Foreign aid: the belt is too tight
Unlike most ragets of Mr. Reagan's economic ax, one budget item -- foreign aid -- has no built-in domestic constituency and deserves a better hearing. It falls in a different category of spending for it has implications for world stability and national security. That US foreign aid has fallen on such tight-fisted times is, frankly, short-sighted and tragic.
Some consolation can be taken from the fact that Secretary of State Haig has rescued one part of the aid program from the White house scissors; namely, the $ 3.2 billion pledge for the International Development Association. This would enable the US to fulfill its commitment to the World Bank affiliate, which lends (not gives) money to the poorest countries. Without the US share, IDA would not be able to receive new funds from some 30 other donor nations because 80 percent of the total funding must be officially pledged before the fund can operate. Loans would therefore cease, imposing intolerable burdens on nations trying to struggle out of poverty.
It is also comforting, if only slightly, to learn that Secretary Haig, with the support of the Treasury Department, has obtained a higher level of direct American aid than the $1.7 billion authorized by Congress for the current fiscal year. But not much higher. The budget request is for $1.9 billion, which is far less than the $2.3 billion asked for by the Carter administration, which, in turn, is far less than the US needs to give to restore its international position as a solid aid donor. Americans may justifiably feel that other advanced nations must today pull a greater weight. But in fact they do. It should be a source of embarrassed concern that the US has dropped to about 15th place among industrial countries in aid as a percentage of GNP.
Not only has bilateral American aid dropped dramatically in recent years. An increasing share of it now goes not for so-called "development assistance" for the world's poorest countries, but for what are termed "economi support funds" -- i.e., politically motivated aid designed to promote the stability of nations deemed vital to US interests. Today Israel and Egypt are the biggest beneficiaries of such help. Last year they received some $4 billion in support funds and military sales credits (a large portion in outright grants). So, the poorest countries are disadvantaged not only by the drop in the US foreign aid budget as a whole but by the growing share allocated in it to Egypt and Israel.
This is not to argue against generous help to these nations. Such aid is important in the context of the Mideast peace process. But the US belt-tightening on aid for the neediest is wrong on several counts. It seems to point to a faltering benevolence towards the world's impoverished millions. It shows a lack of understanding of their desperation and the possible consequences of this for the wealthy minority of humanity. A hungry world can endanger peace as much as any military adversary. Former Secretary of State Muskie, upon leaving office, warned against regarding security only in terms of external threats:
"We can no longer afford to act as if foreign aid were charity, and as if diplomacy were a diversion. They are as vital to our long-term security as defense -- as essential to the well-being of the American people."
Taking up the budget, the US lawmakers should consider the economic benefits of foreign aid. It provides jobs at home and boosts exports. In the long term, as the poor nations develop, even more markets are opened up for US goods and new business opportunities for US companies. It is fashionable today to intone that America must rebuild its industrial base, regain its competitive edge, and become a vigorous trader in an interdependent world. But, if the US does not help the undeveloped countries lift their own economic standards -- and thereby their ability to trade -- all the lofty talk about the fruits of interdependence will count for naught.