Global Policy Forum

Paying Aid to Corrupt Regimes No Use to Poor


On UN International Anti-Corruption Day, John O'Shea Looks at the Greatest Barrier to Development

By John O'Shea*

Irish Times
December 9, 2004

Of all the factors holding back the developing world and keeping its people steeped in abject poverty, by far the most crippling is that of corrupt politicians who see power as the means to personal wealth at the expense of the poor.

Take Frederick Chiluba who during his 10-year presidency in Zambia filched hundreds of millions from his country leaving his people among the poorest in the world. Chiluba is accused of 169 counts involving the theft of $43 million (EUR 32.4 million) from the country's coffers, believed to be a fraction of what he is thought to have stolen. Recently the London High Court froze $24 million of assets held in Britain by Chiluba and four cronies. When he left office in 2001 the Zambian people were among the world's poorest despite their vast copper mines.

Mohammed Suharto, Ferdinand Marcos, and Mobutu Sese Seko between them ripped off up to $50 billion from their impoverished people in Indonesia, the Philippines and Zaire respectively. The West turned a blind eye to Suharto's activities because he was perceived to be a force against communism in Asia. He stole $35 billion during three decades in power, but when deposed was judged too ill to stand trial.

Mobutu Sese Seko stole almost half of the $12 billion in aid that Zaire received from the IMF during his 32-year reign, leaving his country (now the Democratic Republic of Congo) in a pathetic mess. Among the hall of shame are also: President Sani Abacha of Nigeria - took five years (1993-98) to enrich himself to the tune of $2 billion to $5 billion; Slobodan Milosevic - took $1 billion from the people of Serbia between 1972 and 1986; Haiti's Jean-Claude Duvalier from 1971 to 1986 siphoned off $300 million to $800 million of public funds; Alberto Fujimori, president of Peru through the 1990s, was $600 million richer when he left office; from 1996 to 1997 president Pavlo Lazarenko of Ukraine embezzled $200 million; Arnoldo Aleman served one term as president of Nicaragua (1997-2002), but time enough to steal $100 million.

Corruption is a major obstacle to democracy and the rule of law and, ultimately, if allowed to get out of control it will reach a point where society is no longer able to function. Peter Eigen, chairman of the corruption watchdog NGO Transparency International, put it starkly in his introduction last month to the 2004 TI Corruption Perceptions Index:

"Corruption robs countries of their potential. . ." he said. "Across the world, corruption in large-scale public projects is a daunting obstacle to sustainable development, tearing at the social fabric and contributing to civil unrest and conflict. It is a blow to the hopes of millions, one that results in a major loss of public funds needed for education, healthcare and poverty alleviation, both in developed and developing countries."

Corrupt politicians squander public resources on uneconomic "trophy" projects like dams, power plants, and refineries, at the expense of less spectacular but more necessary projects like schools, roads, or the supply of power and water to rural areas.

Over 27 years I have witnessed the effects of corruption on impoverished communities. It quickly pervades all strata of society, and graft and bribery soon become the norm, with far-reaching and devastating effects. If parents cannot afford to pay the teacher in the local school then a generation will go without education. If you cannot afford the bribe for access to the government clinic your child may well die.

In my experience corruption is the single greatest barrier to development, often leading to a sense of hopelessness in the civilian population. Development is often held back further by an exodus of the better educated and more honest who see more opportunities away from its economically debilitating effects. Even the natural environment suffers. Greedy over-exploitation of natural resources for personal gain by means of environmentally devastating projects sees hundreds of millions of what should be public money siphoned off.

In the seven years to 2002 sub-Saharan Africa received about $114 billion in aid. Yet African countries have consistently been bottom of the UN Development Programme's Human Development measures of life expectancy, GDP per person, and literacy. Not all of this money has disappeared due to corruption; much can be put down to waste or atrocious management. But a considerable amount has over the years found its way into the pockets of very corrupt politicians and officials. A report to the recent summit meeting of the African Union in Addis Ababa estimated that corruption costs Africa at least $150 billion a year.

In July Edward Clay, British high commissioner to Kenya, suggested that aid to Kenya should be suspended. He said officials were "behaving so gluttonously at the aid trough that they are now vomiting on the shoes of donors". I have been a long-time critic of the Department of Foreign Affairs for its reliance on bilateral (government to government) aid rather than other more reliable methods of helping the poor in these countries. Giving millions to regimes known to be corrupt and with dreadful human rights records is, at the very least, a waste of taxpayers' money and sometimes tantamount to collusion in criminal activity.

Irish Overseas Development Assistance money is paid to some questionable regimes. The government of Yoweri Museveni in Uganda, for example, is a favoured nation even though it has been immersed in an illegal war in neighbouring Democratic Republic of the Congo (DRC) which has caused the deaths of five million people. There is much evidence to link the president, his family and the top brass in the Ugandan military to major crimes in DRC. Some governments have stopped providing aid to countries whose regimes are perceived as corrupt or involved in human rights abuses. The Dutch and Danes have both slashed aid to Uganda citing corruption, poor governance and poor human rights records.

It is GOAL's experience and that of numerous missionaries that bilateral aid rarely trickles down to the poor in the slums and villages of developing countries. Our Government should of course continue to assist the poor, but we must, for our own sake as much as theirs, ensure we get the best value for our contribution. There has been some debate recently about the Government's failure to reach the UN target of 0.7 per cent of GDP, but I am convinced that the manner in which the money is spent is infinitely more important to Irish taxpayers.

About the Author: John O'Shea is founder and chief executive of aid agency GOAL.

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