The U.S. Agency for International Development (USAID or AID) has been under siege for over a decade due to the generally accepted view that it has failed to significantly advance the cause of development in numerous countries in which it operates.1 AID's critics are found in academia, the corporate world, recipient nations and the non-profit sector. That is to be expected. What is even more significant, however, is the extent and tile persistence of the criticism coming from within AID itself as well as other branches of the U.S. government. The Congressional Research Service acknowledges this “broad agreement that the United States foreign assistance program [needs] a major overhaul.”2
Working from the assumption, if not actual proof (to be discussed further below), that U.S. foreign aid has failed to have a significant impact on promoting development in "third world ' economies, this special issue and the next of Middle East Policy seeks to find the underlying causes for this failure and to suggest ways to salvage the U.S. foreign assistance program.
Critics of foreign aid in general and USAID in particular have many weapons at their disposal. There is a plethora of reports of waste, mismanagement, corruption,3 and inappropriate projects and/or technologies. While recognizing that the failure of aid is a complex issue in which there are many culprits, several contributors to this volume and the next focus especially on the American side of the aid-for-development process because of the numerous problems emanating from it. Indeed, while not dismissing the problems associated with recipient handling of U.S. aid, much of the criticism has been directed at USAID because "program objectives are too numerous, lack focus, provide no sense of priority, and spread resources too thin to achieve results" and for AID's “poor management and an inability to assess the impact of its programs.”4The case studies that follow, especially those on Egypt, Morocco, Somalia5 and the West Bank/Gaza Strip, demonstrate that political and strategic objectives take precedence over economic development, thus rendering much of the foreign-aid packages developmentally irrelevant (at best) or damaging (at worst).
Since AID is undergoing significant structural reform by President Clinton and is being threatened with oblivion under the Republicans in Congress, it is vital to examine this institution now while there is still a chance to offer constructive criticism and suggestions about which way this reform should proceed.
FROM WORLD LEADER TO "ALSO-RAN"
The significance of U.S. aid policy, and the problems surrounding it, extends beyond the obvious bilateral relations of the United States and recipient nations. U.S. aid policy has been, at least until recently, an agenda-setting model for the aid policies of other major Western donors and certainly of the multilateral agencies, primarily the World Bank and the International Monetary Fund. Using the experience of four major donors, including the United States, as evidence, Hook concludes that during and after the Cold War, states have “turned to regional or functionally specific global organizations or to loosely knit ‘regimes,’ including that for foreign assistance, to preserve global collective goods such as stability, a livable environment and material welfare.”6
Hook's point about “regimes” is especially appropriate when discussing the various bilateral assistance programs in numerous recipient nations. In Egypt, officials of the Canadian International Development Agency (CIDA) agree that the U.S. aid program is the dominant voice in development programming7 due to the size of its contributions and the extent of its project assistance (nearly 100 projects completed plus another 40 still active). In 1994 the United States provided approximately 30 percent of the $2.4 billion Egypt received in economic assistance from bilateral and multilateral donors. Bilateral agencies generally defer to the United States and follow its lead; others occasionally see where the United States is going and strike out in a different direction. Either way, various donors react to U.S. policy. In addition, USAID works closely with the World Bank and IMF in guiding the Egyptian government's policies on structural adjustment and privatization.8
In the West Bank and Gaza Strip, of $2.4 billion pledged by over 30 donors (nation-states and multilateral agencies) to enhance the prospects for Palestinian autonomy, the U.S. pledge was more than one-fifth of the total pledges: $500 million between 1994 and 1998. The World Bank is coordinating this massive assistance program and is working with the Palestinian Authority in Gaza.
The significance of U.S. aid policy, and the impending changes in that policy, are felt on a global level. As Congress cuts aid funding levels and places restrictions on U.S. contributions to U.N. development agencies, there is the expectation of a dramatic decline in U.S. leadership in the development-assistance arena. In a rare criticism of his party's proposals to drastically cut foreign aid, Senator Mitch McConnell (R-KY) warned in May 1995 that such cutbacks would leave the United States with “as visible and viable an international role as Ghana. Maybe not Ghana maybe Burkina Faso.” He further warned that the proposed drastic cuts from nearly $19 billion in FY 1995 to perhaps $12.6 billion in FY 2002 "will leave this president, the next president, our nation, our citizens with no global options, no global options at all other than sending in the troops.”9
Senator McConnell’s and others’ warnings may already have come true. In June 1996, the United States was ranked in fourth place on the list of foreign-aid donors in total amounts given, falling behind Japan, France and Germany; it ranked “last among the 21 nations in the Development Assistance Committee of the.... Organization of Economic Cooperation and Development in the share of national [economic] output devoted to [foreign] assistance”10(see table 1). Not only do cuts in foreign aid remove the United States from its traditional leadership role in global development programs, they actually encourage other nations to follow the United States in its retreat. “Worldwide funding levels [by donors to developing countries dropped 18 percent over the last two years.”11Such cuts, says AID Administrator Brian Atwood, will hurt the U.S. economy because “the global economy will be disrupted continually by failed states, by refugee flows, by environmental deterioration and the like.... Now that the United States [has] 26 percent of its economy tied into the global economy, that means our economy is going to suffer”12from these disruptions.
The gutting of foreign aid may have come to an end, but this does not mean things should stay at this low level of foreign assistance. One reason the precipitous decline may have halted is that foreign aid has long been derided by politicians and by the American public due to the false assumption that it consumed a large part of the federal budget. Politicians and the general public are learning that their views are misinformed. Public opinion polls in the last year alone indicate that Americans could support higher levels of foreign assistance-as much as 5 percent of the federal budget.13
How did this gutting of U.S. foreign assistance come to be and how has it been justified? Can American leadership be regained? Was that position legitimate given the lack of progress in U.S. foreign-aid programs globally? With evidence from several Middle East and North African countries as well as regional programs such as democratization projects and support for NGOs, this special issue of Middle East Policy and the next one address these questions and seek to provide suggestions for reforming U.S. foreign aid to the Middle East and North Africa with implications for U.S. aid to the rest of the world.
USAID UNDER ATTACK
Seeking a New Rationale
The American foreign-aid establishment came under increased criticism in the late 1980s by both Congressional leaders and Executive Branch officials. Alan Woods, the late director of USAID, called for a restructuring of the aid process, and Congressional hearings were held on the question of how to reform it. Nearly a decade ago, Mr. Woods recognized the political motivations of foreign “economic” aid. He bemoaned the fact that there had been (as there continues to be)
no graduates from less-developed to developed [countries] in 20 years [of aid donations] ... Direct U.S. development assistance, overall, has played a secondary role [in fostering development] and has not always succeeded in fostering growth-oriented policies among recipient states.14
And in February 1989, months before the dramatic changes in Europe that ended the Cold War, a Congressional Task Force on Foreign Assistance, spearheaded by Congressman Lee Hamilton (D-IN), recommended the creation of a restructured foreign-aid implementing agency to replace USAID because of the latter's inability to achieve its overall objectives.
Thus, this criticism has been around long before the end of the Cold War – the primary impetus for U.S. foreign assistance since the 1950s – and before the U.S. Congress was controlled by Republicans determined to dismantle programs the Democrats had established and maintained for decades. AID was one of those programs.
Established in 1961 by John F. Kennedy, AID was designed to promote socioeconomic development in the Third World. While AID officials’ preferred goal of promoting development has remained relatively constant over its 35-year history, its definition of development and thus the methods it uses to achieve it have changed due to a great deal of organizational and individual learning. One particular and significant change in AID’s approach to development has come about in the last 18 years. It began during the Carter presidency but was strengthened and encouraged under the Reagan administration,16when it received ideological as well as political support. This change in approach to promoting development resulted from a great many AID officials becoming frustrated with what they believed to be the failures of many Third World states to utilize foreign aid efficiently. These AID officials blamed this failure especially on statist policies subsidizing urban consumers as well as protecting and supporting inefficient industries. The economic burden for this urban bias was placed on farmers and much of the agriculture sector generally, the largest sector in Third World economies and the one with potential for being an engine of growth for the entire economy. AID officials also have become increasingly frustrated over their own government's tying their hands by making political compromises with Third World governments that have had negative economic effects.17
Recipient governments' misuse of aid monies, mismanagement of their own public sectors and inhibiting the development of the private and non-profit sectors might suggest that it is inappropriate to label U.S. aid a “failure.” If aid funds do not account for significant proportion of gross national or domestic product or savings and investment, is it realistic to hold AID responsible for the lack of a dramatic impact on national development in recipient nations? It is for two reasons: (1) economic growth and development are the rhetoric and promises of AID, even though foreign aid is above all a political tool;18and (2) AID began to use assistance programs for policy-reform objectives and thus tied itself to the political processes of recipient nations. Indeed, a common complaint among government officials and intellectuals in recipient nations is that AID dictates policies to recipient governments, using aid disbursement as leverage. To some extent, which varies with the degree to which AID can leverage policy reform, the failure of those nations' policies be came the failure of AID.
From Basic Needs to ''New Orthodoxy" and Beyond
Frustrated by numerous experiences with state-dominated and inefficient economies, AID officials and the organization as a whole adopted a new approach to promoting development. The original goals of promoting economic growth and satisfying basic human needs, while still desirable, have been upstaged by AID's new desire to promote private sector interests and efficient government management of the economy. The private sector is not only viewed by AID as the (last?) best hope for economic development but also is a traditional favorite of many in Washington as the engine of political development and democratization.
Then, with the end of the Cold War and the reemergence of democratic structures and states in Eastern Europe and parts of Africa and Asia, this new orthodoxy was further invigorated and reinforced. American concepts and Western values – particularly democratic principles – purportedly had won out over communism and authoritarianism. USAID and other branches of the U.S. government unabashedly began to pro mote democratization, economic liberal ism and the private sector as the necessary elements of true development in the “Third World/LDCs” – particularly in those developing countries that received American foreign aid. Not just ends in themselves, these values/concepts became the means to the other end: economic development.
In January 1991, USAID Administrator Ronald Roskens, a political appointee of George Bush, issued a restructuring program for the Agency. Entitled “Aid Initiatives: A Roadmap for the 1990s,” the four points of emphasis for the “new AID” were (1) business and development partnership, (2) democracy, (3) family and development, and (4) towards strategic management (i.e., organizational reform). While four goals were stated to reform the agency, the most important (given the emphasis and detail put on them by Administrator Roskens) were the first and last. Great stress was placed on promoting a more efficient agency, one that could do more with fewer resources. Under “Business and Development Partnership,” Roskens asserted that “as America's private sector faces the challenge of recession at home, it's a good time to interest them in the growth and potential of developing economies. We at AID, in Washington and in the field, can provide valuable information and contacts to expand the opportunities for U.S. business and indigenous businesses in developing nations.”19
This restructuring sought to make AID more like the Department of Commerce and less an agency designed to foster indigenous development and self-sufficiency in poor countries. The goals were primarily the promotion of American business interests in developing countries, not the promotion or American foreign-policy interests by using aid as leverage or the promotion of humanitarianism. Still, these goals were in keeping with Secretary, of State James A. Baker's “charge” to orient American foreign policy to consolidate democracy worldwide, build free-market economies, help regional peacemakers and provide disaster relief. AID’s traditional goals of improving “the quality of human life by reducing poverty, ignorance and malnutrition” were subsumed by Roskens, walking in step with Baker, under the category of humanitarian assistance rather than either a productive investment or an ultimate development goal. The reduction of poverty generally was viewed as “a ‘humanitarian assistance nee’' rather than a central purpose of development.”20
Whatever the intent of the restructuring effort, the effect was negligible mainly because AID employees worldwide resisted this blatant attempt to undercut the traditional goal of promoting development for the recipients of aid and to use foreign aid overwhelmingly for the benefit of the donor. One former AID official summed up the sentiments of many of his colleagues when he criticized Roskens’s attempt to replace the former rationale for foreign assistance, that of Cold War politics and containment, with “an effort to assist directly American businesses that compete in certain world markets.”21
Just as President Bush entrusted AID Administrator Roskens to “reform the donor” and emphasize trade as key to development, President Clinton has entrusted his administrator with a similar task. The Clinton administration, however, has not sought to use AID as an extension of the Commerce Department.
J. Brian Atwood was appointed by President Clinton to lead and reform USAID in the post-Cold-War era. Atwood has observed that “[w]ith the end of the Cold War, the international community can now view the challenge of development directly, free from the demands of superpower competition.”22 Atwood's own priorities to accomplish reform, in keeping with the Clinton ad ministration's effort to “reinvent” government, have been to establish a clear set of objectives. U.S. assistance is supposed to be directed at the environment, democratization, population, “broad-based economic growth” (markets, trade and human resources), and humanitarian assistance/disaster relief.
Whether these new emphases will be sustained, especially in light of the “Republican revolution” in Congress, remains to be seen. Many an AID administrator has sought to map out “new directions” of his or her own. Regardless of various directions past, present or yet to come, the fact remains that USAID (1) is a tool of U.S. foreign policy and exists to promote U.S. interests more than to promote development in poor nations; (2) has failed in its professed goal of helping promote self-sustaining economic development in various developing countries; and (3) is essentially a Cold War agency now (or perhaps still) in search of continued legitimacy.
While American politicians and business people appreciate the first point, the second and third points have placed AID in the midst of the most important foreign-policy questions of the mid-1990s: (a) should foreign aid continue; (b) can the aid program, and USAID in particular, be reformed; and, if so, (c) how? AID itself suffers from a remarkable lack of institutional legitimacy, perhaps because of its dependent relationship (and subservient position) to the U.S. Department of State and the U.S. Congress, among others. While AID is often cited as an “independent” agency, the fact remains that AID is subservient to the political mission of the State Department and to a Congress that often micromanages projects and ties aid in such a way that the benefits accrue to their constituents rather than to the nominal recipients.
Whether AID should be dismantled because it is beyond hope, be reorganized if there is any hope, or be “reinvented” because that is the favorite theme of many, is the most pressing question before us. To answer it effectively, we must first confront a host of issues: the politics of aid, the political economy of development, development versus dependency, organizational behavior and absorptive capacity, among others. There are many answers to the general question asked by academics, development specialists and different groups in recipient nations, as well as AID administrators and members of Congress: Why has AID failed? I will deal principally with the politics of aid, including some of the related bureaucratic wrangling.
The Politics of Aid
While foreign assistance is an economic instrument,23 the giving of aid-deciding who is worthy, determining who gets what and how much, measuring one country's loan or grant against another's, using aid to leverage recipient governments for “other” purposes-is inherently a policy, and thus a political, process. As an AID development economist puts it: "The politics of foreign assistance is, after all, the art of generating majority support in Congress from different groups that may have only a tangential interest in the program.24 Conservatives and progressives alike recognize this reality, even as they critique it from divergent perspectives and recommend vastly different solutions to what both see as the failure of aid.25
Politics by itself, however, may not be enough of a factor in causing the global failure of American aid. Cold War politics was the determining factor in the Marshall Plan the $13 billion European Recovery Program which lasted from 1948 until 1952 and this “model” program (never to be repeated) continues to be hailed as a major success.26Thus, politics by itself is (1) unavoidable and (2) not always a sufficient obstacle to success.
One arena in which politics is an obstacle to success is that of internal American politics. Congressional meddling in aid has been a primary obstacle to the success of American economic assistance programs in various countries. Compounding this meddling are the turf wars waged against AID by other U.S. agencies, such as the departments of Agriculture and Commerce. And the institutional framework of AID is not designed to allow AID officials to resist such inevitable turf battles; rather, it is designed to allow commercial interests to win these battles over development assistance priorities.
There are numerous examples of bureaucratic and political competition and rivalries over aid disbursement. This competition often pits USAID against its own parent bureaucracy, the Department of State, including U.S. embassies around the world, as well as against the White House, the U.S. departments of Agriculture and Commerce, the Congress and so on.
These agencies are generally pursuing mutually exclusive goals, or at least the goals are perceived to be attainable only in a zero-sum game. For example, AID seeks to enhance development, empower the poor (with increasing attention to women), promote decentralization and local development. U.S. embassies generally seek to strengthen “friendly” governments and do not want to empower opposition movements thought to be hostile to friendly relations with the United States. So immediately there is a conflict between the economic priorities of USAID and the political priorities of the U.S. embassy in a given country. Also, as USAID seeks to promote agricultural development, the U.S. Department of Agriculture has representatives in developing nations whose mission is to promote American agricultural exports. They would rather maintain a poor nation’s dependence on American imports and certainly do not want to see any other country's products competing with U.S. goods in the global marketplace. The “Food for Peace” (Public Law 480) program has long been an area of contention and organizational conflict between USAID and the USDA, as well as between AID and the State Department. AID officials struggled for years against congressional mandates that imposed the sale of American wheat and other products in countries where AID was operating. AID officials saw these cheap imports as restricting the development of the agriculture sector in developing countries. Recipient governments (Egypt, India, Thailand) often appreciated these cheap imports as part of the development assistance package since they provided badly needed foods to a poor country. Indigenous farmers resisted this unfair competition but were often powerless to stop it.27 State Department officials also sought indefinite continuation of PL 480 to Egypt as the huge amounts – often well of $200 million annually – put Egypt on a near par with Israel in terms of overall economic aid received: about $1 billion annually. AID officials won a minor battle in the early 1990s when food aid was removed from their economic aid program in Egypt; but food aid continued at a lower rate of roughly $50 million and under the supervisions of the USDA.
Congress has placed increasing restrictions on aid missions in terms of determining the level and purpose of development assistance. Not only has Congress placed stringent reporting requirements on AID, it often dictates specific projects that must be pursued, even if AID sees no development purpose in them. Indeed, rarely is there such a purpose. Congress dictates these projects for political purposes, such as projects that must be implemented in Egypt in order to force that country into bilateral, “cooperative” relations with Israel. The rationale is Congress’ desire to “enhance the peace process.”
Competition between bureaucracies is equally fierce on the recipient size of this aid/development equation.28 Administering an AID project in one’s own country is such a valued prize that administrators across ministries as well as colleagues within ministries lobby hard to win such an honor. At the same time, traditional forces resistant to American assistance, and the inevitable meddling that brings, also compete against their colleagues; in such cases, the competition is intended to scuttle the prospects for success of a particular minister or his/her assistant or of the project overall. With so much American aid targeted at agriculture, fierce competition may be found in a recipient’s Ministry of Agriculture. In Egypt, agricultural research centers have been a favorite way for AID officials to spend money, and if a project fails to bear much fruit, AID may simply lose faith in one research center only to establish yet another within the same agriculture ministry but to switch their monies to another official. AID officials have themselves been used by powerful ministers who insist upon using aid money to empower the minister’s apprentice.
Another of the political aspects of development aid is the very way in which aid is “given” away, in the form of government-to-government disbursements. As the global community hails the achievements and enduring potential of non-governmental organizations (NGOs), U.S. assistance remains targeted at recipient governments and expects the latter to use these funds wisely, efficiently and justly even as donors (USAID, the IMF, and World Bank among others) continue to criticize these very governments for their decades-old mismanagement of economic enterprises. Moreover, if there is anything to our claim that NGOs are key to development, government aid is an especially questionable method of attempting to build up civil society to the point of its own self-sustaining development.
Perhaps the most blatant example of the politics of aid can be found in American assistance to Palestinians in the occupied territories, especially since 1975. While nominally targeted for the promotion of development of Palestinian communities and while nominally funneled through U.S. PVOs (private voluntary organizations) working in the occupied territories, American aid has become a weapon against the Palestinians. The U.S. government has allowed the Israeli military occupation authorities to have a veto29 over the development projects in the West Bank and Gaza Strip: e.g., if a project is deemed as potentially threatening is Israeli commerce or does not fit into what Israel has determined are appropriate development objectives for the Palestinians. While the form of political manipulation of aid to Palestinians will probably change with the supposed movement toward Palestinian autonomy, the substance will remain. Aid will still be used for political purposes. One of the new forms that is potentially devastating to real socioeconomic development in Palestine is the transfer of funds away from Palestinian NGOs and into the hands of the Palestinian Authority (PA) and the PLO officials in charge. Now Yasser Arafat, the PA and the PLO will be the ones determining aid projects and priorities although many of them, who have been in exile for decades, are unfamiliar with local needs and often have objectives at variance with local NGOs.
The politics of aid disbursement and development choices includes bureaucratic turf battles on both sides of the aid process and political manipulation of aid monies. The latter may include mismanagement, waste, corruption and other fraud.
No discussion of the "politics" of aid disbursement would be complete without emphasizing a more mundane fact: the vast majority of U.S. economic (and military) assistance returns to the United States every year due to the "tied" nature of U.S. foreign assistance. Members of Congress and the Executive Branch surely take comfort in their otherwise politically risky support of foreign-aid programs by explaining to their constituents that it is American consultants, manufacturers, farmers, PVOs and universities who are the primary beneficiaries of foreign aid abroad: In Egypt, the amount of money returning to the United States has long been estimated at around 80 percent. An independent audit in 1995 confirms this and indicates that this is the norm for other aid “recipients”30 as well.
Even if American aid to virtually all developing countries is distinctly political in its origins, the United States is promising significant economic benefits to these recipients. U.S. officials must, then, come through on these promises or even their political priorities (e.g., regime stability or extending Middle East peace agreements) will be undermined if the United States is seen as failing in its commitment to would-be friends.
Reinventing USAID
In an effort to provide constructive criticism to policymakers and suggestions for continuing research to scholars, most of the articles in this volume and the next examine, in one form or another, the following hypothesis: U.S. aid has failed in its attempts at promoting self-sustaining economic growth in recipient nations due primarily to the political and bureaucratic obstacles inherent in the existing organizational structure. Testing this hypothesis is done with data gathered from various countries in the Middle East, ranging from Egypt (D. Sullivan), the largest AID mission/program in the world, to the West Bank and Gaza Strip (S. Roy), host to one of the smaller AID programs until 1994, after which it became one of the "top 10" recipients of U.S. economic aid (see table 2). Additional cases include: Israel (S. Zunes) and Syria (F. Lawson) (which have no AID missions) and Jordan (A. Amawi) in this issue, and Morocco (J. Coupe) and Somalia (K. Menkhaus) in the next. In that issue, Clement M. Henry will also deal with regional projects for democracy supported by AID. Beyond economic indices and other statistics, most contributors support their conclusions with analysis of their own interviews with AID, governmental and non-governmental officials.
With evidence from USAID programs in the Middle East and North Africa, most articles support the hypothesis that U.S. aid has failed in its attempts at promoting self-sustaining economic growth in recipient nations. This failure is due primarily to the political and bureaucratic obstacles inherent in the existing organizational structure of U.S. aid programs. A host of critics, from those inside various government branches and agencies as well as private contractors and academics, support this conclusion. In addition to this “structural” reason, Louis J. Cantori suggests in his paper (see next issue) that “American development policy in the Middle East...is fundamentally flawed by the contradictions” between the liberal pluralistic assumptions of that policy and the "conservative, corporatist characteristics of Middle Eastern society."
This examination of American economic aid programs from an extremely critical perspective is not intended simply to place blame and condemn. My own interest in finding the underlying reasons for the failure of American assistance in developing nations is to suggest ways to reform the aid process, beginning with the point of origin the United States.
AID and U.S. aid programs in general need reformation or reinvention; on that point most observers, politicians and bureaucrats agree. How to do it is the question over which consensus breaks down. Senator Jesse Helms, chairman of the Senate Foreign Relations Committee, supports the dismantling of AID,31 Secretary of State Warren Christopher floated a suggestion that AID, along with USIA (the U.S. Information Agency) and ACDA (the Arms Control and Disarmament Agency), be swallowed up by the Department of State. Apparently Vice President Gore disagrees; he rejected Christopher's proposal in January 1995.
If the United States government retains some type of institution (agency, department) to channel funds to nations in need of assistance (long-term development aid or short-term emergency relief), then Secretary Christopher's and Senator Helms's approach is exactly the opposite of what is needed. In fact, this approach would simply formalize what already exists-the dependent relationship of USAID on the State Department as well as other governmental institutions, Congress particularly. While AID exists on paper as a quasi-independent agency, it is not independent in any real sense. Rather than formalizing that dependence by merging AID completely into the Department of State, AID should be given real independence as a separate agency of government, much like the inter-American Foundation and the African Development Foundation. These foundations have been given mandates by Congress to promote the priorities and initiatives of the poor and-most important-have been extended the institutional autonomy to pursue the most appropriate development projects without interference from other U.S. institutions.
An autonomous "independent" foreign-aid agency would be a boon to America's role in' the global community as well. Other bilateral and multilateral agencies would regain some confidence in the leadership of U.S. economic-assistance programs. Such programs would then be seen to be separated (if not fully divorced) from the vast array of U.S. political and bureaucratic wranglings and struggles over their share of the foreign-aid pie.
A redesigned AID should be streamlined, with the real work being done in regional and provincial centers in developing countries. AID Director Atwood has begun to move in this direction, but the president and Congress need to take the next giant step, in a direction toward which they currently are not headed. AID might be reconstituted as a government corporation with a board of directors (appointed by Congress and/or the president) or in some other way as long as it becomes the autonomous agency that so many people pretend that it is at present. This would allow for independence from Congress to a certain extent so as to avoid use of a development agency for domestic constituent satisfaction. It would also give AID the ability to fend off USDA and Commerce Department efforts to determine the flow of bilateral assistance in developing countries.
In addition to redesigning the institutional structures (or "bureaucratic home") of AID, economic assistance should be separated from political pay off. Political aid – for example, ESF (Economic Support Fund), which makes up the bulk of U.S. foreign assistance right now and is the rationale for aid to Egypt and Israel, among others, can continue.32 The State Department, under the direction of the president and with the funding approval of Congress, can continue to determine the use of non-development aid. The strings attached could be cut substantially and American "aid" (which should no longer be called "economic aid") can be recognized for what it is: financial rewards and/or incentives to strategic "allies" or would-be friends.
The flexibility of this approach would be of great benefit to USAID, to be sure, but also to State Department officials, who would not need to find "development" justifications for grants and loans that are clearly designed for political purposes only.
Flexibility and autonomy are two essential reforms needed in the U.S. aid program. As development specialists demonstrate what works in less developed societies, especially the continuing and growing importance of NGOs and other grass-roots organizations, American aid officials need the flexibility to respond to what works and the autonomy to fend off the political pressures corning from their own government They will continue to have to struggle with similar pressures from their hosts, the recipient governments, but that is an issue to be tackled (if possible) at another time. First, they need to be independent-while still accountable, via their board of directors, to Congress and the American taxpayers-in order to respond to global concerns and regional problems of development.
TABLES
TABLE 1: OECD AID DONORS, 1995
OFFICIAL DEVELOPMENT |
|
Japan |
14.5 |
France |
8.4 |
Germany |
7.5 |
United States |
7.3 |
Netherlands |
3.3 |
United Kingdom |
3.2 |
Canada |
2.1 |
Sweden |
2 |
Denmark |
1.6 |
Italy |
1.5 |
Spain |
1.3 |
Norway |
1.24 |
Australia |
1.1 |
Switzerland |
1.1 |
Belgium |
1.03 |
Austria |
0.75 |
Finland |
0.38 |
Portugal |
0.27 |
Ireland |
0.14 |
New Zealand |
0.12 |
Luxembourg |
0.07 |
Total |
58.9 |
ODA AS % of GDP, 1995 |
|
Denmark |
0.97 |
Sweden |
0.89 |
Norway |
0.87 |
Netherlands |
0.8 |
France |
0.55 |
Canada |
0.39 |
Belgium |
0.38 |
Luxembourg |
0.38 |
Australia |
0.34 |
Switzerland |
0.34 |
Austria |
0.32 |
Finland |
0.32 |
Germany |
0.31 |
United Kingdom |
0.29 |
Japan |
0.28 |
Ireland |
0.27 |
Portugal |
0.27 |
New Zealand |
0.23 |
Spain |
0.23 |
Italy |
0.14 |
United States |
0.1 |
SOURCE: OECD
TABLE 2. TOP TEN RECIPIENTS OF U.S. FOREIGN AID, FISCAL YEAR 1995 (U.S.$ BILLION)
Country |
Economic |
Military |
Total |
Israel |
1.2 |
1.8 |
3 |
Egypt |
0.815 |
1.3 |
2.115 |
Russia |
0.347 |
0.0007 |
0.348 |
Haiti |
0.167 |
0.003 |
0.17 |
Ukraine |
0.162 |
0.0006 |
0.163 |
India |
0.139 |
0.00025 |
0.139 |
South Africa |
0.135 |
0.00025 |
0.135 |
Ethiopia |
0.126 |
0.00025 |
0.126 |
Poland |
0.079 |
0.001 |
0.08 |
West Bank/Gaza Strip |
0.076 |
0 |
0.076 |
SOURCE: THE LOS ANGELES TIMES, 1995
1 This introduction is an adaptation and update of “The Failure of U.S. Foreign Aid: An Examination of Causes and a Call for Reform,” Global Governance, vol. 2, no. 3 (September 1996).
2 CRS Report for Congress, “The 104th Congress: Key Issues and Early Agenda;” Congressional Research Service, The Library of Congress, December 5, 1994. p. 35.
3 On the recent rise in corruption within Egypt, see Cassandra (a pseudonym), “The Impending Crisis in Egypt” Middle East Journal, vol. 49, no. 1 (winter 1995), pp. 9-27. In 1994, The Washington Post ran a series of article highlighting governmental corruption in Egypt and questioning whether the United States should continue to give aid to such a regime. Egyptian scholars also are highly critical of their government’s corruption. See interviews with: Hussein Amin, career diplomat and scholar, who blasts his government for its failings, including its corruption; and Dr. Ismail Sabri Abdallah, leader of opposition Tagammu party, who laments the choices that Egyptians have been given, that they have been “reduced to a choice between a corrupt ruling party and a reactionary religious one.” Interviews in “Politics full of uncertainty: perceptions turn doubtful,” Financial Times, April 22, 1993, section IV, 1+. There are already reports, as yet unpublished, by academics doing field research in Gaza about the high level of corruption within the Palestinian National Authority, the Palestinian “government” overseeing autonomy. Personal correspondence with Sara Roy, May 23, 1995.
4 CRS Report, op. cit., p. 36.
5 Morocco and Somalia will be dealt with in the next issue.
6 Steven W. Hook, "Development Assistance and Foreign Policy in the 1980’s p. 40. Paper presented at International Studies Association, March 23-28, 1993, Acapulco, Mexico. For an elaboration of his argument on development assistance programs of France, Japan, Sweden, and the United States see his National Interest and Foreign Aid (Boulder: Lynne Rienner, 1995).
7 Interview with CIDA official, Cairo, March 1991.
8 See, for example, Denis J. Sullivan, "Extra-State Actors and Privatization in Egypt," in Iliya Harik and Denis J. Sullivan (eds.) Privatization and Liberalization in the Middle East (Bloomington: Indiana University Press, 1992).
9 “US Senator criticizes party on foreign aid: Sees surrender of US leadership,” Boston Globe, May 12, 1995, p. 2.
10 Thomas W. Lippman, “Once Aid Leader, America Now Rates Last in Relative Generosity,” The Washington Post, June 18, 1996, p. A10.
11 Ted Clark, “U.S. Holds Back on Foreign Aid,” Weekend Edition, National Public Radio, June 23, 1996.
12 Ibid.
13 The Program on International Policy Attitudes at the University of Maryland conducted a survey on Americans’ attitudes toward foreign aid. Most respondents thought the United States spent 15 percent of the Federal Budget on aid; most felt that level should be 5 percent; they thought 13 percent of the budget spent on aid would be too much and 3 percent would be too little. Still, once they were told that the United States actually spends only 1 percent of the Federal Budget on foreign aid, nearly, half of the respondents felt this was "about right.” See The New York Times April 30, 1995, Il· 4.
14 Alan Woods in a briefing with reporters, as reported in Christian Science Monitor, February 21, 1989, p. l.
15 Former U.S. Ambassador to Egypt Frank Wisner puts the approximate date of this ideological evolution at 1978.
16 Robert Springborg claims this new orthodoxy came in with the “Reagan Revolution” and the president's ability to clean out the bureaucracy and replace it with like-minded conservatives (“liberals”?); “The Politics of Agricultural Development in Egypt,” American Research Center in Egypt lecture, Cairo, November 4, 1986. Most State Department and USAID officials I spoke with disagree with this view. They say that Reagan could not have done such a thorough cleaning out of AID and that the new orthodoxy is much more an evolutionary development, resulting from 25 years of AID's dealing with Third World governments.
17 This frustration not only was related to me by the overwhelming majority of AID officials whom I interviewed in Cairo and Washington; this same sentiment, using remarkably similar phrasing, has been expressed to Scott Gates during his re search on AID in Pakistan; "Micro Incentives & Macro Constraints of Development Assistance Conditionality," Ph.D. dissertation, Department of Political Science, University of Michigan, 1988.
18 See Denis J. Sullivan, “Bureaucracy & Foreign Aid in Egypt: The Primacy of Politics,” in Ibrahim Oweiss (ed.) Political Economy of Contemporary Egypt (Washington, DC: Center for Contemporary Arab Studies, 1990).
19 Transcribed from the video, Aid Initiatives, January 30, 1991.
20 C. Stuart Callison and John G. Stovall, “AID's Identity Crisis,” Foreign Service Journal (January 1992), p. 34.
21 David Steinberg, writing in the Christian Science Monitor, as quoted in ibid, p. 32.
22 Strategies for Sustainable Development (USAID, March 1994), p. 1.
23 For the donor (the United States), foreign aid is a political tool. Its terms of disbursement are not determined solely or even principally on economic rate of return on investment; rather, they are determined by political return. For the recipient, foreign aid is accepted primarily for its economic aspect. It is used for a variety of purposes including purchases of military equipment, importation of foodstuffs, financing balance-of payments deficits, promoting industrial and agricultural growth, infrastructure development, water and waste treatment, population planning and other health-care projects, human-resource development, and so on.
24 C. Stuart Callison, “Thinking Globally, Acting Locally,” Foreign Service Journal (November 1992), p. 36.
25 See, for instance, Nicholas Eberstadt, Foreign Aid and American Purpose (Washington, DC: American Enterprise Institute for Public Policy_ Research, 1988); Stephen Hellinger, Douglas Hel linger and Fred M. O’Regan, Aid for Just Development (Boulder: Lynne Rienner Publishers, 1988). For a discussion of the Economic Support Funds, which account for more than half of all U.S. bilateral economic assistance and is the category under which Israel and Egypt receive U.S. aid, see Robert F. Zimmerman, Dollars, Diplomacy, and Dependency: Dilemmas of U.S. Economic Aid (Boulder: Lynne Rienner, 1993). Two other classics include Robert Packenham, Liberal America and the Third World (Princeton University Press, 1973); and John D. Montgomery, The Politics of Foreign Aid: American Experience in Southeast Asia (New York: Praeger, 1962).
26 Robert E. Wood, From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy (Berkeley: University of California Press, 1986).
27 For further discussion of the negative impact of PL 480 food aid on some countries – such as Egypt, Indonesia, Senegal – see Zimmerman, op. cit., pp. 178-180.
28 See Denis J. Sullivan, “The Political Economy of Reform in Egypt,” International Journal of Middle East Studies 22 (August 1990), pp. 317-334.
29 Sara Roy, “Development under Occupation? The Political Economy of U.S. Aid to the West Bank and Gaza Strip,” Arab Studies Quarterly, vol. 13, nos. 3/4 (Summer/Fall 1991), pp. 65-89.
30 1994-95 audit by Associated Press of AID contracts in Egypt in 1993. See Miami Herald (International Edition), March 26, 1995, p. 25 JM.
31 "GOP Backs Merging Foreign Policy Agencies," The New York Times, February 15, 1995, p. A5.
32 See Hellinger, et al., op. cit., for detailed suggestions on how a new aid agency could be designed and implemented. Several chapters provide specific suggestions and details are given in chapter 8.
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