Foreign Aid: More About Self-Interest Than Helping Those In Need


Foreign aid – despite its good intentions – does not always have the desired effect; rather, it serves as a tool, coercing nations and producing results which frequently benefit the donor. Aid organizations are often closely linked with government institutions which serve the nation’s strategic and economic interests, prioritising infrastructure and energy projects over services that promote long-term development.

With the overall messiness of geopolitics and aid, the public has begged the question “Does foreign aid work in the first place?” Indeed, when looking back over its history, it appears that genuine developmental aid has not, in many cases, truly been implemented.

In 1949, President Truman’s inaugural address promoted his vision, stating “… More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people”. Half a century has passed since then, and a large variety of approaches have been implemented. In some areas progress has been made, whilst in others – particularly in parts of Sub-Saharan Africa – the situation has deteriorated since independence was declared.

Forbes writer Thomas Dichter, who has 50 years’ experience in foreign aid, argues that “we have learned a lot in the 70 years since then… The sure-footed sense of what was possible in Truman’s day has given way to a recognition of how daunting promoting development can be. But looking at how our foreign aid money is allocated today it seems as if we’ve pretty much forgotten about development… little of our aid money [is devoted] to Truman’s array of interventions”.

Sources vary wildly. According to USAID’s Fiscal Year projected budget for 2019, most development will be made in “Peace and Security” (almost 28%), whilst long-term development services such as “Education and Social Services” (2.3%) and “Democracy, Human Rights and Governance” (5.06%) will be neglected. Less than a quarter of the budget is dedicated to providing solid foundations for societal development, which was its initial purpose.

“Humanitarian Assistance”, “Health” and “Peace and Security” make up 76.94% of the total budget. One might think that these sectors promote development, but in practice, it’s a different story. Health, though incredibly beneficial in every community, is rarely used to accelerate social development; the budget simply prioritises the curing and preventing of diseases. Little effort is made to provide the much sought-after infrastructure that would otherwise guarantee clean water and sanitation, whilst simultaneously reducing the severity of disease. Humanitarian Assistance focuses on reconstruction projects – often around natural disasters and war – rather than offering the tools necessary for people to become less dependent on external support.  Although these projects are all genuine and promote the greater good of mankind, they are still merely a band-aid for a significantly larger issue.

There’s a myth that non-government organisations are responsible for the majority of foreign aid. However, they actually hold only 4% of the total humanitarian economy (2014); over 50% of aid, according to IRIN news, comes from three government aid agencies: the United States, the United Kingdom and the European Commission. Those in charge rarely fund long-term development, and aid comes with a variety of strings attached; it has in the past – and is still – done with self-interest, through accessing resources, selling products and so on. For example, donations from New Zealand towards the Cook Islands, Tonga and Samoa were not used on improving societal conditions; instead, half of its $3 million budget was used on subsidizing Air New Zealand Flights between 2009 – 2011, placing local airlines at a disadvantage and funnelling wealth back towards the donor (writes Warwick Murray, Professor of Development Studies at Victoria University).

Tourism-dependent economies are at the mercy of their wealthy neighbours, and much of the Pacific prioritises its tourism facilities while disregarding its own citizens. New Zealand’s High Commissioner for the Cook Islands, Peter Marshall, has voiced increasing concern for the dependency of small island nations on foreign aid. Nearly 70% of their GDP comes from tourism and much is subsidised by the New Zealand government; the cost of aid is leading to other industries steadily declining. Marshall stated that “New Zealand’s aid is focused on economic development and supports critical infrastructure upgrades, the tourism sector, and quality education and health service”. Aid distorts local economies and hinders development, continuing to cause more harm than good. Foreign aid will not truly alter the status of its inhabitants, but maintains an unjust status quo, from which donor states continue to benefit.

Pacific aid is dominated by Australia, the U.S.A, France and New Zealand, with China’s influence steadily growing; deteriorating influence by the original donors shows that aid was used purely in self-interest. Marc Purcell, Chief Executive Officer on Australia’s Council for International Development, said that “climate is the greater issue that Pacific Islands governments think need attention. But our focus instead is fending off China… It’s questionable whether if we get into a lending race with China whether we can in the long term prevail because China has bigger profits than we do”. The Pacific is becoming increasingly contested, especially with China’s Belt and Road Initiative. However, it’s open to debate whether their involvement will be a force of good for the region as a whole.

Still, there is a bright side; increasing public awareness of bogus aid projects has brought to light alternative methods of assistance, with donor states currently reviewing their aid policies. One example is New Zealand’s plans for a ‘Pacific Reset’, through which the country has grown conscious of many of its self-benefitting aid policies and has recognised the environmental impacts on Pacific island nations.  Non-government organisations have been at the forefront, experimenting with new methods of community assistance. One method gaining popularity is sustainable development that acknowledges that climate change and societal issues are linked, arguing that true long-term development must recognise the importance of environmental and social factors far into the future. Sustainable development seeks to meet the needs of the present without compromising the reality of future generations. It has a grassroots approach to development, encouraging community-based projects to benefit the locals themselves, whilst minimizing their environmental impact.

Often, aid programs attempt to tackle massive long-term goals which are so stupendously complex that they’re setting themselves up to fail. This is inefficient and often fails to add meaningful contributions to poorer societies. New York University Economics Professor, William Easterly, recognising these issues, asserts that there is no such thing as an effective master plan to fix these problems; such massive projects as the Millennium Development Goals cannot truly counter the sheer complexity of poverty. Easterly argues that poverty alleviation shouldn’t be in the hands of those outside the community, but rather the very families living within it. The people who know best are the poor themselves, who deserve to be a part of the decision-making process. Aid projects must recognise the potential of local inhabitants; encouraging them to pursue their own views of development is far more likely to result in genuine societal improvement than allowing those with power to work within their own self-interests.

For foreign assistance to truly have positive effects, we must empower the most vulnerable lives through quick projects which have long-lasting effects. Societal improvement takes time, and this is made by small incremental steps tackling small issues, one problem at a time. To reiterate what Dichter said, we now know how truly daunting promoting development can be, and it seems that we’ve never truly implemented genuine aid.

Jonno McPike

Student at Victoria University of Wellington, New Zealand. Focusing on education policy and its role within foreign aid.
Jonno McPike

About Jonno McPike

Student at Victoria University of Wellington, New Zealand. Focusing on education policy and its role within foreign aid.