Sir Tim Lankester on Britain's Foreign Aid

Sir Tim Lankester, Chairman of the Council of the London School of Hygiene and Tropical ‎Medicine and Advisor on South East Asia to the consulting firm Oxford Analytica, delivered a ‎CIRS Focused Discussion on “The Politics and Economics of Britain’s Foreign Aid” on October ‎‎8, 2012. The talk was based on his recent book,The Politics and Economics of Britain’s Foreign ‎Aid: The Pergau Dam Affair (Routledge, 2012), which he described as “a case study of what can ‎go wrong when you do development assistance badly.”‎

Giving a background of the history of British foreign aid, Lankester said that the program was ‎initiated in the 1960s and was driven by the British government’s belief that it had a moral ‎obligation to its former colonies as well as practical political interests in those countries. In the ‎‎1980s, Lankester was the Permanent Secretary of the Overseas Development Administration – ‎the ministry responsible for development aid. During his time in the ministry, “one of the most ‎controversial projects ever funded by British aid” was taking place. This was the establishment of ‎the Pergau Dam and power-generating project on the Malay-Thai border, which “was the largest ‎funding in the history of British aid,” Lankester recalled.‎

The controversial Pergau Dam project was the result of a private agreement between some key ‎members of the Malay and British governments and was based on Britain providing Malaysia ‎with 200 million pounds worth of civil aid in return for sales of 1 billion pounds of defense ‎equipment. Lankester recalled that an agreement based on the offer of British aid in return for ‎arms sales was both unprecedented and against British policy and was thus divisive from the ‎start. To make matters worse, once the agreement was signed between the two governments, the ‎powerful contractors and companies assigned to building the project increased their estimates ‎and the total cost for the project almost doubled. ‎

Despite the increasing costs, and against the advice of British government officials and ‎economists, the project went ahead with the support of Mrs. Thatcher and a host of others with ‎special interests. Since both the prime ministers of Malaysia and Britain had backed the project, ‎the other government departments buckled under the pressure and did not offer sufficient ‎opposition to their leaders. Lankester described the situation as being one that suffered from ‎conflicting policy agendas and the “excessive mixing of politics, business, and conflicts of ‎interest.” ‎

In his capacity as Permanent Secretary, Lankester was tasked with evaluating whether or not the ‎money for the project was being properly and lawfully spent. Although the legal assessment at ‎the time showed that the project was lawful, the spend for the project was based on taxpayers ‎money and was so inefficient and uneconomic that Lankester felt obliged to formally ‎disassociate himself and the civil service from it. “This,” he said “is a story of politics and special ‎interests trumping sound development and sound economics.” Had there been more ‎transparency, it may have been possible for parliament, the media, and other interest groups to ‎formally oppose the project that ultimately damaged British-Malay relations at the time. ‎

In conclusion, Lankester said that he was curious to know whether the very same project would ‎have been viable today. His ex-post assessment, in light of increased gas prices over the years, ‎was that the project would still be an uneconomic one by today’s calculations. As a final thought, ‎he advised that the Pergau Dam case study provides valuable lessons for governments, and his ‎advice was that “it is better to be transparent than obscure,” “don’t say one thing and do ‎another,” “when things go wrong, don’t cover up,” and, lastly, “if you make one mistake, don’t ‎compound it by making another.”‎

Sir Tim Lankester is a member of the joint advisory board of the Georgetown University School ‎of Foreign in Qatar. He was UK Executive Director on the boards of the IMF and World Bank, ‎and later Permanent Secretary of the Overseas Development Administration. He was Director of ‎the School of Oriental and African Studies, London University, and from 2001 to 2009 ‎President of Corpus Christi College, Oxford. He has published articles and book reviews on aid ‎and development. ‎ 

Article by Suzi Mirgani, Editor and Manager for CIRS Publications