7 November 2010

British Aid - who benefits?

By David Seddon

British aid refers to concessionary loans and grants to developing countries, provided by the British government, ostensibly to reduce poverty and promote sustainable growth. The main institutional mechanism for distributing aid is the Department for International Development (DfID). Under some governments, this department has been a full ministry with a seat in Cabinet; under others, it has been closely linked with the Ministry of Foreign and Commonwealth Affairs (FCO). The present Minister - under the Coalition Government - is Andrew Mitchell, a Conservative MP, who was Shadow Minister for International Aid from 2005 to 2010.

Spending on international aid is one of only two areas, along with health, that the Coalition Government has pledged to protect as it slashes domestic departmental budgets to try to tackle a public deficit running at about 11 percent of national output. In fact, it has gone much further than that and has increased the aid budget significantly, to a total of 13 billion pounds a year. Government has made clear that the international development budget will increase to 0.7% of Gross National Income from 2013. While most in all three major parties welcomed this initiative, there were many who were strongly critical.

Defending the government's decision to continue spending taxpayer money in other countries at a time when Britons are being warned to expect tough cuts to public services, Andrew Mitchell said, in an interview in July 2010, that it was ‘in Britain's national interest’. "We are making the choice not only on moral grounds but also on national interest grounds," he said. "It is an issue of national interest because many of the problems which make our world much less secure emanate from very poor developing countries often caught up in crisis and conflict." In the case of Afghanistan - a prime instance of a developing country which the Coalition government (like the previous Labour government) argues is a security threat, Mitchell claimed that there would be 40 per cent more going into the development budget.

The major focus of development aid is undoubtedly selected developing countries, and the major stated criterion for the selection of those countries is their poverty. Undoubtedly, some of the recipients are by no means among the poorest and some should probably not even be classified as ‘’developing’. Furthermore, it was revealed recently that, over the last five years, 45.6 million pound was spent by DfID directly on projects based within the UK, with almost half of that – £22.7 million – spent on the Development Awareness Fund, a fund for "projects which raise awareness and understanding of global poverty and how it can be reduced". Last year alone, DfID spent £13.6 million on projects based in the UK.

Many would argue that ‘development education in the UK’ is a good way to spend ‘development aid’ but others are highly critical. The International Policy Network (IPN), for example, believes that "it is ridiculous for DfID to spend tens of millions of pounds right here in the UK. Foreign aid should be just that – money spent overseas, not wasted on wishy-washy feel-good projects in the UK. The Tax Payers' Alliance also argues that "DfID funds are intended to help the world's poorest people, not pay for politicking here in the UK. Tory MP Douglas Carswell, who sits on the Public Accounts Committee, claimed that "these schemes are about making people feel good rather than helping Third World countries. It is time to radically overhaul how DfID spends our aid budget."

There are also many who are critical of where international aid goes, even when it goes abroad and is not spent in the UK. Early this year it was revealed that 10 million pounds were to be given over the next five years to The Energy and Resources Institute (TERI), an Indian organization run by Dr Rajendra Pachauri, the controversial chairman of the UN Intergovernmental Panel on Climate Change (IPCC), despite growing concern over its accounts. At the end of October 2010, its UK head re-submitted its accounts to independent auditors after 'anomalies' in its accounts prompted demands for the Charity Commission to investigate. The decision followed a Sunday Telegraph investigation into the finances of TERI Europe, which has benefited from funding from other branches of the British Government including the Foreign Office and the Department for Environment, Food and Rural Affairs (DEFRA).

The decision by DfID to fund Dr Pachauri's institute, based in Delhi, will add to growing concern over allegations of conflict of interest, with critics accusing Dr Pachauri and TERI of gaining financially from policies which are formulated as a result of the work he carries out as IPCC chairman. Dr Pachauri has built up a worldwide network of business interests since his appointment as chairman of the IPCC in 2002. The post, argue critics, has given him huge prestige and influence as the world's most powerful climate official. According to TERI’s own website, both Dr Pachauri and his wife are on the jury panel for the 2010 awards, and Dr Pachauri has been on the jury panel in previous years. A DfID spokesman, however, described Teri as a “globally respected institution”. “Their accounts are externally audited and annually submitted to the government of India,” he said. “As is routine, DfID is undertaking a full institutional assessment of Teri as part of our due diligence process.” But one has to wonder.

Finally, also in October, and closer to home, The Sunday Times alleged that the international development secretary, Andrew Mitchell, had intervened improperly on behalf of multimillionaire cocoa dealer, Anthony Ward, who funded his office in opposition. Ward, known as "Chocfinger", had asked Mitchell to lift a ban on his firm, Armajaro Holdings, which had been banned from trading in western Ghana after one of its contractors was alleged to have been involved in smuggling. John Mann, the Labour MP for Bassetlaw, referred Mitchell to John Lyon, the parliamentary commissioner for standards, for further investigation. Mann said: "The reports that Andrew Mitchell lobbied on behalf of 'Chocfinger' raise serious questions to answer about the secretary of state for international development's conduct. Was Mr Mitchell acting in the best interests of the British government or a donor that has subsidised his parliamentary office and funded the Conservative Party?”

1 comment:

  1. Since becoming international development secretary in May 2010, Mitchell, a former investment banker, has made clear his intention to beef up the private sector's role in DfID's poverty alleviation strategies - he is, of course, a businessman himself and has a range of overseas investments. Its not just Chocfinger with whom he has dealings.