Rogue development aid by Moisés Naím:
States like China, Iran, Saudi Arabia and Venezuela have the cash and the will to reshape the world into a place very unlike the one where we want to live. By pushing their alternative development model, such states effectively price responsible aid programs out of the market exactly where they are needed most. In place of those programs, rogue donors offer to underwrite a world that is more corrupt, chaotic and authoritarian. That sort of aid is in no one’s interest, except the rogues.
This probably overstates the difference between China and the behaviour of western countries in Africa. I don’t recall all the newspapers complaining about our oil companies and mining companies pumping money into governments in Africa over the last forty years to buy licences to extract mineral resources. And all that money was just as chaotic and corrupt, and just as free of strings, as the money that China is now spending to get access to Africa’s mineral wealth. Why would we expect China to behave any differently from what we have been doing for decades?
Some rights reserved
Excellent point. Owen: Should African countries, post HIPC, have the freedom to access international capital markets? (regardless of their access to grants of development banks? ) Ghana is going to issue US$ 500 bonds. What do you think? If governments are considered responsible to spend budget support aid, are they to be considered equally responsible to be responsible debtors?
Carlos – Isn’t that for the markets to decide? If people are happy buying Ghanaian bonds then who are we to stop them?
Adam
What if they are expecting a future bail-out?
Owen
Bail-outs are common and in one sense predictable, I agree, but that’s clearly a risk the buyers would take, and I don’t see the mechanism by which one country prevents another from issuing bonds once a country has reached HIPC completion point. Or would the discipline come from the PRGF? I’m not knowledgeable enough about conditions underlying Ghana’s macroeconomic programs with donors.