Linda Polman believes the business of international aid - from Ethiopia to Rwanda to Afghanistan – is only helping gangsters and fighters, while innocent victims suffer on

Last month the claim that Band Aid famine relief money had been used to arm rebels elicited a fierce response from Bob Geldof. He accused the BBC, which aired the allegation, of "disingenuous posturing", distortion and a failure to provide credible evidence. He also said that it would be a "tragedy" if people stopped giving to charity and requested that journalists "stop venturing palpably untrue statements dressed up as fact".

It was a characteristically heartfelt response, filled with anger and indignation. No wonder he was annoyed. In effect, the BBC report had said that his vision of humanitarian intervention, which had galvanised a generation, was, at least partially, a sham.

Exactly what took place in Ethiopia 25 years ago will probably never be established beyond doubt. After all, it was a war zone mired in chaos, desperation and human misery. It may be, as Geldof insists, that the vast majority of aid his charity raised reached its intended recipients and that none was used, contrary to the BBC report, to buy military hardware.

But according to a new book by the Dutch writer Linda Polman, such positive outcomes are the exception in the field of humanitarian aid. In War Games: the Story of Aid and War in Modern Times, Polman argues that humanitarianism has become a massive industry that, along with the global media, forms an unholy alliance with warmongers.

Since the end of the cold war, the business of humanitarian aid has flourished. During the proxy wars fought by African and Asian states backed by the Soviet Union, China and the USA, aid agencies found it very difficult to gain access to war zones. But with the end of the Soviet Union, suggests Polman, regions afflicted by war became something like charity enterprise zones, creating a massive expansion in the aid industry. Back in 1980 there were about 40 INGOs (international non-government organisations) dealing with Cambodian refugees on the Thai border. A decade later, there were 250 operating during the Yugoslavian war. By 2004, there were 2,500 involved in Afghanistan.

All too frequently, according to Polman, the result is not what it says in the charity brochures. She cites a damning catalogue of examples from Biafra to Darfur, and including the Ethiopian famine, in which humanitarian aid has helped prolong wars, or rewarded the perpetrators of ethnic cleansing and genocide rather than the victims. Perhaps the most striking case in the book deals with the aftermath of the genocide in Rwanda in which the Hutu killers fled en masse across the border to what was then Zaire (now the Democratic Republic of Congo). There, in Goma, huge refugee camps were assembled and served by an enormous array of international agencies, while back in Rwanda, where Tutsi corpses filled rivers and lakes, aid was not so focused. The world was looking for refugees, the symbol of human catastrophe, and the refugees were Hutus. This meant the militias that had committed the atrocities received food, shelter and support, courtesy of international appeals, while their surviving victims were left destitute.

Worse still, Polman believes the aid enabled the Hutu extremists to continue their attempt to exterminate the Tutsis from the security of the UNHCR camps in Goma. "Without humanitarian aid," she writes, "the Hutus' war would almost certainly have ground to a halt fairly quickly."

Such perverse situations, according to Polman, stem from the issue of neutrality. Ever since Henri Dunant set up the Red Cross back in the late 19th century, the role of the humanitarian has been to avoid taking sides in war. Dunant's concern was not the rights or wrongs of any particular conflict. Instead he simply wished to ease the suffering of, and improve the care offered to, all victims of war, which at that time were mostly soldiers. In this endeavour he was opposed by Florence Nightingale who argued that Dunant's compassionate vision was a charter for prolonging war.

In her book, Polman maintains that when aid organisations don't actively discriminate, the most likely beneficiaries of war zone operations are the powerful, rather than the most needy. Not only is it the soldiers and militias who are able to levy taxes on aid, cargos and the movement of charity personnel, and to steal or divert funds, it is also these groups and the elites that have best learned the images and triggers that attract aid.

War Games is a chastening polemic which doesn't exactly leave you rushing to renew your charity direct debits. Was this Polman's intention, to discourage humanitarian donations? "No, no, no," she says, when we meet at her hotel in London. "The best thing that can happen is that people realise that aid as it is given can be improved. Read the reports by the agencies themselves. They know what's going wrong."

The problems, she says, is that while aid agencies may recognise their failings they are unwilling to address them because of the pressures of competition. Humanitarianism is a multi-billion-dollar business and if one charity pulls out of an operation, be it from moral or strategic concerns, there are plenty of others who will fill their place and solicit their funding. Recent years have also seen a large growth in smaller organisations, set up to negate the bureaucratic practices of the larger aid agencies. They can be run by just a handful of people – hence they've been named MONGOs (my own non-governmental organisations) – but Polman believes that while they may cut through red tape, they only add to the sense of chaos and competition in the field.

There are few words of comfort, much less praise, to be found in the book. If Polman castigates aid organisations for blindly supporting belligerents, she is also critical when they abandon their neutrality. She admonishes agencies in Afghanistan, for example, for being too tied to the policy of coalition forces. As INGOS run projects that "are aimed in part at depriving terrorists of their grass-roots support" she points out that it's no surprise that the Taliban view "aid as an instrument of war". Therefore aid agencies have only themselves to blame for elision between humanitarianism and military intervention. It seems that INGOs are damned if they do, and damned if they don't. So what is it to be, are they supposed to be neutral or not?

"Whether you're being manipulated by the Sudanese regime or coalition forces in Afghanistan, you are always an instrument of war," she says. "The system as it is now, the humanitarian ground rules say that aid agencies are neutral and therefore not responsible for what other people do to their aid. I think that's too easy. They should stop claiming neutrality, stop claiming that they're above the law."

She says that if George Bush could be arrested for war crimes, a prospect she would welcome, then "perhaps aid agencies can be held responsible for what they do as well".

If there is understandable public suspicion of private contractors, like project-management firm Halliburton, who profit from war, she asks, why are private aid organisations treated differently? So how would she describe the humanitarian agencies that in her opinion enabled the continuation of the Hutus' genocidal attack on the Tutsis?

"Perhaps war criminals," she muses. "It's interesting."

Interesting, yes, but that's also an extremely grave charge.

"This is true," she says with that matter-of-factness for which the Dutch are justly renowned, "because we don't see it that way. We see it as aid agencies being placed in circumstances in which they have no choice. I'm saying they do have a choice. They have a choice of not doing it."

On balance, then, does she believe that the charity effort, including Band Aid, in response to what she maintains was a war-created famine in Ethiopia, made a bad situation worse?

"Umm," she pauses. "It did nothing to stop the bad situation. It facilitated the regime."

The irony here is that Band Aid has now been accused of facilitating the rebels. She says she hopes that either Geldof or those involved at the BBC will sue one or the other so that the truth will come out. Either way, she is in no doubt that aid helped extend the war that caused the famine in the first place.

Fifty this year, Polman is a veteran of war zones. On a visit to a friend in Somalia in 1993 she encountered her first UN peacekeeping mission. She then followed the "blue helmets" to Haiti and Rwanda (she has also lived and worked in Sierra Leone). She wrote a book about her experience reporting on the peacekeepers entitled We Did Nothing. As the title suggests, the book was another indictment of a supposed good cause, in this case peacekeeping. Her greatest fury was reserved for an incident at Kibeho refugee camp in Rwanda when UN peacekeepers stood by while Rwandan Tutsis launched a massacre on Hutus refugees that, elsewhere in War Games, Polman assails the INGOs for supporting.

Like many good journalists', her indignation is large enough to contain a variety of contradictions. She believes that George Bush should answer in court for US actions in Iraq, yet she also wants the US army to go into Darfur. "Don't go after the oil," she says, "go after human-rights violations. Europeans believe too much in dialogue. We do not use violence against Burma, for example, but it could help."

Another area of complexity in which Polman sprays around denunciations like a machine gunner behind enemy lines is what might be called the micro-economy of aid. She describes in censorious detail the relative luxury in which aid workers often live in the developing world. But she also condemns the way that aid organisations draw local staff away from vital industries by paying way above the domestic rate. There are not easy solutions to these problems. Why should humanitarian workers from the developed world live in greater hardship than their compatriots, and what would be said of a charity that paid its local workers, who take the greatest risks, a pittance?

"Aid workers should respect the fact that local people live in poverty," she says. "It is perverse, for example in Haiti, that there are people sleeping outside in the streets and aid workers step over them to enter the clubs."

I point out that most aid workers probably wouldn't be quite so insensitive, and that it's neither shocking nor sinister that humanitarians are also human: they also need to relax after work sometimes in a bar.

"I think it's shocking and sinister," she retorts, "if aid workers engage in child prostitution or that aid workers visit brothels."

Quite, but are there any aid organisations that encourage such practices?

"I hope not," says Polman, "but I do know of cases where aid organisations knew that employees were engaged in this and they decided to smother the case. They did not follow up or remove the person."

Are you talking about the Catholic church?

"It sounds like that, doesn't it," she smiles, before naming the place and organisation, and informing me that the individual remains in his position.

Surely, though, a single case, no matter how disturbing, can't be made to represent the norm.

"It's there, always," she says. "It can be seen. And I know it adds to the impression people have of aid organisations and makes them cynical."

Nor does Polman spare her own profession, especially in the shape of the broadcast media. It's the visual image that sets the news agenda, and the more shocking the image, the more attention it gains, and the more attention it gains, the more aid it's likely to attract.

Polman focuses on an account given to the Sierra Leone Truth and Reconciliation Commission which documents a secret meeting between rebels and government troops in which they both noted they only received coverage from BBC World when amputees emerged from the jungle. Whether or not this is an accurate account, it's clear that there are few images that prick the conscience, and thus open the wallet, more rapidly than that of a child amputee.

Does that mean that amputees should not be filmed?

"Well," she says, "first of all journalism will have to acknowledge that the problem is there. I do believe that the receivers of our aid are learning entities, they are learning organisations, groups and governments. Which is only logical. They have seen the mechanisms of the aid agencies at work for many decades and so it's only natural that they become better and better at understanding what the rules of the aid industry are."

By the end our conversation, I feel even less confident about the direct debits than I did having read the book. What, I ask, would she do if she could institute one change in the aid business?

"I would force aid agencies to combine in the interests of the people they claim to be helping. That means you go to an area and assess what is best for the people, not what is best for the organisation or the system of aid. In Darfur, the aid agencies say, 'If only we could work together, we could make a fist against the Sudanese government that is now manipulating us.' You're in the business of saving lives. Do it in a way that you can save the most lives or for the cheapest price. That can mean sometimes, you don't go to an area and you choose other victims in areas that we don't see on TV. Go to where you can save the most people for the same money. Stop the system of rewarding bad behaviour. If your aid is being manipulated, don't give aid to those doing the manipulation."

At heart, she says, she's an old hippie who believes there's a better way. But in reality humanitarian aid necessarily takes place in imperfect conditions. It's always going to be subject to compromise and error. Public scrutiny can help, but how far are people prepared to go in assessing available information? It seems that there's no shortage of donors who are ready to run marathons to raise funds, but, as things stand, far less who are willing to wade through the documentation, if it even exists.

There's an argument, most recently made by the Zambian economist Dambisa Moyo, that says aid is the cause of rather than the solution to developing-world problems. But when the next appeal comes bearing images of starving children, most of us who care will neither look away nor dig a little deeper into the political background. Instead we will get out the cheque book. Because while charity doesn't always benefit the intended recipient, it usually manages to make the donor feel better.

War Games is published by Viking, £12.99. To order a copy for £10.99 with free UK p&p go to observer.co.uk/bookshop or call 0330 333 6847

CASE HISTORY 1

ETHIOPIA, 1984-85

Mother and children in a camp during the famine in Ethiopia, 1985. Photograph: Herbie Knott / Rex Features

In 1984 prolonged drought coincided with civil war between the communist junta that governed Ethiopia and rebels in the northern provinces of Eritrea and Tigray. In an effort to win the battle, the government soldiers, writes Polman, "sealed off the northern region and went to work. They shot men and boys dead. They raped and mutilated women and girls. They flung infants on to fires alive. They set schools and clinics ablaze, slaughtered livestock, burned grain stores and poisoned water sources with human corpses and dead animals."

And then they invited in the international media to witness the flood of famine refugees. Journalists like Michael Buerk decided that the war was a side-story to the main issue that demanded attention: the unfolding humanitarian crisis of mass starvation. Following Buerk's famous BBC report, an enormous fundraising campaign took place, including Band Aid, and thousands of aid workers and journalists flew in. "They were forced to change their dollars for local currency at rates favourable to the regime," Polman states, "and this alone helped to keep the Ethiopian war machine running. Food aid was used as bait to lure starving villagers into camps. They were held there awaiting deportation to the state farms in the south. A life of forced labour lay ahead."

It's not known how many Ethiopians died during the operation, but estimates vary between 300,000 and one million.

CASE HISTORY 2

RWANDA, 1994-96

A Spanish nurse with starving children in Goma camp. Photograph: Angel Diaz/ EFE/Corbis

In July 1994 the Rwandan Patriotic Front, formed from Tutsi refugees based in Uganda, invaded Rwanda to put a stop to the genocide committed by Hutus on Tutsis. The Hutu militias, and many of the Hutu population, fled across the border to Goma in Zaire (now the Democratic Republic of Congo).

Shocked by the news of the genocide, in which up to one million Rwandans (overwhelmingly Tutsis) were slaughtered, the global community raised $1.5bn (£976m) in relief aid. The first and most conspicuous beneficiaries of this effort were the Hutu refugees, including among them many of those responsible for ordering and carrying out the genocide. "The rescue operation mounted for the Hutus," writes Polman, "became the best-funded humanitarian operation in the world."

Twenty-five refugee camps were built around Goma, supported by 250 different aid organisations, each with their own flags and logos. The Hutus brought with them everything they'd looted from their victims, leaving an impoverished country in which, according to Polman, "hardly any aid organisations, let alone investors, had shown their faces". Meanwhile the Hutu architects of the genocide reasserted their leadership in the camps. "On all the food rations distributed by aid organisations," Polman asserts, "the Hutu government, from its tourist hotels, levied a 'war tax' to pay its army, which enabled it to continue its campaign of extermination against the Tutsi enemy back in Rwanda."

Eventually, after repeated warnings, in November 1996, the Rwandan Tutsi army invaded Goma and closed the camps, killing several thousand Hutus in the process. Fiona Terry, project leader of the French Médecins sans Frontières, described Goma as a "total ethical disaster."

CASE HISTORY 3

AFGHANISTAN, 2001-PRESENT

A displaced Afghan woman waits for transportation after being given aid in Kabul in 2009. Photograph: Shah Marai/AFP/Getty Images

Polman depicts Kabul as a city divided between the poverty suffered by its inhabitants and the luxury enjoyed by foreign aid workers who "can be found [at a nightclub called L'Atmosphere] with cocktails and glasses of wine, or relaxing in the swimming pool near the bar".

Beyond Kabul, aid money behaves like Zeno's arrow, never quite reaching its target, as each of a succession of subcontractors takes a cut and passes what's left on to the next. This process, she says, is largely unsupervised because aid workers have become Taliban targets and are too worried to venture out into dangerous provinces.

"Unsupervised aid invites theft and corruption," she writes, "which strengthens and multiplies Taliban support, leading to greater insecurity, which brings more security companies, prompting even more hostility towards foreigners, with greater insecurity, because [there are] more Taliban, as a result. So even more aid remains unsupervised."

One house-building project in Bamiyan Province began with $150m (£97m) in funding. Once various aid agencies had taken a cut for their own organisations, a subcontractor bought wooden beams from Iran, which were delivered by a company owned by the governor of the province at five times the standard freight fee. The beams, it turned out, were too heavy for the houses, so the villagers chopped up the timber to use for cooking fuel.