aid

Return to Common Sense

July 1, 2010

Section: Foreign – Aid

“Foreign aid should be stopped, due to government mismanagement and corruption, and let monies flow directly from business and individuals directly to those who can most benefit”

“Foreign aid might be defined as a transfer from poor people in rich countries to rich people in poor countries.” Douglas Casey.

Philosophy (Background, Issues, Objectives):

USAID is an independent government agency that receives foreign policy guidance from the Secretary of State.

USAID was chartered under the Foreign Assistance Act of 1961
Assists countries to recover from disaster, trying to escape poverty, and engaging in democratic reforms.
Further foreign policy interests in expanding democracy and free markets while improving the lives.

Over the past four decades the U.S. has given over $480 billion in development assistance.

In 2003 U.S. gave over $23 billion, with most going to Near East and South Asia.
Recent poll showed American aid is single most important action people value for the U.S.
Visible U.S. assistance can have a positive impact on foreign public opinion.

In 1996, the UN declared that 70 countries, aid recipients all, were poorer than in 1990.

Simply providing money to third world countries will not buy political stability, spur social progress, or eliminate poverty.

People in many of these countries are no better off today in terms of GDP per capita.
Corrupt and institutionally weak regimens have siphoned off much of this aid money.

o Ruling elite make personal fortunes, distribute funds based on nepotism and favoritism.

Vast majority of the foreign aid recipients routinely vote against the U.S. in the U.N at an average rate of 74%.

U.S. funds 25% of United Nations budget, which gives $1.4 billion to U.N. programs and agencies.
Only 26% of foreign aid went to countries that endorsed American initiatives and causes.
In 2003 Egypt received over $2 billion, but voted against the U.S. 79% of the time.
In 2003 Jordan received over $1 billion, but voted against the U.S. 71% of the time.
Foreign aid can become like a narcotic growing dependence on outside aid vs. developing internal capabilities.
Much of foreign aid is siphoned off in various ways by the ruling elites/

o According to an old UN report, in 1991 alone, $200 billion of AID ended up in foreign private bank accounts of African politicians and government officials.

o Aid kills democracy because it makes being in power enormously lucrative.

o Refusal to relinquish or share power in African countries that leads to insurgencies.

U.S. is the leading giver of charitable contributions in the world.

In 2006 Americans gave $295 billion to charity, up 4.2% over 2005.

o Estimates place percentage of American households that make monetary contributions each year as 70-80%.

o In 2006 Americans contributed privately $34.8 billion to individuals and organizations in developing countries.

§ 8.8 billion was contributed from religious organizations.

U.S. gave $95.2 billion to the “developing world” in 2005.

o Individuals gave $61.7 billion.

o Foundations contributed $2.2 billion and corporations donated $5.1 billion.

o Private and voluntary organizations (including volunteer time) gave $16.2 billion.

o Universities and colleges gave $4.6 billion.

o Religious organizations donated $5.4 billion.

Number 2 giver was Britain at $19.8 billion, followed by Japan at $19.7, then France at $17.5.

The Millennium Development Goals (MDGs) are eight international development goals

All 192 United Nations member states and at least 23 international organizations have agreed to achieve by the year 2015.

o Goal 1: Eradicate extreme poverty and hunger

o Goal 2: Achieve universal primary education

o Goal 3: Promote gender equality and empower women

o Goal 4: Reduce Child Mortality Rate

o Goal 5: Improve maternal health

o Goal 6: Combat HIV/AIDS, malaria, and other diseases

o Goal 7: Ensure environmental sustainability

o Goal 8: Develop a global partnership for development

· Progress towards reaching the goals has been uneven. Some countries have achieved many of the goals, while others are not on track to realize any.

· The UN believes that donors should commit to reaching the long-standing target of 0.7 percent of GNI by 2015.

o The U.S. never agreed in Monterrey to spending 0.7% of GDP on development assistance

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency, created by Congress in January 2004, that is helping lead the fight against global poverty.

· Money provided through this program flows solely to developing countries that prove they’re dedicated to transparent governance, economic freedom and empowering their people.

· Developing countries must meet a maximum per capita income requirement.

· Countries are evaluated on a battery of publicly disclosed third party indicators designed to measure performance.

· If the country outperforms a majority of its peers, it is eligible to submit a proposal for funds.

· Acceptance based on: performance, opportunity to reduce poverty, and availability of funds.

Free Cities have been proposed as a revolutionary alternative incentive-based system to replace block grants.

· “Good institutions” are key to resisting the corruption and racial strife that hobble so many third world economies ie:

o Rule of law, democracy, merit based civil service, limits on government’s ability to expropriate property, independent central banking system.

· Establishment of “private sectors” inside impoverished countries will harness market forces.

· In 1984 Hong Kong was designated a free city, under the protection of the PRC.

Principles:

Help our allies.

Incent our potential enemies to change.

Shared characteristics and principles of foreign aid projects that work:

· Local ownership and initiative (Successful programs and projects reflect actual needs of the recipient countries as expressed by local actors, rather than simply reflecting instructions of what projects and programs may be available for local recipients from USAID.).

· Partnership (Successful projects and programs demonstrate collaboration between American and developing-country institutions, especially private institutions.).

· Leverage (The U.S. government can take advantage of the myriad new sources and techniques of global support for developing countries, including foundations, private voluntary organizations, corporations, universities, and remittances.).

· Flexibility (Efforts by today's aid projects to tackle new problems are often hampered by decades-old legislative mandates.).

· Peer-to-Peer Approaches (Long after USAID's financial role has ended, U.S. foreign assistance can allow America's professionals and institutions to build relationships with their developing country counterparts on the basis of perceived professional self-interest.).

· Technology Adaptation and Adoption (Some of the most widely acknowledged foreign assistance successes, such as the Green Revolution, have at their core the application of technology to improve the human condition.).

· Self-Reliance (The most important steps taken to improve the long-term success of developing nations will come from within those countries.).

· Continuous Information Feedback (The best evaluation systems are not simply tasks that result in reports.).

· Risk (A partnership and venture-funding culture implies a tolerance for risk and a frank willingness to recognize failures.).

Recommendations:

Short Term, Integrate all agency opinions (State, Intelligence, Defense, UN, USAID) into a coherent unified foreign policy.

Ensure U.S. government humanitarian aid is visible to receiving public.
Include U.S. private charity into total American support picture.

Promote free trade and investment accords as an alternative to aid.

Grant trade preferences to developing countries as interim step to free trade agreements.
Establish free cities within struggling third world countries.

Long Term, Establish strong oversight over use of taxpayer funds to finance foreign aid.

Discontinue the current foreign aid program and policies.
Remove USAID independence in order to directly link foreign aid and country behavior.

o Utilize a scorecard to rate economic, social, and political behavior as input to aid calculation.

Expand the use of Millennium Challenge Corporation (MCC) to replace less effective forms of Official Development Assistance (ODA).

References:

“Are We Throwing U.S. Foreign Aid $ Down the Toilet?” dated October 13, 2003 published by StrangeCosmos.Com at http://www.strangecosmos.com/content/item/24974.html .

“Foreign Aid from USA - How Those Countries Vote” dated June 4, 2004 published by StrangeCosmos.Com at http://www.strangecosmos.com/content/item/100384.html .

“How Will Greater Foreign Aid Help the Poor This Time?” by William Easterly dated March 28, 2006 published by The Heritage Foundation on http://www.heritage.org/Research/TradeandForeignAid/hl950.cfm .

“Why Doesn’t Aid Work?” by William Easterly dated April 3, 2006 published by The Cato Institute on http://www.cato-unbound.org/2006/04/03/william-easterly/why-doesnt-aid-work/ .

“How Will the Poor Trade Up?” by Jim Kolbe dated August 8. 2006 published by Washington Post at http://www.washingtonpost.com/wp-dyn/content/article/2006/08/07/AR2006080701234.html .

“America’s image” by Helle Dale dated October 25, 2006 published by Washington Times at http://www.washtimes.com/op-ed/hdale.htm .

“U.S. aid ship cures public opinion” by Anju S. Bawa dated November 17, 2006 by Washington Times at http://www.washtimes.com/world/20061116-111328-7422r.htm .

“The Challenge of Global Health” by Laurie Garrett dated January 13, 2007 published by Real Clear Politics at http://www.realclearpolitics.com/articles/2007/01/the_challenge_of_global_health.html .

“A Second Look at Microfinance” by Thomas Dichter dated February 15, 2007 published by Cato Institute at http://www.cato.org/pubs/dbp/dbp1.pdf .

“Privately Generous” by Shawn Macomber dated March 1, 2007 published by The American Spectator at http://www.spectator.org/dsp_article.asp?art_id=11072 .

“Americans are ‘Cheapskates’ over Lack of Foreign Aid Spending?” by Warner Todd Huston dated May 5, 2007 published by American Daily at http://www.americandaily.com/nucleus/plugins/print/print.php?itemid=18675 .

“Americans are ‘Suckers’ When it Comes to Giving” by Gordon Bishop dated July 11, 2007 published by American Daily at http://www.americandaily.com/article/19546 .

“Please Stop the Aid” by Nancy Salvato dated September 17, 2007 published by American Daily at http://www.americandaily.com/article/20298 .

“Pay for Performance” by Karen Porter dated January 30, 2008 published by The American Magazine at http://www.american.com/archive/2008/january-01-08/pay-for-performance .

“A Nation of Givers” by Arthur C. Brooks dated March/April 2008 published by The American Magazine at http://www.american.com/archive/2008/march-april-magazine-contents/a-nation-of-givers .

“Free Cities” by Ken Hagerty dated April 8, 2008 published by The Weekly Standard at http://www.weeklystandard.com/Content/Public/Articles/000/000/014/957snnwz.asp .

“America’s Generosity is Unmatched” by Star Parker dated June 3, 2008 published by Real Clear Politics at http://www.realclearpolitics.com/articles/2008/06/americas_generosity_is_unmatch.html .

“Getting More Out of Foreign Aid” by Ed Fuelner dated September 4, 2008 published by Town Hall at http://townhall.com/columnists/EdFeulner/2008/09/04/getting_more_out_of_foreign_aid .

“Foreign Aid: What Works and What Doesn’t” by Nicholas Eberstadt and Carol C. Adelman dated October 27, 2008 published by American Enterprise Institute at http://www.aei.org/publications/filter.all,pubID.28842/pub_detail.asp .

“How Foreign Aid Destroyed Africa” by Jamie Glazov dated December 3, 2008 published by Front Page Magazine at http://www.frontpagemagazine.com/Articles/Read.aspx?GUID=D1ED8113-B52B-4674-9959-AD7902604D8B .

“The Welfare State Writ Large and Small” by Steven D. Laib dated March 26, 2009 published by Intellectual Conservative at http://www.intellectualconservative.com/2009/03/25/the-welfare-state-writ-large-and-small/ .

“Foreign Aid: Congress Should Shift USAID Funds to the Millennium Challenge Account” by James M. Roberts dated August 4, 2009 published by The Heritage Foundation at http://www.heritage.org/Research/ForeignAid/wm2574.cfm .

“Welfare World” by Joseph Klein dated July 1, 2010 published by Front Page Magazine at http://frontpagemag.com/2010/07/01/welfare-world/ .