubling aid to halve poverty.” What, you may ask, could be more progressive than that, particularly when presented, as the Chancellor did, as “the richest recognising out of duty and a deep moral sense of responsibility their obligations to the poorest of the world?”

No one can deny the weight of these obligations. But they press at least as heavily on the rich in poor countries as on us. The lion’s share of official aid goes to governments – thus often to the politicians who have kept their people poor. The evidence is that foreign assistance helps only at the margins, and only where it supports policies that give the poor a fairer chance to use their talents. Its impact is greatest in decently governed countries. In the badly misruled, development aid makes bad worse by easing pressures for reform.

So the Chancellor’s assertion that doubling foreign aid will “halve” poverty is simplistic nonsense, as he must know. If it were that easy Africa should be booming, since Africans have had more aid per head than anyone else.

Mr Brown delivered an hour-long homily about duty and morality without touching on poverty’s homegrown roots: dictatorship, political and administrative ineptitude and the greed of the powerful. He declared that we in the West are failing Africa. Yet although 40 per cent of the continent’s wealth flits abroad each year, the word corruption did not pass his lips nor did any explanation of Britain’s indefensible failure to ratify the UN Convention on Corruption.

For a man of the Chancellor’s presumed intelligence to be indulging in such patronising “their lives in our hands” rhetoric is worse than dispiriting. It is alarming. Such shibboleths, allied to power, can do great harm. Next year Britain’s power will be enhanced, as it chairs both the G8 and European Union at the same time as two other events, the critical Doha Round trade summit in Hong Kong and a UN special summit in September on the Millennium Goals: halving extreme poverty, tackling polluted water supplies, preventable diseases and epidemics, and making primary education universal – all by 2015.

The Chancellor and Prime Minister appear to see 2005 as their chance to save the world or, at least, Africa. They are awash with “initiatives.”

The G8 already has an “Action Plan for Africa” and Africans have their sadly named Nepad, a bid to trade internal reforms for more external aid. Yet Tony Blair has launched his very own Commission for Africa, where such deep Western thinkers as Bob Geldof outnumber Africans. The Commission, unsurprisingly, started by demanding a doubling of aid to Africa – why Africa, when half the world’s acutely poor live in South Asia, is never explained. But this is modest stuff, compared with Mr Brown’s masterplan to conquer poverty.

He has announced three main goals for 2005. First, 100 per cent debt relief. The Chancellor promises to “wipe out” the debts the poorest countries owe British taxpayers, not just “because these debts are not easily paid” but because to insist on payment “offends human dignity.” Must try that one on my bank manager. Does Mr Brown really want debt to be thought of as a free lunch; and has he asked what would then happen to these countries’ future prospects of borrowing? Properly used, as I tell my bank manager, debt is a wealth creator. Even the Chancellor concedes that poor but debt-free countries like Bangladesh could end up worse off. The trade calls this “moral hazard.”

The second “priority,” about which he has said least and ought to be saying most, is “delivering (ugh, that word again) the Doha Round” of trade liberalisation. Instead, he reverts constantly to “doubling aid to halve poverty.”

The Chancellor wants other countries to sign up to his pet scheme for doubling aid overnight, through an International Finance Facility (IFF) that would not cost today’s taxpayers a penny. When he came up with this wheeze two years ago, I questioned the need for yet another “facility.” I had failed to see its singular beauty: the IFF would produce money that does not exist by mortgaging future aid to obtain extra cash now. The idea is for governments to guarantee aid levels up to 2015, commitments that would be used to raise loans on bond markets, repayable from post-2015 aid budgets. Mr Brown was livid when Poul Nielson, then the EU’s Development Commissioner, compared this to Enron’s accounting. The worthy Dane hit the nail on the head. What else is this but borrowing off balance sheet as Enron did, leaving tomorrow’s taxpayers to pick up the tab?

Mr Brown appears to assume; either that a “critical mass” of aid now will be so effective that countries will have outgrown aid by 2015; or that aid budgets will by then have risen so much that the repayments will barely be noticed. France and Italy rather like the “prudent” Chancellor’s borrowing from tomorrow but other donors smell a rat. Undaunted, our Gordon is off to Washington this week to twist the Bush Administration’s arm one more time. He will tell them that this is a modern (pain-free) version of the Marshall Plan. I doubt that Americans will see in quite the same light this dodgy scheme for burdening their children with yet more debt.

More importantly, there are powerful economic arguments against the overnight doubling of aid – particularly to Africa. This autumn Treasury officials sat in on meetings jointly convened by the Overseas Development Institute (ODI) and the All-Party Parliamentary Group on Africa, whose experts have urged ministers to think much harder about how African leaders see aid “and how this affects the incentive to build capable states.” They have pointed out that, overall, Sub-Saharan Africa is growing at 4 to 5 per cent despite catastrophic conditions in nine countries and that in 25, living standards are rising. The message: encourage Africa to “confront its demons” by getting its politics right; recognise that business in Africa can be profitable and that these countries are bursting with frustrated entrepreneurs; do not exacerbate aid dependency; and do not propagate the myth that the continent is a basket case.

Tony Killick, a former director of the ODI, observes that “speedy large-scale increases in aid” would “cut against the principle of aid effectiveness, just when we were beginning to make progress” – by reducing “the willingness of African leaders to address their own problems, and the ability of their peoples to hold them to account.” Most of Africa’s continuing problems, he says, are not, as Mr Blair puts it, “a scar on the conscience of the world”; they are “domestic in nature.” It does Africans no favours to pretend otherwise.

Mr Killick, like others, further insists that banging the aid drum will divert attention from the West’s duty to take “more uncomfortable” decisions, such as coming down hard on bribe-payers and money-laundering, and dismantling the protectionist barriers against Africans who diversify into value-added processed goods. Even though Africa’s share of world exports is miserable – and has shrunk from 4 per cent in 1980 to 1 per cent last year – freer trade could cut the number of Sub-Saharan Africans in absolute poverty by 60 million.

Surely the Treasury officials reported this sensible advice to the Chancellor. Surely he understands that Western tariffs and farm subsidies reduce developing countries’ export earnings by $75 billion (£39 billion) a year, 50 per cent more than they receive in aid.

Does evidence mean nothing to this man? Or could it be that, in an election year, debt bonfires and doubled aid are more touchy-feely than free trade? The distortions of post-colonial guilt have compounded Africa’s problems. To perpetuate the myth of African helplessness in the name of morality is nothing short of shameful.