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Op-Ed

Foreign Aid in Lean Times

Jurnan Goos, October 31, 2010

The Netherlands is set to save 19 billion euros, but that record pales in comparison to what U.K. Prime Minister David Cameron is going to treat his voters with. Not just do the Tories and Liberal Democrats aim for cuts that are greater in real terms than that of the newly baptized Dutch government, they also swing an axe fiercer than anyone else's in terms of share of GDP, except for much-troubled Greece.

And there are noteworthy similarities and differences. Impressive as the welfare achievements in the Netherlands seem to be regarded by the rest of the world, there is plenty of work to do to keep the country competitive. The Christian Democrats, Liberals and the Freedom Party have showed a lack of rigor when it comes to tackling many economic and market issues, of which the two most notable issues are failing to agree on implementation that allows companies to lay off workers more easily and doing away with mortgage interest reduction. The latter wasn't expected to happen—not with the Liberals in charge—but for the former there was at least some hope left. Sadly, the hand of the Freedom Party manifests itself in many economic issues.

Right-wingers in the Netherlands are keen to limit the size of its budget, regardless of whether this breaches international outlines and agreements. The U.K. government, however, is about to make sure all of its own departments need to save money, averaging about 19 percent. There are three main exceptions to this rule. The first is the ludicrous election promise that the National Health Service would be ring fenced—no reorganizations, no cuts. The other two are defense and foreign aid. The first still needs to save about 8 percent, but that is a lot less draconian than the rumored 20 percent they would be facing if Cameron had not intervened.

That foreign aid escaped "savings"—to speak in U.K. Chancellor George Osborne's terminology, as he seems reluctant to utter the word "cuts" too often—was something that came as a surprise to me. After all, what the Tories and Lib Dems are pulling off is sure to create some uprisings once the pain can be felt in people's wallets. Wouldn't it have been more popular, almost prudent, to save on foreign aid as well? From a populist point of view, the answer would be yes, as Party for Freedom leader Geert Wilders has shown us all too well (though the Liberals favor cuts, too). That Labour did not want to reduce the United Kingdom's development aid contribution is not all together very surprising; their quality has never been fiscal prudency. The Tories don't mind "cleaning up the mess," yet there is one thing that still haunts them.

Her name is Margaret Thatcher. Not exactly a proponent of "supranationalism," spending too much money or busying herself with a likeable image. The Tories want to prevent at all costs that they will, once again, become what they were when she was in charge. In other words, they do not want voters to think that they are as unkind. The ironic thing is that, while Thatcher upheld the nickname "The Iron Lady," her policies don't get anywhere near the scope of what the current U.K. coalition is aiming for. With her image in the back of our minds, not reducing foreign aid can either be seen as aiming to fulfil international agreements or a way of boosting the government's own image.

It probably ends up being neither of those. Questions have already been raised (as early as June, before a more detailed public government plan) about money that has been diverted from foreign aid to national projects that are not exactly transparent choices, nor reasonable ones as far as I can tell. It seems likely to me that this mess will enable the government to put money on a detour, in order to make sure that 0.7 percent of GDP in foreign aid—which is the official aim—will be reached. Why on earth politicians keep focusing blindly on this number is still a mystery to me, as this fancy number traces it roots back to the 60s. Times change, and while that doesn't mean we shouldn't spend money on foreign aid, it ought to mean that we need to be able to trace the money to where it goes and how it gets spent.

The United Kingdom used to spend a lot of money on foreign aid to India, for instance, despite the fact that India's economy was already bigger than its own. Sure, India is not problem free, but how do we know the money ends up where it is supposed to end up? India's feared bureaucracy points to a widespread trend in aid. No one knows where "our" money goes and what happens to it. Too bad the coin has so many sides. Plainly saying reducing aid is a good thing would be foolish. The Netherlands and the United Kingdom are wealthy enough to beggar belief of many African citizens, and it is clear that some additional wealth is less valuable from a moral standard than feeding a child or providing someone with emergency healthcare. That's not something the Tories, Lib Dems or either of three Dutch parties fail to realize.

To me there seems to be a similarity between healthcare and foreign aid. Both are necessary; neither can be taken care of solely by individuals or market processes. Yet a dogmatic stance, whether that means aiming for 0.7 percent of GDP or immunity to cuts, is not a good thing. If a government is saving money, it should do so anywhere it can. The end does not justify the means, but the means may be adapted to suit national goals. The NHS should never have been ring fenced, exactly because it has much room for improvement. Nor is it smart to keep spending on foreign aid if half of it gets flushed down the toilet.

While I think we not only have an obligation to improve the lives of people in other nations, we also would do well to remember the importance of developing countries. We might not depend on them today, but they will be tomorrow's partners. China is the infamous example, and also one where we go madly astray. Yes, we speak loudly and proudly about moral obligations, the new world order and how Europe would like to be part of this, but how will we explain to China's leaders of tomorrow that we chose not to annoy their suppressive government because we had to make economic profits?

Jurnan Goos is a Dutch writer who works under the pseudonym Reckless Rose for jurnan.eu.

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