WASHINGTON, D.C. — When it comes to U.S. foreign assistance, it is not unusual to see claims about how corruption, inefficiency and misguided spending are a hindrance more than help. While this is not as extreme as some make it out to be, there is some truth to these claims. There are several ways in which foreign aid generates less-than-desired results. In some cases, it is just the product of unintended consequences, and in others it is the result of misguided policies that do not take into account or thoroughly analyze the needs of each specific country.
An example of the first category is the aid provided by the U.S. to the Lebanese Armed Forces (LAF). The U.S. provides material and financial assistance to Lebanon to strengthen its security institutions and counter Hezbollah’s militia forces. However, this well-intended help might actually be producing the opposite results.
Aid policies toward Lebanon are indirectly helping Hezbollah and commanding continued violations of international law. While the Lebanese security forces strive to portray themselves as guardians of the country’s sovereignty and neutral peacekeepers between the Shia Hezbollah group and its Sunni led rivals, deep domestic polarization makes this task almost impossible.
On the surface, the work of the LAF is part of the framework that comprises state action. However, to understand this dynamic, it is imperative to look further into a 20-year history of patronage, coercion and manipulation by the Syrian government during its occupation of Lebanon. This is evident in the recent performance of the LAF at the Syrian border.
While the LAF is commanded to protect Lebanese citizens and aid with the flock of Syrian refugees entering the country, unofficially they have operated as a Hezbollah-LAF counterinsurgency targeting Syrian opposition forces. Moreover, U.S. foreign aid is also unintentionally undermining the efforts of the Lebanese security forces. Growing resentment within the armed forces due to favoritism toward one group, in this case the Shia, threatens its cohesion.
In the second category we find foreign aid funded projects that misguidedly perpetuate trends that hinder development. Several new investments by the International Finance Corporation (IFC), the World Bank’s investment corporation, are indeed perpetuating inequality rather than alleviating poverty in the newly established democratic country of Myanmar, formerly known as Burma.
According to the rights group U.S. Campaign for Burma, the work of the IFC needs to be carefully analyzed before making more investments in the country.
“The IFC has the responsibility to use its financial influence to promote transparency and reform in Burma’s corrupt business environment,” said Rachel Wagley, the group’s policy director. “Regrettably, the IFC’s recent investment proposals seem to mark a deviation from the IFC’s earlier objective to bolster the growth of micro-finance in Burma and may instead exacerbate socioeconomic inequality in the country.”
Following the repeal by Congress of sanctions prohibiting investment in Myanmar, and given that 30 percent of its population lived below the poverty line, the IFC determined that the role of its office there would be primarily poverty alleviation. To accomplish this, it proposed five investment projects aimed at this goal. However, the majority of the funding is being diverted to projects to build upscale hotels and a business complex. The argument made by the IFC is that this is much needed infrastructure to attract further investment to the country. Another important chunk of funding would be allocated toward a program run by the Yuma Bank aimed at facilitating financing for small and medium scale businesses to fuel Myanmar’s private sector.
Nevertheless, according Jennifer Quigley, U.S. Campaign for Burma executive director, “the issue isn’t a lack of funding but restrictions that make sure only a few benefit monetarily from foreign trade and investment.” More importantly, IFC’s investment policies has mainly targeted urban areas, while 70 percent of Myanmar’s population live in rural areas and dedicate their time mostly to agricultural activities. This is further widening the gap between urban and rural income levels and perpetuating social inequality.