The Zig Zag

Drowning in Aid

Is there a danger that too much aid is being raised for the Tsunami disaster funds? The signs are there for some :-

“The Australian branch of aid agency Medecins Sans Frontieres (MSF, Doctors without Borders) has become possibly the first in the world to ask donors to stop pledging money to its tsunami appeal. The local MSF branch paused its appeal after reaching its $1 million [US$ 0.77 million] target in just three days. It decided it would be breaching its ethical code to collect money if it could not be used for its designated purpose”

It's worth remembering that the structural damage caused was not huge; damage was mainly limited to poor undeveloped coastal communities and didn’t destroy much expensive infrastructure such as power plants and bridges. So beyond ensuring that there is no disease outbreak, water is supplied and that victims e re-housed, it is hard to see what the money will be spent on. And aid without an aim can do more harm than good.

There are a number of channels though which this may occur;_

1. A signaling effect:- some business are already complaining that the excessive coverage to drum up aid is harming their ability to redevelop their livelihoods and business:-
Much to our dismay there are many unsubstantiated news stories about “total destruction” of Phuket’s coral reefs. Even our own effort to bring a CBS team to the Similans for a first hand look turned into a nightmare when they broke their promise and turned it into yet another “spectacular disaster” story. Our crew and passengers were quoted out of context and our underwater video footage used incorrectly. Never again!”
As long as the aid agencies are raising and spending money they will be implicitly advertising that the relevant areas are disaster zones and should therefore not be visited.

2. Crowding Out and Inflation
Aid agencies live in hotels and buy local goods. Typically they have limited cash controls meaning that the price of local goods may be artificially inflated in the affected area. This not only distorts price signals but again may discourage tourists and the establishment of new businesses.

3. Carpet BaggingThe presence of large numbers of NGO’s with little idea of how to spend the money will undoubtedly attract some unscrupulous carpet baggers with ideas about how this money should be spent. More dangerously, in areas already fairly lawless this can spill over into the warlordism that afflicted the aid effort in Somalia in the 90’s. there are already signs of fights over aid starting to break out in Sri Lanka where the Tamil Tigers are already starting to compete with the Sinhalese government over the allocation of aid.

But of course all this will be ignored because there isn’t really any one in charge with the incentive to care.

Posted by wardx107 at January 6, 2005 12:12 PM