David Sogge: Comments on the strengths and silences of the WRR report

Development Policy20 Jan 2010David Sogge

In a closed meeting recently, I heard a senior figure in the Dutch aid/development world (high among ViceVersa’s ‘top tien’) remark, in despairing tone of voice, that there had been no serious critique of Dutch aid since Paul Hoebink’s ‘Geven is Nemen’ in 1988. As the Dutch say, that’s a truth like a cow. With the WRR report, that needed critique is now at hand. It is in any case more worthwhile, being less pretentious and more ambitious, than much of what passes for critique in the Netherlands in recent years – both from the denouncers (‘Aid-isn’t-working-so-let-(financial)-markets-do-the job’) and the defenders (‘Aid-isn’t-working-so-let’s-give-more-of-it’).

On a rapid, and selective, first reading, the WRR report met my hopes for something well written, fresh and largely free of conventional aid talk and dogmas. It was gratifying to see how it taps critical intellectuals such as Polanyi, and gives Samuel Huntington the heave-ho. It ignores fundamentalist heroes such as Hayek. Yet that may have been a missed opportunity, since Hayek’s ideas have influenced aid policy far more than Polanyi’s and, with heavyweights like Easterly pushing them, seem destined to remain influential. The report’s compilers cast their research nets widely, though largely in Anglo-Saxon waters. They have positive words for, but make virtually no use of, research and analysis from critical watchdog organizations –- the very kind of organization, they conclude, that the Netherlands and other aid givers need more of.

Among the report’s many strengths, perhaps the most important, and in official circles the freshest, appear in its insistence that aid is dwarfed by other forces and flows, such as capital flight. When all financial flows (including aid, investment and remittances) are added up, sub-Saharan Africa remains a net creditor to the rich; per saldo in 2008, Africa’s contribution to Western, mainly American, interests was around US$130 billion – and that figure reflects only what was officially registered. Net flows from Latin America, Asia and the former Eastern Bloc are even larger. The WRR report could have explored in greater depth the issue of who is really aiding whom.

Nevertheless, the report may be the first document from an official institution in the Netherlands to argue that curbing illicit flows – and it names corporate transfer pricing, the heart of the matter, by name – would have a more positive impact than adjustments to aid. Yet it is largely silent about the Dutch role in facilitating these flows. It notes that Sweden is a major weapons exporter, yet official Swedish statements about coherence make no mention of that fact. Much the same can be said about offshore financial services, including money laundering, under Dutch jurisdiction, and official Dutch statements about coherence.

The report insists on the need to pay far more attention to national contexts. It rejects the all-encompassing paradigms, the coercive mantras like ‘there is no alternative’, and the ‘best practice’ formulas that accompany them. This is hugely welcome. But it would have been more convincing if the compilers had held more firmly to their skeptical, probing approach on a number of fronts. For example, the report seems to accept at face value the obituary notices for the Washington Consensus. Yet news of its death has been highly exaggerated, as close observations on Bretton Woods programmes by heavyweights like Dani Rodrik , think tanks and NGO watchdogs make clear. Similarly, it appears to have high regard for knowledge produced by the World Bank. Yet not long ago, a high-level panel of independent economists, led by Princeton’s Angus Deaton, used words like ‘undistinguished’ and ‘not remotely reliable’ to describe much of the Bank’s economic research.

Finally – though there’s much more to read and comment on – among the report’s numerous and perhaps necessary silences, one stood out. While offering the reader brief quite yet sophisticated and convincing pieces of political sociology, such as about Hutu and Tutsi interests in Rwanda, there was little if any analysis of the central and fundamental geopolitical interests that have framed and driven the Western aid system for more than half a century. The silence was thus about the role of the world’s hegemon, the United States, vis-à-vis Europe and the Netherlands in particular. Such an analysis was the basis, after all, of a recent joint statement arguing for European autonomy from the United States – by no less than Messrs Lubbers, Voorhoeve and Pronk. Evidently that Atlantic relationship was a bridge too far.