The Dilemma of Foreign Aid

     Foreign aids has always been the favorite target for Congressional budget cutters. Since the global economical crisis the U.S. house and senate are once a gain becoming stingy about foreign aids and are considering on taking 1.5 trillion dollars out of the budget. On the other hand, editorialists of the New York Times like Carol Giacomo argue that it is no time to get stingy with foreign aids. The debate is already heating up in Washington but in order for us to really understand the issue we have to first look at the relationship between the developed and developing countries and than look at the effects of foreign aid. There is no real answer for this issue but from the point of view of Ha-Joon Chang and through the results that foreign aid had until this date, it seems that the current system of foreign aid run by the OECD(Organisation for Economic Co-operation and Development) has more cons than pros.

     Since the colonial era, developed countries buckled down and started to outstretch their influences over underdeveloped countries such as Africa, Southern Asia,  Australia, America, and other parts of the world. England, Spain, Portugal, and France were the big powers of the century. Through their colonies, they accumulated such wealth that England called themselves the sun of the world. The developed countries created a system in which lead to the total deprivation of the colonies. One such example is the plantation system which is the creation of farmland within the colony which utilizes the colonies labor. The problem of the system arises when the crops are ready. The crops raised in the colonies are, so to say, “imported” by the country in power. The reality is, however, not much different from pillaging. The dominating countries of that era put up subsidies and tax barriers against foreign products and acquired their needs very cheaply from their countries. Furthermore, they resold packaged products to their colonies at a high price. These products were not limited to crops but ranged over clothing, metals, and other items. Through this system, the rulers flourished, or they seemed to for a while, for the sun of England eventually set.

     With the ending of the colonial era, many of the colonies gained freedom. Africa for example were divided artificially by the winners of the World War. The political domination that happened during the colonial era seemed to end, but it actually did continue, not through political control, but through economical domination. Under the dominating system of market economy the developed countries held on to their power over developing countries, which were once their colonies. Ha-Joon Chang, one of the leading economist, working at the University of Cambridge, wrote in his famous book, “Bad Samaritans” about the problems of the market economy. Ha Joon Chang, being against neoliberalism, or the theory which supports the system of market economy with the least amount of government intervention, pointed out that the Western developed countries are forcing the developing countries to stay within poverty. His main idea was that the underdeveloped countries, the so called “third world”, must do as the current developed countries did when they were undeveloped, not as these developed countries tell them too. The WTO(World Trade Organization) is one of the main organizations that is hindering the development of the developing countries: foreign aids. The most prevalent of these aids is the ODA(Official Development Assistance) which is an aid officially given by the developed countries, while overseen by the OECD, to the developing countries. 

     Now, coming back to the main issue of foreign aids, the issues discussed above may have seem unrelated to the topic. The truth is, however, that the ODA, is just an extension of the colonial era. Through consistant support of aid in the current system, the developing countries become more and more reliant on the developed, while the developed are donating money that is eventually used to buy products from their own country. Overall, the economical assistance leads to developed countries becoming more and more reliant on the developed countries, which leads to continuous need for the ODA. This vicious cycle itself is a good enough reason to reduce the ODA, but these aids have more unseen problems. Due to the way the money is transferred, the ODA, in many cases like Chad, led to corruption. In Chad, the aids were used in acquiring weapons and were than used to threaten countries opposed to its own. Furthermore, it decreases the urgency to reform the political and economical system of the receiving country. For example, Nigeria, in the status quo is sixty to seventy percent reliant on the ODA for its national budget. A large portion of this is again misused by the corrupt government and lessens the urgency to reform the corrupt status quo. In a macroscopic sense, the ODA does not help the speed of development for the receiving countries. Like Peter Bauer, a famous economist specializing in foreign aids said, the ODA is “...an excellant method for transferring money from poor people in rich countries to rich people in poor countries.”

     The side effects of ODA or any other foreign aids will always be present, our job for the future is to create ways in which we can limit such problems to a minimal level and eventually decrease the amount of ODA as the receiving country develops. Through increasing the transparency of the aid and adding specific guides and options that require them to reform their own system of politics and economy, we can create a world that is truly one and equal. Like Claude McKay says in her poem, “America”, I gaze into the days ahead.