Over here Teddy Brett, Associate Director of the London School of Economics' Development Management Program, makes some very valid points about development aid that are frequently swept under the rug or simply ignored as inconvenient truths by project designers in the various aid agencies. In short, he correctly points out that politics in recipient countries often kills off poverty reduction efforts when the implementation of the effort touches political sensitivities of the corrupt elite.
The problem is endemic and donor agencies are incapable of addressing the issue, choosing rather to ignore corrupt government officials and elites, rather than simply cutting off the funds and allocating those to less corrupt governments. It is a choice of evils.
Furthermore, for some countries, finding substitute donors is somewhat easier, particularly if there is a geo-political or resource reason for investing the money. The Kyrgyz Republic, for example, has already been promised $300 million in aid from Russia which correctly sees the recent revolution, where evidence is mounting that it orchestrated, as an opportunity to establish a stronger foothold in the region - nothing wrong with that from their strategic interest point of view.
Then there is Sudan and other African countries with resources that China wishes to secure. Non-democratic or corrupt regimes are ignored merely because China sees no upside in political interference or moralizing. And in any event, that is a pot and kettle situation.
There are only two reasons for the enormous amount of aid rained on Armenia by the United States. The first is an incredibly powerful lobby in Congress (these aid funds are largely earmarked). The second is purely geo-political: to counter Russian influence in Armenia. In regard to the latter, purely political reason, the US has been singularly unsuccessful.
Let's be realistic. Aid is an arm of foreign policy and when that aid involves economic and structural reforms it will run smack into local politics and power centers which will either support or obstruct it depending on self-interest. That should not be a shock to anyone.
Poverty reduction is like apple pie and no one is going to say that they are not interested. How that poverty reduction is implemented is the difference. But in the end, it is all political and foreign aid assistance needs to be better formulated to address this fundamental.