Sunday, March 28, 2010

Pope in Crisis

NY Times: As Archbishop, Benedict Focused on Doctrine;
Abuse Scandal’s Ripples Spread Across Europe
Pope May Be at Crossroads on Abuse, Forced to Reconcile Policy and Words
Financial Times: Protest at priests’ abuse reaches Vatican steps

Joseph Ratzinger, better known as Pope Benedict XVI, is in the middle of a stormy scandal of abuse involving the Catholic Church, many nations, numerous priests, and thousands of victims. In this latest round of scandals, this week new allegations surfaced against a priest in Germany who reportedly abused young victims for over two decades, all under the presumed knowledge of archbishop Ratzinger who, at the time, allegedly did nothing to investigate or stop the abuse. When Ratzinger was archbishop in Munich, he was copied on a memo informing him that a priest who had undergone therapy after sexually abusing children would return to working with children in a new parish. Church investigators say that the priest, Rev. Peter Hullermann, sexually abused young children for decades, and to avoid disclosure of these wrongs, church officials transferred Hullermann from parish to parish and continued to allow him to work with young children, even after being convicted of pedophilia crimes in 1986. This history of Hullerman’s career is as follows:

o He was abruptly transferred from Bottrip to Essen in 1977, without comment of abuse.
o H was then transferred to Munich for pedophilia therapy after three claims of sexual abuse in 1980.
o Hullerman returns to parish duties in Munich shortly thereafter.
o He was later transferred from Munich to Graming, where he was criminally convicted for more abuse in 1986, resulting in a fine and probation.
o After his probation, he was transferred to a Garching to work in another parish with young children, where he worked for 21 years. More allegations of abuse have resulted from his tenure in Garching.

The Pope’s supporters, describing his tenure as archbishop when he overlooked repeated signs of Hullerman’s abuse, defend him by characterizing him as an academic - more concerned with theology than with the personal affairs of his priests or congregations. They suggest that the recent media crisis is just an “elaborate attack on the Pope.” Those accusing the Pope of wrongdoing suggest he his oversight and neglect reveal an evil intent to conceal and protect pedophile priests’ actions from the public.

Hullermann isn’t the only Catholic priest facing scrutiny these days. Ireland’s Bishop John Magee resigned this week after reports surfaced that he failed to respond to accusations of abuse in Cloyne. Magee later issued an apology for his failure to protect child victims from sexual abuse. Irish Catholics are dissatisfied with the extent of repercussions from the Irish scandal because the four other Irish bishops involved in the issue have not resigned, nor has Cardinal Sean Brady, despite revelations that in 1970 he encouraged two young children to sign secrecy statements to prevent disclosure of their abuse.

Allegations of abuse are not isolated to Europe. There have been many reports of abuse in the United States, including a 1991 warning sent to Cardinal Ratzinger th at a Wisconsin priest had abused over 200 deaf boys over the span of 25 years beginning in 1950. Similar to the warnings about Rev. Hullermann, Ratzinger took no action against this priest for his misconduct.

Discussion Questions:
1. How does a religious scandal affect a country’s financial affairs? Is the effect of religious scandal more pronounced in countries where there is no formal or effective separation between church and state?
2. What is the effect of scandal on contributions to the church? Might the church be forced to sell assets? Would a large scale sale of church assets have an impact on markets?

Fraying U.S. and Israeli ties lead to continued Palestinian poverty


CNN: Biden highlights close U.S.-Israeli ties on Middle East trip

UN News Centre: UN-backed Middle East Quartet condemns Israeli plans to expand settlements

New York Times: Conflicting Demands Test Netanyahu

BBC: Ban Ki Moon calls Gaza conditions 'unacceptable'

UPI: Despite rift, Israel to get U.S. C-130s

Jordan Times: Seize the opportunity at hand now, King tells Israeli people

Workers World: Forget Biden’s ‘dignity’ — what about the Palestinians?

The rocky road of the Middle East peace process recently hit another bump when American Vice President Joe Biden visited Israel this month. In the middle of his trip, the Israeli Minister of the Interior made a surprise announcement that he would approve the construction of new houses in East Jerusalem. Many officials were caught off guard, including the Vice President, Secretary of State Clinton, and even Prime Minister Netanyahu. This has strained US-Israeli ties, and is seriously threatening to prevent any further movement on Israel-Palestine peace talks. This might seem like more of the same to many casual observers in the West. But, for people living in the Occupied Palestinian Territories it means continued unemployment and crushing poverty.

American Vice President Biden went to Israel with the intention of jump-starting the moribund peace talks. The trip itself was proceeding according to official protocol with Biden stressing the “close relationship” between the two countries. However, both the trip and the relationship was jarred by a sudden announcement that the Interior had approved a plan to build 1600 new homes in East Jerusalem. Not only did this harm the US – Israel relationship but many suggest that this undermines the entire peace process.

The source of this contention is itself a unique development problem. The ownership of East Jerusalem is disputed. Both Israel and Palestine claim the area as their capital, however it is under the control of Israel. Over time, Israel has taken over more and more Palestine land and homes and has moved in Israeli families. Generally, building new homes is considered a positive step in development, but in this case the new construction has instead served to endanger greater peace and development issues. While the legality of these settlements is disputed by IsraelPalestine, it is worth noting that the global community generally believes they violate international law, as evidenced by United Nations Secretary General Ban Ki-moon who recently called them illegal.

Secretary General Ban Ki-moon has also discussed the conditions in Palestine. He described conditions in Gaza as "unacceptable, unsustainable." Poverty is the norm, not the exception as a result of the conflict with Israel. Jordan’s King Abdullah has recently tied the continued building of settlements to the peace process and noted that failure could result in future violence. While this poverty continues, it is worth noting that United States aid to Israel continues at around $3 billion a year.

The strained relationship between the United States and Israel is a concern. Different administrations in both countries will have different opinions about how to proceed towards peace. However, until real progress is made, it appears that poverty will be the status quo in Palestine.


1) Should the United States stress development and human rights issues more in its relationship with Israel?

2) Considering that the road to peace appears long, what immediate steps can the United States take to help humanitarian development in the Palestinian Territories?

Japan's Postal Privatization Debate

WSJ: Japan Unveils Postal Reform Plan; Officials Spar Over How Far to Privatize Japan Post; Japan Shifts Course in Halting Postal Sale
Reuters: Japan scales back Japan Post privatization
JapanTimes: Kamei pitches postal privatization retreat; All eyes on Japan Post as privatization begins

Japan Post Holdings Co. does not just deliver mails. It is also the world's largest financial institution in terms of assets ($3.3 trillion), providing banking and insurance services. In 2007, Japan's former administration led by Junichiro Koizumi launched a 10-year plan to privatize this government-owned institution. By reducing government shares and support, it was expected that funds would be allocated more efficiently to productive users and other private banks would not be unfairly disadvantaged. Last week, however, reversing Mr. Koizumi's effort, the current government proposed that it should hold more shares of Japan Post than originally planned.

Banking and postal services Minister, Shizuka Kamei, said that the government needs to continue to support Japan Post in order to improve economies in rural areas. According to Mr. Kamei, the government plans to maintain more than one-third of Japan Post shares in which case the government can exercise veto power. Also, the government plans to expand Japan Post's business by increasing the ceilings on the amount of its deposits and insurance payment by June. Currently, a customer can deposit money in postal savings accounts up to 10 million yen ($108,070), but this limit will be raised to 20 million yen. In the case of insurance payments, the limit will increase up to 25 million yen from 13 million yen.

Many including private banks and other cabinet members strongly criticized the reform plan, arguing that it would hinder healthy competition. They complain that the money deposited in private banks will likely to shift to Japan Post as customers tend to view the government-owned bank as a safer place to save money. They also worry that with expanding deposits, Japan Post may consider providing additional financial services such as providing mortgage loans. Japan Post currently does not provide loans and 80 percent of its assets are invested in the government bonds.

Prime Minister Yukio Hatoyama said he intended to have a cabinet meeting next week to discuss the new reform plans and finalize it by March 30th. However, according to Japan Times, the basic features of the plan are not likely to be changed.

In 2007, under the previous privatization plan outlined by the former administration, Japan Post was split into private subsidiaries (Japan Post Bank Co., Japan Post Insurance Co., Japan Post Services Co., and Japan Post Network Co.) under Japan Post Holdings Co. Among them, banking and insurance subsidiaries were supposed to go public in 2010 and be span off by 2017. Also, the government was supposed to decrease its shares to about 33 percent.

Discussion Questions:
What are the positive and negative aspects of government support for Japan Post? How should the Japanese government proceed its postal reform?

EU and US successfully Achieve an Extension of the Open Skies Agreement

Sources: Washington Wins Battle of the Open Skies; U.S. and E.U. Agree to Expand Open Skies Accord; Open Skies Deal Version 2.0, Doesn’t Go Far Enough; Second Stage E.U.-U.S. "Open Skies" Agreement and Existing First Stage Air Services Agreement-Briefing.

In March of 2007, the United States and the twenty-seven European Union Countries entered into the Open Skies Agreement. Since 2008, this agreement has allowed any European or American Airline to fly planes between any two airports in either region, for the first time allowing European airlines to operate bases outside their licensing state. So for example, the agreement allows British Airways to operate a flight from Boston to Frankfurt instead of forcing the company to operate solely out of Great Britain. The Open Skies Agreement has essentially been a deregulation of the transatlantic aviation business, which replaced the resulting in increased competition, fostering job creation and lowering airfare in the $18 billion market.

On Thursday, March 25, E.U. and the U.S. leaders signed a draft expansion of the Open Skies Agreement after concluding negotiations in Brussels, Belgium. Currently, U.S. law prohibits foreigners from owning more than 25% of the voting stock of U.S. airlines. This has been a major point of contention for the E.U. as members allow for 49.9% of foreign ownership in its airlines. Many European airline companies were hopeful that the talks would result in the U.S. agreeing to open their markets to allow for a higher percentage of foreign ownership rights. However, the U.S. made clear that it has made no commitments to lift its restrictions on foreign ownership, prompting British Airways to renew an earlier request to drop the treaty should the U.S. refuse to cooperate.

Even though the United States has not agreed to liberalize their market restrictions to foreign ownership, the agreement does further open the aviation market to other entrants. For instance, the U.S. has agreed to explore ways that American carbon emissions regulations could be squared with those of the E.U., something that the Bush Administration had firmly rejected in the first stage of the agreement. Further, the E.U. has gained greater access to travel by American government employees, who had previously been restricted to American airlines under what was known as the “Fly America” program.

Thursday’s deal has had, at the least, the effect of guaranteeing that the terms of the 2007 Open Skies Agreement are in place permanently. The relationship between the E.U. and the U.S. on this matter is intact and both sides are expecting further progress in the future.

Discussion Questions:
1. Why would the United States be hesitant to open their market to foreign ownership? Do you think the aviation market is more sensitive due to past instances of terrorism?

2. Is it likely that a result of this deregulation will be lower airfare for the consumer on airlines like American or Aer Lingus? Why or why not?

Saturday, March 27, 2010

Inter-American Development Bank Increases Capital

Sources: Financial Times – IDB shareholders discuss capital increase / Financial Times – IDB Governors agree on capital increase / Wall Street Journal - Brazil Min: US Demands Threaten IDB Capitalization / Wall Street Journal – Brazil Minister Warns IDB May Need More Capital / – IDB approves historical expansion of capital, financial package for Haiti / Business Week – IDB Management Questioned as Funding Increase Pared / Business Week - IDB Capitalization Stalls on U.S. Reform Drive, Bernardo Says / Business Week – IDB Board Agrees to $70 Billion Capital Increase

The Inter-American Development Bank announced on March 22, 2010 that its members agreed to raise the bank’s capitalization by $70 billion. Bank members reached an agreement at a meeting of the Bank’s Board of Governors in Cancun. The agreement represented the first increase in bank capital since 1994. After the increase, the IDB will have approximately $170 billion in resources. The Bank Board of Governors also agreed to provide additional aid to Haiti and forgive $479 million of Haiti’s outstanding loans. At the conclusion of the meeting, IDB President Louis Alberto Moreno stated, “This is a tremendous vote of confidence in the direction and vision of a reformed and renewed bank.”

The IDB’s membership base consists of 48 countries, 26 of which are borrowing countries in Latin America and the remaining 22 being non-borrowing countries from around the World. The US is the largest shareholder in the IDB, holding approximately 30% of the Bank’s shares, and will bear the largest burden of the increased funding. The US Congress must now approve the increased funding. Political commentators expect some fallout in the US from the increased funding because the IDB provides loans to member countries that have icy political relations with the US.

The increased capitalization will allow the Bank to loan approximately $12 billion annually over the next few years. The Bank loaned $5 to $7 billion in the years leading up the financial crisis. Brazil’s Planning Minister Paulo Bernardo asserted that the demand for loans is continuing to increase. For example, Chile, which traditionally does not utilize IDB loans, may now use some IDB loans to assist it in rebuilding from the powerful earthquake that struck the country this February.

Some IDB members immediately declared the increase was not large enough to meet the region’s needs. Following the approval, Armando Boudou, Argentina’s Economy Minister stated, “With time, it will surely prove insufficient.” Brazilian leaders predicted the IDB would need additional funding within three to four years. Brazil’s Planning Minister Paulo Bernardo stated, “We may be called in the short term to discuss capitalization again.” Mr. Bernardo went on to say that, “I heard a lot of complaints that it still wasn’t sufficient.” The IDB loaned $15.5 billion last year assisting its members with the global financial crisis. This represented a 37% increase from 2008 lending and was an organization record. Latin American GDP shrunk by 2.7% in 2008. Although Latin American economies are recovering, many of the region’s countries remain weak and need assistance to propel their economies back to higher growth rates.

Leading up to the meeting, the US was hoping for a $60 billion increase in capitalization while other members were demanding an $80 billion increase in capitalization. Member countries appeared to split the difference in agreeing to a $70 billion increase. Although $70 billion will allow the IDB to double its pre-crisis funding, the amount is significantly smaller than an IDB advisory board’s recommendation. Last year, an IDB advisory board recommended an increase of $150 to $178 billion, which would have allowed the organization to provide $18 billion of loans annually.

The US also demanded several reforms that ranged from environmental standards to increasing transparency before it would agree to increase the Bank’s capitalization. Brazil also pushed the IDB for increased transparency. The IDB made a series of questionable loans over the past few years. For example, the bank took a $1 billion loss last year because of bad bets on mortgage-backed securities. Both the US and Brazil hope that increased transparency will result in better decision making at the IDB. The members rejected most of the US proposals during the meeting; however, US Treasury officials still insisted after the meeting that they met their goals.

Discussion Questions:

Will there be any political fallout in the US from the increased funding?

Did the IDB act responsibility in loaning out a record amount last year before it secured additional funding?

Discussion Questions:

Was the funding increase enough or will the

Monday, March 22, 2010

New United Nations report says food aid for Somalia not going to the hungry

New York Times: Somalia Food Aid Bypasses Needy, U.N. Study Says
UN Dispatch: Somalia: What Happens When Political and Humanitarian Goals Collide?
BBC Online: Contractors divert Somalia aid, UN report says
BBC Online: UN agency acts on Somali food-aid claims

Major news organizations are reporting that a new United Nations study reveals that food aid to the war-torn country of Somalia is being diverted at an alarming rate. It claims that contracts are awarded to a select group of powerful and influential individuals, and from there the aid is funneled away and resold. The study finds that a number of factors are responsible for the problem, but the root cause is corrupt Somali contractors. The report also suggests that some local UN workers are making money from this illegally sold food.

The history and recent developments of the Somalia conflict are detailed here. The UN-run World Food Program (WFP) is responsible for distributing $485 million in food aid to 2.5 million people annually. It is important to remember that the WFP is strongly apolitical, and delivers food aid regardless of who is in control of a country. It is in this light that they have been working with al-Shabab militants to deliver food.

The report has yet to be brought up for discussion at the Security Council and already its impact has been significant. Some of the report’s authors have received death threats. This is against a backdrop of growing security concerns that caused the United Nations to relocate their regional office in Kenya to New York. As the report was leaked, publicity brought mounting pressure on the United Nations to respond. This resulted in a quick blacklisting of three Somali contractors. The WFP has also responded to the substance of the report by saying that many of the problems outlined within the report have already been dealt with. It claims the reason for the corruption is because food transporters must navigate a variety of roadblocks set up by bandits and members of militias.

Reducing corruption and improving food aid are important goals. People are going hungry, and aid dollars are being wasted. However, it is important that changes to the program do not do more harm that good. Cutting back food aid overall would be tragic, and politicizing humanitarian programs could lead to more suffering. It is hoped that this report will bring shortcomings to light, and will overall improve the amount of food delivered to hungry people.

1) What is an acceptable amount of corruption in humanitarian programs?
2) Should the United Nations work to prevent leaks? Should it make program decisions before a formal presentation of reports?

Sunday, March 21, 2010

Does Greece Really Need Financial Aid? Will Germany Really Provide It?

EU Business
EU Ready to Give 'Urgent Assistance' to Greece
Merkel Not Opposed to Bilateral Aid for Greece
Europe Waits on Germany as Greece Deadline Looms

Greece is still trying to figure out how to recover financially after its prime minister revealed late last year that the country’s finances were much worse than previously disclosed. Since then the country has proposed certain austerity measures that would help rectify its financial stress, namely spending cuts and tax increases that would bring its deficit back in line with other EU members. Fear remains, however, that Greece’s austerity measures are not enough to cover the EUR 50billion in bonds that will roll over this year because Greece’s cost of borrowing has increased dramatically to more than double the rate that investors are willing to pay for fellow EU member Germany’s financially attractive bonds.

To help with its fiscal crisis, the EU Commission is ready to enact plans that provide Greece with concrete financial assistance. EU Commission chief Jose Manuel Barroso has been putting pressure on Angela Merkel, German Chancellor, to approve an aid package that will be proposed to the 27 heads of state and government in an EU summit in Brussels next week. The proposed aid would come in the form of bilateral loans that avoid the limitation in the EU’s Lisbon Treaty that prevents bailout loans to any euro country. The bilateral loans would come from multiple European states, not limited to Germany.

Merkel’s stance on the matter has been fickle and seemingly adaptable, depending on her audience. While she isn’t altogether opposed to assisting Greece, she doesn’t think it is absolutely necessary at the moment. Last week she said that she would rather see the Greece obtain assistance from the IMF. This position represents a more nationalistic view that discourages Germany, a cash-rich country, from bailing out weaker EU members. German residents and politicians have clearly voiced their opposition to bailing out weaker EU members who were, ostensibly less fiscally responsible. Radical Germans have suggested ejecting Greece and other weaker members from the European Union and welcome the return of the Deutschmark if weaker countries drag the euro down. Despite the opposition, this week Merkel was quoted as telling Prime Minister Papandreou she would do “everything necessary to preserve eurozone stability,” which would seem to include a Greek bailout.

Prime Minister George Papandreou’s stance on a Greek bailout has also been somewhat inconsistent. Saturday he pleaded for help from EU member states, suggesting that the political support will help reduce its rate of borrowing and allow it to recover without destabilizing the rest of the European Union. On Sunday, however, he specifically confirmed that Greece is not in need of any financial assistance. Lining up political opinions with actual financial policies appears to be the biggest hurdle in organizing a path of financial reform for the struggling Greece.

Discussion Questions:
1. If the EU members bail out Greece, how will the union enforce fiscal discipline among its membership going forward?
2. What form of rescue funding will be least painful for the Greek people; an IMF loan or bilateral loans from other EU members ?

Friday, March 12, 2010

Student Loan Initiative Added to Health-Care Reform

Key Senators Balk at Adding Student Loan Overhaul to Health-Care Legislation: The Washington Post; Student Loan Overhaul Taking Filibuster-Proof Route to Overcome Corporate Opposition: The Huffington Post; Deal Gives New Life to Overhaul Student Loans: New York Times; Democrats Pare Differences Over Health Overhaul: Yahoo News.

Democratic leaders in Congress decided Thursday to entertain a deal that would bundle the health-care reform bill with a popular proposal to overhaul the student loan system. Pressure for the deal has come from House leaders and members of the Obama Administration, who are anxious to see the success of two of their biggest political agendas. That said, opposition for the deal has come from key democratic senators who suspect pooling the two agendas could jeopardize the health-care bill’s success.

The success of the health-care reform bill has been long-awaited by many Democrats in Congress. The Bill has been the top priority of the Obama Administration since his presidential campaign began. The bill to reform health-care looked as though it would pass through the Senate in January, but was objected to by Republicans through the filibuster process, preventing the bill from passage. Since that time, Democrats have come up with a plan to revive the bill by passing two separate health-care bills. This strategy will be filibuster-proof and will be part of the expedited budget reconciliation bill. For the bill to pass it will need 50 votes and Senate Democrats control 59. The addition of student loan reform is set to be added to the second of these and democratic leaders are hopeful both will pass in a matter of days. Due to anticipation of the bill’s success, President Obama has elected to put off a business trip to Indonesia, and will also be returning from that trip at an earlier date.

Student loan reform was adopted by the House last September in The Student Aid and Fiscal Responsibility Act. The Act provides for a $5,500 per student increase in Pell Grants per year and the minimization of the private sector’s role in student aid, ending government payments to private lenders and allowing the government to use that money to fund students directly. Pell Grants fund nearly 8 million of the lowest income college students in the nation. The bill would redirect billions of dollars to the Pell Grant fund. Private banks have been very opposed to the bill, with lobbyists making a concerted effort on Thursday to stop the loan reform from being added to the budget reconciliation bill.

Discussion Questions:
1. Was there a benefit to private sector involvement in the student loan program? What was the sense in government funding of private loan companies?

2. Another aspect of the bill is that the Pell Grant will automatically increase with inflation each year instead of being recalculated by Congress. Will this shelter the Pell Grant from budget cuts?

3. Will the addition of student loan reform to the health-care initiative scare off too many Democrats whose campaigns are substantially supported by large corporate entities? Could the bundling prove to hurt both initiatives?

Thursday, March 11, 2010

"Empowerment Gift" to Indian Women

BBC News: Indian upper house approves women's quota bill
NYT: Uproar in India over Female Lawmaker Quota
Global Voices: India: Women's Bill Stirs Up a Hornet's Nest
WSJ: India, Women and Democracy

On the International Women's Day (March 8th), the Indian government introduced a bill that would require one-third of the seats in the national and state legislatures to be reserved for women for 15 years. The upper house of Parliament (the Rajya Sabha) passed this Women's Reservation Bill on March 9th after being adjourned due to strong opposition against the bill. Although the approval of the upper house is only the first step, many welcome this historic move and hope that this step would contribute to improving gender equality and empowering women in India. In fact, it was the first time that the bill passed the first hurdle since it was introduced in 1996. The bill further needs to be approved by the lower house and at least 50% of state legislatures as well as the President of India.

Currently, only 59 out of 545 legislators in the lower house (the Lock Sabha) are women, and there are 21 women out of 245 legislators in the upper house. Women in India face "discrimination at home...domestic violence, unequal access to health and education. This has to end," said Prime Minister Manmohan Singh.

Those who oppose the bill argue that it will not make a big change as the reserved seats will likely to be filled with the female family members of prevailing male politicians and those women will just act as substitutes for men. Opponents also say that this bill will adversely affect other minorities. As more seats are reserved for women, other minority groups such as Muslim politicians will face more competition for the less number of seats and their representation in the legislatures may decrease. Some criticize that the bill would undermine India's democracy because the seats can be reserved for women rather than for those who people choose.

At the local level, one third of the seats in local councils have been already reserved for women in India. In Pakistan, 30% of legislative seats are reserved for women and over 27% in Afghanistan.

If passed, what kind of impact would this bill have on Indian women and development in general? Do you agree with opponents' concerns regarding the bill? Does the bill need to have sub-quotas for other minorities such as Muslims and the lower castes?

Monday, March 08, 2010

BBC reports that Ethiopian humanitarian aid diverted for arms


BBC News: Bob, Band Aid and how the rebels bought their arms

BBC News: Bob Geldof demands proof of BBC Ethiopia aid report

BBC News: On the trail of Ethiopia aid and guns

BBC News: Ethiopia famine aid 'spent on weapons'

Ethiopian Recycler: Live Aid money did pay for weapons

AOL News: Live Aid Famine Cash Bought Guns, Not Grain

A recent BBC World Service report alleged that rebel groups in Ethiopia diverted aid money intended for humanitarian famine relief and used it to purchase arms during the 1980s. The story has been met with strong criticism in Ethiopia and in Great Britain.

The Ethiopian famine in the 1980s gripped the world like few before or after have. Even today, the images of men who look like walking skeletons and sad faced children with bulging distended stomachs are etched in the minds of millions of Westerners. Those in the developed world felt with their heart, and acted with their checkbooks, donating large sums of money through many non-governmental organizations (NGOs) and events such as Live Aid. The cause of so much misery was the lack of food crops. But it was exacerbated by another horseman of the apocalypse—war. During this conflict, the Tigrinya People's Liberation Front (TPLF) was fighting the Ethiopian army, and had control over the Tigray region.

Aid planners found that the only way to provide needed supplies to people living in rebel-held areas like Tigray was to direct the money to the Relief Society of Tigray (Rest). Two key members of the TPLF have claimed they diverted the funds, with one claiming no more than 5 percent were used for humanitarian purposes. Robert Houdek, a former senior U.S. diplomat to Ethiopia in the 1980’s states that TPLF members at the time hinted at the diversions, while a CIA document collaborates the story. While the truth of these claims are disputed by some, such as former TPLF leader and current Ethiopian Prime Minister Mêlées Zenawi, the many signs found by the BBC point to at least some funds being diverted.

Despite strong evidence, this report has lead to a strong backlash from many aid organizations in England. The founder of the wildly successful Live Aid event, Sir Bob Geldof, has been a vocal critic. He has said there is "not a shred of evidence” that funds from those events were used to buy arms. He has said that if credible claims were brought forward, he would sue the Ethiopian government to reclaim the misspent funds. He has described some of the sources used by the BBC as “not credible,” and along with many other charities is writing a letter of complaint to the BBC Trust.

The veracity of these charges will do little to change the current reality in Ethiopia. No one has yet called for Prime Minister Meles Zenawi to step down. No one has also charged that any charity or NGO was complacent in these events, even the rebel leaders talk of using “tricks.” However, this will be of little comfort to Ethiopians who could have been saved by aid money, or Westerners whose donations unwittingly went to buy guns.


1) Does the risk that aid could be misused mean that it should not be given?

2) To what extend should governments and NGO’s try to take back their misappropriated funds?