The Many Roles of Foreign Aid
Each type of foreign aid has a very different role to play in furthering America’s own national security.
A Hypothetical Interview: Part 2
There was a national security strategy in place before the current administration. How does foreign aid fit in?
There are really four main types of foreign aid. Each type contributes to the U.S. national security strategy in its own way, so to answer your question, we’ll have to talk about each one separately.
The four types of foreign aid are humanitarian aid, public health aid, transactional aid, and development aid.
Let’s start with humanitarian aid.
It’s the one that the American public probably understands the best. Overseas, there’s a natural or human-caused disaster. There are appeals on TV, with graphic images. The public responds with private donations to their favorite charity.
The American public is mostly motivated out of sympathy for victims, a sense of charity, expecting nothing in return. But there’s also a national security aspect, which motivates the American government to respond, consistent with the requirements of the Constitution. It’s easiest to illustrate the national security aspect — the constitutional imperative — with an example.
Suppose a tsunami — a tidal wave — strikes a poor country, let’s say, Indonesia. That country will of course do what it can to help its own people, but the effort may very well bankrupt the country, which in turn would cause even more suffering. Hundreds of thousands of people are now without homes, food, drinking water, medical care. Many die, but the rest of them struggle to seek safety for themselves and their families.
Where can they go? When such a large percentage of a country’s population is suddenly homeless and suffering, it may be nearly impossible for the rest of the country, which is also poor, also living on the edge of survival, to help enough.
Suddenly, the world has an enormous refugee problem. Or maybe not. It depends on what the rest of the world does.
We can either choose to help Indonesians at the site of the disaster to return immediately to their homes and rebuild, or we can wait until the victims become so desperate that they feel they have no choice but to flee the country altogether.
Again, most ordinary Americans are motivated out of sympathy for the victims and a personal desire to help. Perhaps this arises out of what they’ve been taught in their church, synagogue, mosque, or temple. Perhaps it’s just an innate belief that’s common to us all.
However, our government also has an obligation, under our Constitution, to provide for our common defense, which it does through our national security strategy, which includes a component for humanitarian assistance in the case of natural or human-caused disaster.
Is humanitarian aid one of the parts of foreign aid that the Trump Administration cut?
Yes, and we can only assume that they must have believed that the money was better spent on something else, perhaps on disasters here at home, though they also cut that budget. So what they’re really doing is creating a situation that will inevitably lead to more deaths, which they seem unconcerned about, and to more refugees, which they say they are concerned about.
The Trump Administration says they’ll stop the flow of refugees by building higher walls on our southern border. The problem with a wall, conservatively estimated to cost $70 billion to build and then billions more to patrol and maintain, is that a wall is far more expensive than foreign aid.
Walls send a signal. It says we don’t care about the people suffering from misfortune abroad. The fact is that most Americans do care, but sending that signal means we’ll be creating enemies where we could have had friends.
But do walls work?
In a very crass sense, sure, they work a little. Foreign aid works much better, but walls do slow things down. We end up with fewer refugees in America because many die trying to cross the border. But the ones who survive will find a way. Over, under, around, through a different border. They’ll find a way.
Let’s turn to public health aid.
This is much simpler, which makes it so amazing that the current administration would want to cut it.
We offer public health aid for the same reason we address serious communicable diseases at home. If you don’t want mosquitoes and other vectors to transmit the Zika virus or malaria or yellow fever or Ebola or dengue fever to people here in America, we must then protect Americans — provide for our common defense — by addressing such problems at the source.
I can’t keep mosquitoes out of my house. I don’t know how they think a wall on the southern border will keep them out.
And transactional aid?
This is more the kind of aid that the Trump Administration seems to appreciate. Insiders will know this aid as the Economic Support Fund (ESF), or one of its cousins created for programs in Central Europe and the former Soviet Republics. It has its origins in aid for Vietnam and its neighbors in the mid 1960s and 1970s.
Sometimes the word “realpolitik” is attached to this kind of aid. That word comes from the German, and basically means “realistic politics”, having to do with the very short-term or immediate interests of the United States in a particular situation. This kind of aid generally rejects principles, ideology, or morals as a motivation, though those factors may come into play.
Simply put, America gives transactional aid because it wants something in return. Maybe we give it to an authoritarian dictator in Central Europe because that dictator allows us to station our military facilities in that country. In Vietnam in the 1960s, we provided aid to rural peasants that agreed to fight the communists, or maybe pretended to agree.
As a practical matter, transactional aid is directed by the State Department. It’s the State Department that decides what transactions are necesary. The State Department defines America’s realpolitik. While the U.S. Agency for International Development may actually hand out the aid, USAID does this only with the approval of the State Department.
Does it really matter whether the State Department is involved or not? Isn’t the aid the same? Can’t the U.S. government help poor people while at the same time engaging in transactions with foreign governments?
The State Department has always made this argument. They say all aid is the same. So why shouldn’t the United States get something in return?
I’ve been involved with transactional aid on the USAID side. I can assure you that for a development professional, for a person skilled in implementing development aid, being forced to implement transactional aid is an eye-opening experience.
The people who created USAID in the Kennedy Administration back in 1961 were well aware that this would be a problem. They fought pretty hard to make sure that USAID would not be subservient to the State Department.
When I was the head of a regional economic office in Ghana, where my program was entirely development aid, I did not report to the chief economist of the American Embassy in Ghana. If the ambassador or an economist in the embassy had questions, I’d answer them, but I did not report to the embassy, and they had effectively no say in what I did.
But when I was in charge of a program implementing transactional aid, that wasn’t the case at all. I recall being summoned, and at times I was instructed to change my program to suit politically determined requirements.
And you followed that instruction?
I communicated the instruction to my superiors within USAID. They sorted it out.
None of this is to say transactional aid is not important for America’s national security. But let’s not confuse it with other kinds of aid. Transactional aid has a different objective, and it’s administered differently from other kinds of aid.
Interestingly, and not surprisingly, transactional aid is the favorite type of aid of the Trump Administration. They do seem to like making deals.
Here’s the problem with transactional aid: When push comes to shove, what matters most is the transaction. Some poor folks may benefit, but only incidentally. When you compare transactional aid to development aid, this problem is much easier to understand.
OK, what about development aid. How exactly is it different from transactional aid?
Development aid looks to the long-term future. It’s not about this year or the next. It’s about what we want the world to look like five or even ten years from now.
Do we want to live among countries in which their ordinary citizens are trapped in increasing poverty” Or would we prefer that our neighbors be increasingly prosperous?
I’ve read that development aid was started under the Marshall Plan, right after World War II. Is that right?
No, not really. Under the Marshall Plan, aid was provided to countries in which physical infrastructure had been destroyed by massive war. The institutions were largely intact, but the buildings in which these institutions operated were destroyed. The skills and knowledge to operate a modern economy were largely intact. The Marshall Plan was responding to a disaster, much like humanitarian aid.
How was development aid different from the Marshall Plan?
Development aid was designed to transform existing institutions that are actually not working for ordinary people. The Kennedy Administration created development aid because they saw what had happened in Cuba. They blamed American multinational corporations for corrupting the Cuban government, for enforcing poverty wages, and for stamping out any effort on the part of ordinary Cubans to achieve a better life. All of this was happening just 90 miles from the United States, the wealthiest country the world had ever seen.
When Congress passed the Act for International Development in 1961, it resolved in its statement of policy, section 101 of the Act, that assistance should be about:
“… aiding people of less developed countries of the world to develop their resources and improve their living standards, to realize their aspirations for justice, education, dignity, and respect as individual human beings, and to establish responsible governments … to help make a historic demonstration that economic growth and political democracy can go hand in hand to the end that an enlarged community of free, stable, and self-reliant countries can reduce world tensions and insecurity.”
You see there again the reference to security. Sure, the people of America broadly approve of helping people in other countries because we are fundamentally a compassionate people, because we are in many cases taught by our religions that this is the right thing to do. However, we also provide development aid because it is vital for our long-term national security.
So development aid is focused on long-term institutional transformation, while the other three kinds of aid seem to have a short-term focus. Is that right?
Precisely correct. When Congress first authorized development aid, it directed the president, in section 211 of the Act, to focus specifically on long-term development objectives.
The people that designed the U.S. Agency for International Development actually fought for a special kind of appropriation from Congress, where the money was allocated for a period of five years instead of just one. The idea was that achieving true development, true institutional transformation, was going to be hard, and would take time. Plans needed to be long term.
Unfortunately, Congress insisted for the most part on one-year budgets, primarily because Congress didn’t want to give too much power to the president. The designers of USAID lost that fight, but that didn’t mean they were wrong.
[To be continued…]