This article describes my experience of aid, starting over 40 years ago in Africa, and then in the ex-Soviet Union. Some will hotly deny my conclusions, but their veracity is only too apparent in the current state of the world and the decline in western values. Part one deals with the background and part 2 illustrates it with actual experiences.
Twenty years ago, I was living and working in Bishkek, Kyrgyzstan. Together with an American friend then living in Tashkent, I co-wrote an article about western aid. We concluded that the West had been giving away free lunches to the wrong people. This harmed not only the poor people we were supposed to help, but our own values too. Our democracies and law-based systems did not just pop up like mushrooms. They evolved over centuries. They cost hard work, at times, blood and treasure. Our agencies, we claimed, were debasing that heritage.
Twenty years later, nothing has changed. Free lunches are still being given away. Looking at the world from within their self-interested bubble, the aid community pursues failure because that is what ensures their survival. We are in danger of having created a Trojan Horse that will undermine, in our own countries, those values we have so tragically failed to introduce to others.
Many of the events described in part 2 happened 20 plus years ago. I have focused on Kyrgyzstan because I know it best, they could equally have been written about other Soviet bloc countries. They are still relevant for three reasons. Firstly, they were the result of a mindset that still dominates. Secondly, they presaged an assault on the integrity of western democracy and, lastly, because nothing has been learned from the failures.
During my time in Africa, I was shocked at how aid was wasted. For example, Medicines delivered by the UN were openly sold in the markets. No one seemed to care, including the international community. The scandals that have beset some major charities came, regrettably, as no surprise. The only surprise was that, at last, they were being reported.
My experience of trading with countries of the Soviet Bloc, spans 40 years while working both in Europe and Africa. By the time the Berlin wall came down and the Soviet Bloc disintegrated, I was living in Germany. It was an exciting time. New possibilities opened for trade, including in some parts of the old USSR that had seemed remote and mysterious.
The fall of the Soviet Union, almost thirty years ago, and the disintegration of the USSR presented the west with a golden opportunity. Unlike today, the west had unchallenged power and authority. It had within its grasp the potential to create a new world order of peace and prosperity. That it failed to do so is the great tragedy of our times. The blame for that failure can be laid at the door of politicians who allowed civil servants and International institutions to set the agenda. With astonishing arrogance, it was decided that a mishmash of western ‘best practice’ would be served up and that, as a result, the new countries remade in our image, would become functioning western democracies. The fact that, with few exceptions, (India being the most notable) the policy had failed dismally elsewhere; did not deter them. True, Western Germany and Japan had been democratised, but that was ‘forced’ upon them as the price of peace. Those conditions did not exist elsewhere. Indeed, even in those countries that had experienced democracy, it was now a folk memory. Most had simply moved from serfdom to Soviet rule. Not only was there no tradition of democracy, but no laws that enabled it to be nurtured.
Into this vacuum, rushed International institution such as the UN, OECD, international financial institutions (IFIs) such as World Bank, IMF, EBRD, ADB plus individual countries’ agencies, e.g. USAID and DFID. Without, it seems, a thought for the needs of the newly liberated or the consequences of repeating their mistakes, they set about servicing the new markets.
Constituting a new international oligarchy, they peremptorily imposed their view of the world. It was a view that had everything to do with wishful thinking, hubris and the preservation of career opportunities and almost nothing about the reality of people’s lives. Their collective world view precluded anything other than ‘selling’ the new countries their defective solutions. They learned nothing from their past, failed, endeavours.
Like medieval alchemists, they created a development potion for the new patients. A dash of the US constitution, a few shakes of Westminster democracy, a spoonful of Anglo-Saxon laws (incompatible with Soviet Civil Codes) mixed with World Bank economics and shaken together with UN pre-Wokeness to create an elixir.
The ‘cure’ was (and still is) delivered by ‘specialists’ and ‘consultants’ at either no cost or financed by soft loans. Conferences were organised where aid workers, representative of aid HQs could exchange views with local rulers and pass resolutions. It all smacked of evangelism. They had no anthem, but all their achievements could be summed up with a few lines from the 1947 song ‘Busy Doing Nothing’:
“I have to meet a turtle
I’m teachin’ him how to swim
Then I have to shine the dewdrops
You know they’re looking rather dim”
Einstein ‘s dictum “The definition of insanity is doing the same thing over and over again, but expecting different results.” is lost on those who waste our taxes.
Politicians failed to oversee or control the oligarchy. Incompetence, ignorance, laziness, future employment prospects – perhaps a mixture of all these, were behind the laxity and waste of tax money. Diplomatic missions proved inept, or perhaps they had either bought into the program or were under orders to facilitate ‘dialogue’ increasingly a euphemism for supporting the new dictators that sprang up in place of the old.
The medicine prescribed, of model laws and ‘democracy development’ programs, sounded grand. With no foundation of a legal system that supported democracy or basic rights, it had little chance of success. Lacking any support from the new rulers it was bound to fail. That these programs continue to this day is a shameful scandal.
There was another way. It involved empowering people. Creating programs that developed a middle class, essential to a functioning democracy. I was part of an effort to implement such a program in Kyrgyzstan. It was ‘killed off’ by the rulers that the aid agencies have nurtured.
In the majority of developing countries, the oligarchy has succeeded only in strengthening corruption. They have done so at enormous cost to taxpayers, but worse, at huge cost to our own institutions. The world is a dangerous place and much of that danger has been fostered by us. The opportunity of welcoming millions into a peaceful world has been squandered. We have created the circumstances that have allowed a resurgent Russia to dream of recreating the USSR; to fill the vacuum our failures have created.
This malign influence is not restricted to the Middle East and Central Asia. It extends to Europe and the EU. The ex-Soviet bloc is especially subject to Russian influence as Andrew Boff explains in his article about Croatia as that country takes on the presidency of the EU.
The UK is currently spending over £14 billion annually on aid. According to the OECD, we are the world’s fourth largest donor country. It is bad enough that our own agencies are profligate. Giving part of the money to multilateral organisations including the EU for them to waste is ridiculous. Properly targeted, delivered direct to the people who need it, our aid (cut by 50%) would produce real benefit for those who actually need it. We should also review the use organisations, such as IMF, World Bank, IFC, OECD, ADB, EBRD, put our shareholder funds. We have provided gravy train fuel for too long. It is time for the government to be bold and tackle what has become an affront to taxpayers.
This is a story about a system that has failed. It has failed our values and failed the people it was supposed to help. It is an example of delinquent agencies and their employees working against the interests of their employers. If donor countries’ politicians, civil servants, and their agencies were/are unaware of the situation they are incompetent and should be removed. If they ignored the corruption they have been, in my view, criminally negligent in not protecting our interests. A massive shake up is long overdue.
It’s too late to put the genie back in the bottle, but we can stop the nonsense and put the money to better use – really helping people and better protecting ourselves.
In the late 90s, I’d been asked to sort out a couple of companies in Ukraine, both haemorrhaging money at an alarming rate. At the time, Ukraine was a quagmire of corruption and had red tape designed to support it.
Moving to Kyrgyzstan in Central Asia came as a huge relief – or so it seemed.Little known when part of the USSR the region had, according to those who claimed to know, a bright future. I was tasked with setting up a company and employing staff. Apart from needing to “re-educate” male staff on what was or was not “Women’s work,” staff were good. (I should explain that in every developing country I have worked in; it is women who actually work while pretending otherwise to their menfolk. I have always firmly believed in a gender and race neutral approach and enforced that, much to the chagrin of many men who believe themselves intellectually and socially superior.)
The Bishkek office was designed as a hub to develop an investment consultancy services for Central Asia. The business environment seemed open. It was easy to meet officials and ministers. The first of our services was auditing commercial banks. In association with a major audit firm, we won audit mandates from two commercial banks (this was only possible because the Luxembourg government intervened with EBRD to force them to accept an additional audit firm outside the big five.) The Kyrgyz Finance Ministry asked me to accept a tax inspector on secondment. He (and they) were keen to learn about western methods. I agreed, provided we paid him. He joined on a salary of US$350 a month. That was generous, at the time, teachers and doctors earned about $30 a month. Three months later he resigned. He explained that he paid his boss $1,000 a month for his job and could not afford to be away from it any longer. This was a rare insight into a practice everyone knew about, but few had had substantiated.
Like other ex-members of the USSR and Soviet Bloc, Kyrgyzstan was (and is) run on a system of patronage, organised along the lines of a pyramid sales scheme. Anyone in power political or otherwise could “give” a job to friend or relative (or their friends) but the opportunity had to be paid for every month. The tax inspector paid his boss, who paid his and so on up to the minister. At the other end of the spectrum, a policeman paid $50 for his job that paid a wage of $20. To make it worthwhile he needed to extort money from other citizens and small businesses. The person he paid, paid the person above him and so on up the chain. The education system ran on bribes. Indeed, the only people who seemed outside the system were, to their great credit, the medical profession who were paid by their patients.
Endemic corruption is not easy to tackle. Rather than seeking to tackle it, western governments the World Bank, IMF, OECD and agencies such as UNDP, EBRD and ADB actively encouraged it by their ignorance and unwillingness to understand conditions or fight flagrant abuse. Kyrgyzstan was provided with a tax code, written in accordance with western norms. It included the rather odd addition of an amortisation clause that made it impossible to write off capital goods. It was complicated and facilitated tax authority corruption. Those of us with ‘Real world’ experience advised that a flat tax no longer than a couple of paragraphs would improve conditions. Simplicity would make industrial scale corruption impossible. We were ignored. To add yet more misery, VAT was also introduced, a complicated tax that has attracted its share of corrupt practice even in advanced countries. The result of western ‘help’ was to provide corrupt official with new tools that they used to extort money from the people.
The problem was not confined to the provision of law and regulation. IFIs and UNDP had tranches of money to disburse, often through local banks. Typically, they insisted on the potential recipient paying for a business plan. These were produced by work experience student on gap years with organisations like USAID and DFID. They had a laptop, a business plan program and zero knowledge of the country or the business they were planning for. Once equipped with the plan, the new businessperson would be faced with a 30% p.a. interest rate and no real help. A farmer relative decided to expand by growing potatoes. His plan was to market them in the capital city, a 400 km journey. At the third police “Hold up” he decided that it was just not worth the effort and turned back. Situations like this were a daily problem and one for which the aid community had no answer – indeed they simply ignored it. Those struggling to run a business sought protection from one of the “Mafias” the most prominent of which were: the Police, the Revenue and the Army.
For a variety of reasons, the cooperation with our audit partner ended. Having met my future wife, I decided to stay in the country, working on a number of different projects. Initially these held great promise, but failed on the self-destructive rocks of post-Soviet braggadocio. An example of this was Rock Wool production. Kyrgyzstan is mountainous, it is made of rock. A building boom in neighbouring Kazakhstan meant rockwool was in high demand. There was a disused Soviet era factory staffed by three “Directors.” A European manufacturer was willing to invest and upgrade machinery. The directors gave me samples of their product. It was terrible. “Are they making marbles?” queried the potential investor. The investment offer was turned down, “We don’t need your western expertise, ours is better. All we are lacking is money.” Their idea of a junior partnership with zero control in return for substantial investment was rejected. They were amazed. It was an attitude I found in industry after industry.
I was engaged as a consultant by the company designated to run Kyrgyzstan’s new (Foreign funded) International cargo facility at Bishkek’s Mannas airport. Although my brief was IT system compatibility, I got involved in security issues too. There were none. I raised the concern and was included in a meeting with the head of customs. “At least once a week a cargo plane will land and discharge and reload through your facility” he announced, “you will not count, inspect, or record these events.” I protested that this was a blank cheque for thieves. He was furious “They are our thieves” he roared. My engagement was terminated a few days later. At the same time, the UK government was funding a program teaching international customs procedures!
Next, I was excited to advise on telecoms. The situation was simple. While a system might cost, say $2.5 million, the hardware, the part used as security for a loan was only a fraction of the cost. By far the largest component was software. My initial task of formulating a secure lending model based on almost worthless hardware, morphed into one of the most exciting projects of my life. It was designed to serve the needs of the country and its people – in stark contrast to the aid communities’ efforts.
An incredibly skilled engineer had come up with a mobile telephone system that fitted in a telephone box. Drop it anywhere, start a generator – hoist a mast and – phone coverage for a radius of 35 miles. With this flexibility we concentrated on developing a system that would bring telephony to remote, sparsely populated areas. Not just that, but empower and involve local people too. I negotiated a deal with a UK company that agreed to provide software in return for a share of revenue. No upfront cost. This dramatically reduced the cost and combined with a lease, not sale, model meant that local people in a cooperative could “own” the system – a genuine “Trickle Up” proposition. The army was in favour because they had no communications in remote areas. Local communities welcomed a connection that could give them distance learning for children, medical advice and news. In the remote areas, many had never earned a lot of money and we included the idea of barter – sheep for minutes. We also developed the idea of using phone minutes to pay for products – an idea ahead of its time and derided accordingly. The government signed an agreement agreeing to three test areas – we agreed to supply the equipment and operate it. Any profit would be split 50/50. In the event of a loss we would bear it. At the end of the test we would donate the equipment to the communities.
We returned from Christmas leave eager to learn the exact geographic delineations and frequencies. No progress for weeks. Then, I got a call from a Presidential advisor. He told me “We have a problem.” The problem was that the then President had decided he needed some $millions donated to his personal pension fund before he could agree the final details. We had a strict no bribe policy and shipped the equipment we had, out of the country. Prior to that, I was asked if we could get help from embassies. The British said, “Ask the Germans.” The German ambassador listened intently, shrugged and smiled “Oh dear, how typical.” Only EBRD offered help because they claimed to ‘know how to handle the government’. A laughable claim coming shortly after they had lost a watertight court case due to government bribes and intervention.
Corruption, trashing contracts and “bad” commercial behaviour were excused by the western representatives and aid organisations. A contract, they claimed, was only a permission to negotiate. This absurd idea eloquently demonstrates the disconnect that exists between the real world and those who rule it. In response to protests and evidence of malpractice they fell back on the ‘We have to maintain a dialogue’ defence. Their dialogue was with the deaf, and bereft of sign language.
There were occasional meetings hosted by the World Bank, IMF or UNDP to discuss how the business climate could be improved. The need to encourage the growth of a strong middle class was acknowledged as important. Suggestions to pay police, teachers and medical staff directly rather than giving money to government were dismissed as interference in sovereign affairs. Having empowered corrupt officials (Euphemistically referred to as “Rent Seekers”) the only lever left was to pay important sectors a decent wage free from the patronage system.
Of course, the representatives of the developed world lived a splendid life. Business class travel. Hotels at $120 to 180 a night, up to six times more than a doctor’s monthly salary. Those stationed in the country cheerfully paid western taxpayer’s money to rent living accommodation from Kyrgyz officials. As a foreigner, one pays more. We paid $100 per month for an apartment in a good area. Typically, those on the gravy train paid upwards of $600 for similar accommodation.
During this time, my wife’s law firm had started to suffer. She only had foreign clients, mostly commercial, but an important NGO and a major EU country too. She steadfastly refused to bribe and as a result lost a court case, despite the judge admitting that in law her client was right. Commercial firms started closing down and although fee income from winding them up was good, there were few prospects for the future. On top of that, the firm was subjected to intense scrutiny by a tax inspector who demanded a bribe. He investigated her firm and all her clients. Unable to pin anything on any of them, at a final meeting he pathetically asked if he could keep a ball point pen. How different things might have been if the international community had shown equal resolve.
Seeing little future, we moved to London in 2002. My wife studied, qualified as a solicitor and gained an LLM in tax law. She is now a partner in a London firm. We know many Kyrgyz women who have made a new life in the UK. They have careers in arts, pharmaceuticals, accountancy, financial analysis and, law to name, but a few. They are a loss to their motherland. None regret seizing the opportunities offered by a society that rewards hard work and honesty.
The western agencies claim they have to provide support in order to maintain influence. The truth is that all the largesse simply enriched the elite who, adept at the game, played it to extract more. The west has, and is failing to turn $s and £s into tangible returns, for us or the people of target countries. Comparing the west’s record with the achievements of Russia and Turkey demonstrates the point. Russia is dominant in many areas.
Kyrgyzstan is a member of the Commonwealth of Independent States (CIS) a Russian controlled organisation which includes a Free Trade Area and Military cooperation. It is a major part of Putin’s plan to re-establish the USSR. To that end Russia maintains a military presence in the country. The media is Russian dominated.
Turkey’s achievements are spectacular. At the end of the Soviet era, most people were either atheist or agnostic. Despite being themselves an aid recipient, Turkey’s Diyanet Foundation (The Directorate of Religious Affairs) An official state institution, (2015 figures: over 150,000 staff and $2 billion budget) built the biggest mosque of central Asia in Bishkek. With (it is rumoured) Qatari assistance, it has been busy building Mosques in almost every village in the country. It also offers scholarships in Turkey as part of its remit to offer Quranic education to early ages and boarding schools – ‘enabling the full immersion of young children in a religious lifestyle’– and now issues Fatawa on demand. There are more Mosques than Schools and Hospitals/Clinics combined. They serve as places of worship, indoctrination and centres for the men. They marginalise women. One of the few benefits of Soviet rule was equality of the sexes and the opportunities it afforded women. Islamification is reversing that.
Of course, the west could have built hospitals and schools, we could have used our money to help the people – instead it has been wasted and those who wish us harm have been empowered.
Currently DFID has 13 projects totalling £21 million. Yogi Berra’s “It’s Deja vu all over again.” is apposite, they are much the same as they were 20 years ago. They focus on, Democracy, Governance, Government Reforms, Human Rights, Rules Based Systems. Scandalously, the only thing that might help foster democracy, respect for law and friendship for our country: education and scholarships receives just 1.1% of the budget.
Michael Wood dropped out of art school and worked in agriculture until accepted for business training by a major Japanese trading house. Working for major Japanese, Dutch and German firms he was involved in International trade from the mid sixties to his retirement in 2010. His career focus was mainly on agricultural products and he has extensive knowledge of perishables both short sea imports and deep sea exports. He travelled widely and has lived and worked in Nigeria, Ukraine, Central Asia as well as the EU (Belgium, Germany and Luxembourg). He became involved in information technology in the late 90s and was engaged by LM Ericsson to advise on a mobile telephone business model applicable to sparsely populated developing countries in Central Asia.
Prior to retirement he was CFO and GM of a London based manufacturing, warehousing and property company. The manufacturing division sourced raw materials and parts from Italy, UK, China, Taiwan and India.
After retirement he developed disability products with Chinese manufactures and imported them into the UK.
He now lives in London with his wife, a lawyer, and writes on a variety of subjects including disability issues.
This article was first published on the Bruges Group website, and is republished with permission. You may not use, copy, distribute, publish, syndicate, sub-license and transmit the whole or any part of such material in any manner and in any format and/or media without the permission of the original publishers.