Features-It is official: Busan heralds the dismantling of the aid industry
2011-12-16, Issue <http://www.pambazuka.org/en/issue/563
The 'aid industry' fooled many into believing it was a necessary tool for
development. But following the Busan forum on aid effectiveness, its time to
rethink a world without it, writes Yash Tandon.
> Fourth High-Level Forum on
Aid Effectiveness (HLF4) was held in Busan, Korea, 29 November - 1 December
2011. It is an end of a long journey that began with the Paris Declaration
on Aid Effectiveness (PDAE) in 2005. It was a misguided journey right from
the beginning. Its authors were probably well-intentioned, but they
legitimised and built on a monstrous global aid industry that is largely
Eurocentric and self-serving, and that has nursed illusions for over half a
century. HLF4 was launched with much fanfare; but it ended with the
recognition - finally - by the architects of the PDAE that they were on a
wrong course. The Outcome Document talks of not 'aid effectiveness' but of
'development cooperation', which is what it should have been from the start;
and it sets out the schedule for the 'phasing out' of the aid structures by
June 2012. This paper is part of a larger story of how the 'aid industry'
has managed to fool the rest of us for so long. It gives the main highlights
of Busan's final burial of this self-reproducing aid industry. The
'industry' will no doubt try and find other reasons to survive. Nonetheless,
those not taken in by the industry must now rethink of a world without
AID DIPLOMACY AT BUSAN
READING BETWEEN THE LINES
Professional politicians and diplomats have a particular way of making
public speeches. They send important and often critical messages encrypted
in coded language. One has to be able to interpret the code, to read between
the lines, in order to get to their hidden messages. At Busan, when the US
Secretary of State Hillary Clinton said 'Beware of those who want to take
your resources with quick fixes', you can be reasonably sure that the
warning was levelled at African countries and the pointer was at China. (I
was once a politician and a diplomat; I have learnt to read between the
Clinton said much more at Busan. Below I give an account of the main content
of her speech, and of speeches of other dignitaries at the closing session
of Busan. I supplement summary reportage by extrapolating from the
diplomatic speeches reasonable elaborations in order to bring to the surface
their more hidden messages and implications. (I was largely an observer; and
I took copious notes of what I saw and heard. I depart from the 'normal'
method of writing. Long diplomatic usage - especially of 'experts' in UN
meetings - forces authors to write in a contrived, artificial, style that
stifles thinking outside the 'diplomatic norm'. What is needed is a bit of
innovation, a bit of 'out of the box' thinking).
CLINTON CONFIRMED THAT DEVELOPMENT AID IS INEFFECTIVE
Clinton, in a short but 'sufficiently' passionate speech for the occasion,
made three points.
One, the ODA (Overseas Development Aid) is no longer the main source of
development financing. 'It used to be 70% of total financial flows in the
1960s; now it is only 13% -- even as aid quantity has increased'. So, then,
what is the purpose of aid? It should be, she said, 'to facilitate private
ELABORATION: Aid, in other words, is an adjunct, an accessory, to something
else. (I agree with Clinton on this - aid has no 'independent' life of its
own. I return to this point later).
Two, 'donor aid is driven by donor agenda.We should follow partner lead'. By
'partner' she meant the recipients of aid. There should be, she added,
'genuine mutual accountability'. She gave the example of recipients'
insistence that donor aid should be 'untied' to donor procurement sources.
She claimed that the US was trying its best to do so. But, in a frank
admission, she went on to add that some US aid will remain tied in order for
the Administration to secure political support of the Congress.
ELABORATION: The reference to the need for 'genuine mutual accountability'
clearly implies that this is presently lacking, further reinforced by her
point that 'donor aid is driven by donor agenda'. (Clinton is on good ground
evidentially; i.e. on the lack of mutual accountability). Also, and this is
an important point, she acknowledged that aid is a means to promote certain
politically-backed US exports. We know from other sources that the US
Congress is a hothouse for business lobbyists, and that the USAID has been
used by, for example, the farm lobby to promote US grain exports to Africa
and other third world countries, and that these have had disastrous effect
on local food production and domestic food security. (Besides Africa, Haiti
is a good example of the disastrous effects of US food aid - limitation of
space prevents further elaboration).
Three, and this is a telling statistic that put to question the whole issue
of aid effectiveness. Clinton said that an independent study undertaken just
before the Busan meeting revealed that out of 13 objectives set out by the
Paris Declaration on Aid Effectiveness, only one was met. Here is the full
quotation from the independent study: 'Although the Paris Principles
continue to demonstrate their relevance over time, progress in implementing
the agenda has undoubtedly fallen short. The preliminary results of the 2011
survey show that only one of the original 13 targets set for 2010 has been
ELABORATION: There is (sadly, an almost too human) tendency to reject the
verdict of empirical evidence (especially among professional politicians and
diplomats, joined as I recount below, by international bureaucrats). Whilst
acknowledging that only one out of 13 targets for 2010 were met by the
'development aid' (i.e. over 90 per cent of the aid failed to meet its
objectives), the 50 'prominent thinkers in international development' went
on to say that the 'Paris Principles continue to demonstrate their relevance
over time'. On what basis these 'thinkers' came to that wishful thinking
defies logic. It is like the well known fact that the gap between the poor
and the rich countries has increased 'over time', and yet, in the diplomatic
and political world, it is necessary to go on reiterating, ad infinitum,
that the 'principle' of narrowing the gap is 'relevant over time.' Of
course, it is 'relevant'. (So are the Ten Commandments). But what has
'relevance' got to do with the achievability of these hallowed principles?
This is a serious question, and needs deeper thinking. The question is: Are
there not some inherent dynamics within the global system of production and
distribution that inexorably lead to the widening of the income gap not only
between countries but also within countries, (not excluding the United
States)? Is this not what the 'Occupation Wall Street' movement is all
about? As with income disparities, so with 'development aid'. Aid has
failed; that is the simple, unadorned truth. The principles of the Paris
Declaration on Aid Effectiveness do not address the underlying dynamics of
'aid'. The PDAE takes 'aid' for granted as a 'virtue', and gets on to the
'technical' task of making it 'effective'. Deeper thinking (not a forte of
'normal' professional politicians and diplomats) would show that the PDAE
principles obscure, obfuscate, reality of life; they encourage muddled
thinking on aid.
For good measure, Clinton ended her speech by taking a passing shot at what
she called the 'ruling elite' of aid receiving countries. They 'have to make
tough choices to remove their special privileges'. (I agree)
PAUL KAGAME TELLS IT LIKE IT IS FROM A RECIPIENT PERSPECTIVE
The President of Rwanda made a cool, dispassionate, speech covering the
One, 'massive aid transfers have been ineffective'.
Two, there is a contradiction in the growth statistics of Africa. On the one
hand, African economies have grown 7 to 8 per cent over the last several
years; on the other hand, the per capita income has fallen.
Three, many African countries are unlikely to meet the Millennium
Development Goals (MDGs) by 2015. This is the hard reality.
Four, there is a 'huge aid industry' that has now become 'a permanent
feature' of north-south relations. This 'industry' is undermining the
essential linkages between aid, trade and investment.
ELABORATION: Aid has occupied an undeserved place in the pantheon of
financial flows, often to the detriment of trade and investment.
Five, the Paris Declaration on Aid Effectiveness states 'mutual
accountability' as one of its principles. 'In reality there is no mutual
accountability'. Kagame pointedly added: 'When a country is not managing its
resources how can it be held accountable?' (Good question)
ELABORATION: Kagame went beyond Clinton: There is not only no 'mutual
accountability'; Africans do not even manage their resources. I agree with
Kagame. African economies are still by and large in the control of foreign
corporations - mining, manufacturing, trading, banking, services, etc. This
is an all-pervasive phenomenon about Africa which distinguishes the
continent from, for example, many large Asian countries such as China and
India and now also several Latin American countries such as Brazil and
Venezuela. Africa still does not 'own' its economy in spite of its
'political independence'. How can its leaders be made accountable for, for
example, 'aid effectiveness', when foreigners control its economies?
Six, Donors only talk about channelling aid through country systems; 'in
practice they refuse to use national systems'. There is a 'need for greater
ELABORATION: Mutual trust between the donors and the recipients is lacking;
the donors do not want to put their money into a system they do not trust.
Actually, it is not just a problem of trust; it is an existential or
institutional problem. Donors argue, understandably, that they are dealing
with public money and are accountable to their accounting procedures and
legislatures. In other words, by its nature, and despite wishful thinking by
President Kagame, the issue is inherently impossible to resolve. (Excuse us,
Your Excellency, take it or leave it; we are accountable to our accounting
procedures, not yours; but you take our money, so you are accountable to us
for the money we give you).
Paul Kagame ended his speech with: 'So fundamental rethinking is necessary'.
This fundamental rethinking came from an unexpected quarter.
QUEEN RANIA AL ABDULLAH OF JORDAN - THE MOST ENLIGHTENED AND FUTURIST SPEECH
OF THE WHOLE BUSAN CONFERENCE
In a slow, compassionate (not diplomatic) and measured tone, the Queen
delivered a few 'truths to power', challenging the prevailing orthodoxy
about aid and development, and putting to shame the more compromising and
subdued stance taken by the civil society organisations present at the Busan
Busan, she said, is different from Paris or Accra. 'We live in a different
world; it is a world of Tahrir Square, and Wall Street occupation'. The
world, despite all talk about globalisation, is 'growing apart, not coming
close'. In some countries such as Argentina and Malaysia they have narrowed
income gap. But global inequality is increasing. We need 'a new development
paradigm'. Development has to be based on equity; growth itself does not
bring equity. We must give everyone an opportunity to develop his or her
potential. 'Sixty percent of our people are youth and a quarter of them are
unemployed. They want jobs not aid'. Government should facilitate
development of people not sit on top of them. The education curricula in our
countries are 'outdated'. (By the way, the Queen is a radical innovator of
education policy in her country).
ELABORATION: It was a speech delivered from the heart. While most
presentations, including those of other eminent speakers on the panel, and
civil society organisations, made their points within the prevailing and
dominant paradigm of development with its emphasis on growth, the Queen
challenged its underlying assumptions. She was thinking 'out of the box'.
Economic growth is necessary, of course, but it does not bring equity. The
evidence on the ground, both at the national and the global level,
contradicts the naive assumption that growth brings equity. 'The world is
falling apart, not coming together'. Tahrir Square and the Occupy Wall
Street are not only symbolic or heuristic reactions of the youth against the
prevailing order; they are also a demand for a new international economic
and political order. It is necessary to learn from the street. The path
ahead is not clear (yet); but the path left behind is clearly not the path
ahead. A new cognitive framework is needed to move forward. (These are my
ANGEL GURRIA, MYUNG-BAK LEE AND BAN KI MOON TREAD OLD, OBSOLETE, PATHS
Angel Gurria, the Secretary General of the OECD, President Lee Myung-bak of
Korea, and Ban Ki-Moon, UN Secretary-General were treading old, worn out,
paths in their presentations. Interestingly, they had the same message, as
if they had sat together and planned what to say. Their arguments can be
briefly summarised as follows:
One, Korea is a shining example of a country that has 'moved from being a
recipient of aid to a donor'. (This message was played up, insensitively,
almost nauseatingly, in speeches and in large poster displays at the Bexco
Two, aid will end poverty, improve gender equality, bring education to girl
children, and so on and so forth.
Three, the world has fallen behind achieving the Millennium Development
Goals (MDGs). 'Therefore' (sic!), rich countries need to 'give more aid'.
Four, the 2008 financial crisis has shown that when countries work together
they can prevent contagion. Etc, etc.
ELABORATION: Korea was presented as a 'success story'; that may be the case.
But the period when Korea was able to carry out land reform under American
occupation; pursue state-aided and bank-rolled programs for encouraging
Daihatsus; industrialise without having to pay massive intellectual property
rents for technology; and export to the US almost duty-free at a time when
the latter needed a dependable ally in Asia to contain communism - this
period and its circumstances are not the same as today. Korea cannot be
repeated by, for example, African countries. Korea is no 'model'.
Furthermore, the two Koreans (Lee Myung-bak and Ban Ki-Moon) conveniently
ignored the fact that their country's development owes itself largely to
their hard-working working classes rather than 'aid'. As for the argument
that 'because' the world has fallen behind MDGs, 'therefore' the rich should
give more aid to the poor is so seriously flawed of logic that it defies
THE BUSAN OUTCOME DOCUMENT
As I have recounted, the arguments of the principal proponents of aid at
Busan (the Secretary Generals, respectively, of the OECD and the United
Nations - and the host country) are seriously flawed on grounds of logic as
well evidence on the ground. Some of these were acknowledged by the panel of
eminent speakers, including the US Secretary of State. But these flawed
claims are reproduced in the 'Outcome Document' with the usual 'diplomatic'
cover-up (such as that the Paris Principles are 'relevant' or that they will
work out 'over time'). Once these weaknesses are exposed to the light of the
sun (i.e. out-of-the-box thinking), it should be clear that HLF4 was not a
success of the 'Aid Effectiveness' agenda, but its total negation.
Here is a brief analysis of the outcome document.
ONE: To start with its title, 'Busan Partnership for Effective Development
Co-operation'. 'Effective aid' is now replaced with 'effective development'.
This is a more telling indictment of 'aid' than is realised at first glance.
After all, in 2005 the OECD countries had set out to redesign the
architecture of 'aid', not development. After six years, and following
vastly exaggerated claims of 'success' at Accra HLF3, the OECD aid
architects seem to have abandoned the 'aid' project, and they have come down
to embrace the larger, and even more complex, concept of 'development'. The
HLF4 Outcome Document confirms the point made by Hillary Clinton that 'aid'
has no life of its own outside of 'private investment', or as Paul Kagame
put it, aid has been 'ineffective' as a resource for development, a
sentiment echoed by many African leaders.
It is only when we come to paragraph 28 of the Outcome Document that this
'change of focus' is explicitly acknowledged. It says: 'Aid is only part of
the solution to development. It is now time to broaden our focus and
attention from aid effectiveness to the challenges of effective
development.' It then goes on to set out principles that are radically
different from the principles set out by the Paris Declaration on Aid
TWO: HLF4 was largely an affair between the 'poor' countries of the
so-called 'third world' and the so-called 'traditional donors' of the OECD
countries. Conspicuously absent were the BRIC countries (Brazil, Russia,
India and China). They were not present at the 'high tables' during the
inauguration or the closing sessions; they made practically no contribution
in the debates in the various fora and side events; they were represented by
senior officials but these kept their counsel to themselves; and they were
not actively engaged in the negotiation of the Outcome Document except to
say that they were not part of this game called 'aid effectiveness'. In
other words, BRIC countries illegitimated HLF4 simply by their silence.
This was reflected in the telling opening of paragraph two of the 'Outcome
Document' with the words 'The nature, modalities and responsibilities that
apply to South-South cooperation differ from those that apply to North-South
cooperation.' (This sentence needs to be re-read to grasp its significance).
However, in order palpably to save face of the hosts and the UN and OECD
Secretaries General, the paragraph ends with: 'The principles, commitments
and actions agreed in the outcome document in Busan shall be the reference
for South-South partners on a voluntary basis.'
ELABORATION: There is no question that the bigger countries of the south
(India, Brazil and China) as well as Russia have distanced themselves from
the 'aid effectiveness' agenda of HLF4. Their agreement to refer to the
principles of North-South relations on a 'voluntary basis' can only be
interpreted as a political rejection of those principles. (Excuse us, Messrs
Ban Ki-Moon and Angel Gurria, but we are not part of your game; count us
THREE: In paragraph 36(d), the Outcome Document invited the OECD and the
UNDP 'to support the effective functioning of the Global Partnership on
their collaboration to date and their respective mandates and areas of
ELABORATION: The OECD has dumped the 'aid baby' on to the lap of the UNDP.
FOUR: The aid denouement is officially announced in the Outcome Document in
paragraph 36(c). It calls on the Working Party on Aid Effectiveness (WP-EEF)
to 'convene representatives of all countries and stakeholders endorsing this
document. in preparation for the phasing out of the WP-EFF and its
associated structures in June 2012.' By implication, the BRIC countries,
possibly others, do not have to be part of this process; they are not part
of the 'associated structures' in any case.
ELABORATION: The WP-EEF is a structure created under the Paris Declaration
on Aid Effectiveness - an insular, self-serving organ of the OECD that was
created to monitor the whole scam of 'aid effectiveness'. It is called to
self-destruct in June 2012. It is therefore now official: The aid industry
is . finally . dead.
CONCLUSION AND WAY FORWARD
Aid effectiveness of the OECD club of the rich is, for all practical
purposes, dead, buried, pulverised, vaporised - in short, gone. Busan was
its burial site.
However, the 'aid industry' has been in existence since the Second World War
and is not likely to self-destruct that easily. Like the mythical English
Cheshire cat, the whiskers will still be seen even as the body has
The 'aid industry' or 'complex' (recall Eisenhower's 'military-industrial
complex') is at least a million-strong, largely inhabiting the North Pole
(or a bit south of it) in countries like England, France, Germany, Canada,
and the US, and its octopus-like NGO tentacles in the South Pole. It is a
gargantuan network of self-styled pseudo-experts on development;
well-intentioned do-gooders; hard-headed realpolitik operators in
aid-dispensing Western countries; and a bunch of illiterate idealists.
What will happen to this 'complex'? I can only make some indicative
suggestions and tentative predictions. BetterAid - an NGO genie that was
taken out of the bottle by the OECD in order to reach out to civil society,
mostly in the Polar South, to peddle (and legitimise) the concept of 'aid
effectiveness' will need to consider its future. Since BetterAid is
aid-dependent, this is probably the only genie that could be pushed back
into the bottle if the OECD so desires.
A bigger challenge confronts 'charity' organisations such as the Oxfam.
'Aid' (or charity) is their way of life, a sub-culture, with its priests,
rituals. and yes, illusions. Oxfam alone has thousands on its payroll, and
hundreds of shops where it sells tens of thousands of second-hand clothing,
books, music, movies, etc donated by Oxfam supporters, generating literally
millions of dollars in order to 'fight poverty' in the third world. What
will Oxfam - and the likes of Oxfam - do? It is time for them to do some
out-of-the-box thinking. Charity will remain as long as there are people
like Geoffrey Sachs, Bob Geldof, rock musicians, do-good charity
organisations, and the like, around. But they must realise that charity
helps the givers: It uplifts their (Christian and other delicate) souls; but
charity destroys the takers: It kills their spirit of self-reliance.
What, then, of the bigger and richer countries of the South (such as China,
India and Brazil)? The first thing to acknowledge is that for a while they
too were using the concept of 'aid' in describing some of their financial
south-south transactions However, they now know better. HLF4 vindicates them
for refusing to associate with this self-serving creation of the Europeans
and the Americans. As the Busan document says, 'The nature, modalities and
responsibilities that apply to South-South cooperation differ from those
that apply to North-South cooperation.' They will now have to work out their
own modalities of operation outside the framework of 'aid'.
In the light of HLF4, what will the aid-dependent political-bureaucratic
leaders of the countries of the South do (or should do)? Here I can only
repeat Hillary Clinton's advice: Strip your elite privileges. To this I add
my own: Learn to be self-reliant on the strength of your people's ingenuity
and labour and intellectual resources, and your countries' and region's
What, then, of the UN agencies on aid? As noted earlier, the OECD has dumped
the 'aid baby' on the laps of the UNDP. Here is my suggestion: the UNDP must
stay clear of the donors' aid agenda. Also, the UN's Development Cooperation
Forum (DCF) must clear its decks and method of operation. Its present
composition is OECD donor-dominated; it is funded largely out of donor
funds, such as the various German development funds; and it is 'legitimised'
by civil society organisations that are themselves aid-dependent. Other
institutions such as the UNITAR might focus their training and research on
designing methodologies to enable countries of the South to be more
self-reliant nationally and regionally.
Finally, a word on those in the north who work with their 'partners' in the
south on the basis of solidarity - based not on 'aid' or charity but on
shared values of equity and justice. Solidarity is a complex concept - more
so in practice than in theory. There are those who define it as action based
on a 'universal social protection system', or as an essential component of
the 'common good of humanity'. However, they need to revisit these concepts,
because they could easily lend themselves to manipulation by the Big Powers
of the North (such as those in the North Atlantic Treaty Organization) to
bomb innocent civilians in the name of 'humanity', 'social protection',
'democracy', 'good governance', 'fighting corruption' and the like.
BROUGHT TO YOU BY PAMBAZUKA NEWS
* Yash Tandon is a writer on development theory and practice, chairman of
SEATINI and senior adviser to the South Centre.
* Please send comments to <mailto:editor_at_pambazuka.org>
editor[at]pambazuka[dot]org or comment online at
> Pambazuka News.
 I am author of two recent publications on aid. One - 'Ending Aid
Dependence' -- was published on the eve of HLF3 at Accra by the South Centre
and Pambazuka Press in 2008; and the second - 'Demystifying Aid' - was
published on the eve of HLF4 at Busan, by the Pambazuka Press in 2011.
 This is a reference to the roundtable event at the Brookings Institution
in the US where 50 prominent thinkers in international development came
together to discuss 'a new role for global development co-operation'. Its
report "The Road to Busan: Pursuing a New Consensus on Development
Cooperation" came to this sobering conclusion about aid effectiveness.
 Aid and solidarity are two separate rivers, about which I shall write
from my experience some time in the future. Suffice to say for now that I
have over three decades of experience working on the issue of solidarity
with friends in the North.
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Received on Sat Dec 17 2011 - 18:15:53 EST