Foreign Aid on the Budget Chopping Block

02.15.11

Foreign Aid on the Budget Chopping Block

02.15.11
Haiti

In the past month there have been revolutions in Tunisia and Egypt, unrest in Yemen, Bahrain and Iran and historic elections have been held in Sudan and despite these seismic positive global shifts policymakers on Capitol Hill are calling into question the necessity of foreign aid.

Contrary to conservative claims and popular perception foreign aid constitutes less than 1% of the federal budget. Yet policymakers argue that foreign aid and discretionary spending lie at the heart of the current and long-term fiscal health of the United States. It is because of this misperception that policymakers are able to argue for the termination of foreign assistance. Counter arguments are less persuasive because when policymakers argue that if something is not done to fix the U.S. economy our streets will fill with Greek type protests. Capitol Hill’s most ardent budget hawk, and critic of contemporary U.S. foreign policy, Rep. Ron Paul (R-TX), made the claim during his speech at CPAC in Washington “We need to do a lot less, a lot sooner, not only in Egypt but around the world.”

Policymakers in Washington will have to deal with the country’s massive budget deficit and make difficult choices. Foreign aid along and other programs are being considered before non-discretionary spending. Foreign aid, spending on education, transportation and a whole host of domestic spending programs are being scaled back by Congressional Republicans in their continuing resolution (CR). While it is doubtful that Senate Democrats will agree to any of these budget-cutting mechanisms both political parties will have to come to some sort of agreement to avoid a government shutdown.

Because a budget was not passed during the last Congress a seven-month government-spending bill must be passed. There are several hundred Amendments being offered by both Republicans and Democrats to be tacked onto the CR. Rep. Ron Paul (R-TX) wants to end aid to Egypt, Jordan and Israel, Rep. Anthony Weiner (D-NY) wants foreign assistance to Saudi Arabia suspended and Rep. Blaine Leutkemeyer (R-MO) wants to prevent U.S. funding of an international climate change agency. Secretary of State Clinton told reporters after her meeting with Speaker of the House John Boehner regarding the proposed cuts to the Department of State, “We would be forced to scale back significantly our mission in the front line states of Iraq and Afghanistan.” Clinton continued, “We certainly understand the tight budget environment,” she said. “But the cuts of that level will be detrimental to America’s security.” The House Republican approach calls for $3.8 billion in savings at the Department of State.

When policymakers claim that foreign assistance and discretionary spending lie at the heart of the country’s budget problem they are misrepresenting the facts. Non-discretionary spending, defense, Social Security, and Medicare and Medicaid constitute the bulk of what consumes the federal budget. Foreign aid is often misinterpreted to mean just dollars going to states like Israel and Egypt in the form of military assistance. Other forms of foreign aid or foreign assistance include bilateral development aid, humanitarian aid, multilateral economic contributions and economic assistance supporting U.S. political and security goals.

The largest recipients of military aid are Israel, Egypt, Afghanistan, Pakistan, Colombia, Sudan and Jordan. Military assistance goes beyond simply supporting military operations abroad. It pays for reconstruction efforts in Iraq, fighting nacro traffickers in Central and South America and keeps states like Egypt allied to the United States which I pointed out in a previous article, “The U.S. Military and Egypt.” Foreign assistance is not just a tool pursued by Democratic presidents. Republican and Democratic presidents have pursued foreign aid in the form of humanitarian assistance and other mechanisms to both improve the lives of global citizens and improve the strategic interests of the United States. The most obvious example of foreign assistance was in the form of the Marshall Plan.

The late historian Tony Judt made this point in 2006 on “Charlie Rose” “It wasn’t the money…what mattered was the physiological boost. Europeans in the spring and summer ’47 after an awful winter, terrible food shortages, no foreign currencies so they couldn’t buy stuff from overseas from the States or Canada or South America. Europeans were really at their most depressed, much more depressed than in ’46 when they thought they were rebuilding after the war.” This form of foreign assistance and German, French and U.K. economic policies allowed Europe to eventually become financially viable. These policies were in the form of institutions like the European Coal and Steel Commission (ECSC) and eventually the European Economic Community (EEC) and finally the European Union (EU).

Foreign assistance alone does not pave the way for growth and development. Often, internal economic policies hinder a country’s ability to enhance its ability to develop. The Marshall Plan alone did not provide the necessary tools for European states to become economically stable. Richard W. Rahn, a senior fellow at the Cato Institute writes, “The post-World War II Marshall Plan in Europe is often cited as the great success of foreign aid. But, in fact, the German and other economic miracles in Europe only began after the Germans and others, despite opposition from the Allied Control Commission, removed their extensive price controls and other restrictions on trade, production and distribution.”

Foreign assistance is rightly criticized for creating a condition of need in many developing nations. Donor nations need to provide the tools to recipient nations to enable them to develop policies to eventually wean themselves from foreign assistance. Contemporary U.S. presidents have pursued foreign assistance with a great deal of success. Two efforts by former President Bush have shown results. One is the Millennium Challenge Corporation (MCC) and the second is an effort to curb incidents of new cases of HIV/AIDS and treat people with the disease throughout the African continent, in the Americas and in parts of Asia.

MCC is described as “MCC provides these well-performing countries with large-scale grants to fund country-led solutions for reducing poverty through sustainable economic growth.” There are two forms of grants, compacts and threshold programs. Compacts are “large, five-year grants for countries that pass MCC’s eligibility criteria” and threshold programs are “smaller grants awarded to countries that come close to passing these criteria and are firmly committed to improving their policy performance.”

Former President Bush’s most underappreciated development program has been the President’s Emergency Plan for AIDS Relief (PEPFAR). With funding levels of $18.8 billion, between 2003 to 2008 PEPFAR treated more than 2 million people affected by HIV and provided care for more than 10 million people in Namibia, Botswana, Rwanda, Cote d’Ivoire, Ethiopia, Uganda, Haiti, Kenya, Mozambique, Nigeria, Vietnam, South Africa, Guyana, Tanzania and Zambia. While still secretary of state, Condoleezza Rice discussed PEPFAR during a briefing, “In 2003, when President George W. Bush announced PEPFAR, many still doubted whether HIV prevention, care and treatment services could ever be provided in a resource-limited setting, where HIV/AIDS was a death sentence.” Rice continued “Just five years later,” she added, “thanks to strong partnerships between the American people and the people of host nations around the world, we’ve seen what was once thought to be impossible become truly possible.”

Other forms of direct foreign assistance respond to natural disasters. The 2004 Indian Ocean tsunami and the 2010 Haitian earthquake witnessed some of the largest aid efforts in history. While reconstruction depends a great deal on the abilities of the countries affected to do a significant amount of work independent of outside assistance there was a need for foreign assistance in the immediate days after each disaster. Despite the efficacy of building secular schools in Pakistan, providing needed food shipments to parts of Sub-Saharan African through USAID, building roads in Afghanistan and decades of positive American leadership around the world, it is military aid which garnishes the most attention.

It was because Secretary of Defense Robert Gates and Adm. Mike Mullen were able to communicate and influence the Egyptian military during that country’s upheaval and press them not to act against the protesters that kept the violence during the revolution to a minimum. Now as the Egyptian government, controlled by the military, begins the process of reform post-Mubarak it is these relationships developed through years of military assistance and cooperation, which allow the United States to have a positive influence.

On ABC’s “This Week” George Will made the point that there are several NGOs and organizations that were created in the 1980s that can promote democracy and political parties in countries throughout the world including in Egypt. Will argues that there efficacy would be limited should the foreign aid budget be slashed. Ronald Reagan established many of these efforts as The Brookings Institution’s Robert Kagen points out and that “it would be foolish” to see these efforts limited. In the early 1980s, during a foreign policy address at Westminster Palace, Ronald Reagan called for an initiative “to foster the infrastructure of democracy-the system of a free press, unions, political parties, universities-which allows a people to choose their own way, to develop their own culture, to reconcile their own differences through peaceful means.”

Out of this speech the National Endowment of Democracy was created. Efforts like the NED are needed throughout the world to both promote democracy which creates stability in global regions and helps America’s strategic interests. Americas push for democracy promotion would be hampered if the foreign aid budget were viewed as the only way to get the American fiscal house in order.

2 comments
4 comments
Nichol S
Nichol S

Your Journal is attractively laid out and well written. Keep up the good work!

Jody S
Jody S

Couldn't agree more. Well stated! JS

Nichol S
Nichol S

Your Journal is attractively laid out and well written. Keep up the good work!

Jody S
Jody S

Couldn't agree more. Well stated! JS

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