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Ethical Issues in International Funding

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  • Published
    23rd Mar, 2021

Recently, the Prime Minister of India said in the Parliament that the country needs to be cautioned against the influences from abroad, which he referred to as the new FDI i.e." foreign destructive ideology". He was trying to highlight how International agents today are playing an important role in shaping a countries’ value system.


Recently, the Prime Minister of India said in the Parliament that the country needs to be cautioned against the influences from abroad, which he referred to as the new FDI i.e." foreign destructive ideology". He was trying to highlight how International agents today are playing an important role in shaping a countries’ value system.


  • The farmers' protest against the government's newly-enacted farm laws has gone international. Tweets by renowned pop-star Rihanna and Swedish climate-activist Greta Thunberg favoring the agitating farmers have stirred up a hornet's nest with the opposition parties calling it a hit at India's reputation.
  • Last year, the government tightened the FCRA rules through which NGOs garner foreign funding. The argument is that foreign-funded NGOs toe lines of foreign actors and slows down development activities.
  • Known for its campaigns against India's coal-fired power plants, Greenpeace has been barred from receiving foreign donations since 2015.
  • Recently, after a successful eight-year run in India addressing several crucial human rights violations on issues like the Delhi riots of 2020 and the use of excessive force in Kashmir, Amnesty International India has decided to shut its operations in the country, allegedly due to government repression.
  • Civil Societies have played a crucial role in the development of the nation, but recently their funding from foreign partners is being highlighted as detrimental to the nation.
  • In this regard, we shall understand ethical issues surrounding international funding in general.


Ethics is the study of the moral code of conduct or the ideal behavior to be sought by human beings. It guides to the realm of international relations as well.

International Ethics:

  • International ethics is an area of international relations theory that concerns the extent and scope of ethical obligations between states in an era of globalization.
  • It provides an understanding of how nations and other entities treat other nations and their people.
  • It guides the international community on ways to tackle global challenges. Eg. UNCLOS has helped in demarcating resources in the world’s oceans equitably to all Nations.

Some sources of International Ethics

  • UN Declaration of Human Rights
  • Geneva Convention for humanitarian treatment in War
  • Common but differentiated responsibility under Paris Climate Deal of UNFCCC

Importance of International Ethics

  • Legitimacy: Ethics grants and withdraws legitimacy. Practices have sprung up or gotten abolished based on the core values of the society.
  • Rights and Responsibilities: There have been many attempts at forging general agreement on the composition of human rights—the best known being the Universal Declaration of Human Rights as well as the United Nations Charter, the Geneva Conventions, and additional international agreements such as the Refugee Convention.
  • Peace and Harmony: Ethics aims at “Peaceful World”, “Respect for All” & “Equality” while forming international organizations, declarations & forums.
    • Eg.: The demand for equality in IMF & UNO shows the demand for adhering to ethics in a way.
  • Solidarity: Natural disasters and refugee crisis situations require a more compassionate view of the global community. These are not isolated events and rather, the duty of every global citizen to help in times of crisis.
    • Eg.;Aid during natural disasters (Nepal earthquake)
  • Fairness: Fairness addresses normative standards for appropriate contribution, equal regard, and just desert.
    • Eg.;Amartya Sen’s “capabilities approach”.

International Ethics and foreign funding

  • It is widely argued that international funding helps in building the capacity and empowering local development actors (like NGOs) in developing countries. This is an inclusive and democratic approach to development.
  • When there are places in the world with no opportunities, economic insecurity, war, instability, hunger, and overwhelming hopelessness, it’s a natural breeding ground for terrorism. So one of the best ways to tackle global terrorism is to lift people out of poverty. International funding is a way to achieve this.
  • It is anticipated that the complexities of responding to climate change require partnerships between international and local NGOs and CSOs.

Despite several such needs, many countries including India are wary of international funding due to the following reasons.

Issues with International funding

  1. Suppress Sovereignty of Nation
    • Conditional Funding:
      • The donors shape the policy framework and strategies through impositions, seriously undermining the rights, choices, and decisions of the people to determine their demands and actions needed for their development.
      • Local societal diversities and local ownership are ignored by conditionality.
      • Eg.;The IMF loans to India after the 1991 economic crisis came with severe conditions on macroeconomic policy.
    • Debt-Trap Funding: Foreign funding to governments in the form of loans to infringe on national sovereignty has also come to light due to China’s debt-trap diplomacy.
      • China provides loans to Pakistan for ‘One Belt One Road’, as Pakistan is not able to pay back, it is entangled in China’s debt trap.
  1. Funding to NGOs
    • There has been an increasing fear that by funding local NGOs, giving their ideas unwarranted prominence, and underwriting their activities, foreign government donors seek to shift the target government’s policies and serve their interests.
    • It has been alleged that Foreign agents use NGOs to carry forward their objectives like creating social disturbances, slowing down development works, etc.
      • Greenpeace serving western interest by slowing coal power projects.
    • Many argue that foreign funding is undemocratic because it contradicts the principle of government “of the people, by the people, for the people.”
    • From this perspective, civil society, progressive or otherwise, is legitimate when it can raise funds at home, but NGOs relying on foreign funding, however, pervert the will of the people.
  2. Hamper National Security
    • Funding terrorist organizations. Eg. Pakistan’s ISI has been actively supporting radical organizations to create social disharmony, radicalize local youths, and hire them for terror activities.
    • In the age of Information technology, foreign funding to technology (software and hardware) companies creates a cyber-security risk.
      • Example: Last year, India banned several Chinese apps and made FDI through government routes mandatory for investments from neighboring countries.
  1. Decrease legitimacy of Elections
    • Electoral Bonds are allowed to receive foreign funds. This opens a new and more direct way of foreign influence on local politics.
    • There have been allegations by some western countries against covert Russian meddling in their elections. Such incidents can happen in India as well.
  2. Funding for Clinical trials
    • Many western countries have been accused of funding voluntary clinical trials in poor countries of Africa and Asia.
    • This is a clear violation of human rights.


Though international funding entails with itself various ethical issues, it is still a need for the development of any nation. This funding if you used correctly can take the Nation on a positive trajectory of growth and prosperity. It is the need of the hour to ensure an international framework is devised by International organizations and Governments to ensure an ethical approach is taken to give and receive funds internationally. India can use its position, as a member of UNSC, to nudge the International community towards such a goal.

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