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Tuesday, February 8, 2011

FOREIGN AID: Eliminate or Re-structure?

Ron Paul,  Libertarian Republican Congressman from Texas, wants to eliminate all foreign aid.  In light of the situation in Egypt, one can understand a reaction to the $1.5 billion annual request in foreign aid to Egypt (and to other Middle Eastern countries in varying amounts), but Paul’s over-reaction is typical of politicians blinded by their ideologies to the larger realities of the wide world.  Can we not count on our Congressional leadership for more thoughtful and intelligent leadership?  Probably not.  Strangely enough, this attitude harks back to the proposals of a certain staunch conservative (some called him worse), named Jesse Helms who proposed in 1995 that the Agency for International Development be replaced with a foundation that would channel foreign aid for education, health and agriculture through grants to companies and nonprofit groups.

This is not to say that Dr. Paul doesn’t make any sense.  His is not the only critic of our foreign aid policies, and of the process by which our largesse is distributed. Many independent “watch-dog” groups have said that our foreign aid:

Props up dictators and provides opportunities for them to line their own pockets;
Often does not get to the people who need it because of corruption in the distribution system;
Finds its way back to this country through contracts with U.S. corporations;
Reduces free trade by forcing recipient countries to buy U.S. goods and services;
Too often involves the financial and political interests of the current Administration;
Rewards political and military partners rather than advancing humanitarian causes ;
Is used as a political weapon for the US to make other nations do things “our way”;
Promotes aggression and war through sale of military weapons or transfer of cash that can be used to buy weapons;
Since 9/11, has been cast too frequently in terms of “contributing to the war on terrorism” as the top foreign aid priority.

Let’s first put “foreign aid” in perspective.  In FY 2009, the Bush Administration’s foreign aid request for the Department of State and USAID, equaled $39.5 billion.  Although we do not have the  Obama Administration’s budget figures for 2011, there will probably be some cuts in aid for the wars in Iraq and Afghanistan, perhaps lowering this figure by a few billion dollars.  What is important to understand is that the total foreign affairs budget in the FY 2010 federal budget was just 1.7% of the total budget for operating the federal government (according to a Forbes article).  This percentage may be even less under the FY2011 budget being proposed by the Obama administration.  For anyone serious about reducing the deficit, it is doubtful that foreign aid is the most productive place to start. 

The United States leads all developed nations in the total amount of foreign aid given to other nations (probably because the USA is the richest nation and this figure encompasses all foreign aid, including private sector contributions!).  However, the USA is rated the 21st stingiest of 22 developed countries in terms of the percentage of governmental foreign aid given in relation to its GNP.  Denmark is actually on top in that latter category, giving 1.01% of GDP, while the USA manages just .17%.  Not only is the USA the second stingiest in proportion to its GDP, but the largest portion of its aid budget is spent on middle-income countries in the Middle East, with Israel being the recipient of the largest single share.  

Unlike Ron Paul’s simplistic analysis, let us realize that “foreign aid” is a very complicated subject, involving different sources of aid and various reasons for the aid in the first place.  Generally, different types of foreign aid support different objectives. 

The Clinton Administration emphasized the promotion of “sustainable development” as a new post-Cold War strategy for the programs under the aegis of the U.S. Agency for International Development (USAID), centered around six inter-related goals: broad-based economic growth; development of democratic systems; stabilization of world population and protection of human health; management of the environment; building human capacity through education & training; meeting humanitarian needs.

Early in the G.W. Bush Administration, these goals were modified around three “strategic pillars”  of 1) economic growth, agriculture & trade; 2) global health; and 3) democracy, conflict prevention, and humanitarian assistance.

Under the Obama Administration, foreign assistance is divided into 35 “sectors” under seven categories, which are: 1) Peace and Security; 2) Democracy, Human Rights, and Governance; 3) Health; 4) Education and Social Services; 5) Economic Development; 6) Environment; 7) Humanitarian Assistance.

More than $58 billion per year goes to foreign assistance through more than 20 federal agencies; roughly $38 billion of that is managed by the USAID and the State Department within the just-described categories.   However, Americans have always given beyond their taxes to support humanitarian causes throughout the world.  It is estimated that private American charitable donations equal about $250 billion each year; 75% of that coming from individuals (corporations are particularly poor philanthropists). 

And, what about that other $20 billion that doesn’t go through the State Department or USAID?   The USA also provides assistance to friends and allies to help them acquire US military equipment and training (about 23% of total US foreign aid).  Foreign Military Financing  (FMF) is a grant program that enables governments to receive US military equipment or to access equipment directly through US commercial channels (most FMF funds support the security needs of Israel and Egypt: F-16 Jet fighters, Apache attack helicopters, and other equipment, like the teargas canisters used against the peaceful demonstrators in the Fahrir Square in Cairo--made right in the good old USA).  Peacekeeping funds are also used to support voluntary non-UN operations and training, especially for the Afghan army.

The total US commitment to international health, particularly HIV/AIDs programs, is somewhat larger than that run through USAID and the State Department when budgets for domestic “non-foreign aid” agencies (like HHS and Labor) are included.  The same is true of Economic Support Fund grants, much of which target countries of importance in the war on terrorism.  ESF funds can be used as cash transfers to help stabilize economies or to service foreign debt.  Let’s not forget that a relatively small 8% of total US foreign assistance is combined with contributions from other donor nations to finance multi-lateral development projects through such international organizations like UNICEF, the UN Development Program and the World Bank.  In addition, there are programs related to foreign affairs that go through the budgets of several other federal agencies, including Agriculture, Energy, HHS, Commerce, Homeland Security, and even Interior.

Conservative Republicans and Tea Partiers demand cut-backs in spending, but because they never target specifics, their generalized cut-talk borders on irresponsibility, and on ideology-based rather than reality-based information.  Once again, a little perspective is helpful: the federal government invested $100 billion (TARP funds in 2008) in Bank of America, Citigroup, JPMorgan Chase and Wells Fargo in order to prop up the US financial sector, but spends half that on foreign aid. 

So what am I calling for?  Well, in my opinion, the Ron Pauls of this world are on the wrong track!  We don’t need elimination of foreign aid; we need a new way of looking at it and of providing it, because:

--We are too politically-motivated  about who receives our aid, often having to fit or adjust our own goals and objectives for political ends.
----People of other countries are driven to hate us for economic aggression, hypocrisy, and power-mongering through our aid programs.
--We think “money is power” and that commercialism trumps morality.
--We are trying to buy the loyalty, morality, commerce, style of government and fealty of other countries.
--We are perhaps the loudest self-congratulators of our own largesse; we claim goodness because we are generous.
--Our motives are often not seen as charitable but as manipulative; we are not trusted.
--We think our way is best; know little about the rest of the world, and think that our “exceptionalism” means that other countries are not “in the same league.”

These attitudes are not serving us well.  They taint our true humanitarianism and the caring attitudes of our people.  Foreign aid should be an expression of our recognition that the world is not alien; it is our larger community and we do have a basic responsibility for it’s well-being.

We desperately need a new set of priorities for how foreign aid is to be utilized, a well-defined set of goals and objectives, and a system of measurable outcomes that can be evaluated to ensure that our money is being  used to enrich others around the globe and not to exploit them. 

More on this next time.