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Aid for the poorest countries

“The public doesn’t want to be fed fantasies”

by Paul Collier
Infrastructure matters: building a feeder-road in Guatemala

Infrastructure matters: building a feeder-road in Guatemala

To too large an extent and for too long, official development assistance has been geared towards cooperation with middle-income countries, as Paul Collier, economics professor at Oxford, argues in his book “The bottom billion – Why the poorest countries are failing and what can be done about it”. To assist desperately poor crisis countries, conventional aid practices need to be re-considered. [ Interview with Paul Collier ]

You say that aid agencies need to become less risk-averse. They must risk failure, because otherwise they won’t be able to work in the places where the need is greatest. Do you see any change of attitude yet?
Yes, I think there is a shift of both money and people towards the tough conditions. And I think there is a growing understanding that the approaches that work in easy and promising environments are not really relevant in desperately poor countries and crisis states.

One thing you say is that these countries need technical assistance more than they need budget support. That goes against the grain of recent international discourse. Budget support is where donor harmonisation has made most progress.

Yes, that is right, but budget support is the right answer to a different situation. It is the right answer where governments are already reasonably competent. But budget support is the wrong answer in environments where the civil service and the budget process have badly corroded. In those cases, you are not simply wasting money. Your money is going to empower the very forces that damage those societies most. On the other hand, the decay of the civil service and the exodus of skilled people mean that there is a desparate shortage of skills. So there is a huge need for a wide range of technical assistance. And beyond that, there is a need to build a new institutional architecture. There certainly is a need for a lot of people.

And those people may as well be foreigners; they don’t have to be from the country itself.

Of course it makes sense to get members of the diaspora to go back. That can be done in an organised fashion. On the other hand, the advantage of foreigners, especially young foreigners, is that they are not seen as a political threat. The diaspora always comes with political baggage, whereas young foreigners are not a threat to anybody.

But do they have the skills needed?

A lot of these skills are pretty mundane actually, so yes.

Critics have been arguing for years that technical assistance is not really helpful. It is said to be donor-driven and expensive, with the lion’s share of the money going into the salaries of Western academics.

Well, those are two distinct issues. Technical assistance is indeed too often donor driven. Donors should not simply provide their standard programmes of technical assistance, whether that is needed or not. Technical assistance should be geared to specific situations. When a civil war ends, or political change opens a window of opportunity, technical assistance is needed. I don’t believe the donors can create political windows. Political windows are created by internal political struggle. Technical assistance cannot do much good unless a country has decent political leadership. But once that kind of leadership emerges, that leadership will need an operational civil service to implement prudent policy. And that is the moment to get technical assistance behind them – fast and at a massive scale.

Please give an example.

Take Liberia. When the country finally got a decent president and a good finance minister, the first thing those two women did was to fire the entire staff of the Finance Ministry, and that was the right thing to do. But then what do you do on the day after? The most well-meaning leadership cannot lead anywhere without a well functioning civil service. So it makes sense to fly in capable members of the diaspora and foreigners to do the job. That’s the way to get something done. And bear in mind that such windows won’t last very long, so technical assistance should be managed along similar lines as humanitarian relief. It is something we need in emergencies.

So it is okay to spend aid money on foreign experts?

The argument that money spent on foreign people is not aid is simply not legitimate. The real point in the situations I am speaking of is that if you send money instead of people, the money will get looted. Your funds will not help, they will hinder. For obvious reasons the people who want to loot the money don’t appreciate technical assistance. Technical assistance threatens the existing civil service. But that civil service is part of the problem, not part of the solution.

In your book you write that infrastructure matters a lot, but that infrastructure went out of fashion a long time ago. Is that changing?

The problem with infrastructure is that it is the epicentre of misgovernance. So it does not make sense to just scale up infrastructure projects and programmes. Unless doing so goes hand in hand with much, much tighter scrutiny of the money, it won’t work. Without decent infrastructure, however, the economy will never take off. The up side is that post-conflict countries are in such a dismal state that investing in infrastructure can do a lot of good, and if an economy grows for a decade or so, society will change and become more peaceful.

But tighter scrutiny means higher overhead costs.

Oh yes, the operating costs in these particularly challenging environments are going to be high. It is ludicrous to imagine you can move a lot of money at low administrative costs in fragile states and other difficult environments.

That goes against conventional aid discourse. Normally low overheads are emphasised, because the money is supposed to do something for poor people. Will it be possible to convince the public in donor nations of high overheads?

Of course it will. The public doesn’t want to be fed fantasies, and it has become deeply skeptical about agencies’ competence to deliver change. So it is essential to be realistic anyway.

In your book you stress that aid alone will not do. Military security and international trade also matter. You propose several international conventions, for instance, one on investors’ rights. The issue is very controversial; the vast majority of developmental non-governmental organisations oppose any such approach. Do you see any movement in that field?

No, I don’t. But I think the NGOs have not thought it through. It is very obvious that, in poor and fragile countries, we will only see low, bad and short-term investment unless the risk of expropriation is closed off. That must be done to get high quality long-term investment, but it is not something that governments of crisis countries can do themselves. After all, they normally have lost all credibility. We need international rules to provide them with the credibility they do not have. The big beneficiaries of an international rule which delivers investors’ rights would be the countries that otherwise do not have credibility.

You also express yourself in favour of military intervention. But wouldn’t an international charter to stop civil wars or to reverse military coups overburden the countries that could actually deploy the forces for doing so?

At least protecting democratic governments from coups d’état is a feasible, worthwhile and credible thing to do. Unfortunately, democracy doesn’t provide a defence against coups d’état, and democratic governments in low-income societies are as much at risk as autocratic governments. But we don’t want democratic governments to be deposed in coups. What I would like to see is a voluntary charter with governments committing themselves to certain basic democratic standards, for instance, free and fair elections, press freedom and an independent judiciary. In return they would get a commitment that, if they were deposed by a coup, the international community would use its resources to bring them back. That is well within our military capabilities; particularly as we would probably never have to use military force if we had such a charter and it was credible, because coups would simply not happen.

So you are not thinking of the UN notion of R2P, the responsibility to protect people?

In many ways what I am proposing is much less interventionist than R2P. R2P says we, the international community, have a right to protect your citizens against you, the government. That really is very interventionist. What I say is that democratically elected governments should be protected from their own army by our army. That seems to be quite a modest step.

For the things you propose to happen, the leading industrial nations will obviously have to cooperate closely. Are the G8 governments acting in an adequately coherent form?

No, they never have and probably never will. But in the case of fragile states, I think it is possible for three or four serious players to get it right, because the cost of getting it wrong is so incredibly high.

Which are those three or four serious players?

Germany is one of them because you have got a very long tradition of technical assistance. You are a big player; you are obviously the biggest country in Europe. Another big player is Britain. The Ministry of Defence, the Foreign Office and the Department for International Development are doing a lot to get joint action on fragile states, and for the next three years at least you can expect strong leadership from the Foreign Office. France, very obviously, is aware of the problems; just think of the situation they are facing in Chad today. The Americans can also play a helpful role.

But isn’t the USA part of the problem? Washington basically seems to emphasise military force and quick fixes.

(Laughs). Well, yes, but they can be part of the solution too. They are a big player, and they have been getting it manifestly wrong for quite some time. I really see an opportunity for them to start getting it right. And if the G8-countries I mentioned acted together in a coherent manner, that would be an enormous step forward.

But that would be – to use a somewhat bizarre term – a “coalition of the willing”, and not a joint effort by the European Union or the formal result of donor harmonisation within the OECD?

Let’s look at it realistically. There are not many countries that feel the urgency of the security-development nexus. If we can get more encompassing coordination, that will be great; but it does seem very difficult. Let’s use anything that works.

Interview by Hans Dembowski.