The worst-kept secret in aid: aid-receiving governments run the aid agencies

see UPDATE at end of this post

Thomas Friedman had a good NYT column about Karzai yesterday. {{1}} His column cleared up the puzzlement created by a Dallas News editorial and other very similar stories about how Obama’s visit to Afghanistan to get Karzai to clean up corruption was great for “seizing Karzai’s attention.” Now we know why there’s corruption in Afghanistan: Hamid Karzai just FORGOT to deal with it. Could one of our army doctors give him A.D.D. medication?

Friedman is more realistic about a phenomenon that has been long known in donor-government /recipient-government relationships:  the recipient is the one who runs the donor government’s policies towards the recipient government. The same happens in multilateral aid agencies. We saw this all the time at the World Bank, where the corrupt autocrats receiving our loans would let us know what conditions we should put on the loans to them.

Friedman has a pithy rule that donors routinely break:

Never want it more than they do.

Of course, when the donors want something more than the recipient, and the donors know they MUST continue the aid relationship, the recipient is in a strong bargaining position to ignore that something, and no amount of attention-seizing is going to work. As Friedman says:

If we want good governance in Afghanistan more than Karzai, he will sell us that carpet over and over. How many U.S. officials have flown to Kabul — the latest being President Obama himself — to lecture Karzai on the need to root out corruption in his administration? …. he believes he has us over a barrel and, in the end, he can and will do whatever serves his personal power needs because he believes that we believe that he is indispensable for confronting Al Qaeda…

Even in less fraught situations than Afghanistan, the donors have an extremely poor record enforcing conditions on recipients. Not only do they break the Friedman Rule, but the department for Country X in the aid agency MUST disburse its budget for Country X this fiscal year (or else it won’t get any budget next year). The recipient knows this and so can ignore the conditions. (For a more careful and technical development of this argument, see the classic paper on why aid conditions don’t work by Jakob Svensson).

The solution to the problem is as logically simple as it is politically difficult: give aid only to country governments who want IT more than we do.

UPDATE (4/1, 12:14PM): Karzai says to luncheon guests  that America is an obstacle to peace in Afghanistan. Well, THAT would really simplify the problem -- just remove the obstacle! 

[[1]]Just for the record, I usually think that whatever Friedman writes about economics is nonsense while what he writes about Middle Eastern/Central Asian politics is good. This may be because I know something about the former and nothing about the latter.[[1]]