Wednesday, November 17, 2010

Aid as an instrument of repression

A new blog post by William Easterly and Laura Freschi at the New York Review of Books calls attention to a recent Human Rights Watch report on the Ethiopian government's use of aid as an instrument of repression. The blog post does a nice job of tying together some of the concerns raised by Peter Gill's book Famine and Foreigners (see earlier post here) and by Easterly's NYR article on foreign aid for dictators (see earlier post here).

As Easterly and Freschi note, the HRW report convincingly establishes that (officials in) Ethiopia's government, headed by Meles Zenawi, frequently uses aid as a political weapon against dissent. Given that Ethiopia's foreign aid receipts are higher than those of almost all other developing countries, this is a serious problem. Moreover, a key challenge in addressing it is that the standard tactic — bypassing the government and delivering aid at the village level — is unavailable, since the ruling political party controls village-level authorities as well.

Still, the HRW report focuses on government-run programs. So one alternative would be to funnel aid through local non-governmental organizations. It is not possible to tell from the HRW report how feasible this is, but a look at the AidData database suggests that it would be difficult: a lot of aid would need to be re-oriented.

Searching the database for aid projects in Ethiopia in the past few years, and then sorting by declining project size shows — not surprisingly — that all of the largest projects take place in conjunction with the official authorities:

HRW focuses on two programs that each appear among the top 10 largest projects: the Protection of Basic Services program ($180mn from the World Bank's IDA in 2007, $150mn from the EU in 2007, and $140mn from the African Development Fund in 2008), and the Productive Safety Nets Program ($145mn from the World Bank's IDA). The other top projects, including road transport, food security, and industrial developments, all involve government authorities as well.

The prominence of the World Bank in this list underscores Easterly and Freschi's criticism of the World Bank's "hollow" resolution to channel aid past the national government in order to prevent "political capture". They are right to conclude that the current situation is unacceptable.

As one might expect, some donor agencies take issue with HRW's findings. The multilateral Development Assistance Group Ethiopia, which includes most of the largest donors to Ethiopia, issued a rebuttal, claiming that they have not found "evidence of systematic or widespread distortion." Note how carefully this is phrased: the implication is that there was quite a bit of "distortion," only it was not extensive enough to qualify as systematic or widespread. Perhaps so, but that is still pretty problematic.

DAG Ethiopia suggests that "a greater focus on... transparency and independent monitoring" can solve the problem. Easterly and Freschi seem inclined to be skeptical. Given the lack of donor reaction to similar past reports or to the fraudulent election in May 2010, I think they are probably right.

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