Dead Men Left

Monday, May 23, 2005

Brown's "ambitious plans" for increasing aid are a sham

The Liberal Bomber, a fortnight ago, was furiously plugging the Make Poverty History campaign. This is for the good, despite the heavy weight they placed on Brown's International Financial Facility scheme:

At the heart of the Brown-Blair proposal to maximise Britain's chairmanship of the G8 are plans to raise an extra £30bn a year in overseas aid over the next decade. Known as the International Finance Facility, it would pool rich countries' aid budgets to generate a huge injection of cash to be paid back over the next 25 years. France and Germany have already said they will back the plan, but Brown has secured little enthusiasm in Washington.

Pointedly, the details of the IFF are left unconsidered. This is just as well; it is a simply dreadful idea. Brown wants richer countries to mortgage their future aid payments on the bond markets. By using aid payments into the future as collateral, he hopes that a huge amount of money can be borrowed immediately to kick-start Africa.

Unfortunately, as those in the South know only too well, money, once borrowed, needs to be repaid, and repaid with interest. The World Development Movement, based on the Treasury's own figures, has calculated that the IFF would generate $209bn in extra cash over its first decade. However, over subsesquent years, aid flows would reverse as this massive loan was paid back - with interest - to the tune of $316.6bn. The IFF would produce a net loss in aid of $108bn.