The Downs and Ups of Foreign Aid

By Frank Trippett

Everyone is familiar with the gasps and adjectives-stunning, walloping, whopping, staggering-usually inspired by a $5 billion price tag. Yet when President Carter pledged roughly that amount in additional military and economic aid over three years to help bring Israel and Egypt together, there were few immediate complaints. Most Americans seemed to agree with Senate Republican Leader Howard Baker's belief that the prospective aid would be a real bargain.

The episode should be instructive to a country that has long been beset with doubts about its overall foreign aid program. It is particularly ironic that Washington should have given such a hospitable reception to a big, unexpected outlay in these tight times. Earlier, Congress had been expected to offer stout resistance to an Administration proposal for a $159 million increase, to $6 billion, in economic and military aid worldwide for fiscal 1980. Last week's events probably will not alter that prospect dramatically, but they at least raise the possibility that the nation might be moved to renovate and expand its enervated foreign assistance program--if it can just be shown clearly the advantages of doing so.

The U.S. discovered the self-benefits of helping others when it carried out the Marshall Plan with bipartisan fervor beginning in 1948. The U.S. was the first great power to use aid as a major instrument of foreign policy, and over the next two decades the nation was by far the biggest source of such assistance. There were many intricate reasons for America's subsequent disenchantment with foreign aid, but it became pronounced during the Viet Nam War. It was in 1968 that Congress radically slashed the proposed aid budget--by 40%, to a 21-year low of $1.75 billion. Since then, the program has been in trouble, chronically confused, steadily losing supporters, widely misunderstood.

Today U.S. foreign aid is a hodgepodge of programs with a muddle of purposes directed by a multitude of agencies. The main one is the Agency for International Development, and its chief, ex-Governor John Gilligan of Ohio, is leaving next month under pressure, in part because he offended too many people by trying to straighten out his department. AID is tangled up by more than 150 restrictive and sometimes contradictory congressional mandates. It is not astonishing that a program so confused within is so misunderstood on the outside.

Popular misunderstanding takes many forms. One false notion, which undercuts political support for increasing the aid effort, is that the U.S. is still a leader in the field it pioneered. Not so. In the early 1960s the U.S. spent up to .5% of its gross national product on foreign aid but today allocates only .27%. Sweden gives 1.01% of its G.N.P., and Denmark donates .6%. Thirteen nations, including France, Canada, Belgium, Britain, West Germany and Austria give a larger share than the U.S. Says Gilligan: "Last year the people of the U.S. lost more money at the gambling tables in Nevada than we have in our development assistance programs. We spend more money on dog food than we do on the 600 million people in this world who are malnourished."

Jimmy Carter entered office with the hope of doubling U.S. economic development programs by 1982, but he soon curbed this aspiration in the face of a budget-chopping mood. He has pushed some increases through the Congress, with total aid outlays of $5.1 billion for fiscal 1978 and $5.9 billion for fiscal 1979. His current budget proposes just over $6 billion for fiscal 1980, and would have been higher, a White House spokesman said, except that larger sums "might have raised the profile of foreign aid and made it even more vulnerable." The proposed 1980 budget is vulnerable enough. While the President shuttled between Cairo and Jerusalem, the Senate Foreign Relations Committee was recommending aid cuts of more than $700 million.

Recent efforts to reorganize foreign aid have fared much BY GEOFFREY MOSS worse than attempts to increase appropriations for it. Senator Hubert Humphrey's last legislative initiative was the International Development Cooperation Act, which would have assembled all foreign aid programs, for the first time, under one roof and a single planning command. The bill died last year as a result of congressional inaction that was abetted by both of the major Administration departments that would have lost power. The State Department would have forfeited control of bilateral pro grams handled by AID, and the Treasury Department would have been displaced as U.S. policymaker in the multilateral development programs run by the World Bank and other international financial institutions.

Thus the administration of the foreign aid program was left just as it was: beset and beleaguered, and known largely for its failures. Those failures are well publicized: some ill-advised projects and scattered cases of misuse of funds by corrupt recipients. In an odd Gresham's Law, the bad news about foreign aid seems to drive out the good--and there is a lot of good news. Foreign aid has contributed to the rise of a series of economically free and prosperous "ADCS," or advanced developing countries, including South Korea, Singapore, Taiwan, Malaysia and Thailand. U.S. assistance has also helped lift many less fortunate countries out of total destitution. The material results of foreign aid are often significant but little-known factories, dams and agricultural projects that create jobs and food, which in turn contribute to economic and political advance--and to good business for the U.S. Improving the economies of the developing countries makes them better customers. An estimated 2 million American jobs depend on exports to developing countries, and twelve of those nations, according to a United Nations Association study, are the world's fastest growing markets for U.S. products.

There are even more tangible benefits for America. For every $1 that the U.S. contributes to international financial institutions that give aid, the recipients spend $2 to buy goods and services in the U.S. For every $1 paid by the U.S. into the World Bank alone, $9.50 flows into the nation's economy in the form of procurement contracts, operations expenditures and interest payments to investors in the bank's bonds.

In short, the U.S. does well by doing good. What is needed is a reorganization of the aid program in order to centralize its di rection, clarify its aims and display to the U.S. people that its lofty missions can produce down-to-earth results. As the early reaction to Carter's multibillion-dollar pledge in the Middle East showed last week, the nation is willing enough to assist other peoples if there is a reasonable promise that the investment will produce political or humanitarian benefits. --Frank Trippett

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