Musk is wrong about foreign aid – it’s how countries show their character to the world

Foreign aid is being decimated. In a flurry of tweets on the US agency responsible for foreign aid, USAID, Elon Musk posted: “It is time for it to die.” In the United Kingdom, aid cuts were announced as part of a well-crafted speech in parliament by the prime minister. Whether in a suit or via a flurry of tweets, the result is the same.

Other countries, such as Germany, France, Belgium and the Netherlands, have cut aid as well in recent weeks and months. It has been a terrible few weeks for international aid.

It reopens the debate about the point of foreign aid. Some accuse aid of being ineffective, mismanaged and even corrupt. Others talk about the cuts solemnly and with regret, or even rage. Those who decide to cut it see it in any case as surplus to requirements, as they know full well from polls and focus groups that it is hard to get the broad public really to choose cuts in public spending on aid over almost anything else: polling suggests that 64 per cent of the UK population is in favour, and this two-thirds percentage has been remarkably constant for many years.

Campaigners are pointing to the devastation faced by the developing world if this assistance is cut. But is aid effective? Broadly speaking, many programmes are highly so: there is quality research backing this up. There is no doubt that many aid programmes have saved lives and changed them for the better.

For example, Gavi, the aid-funded global vaccine alliance, can rightly claim to have saved at least 1.5 million children’s lives since 2000. BRAC, a Bangladeshi NGO, has managed to lift more than two million ultra-poor families out of the deepest poverty in the last 20 years, with large financial support from the British and Australian governments.

It is hard to see how the global energy transition required to limit climate change can be handled without the firepower of the multilateral development banks such as the Asian Development Bank. And without humanitarian support, millions in Sudan or Gaza will face much hardship.

Is foreign aid always effective and managed well? No, it could be better. Many of the government aid bodies and the international organisations such as the United Nations or the World Bank are still too bureaucratic and expensive. They can be deeply patronising to those governments and partners in the developing world that try to make a difference, while being too forgiving of those in power who could not be bothered. For example, Democratic Republic of Congo and Nigeria received amongst the largest subsidised loans from the World Bank between 2016 and 2019 in Africa, with both countries absolutely mismanaging their economies at the time, while some trying to do somewhat better, such as the Ivory Coast, Kenya or Ethiopia, were left to issue expensive debt.

So why do it? Surely, if one wants to care about poor and vulnerable people across the world, why not spend on your own nation’s people first? Fair enough – but note also: if one compares the material living standards across the world, then using a calculator devised by the Institute of Fiscal Studies, it can be shown that a person in London classified as poor, in the sense of receiving income and housing support, would still be better off than 75 percent of the world’s population, and hundreds of millions live in deep deprivation.

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I am sure I am not persuading any Maga or Reform supporter with any of these arguments. The one usually tried is that it is in a country’s national interest to give foreign aid. That it stops war and migration and creates new trading partners for our growth is much harder to prove. But we do know that better-off countries are less likely to embark on war and are more likely to turn into democracies over time. Aid is unlikely a quick fix for this. In Afghanistan, aid overall probably did good, as it was instrumental in getting large numbers of girls educated, but obviously did not stop conflict, or led to the emergence of a fair and equal society there, and a friendly nation to the UK.

So let me try another argument: foreign aid is what great nations do. The Roman Empire did it: it provided food supplies to neighbouring states to keep borders secure. But it also went further, building roads and infrastructure well beyond simply for military protection. Cicero, the great orator and politician, argued strongly for it, stating that “the power of goodwill (benevolentiae vim) is so great and that of fear is so weak”. Foreign aid is simply a sensible part of how to deal with other countries: it is what powerful countries and civilisations do. Cutting aid from the United States and the United Kingdom is a sign of weakness, not strength.

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Ronald Reagan understood this well, saying in 1987 that: “America is not only the strongest nation in the world – it is also the kindest. Our strength lies in our willingness to help those who are less fortunate.” Whatever we think of the Great Communicator, he put it well: foreign aid is part of how you show your national character to the world. Britain should take note.

How you do foreign aid matters too. While the Belt and Road initiative seemed a win-win for China and recipient countries at first – no one can argue with the fact that Africa needs more roads and other infrastructure – over time, the recipients’ debt distress is creating a headache for Beijing as well, and its reputation even in African political circles has taken a big hit. The United States better be warned: trying to extract an excessively big prize for aid may look like a good deal at first, but it is hardly going to win hearts and minds in the long run.

Foreign aid can be acquitted of the accusations levied on it by Elon Musk. But it should still be given a warning: aid done badly will neither help donor nor recipient. The case for foreign aid remains. It is nevertheless also right to ask aid agencies all over the world to use their resources well and carefully, so that it genuinely improves lives and is not captured by the already rich and powerful.

Stefan Dercon is professor of economic policy at the Blavatnik School of Government and the Economics Department at the University of Oxford, and author of Gambling on Development: Why Some Countries Win and Others Lose (Hurst Publishers, 2022)

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