“There is such thing as a free lunch”; truer words perhaps have never been spoken. To this end, much of the governmental aid given to developing nations often comes with the precondition that recipient countries must embrace liberal values such as democracy and human rights.
And this relationship between aid and respect for liberalism has been tightened further still in recent times. Coming to office in 2010, the Cameron administration announced that its aid will not be giving to countries that do not respect women’s and gay rights as part of what it calls: “muscular liberalism”. Elsewhere, the US government’s Millennium Challenge Corporation has made its position clear that for instance, aid Compacts will not be given to nations that host the Sudanese President, Omar al-Bashir, who currently is facing charges of crimes against humanity.
Yet, whilst most of the attention is given to how efficacious aid is in bringing socio-economic development, little attention is given to the issue of whether or not aid is actually successful in fostering the liberal values that are attached to it. And indeed there is a growing number of studies that appears to cast doubt over this.
Writing in Stanford University’s “Journal of Development Studies”, Nicholas Eubank begins by drawing a juxtaposition between Somalia and Somaliland.
On the one hand is Somalia. Properly recognised as a sovereign state, Somalia, like most countries in its economic situation, qualifies for access to aid taps. And yet, in spite of billions of dollars in aid assistance, Somalia continues to suffer from dysfunctional political institutions as its people live in abject poverty and destitution.
Compare this to Somaliland. Whilst it would be a gross exaggeration to compare the nation to its Western counterparts for example, Somaliland, as a consequence of not being recognised as a state and therefore not qualifying for aid, has excelled its neighbour, Somalia. Those who travel to it often record a picture that is unimaginable in Somalia: peace, stability, democracy and a thriving private sector.
The apparent conclusion being that not only does aid fail to foster liberalism, but also that this aim is better achieved, rather ironically, through the absence of it!
In one incident recorded by Eubank’s study, business leaders decided to come together and allow the newly formed government in Hargeisha to tax them, but only if the politicians agreed that they would develop representative and accountable political institutions – almost as if to make John Locke’s “Two Treatise of Government” sound like a prophesy.
But these lessons aren’t particularly new. Those well versed with western history will recall “No Tax Without Representation” in the Thirteen Colonies of what is now the United States of America. Or indeed the root causes of the English Civil War – a King who lived lavishly and fought wars abroad, expecting his subjects to fund them, whilst he subjected them to religious dogma they didn’t necessarily agree with – and how all that led to birth of English Democracy as we know it today.
And indeed history continues to repeat itself. In 2011, the UK government announced its withdrawal of aid to Malawi, whose national budget is 40% dependent on aid, for persecuting minorities and bad governance. In an attempt to fill the 40% gap, the government of President Bingu Wa Mutharika introduced an unprecedented wave of new taxes.
In retaliation, citizens within months, rallied themselves around Civil Society Organisations, organised a series of nationwide protests that practically paralysed the whole country. It all ended with the people representing the government with a list of 20 demands, ranging from a reduction in the number of cabinet ministers and their individual salaries, to economic and constitutional reform. These demands had to be met, they said, if the people are to be expected to tolerate the new tax regime.
Suffice to say, 18 months later, many of those demands have now been met.
So what lessons is any should be drawn by policy makers in donor countries?
What the historical examples above illustrate is the necessity of a nexus between taxation and the birth of democracy. Time and time again, what we see in matured democracies is that what in actual fact happened in order for western nations to emerge as democracies, was the occurrence of a long struggle between what were authoritarian regimes (much like in developing countries today) and their need to tax the population to fund its administration on the one hand (a need that doesn’t exist in developing countries due to aid grants), and citizens who essentially became fed up and demanded that they be heard if governments want their tax.
And folly of aid pre-conditions is this. Whilst donor nations no doubt are well intentioned, aid distorts the opportunity for a proper dialogue between government and its people to occur as to how they are to be governed. Far from being accountable to their people, aid recipient governments are instead accountable to donors. And whilst aid does come with a pre-condition of respect for liberal values, whether or not the recipient country actually abides by those conditions can very easily be falsified, as just about every aid worker can testify. In other words, governments of aid recipient countries are having a free lunch at the expense of their people.
This article, by no means does not advocate and overnight withdrawal of aid. That would plainly be reckless on every level. It does however advocate that a time frame for reigning in aid should be set. And in its place should be trade. The of course will mean that free trade areas will have to be extended much further.
The gradual withdrawal of aid and increase of trade will in turn encourage governments to become financially dependent on the tax revenues of its people.
Until governments are in this way dependent on its people, properly functional, organic and matured democratic institutions will remain a distant aspiration in the developing countries.