Foreign Aid FAQs – #10 “Aid money is spent on the wrong things”

Foreign Aid FAQs – #10 “Aid money is spent on the wrong things”

There is a widespread belief that overseas aid money is either handed over to corrupt dictators and never reaches the people it is supposed to help, or is wasted on extraordinarily expensive projects which have little or no benefit for people living in poverty. These are perfectly understandable concerns – all public spending should be scrutinised and accountable to ensure that taxpayers are getting the best possible value for money. But do these accusations hold up?

During an episode of Question Time this January, the UKIP donor Arron banks declared that ‘We have to start working out our priorities. Is it to spend £12 billion [in foreign aid] that is misappropriated by foreign corrupt governments or spend the money on the NHS for people in this country?’[1] Firstly, the idea that we should cut foreign aid in order to pay for public services is tackled in this article. Secondly, the claim that the entirety of the UK’s aid budget ends up in the pockets of foreign governments is simply untrue.

The first thing to understand is how the foreign aid budget is actually spent. The vast majority of the aid budget is not given to foreign governments. In fact, the Department for International Development has committed to ending traditional ‘budget support’ – money given directly to developing country governments.[2] The proportion of the aid budget spent this way has been steadily declining, and in 2014 accounted for just 0.45% of the total aid spend.[3]

Around 40% of the aid budget goes to multilateral organisations – bodies such as UNICEF which bring together various governments, individuals, corporations, and foundations to act collectively.[4] This has both pros and cons. Multilateral organisations have economies of scale, world-class specialist expertise and a large reach, and are also widely seen as independent and politically impartial. However, sending money to multilateral organisations can reduce the oversight which the UK government has over exactly how that money is spent.

The other 60% is spent on direct assistance to developing countries. As seen above, only a very small (and falling) proportion of this is simply handed over to foreign governments to do what they like with. The vast majority is used to fund specific projects which the UK government maintains oversight of, and in fact the Department for International Development is one of the most transparent aid agencies in the world.[5] The bulk of this money is channelled through international development charities which work directly with local communities in developing countries, meaning that their governments don’t get a chance to misappropriate the funds.[6]

By all means let’s have a discussion about how to end corruption around the world. For example, a good start would be closing down tax havens which allow corrupt leaders to hide their ill-gotten gains. But lazily repeating the falsehood that aid spending first and foremost goes to corrupt foreign leaders is both dishonest and unhelpful.

The problems with aid

Overseas aid has achieved incredible things (see this article for some examples), but of course it is not perfect. Examples abound of money from the aid budget not being spent on the most impactful projects, to say the least. For instance, the infamous example of £3.8 million being used to fund the Ethiopian ‘Spice Girls’.[8] An increasing amount of aid money is not even leaving the UK, but is being spent on expensive consultants. The Times newspaper claimed that up to £1 billion a year from the foreign aid budget was spent this way, with one consultant reportedly paid £23,000 to write a 2-page policy brief.[9]

Source: http://www.globaljustice.org.uk/resources/poor-are-getting-richer-and-other-dangerous-delusions

Furthermore, too often the primary purpose of aid has not been poverty reduction, but it has instead been used to secure policy concessions (e.g. preferential trade deals, military support, privatisation of public utilities).[10] Of course, if aid is to contribute to a world free of poverty, this needs to end.

The public debate around foreign aid has been reduced to an uncritical ‘for’ camp and an irredeemably negative ‘against’ camp. Against this backdrop, it’s tempting to gloss over the failings of foreign aid when coming to its defence. However, we won’t build public support for aid by pedalling rose-tinted untruths.

It is perfectly possible to be critical of how the aid budget is spent while still supporting it in principle. If millions of pounds from the health budget were found to have been misspent, this would prompt calls for reform rather than for health spending to be scrapped. Those of us who believe that foreign aid is a good use of public money must put forward a positive vision of what the aid budget should be spent on, rather than uncritically defending it in its current state. Global Justice Now have done some excellent work in this area, releasing the report Re-Imagining UK Aid which sets out such a vision.

The foreign aid budget is not perfect, so let’s reform it. It’s time to move the public debate away from straw-man arguments and oversimplifications and towards a more nuanced discussion around the areas in which foreign aid is failing and the ways it can be improved.

[1] www.insuranceage.co.uk/insurance-age/opinion/2480294/blog-arron-banks-question-time-appearance
[2] www.gov.uk/government/uploads/system/uploads/attachment_data/file/573889/Bilateral-Development-Review-2016.pdf, p. 49
[3] www.gov.uk/government/uploads/system/uploads/attachment_data/file/538878/annual-report-accounts-201516a.pdf, pp. 149, 153
[4] www.theweek.co.uk/63394/how-is-the-12bn-foreign-aid-budget-spent
[5] www.gov.uk/government/news/media-reports-on-uk-aid-projects-setting-the-record-straight
[6] www.theguardian.com/global-development/2013/mar/20/uk-aid-spend-important-works
[7] www.gov.uk/government/uploads/system/uploads/attachment_data/file/573889/Bilateral-Development-Review-2016.pdf, p. 25
[8] www.telegraph.co.uk/news/politics/11228152/The-bizarre-recipients-of-British-foreign-aid.html
[9] www.theweek.co.uk/63394/how-is-the-12bn-foreign-aid-budget-spent
[10] Bruce Bueno de Mesquita and Alastair Smith, The Dictator’s Handbook, ch. 7


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Foreign Aid FAQs – #6 “Their own government should help them”

Foreign Aid FAQs – #6 “Their own government should help them”

It is without a doubt true that governments should help their own people. However, this phrase is often used to mean that the welfare of people living overseas is a problem for their own government to deal with and no-one else.

The problem with this idea is that the concept of each government having absolute responsibility for taking care of their citizens only really works if each state is equally capable of doing this. In reality, because of accidents of geography and the course of history, some states have more capacity to look after their citizens than others.

For example, in 2009 the UK was able to collect the equivalent of $13,806 in tax per person. Compare this with even a relatively affluent developing country like Brazil which – with an almost identical tax rate – collected just $3,957 per person.[1] This enormous difference in tax receipts means that the UK is far better placed to take care of its citizens than Brazil is. The point of foreign aid is to get all countries to the stage where they can collect enough tax to ensure the welfare of all their citizens.

In many cases, developing countries are struggling to overcome poverty because of the actions of developed countries such as the UK. Climate change, disproportionately caused by developed countries, is disproportionately affecting developing countries. Climate change adaptation is already a significant cost for many developing countries, costing Sub-Saharan African countries a total of $10.6 billion a year.[2] It seems only fair that the UK assists with this cost.

Furthermore, the present wealth of the UK is built on the profits of imperialism, which held back the development of many present-day developing countries. Foreign aid is not just an act of charity, but well-deserved compensation for these wrongs.

There are also pragmatic reasons why the UK should continue to send aid to developing countries. It is an excellent way to improve foreign relations and, after all, the aid recipients of today are the trading partners of tomorrow. Helping other countries to develop also contributes to the creation of a more stable world, as states plagued by poverty and inequality are much more likely to be unstable.

Additionally, it is a way to reduce immigration. People born in poor countries are driven by the perfectly natural impulse to seek out a better life for themselves and their family, which often leads them to attempt to move to a wealthier part of the world. Improving the quality of life in their home country therefore reduces the incentive for them to emigrate.

“But what about corrupt dictators and despots?”

Given the examples of Robert Mugabe and other dictators dripping in wealth while the majority of their population struggles to get by, it’s tempting to think that if only these tyrants were toppled, their countries’ problems would be solved. However, more often than not they would simply be replaced by an equally corrupt dictator and these countries would still be poor. Dictators don’t just occur because of individual immorality, but because there are structural factors in place in poor countries which allow dictatorships to easily take hold.

The leader of a poor country essentially has two choices as to what to do with the limited amount of public money at their disposal: use it to improve the lives of their citizens (building roads, hospitals, etc.) or use it to enrich themselves and their key supporters. A good leader would of course use it for the former, but these kinds of leaders tend not to last long. All money spent on helping the public is money which an opportunistic rival can promise key supporters should they replace the current leader. If all dictators around the world were immediately deposed and replaced with benevolent rulers, there would still be plenty of rivals waiting in the wings to take the reins of power – and the opportunities for self-enrichment that come with them.

Part 1 (clip ends at 4.30)

Part 2 (clip ends at 13.30)

When we talk about ‘rich’ and ‘poor’ countries, it doesn’t refer to how much currency they have. Rather, it refers to how productive their economies are. Developed countries like the USA and Japan are rich because their economies have a large proportion of high-productivity industries such as manufacturing, which produce a comparatively large amount of value in a short period of time. This means that workers receive higher wages and the government collects more tax which it can then invest back into the economy.

Developing countries are poor because a greater proportion of their economies are occupied by low-productivity industries such as textile production, agriculture and mineral extraction. One of the objectives of foreign aid is to help developing countries to transition from low-productivity economies to high-productivity ones.

Improving the productivity of developing countries’ economies can actually help to reduce the chances of despots hoarding the nation’s wealth for their own benefit. In a relatively poor country which relies on a few low-productivity industries (e.g. oil or mineral extraction), rulers can get by just keeping the small number of people which run these industries happy. As economies become more productive and therefore reliant on a greater number of industries, rulers must keep a greater number of people happy in order to remain in power, and are therefore set on the path from dictatorship to democracy.

By giving developing countries the nudge they need to reach this productivity threshold, foreign aid can pave the way to democracy and bring about a world where every government is willing and able to help their own people.

[1] fusiontables.google.com/DataSource?docid=1cWAzCSaIBlgUpWJBFXslH31NLh6bCfrn6mvtCA#rows:id=1
[2] www.healthpovertyaction.org/wp-content/uploads/downloads/2014/08/Honest-Accounts-BRIEFING-webFINAL.pdf


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Freedom from Tyranny

Freedom from Tyranny

Two armoured vehicles were parked beside the main road from Harare to Chinhoyi, about 20 km from the city.  The news was received with scepticism and confusion. A military coup taking place in Zimbabwe seemed premature at best. But it was true. Reports that after 37 years, the Mugabe regime had come to an end were greeted with celebrations all around the world. Only a few days earlier, Zimbabweans had been infuriated when one of the President’s sons filmed himself pouring hundreds of pounds worth of champagne over his diamond-encrusted wristwatch, all the while unemployment remains high and the health system collapses.

Reactions from politicians were muted and calm at the time. Britain’s foreign minister refused to be drawn into the Mugabe succession debate, but instead called for free and fair elections to be held as scheduled next year. Chair of SADC (Southern African Development Community) and South Africa’s president Jacob Zuma sent an envoy into Zimbabwe and is believed to have talked to Mugabe whilst calling for calm and restraint. African Union chairperson Moussa Faki Mahamat urged the crisis to be resolved in a responsible manner, but also argued that the AU was against “any unlawful takeover of power anywhere on the continent.”

Zimbabwe celebrates as Robert Mugabe resigns / BBC News

Amid the joy of now having ended the 37-year rule of Mugabe, there was some sense of caution. Zimbabwe’s armed forces commander, General Constantine Chiwenga, had kick-started a process that means Zimbabwe is now one of 40 African countries that have seen coups. Chiwenga held a press conference attacking the manoeuvres by Grace Mugabe that took Emmerson Mnangagwa from the post of vice-president proclaiming that, “We must remind those behind the current treacherous shenanigans that when it comes to matters of protecting our revolution, the military will not hesitate to step in.” Three days later, General Sibusiso Moyo read out a statement on the state broadcaster stating, “What the Zimbabwe defence forces are doing is to pacify a degenerating political, social and economic situation in our country, which if not addressed may result in a violent event.”

The rationale the army is using to justify their actions creates more questions about the future of Zimbabwe than answers. Zimbabwe has been in free fall politically and economically since the late 1990s, reaching fever pitch in 2008 after it is believed Mugabe had lost the presidential elections. Why did the army not intervene during the 2008 general election period, to pacify an unstable political situation which left more than 100 … dead, 200-plus abducted and missing, hundreds more jailed on spurious charges, thousands beaten and tens of thousands forced from their homes? Was the death of so many people in 2008, not a “degenerating political, violent event” as stated by Major General Moyo? There were also a number of reports that in 2008 instead of stopping the violence during that period, Chiwenga reportedly told Mugabe, ‘We can’t lose elections. We can’t hand power to the MDC. We are going to obliterate them,” amid reports that Mr Mugabe was going to accept defeat.

Chiwenga’s statement read at the press conference blatantly reinforced the army’s argument which they have repeated every election year since the rise of the opposition in Zimbabwe, that they will not accept, let alone support or salute, anyone without liberation war credentials. The opposition leader Morgan Tsvangirai criticised this logic in 2002, saying it was tantamount to intimidation.

Many people will argue that the country has got rid of the biggest obstacle to democracy and peace by the ending the Mugabe regime. However, the replacement chose by ZANU-PF assisted by the army could continue the situation Zimbabwe has been in for the last few decades. The belief among academics and analysts who know of Emmerson Mnangagwa is that there is a little chance that he will walk away from power after two terms (according to Zimbabwe’s constitution) after he is sworn in today in Harare.

Zimbabweans will celebrate the end of the Mugabe regime and rightly they should after all these decades. For many Zimbabweans, Grace Mugabe becoming president would have been the worst thing to happen for the country. However, the army has taken away a raw moment of celebration and freedom from the Zimbabwean people and given them an illusion which could dissolve into more years of despair. Emmerson Mnangagwa did not receive the nickname ‘the crocodile’ for his pacifist persona. As history has shown us, coup leaders don’t always live up to the promise of instilling democracy, and many coups result in an upturn in human and constitutional rights abuses.

Find out more:

Zimbabwe is free of Robert Mugabe, should the world celebrate? | The Economist
https://youtu.be/UOmtHF_61DE

 


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Un Mundo Novo: A New World

Un Mundo Novo: A New World

In this article, Isabel O’Brien discusses the disregard for Rio’s favelas in the midst of political corruption and the impact of increased Olympic spending on the city’s poorest communities.

I cannot help but think officials gave as little attention to the creation of the Rio 2016 Olympic slogan as they do to the issue of favelas, the city’s crime-ridden slum areas. The promise of a new world is no more than a fallacious narrative, a narrative that the favela communities of Rio de Janeiro are tired of reading. They care not for the next chapter but rather that the entire book is rewritten, that they be given the voice of a protagonist and not a character who is encountered so fleetingly they are barely worthy of a name. Favelas are repeatedly excluded from public legislation and fiscal policy rendering their existence invisible in the eyes of the state, despite their conspicuous nature across the urban landscape. The relentless desire to silence the favelas has not gone unnoticed. A Perspex ‘acoustic’ barrier constructed between the Complexo da Maré, a large network of slums, and the Linha Vermelha, the main expressway connecting the airport to the city is known locally as “the wall of shame” reaffirming the disheartening idea of second rate citizenship that continues to percolate favela mindset.

Peter Burgess/Creative commons license
Peter Burgess/Creative commons license

Rio’s favelas, however, are rich in organic Carioca culture. I was fortunate enough to visit Rocinha in June, the most populous favela in Brazil, with an estimated population of over 100,000. Whilst I speculate that my experience of Rocinha was highly sanitised, the things I encountered did little to subdue my social conscience. Children samba, but dance in their own sewage. Women nurture but worry how they can protect the health of their babies. Men admire the ocean view but do so under the surveillance of gun-wielding drug lords. Yet beyond dystopian observations, Rocinha’s community is defined by enviable bonds of kinship, liberal artistic displays and a shrewd level of entrepreneurship that sustains the favela’s informal economy.

All of this, however, is fundamentally undermined by the Brazilian drug trade and endemic police corruption. Although Rocinha was pacified in 2011, drug-lords continue to infiltrate Rocinhan society and the impasse between state officials and narcotic dealers is undoubtedly worsening. The police’s approach to rectifying the drug-fuelled monopoly over Rocinha is paradoxical to say the least and inhibits development schemes seeking to deliver educational services and health awareness to residents, essential given current concerns regarding the Zika virus. Drug lords facilitate the laundering of hush money, benefitting the police who seldom apologise for the impact this has on aid provision and eventually kill those who have exhausted their use. 10,699 people were killed by police in Rio between 2003-2014. In the midst of their politics, there is still only one high school in the whole of Rocinha but the intimate relationship between the government and the police ensures that positive state intervention remains at a dismal level, jeopardising the health, education and future of Rocinha’s youth.

So can the Olympics bring some relief to Rio’s favelas? Despite an Olympic ‘taster day’ at Rocinha’s Sports Centre, the scaling back of favela pacification in order to accommodate for the

Guy chaillou/Creative commons license
Guy chaillou/Creative commons license

Olympic budget suggests otherwise. It is estimated that 39.1 billion reals (£9.1bn) will be spent on the games however it is unlikely that favela communities will share in any success. The inclusion in the Opening Ceremony of Favela Brass, an NGO-led brass band, and the Passinho dance, a funk-samba hybrid birthed in the favelas is moderate recognition of favela culture but it does little to compensate for the cuts to essential development programmes. Rocinha needs improved infrastructure to cope with its growing population and its physical vulnerability. Due to its hillside location, the favela is subject to frequent deadly landslides during periods of heavy rainfall but the community is unsurprisingly ill-prepared for these and less than half of residents have piped water systems. The charmingly narrow lanes typical of Rocinha are resented by those whose lives depend on scaling the steep steps every day. There is perhaps no better metaphor of government attitudes towards favela development than the half complete cable car structure that watches over Rocinha.

Unfortunately, favelas are not in keeping with the global Olympic facade. They have been omitted from official Olympic maps and tourists have been awarded priority to use Rocinha’s first subway station, a decision that endorses the fear of second-rate citizenship. The favela communities require government support yet subscription to a state system steeped in immorality seems regressive. The legacy of Rio’s Olympic games is unlikely to be that of ‘a new world’ and rather that of a deeply divided city.

 


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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The Luxuries of the Department for International Development

The Luxuries of the Department for International Development

The Department for International Developments budget remains at 0.7% of gross national income. In this article Katie Wand questions whether the current checks and balances in place on DFID’s spending are sufficient.

Call me an idealist, but after centuries of societal evolution, I for one expect the state to hold up their end up of the proverbial deal, fulfilling their duties according to the social contract in return for our societal obligations. Besides, we haven’t sacrificed our civil liberties for nothing, have we?

To justify the recent cuts to the NHS, and the subsequent paychecks and self-respect of our junior doctors, we assume that the government simply does not have sufficient funds to sustain the government service of days gone by. That sounds reasonable; with lower growth forecasts than expected, and an impending crisis overseas, it may pay to be thrifty. As a country that prides itself on its dedication to justice and other worthy attributes, to the extent that it seeks to impose these ideals on other less reputable countries, we can surely assume that our money is being well spent, warranting the taxes we pay, and the civil liberties we cede in order to participate in the mutually beneficial agreement we call society.

Sadly this utopian ideal has been replaced by an unnervingly dystopian reality. Take DFID (The Department for International Development), for example. Of all the government departments, you would hope that the one assigned to the noble task of international development (and the imposition of so-called British ideals) might be one on which we can rely; a beacon of honesty in the obscurity that is the developing world. But where does the money actually go? Aside from the already questionable morals behind British interventionism abroad, in terms of results the proof really is in the pudding, which at times looks about as appealing as some sloppy semolina.  Not so long ago, DFID generously funded a project in Uganda for £150,000. The project was reportedly implemented, budgets signed, etcetera. Later it materialised that this generous sum had been used to design and build not one, but two lovely new houses for the programme officers on the ground. Money well spent, I’d say. If the government is to haphazardly distribute large sums of cash, surely it is not too much to ask that we police the projects, ensuring misconduct like this does not occur?

 

DFID / Creative Commons License
DFID / Creative Commons License

 

This is an example of painstakingly blatant corruption, and is absolutely not unique to Africa. My colleagues in Nepal casually dropped in that whilst working on a DFID funded project in Kathmandu, they and their many associates were treated to breakfast and lunch every day at the most regal and expensive hotel in the country, named Dwarikas. An old palace, Dwarikas is notoriously expensive, and my colleagues reckoned that DFID spent around £10,000 per month on this communal bi-daily feed. It is no wonder that NGO work and international development is one of the most lucrative sectors in developing economies.

It would be naïve to think of this as a dig at DFID. My digging encompasses far more than one sole inefficient government department. Military spending will take up about 5% of the budget, more than twice as much as is spent on housing, unemployment and family and children welfare combined. The age old argument of needing an expansive military for our protection against aggressors might seem reasonable, were we under attack. Yet in my lifetime we have not once defended ourselves against aggressors, but instead have become the aggressor, using our military to not defend, but to attack other countries.

 

Jan Tik / Creative Commons License
Jan Tik / Creative Commons License

 

I am by no means proposing cutting government spending, especially not to foreign development services (nor the NHS, for that matter). What I do propose is that more safeguard measures be put in place, and a results-based system enforced to ensure that public money is put to good use in some of the many wholly worthwhile endeavors.  The tragic and unjustifiable waste of public funds is just testament to the crumbling mess that our social contract has become, whereby state acts independently of society, conducting practice to fit the wishes of the very few. We preach transparency and efficiency, yet we- the British public- unknowingly provide the very fuel to the fire of corruption and inefficiency, both at home and abroad.

At a loss for ideals and expectations, perhaps it is time our notions of government service delivery become more realistic.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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The Paradox of Corruption: Can there be ‘good’ corruption? Part 2 (Country Studies)

The Paradox of Corruption: Can there be ‘good’ corruption? Part 2 (Country Studies)

The importance of healthy institutions is a center piece of successful development policies. Everyday citizens are effected by corruption because it takes money from the public treasury that could be spent on maximizing everyone’s well-being, to private bank accounts. In Part 1, Alexei Ivanov discussed the nature of corruption and how it’s one-tailed definition is hurting our abilities to treat it at the source. Using case studies, this part aims to discuss unhealthy institutions and healthy institutions in order to exemplify the equivocal nature of corruption.

Nigeria

A recent major corruption scandal has been the $1 billion oil exploration case by the Nigerian Government against Shell and ENI. These companies were taken to court for supposedly bribing officials in order to get access to an exclusive highly profitable oil block called, OLP235. From the total $1bn fees paid by Shell and ENI to the Nigerian government, $800 million from this deal went to the private accounts of various government officials. What was left of the remaining  $1bn, went to a small off-shore oil company belonging to the oil minister of Nigeria, Dan Etete.

©Marcel Oosterwijk/Creative Commons License
©Marcel Oosterwijk/Creative Commons License

While the finer details of the case is in the hands of the Nigeria Judicial System, we can make light assumptions. From the 2009 Worldwide Governance Survey, Nigeria had one of the lowest rankings for accountability, rule of law, violence, and other indicators to signal the health of Nigerian public institutions. Unhealthy practices within the Oil Ministry have allowed for situations such as this, the Head of the Nigerian Oil Ministry, to award his personal company oil fields.

 

We can make the connection that since the quality of institutions is low and economic freedom is high, this type of corruption has hindered the growth of a country. The role of the Oil Ministry as an institution is vital in this certain case and has obvious economic outcomes. In a country where 2/3 of the population live on $1.25 per day, a billion of dollars into the hands of one man isn’t fair. This money shouldn’t just be given out to people, but spent on social programs.

What could be done?

Bangladesh

Textiles and garment are one of Bangladesh’s biggest exports. Informal transactions are a type of corruption, but searching through Bangladesh Garment Manufacturers and Exporters Association’ (BGMEA’s) history, not one case of major corruption has ever shown up. BGMEA more importantly has set out goals of: ‘a healthy business environment for a close and mutually beneficial relationship between the manufacturers, exporters and importers’.

A closer look shows:   ‘…foreign buyers were aware of these arrangements and happily participated in them. This meant that arbitration using formal procedures would have been difficult in these cases anyway, and informal arbitration had a great deal of credibility because industry insiders had the knowledge to find acceptable solutions.’

These ‘informal’ dealings of the BGMEA are corrupt by definition. However, from the same 2009 World Governance Survey that rated Nigeria so badly, Bangladesh considerably did better than Nigeria. By allowing for informal ‘talks’ at the BGMEA, the economy has grown through bypassing inefficient regulations, ‘greasing the wheels’. This has made BGMEA to play a major role in rising Bangladesh’s economic development.

Uganda

Despite the Ugandan government scoring 96 out of 100 on legislative framework for governance and corruption control, 8 out of 10 citizens think that corruption is the countries biggest problem. A recent step taken by the Inspectorate of Government (an NGO) in Uganda was to address the ghost worker problems, people having fake jobs for real salaries(would be nice wouldn’t it?). After a public audit on this payroll, the government first decentralized payroll system to be given to each government agency this power.

©futureatlas/Creative Commons License
©futureatlas/Creative Commons License

This was reinforced by the salaries being put up online and on boards displaying who works for what and for how much. Through this type of transparency, corrupt individuals can’t make up job rolls for their peers anymore, as well adds to the cost of getting caught, making it less appealing. Furthermore, this will save the government at least $20 million in revenue. Uganda has fought corruption by employing technology, but more can still be done.

Conclusion

The effects of corruption can be felt by everyone. From bribing doctors to get better medical care to millions and billions of public money going into private bank accounts. Since corruption is so diverse and depends on the country, the case can be made for the importance institutions. Furthermore, ‘corruption can’t be generalized on all levels in emerging market’s’ because the evidence shows mixed results on corrupt practices, some are beneficial to better business, some are not good and harm the public via the restriction of economic development.

In Nigeria, the evidence suggests that companies and government agencies are involved in shady contracts, but steps are being taken to address these problems. In Bangladesh, we saw that informal negotiations are actually driver of better economic activity. And lastly in Uganda, corruption is strong, but being tackled through technology, opening up to new ways of dealing with corruption. By creating a dynamic understanding of corruption, we can adopt technology and other methods to eradicate the problem at it’s source, the institutions.

 


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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The Paradox of Corruption: Can there be ‘good’ corruption? Part 1

The Paradox of Corruption: Can there be ‘good’ corruption? Part 1

Corruption is a strikingly dirty word in today’s newspapers, among academics, and even in our favorite TV shows and movies. It has a negative connotation because paying sums of money to public officials in order to bypass a law or other public ordinance is unethical within our society. By having such conventional definitions of corruption, we unfortunately can’t fully locate the problem and assess it. That’s because corruption might actually be helping economic growth  in certain cases instead of hurting it, causing an unknown policy schizophrenia on how to best tackle it. Everyday citizens are hurt by corruption because of the excess income they have to spend and the misuse of public money on their behalf.

Alexei Ivanov aims to show that the core of the problem to corruption are institutions and by expanding our definition of corruption, we can attempt to alleviate the poor institutional practices witnessed all over the world in developing states.

In the popular media, corruption is usually portrayed wicked and sinister, chiding public sector employees for having poor morals, whenever a case against a public official emerges (one of the most popular examples of this today is the political drama House of Cards).

Corruption is also not limited to one place or even developing states. Just recently, criminal judges in North Western Australia admitted to accepting bribes of over $2,000,000 from mafia bosses to hand down lighter sentences. It has an impact on anyone and anywhere, but more specifically we can make claims that developing countries are more prone to corruption. This is due to weaker institutions that allow for the facilitating of rent seeking practices by public officials.

©World Bank/Creative Commons License
©P T/Creative Commons License

A Nepalese billionaire Binod Chaudhary discussing corruption in developing states, said that, ‘it’s hard to generalize corruption on all levels… there are ‘facilitation costs in emerging markets’ and more, ‘businesses have to support political parties’. This evidence casts doubt on all corruption being intrinsically harmful.

Corruption Facts

Over 12 months, one in four people paid a bribe when they came into contact with one of nine institutions and services, from health to education to tax authorities

Since 1996 the World Bank has supported more than 600 anti-corruption programs….The World Bank…investigates corrupt practices with a staff of more than 50 employees and consultants, and expenditures of more than $10 million annually’

Research

The real story isn’t as clear as the facts try to show it. There is no denying that corruption occurs within all parameters of society, whenever public officials take in more than their paychecks show. However, economists have long been challenging the standard understanding of corruption.

Some economists such as Samuel Huntington believe that corruption can enhance growth by allowing individuals to pay bribes in order to circumvent inefficient rules and bureaucratic delays. Others such as Gunnar Myrdal (1968) believes that some governments set up fake rules and regulations to increase their payroll.

Corruption could be summarized as, ‘getting things done’, and usually occurs through two mechanisms:

  1. ‘Speed Money’ -> Getting past bureaucratic red tape
  2. Public Officials levying bribes as an incentive to do their jobs

Several studies have tried to link corruption and institutional quality. Most get to the conclusion that there is a non-linear relationship between corruption and economic growth. Heckelman and Powell (2008) find that corruption hinders growth in more autocratic developing states, while increases growth in democratic developing states. Mauro (1995) came to a conclusion that institutional quality is at the heart of increasing growth by eliminating corruption. While political institutions are important, another invisible attribute of corruption is the quality of economic institutions.

©Psudo on politics/Creative Commons License
©Psudo on politics/Creative Commons License

If economic freedom is low, corruption is more likely to aid in the growth of the economy. If the economic freedom is high, corruption will hinder economic growth. Therefore, the way corruption can take hold and affect a country’s economic landscape is dependent on the quality of it’s institutions. One thing that most economist today can agree on is that: poor institutional quality leads to inadequate policy decisions and overall bad governance. An MIT paper from 2009 came to the conclusion that the quality of institutions will also have economic impacts.

Where next?

With this knowledge we should put more focus on strengthening institutions as a means to change behavior rather than behavior modification designed to produce better institutions. Changing institutions is not an easy process. New institutional economics (NIE) is a recent paradigm that allows economists to analyze development, but not accept the straightjacket of the rational choice framework.

Instead of gripping onto the markets for assurance or government intervention, institutional economics analyzes both with scrutiny. Instead of taking on one ideology of socialism or capitalist, we can instead say, ‘, markets aren’t perfect, but governments aren’t either, maybe both can work in our interest if we want them to’.

By not generalizing corruption on all levels, we can better tackle corruption by figuring out productive corruption and rent seeking corruption. There doesn’t seem to be a consistent method of eradicating corruption, but that might be because each case of corruption has various factors that might different from case to case. In Part 2, coming up on Thursday, we explore  cases studies in corruption to both present the problems (and potential solutions) in practice.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Decentralising food distribution in india

Decentralising food distribution in india

India, with its abundant and cheap labour, has potential for rapid growth and development. This resource can be particularly well applied in the agricultural and manufacturing sectors. However, here Kartikeya Rana disucsses the role of a corrupt government and high levels of red tape in decreasing the efficiency of work conducted and results in avoidable costs.

One important measure of the country’s development is whether the people are able to gain a staple diet. India is currently facing a serious problem of undernourishment and malnutrition. It has the highest number of poor people, in terms of percentage of population, in the world.

© Balazs Gardi/Creative Commons License
© Balazs Gardi/Creative Commons License

Apart from being a source of damage for the populous, it has also cost the taxpayer a tremendous amount of money. Schemes such as subsidised grain have led to a loss of around 2 billion rupees worth of crops in 2012 alone. This has not helped to improve public perception of the government, which sees the government as a corrupt and criminally intended organisation.

The issue in India is not only one of policy paralysis but also of implementation. Although the government has implemented legislature to overcome the problem of hunger in the country, high levels of graft and lower level management has resulted in poor implementation.

Policy paralysis

The issue of policy paralysis in India can be explained by the dysfunction of the parliament. Poor attendance and regular disruption in parliament leads to a lack of effective policy development and implementation. As a result, archaic policies implemented over 30 years ago are still used in India today for a number of sectors. This is particularly problematic because of the rapidly changing nature of the world and the growth of the Indian population. This results in high levels of red tape and complicated regulations. As a result, policies such as food subsidies become particularly hard to implement.

Implementation problems

There are a number of policy’s in place to ensure children are able to gain a nutritious diet. The scheme of mid-day meals was implemented wherein kids attending government schools were able to gain a lunchtime meal. Furthermore, a scheme of highly subsidised grains to the poor was implemented to ensure that every person was able to gain a basic level of nutrition necessary for survival. Both important policies for advocates of redistribution to those in need.

However, both these schemes have undergone failure due to issues of poor implementation. The mid-day meal scheme has failed as poor cooking techniques have led to the poisoning of a number of kids and their subsequent death. This led to a severe public outcry and consequential derailment of the scheme. The government has promised to re-engage in the scheme once stronger guidelines are put in place.

© Ajay Tallam/Creative Commons License
© Ajay Tallam/Creative Commons License

The distribution from the suppliers for the subsidised grain to the rest of the population was necessary to be undertaken via government food storage facilities. Much of the food was left in place for a very long period of time. This is due to poor implementation standards within the country. These poor standards can be because of the large regulations that have to be overcome for procurement and distribution.  This has led to the rotting of the food crops and further increased the level of malnutrition. Furthermore, a number of ill-intentioned suppliers have used the food grains as fodder for their cattle.

Although there has been severe media scrutiny and public outcry about this problem, the government is yet to take concrete steps to curtail this problem.

 

What steps could they take?

India tends to follow a system of self-designated village governments or ‘Khap Panchayats’. this system involves unique policies and guidelines, which the community follow. Since their views are highly respected, they are more likely to be implemented. If these local governments were given the resources to ensure effective distribution of the grains, they are more likely to be implemented. Furthermore, a fear of social isolation will also reduce the number of cases of implementation failure.

However, a control of such a large number of food produce will also provide the self-elected bodies with a tremendous amount of power. A Panchayat with views which are less aligned with those of the government may take the resources and utilise them for less favourable intentioned. It is known that these panchayats have previously implemented very conservative diktats, which have hampered women, minority and general citizen rights. Therefore, the government must have a local authority in place to ensure that an even distribution of the resources between the people regardless of class, religion or other racial aspects, takes place.

 


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Breaking Good: The transcendence of social reintegration programs for Mara Salvatrucha and other gangs’ members

Breaking Good:  The transcendence of social reintegration programs for Mara Salvatrucha and other gangs’ members

Oscar is 29 years old and lives in San Salvador. He used to be a member of the notorious Mara Salvatrucha (MS13) gang. Nowadays, he and his fellow ex-gang members spend their days working at a bakery.  Oscar is just one of the many ex-gang members engaged in reintegration projects, looking for a second chance. Carlos Arturo Aguilar discusses the role that such rehabilitation projects can have in reintegrating violent criminals back into the folds of mainstream society, and ultimately resulting in a meaningful and moving transformation.

 The MS-13 is the most significant street gang in the Western Hemisphere, extending from Central American nations through Mexico, the USA, and Canada. Recently, the Guardia Española detained 35 gang members in Spain accused of being involved in organised crime . The MS-13 has helped to make the Northern Triangle (Guatemala, El Salvador, and Honduras) the most violent place in the world that is not at war.

©United Nations Development Programme/Creative Commons License
©United Nations Development Programme/Creative Commons License

A decisive problem of the increase in the membership of gangs is poverty and inequality, exacerbated by famine and lack of jobs. The MS-13 emerges as a convenient option for thousands who end up as outcasts due to the absence of opportunities for social mobility. In turn, organized crime prohibits development.

It is hard to establish the exact number of maras. Associated Press and El País have calculated up to 60,000 in El Salvador alone. This figure carries more weight than seen at first glance.  Roberto Valent, the UN’s representative in El Salvador, says those 60,000 members might have as many as 300,000 dependants, which constitutes approximately 6% of El Salvador’s population. In social and economic terms these numbers and therefore the effect of gang involvement on the general population is critical.

A second opportunity

As previously stated, a strong motivation to become part of a gang is that little opportunities exist outside of gang involvement. If any hope of a transition exists, it rests on the creation of job opportunities, economic uplifting and social reintegration of those that have lost most of their youth and lives to gang warfare and criminal activities. International and local organisations, as well as specialists such as Clare Ribando Seelke have flagged up the creation of programs to foster such reintegration as an urgent action in order to encourage more current gang members (and their families) to quit the gang, offer alternatives to present prisoners to avoid recidivism, and tackle recruitment.

Such programmes have gained much attention and debate but little of this has translated into action. The Government of El Salvador is currently engaging in projects to restructure prison systems towards creating opportunities for rehabilitation of criminals and not just providing punishment. Yo cambio (I change) is an official initiative implemented at the municipality of Ilobasco, where the Farm for youths in conflict with the penal youth law has been established in order to receive about 800 prisoners, former MS13 and M18. At the farm they receive specialized attention (education, workshops, sports, health and mental treatment, family union courses, etc.).

©Natasha Padgitt/Creative Commons License
©Natasha Padgitt/Creative Commons License

The Minister of Justice, Benito Lara, remarks on the importance of transforming the judiciary system, particularly prisons to focus more on rehabilitation and social reintegration. The rehabilitation and reintegration of gang members has to be part of the the justice system and policies should reflect this. However, as Ribando mentions, government-sponsored gang prevention programs have tended to be small-scale, ad-hoc, and underfunded. Governments are still barely involved in sponsoring rehabilitation programs for individuals seeking to leave gangs, with most reintegration programs funded by church groups or NGOs.

María Luz Panameño, known as Alba, leads the Asociación de Desarrollo Comunitario de la Comunidad La Selva (ADECSELVA) in El Salvador. In collaboration with the municipality of Ilopango, 12.5 km from San Salvador, they set up a farm where about 40 ex-gang members learn about poultry farming. These programmes provide alternative sources of income for ex-gang members and are crucial for rebuilding lives.

Shared Responsibility

The two projects aforementioned are different one from the other but mark an important and essential aspect of the reintegration program’s theme. While the first example is an official effort, the second one is fostered by civil society. This highlights the necessity of collaboration between civil society and the government with the latter needing more involvement. Both agents share the responsibility for reintegrating gang members. Civil Society seems to be heading the majority of efforts, while governments show a keen interest, there is still a long way to go.  The MS-13 is a failure of the whole system. Therefore, a solution can only be the responsibility of the whole system. The development of such programmes is not only vital for the rehabilitation of gang members, but also for the healthy functioning of society.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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The Tourist Rush to Cuba: Is it right?

The Tourist Rush to Cuba: Is it right?

As the relationship between the United States and Cuba opens up, Tal Gurevich raises important concerns about ethical travel.  Tal also unpacks the troubling fascination that tourists often have with observing life under an oppressive regime in its purest form, without the influx of foreign, ‘Western’ influence. 

Last month regulations which lift some of the prohibitive restrictions on travel and trade between Cuba and the United States were introduced. Although these rules do not spell the end of the five-decade long embargo, they go some way towards beginning a normalization of relations between the island and its northern neighbor. While we can only speculate on the impact these changes will have on Cuba, the government and its citizens, what is clear is that this somewhat surprising turn of events is at the forefront of people’s minds.

As I waited at the boarding gate to catch a flight from Los Angeles to Miami, a young woman sitting beside me remarked to her friend that she was very excited about going to Cuba. The friend, although clearly excited for her girlfriend’s impending adventure, lamented that she wouldn’t be able to visit Cuba before ‘it changed’.

© John Delconte/Creative Commons License
© John Delconte/Creative Commons License

The conversation became inaudible as it was announced that the plane was ready for boarding. Throughout the bumpy 5-hour flight, I kept on thinking, what is it exactly that the woman and many others like her are in a rush to see?

I thought about the rush for rum and cigars but quickly ruled that out, together with some other explanations: the immediate rush is certainly not to the many all-inclusive holiday resorts on the island. Wanting to participate in cultural events, festivals and festivities is also a doubtful reason – these will not change overnight due to the new rules.

What then, do people think will change overnight? Maybe it’s that something about Cuba that makes it different, non-Western, an exotic adversary to the US. Perhaps they are curious to see what that ‘otherness’ means, what overt propaganda looks like and how people go about their daily lives under an oppressive regime.

Real change?

There is an underlying expectation that life will be different under the new normal – more ‘Westernised’, better and easier. However, the effects of the changes are far from clear and are hotly debated. Some people point out that the easing of travel restrictions and the introduction of better commercial relations will be of tremendous benefit to Cuban citizens and that increased tourism will have a positive effect. Others are more skeptical and believe that the only people who will really benefit are those in the government.

Terry Gross, the host of Fresh Air, mentioned that “several Cuban dissidents were recently arrested, and this was after President Obama said he wanted to open relations with Cuba”, perhaps indicating that either way the consequences are far from straight forward.

While the effects of the changes are unclear, people can still question the rush to Cuba and their own personal choice from a non-consequential ethical perspective. They can and should question their motives. Is it from an impulse of curiosity, of wanting to see what life is like under current conditions?

© People In Need Cuba/Creative Commons License
© People In Need Cuba/Creative Commons License

Cuba is an island where there is no freedom of speech and where many other liberties are curtailed. Where there is a huge gap between what people earn in their official jobs and how much is needed to survive (doctors are paid $20 dollars a month). Where food is scarce and many people pay a lot of money and take huge risks to leave the country because the situation on the island is unbearable. With the changes to the regulations, Americans can now have a glimpse into these people’s ordinary lives for a period of time and then return to their own comfortable ones. Is this rush to see Cuba ethical?

There is no straight forward answer. Some would say that people are implicitly endorsing the Cuban regime by visiting it. Others believe in the merits of experiencing a different way of life and see it as a positive educational experience for both tourists and locals. There are many debates about what it means to a responsible traveler. However, one thing is certain – these are exciting times. Many have a natural curiosity to visit and see regimes such as Cuba and North Korea now before they ‘change’. Perhaps people want to be the first ones into such countries, to get the ‘off-the-beaten-track’ experiences in Myanmar. Perhaps they have other reasons. The motives for and the implications of such visits and the rush to Cuba are complicated and at the end of the day the choice is a very personal one. The important thing is that people think before booking that flight.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Anti-corruption Day: A misguided focus

Anti-corruption Day: A misguided focus

In today’s international development discourse, corruption is often considered as a developing world problem. According to the UN, however, corruption is a complex social, political and economic phenomenon that affects all countries. On International Anti-Corruption Day, Amelia Worley helps unpack  the phenomenon. 

Corruption undermines democratic institutions, slows economic development and contributes to governmental instability”.  Various indices which have been developed allow us to quantitatively measure the presence of corruption, which suggests corruption as a variable stands alone.  High levels of corruption correlates with the prevalence of conflict and poverty, and are generally considered to be endemic in developing countries.

Different arguments stand as to whether corruption breeds poverty and instability, or whether the latter two are conditional for corruption to grow and strengthen.  Does the stark absence of food, supplies and resources force people to turn to a ‘corrupt’ way of living?  Or is corruption supposedly inherent to people living in these areas?

©Mike Blyth/Creative Commons license
©Mike Blyth/Creative Commons license

Poverty can be identified through the very unequal distribution of resources – notably food, water, healthcare and economic wealth.  This is often mirrored by the centralization of power, whereby those in power are not held accountable by the people inhabiting their state.  Unlike the West, those in poverty have no security of income to purchase resources, or know whether said resources will be readily available when they are needed.  It is quite easy to understand why a mind-set of ‘each man for himself’ may perhaps arise when resources, or the power to obtain such resources, do become available.

We see examples of corruption every day in countries considered to be at the highest end of the development spectrum.  Just look at the British government, which scored 78/100 according to Transparency International’s recent corruption perception index to rank 14th in the world for anti-corruption. There is much evidence for the presence of corruption- look at MPs expenses scandals, LIBOR, and, to a more contentious extent, everyday nepotism.

Historically these sorts of things have happened to much worse degrees, with bribes dominating in parliament and cover-ups occurring.  Corruption is rarely discussed as a factor which has affected the UK’s course of economic development.  It can be stated with some confidence therefore, that corruption, or at least corruption alone, is not a prime reason for maldevelopment.

Are we then using this notion of corruption as a form of scapegoat which provides an explanation for the sincerity and frequency of conflict in parts of the world?  Is corruption used as a reason for us to take a backseat and watch what is going on?  Perhaps blaming problems on corruption is our way of portioning blame on societies while avoiding the reality that global policies, from divisive colonial strategies and continuing to this day via aid conditionality to the exploitative focus of profit driven practices of big businesses, have contributed to poverty.

How can we fix this?  If conditions of poverty breed corruption then we should focus on tackling the root causes of such corruption thus allowing countries to prosper.  Therefore, rather than raising awareness of the poisonous ‘corruption’ permeating through developing countries through ‘anti-corruption days’, there should be an encouragement for increased activity to tackle the determinants of poverty; education, effective infrastructure and healthcare.  Stating the presence of corruption arguably only enforces the neo-colonial tendencies of ‘us’ versus ‘them’ within the discourse of development.  Identifying institutions as corrupt stands to differentiate the developed and undeveloped world; in reality, this is anything but true – corruption is undoubtedly present everywhere.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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The Republicans vs. Climate Change

The Republicans vs. Climate Change

Climate change is a topic that is growing increasingly political. Andrew Stretton explores the future of President Obama’s environmental policy in light of the Republican Senate victory in the recent US mid-elections. 

Last week, the Republicans won control of the US Senate, meaning they now control both chambers of Congress. While this power shift won’t result in the Republicans having significantly more direct power, it will allow them additional influence over Barack Obama’s policies and agenda in his final two years as President. There will be meaningful changes to the chairs of several Senate committees and this is likely to have substantial effects on US climate, energy, and environmental policy.

Obama’s green credentials seemed assured in his first term, being perceived as America’s first ‘green president’ shortly after taking office. He spoke about the development of green energy as a way to transform the economy and protect US security, asking Congress to provide legislation to allow him to put a cap on carbon emissions and drive production of renewable energy. $100 billion dollars were put towards making private homes and government buildings more efficient, developing wind and solar power and improving public transport.

©Gage Skidmore/ Creative Commons license
Jim Inhofe ©Gage Skidmore/ Creative Commons license

For all of Obama’s attempts, the expected appointment of Republican Jim Inhofe as chair of the Environment and Public Works committee, which is in charge of climate change legislation, is likely to limit further progress. Inhofe, who chaired the committee from 2003 to 2007, is a prominent climate change denier. He has written a book claiming that climate change is a hoax and even compared the Environmental Protection Agency (EPA), which develops and enforces environmental regulations, to the Gestapo. He has also claimed that it is impossible for human caused climate change, or Anthropogenic Global Warming (AGW), to be true because “God’s still up there.” Inhofe cited evidence in the Bible and declared that humans should not be “able to change what He is doing in the climate”.

This expected appointment comes at a time when the scientific opinion on AWG has reached a consensus that is endorsed by over 97% of scientists who have written on the topic. It has also been revealed that the number of papers that rejected AWG has decreased over time and “is a vanishingly small proportion of the published research. A few days before the elections, the United Nations Intergovernmental Panel on Climate Change (IPCC) released their fifth comprehensive assessment report on the latest climate science and technical and socio-economic aspects of climate change. The report, written by over 800 expert authors, warns that should no action be taken on climate change “severe, widespread, and irreversible impacts” will be inflicted on both humanity and the natural world. At the report’s launch, UN secretary general, Ban Ki-moon, said “Science has spoken. There is no ambiguity in the message. Leaders must act. Time is not on our side”.

Given the conclusive verdict passed by scientists, it would be reasonable to expect that politicians would follow the strong recommendations and cap fossil fuel emissions and turn to renewable energy as soon as possible. However, for various reasons, a political consensus to pursue such strategies has yet to be established. In the US Senate, Inhofe is not alone in refusing to accept the overwhelming evidence of AWG. Come next January, Ron Johnson, Mike Enzi and Ted Cruz, all fellow climate change deniers, are expected to be the chairs of key Senate committees.

©Playing Futures/Creative Commons license
©Playing Futures/Creative Commons license

Why the denial?

A quick look into who funds politicians like Inhofe reveals the likely source of such widespread denial. Inhofe raised $4.6 million dollars for re-election in 2014, over ten times the amount of his closest challenger. His top contributors were Devon Energy (oil & gas), Boeing Co (aviation) and Murray Energy (coal mining), followed by many other fossil fuel companies including Koch Industries. It is a similar case for other deniers. Should Inhofe and his fellow climate change deniers have a change of heart, it is safe to assume that their considerable funding would diminish.

This round of US midterm elections saw a record $85 million pledged by environmental organisations and individuals such as Tom Steyer. However, this unprecedented spending still resulted in defeat at the ballot box. The harsh reality is that for every dollar environmental groups will spend, the fossil fuel corporations will always have a dollar more. For instance, the political network backed by the Koch brothers (owners of Koch Industries) was estimated to have spent over $300 million on the midterms, buying over 44,000 TV ads in the process.

What next for America and the World?

Despite Obama’s 2009 plea, Congress has proven to be uncooperative with his green policy attempts. As recently as May 2014, the Senate blocked an $85 billion tax cut which would have helped wind energy. It is now increasingly likely that successful climate change action in America will have to occur at a local level. World leaders have a self-imposed deadline to agree a new global climate deal by the conclusion of the Paris 2015 summit. With the current lack of political consensus, it will take a combination of strong leadership and public pressure, through protest or ballot box, to instigate real change.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Chevron and the ‘Amazonian Chernobyl’

Chevron and the ‘Amazonian Chernobyl’

When it comes to environmental degradation, the profits of large multinational corporations often trump the environmental costs. Adil Khan examines how the oil giant Chevron apparently caused an environmental disaster in Ecuador and has yet to clean up its mess.

Over the course of 25 years Texaco – later amalgamated with Chevron in 2001 – caused mass destruction in the Lago Agrio area of the Amazon Basin; a catastrophe dubbed, by both experts and activists, the ‘Amazon Chernobyl’. Specifically, in Ecuador, it is claimed that the oil giant spilt 17 million gallons of crude oil into the environment, allowed 18 billion gallons of toxic wastewater to pollute rivers, and failed to effectively clean up hundreds of open-air pits containing hazardous waste. With the land now spoiled and the residents left in a state of despair, the question has to be asked, will Ecuador receive the assistance needed to return this area to its unspoiled origin, or will the international community continue to ignore the pleas?

©Dallas Krentzel/ Creative Commons license
©Dallas Krentzel/ Creative Commons license

Recent legal battles

Since 1993 the plaintiffs, represented by a coalition of Ecuadorian and American lawyers, have battled against Chevron and sought $27.3 billion for the horrific damage caused to the local population and the environment. Then in 2011 in a landmark decision an Ecuadorian court fined the corporation $8 billion; an exiguous amount compared to the original level of compensation desired, but nevertheless it was perhaps the first step towards a more just outcome.

However, in March of this year, a New York judge blocked the collection of the fine on the grounds of deep corruption and illegal conduct by the Ecuadorian legal team. This effectively rendered Chevron unaccountable for their alleged actions and the much-needed recovery and development of the Amazon was prevented from coming to fruition.

A case of corruption?

Corporate criminologists Kramer and Michalowski point out; through a ‘chain of command ’ procedure proxy agents may be used to achieve the illegal goals of a corporation. Therefore corporations evade accountability through a claim of ‘plausible deniability’ ; in essence, any suspected perpetrators of threats are far removed from those who authorised the deviant activity.

Dirty tactics have been levelled at both sides throughout the trial, the latest of which involves an Ecuadorian lawyer representing farmers affected by the crisis. According to a report by The Guardian, lawyer Juan Pablo Saenz has received death threats and is being routinely followed in his home country. Whilst there is no direct evidence linking these threats to Chevron, it should be noted that multinational corporations do have the political and economic muscle, to systematically eliminate independent judiciary and prosecution, which can affect the course of justice.

2014 Environmental Report

The source of death threats may be difficult to prove, yet the effects of Chevron’s oil spill are clearly evident according to the latest study investigating the health and environmental impact. It has been found that pollution still severely contaminates the area – more than 20 years after Texaco withdrew from the country. The Louis Berger Group (LBG) scientists who conducted the research, have reinforced the validity of previous studies by confirming that the pollution has increased the risk of cancer, as well as other health issues such as immune system deficiencies. Furthermore, illegal levels of toxins are still prevalent at Chevron sites; a fact which the corporation hid from the Ecuadorian court during its trial. Chevron’s malfeasance is compounded by the fact that the LBG scientists also found troubling evidence that contamination continues to this day and pollutes the water supply of the local population; a gross violation of their most basic of human rights.

©Rainforest Action Network/ Creative Commons license
©Rainforest Action Network/ Creative Commons license

Will Chevron face justice?

Karen Hinton, a U.S. spokeswoman for the Ecudorians, compares their case to the BP oil spill of 2010 in the Gulf of Mexico. Unlike BP who were severely reprimanded and are being held accountable, Chevron has remained a ‘fugitive’, evading punishment for their crimes and avoiding responsibility for the clean-up operation. The South American government itself has also to an extent been a puppet of the Chevron corporation, and therefore has been largely invisible in dealing with these matters. This is in stark contract to the US government, who ‘threatened to “keep a boot to the throat” of BP until it took responsibility’.

Whilst Karen Hinton may believe that eventually ‘Chevron will lose thecase on both the law and the facts’, and although the coalition of lawyers have quixotically fought for justice for over 20 years, ultimately it is unclear whether Chevron will ever truly be held accountable and legally obliged to compensate their victims. For a nation with revenues of $37 billion, any legal struggle against a corporation whose own operating revenues are six times that figure – and equate to a staggering $220 billion –  is unlikely to result in the victory that the Ecuadorians crave.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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Las autodefensas: Mexican heroes or armies ‘out of control’?

Las autodefensas: Mexican heroes or armies ‘out of control’?

During the last two decades, drug organisations have gained tremendous power in Mexico. These groups, combined with the corruption that pervades government structures, have created a vicious environment in which civilians are the most affected. MA International Political Economy student Carlos Arturo Aguilar investigates the recent trend for civil retaliation, and its effects on the balance of power and security.

 

Mexico’s cartels have gone beyond drug trafficking. In many towns they control the inhabitants’ livelihoods by setting taxes for producers, distributors and retailers. They also put tariffs on property depending on the size of house or the number of vehicles a family owns. People fear that the cartel will knock on the door someday asking either for money, women or the life of a family member.

But patience has limits, especially when life is at stake. Since 2013, it has not been rare to find towns patrolled by 4x4s with men and women carrying AK-47s and assault rifles, wearing bulletproof vests and equipped with radio-transmission devices. These people are the self-defence groups (autodefensas). Their objective: to reinstate order and security by driving out the drug organisations. Keep reading →


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Corruption, controversy and ballooning costs: the dark side of the Olympics

Corruption, controversy and ballooning costs: the dark side of the Olympics

As consumers in a globalised world, it’s all too easy to forget the hidden costs of our daily conveniences. But what about those of international sporting events? As the excitement of the Sochi Olympics fades, Connie Fisher asks us to look beyond the hype and the glory to the human consequences of the greatest show on Earth.

 

Olympic Cauldron Relit for Sochi Winter Games 2014, Feb 21st
Sochi 2014’s Olympic flame © GoToVan (Creative Commons)

No major sporting event comes without its problems, but as we have seen with this year’s Winter Olympics in Sochi, Russia, the pre-games controversy – especially over LGBT issues – was all but forgotten amidst the thrill and excitement of the sport. However, behind the scenes, massively inflating budgets, corruption and health and safety issues require us to ask whether such events ultimately benefit or hinder the host countries, especially considering the increasing number of successful bids from BRICS nations.

With a whopping $51bn price tag (five times the original $12bn prediction), the Sochi Games have become the most expensive Olympics in history, leading the International Olympic Committee (IOC) to question whether it is time to reassess their budgeting and bidding procedures. The blame for the exorbitant price of the Sochi Games, which weighed in at nearly three-and-a-half times the cost of London 2012, has been placed on corruption endemic within the construction industry and, according to opposition politicians, up to $30bn in kick-backs for figures close to Vladimir Putin. Keep reading →


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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