376. Aid vs Defence: A Livestream Special

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1:58Welcome to a Restless Politics live stream with me, Anastagambo. And me, Rory Stewart. And Rory yesterday when we were recording the main episode for this week, we started, as we started, Gearsdharma still up in the House of Commons and announced an increase to 2 .5 % of GDP on defense spending. And if you remember, and I said, and part of that is going to be funded by a cut in aid and development, what I hadn't realized at that point is the whole thing is being funded by that. And you and I have both since been absolutely inundated with people who work in the aid and development sector and quite a lot of labor supporters as well saying that, yes, we agree we're in very dangerous difficult times and maybe we need to up defense spending, but surely they could have found other ways to do it.

2:50So what sort of feedback have you been getting? Yeah, well, so I was talking this morning, I'm in the US to the former Administrator of USAID who came in to see me for breakfast completely shattered because if we put the clock back 10 days ago, the United States government announced that it was stopping all USAID funds worldwide, cut all its contracts and laid off staff. I mean, it's not a sort of temporary halt while they look at things, what they've actually done in the United States. Yesterday talking to a lot of USID staff, it lost their jobs. As you pointed out, I think on the show, we've gone from thousands of USID staff focused on programs in Africa and it's been reduced to 12 people.

3:35And that's just the core of USAID. The entire rest of the American aid infrastructure is collapsing along with it. So a lot of the development aid in the US was delivered by these big partners, it is not relevant for listeners, but people like DAI, Communics and thousands of other partners, but also huge numbers of partners on the ground. So there was a big under Samantha Power who was the head of USAID, big localization agenda. So there were enormous numbers of local NGOs and people employed on the ground. Also, enormous numbers of people employed in other governments who were funded by American tax pay money.

4:15Now, that all stopped. So that removed about $40 billion overnight from the international development system. But the hope was that Europe and the UK in particular would step up to fill the gap because when I was in charge of DFID, which was the UK development thing, we had a budget of about in US dollar terms, about $20 billion a year. And as the man I had breakfast with this morning pointed out, it was the US and the UK. If you remove the US and the UK from the international development system, there's not a great deal left. I mean, there are other bits, the European Union does stuff, Japan does stuff, Germany does technical assistance, but as you've often pointed out, it was one of the few ways where the US, the UK was really punching above its weight, where it really was a development superpower.

5:11We were the first really big country to make it to 0 .7 % GDP on international aid spend. And we did it cleanly. We didn't do it by redescribing in those days in the way that Germany was doing a lot of internal programs as being external aid. We did it with relatively few staff. Now, I can talk about what that then means, but what we're really talking about is that Kierstarma based with the collapse of the old US -based system and all that meant for some of the poorest countries and well, then what it meant for climate and crisis, instead of stepping up with European partners to fill that gap, he's decided to cut.

5:54And so it looks at the moment on the current figures coming out, as though in practice, UK development spend will be less than the third in real terms of what it was when I was running the department as recently as 2019, and because of our multilateral commitments, probably even smaller. I mean, the other point I'd like to make, and I think it was politics Joe who I follow, and they did a quite an interesting compilation of all the times that Kierstarma stood at the dispatch box and explained why it is a good thing that we the UK invest properly in international aid and development, and he did that against successive Conservative Prime Ministers.

6:37And I actually think the arguments he was making are still right. I think that when he made the case as Tony Blair and Gordon Brown and others had done before him, that investing properly, invest in international aid and development in some of the poorest and some of the war torn and climate, and all the rest of it, all the problems that these countries are facing, that our investment in them, actually in the long term is good for them, but it's also good for us. And I think that's an argument that we were proud to make for a very, very long time. And so we've now sort of upended that. And also the other thing to say, Royes, I've been quite biased by the extent to which the government has actually constantly been saying, you know, we don't want to break our manifesto promises.

7:21So that's why we can't think about the customs union. That's why there are certain tax rises we can't make. This is a another, this is a manifesto commitment that is fundamentally broken. And I think when people say this is a, I saw Caroline Lucas, the former Green Party leader being interviewed about it and she said, you know, it's all very well to say this is a tough choice, but actually of all the choices that you could make to find the additional spending, given the way the debate is in the country right now, maybe it's not that tougher choice. Now you and I, and lots of other people have been talking to us and, you know, we mentioned David Miliband yesterday, I hadn't quite realized USAID is going to take hundreds of millions out of the charity that David runs.

8:06That is real money on real projects around the world. And there will be projects around the world that are dependent on UK funding right now that will be fairly in a state of clean. Let me return again to the big picture. It's very, very important to understand that as the UK is doing it, other countries are doing it too. So the Netherlands has just announced a radical cut in its own development aid. Sweden has been reducing its development aid. France has, having been on the path towards .7, came away from it. More and more of the money, as meant by pilots, is spent on internal stuff. So we are really talking about something that's really difficult to imagine.

8:51You know, yesterday we were talking about trying to imagine what Europe and Russia would be like without American security guarantees. We already know what that's like. It's very difficult to think because it's been 80 years. This thing is is equally completely uncharted. Nobody's run the experiment before of what happens if you suddenly stop the two major international development funders in the world from operating. But let me try to sketch out the different things that these agencies do. And maybe one way to do is just to think through the different departments that I had when I was running Difford.

9:33The first obvious one is humanitarian. So a lot of this money went quite literally to deal with starving people. So I stood in Somali land. I watched mothers carrying babies for two weeks across the desert and arriving with one baby dead and the other one alive. And that's a lot of what we talk about, Dave Miller banned losing 300 -400 million out of the international rescue committee. And of course, Musk will say it was a grift and somehow suggest that was his own personal money. No, what I see was doing was providing plumping up, which is the type of nutritional supplement to keep babies alive.

10:11So that's the first thing that will happen. When there is a humanitarian catastrophe and they happen quite a lot, let's say this is tsunami or there's an extended drought and hundreds of millions of people are on the edge of famine. And the UN go and make an appeal and say, we need the money. This often happened. I'd some with land on my desk. There's a big one and a half billion pound appeal for a crisis since Malia. And I was able to say, okay, Britain will contribute. And often we were able to put in, let's say, a couple hundred million in the US, we put in a couple hundred million. So that's one thing.

10:47I'll accelerate. I got too deep into that one. Second thing we did is a lot of economic development with countries, including trade development. So we worked on getting the borders and the customs sorted out between East African countries to create a free trade zone. We provided technical assistance to their governments on finance and taxation, which was often revolutionary. I mean, a very small amount of money we spent in Myanmar completely transformed the taxation revenue of the government. So the government ended up getting about 30 times as much money as we put in and became more self -reliant.

11:23Civil war, a lot of the money we put in is helping very fragile poor governments deliver services. And when that money is whipped away, those governments come very close to collapse. And we've seen this across the Sahel migration. What were we doing with the money? Well, a lot of the money was making sure that five million of the people who left Syria didn't come to Europe because we funded Jordan, Lebanon and Turkey to host them. And you saw those camps in Lebanon when we crossed that border. And finally, global health. A loss of the stuff that I was doing was around global health. And so when Ebola takes off in Congo or on the Uganda border, it was the US and the UK who were funding the surveillance systems, which picked up early signs of its spreading.

12:12And what does the surveillance system mean? It means people. It means thousands of Congolese and Uganda and health workers tied into quite complex systems, which ultimately helped protect the world from the development of these pandemics. Those of all gone now. I was talking to a couple of Labour MPs earlier. And I think there's one thing there, just this is on the politics of this now. And I completely agree with you. I think it's really important. We don't lose sight of the fact. One this country has got an amazing record in this field and is recognised worldwide as one of the big four. I think there's a danger that's now gone.

12:49And it'll be quite hard to get it back. The second thing to say is on the politics of this. One of two of these Labour MPs are saying to me that they actually, everybody accepts. And you and I've been saying this for quite a long time. We are entering into a really quite fragile, dangerous sort of geopolitical geostrategic space. And we need to improve our defenses. No doubt about that at all. So therefore, you and I would both welcome. In fact, even say maybe should have gone further yesterday in terms of the commitment on defence. But then to say this is one of them said to me, it's actually not that hard a choice.

13:24A really hard choice is actually to say, do you know what? This is so bad and this is so dangerous that we are going to have to look at certain taxes. We maybe are going to have to think about how we bring in a well tax. Now, one of the reasons why we should apologise, by the way, we were a few minutes late. And the reason dear listeners and viewers why we were late is because we were interviewing a member of the cabinet Peter Kyle, who's a very, very fine man and it turned out he was a really good interview. But we over ran a little bit because we were sort of enjoying it. That's why we were late.

13:56But he did at one point call me wet because he said that I was constantly sort of standing up for any cause and saying that's what the government should do, etc, etc. But I think on this, there's a real danger that the argument that Trump, Musk, Vance, etc., are driving, that the AFD are driving in Germany, that Farage constantly drives here, that we should only think about ourselves. We should only focus on our own interest, America first, Britain first, whatever. And there was an element of that I felt to the communications around what Keir did yesterday. You know, we've got to think about our own security rather than those people far away.

14:36We've got to make a link between the two. So I really would have been much happier if the dissed look, this is a genuinely hard choice. We're going to have to find more savings in the welfare budget. We are actually not going to be able to do something that we were planning to do because we're now going to have to find the money for this. I think actually going for aid was not the right choice. Yeah. And you know, we've often said that it was regrettable that Labour tied its hand on taxes before the election and then forced ritual reefs to raise employers national insurance, which was probably the worst kind of tax she could raise, when in fact the big taxes, VAT corporation tax, income tax, whether one's where she should have been working.

15:20And this could have been an opportunity to do that. I mean, we could do wealth tax. And I think I agree with you, there's a big argument for targeted wealth taxes. There's also would be a very straightforward argument for saying for the British people the world's changed. We're in a much more dangerous world and there are other forms of taxes we put up. I think the other thing that we're missing here is that development is not totally separate from defence and security. Deplamacy, defence, development. Which is the argument, which is the argument that Kierstama used extensively in those clips that I mentioned over the recent years.

15:57Exactly. Because these three things completely go together. It's extremely foolish in fact to put all your money into building weapons systems. If a much smaller amount of money is spent in the right way, can actually stop the conflicts breaking out in the first place. So a lot of the different money in which it had pretentious names, governance, conflict resolution. But broadly speaking, what it was about doing was working with partners to try to reduce the likelihood that states collapse into conflict. Reducing the likelihood they become failed states, reduced the likelihood that they start harboring terrorists, reduced the likelihood that they collapse and migration starts spreading.

16:42In other words, reduce the things that are going to make you have to use your weapons in the first place. You're spending upstream on prevention. This ties in with West Streetings theories on the NHS. What they're doing is the equivalent of putting all the money into fancy hospital treatment and doing nothing and public health at the other end. We've been getting lots and lots and lots and lots of comments. Thank you for all of those. Dan O 'Neill, echoes the point you just made. Money to aid and spending on defense do not have to be exclusive. I think Dan may be an American looking at the spelling of defense.

17:12Those two things aren't a zero sum game. In fact, more spending on aid often reduces the need for defense spending. Sirius Business says getting Amazon to pay some tax, any tax would be a start in paying for all this sort of stuff. Some day, Al Serben Legends, Capital Gains Tax, FFS. I just think that this is the other thing on the politics of this is that when Kirstal was talking about it at the press conference, I didn't see the his statement in Parliament because we were recording, but I caught part of his press conference. A lot of the questioning was about, come on, fess up, be honest. You wouldn't be doing this if Donald Trump hadn't been making all the noises he's making about Russia and Ukraine.

17:56John Healey, the defense secretary, had a conversation with the American Secretary of State, the Fox News guy Pete Hesketh. Is it Hexeth or Hexeth? Hexeth. Hexeth. Hexeth. Hexeth. Hexeth. Hexeth. Hexeth. Hexeth. Hexeth. He was putting out tweets with stars and stripes and union flags and you can rely on Britain, etc. So I think from the perspective of what is going to be a very, very difficult meeting tomorrow, I think this makes absolute sense. I think the politics that flow from it beyond what happens tomorrow and beyond the relationship with the US over Ukraine about aid, we've said in the last two or three episodes that the Americans getting rid of USAID gives the UK a huge opportunity in the field of soft power to increase our soft power and I fear that we've just sort of 86ed it.

18:49Big strategic mistake also because what we're doing is we're giving a huge space for China and Russia. So when I was the Africa minister in 2016 and nine years ago, British investment in Africa was still a third higher than Chinese investment in Africa. One very long day. And US and French investment was ahead. Right. Today, Chinese investment completely dwarfs. We have had a situation where as we've talked about in Chad, Niger, Marley, Bikina Faso, Gabon, there have been these military coups right across the Sahel. And in almost every case, Western allies like the US and France have been driven out.

19:34And Russian, rather mercenaries have come in. So the Russians have private security companies. Now in dozens of countries in Africa and the Chinese have private security companies and thousands of countries in Africa. China is taking control of Lithium, cobalt, nickel, rare earths from places like Congo, which are absolutely vital for the future, energy revolution, for electricity, for the future of computing. And we are creating a vacuum by the US and the UK leaving. And it's a vacuum that began under Boris Johnson. Right. So we went from in practice about 4 billion pounds a year of bilateral aid into Africa, which would mean that in many African countries, we had 150 million pounds to play with when we were negotiating with those governments, supporting those governments, influencing those governments to work with us on global trade, on Ukraine, on health towards the world in which we will now have 5, 10 million pounds.

20:40And that sounds odd because people listening will be like, where does that they just cut the budget by 75 % from 0 .7 % when you're talking about a major set cut. This leads to another point which I'd like to get on to in a second, which is what this means for the United Nations, what this means for World Bank, what it means for the IMF. But let me just throw that back to you first. This question of creating space for China and Russia, the way in which actually often this money, and I'll give you the final example for a cup, actually Nepal, what happened is that US governments said, don't go with Chinese investment, take 500 million dollars from the US, we will build an electricity line which will connect Nepal into India, we're good for climate because it's going to be hydropower.

21:19It'll be good for developments in Nepal because it's electricity, but above all, it's good for the United States because it's keeping China out of a key region. All that's now gone and China's just come back into Nepal and say, okay, we'll pick it up. Yeah, well that's interesting. For obvious reasons, we have been talking a huge amount on the podcast in recent months about the United States because of Trump and the election and about Russia because of the war in Ukraine. And actually China, which does tend to sort of just keep chugging along and playing the long -term game, has been relatively quiet.

21:56There's also some economic and social and political things going on there, but it's been relatively quite by comparison. I think at some point there is a case for us talking to a real expert about the extent of Chinese investment through the Belt and Road Initiative, through their aid and development programs. We've got a question on question time tomorrow where I, we somebody asked whether if Rory was offered a job running the Chinese equivalent of the USAID, would he take it on it? He said no, but actually it is, that is how they will be thinking. US, UK, vacating this space opens opportunities for us.

22:35And when we talked to Franz Timurans on leading this week and you were asking at the end, what you optimistic about and you were saying was optimistic because there's so much opportunity in the global south and because the extent to which African development is taking place etc. Well, we are now to some extent pulling away from that at the time when China in particular and on the military support side Russia in particular are stepping in. So I think on all sorts of levels, this is one of those decisions that may get decent headlines from right -wing newspapers, may make MPs feel yes, and by the way I support Britain, I said this on the podcast today, Britain showing leadership on European defence, absolutely all up for it.

23:17But in the end, where Kirsten was absolute right is about tough choices, a lightest feel, you know, you and I, we're agreeing agreeably and violently on this. This is not the trend. And the sums of money involved are not big compared to other bits of the government budget. I mean, it sounds big, but but what had happened as far as Johnson had already hacked international development, spent pieces and David didn't put that spending up. Yeah. So it was already much lower than it was when I was in government. There have been questions here in the in the thread about, you know, can the UN step up.

23:52But the truth is, of course, that the UN is funded by us. Yeah. So these UN agencies, when Tom, who's now the who we interviewed on on leading, he's now the head of UN humanitarian stuff, when they make a humanitarian appeal to fund those agencies, they're appealing to the UK and the US to provide that funding. They don't have their own money. Their money comes from our development budgets. The World Bank, I mean, you know, people may not be very interested in international finance, but these organisations, the World Bank, the IMF, which are really vital for the global financial system, right.

24:31They're the work with the central banks, make sure that the currency and money flows are working, provide emergency support when the Indonesian economy collapses and actually in the case of Britain, provide emergency support when our economy collapsed in the 1970s. These two are funded through our international development budget, right. They have a part of money, but we top it up all the time. So what's happening now is something that we haven't begun to think through. We haven't really begun to think what the implications are of removing what I guess will be if you take the US and all of the US and almost all of the UK out of the international development system, you're probably reducing by about 50 % the entire size of all international development worldwide.

25:20You're left with Germany and Japan as the main sort of drivers of this. And Germany and Japan do it in a very different way. So Germany does it with an enormous amount of staff providing technical assistance. They don't provide much budgetary support. So a lot of the budgetary support, and again, that's a kind of technical work, but that means that many of the governments around the world received from the US and the UK direct assistance for their budgets. So Jordan, for example, now 40 % of key parts of its budget was directly paid by the United States. Now they're in a situation where Trump is saying, I'm not going to give you money unless you take a million Palestinian refugees.

26:01And what he's really saying, whether he understands it or not, is I'm going to collapse Jordan. I'm going to collapse its economy. I'm going to collapse the monarchy, and I'm going to crase a failed state. And this is going to be true in many, many more countries around the world than we recognize. So the risk of global conflict will go up, risk of civil war will go up, the risk of Russia and China coming in will go up. And then I just want to loop back to this question of pandemics. I worked very closely on the Ebola response, and of course people sort of have a sense of this from COVID. But there are many, many worse things out there than COVID.

26:40Ebola literally is flesh eating, and mortality rates can be 50%. I remember going to see the doctors and nurses and those clinics in eastern Congo and sitting with a nurse who who got it, treating other people. And the children that you see, if we hadn't had surveillance mechanisms in place paid for by the British and American governments on the Uganda Congo border, that would have spread much, much further. And Ebola, luckily, is quite difficult to catch, but there will be many, many other pandemics spreading. And we just want to have the infrastructure to deal with them, and that will affect us dramatically.