In 1961, US President J F Kennedy described foreign aid as "a method by which the United States maintains a position of influence and control around the world." Equally candid, in 1968 President Richard Nixon advised fellow Americans to "remember that the main purpose of American aid is not to help other nations but to help ourselves." Four decades later – call it amnesia or American exceptionalism – US Secretary of State Hillary Clinton, addressing poor countries at the 2011 Busan aid conference, urged them to "be wary of donors who are more interested in extracting your resources than in building your capacity."
It is easy to overlook the fact that aid is above all a political project because of its associations with humanitarian assistance and development. As an adjunct of foreign policy, aid is used to secure the economic, political and military interests of donor countries. The maxim that there is no such thing as a free lunch is applicable to the context of foreign aid. Aid puts an iniquitous burden of debt on poor countries. Given the financial instability and volatility of currencies in today's globalised world, poor countries find themselves spending more and more with every passing year on debt repayment. Patrick Bond, in his book Looting Africa, writes that the debt of developing countries rose from $580 billion in 1980, to $2.4 trillion in 2002 – much of it unrepayable. The volume of overseas development aid in this year was $37 billion, but there was a net outflow of $340 billion in servicing this debt. Indeed, as economist Joseph Stiglitz has observed, "What a peculiar world, in which the poor countries are in effect subsidizing the richest…"