Global Issues: Development Assistance in 2006

(Last updated December 11, 2006) Foreign aid is an important component of  reducing poverty in developing countries. This report 

• discusses (some of) the important developments in foreign aid in 2006

•  provides a basic analysis of  United States foreign aid,,

• and finally reports on debt forgiveness initiatives.

Important developments in foreign aid

There are a variety of foreign aid issues, some of which are covered in other sections of Hunger Notes. Key issues are:

• the reorganization of U.S. foreign aid

• the role of the U.S. military and military assistance to developing countries

• the Millennium Challenge Account

• aid and hunger

• corruption and other aid delivery issues

• pledges of increased development assistance

 The reorganization of U.S. foreign aid

United States foreign aid, it appears, is being reshaped in a major way. In Hunger Notes opinion, it is the most major change since the 'New Directions" foreign aid legislation that created USAID in the 1960s.  The United States Agency for International Development, the principal U.S. aid agency, is being integrated with the U.S. State Department.  This is being done in the following way.  Randal Tobias, now the United States HIV/AIDS coordinator, with his office and functions in the State Department, is being named as the USAID administrator and simultaneously, will hold the additional new title of director of foreign assistance, equivalent to deputy secretary, a next-to-the top level of the State Department bureaucracy.

There are advantages and disadvantages to doing this.  Hunger Notes honestly does not know how it will work out.

The major disadvantage, from Hunger Notes point of view, is that it will shift USAID and U.S. development assistance away from an ostensible and to some degree real focus on the problems of developing countries.  Development assistance will now to an increasing degree be seen through the State Department lens of what is in the best interest of the United States. This has, in the past and present, and may well in the future, subordinate developing countries interests  to U.S. interests.  Where does the current U.S. foreign aid budget go?  Who are the two largest recipients?  By far, Iran and Afghanistan. Why should it be this way? Why are not the billion poor people in the world worthy of more attention in the U.S. foreign aid program? 

The major possible advantage is that the United States has possibly finally got the picture that developing countries are important.  It may have taken Islamic radicalism and two wars--Afghanistan and Iraq--to shock a government foreign affairs bureaucracy into change. The new and possibly good idea is  "transformational diplomacy." That is the concept of using aid as a way of bringing good government to poorly run countries. Good government is sorely lacking in developing countries, by and large.  The big problem with transformational diplomacy--as  a U.S. foreign policy goal--is that the United States government has an extremely strong streak of self interest and self complacency which affects its ability to  fairly judge  what is good government in developing countries.  So we may see, in the name of "transformational diplomacy,"  a heightened degree of self interested (and very possibly short sighted) meddling--already high-- by the United States in developed countries. Hunger Notes believes that this is what will actually happen.

The following articles describe how the Bush administration has reshaped foreign aid. 

The big idea is that the biggest chunk of foreign aid--that which is managed by USAID-- will be now be run from the State Department. What is now in effect is that  Tobias Randall, previously the State Department HIV/AIDS coordinator (whose office had already taken quite a bit of development assistance financing from USAID) will now be both the USAID administrator and has also assumed a new title equivalent to a deputy Secretary of State.  "Although the move stops short of merging USAID with State, it is intended to draw the agency closer into the department's fold, the officials said."  U.S. State Department to shift more diplomats to developing countries and countries in conflict; restructures administration of foreign aid  Glenn Kessler and Bradley Graham    Washington Post January 19, 2006 (You will leave this site and be required to register [once] with the Post.)

A  fundamental idea for foreign aid, which gets almost zero expression and appreciation in Washington and foreign policy circles, is that (a substantial sum of) money should be set aside to help poor nations develop, so that poor people in these nations may have a better life--up to some degree from destitution. Assistance to the poor is a fundamental tenet of the major religions of the world.  The religions of the world have made a major, but often ignored, contribution to the welfare of the world, by insisting on reasonable and desirable codes of human conduct. "Do unto others as you would have others do unto you."  When this sort of belief is adopted by enough people, space emerges for people to undertake productive lives.  Individuals forsake theft and murder, groups give up domination and oppression, and more effort can go to productive labor rather than protecting ones possessions and person against criminal and other harmful activity. Within this basic framework, assistance to the poor has a special place.  It is to help others and, in a disinterested way, actually involving a real sacrifice of income or time. The Biblical story of the Good Samaritan perfectly illustrates the religious ideal. The practical result of these 'impractical' ideals (martyrs were created by adherence to these religious beliefs in the beginning of the world's religions) was a space for productive activity and human freedom.

Hunger Notes basically believes that the  State Department should protect United States interests. With the preceding paragraph as a basic framework, Hunger Notes believes that incorporation of foreign aid into the State Department is a move away from disinterested help for countries and their people to incorporation in the self-interested power politics framework of standard U.S. diplomacy. This will not be good for developing countries--it will represent a further strengthening of U.S. imperialistic tendencies-- and it will not be good for us, U.S. citizens--as citizens of  the richest nation in the world, or nearly--we must learn to help those much less fortunate and live in peace with them.

Here is an example of why a combination of military, political and economic efforts might be useful in reducing human suffering.

Bush calls for more muscle In Darfur. U.S. policy shifts as talks stagnate. Jim VandeHei and Colum Lynch Washington Post February 18, 2006 (You will leave this site and be required to register [once] with the Post.)

Here are examples of non -'disinterested' use of USAID development funding.

Eleventh-hour election meddling in Nicaragua  Ben Beachy  Witness for Peace   November 1, 2006 

U.S. funds enter fray in Palestinian elections. Bush Administration uses USAID as conduit. Scott Wilson and Glenn Kessler. Washington Post January 21, 2006 (You will leave this site and be required to register [once] with the Post.)

RAMALLAH, West Bank -- The Bush administration is spending foreign aid money to increase the popularity of the Palestinian Authority on the eve of crucial elections in which the governing party faces a serious challenge from the radical Islamic group Hamas.

The approximately $2 million program is being led by a division of the U.S. Agency for International Development. But no U.S. government logos appear with the projects or events being undertaken as part of the campaign, which bears no evidence of U.S. involvement and does not fall within the definitions of traditional development work.

The United States government, playing 'hardball' politics or blinded by its ideology, is apparently incapable of understanding (or expressing publicly its understanding of) why countries are opposed to its policies.  It will be interesting to see what policy the United States adopts toward the new Bolivian government, which opposes several U.S. government policies. It is difficult to try to explain why the United States, which we have been raised to think of as 'the world's greatest democracy' should be in conflict with government leaders, such as Morales in Bolivia, who have been elected by the votes of poor people in Bolivia.  Nonetheless, we offer the following observations of why this is so.

• Large parts of the world--Africa, Asia and Latin American-- were controlled by other parts of the world-- Europe and the United States- for a long time. Though control has diminished, Europe and the United States still have a major influence on world events, through military, economic and political power. The standard view in Europe from AD 1500  or so was go out, conquer or otherwise control territory, and take economic advantage of the territory.  Thus, for example the native people were put to work taking out gold and silver in Bolivia and sending it back to Spain. El cerro rico de Potosi. Countries in Europe controlled the vast majority of land and people in Asia, Africa, and Latin America.  This was called imperialism by those opposed to it.  Understanding of this situation is part of the knowledge of people in developing countries and also of the politics.

• This domination of vast swaths of the world by European countries was one important factor in the development of socialism.  The other, and probably more important, was the elite nature of European (and U.S. to a lesser, but still significant extent) societies as capitalism developed from the 1700s onward.  An era of kings and royalty which evolved to include capitalists, who were able to use the power of the state to control workers and allocate resources away from workers to firms. 

• In our view the United States has pretty much totally failed to recognize anti-imperialism as a genuine, legitimate, and very important foreign policy concern of developing countries. The United States has defined things as 'communism/socialism  vs. democracy' and  been on the side of 'democracy' however far it may have been from actual democracy ("our dictators vs. theirs).  This U.S. blind eye led us into the war in Vietnam, where the United States took over from the French who had Vietnam as their colony, and where the United States defined the North Vietnamese as 'communists' rather than nationalists.

• Coca production/eradication may be taken as an example of the U.S. failure--as far as we can see--to understand one county's--Bolivia--point of view. A key issue in Bolivia is coca production. Coca is a bush, and coca leaves are the ingredient of cocaine.  It is hard to describe all the issues that enter. First, Bolivians have lived with coca for many years. As a leaf--chewed necessarily with charcoal to release coca's alkaloids--it is part of a culture of poverty--a way to help get through the day for very poor people, but not something that is widely adopted. Secondly, the evil effects of cocaine--the refined substance of the coca leaf--seem to result mainly as result of the addictive and fairly clueless behavior of people in the United States and elsewhere in the developed world.  Thirdly, the market signals--to very poor people--are to produce coca. (Tell me why again in a market economy we should not produce goods worth the highest price?) Fourthly, it appears that the United States is not doing enough to control its own borders and criminal activity, and is transferring its policing activity to Bolivia.  Fifth, the criminal activity surrounding cocaine from the Bolivian point of view seems mainly attributable to the U.S. market--Bolivia is not the problem, the United States is.  Sixth--and this is probably the hardest to describe or understand--the link between the desperate poverty of the coca producers and the high-cost whim or indulgence of the consumers of cocaine.  What manner of world is this?

For Bolivian Majority, a New Promise: Nation's First Indian President Vows to Chart Course Independent of U.S  Monte Reel  Washington Post January 23, 2005  

The United States is already at loggerheads with Venezuela, who under President Chavez, has established a pro-poor, and socialist, agenda that has brought him into conflict with the United States.

For Venezuela, U.S., a (Very) Little Civility  Pamela Constable Washington Post February 10, 2006 (You will leave this site and be required to register [once] with the Post.)

The role of the U.S. and foreign militaries in development assistance

Here is an evaluation of the United States' "Plan Colombia" focusing on military assistance and drug eradication.  United States aid to Colombia since 2000 has totaled $4.7 billion with $3.8 billion going to Colombian security forces. 

Plan Colombia: six years later   Adam Isacson  Center for International Policy November 2006

An extremely unnerving development is

Pentagon Can Now Fund Foreign Militaries  Bradley Graham Washington Post  January 29, 2006

A major enemy of democratic governments in the past has been military governments and oligarchic governments supported by the military. This new source of funding for developing country militaries will strengthen these militaries and may well/will probably weaken democracy in developing countries. The militaries of governments in Chile, Argentina, El Salvador, Guatemala and Mexico--to consider only Latin America--killed very large numbers of people in their countries.  Do a 'Google' search on the country name and other words such as 'disappearance'  and 'human rights.

Details of Mexican government's murder, torture of dissidents chillingly documented in new government report  Juan Forero  Washington Post November 22, 2006 (You will leave this site and be required to register [once] with the Post.)

But, as noted above, military action may well be necessary to free people from domination. This is most evident in Darfur, where efforts to increase United Nations military presence/peacekeeping force to protect civilians have been thwarted througout 2006. 

Annan presents new plan for Darfur peacekeeping force  BBC News November 16, 2006 (You will leave this site.)  Bush calls for more muscle In Darfur. U.S. policy shifts as talks stagnate. Jim VandeHei and Colum Lynch Washington Post February 18, 2006 (You will leave this site and be required to register [once] with the Post.)

The Millennium Challenge Account

With new leader, foreign aid program is taking off. Millennium Challenge Account will give more grants to well-governed nations.  Michael A. Fletcher and Paul Blustein  Washington Post January 31, 2006 (You will leave this site and be required to register [once] with the Post.)

The Millennium Challenge Account is a story in itself. The Monterrey (Mexico) Conference on Financing for Development of 2002, with attendance from countries worldwide,  was called by the United Nations to substantially increase developed country assistance to developing countries for the purpose  of achieving the Millennium development goals, which were and are in danger of not being fulfilled/coming close to being fulfilled.

The United States did not agree to supporting the Millennium development goals.  Why this is so is not clear. It is possible, even probable, that the United States does not want its freedom of action constrained by the global rule of law and the alternative decision making mechanism that the United Nations represents.  In particular, the United States does not want to be bound by treaty obligations, especially when many other nations who sign treaties ignore them in practice.

The United States alternative to directing assistance to achieving these goals was to establish the Millennium Challenge Account, as a new category and institution  (the Millennium Challenge Corporation  or MCC) of US foreign aid  This account was supposed to reward good government in developing countries by providing a substantial amount of development assistance to countries that bought into the idea of good government. 

Hunger Notes has four criticisms of U.S. government handling of the Millennium Challenge Account. These include:

• the takeover of lofty development goals by power politics has begun, and well may be far along.  In setting up the Millennium Challenge Account, the Bush administration wanted to allocate aid based on how well countries were governed.  Now--four short years later and during the same administration!--the State Department is challenging the MCC on funding allocations, and in fact the MCC has already made several decisions--Hunger Notes is not keeping track of them all!-- that would seem to violate its professed goals in favor of political considerations.  These include the following. MCC granted funding to Nicaragua, where government corruption is a major issue, where the government was paralyzed by both major  political parties, and where a significant portion of the funding was allocated to a U.S. accounting firm to keep track of MCC expenditures--hardly a sign of confidence in the government!   Jordan, which is not a democracy, qualified for an interim program, very possibly because it is a U.S. ally in the Middle East.  Similarly, Georgia, which has also supported the U.S. in Iraq, has received a large grant even though it has a high level of corruption and does not do well on other indicators of good governance.  Both Condoleezza Rice, the Secretary of State, and Randall Tobias, the Director of United States Foreign Assistance (a State Department position) sit on the MCC board of directors.

• the account does not respond to the challenge posed by the Millennium development goals.  The Millennium development goals were goals to reduce various key aspects of poverty.  The United States did not subscribe to these goals, nor commit the U.S. government or country to their achievement, thus delivering a telling blow to achieving the goals.

• the funding--supposedly large--was reduced by two key factors.  First, Congress did not provide all the funding requested, and seeking the funding requested was not a high priority of the Administration, so funding was much less than announced at the Monterrey conference. Secondly, proposed funding in the Administration budget  for the MCA came at the expense of the United States Agency for International Development,  so the overall proposed spending for development assistance was much less than that announced by the United States government at the Monterrey conference.  

Aid and Hunger  

A central part of U.S. and other countries' foreign assistance is responding to food emergencies.  Malawi, Niger and Ethiopia are important examples of countries where people have been hungry and quite a bit of assistance has gone to these countries to reduce hunger. The aid response has been principally emergency response, with the main component being food aid. One key issue is  is too much assistance being given as emergency response--responding to short term needs--and not enough given to address the key problems that result in hunger

The answer to this question is no, Hunger Notes believes.  Barely enough is being given as emergency response to hunger. The problem is that a  very inadequate amount is going for the larger aspect of reducing hunger. Thus it is not a question of the proportion--shifting money from emergency response to addressing root causes--from the same total amount of money.  This would not reduce hunger, and in fact would increase the number of deaths due to hunger.  What the problem is is increasing the non-emergency response to hunger. Why a lot of 'hunger assistance' is given as emergency assistance is that when people in a particular developing country such as Niger get to the point where they are starving, people and institutions in the developed world respond, while if people are not starving, exactly, but living lives of 'quiet desperation' the response is much less full.

Why it is much less full is an complicated question.  Some key elements are:

• Development assistance as a percentage of developed countries income has fallen dramatically since the 1970s. In the current decade it has increased somewhat, but to nowhere near previous levels. Thus various major concerns such as helping to improving health, nutrition and democracy must compete for a very limited amount of funds.

• Addressing hunger involves addressing a variety of issues and thus are difficult for aid agencies such as the United States Agency for International Development (USAID) to incorporate.  See The Hunger Dilemma by John Osgood Field for a good explanation of this phenomena.

The next articles address the (lack of) effort to reduce the number of hungry people.

The number of hungry people in the world is increasing by 4 million per year  U.N. Food and Agriculture Organization  October 30, 2006

The world will have 100 million extra hungry people by 2015, scientists say  BBC News  February 17, 2006 (You will leave this site)

The next article discusses how countries'  food policies are shaped.

'We're a thirsty land of empty promises.' As Kenya's North suffers worst drought in 20 Years, citizens point to government corruption.  Emily Wax  Washington Post  February 20, 2006 (You will leave this site and be required to register [once] with the Post.)

Corruption and other aid delivery issues

The persistently poor: an internal report criticizes World Bank's efforts on poverty  Peter S. Goodman Washington Post  December 5, 2006 (You will leave this site and be required to register [once] with the Post.)

Afghanistan opium crop sets record. U.S.-backed efforts at eradication fail  Karen DeYoung   Washington Post  December 2, 2006 (You will leave this site and be required to register [once] with the Post.)

Despite billions spent, Iraq rebuilding incomplete. Bad security, poor planning plague effort.  Griff Witte  Washington Post November 12, 2006 (You will leave this site and be required to register [once] with the Post.)

The UN World Food Program proposes to feed Nepal's Maoist rebels and their families once a peace deal has been signed with the government  BBC News  October 23, 2006 (You will leave this site.)

Bangladesh's Muhammad Yunus and the Grameen Bank have been awarded the 2006 Nobel Peace Prize for their pioneering work in reaching poor people with credit  BBC News  October 13, 2006 (You will leave this site.)  2006 Nobel Peace Prize award statement Nobel Peace Prize Committee October 13, 2006  Foreign assistance has strongly supported the Grameen Bank and other microenterprise initiatives.

Can aid bring an end to poverty?  Mark Doyle BBC News  October 4, 2006 (You will leave this site.)

Aid politics: why Ethiopia and its donors are no longer talking  David Loyn BBC News August 1, 2006 (You will leave this site.)

Ties to GOP trumped know-how among staff sent to rebuild Iraq  Rajiv Chandrasekaran  Washington Post September 13, 2006 (You will leave this site and be required to register [once] with the Post.)  Much left undone in rebuilding Iraq, audit says  Andy Mosher and Griff White  Washington Post August 2, 2006 (You will leave this site and be required to register [once] with the Post.) U.S. plan to build Iraq clinics falters. Contractor will try to finish 20 of 142 sites.  Ellen Knickmeyer Washington Post April 3, 2006 (You will leave this site and be required to register [once] with the Post

Largess with clear limits: in Africa and elsewhere, Gates Foundation takes focused approach to giving. Craig Timberg  Washington Post July 23, 2006 (You will leave this site and be required to register [once] with the Post.

UGANDA: Global Fund probe reveals massive graft   IRIN  April 3, 2006 (You will leave this site.).

World Bank President Wolfowitz's Corruption Agenda Sebastian Mallaby  Washington Post February 20, 2006 (You will leave this site and be required to register [once] with the Post.)

Bush calls for more muscle In Darfur. U.S. policy shifts as talks stagnate. Jim VandeHei and Colum Lynch Washington Post February 18, 2006 (You will leave this site and be required to register [once] with the Post.)

Theft, bribery, and extortion deprive millions of proper healthcare  Transparency International  February 1, 2006 Special report: harmful economic systems.  (Harmful economic systems are the major reason why people are poor, in Hunger Notes' opinion.)

World Bank suspends loans to Chad, as Chad relaxes controls over use of oil revenue (that has been used for personal enrichment of government officials in other countries)  BBC News  January 6, 2006 (You will leave this site)

Pledges of Increased foreign assistance

The United States and other developed countries have promised to increase substantially development assistance to Africa and other developing countries, most recently at the 2005 G-8 meetings.

G8 'failing to meet aid pledges'  David Loyn  BBC News July 2006 (You will leave this site.)

Basic analysis of United States foreign aid

U.S. Foreign Aid Explained  Lane Vanderslice  June 5, 2005

This article describes the four principal components of U.S. foreign aid: 

• development assistance ($8.4 billion in 2005) to assist in the development of poor (and other) countries.  The  principal components assisting poor countries are the USAID Child Survival account, the USAID development assistance account,  the State Departments Global HIV/AIDS initiative, the Millennium Challenge account, and contributions to multilateral development banks such as the World Bank.  There are also two accounts assisting Eastern Europe and countries of the former Soviet Union, most of which are higher income countries.

• humanitarian assistance ($2.3 billion in 2005) goes to those very much in need, because they are in a natural or man-made disaster (such as war) or because they are refugees.

• military and security assistance ($7.8 billion in 2005) provides assistance to U.S. allies, principally through  financing military purchases by these countries or making budget support payments to their governments.

• narcotics control initiatives ($1.0 billion) to assist countries in eradicating drugs and providing alternative employment.  Assistance to country police forces is also made.

Official Development Assistance. How much are developed countries contributing to developing countries?   What is official development assistance--what is counted and what is not?

Half of total assistance, $9.7 billion in 2005,  is development and humanitarian assistance that goes to poor countries. (Some development and humanitarian assistance goes to countries that are not classified as poor, such as many countries in Eastern Europe and the former Soviet Union.)

Official development assistance (ODA) measures how much each developed country gives to developing countries, both in terms of United States dollars and as a percentage of each countries gross national product. The United States gives the largest amount of  development assistance, but it only gives .17 of one percent of its gross national income (GNI), substantially below the average country contribution of .41 of one percent of GNI, and far below the agreed upon target of .7 percent (in 1992 at the Rio Earth Summit). For more information see How much are developed countries contributing to developing countries?

Official development assistance (ODA) is slightly broader than development assistance to developing countries--the $9.7 billion mentioned above.  It is difficult to find a good explanation of what exactly ODA is and what it counts. Hunger Notes provides two:   What is official development assistance? (based on information from the United States Agency for International Development) and a fuller explanation,  "Foreign aid: understanding data used to compare donors" (six page pdf file) by Larry Nowells,  a researcher with the Congressional Research Service of the Library of Congress.  This article was originally done for Congress.

Debt and development

Inter-American Development Bank to offer debt relief for Haiti and four other Latin countries  Hunger Notes  December 1, 2006

Till debt do us part: lessons from Argentina’s experience with the IMF, debt, and financial crises  Alan Cibils  IRC Americas Program September 6, 2006

World Bank will cancel $37 billion of developing country debt over the next 40 years as a result of developed countries financial pledges, 19 countries to have eligible debt forgiven entirely  BBC News   June 30, 2006

Developed Countries (G-8) Act To Forgive Development Debt to 18 Very Poor Countries; 20 More May Be Eligible  BBC News  June 11, 2006 (You will leave this site.)

Rich Countries Back Africa Debt Relief Plan  BBC News  February 6, 2006 (You will leave this site.) G-7 Take One Step, But Still Long Road to Debt Relief for World's Poorest  Jim Lobe OneWorld February 7, 2006

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