Pity the Fools: The UN’s embarrassing aid proposal

There have been many many bad ideas over the years about how to help Africa, but here’s my vote for the worst one in a long while: UNCTAD’s proposal to create a new UN agency to manage a doubling of aid flows to the continent.Before we get to the proposed solution, the analysis of the problem is deeply flawed. According to the press release:

a new "aid architecture" is needed, drawing in part on the Marshall Plan that helped revitalize European economies after World War II. That plan, paid for by the United States, recognized that shock therapy and piecemeal projects had not helped in getting Western Europe back on its feet and offered instead a generous, multi-year and coordinated funding approach, with each State drawing up long-term recovery plans with no outside interference.

This is a strange interpretation of the Marshall Plan! US assistance to Europe only lasted a few short years and, even at its peak, was never more than a few percentage points of GDP of any receiving country (a fraction of current inflows to many African countries). More importantly, as Brad de Long and Barry Eichengreen demonstrated years ago in The Marshall Plan: History’s Most Successful Structural Adjustment Program (PDF), the success of the Marshall Plan had little to do with capital infusion and mostly was about the attached conditions—precisely the opposite reading of UNCTAD. How UNCTAD decided that the Marshall Plan is a model for hands-off, long-term predictable funding is utterly baffling.It gets worse:

…existing multilateral aid mechanisms, such as the World Bank´s International Development Association (IDA) and the International Monetary Fund´s Poverty Reduction and Growth Facility, have not lived up to expectations and are not suited to administering doubled aid….These funds along with various new mechanisms related to a doubling of aid might best be merged into a new UN fund...

Really? Merge IDA and the PRGF, plus all the new aid coming down the pipeline, into a single UN agency? Any guesses for what might be the donors’ reactions? The suggestion is so naively ludicrous that I first thought it was a joke (or perhaps a hoax designed to finally goad Congress into pulling the US out of the UN?). It's no accident that the World Bank and IMF are designated as the lead multilateral agencies for, respectively, development and fiscal stability. Nor is it an accident that they were set up as distinctly separate from the UN.This proposal is, in the end, quite a sad indication of the desperation of some marginalized agencies to find a shred of relevance. But rather than making the case for the UN to take more responsibility, this report has instead shown exactly the opposite.