Profits from poverty: The lucrative business of "aid" agencies

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"One worker explained his move to assistance. Pointing to the three or four times higher salary, he said, •Well, I want what they have. I want the villa and the car and the two servants.... I don't think that is "Lords of Poverty: The power, prestige, and corruption of the international aid business" by Graham Hancock. Monthly Review Press, New York; 234 pages; $17.95.

"This book is an attack on a group of rich and powerful bureaucracies that have hijacked our kindness." With this introduction Graham Hancock takes us behind the scenes of the "international aid business."

This is a vast network of public and private foundations, agencies, and commissions ostensibly helping needy people in underdeveloped countries. The Wall Street Journal once described it as "the largest bureaucracy in history devoted to international good deeds." Hancock is not so sure of the "good deeds."

He is lenient with the privately funded agencies such as Oxfam, Save the Children Fund, and Catholic Relief Services. Their staffs are likely to be found in the villages of Somalia or Bangladesh feeding the hungry and ministering to the sick.

They make mistakes, he says, but they mean well, and relate directly to the poor. It was their humanitarian ideals, no doubt, that motivated Hancock, East Africa correspondent of The Economist, to contribute his talents to the international relief problem.

Good intentions, Hancock says, by well meaning amateurs, have not prevented private agencies from committing snafus that embarrass the agency and anger the recipient. It is due, Hancock thinks, to the prevailing attitude among aid workers that "we know what is best for you." Aid is administered to the needy rather than with the needy. Local people are not consulted when decisions are made. As a consequence, these decisions can then be disastrous.

Refrigerators running on 110 volts are shipped out to a country that uses 220 volts. Frost bite medicine is sent to a nation in equatorial Africa. "During a disAndrow Holbrooke aster all sorts of junk comes rolling in." said one aid worker. In 1979, an American private agency sent 19 tons of "survival food and drugs" to Kampuchea. The food was so old that San Francisco zoo-keepers had stopped feeding it to their animals. Some of the medicines and drugs had expired 15 years earlier!

Vital as it is, distributing food and medicine to starving people involves less than 10 percent of the $60 billion a year spent for foreign aid and development.

Most of the money goes for projects that develop a country's infrastructure. In theory a dam here and a power plant there are bound to bring benefits that trickle down to the poor at the bottom.

To plan and administer these projects a vast international bureaucracy has been built, funded mainly by the taxpayers of the industrial countries.

Among the agencies are the World Bank, the International Monetary Fund (IMF), and the Overseas Development Administration (ODA). They are ostensibly sponsored, but not really controlled by the United Nations.

Nobody monitors «aid" cartels Hancock says, "Nobody watches or controls any of these institutions...Their excessive secrecy, their closed session meetings, all conspire to prevent any kind of oversight of their doings." But financial muscle is powerful.

"Since the U.S. gives twice as much ($9.784 billion in 1986) as the next biggest donor, Japan ($5.634 billion), the United States controls the World Bank and its subsidiaries through a weighted voting system. Washington has been able to hold back aid from "unworthy" nations: Cuba has not received a nickel in 40 years.

The mandate of the aid industry was expressed eloquently by Barber Conable, President of the Bank, at a world conference in 1986. "Our institution is mighty in resources and in experience," he said, "but its labors will count for nothing if it cannot look at our world through the eyes of the most under-privileged..."

Actually the poor are seen only dimly at the end of a long line by the men who preside over scores of agencies and thousands of employees. They deal only with the higher levels of foreign bureaucracies, with ministers, sheikhs, and other privileged and powerful people. The world of the elite in which they move is reflected in the aid organizations themselves.

Hancock speaks of the luxurious ambiance at the Bank-Fund's 1986 meeting of several thousand people dedicated to the problems of the poor. Hancock writes, "The total cost of the 700 different social events laid on during that single week was estimated at $10 million..." The head of a catering firm that put on a dinner costing $200 a person, observed, "No one is stinting-but, then, they never have."

Almost no one who works for these aid agencies is asked to stint. Salaries are much higher than comparable work elsewhere. Altruism may sustain an OXFAM volunteer on a low salary, for a while, but the bright lights of the UN agencies are alluring.

One worker explained his move to the public sector of "aid" assistance. Pointing to the three or four times higher salary, he said, "Well, I want what they have. I want the villa and the car and the two servants. ... I don't think that is unreasonable, do you?"

Once within the UN structure the recruit finds, in Hancock's words, "A system of empires has been created by ambitious and greedy men and then staffed by time-servers and sycophants."

Much of the time-servers' time is spent traveling, first class, all over the globe. The president and executive board of UNESCO, the education agency, spent $1,759,548 for one year of travel and lodging. In the same year they doled out only $49,000 for educating handicapped children in Africa!

Much of this travel involves staff members making brief stops in remote countries to give advice on proposed and ongoing projects. Since the site of the dam may be hot and uncomfortable, the adviser usually skips the project itself. He or she confines their visit to the larger cities and the air-conditioned offices of top-level bureaucrats.

They often miss—or ignore-the utter failure of some projects that look so good on paper. For example, dams that become useless in a few years because the reservoir silts up at a rate never contemplated. It never occurs to them that power plants may remain unused because the poorer countries cannot afford the fuel to run them.

Charity begins at home The aid agencies fail to see the negative affect some projects have on the needy they are supposed to help. The poor people displaced by a reservoir are seldom compensated by the venal government that cares nothing about them. Flooding a poor country with food can contribute to later famines, as local farmers cannot raise crops profitably in the face of mountains of imports.

The mountain of food sent to country "A" may relieve the burden of country "B." This is the wealthy country that finds foreign aid a great way to unload its surplus crops. Here Hancock explains why hard-nosed business men are so "charitable"-why they are willing to spend $60 billion on poor people thousands of miles away.

Actually, this charity begins at home, paying home industries for the trucks, generators and food sent overseas. Hancock estimates that 90 percent of the money contributed stays in the donor country. The U.S. Agency for International Development proclaims, "Foreign aid does not cost Americans, it pays." Millionaire farmers agree, as they collect $1.8 billion in procurement orders.

Aid planners prefer large projects over small ones, as more equipment can be sold this way. The results are great power grids that generate electricity for a few factories, while by-passing peasants who still must make do with oil lamps.

Since much of the aid is in the form of "soft loans" that must eventually be paid back, the poor become poorer yet as this new burden is laid upon them. In addition, loans made by the IMF carry stipulations to guarantee repayment, which push national living standards even lower.

While the poor were getting poorer, many of the elite got richer as aid money equipment and supplies, extracted $136 million for themselves. These "commission agents," however, are pikers when compared to Ferdinand and Imelda Marcos of the Philippines, or the Duvaliers of Haiti-whose "take" ran into the billions.

These rulers certainly did not want their countries to be developed to the point where the flow of aid money would be no longer needed. The "lords of poverty," for their part, had no difficulty working with these "kleptocracies."

Marcos, Duvalier, and countless other dictators, never objected to any inadvisable project so long as they got their "cut." And they could be counted on to silence any objections from the workers and peasants.

Hancock points out that 50 years of negative experience has led some of the poor countries to say, "Please, leave us alone!" Hancock agrees with them. If 50 years of "aid" left the poor poorer than ever, the profit-driven international aid business is a failure.

"It is time for the "Lords of Poverty' to depart," Hancock declares. However, he does not offer a real alternative solution to the very real problems of poverty and hunger. But "Lords of Poverty" does open to informed debate the life and death question of rescuing the starving and bringing effective help to the poor.

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