In my last post on the topic, I argued that perhaps people should focus on helping out charities at home instead of donating blindly overseas. My main reasoning was that just because a country is rich does not mean it should have to donate. I also took issue with the fact that rich individuals wasted no time in throwing money overseas but they are hard-pressed to donate in Canada (or their respective countries). One such family are the owners of MusicWorld. I have been doing some more reading lately, and I have some new reasons to question the aid heading overseas. One article that sums up most of these reasons is from Economist.com, titled “A cautious offer, cautiously received.“
You have probably heard in the news that somewhere around $3.64 billion dollars (USD) has been pledged to the countries who were affected by the tsunami. What you probably have not heard, is that those same countries owe billions and billions of dollars in debt – Indonesia alone owes $48 billion to the so-called Paris Club of major lenders. In 2005, $5 billion in debt repayments were to be made, but the members of the Paris Club recently announced that they would freeze debt-repayments.
Sounds great right? But think about it for a minute. The countries in the area of the tsunami now effectively have over $8 billion dollars to play with. And yes, I mean play. Experts from around the world have already said that no more money is needed. It seems very unlikely that the amount of money that has been donated can all be spent on rebuilding. And these countries are already heavily-indebted, so who knows if they can be trusted to spend the money responsibly?
Such relief frees up resources, which a government can then devote to aid and reconstruction—or divert to anything else. Heavily indebted governments tend to be bad governments, sceptics argue. If they cannot borrow money prudently, why should we trust them to spend it well? Any money given to such countries should come with strings attached.
The only country that has indicated it will make its debt payment anyway is Thailand, and I hope that is indeed what they do. As for the other countries, like Indonesia who is ranked as the fifth most corrupt country of all countries tracked by Transparency International, the best we can hope for now is that they don’t waste the money.
Another reason that the huge amounts of aid are absurd? Remember the controversy and suggestions of fraud surrounding the UN’s oil-for-food program? Well the huge amounts of money being sent to tsunami-afflicted countries offer the perfect way for the UN to prove that it can indeed handle money transparently. So not only are there no strings attached, but the UN is eager to distance itself from the money. Perfect timing isn’t it? The one time the UN should be closely monitoring and directing money, it steps back for political purposes.
The amount of money heading overseas continues to grow, and with more benefit concerts and events coming up, it doesn’t look like it will end anytime soon. I hope the money is being spent wisely, but I won’t be surprised to see reports five years from now describing how aid money was used for other purposes.