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The Marriott Hotel in Islamabad symbolises Pakistan’s profound problems with terrorism and its amazing spirit of survival.

Three
years ago, a truck laden with explosives destroyed the landmark
building in the centre of the nation’s lush capital, killing 54 people
in a blast that left a 60ft-wide crater and was heard more than ten
miles away.

Just three months later, the five-storey hotel was
back in business. And ten days ago, I walked through the rings of
intense security to attend a conference on the challenges now
confronting Pakistan.

A cloud of smoke billows from the burning Marriott hotel following a powerful bomb blast in Islamabad on September 20, 2008

Pakistani security personnel and officials ring the huge crater left by the blast as they arrive for search operations

These challenges are deep-rooted in a country deemed the most
dangerous in the world. It is ripped apart by terrorism and run by some
of the globe’s most venal politicians, who pour money into dubious
defence projects rather than desperately-needed schools. Behind
everything is the shadowy presence of the military, taking billions in
Western aid to fight terrorism while protecting some of our bitterest
enemies.

So it was surprising to hear a panel of speakers from Left and
Right unified in contempt for this aid. While the United States offers
an incredible $7.5 billion package to Pakistan, and Britain plans to
double donations to approaching half a billion pounds a year, these
experts said this cascade of cash was the cause of their country’s huge
problems, not the solution.

They are not alone. More and more
people in the developing world, from academics to economists, from
journalists to politicians, share this view that the flood of
paternalistic Western aid is corroding their countries. They say it
encourages a dependency culture, fosters corruption and fractures
society. It is not just British voters who are concerned that so much
money is being sent overseas at a time when our own economy is in such
dire straits.

Leaked: Defence Secretary Dr Liam Fox
wrote to David Cameron, the Prime Minister, attacking the government’s
spending on overseas aid

Yesterday, it emerged the Defence
Secretary Liam Fox had written to the Prime Minister opposing plans to
set in law the supposedly sacred target of spending 0.7 per cent of
gross national income on aid. Given this is the second leak of a letter
written by Dr Fox, there is a strong suspicion that someone is playing
political games, whether on behalf of —  or indeed to undermine — the
Defence Secretary.

Regardless of the politics, and although I am
far from his biggest fan, I share Dr Fox’s concerns. The Coalition’s
stance on overseas aid is wrong in every way possible, from the
muddle-headed idea of making the pledge legally binding — ensuring the
creation of a lucrative new seam for lawyers and litigants to mine — to
the core principles underpinning the policy.

Just listen to those
experts in Pakistan who have seen their country come close to implosion
over the past decade, with terrorists killing 35,000 people and so much
political and social progress stunted.

‘The argument has been
that without aid our country will get more militant and more unsafe. But
all this is happening with aid, which raises the question of whether it
is making things worse,’ said S. Akbar Zaidi, a prominent social
scientist.

Professor Zaidi said the torrent of aid broke the chain
of political accountability between rulers and citizens. After
revealing figures showing two-thirds of those who should pay income tax
evaded it, including many in the governing elite, he concluded that aid
reinforced all the nation’s difficulties. ‘Aid donors are not helping
Pakistan, they are hindering us.’

It makes sense, of course. A government handed huge chunks of money
from abroad — and some impoverished nations receive half their revenue
from donors — has less reason to respond to the needs of its people.
This is why, for all the noble intentions, our aid ends up causing
corruption, disrupting democracy, reducing local investment, undermining
innovation and even boosting military spending in nations that can
ill-afford it.

Politicians take the huge sums on offer from
Western governments to pay for schools and hospitals, then fritter
revenues on security or stash them away in private bank accounts. At
election time, they rely on bribery or violence rather than the
provision of decent public services.

Indeed, Harvard Medical
School researchers found that when health-related aid was given to
governments in sub-Saharan Africa, they often reduced their spending on
health.

From the very start, aid has been a gimmick used by
Western politicians. It began when U.S. President Harry Truman was
looking for ideas to give his 1948 inaugural speech more punch, and a
speechwriter came up with the idea of helping the world’s poor.

His
team were amazed how the vague concept seized the headlines, but
quickly turned the declaration into action, giving birth to the era of
foreign aid.

Since then, more than $1 trillion has been
transferred to Africa alone — but over the past three decades, according
to Zambian economist Dambisa Moyo, the most aid-dependent countries
exhibited an annual growth rate of minus 0.2 per cent.

There have
been some successes, especially in immunisation programmes to fight
disease, but far too many failures and far too much profligacy.

Too
often, foreign donors think they know better than local people what
they need. Take the tale of the village in Kenya that built its own
school, only to be told by foreign donors it needed a bigger school,
then another. So now this small community has three schools — one that
was functioning perfectly well and now sits vacant, an expensive new one
plastered in foreign names, and a third that has never been finished.
All on half an acre of land.

Despite mounting evidence of failure, foreign aid remains a useful
prop for politicians seeking to burnish populist credentials. Typically,
Tony Blair was quick to see this, tapping into the short-sighted
emotionalism of the charity concert Live8 in 2005 with ludicrous
promises to ‘make poverty history’. Now, the Coalition uses aid to
counterbalance the cuts at home and show it cares.

When Mr Blair
established the Department for International Development (DFID) in 1997
as the political wing of the charity sector, it had a budget of
£2.6 billion. Incredibly, this has grown to £8.1 billion and is set to
keep on growing by another £3 billion by the end of this parliament,
despite domestic spending cuts hitting nearly everything from defence of
the realm to services for people with disabilities.

Even insiders admit it is difficult to spend such huge sums without
ensuring much of it is wasted — especially when the number of DFID
employees has risen only marginally. After all, staff don’t win
promotion by finding savings or pointing out wastage in such a culture
of philanthropy.

This explains why British taxpayers have propped
up a one-party state in Ethiopia, collaborating with a regime that has a
shocking human rights record. And why huge sums are spent supporting
another repressive regime in Rwanda, where aid even funded an electoral
commission that endorsed blatantly undemocratic elections and a state
media body that suspended critical newspapers.

And again in
Uganda, riven with unrest after a controversial election, where the
veteran president has been caught buying Russian fighter jets at
seemingly twice the market rate without parliamentary approval.

One
critic pointed out the sums spent — close to half a billion pounds —
were enough to run the Ugandan health service for three years. Britain
will hand over a similar amount in the course of the next five years.

But
still we keep on pressing towards that target of giving away 0.7 per
cent of our nation’s income. Strangely, no one ever bothers to question
this hallowed figure, the result of a messy compromise more than four
decades ago, based upon assumptions that are no longer true and
justified by a model that is no longer credible. 

When two
experts at the respected Centre for Global Development in Washington
applied the same methods of assessment to modern economic and social
conditions around the world, they found it yielded an aid goal of 0.01
per cent of national income. An uncomfortable truth that lays bare the
folly of our policies, which seek to send abroad 70 times that amount.

And
still we refuse to face the facts that our best intentions may be
backfiring, and that aid is part of the problem in places such as
Pakistan and Uganda rather than the solution. It is so much easier to
salve our consciences with stunts and soundbites.