Waylaid Dialectic

April 25, 2011

Aid and Corruption

Filed under: Aid,Governance — terence @ 9:24 am
Tags: , ,

A couple of posts ago I wrote:

In the case of government donors additional problems include:

1. The fact that aid takes place overseas, which provides politicians plenty of leeway to do things such as give aid in a way that benefits powerful constituents of their own.

Over at the Guardian’s Poverty Matters blog, a must read post by Mark Weisbrot, highlights the fact that it’s not just politicians who take advantage of this leeway.

[L]ast December…Lewis Lucke, a long-time US Agency for International Development (USAID) official turned influence-peddler, sued a consortium of firms operating in Haiti for $492,000, for breach of contract. As Lucke would have it (sorry!), he was promised $30,000 a month, plus incentives, to use his influence to secure contracts for these nice fellas. He got them $20m worth of contracts, but they cut him off after two months. The defendants in the case are Ashbritt, a US contractor with a questionable track record, and the GB Group, one of the largest Haitian conglomerates. Together, they formed the Haiti Recovery Group, which they incorporated in the Cayman Islands, to bid on reconstruction contracts.

Lucke was well-positioned for the job, having formerly been in charge of the multibillion dollar reconstruction effort in Haiti for the US government. (He was also previously the USAID Iraq mission director; we know how that reconstruction turned out.)

Politicians here are quick to blame the Haitians for the lack of progress since the earthquake, and corruption is often assumed to be exclusively a Haitian problem. But it is clear that some of it comes from outside. Maybe a lot.

For example, influence-peddling might help to explain why not a single US government contract for Haiti’s reconstruction in the last five months has gone to a Haitian company. In fact, out of $194m awarded since the earthquake, just $4.8m, or 2.5% of the total, has gone to Haitian companies. USAID has given out $33.5m, none of which has gone to a Haitian company; some 92% of USAID’s contracts have gone to Beltway (Washington, DC, Maryland and Virginia) contractors. Now, isn’t that a geographical oddity? About 15.5% of contracts in January 2010 were “no bid”, which presumably could be justified because of the urgency; however, this proportion has increased to 42.5% over the last five months.

Since writing my previous post I’ve been pondering structure and agency in the world of aid. In that post I argued that a lot of aid’s problems were structural issues, and had nothing to do with the moral failings of Irish pop stars or NGO staffers. I argued, for example, that ‘poverty porn’ exists because it works (increases donations) and that it works because of the limited extent to which most people who donate to NGOs think about or understand development. I also argued that corrupt aid giving by government donors takes place because the impacts of aid are felt in other countries, and aren’t well understood, which affords actors in donor countries space to behave unethically.

I still stand by these points, but it is worth noting that not all NGOs resort to ‘poverty porn’ and not all former USAID staffers become aid brokers. Structure matters: the structural problems of US politics go a long way to explaining why US Aid is worse than Swedish aid, for example. But even within these structures people and entities do get to make choices, up to a point.

Which is another way of saying my previous post was all about trying to understand the hurdles that prevent us from giving better aid. It definitely wasn’t about exculpating people like Mr Lucke.

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