Sunak must ignore the populists on foreign aid

By Pete North - September 1, 2020

A site that has grabbed my attention lately is that of the Organized Crime and Corruption Reporting Project. The organised crime aspect of trade is every bit as important as the mainstream debate.

They report that leaked documents and an affidavit from a whistleblower working at a major Western fishing company operating in African waters have given rare insight into how food multinationals can shift profits around the world to avoid paying taxes in developing countries.

While there has been widespread reporting about similar schemes used by oil and mining giants in Africa, until now there has been little focus on one of the continent’s most precious natural resources – fish.

Maritime African countries are estimated to lose up to $1.6 billion a year in tax revenues through illegal and undeclared fishing, according to recent research. Nick Branigan, chair of the North Atlantic Fisheries Intelligence Group, a network of international government agencies that works with the UN and Interpol on fisheries crime, said this figure is likely an underestimate.

“The problems of undeclared and illegal fishing in developing countries are magnified because multinational fisheries firms routinely strip operating profits out of developing countries and place these in low tax countries,” he said.

The latest research has it that illegal, unreported, and unregulated fishing is widespread; it is therefore likely that illicit trade in marine fish catch is also common worldwide. Globally, between 8 and 14 million metric tons of unreported catches are potentially traded illicitly yearly, suggesting gross revenues of US$9 to US$17 billion associated with these catches.

Estimated loss in annual economic impact due to the diversion of fish from the legitimate trade system is US$26 to US$50 billion, while losses to countries’ tax revenues are between US$2 and US$4 billion. Worth more than a dozen FTAs, when measured against gains from tariff reductions.

What makes this especially relevant is that African states are doing all they can to develop revenue streams other than mineral wealth and tariffs on the import of goods, and if such abuses go unchecked, it’s unlikely they will never be able to trade on equal terms through FTAs.

Action on this, though, requires international cooperation. We need better systems for the prosecution of the prosecution of crimes such as complex frauds, wildlife trafficking, cyber-crimes, human and arms trafficking, tax evasion, money laundering, environmental crimes and the prosecution of organised crime syndicates.

There have been encouraging reforms in Uganda, but the UK can help with capacity building and the development of international policies to address the epidemic. Though there is domestic pressure to end foreign aid spending, it is precisely this kind of engagement Britain should be leading.

The Environmental Investigation Agency, an international NGO, has noted Uganda is among the top ten most significant transit hubs for ivory in East and Central Africa. Through well-organized networks, these criminals are able to move not only ivory, but also pangolin scales and indigenous teak wood through Uganda almost uninhibited. This is a multimillion dollar industry that has also been shown to finance rebel groups, such as the Lord’s Resistance Army(LRA).

Aside from the obvious ecological and humanitarian imperatives, this is absolutely in line with the direct national interest. Political instability, conflict and imbalanced trade is a massive pusher of migration. We may not be able to slow the flow of people but at the very least we can stop making it worse by closing the net at both ends.

The foreign aid debate in the UK presently misses the point. Voices on the left think it’s all about helping the needy while the isolationist right thinks charity begins at home. Neither approach speaks to the needs of the nation. Helping the needy is a humanitarian function to which we should contribute but is best left to international organisations and NGOs. The UK government, though, notwithstanding Brexit, still has an important voice by way of the assets it can bring to bear.

The populist right is demands an end to foreign aid but what they’re actually saying is “defund foreign policy”. This is not compatible with “Global Britain”. Our overseas objectives cost money. It’s as much a matter of national security to have an active foreign policy and a development policy aimed at strengthening good governing in Africa.

The problem with foreign aid is that it’s experimental and often against all odds. It will always have egregious examples the tabloids can exploit, subsequently exploited by populist isolationists. (The usual blether about giving it to useless veterans charities etc). But with a newly focused development department, recognising the expertise and international reputation of DfID, the aid budget is an essential policy tool.

Spending the money at home may prove a popular gimmick but ultimately doesn’t do any good. A retreat from multilateral cooperation removes the UK from an essential global diplomatic intelligence network with boots on the ground. Aid is as much an arm of diplomacy. With international problems mirrored on our city streets, acting internationally is as important as policing at the community level.

The aid industrial complex didn’t do itself any favours during the Blair and Cameron years, making it far harder to defend international aid spending, but the problem is less to do with aid as the mindset and the doctrine behind it. If the aid blob can be retrained to think in more utilitarian terms, we better serve the national interest and we may find some of the humanitarian side effects of corruption and fraud will attend to themselves in time. Either way, this is not a good time for the UK to retreat from the world.