60% of Alleged Aid is Phantom says NGO

(OneWorld) - International development organization, ActionAid has lashed developed nations for providing aid that serves their corporate interests, pushes privatization in recipient countries, funnels money to rich consultants and leaves the poor countries heavily indebted.

At a press conference in New Delhi on Thursday to release its report – RealAid - ActionAid alleged that two-thirds of the donor money is not available for poverty reduction in developing countries as it goes back to the donor countries. Some of the countries where research was conducted include India, Vietnam, Cambodia, Uganda and Ethiopia.

International director of ActionAid, John Samuel said: "In 2003, $65 billion was given as aid to the poor countries of which only $27 billion reached the poor countries. The USA and France, two of the world's largest aid donors, give the maximum phantom aid. If these countries provide one dollar as aid to the poor countries, almost 90 cents go back to them."

The international development organisation also criticized the G-8 countries for falling short of international aid targets. ActionAid Country Director Babu Mathew said: "The official international aid target of 0.7 per cent of national income of the rich countries is not being met and in 2003 was only 0.1 per cent of their national income."

"A classic example is the tsunami catastrophe in which countries like Australia, France, the Netherlands, the USA and the European Commission have delivered between 7% to 33% of the pledged aid."

Presenting the mechanisms that the rich countries use to manipulate aid for their own benefit, Samuel said: "The aid is in books, but not in actuality. A big portion of the aid is given to consultants in the form of technical assistance. Nearly 18 $billion dollars of aid was given as fee to consultants from the UK, the USA and Canada. Another portion of the money is 'tied aid', in which the donor dictates to the recipient country of how and where to spend the money. In such cases the USA will ask India to buy anti-retroviral drugs only from American pharmaceuticals under its AIDS/HIV aid programme."

Samuel alleged that in the last two years a large part of the aid meant for eradicating poverty has been transferred to buying arms and ammunition, even as 800 million people go to bed hungry everyday in India and sub-Saharan Africa.

"Over the last two years, most of the aid has been directed towards buying arms and ammunition," Samuel said. "Aid diversification for military purposes is being done by the donors, particularly the US, especially after 9/11," he said.

The RealAid report says that aid is being used to privatize the water and energy sectors and open markets in developing countries. In India it is being used for modernization of harbours, modernization of fishing and for promoting beach tourism.

The report says that some of the poorest countries are spending upto 85 per cent of their national budgets on debt servicing, or paying off interest to the rich countries for development aid. RealAid asks for a new international aid agreement to make aid more accountable and effective by setting up a new UN Commissioner on Aid....

See: ActionAid Report on G8 Summit [pdf]