Is Bhutto’s Death Boon or Blow to the U.S.?

Does the fear and chaos created by Bhutto’s death benefit Bush-Cheney by protracting their “war on terrorism”?

Or does it mean the assured failure of the Bush administration’s policy in Pakistan and the Middle East?

Analysts agree that the assassination of the strongly loved and hated Benazir Bhutto will cause more instability in the nuclear-armed nation. However, there seem to be more disparate opinions on the consequences this uncertainty in Pakistan bears for the U.S. and the wider world.

Many equate the resulting violent unrest in Pakistan, and the possible further derailment of its already-crippled democratic process as wreaking havoc on hopes for a stable and peaceful Pakistan. As the only Muslim nuclear nation, Pakistan is strategic for several reasons including the fact that it neighbors Afghanistan, India, Iran and China, and serves as the base for at least some of the Al Qaeda and Taliban activities. Instability in Pakistan means instability in the Middle East and across the world.

While some think the U.S. administration will worry about this spreading instability, others think it is just what it ordered – so it can not only continue its presence in South Asia and the Middle East, but increase it. The uncertain situation created by Bhutto’s death allows the U.S. administration to strengthen its political control over Pakistan, and paves the way for an expansion and deepening of the war on terror. The argument goes that Bhutto’s death benefits Bush because it yields him and his cronies greater, continuing war dividends.

I think Bhutto’s death may create more trouble than benefits for the Bush administration. The U.S. has come under harsh criticism for its unconditional support of the autocratic President Musharraf, and has been trying to phase him out of power slowly. Considered the ‘Darling of the West’ because she appeared to be closely allied with the U.S. on fighting religious extremism, U.S. officials had pushed Bhutto hard to reach a power-sharing deal with Musharraf.

With Bhutto dead, U.S. options for viable, democratic leaders to support instead of Musharraf are extremely limited.

It is bad news for the U.S. that it is stuck with Musharraf as the only suitable front-man in Pakistan to fight its war against terror. Recent reports indicate that the dictator may have wasted most of the $5 billion in aid given to Pakistan since 9/11. His track record on fighting Al Qaeda and sympathetic terrorists in Pakistan thus far is lacking at best. By cracking down on Pakistan’s judiciary and civil society, Musharraf’s power-seeking authoritarian measures threaten the already-slim prospects for democracy in the country.

Will the U.S. continue to back the autocrat? Or will it find a way to side with the people of Pakistan rather than throwing its support behind a single leader?

What You Didn’t Know about Foreign Aid

As the U.S. rethinks its promise of $750 million in civilian aid to Pakistan’s tribal regions, and Australia, Britain and France promise new aid packages to Afghanistan, I was reminded of a highly insightful research paper that analyzes the determinants of foreign aid.

The authors, Bruce Bueno de Mesquita and Alastair Smith, both professors of politics at New York University, approach foreign aid as resources traded for policy concessions. This means they view official giving abroad as aid-for-deals rather than as motivated by humanitarian concern.

According to the authors, donor country governments are willing to purchase policy concessions that are favorable to their country but costly to recipient countries. Such policies are always harmful to the recipient country or they would not have to be paid to pursue them.

Mesquita and Smith analyzed bilateral OECD aid data for all countries during the years 1960-2001 and found some very interesting results. I summarize the thought-provoking ones as follows:

• Autocracies are more likely to receive aid than democracies.

That autocratic regimes attract more foreign aid from OECD countries reflects the fact that it is cheaper to buy off a dictator who only needs to pacify his small group of loyal cronies. Since it is hard for a democratic government to implement a policy that hurts the country, it is more expensive for a donor government to buy that policy concession. Because democratic leaders require high levels of aid before being willing to provide policy concessions, they are less likely to receive any aid.

• When democracies receive aid, however, they get larger aid packages than autocracies receive.

Since the aid-recipient democratic government is answerable to its entire electorate rather than a small group of loyal followers, it incurs a higher cost in implementing a policy concession unfavorable to its populace. The size of the aid packages offered to democratic countries reflects this higher cost.

• Needy countries are not very likely to receive aid.

The authors use the crude death rate, measured as number of deaths per thousand people, as the indicator of a country’s need. “A high death rate is associated with poor health care, poor sanitation and drinking water, too few physicians, immunizations, inadequate education, and so forth.”

Altruistic donors should predictably give more aid to needier countries with worse death rates. The empirical analysis shows that having trade and security interests with a certain country increases the chances that it receives aid from OECD countries while being needy does not.

• Conditioning on receiving aid, needy countries are likely to receive small aid packages.

Non-U.S. OECD countries are not only less likely to give aid to needy countries but when they give, they are also giving them relatively less.

This supports the aid-for-deals theory. The neediest are not receiving the most aid; rather, those whose policy compliance can be purchased at an affordable price apparently are offered aid and agree to take it.

• Contrary to popular belief, U.S. does not have a more cynical aid policy than the rest of the OECD.

It is well-known that relative to many European, especially Scandinavian, countries, U.S. gives very little aid as a proportion of its GDP.

The data shows, however, that while non-US OECD members gave less to those with the greatest need, the U.S. was needs blind in the amount of aid it gave. Furthermore, while other OECD countries are less likely to give at all to needy countries, the U.S. is more likely to give to countries with a significantly elevated mortality rate.

These results suggest that the argument that non-U.S. OECD members are more motivated by humanitarian concerns may need some reconsideration.

The on-going discussion about the efficacy of foreign aid as a poverty alleviation tool would be significantly improved if it acknowledged that the reduction of poverty is not aid's primary function either for donors or recipients.

Which of the study's findings stood out to you as surprising, awful, or obvious?