[OPINION] The paradox of a gift: Foreign aid and its conditions

Amid the increasing tensions over the disputed South China Sea, President Rodrigo Duterte asserted: “You know, Red China or Communist China just wants to be friends with us.” This statement is not without basis; after all, China has already pledged $24 billion in investment and credit facilities to the Philippines.

President Duterte is not the only world leader who sees China as a friend. After signing economic agreements in 2015, then-Zimbabwe president Robert Mugabe called Chinese President Xi Jinping “God-sent.” (READ: ‘A friend in need’: China’s promises to PH)

China is one of the world’s largest providers of foreign aid, spending approximately $354.3 billion across 140 countries from 2000 to 2014, according to AidData.

China has reiterated that its assistance to developing countries is premised on equality between partners and respect for sovereignty in order to enhance the productivity of its recipients. However, researchers caution that there may be “strings attached” to these acts of generosity. French philosopher Jacques Derrida argues that a gift always involves a cycle of giving, receiving, and taking back. He claims that giving most often involves recompense, debit, credit, and interest.

This is the paradox of foreign aid as a gift: on the one hand, it is depicted as genuine help without any expectations of reward, but the practice of aid has historically involved economic and political conditionalities.

Economic conditions: Loans and grants

Foreign aid has been used to create debt among the recipient countries. One of the major findings of the same AidData study indicates that a very small portion (21%) of the money China gives to other countries is considered a direct grant (and therefore does not lead to debt). Majority (79%) is in loan form that needs to be repaid over time with interest. (READ: Made in China: Loan terms with waivers, shrouded in secrecy)

Socioeconomic Planning Secretary Ernesto Pernia admitted that in the case of the Philippines, Chinese loans carry 2% to 3% interest rates which is 12 times more expensive than the interest rates of Japanese loans (0.25% to 0.75%). (READ: What happens if the Philippines can’t pay off loans from China?)

Consequently, several critics have voiced out concerns after witnessing the fate of Sri Lanka, Tajikistan, and Zambia, among others. Under its “debt-trap diplomacy,” China has demanded concessions when countries were unable to keep up with repayment. (READ: [ANALYSIS] How the Philippines fell for China’s infamous debt trap)

More specifically, Sri Lanka gave up its Hambantota port on a 99-year lease, Tajikistan handed over land on its disputed border with China, and Chinese loans in Zambia account for one-third of the country’s total national debt. (READ: [ANALYSIS] Is Duterte selling out the Philippines to China?)

Political conditions: Military and private interests

Foreign aid has also been used as a political tool to serve military and security goals. In Africa, Chinese development aid tends to be concentrated in areas where government officials reside. Furthermore, one of the architects of the 2017 Zimbabwe coup (Vice President Constantino Chiwenga) reportedly went to China a week before, suggesting some level of Chinese involvement in Robert Mugabe’s removal.  

Despite the international arbitration ruling that the Philippines has sovereign rights over the West Philippine Sea, President Duterte has softened his approach to the territorial claims. Appeased by the financial promises to support his Build, Build, Build program and war on drugs, Duterte remarked: “If I wage a war with China, in 7 minutes their missile will reach Manila.”

Conditionalities prevalent in other countries too

To be fair, these conditionalities do not apply to China alone. Official development assistance (ODA) from Western countries have also shown these conditional tendencies.

US foreign aid has also been directed by strategic interests. During the Cold War, the US government gave financial aid to “strengthen corrupt but geopolitically useful autocracies.” Furthermore, in 2001, it showered Iraq, Afghanistan, and Pakistan with aid as part of its global war on terror. However, it has withdrawn aid when its objectives were not met, such as when the Philippine government tried to prohibit foreign military bases in the country in 1992.

Japanese loans in the Philippines are likewise guilty of “product tying,” where aid is tied with the purchase of goods and services in the donor country. Eduardo Tadem’s research on ODA revealed that Japan “earned from 75 to 95 cents for every dollar of aid it gives…as prices of tied goods were over 20% higher than the lowest available international prices.”

So what do these mean? Should we reject foreign aid as it is ultimately self-serving anyway? Not at all.

Sociologist Marcel Mauss considers gift-giving as an age-old social phenomenon which “helps establish complex and multidimensional social relations.”

It would be a mistake to repress or deny it, as foreign aid is really important to developing countries like the Philippines. In fact, in 2017 alone, the Philippines received gross ODA of $823.7 million, with Japan ($326.9 million), the US ($213.1 million), and Australia ($53.9 million) as the top 3 donors.

We should be vigilant instead, constantly questioning and negotiating, taking nothing at face value, and learning from others as well as from our past mistakes, so that we can altogether better bring the donor to account. – Rappler.com

Justin See is a PhD candidate at the Department of Social Inquiry of La Trobe University in Melbourne, Australia. He is doing research on power, politics, and distributive justice of climate change adaptation interventions by non-governmental organizations. He was also a former lecturer at the Department of Sociology and Anthropology of Ateneo de Manila University.