Monday, February 19, 2007

Rogue Aid

China, which is sitting on over $1 trillion in foreign exchange reserves, has suddenly become one of the world's most generous states. Taking a page from the United States and the Soviet Union, both of which used foreign aid to try to secure the loyalty of strategically important regimes during the Cold War, China has been offering resource-rich states development assistance without international oversight or other onerous restrictions.

But Moisés Naím, editor of Foreign Policy and author of Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy, says there are some problems with the way China is throwing its money around:

Call it rogue aid. It is development assistance that is nondemocratic in origin and nontransparent in practice, and its effect is typically to stifle real progress while hurting ordinary citizens.

What, exactly, is the problem? The kind of no-strings-attached aid China provides not only fails to address corruption, inefficiency, environmental problems, or other issues that international development organizations such as the World Bank consider when structuring development packages, it also bolsters dictators who steal from their people or commit serious human rights abuses.

The problem, Naím says, is that "rogue aid" serves the interests of the states that provide it, not the interests of the people such aid is ordinarily designed to serve. So, Naím concludes,

States like China, Iran, Saudi Arabia and Venezuela have the cash and the will to reshape the world into a place very unlike the one where we want to live. By pushing their alternative development model, such states effectively price responsible aid programs out of the market exactly where they are needed most. In place of those programs, rogue donors offer to underwrite a world that is more corrupt, chaotic and authoritarian. That sort of aid is in no one's interest, except the rogues.