Reshaping Foreign Aid

As President Bush embarks upon his 6 day tour of Africa, visiting Benin, Tanzania, Rwanda, Ghana, and Liberia, I find it a good time to reflect on America’s aid to developing nations.

I’ve heard quite a few criticisms of the way US foreign aid is doled out. For instance, with regard to country appropriations, political considerations often trump the demonstrated needs of countries for aid. One common example of this is our financial support of Israel. Israel comprises just .001 percent of the world’s population yet receives 1/3 of U.S. foreign aid. Is Israel a third-world country desperately in need of aid? Not in the least. Israel has one of the world’s higher per capita incomes. Israel’s GNP is higher than the GNPs of Egypt, Lebanon, Syria, Jordan, and Palestine combined. At $28,800, Israelis enjoy a higher per capita income than oil-rich Saudi Arabia, and are on equal footing with Monaco, Greece, and Spain. In 2007, the Bush administration asked Congress for $20 billion in foreign aid: $2.4 billion to Israel, while Ukraine (with 1/10 the GDP per capita of Israel and much more need for aid) received $71 million, 1/35 of Israel’s haul. This amount does not include loans to Israel that are often forgiven. With these loans taken into account, the much needier Ukraine gets 1/100th the financial support given to Israel.

Why does Israel get 100 times the amount of aid given to its poorer neighbor?

Another common criticism of our foreign aid is our food aid program, which has caused quite the controversy. The U.S. insists that its food aid be grown at home, and this extra demand for domestic grain amounts to a subsidy to American farmers. “Many European NGOs argue that this policy, coupled with the U.S. law that 75% of food aid be carried by U.S. ships, means food often arrives too late, floods local markets and damages indigenous farming.”

Flooding local markets and damaging indigenous farming doesn’t equate to help. Isn’t help what aid is supposed to be?

Food aid shouldn’t exclusively come from major mechanized producers, it should be grown locally to where it is distributed. This is a more permanent kind of aid because it encourages farmers to build a sustainable infrastructure that will pay dividends far into the future by stimulating farm employment. Reporter Eben Harrell says that E.U. policy reflects this sentiment: “less than 10% of [the E.U.'s] food-aid budget is [...] reserved for European-grown food.”

Obviously, something needs to be done to change our foreign aid system, whether it is distributed as hard-currency or food. And the man asking for change may surprise you.

It’s none other than George W. Bush.

“We have also revolutionized the way we approach development,” Bush said Thursday. “Too many nations continue to follow either the paternalistic notion that treats African countries as charity cases, or a model of exploitation that seeks only to buy up their resources. America rejects both approaches. The United States demands clear results for the billions of taxpayer dollars [sent] to Africa.” He accused other nations of exploiting the continent’s resources or irresponsibly offering aid as charity, according to the Associated Press. “America is serving as an investor, not as a donor,” Bush said.

“The between-the-lines message is that countries that shower budget support on all countries, such as the World Bank and the Europeans, are often merely pouring good money after bad,” said Joel Barkan, a specialist in African issues at the Center for Strategic & International Studies. He said Bush’s comment was also likely a “not so subtle dig at the Chinese,” who are a major investor in the African continent and a competitor for oil and other resources.

Along with trade and education initiatives, Bush is touting a broad investment package that, in his view, shows the generosity of the American people.

This package may be just what the doctor ordered.

Time Magazine - CARE Turns Down U.S. Food Aid
Israel still top recipient of US foreign aid
Bush Says Paternalism Over in U.S. Aid
Fiscal Year 2008 Budget Request (PDF)

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