Foreign Aid- A Myth called Humanitarian Intervention
July 15, 2010 Leave a Comment
I was watching a news report on CNN by Dr. Sanjay Gupta about the problems of delivering aid to Haitian earthquake victims and thought I should blog about it. The report shows Dr. Gupta in ‘humanitarian-mission-mode’ unlike traditional journalists, visiting an orphanage running out of food even though its located close to a warehouse filled with foreign aid supplies. He makes a few calls and brings aid to the orphans. He also shows visuals of food dating back to January when the earthquake happened, still undistributed and now close to expiry, and tells us how its all going to waste.
Now our normal reaction after watching such a report would be one of anger and frustration at the Haitian government authorities and the hundreds of NGO’s operating there. Why is it so difficult to get aid to the needy even after six months? Could there be other reasons?
Yes there are, if we bother to carefully analyse the report and care to look beyond just the humanitarian or the emotional aspect. It’s not like the Haitian government doesn’t care about its people or that the NGO’s are doing a lousy job. It all boils down to the economics of demand and supply and the role played by foreign aid in subverting it.
In normal times, Haiti would have been able to fend for itself, mostly if not completely, as it would have the capacity to source its food locally. But after the catastrophic earthquake, foreign aid began to arrive and was distributed among the people. Thus an artificial supply of food was created to prevent starvation. This system worked for a short period of time albeit with hiccups. But then there were more problems. Any good economist would agree that when there’s too much aid and that aid is continuously supplied to more than a million people for more than two to three months, it becomes more of a curse than a blessing. It starts wreaking havoc on a fragile local economy like Haiti, trying to recover from a major catastrophe as there won’t be many takers for the locally produced stuff which is the real backbone of such a nation’s economy. Since the foreign aid isn’t locally sourced from Haiti, such aid in turn creates a vicious circle of low demand for locally produced food resulting in financial losses for the person or company producing it which in return results in layoffs and unemployment. Thus instead of self-reliance, foreign aid actually aids the destruction of the local economy. The Haitian government knows this and has therefore chosen to support its local economy and generate employment rather than distribute foreign aid. As a consequence, the aid is rotting up in the warehouses.
Its true that foreign aid could do a lot of humanitarian good. But then it also disrupts the local economy precisely because the aid is ‘foreign’.In fact, the donations given by people all over the world as a humanitarian gesture of support for Haiti’s victims would ironically, have ended up supporting their own nations! Of course CNN wouldn’t want to show this because it wouldn’t want USAID being shown as being part of the problem rather than the solution. That explains the pure humanitarian angle of Dr. Gupta’s report which makes for great journalism but solves none of the problems which has created the crisis in the first place!
Of course this doesn’t mean any foreign aid or humanitarian intervention isn’t beneficial to a nation in crisis. In fact it should be supplied as quickly as possible to effectively tide over the crisis. But after the first few weeks, depending on the recovery efforts, foreign aid, if at all necessary, should be ideally given in the form of monetary contributions which should be used to procure locally available labour and goods. This would generate employment and enable the crisis hit population to be self-reliant making any further aid or humanitarian support unnecessary. The common sense approach to solving a humanitarian crisis would be to do everything necessary to help the victims stand up on their feet as soon as possible and not make them dependent on foreign aid and handouts for the rest of their lives. That could only happen if the UN and the international community is truly interested in humanitarian efforts instead of serving its own self interests!