Because America’s prosperity is intertwined with the prosperity of other nations around the globe, modernization and elevation of foreign assistance must be a priority as a cost-effective mechanism to stimulate and promote the American economy and global stability.
Recent economic turmoil in the U.S. has raised the question of budgetary tradeoffs and whether more consideration on foreign assistance is the right priority in a resource constrained environment. However, in the global economy America cannot afford to disengage. Foreign assistance has been a cost-effective mechanism to promote the American economy and prevent threats to our national security, and it has been a means to restore America’s moral leadership and offer hope to those struggling to break the bonds of poverty and conflict. Modernizing and elevating our foreign assistance structures is not only necessary to meet 21st century challenges, it is also addresses our current economic turmoil.
Developing stable foreign economies that act as responsible trading partners and purchase American goods will fuel the American economy and spur economic growth. The numbers speak for themselves. Roughly 95 percent of the world consumers live outside the borders of the U.S. and it is estimated that 1 in 5 American jobs depend on trade. Due to increased access to global markets since 1945, U.S. annual incomes are now $1 trillion higher, or $9,000 per household. Today, the Office of the U.S. Trade Representative estimates that further access to global markets could increase U.S. annual incomes by an additional $500 billion, adding roughly $4,500 per household.
Furthermore, as poor nations become richer and more integrated into the global economy, they purchase more American goods. Twenty developing countries that receive foreign assistance from the U.S. are among the top 50 purchasers of U.S. goods. Between 2002 and 2007, these countries received roughly $20 billion in U.S. economic assistance while exports to these countries increased by 75 percent from $194 billion to $338 billion, suggesting investments in economic development can have an enormous payoff for the American economy.
Conversely, the potential costs of disengagement are enormous. The Brookings Institution estimates there are 56 failing states around the globe that lack the essential capacity to fulfill critical government responsibilities. These countries are more vulnerable to a host of national security threats from terrorism, weapons proliferation, organized crime, infectious disease, and armed conflict. Responding to these challenges America must be proactive. Secretary of Defense Robert Gates stated that our military force “should be subordinate to measures to promote participation in government, economic programs to spur development, and efforts to address the grievances that often lie at the heart of insurgencies”. This military recognition that development is crucial to respond to threats to our national security was echoed in a recent poll of military officers conducted by the Center for U.S. Global Engagement.
We must invest in prevention; given today’s complex global challenges, we cannot afford to be reactive to threats. Compare, for instance, the relatively small amount of money it would cost the U.S. to help poor nations respond to a new pandemic flu with the projection that if it were to hit the U.S. it could kill over half a million Americans, hospitalize more than 2 million, and cost our economy a staggering $70 - $160 billion in lost productivity and direct medical expenses.
It is important to put our expectation for foreign assistance in perspective. Foreign operations, including foreign assistance, account for less than 1 percent of the current budget. Our foreign assistance has been operating in a Cold War framework created in 1961, has been hampered by an 11 percent funding decrease since the height of the Cold War in terms of real dollars, and our premier international development agency has fewer foreign service officers than the crew of the air wing on a single Navy aircraft carrier.
In the global economy stock market fluctuations, credit, and debt are not constrained by international boundaries and we cannot solve our domestic economic problems by deferring international concerns to future generations. We need to be asking ourselves how we can modernize and elevate our foreign assistance for 21st century opportunities and challenges, including stimulating our economy. Cutting foreign assistance may save some money today, but will be very costly for generations to come.
Nate Wright is a Policy Associate with the Center for U.S. Global Engagement. He is also the Founder of STAND: A Student Anti-Genocide Coalition with over a thousand chapters worldwide. He holds a B.A. in History from Georgetown University and recently completed an LL.M. in International Human Rights Law as a Mitchell Scholar in Ireland.
The content is exclusively the personal opinion of the author. Under no circumstances should the content be attributed to CSIS, Next America, or the author’s employer, unless explicitly stated.
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Focus on Humanitarian Donations
The percentage of our budget that goes towards foreign aid is miniscule and if spent domestically would make little to no impact on the national economy and the everyday lives of the American people. Furthermore, providing aid to other countries will not significantly benefit the US economy by building foreign trade partners as was argued by Nate. The types of countries receiving aid represent very small markets and cannot be transformed into meaningful trading partners by providing mere millions of dollars. With the economic issues of each side of the debate somewhat put aside, other more critical dimensions of the debate can be examined. The main use of aid is political, as shown by Israel being the largest beneficiary of U.S. foreign assistance. Foreign aid helps to give the U.S. at least marginal influence in countries all over the world. However, what foreign aid really can and should be used for are humanitarian emergency missions. As an international superpower, the United States has the moral responsibility to help those countries that need aid. Therefore, the real debate should center on which countries we are giving aid to. Foreign assistance should only be given to those countries that would receive the highest marginal benefit from it. Humanitarian assistance has political capital in of itself as it enhances America’s image abroad.
We argue the US ought not to scale back foreign aid since we can expect our economy to be improved little by the monetary savings. Providing aid for humanitarian causes provides political benefits that outweigh the monetary costs, even in the current economic crisis. We do agree with Nate that aid is a poor tool for economic development and hence advocate aid being used strictly for humanitarian missions.
Our House First
I'm not a college student, I never was, and I probably never will be. I have no academic or other knowledge on how things in government finance work- I learned a gang of information on finances, both domestic and international, just from reading the posts on this topic- but I do have, and regulary employ, common sense.
America has always been billed as the most prosperous nation on earth, and I'm going to assume that's partially what led us to be a 'superpower' on the global stage. That, and all of our guns. As the 'most prosperous nation', it only makes sense to participate in assisting less capable areas around the globe. But in times like these, I strongly believe that the focus should be at home, first, and abroad, second.
I'm even less a 'numbers junkie' than I am a college student, so finding out what percentage of our budget(s) we send to other countries does me no good, therefore I could care less what the percentage is. What I do care about, as should a great many people, is the type of aid sent overseas. Keeping in line with the 'home first' line of reasoning, if America sends a couple mills to, say, Karakaflakistania, for arms development and military research, as opposed to educational and humanitarian development, then I say pull the plug. Missiles and satellites don't feed or nurture anybody. Defense is an unfortunate necessity in the world, but enriching and uplifting people in a progressive manner trumps that every time.
While I have a slight understanding of the global crises currently going on, I can't help but feel that every nation affected by such crises needs to focus on the areas within their borders or control; how can I reasonably offer to come and clean up your house when mine looks and feels like a tornado ripped through it? Cooperative measures between nations certainly need to be pitched, discussed, and implemented when and where possible, but in keeping with domestic pride and responsibility, every nation needs to focus primarily on what they can do for their own people with their own resources first.
Perhaps what I'm espousing here is 'protectionism'- if so, then so be it. I'm not against the idea of cooperating with other nations to help ensure that crises like these don't happen again, but I am quite fond of the idea of countries becoming more self-reliant than not, and in order to do so, some things- like various trade agreements that are more crony-ish than not- need to be suspended if not outright terminated. With the exception of a few industries or resources, every nation has exactly the same things available to them- domestically- and these resources need to be tapped and used first, instead of farming out for supplies from elsewhere. I really believe that.
For the duration of these crises, I think and feel that such measures are absolutely necessary. Who knows, perhaps if such measures are indeed enacted, dependence on overseas resources will disappear. With respect to Foriegn Aid, though, I say put the responsibility where it belongs- in the hands of the powers-that-be of whatever particular nation. If what they're trying to do isn't working with the plans and ideas they have at present, well, do like the rest of us do:
Go back to the drawing board until you come up with something that does work.
The bottom line, as far as I'm concerned, is whether or not the Aid we send out is genuinely sent for the purposes of actually helping other countries, and not laden down with political promises and full of favor expectations somewhere down the line. If we're going to help others, then let's do that- and only that. It's not Aid if it carries political conditions.
But fix ourselves before we fix others. That's my 2 cents.
Peace.
On Baited Breath: US Foreign Aid Decisions During a Crisis
Each year as Congress prepares to hear legislation on foreign aid, representatives and advocates from around the world come to DC to argue their counties' dire need of funds. There is no need to send the majority of these people away empty handed. This money, while a small part of our GDP, is instrumental in keeping other nations running; it can even prevent war. What would happen if the US cut aid to Israel? Currently all US aid to Israel is allocated strictly for defense, and the aid to Egypt and Jordan is the single strongest tie between those three nations. Without that aid, not only would Israel not be able to work on such projects as David's Sling and Arrow 2 missile defense programs, the peace treaties in the Middle East would begin to rip apart.
Foreign aid should not be reduced in this time of recession, but maintained, perhaps even enhanced in certain regions. Smarter spending and greater oversight of distribution will find the current allocations have great potential. Cutting foreign aid in today's world will allow the downfall of the current geopolitical structure spreading the discord which comes with such upheaval.
Foreign Assistance Needed
For the past few years the United States of America has been acting unilaterally regarding international issues. Many different countries in the world have been dissapointed and have challenged American Foreign Policy: Iraq, for example. The United States has been using unilateral strong power towards the world. Many countries have seen the war in Iraq an action that was not necessary. Many countries in the world disagreed with America on that, many countries started to challenge Amercan leadership.
COnsequently America needs to rebuild those relations with many countries in the globe. Foreign aid will be a great tool to enhance a policy of soft power, a policy that can bring new partners, new allies to face future challenges that America can face in the global community.
Foreign aid helps develpment countries to improve their education standards, health care system, and infrastructure. Consequently America needs to keep helping countries around the world.
Would it be rational to keep enhancing this policy during this economic crisis? Yes it is rational to keep helping countries, and it will not affect Americans at all. The United States of America uses less than 5% of its total GDP in foreign aid. It will not affect the American economy if we keep helping countries around the world.
Soft power brings new allies, greater and stronger consensus. Foreign aid is a great tool to improve social standards in many developing countries which will increase the probability to increase and strengh democracies around the world. More democracies around the world will make America more secure.
Aiding the World
It is crucial for the United States to maintain foreign aid in today's world. Aids, hunger, poverty, natural disasters, and failed states which fuel terrorism are simply too big of issues across the globe for the United States to say that is needs to spend less on helping to eradicate these problems. If their is to be a change in foreign aid, it should be a larger emphasis on development projects and education, so that countries may then begin to change their own countries. In a sense, the "teach a man to fish" theory.
Although the U.S. does give arguably the largest amount of foreign aid, it pales in comparison when speaking of actual percentages. For example, in the United Nations, the U.S. by far contributes the most to their budget (around 22 percent). However, while countries like Sweden give around 1 percent of their total GDP, the U.S. gives less than .01 percent, a total much less than the other countries. To me, that means we should be giving more.
Also, I am a firm believer in the idea that foreign aid is essential to the United States' security. Failed states are breeding grounds for rebellion and terrorism. The biggest example of this is the current situation in Afghanistan. With more assistance and attention in the years following the Cold War, perhaps Afghanistan might not be the seemingly hopeless situation that it is today. Aid is not only essential to people's survival across borders, but important for the security of the world.
Foreign aid, however, should not just be handouts. A perpetual system of handing out food instead of teaching a village best farming practices is only going to lead to perpetual dependence. Giving micro-loans to self-sufficient women in Africa, for example, is a way that not only immediately aids people, but encourages them to develop, grow, and pursue opportunities on their own. Another example could be aiding in alternative crop growing in places like Peru or Bolivia, where growers have other options other than drugs to grow and make a profit. On the other hand, there are important handouts, like mosquito nets, that instantly can save thousands of lives from the effects of malaria.
In the end, it is not the amount of foreign aid, but the way it is used that should be monitored. We do need to make sure that the ways we give foreign aid are regulated, but absolutely not restricted. Too many children are dying, wiping out generations of potential and prosperity that could be changed from simple solutions. If cutting back on foreign aid means increasing poverty, disease, crime, and basic human rights around the globe, that is a sacrifice I am not willing to make.
Not a matter of more or less, but a matter of effectiveness
In the midst of this financial crisis many Americans are grumbling about their tax dollars disappearing overseas when domestic needs are so great. These taxpayers fail to consider that the financial crisis expands well beyond our borders and that our security and our own economic development are entangled with the state of many other nations around the globe. Foreign assistance certainly should not be overlooked at this critical moment in our nation's history. The question being debated here of whether or not the United States should scale back on foreign assistance is not the right question to be asking. There will always be tradeoffs that need to be made when developing the federal budget. The more appropriate question is: How can U.S. foreign assistance be more effective? To address this issue, we need to look at why the U.S. gives foreign aid? The perception that the U.S. provides foreign assistance based on our altruist nature is naïve. The reasons why the U.S. government provides foreign assistance are numerous and varied. Egypt, for example, is one of the top recipients of aid, mainly as a result of our U.S. strategic interests in establishing peace and stability in the Middle East. In Liberia, on the other hand, U.S. foreign assistance reflects a commitment to long term development goals, where U.S. assistance is spread relatively evenly over democracy and governance, health, education, economic growth, and peace and security programs. In Somalia, U.S. priorities are mainly focused on humanitarian assistance and peace and security. In contrast, the U.S. relationship with Bulgaria is centered on building and sustaining a strong a partnership. Whether we are giving foreign assistance for motives related to improving our national security, addressing humanitarian crises, improving our image abroad, tackling global health and education deficiencies, or promoting democracy and governance, it is more important that we focus on using American taxpayer dollars most effectively rather than on how much or how little is allocated to U.S. foreign assistance. So, the more important debate and discussion should center on how can foreign assistance be most effective?Cyndee Pelt-Next America Fellow
Reform, don't discard, aid
Foreign aid is crucial to both the United States' basic humanitarian obligation and its national security. However, foreign aid as it currently stands is often ineffective and misused. The policy research efforts of groups like the Modernizing Foreign Assistance Network (M-FAN) should be utilized by the US Government to hone the impact of aid and make sure it is reaching those who need it most. Stopping aid would only worsen the impact of the global financial crisis for those hardest hit, decreasing international security and the standard of living for millions around the globe.
Foreign Aid doesn't cause development, but it can save lives
I do believe that we haven't really figured out the best way to cause economies to develop via foreign aid. I don't think this is just a matter of ineffective programs or underfunding so much as a difficult problem to begin with.
However, there are ways to make people's lives better that don't directly show up in GDP. Disease aid is one of the most prominent examples, we've gone a long way towards eliminating some of humanities long-time nemeses and I have no problem calling that a worthwhile endeavor even if it didn't lead to development. Also disaster response aid can be highly effective, it doesn't lead to growth as such, but helps the economy return to what it was already doing which is a much easier problem.
I do give some points for Nick Loris's suggestions on ethanol subsidies, micro finance, farm subsidies, and foreign debt forgiveness. That said, I think he goes a bit too far in opposing government-to-government transfers. I recently attended a program regarding Afghanistan's National Solidarity Program. That government program worked by putting funds in the hands of local democratically elected councils and thus did a good job of dealing with accountability problems.
Teach a man to fish
The question is not whether the US has enough money to throw at foreign governments. The question is whether this aid succeeds in bringing people out of poverty, or whether it merely snowballs itself into the permanence of self-justification.
Government-to-government foreign assistance, as demonstrated consistently throughout its history, does little to nothing in terms of international development. Nick Loris hits on many of the reasons why this is so and presents solid alternatives.
The key to improving states' economies is not injecting money into the government, but enabling individuals to better their own lives. Governments that receive aid are often corrupt, and the money rarely makes it beyond a close-knit cabal of officials and cronies. This does not benefit the supposedly intended targets of the aid. However, even given competent governance, aid money cannot be effectively allocated throughout the economy to those who not only need it, but will be able to create something sustainable with it.
US trade policy, especially regarding all forms of agricultural barriers, keeps an important path to economic progress closed to developing states. If allowed to compete on a level playing field, individuals in underdeveloped societies would be able to harness comparative advantage and reap the benefits of trade.
Trade, not dollar injection, is the key to a sustainable economy. Underdeveloped states must be allowed to develop local industries that cater to local strengths in a global economy. Businesses in developed states must be allowed to invest and provide expertise, driven by the profit motive to reap mutual and sustainable benefit. Developed states must allow burgeoning economies access to their citizens, who will also benefit by lower prices for goods and services.
No amount of good intentions can mask the fact that foreign aid injections are not effective. "We have to do something" is not a sufficient nor convincing rallying cry. If our maxim is "Do no harm", surely inaction can be preferable to well-intentioned but ultimately harmful action.
Now, if we admit that foreign aid is not an effective tool for economic development, there are some areas in which it may still be useful. As David Morar points out, offerings of aid can be a powerful tool in international relations. Aid sounds good, and sometimes that might be enough. However, that cannot obfuscate the fact that government-to-government aid is no friend of those concerned with international development and poverty.
Times of Crisis Should Be Times to Give Back
The fact that the United States is in economic crisis should not be enough to cut back on foreign aid. Less than 1% of our budget goes to foreign aid. Sweeden gives more than we do. Not that money is a panacea for all the world's problems, but if Congress can find over $700 billion to rescue the economy, I'm sure they can figure out a way to help people around the world find safe drinking water.
DOES MONEY CREATE MORE PROBLEMS THAN IT SOLVES
It seems to me that money provides sustenance to the seven deadly sins (demons) to maintain their grip on and continue to enslave our soul, spirit, and will (the soul being the epithelium of the spirit). To me money is like fertilizer -you have to spread it around to make things grow. But we must also have seeds to plant. If money is the fertilizer then people must be seeds of the tree of GODS love; the fruit of which is our very existence. Therefore, how do we keep this tree growing in this world when the demons above keep chopping away at it. Should we allow are elected leader to appropriate money our own poor have earned (as opposed to the rich who wrongfully earned their money).
I once read the saying early to bed early to rise makes one healthy, wealthy, and wise. I asked GOD how should I measure my wealth. HE told me "by the number of friends you have to share your love, knowledge, and wisdom with. The three cakes one can eat and still have." So why should anyone need money? What is its purpose? I asked GOD. GOD told me "so that men can buy and sell one another as if they were chattel". I see, that is why we compete, because he who makes the best grades fetches the most money when he sells himself to an employer, this seems quite unwise and degrading to me. But I guess I am nobody to say so. GOD said to me "I see you are wise." I replied it is a fool who thinks he is a wise man and a wise man who knows he is a fool. GOD said "I see you understand what wisdom is. Are you a fool or a wise man?" I replied neither and both. GOD said "good answer!" I then said thank you, I figured its better to be a wise fool then a fool who thinks he is wise.
A fool and his money are soon parted.
A fool and his power are soon parted.
A fool and his fame are soon parted.
Life is short, thank GOD!!!
Therefore, I think the rich in this country should pay more taxes if our government is going to give monetary aid to foreign countries. If the rich people refuse to help support the poor nations of this world, then many of GODS seeds will be lost.
Unfortunately, our government has wasted fortunes on weapons that destroy life, instead of on ways to create a better quality of life. You cannot fight for peace and freedom will be free once our government realizes this.
What do we do about the increasing poverty in the US? Technology is a great thing now everyone in this country can afford to buy a computer, but many cannot afford food and shelter, not to mention the cost of medical assistance. We must calculate the consequences of what we invest in. If we do not then money will create more problems then it solves.
Thank you for allowing me to share my views.
Could You Spare a Couple of Millions for a Poor Country?
The answer here is simple. Why is the USA giving foreign aid? Just because Congress feels the need to spend some money outside of the country? No! It's because other countries need that help.
Now, while continued foreign aid by the United States is needed, there's got to be a distinction. A very clear one. Programs to spend money aren't always fair and balanced. Programs to receive money are almost never fair and balanced. So there's a disconnect between what is happening and what ought to happen. A major disconnect. This is the area that policy makers need to focus on, reforming their programs, and creating standards for the other programs on the receiving end. Because foreign aid is more than just about money. It's about inter-state relations, it's about securing strategic "friendships" and mostly about keeping your word. What would the last one mean? Well, when American presidents go out and visit foreign countries they make promises, aid, trade agreements, relaxation of immigration, etc. And they have to keep their promises. Because these promises come as they get something in return. "Aid" is a wonderful bargaining tool, which can be given and taken away just as easily if certain demands aren't met. So, unless the next president wants to go to a foreign country and promise them nothing more than just the fact that they won't have to take their shoes off at the airport, foreign aid must continue.
The spending cuts, which have to happen due to the situation the USA is in today, should come from programs that have been declared useless, yet still receive funding, from the pork barrel, the ear marks, even the war in Iraq. These deserve a thorough evaluation and drastic measures to be taken, not foreign aid.
David Morar
Invest more, not less, but do so in a smarter way
Foreign assistance, when properly disbursed, provides relief and empowers countries ravaged by poverty, hunger, disease, war or natural calamities. This is a crucial aspect of U.S. foreign policy, therefore the current financial crisis should not prevent the United States from adhering to its foreign assistance commitments. In fact, once in office, president-elect Obama should double the foreign aid budget as promised.
As the previous blogger points out, the percentage of U.S. federal budget allocated for foreign assistance is a mere one percent. Scaling back foreign aid would not alleviate economic distress at home, but the harm to developing nations would be immense. While the financial crisis has hurt the U.S. and other rich nations considerably, developing nations have suffered even more as a result of declining commodity prices and a slow-down in foreign investment. For some aid recipients like Afghanistan, foreign assistance funds up to ninety percent o f government spending. A reduction in aid would force that country to halt development programs and infrastructure projects; in turn, unemployment would rise leaving more people disposed to Taliban influence.
Critics of foreign aid say it does not achieve its objectives. Where foreign aid has not worked, ineffective programs are to blame. To keep from pouring money into failing programs, institutions that deliver aid need to be restructured and programs must be rigorously assessed. Smarter aid allocation, not a reduction in foreign assistance, is the answer to aid ineffectiveness. Ultimately, if the U.S. wishes to advance global prosperity, it must prop up the tools that do so, especially foreign assistance.
Why U.S. foreign assistance should not be a sacrificial lamb
My answer is a resounding no. The financial crisis has and will continue to have a very real impact on everyday Americans, but the combination of the financial crisis going global, increasing food prices and commodity shocks hits the world’s poor the hardest. Cutting back U.S. foreign assistance does little to address the impact here or abroad. In fact, it may, in the long term, do more harm than good. The savings is small in terms of money and it potentially leads to greater losses in terms of sacrificing investments in building global trading partners, creating conditions to attract foreign investment, and bolstering a new global economic order to protect against future crises. Ultimately, foreign assistance is a relatively low-cost investment which can yield large returns in terms of national security, moral standing, and a U.S. role in the fight against global poverty and hunger. In the current climate of economic turmoil and a tight US federal budget, the strategic use of funds for international development can foster long-term benefits such as economic growth, strengthened relationships, and poverty reduction in developing countries.
The current International Affairs Budget, which includes the majority of core development assistance, comprises less than 1% of the federal budget – approximately $35b per year. Chump change compared to the more than $700b being utilized to avoid the collapse of the U.S. financial system or the $500b per year – 18% of the federal budget -- spent on defense. Cutting spending for international assistance is simply not the most efficient way to save money nor the most effective way to reallocate funds. These figures and the recent extreme fluctuations in international financial markets convey the need for a more balanced and rationalized U.S. federal budget.
Rather than cutting spending on foreign assistance, the U.S. could recalibrate the budget to reflect a “smart power” approach to national security and evaluate policies that more directly affect the fiscal balance such as agriculture or trade subsidies. Development is part of the three legs of foreign policy for the U.S.; intertwined with defense and diplomacy it forms the core of a well-rounded national security strategy adept enough to take advantage of myriad international opportunities and mitigate global threats. In spite of the paucity of resources that it has been allocated to date, development remains an important moral marker and a beacon of positive U.S. engagement with the world. The U.S. must maintain its commitment to those less fortunate both at home and abroad, and keep its promise of working toward a better world for all. Foreign assistance for development has contributed to the reduction of poverty and hunger as well as economic growth in numerous developing countries. Agricultural diversification to improve nutrition in the Guatemalan highlands, support for civil society organizations in Rwanda to promote democracy, and help to rebuild silk production by the women of Afghanistan are just a few examples of meaningful, results-based U.S. development assistance. The bonds formed through these and other programs can restore the world’s faith in U.S. economic and moral leadership.
Lastly, U.S. foreign assistance is an important signal of hope and promise – not only to skittish investors, but to the poor of the world, to citizens of the U.S. and to international citizens. It is an investment in the future – which the recent crises have reminded us, is linked across the globe.
Amy Crone is a Research & Policy Analyst at the Center for Global Development, where she works on the Modernizing Foreign Assistance and MCA Monitor initiatives. She also worked at the Millennium Challenge Corporation and has spent time in Latin American and the Philippines working on energy and environment projects. She received her B.A. in Government from Cornell University and her M.A. in International Development from American University.
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