Katherine A S Sibley. Encyclopedia of American Foreign Policy. Editor: Richard Dean Burns, et al., 2nd Edition, Volume 2, Charles Scribner’s Sons, 2002.
The United States government first recognized the usefulness of foreign aid as a tool of diplomacy in World War II. Such a program, policymakers believed, would fulfill three goals: it would furnish humanitarian assistance to needy peoples, it would promote liberal capitalist models of development in other countries, and it would enhance national security. The U.S. commitment to foreign aid since has amounted to well over $1 trillion in current dollars—not counting hundreds of billions more donated through the International Monetary Fund, World Bank, and other multilateral agencies. Always a controversial program, foreign assistance drew its broadest support in the early Cold War era. At that time, the effort to undermine communism permeated all other aid considerations, including the plight of the poor, the expansion of democracy abroad, and U.S. economic goals that might be served by foreign assistance, such as stimulating private investment and opening up markets to American products. All of these objectives, however, generated wide support from members of Congress, ranging from those whose chief focus was U.S. security to those who were most interested in developing the Third World.
In the Vietnam era, however, the consensus of support began to unravel. Like the war itself, foreign aid programs were variously attacked as imperialistic, paternalistic, harmful, wasteful, or just plain useless. (Indeed, these imperialistic attributes of aid had contributed to the United States’s own birth—without the assistance of the empires of France and Spain, the nascent republic would hardly have survived.) Although American foreign aid has changed its emphasis frequently since the Vietnam era in response to such criticisms, the flow has never stopped and has continued to generate calumny from all sides of the political spectrum. Notwithstanding these attacks, foreign aid has undoubtedly racked up some solid achievements. Third World residents have experienced great advances in their standard of living since the 1960s. The eradication of smallpox, the halving of poverty, the doubling of literacy from 35 to 70 percent, and the sharp rise in life expectancy from forty-one to sixty-three years, are evidence of this. Unfortunately, such improvements have not headed off a broadening economic gap between the rich and poor nations. For instance, Africa’s average annual income in adjusted dollars in the 1990s was about the same as it had been in the 1960s, approximately a dollar a day. There, too, the AIDS epidemic has proved as devastating as smallpox. The great ambitions of President John F. Kennedy for foreign aid (see sidebar) were not met in the 1960s “decade of development,” nor have they been realized since.
During the Cold War era, bilateral assistance (on a government-to-government level, including that channeled via nongovernmental organizations) broke down in unadjusted dollars to $139 billion in military and economic assistance to the Middle East and South Asia, $70 billion to East Asia, $48 billion to Europe, $29 billion to Latin America, and $23 billion to Africa. In the 1990s, both the demise of the Soviet Union, whose influence U.S. foreign aid was long designed to check, as well as the spectacular economic growth of such former aid recipients as South Korea, led the United States to adopt new targets. Indeed, as Secretary of State Madeleine Albright declared in 1999, “traditional notions of ‘foreign aid’ have become virtually obsolete.” The 1997 State Department strategic plan outlined the following goals for foreign aid: creating “institutions that support democracy, free enterprise, the rule of law and a strengthened civil society”; providing humanitarian aid; and “protecting the United States from such specific global threats as unchecked population growth, disease, the loss of biodiversity, global warming, and narcotics trafficking.” At the turn of the twenty-first century, U.S. funds were defending peace in Kosovo, East Timor, and the Middle East, dismantling Soviet nuclear weapons, disarming drug dealers in Central America, democratizing Nigeria, and developing the armies of America’s erstwhile enemies, the former socialist countries. Yet, as Albright herself acknowledged in 2000, the programs continued to support very traditional aims, such as “promoting U.S. exports, spurring overseas development and helping other countries to achieve viable market economies”—in other words, expanding the adoption of liberal capitalist norms of development. While recipient countries have certainly changed, the United States continued to spend about the same amount as it had at the end of the Cold War, utilizing Cold War foreign aid instruments like the Foreign Assistance Act and the Agency for International Development. According to the State Department, in 2000 the United States spent $16.5 billion on foreign operations, ranging from the Peace Corps ($244 million) to the foreign Military Training Program ($4.8 billion).
The Origins of Foreign Aid
Prior to World War II, U.S. government-to-government assistance and loans were extremely rare and limited to emergency situations. The impulse to spend money to spread goodwill and influence abroad was not absent, of course: in the nineteenth century, private individuals supported such causes as Greek independence in the 1820s and victims of the Irish famine in the 1840s; later, major corporations set up international philanthropic arms like the Rockefeller Foundation. During and after World War I, the U.S. government became directly involved in disaster relief, assisting German-occupied Belgium and sending $20 million to Russian famine victims in 1921. Subsequently, enormous U.S. lending helped rebuild Germany and other countries, alongside the efforts of American religious organizations like the American Friends Service Committee and the Young Men’s Christian Association. The U.S. loans stopped, however, in the Great Depression and were never repaid. Campaigning in 1932, Franklin D. Roosevelt promised that the United States would sanction no more such foreign investments.
But military aid continued to flow throughout the interwar years to pro-U.S. regimes in neighboring countries, including Cuba, Mexico, and Nicaragua. During World War II, moreover, the State Department’s Coordinator for Inter-American Affairs, Nelson Rockefeller, set up the Institute of Inter-American Affairs, which furnished food and sanitation assistance as a counterweight to Nazi influence in Latin America. In the late 1930s, President Roosevelt developed a Western Hemisphere Defense Program to further U.S. influence in the region with greater trade and cultural ties, as well as military aid. Like the subsequent $50 billion lend-lease program for Europe and Asia, which included the first major U.S. effort to export arms outside Latin America, these initiatives were all defense measures. They were supplemented by other programs, such as the $6.1 billion that the United States contributed to the Government and Relief in Occupied Areas program from 1943 to 1951, as well as the $2.6 billion it furnished the United Nations Relief and Rehabilitation Administration from 1943 to 1947. In the immediate aftermath of the war, the United States also sent military surplus items to France, Britain, Nationalist China, and the Philippines, where it maintained bases following independence in 1946. Such assistance remained ad hoc, since Congress as yet resisted an expansion of U.S. military aid. “We should not be sending military missions all over the world to teach people how to fight in American ways,” said the Republican senator Robert Taft of Ohio.
Also during World War II, the Bretton Woods Conference led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank), two key instruments of economic relief and reconstruction that were aimed at ending the kinds of economic nationalism that many felt had led to the Great Depression and the war. The IMF established the dollar as the international currency, facilitated international trade, and made loans to governments to fix trade imbalances; the World Bank ensured that foreign investment in developing areas would be less risky by extending loans for reconstruction and development projects, and promoting investment and international trade. The United States dominated both organizations, in 1945 holding one-third of the votes in each and supplying one-third of the financing of the bank, or $3 billion. At century’s end, the United States still supplied one-fifth of all IMF funds, and these institutions and their policies continued to generate controversy. In September 2000, at World Bank-IMF meetings in Prague, the debts owed by Third World governments sparked riots as thousands of protesters, dissatisfied with the agencies’ debt relief policies and the pace of economic globalization, threw Molotov cocktails and rocks at police and at such bastions of global capitalism as a McDonald’s restaurant, cutting short the meetings.
The Cold War Foreign Aid Program, 1947-1953
The postwar commitment of the United States to foreign aid stemmed from its vast aid role in World War II but also involved a number of new considerations. Initially, American foreign aid programs in the early Cold War demonstrated the nation’s assumption of the economic and political role previously played by Great Britain, as exemplified by the Truman Doctrine and its support to such former British clients as Greece and Turkey. The United States also used foreign aid to promote free-market standards for development, including the integration of West European economies and the curtailing of economic protectionism, through such instruments as the Marshall Plan. These programs, and especially the Marshall Plan, would greatly benefit the U.S. economy by generating orders at home. Finally, and most importantly, these efforts were designed to prevent the spread of international communism. By early 1946, U.S. policymakers were becoming increasingly convinced that the Soviet Union had embarked upon a path toward world domination. The following year, the State Department official George F. Kennan called for “longterm, patient but firm and vigilant containment of Russian expansive tendencies,” and the United States adopted containment as its doctrine for dealing with the Soviet Union.
It was Soviet pressure in the Mediterranean that led the United States to announce the Truman Doctrine in March 1947, thereby launching its Cold War foreign aid program in earnest. Extending an unprecedented peacetime aid amount of $650 million, the doctrine proclaimed that “it must be the policy of the U.S. to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” It was the first time that the United States had put cold cash as well as warm bodies, in the form of technical advisers, behind the containment policy. In a joint session of Congress, Truman declared that totalitarian regimes “spread and grow in the evil soil of poverty and strife,” and thus, U.S. help—the only help available, he declared—was necessary to stop the spread of communism.
Less than three months later, the United States proposed the Marshall Plan, or European Recovery Program, in response to the postwar economic crisis in western Europe that many U.S. officials felt would only make it easier for communist parties to take hold there. Secretary of State George C. Marshall, outlining the aid plan in an address at Harvard University on 5 June 1947, stated that the United States “should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace.” If not for American aid, the Truman administration contended, no parliamentary regime in western Europe would survive and U.S. security would therefore be threatened. The Marshall Plan provided a $12 billion package to sixteen countries in western Europe that not only rebuilt the economies of its recipients but also instituted liberal economic practices such as lower tariffs and instruments to coordinate economic policies.
U.S. officials envisioned that foreign aid, by establishing beneficiaries’ internal political stability, promoting their general economic development, and building military strength, was the best way to counteract Soviet expansion. As the program grew during the Cold War, aid recipients fell into two categories: forward defense countries bordering the communist bloc as well as those located in other strategic areas like South Asia and the Middle East, and the less strategically placed countries. In the forward defense countries, but also in sensitive areas like Latin America, aid was often designed to support existing, pro-American governments, through arms and personnel as well as through economic aid to mitigate internal discontent. It was hoped that aid would prevent these countries from falling into the Soviet orbit, which as a result often put the United States on the side of reactionary domestic forces, as was the case in Vietnam, Iran, and Cuba.
Economic assistance programs faced resistance in a tight-fisted Republican postwar Congress, but Cold War threats helped squelch such recalcitrance. Foreign aid quickly expanded to include the economic stabilization of non-European areas, as well as a new emphasis on military assistance. For example, the United States gave limited aid to such nations as South Korea, the Philippines, and Iran. Its biggest expenditure outside of Europe was the $2.5 billion in military and economic aid to the Nationalists in China, aid that continued even after Chiang Kai-shek’s government had proved itself utterly beyond help. Then, at his inauguration in January 1949, Truman put forward a pioneering foreign aid proposal that included (1) support for the United Nations; (2) U.S. programs for world economic recovery; (3) support for “freedom-loving countries against aggression”; and 4) “a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of undeveloped areas.” In the wake of China’s “fall” to communism, and the Soviet atomic blast, the military threat of Soviet expansion appeared grave, and Truman’s third point, to assist “freedom-loving countries,” was quickly put into effect. In October 1949, two months after the United States had officially joined NATO, the Truman administration created a Military Assistance Program under the auspices of the Mutual Defense Assistance Act, with a budget of $1.3 billion. Expenditures continued to rise, and in its first three years, as Chester Pach has noted, the program extended $8 billion in military aid to western Europe, largely with the aim of enhancing “the psychological attitudes and morale of our allies.” Despite controversies that have dogged military assistance ever since—for instance, that it was an unwieldy program with “no organized, careful thought about what it was that we were trying to do,” as Secretary of State Dean Acheson aptly put it—the program continued to grow. U.S. officials reckoned that if military aid were not continued in ever larger amounts, demoralization would set in, weakening western Europe’s military position still further.
Point Four, which the inaugural address is best remembered for, was the basis for the Agency for International Development (AID), a $35 million program that provided technical assistance to the Third World. The Point Four program, according to a State Department official, sought “to strengthen and generalize peace … by counteracting the economic conditions that predispose to social and political instability and to war.” Europe, now recovering with Marshall Plan aid, would no longer be the major recipient of American economic assistance. Despite Europe’s continuing importance, as Acheson told Congress in 1950, “economic development of underdeveloped areas” had become a national concern, since “our military and economic security is vitally dependent on the economic security of other peoples.” The process of decolonization had made these countries a key battleground in the Cold War, with both Russia and America vying for influence over the newly formed nation-states of Asia and Africa. (Another undeveloped area, Latin America, received less attention in the 1950s.) The UN and the World Bank also shifted their focus from reconstruction of war-torn Europe to the problems of the Third World at this time. The Third World’s stash of raw materials further heightened its importance. In 1952 the President’s Materials Policy Commission recommended that the United States look to the countries of Africa, the Middle East, southern and southeastern Asia, and Latin America for imports of minerals and tied aid programs to this end in the 1950s.
Truman’s initiatives were incorporated into the Mutual Security Act (MSA) of 1951, which succeeded the Marshall Plan and offered a new program of economic and, especially, military aid both for Europe and the developing world. In its first year, for example, the act extended to Europe a combined military and economic package of $1.02 billion; in 1952, as the Korean War ground on, it included $202 million in military support to Formosa (Taiwan) and Indochina. In the wake of National Security Council document NSC 68 of 1950, which had called for large-scale military aid along with an enormous defense buildup, security-related assistance would become a hallmark of the Eisenhower era (1953-1961). Thus, while military assistance had been a little more than a third of the $28 billion in aid that the United States had extended during the Marshall Plan era (1949-1952), during the succeeding eight years, it was almost 50 percent of a larger, $43 billion total. Meanwhile, technical assistance under Point Four went to such countries as Liberia, Ethiopia, Eritrea (where the United States had a large surveillance post), Libya, Egypt, Saudi Arabia, Lebanon, Iraq, Israel, and Iran. Latin America was largely left out of Point Four until the end of the 1950s, although certain countries in which the United States countered perceived communist threats received significant security assistance.
The Eisenhower Administration and Expansion of Foreign Aid
Senator Tom Connally, chairman of the Senate Foreign Relations Committee, demonstrated the popular sentiment toward foreign aid when he declared in 1951, “We can’t go on supporting countries all over the world with handouts just because we like them—or any other reason.” Indeed, many members of Congress in this era were reluctant to vote public funds for development purposes, because they believed that such funds should not replace private investment. Beginning with the Marshall Plan, aid had been traditionally aimed at stimulating private investment through trade liberalization and by making improvements in the global economic climate. In fact, in his first State of the Union message, President Dwight D. Eisenhower unabashedly proclaimed that the explicit purpose of American foreign policy was the encouragement of a hospitable environment for private American investment capital abroad. He called for trade, not aid. Such hard-headed motives did not preclude a significant expansion of U.S. economic aid in the Eisenhower administration, however, as confirmed by a significant augmentation of U.S. Export-Import Bank loans and an increase in soft loans in 1954. Cold War pressures as well as the lobbying efforts of individual countries helped further this trend, and the Mutual Security Act of 1954, the first single piece of legislation to embrace the entire foreign assistance program, became the instrument for this new policy. The United States also launched the Agricultural Trade Development and Assistance Act in 1954, commonly called the Food for Peace program, which was still thriving a half century later. This program initially authorized $350 million in food surplus shipments, payable in local currency. Known as Public Law 480, it was the product of some heavy lobbying by Senator Hubert Humphrey, a Democrat who hailed from the farmfilled state of Minnesota. Designed to “increase the consumption of United States agricultural commodities in foreign countries, to improve the foreign relations of the United States and for other purposes,” Public Law 480 would authorize $3 billion in sales by 1956 and become an important element in the foreign aid program, while helping to lower U.S. food surpluses. The foodstuffs served as a development subsidy, enabling recipient countries to sell them on the domestic market and then use the proceeds for development projects. Unfortunately, food aid significantly damaged Third World producers, including many Indian farmers, pushing India close to famine in the 1950s and 1960s.
In addition to providing food, foreign aid was also an important weapon of anticommunist intervention during the mid-1950s. After the United States brought down Iran’s nationalist, anti-American prime minister, Mohammad Mossadegh, in 1953, replacing him with Shah Mohammad Reza Pahlavi, it gave that country $85 million in foreign aid, and the shah’s army was soon among the best-equipped in the Middle East. Eisenhower and Secretary of State John Foster Dulles also used foreign aid to gain friendship and allies in Latin America. In 1954, the United States intervened in Guatemala to overturn the regime of Jacobo Arbenz Guzmán and assist in the military coup of Carlos Castillo Armas. Guzmán, according to U.S. Ambassador John Peurifoy, “talked like a communist, he thought like a communist, and he acted like a communist, and if he is not one, he will do until one comes along.” American aid to Guatemala, which had amounted to just $600,000 over the preceding ten years, rose to $130 million in the six years following Castillo Armas’s coup. One of Guatemalan aid’s most vigorous supporters was Vice President Richard Nixon, who touted construction of the country’s Inter-American Highway as promoting everything from trade to security. Guatemala thus became a “testing ground” in the Eisenhower administration’s newly expanded foreign aid program.
At the same time, however, U.S. officials grew increasingly uncomfortable with another Latin American client, Cuban leader Fulgencio Batista, who used American military aid meant for “hemispheric defense” against his own people in the late 1950s. Washington welcomed his departure and, initially, the ascendance of Fidel Castro. Soon, however, American military aid, training, and scuba suits would be furnished to the Cuban foes of the Soviet-leaning Castro, though to little effect. In 1957, the State Department’s International Cooperation Administration set up a Development Loan Fund chiefly to assist India, which faced a serious foreign exchange crisis. This program represented the first significant use of subsidized (or soft) loans, which by the end of the decade would become the most important tool employed in U.S. foreign aid programs, replacing development assistance. By 1961, the World Bank had also set up a soft loan agency, the International Development Association. U.S. and World Bank lending to India helped the government build fertilizer plants, power plants, highways, railroad locomotives, and airplanes. In the process, however, it strengthened India’s national economic planning apparatus, as Shyam Kamath noted in a 1994 article, and “facilitated the growth of the public sector at the expense of the private sector.” Thus, though the United States professed that its aid and technical assistance was aimed at creating a better environment for investment and a more liberal economy, as the Indian example shows it often assisted instead in the entrenchment of heavy-handed central planning agencies in the Third World.
As the loans to India demonstrated, the less-developed countries continued to be a vital battleground for U.S.-Soviet competition. In January 1957, in response to the deepening of relations between Egyptian leader Gamal Abdul Nasser and Soviet premier Nikita Khrushchev, the Eisenhower Doctrine pledged U.S. support to any nation in the Middle East that wanted help “resisting armed attack from any country controlled by international communism,” and Congress approved a $200 million economic and military aid program for the defense of this region. Then, as 1960 ushered in the “development decade” (see sidebar), Washington finally recognized its largely neglected neighbors at the Conference of the Organization of American States in Bogotá, pledging $500 million for the Inter-American Fund for Social Development. This fund included a bank to furnish improved sanitation, housing, and technical training, in order to enable “the individual citizen of Latin America to live a better life and to provide him the fullest opportunity to improve his status.” At the Punta del Este Conference the following year, the Kennedy administration would launch the Alliance for Progress. This program, funded largely by the United States, had as its goal the modernization of Latin America through reform of its political and economic structures, and the injection of capital and technical assistance.
The Peak of Prestige: Foreign Aid Under Kennedy
Upon entering office in 1961, President John F. Kennedy very much hoped to burnish the image of American foreign assistance, which had been skewered in such recent books as Eugene Burdick and William J. Lederer’s best-selling The Ugly American (1958), a novel about an ignorant, insular set of foreign service officers-at-large in Southeast Asia, hopelessly losing the battle to communism owing to their maladroit application of foreign aid. Kennedy saw the Peace Corps as one way to revamp this impression of America abroad. The notion of volunteers living alongside those they sought to help was a far cry from The Ugly American‘s out of touch bureaucrats and was particularly appealing in an era that came to represent the “high-water mark of idealism concerning what overseas aid could achieve,” as Paul Mosley wrote. Kennedy established the agency by executive order less than six weeks after he took office.
While The Ugly American no doubt had a salubrious influence on him, perhaps the president should have paid closer attention to a far more chilling and penetrating critique of American foreign intervention in this era, Graham Greene’s The Quiet American (1955). In this novel, an arrogant, clean-cut young American character, Alden Pyle, idealistically destroys innocent lives in order to save the Vietnamese from communism, eerily foreshadowing the U.S. role in that country that Kennedy helped propel in the early 1960s, in part through foreign aid.
In September 1961, Congress enacted the Foreign Assistance Act (FAA), still the governing charter for U.S. foreign aid. Like the MSA earlier, the FAA attempted to systematize all existing foreign aid programs and included a Development Loan Fund, which would assist with large projects, as well as a Development Grant Fund for technical development. In addition, the FAA provided a “supporting assistance” program (later called the Economic Support Fund) to promote economic and political stability and launched a program to protect American business abroad, the antecedent of the Overseas Private Investment Corporation.
Later that fall, the Agency for International Development (USAID) opened for business, coordinating U.S. assistance programs under the aegis of the State Department. As this flurry of activity shows, Kennedy was a great promoter of foreign aid, which he envisioned as part of his goal to “pay any price, bear any burden” to assist the free world. The fundamental task of our foreign aid program in the 1960s, he said idealistically, “is not negatively to fight Communism … it is to make a historical demonstration that in the twentieth century, as in the nineteenth … economic growth and political democracy can develop hand in hand.” As Michael Hunt notes skeptically, Kennedy and other foreign aid advocates were convinced that “thanks to American wisdom and generosity and to the marvels of social engineering, the peoples of these new nations would accomplish in years what it had taken the advanced countries decades to achieve.”
Despite Kennedy’s words, fighting communism remained a priority. By its very dynamic, as he recognized, the modernization process that was necessary for economic growth could also unleash unpredictable forces, including mass unrest. This was just the sort of milieu that communists might exploit through sponsorship of internal insurrection, “the so-called war of liberation,” as Kennedy put it in a June 1961 speech. An American military response alone would be ineffective in combating such uprisings; aid, too, was necessary, as it would “help prevent the social injustice and economic chaos upon which subversion and revolt feed.” Foreign assistance and American counterinsurgency expertise, it was believed, would steer countries through these difficult transitions without their resorting to revolutionary, communist regimes.
As USAID administrator Fowler Hamilton put it plainly to Congress in budget hearings in 1962, “The communists are active. The total commitments they are putting out now run on the order of $1.2 billion to $1.3 billion a year.” Fortunately, “the free world” was more than holding its own, supplying the Third World with $8 billion in both aid and private investment. “I think that we have the resources and the good sense to prevail,” said Fowler, mindful of his budgetary ambitions.
Yet Representative Marguerite Stitt Church of Illinois raised one of foreign aid’s most vexing questions during Fowler’s testimony. While agreeing with the importance of defending “the cause of human freedom, as exemplified by the ideals of this country,” she also worried that the emphasis still placed on major huge projects “would not reach the lives of the ‘little people’ whom we must touch.” A similar plea was made at the time by the foreign aid analyst John D. Montgomery in The Politics of Foreign Aid, who argued that the United States was too willing to overlook the undesirable aspects of certain recipient regimes, giving the United States the reputation of being “divorced … from the social progress” of the people in these countries.
As such observations revealed, even in the heyday of foreign aid the program faced sharp criticism. Representative J. L. Pilcher asserted that despite over $1 billion already spent in Vietnam, leader Ngo Dinh Diem’s lack of popular support would mean that the country would be “in the hands of the communists” within twenty-four hours of the departure of U.S. troops—not such an inaccurate prediction, as it turned out. “Where is all our economic aid going to help stop communism in that country?” he wondered. It was an unanswerable question, and the spending continued.
Indeed, U.S. representatives in the newly decolonizing countries quickly learned that aid would get them improved access to government officials, and by 1963, there were twenty-nine aid programs operating in Africa. Some members of Congress, however, remained dubious about the expansion of foreign aid, and, for that reason, Kennedy asked a prominent detractor of foreign assistance, General Lucius Clay, to look into the matter—the confident Kennedy certain that even the critic Clay would be convinced of the program’s value once he looked into it. However, Clay’s committee’s findings showed that “these new countries value their independence and do not want to acquire a new master in place of the old one … there is a feeling that we are trying to do too much for too many too soon … and that no end of foreign aid is either in sight or in mind.” Clay’s verdict as to the indeterminate nature of this program was certainly borne out. And despite Kennedy’s fervent conviction of the effectiveness of foreign aid, programs like the Peace Corps and the Alliance for Progress were hard-pressed to meet the social and economic challenges they confronted in the Third World.
Kennedy’s idealism, too, could not alter the fact that throughout the 1960s, foreign aid programs were conceived with increasingly close attention to U.S. security interests. Foreign assistance remained largely focused on keeping the Third World from turning to communism, and included support to strengthen resistance to internal communist movements as well as to meet the external Soviet threat. Funds for infrastructural improvements and education were a favorite vehicle for these objectives. Secretary of Defense Robert McNamara, demonstrating the close link Washington envisioned between aid and U.S. predominance in the Cold War, declared in 1964 that “the foreign aid program … and the military assistance program [have] now become the most critical element[s] of our overall national security effort.” Making the connection even more precise, President Lyndon B. Johnson added that the foreign aid program was “the best weapon we have to ensure that our own men in uniform need not go into combat.”
Actually, foreign aid went right into war alongside the soldiers in Vietnam, as part and parcel of the large U.S. pacification program in the southern half of that country. Vietnam drew the fervent involvement of USAID, which, as Nicholas Eberstadt has pointed out, made that country the donor for nearly half of its development grants by 1966. Much of this went to fund the ill-fated strategic hamlet program and other disastrous measures, which, while feeding the dislocated South Vietnamese, gutted their economic foundations and thus worked exactly against the traditional objectives of foreign aid. But at the same time, the United States also showed its sensitivity to indigenous economic conditions by hosting the Tidewater conference in Easton, Maryland, where representatives of seventeen nations mobilized in 1968 in response to the threat of famine in India. Their work led to the “green revolution,” a movement that brought innovations to agricultural cultivation in the Third World to produce more staple foods and prevent famine.
Foreign Aid in Crisis: The Vietnam Effect and “New Directions”
Despite such successes, disillusionment arising from the deepening commitment in Southeast Asia led many Americans across the political spectrum to disparage foreign aid, and for the first time such criticisms were heard at the highest levels of the U.S. government. For much of the post-World War II period, the policymaking establishment held foreign assistance as sacrosanct in American politics and diplomacy and often oversold its virtues to a skeptical public and Congress. Democratic and Republican administrations outbid each other in extending aid programs; liberal and conservative members of Congress joined in bipartisan voting on aid appropriations, even as individual members grumbled; and labor, management, religious, and educational groups all voiced approval of foreign aid. Yet the interventionist consensus articulated in the Truman Doctrine and Point Four, and widely supported for two decades, foundered in Vietnam. Arguments that for twenty years had given the greatest urgency and immediacy to the cause of foreign aid—including the threat of communism, the need for continued access to vital raw materials, the economic benefits to be gained through increased trade, and the political dividends to be reaped in terms of peace and democracy—lost much of their force, at least temporarily. At the deepest point in U.S. involvement in the Third World, many Americans began to question the rationale for any involvement.
Thus, by 1970, Washington had dropped its commitment in Africa to ten countries, and in 1971 and 1972 the Senate refused to fund foreign assistance at all, although a year-end catchall resolution covered the budgets. Antiwar legislators joined members of Congress who opposed government waste in tightening the reins on USAID, as the agency became subject to heightened congressional oversight that gave legislators veto power over even the smallest items. Despite considerable public and congressional debate over the objectives and techniques of foreign aid programs—particularly from conservatives in both parties who objected to what Representative Otto Passman called “the greatest give-away in history”—Congress decided to keep foreign aid in the 1970s, although revising its aims significantly.
Meanwhile, Third World nations were also becoming increasingly critical of the existing system of aid distribution. Rejecting reform proposals of the foreign aid establishment such as those contained in the Rockefeller Report (1969), which urged the United States to widen its use of private investment, skills, and other initiatives, these nonaligned nations proposed a new international economic order, which Jeremy Brecher and Tim Costello note called for “the regulation of global market forces in the interest of the development process” through a program of subsidies and other supports for exports. Critics of the proposal like Nicholas Eberstadt, however, claimed that it was simply an attempt to “disassembl[e] the liberal international economic order … augmenting instead the capacity of states and the authority of their leaders to plan their local economies” at Western expense.
In the self-critical angst that characterized the late Vietnam era, the United States was only too willing to shed its old shibboleths about capitalism’s virtues. Under the U.S. Foreign Assistance Act of 1973 and the Mutual Development and Cooperation Act, also passed that year, the liberal capitalist model for Third World progress and its associated large-scale development projects came under withering criticism. The mantra of the 1973 reforms, known as “New Directions,” became the goal of meeting “basic human needs.” USAID focused on programs that assisted in the provision of food, medicine, and housing, especially in rural areas, rather than more grandiose infrastructure projects. The act’s categories of assistance grants and development loans were replaced with “functional categories aimed at specific problems such as agriculture, family planning, and education,” an organizational structure that has largely remained. The new program in some ways resembled the technical assistance efforts of the early 1950s, but in keeping with the move away from liberal capitalist tenets, the U.S. effort emphasized instead top-down government “development planning” as the best tool to foster Third World growth. Unfortunately, this was often “planning without facts”—especially when Texas-style cattle raising proved untenable in sub-Saharan Africa. The World Bank, meanwhile, participated in a $2.4 billion investment in African agriculture in the 1970s, largely for vast state farms and irrigation programs, with dismal results. In a 1994 article, James Bovard attributed these failures to inappropriate technology as well as “soil unsuitability.” By the 1980s, food output in Africa had fallen 20 percent from twenty years earlier. Governments’ zeal for complex technologies in place of simple and workable changes, coupled with widespread political corruption, was largely responsible for the disasters in Africa.
In the 1970s, the United States increasingly turned to the World Bank and similar agencies as a favored instrument for dispensing aid, a process called multilateralization. Ostensibly, multilateral aid diluted the pressure that bilateral aid placed on recipient countries, although these agencies’ funds came with their own chafing leash. During Robert McNamara’s tenure at the bank (1970-1981), its lending rate increased thirteen times, from $883 million to $12 billion. This aid was not always helpful to the people of the Third World. In his article, Bovard quotes a former executive director of the International Monetary Fund, who charged that such “unseemly” lending only ratcheted up Third World politicians’ control over their own people, assisting the repressive collectivization programs of such leaders as Julius Nyerere of Tanzania in the early 1970s and the brutal social engineering of the Vietnamese government later in that decade.
The Carter and Reagan Administrations: From Human Rights to Market Reforms
When President Jimmy Carter entered office in 1977, he made human rights an important priority in U.S. foreign policy, and this focus led him to cut back on aid to such brutal regimes as that of Ethiopia’s Mengistu Haile-Mariam. Military aid, however, continued to the Somalian enemies of the now Soviet-backed Mengistu; by 1980, 75 percent of total African aid was going to the Horn of Africa, reflecting Cold War priorities. Carter’s human rights campaign helped reform oppressive governments in Brazil and Argentina, but elsewhere, such as in El Salvador, South Korea, and China, Carter’s message was more inconsistently applied, with security interests outweighing human rights concerns. Most egregious, perhaps, was his approach to Iran, where Carter, despite strong congressional criticism, sold the shah of Iran sophisticated AWACS radar systems. American support for the shah helped lead to the revolution of Ayatollah Khomeini. At the same time, Carter administration officials sought to deflect criticisms that USAID was a U.S. foreign policy “tool,” and they removed it from the State Department, placing it under the new International Development Cooperation Agency (IDCA). USAID remained closely connected with the State Department, however, and foreign aid continued to serve America’s state interests. (The IDCA was closed down in 1998.) Carter also continued a practice begun in the wake of the 1973 Yom Kippur War of extending heavy aid to the Middle East, especially Israel and Egypt, following the 1978 Camp David peace accords between those two nations. In 2001 Egypt and Israel remained the largest recipients of U.S. foreign aid.
When Ronald Reagan entered office, his rhetoric harked back to the Eisenhower administration in its emphasis on traditional liberal capitalist models of development that would stimulate private investment, an outlook that over the following decade slowly took hold in the foreign policy establishment, replacing the 1970s New Directions ethos. By the 1990s, this model was manifest in the foreign aid establishment’s support for globalization, essentially a process that promotes the opening of national borders and the internationalization of economic and social ties through capitalist models of free trade and investment. However, in the 1980s, USAID administrator M. Peter McPherson could still insist that overpopulation, not underinvestment, corruption, and mismanagement, was the “primary obstacle” to Third World development. Indeed, the United States continued to fund hopelessly crooked regimes in order to keep them from linking up with the Soviet Union, like that of Mobuto Sese Seko in Zaire (now the Democratic Republic of the Congo). As an exasperated USAID official noted later, Washington’s $2 billion investment in Zaire “served no purpose.”
During the Reagan administration military aid once again became a high priority, with more than 40 percent of U.S. bilateral aid being distributed in the form of loans for military training and equipment between 1981 and 1986. Outside of Israel and Egypt, a good deal of this aid went to Central America’s anti-leftist regimes, including the government of El Salvador. Another key shift in foreign aid in the Reagan era was the new importance placed on Africa. Owing in part to the efforts of a growing number of African-American members of Congress, as well as the increasingly influential nongovernmental organizations, Congress created the Development Fund for Africa, which, as Carol Lancaster notes could not be “raided” by other programs. By the early 1990s, the U.S. African effort had more than recovered from the cutbacks of the early 1970s. USAID had programs in forty-three African countries, with thirty field missions.
While the United States certainly changed priorities in its economic aid programs in the wake of Vietnam, Congress was ready to gut military programs in this era. In 1976, President Gerald Ford tried to stem congressional zeal for cutting military assistance, as exemplified in the Foreign Assistance Act of 1974, which called for such aid to be “reduced and terminated as rapidly as feasibly consistent with the security of the United States.” Ford compromised by cutting such assistance in the 1977 budget. However, Congress then passed the International Security Assistant and Arms Export Control Act of 1976, which made legislators the final arbiter of arms transfers and deployment of military advisers abroad.
The 1980s, however, also saw a growing debt crisis in the Third World, as many countries defaulted on their foreign obligations. In Africa, debt grew from $55 billion to $160 billion between 1980 and 1990, and servicing the debt proved a crippling task for many governments. The International Monetary Fund and other multilateral agencies, reflecting the growing ethos of “neo-liberalism” in this era, emphasized the importance of markets and market-based reforms to get nations out of debt. Continued aid was made contingent upon policy reforms designed to bring stabilization, such as cutbacks on borrowing and currency devaluation. Gambia, for instance, devalued by 90 percent. In Nigeria, the World Bank made loans conditional on the ending of subsidies and large-scale irrigation schemes and the furthering of market reforms. In many countries, however, these changes often proved as difficult and culturally dissonant as cattle raising had in the 1970s. As Nguyuru Lipumba noted in a 1988 article, in countries like Tanzania, “streamlining public enterprises and letting them operate as commercial enterprises … without central government interference is considered a secondbest policy.”
The Post-Cold War World
With the fall of the Soviet Union in 1991, U.S. foreign aid programs faced a deep crisis. Senators like Patrick Leahy proclaimed that American aid had lost its purpose and vision and that its connection to foreign policy goals was tenuous at best. This transitional period has provided an opportunity for business groups, among others, to call for a more traditional use of aid: to provide markets for U.S. exports, a sentiment that also led to the 1992 signing of the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico. The NAFTA negotiations were a direct result of Mexico having moved away from more traditional patterns of Third World development, including import substitution and high tariffs, toward a more open market in the 1980s. Such economic openness was touted by foreign aid officials as the best means to improve the plight of the Third World.
The post-Cold War reassessment of aid also brought sharp budget cuts, and by 1997 USAID had lost twenty-four foreign missions and one-third of its staff from a peak in the early 1990s. While traditional in-country development did not disappear, the new emphasis on globalization helped create an agenda of transnational issues, or problems that affect a community of nations, often in a specific region. In 1993, the Clinton administration established the Task Force to Reform AID and the International Affairs Budget, which offered a number of broad-based initiatives reflecting the new transnational perspective on foreign aid such as preventing the spread of disease, environmental destruction, and drug trafficking, and addressing concerns such as child survival, migration, population growth, and the promotion of democracy. The task force’s Wharton Report became part of the administration’s Peace, Prosperity, and Democracy Act proposal, which called for making foreign assistance more amenable to “emerging international realities”—thus challenging the more narrowly construed national security premises of the venerable Foreign Assistance Act of 1961. This effort did not succeed. Senate Foreign Relations Committee Chairman Jesse Helms decided in 1994 that cuts to foreign aid were more important than an ambitious retooling: “We must stop this stupid business of giving away the taxpayers’ money willy-nilly.” However, some revamping was unavoidable; the world had changed. To assist the former socialist states, in 1994 Congress enacted the Freedom Support Act and the Support for East European Democracies Act. USAID accordingly set up its Center for Democracy and Governance and an Office of Transition Initiatives. Sixteen Eastern European and former Soviet Union countries were targeted for assistance ranging from election financing to media advice. As a result of such initiatives, in 1996 the United States was giving aid to more countries (130) than it did in 1985. Still, traditional priorities did not disappear; while more countries were now getting development aid, it was a small total compared to the security aid that went to the two nations of Israel and Egypt.
The 1990s were also a decade of close reexamination of foreign aid in the international giving arena. The United Nations Development Program issued a study in 1996 that noted that in the 1980s, 100 countries, or 1.6 billion people, had experienced economic decline—despite enormous amounts of global aid. Most of these countries had lower average incomes in 1990 than in 1980, and almost half had smaller incomes than in 1970. The few who seemed to be holding their own were civil servants, whose salaries totaled 20 percent of Zambia’s GNP, for instance.
Foreign aid’s role in forestalling crises looked dubious too. Much U.S. aid, for example, had gone to so-called “collapsed states,” meaning states that have fallen apart due to mismanagement, corruption, civil war, or oppressive leadership, including Somalia, Liberia, Zaire, Rwanda, Sierra Leone, and Sudan. And where states survived, it became difficult to argue that such aid did not have distorting effects on local economies. In 1995, for example, such funds accounted for 46 percent of Lesotho’s government expenditures; 77 percent of Ghana’s, 97 percent of Malawi’s, and an unbelievable 101.4 percent of Madagascar’s. In the 1990s, recognition of this fact and its contribution to corrupt practices led the United States to cut off bilateral aid to fifty countries. Washington later replaced some of this aid with assistance designated for humanitarian purposes. The AIDS epidemic in Africa, which by 2001 had created 11 million orphans, was a major impetus behind this new agenda.
In 2000, Congress allocated $715 million to child survival programs that promote maternal and child health and provide vaccines, oral rehydration therapy, and education. Nongovernmental organizations (NGOs) like the Global Alliance for Vaccines and Immunization, backed by corporate constituents including the International Federation of Pharmaceutical Manufacturers Associations, have played a leading role in administering these programs. In 1995, in fact, NGOs registered with USAID spent $4.2 billion on overseas programs, and fourteen of them raised more than $100 million in cash and kind, including government food and freight assistance. These ranged from the giant CARE, with a total of $460 million, to Project Hope with $120 million. The NGO projects were often both simple and innovative. Project HOPE, for instance, used USAID funds to work with tea plantations in Malawi to provide health care for women and children.
Another priority was the promotion of democratic politics in the so-called Second World of former socialist countries. In Serbia, U.S. aid supported resistance movements like Otpor, whose activism helped bring about the ouster of the dictator Slobodan Milosevic. Aid administrators were also tying their works to new transnational priorities. The Clinton administration’s Climate Change Initiative, for example, assisted forty-four countries in lowering greenhouse gas emissions. In addition, growing sensitivity to local economies prompted the United States to begin to send farmers along with food supplies in the Food for Peace Program. More than five thousand were sent abroad in the 1990s. Perhaps the largest priority as far as spending was concerned were peacekeeping efforts. These included the well-established programs in the Middle East as well as newer initiatives in the Balkans and in Northern Ireland.
The USAID Development Assistance request from Congress for 2001 illustrated the new global priorities, with $234 million for economic growth, $12 million for human capacity development, $92 million to support democratic participation, $225.7 million for the environment, and $385 million for population programs and protecting human health. The increase in spending on child survival, which rose from $650 million to $724 million between 1998 and 2000, was notable, as was the rise in the International Fund for Ireland (that is, Northern Ireland), which rose from $2.4 billion to $2.7 billion, and the Assistance to Independent States, which rose from $770 million to $836 million. The new emphasis on such programs as child health, which over-shadowed development aid, highlighted a continuing debate among the foreign aid establishment as to the relative merits of relief initiatives versus developmental ones.
U.S. economic assistance in the early twenty-first century came through many channels. For example, the Development Assistance program was a mammoth account that included such programs as the Narcotics Control Program of the Department of State, the Development Fund for Africa, Economic Support Funds, Support for East European Democracy, Food for Peace, the InterAmerican Foundation, and the Peace Corps. In addition, many U.S. cabinet agencies, like the Departments of Transportation and Commerce, also provided their own aid and technical assistance programs in such countries as Egypt, Kazakhstan, Russia, South Africa, and Ukraine.
Globalization’s Impact on Foreign Aid
Many of the new priorities reflected a growing recognition of the ongoing process of globalization, which has flourished since the breakdown of rigid trading blocs in the former communist world, as well as the embrace of free trade by Third World nations such as Mexico and South Korea. As noted, it has also brought new attention to transnational issues such as environmental destruction, infectious disease, and terrorism. Globalization has certainly greatly accelerated international communication and trade. It has, for instance, allowed U.S. exports to Central America to double since 1992 to almost $10 billion annually. The process has won a wide following in U.S. foreign aid circles; in 1989 a study conducted by USAID pointed to a seven-point annual growth rate difference between the most and least open economies. In 2000, the World Trade Organization (WTO), an international body that promotes free trade and supports developing countries with technical assistance training, published a paper by Dan Ben-David and L. Alan Winters that argues that poor countries engaged in free trade are able to lift their living standards. The authors cite the experience of South Korea, whose economy jumped 700 percent since the 1960s. In a similar study of eighty countries over four decades, the World Bank agreed that economic openness is linked to higher living standards and growth. The rise of globalization has thus been used by foreign aid administrators to make the case for liberal capitalist models of development, and has undermined the 1970s ethic of direct government-to-government economic transfers to the Third World. As a result, while USAID did not abandon its development projects, it began to tailor them more closely to market results. Yet the U.S. support for just such policies, as exemplified in its leading role in the agencies that promote globalization such as the World Bank, International Monetary Fund, and World Trade Organization, has opened it to criticism that it is forcing them onto Third World nations who would prefer a different path to development.
The 1999 World Trade Organization summit in Seattle, Washington, vividly revealed the wide opposition to globalization, drawing a huge force of protesters from both poor countries and wealthy ones. Many of the protesters would agree with the arguments of Jeremy Brecher and Tim Costello, who have asserted that the WTO “work[s] hand-in-hand with the IMF and the World Bank to impose the Corporate Agenda on developing countries.” This corporate agenda, they write, seeks “to reduce all barriers to downward leveling of environmental, labor, and social costs” The American Friends Service Committee went so far as to claim that globalization “has undermined basic rights, cultural and community integrity, the environment, and equity … [and] caused economic insecurity.” Critics point out that it has also lessened the importance of nations that once could use their resources or strategic locations as bargaining chips for aid, and has helped to create global disasters like the banking crisis in Asia in 1997-1998. Moreover, while some Third World nations like Mexico and Chile were enjoying rebounding economic success from globalization, many were being left behind.
Despite the critics, the process continued apace; in 1998, U.S. exports to the Third World reached $295 billion, showing the increasing importance of these markets to the global economy. Meanwhile, foreign investment in developing nations rose from $70 billion to $118 billion in just two years, 1996-1998. But some globalization supporters have pointed out that Americans and other Westerners could help still further by fully embracing the process themselves and allowing larger quantities of the most impoverished nations’ goods to land on their shores. In a 1994 article J. Michael Finger pointed to the stark fact that developed countries’ protectionism “reduces developing countries’ national income by roughly twice the amount provided by official development assistance.”
Foreign Aid’s Critics
Attacks on globalization and its supporters in the foreign aid establishment, interestingly, resembled earlier excoriations of the imperialistic taint of foreign aid programs. In a 1987 study, Michael Hunt contended that “development was the younger sibling of containment” and “drew its inspiration from the old American vision of appropriate or legitimate processes of social change and an abiding sense of superiority over the dark-skinned peoples of the Third World.” Writing in 1978, Ian J. Bickerton noted that “foreign aid has enabled former colonial powers, such as the United Kingdom and France, to maintain their historic political, economic, and cultural ties with former colonies … it is precisely this network of Atlantic-European domination and imperialism that forms the basis of the current aid programs.” This assessment was echoed by the World Trade Organization protesters in Seattle, who accused the United States and other Western countries of perpetuating a mechanism of worldwide economic imperialism—née globalism. In the view of globalization’s critics, this process is just another way for rich countries like the United States, with only a fraction of the world’s population, area, and natural resources, to manipulate the global money market, to control much of the world’s trade, and to reserve most of the world’s raw materials for its own use.
In many ways, of course, foreign aid does continue the relationship that began under an earlier, imperialist past, particularly for colonial powers like Britain, France, and Belgium. Yet many other countries, such as the Scandinavian nations and Canada, who lack an imperialist history, have also become foreign aid donors, as Olav Stokke noted in a 1996 article. An overemphasis on the imperialism of foreign aid overlooks the importance of their “humane internationalism,” which he termed “an acceptance of the principle that citizens of industrial nations have moral obligations” to the outside world.
Beyond the crimes of imperialism, foreign aid has also been vilified for aiding and abetting despotic regimes that have done little for their people. Scholars such as Hunt, Thomas G. Paterson, Richard H. Immerman and many others have criticized the United States’s historic penchant for supporting right-wing military dictatorships in Latin America, Southeast Asia, and the Middle East in order to inhibit the forces of “international communism.” Analysts like Nicholas Eberstadt, Doug Bandow, Peter Boone and others agree that aid keeps oppressive political elites in control, but they have focused their critiques more broadly on the overall ineffectiveness of this aid in meeting its stated aims. In several African countries, governments have been so corrupt and countries so wracked by civil war that foreign aid has served only to line the pockets of dictators. While such funds have certainly helped mitigate illiteracy and disease in much of the world, their record of lifting countries out of poverty is more mixed. Many countries have been aid recipients for as many as three decades, including Chile, Egypt, India, Sudan, Turkey, and the former Yugoslavia.
Besides being often ineffective, in some cases aid has been actually damaging. Relief worker Michael Maren, a veteran of the massive Operation Restore Hope campaign in Somalia during the early 1990s, recalled that “the relief program was probably killing as many people as it was saving, and the net result was that Somali soldiers were supplementing their income by selling food,” even as rebel forces were using it to further their warfare on Ethiopia. In another ironic example, the U.S.-supported World Bank gave $16 million to Sudan to fight hunger while Sudan’s government was starving its own people. Foreign aid, then, has been attacked by critics for imperialistically exploiting the Third World for Western interests, distorting economies, hurting local farmers and peasants, and consolidating the grip of local elites at the expense of the average Third World resident.
Nicholas Eberstadt argues that a chief reason for the inefficacy of U.S. aid is because it has not supported policies that are congruent with American values, including “the defense of liberty” and “the promotion of justice.” Instead, the United States has too often relied on a “materialistic” policy limited to financial aid to oppressive regimes, overlooking the plight of those who continue to live under them. Yet Carol Lancaster, a former deputy administrator of USAID who readily admits the failure of aid in many African countries, contended in a 2000 article that foreign aid nevertheless has been “an extremely useful tool of U.S. diplomacy.” She points to progress in lowering the rate of poverty worldwide, from 28 percent in the late 1980s to 24 percent a decade later, and to the trend of rising living standards in Europe, Asia, the Middle East, and Latin America. By the end of the twentieth century, these trends had yet to affect much of Africa. Further, she argues that a new policy of foreign aid, one that emphasizes humanitarian relief, democracy, human rights, and development—the latter to be limited to the poorest countries—is precisely the mechanism to further an American “diplomacy of values.” Such aid will bring “soft power” to the United States, enhancing “the credibility and trust that the U.S. can command in the world.”
This continued emphasis on values recalls the spirit of the 1985 Live Aid concert, orchestrated by rock star Bob Geldof in response to a devastating famine in Ethiopia. This and subsequent events helped create among their numerous participants a “constituency of compassion”— and a conviction that famine was a concern that the world community should respond to. At the time, however, critics dismissed this as so much sentimentalism and called for “development experts” to tackle the problem instead.
In the post-Cold War world both America’s money and its position as the world’s only superpower have made its global economic influence more significant than ever, especially in remaining areas of tension such as the Middle East and the former Yugoslavia. Peacemaking in such areas has emerged as perhaps the leading foreign policy problem facing the United States, and foreign aid remains the vehicle for most of the money that goes to these areas. In the Balkans, for instance, a promise of $500 million in U.S. aid helped end the war in Bosnia. The Israeli-Arab conflict has proved more intractable, though this seems unlikely to stem the flow of U.S. aid. Of the $3.5 billion in Foreign Military Financing (FMF) grants proposed in the 2001 budget to buy defense products and services, Israel was to receive just under $2 billion and Egypt $1.3 billion. In addition to this military aid, the State Department’s Economic Support Fund also listed a $2.3 billion allocation for Israel and Egypt, with $840 million for the former and $695 million for the latter. Despite such hefty grants, Israel requested several billions more for advanced weapons systems not covered by the requested amounts.
Some critics have questioned how consistent these expenditures are with American values or with U.S. interests. As the Center for Defense Information’s Rachel Stohl writes, “Selling weapons to these countries can perpetuate autocratic rule…. United States programs should not contribute to the prolonging of these ‘un-American’ practices.” Leon Hadar of the CATO Institute, moreover, argues that the United States should drop its heavy commitment to Middle East peacekeeping, making room for regional powers such as Egypt, Jordan, and Saudi Arabia to get involved instead.
In addition to providing aid to Israel and Egypt, the FMF funds have been used for detonating mines, fighting narcotics traffic, helping to dismantle nuclear weapons in Russia, and integrating Hungary, Poland, and the Czech Republic within NATO. FMF aid, indeed, was part of a sizable U.S. foreign military assistance program that amounted to $17.4 billion in 2000, including both State and Defense Department programs. The International Military Education and Training Program (IMET), for instance, provided military training in the United States for personnel from thirty countries. While the Pentagon asserted that the $50 million program inculcated its students with American values and human rights principles, one of its member institutions, the School of the Americas in Fort Benning, Georgia, came under attack beginning in the 1980s for its connection with military adventurism in Latin America. Nineteen of the twenty-six members of the El Salvadoran military implicated in the murder of six Jesuit priests in that country in 1989 were alumni of Fort Benning. Adverse attention led the school to change its name in late 1999 to the Center for Inter-American Security Cooperation.
Far larger than IMET is the Pentagon’s Foreign Military Sales Program, which racked up $12.1 billion in government-subsidized sales abroad in 2000 on such items as the M1A2 tank and the F-16 aircraft. A similar but much smaller effort is the Excess Defense Articles program, which exports military surplus through sales or grants to such countries as Israel, Egypt, Turkey, Poland, and Greece. Under the Foreign Assistance Act, the U.S. president also has “drawdown authority” to use defense monies for foreign emergencies as he sees fit. In 2000, President Bill Clinton put $80 million toward such causes as peacekeeping in Sierra Leone and a program to promote democracy in Iraq.
Conclusion
While U.S. economic and military aid continued to grow modestly at the turn of the century, it comprised a far smaller percentage of total global assistance than was the case in the early Cold War. In the late 1940s, during the height of the Marshall Plan, the United States provided 60 percent of the globe’s foreign aid; by 1993, its portion had dropped to 16 percent. But the United States has not been alone in decreasing its foreign contributions. In the 1990s, international development assistance declined by one-third in real terms, dropping from $61 billion to $52 billion between 1992 and 1998. Development assistance fell to an average of 0.24 percent of GDP in advanced countries by 1998. The most generous country was Norway, which gave away nearly 1 percent of its GNP; the United States, by contrast, donated only 0.1 percent, the smallest of all members of the Development Assistance Committee of the Organization for Economic Cooperation and Development. However, the United States did furnish the second-highest dollar figure in 1998, $8.8 billion; Japan topped the list with $10.6 billion.
Owing to such expenditures, by the mid-1990s Third World governments owed almost $2 trillion to Western loan agencies and governments. The African debt alone surpassed $230 billion. Beginning in 1996, the IMF and World Bank launched the Heavily Indebted Poor Countries Initiative (HIPC), an attempt to provide significant debt relief (up to 80 percent) based on a program of economic restructuring in the debtor nations. However, when few countries proved able to sustain the restructuring requirements, the funding institutions announced HIPC II in 1998, a bolder initiative that targeted $100 billion in debt reduction. By April 2001, $20 billion in debt had been cancelled for twenty-two countries, eighteen of which were in Africa. Over time the reductions were to bring associated total relief of $34 billion to these countries. When combined with other existing debt relief programs, reductions would amount to $55 billion, about a twothirds reduction. The millennial year also saw the launching of the international Jubilee 2000 coalition to lobby for further debt relief, using the biblical terminology of a jubilee year, based on ancient Israel’s practice of forgiving debts on a fifty-year cycle. To the great enthusiasm of a crowd gathered for a Jubilee 2000 meeting in December of that year, British Chancellor Gordon Brown announced that Britain would cancel or “hold in trust” the debt payments of forty-one countries.
Debt-relief efforts were certainly expected to provide a break for poor nations. However, the fact remained that in 2000 the average person in the richest twenty countries earned thirty-seven times more annually than the typical resident of the poorest twenty nations, double the gap since 1960. Foreign aid, which USAID claims has been responsible for a great deal of the progress in lessening poverty, disease, and illiteracy, indeed may have stopped that gulf from being even wider. The reasons for a continuing gap defy easy explanation, and in general are tied both to rising growth rates in the First World, including a great expansion in private capital, as well as the continuing political, social, and economic problems of the developing world.
With the end of the Cold War’s communist threat and a widening perception that foreign aid monies have been ineffective, wasted, or turned to corrupt purposes, America’s foreign aid program underwent increasingly close scrutiny. As noted, humanitarian relief and child rescue emerged as the most notable new priorities in the 1990s, supplanting the development paradigm and its of discredited large-scale projects. Moreover, a new ideological purpose arose to replace the old Cold War consensus. Upon entering office in January 2001, President George W. Bush cut off U.S. funding to all foreign NGOs with family planning programs that provide abortion or abortion counseling, restoring a policy that his father, George H. W. Bush, and Ronald Reagan also employed, dating back to 1984. At the same time, the longtime critic of foreign aid Jesse Helms called for channeling foreign aid funding directly to religious charities and NGOs, separate from the efforts of USAID’s “cold, heartless bureaucrats,” as he put it.
American economic and military aid programs, for all their shifting priorities, contested results, and popular distaste, have long outlived the span that their early adherents predicted, and at the turn of the twenty-first century it appeared likely that foreign aid would continue. One may hope that in the next half century, either owing to aid, investment, political reform, or some other set of factors, the developing world will have come much closer to reaching the results predicted by John F. Kennedy for the 1960s “decade of development.”