Kennesaw State University

Motivations of Foreign Aid and Political Altruism

International Political Economy IPM 7745

26 Mar 17

Jason Ford
 Motivations of Foreign Aid and Political Altruism

Introduction

Current American foreign aid strategies have its lineage traceable to Harry Truman. Yet,

in a chapter by Louis Picard and Zachary Karazsia in a book on Truman’s foreign aid by

Geselbracht, the authors point out that motives for foreign programs “can be traced back to the

fifteenth century’s most notable political strategist, Niccolo Machiavelli” (2014: 14). They go on

to say, “Machiavelli contended there are two primary methods that leaders can use to persuade

their counterparts: rewards and retributive measures” (Picard and Karzsia in Geselbracht 2014:

12). This is realism at its core and it is in this vein of international relations theory that this paper

will flow.

In the Global Political Economy, there is a school of thought, based on realist

International Relations (IR) theories, where states make decisions as a unitary actor and on what

generates the best outcome for themselves. Some states have risen over others in their wealth and

power as a result and in some cases, at the expense of other states. In layman’s terms one could

assert that some states can be labelled as haves and others could be labelled as have nots. In IR

terms, we label these haves and have nots as Developed Countries (DCs) and Less Developed

Countries (LDCs). If IR can be generalized as interactions between states in the chaotic

international regime that all boil down to the causation of or the prevention of war, where does

foreign aid fall in that system?

Political Altruism

At first glance, it may seem clear that DCs, due to societal changes, feel obliged and

maybe even obligated to protect the human experience from harm by altruistic motives. Starving

children, disease, corrupt governments and other causes bring the family of developed nations to

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intervene on the have nots behalf in order to protect the less fortunate. That may be the role of

some regional organizations and for NGOs, but in a system driven by the state, there may be a

different reason for this type of intervention. This paper puts forth the reason for DC foreign aid

to LDCs is not because pure altruism but because of economics or what I am calling political

altruism. In political altruism, it is cheaper (in blood and treasure) to buy access, in the form of

foreign aid, to resources that DCs need from LDCs to continue their economic dominance, rather

than waging war against them and taking these resources by force. This makes the transaction

seem cooperative rather than manipulative and creates the appearance of a positive-sum game.

Political altruism is similar in theory to the ideas of Wolfgang Stolper and Paul

Samuelson. “According to the Stolper-Samuelson theory, trade liberalization benefits abundantly

endowed factors of production and hurts poorly endowed factors” (Cohn 2016: p. 217). This

paper asserts that political altruism tilts the balance of power towards the DCs in the global north

at the expense of LDCs in the global south because of reverse dependency, maintaining the status

quo in the system, and the global system is not operating in positive-sum or zero-sum game, but

potentially in a negative-sum game.

Foreign Aid

Foreign aid “refers to grants, loans, or technical assistance that donors provide to

recipients on concessional rather than commercial terms” (Cohn 2016: 340). This paper will

challenge that assertion, but for now, this is our starting point. George Guess tells us there are

five components of foreign aid. They are:

(1) Economic Support Fund (EMF), (2) Development Assistance (DA), (3) Food
Aid or PL 480, (4) Security Assistance, and (5) multilateral Development Banks.
These interrelated programs have separate constituencies and are proposed for
funding by bureaucratic actors that are, in turn, controlled for efficiency and
effectiveness by Congress working in conjunction with them (Guess 2011: 1).

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Foreign aid is nearly a single source for many countries in the world to provide their citizens

with the basic needs required for life. Money, technology, in-kind donations and more are

received by LDCs and there may be a visible or hidden quid pro quo relationship as a caveat to

that gift. There is a school of thought by critical theorists that assert aid as “perpetuating

dependency relations, promoting the South’s integration in an unequal global market, and failing

to deal with problems such as environmental degradation” (Cohn 2016: 340). Foreign aid is the

tool by which DCs use political altruism to exploit LDCs resources. This avoids violent conflict

and gives the appearance of a positive relationship. There may be tensions boiling underneath

that lead to conflict regardless, but that is another area of research that should be conducted.

One note, there are those who view foreign aid, particularly that of The United States, as

evil with the intent of advancing their own agenda at the expense of others. “Whatever the

attitudes of the US leadership toward freedom at home—and as noted, this is highly

ambiguous—systematic policies towards Third World countries…make it evident that the

alleged commitment to democracy and human rights is mere rhetoric, directly contrary to actual

policy” (Chomsky and Herman 2014: 4). I do not share Chomsky and Herman’s dim view of

political altruism. I only intend to demonstrate that there are varying motivations for foreign aid.

It is up to others to decide if the design is for good or evil.

Dependency

We again turn to Theodore Cohn for his definition of Dependency Theory. He says

Dependency Theory is “the dominant approach to development among Latin American

intellectuals in the 1960’s, rejects the optimism of liberal moderation theory…and argues that

advanced capitalist states either underdevelop LDCs or prevent them from achieving genuine

autonomous development” (2016: 108). I take that a step further and assert that political altruism

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is the mechanism that developed countries use to exploit the resources of the global south in

order to advance DCs own needs and grow their power base. Cohn goes on to explain that DCs

in the core of the economy need peripheral weakness (2016: 109). The basics are as follows:

many claim that it is the LDC that is dependent on DCs. Without infrastructure or technology,

LDCs allow DCs to use their cheap labor force and resources in exchange for higher paying jobs

than they would normally have. In turn, this drives the price of said good or service down for the

product. I believe this system is reversed.

Reverse Dependency

DCs have a standard of living that is high and ever growing. The domestic needs of

developed countries force the state to make policy decisions to sustain a level of acquired and

adapted communal life style. The beast must be fed and to do this supply and demand has forced

DCs to find new ways and new sources of raw materials to drive prices down. This means that

DCs are actually dependent on LDCs and there are incentives to keep LDCs in an

underdeveloped state.

Growing the idea of dependency theory beyond Latin America and examining it from

another point of view, it is easy to see that DCs must keep LDCs underdeveloped to maintain

their power and influence around the world, while keeping their citizen base happy at home.

S. Heckman (personal communication, March 2, 2017) says “we can also view this in a way that

developed states are dependent upon the periphery for cheap raw materials, resources, and labor

to sustain their own highly industrialized economies. Without this access to LDCs, DC

economies, like the United States or China, would begin to plateau. This will cause their citizens

to potentially vote those in power out of office. If the best interest of the state is to maintain the

status quo. By using political altruism, this can be done.

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 Like mentioned in the introduction, there are two mechanisms by which to maintain the

status quo; since war is very costly to states, they will choose the “carrot and the stick” policy

that is political altruism rather than taking those resources by force. By supplying LDCs with

foreign aid, LDCs are constantly chasing the carrot. A cooperative relationship develops, DCs

thrive and LDCs continue to not die. As one LDC runs out resources and incomes grow, they

will be driven out of the market by another hungry LDC. It is in this way that the global political

economy is a negative-sum game. It is not in the best interest of the system to make everyone

equal, because everyone’s prices are driven to high. Yet, the world’s renewable resources are

getting more scarce and the pie could potentially be shrinking.

Removal of Foreign Aid

There are other forces at play in the world of foreign aid. Nationalist movements are

popping up all over the world in DCs and some are calling an end to the concept of political

altruism. First, The United Kingdom, in a now famous referendum coined “Brexit”, decided to

leave the European Union. Donald Trump rode a “hire American, buy American” campaign

mantra all the way to the White House. In the Netherlands, conservatives clamoring for

nationalism won a large number of seats in a coalition government, and Marine Le Pen just may

beat the polls, Trump style, and lead France away from the European Union.

There are three main reasons the removal of foreign aid may be put forth as a policy.

First, returning jobs in a nationalist movement gets votes. Second, spending foreign aid money

on programs at home gets votes. Lastly, LDCs not spending “altruistic” money wisely will not be

popular at home and suspending wasteful spending programs abroad gets votes. It is a curt view

of international politics but it is the reality of the current electorate around the world. The

question is, what would really happen if these nationalist leaders actually withdrew foreign aid?

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 Whereas African countries today have been substantially transformed into
supplicants that come up with a good number of projects in the hope that more aid
would be granted…public perception may have the last say in who stays in power,
whether by democratic means or by cronyism (Asongu and Nwachukwu: 13).

This suggests that not only are DCs buying access to LDC resources but LDCs are selling. This

creates dual dependency at a minimum. Imagine the potential reaction of foreign aid withdraw;

interstate conflict that could lead to termination of trade partnerships is likely. In this scenario,

DCs still need those resources and the potential for violent conflict will rise.

United States Foreign Aid

Since China is seen by some as a potential challenger to United States hegemony, it

allows a situation where US v. China policies can be looked at in a comparative light. I will take

each in turn. This section looks at US foreign policy, otherwise known as The Washington

Consensus. “There is a thesis in the Washington Consensus which postulates that economic

rights should follow political rights” (Asongu and Nwachukwu 2017: 204). This analysis is

smoke and mirrors. The smoke and mirrors assertion is confirmed in literature, again by George

Guess, who points out “that foreign aid is frequently pressed into service of American foreign

policy for ‘diplomatic’ (establish a presence by earthquake or food aid), ‘compensatory’

(military base rights in exchange for aid) and ‘strategic’ purposes (improve world order via

economic and military aid) …opens it to controversy on a variety of differently levels” (2).

The United States uses political altruism in all of the sectors listed above. In Haiti, who

was first on the scene after the Hurricane? The United States. If Haiti ever obtains any level of

stability, The United States will be able to influence any government to implement favorable

policies based on services rendered during Haiti’s time of need. Of course, Haiti will only move

up so far in the LDC caste system. Yes, tourists will go there and some money will be made. But,

Haiti is unlikely to become an economic player in the international system.

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 The US still has a military presence in the Middle East. In return for allowing the US to

use bases, our “allies” help promote an American agenda in their neck of the woods. For

example, after the Gulf War during George Bush I’s presidency, US military bases were

established in Kuwait and during George Bush II’s presidency, those bases were used as

launching points for the invasion of Afghanistan and Iraq.

Lastly, the US contributes huge sums of money to Uganda in order to socially re-engineer

equality in a poverty stricken region of Africa. Even now that the Lord’s Resistance Army has

been chased out of Uganda, the US provides money and military support to the country. This

allows, the US to have a strategic placement in Africa.

Some in the west view The Washington Consensus as being good and the Beijing

Consensus as evil, while others see nothing wrong with how the Chinese operate. I will not offer

a view whether one is better than the other, I will only show that there is a difference in design

but not in intent between the two. This leads us to a discussion on China.

Chinese Foreign Aid

Since the Washington Consensus places the political before the economics, The Beijing

Consensus is seen as the opposite. “On the other hand, its antithesis in the Beijing consensus

sustains that political rights should come after economic rights” (Asongu and Nwachukwu 2017:

204-5). Moises Naim writes a scathing review of Chinese foreign aid policies. He asks and

answers his question when he says, “what’s behind this sudden Chinese drive to do good around

the world? The three short answers are: money, access to raw materials, and international

politics…Beijing is increasingly leveraging this cash to ensure its access to raw materials while

also boosting international alliances that advance China’s growing global influence” (Naim: 97).

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The article by Naim provides the strongest argument for my thesis that political altruism has

nothing to do with making things better in other countries.

In fact, there is another study that gets quite specific about Chinese development plans.

“The Chinese government is backing the construction of six overseas special economic zones in

Africa, part of a global program that has seen 19 zones selected for support. These special

economic zones, called ‘trade and economic cooperation zones’…were apparently positioned to

serve several strategic objectives for China” (Brautigam and Tang 2014: 79). This sounds

wonderful, but looking deeper into the article by Naim, he asks a series of questions about the

social status of recipients in LDCs that receive foreign aid and they are all answered by the

following phrase, “because their goal is not to help other countries develop. Rather, they are

motivated by a desire to further their own national interests, advance an ideological agenda, or

sometimes line their own pockets” (Naim 2007: 97).

Naim’s article has a tone that ascribes malintent in political altruism. I do not. I simply

suggest that two things can be true at the same time. China wants to be the world’s hegemon and

they see economics as the key to establishing political standards. The issue China has is

transparency and it is for that reason that many take umbrage with Chinese policies. I assert that

in The Washington Consensus, a veil covers the motivation for their political altruism also, but

by focusing on social change as conditions to access to funding, the appearance of doing the

“right thing” is broadcast throughout the world. In fact, in an article similarly titled to Naim’s

Rogue Aid, a hypothesis is put forth that “Chinese aid is not linked explicitly to conditions

typically imposed by Western Donors, such as the implementation of good policies, democracy

or respect for human rights. Furthermore, Chinese financial assistance is made available quickly.

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To many recipients, China is thus a welcome alternative to DAC donors with their bureaucratic

procedure and sometimes detailed policy conditionality” (Dreher and Fuchs: 993).

Discussion

These few examples from above can be repeated over an over again throughout the

world. To be clear, this paper does not assert that political altruism is a good or bad thing. This

paper’s intent is simply to put forth that there are alternative motives for the use of foreign aid

beyond pure altruism. There is some talk of a hybrid view between The Washington Consensus

and The Beijing Consensus with the Washington Consensus being the best long game and the

Beijing Consensus having the better short-term benefits. It seems that motivation for political

altruism in The Washington Consensus is more discreet and the motivation built into The

Chinese Consensus is more overt. In either case, the desire is the same, political and economic

access to resources in LDCs and thereby greater power for the developed state.

It makes sense that this motivation, particularly that from Washington is more discrete. It

is seemingly difficult to pin down the conversation that takes place behind closed doors that

would officially confirm my thesis. As a result, I can infer based on observations that political

altruism is a motivator in the foreign aid complex.

I should point out that there are alternative views to what I postulate in this paper. In the

literature, one article worth noting, provides a counter argument to my assertions and I believe it

is fair to include it in this paper. One article in particular created a mathematical model showing

that foreign aid is indeed altruistic. They call it countercyclical altruism. In their thesis, “aid from

a donor displaying the countercyclical-altruism signal has a distinguishable, more positive and

significant long-run effect on recipient growth than aid from donors without the signal” (Civelli,

Horowitz and Teixeira 2016: 2). This can be interpreted as to meaning if the recipient wants the

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aid, then the aid is good. That has nothing to do with the motivations of the donor per se and of

course, a state who is receiving aid will be happy to get it. No news there.

Ultimately, foreign aid is perfectly described by Hollist and Johnson. They say:

Foreign aid is basically an asymmetrical, nonreciprocal exchange. Foreign aid

lonas are obtained with interest rates and repayment schedules substantially lower
than those experienced on the commercial market. The loan recipient receives a
‘gift component’ or ‘aid component’ of the loan roughly equal to the positive
difference between the cost of commercial loans and aid loans. The loan recipient
becomes indebted to the donor for the nonreciprocated, asymmetrical benefits.
(1132).

Again, this is the goal of political altruism. DCs want to create a system where LDCs feel it is

required of them to supply more powerful states with access to their resources and labor forces.

If these resources are going to other states, they can not be used by the LDC.

This leads us to a discussion on the negative-sum game that was mentioned earlier. In

competition for limited resources, the powerful will rise to the top and the resources and labor

force of LDCs will be used up. There is potential, and it needs to be studied more, that

globalization will eventually cause a negative-sum game as scarce resources are used up;

juxtaposed to many who assert that globalization creates a positive-sum game. In the short term,

there may be win-win outcomes. But as the DC and LDC cycle of dependency and reverse

dependency continues, I believe LDCs will continue to stay marred in underdevelopment and the

economic pie will begin to shrink.

Limitations of Research

For this type of research paper, time is always a limiting factor. For the course, there are

only sixteen weeks, so secondary sourcing is the only realistic way of attempting to confirm new

ideas. Another limiting factor is the page and word count restriction. While this restriction is

appropriate for the nature of the project, it means some of the useful information must be left out.

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Also, while there is some research on the topic, there is an unwillingness to admit the

exploitation of an entire state or group of states for the advancement of others.

Future Research

Future research on this topic should not only verify these findings and include

information that was left out by restrictions, but examine the nature of the transaction. Does

purchasing market access limit LDCs ability to develop and does this cause a negative-sum game

system? Is this an effective system? Is the nature of political altruism good or bad? Does political

altruism create inefficiencies in the market place that should be created? Finally, does political

altruism prevent violent conflict?

Conclusion

Political altruism uses foreign aid as a tool to buy access to LDCs resources rather than

taking those same resources by force. DCs are playing a two level game where their domestic

sociopolitical and economic agendas must be sustained at the cheapest level possible. Buying

access to markets is cheaper than fighting a war to obtain them, so the motivation for providing

foreign aid is not at all altruistic as some would suggest. The motive is based in realist and

neomercantilists theory and is economic in nature. It seems there is some political reason to hide

the nature of this exchange. I am not certain that is necessary.

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 References

Asongu, S. A., & Nwachukwu, J. C. (2017). Is the Threat of Foreign Aid Withdrawal an
Effective Deterrent to Political Oppression? Evidence from 53 African Countries.
Journal Of Economic Issues (Taylor & Francis Ltd), 51(1), 201-221.
doi:10.1080/00213624.2017.1287510

Bräutigam, D., & Tang, X. (2014). “Going Global in Groups”: Structural Transformation and
China’s Special Economic Zones Overseas. World Development, 63(Economic
Transformation in Africa), 78-91. doi:10.1016/j.worlddev.2013.10.010

Civelli, A., Horowitz, A. W., & Teixeira, A. (2016). A Signal of Altruistic Motivation for
Foreign Aid. B.E. Journal Of Economic Analysis & Policy, 16(4), -1. doi:10.1515/bejeap-
2016-0024

Chomsky, N., Herman, E. S., & On, J. (2014). The Washington connection and Third World
fascism. Chicago, Illinois : Haymarket Books, 2014.

Cohn, T. (2016). 7th ed. Global Political Economy: Theory and Practice. New York: Routledge.

Dreher A, Fuchs A. Rogue Aid? An Empirical Analysis of China's Aid Allocation. Canadian
Journal Of Economics [serial online]. August 2015;48(3):988-1023. Available from:
EconLit with Full Text, Ipswich, MA. Accessed March 26, 2017.

Geselbracht, R. H. (2014). Foreign Aid and the Legacy of Harry S. Truman. Kirksville,
Missouri: Truman State University Press.

Guess, G. M. (2011). The Politics of United States Foreign Aid. Oxon, UK: Routledge.

Hollist, W. L., & Johnson, T. H. (1979). Political consequences of international economic

relations: alternative explanations of United States/Latin American noncooperation.
Journal Of Politics, 411125-1155.

Naim, M. (2007). Rogue aid: what's wrong with the foreign aid programs of China, Venezuela,
and Saudi Arabia? They are enormously generous. And they are toxic. Foreign Policy,
(159), 96.

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