As President Donald Trump puts American foreign aid through the wood chipper, is this the opportunity to re-set aid?

28 February 2025 – Mukesh Kapila

First released 28 Feb at The National News

Image: AFP, AP via The National News

My own ambivalence towards aid goes back to growing up in hunger-prone 1960s India. I recall our ration packs adorned by the slogan, “from the American people”.  I learnt English from books gifted by the British Council, and enjoyed the adventures of Young Pioneers, thanks to the library sponsored by the Soviet Union.  Body nourished but mind confused, the battle for my heart continued with scholarship offers from Britain and Russia.

However, my enduring memory is not of gratitude but shame because my great India – as indoctrinated in school – depended on foreigners. I questioned their motives and resented our benefactors because their showy patronage humiliated us.

My teenage ruminations were set against the Cold War when western and communist blocs competed for India which played both sides pragmatically. But less confident countries were squeezed between superpowers wielding aid overtly and covertly.

In due course, I entered  a thirty-year aid career spanning the heyday of liberal globalism. Its central notion was a moral one: reducing suffering and advancing well-being are self-evidently good , and the rich are duty-bound to help the poor.

We debated alternative socio-economic approaches.  An expanding multilateral system   mediated between rival models to reach consensus around the Millennium Development  Goals, and now Sustainable Development Goals (SDGs). The cardinal principle of  aid’s organising framework is that the most needy are prioritised while none are excluded.

Official development assistance (ODA) from rich Western donors swelled from $83.6 billion in 1990 to $214 billion in 2023. Others, especially China, UAE, Saudi Arabia, and philanthropies such as the Gates Foundation joined the scene to disburse upwards of $9 billion annually.

Good people generally agree that poverty, illiteracy, hunger, and disease are indecent in our plentiful world where global GDP has nearly trebled from $34 trillion at the millennium to $115 trillion today. But as consensus decayed on how to tackle deprivation and inequality, foreign aid became divisive. Why?

It started with linking aid to human rights. Some see poverty simply as requiring redoubled charity. Others challenge the oppression created by a skewed world order where the poorest half get two per cent of global wealth while the richest 10 per cent own more than three-quarters.

Therefore, is aid for mitigating human misery or for correcting underlying unfairness – through transforming social organisation and governance? The former is humanitarian assistance that reached $26.1 billion or 11.6 per cent of ODA in 2023.  The rest is development assistance.

But in our era of multiple and endless crises, the humanitarian – development distinction is moot. The former is supposedly unconditional in accord with  the principles of humanity, impartiality, and neutrality. In practice, donors confer favours according to political affinity. This is problematic when humanitarian aid is toxified in beleaguered Gaza, attacked in divided Sudan, minimised in unpopular Burkina Faso, or overlooked in difficult Afghanistan.

Surveys indicate that two-thirds of humanitarian beneficiaries consider help received as inadequate or irrelevant. They also resent not being involved and the perceived arbitrariness of top-down benevolence creates disrespect. Is this a factor in the five-fold increase in violence against aid workers over the past quarter-century?

Meanwhile, development aid is strongly conditioned towards political, social and institutional re-engineering in receiving nations. Even more so by  dominant International Financial Institutions where big western shareholders hold sway. When emerging economies push back, disagreement follows.

Further polarisation comes from frustrated developing nations demanding aid as restitution for historic wrongs such as slavery and colonialism. Reparations for Transatlantic Chattel Slavery are calculated at $107.8 trillion, setting  African and Caribbean claimants against European and American donors.

Neither is China, where Covid-19 started, moved by calls for compensation for the $8.5 trillion global economic losses incurred. Co-operation on future pandemic prevention has stalled. And $192 trillion are calculated to be owed to the global South by the global North’s disproportionate carbon use since industrialisation. This irritates rather than facilitates increased financing to combat climate breakdown.

Weaponising aid undermines the solidarity essential to tackling shared problems. That is further compounded when aid is mis-prescribed. For example, to stop irregular migration – a toxic concern everywhere.

Increasing  aid to poor countries is mis-sold to donor publics to curb migrant flows. The converse has happened with, for example, European Union migration control allocations exceeding $80 billion this decade while irregular arrivals increased from 95,000 in 2020 to  275,000 in 2023. Profits from associated human trafficking have soared to $245 billion annually.

Combining ODA and security funding to build “Fortress Europe” has undermined aid intentionality and damaged underlying norms, including  the 1951 UN Refugee Convention.

Cynicism is further fuelled when foreign assistance budgets are raided for domestic spending on asylum seekers. That amounted to 28 per cent of the UK’s 2023 aid spend. Donor meanness includes charging interest on concessional loans and linking aid to the purchase of donor products and services or forcing preferential trade agreements. Aid ‘tying’ increased from 10 per cent in 2012 to 20 per cent in 2022.

Overall, at least one in three aid dollars never leave donor countries or returns to them. Take sub-Saharan Africa which annually receives over $60 billion ODA but $90 billion left the continent in illicit capital flows in 2020.

How much aid is lost to waste, fraud and corruption?  Critics quote 20-30 per cent with little evidence for this statistic. But with many documented examples of spectacular leakage, large aid providers and users – especially governments and multilaterals – appear reluctant to improve accountability and transparency.

Against that context how do we assess aid impacts? The conventional narrative celebrates moving one billion people  out of extreme poverty (those below the International Poverty Line of $2.15 daily in 2017 international dollars) this century. It is arguable if this abysmally low benchmark can keep anyone’s body and soul together.  By way of comparison,  the US poverty line is  $24.55.

Can international aid be credited for enhancing development?  Perhaps so with specific interventions on child mortality, HIV, cereal yields, water, sanitation, and energy. That is laudable but the evidence attributing wholescale progress to aid is weak.  Countries lifting most people out of poverty such as China and India have done so due to their own policies on economic growth, distribution, and “frugal” innovation.

Elsewhere progress has stalled. Seventy per cent of those in extreme poverty  live in 75 countries that receive grants and loans from the World Bank. Sub-Saharan Africans living in extreme poverty increased from 282 million in 1990 to 464 million in 2024 even as the continent received  five times per capita assistance that Europe received after the Second World War.

Complex explanations include persistent conflicts, frequent disasters, and corruption, and for how long are we going to continue blaming Covid-19?  Whether aid mitigates or exacerbates the downside of such contexts is debatable. Nevertheless, the legacy is a  crippling subjugation to aid dependency with ODA making up two thirds of external finance for least developed countries.

Africans lamenting the hardship caused by Mr Trump’s shuttering of American-funded clinics and warehouses ask why they became so dependent, despite their continent’s riches, talents, potential, and their leaders’ rhetoric on self-determination.

In summary, none of the 17 Sustainable Development Goals are likely to be achieved by 2030, and 83 per cent of SDG targets are static or regressing.  Development is obviously not achieved by aid but through investment.  But the investment gap across SDGs has widened from $2.5 trillion in 2015 to $4 trillion in 2023.

Proposed reforms tinker at the edges of financing architecture with perverse impacts that allowed rich countries to print money to mitigate Covid-19 effects, while constraining developing countries from doing so.

With 38 per cent of developing nations spending over ten per cent of revenue on debt interest, the debt servicing burden of  44 least developed countries increased by 50 per cent from 2022 to $40 billion today. Partly due to toxic debt from wildly ambitious or environmentally-damaging projects that became white elephants.

Meanwhile, public perceptions are unhelpfully skewed. Americans think that 25 per cent of their federal budget goes on foreign aid when the true figure is one per cent. Well-meaning advocates trying to reverse Mr Trump’s policy play straight into the “America First” camp by arguing that reducing food assistance harms farmers in Iowa and Kansas. Or that reducing aid harms US influence and advances rival China.

Technocratic and bureaucratic reforms to improve efficiency are of little utility when  “my country first”  attitudes  instrumentalise aid. Not only by Americans but by most donors.

Correction demands restoring the moral justification for aid as selfless outreach to the needy – anywhere and everywhere. That appears idealistic under the current scenario, but the long journey must start.