Canada criticized for tying foreign aid to commerce

Once held up as a model global citizen, Canada is facing growing criticism from aid groups over moves to tie foreign assistance to trade through partnerships with mining and other firms.

Plenty of nations use foreign aid to further their political and economic interests, and Ottawa has insisted that in tough economic times a market-based approach involving private firms will insure that aid is used efficiently.

But aid groups counter that in tying assistance to economic gains Canada neglects its obligation to fight poverty, and Ottawa has even earned a rare rebuke from the Organization for Economic Cooperation and Development (OECD).

In January, Canada's International Cooperation Minister Julian Fantino announced the suspension of new aid to Haiti over concerns about mismanagement of funds in the impoverished Caribbean nation, ravaged by a 2010 earthquake.

"Are we going to continue doing things the same way in Haiti? I don't think so. Because we're not seeing the kind of progress that Canadians should expect," Fantino told the French-language daily La Presse.

"Will we have to continue dealing with Haiti's problems forever? They too have to step up," he added.

Canada is a leading backer of international efforts to rebuild Haiti, and the announcement drew immediate criticism from aid groups.

"It was a blow below the belt!" said Katleen Felix, director of Kanpe, a Haiti aid foundation co-founded by the rock group Arcade Fire.

She accuses Prime Minister Stephen Harper's Tory government of "not understanding" the dire reality in Haiti and of ignoring progress there. She sees the move as part of a larger effort to link aid to commercial interests.

During a recent visit to the Haitian capital Port-au-Prince, Foreign Minister John Baird said Canadian firms should play a "greater role" in the country.

"We must determine if we have gotten a good return on our investments," he added, in reference to aid monies.

Bonnie Campbell, a politics professor at the University of Quebec in Montreal, said the changes began in 2009, when the Canadian government axed funding for eight African countries.

Colombia and Peru, two nations that had recently signed free trade agreements with Canada, were meanwhile added to Ottawa's list of top aid beneficiaries.

"Those picks are worrying," said Campbell. "We're choosing targets for aid based on Canada's commercial interests and we're distancing ourselves from our international obligations to reduce poverty."

"Foreign aid should not be used to promote Canadian companies," said Chantal Harvard, spokeswoman for Canada's Coalition to End Global Poverty, which represents more than 100 non-governmental aid agencies.

The latest changes even drew criticism from the OECD, which last year deemed unfortunate a five-percent reduction in Canada's foreign aid budget, saying its "new approach to foreign aid is neither sufficient nor transparent."

In a response to AFP, Fantino touted the private sector as "absolutely essential for job creation and durable economic growth, without which developing nations cannot break the cycle of poverty."

He said Ottawa has obtained positive results by focusing aid on the "social, economic and health needs" of people in poorer nations and defended its partnerchips with mining and other firms.

"In Ghana, for example, a project run by World University Service Canada and Rio Tinto Alcan provides training for 400 children living in mining communities in order to get good-paying jobs at local mines," he wrote.

"The project also offers a quality basic education to 134,000 locals as well as access to clean drinking water."

Canadian Trade Minister Ed Fast meanwhile led a trade mission to Ghana last month with a focus on the extractive sector.

Canada's sector accounts for almost half of worldwide mining activities and 12 percent of Canada's direct investment abroad, second only to financial services, according to government figures.

Canada is expected to release its latest annual budget in the coming weeks and some fear a further cut in foreign aid.

Canadian foreign aid was 0.34 percent of gross domestic product (GDP) last year. Based on past cuts, opposition parties and aid groups fear it could fall to 0.25 percent by 2015 -- far below the UN benchmark of 0.70 percent.