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The Foreign Aid Conundrum


Canada is slashing its foreign aid payments while calling on other countries to increase theirs. The cuts would be hypocritical if the payments were effective at reducing world poverty, but they have not been.


Rory Leishman

 Author Notes

Freelance journalist, author of a weekly national affairs column for The London Free Press and Sun Media Newspapers in London, Ontario. Mr. Leishman's work also appears in various other journals, and he operates his own web site where others of his essays can be viewed. He can be reached via e-mail at rleishman@home.com.

 Essay - 7/28/2000

That was a bold move by Prime Minister Jean Chretien to call upon the G-8 leaders of major industrial countries to increase their spending on foreign aid by five to 10 per cent. Since 1991, Canada has slashed its own spending on so-called development assistance by close to $1 billion.

Moreover, most of the cutbacks have occurred since the Chretien government took office in 1993. This year, Canadian foreign aid will amount to about 0.26 per cent of gross domestic product, down from 0.5 per cent in 1988 and a far cry from the target of 0.7 per cent of GDP that the Chretien Liberals have promised to achieve in the last two elections.

Granted, in relation to GDP, Canada still spends a lot more on foreign aid than the United States. The total foreign aid budget for this year is about $16.3 billion in the United States as compared to $2.2 billion in Canada.

Still, is not Chretien right? Given the enormous wealth of the G-8 countries, should they not collectively increase their development assistance to the most impoverished countries on Earth by at least five to 10 per cent?

The answer would be clear, if there were compelling evidence that most foreign aid has proven to be an effective means of combating poverty and fostering economic growth. However, that is not the case. There is better reason to believe that much of what Canada and other donor countries have handed out in foreign aid to Third World countries has been wasted.

Consider the dismal record of failure in Tanzania. While presided over by the late dictator, Julius Nyerere, Tanzania received more foreign-aid per capita than any other less developed country. With this money, Nyerere, the darling of Western socialists, built himself a new national capital, Dodoma; he imposed collectivized agriculture on his people; and he maintained a vast army of socialist bureaucrats whose huge costs and misguided policies stifled economic growth.

The abuse of foreign aid in Zaire was even worse: The late dictator, Mobutu Sese Seto, stole much of the money. A good chunk of it went into the construction of 11 presidential palaces, while most Zairians languished in abject poverty.

The annals of Canadian foreign aid, in particular, are replete with scandal. The Canadian International Development Agency (CIDA) spend a small fortune shipping brand-new, high-tech harvesters from Western Canada to the desperately poor farmers of Tanzania, only to have the machinery rust away, for want of spare parts and knowledgeable mechanics.

Of course, some foreign aid has been put to good and effective use. That's particularly true of food, medicine and other forms of humanitarian aid that Canada has rushed to the victims of war, floods, earthquakes and other calamities around the globe. However, disaster relief comprises only 2.7 per cent of Canada's foreign aid budget.

Maria Minna, the cabinet minister in charge of CIDA, has announced plans for a new social development agenda that will shift Canadian foreign aid away from economic megaprojects and handouts to governments. Instead, she wants to have CIDA, "focus its energy and resources on key areas of social development: health and nutrition, basic education, HIV/AIDS and child protection."

That's a sound idea. Even better is Minna's promise that her new agenda, "includes concrete goals so that Canadians can measure our progress, and understand what they are getting for their tax dollars."

Gurmant Grewal, a foreign aid critic for the Canadian Alliance, has charged in the Commons that the Chretien government, "delivers billions of dollars of our foreign aid unaudited, without transparency, without parliamentary review and without compatibility with our national interest." He's right on all counts.

Minna, like many of her predecessors, has promised to rectify these serious deficiencies. She should get on with the job. It will require the closure of entire departments within CIDA and the elimination of millions of dollars in wasted spending that does less to aid the poor overseas than to shore up Liberal support among contractors in Canada.

Meanwhile, Parliament should hold the line on foreign-aid spending. There should be no major funding increases for CIDA until Minna or her successor can come up with solid evidence that most of the billions of dollars that Canadian taxpayers are already providing in foreign aid is being put to good and efficient use in helping the neediest.

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