Foreign Aid
Has the debate on U.S. foreign aid shifted since September 11? Yes. Foreign aid has been unpopular in recent years, but experts say the global campaign against terrorism has reinforced the view among U.S. politicians and the public that economic and military aid to other countries is both a moral obligation and a useful foreign policy tool. After steady cutbacks in the 1990s, the United States is pledging to increase humanitarian and development aid abroad, as well as stepping up economic and military support to new strategic partners in the war on terrorism. But experts still disagree about how best to structure aid packages, and some worry about sending aid to new partners who are known to abuse human rights. Why does the United States give aid to poor countries? While President Bush has said that “poverty doesn’t cause terrorism,” many experts argue that poor countries with nondemocratic governments could become havens for terrorism. Moreover, the U.S. Agency for International Development maintains that “U.S. foreign assistance has always had the twofold purpose of furthering America’s foreign policy interests in expanding democracy and free markets while improving the lives of the citizens of the developing world.” But experts say that the U.S. government has given aid more often to reward political and military partners than to advance social or humanitarian causes abroad. How much aid does the United States give? Less than 1 percent of the U.S. budget goes to foreign aid. President Bush’s 2003 budget proposes about $11.4 billion in economic assistance and about $4.3 billion for peacekeeping operations and to finance, train, and educate foreign armed forces. How do U.S. aid levels compare with those of other countries? The U.S. foreign-aid budget as a percentage of gross national product (GNP) ranks last among the world’s wealthiest countries (at about 0.1 percent). In raw dollars, however, the United States is now the world’s top donor of economic aid, although for more than a decade it was second to Japan, which is far smaller and has been beset by economic woes. In 2001, the United States gave $10.9 billion, Japan $9.7 billion, Germany $4.9 billion, the United Kingdom $4.7 billion, and France $4.3 billion. As a percentage of GNP, however, the top donors were Denmark, Norway, the Netherlands, Luxembourg, and Sweden. The tiny Netherlands (pop. 5.3 million) gave $3.2 billion in 2001—almost a third of what America contributed. Do Americans understand how much of the U.S. budget goes to foreign aid? No. A 2001 poll sponsored by the University of Maryland showed that most Americans think the United States spends about 24 percent of its annual budget on foreign aid—more than 24 times the actual figure. Do Americans support increasing foreign aid? Yes. A University of Maryland poll, which was conducted in July 2002, indicated that 81 percent of Americans support increasing foreign-aid spending to fight terrorism. According to the poll’s findings, the typical American would like to spend $1 on foreign aid for every $3 spent on defense; the real ratio in the proposed budget for fiscal year 2003 is $1 on aid for every $19 spent on defense. Did America used to give more aid? Yes. During the Cold War, Washington considered foreign aid a critical tool for containing communism. Under the Reagan administration, for instance, U.S. economic and military aid reached $27 billion per year—almost three times the current level. But with the end of the Soviet threat and growing congressional misgivings about foreign aid, U.S. spending dropped dramatically. Skeptics argue that giving aid often means squandering taxpayers’ hard-earned dollars on inefficient programs or corrupt regimes. Some experts also say that other countries should shoulder the foreign-aid burden since U.S. spending on defense during and after the Cold War has protected its allies. How is U.S. aid administered? The United States gives assistance directly to states through grants and loans and indirectly through funding to international organizations such as the United Nations, the World Bank, and the International Monetary Fund (IMF). The Bush administration has given more preference to grants than to loans, arguing that giving loans to poor states that can’t repay them simply drives them deeper into debt. Which countries receive the most aid? The top recipient is Israel, which gets about $2.1 billion per year in military aid—used mostly to purchase U.S.-made weapons—and $600 million per year in economic support. The second-largest recipient, Egypt, annually gets around $1.3 billion in military aid and about $615 million for social programs. (In August 2002, the Bush administration said Egypt’s human rights record was so poor that Washington couldn’t support Egyptian requests for additional aid—the first time the United States had linked Egypt’s aid package to its human rights practices.) The embattled government of Colombia, the third-largest beneficiary, gets around $540 million per year to help battle the drug trade and crack down on local terrorist groups. Jordan, a leading U.S. friend in the Arab world, is slated to get about $250 million in economic support and $198 million in military financing in FY 2003—a sharp increase from 2002, due to its increasingly pivotal role in the Middle East. Peru, Ukraine, and Russia each receive about $200 million annually in economic and military aid. Is the U.S. government giving more aid to Afghanistan and its neighbors? Yes. Since September 11, the United States has increased relief and development aid to several states in the region to help them absorb the economic shocks of war and reward them for providing logistical support in the U.S.-led war on terrorism. Yes. Since September 11, the United States has increased relief and development aid to several states in the region to help them absorb the economic shocks of war and reward them for providing logistical support in the U.S.-led war on terrorism. - Pakistan, which became a key ally in the war in Afghanistan, will get $200 million in economic aid and $50 million in military support. (In the fall of 2001, the United States lifted a ban on aid to Pakistan imposed when General Pervez Musharraf seized power in a 1999 coup.) The United States also arranged for the World Bank and the IMF to forgive about $1 billion in loans to Pakistan.
- Turkey, which has provided military support and helped track terrorist financial networks, will receive $17.5 million in military aid. Previously, it had not been receiving any military aid.
- Central Asian states that have provided air bases for U.S. operations will also receive military aid: Uzbekistan will get $43 million, and Kyrgyzstan will get $4 million.
- Postwar Afghanistan, which is struggling to recover after years of Taliban rule and the U.S.-led war that toppled the Taliban, has already received almost $450 million in humanitarian and reconstruction aid and will also get $140 million in economic and military assistance.
Is the United States increasing aid to weak states that could become havens for terrorism? In some cases, yes. In recent years, the United States has shied away from supporting struggling states, due to disinterest, the lack of a strategic plan, and because aid can sometimes disappear into the personal coffers of corrupt dictators. However, in March 2002, President Bush surprised foreign-aid supporters by pledging to increase U.S. assistance by 50 percent over the next three years—the biggest rise in 45 years, resulting in a $15-billion increase by 2006. Some traditionally antiaid Republicans in Congress are also supporting an increase in foreign assistance; North Carolina Senator Jesse Helms credits Bono, the lead singer of the rock band U2 and a longtime aid advocate, with his conversion. The Bush administration has also changed its aid policy for some states where terrorist networks are known to operate, such as Colombia, Indonesia, the Philippines, and Yemen. In July 2002, Congress approved a proposal to let Colombia use some of its U.S. antidrug aid for counterterrorism. Indonesia and the Philippines will each receive more than $50 million in funding to combat terrorism, and Yemen will receive $10 million in U.S. economic support (up from $5 million in the previous year), as well as a new $2-million grant for training and equipment to stop infiltration by terrorist groups linked to al-Qaeda. Could providing more foreign aid help reduce global terrorism? It’s hard to say. The precise cause-and-effect relationship between terrorism and poverty is unclear. Some experts say that since the small amount of foreign aid available has not profoundly reduced world poverty, its impact on terrorism might also be minimal. Others argue, however, that a well-focused, sustained foreign-aid program that encourages employment, institutional development, public security, and education could help poor states get on their feet—and thereby reduce their risk of becoming havens for terrorism. Some experts say that U.S. generosity might also reduce the anti-Americanism in the Arab and Muslim world that al-Qaeda and other terrorist groups often exploit. Does U.S. aid play a role in Middle East peacemaking? Yes. The two largest recipients of American aid, Israel and Egypt, got their assistance packages as rewards for concluding the first Arab-Israeli peace treaty in 1979. U.S. aid to Israel and its neighbors has provided incentives for taking often risky moves toward peace. While Yasir Arafat’s Palestinian Authority—which the Bush administration says is tainted by ties to terrorism—doesn’t receive any direct assistance from the United States, Palestinians benefit from $70 million a year in U.S. aid through U.N. refugee assistance programs, as well as about $75 million administered to water, housing, employment, and democracy programs. Copyright ©2003 Council on Foreign Relations.
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