We May Be Poor, But We Pay More

Everybody does it, argue Nancy Birdsall and Todd Moss of the Center for Global Development in Washington, in reference to the Bush administration's decision (since revised) to limit reconstruction contracts in Iraq to American companies.

They write (in the New York Times, though it's an IHT link):

All the fuss must seem rather strange to the more than four billion people in the developing world. After all, restricting overseas development contracts to domestic bidders - so called "tied aid" - has been standard practice in the aid world for the past 40 years.

They go on to point out:

Advocates of improving aid effectiveness have long argued to eliminate the practice of tied aid - which, according to one economic study, reduces its value by 15 percent to 30 percent. Untying aid would allow poor countries to purchase the most efficient and cost-effective goods and services necessary for their development projects. That makes sense because the real point of aid is to help people escape from poverty. But old habits die hard.

Indeed, which means, I suppose, we should applaud especially loudly that Bush saw the light yesterday on opening up the Iraq market to "coalition of the unwilling" states.