Godfrey Bloom’s recent remarks on Foreign Aid caused a predictable storm of media froth over his choice of language. But Godfrey has also started a heated debate around the substantive issue. Just for the record: UKIP’s position is that we would support immediate and compassionate disaster relief in cases of tsunamis, floods and so on — tents, sleeping bags, emergency rations, medicines — but we cannot support general development aid as long as we face economic problems at home, and in any case we have serious doubts about the effectiveness of such aid.
Tim Montgomerie, formerly of ConHome and now with the Times, argues that the average British worker on £25k a year pays the equivalent of only 20p a day for foreign aid. Call that 25p gross, and multiply up, and it’s around £66 a year. Many people will be willing to pay that. But in these hard times, many will not. Some already give more than that as private donations — which is how charitable spending ought to be done.
It’s all too easy to think of aid as the major financial input for poor countries, but it’s not. Trade, and remittances from overseas nationals, are generally much larger, and generally much better targeted. In fact if we wanted to help poor countries we’d be much better spending our time dismantling the EU’s protectionism, rather than sending money “from poor people in rich countries to rich people in poor countries” to repeat the cliché.
Justine Greening, described as “Secretary of State for International Development”, says that it is in our self-interest to keep giving aid, because by helping poor countries to become rich, we create our export customers of tomorrow. But there is little evidence that foreign aid does in fact help poor countries become rich. It is arguable that we merely subsidise bad governance, create dependency and make matters worse. And it is an economic nonsense to suggest that we can prosper by giving our customers the money to buy our goods. This is like pulling ourselves up by our bootstraps. Germany is trying it now — selling Mercedes cars to Greece, and then finding that it must give Greece bail-outs so that Greece can pay Germany for the cars. Bad business.
In an uncharacteristically churlish and discourteous piece, the Telegraph’s Matthew d’Ancona joins in the media’s Bloom-bashing (poor Godfrey — it seems to be Open Season). He described Godfrey’s choice of words as “crass xenophobia”, which it clearly was not. But he added something that really must be challenged. He refers to “countries that receive aid — many of them scarred by famine and millennial poverty”.
The issue in many poor countries is not poverty and famine, but corruption and bad governance. Take Southern Rhodesia, for example. (OK, if you must, “Zimbabwe”). It used to be a successful economy. It used to be able not only to feed its people, but to export food as well. It was “The Breadbasket of Africa”. So what went wrong? Quite simply, appalling governance. Mugabe has no idea how to run a modern economy (or any economy). He runs it as a personal fiefdom, to reward his cronies and to buy their loyalty, and he cares nothing for property rights, enforceable contracts or the rule of law. And the results are entirely predictable. Dire poverty and hunger. So throwing foreign aid funds into this débâcle, without first putting in place reform measures, is simply a waste of resources.
Much the same could be said of North Korea. Fifty years ago, North Korea’s per capita GDP was slightly ahead of South Korea. Since then, South Korea has pursued a (more or less) free market route, albeit with considerable government influence. And it has been a great success. It has moved beyond “developing country” status to take a respected place amongst the advanced nations of the world. And its per capita GDP is now roughly twenty times that of the North. Twenty times. Not twenty percent higher. Twenty times.
This gives us a stunning, head-to-head comparison of the victory of free markets over an eccentric post-Communist personality-cult dynasty, which apparently has no particular strategy or objective except to survive. Of course the head-to-head rivalry between East and West Germany gave much the same outcome.
But North Korea has considerable natural resources, and could potentially be rich. It could feed its people without relying on foreign charity. All it needs is to sort out its governance, and to get a few basic economic decisions right. But the régime is unable or unwilling to do so. I wrote recently about foreign aid in North Korea (I was there myself a few weeks ago).
Recently Uganda, one of the world’s poorest countries and in receipt of £95 million annually from the UK, passed a law effectively outlawing political discourse and banning criticism of President Yoweri Museveni. Yet we ignore the repressive law, and keep paying the money.
If you argue that Foreign Aid is a good thing, you must believe that it does some good (or at least what’s left of it after the spending on arms deals or Swiss bank accounts). But there is a good case to be made that it does more harm than good. It distracts us from trade, which is a far more promising route to prosperity. And we may well, as in Zimbabwe and North Korea, simply be subsidising corruption, tyranny and despotism. We are sustaining poverty and serfdom. Not a lot to be proud of there.