What is foreign aid for?

Posted By Paul Miller Thursday, January 27, 2011 - 6:30 PM Share

Foreign aid is once again under fire. Every so often a few politicians -- usually Republicans -- get up in arms about our government's gift of large amounts of money to other countries. Equally often, media stories appear detailing how ineffective aid supposedly is. The picture emerges that foreign aid is unnecessary, ineffective, and wasteful.

For example, the Republican Study Committee (RSC) released a proposal last week to cut the budget for the U.S. Agency for International Development (USAID) by $1.39 billion as part of a broader package of deficit-reduction proposals. (Hat tip to our friends at The Cable for their post on the subject.) There were similar rumblings after the Republican takeover in 1994. Republicans seem to have an inborn suspicion -- usually dormant, but one that fitfully flares up once per decade -- that aid is just a handout from rich countries to poor ones to help the former ease their consciences.

Or take the lengthy Wall Street Journal story last week that declares, "A massive U.S. aid program that has made Pakistan the world's second-largest recipient of American economic and development assistance is facing serious challenges, people involved in the effort say. The ambitious civilian-aid program is intended in part to bolster support for the U.S. in the volatile and strategically vital nation. But a host of problems on the ground are hampering the initiative." Despite billions of aid, the United States remains unpopular in Pakistan; thus, the article implies, aid is ineffective.

These criticisms of foreign aid rest on faulty notions of what aid is and what it is supposed to accomplish. There are two views of aid reflected here, neither of which are helpful.

  • National bribery. Some people think that the United States gives money to other countries to be popular. On this view, if the United States lavishes the Pakistanis with enough money, they will respect the United States. The problem is that if someone did this on an individual level, the United States would call it craven, insecure, and insulting -- which is probably how it is perceived by the Pakistanis. Aid as bribery doesn't work. Money can't buy me love -- not individually, and not between states.
  • Charity. Others seem to think that the United States gives money out of the pure, unalloyed goodness of our hearts. Foreign aid is an extension of private goodness. Individually, we give money to the Salvation Army or World Vision so they can help our fellow man on the far side of the world. Foreign aid is functionally the same thing: the United States gives our tax dollars to USAID to do the same kind of charity work as NGOs. But why should the U.S. be charitable to someone in Nepal just because they live in an exotic country when there are Americans who need help? Additionally, there is no logical limit to how far the United States's charity could extend. The United States could bankrupt itself trying to save the world.

I propose a third view of foreign aid.

  • Strategic investment. Foreign aid helps countries whose interests align with our own increase their capacities. The United States gives money to help select countries -- not the entire world -- improve specific abilities, like their ability to provide public security, defend their borders, or buy and sell goods.

The advantage of this view is that it is realistic. The United States can actually do this. The U.S. is not trying to change people's heart or minds, contrary to the bribery view. It is only trying to change their capacity. Additionally, this view helps the U.S. prioritize which countries should get aid, and what kind, contrary to the charity view. Giving billions to Tuvalu would be a commendable act of charity for the Salvation Army, but it would be folly for USAID because Tuvalu is not a strategic priority for the United States.

(I am not arguing that we should never be charitable. Rather, every possible foreign aid program is an act of charity. Charity by itself cannot help us decide which charitable programs to undertake. The United States either has to flip a coin to allocate our charity randomly, or consult our own interests to allocate it strategically.)

The Marshall Plan is a good model. The United States gave something like $25 billion (in today's dollars) per year to Western Europe after World War II. It was undoubtedly an act of charity. The money helped the Europeans rebuild their economies and saved tens of millions of people from poverty or even starvation. But it was also a strategic investment. Policymakers at the time worried about a return of the Great Depression following demobilization and the Marshall Plan helped Europe become a strong trading partner for the United States. Most importantly, U.S. officials feared the rise of Soviet power and hoped the Plan would bolster European governments' stability and prevent the spread of communism.

This view of foreign aid would help protect it from the kind of cuts the congressional Republicans are proposing. Aid is hard power. It is a weapon the United States uses to strengthen allies and, thus, ourselves. But this view would also help save it from the kind of limitless, grandiose visions Democrats sometimes seem to have for it. This is the sort of view that I hoped Secretary of State Clinton would incorporate in the recent Quadrennial Diplomacy and Development Review. But despite the document's many strengths it did not seem to offer a framework for prioritizing among the Unites States' many foreign aid opportunities.

YASUYOSHI CHIBA/Stringer, AFP/Getty Images

EXPLORE:FINANCE, FOREIGN AID, INTERNATIONAL ORGANIZATIONS, OBAMA ADMINISTRATION, STATE DEPARTMENT, U.S. CONGRESS, U.S. FOREIGN POLICY
 

PULLER58

10:10 AM ET

January 28, 2011

Foreign aid

This article ignores most of the horror stories that have been done about the abuses of foreign aid. Not only can we not buy our friends, nor can we bribe our enemies. Corruption is common, and the results in places like Iraq and Afghanistan are not encouraging. Of course it should be pointed out that for all the money we give Israel, we are on the receiving end of endless agitation in our political system from AIPAC and other special interest groups. While Democrats indeed want to throw open the doors of the treasury and spread the wealth worldwide, (The Congressional Black Caucus' fetish for countries with large black populations is grotesque.) the GOP has long been receptive to right wing dictators that "need" funds to stop communist insurgencies or leftist tyrants like Hugo Chavez. On top of the corruption, you have human rights abuses that once again damage the United States' image. I believe that the US owes its citizens far more than it does the rest of the world. Let the the rest of the world find its own resources.

 

PATRICK GAGE

4:55 PM ET

January 28, 2011

Foreign Aid

i would be happier if so much of the Aid budget did not pass through the hands of the usual beltway bandits who rake off a very large proportion of the money in the form of 'overheads', 'home office administration', etc. But then it might mean that USAID officials might actually have to do something other than approve contracts. An illustrative example would be how much has been promised to Haiti and what has actually been delivered.

 

ZATHRAS

5:37 PM ET

January 28, 2011

Two Strategies

Paul Miller's analysis is not wrong, and it is necessary to raise the points he makes with Republicans in Congress and to the public generally. However, he does not address the real reason gutting USAID made the Republican Study Committee list of proposed budget cuts.

This has nothing to do with the substance of Miller's argument. It is instead all about adding up numbers -- of the spending for programs without domestic constituencies likely to vote primarily for Republicans or contribute money to sustain the party's campaign infrastructure -- until a plausible deficit reduction number has been reached. The number has to be really big as part of the GOP's campaign strategy, which is the only strategy that matters in the RSC. It can't include any tax increases, or defense, and can't enrage people from whom Republicans hope to get either votes or large amounts of money. So, everything else has to make the list for the big number to work.

Republican boilerplate about cutting spending and limited government has been mostly hot air for more than a generation. The Reagan administration, in its early years, fired real bullets on the subject, but even then the big money entitlement programs were left off the agenda (and defense wasn't subject to any budget discipline at all). Today's Congressional Republicans represent a constituency wary of government's size and resentful of many government program beneficiaries, but also heavily dependent on the major entitlement programs. So, even though a few Republicans in Washington are making brave noises about cutting spending on Social Security and Medicare, the GOP can't make these the foundation of its position on fiscal issues.

This the only real reason why gutting foreign aid makes it onto the RSC list. There is no domestic, mostly Republican voter constituency, and not much of a financial constituency for most of what USAID does. Conversely, and whatever one thinks about the policy merits, American aid to Israel has both -- so aid to Israel does not make the RSC list of spending cuts.

While the logic of behind the RSC document invests the whole subject of foreign aid with an air of hopelessness -- because policy arguments are irrelevant to it -- the document itself is a transient thing. It lays down a marker that will allow Republican Congressmen to claim that they "proposed" or "supported" a big spending cut number (the $2.5 trillion over 10 years) in their public statements and future campaign rhetoric, without requiring them to do anything about it. It would be better if arguments in the political arena for reducing foreign assistance spending were based squarely on the policy merits, but that isn't how GOP politics works right now.

 

NSC LOS ANGELES

10:24 PM ET

January 28, 2011

ROI

If we're making "strategic investments" such as the Marshall Plan is it unreasonable for the taxpayer to request a project return on investment? If this can't be assessed it's not really anything but charity/bribery.

 

MELISSAROSSI199

1:07 AM ET

January 29, 2011

Foreign Aid = Arms giveaways

I find this article to be disappointing and missing the realities of US foreign aid. Let's first talk about what US foreign aid IS. The picture of the bags of grain merely underscores the notion that US foreign aid is food giveaways or agricultural aid. Moneywise, it is NOT. The biggest expenditures of US foreign aid are ARMS giveaways and financing, foremost being the YEARLY $3 BILLION to Israel, followed by the $2 billion+ to Egypt -- for arms to keep peace, given by the US since 1979, much of it in the form of a "credit card" to buy from US arms dealers, although Israel can use it to built its own. Those are merely the top two countries in a typical year. Recently Iraq, Afghanistican, Pakistan have also received billion -- much of that for ARMS.

The ENTIRE USAID program, the one theoretically that delivers food, is LESS than $2 billion/year.

You want to cut foreign aid -- I suggest cutting the arms gifts/ arms financing. This article doesn't even mention that and perpetuates the notion that US foreign aid = free food. Even the Economic Support Fund (ostensibly a bigger program in budget) is often used to buy arms. You call that strategic investment? I sure don't.

http://www.vaughns-1-pagers.com/politics/us-foreign-aid.htm
http://www.fas.org/asmp/profiles/aid/aidindex.htm
http://www.census.gov/compendia/statab/2011/tables/11s1298.pdf

 

BIZZNZMAN

12:54 AM ET

January 31, 2011

Foreign Aid Amounts

The 2009 Green Book figures are available that detail the amounts, recipients and nature of aid granted other countries. Let's take Egypt for example. The total amount of aid, both military and economic, is about $1.8B (nearly $550M is economic) for the latest data from 2009. I agree that's still a lot of military money but remember that money helps Egypt feel safe in the security dilemma sense and is one of the cornerstones of the peace between Israel and Egypt. And it has contributed to over thirty years of peace whereas in the previous thirty years there were three wars. If that peace did not exist, the possibility of finding a solution for the Palestinians would be zero instead of at least some possibility now.

So the arms that you call to our attention have not ever been used in warfare by Egypt and indeed have contributed to the peace. That's a good deal for the US because I assume you are writing your input to FA on an electrically powered device while seated warmly in your home. All out war in the Middle East does not promote that comfort and productivity (please don't respond with a diatribe about alternative energy, most people here know the ins and outs of that already). And wouldn't you agree that thirty years of peace is a good deal for the people's of the Middle East? As far as USAID's budget is concerned, the $2.2M number mentioned has no basis in reality. The top twenty recipients alone got about $8B. The 2009 obligated funding for AID overall appears to have been about $17B. In fact the foreign aid numbers overall indicate that there was about $33B in civilian aid, if you will, and about $11B in military aid.

 

MR TERRY

9:48 AM ET

February 3, 2011

Foreign Aid

I think it's a little cynical to liken foreign aid to arms giveaways. Foreign aid can also be given by the corporate sector. When a company claims a deduction in its tax return for foreign charity donations, that company is effectively directing foreign aid. That money is revenue that the Government would otherwise have, and strangely enough there is no limit on donations in most Western countries.

 

Shadow Government is a blog about U.S. foreign policy under the Obama administration, written by experienced policy makers from the loyal opposition and curated by Peter D. Feaver and William Inboden.

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