from Follow the Money

Competitve compassion: the coming development debate

January 5, 2005 9:28 pm (EST)

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Act one: Tsunami. A few well-timed comments on stinginess produced an outpouring of aid.

Act two: The UK plans a "development" G-8 summit. The summit won’t happen for a while, but the real negotiations don’t take place at the actual summit either. The content announced at the summit has to be hashed out this winter.

Act three: The selection of the new World Bank president. By tradition, an American -- but also an American that the Europeans (and others) can accept. Someone like Zoellick would have been a good fit.

The FT gets out ahead of the curve with a nice Beattie, Giles and Balls overview of the current debate on development policy.

My summary of the key positions:

France: Why don’t we tax things the UK does really well (trade currencies, sell arms) to pay for more development aid?

UK: Why don’t we revive the third way, and leverage our financial savvy to do good? If we borrow against our future aid commitments, we can spend more -- lots more -- now. The City likes it, as do the development campaigners.

US: Why is the debate always about money? Development should be all about using existing resources more effectively.

There is a reason why the US is a bit defensive when the debate turns to development. The US share of global development aid -- $16 billion of the $69 billion total in 2003 -- lags the US share of global military spending. And the US does not necessarily get more development bang for the aid buck either. Egypt, Iraq, Jordan, Pakistan, Afghanistan combined to get about $3.5 of the $16 billion in US aid. Winning the war on terrorism is important and Afghanistan is really poor, so it is a true development challenge. But the concentration of US aid in the Middle East and central Asia leaves the Europeans in the driver’s seat when it comes to helping Africa. To date, the ratio of speeches by Treasury Under Secretary John Taylor speeches extolling the Millennium Challenge Account to actual Millennium Challenge Account disbursements has been rather unfavorable.

Development is one area where Europe as a whole does punch above its weight, though European aid is doled out primarily through a lot of different national aid agencies. Most of the $44 billion in aid that does not come from the US or Japan comes from various European countries [Update: apparently, the total from Europe is $37 billion, per the Times]. Donor coordination often means European coordination. On the other hand -- as we have seen recently -- it can be hard to generate large sums for politically unpopular causes without a bit of nationalistic competition.

Aid to Africa and other poor countries. Too often still considered a waste (it need not be). Beating the French (or the Brits)? Priceless.

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