IT’S the time of the year when pundits put on their thinking
caps, mull over the events of the year about to end, and try and make
educated guesses about what lies ahead. The defining event of 2017 was
Trump’s decision to declare Jerusalem the capital of Israel, and the
pronouncement that he would move the US embassy there from Tel Aviv.
This was the culmination of Trump’s bizarre moves in world affairs that
featured his infantile comments of the North Korean dictator Kim
Jong-il.
And when Muslim countries in the UN General
Assembly voted on the proposition that the ancient city of Jerusalem
would be the capital of Palestine whenever a state was achieved, Trump
threatened those voting for the motion with financial pain.
Specifically, he promised to cut aid to the offending countries. His UN
Rottweiler, Nikki Halley, sounded even scarier. All this from a country
that has long preached democracy to the rest of the world.
However,
Trump does have a point: there is no such thing as a free lunch.
Countries give aid to gain influence, and not out of a generosity of
spirit. True, some emergency assistance is provided because people are
moved by images of hunger and poverty. Natural disasters often provoke
sympathy. But state-to-state aid is usually calculated.
Many
countries become addicted to this annual bonanza, and expect it almost
as a right. Had this assistance been put to proper use, perhaps it could
have benefited ordinary people, and raised living standards. But in
most recipients, aid is used on public projects, education and health,
while the funds raised by taxation go to the military and for vanity
projects. By this substitution, the economy is sustained at a low level
without completely collapsing.
The arms received permit
the recipient to adopt a far more aggressive posture than would have
been possible if indigenous funds had to be used to buy arms. But the
flip side to accepting modern weapons systems from a single source is
that dependence builds up on ammunition and spare parts.
Rentier
countries like Pakistan and Egypt have, over the years, received scores
of billions of dollars in aid, most of it in the form of weaponry.
Decades of this dependence later, poverty, hunger and illiteracy still
stalk both countries. So where did all this money go? Meanwhile, coming
generations have been saddled with the crushing burden of servicing the
loans and repaying them.
Once a country is caught in the
aid trap, there is no escape. It’s an easy way to balance the budget and
get access to shiny new toys for the boys. As time goes by, fresh aid
is indirectly used to service old loans.
And every year, the amount to be paid as interest, and the tranches to
be repaid on the capital, goes up.
While China and Saudi Arabia are important donors to Pakistan, the US is
by far the biggest, having provided $78.3 billion since 1948. Overall,
we shell out some $6bn annually for servicing our debt.
While
we are the largest aid recipient in the region, we are well behind our
neighbours in terms of virtually all social indicators and economic
growth. Egypt, too, is mired in a morass of subsidies that have
virtually bankrupted it. Both Egypt and Pakistan were co-sponsors of the
recent UN resolution on Jerusalem, and might now face American
retaliation in the shape of reduced aid flows.
And it’s
not just American aid that could be affected as the country has a
powerful voice in IMF and World Bank decision-making. So clearly,
there’s a lot at stake here: adjusting to a world of falling economic
assistance will be hard and painful. Countries like ours had fooled
ourselves into thinking that we could have our sovereignty as well as an
open-ended supply of overseas aid that would be written off in the
distant future, or paid off by our descendants long after we had enjoyed
spending the cash.
Sadly, the real world doesn’t work
that way. Every dollar we receive means a slight loss of our freedom to
act. And if we don’t dance to our donor’s tune, we get punished by a cut
in aid. Of course it’s a bit more subtle than that: we will get told
about resource constraints, or that voters are not receptive to foreign
aid, or, simply, that we aren’t “doing enough”.
As it is,
the world is in turmoil, especially from Morocco to Indonesia. Part of
the conflict is being caused by the ongoing face-off between the proxy
forces of Iran and Saudi Arabia. Then there is the confrontation between
North Korea and the United States that might easily turn into a nuclear
war. China’s aggressive posture in the South China Sea also has the
potential of spiralling out of control. Russia’s role in Ukraine has not
been conducive to peace and tranquillity in the region. Pakistan and
India’s continuing refusal to sort out the confrontation over Kashmir
could also escalate.
So all in all, our planet is a far
from peaceful place currently. An economic meltdown in a large number of
recipients of US aid will create further turmoil. While I am no
advocate of aid dependency, I do think the removal of this crutch needs
time and careful management. The addiction in many countries is too
deep-rooted to eliminate abruptly.
But a serious rethink
of the relationship between donors and recipients needs to begin so that
we can envisage a world where nobody gets any free lunch.