The Fallacy of Foreign Aid

from David Jones The 1966-67 annual report of the World Bank, published last Tuesday, makes especially interesting reading in this country where the Ministry for Overseas Development has been reserved as a parking place for the consciences of ex-Tribe unites. Actual disbursements of U.K, aid, net of amortisation, crept up from $457m. in 1961 to #501m, in 1966, ‘Thus an average yearly increase of less than 2%-was maintained at a time when payments of amortisation and interest on external public debt grew by 10% a year for 95 "developing" countries included in the bank's statistics, Two thirds of the offical aid received by these countries is taken up in servicing their foreign debts. Part of the cause of deeper indebtedness is thet the rich countries are giving more in loans and less in grants, Debt servicing is becoming harder to manager because of the "large proportion of aid which is country=tied and commodityrestricted." At the same time, "a major factor affecting the flow of capital to the developing countries has been the persistence of balance-of-payments problems in the U.S. and the United Kingdom," the report states. The 95 poor countries in the report's statistics owed some $25,000m, in 1962 but $41,000m, in 1966. Service payments last year were 24,000m, - two-thirds of all offical aid from the main donors, The bank's report claims continued headway by the developing countries in 1966, But the detailed figures given later show this opening statement to be meaning=~ less, The Southern Europeans are included and if the population increase is taken into account the ppr-head growth has averaged only 1.7 per cent, Given the doubtfulness of many countries! statistics, the optimistic assertion that progress is being made looks unconvincing, Interferance by the World Bank in the internal affairs of countries receiving aid is made clear in the statement that many of the developing countries are now better able to make efficient use of aid. They have adopted "more effective economic policies and are better at encouraging private investment, production, the programming of government investments, the regulation of exchange rates and prom otion of trade." This report shows just how little the underdeveloped countries are being paid for their complete abandonment of any possibility of socialist development, The hypocrasy of the Labour Government in creating a Ministry of Overseas Development with none of the resources needed to tackle the problems before it needs to be made very clear, The OXFAM mentality may satisfy those in the Liberal Party but a far more radical solution to the problems generated by the neo#Imperialism of Western capitalism is required of a party with any pretentions to socialism.