Aid flowing to Myanmar may hinder, not help

Governments and agencies must be wary of drowning Myanmar with well-intentioned but ill-targeted aid, experts have warned, admonishing the global community to "first do no harm." As the once pariah country approaches the second anniversary since a quasi-civilian regime led by ex-general Thein Sein took power, foreign aid is pouring in after surprising political, economic and democratic reforms. But there is "ample evidence that the flow of foreign aid... is likely to be greater than Myanmar's capacity to absorb it," said a new report commissioned by US economic consultants Nathan Associates. Myanmar "is undertaking a remarkable transition, it's not an easy transition. And the outcome, I think, is highly uncertain," said the report's co-author Lex Rieffel, a senior fellow at the Brookings Institution think-tank. "Don't think that everything's going to go well," he cautioned, noting that while the country needs help there should also be "sensitivity in recognizing that not everything we might want to do is actually helpful." The report gave the government "high marks" for its planning and management of the flood of foreign aid so far. But Myanmar officials have been swamped by requests for meetings from governments, NGOs and even movie stars as it emerges from six decades of isolation. Such requests divert time and energy from challenges facing the country's leadership as it grapples to shore up long neglected institutions, reach peace agreements with ethnic minorities and deal with deep-seated corruption."We think one of the biggest problems is the incentives donors have," said the second co-author, James Fox, a former senior economist for the US Agency for International Development. "Every donor wants to make a difference," he said, referring to it as the "MAD disease" in which each donor pushes its own programs. That can lead to chaotic aid distribution in which the agencies jealously fight their own corner to pump up their image back home, while pushing programs sometimes unsuited to life in Myanmar. New Zealand, for instance, decided that 85 percent of its aid over the next five years would go toward dairy farming, even though that was a low priority for the government, the report said. Another key issue is upcoming polls, which give the Myanmar government a "political imperative," said Georgetown University professor David Steinberg. "They have to demonstrate the effectiveness of aid before the 2015 elections," he said. "Expectations are very high. Those who oppose the regime will use the lack of effectiveness against them." Donors, apart from Japan and Singapore, have also been loathe to fund such activities as education abroad, or facilitating the return of the Myanmar diaspora, which could help boost the domestic talent pool. Some 70 percent of the population is also rural and dependent on agriculture, but "the few steps taken by the government in this area fall well short" of what is needed to make the agriculture sector an engine of growth. However, Acting Assistant Secretary for East Asian and Pacific Affairs Joseph Yun disagreed there was too much aid flowing into the country, saying "the burden now is on everyone to keep the momentum." "I cannot think of any engagement that the Americans could provide that would not be useful. I think in every sense of the word more would do better. "This country which has suffered so much over the past 60 years deserves a better chance and it could be a huge success story," Yun said. The United States has been one of the main instigators of opening up Myanmar, lifting a slew of sanctions which had been imposed over the decades, and preparing for American businesses to move in and start investing. But the report highlighted there was a desperate need for English language teaching to improve communications between Myanmar and the outside world.