David Cameron's op-ed in the Wall Street Journal yesterday morning lays out his "golden thread" vision of development and foreign aid. This is an approach to development clearly pitched to political conservatives.
"There is an old debate between those who say the way to tackle global poverty is to spend more on aid and those who believe instead that the solution is to deal with the weak institutions, corruption and conflict in developing countries. The truth is that right now, we need to do both."
Cameron's golden thread -- the focus on institutions, corruption, property rights, and transparency -- is also the tie that binds many conservative politicians' approaches to foreign aid, on both sides of the Atlantic. But while conservatives tend to agree on the importance of this golden thread, they’ve had wildly divergent views about what foreign aid can do to strengthen that thread.
Consider three cases: Mitt Romney, George W. Bush, and now David Cameron. Romney is bullish on the power of aid. Bush was surprisingly pessimistic. Judged against these alternatives, Cameron’s approach may provide needed balance.
Romney's big foreign policy speech in October held up foreign aid as a powerful tool. He declared that we need more carrots and sticks in U.S. foreign assistance, to encourage receiving countries to clean up their act and adopt better policies.
"I will make further reforms to our foreign assistance to create incentives for good governance […]And I will make it clear to the recipients of our aid that, in return for our material support, they must meet the responsibilities of every decent modern government"
These are big words backed up with a pretty feeble aid stick. For those of us in the development industry, this induced a bit of de ja vu, evoking images of old-fashioned "policy conditionality" in aid. In the 1980s and 1990s, multilateral institutions like the World Bank and IMF got publicly flogged for the harsh policy conditions they imposed on many borrowers. But the reason conditionality went out of fashion in development economics was not really the push-back from civil society, but the dawning realization that it simply didn't work.
Development experts gradually came to accept that aid donors are much less powerful than they'd like to think when it comes to steering recipient countries' big-picture, high-stakes policy decisions. In the early 2000s, a string of highly influential papers from the World Bank's research department (e.g., here and here) began to acknowledge that conditionality had failed. But they claimed to show that aid could contribute to economic growth and poverty reduction if and only if recipient countries had good institutions and economic policies. Yes, Cameron's golden thread mattered, but it was completely out of the control of aid donors.
George W. Bush wholeheartedly embraced this approach, known by aid wonks as the "selectivity paradigm", and enshrined it in a new American aid agency, the Millennium Challenge Corporation (MCC). Even now, MCC continues to apply this logic quite literally, restricting its aid programs to countries that meet fairly high thresholds on various governance indicators.
Thus Bush implicitly, and quite uncharacteristically, accepted the impotence of American aid to improve bad governance.
The obvious weakness of this devil-take-the-hindmost approach is that it rules out giving aid to many of the poorest countries -- where many of the poorest people reside through no fault of their own. MCC effectively concedes the irrelevance of aid to fragile states.
The attempt to find a common thread linking conservative approaches to foreign assistance can only take us so far though. It’d be disingenuous to ignore Bush's other signature initiative in foreign assistance, the President's Emergency Plan for AIDS Relief. Through PEPFAR, Bush dramatically increased funding for HIV treatment, including in many sub-Saharan African countries whose scores on democracy and governance indices are less than stellar. Consistency is not always the highest virtue.
Cameron's golden thread proposal, to be extremely charitable to his somewhat vague statements so far, at least avoids the two extremes embraced by Bush and Romney. It is true to the conservative impulse -- too true for my tastes -- in focusing on corruption and government failure. (For more on this, read Chris Blattman here.) But Cameron is not talking about Romney-style conditionality, or Bush-style selectivity. The alternative he proposes involves sustained aid flows; constructive engagement, if you will, rather than carrots and sticks. And it acknowledges a multitude of relevant players: not just transfers from the UK Treasury to the Malawian ministry of Finance, but engagement with the judiciary, civil society, and other actors.
Finally, a refreshing element of Cameron's proposal – also highlighted by Todd Moss here – is the focus on rich countries' responsibilities beyond signing aid checks.
"[W]e in the developed world must also put our own house in order, including by tracking down and returning plundered assets, refusing visas to corrupt foreign officials and stopping bribery involving our companies… [and] introduc[ing] legally binding measures to require oil, gas and mining companies to publish key financial information for each country and project they work on."
I'd argue he's left out the most important rich-country policies for global development, from relaxing immigration restrictions to tackling climate change. But I guess this is a Tory platform after all.