Stingy Korea Image May Backfire Overseas
By Yoon Ja-young
Staff Reporter
Official Development Assistance (ODA) is still an unfamiliar term to many Koreans. When hearing about how our parents received rations of small powdered milk cakes when they were at elementary school, we should think about who helped our parents and grandparents escape malnutrition.
Korea, which rose from the ashes of the Korean War through the help of other countries, needs to do more of the same for others. An increasing number of people see ODA as a diplomatic and economic strategy. President Lee Myung-bak included expansion of ODA in his presidential campaign pledge, reiterated by the transition team and in the President's inaugural speech.
The new administration, which under President Lee emphasizes the economy, has stressed the economic gains from ODA. Hence, it is to be used as a diplomatic strategy for natural resources and energy, or for strengthening the alliance with the United States. A natural course when considering Lee's ``pragmatic diplomacy.''
However, some experts showed concern at a forum organized by ``ODA Watch'' of the Citizens' Coalition for Economic Justice, a leading NGO in the country, last week. ``ODA Watch'' was formed in 2006, to contribute to the improvement of Korea's policies. Amid increasing interest, the forum gave insights as to where Korea's ODA should head.
Stingy Korea
Despite Korea's place as the 13th largest economy in the world, its contribution to those in need is very small. Its ODA totaled $670 million in 2007, accounting for 0.074 percent of the gross national income (GNI). This ratio is the lowest level among Organization for Economic Cooperation and Development (OECD) member countries, where the average ratio was 0.28 percent. It plans to increase the ratio to 0.108 percent this year. The former President Roh Moo-hyun administration planned to increase the ratio to 0.25 percent by 2015 in its ``Vision 2030,'' but it is doubtful whether the aim can be pursued as economic indices recently turned negative.
The quality of the ODA also falls below the global standard. Over half of the money promised by Korea was non-grants, meaning recipient countries must pay the money back. The Development Assistant Committee (DAC) member countries under the OECD, however, give over 95 percent as grants. Korea plans to subscribe to DAC in 2010. The committee recommends that grants make up 87 percent of the total assistance.
Korea also regularly attaches conditions to aid. Around 80 percent of Korea's assistance was tied aid, stipulating the money should be spent on goods or services produced in Korea. In case of other OECD and DAC member countries, untied ODA is over 90 percent.
Help Wisely, Be Refined
Many ODA experts emphasize that aid money should be wisely spent. ``If you are interested in the poverty of underdeveloped countries, you should first think about why they are poor,'' said Kwon O-yoon, a professor at Dongguk University.
He pointed out that African countries, which have been recipients of huge assistance, are still poor, while China and India escaped poverty without such. ``I want to raise questions on whether the ODA in its current form is really helpful for those poor countries. We should discuss why they can't get out of poverty.''
He said the aid is not based on totally pure intentions. In the past, the assistance was used to stop the expansion of communism, and later it aimed at encouraging underdeveloped countries to join global economic schemes like the WTO. Recently, the fight against terrorism has become another motivation for ODA. He indicated that the biggest donor is the United States while the biggest recipient is Iraq. ``I believe the money should be given to those suffering from hunger, like countries in Africa, or North Korea.'' He added that while many poor countries join the WTO system, they are exposed to unfair trading competition. ``I don't think Korea would have achieved this much growth if it joined the international division of labor earlier, as it barely had any competitiveness back then.''
He cited Peter Bauer, who criticized ODA as the transfer from the poor of the developed world to the rich of the underdeveloped. ``It's the money of the working class as it comes from tax, and the money is often given to conglomerates and politicians of the poor countries. Bauer meant that ODA needs improvement.''
Kwon said he was surprised to see President Lee Myung-bak mentioning ODA. However, the new administration isn't doing it in a refined way, according to Kwon. ``The new administration emphasizes national interest in its ODA strategy. National interest is a term that shouldn't be modifying foreign diplomacy. It should make recipients pleased.'' He said it is against global etiquette.
Kwon Yul, a research fellow at the Korea Institute for International Economic Policy, said the kind of assistance matters more than the quantity of the aid. ``The aid should be practically contributing to the economic and social development of recipient countries. We should maximize the growth potential of underdeveloped countries and they should help themselves too. Assistance without improvement in indicators is meaningless.''
Sohn Hyuk-sang, a professor at Kyunghee University, also criticized the emphasis on national interest in foreign aid. ``China is criticized for its oil safari, and Japan is also blamed regarding its assistance to Indonesia.''
He said one should think about the pride of the people when talking about national interest. ``There are traditional national interests such as military, economic and diplomatic, but these days, the pride of people plays a huge part. Shallow slogans like `Korean businesses would benefit from ODA' hurts people's pride.''
Hansung University Professor Lee Tae-joo showed concern that Korea could establish a negative image of being an immoral corporate country. ``National interest shouldn't be the direct object of ODA. Rather, this will be achieved through long-term relations, partnerships, and trust built up with the recipient country.''
He advised that the assistance strategy be based on long-term perspectives, including ways to cope with climate change. ``Else, there could be the curse of aid as Djankov pointed out,'' Lee said.
He called for more participation by the private sector. He gave an example of Scandinavian countries, where labor unions also actively participate in ODA.
ODA and Energy
Though one should not be helping other countries only for oil, ODA's role in resources diplomacy can't be ignored, according to Jung Woo-jin, a senior research fellow at the Korea Energy Economics Institute. ``With oil prices breaking $130 and the price of uranium growing nine fold in the last three or four years, countries are desperate for energy.'' He said it is now impossible to get energy by simply participating in bidding as in commodities.
``China is especially securing energy at high prices. They bid high prices that others dare not.'' Jung said it is difficult to get resources without diplomacy in this energy war.
``China showed off its influence in Africa, inviting the heads of African nations to Beijing in 2006. They have invested a lot in the region whereas Korea has barely invested anything. Korea has a very weak basis in Central Asia and Africa.'' China plans to give $4 billion in aid to Africa in the next five years.
He said Korea can never win in such a competition if it's just spending money. However, he said Korea should make use of its strength in the IT sector. ``Its infrastructure, telecommunications, power generation facilities, and oil refineries are all very developed. The brand Korea is powerful, and Central Asia and Africa need these industries.'' He said Korea should use a package strategy, linking these industries with natural resources. He also suggested expanding human networks.