The Dark Side of Foreign Aid

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The Dark Side of Foreign Aid

A new book considers the realities of foreign aid to Cambodia, and its implications for the development of democracy.

Foreign aid has a long track record. The biggest upside appears to be the injection of large sums of money into developing countries otherwise gripped by poverty, war and conflict. For better or worse, that money should, in theory, improve lives and raise people out of poverty, leading to sustainable growth and development. The unfortunate truth, however, is that foreign aid has often presented more challenges than opportunities to aid recipients. In the sixty-plus years aid has been mandated by government – versus relying solely on private donations – we’ve seen small improvements across the globe, from reducing poverty to slowing population growth to curing and preventing diseases. Progress that otherwise would have been absent without an outpouring of foreign support.

However, the impact from aid has not been proportionate to the amount of money donated. Foreign aid’s biggest downside is that no clear, effective system has been put in place to hold aid recipients and their governments accountable for resources illegally taken from public sector coffers – a long-standing, and still very present, trend from Asia to Africa to Latin America/Caribbean to Europe. Unfortunately, the absence of that system reinforces social inequities and perpetuates cycles of political abuse that has led to a sophisticated new form of authoritarianism – one that empowers the elite few, while keeping a majority of people in abject poverty.

Discussions about foreign aid remind me of James Bovard’s nominal 1986 article, “The Continuing Failure of Foreign Aid.” Analyzing world events over a period of more than 40 years, Bovard argues convincingly that the success of foreign aid is often measured by intentions, not results. Using the U.S. as one example, Bovard writes, “[F]oreign aid has routinely failed to benefit the foreign poor…the U.S. Agency for International Development [USAID] has dotted the countryside with "white elephants"…the biggest…of them all – a growing phalanx of corrupt, meddling, and overpaid bureaucrats.”

This trend is apparent in countries like Cambodia.

Sophal Ear, an assistant professor of national security affairs at the U.S. Naval Postgraduate School, is among a handful of scholars to write persuasively about the dark underbelly of foreign aid in Cambodia. His argument, clearly presented in Aid Dependence in Cambodia: How Foreign Assistance Undermines Democracy, is this: “[E]ven though aid is meant to encourage development, aid dependence results in bad governance, stunting development.” Two pages later, he goes on to note, “I am convinced that, on balance, the long-term effects of aid dependence have made it difficult, if not impossible, for Cambodia to take ownership of its own development.”

Ear takes an important and much-needed step beyond the traditional practice – among Cambodianists, sympathizers and self-proclaimed rebel princesses – to apply sweeping statements, if not judgment calls, about the political and economic challenges of present-day Cambodia, without providing evidence to substantiate those lofty claims. For seasoned analysts and scholars, Ear’s rigorous analysis is useful and appreciated. However, for the casual reader, he misses important teachable moments that could raise greater awareness around the issue. Ear should have taken a more moderate approach in his writing to appeal to a variety of audiences.

Ear doesn’t link the history of foreign aid to present day challenges in Cambodia. For example, historians have long suggested that foreign aid has evolved from colonialism – with colonizers doling out loans to local governments – and that effort accelerated after World War II, specifically as U.S.-led efforts to rebuild Europe and Japan from the ashes of war. During that period, the United Nations, the World Bank, the International Monetary Fund and other global institutions were created to assist with development. Understanding history enables readers to make sense of contemporary challenges with the hope of identifying practical solutions for the future.

And because the U.S. has been foreign aid’s largest benefactor since the 1940s, it would have been useful to understand Washington’s role in Cambodia’s foreign aid dilemma – despite not being the country’s largest aid donor. According to the non-partisan group, Face the Facts USA, an affiliate of the George Washington University, the U.S. contributed $38 billion to foreign aid in 2010 alone, and continues to be the world’s largest donor country. China has also joined the fray, doling out large amounts of unconditional loans often attractive to post-conflict countries with weak institutions. Ear could benefit from asking questions like, “How much has America’s efforts in Cambodia’s aid climate changed over the years?” and, “To what extent has Cambodia’s growing relationship with China – and its dependency on unconditional loans – helped or hindered economic development and democratic consolidation?”

However, Ear’s take-no-prisoner approach to identifying the root causes of foreign aid’s failure in Cambodia was evident.

For example, he takes, perhaps with intentionality, one liner “moral highroad” jabs at foreign aid donors and Cambodian government officials. Those jabs are laced throughout the book and come randomly at the end of paragraphs. Saying things like, “The right road must be chosen to turn bread and circuses into wealth and prosperity,” in pointing out the superficiality of today’s economic growth, and “Perhaps the secret to happiness, then, is to have low expectations” in referencing the state of democracy, without much of an explanation that follows raises concerns – though his comments aren’t without merit. It contradicts the larger goal of the book, which appears to present objective data to identify specific aid-related challenges in Cambodia. Why, then, rely so heavily on empirical data?

Taken together, however, Ear’s book makes an important and timely contribution to the field. It raises awareness around Cambodia, and sheds light on what is otherwise widespread apathy and complacency. Those two actions, however, are increasingly called into question, as Ear has done persuasively, given the role they play in legitimizing illegitimate governments, whereby a small group of elites dominate the entire country. His book attempts to remove the veil of ignorance from an issue that has largely gone ignored, in part because of Cambodia’s overall insignificance on the global stage. There’s also reason to believe that foreign and local stakeholders aren’t willing to challenge the status quo of rampant aid failure, in a futile attempt not to rock the diplomatic boat.

But Ear takes this matter into his hands. And why shouldn’t he?

Peter Tan Keo is an independent analyst and founder of think tank Global Strategy Asia.  He was educated at Harvard University, The University of Chicago, and is completing a doctorate from Columbia University. His research examines post-conflict reconstruction, education, and youth empowerment in fledgling democracies. Follow his blog at For questions or comments, please reach him at [email protected].