Participants pose for a group photo during the extraordinary summit of the Organization of Islamic Cooperation (OIC) in Istanbul, Turkey, on Dec. 13, 2017. Picture by Anadolu Agency/Xinhua News Agency/PA Images. All rights reserved.With his bullet-proof limousines at hand, and an entourage of 1500 conveyed from Riyadh in six jumbo jets, Saudi Arabia’s King Salman bin Abdulaziz visited Indonesia in March 2017. A pledge of a billion dollars for “various development projects” was among the mega-deals signed. The monarch’s other promise of aid, probably of higher priority, was for education centers to promote Islamic teachings consistent with Saudi preferences. At the same moment, in Pakistan, Turkish President Recep Tayyip Erdogan was calling attention to Turkey’s aid during a summit of Economic Cooperation Organisation, a group of Muslim-majority states (several with Turkish cultural affinities) jointly committed to building a Central Asian common market like that of the European Union.
Such events highlight concerns, voiced for many years In western chancelleries and think-tanks, about ‘rogue’ aid wielded by autocrats. Overtly developmental and humanitarian, such aid is regarded as covertly political. Where aid is supposed to adhere to technocratic ‘good practices’ such aid is patently ‘bad practice’, and poses geo-political risks. ‘Rogue’ donors include the usual suspects: China, Venezuela and Iran. But some of them lurk in the west’s own camp, notably Saudi Arabia and others in the Gulf Cooperation Council (GCC): Kuwait, Oman, Qatar, and the United Arab Emirates. In addition, Turkey, where a faith-based political party has steered foreign aid for nearly 20 years, is by no means above suspicion.
The Gulf monarchies and Turkey are increasingly welcome in the western-led aid congregation
Especially awkward for the United States – whose military and diplomatic protection of the Gulf monarchies and of Turkey has never wavered – was those states’ covert promotion of Islamic fundamentalism, the ground from which so many troubles for the US and its allies have sprung since 9/11. Beyond politico-cultural hazards, their aid also carried economic risks for western interests. Apprehensions have grown that new donors are using their aid to gain lucrative footholds in markets hitherto the exclusive preserves of western exporters and investors. In command-posts of the aid system (IMF, World Bank, OECD) there are further concerns that their worldwide project of diffusing market fundamentalism may be put in jeopardy. In that scenario, cheap and unconditional loans from ‘rogue donors’ may weaken recipients’ acceptance of ‘improved’ policies (that is, austerity and other neoliberal measures) that western donors demand in exchange for their aid.
On the aid stage, Arab and Turkish donors aren’t small-time players. Aid from the GCC monarchies (at least $14 billion in 2016, up from $1.2 billion in 2000), and from Turkey ($6.5 billion in 2016, up from $0.1 billion in 2000) attest to their rising importance. In 2016, aid outlays by GCC donors combined ranked fourth (behind the US, UK and Germany) while outlays by Turkey ranked seventh (after those of Japan, France, and Italy). Total spending is even larger, since many transfers go unrecorded, especially those from the Gulf monarchies, where elites make few distinctions between public and private money and where public finance is almost totally opaque.
But have western fears been borne out? Do Gulf monarchies and Turkey use aid in ways that violate OECD aid norms, and fuel business competition and political tendencies unwelcome to western powers?
Over the past two decades western donors have worked to gain the adherence of Turkey and the Gulf monarchies to norms and rules of the aid mainstream, and ultimately to recruit them into their old ‘club’, the OECD Development Assistance Committee (DAC). Aid system idioms and policy formulas are transmitted routinely through publications and gatherings, such as the annual ‘Arab-DAC Dialogue on Development’. Turkey, Saudi Arabia and Kuwait together with several Arab development banks are signatories to the OECD-driven Paris Declaration on Aid Effectiveness (2005) and numerous other statements of resolve, which focus chiefly on technocratic matters of aid management. Performance according to these standards seems to be rising (OECD/UNDP 2016). When selecting recipients and apportioning them aid, GCC and Turkish donors behave like western donors in weakly favouring recipient ‘good behaviour’ (especially the vaguely-defined ‘good governance’) and in showing little regard for social and economic rights.
Today, having begun to sing from the same policy song-sheets, and having put some money in UN and other global collection boxes, the Gulf monarchies and Turkey are increasingly welcome in the western-led aid congregation. Yet a deep and genuine interest in management performance, and in recipient ‘good behaviour’ as defined by established donors, is not self-evident. Of far greater interest to the Gulf monarchies and Turkey are religious affinities, political allegiance and export markets. Their aid goes chiefly to states, multilateral development banks and non-state actors in the Muslim world or Ummah, preferably of Sunni Islamic persuasions. With exceptions like Pakistan and Somalia, countries in the ‘near abroad’ of the Middle East and North Africa have priority.
For the private sector, aid can be a competitive contest with high stakes. It helps open doors to new markets for donor economies, and is often provided on condition that recipients accept goods and services only from the donor land. Turkey (like the US, Austria and others) overtly “ties” its aid in that way, but the Gulf monarchies do not, at least formally. Yet boosting non-oil exports is a GCC priority, and aid is supposed to play its part in promoting them. Recipients, for their part, seek aid on the softest possible terms, especially when money is conditional on wrenching and thus politically risky changes of policy, such as the ending of subsidies for fuel and food. But China offers aid without internal meddling. Faced with that competition, Washington’s hard conditions tend to turn soft. Aid from the Gulf Monarchies had such effects up to 2000, but no longer.
Today the GCC and Turkey pose no challenges to mainstream aid’s leading paradigms. In terms of developmental vision, they have gone along with the UN’s Sustainable Development Goals (although Saudi Arabia wished to see the target on ‘reproductive rights’ deleted). Yet in practical terms their vision is probably better captured in statements about their own development, drawn up by the management consulting firm McKinsey – jokingly referred to as the Ministry of McKinsey, a sign of its powerful influence in the Gulf states.
Little of this aid was invested for productive purposes
Western powers’ indulgence of this aid is encouraged by the simple fact that petrodollars are routinely recycled to western financial interests, notably on Wall Street. The story of Arab aid fuelled by an oil rent boom is illustrative. As revenues flooded into oil-producer treasuries in the 1970s, Kuwait, Saudi Arabia and the UAE began an aid-spending binge. Up to the mid-1980s they accounted for as much as one-third of aid worldwide. It was a massive windfall for state treasuries of Muslim-majority lands: Egypt, Syria, Jordan, Yemen, Morocco, Pakistan etc. Subsequent research in pursuit of the question ‘how is foreign aid spent?’ reveals that little of this aid was invested for productive purposes. Instead, most went toward consumption (mainly of imports) or departed rapidly as “huge unaccounted capital outflows”, probably to offshore accounts in OECD jurisdictions. Recipient countries benefited only in part, and then only for short-term purposes; a substantial but unknown number of those benefiting were private firms and individuals elsewhere.
Risks remain high that their aid will not yield a lot of development but instead a lot of debt
Might today’s aid produce the same results, boosting short-term consumption and capital flight? Perhaps not to the same extent, since today both donor and recipient capacities to use aid productively and transparently are better than 30 years ago. Yet in the face of continuing indulgence if not promotion of secrecy jurisdictions, the rise of high-cost ‘public-private partnerships’ and of GCC donor preference to provide loans (notorious as sources of capital flight) rather than grants, risks remain high that their aid will not yield a lot of development but instead a lot of debt.
Under banners of ‘security’ western donors welcome Turkish and Gulf aid where it might stabilize conflict-prone situations such as Somalia, where since 2011 Turkey has taken big risks in its aid efforts. Its interventions have been intense and intentionally visible – so visible that for one Somali resident “Turkey has become the McDonald’s of Mogadishu. Their flags are everywhere, just like the yellow arches of McDonald’s are everywhere in America.” Humanitarian action under a Turkish flag is meant to demonstrate Islamic solidarity and virtue, to enhance Turkey’s political and diplomatic standing, and not least to raise revenues through public donations. In recent years, Syria – that is, support of Syrian refugees in Turkey – accounted for well over half of Turkish aid worldwide, which includes charitable donations raised through government sponsored telethons. A highly-publicised case of humanitarian action was the 2010 ‘Gaza Freedom Flotilla’: six Turkish ships carrying hundreds of activists and thousands of tons of relief goods attempted to breach the blockade of Gaza, but were stopped, with deadly violence, by Israeli commandos.
Gulf monarchies have for many decades used their aid for political, diplomatic and cultural ends, usually to the satisfaction of key allies in the west. In the 1970s, the demise of secular pan-Arab nationalism was at least in part a result of Saudi Arabia’s skilful use of its money. It routinely bolstered autocratic regimes in Egypt and Morocco and bankrolled small anti-communist wars such as Siad Barre’s incursion into Ethiopia and the Mujahidin’s campaign in Afghanistan. It fortified Muslim inter-state relations pivoting on itself, notably in the creation of the Organisation of Islamic Cooperation. And for the time being it has helped contain popular upheavals from 2011 to 2013 across the Arab world.
Less satisfactory for western allies is the powerful impact of aid used to diffuse a particular brand of conservative, yet militant, Islam. Today, however, a kind of ‘buyer’s remorse’ is detectable in the Gulf and beyond, since a nihilistic militancy – the ‘blowback’ from decades of investment in Salafist/Wahhabi missions, schools and media – has become a nightmarish threat to the monarchies and their allies.
The patterns noted here – aid as a seeding-mechanism for business interests, and especially as a tool of statecraft to gain prestige, build coalitions and inter-state institutions, and to promote a transnational ideology – are also commonplace in the aid mainstream. The spontaneous, rapid and fluid practices of the Gulf monarchies and Turkey as donors, especially for political ends, would normally meet disparagement from the donor mainstream. Yet some established donors may be giving such practices a second look. In its latest flagship report the World Bank encourages aid strategists to move beyond technocratic approaches and to take domestic and international politics seriously. In that new perspective, Turkey and Gulf monarchies in their savvy, if reactionary, use of aid may have stolen a march on western citadels of donor power.
Get our weekly email
CommentsWe encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.