How does a country give "aid" to another?
score:6
It depends entirely on circumstances. It can be any of the following:
Grants (You get money)
Prior loan forgiveness.
This is EXTRA big deal since when you forgive a loan, it's not just the monetary value of the loan+interest that the recipient country essentially gets for free.
The country also removes the risk of defaulting on that loan which - if it happened - would have ruined your credit rating and made it extremely more costly to borrow in the future.
Regular loans (You borrow money you have to repay later with interest).
This is mostly business as usual, EXCEPT that they frequently go to countries that wouldn't have been able to borrow money on capital markets AT ALL due to high risk of default.
Low interest loans (You borrow money you have to repay later but at ABSURDLY low interest rates compared to the rates you'd be paying had you tried to borrow the money yourself given your lack of collateral and low credit rating).
In essence, you are gifted the interest you did NOT have to pay for free, which is a very large amount.
Investment into local economy.
Equipment grant. Either civilian or military.
Also, any of the above methods may have different strings attached:
No string attached.
Some strings attached as far as how you distribute the money
Some strings attached as far as what you SPEND the money on (e.g. "no weapons" or "food only" or "weapons from US only")
Some strings attached as far as your behavior. Usually means enacting some sort of economic or political reforms (eliminate corruption, privatization etc...).
As an example, Israeli defense industry was forced (By USA) to cancel many extremely lucrative weapons contracts with other countries (e.g. China) with US military aid being used as a leverage. The reasons ranged from US not wanting specific technologies going to China, to US wanting to get a competing military-industrial industry out of a market.
As totally unrelated example, a lot of Western aid is predicated on passing "anti-corruption" laws etc...
Quid Pro Quo. You get money, you vote for my interests in UN etc...
China seems to be doing some of that, especially in Africa.
"I mean if it's the latter 2, why it's called aid? It looks like bizs as usual to me"
As noted above, loans are usually on extremely good conditions. As in, if you count interest, you could be getting 2x-10x more money compared to obtaining that loan on capital markets.
As for weapons, it's part business as usual.
Upvote:2
Sometimes it means: US lend $1 billion check to Pakistan at some rate. But Pakistan must buy US weapon for these money, must hire US consultants to use it for its own money, at prices set by US, do this-and-this on the borders, arrest such and such people and so on.
Usually the agreement is not so blatant, but they are only plans. Reality is much worse. I had once seen the ways of Humanity Help from Germany to Germans in USSR in 1990. All money went to local authorities in places where USSR Germans lived and to the civil servants from Germany. The sum was about $200 mill. Not a single normal citizen got anything. I was acquainted with one factory owner from Germany who was outraged with this situation (he gave a large sum in this help fund personally) and promised me ( I was in the counsil of the Moscow German Society then) to do something or at least to get some info or raise a scandal. Result=0.
The corruption in the world is on such level, that I am afraid, sums under 1000 mill. simply disappear in the pockets of the civil servants on both sides. While returning the Russian debt to Czechs in 2001 2/3 of it ($1200mill) disappeared. Officially.
Of course, while it is known, that all the aid will be stolen, the giver could demand something on the civil servants of the state-taker. And somethin will be get. But not much. They love to steal, but they hate to pay.
Upvote:4
Aid takes many forms. And yes sometimes it's money, sometimes it's equipment worth $X, etc. Sometimes there are so many strings attached it's not really very beneficial (but sorta better than nothing), sometimes it's bad for the country overall, but good for some people, etc.
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