Home > Politics (general) > A challenge, an opportunity and a test

A challenge, an opportunity and a test

December 31st, 2004

When we’re faced with a catastrophe like the one still unfolding in Asia, any response seems inadequate, and it is perhaps inevitable that there have been complaints about weak responses. In the short run, the issue isn’t financial commitments: the main problem is the logistical one of getting help to where it is needed as fast as possible. In the longer term, however, dollars will matter. The record of the developed world on this kind of thing is good. Big promises are made during the initial outpouring of grief and sympathy, but when the time comes to deliver on those promises, the ordinary processes of politics push foreign aid to the bottom of the priority list. People in Bam, the Iranian city destroyed by an earthquake last year, are still living in tents because the aid promised to help them rebuild their homes hasn’t arrived. Meanwhile, with or without disasters, poverty, preventable disease and malnutrition kill people by the million every year.

If all the rich countries gave only 1 per cent of their income to development and emergency aid, there would be enough to pay for huge improvements in living standards, like those set out in the Millennium Development Goals and to have a standing response to disasters and emergencies. For Australia, the cost would be an extra $5 billion per year, about the cost of a “sandwich and milkshake” tax cut, or a couple of days worth of the promises made during the last election campaign.

It’s sadly unlikely that the rich countries will, in fact, do anything on a collective basis. But with Indonesia being the country hit hardest by the disaster, Australia in particular is faced with a challenge, an opportunity and a test. We can, if we want, send a few emergency missions, then return to business as usual. Or, we can make it a major policy priority to help our neighbours, and particularly Indonesia, rebuild over the next few years.

For various reasons, our relationship with Indonesia has been fraught with tension ever since that country achieved independence. We have the chance to put that history behind us and work together now. In this context, it’s worth looking at the example of Turkey and Greece, two countries with a long and bitter history of conflict and war. The positive response by the Greek government and ordinary Greek people to the terrible earthquake that hit Turkey in 1999 began a process that has seen much of that bitterness dissipated, even though problems like Cyprus remain unresolved. Helping our neighbours won’t eliminate all sources of disagreement with them. But it offers the chance for a relationship much better than we have had in the past.

Of course, we should help because it’s the right thing to do, and not just because it will do us good in the long run. But when the disaster has faded from the television screens, it’s worth remembering that it’s in our own interesting to keep on helping.

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  1. December 31st, 2004 at 09:04 | #1

    “Collectivism” and strong co-ordination is exactly what is required here from donor nations and NGOs, regardless of any yucky socialist connotations the term may have for some. It just does not make a whole lot of sense for ten gazillion independent, almost competitive organisations to all do their concertedly individual bit, only to find that there is duplication of effort in some areas and a distinct lack of it in others.

    Nice to see that Dubya has launched a “Coalition of the Giving” to assist victims of the tragedy, but disappointing that so few countries are involved in the initiative. I guess that could potentially say something about Dubya’s track record with “coalitions” in recent history, but we’ll stay off that beaten track…

  2. December 31st, 2004 at 09:28 | #2

    Unfortuantely I don’t think that the relationship between aid and good relations is always a reliable one. The US is the worlds largest supplier of aid, but is it the worlds most loved country?

    The second largest donor is Japan. Again, while in some parts of Asia this has ameliorated antagonisms, I would hardly say its eliminated them in countires such as China and Korea.

    So there’s no guarantee it’ll make things better. And it could make things worse -Indonesia has a troublesome relationship with Australia because it is poor while Australia is rich, not because it doesn’t give enough aid. The first problems with giving increased aid to a country like Indonesia is that it may fuel this resentment.

    The second problem it is not a homogeneous country; if more aid is given to the Mollucccas than Java, maybe the Javanesse will get jealous. If Aid is given to Aceh, some in jackarta might look at it in the same way as they look at aid to timor.

  3. John Quiggin
    December 31st, 2004 at 12:48 | #3

    “The US is the worlds largest supplier of aid, but is it the worlds most loved country?”

    The US gives about half as much as the EU, though the two economies are of comparable sizes. When the US was a big aid donor, in the days of the Marshall Plan, it was much better loved than it is today.

  4. Peter Kemp
    December 31st, 2004 at 13:54 | #4

    The most effective aid for Indonesia is that which goes through NGOs, generally. When I was in Batam, Indonesia (next to Singapore) my factory foreman started a fund to help the victims of a local landslide which killed about 20 people. The funds were give to the local authority but later checking with victim’s families revealed not a single rupiah was disbursed—it ended up in the pockets of those very same officials.

    As World Bank and IMF past experience shows, at the very very least, 30% of aid/borrowed funds ends up in corrupt official’s pockets, hence the move by Australia, Ausaid etc to fund NGOs who maintain (one only) set of books with proper auditing.

    Anyone who thinks that corrupt Indonesian officials will not steal money from sick and/or starving people should think again. I’m not suggesting that people shouldn’t donate, but to satisfy themselves that their donated aid does not go to the Indonesian government or its bureaucratic organs.

  5. Giles
    December 31st, 2004 at 14:23 | #5

    “The US gives about half as much as the EU”

    Is the EU a) a country b) loved?

    And if you count private donations, then no, the EU is not a bigger supplier of aid.

  6. John Quiggin
    December 31st, 2004 at 15:02 | #6

    “And if you count private donations, then no, the EU is not a bigger supplier of aid”

    I’m interested in data on this topic. Private giving by Americans is substantial, but most of it appears to be given to churches and used to fund local church activity. Can you point me to data on US private contributions to foreign development aid (I don’t mean to exclude aid by religious organisations, but I don’t count religious proselytisation as aid).

  7. Geoff Honnor
    December 31st, 2004 at 15:50 | #7

    The Bill and Melinda Gates Foundation funds HIV/AIDS programs in the developing world to the value of 15 billion dollars.

  8. John Quiggin
    December 31st, 2004 at 16:22 | #8

    A good point, Geoff, and one I should have remembered since I’ve posted on it previously. And there’s George Soros as well. Certainly the US has a better class of billionaire.

  9. Malatesta
    December 31st, 2004 at 17:49 | #9

    Out of interest, take a look at the California earthquake preparedness website. This is one of best sites I’ve seen, ever!

    If the US-India-Japan-Oz conjunction achieves much, it will be out of hard political reality, and not a little opportunistic view of life down the track. There are good reasons for the participants being there, but ’tis interesting to reflect that China and Islamic states (say, rich ones like Brunei and Saudi) are not there. It wasn’t long ago that the composition of the Security Council was being looked at, and a couple of the erstwhile contenders are in this coalition.

    We can only wish Mr Powell all the best, and I will give a cheer when the first bulldozer is loaded off.

  10. kyan gadac
    December 31st, 2004 at 18:40 | #10

    Could I recommend the South East Asian Earthquake and Tsunami Blog to interested readers. The question of corruption is being discussed here in real time along with the most comprehensive lists of NGO’s distributing aid in various countries.

    Meanwhile in Burma very little information is being reported and the generals have refused outside assistance. According to DVP “the family members of top generals such as Than Shwe, Maung Aye and Shwe Mann have been involved in full-time “evil warding offâ€? ceremonies”. I’m sure it is a great comfort to them.

  11. December 31st, 2004 at 21:00 | #11

    The news tonight that the indonesian army is still operating against the rebels is bad news for us.
    The indos should be condemned for carrying on the war during the crisis-where are the indonesian helicopters?
    Off shooting people in irian jaya and also in aceh,still!
    I do believe that this tragedy will turn into an opportunity for the achanese and the australians to help stop the war.
    Where are the spy satellite photos of sumatra and burma?Surely they exist?The damage could have been assessed days ago from satellite photos-couldn’t it?
    Or do we not admit to spying at all?

  12. January 1st, 2005 at 04:10 | #12

    There’s OECD data here tab 3 and an article here.

    I’d also disagree with your assessment of the contribution of churches/religious charities. In my experience religious organization deliver aid at a far lower cost than most aid organizations – principally because their people on the ground are paid much less.

    I also think that they tend to be far more focused on real poverty problems – like malaria prevention as opposed to the often trendy issue followed by aid organizations.

    So I’d tend to count 1 dollar of aid delivered through a church is worth at least 2 delivered through an NGO.

    On the other hand religious aid does tend to have “externalities�. Far more of a dollar given to Hamas will reach the poor than a dollar of Aid given by the EU, but obviously some of that dollar will go to killing Israelis. Simlarly Christian missionaries were the primary cause of two of the most deadly revolts in history – the taiping rebellion and the Indian mutiny.

  13. John Quiggin
    January 1st, 2005 at 06:28 | #13

    Giles, I followed the links and it appears that most of the money cited by the Heritage Foundation is remittances to family members. The flow of remittances is important, but I think needs to be treated separately from aid in the current context.

    There’s some useful info here though the mention of Tech Central Station gives me pause. In particular, aid by US church groups is estimated at $3.4 billion per year.

  14. January 1st, 2005 at 08:56 | #14

    I agree that heritage is overeggin it and that remittances are more like a trade than an aid issue. Still, the OECD figures do show that the US is just an average donor if private and public aid is added together – it comes 12th/24, so not really a stingy donor.

    I would also question the OECD role in all this – why is the only graph published the official aid figure? Why do they use GNI as well?

  15. John Quiggin
    January 1st, 2005 at 09:27 | #15

    The main private component of the OECD data is investment, which tends to bounce about quite a lot (it’s negative for several countries). As with remittances, I don’t think investment is relevant in the current context. Also, the data is for 1992-93, which was a fairly low point for the US CAD (the opposite of the capital account surplus). Given that the US is now the dominant capital importer in the world, I think these figures would be radically different today.

  16. January 1st, 2005 at 10:51 | #16

    Most Official Development assistance is (or at least used to be) investment/infrastructure so it is probably relevant – see table 18 – it seems to constitute about 50% of official aid for most countries. So if you want to exclude investment from the private figures, then you’ve got to exclude it from the official figures – which by a quick eyeball would increase the US position as it has a very large “otherâ€? entry.

    The negative signs are I think caused by the repayment of loans at undervalue (loans at an undervalue are counted as development assistance whether private of public) or options on grants. But I haven’t seen a clear definition of the terms by the OECD so there’s a strong element of who knows about all the figures

    NB data that I can see if up to 2003.

  17. John Quiggin
    January 1st, 2005 at 11:09 | #17

    Giles, you’re right about the data period – I misread the spreadsheet.

    I still can’t make much sense of the private investment numbers, and I still don’t think they’re very relevant to the kinds of problems discussed in the post.

  18. Giles
    January 3rd, 2005 at 14:18 | #18

    I.m not sure what the private numbers mean either – but it then means you’ve got to question whether the public numbers a bit fictional as well.

  19. January 3rd, 2005 at 16:57 | #19

    I understand that this is a leftwing blog and the current US adminsistration is the worst in living memorty so the US system must be ritually traduced at least once per day. But isnt the current output exceeding the quota?
    If one measures aid by only governmental welfare sources then the US is stingy giver. The Organization for Economic Cooperation and Development reports that the world’s major countries gave $108.5 billion in combined foreign aid in 2003. The U.S. contributed $37.8 billion or 35 percent of the total. Not trivial.
    But if non-governmental non-welfare sources of aid are included, as they should be, then the US’s aid profile is decent enough, although could be improved.
    Warfare aid can be as useful as welfare aid (remember Nazis and Communists are bad for your health.) US foreign military establishments have been a source of in-kind foreign aid to both allied countries, traders needing open sea lanes and nations experiencing oppressive governements. The sums provided by US taxpayers to fund the US’s overseas military committments would run into a hundred billion dollars and should surely partially count in the aid ledger. No doubt Iraq should be put in the debit (although it is cancelled out by Afghanistan.) Right wing economist Bruce Bartlett gives some balance:

    The first thing one notices when looking at the big foreign aid contributors is that they all spend very little on national defense. According to the Stockholm International Peace Research Institute, in 2002, the Netherlands spent just 1.6 percent of its gross domestic product on defense. Norway spent 2.1 percent, Switzerland spent 1.1 percent, and Ireland spent a piddling 0.7 percent. By contrast, the United States spent 3.4 percent — and this was before the Iraq war.

    quite a high share of aid to foreign countries when private sources are factored in. The fact that the US motivation is religious is irrelevant. If the aid is offered and accepted it is, ipso facto, welfare enhancing (poetry = pushpin etc).

    Former U.S. Agency for International Development official Carol Adelman tried to total all private foreign aid in the year 2000 in a 2003 Foreign Affairs magazine article. She found private foreign aid greatly exceeded that of the U.S. government. Official aid totaled $22.6 billion that year, but private aid came to $35.1 billion, including $18 billion in remittances, $6.6 billion from private voluntary organizations, $3.4 billion in aid from churches, $3 billion from foundations, $2.8 billion from corporations, and $1.3 billion from universities.
    in 2003, U.K. charitable giving amounted to 8.6 billion pounds or 0.8 percent of GDP, the Charities Aid Foundation says. Compare that to the United States’ $241 billion or 2.2 percent of GDP, according to the American Association of Fund-raising Counsel.

    of foreign aid is a progressive immigration policy which the US pursues enthusiasticly. OTOH the US also sponges off the cream of Third World sci-tech graduates. (OTOOH the US also produces most of the worlds copyable patents and inventions.)
    The best aid is trade and in this respect the US’s open market consumer is the gift that keeps giving. That is why Hayek chose Catallactics, a term that means making a friend of an enemy by trade, as the best mode of social progress.
    PS I think Pr Q’s idea of a massive on-going disaster aid program has great merit on both personal-humanitarian and political-utilitarian grounds.

  20. January 3rd, 2005 at 17:54 | #20

    Jack, mostly US defence spending shouldn’t be counted as aid precisely becuase it is spent for the US. When they try to claim Iraq as a plus for them, of course it’s the same mistake of the story of the four boy scouts who helped a little old lady to cross the road. When they were asked why it took four of them, they replied that she didn’t want to go.

    Unfortunately a great deal of US aid is of that sort, not just Iraq, and in particular US defence spending should be taken as that sort unless conclusively proved otherwise. It isn’t even enough to use the police self-justification “they are glad enough of us when they need us”, for the simple reason that they themselves act to prevent the possibility of independent action. That’s certainly what happened in the Balkans, when the USA supposed it proved Europe needed the USA; in fact Europe had learned the USA’s dog in the manger attitude in such things as Suez – which would indeed have headed off many of today’s troubles. It is forgotten how much the USA contributed to destabilising the withdrawal from colonialism that had been under way in a controlled manner in the 1930s.

  21. January 3rd, 2005 at 21:07 | #21

    BULLSHIT!
    The indonesian military will not give one inch in aceh or west papua.
    Don’t kid yourself that we will be able to bring any justice along with our aid-the locals will continue to suffer under the army boot.

  22. January 3rd, 2005 at 22:08 | #22

    P.M.Lawrence — 3/1/2005 @ 5:54 pm trots out more tired and discredited left wing boilerplate:

    Jack, mostly US defence spending shouldn’t be counted as aid precisely becuase it is spent for the US…Unfortunately a great deal of US aid is of that sort, not just Iraq, and in particular US defence spending should be taken as that sort unless conclusively proved otherwise.

    and beknighted world view that argues against an action solely because it benefits two parties instead of just one. US military installations and interventions in large measure helped the First and Second Worlds to see off Nazi and Communist military threats. These policies may have benefitted the US no doubt. They also greatly aided the non-US. The technological and financial boom “peace dividend” that proceeded the slo-mo collapse of communism in PRC (1978-) & USSR (1985-) is an existence proof of the global utility of the US’s global interventionist warfare policies.
    It is no more than the truth to state this, but apparently this truth is hard to swallow for those committed to seeing evil lurking, or good fleeing, behind most US global actions.

  23. January 3rd, 2005 at 23:03 | #23

    Jack, I am not a lefty (though I believe I can get further showing them what’s what than by either shouting at them or by sticking to a party line that is itself not 100% correct).

    When I point out that US defence efforts should not be counted as aid for others, it’s just a claim that when you do accounting you shouldn’t do double counting. Choose a split by all means, but be prepared to defend it – and if there is a claim that the USA was acting in its own interests, you really cannot assign the same action to any other column.

    By the way, my attitude in that post is the old conservative one from the UK, the kind prevalent until the Heath-Thatcher conflict. Read some of Matthew Parris’s articles in the Spectator, in some of which he looks at the reflexive conservative support for the USA these days and compares it to the much more clear eyed awareness of the different interests of the two countries that the UK (and Australia) used to face up to.

  24. January 5th, 2005 at 14:30 | #24

    P.M.Lawrence — 3/1/2005 @ 11:03 pm serves up more of the same:

    When I point out that US defence efforts should not be counted as aid for others, it’s just a claim that when you do accounting you shouldn’t do double counting.

    5 years the civilised RoW has been a gigantic free-rider on global US global defence expenditure, which has been useful aid to countries in the Second and Third Worlds battling revolutionary ideologues and reactionary theologues. It is not “double counting” to put global defence into the US’s credit column because the (non-ex British Empire) has hardly put a single resource into this public good.

    Matthew Parris’s articles in the Spectator, in some of which he looks at the reflexive conservative support for the USA these days and compares it to the much more clear eyed awareness of the different interests of the two countries that the UK (and Australia) used to face up to.

    w Parris was right about the unwisdom of the US attack on Iraq, and perhaps the UK’s co-operation with it, he is ignorant of AUS strategic realities. He also strikes me as a bit of a tosser, perhaps indicative of the push that his toeing his line .
    The ADF’s participation in Iraq-attack consolidated our most important strategic alliance during a time of increased instability and threat in our region and was payback for US military asssistance to INTERFET. I predicted this rationale at the time of Iraq-attack and it was subsequently confirmed by Downer.
    The periodic renewal of the ANZUS alliance is not “reflexive conservative support” it is in AUS national interest. THis fact has been systematicly ignored by “reflexive progressives” and DFAT Jakarta Lobbyists. It would be nice for once, in the history of the cosmos, the progressives had the intellectual courage to face this unpleasant fact that sits in front of their noses.

  25. Fyodor
    January 5th, 2005 at 14:51 | #25

    Jack,

    You’re running a very foolish argument if you believe US taxpayers cough up their hard-earned tax dollars for defence spending as a form of aid. Yes, there’s a lot of free-riding on the USA, but you’re exaggerating the benefits to the RoW of the USA’s watch as global policeman. You were better off focusing on private charity, trade and technology transfer – that’s where the USA helps poorer countries most.

  26. January 5th, 2005 at 16:44 | #26

    JS, you mistake me. Even to the extent that the rest of the world really is free riding, the point is that it’s free because the USA is doing it for itself. While possibly the rest of the world should be glad, there’s no reason to be grateful – the USA has had it’s money’s worth already.

    But it’s wrong to classify it as a free ride, when the only reason for the USA being in that position (“global policeman”) is that it muscled other people out of the way to begin with. It’s like expecting gratitude for a tax cut. Perhaps you’ll appreciate why that’s not really something to be grateful for – either the government is “giving back” something it really needed for our collective benefit, or it’s letting us keep what it had no moral right to anyway, and either way that sort of gratitude is a trap for fools.

  27. Fyodor
    January 6th, 2005 at 07:49 | #27

    JQ,

    I think it’s worth pointing out that the Howard government has increased its aid package to Indonesia to A$1bn over five years.

    [http://www.abc.net.au/news/newsitems/200501/s1277184.htm?fp_news_stor].

    I’m proud of the way our government (yes, including the Rodent) and our people have handled this crisis so far. Credit where it’s due: boy done good; challenge met.

  28. Paul Norton
    January 7th, 2005 at 11:33 | #28

    Jack writes:

    “. . .the civilised RoW has been a gigantic free-rider on global US global defence expenditure, which has been useful aid to countries in the Second and Third Worlds battling revolutionary ideologues and reactionary theologues.”

    Of course, we also need to enter, on the debit column of the ledger, those elements of US global defence expenditure which were “useful aid” to governments in the Third World battling the legitimate aspirations of their own people and/or national or religious minorities within their borders. On this point it also needs to be acknowledged that: (a) on occasions the agendas of the “revolutionary ideologues” coincided with the interests of the peoples concerned, as in the cases of FRETILIN and the South African Communist Party; and (b) the “reactionary theologues” in Iraq may yet emerge as the windfall beneficiaries of Gulf War II and its aftermath.

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