NIAS ISLAND, INDONESIA —The flotsam of disaster was everywhere:
trash, bricks, splintered wood, household effects, clothes, debris.
Buildings by the ocean were mostly leveled. Across the road several
structures survived, barely: only their side walls, perpendicular
to the water, still stood. Plastic sheets replaced missing
walls.
Known for its idyllic surfing, Indonesia’s Nias Island suffered
from the December 26 tsunami even before the more recent,
devastating earthquake. The island’s losses — hundreds of dead,
thousands of homeless — were small compared to the casualties on
much larger Sumatra Island next door. But the human suffering was
the same.
International assistance largely passed by Nias. The hotels in
Sumatra’s Medan, a short hop away from devastated Banda Aceh, were
full of aid workers from a dozen nations and scores of agencies,
public and private. Traffic into Gunung Sitoli on Nias was much
less.
But small private organizations stepped in to meet what were
still very real, public needs. Shortly after the tsunami Jim
Jacobson, president of Christian Freedom International, a lean
humanitarian group based in Front Royal, Virginia, made the lengthy
trip to Nias, an overwhelmingly Christian island in an equally
overwhelmingly Muslim country.
CFI had to surmount the administrative challenge of transporting
donated goods to a distant, rugged island, and then on to a
disaster area on the west coast separated from east coast air and
port facilities by a crude road. Nearly impassable to anything
other than a four-wheel drive vehicle, the 80 kilometer drive took
four hours.
The recent earthquake, damaging Binaka airport and destroying
homes, businesses, and other buildings all over the island,
attracted more international attention, but has simultaneously made
the challenge even greater. In response, CFI is drawing on surplus
goods collected earlier while stepping up collection of medicine,
tools, blankets, clothing, and other items — even children’s
toys.
Multiple disasters afflicting Southeast Asia have brought the
problem of international poverty to the fore. Indeed, the tsunami
triggered a competition among governments over aid promises. Here,
as elsewhere, politicians used public funds to bid for
international favor.
Assuming the money is used well, there seems little harm in a
charitable competition to help people in need. But too often
government-to-government aid is not used well. Indeed, the last
half century has seen wealthy nations pour hundreds of billions of
dollars into the developing world with little positive result. Much
of the money has been stolen. Even more has been wasted.
Little has been used to promote long-term productive economic
growth. More often than not politicians have established prestige
projects, such as capital cities, national airlines, and heavy
industries. State companies have been used to promote full
employment; borrowers and lenders alike have favored creating new
roads and buildings rather than repairing old ones.
Even more important, absent market reforms, economies won’t
develop. Prosperity and growth correlate with economic liberty,
nothing else. Not aid levels, not resource endowments, not
population densities. Giving money to incompetent socialist
politicians benefits no one.
Worse, transfers often have hindered reform by relieving the
price of economic failure. Ruling regimes routinely use foreign aid
to remain in power even as they impoverish their peoples. A similar
problem is evident today in Iran, as abundant oil revenues have
discouraged the government from bargaining away its apparent
nuclear weapons program for economic aid from the West.
Over the years the awful record of official assistance has
become undeniable. Multilateral development banks, such as the
International Monetary Fund, now attempt to justify their
activities as market reforms.
Yet the illusion that government-to-government aid can create
prosperity persists. Jeffrey Sachs, who is leading the U.N.
Millennium Project, proposes spending about $200 billion annually
on a grand new initiative.
World central economic planning is to succeed where national
central economic planning has failed. Sachs believes that if he can
cover the developing world with mosquito nets, malaria will be
conquered. Give him enough fertilizer and the fields will bloom;
enough drugs and disease will disappear. “We are in a position to
end extreme poverty within our generation,” he confidently
proclaims.
Alas, though Sachs is bright and dedicated, his rhetoric harkens
back to the 1970s, when Robert McNamara ruined the World Bank by
vastly increasing loans with no concern as to whether or not the
money was used well. As a result, scores of poor states ran up huge
debts while ending up poorer than they had been at the start.
Indeed, real per capita GDP in Sub-Saharan Africa was lower in 2000
than in 1970.
Calculating the theoretical number of mosquito nets necessary to
protect every poor person is easy. The real challenge is getting
the nets into people’s hands and getting people to use them
properly.
The illusion that increased foreign transfers can buy
development is reemerging. Foreign ministers of the Group of Seven
wealthiest states have proposed writing off Third World debts —
while extending new loans. The Blair government in Great Britain is
pushing to double official aid.
Although the Bush Administration has refused to back Tony
Blair’s proposal for a $50 billion bond issue to provide a new
source of international assistance, the President, too, has bought
into the misbegotten notion that more aid is better. The
administration wants to reward its allies in Iraq, such as Poland
and Ukraine, with tens of millions in aid. The administration would
provide $200 million to the new Palestinian Authority, even though
past monies have been looted by the leadership and paid to the
families of suicide bombers.
President Bush also has proposed to up contributions to the
World Bank’s International Development Association and double funds
for the U.S. Millennium Challenge Account. Even the conservative
Heritage Foundation, once a scourge of foreign aid waste, now is
pushing Congress to dump more taxpayer resources into assistance
programs, on the theory that aid officials will do better this
time. Never mind that Third World governments haven’t used all the
aid that was approved last year; Congress should give the MCA
another $3 billion. (The President initially wanted to spend $5
billion next year.)
Still, a world in need remains. There is no easy answer, though
globalization probably offers the greatest hope. Western investment
and trade have helped lift hundreds of millions of people out of
poverty in China and India. Even the poorest states, such as
Bangladesh, have found a glimmer of hope through export trades,
such as textiles. The toughest jobs in that industry offer better
opportunities than those available elsewhere.
The nations hardest-hit by the tsunami pay more annually in
Western import duties — roughly $2 billion by Indonesia, India,
Sri Lanka, and Thailand last year, for instance — than they
recently received in aid. Thus, eliminating Western protectionist
barriers is the surest method of aiding growth abroad.
Foreign assistance can help, but it needs to operate as aid
rather than as hindrance. That is most likely to occur with private
programs. Although totals are hard to come by, the U.S. Agency for
International Development estimated $33.6 billion in private
outlays in 2000.
When the UN’s relief coordinator Jan Egeland accused the U.S. of
being “stingy” after the tsunami, he was thinking only of official
transfers. Yet Americans had privately contributed even more than
their government.
Private aid shows up in many forms. Some monies run through
large charitable groups. The Red Cross, Catholic Relief Services,
Doctors Without Borders, Oxfam America, Save the Children, World
Relief, and CARE all raised tens of millions of dollars in the
aftermath of the tsunami. Many such organizations support ongoing
development projects around the world.
Big foundations and companies also contribute. The Gates
Foundation supports extensive AIDS treatment programs throughout
Africa and recently announced a $750 million grant to increase
access of poor children to vaccines.
The pharmaceutical giant Merck works with the Gates Foundation,
providing pharmaceuticals for AIDS treatment in Botswana. Pfizer,
an even bigger drugmaker, donated $25 million worth of medicine and
$10 million in cash to aid tsunami victims in Southeast Asia.
Proctor & Gamble has developed the PuR Water Purifier which
makes contaminated water drinkable. (Each powder-filled packet
cleans 2.5 gallons of water.) The purifier is useful most anywhere
in the developing world, but especially in disaster areas. P&G
has worked with non-governmental organizations and faith-based
groups, such as Franklin Graham’s Samaritan’s Purse, to distribute
its product at cost. In the aftermath of the tsunami the company
donated millions of packets and made millions more inexpensively
available, providing enough purifiers to clean more than 150
million liters of drinking water.
But size is not everything. Most nimble and creative are small
organizations like CFI. Devoted to saving individual lives rather
than entire societies, CFI collected materials for Nias before
large organizations were even thinking about the island.
CFI runs orphanages and schools for ethnic Karen refugees from
Burma (or Myanmar) now living in Thai refugee camps. The group also
builds simple clinics, termed “freedom hospitals,” and trains
medics to work inside Burma, where the Burmese military routinely
destroys villages and terrorizes residents.
In the aftermath of extensive Muslim-Christian violence in
Indonesia’s Moluccan islands, CFI provided aid to refugees in camps
on nearby islands. And the organization is currently raising funds
to create a training center for handicapped (often blind) Christian
converts in the largely Islamic nation of Bangladesh. They suffer
what amounts to a dual disability, ensuring that they endure both
public and private hostility.
The world is simultaneously awash in opportunity and tragedy.
Those of us who possess much have moral responsibilities to those
who possess little. But massive new international schemes
incorporating vast new resource transfers are a discredited
throwback to the past rather than a sophisticated vision for the
future.
The best, most creative and efficacious aid is privately
conceived, raised, and provided. The poor will always be with us.
But people willing to give both generously and thoughtfully can
reduce the number of the poor in the future.
Doug Bandow is a Senior Fellow at the Cato Institute.
Co-editor of Perpetuating Poverty: The World Bank, the IMF,
and the Developing World, he is a member of the Coalition for a
Realistic Foreign Policy.
