What Ails International Aid?

From the earliest days of international aid, insufficient contemplation of its means and ends has crippled the endeavour.

Among the many redemptive hopes projected onto Barack Obama was that he would restore American participation in peaceful international affairs and rebuild the enterprise of internationalism. But even if the economy had not altered Obama's agenda, mending the disorders of international aid is one policy problem he could not have remedied. The question of what ails international aid have resurfaced mightily over the last month, building on a devastating review by the author Philip Gourevitch in The New Yorker, followed more recently by Margaret Wente's column in the Globe and Mail and on the blog of economist Bill Easterly.

In a Nov. 14 post – "How Foreign Aid Was Invented by Accident" – Easterly plays with the idea that the Point Four program articulated by Harry Truman in his 1949 inaugural address – often cited as the doctrinal origin of aid – may have emerged accidentally, an insight that gives Easterly comfort.

I share appreciation for historical accidents: it is reassuring that policy sometimes evolves (for the better) more from circumstance than planning. Yet in the particular history of Point Four, insufficient contemplation of the means and ends of international aid initiated a cycle of institutional dysfunction from which the postwar economic development ideal never recovered.

At the time of Truman's inaugural address, the United Nations was establishing the Expanded Program on Technical Assistance, to which the Canadian bureaucrat and ambassador Dr. Hugh Keenleyside was named director in 1950. According to his 1966 book, International Aid, Keenleyside was moved by Truman's inaugural address to be part of the effort to promote technical assistance, which he believed "could become the finest and highest of public concepts." "With all its shortcomings," Keenleyside continued, "to have brought about within a period of about a quarter-century an almost universal acceptance of the philosophy of general responsibility for the welfare of all peoples is a very remarkable and a wholly unique achievement in the history of international relations."

Keenleyside soon discovered, however, what so many international idealists learned early on: reality is often life's greatest disappointment. And much of the disappointment encountered by internationalists was rooted in the failures of Point Four.

Though the establishment of the Expanded Program was heralded as a new age of shared responsibility, the enterprise was devastated by a profound early oversight: It was not funded.

Instead, resources were expected to come from the implementation of Point Four in the U.S. Congress. But Republican gains in the 1950 midterm elections guaranteed that Point Four would never be funded in the way internationalists had hoped. Even as financing for technical assistance grew from $400,000 to over $50 million by 1965, the absence of sustainable funding resulted, according to Keenleyside, in the cult of "bankable projects."

Keenleyside soon became distressed over bureaucratic battles that, he felt, fundamentally overturned the values and mission of the United Nations. Each agency, office, and commission developed its "particular panacea," and then solicited the governments of underdeveloped countries in an unregulated project marketplace. Rather than governments approaching the UN with requests for assistance, the development enterprise was inverted: UN bureaucrats sold their panaceas to the governments, with, Keenleyside writes, "a persistency and even urgency that has been embarrassing to the UN or the agency most directly concerned."

Continuing with this theme, Keenleyside writes:

“The goal of the Expanded Program was not intended to be the random improvement of technical skills or the promotion of a haphazard set of unrelated projects. Its purpose was to stimulate indigenous processes of economic growth and to give the citizens of the countries concerned consistent guidance and training in methods of promoting their own material and social progress. To achieve those ends, it was apparent that individual projects and training plans should be seen in perspective as parts of a general scheme. Yet within a year after the EP began, it sometimes seemed that the chief reason for undertaking a particular project was not the fact the applicant government had placed it high on its list of priorities, but merely that a particular agency had money available and was willing to finance it. The system strengthened the natural tendency for an agency to use hard sell or high pressure tactics to increase its volume of requests in order keep its staff busy and to impress its supporters with the popularity and importance of its particular programmes.”

By the time Keenleyside left the Expanded Program in 1960, governments from underdeveloped countries were attuned to the dysfunction of the project financing system, and habituated to requesting funds and services that neither fit their particular development needs, nor were part of any coherent vision of economic and social progress.

In 1966, the Expanded Program and the UN Special Fund were amalgamated and replaced by the 37-member governing council of the new United Nations Development Program. The UNDP, it was hoped, would be a stable financing mechanism strong enough to reduce the persistent scramble for resources and protection of individual fiefdoms built upon fundraising prowess.

Anyone familiar with the way UNDP operates today, however, knows this original mandate has long since vanished, and like the Expanded Program before it, is one of myriad agencies competing for – rather than financing – bankable projects. In my field of international environmentalism, entire UNDP offices are devoted exclusively to the pursuit of project funds from external sources such as the Global Environment Facility.

These historical roots of the disorders of international aid, are, in my experience, unknown to today's UN officials and other internationalists, and this ignorance is one reason the same mistakes are repeated. Institutions are like individuals: unless you treat root causes of dysfunction, the symptoms will reoccur.

International development aid never recovered from the initial failure to adequately finance technical assistance programs. Time and again, new agencies are created – in an endless multiplication of institutions – to establish order and coherence, but these agencies wind up panhandling, chasing the bankable project in a sorry cycle tied directly to the poverty of planning that crippled Truman's Point Four program.