Economic Interests

If you owe the bank £100, that's your problem. If you owe the bank £100 million, that's the banks problem.

Altruistic Britain

Britain has recently declared that it will steadily end its £280 million a year aid package to India by 2015 and is also reviewing its current aid scheme towards Rwanda in Africa. Both have good reasons; India is currently growing faster than Britain and has its own aid and space program (which costs £750 million a year), while Rwanda has repeatedly been accused of human rights abuses and has a repressive government. When you then consider Britain has just come out of a recession and is struggling to cut its large budget deficit, it becomes hard to believe for the general public that billions of pounds are leaving the country with no tangible reward.

Paul Kagame, the controversial leader of Rwanda, after many allegations of human right abuses. 

This isn’t just India and Rwanda, Britain is one of the largest aid donors in the world in comparative terms. It donates three times more than America as a percentage of GDP and attaches far less strings than for example the IMF does for its loans to Greece. Britain’s whole aid program last year totalled around £8.5 billion and is split between direct aid to governments (bilateral aid) and funds given to international bodies like the UN and IMF (multilateral aid). Alongside India, Bangladesh and Ethiopia receive the two other largest amounts of bilateral aid, at £219 million and £324 million a year respectively. The countries aid programme is also one of the few public spending measures not to be cut, relieving it of the austerity that the NHS has had to face.

This graph from the economist shows British aid as a percentage of GDP compared to other countries in 2010. It lies only behind the Scandinavian states. 

Critics of aid suggest it does more harm than good. The money given to countries governments can tend to be “lost” on the way to those in poverty, usually lining the pockets of those in power. This is a big deterrence, as donors argue rightly they don’t want to be financing the corrupt governments that allow their people to live in such dire conditions. Another problem is that it can lead to countries become dependent on aid, shutting out private businesses and stifling real solutions to the poverty problem.  A good example of this is Afghanistan, whose economy has become overwhelmingly dependent on foreign aid, accounting for 100% of GDP last year.

Another graph from the economist shows Afghanistan’s foreign aid reaching 100% of GDP last year. 

So has British aid yet to adjust to Britain’s dwindling influence in the world? And is the cutting of India’s aid a sign of things to come?

I would suggest it shouldn’t be. While the aid given to India sounds unneeded, the country actually contains a third of the world’s poorest people (which its current tax system cannot deal with alone). With Rwanda, the country has become known for spending its aid money very efficiently (cutting the poverty rate drastically in the last decade) despite its moral ambiguity. In other countries, British aid is a welcome necessity for the very poor and gives the bonus of improving Britain’s image across the world. While the DFID (Department for International development) is restricted by law from making aid decisions based on Britain’s best interests, it aid plans do help improve trade links between Britain and other countries, a welcome boost when British exports aren’t as strong as they used to be. Plus despite all the criticism of British money flowing out of the country, development aid still only accounts for 0.56% of British GDP. On top of that, the DFID is one of the most transparent branches of British government, detailing online where each bit of their budget is spent.

Found here  If Britain reached the current o.7% target for aid spending, then only 1.6p of every pound would go towards aid. 

Britain has become one of the most giving countries in the world despite its lower economic and military status. This should be praised, it’s one of the few government programmes that is truly altruistic and does a lot of good. Britain could cut back on its aid development schemes and become a more background figure in the world stage once again. Or it could continue to lead the way in helping poor countries bring millions out of poverty each year and become a country to be truly respected again. I know which direction I would prefer.


Single Post Navigation

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: