The case for realism in aid policy

Without progress in governance, all other reforms will have limited impact.

– Report of the Commission on Africa, March 2005

In the 1990s, Canadians looked inward. We debated public deficits and rising debt, the ambiguous idea of an Aboriginal right to self-determination, Quebec’s place in – or out of – Canada. These issues continue to worry us, but events outside Canada have jolted our political debates in unexpected ways. This decade, domestic Canadian issues have about them a whiff of parochialism.

Al Qaeda’s assault on the World Trade Center is the most obvious event to have reoriented preoccupations. Al Qaeda may espouse irrational goals – a rejection of the modern and return to an imagined feudal ideal – but there are rational reasons for its popularity among Muslims. An understanding of Al Qaeda begins with the failure of most Muslim states, Arab states in particular, to realize reasonable economic and social progress over the last half century. In country after country, the dominant opposition to the governing elites is a coalition of the urban poor and the pious middle class. The extremists among them blame Westerners for colluding with domestic elites – and are prepared to wage jihad against both.

Inasmuch as the politics of most Middle Eastern states are corrupt, inefficient and repressive, and Western states have colluded to keep the elites in place, the jihadists are right. Unfortunately, that is not news; what is new is that politicized Islam has transformed the frustrations of the Arab street into a worldwide preoccupation that those living in bourgeois comfort in liberal industrial societies cannot easily ignore. From Los Angeles (the bomber’s car, loaded with explosives intended for the city’s airport, was fortunately stopped as it crossed from Vancouver into the United States) to Amsterdam (the assassination of a prominent filmmaker and journalist by an Islamic militant has led to questioning of Dutch multicultural traditions) to Madrid (bombs planted by Al Qaeda allies killed 200 on commuter trains) to Bali (a bomb killed 200, most of them Australians), politicized Islam is forcing the world to pay attention to the dysfunctional politics of Muslim states. Subjects that were hitherto discussed quietly in diplomatic corridors, if at all, now make the front pages of the world’s newspapers.

Politicized Islam is the most evident force reorienting our politics. There are others. There is a grisly parallel between Al Qaeda and AIDS. If deaths attributed to the former have forced us to take the Middle East seriously; deaths caused by the latter are doing the same for sub-Saharan Africa. AIDS began in Africa and the great majority of its victims continue to be Africans, but the disease has become a worldwide preoccupation.

All this is prologue to our section on development policy, with its emphasis on the damaging role played by corruption.

Over the last decade, those engaged in development work – whether in universities, aid agencies or NGOs – have become increasingly blunt in insisting that improvements in the quality of political institutions are a necessary precondition for sustained development in many regions of the world. In 2002, Jean Chrétien used his time as chair of the G-8 to highlight African development. Tony Blair is doing the same in 2005. Over the last year, Blair chaired a 17-member Commission on Africa (Canadian Finance Minister Ralph Goodale was a member). The quotation at the head of this introduction is taken from this commission’s report.

Here in Canada, the Canadian International Development Agency has launched a new journal (Journal of Development Policy and Practice). The author of the lead article in the first issue is Daniel Kaufmann, a prominent World Bank economist and specialist in the analysis of corruption. Ten years ago, CIDA would not have afforded prominence to such a tough-minded realist. And the editorial statement includes the following:

We inaugurate our … journal with a politically sensitive and contentious subject of international dimensions: corruption. Banished from all development discourse and denied recognition by governments and policy makers world-wide until recently, today corruption is centre stage to the development discourse. Never before has the development community witnessed such a surge in public recognition or determination to confront corruption, or seen such substantial theorizing, or produced such a collection of alternative approaches, interpretations and typologies on the subject.

To give a better understanding of why institutional quality matters, and why political corruption is so damaging to the world’s poor, we have invited two on-the-ground aid practitioners to write about their experiences. Both are Canadian, although both currently work for an American NGO (the National Democratic Institute, whose mandate is to promote democratic political practices).

Owen Lippert works in Bangladesh, the world’s third-largest Muslim country (with a population of more than 140 million). In most recent years, it has been the largest beneficiary of Canada’s bilateral aid. Unfortunately, leaders of the country’s two major political parties have engaged in a bitter, sometimes violent, contest for legitimacy, and both have mismanaged a country sorely in need of good government.

Last year, Lippert delivered an intellectually rigorous lecture on all this as an invited speaker in Rajshahi, a divisional capital in the western part of the country. Lippert traces the history of the destructive contest for legitimacy between the Bangladesh National Party and the Awami League. He discusses the problem of politicians who buy their party’s nomination and expect to recoup the cost via postelection boksheesh. Such leaders cannot endorse reform: to do so would entail a loss on their pre-election investment in buying a nomination. He draws a parallel between the corruption endemic in Bangladesh and that of the post–Civil War United States. Containing the contemporary culture of American corruption was central to the agenda of the Populists of the 1890s and of the Progressives a decade later. Preceding both, argues Lippert, was the emergence of a consensus among the American intellectual elite that the status quo was intolerable:

The point of this comparison between post–Civil War America and contemporary Bangladesh is that the spirit of pragmatism and pluralism that helped America overcome its polarized and corrupt politics may help Bangladesh as well. The impetus to reform lies with intellectuals and opinion leaders. They can bring to bear on political leaders the expectation of a higher, more democratic standard of conduct.

Dominic Cardy has worked in several South and Southeast Asian countries, including Bangladesh, and is currently in Cambodia. Cardy juxtaposes the damage wrought by large federal transfer payments to Atlantic Canada with the role of aid in abetting corruption in the developing world. In some regions – such as Cape Breton, which Cardy knows well – federal transfers have created an unholy alliance between the Liberal Party and the federal bureaucracy.

How to push on a string? Can foreign aid deliver economic progress, as opposed to an extrapolation of Cape Breton politics? Cardy refuses the nihilistic conclusions of isolationists and conservative critics of aid. He offers a number of tough-minded suggestions. He wants CIDA to concentrate aid on only a few countries, to study closely the internal politics of the countries selected and to insist on detailed aid accountability. He is cautious. He acknowledges such recommendations may not work, but they improve the odds of something good coming from our development assistance.

— John Richards