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"LORDS OF POVERTY" BY GRAHAM HANCOCK
A Book Review by Sanjay Manandhar
This book is a scathing account of the "free-wheeling lifestyles, power, prestige and corruption of the multi-billion dollar aid business." The central concern of the book is how money from Western citizens are involuntarily taken (in the form of taxes) and used indiscriminately by middlemen in aid agencies and development banks in the name of the poor of the Third World. This book illustrates that this is no more than well-disguised kickback for home companies, a carte-blanche for paying themselves hefty salaries and perks and supporting corrupt, inefficient and morally wrong practices of Third World governments and elites. The book is aptly called Lords of Poverty because it is about the people who perversely manipulate the generosity and taxes of rich nations and pay lip service to poverty.
The attack in this book is focused on official aid agencies, such as the UN, USAID, UK’s Overseas Development Administration (ODA), the World Bank and the IMF and not on voluntary agencies such as Oxfam. The rationale is that voluntary agencies get their money from voluntary contributions (not taxation) so there is more scrutiny of the use of money. In addition, the sums are smaller and the harm done is not significant and are sometimes even beneficial. Nonetheless, I would have liked to see more coverage of some voluntary organizations as well, especially those that are fraudulent and those that peddle evangelism in the name of poverty. In essence, they are also Lords of Poverty but the book intentionally skims their role. The official aid agencies on the other hand deal in millions or billions of dollars but are not accountable for the use of the money. There are strong vested interests in preserving the status quo in which aid continues to flow through their fingers, in essence, upholding bureaucratic survivalism. These agencies are also terribly secretive and except for a few marketing reports, most reports are classified "internal" or "classified."
The Development Business
Hancock goes through a lot of pain to prove that development aid is a business. It is a business where the poor of the South loose, but all others in the cycle win. And it is big business with a lot of money ($60 billion in 1989) involved. From many accounts, documents and data, he manages to prove the paradox: poverty is good business. In addition, hunger, famine and the accompanying scramble to provide relief is also good business. Disasters have become symbols of fundamental decency and western righteousness and kindness. Yet the aid business is not without its share of downright fraud. The Hunger Project, for instance, almost sends no money to the hungry and starving; of the $6.9 million raised in 1985, it passed $0.21 to other organizations doing hunger relief, the rest was spent in the US. International Christian Aid failed to send a single cent to Ethiopia of the $18 million it raised in 1985. I t must also be noted that much of the disaster aid is barely tangible to the victims. At the height of the Sudanese drought the $150/day Khartoum Hilton was packed with "disaster experts" on fact-finding missions. While squads of evangelists came to preach and experts came to "assess the situation" not a single well-drilling rig actually arrived.
Arrogance and Paternalism
There is a strong component of mercy involved in aid; thus, it is no more a neutral material aid but something "we the rich" do to "them" the poor. The aid agencies are riddled with this euphoric feeling of compassion that are "inherently ethnocentric, paternalistic and unprofessional." In 1986 during the Ugandan refugee crisis, the aid "agencies drafted many inexperienced and less qualified personnel from the US and Europe to run the agricultural program for the refugees. The ad asked for applicants who would be able to teach Ugandan farmers how to grow sorghum, sweet potatoes, and cassava, whereas the most serious problems the refugees faced was the lack of hoes and seeds." Examples like these truly add value to the superb work of the book.
The SAL Cartel
Hancock introduced a very important concept called the debt-service-ratio. The development banks are all to often willing to extend loans to service the loans or even allay the pressures of paying the interest. However, this comes with more than the price tag of the money lent. It creates heavy dependence on the development agency and the countries that back that agency. Very often the strings that the development banks attach are in the forms of Structural Adjustment Loans (SAL). These required the recipient country to make sweeping policy changes. To me, the manner in which the book introduced the SAL and explained its insidious nature is a very strong point of the book. The book goes on to say that three-fourths of the countries in Africa and Latin America have not experienced growth as promised by the SAL, but decline in per-capita income. Interestingly, the conditions never include human rights, cut in military spending or control of graft and corruption. The two SAL preachers are the World Bank and the IMF which are really Siamese twins joined at the hip that lash back with a vengeance against those that dare to challenge them.
Hancock also lashes out at the UN and points out in stunning detail the mediocrity and inactivity that has overshadowed its once hallow character. By pointing out where the operating budget of the UN comes from, he shows who really controls the world body. Of the UN’s $6 billion a year budget, 30% contribution comes from the top three (USA, Germany and Japan); it’s 80% comes from the top 27 countries. In addition, the UN has a very strained in-family relations among its many organizations that are over-staffed and have much wasteful duplication, which the book elucidated beautifully.
Aid for Whom? Not the Poor, For Sure!
The book is full of accounts of how aid benefits the citizens of the North and their elite allies in the South. In a very long chapter Hancock soundly disproves those that naively believe that foreign aid is inherently good and has a great generous component. Hancock explains what is now a well known (at least among the development set ) common practice: the expatriates shower down upon the South, not with any magnanimous desire to help but, often for the simple self-interest of furthering their own careers and making hefty salaries and collecting "hardship allowances" and tax breaks. Very often development workers are apt to "sniff out projects" for themselves, for consulting firms or for equipment manufacturers back home. Today 70% of US aid and 80% of UK aid (Pound 850 million total) does not leave these countries. In the US, when there were cries to reduce foreign aid, USAID correctly explained "Foreign aid does not cost, it pays!"
As a person of the South myself, the contents of truly hard hitting books such as this one is a source of extreme revulsion. Through and through the book has provided detailed accounts of harm done in the name of poverty. If anything, the book might be presenting to much data for the casual reader. The book has also skillfully delineated the realities of condescension and paternalism shown to the poor of the South by Joe Blow of the North. Almost as a conclusion, this book has shown unequivocally that aid does more harm than good; it borders on colonialism and no aid is better than any aid. This book could balance the negative and angry tone by taking a look at the future. It could suggest some ways to rein in the SAL cartel and ways to introduce more accountability and effectiveness in development aid. A "must-read" nonetheless!