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Moral realism and Australia’s foreign aid and development policy

Realism would seem an unlikely candidate for understanding the role of morality in a state’s foreign aid and development policy. With its focus on the national interest and the competition for power, realist explanations of foreign aid are often overlooked for normative ones that directly engage with moral questions. Yet it is a misconception to suggest that all aspects of realism are solely concerned with the material dimensions of state power, and the mechanisms to exercise it. It fuels a general caricature of realism: that blunt, rational state interests exclusively guide foreign policies. In this chapter, I argue that the moral realist framework I have developed can shed some light on how morality is viewed in a state’s foreign aid and development policy.

I start with an examination of the dominant perspectives on the role of morality in foreign aid and development, with the aim of drawing out a distinction between foreign aid based on perceived “good” intentions, and one that considers the outcomes of aid policy. This will make it easier to assess how easily moral realism can be applied to understand the evidence presented. I then chart the development of Australia’s foreign aid and development policy from a moral realist perspective, beginning with an evaluation of its early aid program under the Colombo Plan. I then move to analyse specific country aid relationships, as well as assessing which aid sectors (education, agriculture, and good governance), are prioritized in how Australia chooses to deliver its aid. In doing so, I draw out trends in Australia’s aid policy: for instance, the consistent attention paid to aid delivery to states in Australia’s region and the tendency for the sectors of aid to change according to the material interest being pursued. This evidence is used to conclude that moral realism is useful for understanding Australia’s foreign aid and development policy choices.

Defining foreign aid: Official development assistance

Before I begin my discussion on how the literature has approached foreign aid, it is important to define what this thesis means when referring to Australia’s foreign aid and development policy. Foreign aid is typically defined as Official Development Assistance (ODA), which describes all aid flows, including grants and concessional loans, between registered

Development Assistance Committee (DAC) members and developing nations.201 ODA also characterizes the purpose of aid as “the promotion of the economic development and welfare of developing countries as its main objective.” 202 _{For an analysis of Australia’s foreign aid,} this definition is not always sufficient, as Australia was not a member of the DAC until 1966, and its aid program began with the implementation of the Colombo Plan after WWII. Thus, for the purpose of this thesis, any reference to Australia’s foreign aid before its membership to the DAC refers to those resources (whether food, equipment, technical assistance, infrastructure development or direct financial assistance)203 that are voluntary, and exchanged bilaterally between governments, with the stated moral purpose of reducing poverty by increasing economic and social development. This is broadly in line with how Australia has viewed foreign aid as advancing its national interest through sustainable development and poverty reduction. 204

Understanding morality in debates on foreign aid: Intent versus outcomes

There is a natural assumption that a state’s aid policy should include moral considerations. This is largely the approach taken by normative perspectives that emphasize the morality

201 _{OECD, “Official development assistance – definition and coverage,” (2014). Available at:}

http://www.oecd.org/dac/stats/officialdevelopmentassistancedefinitionandcoverage.htm (accessed 30 January 2014).

202 _{This clarification was made to exclude military aid as part of DAC members overall measurement of aid. As} will be mentioned, there were some instances where Australia’s aid did not always fit the ODA standard on keeping military aid separate from development programs. This was most obviously in Afghanistan where the Australian Defence Force (ADF) was involved in the delivery of Australia’s aid. The debate on the

“militarization” of aid is an important one as it can lead to the blurring of the moral dimension of aid. However, it is outside the scope of this thesis to fully discuss the implications of aid as a form of military assistance. In any case, it would not be particularly useful, as reporting for ODA during this time did not include reliable disaggregated data. It was later found that the total of ODA delivered by Australian aid in Afghanistan was less than half between 2006-07, which then increased to between 70% and 75% by 2012. For more see Stephen Howes and Jonathan Pryke, “Australian aid to Afghanistan: Submission to the Foreign Affairs, Defence and Trade Reference Committee.” Development Policy Centre, Crawford School of Public Policy, ANU College of Asia & the Pacific. Available at: http://observgo.uquebec.ca/observgo/fichiers/25713_aideaustralienne.pdf (accessed 2 February 2014).

203 _{The mode of aid that states provide can be important in determining the expectation of return and the} outcomes of giving aid. Aid can be targeted to certain projects often involving experts and contractors from the donor nation, provided as relief or development assistance in concert with business and NGOs, given as low or no interest loans, or even injected directly into a recipient nations budget through General Budget Support (GBS). Yet while there are important distinctions to be made in identifying a state’s preference on the mode of aid, assessing these differences is beyond the scope of this thesis. This is for the very simple reason that the mode of aid makes no difference to the core premise that aid, guided by an expectation of reciprocity, can lead to both moral and material benefits.

204 _{This objective was clearly stated in the Simons Review on aid commissioned in 1997, which identified} sustainable development and poverty reduction as the humanitarian purpose of Australia’s aid program. For more see Department of Foreign Affairs and Trade (henceforth DFAT), Australian aid, “One clear objective: Poverty reduction through sustainable development,” Committee of Review of Australia’s Foreign Aid (Simons Report), April 2007. Available at: http://aid.dfat.gov.au/Publications/Documents/simons.pdf (accessed 25 February 2014). As will be discussed, development and poverty reduction had always been a clear expectation guiding Australia’s aid, which continued in its contemporary aid program.

involved in formulating policies that promote human rights, foster democracy and contribute to economic development. In doing this, they stress the value of common humanity and distributive justice as principles of the foreign aid regime that can bring about moral transformation within the international system. There are broadly two perspectives that hold this view: cosmopolitanism and constructivism.

Cosmopolitan thinkers like Charles Beitz and Lukas Meyer have argued that foreign aid can be analysed as the international extension of the Western domestic principles embodied in the liberal welfare state.205 Here, the moral dimension is attributed to the inherent obligation of the strong to aid the weak. These scholars typically highlight the perceived injustice of the international system for the developing world and the duty of the industrialised nations to correct this by adopting foreign aid policies that mimic the process of redistribution employed within their own borders.206 For them, the post-World War material redistribution recast the material wealth along recognisable ethical boundaries between donor countries and recipient states. And following the 1970s, the institutionalisation of aid as a multilateral practice further cemented the foreign aid regime into a collective order or a “global social contract.” As evidence, they point towards the steady increase of aid over the last 50 years amongst OECD donors, and the inability to account for the reasons for giving aid by referring to the political and strategic motivations of the donor. Instead, they argue that the moral duty of wealthy nations to give to less development ones – along with the spread of democracy, free-trade and international law – has led to the blurring of distinction between the Global North and the Global South, which will eventually produce the equalisation of global wealth.207

This explanation of foreign aid leaves much to be desired. To begin with, the empirical record does not always present such a clear picture. The programs of social development that exist within the internal structures of the welfare state cannot be directly comparable to its

205 _{See for instance, Alain Noel and Jean-Philippe Therien, “From domestic to international justice: The welfare} state and foreign aid,” International Organization 49, 3 (1995), pp. 523-553; Lukas H. Meyer, “Liberal

cosmopolitanism and moral motivation,” Global Society 14, no. 4 (2000), pp. 631-647 and Charles Beitz, “Cosmopolitanism and global justice,” The Journal of Ethics 2, no. 9 (2005), pp. 11-27. These scholars argued that aid reflected an international transfer of wealth that flows only one-way from the donor country to the recipient, thereby contributing to the eventual equal distribution of wealth. These perspectives do not pay attention to whether the donor country can benefit in return. In fact, cosmopolitanism views this aspect of aid to be one its main problems because it interferes with the transformative process by prioritizing the material interests of the donor, which reinforces the un-equal distribution of wealth.

206 _{Brian Opeskin, “The moral foundations of foreign aid,” World Development 24, 1 (1996), pp. 21-44.} 207 _{Beitz, “Cosmopolitanism and global justice,” p. 17}

ability to give aid on a global scale. States like Denmark, the Netherlands, Sweden and Norway, known for their generous social welfare programmes, do spend the most relative to their Gross Domestic Product (GDP). But the US, Japan and the UK, often criticised for their poor domestic welfare systems, have spent more on foreign aid in dollar amounts than the widely-praised Scandinavian countries.208 Regardless of the metrics used to identify the most generous aid donors, inside-out perspectives find it difficult to link the motives of why states give aid, with whether it actually achieves any benefits. This perspective is also out-dated and cannot account for the rise of developing aid donors like China, whose social and political system is at odds with the welfare model and yet is a rising participant in the foreign aid regime.209 Likewise, cosmopolitanism cannot properly accommodate the presence of South- to-South aid cooperation where the transfer of wealth is between developing countries.

Constructivist understandings of the moral dimension in foreign aid share similarities with cosmopolitanism in that they start by looking outside the economic and political interests of the state.210 David Lumsdaine has argued that the giving of aid arose from mutual humanitarian concerns amongst donor states. From this perspective, the giving of aid reflects a shared response or “identity” in relation to poverty and inequality, which over time turned the practice into a guiding norm for pro-social state behaviour.211 These shared identities combine with the common belief that long-term peace and stability can only be achieved if all members of international society were able to prosper. Foreign aid is thus a normative practice guided by an acceptance that developed states have obligations to resolve global economic injustice. Therefore, like cosmopolitanism, constructivists understand the giving of aid as a mechanism that transforms international order by closing the gap between rich and poor nations. As a result, constructivists have tended to gather evidence from states that share a common identity, such as the Scandinavian states identified above. In doing so, though,

208 _{In 2012, the US, the UK and Japan were the per dollar top aid donors. Japan has recently moved further} down the list, and has been replaced by France and Germany. The US and the UK have remained the top two aid donors. “Top ten largest donors of foreign aid in the world,” Development Diaries (2013). Available at: http://developmentdiaries.com/top-10-largest-donors-of-foreign-aid-in-the-world/ (accessed 23 March 2014). 209 _{In the period between 2000 and 2012, China’s financial commitment to foreign aid amounted to US$84.68} billion. For more statistics and time series data see AidData, “Open data for international development,” (2013). Available at: http://china.aiddata.org (accessed 26 March 2014). Between 2004 and 2009, China’s yearly budgetary aid commitment increased by 30%. Clair Provost, “China publishes first report on foreign aid,” The Guardian, 28 April 2011. Available at: http://www.theguardian.com/global-development/2011/apr/28/china- foreign-aid-policy-report (accessed 23 March 2014).

210 _{Martha Finnemore, The National interest in international society (New York: Cornell University Press,} 2001).

211 _{David Holloran Lumsdaine, Moral Vision in International Relations: The Foreign Aid Regime 1949-1989} (Princeton: Princeton University Press, 1993), p. 24.

they also frequently overlook the material factors involved in determining where aid is being delivered, and the state’s primary purpose in delivering it.

Whether viewing aid through the lens of obligation or identity, both cosmopolitanism and constructivism see it as a product of “good” intentions. In terms of practical application this places an idealised set of assumptions on the benefits of aid as it transcends the realm of foreign policy practice, charging aid with its own purpose and set of justifications. In doing so, normative approaches turn aid into a prescriptive force that establishes a standard of what states ought to do rather than what they can or are willing to do. The standard for judging the rationale and effects of aid is then confined to meeting the normative requirements of good intentions, which means normative perspective tend to avoid post-facto assessments of whether the giving of foreign aid actually achieves good outcomes. Therefore, what aid does is central to discovering where it fits in a state’s foreign policy and an emphasis on assessing the consequences of aid is important in judging whether it achieves its objectives, for both the donor and the recipient.

The realist turn: The moral and material outcome of foreign aid and development policy

In light of this, recent realist literature on the function of a state’s foreign aid has turned to evaluating the potential for moral and material outcomes rather than on the state’s moral intent. Specifically, Anatol Lieven and John Hulsman, as part of their developmental realist agenda, have argued that an analysis of a state’s foreign aid policy needs to focus on programs of economic development that can produce visible evidence of equable results for the recipient nation. For them, the practice of developmental realism is much like the Cold War policies of the US in Europe, and East and Southeast Asia, where aid was used as a means to counter the spread of communism, promote economic development, and open new markets for foreign investment.212 The moral dimension is seen to compliment the material interests of the donor state by generating strategic and commercial advantages.

The work of Lieven and Huslman has been useful in contributing to what has traditionally been a one-sided debate on the moral aspects of foreign aid. Yet they arguably have not been

212 _{Anatol Lieven and John Huslam, “Developmental realism,” Harvard Law and Policy Review (16January} 2007) Available at: http://www.newamerica.net/publications/articles/2007/developmental_realism_4876 (accessed 12 January 2014).

extensive enough in fleshing out a set of principles that could be used to test the validity of their claims. Hence, the purpose of this chapter is to provide evidence of how a moral realist framework could explain the position of morality in a state’s foreign aid and development policy.

Expectations of reciprocity

Moral realism takes a similar approach to developmental realism in how it understands the motivations and outcomes of a state’s foreign aid and development policy, in that it understands it to be guided primarily by expectations of material benefits. But moral realism also goes further in stating that this expectation of reciprocity can have outcomes for the recipient state as well. In the first instance, where the aid is delivered is determined by whether it follows the state’s strategic interests. Here, geography can be a significant factor for certain states, like Australia, where its main recipients are in the Asia-Pacific, or it can follow certain military objectives, as was the case with US foreign aid delivered to Iraq in 2003 and to Afghanistan in 2001.213 Foreign aid policy guided by material factors thus increases the expectation of reciprocity, and can lead to certain benefits (described below) in improving diplomatic relations, and in helping to secure economic advantages.

Rational choice

It is important to note that aid will not always appear in the same form, and be directed to the same recipient. This is where moral realism can account for the variability of aid in a state’s foreign policy. In some instances, a state might adjust the type of aid, from a focus on economic development and education, to one that targets the improvement of good governance and transparency. In others, it might adjust the level of aid to a particular country, even deciding to stop aid all together. These shifts are indicative of a process of rational choice as to where the greatest expectations of reciprocity lie, because the returns for giving aid are calculated against the cost to the state in administering it. This is especially important in foreign aid, as leaders are often forced to justify the merits of aid to a taxpaying domestic audience. As well as accounting for policy change, rational choice can also explain why the benefits the donor receives from giving aid outweigh concerns for the interests of the recipient. Even though the donor may aspire to absolute standards in foreign aid policy, like

213 _{For more on the trends in US bilateral foreign aid, see Robert Fleck and Christopher Kilby, “Changing aid} regimes: US foreign aid from the Cold War to the War on Terror,” Journal of Development Economics 91, no. 2 (2010), pp. 185-197.

universal primary education under the Millennium Development Goals (MDGs), this outcome is unlikely to ever be achieved, as it would require a greater amount of commitment than what the state, guided by its own interests first, is willing to give. Therefore, while moral realism expects there to be benefit for the recipient in giving aid, this is part of the state’s calculation that it will achieve its national interest in return.

Moral and material outcomes

Expectations of reciprocity and rational choice address the motivations for aid, and where aid is most likely to be directed. This leaves the effect of aid policy, or the moral and material outcomes. Consideration of the effect of aid is important because, in itself, the act of providing aid is neither good nor bad. In some instances, the delivery of aid can lead to aid