Interview by Richard Dowden

Last year, 13 years after Labour came to power and created the Department for International Development, the OECD issued this verdict:  “The United Kingdom is a recognised international leader in development. This is the result of clear vision, consistent political leadership, strong human resource and financial capacity, and continued commitment to the 2013 target of providing 0.7% of its gross national income as official development assistance.”

The report went on to say that Dfid “has taken a lead in a number of critical areas such as aid effectiveness, engagement in fragile states, humanitarian assistance and the reform of the international aid system. As a result, the UK is in many ways seen as a model by other donors.”

Dfid was the creation of Clare Short, one of the most combative socialists in New Labour. Fulsome praise from the Organisation for Economic Cooperation and Development, the high church of orthodox free market economics, is indeed an irony. But it says a lot about both the vision as well as the dynamism of the development ministry which began under Short, its first minister, and made Dfid into a powerful, independent ministry with a cabinet post, its own clear agenda and a large and growing budget with lofty aims and clear targets.

Short is a born rebel with a rough, aggressive style. I once interviewed her on a plane and when I pressed a point about human rights in Rwanda she threatened to have me thrown off. Since we were over Guinea at the time, I backed off. Now we meet in the genteel tranquillity of London’s Commonwealth Club and she is calm and reflective – though still capable of taking a swipe at anyone who tries to tinker with her creation. I asked her about Dfid’s creation.

“We’d been through the mean years,” she said, “the Thatcher-Reagan years of massive reductions in aid budgets so there were lots of people feeling we should commit more, we should make the world more just. It was a sort of guilt that there’d been meanness. The question was how to stop aid being lots of little charitable projects and to use it intelligently to empower countries to lift themselves up, get their own people educated, run their own ministries, grow their own economies. The point about DFID was that it ceased to be just an aid distribution department and took on analytical capacity (to work on) trade and international environmental agreements and conflict resolution and so on.”

Short acknowledges that maintaining support for aid is difficult but that ordinary people do understand if it is explained in the right way.  “People understand that you’ve got to make the world more decent. If it isn’t more equal it’s more dangerous for everybody. People get that. The patronising dollops of money approach to aid irritates the people on whom it is dolloped and it irritates the British tax payer. It’s just not a good way of doing it.”

So direct budget support became Dfid’s favoured way of delivering aid. “Investing in education is the biggest driver of economic development but you should never do just one thing. Budgetary aid improved financial management. We were helping countries strengthen their financial management systems, their taxation systems. I still think that’s incredibly important. I still believe in budgetary aid because it means the money is helping build the institutions which are permanently more effective, and the country’s own resources will be better spent. It’s no good just building roads, you need to invest in the capacity of the country to invest in its own roads and maintain its own roads, otherwise they will just crumble and you’ll have to build them all again.”

But there is a dilemma here. Should we be giving aid to governments that don’t respect human rights or democracy? Although I hadn’t dared mention Rwanda, Short leaps to President Kagame’s defence. “I bet you that Kagame gives up at the end of his term. And this is (Ethiopian Prime Minister) Meles Zenawi’s argument of course. When you’ve got a poor country, with a low GDP, it’s difficult to be a good government because it’s difficult to give something to everybody. So a more authoritarian state than we are used to that is well intentioned and developmental, might well be the most beneficial. If people are educated they will change it. If you go back in our history there has been plenty of corruption, and plenty of non-democracy. One has to feel hopeful about fairly authoritarian regimes that do the right thing.”

And she is positive about China’s role in Africa today suggesting Africans need to take advantage by playing off the West and China against each other. “There’s been too much bullying and pressurising and telling Africa what kind of models it should have. And now the continent has taken off on its own. It’s not going to be pushed around anymore and it’s rather useful that it has got the Chinese as a counterweight.”

Short praises her current successor, Andrew Mitchell, for having “his heart in the right place” but takes a swipe at the Conservative’s motives, claiming they maintain aid levels as a way of decontaminating the Tory brand. She also feels that aid is slipping back into being a tool of foreign policy though says this started under Labour with aid being diverted to Iraq and Afghanistan.

Short’s abrasive approach did not just upset the aid world. Until then British aid had been a tool of foreign policy. Short took the British label off it and refused to boast about it. And as Dfid’s budget rose sharply and then steadily, the Foreign Office budget was cut. “DFID was making the running and the Foreign Office was a bit jealous and didn’t quite know where it was,” she says. “It hadn’t really cared about conflicts in Africa, but was very irritated that DFID did. I stopped them announcing aid and that made Downing Street and the Foreign Office cross.”

Furthermore aid was no longer necessarily in line with British economic and political objectives. Almost messianic in its mission to end global poverty, Dfid had its own independent agenda. Some in Whitehall wondered aloud if it was part of the British government. “I don’t think that’s true,” says Short. “I mean the culture of arrogance was in the Foreign Office. They were always really jealous of the budget at DFID (and they ran) little projects – which they ran very badly because that’s not what they do. What they do have is very good diplomats. So they did lots of moaning and briefing against us and so on. I’m just saying, the whole world and British foreign policy had a chance to renew itself.”

Then came September 11^th 2001 and everything changed. “Blair’s shoulder to shoulder policy meant we had a new enemy, we know where we are. We can go back into a divided world. So let’s spend lots more money on weaponry. Dfid tried to hold on to some of the old values in a changed climate. Before the War on Terror, and the “˜should to shoulder’ policy, Britain was a former colonial power, but it was seen as a fair country that believed in international law. But after Iraq, Britain’s lost respect massively in the international system, “˜Poodle Britain’ became the general mood. And then all of this “˜punch above your weight’, try and pretend you’re big when you’re not, and you go along with America wherever it goes. It is self-humiliation.”

Britain could be a much more useful country if we recognised our history and our relationships and saw ourselves as a sort of middle ranking power, needing to cooperate with others to move ourselves forward. For example when Hamas won the election in Lebanon – which they did fairly – a country like Britain should go along with South Africa, Brazil, Sweden, Spain and go and talk and open up some space. We shouldn’t be trotting along behind America so pathetically. It’s Britain wanting to feel powerful and important. It’s not got the economy to be a big player, so by being best friends with the biggest power it thinks it makes itself important. And that’s our foreign policy. And it’s pathetic.”

Iraq was Short’s downfall. At first she went along with it then resigned after the invasion. “I regret enormously that Blair did it. I think it despoiled that government, dishonoured it profoundly. Of course, if I had known that he was lying to me I would have gone earlier and it would have been easier, but I still think that it was right to try to avoid the disaster that came. For me that was really the end of my political career – in inverted commas. I didn’t want to be a senior figure in a Labour Party that thought Iraq was OK. The war wasn’t justified – as everyone now knows, the legal opinion that was put to cabinet was false and fabricated. I thought the Attorney General of the UK wouldn’t bring a false opinion in that way.”

And now? Short is Chair of the Extractive Industries Transparency Initiative to encourage oil and mining companies report what they pay in developing countries and achieve greater transparency and less corruption. “If the oil rich countries were able to use those resources to invest in their country they wouldn’t need any more aid. As it is they are more likely to be poorer and more conflict prone than countries without resources.”

She also chairs the advisory panel of the Cities Alliance, a creation of UN Habitat and the World Bank to address the problems of rapid urbanisation in Africa and South Asia.