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The Pacific islands
are an arc of instability threatening Australia's security, argues a
new report (http://www.cis.org.au/IssueAnalysis/ia33/ia33.htm)
released by The Centre for Independent Studies on Wednesday 7 May,
2003. Report author Professor Helen Hughes analyses the causes of
the Pacific's economic stagnation, and calls for a radical
restructuring of Australian aid because it has contributed to the
Pacific's problems.
While these problems
are of considerable strategic concern to Australia, the principal
victims are the people of the Pacific. 'Throughout the Pacific,
population has grown at more than three per cent a year while the
economies have grown at less than one per cent a year. For most
people, life is no better than it was 25 years ago. Redistribution
has been from the poor to the rich. Small elites have appropriated
the benefits of what little growth there has been.'
Women, working in
traditional gardens, have until now prevented the emergence of
hunger, but they bear the brunt of economic stagnation. 'The
majority of girls in the Pacific have only two to three years'
schooling. Maternal death rates - reaching up to 370 per 100,000
live-births, compare with the worst performing African countries.
Women are the victims of violence and crime that have followed
economic stagnation.'
The Pacific receives
the highest aid per capita in the world, averaging US$220 per capita
and for some of the smaller islands exceeding US$3,000 per capita.
However, Professor Hughes argues that aid, far from helping the
Pacific to grow, has damaged it. Because aid is 'fungible', that is,
can be spent on whatever governments choose rather than on projects
for which it is designated, it has made it possible for Pacific
governments to pursue extravagant policies unsuitable for small
island economies. Because aid is unearned income - economic rent -
it encourages government waste and harms economic development.
Australian policy makers will have to understand why aid is damaging
and change aid policies accordingly if they are to combine
compassion with effective economic policy.
Professor Hughes
argues that the problems of the Pacific can only be solved by
Pacific governments. Recolonisation in any form is not an option. At
present, unfortunately, there are no signs of policy change.
Professor Hughes documents Pacific governments' denial that change
is needed and their unwillingness to reform the policies that are
leading the Pacific to decline. Development Banks are compounding
the Pacific's problems, and are far more concerned to get their
loans out than with effective aid policies. Professor Hughes argues
that Australia should follow the US Congress Meltzer Report's
recommendations for radically downsizing the international financial
institutions and it should shift its aid from multilateral to
bilateral channels. Although Australian (and other) aid is nominally
given for projects and programmes, it is in fact included in Pacific
budgets. Charades of project monitoring disguise the fact that aid
flows are in reality not controlled.
Professor Hughes
recommends that Australian aid should be removed from Pacific
budgets. To ensure that Australian taxpayers' as well as Pacific
interests are met, Australian aid should be subject to 'mutual
obligation'. That is, sovereign teams from the Pacific and Australia
should design, oversee implementation and monitor all aid projects
and programmes.
AusAID is one of the
most effective bilateral aid agencies, but its scope is limited. It
should be empowered to implement aid effectively by engaging in
substantive negotiations with its Pacific partners.
Media release from
the Centre for Independent Studies, Australia.
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