The South Pacific Aid Game

Rarotonga courthouse built with Chinese aid.

Rarotonga courthouse built with Chinese aid.

South Pacific countries like Tonga, Samoa, and the Cook Islands have classic “MIRAB” economies, based on migration, remittances, aid, and bureaucracy. An overwhelming proportion of aid money is given by metropolitan powers to their colonies, past or present. France spends a billion dollars a year maintaining its three Pacific colonies, although much of the money returns to France to pay for French imports or services. Australia and New Zealand provide smaller amounts of aid to various Pacific islands. Most of U.S. aid is spent in American Samoa and the U.S.-related entities in Micronesia.

Other European countries such as Britain and Germany channel most of their aid through the European Union, which supplies soft loans, import quotas and subsidies, and technical assistance. Japan is one of the largest providers of bilateral aid to the independent countries. The Asian Development Bank, World Bank, and United Nations agencies are also significant players in the aid game.

Although the South Pacific absorbs the highest rate of per capita aid in the world, much of the money is wasted on doing things for people instead of helping them do things for themselves. Aid that empowers people by increasing their capacity to identify, understand, and resolve problems is the exception, while prestige projects like huge airports, sophisticated communications networks, and fancy government buildings, which foster dependence on outsiders, are the rule. Direct budgetary aid to countries like Papua New Guinea is often siphoned off by corrupt politicians.

Japanese aid is intended primarily to ensure easy access for its fishing fleet and to support Japanese business activities in the islands. Virtually all Japanese aid is “tied,” with most of the benefit going to Japanese companies. In contrast, Australia and New Zealand are to be commended for taking the trouble to develop low-profile micro projects to assist individual communities.

Aid spent in the capitals prompts unproductive migrations to the towns. There‚Äôs a growing imbalance between the cost of government in relation to locally generated revenues. Salaries for officials, consultants, and various other roving “experts” eat up much aid. The only Pacific country with a high per capita income that is not highly dependent on aid is Fiji.