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A 2005 report by Action Aid suggests that even the aid that is earmarked for beneficial infrastructure may not be reaching its nominal destination. Action Aid found that many countries are donating "phantom aid": aid that does not help the people it is intended for in the donor country. Phantom aid includes spending on overpriced technical assistance, aid tied to spending in the donor country, double-counted debt relief, and other aid that never materializes for poor countries.
Canada's habit of tying aid to spending in Canada, effectively transforming aid into subsidies for Canadian corporations, has given us "a black eye in the international community" said McDonough.
A September 2005 article in Reuters reported that during last year's famine in Niger, 90% of the food money given by Canada had to be spent on food from Canada. A report by the Organization for Economic Co-operation and Development (OECD) found that this kind of policy can result in food taking four to five months longer to arrive and, when it does, can drive down prices for local farmers if the famine has already passed.
Most OECD countries, including Canada, signed onto the UN's 1070 mandate to have overseas aid reach 0.7% of Gross National Income (GNI); however, very few, save Sweden, Denmark, Norway and Luxemburg, have managed to come even close to that goal. In 2003 Canada donated 0.22% of its GNI to aid but spent 1.1% of its GNI on the military. In addition, research by Action Aid shows that when phantom aid is taken into account, the percentage of real aid given is even lower.
Phantom aid accounts for over half of Canada's aid spending. 17% of Canadian phantom aid is spent on technical assistance that could be spent in the donor country and therefore cost less, be more effective and better coordinated. In addition, the Action Aid report states that 47% of Canadian phantom aid is tied to spending in Canada.
McDonough hopes that the new Conservative government will improve Canada's reputation in aid spending. She points out that in February 2005, all of the then opposition parties, including the Conservatives, committed to an increase in aid and a restructuring of how aid is used. In a recent letter to Prime Minister Harper, NDP Leader Jack Layton reminded Conservatives of their election promise to increase aid by over $400 million over the next five years. This would bring Canada's aid up to 0.42% of its GNI by 2010.
When asked if she felt the Prime Minister would rescind on these commitments McDonough responded, "You don't speculate on the odds of whether or not [the Prime Minister] will live up to [his commitments], you use every tool you can to push them through."
After last year's famines in Niger and Mauritania, the Canadian government changed its aid policy, requiring 50% of food aid be purchased from Canada, down from 90%. This may be a sign that Canada's aid programs may be on the verge of reducing other tied aid, which is good news for countries like Afghanistan, which is scheduled to receive hundreds of millions of aid dollars from Canada over the next four years.
The Dominion is a monthly paper published by an incipient network of independent journalists in Canada. It aims to provide accurate, critical coverage that is accountable to its readers and the subjects it tackles. Taking its name from Canada's official status as both a colony and a colonial force, the Dominion examines politics, culture and daily life with a view to understanding the exercise of power.