Rogue aid

Moisés Naím, editor in chief of Foreign Policy magazine, writes in an op-ed piece in the NY Times.

In recent years, wealthy nondemocratic regimes have begun to undermine development policy through their own activist aid programs. Call it rogue aid. It is development assistance that is nondemocratic in origin and nontransparent in practice, and its effect is typically to stifle real progress while hurting ordinary citizens. …

The World Bank … proposed a project [to repair the Nigerian railroad system] based on the commonsense observation that there was no point in lending the Nigerians money without also tackling the corruption that had crippled the railways. After months of negotiation, the bank and Nigeria’s government agreed on a $5 million project that would allow private companies to come in and help clean up the railways.

But just as the deal was about to be signed, the Chinese government offered Nigeria $9 billion to rebuild the entire rail network — no bids, no conditions and no need to reform.

China is actively backing such deals throughout Africa; its financing of roads, electrical plants, ports and the like boomed from $700 million in 2003 to nearly $3 billion for each of the past two years. Indeed, it is a worldwide strategy. Beijing has agreed to expand Indonesia’s electrical grid in a matter of months. Too bad the deal calls for building several plants that use a highly polluting, coal-based Chinese technology. No international agency would have signed off on such an environmentally unfriendly deal. …

Nor is China the only regime offering rogue aid. President Hugo Chávez has not been shy in using his nation’s oil money to recruit allies abroad. …

Mr. Chávez’s financial aid to Cuba far exceeds what the island used to get from Leonid Brezhnev during the heyday of Soviet communism, and it has dashed hopes for Cuba’s opening as a result of Fidel Castro’s demise and the island’s bankruptcy. Because of Mr. Chávez’s artificial lifeline, Cubans will be forced to wait even longer for the indispensable reforms that will bring their society opportunities for true prosperity and freedom.

Iranian aid to Hamas in Palestine and Hezbollah in Lebanon may have increased Iran’s influence in the region, but it is damaging to the people in those countries for the same reason that Venezuelan aid hurts Cubans. The same can be said of Saudi Arabia’s sponsorship, in countries like Pakistan, of religious schools that fail to equip students with the skills they need to get jobs. …

States like China, Iran, Saudi Arabia and Venezuela have the cash and the will to reshape the world into a place very unlike the one where we want to live. By pushing their alternative development model, such states effectively price responsible aid programs out of the market exactly where they are needed most. In place of those programs, rogue donors offer to underwrite a world that is more corrupt, chaotic and authoritarian.