Foreign Aid is a Money Laundering Scam for Banks and Major Corporations (Part 1 of 2 parts)

     The term foreign aid has been defined as “poor people in rich countries giving money to rich people in poor countries."  That’s only part of the story. The rest of the story is that foreign aid, by and large, is a money laundering scheme. If the money were taken directly from the taxpayers and handed to the bankers and corporations, there would be as big a protest, or bigger, as the one in 2008.

     I have been asked to write an article about this, and to provide links. The trouble is that my most important information came to me long before the existence of the Internet. To make matters more difficult, at the time I learned these things, I was so uncritically accepting of the official view of how the world works that I didn’t see the significance of the information.

     Nonetheless, if what I’m saying was true then and is still true, the Internet must have some evidence of it, at least as far as current events are concerned. Here’s what I’ll do: I’ll cite some current problems in foreign aid programs in several countries and with the World Bank.

     In part two of this two-part series, I’ll try to tie all this information into a single package. I think you’ll find that the problems of waste and fraud are not “flaws” in the system; that they are, in fact, the way the system is designed to work. Bear in mind that, before you can decide whether a program is efficient, you have to have a clear understanding of what the program is intended to do.

     Here is a sampling of what I found:

    Between July 1, 2007 and June 30, 2010, a whopping 63% of Australian foreign aid contracts went to corporations, and 22% went to individuals. Only 12% went to governmental and non-governmental development bodies. Measured by the value of the contracts, 84% went to corporations, 3% went to individuals, and only 11% went to governmental and non-governmental development bodies. (link) 

     While the fat cat recipients of Australian foreign aid are well known, just what is done with the money is less well known. The World Bank, which receives $450 billion a year (presumably Australian dollars) from Australian taxpayers, has come under fire for its perceived lack of transparency in how it handles the money and why so much of the money is going to corporations. (link) 

     In the United States, fully two thirds of “foreign aid” is actually military aid. Prior to George W. Bush’s second term of office, the State Department was the primary dispenser of U.S. foreign aid. Since then, the Pentagon has handled the lion’s share of “foreign aid.”

     If you think you voted for “hope” and “change” in 2008, don’t look for hope or change in the U.S. foreign aid budget. Like almost everything else about the Bush presidency, the militarization of “foreign aid” has continued through Obama’s term of office. (link)

     Don’t get the idea that the Pentagon’s interest in foreign aid has anything to do with assisting needy foreigners in Pakistan and other trouble spots. The only assistance the Pentagon is noted for giving people in other countries lies in helping them to find out if there really is life after death.

     Let’s not forget how the bankers profit from the foreign aid scam. In Chapter Three of The Economic Rape of America, Frederick Mann points out that money and value are not the same thing. Bankers create paper “money” out of thin air, loan it to governments and other entities, which then have to pay it back with money that has value because it’s the product of labor.

     For a 30-year mortgage at 10%, the borrower pays back 336% of the money he borrows. The principle, which was created from nothing, returns to nothing; but the remaining 226% (interest), which has value, is transferred from the general economy to the banker.

     Now consider how much interest the taxpayer pays on a loan that is never fully repaid. This is addressed in Chapter Three: “The Federal Reserve Bankers.” (link)  To download the whole book, The Economic Rape of America, (free for personal use only), click here. 

     Apart from the military industrial complex scams, there are two kinds of foreign aid: loans and grants. In the hands of corrupt governments, both tend to generate governmental corruption. Loans tend to generate both dependency and corruption. As one example, Zaire’s leader Mobutu See Seko is estimated to have stolen $5 billion dollars in aid money. Almost immediately after negotiating a reduction in interest payments, he “leased a Concorde to fly his daughter to her wedding on the Ivory Coast.” Sam Amsterdam indicates that this level of corruption is commonplace. (link) 
     As I looked for illustrations to use in this post, I found credible accusations that the Burmese (a.k.a. Myanmar) military dictatorship is pocketing tens of millions of dollars in foreign aid for disaster victims.  This aid was intended to be used for the relief of people who had lost everything in the wake of Cyclone Nargis.  Never underestimate the ghoulishness of corrupt dictators.    (link)

     Much of the waste in foreign aid seems deliberate, and it benefits no one other than the corporations that supply unneeded products. In one program, a factory was built for the construction of glass windows in a country in which most houses didn’t have windows. The factory never became operational because it had no access to electricity. The finding of one study was that much foreign aid, as I suggested earlier, is designed to “stabilize” regimes that are friendly to the donor governments. (link) 

     I first became aware of foreign aid problems over thirty-seven years ago, when I took a college interim course based on a book called The Myth of Aid. As I accepted it all at face value, foreign aid programs throughout the world seemed random and chaotic.

     Just as youth seems wasted on the young, I wonder if idealism may also be wasted on the young. Following the wise advice to “question authority” is self defeating when we seek and accept answers from the same authority figures.

     In the second part of this series, I base my answers on observable facts and not on the conclusions spoon fed to us by the authority figures we should be questioning.
(To read part 2, click here.)