A STANDING ARMY AND COMMON ENEMY DIDN’T HURT EITHER

Labour's 'Marshall Plan' for Africa won't work (The Telegraph, January 7th, 2005)

The original Marshall Plan was entirely different to what was proposed yesterday as the centrepiece of Britain's 2005 chairmanship of the G8. In 1948, the European economy was in a slump, millions of people were homeless and the Soviet Union was hoping to capitalise on the chaos by sponsoring a coup in Czechoslovakia. The dictators responsible for this state of affairs were dead, and in their wake Europe was embracing democracy. America loaned $13 billion for reconstruction and the recipients (Britain received $3 billion) had to pay it back. There was a sense of moral obligation and gratitude towards America and Marshall Plan goods were stamped: "For European recovery - supplied by the United States of America."

The Labour "Marshall Plan" for Africa has almost no resemblance to its illustrious predecessor. Once you strip away the rhetoric about a "once in a generation chance to solve world poverty", what is proposed is three initiatives. First, the writing off of Third World debts; second, the doubling of aid; third, the use of financial instruments to front-load aid, so future payments are sped up and received immediately. As so often with Labour, what these amount to is throwing public money at the problem, irrespective of the consequences. The last thing Africa needs is more aid. Already, it receives something like eight per cent of GDP in foreign aid, or 13 per cent if you strip out the big economies of South Africa and Nigeria (at its peak, the Marshall Plan amounted to three per cent of European GDP). Yet much of this money is wasted. Take but one example: the budget for the Department for International Development is growing at nine per cent a year, more than any other department, yet last year it spent £700 million on consultants.

Despite, or even because of, our largesse, some African states are actually going backwards. The reason is simple. They have failed to develop the free institutions - property rights, the rule of law and democracy - that Marshall recognised as so important, and that underpin true economic development. Instead, the likes of Zimbabwe, Sudan and Congo are plagued by war and political failure. Properly functioning government is a rarity. Flooding the continent with aid does not encourage the sort of confidence in individuals, nor the good governance necessary for Africa to thrive. But it does fill us at home with the warm glow of self-righteousness.