ABSTRACT: Large sections of the dossier published in March which revealed in the insufficiency of the system of aid to the Third World and posed the need for a total change of policy.

The failure of Italian public aid to the developing countries.

(NOTIZIE RADICALI No. 66, March 14, 1984)

Myrdal's Appeal

Should state financing for development be stopped? Gunnar Myrdal, Nobel Prize winner for economy in 1974, posed the question in 1980. Noting the counter-productive effects it was having in the developing countries, Myrdal speculated on the advisability of stopping aid for development and limiting it to emergency aid in times of famine.

Myrdal's provocation - such it seemed, also because referring to Sweden's co-operation policy, the most advanced in the world - produced no results. And yet it did not come from an enemy of international co-operation but from one of its leaders who had been prominent in the debate on under-development ever since the Fifties.

His position was later taken up by other scholars such as Bauer and Yamey. (1) Still others enclosed themselves in pessimism, like Joan Robinson: "... today it is not easy to be optimistic about the situation of the Third World. The only contribution that economic analysis can hope to make is that of removing a few illusions and to help men of good will understand exactly what situation they are in...". (2)

It is a whole school of criticism which has made very important contributions to the study of under-development and has

very much revived interest in the theoretical schemes, the operational sites and the administration of international aid, but proposing new and more effective approaches. The critiques of these scholars have never been dictated by moralistic visions nor have they been mere expressions of solidarity with international relations, but are based on evaluations of an economic and strategic nature. Now they have shown that they are defeated. It is important to ask and understand why that has happened.

When Ideas Do Not Change the World

On a cultural level they have affirmed their ideas. They have exposed the economic prejudices which justified the pretension to transplant to the developing countries the same development itineraries of the Western economies. Under the label of "development" policies have passed and continue to pass which are unsuited to the specific problems of the developing societies with the tragic failures that everyone is aware of.

The study of the realities of under-development has put into discussion the cult of traditional economic indicators, has induced concreteness in economic analyses and has worked out tools and approaches appropriate to the diversity of the problems.

Thus the primary goals of the distribution of resources and the satisfaction of the essential needs of the populations have been identified as active factors in the quality and even the rhythm of development. And little by little, as the old economic growth policies revealed their unsuitability for breaking the vicious circle of under-development, poverty and malnutrition have been identified as the major obstacles to the optimal use of resources and so to development itself.

By now this critique is solidly anchored culturally. But it has not succeeded in changing the world. It has clashed with the power of established interests and today appears more helpless than ever. Neither its arguments, in fact, nor the failure of aid have been enough to make a dent in the basic prejudices of economists and politicians. These prejudices are hard to kill because they are useful to the interests dominating in the developed countries and in any case are an essential part of the cultural baggage of the ruling classes.

The attack on poverty, understood as the fly-wheel of development, has been neutralised with the formula of "investing in man", a formula lacking in theoretical validity that leads back towards the generic an intuition that demanded rather the overturning of the traditional approach. The word "investment" is enough to put back into circulation the old concept of "development" with its indifference to the singularity of situations and above all the most urgent needs which are incompatible with long-term projects. In other words, another curtain, more subtle and dangerous, lowered to ward off the need to understand the reality and to act in consequence.

The formula of "basic needs", banalised by a general consensus as well as the facade of one, has thus been re-absorbed by the ideology of "development" to be pursued as the indirect effect of that international economic order that has produced and nourishes under-development.

A System Out Of Control

Shielded against all risks of innovation, public aid to development continues to expand in complete autonomy. But it is a system which by now is blind and out of control, conditioned by every kind of stability and sustained by very strong aggregations of interests that embrace industrialists, consumers and workers of the industrialised countries as well as a great part of the ruling class in the Third World.

In recent years an interminable bureaucracy is depositing its layers on this activity - a real jungle of agencies and sub-agencies with thousands of employees and huge administrational budgets whose own maintenance absorbs a significant part of the "funds for investment". With time this largely parasitical agglomerate has become used to living the tragedy of under-development and hunger and has become a potent factor in "counter-productivity" (in Illich's exception) and in resistance to all attempts at innovation.

Other obstacles, however, are harder ones. They are the mingling of aid with the strategic and commercial interests of the developed countries; they are the use of aid as a tool of foreign policy and economic and diplomatic war. This is a perversion of goals which well explains the insignificant or actually counter-productive effects of aid policies and the worsening of the situation which derives from the dependence of the developing countries.

One need only think of the foreign debt of these countries which by now has reached 800 billion dollars. For many of them the debt, which in 1982 exceeded in toto 130 billion dollars, represents 70% or more of their income from exports. It is an enormously heavy burden on their development prospects, especially for the poorest countries, but it also is a threat to the international financial system.

Even more serious is the involvement of Third World countries in the clashes between blocs with the "importation" along with arms from the northern countries of aggressive policies. Today many developing countries are dominated by military-industrial complexes that earmark ever-greater amounts of resources for the purchase of arms, thus aggravating inflation and foreign debt and leaving parts of the population in total poverty.

International aid is one of the indirect but prime factors of the expanding military expenditures of the developing countries, and so, from this point of view, is one of the main obstacles to betterment of the standard of living of the people. That many Third World regimes pursue policies that conflict with the basic needs of man is not a secondary dilemma of underdevelopment.

According to a recent study, in 1980 no less than 54 developing countries with a total population of one billion people were governed by military regimes. Since then the situation has certainly not improved. And it is obligatory to make mention of the abnormal increase in refugees - official figures put them at 14 million - (3) a drama that recalls the much more limited one of stateless persons who wandered from one European border to another between the two wars.

The "Realism" Of Common Interests

Today international aid policies excite a skepticism analogous to that which was felt about arms control negotiations. Their obvious sterility has favoured the collapse of multilateral aid and the withdrawal of important countries - starting with the United States. The economic recession and the persistent after-effects of the petroleum shocks have done the rest.

It is not only a question of capital: If we have set out on the road to a defeat of historic proportions, it is not only because of insufficient resources being earmarked for developing countries. It is certainly true that development aid has sucked up hundreds of billions of dollars in the last twenty years. If, therefore, they had been spent in the proper direction we would not today be seeing the developing countries even more dependent on the industrial North; we would not be seeing the increase in regional and class imbalances, the expansion of absolute poverty and death from starvation, the continuous decline of the quality of public life itself, factors which are not secondary to the prospects of development.

To limit the discussion to the level of the financial flow means to get caught up in an alternative with no exit: "Reaganism" on the one hand, and on the other a position of solidarity with the interests that dominate the international aid system.

This is confirmed by the recent research of Leontief and Duchin: even if the rich countries were to convert into development aid the resources that today are spent on armaments, by the year 2000 the situation of the poorest Third World countries would remain critical unless there were profound political and social changes in the countries receiving aid. (4) This is only to ascertain the futility of partial adjustments in a mechanism governed by counterproductive logic. What we must do is to set up again the policy of international co-operation with a radical change of goals, of resources and of methodology. Scientific analyses, new political positions and ideas of an ethical and religious nature are beginning to reach agreement on this requirement. But an objective strong enough to affect the "realism" of the established interests is needed.

The Italian Case: Waste and Welfarism

The idea of stopping public aid for development, which Myrdal has proposed for Sweden, would be an even more necessary step for Italy in order at the same time to open a new phase. In the negative picture of international aid, the Italian case is no exception but if anything presents even more accentuated distortions. This is unequivocally shown by the analysis of the Department for Development Co-operation which we will present in this document.

The summary nature of the official data has led us to set rigid limits to the investigation and to renounce all claims to completeness. Nevertheless, the elements gathered here are more than enough to warrant a serious and definitive evaluation. However, for an exhaustive analysis we recommend to the reader Allesandro Monti's recent study <> [The Political Economy of Public Aid to Development. The Italian System of Co-operation With Developing Countries: A Critical Analysis] (5) which was of great help to us. The picture emerging from it is that of an irremediable disaster. Apart from the inadequacy of the funds made available, still far from the OCSE [Organizzazione per la Cooperazione e lo Sviluppo Economico] average and from Italy's commitments to international organisations, the Department has shown a very meagre capacity for spending, having succeeded in reali

sing effective payments not more than 50-60%

of the funds set aside. Clearly it has tailored the public aid expenditures to its own operating capacities instead of bringing its organisation up to the requirements defined on the political level.

In truth, all of the Department's policies contradict the indications fixed by public aid for development:

- extreme dispersion of action on a very wide range of countries that cover half the earth's surface and more than half the world's population;

- the distinct prevalence of laughably small amounts of aid, less than 50 million;

- choosing countries for aid on the basis of our needs for petroleum sources and the possibilities of supplies and commissions, in clear opposition to the directives of the CIPES [Comitato Interministeriale per la Politica Economica Estera, or Inter-ministerial Committee for Foreign Political Economy];

- tardy food aid of bad quality which the beneficiary countries have not seldom refused in the past;

But above all there is the impossibility of verifying the effects of the aid and evaluating to the smallest degree its impact on the economies and societies of the beneficiary countries. It is true that the question is to a great extent rhetorical. But it is sufficient to make evident that the Department is not only not able to evaluate its own actions and correct its errors but, even more, works in a casual manner without any programme and according to the demands it receives from the outside. There is a vacuum of planning and decision-making that appears to be functional only on the level of small-time aid and to favour Italian enterprises exporting arms. And finally, the wasting of financial resources is not to be underestimated.

A Past Hard To Do Away With

It would be a grave error to underestimate the significance of the analyses we have previewed in summary fashion, and not to draw the proper conclusions from them. These are not policies which have failed due to administrative malfunctioning alone. The problem is qualitatively different: under pressure by the Radical campaign against death from starvation, the Italian political class, very determined not to give in on the main point, has preferred a mitigating action: an increase of funds to revitalise the traditional sector of development co-operation. One must note that this effort has had a single result: to show that the old policy, its goals and its very methods is dead once and for all.

The proof is in this affair of the Department itself. It is a matter, in fact, of an operating method conceived by law no. 38 of February 9, 1979 ("Italian Co-operation With the Developing Countries") before the start of the Radical campaign and within the framework of a bland relaunching of the traditional aid policy which Italy had always neglected by hanging on to the coat-tails of the OCSE. It was thus intended to be an organism with limited commitments that were to be strengthened in the long run in tandem with our policy of public aid for development.

One knows that things happened differently. Shortly after its establishment, in fact, the Department had to face up to a sudden increase in funds for development aid and new beneficiaries indicated by Parliament to offset death by starvation even if in a confused and contradictory manner. These were prohibitive tasks, and above all improper ones for structure that started out loaded with the defects and muddling of the ministerial bureaucracy but, at the same time, weak and without political authority and so helpless in the face of pressure.

The relative relevance of the funds did the rest unleashing a myriad of large and small interests, annulling any ambitious programming.

It is in this context that the Department consummated its stagy failure, which also repaid the political groups for their timidity and bad consciences.

One might say that the Department's failure was the last spasm of the past - that of Italy's withdrawal from the international aid system - and not the beginning phase of a new policy that is still entirely to be defined.

Certainly full light has to be shed on the deviations and irregularities that occurred within this structure. There are combinations of interests which must be made clear - part of the personnel of the Department coming from firms that today are beneficiaries of commissions for furnishing plants and services to the developing countries, preferences with regard to certain firms and certain countries, substantial doubts that even this sector has been immune from corruption by the parties... all phenomena that proliferate where there are large funds and the absence of clear goals and effective control measures.

There is an urgent need to eliminate them, also because the public becomes aware of them and they are particularly odious in cases of total poverty and death from starvation. It is also necessary to do this in order to regain the jurisdictions which really do exist for a new policy.

But for this reason too there is not much sense in lamenting over the inability of the Department to gird itself quickly for a more elevated from of action. It has not done so, but it ought not even have been able to have do so, because one cannot overcome on the administrative level the deficiencies that are in the first place political.

It makes no sense, it is unjust towards those who were responsible for the Department and it is dangerous because it can lead to new and worse errors: such as, for example, to seek to resolve - or to evade - the much more important problem of a new policy through a few administrative changes.

Four Thousand Billion For Burning?

To stop aid means to depart in another direction: to depart precisely from the point at which Myrdal and the others stopped because they did not manage to find the connecting link between theory and political practice. And this is where the historical importance of the Radical's campaign fits in. Putting on the order of the day death from starvation as an immediate political problem, it furnished the point of leverage that was lacking to assure the passing from a theoretical critique to a concrete policy for life and development and for setting the aid system back on its feet. And it broke the false alternative between emergency and development, between short- and long-term programmes. A response to the life-and-death starvation emergency is the concrete goal on which to base the transformation of the aid system. It is the only goal with the kind of political force capable of causing a break with the interests and the status quo that today oppress public aid for development; the only one that can rally

a new bloc of non-parasitical interests and, at the same time, win the consensus of the peoples of the rich nations above and beyond their natural egocentricities and the defence of their living standards.

For Italy too it is a legal obligation in conformity with the goals of international solidarity contained in our ratification of the United Nations Charter, specifically indicated in art. 38 of February 9, 1979, subsequently confirmed and specified with assumption of commitments at the UNO, OCSE, and the EEC after much deliberation in Parliament.

It is a political obligation, not only towards the Third World nations but also towards Italian taxpayers, because such a waste of resources in intolerable in the country's critical condition.

As of January 1, 1984 four thousand billion lire were available for development aid and the fight against starvation in the world. By 1990 more than 20 thousand billion will be earmarked (in current lire).

Are they to be burned just as three thousand billion have been already in recent years?

NOTES

1) P. Bauer and B. Yamey, <>, in <>, October 1981.

2) <>, Laterza, Bari, 1981, p. 177

3) Cf. L. Campiglio, <> in <>, Vita e Pensiero, Milan, 1983, p.14.

4) W. Leontief e F. Duchin, <>, Mondadori, Milan, (being published).

5 Ispe, Quaderni no.28/29, Rome, December 1983.