The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Does U.S. Foreign Aid Make a Difference? Should It Be Stopped?

Posted by iusbvision on February 3, 2011

[Editor’s Note – While I think that the foreign aid program should be re-evaluated just as every program should, Greg makes some points here that are hard to dispute. The aid, when done wisely, aids the diplomatic credibility of the United States. That diplomatic credibility has saved lives that none of us will ever know about, including American lives.

Let us just focus on Israel for a moment. Our aid to Israel, some of which is obviously military, sends a message to the world that there will never again be another genocide against the Jewish people if we have anything to do about it. While Israel has had hard times, think of how much harder the years would have been without the fear and credibility of the United States as her ally? We saw the reaction of Arafat after 9/11. He was scared white as a ghost in fear that somehow 9/11 could have been tied to the PLO.

The jihadists see Israel as the “little satan” and the USA as the “big satan”. This means that Israel’s security is our security.

We cannot have a one size fits all – “all or nothing” foreign policy and that is what a ban on all foreign aid is. While I am glad to see Senator Paul take spending cuts and waste very seriously, I believe this particular policy position stems from ignorance, I will be sending a letter to the good Senator from Kentucky. It is my hope that after a few intelligence briefings he will moderate his view on this issue.]

By Gregory Hilton:

The Senate Tea Party Caucus was officially launched yesterday with a two hour meeting open to the public. The Caucus includes Senators Rand Paul (R-KY), Jim DeMint (R-SC) and Mike Lee (R-UT). Tea Party candidates such as Marco Rubio (R-FL), Pat Toomey (R-PA) and Ron Johnson (R-WI) have decided not to join the group. Senator Paul participated in numerous media interviews to mark the debut of the Caucus.

Rand Paul confirmed his opposition to the entire foreign aid program (which is 0.19% of the budget), and said America should eliminate all the assistance it provides to Israel. Foreign aid has never been popular, and this is especially true when the nation has a $1.5 trillion deficit this year as well as a $14 trillion national debt. Senator Paul wants to abolish all aid because “nothing has changed in the poorest parts of the world.”

Senator Paul wants to abolish all aid because “nothing has changed in the poorest parts of the world.” He believes the money is being wasted, and that certainly did happen in the past.

Problems and Opportunities

Many Americans are not interested in the Third World or failed states which have been impoverished for years. Besides, the United States has plenty to worry about on its own.

African nations are far away and have so many problems. They are still beset with civil wars and strife. In the 1990s, Africa had more wars than the rest of the world combined.

During the Cold War, the United States was in competition with the Soviet Union, and foreign aid then went to dictators such as Mobutu in the Congo, Bokassa in the Central African Republic, Duvalier in Haiti and Stroessner in Paraguay. Mobutu alone stole at least $5 billion, and other problems include:

■Corruption remains a problem and in recent years the presidents of Zambia and Malawi have both been charged with embezzling millions in aid funds.

■The governments of Sudan and Zimbabwe are today letting their people starve.

■There have also been mistakes. Over $2 billion was spent to construct roads in Tanzania, but transportation did not improve because there were no funds to maintain them.

■From 1970 to 2002, over 70% of total government spending came from foreign aid in Burkina Faso, Rwanda, Somalia, Mali, Chad, Mauritania and Sierra Leone. Progress has not been made in those nations, and they are unable to maintain their schools and clinic without aid.

■The policy of donor nations has been to give these failed countries the basics. Food and medicine have been distributed and governments have not been asked to do anything. That has created a dependence on more aid. It is far better to have programs based on the power of markets, but that requires a long commitment.

Critics point to the failed states to demonstrate that foreign aid is useless, and poverty will never go away. Millions of people are still dying from disease, and Senator Paul and his allies now want Americans to give up.

What they will not acknowledge is that millions of people have been saved. The aid failures in the past decade have been relatively small, and the victories have been huge. African poverty and inequality is falling fast, and the continent is on track to halve poverty by 2020.

Foreign Aid Often Helps The American Economy

Foreign aid is from the American people, but it is also for the American people. It is far more than charity, and it has proven to be a smart investment. There is substantial evidence demonstrating that foreign aid helps to create new American markets.

Long time aid recipients such as India, Indonesia, South Korea and Poland, are now major markets for American goods and services. The competitiveness of the United States is based on trade. One example of our changing economy is that Buick sales this year will be six times greater in China than in America. This is excellent news because the American taxpayers now own GM.

One out of five U.S. jobs now depends on international trade. Half of U.S. exports (almost $600 billion) are now going to developing counties. Almost 90% of those sales are from small to medium sized companies, and for every 10% increase in exports there is a 7% decrease in America’s unemployment rate.

Foreign Aid Helps Our National Security

Many people view foreign aid as a moral obligation to help the poor and feed the hungry, but the national security community supports the program because it helps to keep Americans safe and secure. That is why foreign aid is part of America’s official national security strategy. In addition, George W. Bush placed development aid alongside defense and diplomacy as a third critical pillar of national security.

America’s foreign assistance team works hand and glove with its military missions in Afghanistan, Iraq, Pakistan, Yemen, the Horn of Africa, and Central America. For example, by improving agriculture in Afghanistan we are helping to defeat the Taliban.

The home base of the Taliban in Kandahar is now exporting food for the first time in 40 years. The schools the U.S. has refurbished have replaced the Taliban’s extremist madrassas. Foreign aid has also moved farmers away from coca cultivation in nations such as Afghanistan and Colombia. In the regions of Colombia where the U.S. is involved, coca cultivation has dropped 85%. This is an essential part of the war on drugs.

The linkage between national security and foreign aid dates back to the Marshall Plan which helped in the post WW II recovery, but it also stopped the spread of communism to western Europe. JFK’s Alliance for Progress helped to stop the export of communist revolutions in Latin America.

As we have recently seen, impoverished states have been spawning grounds for terrorism, trafficking, environmental devastation, and disease. Foreign aid is an important part of the mix because the military can’t secure a society alone. We learned this again in Iraq where we had to shift to a counterinsurgency strategy in 2006, and we had to do the same thing in Afghanistan in 2009.

Full Support From The Joint Chiefs of Staff

The most effective lobbyists for foreign aid have been the Joint Chiefs of Staff (JCS) who have also emphasized how it bolster’s America’s national security. The JCS Chairman told the Senate Foreign Relations Committee that he considers the education of women and girls important to our military goals in Afghanistan and Pakistan, and consequently to our security here at home.

Many studies support their observations. They have noted that a key to alleviating global poverty and its attendant ills such as fundamentalism and extremism is by empowering women and girls. The countries we are having the most trouble with are the ones who marginalize their females.

George W. Bush Completely Changed Foreign Aid

Senator Paul’s real target is President George W. Bush who quadrupled foreign aid. Bush increased the program from $2 billion to $8 billion where it remains today.

At the same time, Bush was successful in encouraging America’s allies to increase their aid, and they now provide $22 billion on an annual basis. This does not include assistance from non-profit and international organizations. The U.S. has the largest foreign aid budget, but as a percentage of our GDP, nations such as Sweden, Norway, Denmark and the Netherlands are far ahead of us. Almost 60% of U.S. aid goes to Israel, Egypt and Colombia.

Bush completely changed foreign aid by numerous reforms and creating the Millennium Challenge Account (MCA) in March 2002. The program was designed to give millions of people the tools they need to build a better future.

The nations which receive MCA aid are those who have made a new commitment to fighting poverty by working in partnership with America to educate their people, encourage economic productivity and fight corruption. The only countries which receive aid are those who govern justly and meet a well defined set of requirements.

The 40 nations which have met the MCA or poverty reduction strategy requirements have an average growth rate of 5.9%. The Bush approach has been effective and amazing progress has happened.

It is also demonstrated in the declining number of child deaths, the advances made against HIV/AIDS, and the number of children going to school. A 2009 World Health Organization report credited the Bush administration with saving over 10 millions lives.

Foreign Aid is Making a Huge Difference

Significant problems still remain in the foreign aid program, and prior to the Bush administration billions of dollars were lost due to corruption. Nevertheless, significant progress was made by previous administrations.

The post World War II Marshall Plan gave $13 billion to Europe, which would be the equivalent of $100 billion today. It is still regarded as a tremendous success. Foreign aid also helped to lift millions of people out of poverty in South Korea, Taiwan, Botswana, Indonesia and Tanzania.

In the past 50 years, infant and child death rates in the developing world have been reduced by 50 percent, and life expectancy increased by about 33 percent. At the same time, smallpox has been eradicated worldwide, and polio will soon join that list. There has been enormous progress in fighting river blindness, guinea worm, diarrheal diseases, and others.

Without the top three U.S. aid recipients, America has about $4 billion to distribute on an annual basis. The world will not be saved with that modest investment, but progress is being made and foreign aid should continue. Some of the milestones are:

■In the past 20 years, the number of the worlds chronically undernourished has been reduced by 50 percent.

■More than 3 million lives are saved every year through America’s childhood immunization programs.

■Five and a quarter million people worldwide have a new lease of life since 2002 because of AIDS treatment.

■Literacy rates are up 33 percent worldwide in the past two decades, and primary school enrollment has tripled.

■In sub-Saharan Africa, the proportion of primary school age children enrolled in school increased from 56% in 1999 to 73% in 2009, the fastest increase of any region. Fifteen African countries have achieved gender parity in primary education, meaning they have an equal number of boys and girls enrolling.

■The United States has brought safe drinking water to 1.3 billion people.

■U.S. agricultural technology and practices have led to the most dramatic increases in crop production in the history of mankind, helping to feed a billion people.

■98 million less people were going hungry in 2010 compared to in 2009. Hunger is down in Ghana by over 75%. The decades of military rule are over in Ghana, and a pro-free market government has been making steady progress.

■23 African economies are now growing individually at 5% or more a year. In total 18 non-oil producing African countries have averaged growth of 5.5% during the past decade. Mozambique has had an amazing fifteen-year record of nearly 8 percent growth. Elsewhere, Egypt and Pakistan have tripled their incomes.

■TB deaths are down from 1.8 million in 2007 to 1.3 million in 2010.

■Measles deaths have fallen by 89% over the past decade after a massive vaccination program carried out by the United States in partnership with African governments, UNICEF and the American Red Cross.

■The U.S. government and America’s non-profit organizations have distributed 122 million bed nets to protect families from malaria. Malaria incidences in west Africa have decreased by 49% since 2003, and the disease is no longer a major concern in Vietnam or Thailand.

■During the past two decades, under-five mortality rates have declined by an average of 52% in Eritrea, Malawi, Mozambique, Niger and Ethiopia.

■Forty-five years ago, Botswana was one of the poorest nations in the world. Then a free market was established and for three decades Botswana had the highest average economic growth rate on the planet.

■Five years ago Liberia appear to be a failed state basket case because of civil war, corruption and poverty. Some people thought an aid program was not worth the effort. Liberia is still a poor nation, but it has made significant progress in all areas.

■Foreign aid is not a never ending dole, and seven more nations have made enough progress to be removed from the assistance roles over the next three years. The first to go will be Montenegro in 2012. Countries which have been past recipients of aid such as India and Brazil are now donors.

Can America Afford Foreign Aid?

Over the past half century many people have claimed a foreign aid program was too expensive. Prior to George W. Bush, the aid program was cut repeatedly, and America does have a big deficit today.

Nevertheless, the critics are wrong in claiming the United States is carrying the world development load. Excluding the top three recipients, aid is only 0.09% of the budget. This is less than $4 billion and a considerable amount of that is helping security programs and the war on drugs.

The United States has received an excellent return on its foreign aid investment. In addition, we have never claimed aid is the only answer. The U.S. strategy includes trade, improved governance and business practices which foster private investment. Everyone also realizes it is essential to stop corruption.

All of these aspects are important, but aid is critical. U.S. assistance goes well beyond delivering food and medicine. It is a partnership with governments such as Ghana. We encouraged their transition to a free market economy and the result so far has been a 75% reduction in hunger.

Many people don’t care if millions of foreigners die, but what they don’t realize is that we are not saving any money by cutting back on foreign aid. If we stopped our aid programs, our allies would also stop or cut back.

The first victim would then be the growth of U.S. exports and the many transitions which are now taking place to a free market economy. Tens of thousands of American jobs would be sacrificed.

U.S. foreign aid goes well beyond food for peace. American aid programs have changed the world during the past decade by encouraging the establishment of fair business codes, viable commercial banks and reasonable tax and tariff standards. These reforms have allowed numerous American companies to enter the export market.

This isolationist strategy is what critics urged after the Soviet Union pulled out of Afghanistan. We listened to their advice, and ignored Afghanistan in the 1990’s. We did next to nothing and the Taliban took hold. The subsequent military spending was a thousand fold of what any foreign aid program would have been. Once again, foreign aid is from the American people, but it is also for the American people.

Can we afford to do it? I think we can’t afford not to do it. Foreign aid today is a hand up, not a hand out. America is now encouraging economic growth policies. That did not happen in the past, but it is now an integral part of our development strategy. The Bush administration understood that good business is good development.

Hilton previously served as Executive Director of the Conservative Victory Fund; Director of Public Affairs for the National Republican Congressional Committee; and as the Republican National Committee’s liaison to the White House Political Affairs Office during the Reagan Administration. Hilton also wrote a full page political column for the conservative weekly Human Events. Hilton served as Executive Director of the American Security Council for 23 years and has helped to raise $100 million for non-profit organizations.

One Response to “Does U.S. Foreign Aid Make a Difference? Should It Be Stopped?”

  1. Frances Rice said

    My Comment is this; I firmly believe that each and every country
    that has people needing help should do it. With our country in the
    shape it is now,all foreign should be cut in half and with some,
    cut completely.

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