Modern Mining March 2025

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What is Trump’s game? By Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

American decisions have global effects.

Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

O ne may say a lot about Trump. As Bono said when introducing U2’s best song at Red Rocks in 1984: “There’s been a lot of talk about this next song…maybe, maybe too much talk… this song is not a rebel song; this song is Sunday Bloody Sunday”. So perhaps there has been too much talk about Trump. But Trump’s behaviour is likely to have bloody consequences, quite literally. And, unfortunately, American decisions have global effects, so we must talk about it. The most pressing thing, which might seem far from mining, is to talk about the abrupt pause to foreign aid recently executed by Trump. Foreign aid is a controversial subject. In 2008, three scholars published a paper called The Curse of Aid, cited 1,193 times since. The opening line of the abstract states: “Foreign aid provides a windfall of resources to recipient countries and may result in the same rent seeking behaviour as documented in the “curse of natural resources” literature.” Strikingly, the lead author – Simeon Djankov – worked for the World Bank at the time. The research work was clear that foreign aid had a negative impact on institutional quality larger in effect than oil rents. “We find that aid is a bigger curse than oil.” This is important work, as it provides a caution against the idea that aid always helps, which reminds me of a book called

When Helping Hurts, and another I reviewed in 2010 called Dead Aid. Aid, if not directed towards building strong domestic institutions through which broad-based development can thrive, can become one more rent source for elite capture. As the Djankov paper points out, stronger incentives for rent seeking seem likely to reduce the quality of democratic institutions and the checks and balances in the governments of recipient countries. In the second half of the 20 th Century, an estimated US$2,3 trillion was spent on aid, and the results are not impressive. Clearly, a rethink is in order. Consider, for instance, the dynamics of what might happen when official “development assistance” and “aid” become a large portion of a country’s annual budget. Let’s take Rwanda, an aid darling despite shocking democratic credentials. In 2022, it received US$1,12 billion (constant 2021 US$) in total aid, about one twelfth of the country’s GDP. US$170.38 million of this came from the US. Health expenditure in 2021 (the last year for which there is data) was US$73.53/capita. In Angola, by way of comparison, aid flows were far lower in total in 2021 (US$247 million) than in Rwanda. And, while GDP is much larger (US$82.4 billion) than Rwanda’s, domestic healthcare expenditure was US$114.77 per capita. That is US$41 per capita

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