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Beyond war, daring to think of foreign aid

Even as the Bush administration’s ill-defined war on terrorism lurches on from one objective to another, voices are beginning to raise questions about what follows. In most of the analysis that arises out of that question, some consideration is given to the need to treat the root causes that often contribute to widespread discontent and ultimately, terror.

Such considerations come with a price tag in the form of foreign aid.

But with the budget surplus gone, military spending skyrocketing and talk anew about deficits, dare anyone speak of an increase in foreign aid?

Misconceptions about foreign aid are widespread. In a survey made last year, half the respondents thought that foreign aid accounted for 20 percent of the federal budget. The current budget exceeds $2 trillion, and aid is about $16 billion. That is considerably less than 1 percent.

Many assume the $16 billion goes to relieve starvation and improve health conditions in the poorest countries in the world. Regrettably, this is not the case. U.S. Sen. Patrick Leahy told the World Economic Forum in New York in February that two-thirds of U.S. aid goes to Israel and Egypt, and that much of the other third is used to promote U.S. trade and to fight drugs.

Leahy exaggerated a bit. The expenditures for the year 2000 showed $4 billion to Israel and $2.1 billion to Egypt (slightly more than a third). But a look at the figures over a 40-year period confirms the point the senator was making. Of a total $258 billion, only $42 billion went to the two most needy continents, Africa and Latin America.

U.S. aid has two clear policy objectives: to expand the market for U.S. goods and services and to influence domestic policy in the recipient countries. More than 70 percent of all aid is tied to the purchase of U.S. goods and services. Increasingly, a condition for aid is the elimination by the recipient countries of duties on imports from the United States. Given the extreme disparity that normally exists in the infrastructure and technology of the two parties involved, this condition is fatal for small-scale agriculture.

While we use our economic clout to pressure poor countries to open their markets, we do not reciprocate. As the chief economist for the World Bank noted last December, protection by the rich countries costs the poor countries twice as much as they receive in aid.

British Chancellor of the Exchequer Gordon Brown made brief headlines a few months ago when he urged the rich nations to repeat the Marshall Plan, this time on behalf of the world’s poor countries. The original plan was a 4-year multination program the United States initiated in 1947 to rebuild a Europe devastated by war.

Brown proposes is something far more modest. He would have the rich nations double their current annual contributions to foreign aid. The sum total of this aid was $53 billion in the year 2000, almost half of it ($25.4 billion) from the European community. Japan was next with $13 billion, followed by the United States with $9.6 billion.

In percentages of GDP, the United States comes out even worse. While Britain’s contribution is 0.31 percent and Japan’s 0.27 percent, we now give less than 0.1 percent. In 1990 we were giving 0.2 percent, and in 1970 it was 0.3 percent. To quote President Carter: “We are the stingiest.” Not a single one of the major industrial nations comes anywhere near the 0.7 percent goal set by the United Nations. It is met only by Denmark, Luxembourg, Norway, Sweden and Ireland.

As the United Nations Conference on Development opened in Mexico March 19, U.N. Secretary General Kofi Annan expressed the hopes of the poor countries. “What they ask for,” he said, “is a fair chance to trade their way out of poverty, without having to face challenges or quotas or to compete against subsidized products from rich countries. Many are also asking for relief from unsustainable debts. And many are saying that in order to make the full transition to sound, open economies, they need increased aid from wealthier countries.”

These are modest demands. It is well within our ability -- and our self-interest -- to fulfill them.

National Catholic Reporter, March 29, 2002