Over 92 percent of the US aid money granted in previous years is being spent through the American NGOs resulting in the return of a fair portion of the financial assistance back to the donor country. The News investigation found that of the projects run through $1.05 billion assistance, the government agencies were granted an amount of $29.68 million (2.78% of the total amount), UN bodies received $50.80 million (4.8%) and US NGOs bagged projects of $960 million (92.30%). This coincides with Ambassador Holbrook’s disclosure about short-listing more than 1,000 NGOs for awarding contracts in Pakistan.

East Timor has received $8.8bn in aid and assistance, including peacekeeping, since 1999, but less than 10 per cent of that has made its way into the East Timorese economy.
(...) The research group says money destined for East Timor goes through many channels, such as trust funds, budgetary support for the government, UN missions, foreign military forces and donor managed projects inside and outside government agencies, all of which provide differing figures from that given by the government. In addition, it says, at least 20 per cent of promised donations are never actually delivered.

So, despite the apparent explosion of global development finance in the past year, there has actually been no effective transfer of resources for investment to the developing world. Financial liberalisation explicitly designed to increase access to resources for new investment has instead been associated simply with much more circulation of finance around the world, instead of creating a growth-oriented intermediation for developing countries. Citizens of the developing world – apart from the privileged few who can take advantage of the newly liberal regime to transfer their wealth around the world to maximise their own returns – may well ask whether the process of capital account liberalisation has been worth it.

The high expenditure on paying, protecting and accommodating Western aid officials in palatial style helps to explain why Afghanistan ranks 174th out of 178th on a UN ranking of countries' wealth. This is despite a vigorous international aid effort with the US alone spending $31bn since 2002 up to the end of last year.
(...) The high degree of wastage of aid money in Afghanistan has long been an open secret. In 2006, Jean Mazurelle, the then country director of the World Bank, calculated that between 35 per cent and 40 per cent of aid was "badly spent". "The wastage of aid is sky-high," he said. "There is real looting going on, mainly by private enterprises. It is a scandal."
(...) "I was in Badakhshan province in northern Afghanistan which has a population of 830,000, most of whom depend on farming," said Matt Waldman, the head of policy and advocacy for Oxfam in Kabul. "The entire budget of the local department of agriculture, irrigation and livestock, which is extremely important for farmers in Badakhshan, is just $40,000. This would be the pay of an expatriate consultant in Kabul for a few months."
(...) Mr Waldman, the author of several highly-detailed papers on the failures of aid in Afghanistan, says that a lot of money is put in at the top in Afghanistan but it is siphoned off before it reaches ordinary Afghans at he bottom. He agrees that the problems faced are horrendous in a country which was always poor and has been ruined by 30 years of war. Some 42 per cent of Afghanistan's 25 million inhabitants live on less than a dollar a day and life expectancy is only 45 years. Overall literacy rate is just 34 per cent and 18 per cent for women. But much of the aid money goes to foreign companies who then subcontract as many as five times with each subcontractor in turn looking for between 10 per cent and 20 per cent or more profit before any work is done on the project. The biggest donor in Afghanistan is the US, whose overseas aid department USAID channels nearly half of its aid budget for Afghanistan to five large US contractors.
(...) Another consequence of the use of foreign contractors is that construction has failed to make the impact on unemployment among young Afghans which is crucial if the Taliban is to be defeated. In southern provinces such as Farah, Helmand, Uruzgan and Zabul, up to 70 per cent of Taliban fighters are non-ideological unemployed young men given a gun before each attack and paid a pittance according to a report by the Institute for War and Peace Reporting. By using these part-time fighters as cannon-fodder, the Taliban can keep down casualties among its own veteran fighters while inflicting losses on government forces.
(...) The international aid programme is particularly important in Afghanistan because the government has few other sources of revenue. Donations from foreign governments make up 90 per cent of public expenditure. Aid is far more important than in Iraq, where the government has oil revenues. In Afghanistan a policeman's monthly salary is only $70, which is not enough to live on without taking bribes.
(...) 40 per cent: Share of international aid budget returned to aid countries in corporate profit and consultant salaries – more than $6bn since 2001.

Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd. accounted for 47 percent of 2007 commodities spending for aid, according to the U.S. Department of Agriculture. The program was created in the 1950s, partly to reduce domestic surpluses. The regulations require that almost all the peas, corn and other crops come from American sources, effectively steering the bulk of the business to the biggest food-trading companies. The rules also stipulate that 75 percent of the food must be transported on U.S.-flagged vessels, benefiting ship operators, including Liberty Maritime Corp., based in Lake Success, New York, and Sealift Inc., of Oyster Bay, New York. In 2007, the program’s shipping contracts were worth $385 million, according to the USDA.

The ICRC noted that around 40 percent of Iraqis, mostly people living in suburbs and rural areas, are not connected to a water network, and must thus either buy water at a cost of around 50 US cents (40 euro cents) for 10 litres, or collect it from often polluted rivers or wells if they cannot afford it.

More than $125.7 billion has now been committed to rebuilding Iraq's infrastructure and government since U.S.-led forces toppled the government of Saddam Hussein five years ago. Though all of that has not been spent, it includes $50.77 billion in money appropriated by the U.S., $57.96 billion in Iraqi funds and $17 billion pledged by other international donor, the bulk of it in the latter in loans and under $5.3 billion in grants.

afghanistan: fear, disillusion, and despair:
In the seventh year after the fall of the first incarnation of the Taliban, two Afghanistans exist. The first is defined by international effort in the country - civil and military - whose story is told in battles won and reconstruction projects brought successfully to fruition. It is largely told through the prism of foreigners, diplomats and soldiers, British, Canadian and American. It emphasises good news, most recently a claim - that would surprise Afghans - that foreign forces were ‘routing’ the Taliban. The other Afghanistan is largely ignored. This has 30 million people in whose name the war is being fought. Its themes are disappointment, bitterness and pessimism: a conviction that the vast intervention to rebuild the world’s fourth poorest country has benefited only a small handful, and Afghanistan is heading for a new crisis. As even some Western diplomats are beginning to acknowledge, the prevailing fear is that the war is in danger not of being lost or won in Helmand province, but in the perceptions of Afghans.
(...) What optimism that there was after the fall of the Taliban has largely dissipated. With 40 per cent unemployment, and faced with drought, rocketing food prices and vast amounts of aid money squandered, the international community’s promises to transform Afghanistan - six years on - ring increasingly hollow.
(...) The accumulating crisis is building around both the failure of governance and the Taliban’s renewed insurgency. Despite national elections in 2004 and 2005, democracy has failed to gain any real traction. Karzai’s Western-backed government, in trying to buy off rival warlords and factions who were once powerful, has created a charmed inner circle. The warlords have found themselves new jobs in the Interior Ministry or police, where they continue to protect drug traffickers. Some of those accused are among Karzai’s closest associates - including his brother Wali. When asked, the unemployed who gather at the roundabouts, the tribal leaders, and the women activists, the journalists and the housewives list the same complaints. Karzai, they say, is ‘weak’. Security is disintegrating. His cabinet is corrupt, the country is in danger again of descending into warlordism.
(...) A UN ‘accessibility’ map shows a very different picture from the official one: a nation sliced in two, much of it hostile for aid workers. Where it is red - classified ‘extreme’ - is where the opium poppies are. Much of the south is red. In the centre of this zone is Kandahar, the Taliban’s first capital in the south. At first glance it seems much like Kabul, a bustling and busy place. Small groups of men pray on the rooftop mosques, silhouetted against the sky. But Kandahar’s differences exist in a hidden geography, in such places as Loyah Wallah, the ‘Big Canal’ district, towards the city university where the Taliban discreetly hold sway. Officially the government says it controls the city. But local people tell a different story. And what people only fear in Kabul, in Kandahar exists as reality.
(...) It is left to a lorry driver from Lashkar Gah to say: ‘There are no jobs.’ And he complains that there is too little security despite the British base. ‘We are all thinking about who will be the next ruler of Afghanistan. If foreign troops go, the Taliban will come. Then there will be resistance and chaos, like there was before. For now there is no peace, no security, no central government. During the time of the Taliban I was left in peace. ‘There is an old Pashto proverb,’ he adds ruefully. ‘The old thieves were better than the new.’

Of the $25 billion in aid to Afghanistan from 2001 until now, only some $15 billion has been spent, aid agencies say. But for every $100 spent, sometimes only $20 actually reaches Afghan recipients, said the Kabul-based internationally funded Integrity Watch Afghanistan (IWA).
(...) Between 15 to 30 percent of aid money is spent on security for aid agencies, the IWA report said, and 85 percent of products, services and human resources used by agencies are imported and provide few jobs for Afghan workers.
(...) As much as 20 percent of international aid to Afghanistan is spent on so-called technical assistance; jargon for highly paid foreign staff. Some $1.6 billion was spent on technical assistance between 2002 and 2006, the report said.
(...) [holy shit!] Some staff working for the USAID, the U.S. government’s development agency, earn as much as $22,000 a month in Afghanistan, IWA said, or 367 times more than an Afghan teacher.
(...) Some 70 percent of international assistance is not channeled through the government so the Afghan state has no control how it is spent and the money does little to enhance its standing with the people or develop its ability to govern. Even though most of the money coming into Afghanistan does not come through the state, the Afghan government still relies on aid for some 90 percent of its budget.

the trillion dollar crisis:
Not one summit of the eight most industrialized countries, the G8, ends without a promise to increase ODA, particularly towards Africa, the continent which is most affected by poverty. Since 1970, the rich countries have promised to increase it to 0.7% of their Gross National Income (GNI). This figure is respected by only five countries: Norway, Sweden, Luxembourg, Denmark and the Netherlands. Last place is occupied by the US, with a figure of 0.16%.
(...) From a global perspective, the ODA does not rise above 0.28% of the GNI, despite a series of statistical manipulations designed to camouflage the low value of the aid money given by rich countries: in fact, they include in the ODA dubious figures such as debt relief, the expenses of the US to rebuild Iraqi and Afghan infrastructures that it destroyed, the tuition fees of students from the South who study in the North, the salaries of expatriated staff and the multitude of consultants who defend the interests of donor countries or who produce costly and useless reports. Furthermore, this aid is largely directed towards countries of geostrategic interest to the donor country, with flagrant disregard for the real needs of the countries of the South: apart from Iraq and Afghanistan, the major beneficiaries of US aid are the Sudan, Colombia, and obviously Israel.
(...) On the other hand, according to the International Monetary Fund (IMF), the potential cost of the current international crisis is approximately 1,000 billion dollars, a result of the so-called 'subprime' crisis that emerged in the summer of 2007 and continues to wreak havoc. In a report published on the 8th of April, the IMF has estimated this cost at precisely 945 billion dollars for the international financial system, of which 565 billion is directly linked to the system of risk-laden mortgage loans. Here is what happened: to obtain astronomical profits on their liquidities, credit institutions loaned out to an already heavily indebted sector of the population, within the poor or middle classes, at a fixed and medium rate for the first two years to entice clients, before the rate increases sharply during the third year. The lenders asserted to the borrowers that the property that they were buying, which also acted as guarantee against the loan, would rapidly rise in value due to ascending prices in the real estate market. In 2007 the real estate bubble burst. The crisis then spread to multiple financial actors which had devised extraordinary debt structures and had carried out enormous operations off the books.
(...) In 2000, the United Nations Development Programme (UNDP) advanced the figure of 80 billion dollars over ten years as the amount required to guarantee universal access to drinking water--yes, universal ­, a decent diet for children, primary education for all, basic health care, including gynecological care. Thus, the challenge was to find 800 billion dollars in total. They were not found, and the living conditions of billions of individuals have continued to decline. The abrupt rise in the price of foodstuffs, due to the development of the production of biofuels, has now thrown tens of millions of inhabitants of Africa, Latin America and Asia into absolute poverty. Food riots have erupted in Haiti, Egypt, the Ivory Coast, Senegal, Cameroon, Burkina Faso and this is only the beginning. Instead of approaching the Millennium Development Goals, however tentative these may be, we are getting further away at great speed. The current banking crisis will cost 1,000 billion dollars, and will prove, that in the case of the 800 billion proposed by the UN to guarantee some basic human rights, it was the political will that was lacking. It is a flagrant violation of the Universal Declaration of Human Rights and other international treaties. It is unacceptable and unforgivable. And it is the very logic of the economic model that should be questioned.

the track record of the world bank:
The World Bank is thus seen in much of the world as a neo-colonial institution, and all its preaching about "governance" seems little more than a way for the Bank to cover for the failure of its own economic policy prescriptions. The Bank has little to show for its tens of billions of dollars of development lending. The vast majority of the countries that have followed its policies have suffered a sharp slowdown in economic growth over the last 25 years, and a resulting decline in progress on social indicators such as life expectancy and infant and child mortality.
(...) [corruption as cause?] While corruption is bad and "good governance" is by definition good, failed economic policies - the abandonment of development strategies, anti-growth monetary and fiscal policies, indiscriminate opening to trade and investment flows, the pressuring of governments to prioritize the needs of foreign corporations - are much more likely causes of this long-term economic development failure. After all, countries like South Korea managed to achieve some of the most rapid and successful economic growth and development in world history without cleaning up corruption. South Korea went from a per capita income level of Ghana in 1960 to that of Europe today, while two of its presidents during this successful development trajectory went to jail for corruption involving hundreds of millions of dollars. And the United States didn't exactly have good governance while the robber barons held sway during the latter part of the nineteenth century, when we were the fastest-growing developing country in the world.

africa and philanthropy:
In addition to providing raw materials, labor, and markets for finished products, Africa also cleanses the conscience of Africanist scholars, evangelists and missionaries, the rock and roll musicians who want to save Africa through orphan adoption, and philanthropists with Mother-Theresa complexes. But at the top of the pack – Western politicians. Occupy Iraq and Afghanistan but do not forget to rescue the African from the clutches of war-lords, poverty, corruption, and disease. Africa has become the continent where the guilt-ridden come to score quick moral points. And we let them.
(...) When Tony Blair intervened in Sierra Leone, it was heralded as an emblem of humanitarian military intervention (one of the five tenets of what became known as the Blair Doctrine). Yet, as Blair prepares to leave office, the reality in Sierra Leone is far different from the success story that will become part of his legacy. . Sierra Leone remains one of the world’s poorest nations. As the BBC reports on its website, 60 percent of its budget is met through foreign aid, life expectancy is 41 years and 70 percent of the population lives below the poverty line. Even with debt forgiveness Sierra Leone continues to import more than it exports – all testaments to a radical dependency and inequality in an otherwise resource-rich nation. This is a recipe for another civil war long after Blair is out of office.
(...)For Bush, as the United States foreign policy suffers defeat in the Middle East, Africa becomes the saving grace. Its working - the Washington Post recently applauded Bush for his War on AIDS. But according to Africa Action’s Salih Booker, since 2002 Bush’s AIDS Plan has been “more smoke than mirrors.” Instead of allocating the promised money through the Global Fund, he channels it through PEPFAR, the President’s Emergency Plan for AIDS Relief which is “often influenced by restrictive and ideologically-based policy prescriptions, such as abstinence-only regulations.” Bush undermines his own efforts through what most experts understand as unworkable ABC programs (Abstinence, Being Faithful and as a last resort, Condoms).
(...) Worse is the AIDS-Industrial Complex. The US under Bush opposed the loosening of patent laws which would allow countries to manufacture or import generic drugs. Donated AIDS money is therefore being spent on expensive premium drugs. The pharmaceutical companies pocket the money then lobby against the loosening of patent laws. The system is locked into a cycle of profit making at the expense of the dying.
(...) In what other parts of the world call corruption, a study by Public Campaign found that in the United States, between 1999 and 2004 “health care related interests [have] contributed $162.3 million dollars to federal candidates and party committees.” In 2003 President Bush appointed Randall Tobias, CEO of Eli Lilly & Co (a large US Pharmaceutical company) to head the U.S. Global AIDS Coordinator.
(...) To put things in perspective consider the following: Africa as a continent, with an estimated population of 680 million people receives 4.5 billion dollars from the United States while the country of Israel, with a population of 6 million, receives about 3 billion. And as Bush spends about 4.5 Billion a year on AIDS in Africa, for the fiscal year 2008, he has asked congress for $624.6 billion to be spent on the military.
(...) According to an Oxfam report, for every dollar given to Africa in aid, the donors get two dollars back. Oxfam also reports that a “one percent increase in trade for Africa would bring $70 billion into the continent – five times as much as Africa currently receives in aid and debt relief.”
(...) Because of the US 49 billion and the EU 93 billion on farmer subsidies, Africa, as a result of cheaper international prices, loses more than it gets in foreign aid. A United Nations African Renewal article shows Mali received 37.7 million in US aid in 2001, but lost 43 million dollars through cheap market prices. The US was taking more with one hand and giving less with other.
(...) But we as Africans also have to take a good share of the blame. Instead of policies that would once and for all break our dependency, our leaders trade our long-term livelihood for short-term gains. In 2003, according to Patrick Bond, a political analyst based in South Africa, the African elite had $80 billion sitting in Western banks. At the same time African governments owed these same banks $30 billion. Or in another startling statistic, between 1970 and 1996, Africa lost $285 billion as a result of capital flight while incurring a $178 billion debt.
(...)