Wednesday, May 31, 2006

Foreign Aid 5: Failure in East Timor

Below is an account and analysis of how billions of dollars of foreign aid in East Timor has enriched the consultants and foreign advisers, but left the country poorer than before. It seldom or never fails: foreign aid is government to government, or consultants to consultants, not people to people. When recipient governments are corrupt, and when conduit consultants are just after the money, most of the tax money from taxpayers of rich countries are simply wasted because the original mission -- economic upliftment of the poor people in recipient countries -- is not achieved.

In this news report, the main reasons why foreign aid has failed are the following:

1) More than half of foreign aid money went to salaries and consultancy fees for foreign advisers.
2) Statism, the recipeint state has become too bureaucratic, penalizing entrepreneurship.
3) Fast population growth and high child mortality rate at the same time, that foreign aid has failed to check.

Below is a truncated story, for brevity purposes. To check the full article, visit:

Ruins of nation-building
By Jane Perlez
The New York Times

...As food and fuel ran low, many of the people said they had lost confidence in the rulers who had fought for independence and then promised a glorious new world on the back of outside financial assistance and advice.

In the early going, some of the best brains at the United Nations and World Bank were sent to set up the government, the army and the police force, as well as economic structures and education and health programs.

From 1999 to 2002, when the United Nations administered East Timor, Sergio de Mello, a UN official who was later killed in Iraq, served as a kind of pro-consul, lending panache and enthusiastic support for the ambitious nation-building project.

It has not worked out as many envisioned. Seven years later, the United Nations and the World Bank acknowledge in recent studies, the people of East Timor are poorer. An economic uptick during the three years of UN rule collapsed after many of the foreign advisers left.

Little headway has been made in improving basic services, the reports say. More children go to school but only 30 percent make it to secondary school.
Very few of the 10,000 students who finish school each year find jobs, leaving an angry group of hardcore unemployed male teenagers who have formed the gangs.
Most adults work the land, which, unlike other countries in the region, is arid with poor soil. Gifts of tractors lie broken and disused because of a lack of fuel and poor maintenance.

Complicating the picture, in a wave of post-independence exuberance, more babies were born than before, boosting the population to nearly one million and giving the women of East Timor the highest fertility rate in the world - 7.8 children per woman.
In a recent assessment, the U.S. Agency for International Development... said that foreign aid for East Timor had not helped check the child mortality rate - among the highest in the world - because little provision was made for free community based health services...

The World Bank warned last year that the government was high-handed in its attitude to the people, ignored the "lack of professionalism and experience" in the security forces and adopted a "statist style."

Prime Minister Mari Alkateri, now at the center of a power struggle with President Xanana Gusmão, spent many years in exile in Mozambique when a leftist government was in power.
After returning home, he has favored state ownership over private enterprise. In a simple example, the fee for registering a business is more than the annual $370 per capita income.

Below the ministers, the country lacked people with enough experience to fill essential jobs to run things on a day-to-day basis, said Sidonio Freitas, a senior manager at the Timor Sea Designated Authority, who was educated overseas.

"We have ministers but no middle managers," Freitas said. A good deal of the responsibility for the nation's mess lies with the foreign donors, he said.

More than half the foreign assistance was spent on salaries and consultancy fees for the foreign advisers, the East Timorese government asserts.

In essence, Freitas said, the foreigners were too impatient. They came, spread their money around and left. "They all had a time frame - one year, two years, four years," he said. "You can't build a country from nothing in that amount of time."

See also: Foreign Aid 4: Easterly vs. Sachs, May 01, 2006

No comments: