Inflammation and stories on trade

Examples of Trade Embargoes
Trade embargoes are government-imposed barriers to international trade. Countries often justify these restrictions using political reasons, such as violations of national security or human rights.

10 Examples of Trade Embargoes

  1. U.S. Sanctions on Nicaragua: On July 5, 2018, the U.S. imposed sanctions on three Nicaraguan government officials, in response to the Nicaraguan government’s treatment of anti-government protesters, which has led to over 200 people being killed during violent demonstrations. Due to the 2012 Global Magnitsky Act, the U.S. can implement sanctions against those who commit human rights violations and corruption. The LA Times reported that under the sanctions, “any assets the three men have in the United States will be frozen, and U.S. citizens are barred from business transactions with them or any companies in which they have 50 percent or more ownership.”
  2. U.S. Sanctions on Russia: In April 2018, the U.S. passed new sanctions against Russia, intending to penalize Russian officials for their alleged involvement in the 2016 U.S. presidential election and their presence in Crimea, Ukraine, and Syria. According to CNN, assets will be frozen for 17 senior Russian officials.
  3. European Union (EU) Sanctions on Russia: As of July 5, 2018, the EU unanimously agreed to extend sanctions against Russia for at least another six months. According to PBS, the sanctions’ extension was no surprise and were “imposed after Russia annexed Ukraine’s Crimean Peninsula in 2014 and backed pro-Russia separatists fighting the government in eastern Ukraine.”
  4. Canada Sanctions on Venezuela: In September 2017, Canada enforced an asset freeze and dealings ban on Venezuela. Under the Special Economic Measures Act, Canada prohibits citizens and any Canadian residents from providing  “any goods, wherever situated, to a listed [Veneuelan] or to a person acting on behalf of a listed [Veneuelan].” The sanctions are based upon a U.S.-Canada alliance in response to human rights violations in Venezuela. For example, the Venezuelan government arrested thousands of protestors in April 2017, and many civilians were injured or killed during the protests.
  5. U.N. Sanctions on North Korea: In 2006, the U.N. Security Council (UNSC) imposed sanctions in response to North Korea’s first nuclear test. The sanction prohibited the supply of heavy weapons and select luxury goods. According to the Council on Foreign Relations, the UNSC announced more restrictions—extending to oil and metal imports, agricultural exports, and labor exports in December 2017. However, the U.N. does allow humanitarian aid to enter North Korea.
  6. U.S. Sanctions on China: Most recently, the U.S. and China are in trade wars—each responding with their own tariffs. On April 16, 2018, the U.S. imposed a seven-year ban on exports to ZTE, a Chinese telecom company. The Washington Post explained that ZTE was reprimanded for “illegally exporting U.S. goods to North Korea and Iran.” On June 7, the U.S. ended the ban.
  7. U.S. Embargo on Cuba: In 1962, the U.S. placed a full embargo against Cuba when the Kennedy administration announced the ceasing of all trade. However, in March 2016, President Obama and Cuban President Raul Castro agreed to “allow commercial flights between the two countries for the first time in more than fifty years.” In September 2017, President Trump proposed the withdrawal of two-thirds of his embassy staff from Havana, Cuba and announced the return of travel restrictions.
  8. EU Sanctions on Sudan: The EU imposed an arms embargo on Sudan in 1994. The embargo was amended in 2011 due to the independence of South Sudan and now applies to both Sudan and South Sudan.
  9. U.N. Sanctions on Iran: In 2006, the U.N. authorized an embargo on supplies for uranium production and ballistic missile development, harming Iran’s economy. In April 2015, the U.S. Treasury Secretary Jacob Lew noted that “Iran’s economy was 15 to 20 percent smaller than it would have been had sanctions not been ratcheted up in 2012.”
  10. U.S. Embargo on Japan: In 1941, the same year the U.S. entered World War II, the U.S. imposed a comprehensive trade embargo against Japan. The U.S. froze “all Japanese assets in America,” which eventually contributed to Japan’s loss of “access to three-fourths of its overseas trade and 88 percent of its imported oil.”

These 10 examples of trade embargoes demonstrate how countries engage with one another to serve their domestic interests and to punish others for violations of human rights.

– Christine Leung
Photo: Flickr

U.S. Benefits from Foreign Aid to Niger
Within the U.S., there is a misconception of the amount of foreign aid given to developing countries. Some Americans believe the government gives up to 25 percent of the budget, but less than 1 percent gets put towards foreign aid. Niger relies heavily on U.S. aid and from additional U.N. agencies; 45 percent of Niger government’s FY 2002 budget comes from foreign aid. The U.S. benefits from giving foreign aid to Niger because of the positive image and the fiscal and potential foreign policy opportunities.

Niger and the U.S. relations

Niger and the U.S. have maintained a diplomatic relationship since the 1960s. The U.S. is a principal donor to Niger, giving up to $10 million yearly in aid, along with helping to coordinate policy in matters like HIV/AIDS and food security. The U.S. benefits from giving foreign aid to Niger because of Niger’s involvement in the Economic Community of West Africa, a program the U.S. maintains a trade and investment agreement to. Along with this program, there is a bilateral investment agreement the U.S. and Niger share with each other.

Foreign aid in Niger

Being one of the poorest countries in Africa, Niger’s economy relies heavily on agricultural production, which is continuously interrupted by extreme heat and droughts. From June to August in 2010, Niger’s crops were destroyed due to the heat, which caused a famine where almost 350,000 people were facing starvation. International food aid was provided when Niger citizens began suffering from malnutrition and respiratory diseases that sickened many children. In addition to international food aid, U.S. foreign aid aims to improve food security, maintain peacekeeping methods and increase healthcare services. With the Millennium Challenge Corporation compact, which began in January 2018, $437 million will be given to enhance Niger’s agricultural capabilities by increasing access to water, roads and markets. Additionally, Niger is one of six other countries that are involved in the Security Governance Initiative, a program that is labeled as a Counterterrorism Partnership Fund.

With programs and partnerships that the Niger and the U.S. participate in, Niger benefits from foreign aid because it is representative of their yearly budget and allows them to develop more resources to eventually become more self-reliant. In addition to providing aid, the U.S. additionally benefits from foreign aid to Niger. Microsoft founder Bill Gates explains how the U.S. benefits from foreign aid: “The 1 percent we spend on aid for the poorest not only saves millions of lives, it has an enormous impact on developing economies – which means it has an impact on our economy.” This shows that giving aid to third-world countries will positively affect the image of the U.S. and the economy.

– Alyssa Hannam
Photo: Flickr

U.S. Benefits From Foreign Aid to Senegal
Since 2001, the United States has consistently provided foreign aid to Senegal. Washington’s contributions have continuously been above $30 million per year and peaked at $141 million in 2014. As a result, this financial support has had significant impacts on the developing nation.

Combined global aid has improved Senegal’s agricultural efficiency by shifting losses into profits of over $300 million per year, enhanced water access to over 140,000 people and increased access to secondary education by over 75 percent. GDP has increased from four to nearly 15 billion.

How the U.S. Benefits from Foreign Aid to Senegal

Such improvements may seem praise-worthy from a charitable standpoint. Foreign aid, however, is not just a one-way street. In fact, the U.S benefits from foreign aid to Senegal. In one way, foreign aid can be seen as a macro-level investment by a government into an underdeveloped market. Foreign aid is unique in that the risk-level is nearly negligible given that the intent is not to see a personal return on the investment, but rather to accelerate growth to meet basic humanitarian needs.

Despite the moral and seemingly charitable nature of foreign aid, it can pay dividends to the provider in the future. As the receiving state experiences economic growth and stabilizes over time, it becomes more able to establish economic moats and reciprocate the help it received. This is typically though not exclusively seen through an increased ability to trade.

Education

According to the Department of Commerce, current U.S.-Senegal trade relations are limited. While U.S. exports have gone up roughly 90 percent from 2006, U.S. exports to Senegal support only about 900 jobs as of 2015. That number, however, could rise significantly through increased foreign aid in education.

As more individuals become educated and start businesses that leverage increasingly efficient agricultural resources or other products, more jobs and growth could materialize as ‘what goes around comes around’ in giving back to aid nations. Increased trade with Senegal in the future could help the U.S. receive money given as aid back into its economy.

Economic and Political Stability

The U.S. benefits from foreign aid to Senegal by also bolstering economic stability so that it may develop into an emerging market. After the U.S. started providing foreign aid, the IMF in 2015 reported that Senegal’s financial soundness metrics suggested that it was stronger than West Africa as a whole.

The democratic state has also improved politically in the years since foreign aid started. Given the key transfers of peaceful power and the absence of violent conflict, the World Bank has regarded Senegal as one of the most stable states on the continent. Positive ratings have been helpful in slowly pushing Senegal onto the world stage as a prospective future power and perhaps, one day, a true regional hegemon in West Africa.

Investing in Senegal

Today, the nation’s political and economic harmony has drawn talks and the interest of private investors. Senegal’s “Plan Sénégal Emergent” is a new policy framework that seeks to combine social justice with good governance and economic growth to stimulate development. The purpose, as the name suggests, is to establish Senegal as an ‘emerging market’ by 2035.

An emerging market is a state that features characteristics of a developed market, but has not gotten there just yet. Such markets have potential for high growth and profitability – drawing the attention of the world’s financial companies.

While the road ahead seems long and arduous, President Macky Sall remains optimistic that his country can work towards achieving the goal. Foreign aid and a demonstrated domestic interest in maintaining stability show that Senegal wants to be a model for pioneering change in West Africa.

Lucrative Give and Take

The U.S. benefits from foreign aid to Senegal if this happens. Emerging markets are known for high growth opportunities that can be lucrative. Current examples of such markets include states such as China, India and Brazil, which have made big waves in the financial world. Senegal, as a result of development from foreign aid, hopes to be next. Investors could be able to capitalize on growth opportunities in a developing nation, which would materialize benefits to U.S. citizens.

With several nations still struggling with similar issues, there is still work to be done. The Senegal case-study shows that there is a need for foreign aid, and the argument for it is no longer exclusive to just global altruism.

– Mrinal Singh
Photo: Flickr

U.S. Benefits from Foreign Aid to St. Lucia
As of 2016, the United States has provided over $38,000 worth of foreign aid to St. Lucia through the United States Agency for International Development (USAID). This small Caribbean island, with a population of 170,015, has a Gross National Income of $11,370 and continues to be at risk for high crime, labor instability and a high level of substance abuse.

Through its many programs and funding ventures via USAID, the U.S. continues to better St. Lucia. However, this foreign aid does not only help the island; the U.S. benefits from foreign aid to St. Lucia as well.

Agriculture and Tourism

Most USAID funding in St. Lucia is allocated to agriculture. By investing in the country’s department of agriculture, the U.S. is aiding as well as fortifying a potential trade relationship. Within the first four months of 2018, almost 10 percent of U.S. imports from St. Lucia were food related — a number that will most likely rise as the country’s agriculture department strengthens.

Another way that the U.S. benefits from foreign aid to St. Lucia is through tourism. St. Lucia’s tourism industry profits greatly from the U.S. as a majority of tourists to the island are American, who tend to buy St. Lucian products. This exchange of goods thus benefits both economies.

The more the U.S. invests in foreign aid to St. Lucia, the more return on investment it will receive. By giving USAID in order to strengthen St. Lucia’s economy, the U.S. is strengthening a trading partner. However, in order to build a secure relationship between the countries, crime and violence must also decrease.

Violence Prevention and Education

One USAID program focuses on targeting violence in a preventative way. In a partnership with St. Lucia’s Department of Education, Innovation, Gender Relations and Sustainable Development, the U.S. has commenced a coding and robotics program into St. Lucia’s secondary education curriculum.

As of June 12, four students and 12 teachers have been trained in the robotics and coding curriculum; more math, physics, computer and traditional classes will be later introduced into St. Lucian secondary schools.

The new initiative creates a new and exciting way for St. Lucian students to become and remain involved in their education as they attend school. In this program, education is not just the knowledge that students gain from learning robotics and coding. The USAID and St. Lucia’s Department of Education also aim to instill a love of learning, teamwork and critical thinking skills into the students.

By introducing the robotics and coding program into secondary schools and impressing a love for learning, as well as teamwork and critical thinking skills, onto St. Lucian students, the two countries hope to decrease the overall violence in St. Lucia.

Sustainable Progress and Growth

People who think critically and are more prone to work together are far less likely to commit violent crimes than their counterparts. By teaching St. Lucian students to be not only better learners, but also better citizens is vitally necessary to the growth of St. Lucia.

With the help of this program, the country’s future adults will be more aptly prepared to participate within St. Lucia as well as the global economy. As the program continues to succeed, St. Lucia will benefit from its future leaders just as the U.S. benefits from foreign aid to St. Lucia.

– Savannah Hawley
Photo: Flickr

U.S. Benefits from Foreign Aid to Namibia
Namibia is a sparsely populated country on the southwestern coast of Africa whose priceless natural resources and small population of 2.5 million enable its upper-middle income status. Relations between the United States and Namibia are friendly, and the U.S. has supported the country’s recovery after the damage of apartheid through programs that improve healthcare, education and economic opportunities.

About two-thirds of Namibian citizens live in rural areas, and two-thirds of the people in rural areas rely on subsistence farming for a living. The country has seen a reduction in poverty, yet this has not had an effect on the rather high unemployment rate of 28.1 percent and the socioeconomic inequalities that linger from the apartheid era. Outside of satisfying a moral need, the U.S. benefits from foreign aid to Namibia in its efforts to address these issues.

A History of U.S. Involvement

USAID involvement in Namibia started in 1990 with the country’s independence from South Africa. South Africa seized the territory from Germany, which was then called South-West Africa, during World War I and annexed it after World War II. The South-West Africa People’s Organization guerrilla group spurred a war for independence in 1966, but South Africa did not release the territory until 1988 under the United Nations peace plan. 

In 2014, the Millennium Challenge Account Compact that aimed to reduce poverty and stimulate growth in education, tourism and agriculture proved to be a success. Namibia is also one of the countries participating in the President’s Emergency Plan for AIDS Relief (PEPFAR), which was initiated by USAID and the Centers for Disease Control and Prevention. Considering the global epidemic of HIV/AIDS and the changing needs within Namibia, USAID has since shifted its main attention to HIV/AIDS work, making large investments in Namibia’s health services. 

How the U.S. Benefits from Foreign Aid to Namibia: Economic Growth and Trade 

Namibia has many strengths that make it a viable country for economic growth. It is politically stable and has developed infrastructure and a modern telecommunication system.

As Bill Gates has noted in several op-eds supporting foreign aid, foreign U.S. investments are beneficial to American businesses by providing opportunities for new customers and new suppliers. When private companies collaborate with organizations like USAID, it creates a market for American goods. One example of a way in which the U.S. benefits from foreign aid to Namibia is if an American company were to help to raise the productivity of subsistence farmers in Namibia, this would benefit farmers and workers in the U.S. while opening the possibility for a larger market in that part of the world.

In regard to fighting HIV/AIDS and disease globally, Gates says societies are more productive when there are healthy “teachers, police officers and entrepreneurs.” Countries such as Namibia that worked with PEPFAR have “improved three times more on one measure of economic development than their non-PEPFAR counterparts,” Gates confirmed. Gates observes that foreign aid alone is not an immediate solution to global poverty, but it stimulates sustainable growth that improves global well-being. Continued support of Namibia and other countries can bring wide-ranging benefits to the U.S. and the world.

– Camille Wilson
Photo: Flickr

foreign aid helps the U.S.
Giving, especially in the form of foreign aid, has shown to cultivate meaningful relationships among people and countries, some that lead to rewarding trading agreements amid other benefits. Recent history has particularly exhibited how foreign aid helps the U.S., which is a crucial consideration in the political dialogue surrounding the current foreign aid budget.

Foreign Aid Helps the U.S. with Trade

One valuable return the U.S. has received in its giving of foreign aid to other developing countries has been the increase in American jobs as well as trade. Foreign aid is much like an investment; it helps to forge the foundation needed for low-income countries to build up and become middle-income, sustainable states. Here are some examples:

  1. After World War II, U.S. foreign aid to Japan helped recover Japan’s infrastructure and highly contributed to the success of American companies like Microsoft.
  2. The U.S. now trades and does business with former recipients of foreign aid, such as South Korea, Brazil, Mexico, Vietnam and Thailand.
  3. The President’s Emergency Plan For AIDS Relief (PEPFAR) successfully slowed down the AIDS epidemic and countries that received such aid have, in turn, consumed more American goods. Exports rose 77 percent in Tanzania, 189 percent in Zambia and 241 percent in Ethiopia.
  4. PEPFAR is one of the strong determinants of increases in the trade of pharmaceuticals.
  5. Foreign aid has attributed $46 billion more in U.S. exports and 920,000 more jobs in the U.S.
  6. In 2011, 44.6 percent of U.S. exports went to developing countries.
  7. In Tennessee alone, more than $33 billion in goods and services were exported to foreign countries in 2014 and this trade, in turn, supports over 22 percent of jobs, 830,000 local jobs to be specific.

Foreign Aid Helps with Health

Foreign aid helps the U.S. in preventing global epidemics that could otherwise be much worse. While assisting developing countries with their challenges in health, the U.S. also does its duty to minimize any possible health issues and diseases from traveling overseas or across borders to the U.S. There has been a great number of such instances, such as:

  • The U.S. was the largest funder of a number of health workers stationed in Nigeria with the original goal of polio eradication. The workers were later reassigned and succeeded in countering the infamous Ebola epidemic.
  • The PEPFAR program has helped stop the spread of AIDS by supplying life-saving medicines to over 14 million people.

Foreign Aid Helps with National Security

One of the non-negotiable benefits the U.S. reaps from its giving of foreign aid to developing countries is an improvement in national security. To prevent a third world war, the U.S. created what is now the modern development assistance program to avoid further instability in Europe.

Stability in developing countries is key in preventing future political issues from unfolding. The U.S. has defense agreements with 131 out of the 135 countries that it provides foreign aid to.

The importance of international aid lies in economic benefits, such as trading proliferations, as much as health and national security. As evidenced above, it is clear that there is truth in the fact that foreign aid helps the U.S. just as much as it helps other nations.

– Roberto Carlos Ventura
Photo: Flickr

biotrade in Peru
Peru’s economy saw a significant boom between 2004 and 2014. However, this growth was achieved in rather unsustainable ways. The U.N. has noted this and has been helping Peru establish more sustainable progress, particularly through what is known as biotrading. Biotrading consists of economic activities such as the collection, production, transformation and commercialization of goods and services from native biodiversity, all while preserving or improving environmental, social and economic sustainability.

The idea behind establishing a green economy in Peru arose in 2012 when four United Nations agencies formed the Partnership for Action on Green Economy (PAGE). PAGE’s mission is to redirect investments and policies toward sustainability, which focus on clean technologies, resource efficient infrastructure, functional ecosystems, good governance and green skilled labor.

Biotrade in Action

According to the United Nations Environment Programme, the implementation of biotrade will develop a green economy in which human well-being, social equity and the protection and health of the environment will all be improved alongside the economy. In fact, over the last five years, biotrade in Peru has resulted in an average annual growth of 20 percent following an almost 200 percent growth from 2009 to 2010, amounting to $320 million.

An example of the poverty reduction biotrade has offered lies with the Peruvian indigenous plants of tara and quihuicha, as well as the animal called cochineal. In the region of Arequipa, the growing area of quihuicha increased from 150 to 578 hectares within three years, tara production expanded more than 400 hectares and planted cochineal reached 4,400 hectares.

The awareness of the direct link between the success and profitability of biotrade in Peru with the health of ecosystems and biodiversity has led to several initiatives. A major focus is on diminishing deforestation, illegal logging, pollution and soil erosion, in conjunction with commercializing non-timber forest products like Brazil nuts and cat’s claw. There are also efforts to increase genetic diversity in crops as well as decreasing the use of pesticides.

As consumers are increasingly seeking products that provide greater health benefits and quality, companies’ socially responsible and environmentally friendly standards, energy-efficient manufacturing and fair labor and trading practices, biotrade in Peru is becoming a more lucrative endeavor. Consumers are still attracted to such bioproducts despite their 30 percent difference in price compared to conventional products.

The Potential of Biotrade in Peru

Projections state the following about the impact of biotrade in Peru from 2010 to 2020:

  1. The growth of sales exports will increase anywhere from about 519 percent to 2,379 percent.
  2. GDP from biotrade will increase from almost $110 million to $2.7 billion.
  3. Employment growth will increase anywhere from 10,000 new job openings to 271,689 openings, from a 619 percent to 2,717 percent increase.
  4. Carbon sequestration impact increased from 2,592 to 5,184 hectares, where 1 hectare is equivalent to 300 tons of carbon emissions.

Improving the Impact of Biotrade in Peru

Peru has significantly benefitted from biotrade, which has stimulated its transition into a green economy while maintaining its economic growth. However, to further progress biotrade in Peru, achieve the sustainability goals of the U.N. and set a pivotal example for other countries in regard to sustainable growth, Peru must now address the following in the years to come:

  1. Provide greater availability of finance for producers and small and medium-sized enterprises
  2. Increase resources for public policies
  3. Support more research and development
  4. Enhance awareness of bioproducts
  5. Improve capacity building
  6. Facilitate the process of achieving quality and sustainability standards
  7. Address market power for products and producers

With a green economy in mind, Peru, with the help of PAGE, has focused policies and investments on sustainability. Now, Peru experiences economic growth as biotrade exponentially grows annually, new green jobs are created, poverty and inequality are reduced and environmental sustainability is protected and even incentivized. Fruitful results are reached when the health of an economy is interdependent with that of nature.

– Roberto Carlos Ventura
Photo: Flickr

Jump-Starting Regional Trade in East Africa
East Africa has some of the fastest-growing economies in the world. Besides being the source of some of the world’s best coffee, East Africa has growing industries in agriculture, financial services, medicine, textiles and apparel. Despite the region’s wealth of natural resources, USAID reports that more than 27 million East Africans go to bed hungry and 46 million live in poverty. This is partially due to the lack of regional trade in East Africa.

Three Things to Know About Regional Trade in East Africa

  1. East Africa’s trade infrastructure was built toward exporting natural resources abroad rather than moving goods within the region. Similar to the rest of Africa, East Africa was colonized, primarily by the British, for a long time. Colonization was partially driven by European countries’ scramble for power, but Europeans were also fighting for resources and trading posts. Most of the countries in the region gained independence in the 1960s, but intercontinental trade was already well established and took precedence over regional trade.
  2. Regional trade in East Africa makes up only 13 percent of the region’s total trade. This means that 87 percent of East Africa’s tradeable resources and products are exported out of the region. In other continents, the percentage of regional trade is much higher. For example, 60 percent of trade in the European Union and 40 percent of trade in Asia is regional.
  3. National policies in East African countries substantially slow trade across East African borders and prohibitively increase costs. Most goods traded within the region cost about 40 percent more than retail because the cost of simply getting the goods to East African consumers is so high.

How Can Regional Trade Be Increased?

The best way to increase regional trade is to boost trade and investment opportunities within East Africa and make regional trade freer and fairer. USAID’s East Africa Trade and Investment Hub (also known as The Hub) works to do just that. The Hub also works to make East African agricultural value chains more competitive, particularly the grain trade.

The Hub’s regulatory reform activities have increased regional trade in East Africa by 39 percent over the past two years. USAID reports that The Hub has facilitated $59.3 million in private sector investments since its founding in 2014. As of 2018, The Hub has already helped create 38,682 jobs and had given 1,402 firms capacity building assistance. The Hub has also supported 829 food security producers and organizations and has contributed to the food security of more than 14.9 million East Africans.

USAID works with and in Burundi, Kenya, Rwanda, Tanzania, Uganda, Ethiopia, Madagascar and Mauritius. The Hub partners with these countries’ governments as well as civil societies and private regional institutions to remove trade barriers in East Africa. Certain regional institutions include the Common Market for East and Southern Africa, TradeMark East Africa, the East Africa Grain Council and the East African Community (EAC).

The EAC promotes the Common Market, a regional integration milestone that accelerates economic growth and development in East Africa. The EAC maintains a liberal stance toward the economic market and specifically works to ensure five freedoms of movement in East Africa:

  • Free movement of goods
  • Free movement of persons
  • Free movement of labor/workers
  • Free movement of services
  • Free movement of capital

East Africa grows enough food to feed its entire population. Freeing trade in the region and making it fairer will help East Africans keep the food they grow and get it to those in need. Free-flowing goods will reduce East Africa’s need for food and financial aid and make the region more self-reliant.

– Kathryn Quelle
Photo: Flickr

How the US Benefits from Foreign Aid to Serbia
Serbia is working to strengthen human rights protections and to promote economic growth within the country while facing external pressure from Russia. Russia has been expanding its influence and amplifying ethnic tensions in several countries that may join the European Union. In particular consideration of the close relations between Serbia and Russia, the U.S. benefits from foreign aid to Serbia because this aid works to prevent a new Cold War in the Balkans.

Social Benefits of Foreign Aid to Serbia

From 2001 to 2017, the U.S. gave about $800 million in aid to Serbia to help the country stimulate economic growth, promote good governance and strengthen its justice system. One example of a major issue Serbia is dealing with is human trafficking.

According to the U.S. Department of State’s 2017 Trafficking in Persons report, Serbia remains listed as a Tier Two country because it has yet to fully comply with the minimum standard for eliminating the issue. However, Serbia has shown significant efforts to address human trafficking by establishing a permanent human smuggling and trafficking law enforcement task force, identifying more victims as well as providing guidelines to judges and prosecutors.

Other U.S. aid to Serbia in the past has gone toward strengthening its export and border controls. This includes efforts to prevent the spread of weapons of mass destruction. More recently, U.S. military aid has helped Serbia take part in NATO’s Partnership for Peace programs as well as prepare for international peacekeeping missions.

Economic Benefits of Aid to Serbia

From an economic standpoint, the U.S. benefits from foreign aid to Serbia through U.S. investors in the country. These investors include KKR, Philip Morris, Ball Packaging, Coca-Cola, PepsiCo, Cooper Tire and Van Drunen Farms. In 2013, Fiat began shipping cars manufactured in Serbia to the U.S., increasing imports from the Balkan countries.

In addition, U.S. technology companies in Serbia are becoming more interested in opportunities in areas such as e-government, cloud computing, digitization, IT security and systems integration. In 2013, Microsoft even signed a $34 million contract to provide software to government offices in Serbia.

Political Benefits of Aid to Serbia

U.S. aid to Serbia is currently focused on helping the country integrate into the European Union, which will decrease Serbia’s vulnerability to Russian aggression as well as strengthen its democratic institutions. Out of the $5.39 million the U.S. plans to allot in foreign aid to Serbia in 2019, 46 percent will be allocated to strengthening the country’s rule of law and protection of human rights, 34 percent will be put toward increasing the capacity of civil society organizations and 20 percent will be for good governance.

The U.S. benefits from foreign aid to Serbia from a diplomatic perspective as well in the case of international terrorism. The Ministry of Interior Directorate of Police, the Security Information Agency and Serbia’s law enforcement and security agencies have continued to work with the U.S. to prevent this major security threat, which affects both nations as well as the rest of the world.

In the past, Serbia has hosted a regional counterterrorism conference on foreign terrorist fighting. The country has also sent representatives to conferences in Albania, Italy and Slovenia to discuss how to counter violent extremism.

There are many economic and political reasons the U.S. and Serbia would benefit from the U.S. providing aid to Serbia. Together, the two countries have great potential to make technological advancements as well as work for a more peaceful world.

– Connie Loo
Photo: Flickr

Top five U.S. Trading Partners
The U.S. has strengthened relations with other countries around the world by offering foreign aid. In 2017, the top five U.S. trading partners all received foreign aid from the U.S., the world’s largest trading nation.

In 2013, U.S. exports in goods and services were $2.3 trillion. Trade is vital to the U.S. economy as it provides growth, aids jobs and offers Americans affordable goods and services. It supports families and businesses by allowing more productive and higher paying jobs, growing the variety of products available for purchase and encouraging investment for a more rapid economic growth.

The top five U.S. trading partners of 2017 received foreign aid, and then returned the favor by assisting the U.S. economy.

China

Aid received from the U.S. in 2017: $16 million.

China is the United States’ top trading partner with 130,000 exports and 505,000 imports in 2017. In 2015, Chinese manufacturing lowered prices in the U.S. for consumer goods which lowered inflation and in turn gave more money to Americans; as a result, consumer prices were 1 to 1.5 percent lower.

Though the percentage seems small, such actions make a significant impact throughout time. In 2015, the average income for a household was $56,500; trade with China saved these families up to $850 each in that year alone.

Canada and Mexico

Aid received from the U.S. in 2017: $28 million and $61 million.

Canada, Mexico and the United States are members of the North America Free Trade Agreement (NAFTA). Between 1993 and 2017, trade between the three countries quadrupled from $297 billion to $1.17 trillion. Specifically, the U.S. increased its exports of goods to Canada and Mexico from $142 billion to $525 billion.

NAFTA aids economic growth, profits and jobs for all three countries in its agreement.

Japan

Aid received from the U.S. in 2017: $30,000.

Japan benefits the U.S. by providing 710,000 American jobs via exports, and their benefits continue to grow as well. Japanese students that study abroad in the U.S. contribute at least $600 each to the U.S. economy; Japan also ranks fourth of countries to contribute to American tourism. In 2014, there were more than 9.4 million Japanese visitors who spent $17 billion in the U.S.

Germany

Aid received from the U.S. in 2017: $15,000.

Germany is the largest consumer market in the European Union (EU), and due to its success, the U.S. benefits from Germany through exports. Although U.S. investors may have to pay a higher cost while doing business in Germany, they can count on high levels of productivity, a highly skilled labor force, quality engineering, a first-class infrastructure and a prime location in the center of Europe. Germany also helps the U.S. through spreading their businesses overseas — companies such as BMW, Daimler, Siemens and Volkswagen have expanded operations in the U.S. which has resulted in more jobs.

Foreign aid is an important aspect of world operations because it strengthens economies and improves other countries’ ability to grow and build relations. The top five U.S. trading partners demonstrate the direct benefits that foreign aid can bring back to American soil.

– Anne-Marie Maher

Photo: Flickr