Very broadly speaking, there are two schools of thought when it comes to foreign aid; the crusaders and the infidels. The crusaders hold that the United States and other economically advanced nations — the collective West — spend much too little helping poor nations overcome their poverty. The infidels maintain exactly the opposite; i.e., that the West spends too much. Which school has it right? Paradoxically, they both do.

The crusaders correctly argue that in comparison to the severity of the problems of poor nations, the United States and most other Western or ‘first world’ nations are not doing nearly enough. Moreover, relative to their own financial capacities, Western nations can clearly afford to spend more to address the problems afflicting impoverished nations. Only the Scandinavian countries invest more than 1% of their gross domestic products (GDP) in foreign aid. The United States, Japan, Germany and the other leading economic powers spend proportionaterly much less. The United States spends only 0.12% of GDP — one-eighth of one percent — in overseas aid. Japan and Germany spend more, but not much more; only about 0.4% of GDP — four-tenths of one percent. While conceding, perhaps reluctantly, the economic superiority of private sector investment, the crusaders point out that private investment rarely flows to the nations that need it most. Indeed, virtually all private sector investment takes place in first world nations or the newly industrialized countries of the Pacific Rim.

The ‘we spend too much’ infidels counter — also correctly — that aid has often amounted to economic advice and technical assistance that might have worked in the West, but which is grossly inappropriate for third world nations with limited indigenous resources, poor infrastructures or uneducated work forces. Other accurate infidel shibboleths are that decisions about foreign aid more frequently reflect political considerations in donor countries, rather than the real needs of recipient nations; that foreign aid is occasionally wasted on poorly conceived development projects like public housing and government buildings that the recipient nation abandons as soon as the aid stops flowing; and that foreign aid sometimes results in subsidies for well-connected entrepreneurs in the recipient country. As The Economist, among others, has observed, foreign aid too frequently has amounted to poor and middle class people in rich countries giving money to rich people in poor countries.[1] Ultimately, the infidels with good reason believe that the most effective form of foreign aid isn’t aid at all, but private sector investment and that private investments will naturally trickle down to the poorest-of-the-poor nations.

Both schools of thought agree that many parts of Africa (e.g., Rwanda, Somalia, Zaire); Europe (e.g., Bosnia, Chechnya); Asia (e.g., Bangladesh), and the Americas (e.g., Haiti) face daunting problems of extreme poverty, over-population, under-education, environmental degradation, disease, civil disorder, and crumbling public infrastructures. The very fact that these problems have persisted and in many respects actually worsened despite fifty (50) years of foreign aid by the West and the former Soviet Union is prima facie evidence to the infidels that spending more can not possibly be the right answer. Obviously, the crusaders interpret the same data differently. They see these problems as compelling proof that the United States and most economically advanced countries should sharply increase their foreign aid budgets.

The philosophical differences between the crusaders and infidels so far appear irreconcilable. Perhaps this is because both sides have considerable justification for their positions. Foreign aid is, indeed, often spent unproductively and third world nations do, indeed, need a financial helping hand. But since there is no philosophical common ground between the two camps, foreign aid policy discussions in Washington and other western capitals have tended to be either sterile or intemperately partisan.

Typically, debate has swirled around the question of whether a new foreign aid bureaucracy should be erected, or whether an existing one should be dismantled, streamlined or folded into the foreign ministry. Or around the question of whether the foreign aid budget should be straight-lined, increased infinitesimally, or reduced by a tiny fraction. These topics should not be dismissed as inconsequential; but they neither engage public, nor inform it. Indeed, debating topics like this allows Western governments to distract themselves from more fundamental and vexing matters, as well as from their responsibility to educate their respective publics about the problems that foreign aid both fixes and causes. That the public is not well versed on foreign aid is demonstrated by the fact that opinion polls, at least in the United States, have repeatedly shown that the public assumes that as much as 15% of the national budget is spent on foreign aid.[2] The actual figure is only 1%.

An informed citizenry might demand that policy makers stay focused on the big picture. On fundamental issues, rather than sideshows like re-organizing the foreign aid bureaucracy. One such fundamental issue is whether aid should be targeted at the poorest-of-the-poor nations in sub-Saharan Africa, or nations like Russia, Ukraine and the Philippines that have greater geostrategic and economic significance. Or, whether the economic and social conditions in some of the poorest-of-the-poor nations are too adverse for productive investment. As long as budgets are constrained, donor nations might be able maximize overall returns on their global foreign aid investments (thereby eventually improving the political standing and budget of the foreign aid program) by “redlining” nations in this sorry category from further economic development aid until conditions improve. Another fundamental policy issue is whether foreign aid should be bilateral and explicitly tied to the strategic interests of individual donor nations; or multilateral — pooled at the United Nations level and distributed according to an international game plan; or both bilateral and multilateral as is currently the case. Aid might even be pooled at the regional level for the Organization of African Unity or the Association of South East Asian Nations to distribute according to the regional-recipient priorities. A fourth fundamental issue involves the role of nongovernmental organizations (NGOs) in administering foreign aid. For example, what accountability is there when the U.S. Agency for International Development delivers foreign aid though international NGOs who in turn subcontract with NGOs based in the recipient nation or in a third party nation? How can U.S. taxpayer assure himself or herself that aid delivered under these conditions actually conforms to U.S. policy?

Taxpayers foot the bill for foreign aid and, therefore, have a right to demand that foreign aid expenditures reflect their priorities. Because the taxpayers in many Western nations are relatively uniformed about foreign aid, their priorities are unclear and conflicted. As a result, many national foreign aid policies have come to reflect short-term, split-the-difference compromises between crusaders and infidels in both the legislative and executive branches of government. What is lost is a shared national and international vision of foreign aid’s long range objectives and consequences. Governmental budget processes may exacerbate this problem by pitting contending factions — who are both right — against one another in zero sum games where every gain for the crusaders is perceived as a loss for the infidels and vice verse. This may be why crusaders reflexly attack proposed reforms as stalking horses for cuts in the foreign aid budget; and infidels instinctively reject calls for new foreign aid projects as misguided or profligate.

The debate over foreign aid needs to be invigorated and re-oriented towards the articulation of long-range objectives. The taxpaying public in the United States and other nations needs to be engaged and informed. But how?

One way might be to appoint a panel of internationally respected opinion leaders and elder statesmen — from both crusader and infidel camps — to review foreign aid programs and recommend new directions, funding levels, and funding mechanisms to each donor and recipient nation and to the United Nations. A main emphasis of the panel’s work would be to authoritatively assess the direct, indirect and inadvertent effects of foreign aid on recipient populations. The panel’s findings could then be reviewed by foreign aid organizations, think tanks, and academic institutions before being debated in the various national legislatures and media.

With respect to alternate funding mechanisms, the panel might give consideration, for example, to financing economic development assistance through a system of voluntary ‘check-offs’ by taxpayers as they pay their annual tax assessment. This would be similar to the U.S. system for funding Presidential election campaigns. The legislatures could set an overall ceiling (for example, at 0.7% of GNP which is the official UN target for donor agencies); but the amount that a nation would actually spend on economic development assistance would reflect the collective judgments of the taxpayer.

Appointing a senior panel or advisory commission is a time-honored approach to resolving contentious issues. Some may view it more as a time-honored method of avoiding decisions; but even when the intent was to defer action, the results were often positive as long as the panel’s work was credible and its members highly regarded. In the United States numerous advisory commissions have been appointed, for example to examine the role of women in the armed forces, to identify military bases that should be closed, and to formulate reforms in Social Security funding. In each of these cases the advisory commission helped to establish common ground between contending factions and to educate the public about the basic issues and alternative courses of action. This is precisely what is needed to elevate the public debate about foreign aid.

With respect to an advisory commission on foreign aid, the drawback is its timing. Panels need many months to conduct their reviews and formulate their reports. On the other hand, contentious issues like foreign aid usually can not be resolved without an extended period of discussion and deliberation anyway.

Notes

1.”Foreign Aid: The kindness of strangers”, The Economist, May 7, 1994, p. 19.

2. US Agency for International Development, Why Foreign Aid?, April 1992, p. 23.

Dr. Miskel is a Professor of National Security Affairs at the U.S. Naval War College in Newport, Rhode Island. His e-mail address is MiskelJ@usnwc.edu.

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