Foreign Aid and Dictatorship - Research Paper Example

Foreign Aid and Dictatorship The policy of foreign aid has been a feature of Western relations with developing and non-western countries, usually with the aim of assisting development and modernization. Foreign aid was a geopolitical and military during the Cold War, especially to countries like the US (Bealinger 2006: 4). Despite the lack of solid empirical evidence, foreign aid improves the economic growth of a country through indirect channels, which are not evident by the analysis of direct effect of foreign aid on economic growth. Some of the channels include the alteration of investment share of the country’s Gross Domestic product (GDP) that affects economic growth indirectly, and the effect on government consumption (Lancaster 2007:21). Foreign aid also has a positive impact on the democracy of a country, which is one of the economic development pillars in developing countries. Countries experiencing high levels of injustices and poverty are often the recipients of aid, which is directed at saving the lives of those individuals, as well as improving the economy of that country. Public development projects like health centres, schools, and roads in some developing countries, depend entirely on foreign aid, whether in form of grants or loans. The grants and loans form a basic part of some country’s budget allocation, which signifies their economic importance. Accordingly, foreign aid helps recipient countries to improve their living of standards, but on a short-term basis. Besides directly benefiting the government of recipient countries, foreign aid also benefits the private sector and the families in those nations. Families and the private sector access aid through foreign direct investment and remittances (Lahiri 2007: 223). This kind of flow of aid resources may adversely affect the economy positively. Nonetheless, there is clear evidence of a cause-effect relationship between aid and development (economic and otherwise). There has been criticism revolving the issues of aid to developing countries, especially to African countries. Economists argue that inflow of aid affects a government’s consumption instead of investment (Sogge 2002:11). This is common in cases where a government has access to unconstrained aid funds, resulting to increase in government consumption that has a negative effect on the economy of that country. Considering the fact that foreign aid constitutes a major portion of developing countries’ revenues, there is a possibility of a “windfall” which may generate rent-seeking activities, corruption, and even civil wars. A prime example is World Bank’s Chad-Cameroon Oil Pipeline aid, estimated at 180 million USD. To avoid corruption, World Bank gave directives to Chad that the funds should be kept in offshore accounts, and that the purposes of the aid funds were strictly for infrastructure, health, and education (Lancaster 2007:27). Problems began after the government started receiving oil revenues in 2004, with the first bonus received from oil companies, 4.5 million USD, purchasing weapons for the Chad government. In total, close to 12 million USD was directed towards purchase of weapons, leading to suspension of the aid by the World Bank. Another case is Somalia. Experts state that the civil war in the country was a result of different factions’ desire to control the huge food aid to the country (Williamson, 2009). Recent studies highlight several mechanisms that explain why windfalls of resources in recipient countries lead to a decline in their economic growth. All the mechanisms indicate that individuals engage in rent-seeking activities in efforts to appropriate portions of the resources, which lead to a decline in the economic growth (Bealinger 2006: 63). The theories also incorporate the idea of commons, which describes the effects of the aggregate capital stock common access that foreign aid induces. In summary, foreign aid has a voracity effect: which states that if powerful groups exist in an inter-temporal elasticity of substitution that is not very low, windfall of resources will cause the growth rate of the economy to decline (Williamson 2009). Donor countries often influence the political environment of recipient nations. They act behind the scenes to strategically position political leaders that cooperate with them. As a result, the political regime assumes accountability to that donor nation. In most cases, the political regime of recipient countries is subject to the donor country’s policies, especially those concerning human rights and democracy (Mavrotas 2010: 274). In essence, recipient nations shift their accountability role from their citizens to donor nations, destroying the reciprocity function of such governments to their citizens. Governments that fund their economic activities through taxes have to negotiate with their citizens at one point or another, but those that depend on aid focus their efforts towards the donor countries (Sogge). Consequently, this causes centralization of power in the political regime, or the government. Donor countries use a one-size-fits-all policy that requires governments to comply with some conditions before accessing foreign aid (Hopkins). The impacts of such policies mean that the would-be recipient government or regime has to changes some of its policies to fit the donors’ policies in order to qualify for aids. The political independence of such governments becomes biased. Foreign aid to recipient countries under the governance of dictators only works to foster their bad leadership. The aids help the dictators to remain in power, consolidate their dictatorial positions, and maintain their corrupt and brutal forms of governance (Ezrow 2011:131). In rhetoric, donor countries strongly condemn the actions of such leaders while still offering aids to those countries, justifying the donations with the objective to facilitate development of liberal institutions that will improve the human rights situation in those regions (Hopkins). Foreign aid to countries under dictatorial leadership benefits the political regime in power, freezing the status quo of the country (Bealinger 2006: 43). The corrupt dictators use the aids to empower themselves through purchase of arms. In addition, the dictators use the aids to perpetuate brute institutions that further violate human rights and compromise democracy in those countries. A handful of countries led by dictators still benefit from foreign aids, but their development of democracy and improvement of human rights seem to decline with time. A prime example is Sudan, an African country under the leadership of dictator Omar al-Bashir. Sudan is an east African country that has a long history of conflicts and civil wars. The country’s pattern of wars and violation of human rights continued with the rise of Omar al-Bashir as the president of the country. Prior to his current position, Al-Bashir was in the military of Sudan. After a successful coup in 1989, Al-Bashir became the chair of the Revolutionary Command Council, a fifteen-member group that was behind the coup (Coyne & Ryan, 2008). The committee issued orders that oversaw the dissolution of all the political parties existing at the time, as well as banning all forms of demonstrations and protests advocating for national stability. The rise to power of Al-Bashir was marked by adoption of anti-democratic and human violation policies against the country’s civilians, including implementation of a mandatory six weeks military training incorporating radical Islam indoctrination, and an inhuman penal code advocating for amputation, flogging, and the death penalty for certain offences. Female citizens were subject to public physical punishment for violating dressing codes. There was a ban for western products, culture, and music, and also alcohol and drugs, including those that were used in combating Malaria (Coyne & Ryan, 2008). Currently, the government of Al-Bashir is corrupt and uses violence against opposition politicians and citizens to maintain its power. In addition, the dictatorial government has links with terrorist groups like Hamas and Islamic Jihad. Despite these facts, Sudan has been receiving foreign aid from donors, notably the Development Assistance Committee (DAC). Records indicate that the US government gave donations of hundreds of millions of USD to aid Sudan despite its dictatorial state. In the same manner, the World Bank gave the country close to 800 million USD between 1983 and 1993, during which Al-Bashir was in power. In total, Sudan has received approximately 20 billion USD under the leadership of Al-Bashir, and remains among the largest debtor to IMF and the World Bank (Coyne & Ryan, 2008). The country does not show any positive impact of the aids, rather it is deteriorating. Human rights violation and dictatorship still paint the country’s name to date. Most dictators and political regime invest the funds from aid in military empowerment. They purchase arms and other weapons that will enable their regimes to stay in power. Others invest in overseas countries for their own benefits. The impacts of such undertakings worsen the poverty situation in the recipient states. Military development and personal benefits do not enhance economic development of such nations in any way. In conclusion, this paper has analysed the importance of foreign aid to a country, as well as the problems. It is evident that a country cannot operate without the help of other countries, but it is of paramount significance to understand that the interrelation could be dangerous. There is a vast impact of the foreign aid to the political regime, which form the governing arm of the country. Government need to put strategies in place to ensure that foreign aid for helping the country does not lead political instabilities and cultural differences. These strategies will ensure that the government uses the aid, in whatever form accordingly. Bibliography Bealinger, Andrew (2006). Foreign Aid: Control, Corrupt, Contain? New York: Nova Science Publishers, Inc. Coyne, Christopher & Ryan, Matt (2008). With Friends Like These, Who needs Enemies: Aiding the World’s Worst Dictators. Retrieved from http://www.independent.org/pdf/tir/tir_14_01_2_coyne.pdf. Ezrow, Natasha. (2011). Dictator and Dictatorship: Understanding Authoritarian Regimes and Their Leaders. New York: Continuum International publishing group. Hopkins, Raymond. Political Economy of Foreign Aid. Retrieved on November 3, 2011, from http://www.swarthmore.edu/SocSci/rhopkin1/research/PolEconFA.pdf Lahiri, Sajal. (2007). Theory and Practice of Foreign Aid. Amsterdam: Elsevier. Lancaster, Carol. (2007). Foreign Aid: Diplomacy, Development, Domestic Politics. London: University of Chicago Press. Mavrotas, George. (2010). Foreign Aid for Development: Issues, Challenges, and the New Agenda. New York: Oxford University Press. Sogge, David. (2002). Give and Take: What’s the Matter with Foreign Aid? New York: Zed Books Ltd. Sogge, David. Foreign Aid: does It Harm or Help? Return to religion online. Retrieved from http://www.religion-online.org/showarticle.asp?title=2035 Williamson, Chaudia (2009). Exploring the Failure of Foreign Aid: The Role of Incentives and Information. Retrieved from http://dri.fas.nyu.edu/docs/IO/12361/WilliamsonRAEAid.pdf Read More