Indiana University Research & Creative Activity


Volume 31 Number 1
Fall 2008

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Matthew Auer
Matt Auer
Photo by Chris Eller, courtesy of IU School of Public and Environmental Affairs

Photo of Bono and Al Gore by Robert Scoble, cc, some rights reserved,

"Although our aid programs have helped to avoid economic chaos and collapse, and assisted many nations to maintain their independence and freedom — nevertheless, it is a fact that many of the nations we are helping are not much nearer sustained economic growth than they were when our aid operation began. Money spent to meet crisis situations or short-term political objectives while helping to maintain national integrity and independence has rarely moved the recipient nation toward greater economic stability."
--President John F. Kennedy, proposing a new U.S. foreign assistance program in 1961

Foreign Aid, Sustainable Politics?

by Ryan Piurek

When John F. Kennedy set out to retool U.S. foreign aid in the first year of his fledgling administration, the mega-rock-star Bono had not yet been born, U-2 was a spy plane shot down over Russia, and world-renowned economist Jeffrey Sachs was an elementary-school student living in Detroit. Bill Gates and Microsoft? Pure science fiction.

In 1961, Americans were becoming increasingly dissatisfied with the nation’s foreign assistance programs, and a bestselling political novel had a lot to do with those concerns. The Ugly American, published just three years earlier, had offered an eye-opening account of U.S. arrogance, corruption, and gross incompetence in the nation’s efforts to assist underdeveloped parts of the world. With the passing of the Foreign Assistance Act, the creation of the U.S. Agency for International Development (USAID), and the establishment of the Peace Corps, all in 1961, Kennedy sought to usher in a new humanitarian movement. Today, that movement is led by the likes of Bono, Sachs, Gates, Bill Clinton, Al Gore, and other celebrity philanthropists who are committed to causes such as eliminating poverty and eradicating AIDS. Billions of dollars have been spent in addressing these and other global challenges, and many significant advances have occurred.

Yet according to Matt Auer, despite our noble intentions, we remain susceptible to "pitfalls" that have consistently limited the effectiveness of our foreign aid and prevented underdeveloped countries from realizing true economic sustainability.

"Our objectives are pure in most cases. Jeff Sachs is genuinely interested in humanitarian assistance, poverty elimination, and sustainable development, as are Bono and other name-brand entertainers. But lessons from The Ugly American remain relevant: It’s simply not enough to come in with aid, resources, and goodwill. We need to spend time doing institutional development to make that aid work," says Auer, a professor of public and environmental affairs at Indiana University Bloomington who has written extensively on public and environmental policy topics, including the politics of foreign aid.

In recent years, Auer has examined whether true sustainability can occur in poor nations that fail to adopt key institutional reforms such as the rule of law, well-enforced banking rules, clean government, and democratic initiatives.

His 2007 article "More Aid, Better Institutions, or Both?" which he wrote after studying the impact of foreign aid on Equatorial Guinea, questioned the wisdom of giving aid without institutional development. Despite an "almost overnight" economic transformation of this Central African country—resulting from the discovery of large oil reserves in the mid-1990s—Equatorial Guinea has lagged behind comparable nations in developmental measures such as life expectancy and literacy rates. According to Auer, Equatorial Guinea’s inability to improve the living standards of its citizens, most of whom who live in poverty, can be attributed to a failure to distribute its newfound wealth equitably.

"You might say it’s the equivalent of a banana republic," Auer says, "where the bananas are natural gas and oil and where government has complete control over contracts and which oil companies get a cut of the action. It’s a very centralized, non-transparent decision-making process that has left the country susceptible to graft and corruption."

In advocating for institutional development as a way to achieve true economic sustainability, Auer finds himself in direct opposition to Sachs, director of the Earth Institute at Columbia University who has been named by Time magazine as one of the world’s most influential leaders. Sachs, who has written hundreds of articles and books on globalization, poverty alleviation, and environmental sustainability, believes the world’s other major industrialized democracies must significantly increase the amount of foreign aid they give to less developed countries. Their primary focus, he says, should be on delivering as much money as possible to those in need. The institutions within those countries, he contends, will take care of themselves.

It’s a "romantic" vision, Auer says, but it misses the mark. "Sachs would say, ‘I’m proposing we give aid directly to the recipients. We don’t need to worry about governments. We’ll work directly with the end users of this aid,’" Auer says. "I find that naïve. Governments are not going to allow you to come in—even if you have deep pockets—and let you control how money is used and who gets the resources. You need to be very premeditated about how you design and deploy institutions that can ensure the aid actually works.

"I believe we should send in aid accompanied by institutional development," Auer continues. "It’s not sufficient for aid agencies to come in and say ‘We’ll take care of that. We’ll guarantee fair transactions. We’ll do all the training.’ What happens when the donors and consultants leave? I find it weird that [Sachs’s] rhetoric says not to worry about corruption, the rule of law, and transparent government."

Despite his genuine puzzlement over the lack of concern about institutional development, Auer commends Sachs, Bono, and others for "fighting the good fight" to address the major global challenges of the 21st century. "To be able to insert themselves into the agenda of every G8 meeting and, if only by attrition, wear down the world’s leaders into paying attention to issues such as poverty in Africa, is a good thing," he says.

But Auer returns to his concern: "If we send massive aid resources without attention to creating robust institutions in these countries and that aid fails, what do you fall back on? What comes next? Do you throw up your hands and say we just wasted our best single chance to deal with these problems?"

Protecting foreign forests

Auer’s belief in the importance of institution-building also stems from a recent examination of 15 years of environmental policy reforms in Central and Eastern Europe. Through his research, he learned that the failure of former Eastern bloc countries such as Poland and Czechoslovakia to address environmental issues in the 1970s and 1980s resulted in serious health problems in those nations. He visited towns in Poland where it was believed that one in 10 children had an intellectual deficit because of exposure to lead and other kinds of metals. Respiratory problems, cancer, and other serious illnesses were also prevalent in a region of the world where the desire of authoritarian leaders for industrialization outweighed any concerns over public health.

The European Union has forced Central and Eastern European nations, outside of Russia, to develop policy structures to deal with environmental issues, Auer says. Still, challenges remain. Long after the fall of the Berlin Wall, corrupt institutions responsible for overseeing Romania’s forestry sector continued to engage in black-market practices, graft, and clandestine exchanges (for example, selling wood that was not part of the country’s officially delegated raw materials). As recently as 2003, Auer was part of a U.S. Forest Service and State Department group that helped delay a World Bank loan to Romania because of a lack of anti-corruption contingencies.

In Romania and elsewhere around the world, Auer has been actively involved in promoting new initiatives for global-scale forest management and the international diplomacy surrounding this effort. He has served as a senior advisor to the U.S. Forest Service and as a member of the U.S. delegation to the International Tropic Timber Organization. In that role, he approved more than a half million dollars of government aid to developing countries for forest management and conservation projects. From 2001 to 2005, he was a member of the U.S. delegation to the U.N. Forum on Forests that sought to strengthen international commitments to sustainable forest management. Part of that effort involved devising a system for monitoring, assessing, and reporting on sustainable forest management and conservation.

"It was very exciting to be involved in monitoring individual nations’ progress toward implementing and internalizing the agreements that were made at the UNFF," Auer says. "Those agreements were not legally binding. There was no hammer, no teeth in any of the decisions made, but still, you did get the sense that the meetings were populated by people who actually cared about forests. These were people who were eager to see their own countries promote sustainable forest management."

Sustainable academics

More recently, Auer, who is in his first year as dean of IU’s Hutton Honors College, has trained his focus closer to home.

Along with several colleagues, he is developing a database that tracks the rising—and in some cases declining—fortunes of academic programs that deal with environmental issues. Although IU’s School of Public and Environmental Affairs boasts the nation’s No. 1 environmental policy and management program, according to U.S. News and World Report, not all programs have experienced success, Auer says. Increased competition in the environmental science marketplace has not always been kind to traditional disciplines such as geology, geography, and agricultural sciences. At the same time, a number of environmental programs, many of which came into existence in the 1990s, have also struggled and, sometimes, dissolved.

"We’re trying to identify the drivers that enable programs to be strong," Auer says. "What determinants make for robust, durable programs?"

This new research is a natural progression from his previous work, Auer says, adding that he has spent all of his professional life proving that academics can make a positive difference in the world. For evidence of this impact, one need not look further than IU’s SPEA, which has been home to scholars such as the late Keith Caldwell, distinguished environmental thinker and a principal architect of the National Environmental Policy Act (NEPA).

"You hear that academics are in their ivory tower and that much of what they do is not applicable," Auer says. "My entire career has been devoted to breaking down these walls. I take umbrage to the claim that academics don’t have an impact. In many cases, agencies really ought to listen to us. It’s gratifying when they do, because we have some good things to contribute."

Ryan Piurek is assistant director of university communications at IU Bloomington.