YOUR SAY: The political economy of United States foreign aid and its implications for U.S. foreign policy
The political economy of United States foreign aid and its implications for U.S. foreign policy
The United States' fiscal health becomes more and more precarious by the minute as the federal deficit has crested above $18 trillion and shows no signs of stopping or slowing down for the remainder of President Obama's second term in office. Many financial experts continue to question at what point and when the United States' debt will become unserviceable, meaning when will the interest on the debt become unpayable with other major outlays of responsibility for the Treasury Department, i.e. Social Security, Medicaid, Medicare and the like.
Congress contends that while the debt is high in terms of dollar amount, compared to domestic output, it is equal to or close to the gross domestic product of the United States. Many on the political left continue to push for social programs which incur continued federal spending while many on the political right call for cuts and reductions in federal spending and reforms to entitlement programs but continue to vote for burdensome national defense bills for example.
The fiscal climate of the United States has now become the primary national security concern for some in Congress and throughout the executive branch. How much longer can the government spend money and print money before it becomes unable to pay the interest on its debt? Time will tell if the United States can reduce its deficit spending and thus reduce its debt. Keeping in focus however, what and why the United States spends so much money may be key to lowering the country's debt by reducing ineffective or unproductive spending.
With the dangerous monetary straits in the forefront of the 2016 election, many in the electorate want a candidate who can balance the federal budget while managing federal revenue and spending levels like most American's manage their checkbook. This would mean that the government only spends what it brings in via revenue, not through inflationary measures.
To date, the United States brings in about $3 trillion in revenue and spends much more than that in addition to the $18 trillion in debt that has already been accumulated. As such, since the recession of 2008 and the budget shortfalls every year to date of President Obama's administration, federal expenditures have faced tough scrutiny by the news media and by the general public. These include the total costs of the Affordable Care Act, the wars in Iraq and Afghanistan, and the budgets for each organization and department within the executive branch of government.
Billions upon billions of dollars are spent each year, however, many cannot explain or are unaware of what so many of the agencies in government actually do or why they are necessary. Since President Obama's pledge to end the wars in Iraq in Afghanistan responsibly, pundits, critics and supporters alike have begged the question -- what did the United States gain from its involvement in Iraq and Afghanistan? Did the United States really, "win" in either conflict? At what cost did these wars come?
Figures for each can be convoluted but the price in dollars that the United States "paid" was on borrowed money, or rather financed in the name of each person in the United States -- "debt held by the public," this can be quantified in dollar/cost-average terms to demonstrate that each person in the United States would have to pay absorbent amounts of money to the federal government to equalize the accounting.
Every year the United States wages a different kind of war, not in terms of guns and soldiers, but in terms of money and influence -- this in the hopes of influencing and controlling the political developments in a number of countries around the world. Every year the United States provides millions of dollars in foreign aid to other countries in hopes of easing foreign policy discomfort often caused by a difference in culture, religion, or ideology as well as the world's stratified economic standing.
The United States also promotes "democratic ideals" to counties around the world with the promotion of so-called democratic societies and institutions in other countries. Wouldn't it stand to reason though, that since the United States is $18 trillion in debt that government expenditures should stop until the debt gets repaid and the budget gets balanced? Surely there must be a bright government planner in Washington, D.C. who has proposed this solution? Perhaps not, in any event, a dollar/cost average should be demonstrative in regards to assessing the effectiveness of U.S. foreign aid.
To put things in perspective, for fiscal year 2016, the president's request to Congress for foreign aid programs is $22.3 billion dollars. According to the State Department, this budget will help the State Department: end preventable child deaths, ensure food security and progress towards ending hunger, build resilience to recurrent crises related to climate change, promote more democratic societies and institutions, improve prosperity and economic growth in Central America, connect and empower Africa, enhance science, technology, innovation, evaluation and learning, and partnership, continue to rebalance to the Asia-Pacific region, provide life-saving responses to areas with the most vulnerable populations, food aid reform and support agency operations.
Many have heard of the plight of the Third World for decades, shanties in sub-Saharan Africa normally comes to mind for most people, followed by the Middle East and southwest Asia. The United States has provided billions of dollars in aid for years to the rest of the world, but has this aid been effective? To think in terms of development, this must apply across several spectrums: economic, infrastructure, human and cultural.
The end-goal of United States foreign aid has been to assist countries that need financial assistance in an attempt to bolster the state's resources, infrastructure, security and assets to help the state attain a higher standard of living, a higher measure of development and a higher gross national and gross domestic product under the premise of enhancing diplomatic relations.
U.S. foreign aid has its roots deep within U.S. foreign policy, the American ethos that democracy and freedom are good for the world, coupled with the belief of former President Woodrow Wilson that it is an inherent American duty to lift up people who are in poverty; this "white man's burden" underpinning has dominated U.S. foreign policy for more than 100 years. The duty of the United States for many in the foreign policy circle is the advancement and attainment of democratic ideals around the world and the expansion of democratic forms of governance, the mechanism for this for many observers is an influx of monetary aid to the governments of the respective countries.
However, with the United States' downward trending fiscal standing since 2008, the current and planned federal government expenditures, and the ability, or rather the inability to increase federal revenues to match government spending; the United States has reached the fiscal question of what federal programs should be and must be eliminated. Especially if they are ineffective or inefficient. United States foreign aid is one program that must face this scrutiny. It cannot be immune. Compounding the answer though is the broader foreign policy question and imperative of ensuring palatable allies to the United States and supporting and fostering the long-term U.S. foreign policy agenda.
Specifically, it does not benefit the United States to have, "enemies" around the world or states whose governments are unfriendly to the United States. These places normally serve as breeding grounds for terrorism, subversive movements, hostile regimes and rogue states. The United States learned this lesson in 2001, for example.
After the end of Soviet occupation in Afghanistan in the late 1980s, the United States abandoned its foreign policy and (covert) monetary support of Afghanistan. As a result, the Taliban took root in Afghanistan and created a social and political atmosphere ripe for the musings of the Al Qaeda terrorist organization. As a result, the interim years between the late 1980s and 2001 allowed for the coalescence of Al Qaeda and the Taliban. Al Qaeda eventually basing training and leadership in Afghanistan in preparation for Sept. 11, 2001. The onset of the War on Terrorism was the primary goal of disbanding the Taliban and dismantlement of the Al Qaeda terrorist network within Afghanistan and worldwide.
The crossroads for fiscal considerations and U.S. foreign policy is the question about an evaporation of U.S. aid and the consequences if this happens in places like Afghanistan. As the United States experienced during Vietnam, foreign policy goals trumped military strategy and the efficient use of waging war. There was no large-scale military threat in Vietnam. The communist regime had no means or serious capabilities to attack the United States militarily. Unfortunately, the broader foreign policy goal of impeding the communist expansion in greater French-Indochina by way of the United States military became the paramount foreign policy goal.
Observers can note many similarities between the Vietnam time period and our contemporary foreign policy architecture of fighting the war on terrorism through several fronts -- one being monetarily through foreign aid attached to the notion of Wilsonian politics of developing the underdeveloped world and the other being the military use of force throughout the world to accomplish foreign policy objectives; this however, not being the optimal mechanism to do so.
Treasury Department experts and commoners alike do not require graduate level mathematics and business skills to see that the pace of U.S. domestic spending is not matched by U.S. revenue sources. It is only a matter of time before the bubble bursts. Concurrently, foreign policy aficionados know that the United States cannot continue to fund on such a grand scale, massive parcels of money around the world in the hopes of catalyzing development.
These factors beg the question: Is United States foreign aid effective? Does it really accomplish realistic foreign policy goals? Does United States foreign aid assist countries in development? Or, is development stagnated by other factors? For fiscal year 2016, the State Department has planned to use $22.3 billion for (major) foreign aid programs around the world. That amount is a significant sum of money on the face of it. One would think that this money would do great things to hasten development in the Third World and in states that are not as developed as the major industrialized nations in today's world. However, examining the major "winners" of U.S. foreign aid and their respective development indicators, U.S. foreign aid appears to be rather ineffective, or perhaps less effective than logic would surmise given the amount of money expended by the United States.
The State Department, through its own, United States Agency for International Development administers most foreign aid (economic, military, humanitarian) to states across the globe, given the current request from Congress, Secretary of State John Kerry has outlined the major goals for the fiscal year 2016 budget which include the following priorities and allocations:
Dedicating $3.5 billion to counter the Islamic State of Iraq and the Levant (ISIL) and respond to the crisis in Syria, bolster regional security, and provide for related humanitarian needs;
Providing $1 billion to address the root causes of migration from Central America, including the migration of unaccompanied children;
Investing in clean energy, sustainable landscapes, and adaptation through the Global Climate Change Initiative to support a healthy global environment, climate-smart growth, and improved resilience to the impacts of climate change for the most vulnerable countries;
Providing $4.6 billion for international organizations and peacekeeping missions to share global security responsibilities with other nations and respond to new peacekeeping requirements;
Investing $4.8 billion to support security requirements and overseas infrastructure to support the people, infrastructure and programs that enable U.S. operations and relations with foreign governments;
Advancing the president's commitment to global health by: investing in programs to end preventable child and maternal deaths; combating infectious disease threats in support of the Global Health Security Agenda; and creating an AIDS-free generation by supporting targeted global HIV/AIDS efforts, including through a new PEPFAR Impact Fund; and
Countering Russian pressure and aggressive actions by providing essential support for Ukraine and neighboring countries in the region.
Reforms:
The Department continues to strengthen budget and strategy integration, drawing stronger correlations between funding requested and the strategic goals that funding supports. The Bureau of Budget and Planning is enhancing systems and out-year budgeting to accommodate tying funding to both bureau and department-level strategic objectives.
These major funding obligations, primarily of $3.5 billion to combat ISIS, $4.6 billion for supporting worldwide peacekeeping operations, and $4.8 billion in support of security programs demonstrate that the United States military, national defense, security and greater foreign policy are tied to U.S. foreign aid initiatives.
Numerous metrics abound for measuring development in quantifiable terms. These measures of utility include: the state of the country's economy, its growth and its potential for growth, education attainment and access to education, national debt, health of the country's financial sector, health care, infrastructure, poverty, trade deficit, advancements in science and technology and urban development among others.
More common measurements of development include: life expectancy, daily caloric intake, education attainment, literacy, poverty and the state's infrastructure in terms of facilitating commerce and transportation. The pervading question for foreign aid advocates, proponents and opponents is the actual effectiveness and value (or ineffectiveness) of foreign aid from the United States to other countries. Trends in this data will reveal how effective this aid is in terms of dollars and measurable growth rates.
Major categorical groupings for U.S. foreign aid include the following categories and allocations (FY2016):
Peace and Security initiatives: $8.8 billion
Democracy and Human Rights initiatives: $2.9 billion
Economic Development initiatives: 3.7 billion
Health initiatives: $8.8 billion
Program Management initiatives and sustainment: $1.7 billion
Humanitarian Assistance: $5.6 billion
Education and Social Service initiatives: $1.2 billion
Environmental initiatives: $1.0 billion
The United States' total foreign aid (planned) budget for the last five fiscal years includes the following allocations:
2011: $40,678,744,190
2012: $39,811,713,513
2013: $43,609,445,477
2014: $37,176,179,006
2015: $36,546,934,459
Aside from fiscal year 2013, we have seen a gradual downward trend in planned U.S. foreign aid. For the last five fiscal years, U.S. aggregate planned foreign aid has averaged $39 billion a year, with the major increase in 2013 as U.S. foreign aid rose above $43 billion dollars.
Dollars actually spent from 2009-2014:
2009: $2,312,644,000
2010: $3,869,134,514
2011: $9,976,000,671
2012: $7,259,381,685
2013: $28,119,380,912
2014: $29,887,145,404
The largest recipients of (planned) U.S. foreign aid for the upcoming fiscal year (FY16) include the following countries with accompanying allocations:
1. Israel: $3.1 billion
2. Afghanistan: $1.5 billion
3. Egypt: $1.45 billion
4. Jordan: $1 billion
5. Pakistan: $803 million
6. Kenya: $630 million
7. Nigeria: $607 million
8. Tanzania: $591 million
9. Ukrain: $513 million
10. Uganda: $469 million
Total planned foreign aid for the top ten recipients for fiscal year 2016: $10.685 billion
In review of this list, several countries stand out as they are major components of the larger U.S. foreign, defense, and/or strategic policy. Israel for one, the United States' longstanding historic support of Israel in the Middle East and the fact that Israel is threatened by numerous U.S. adversaries, Iran being the primary focus, the United States' foreign aid support (planned) for Israel in 2016 is $3.1 billion. Afghanistan, the United States has waged some sort of conflict in Afghanistan since 2001, for almost 15 years, the United States has been influential in Afghanistan's politics and development. With the ejection of the Taliban and the installation of the Karzai government in the early 2000s, Afghanistan has been a key ally in the region and a major U.S. foreign, defense and counterterrorism partner for some time. The United States wants to ensure that the Afghan government remains in good relations with the United States and that Afghanistan will not fall victim to the vacuum effect like it did after the Soviet withdrawal in the late 1980s.
Egypt, another long-term ally of the United States, a major player in the U.S. defense strategy in the Middle East and a major player at the Camp David Accords, now stands at the crossroads of the, "old guard" in the Middle East and the potential for continued emergence of a more representative government in the region. With the Arab Spring movement in 2010 and 2011, the deposition of Hosni Mubarak and the potential for a subversive or hostile political movement to seize power in Egypt that would hamper U.S./Egyptian relations, the United States wants to invest in the long-term objective of fortifying the Middle East with U.S. friendly governments. Massive influx of foreign aid may or may not aid Egypt in the path desired by the United States, however, this is at the heart of the United States' strategy.
Ukraine, a country that rose to international specter in 2014 with Russian incursion into Ukraine as part of a larger annexation effort by leaders in the Russian government who may want to resurrect the tenants of the once "evil empire" by annexing land, this sets U.S. Russian/Baltic relations in a tense position, on one hand we see Russia trying to wage the old empire back to viability and on the other hand we have a question of state sovereignty and state security for Ukraine and a Munich-like conundrum of international appeasement of Vladimir Putin.
The research in this case shows that a myriad of other factors advances or hinder a country's development in spite of U.S. foreign aid. A nation's infrastructure, or lack thereof, the education level of the workforce (human capital), political and ideological alignments, as well as the respective government's use of the monetary resources, which for countries like Afghanistan, Pakistan and Egypt the propensity is high for gross mismanagement and misallocation at the national decision making level.
The majority of the countries receiving the most U.S. foreign aid benefit (top 10) continue to be in the semi-periphery or the periphery of the world's development construct and have struggled and continue to struggle with sustained, measured and continued development that is reflected in development indicators. At least eight of the 10 countries receiving the most foreign aid continue to lag behind the developed world. This has been the case for some time and it reasonable to assume that despite hundreds of millions of dollars from the United States, these countries will continue in this regard.
Given the perilous state of U.S. fiscal policy, the United States cannot continue to pour millions upon millions of dollars into other countries' development initiatives while continuing to run massive deficits and mortgaging the current U.S. debt. Regardless of the United States' foreign policy, fiscal solvency will undermine any foreign policy enterprise at the detriment of the country's financial future.
Douglas P. Harden is a graduate of the School of Public and International Affairs at the University of Georgia. He is the 2014 Denton International Affairs Graduate Scholar of the Sigma Chi Foundation at the University of North Georgia. He is a resident of Kathleen.
This story was originally published January 4, 2016 at 10:10 AM with the headline "YOUR SAY: The political economy of United States foreign aid and its implications for U.S. foreign policy ."