Legal trouble with ‘aid for trade’

During a trip to Kenya, international development secretary Priti Patel has caused a headache for her department’s lawyers and accountants. Patel said: ‘We have to make sure that our aid works in our national interest.’

This involves using the aid budget to pave the way for trade deals.

Aid has been a highly politicised issue in the Conservative party since David Cameron committed government to meeting the UN-recommended aid spending contribution of 0.7% of GDP. Cameron didn’t just meet the target – he made it law.

Sceptics of the policy either want to scrap the law, or to use aid, as Patel suggests, to do deals. The issues will be picked through in the government’s Multilateral Trade Review, though Patel has the air of someone who would like to act pretty quickly.

It isn’t known if she is a fan of eminent Victorian Sir John Bowring, but Sir John’s view that ‘Jesus Christ is free trade, and free trade is Jesus Christ’ is in a similar vein. Get in using a ‘good thing’, then cash in off the back of it.

But here’s the problem. Sir John and his contemporaries didn’t have the bourgeois liberal sensitivities reflected in modern rules and laws – that bribery and corruption are activities we shouldn’t go near.

What is more, the Victorians were not a closely audited bunch.

Patel’s department is. Hence she directs that the review must address concerns over the ‘openness, transparency and accountability’ of aid spending, and that multinational organisations that deliver some UK aid needed performance targets.

‘Aid for trade’ can’t be too brazen; yet it is the fairly brazen approach that could be identified as working.

Consider the form ‘aid for trade’ could take if effective – the UK wants a trade deal done with a not-too-democratic country that’s rich in natural resources.

In this scenario, the UK funds schools and clinics in the home town of the country’s president or treasury minister, although the neighbouring province is in far greater need of these facilities. 

The UK in this instance gets a lucrative deal. But in its delivery, bits of the aid money go astray locally, and UK officials have advice questioning the effectiveness of the spend. Auditors express concerns.

There are various legal and governance problems here, from misfeasance and bribery to reporting issues. In practical terms, aid for trade is also on a collision course with requirements on transparency, openness and effectiveness.

Patel is relying on the Multilateral Trade Review to synthesise all these issues.

But her lawyers will be puzzling until their puzzlers are sore – this can’t be achieved. The world doesn’t work like this any more – there is now far more to be gained for UK exporters by promoting the rule of law than by executing shady deals for which we raid the aid budget.

Eduardo Reyes is Gazette features editor