ment of Ethiopia, which also wants to expand schooling, re-
quests that the Swedes pay for it. This releases money that the
Ethiopian government would otherwise have spent on schools
for whatever else it might choose.
As donors woke up to this problem, most of them moved
away from projects to budget support: that is, they simply
handed over a check to the government, which it could treat
as general revenue for the budget. While this acknowledged
reality, it was sometimes highly irresponsible. Unless budget
systems are sound, money put into the budget will leak into
patronage.
It is one thing to say that budget systems should be sound
and quite another to ensure it. Two complementary resources
are needed: capacity and verification. Public revenue will leak
from wherever there is a hole, and so there is a large prelimi-
nary task of overhauling the practical processes by which money
is spent: budgets need accountants, and lots of them. Starting
from a culture in which there is no presumption of honesty,
the system of financial checks needs to mirror the paranoia of
the dictatorships: there needs to be so much interlocking moni-
toring that even if a few accountants are prepared to be cor-
rupt, they cannot make a difference. Superficially this may look
wasteful, because the administrative cost per dollar of public
spending will be much higher than where there is already a
prevailing culture of honesty. But that is simply the reality: cor-
ruption makes public spending less efficient.
Donors can help governments put proper systems of ac-
countancy into place through technical assistance, which is
the phrase used to describe the supply of skilled people. This
is the most despised form of aid, but it is often essential. In-
Better Dead Than Fed?
215
stalling the capacity is not enough: the donors must verify that
the capacity is actually being used to enforce probity in pub-
lic spending. This requires a forensic approach quite distinct
from the cooperative nature of capacity building. Only where
forensic scrutiny of a budget system has already certified it
as satisfactory should aid be provided as budget support. Of
course, if the donors introduced that as a rule tomorrow, they
would not be able to disburse any money, and so there would
need to be due notice and transitional arrangements. But there
is simply no alternative: projects are largely an illusion, and so
for aid to be effective, it requires sound budgets. If govern-
ments want to spend aid money, this should be the condition
for its use. I call it governance conditionality, to contrast it
with policy conditionality. Donors should not be telling gov-
ernments what policies to adopt, or, within the range of public
goods, how money should be spent. But they have an obliga-
tion both to their own taxpayers and to the citizens of the bot-
tom billion not to connive in budgetary processes by which
public money is diverted for private ends.
If this were the condition for aid, some governments would
decline it, in particular those with large revenues from natural
resource exports. The international community has little finan-
cial leverage over these governments, and a completely differ-
ent approach is required to encourage financial probity. That
would take us beyond this book. However, there is another cat-
egory of country where, while the government might be willing
to accept it, the task of building an accountable budget is simply
unrealistic: the civil service has degraded too far for recovery in
a reasonable time scale. Is there an alternative?
Liberia is now ruled by reformers, led by the admirable
president Ellen Johnson-Sirleaf. She was preceded by a govern-
ment so insalubrious that even the normally pusillanimous do-
nors drew the line. When they could no longer stomach what
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was happening to their money, they threw sovereignty to the
winds and introduced a system called GEMAP (Governance
and Economic Management Assistance Program), in which the
finance minister could not incur expenditure without a coun-
tersignature by the donors. GEMAP is billed as a great suc-
cess, but it was in reality a despairing reversion to colonialism.
I talked to the reforming new minister of finance, Antoinette
Sayeh, and she naturally wanted to move on from it. But to
what? The donors surely trust Antoinette, but she cannot her-
self ensure that public money is well spent. A corrupt finance
minister can ensure that it is badly spent, but unfortunately the
converse does not apply. A minister depends upon the staff of a
ministry. The first act of President Johnson-Sirleaf was to dis-
miss the entire staff of the ministry of finance. She was right to
do so, but what do you do the next day?
Instead of the desperate reactive policy of GEMAP, used
only when the situation is manifestly out of hand, the interna-
tional community needs to anticipate that in some situations
conventional systems of accountability have degraded beyond
rapid recovery. Since these are the situations in which needs
are most desperate, an institutional design is required for how
big money can nevertheless safely be spent on the provision of
basic services.
The model that virtually all the newly independent gov-
ernments of the bottom billion adopted was, unsurprisingly, the
prevailing European model of the 1950s: monopoly supply by
government ministries. Even for Europe this model has proved
a little problematic and there has been a move away from it, but
for the societies of the bottom billion it was usually inappropri-
ate and in some disastrously so.
A more realistic design would separate the functions con-
flated into these grandiose ministries: overall policy, the allo-
cation of money to specific activities, and the actual supply of
Better Dead Than Fed?
217
activities. The ministry should be responsible only for overall
policy. Indeed, only once policy is separated from the spending
of money is the ministry likely to give policy serious consider-
ation: at present attention is often driven by the scope for kick-
backs. Where needs are dire and public systems have failed, the
actual supply of basic services, such as running a school, should
be open to all who can do it well. This is likely to mean churches,
NGOs, local communities, and most promising of all, the new
philanthropists, rather than government-run operations. I am
enormously impressed by the professionalism, innovation, and
energy shown by the new philanthropic organizations, typi-
cally staffed by young people trained in business schools, who
combine passion with an eye for cost-effectiveness.
In between the ministry and these suppliers would be an
agency that handled the money: contracting with the suppliers
and monitoring the
ir performance, but working to objectives
set by the ministry. This type of agency is the missing link: at
present, governments spend the donor money and each NGO
does its own thing, disconnected from public supply and largely
unaccountable. The linking agency would enable donors to
channel money to effective service delivery. In return, donors
would share oversight of the agency with the government and
local civil society. Would donor money channeled through such
an agency still face the problem I sketched with projects? That
is, if donor money funded the priorities of basic social spending,
wouldn’t this simply release government tax revenue for other
purposes? The answer is that in the broken societies like Libe-
ria the economy has collapsed and along with it government
revenue. In such societies there is an enormous need for aid,
yet at the moment they get very little. They get little because
donors know that public systems of spending are too dysfunc-
tional to be used. Donors need to face up to the logical implica-
tion: try a new system.
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Would the governments of broken states accept such
spending systems? If they were accompanied by the realistic
prospect of vastly scaled up inflows of aid, I think most would.
Proposal 3: The International Supply of Security
It is time to turn from accountability to security: this is the pub-
lic good par excellence for which the states of the bottom bil-
lion are too small. Manifestly, its provision has been inadequate:
that is why these states are so dangerous. For some public goods
the lack of social cohesion that is endemic to the states of the
bottom billion can be overcome by decentralization: if at the
national level the public purse is viewed merely as a trough, it
may be better to forgo some scale economies to gain a sense of
common identity. But security is not one of those public goods:
decentralized provision of security services would magnify the
risks of civil war because it would create rival military forces
controlled by rival politicians. Security services need to be sup-
plied not on a smaller scale than the nation, but a larger scale.
As with the other public goods, the high-income countries
have been cooperating regionally on the supply of the public
good of security for more than half a century. NATO is such
a force providing mutual guarantees. Could neighborhoods
within the bottom billion do the same? As I will set out, there
is plenty of untapped scope for security cooperation among the
bottom billion. But before going deeper, is this idea so wild as to
be unthinkable? The United Nations has recently formulated
a far more radical proposition: the responsibility to protect. R2P,
as it is known in the preposterous shorthand of international
parlance, is a full-frontal assault on the concept of national
sovereignty. It proposes that the international community has
the right to intervene to protect citizens from their own gov-
Better Dead Than Fed?
219
ernment. Compared with that proposition, the idea that I am
suggesting is decidedly modest. At its most minimal it is that
neighboring states would get mutual benefits from binding
themselves to security cooperation. At its most ambitious it is
that the neighbors of a country at risk of civil war have a right
to protect their own citizens.
It may be best to start by stating clearly what I do not have in
mind. I am not proposing that the UN cavalry should ride in to
topple President Mugabe, or to impose peace in Darfur. I regard
these as distracting fantasies that impede security cooperation for
less controversial and therefore more realistic purposes.
So let’s begin with the least demanding: security coopera-
tion that generates mutual gains. Think back to neighborhood
arms races. If the neighbors are seen as a threat, then the mili-
tary spending of each government becomes a regional public
bad. Arms races do not enhance overall security; they waste
money. Worse, as I showed, since some of the guns leak into the
informal market, the higher the military spending in a neigh-
borhood, the easier it is for rebel groups to get hold of guns:
cheap guns increase the risk of civil war.
Could the arms races in Lilliput be unwound in Africa, as
President Arias is trying to do in Central America? An analogy
is the mutual deescalation of tariffs negotiated through regional
trade agreements. African governments have been negotiating
regional trade agreements for years, but there is no equivalent
for military spending. One reason is that there are too many
players. Suppose that there was an arms race on an island di-
vided into just two countries. It would be straightforward to
negotiate de-escalation because the benefits are fully reciprocal:
each country’s spending threatens the other.
Unfortunately, mainland Africa is at the opposite end of
the spectrum from such an island: there is a chain of neighbor-
liness with forty-seven countries sharing the same landmass.
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Zimbabwe is next to Zambia, but Zambia is next to the Demo-
cratic Republic of the Congo. So the Democratic Republic of
the Congo is a potential threat to Zambia but not to Zimbabwe.
In turn, the Democratic Republic of the Congo is next to Chad,
and so on. With a trade agreement it is possible to cut tariffs
against some neighbors but not others: Zimbabwe and Zambia
could negotiate with each other and reach a deal that excluded
the Democratic Republic of the Congo. But if a country cuts
its military spending, this benefits all neighbors regardless of
whether they reciprocate. If Zambia cuts its military spending,
both Zimbabwe and the Democratic Republic of the Congo
benefit. If only Zimbabwe reciprocates, then Zambia has be-
come less secure because it is now weaker relative to the Demo-
cratic Republic of the Congo. So for a negotiated reduction in
military spending to succeed, everyone has to agree to do it to-
gether. Since it is a case of all or none, with so many countries
in the region the inevitable result is stalemate. The cooperative
provision of security sounds attractive but is extremely diffi-
cult.
Given that military spending is at least in part a regional
public bad, it should be discouraged. Conceptually, the right
way to discourage a public bad is usually to tax it: this is the
principle behind carbon taxes. So if only the African Union
could reach agreement, it should tax military spending, just as
the Eurozone now taxes the regional public bad of excess bud-
get deficits. Of course, the African Union is a long way from
being able to initiate such regional cooperation, so is there an
alternative? Recall that a public good that benefits a region may
not most efficiently be produced in the region. Such is the case
with the discovery of a
malaria vaccine: the benefits would be
pan-regional, but the research needs the skill base found only
in high-income countries. That is what makes the finance of
the research for a malaria vaccine a particularly good use of
Better Dead Than Fed?
221
aid. The same may be the case for the regional public good of
reduced military spending induced by a tax on military spend-
ing.
By linking aid to the level of military spending, donors
could simulate a regional mutual tax. Recall, donors would
have a very powerful justification for doing so: to date around
40 percent of military spending has inadvertently been financed
by their aid. Donors are subsidizing military spending when
they should be taxing it! At present donors often try to discour-
age military spending by huffing and puffing. It would be both
less intrusive and more effective if their justified dislike for
military spending was embodied into some clear rules of aid al-
location: for example, starting from where military budgets are
now, each dollar of increase would be taxed by a 40 percent re-
duction in aid, which would be redistributed to other countries,
and each cut in spending would be correspondingly rewarded.
Unlike huffing and puffing, this could not be regarded as an
infringement on sovereignty: it provides a regional public good.
And being a clear and stable incentive, it would most probably
be more effective.
N ow l e t ’ s g e t m o r e a m b i t i o u s . So far security provision as an interstate public good has involved mutual gains. All governments want the same public good and security, and international
provision improves the technological possibilities of supply. But re-
member that music: my pleasure might be your pain, or more fan-
cily expressed, my decisions might inflict negative externalities on
you. Those externalities need to be internalized even if I don’t like
it. We now get rather tougher on national sovereignty.
Historically, the entire concept of national sovereignty arose out
of the catastrophe of the Thirty Years War, during which govern-
ments of rival religious allegiances fought it out to impose their pref-
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erences over each other’s territories. By the end of the war the astro-
nomic costs of warfare were better appreciated and the bloody game
of religious conversion by conquest was recognized as not worth the
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