Is the United States the good St. Nicholas or an Ebenezer Scrooge?

That depends on how you view foreign assistance. A narrow focus on dollar amounts and GDP percentages misses the bigger picture of the new directions in foreign assistance under the Bush administration.

We are far and away the world’s largest donor of economic aid but dead last among 22 developed nations when measured as a percentage of GDP. At 0.13 percent of GDP, our country looks like a miser when compared with such countries as Denmark and Norway, or even with such other low GDP donors such Greece and Italy.

But contrary to common assumptions of stinginess, foreign assistance under President Bush has increased dramatically over the levels under President Clinton. Today, the United States provides $4 billion more in foreign aid than it did in the mid-1990s – and that excludes the $25 billion in economic aid that has been assigned to Iraq reconstruction.

War against terrorism

During the 1990s the U.S. foreign assistance program, administered by the U.S. Agency for International Development, lacked what policy wonks call “policy coherence.” During the Cold War, we had a coherence that joined foreign policy, foreign aid and security strategy under one rationale – the “war on communism.” This coherence crumbled with the Berlin Wall, begging the question of how U.S. foreign aid would further U.S. national interests and U.S. national security.

Few in Washington – or either side of the partisan aisle on Capitol Hill – are now asking those post-Cold War questions. As part of the “global war on terrorism,” the Bush administration boasts that it has established a new “policy coherence” in our program. A recent USAID-State Department strategy plan commits the two agencies to “align diplomacy and development assistance” with the president’s National Security Strategy of September 2002 – which institutionalized the concept of preventive war in U.S. security doctrine. In other words, the war on terrorism has replaced the war on communism as the underlying rationale for foreign aid.

We only need to look at the major recipients of U.S. economic aid to grasp the policy coherence with national security strategy. This new selectivity, based on security imperatives, can also be seen in the significant rise in economic (and military) aid to what USAID calls “front-line” states in the war on terror, starting in 2002.

According to the Congressional Research Service, the State Department now highlights the amount of U.S. assistance going to 30 front-line states in the terrorism war. Aid to Pakistan, for example, jumped from $1.7 million in 2001 to $275 million in 2004.

Front-line states

Leading the list of top economic aid recipients in 2004 was Iraq, which received $18.5 billion – more than the total USAID budget prior to 2002. Next comes Israel ($2.6 billion), followed by Egypt and Afghanistan, both of which received $1.8 billion. Other top recipients were Jordan, Pakistan, Turkey, Sudan and Indonesia, along with the main targets of the war on “narcoterroism”:

Colombia, Peru and Bolivia.

Given limited resources and the budget deficit, USAID says that it has to exercise more “selectivity” in its aid commitments. The main benchmark is a country’s coherence with U.S. national security strategy. But this new emphasis on selectivity and “effectiveness” of foreign assistance also includes a greater emphasis on aiding countries that have opened their economies to U.S. trade and investment, thereby meeting what the Bush administration calls the “millennium challenge” of adopting economic and political reforms that win Washington’s stamp of approval.

Aid with ties

Aid comes with other ties as well. According to USAID, 81 percent of its aid supports U.S. exports and services.

At first glance, a country’s generosity in foreign aid seems a good measure of whether the United States or any other country is a good global neighbor. Certainly the high percentage contributions of the Nordic and other Western European countries make them immune to charges that they are stingy. Moreover, these same leading aid donors do not tie their aid to their own products and technical assistance.

But foreign aid is not always an unqualified good, especially when it comes from a country whose aid strategy is so closely tied to its global war strategy and to its neoliberal economic policies.

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