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The Boomerang Effect: How Foreign Aid Gives Back

Foreign aid gives backForeign aid is too often misidentified as charity, with the implication of a one-way relationship. Like other myths surrounding aid, such as its depletion of the federal budget, a reality much different than popular belief silently survives. In truth, only one percent of the U.S. federal budget goes toward foreign aid and shrouded in much the same circumstances lies the fact that foreign aid gives back just as much, and more.

Who Gives to Whom?

According to an article by Jason Hickel, Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics completed a study in which they found that a much larger amount of money travels from poor countries to rich countries, rather than the other way around. As of 2015, cumulative foreign investment in the U.S. totaled more than $3 trillion.

Beyond the quantitative, the proof of return on investment manifests in countries like South Korea, Japan and Germany. All having once depended on U.S. aid in their times of need, these nations now play major roles in the global economy.

How Foreign Aid Gives Back to Developed Nations

Consider the fact that half of U.S. exports now go to developing countries and that developing countries’ economies grow three times faster than our own. The economics speak for themselves—with more new consumers to trade and do business with, more growth opportunities arise both at home and abroad. In Tennessee alone, more than 22 percent of jobs are supported by trade—that’s 830,000 reasons to continue investing in developing nations.

Beyond the wallet, though, foreign aid gives back in ways that cannot be measured. Potential new markets keep the U.S. competitive on the world stage, allowing its reputation and influence to spread. As Bill Gates points out, foreign aid even helps to keep the U.S. safe. By its nature, aid fights poverty, promotes development and largely focuses on foundational areas like healthcare, nutrition and education, which provide for a strong infrastructure.

The ultimate goal of this infrastructure-building rests in the ability to form a middle class, and by extension, find some stability. Countries that achieve this are more capable of preventing global health epidemics and are less likely to go to war. Stabilizing these nations by promoting democracy and human rights and by helping to install strong governance has far-reaching effects.

What Drawbacks Exist for Foreign Aid?

While some would argue that corruption and misuse of aid render the process futile, the results drown out the argument. Programs are in place to fight against this kind of criminality and are finding success. Foreign aid gives back in ways never thought of before now, such as:

  • Stopping diseases before they gain global reach.
  • Promoting U.S. exports.
  • Countering violent extremism.
  • Combating climate change through education.
  • Supporting overseas embassies and new allies.

Foreign aid gives back despite the stigma that claims otherwise. Experts say that cutting the U.S. foreign aid budget would do very little to reduce the federal deficit anyway. If the strongest argument against the use of foreign aid remains money, then it is time to take out the wallet and make a change.

– Daniel Staesser

Photo: Flickr

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Understanding the Negative Effects of Budget Cuts to USAID

cuts to USAID
Recently, the Trump administration, in collaboration with congressional leadership on Capitol Hill, has hammered out a deal to prevent a government shutdown while effectively gutting the State Department and agencies like USAID of their funding. This move not only signals a sidelining of diplomacy but marks one of the biggest budget cuts to USAID and the State Department since the early 1990s.

The effects of the budget cuts to USAID are undoubtedly going to hinder diplomatic agencies in eliminating poverty around the globe and increasing diplomatic relations with the countries that depend on us the most. The United States Agency for International Development (USAID) is the State Department’s main tool for dispensing aid to foreign countries and strengthening diplomatic relations.

USAID currently operates in roughly 100 countries, fighting the spread of poverty and disease while working to improve economic conditions worldwide. The proposed budget cuts to USAID weigh in at approximately $9 billion, a staggering defeat to those working toward the end of poverty worldwide.

The President’s proposed budget cuts to USAID amount to nearly one-third of its total budget, in what seems to be a strategic move away from diplomacy and toward military strengthening. Regardless of the President’s agenda, this move away from soft power and diplomacy has been condemned by many members of the military.

A total of 151 retired senior military commanders, including former chiefs of the Navy, Army, Air Force, Marine Corps and Special Operations Command, have warned that a reduction of this magnitude could have detrimental effects around the globe. As threats to the United States’ national security continue to grow, it is a risk to decrease diplomatic ties at such a pivotal moment.

Many civilians and government employees agree with the opinions of their military leaders. Former USAID Administrator Andrew Natsios said, when facing the 1999 budget cuts to foreign aid, that it is likely budget cuts could have detrimental effects toward the technical expertise of USAID and could mark the beginning of a disaster in the long-term.

As well as the statement above, Natsios describes budget cuts toward foreign aid and agencies such as USAID as an “evisceration of the most important tool of American influence in the developing world.” Other staffers from USAID warn of the spread of disease in the United States rising as foreign aid spending is cut. Outbreaks such as the Ebola outbreak may become much larger and harder to contain with a lack of funding to agencies such as USAID. These concerns are still relevant and even more serious today.

Agencies such as USAID are pivotal in diplomatic relations and national security. By providing funds, resources, goods and trade to other countries, the U.S. invests in itself as well as others. By providing healthcare to those in need, USAID prevents the spread of communicable diseases, prevents premature death and builds a market for low-cost medical technologies.

By providing food and farming technologies, the U.S. prevents world hunger and promotes market trading of produce and other consumable goods. By providing foreign aid, the country also helps form more efficiently-run governments and promotes democracy wherever possible. All of these efforts also prevent bigger catastrophes around the globe, such as mass migrations, food shortages and natural disasters.

At the end of March, Congress approved an omnibus appropriations bill for FY18 that will keep the government open through September 30, 2018. When it comes to funding for development and diplomacy, the omnibus overwhelmingly rejects the deep and disproportionate cuts proposed by the Administration in FY18 – highlighting the strong bipartisan support in Congress for these critical programs. Still, there is more work to be done to protect funding for the foreign aid budget in FY19 and beyond. 

 

Email Congress in Support of the International Affairs Budget

– Dalton Westfall

Photo: Flickr

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Private Businesses Speak Up on Cutting of Foreign Aid Budget

Private Businesses Speak up on Cutting of Foreign Aid Budget
Shortly after taking office in 2017, the Trump administration released its proposed budget cuts for FY 2018. Among the proposed cuts was a 31 percent decrease in the foreign aid budget, which includes cutting funding to the United Nations, the World Bank and other diplomatic institutions. With the already low foreign aid budget potentially decreasing, impoverished nations still do have dependable allies in the U.S. other than the government.

After the release of the proposed foreign aid budget cuts, American business leaders from companies such as Walmart, Nike and Coca-Cola signed a letter to Secretary of State Rex Tillerson urging him to reevaluate the proposed cuts. The May 22 letter highlights the fact that 95 percent of the world’s consumers live outside of the U.S. and that “eleven of America’s top fifteen export markets are in countries that have been recipients of U.S. foreign assistance.”

Not only are private businesses lobbying the government to take responsibility when it comes to stepping up foreign aid policy, but they have also stepped up in their own funding to developing countries and their economies.

According to The Guardian, private sectors have invested money to developing countries at a faster rate than government foreign aid; they receive 27 percent more foreign business investments than development aid. The investments, which have increased nine-fold since the year 2000, are starting to bring countries out of poverty with increasing business capital flow into their economies.

As businesses see more market potential in countries where citizens could come out of poverty and would have more money to spend on luxury goods, they have an incentive to invest in development.

For example, The Coca-Cola Company and The Bill and Melinda Gates Foundation teamed up with TechnoServe to invest in eastern African farmers to produce fruit for their Minute Maid drinks. As a result, local farmers were educated on how to produce better crop yields that would benefit both Coca Cola’s production and the farmers’ incomes. This venture was titled Project Nurture and increased the incomes of 54,000 farmers.

“We are committed to working with you in your role as Secretary of State to share our perspectives on the importance of U.S. international affairs programs to boost our exports abroad and our jobs here at home,” read the May 22 letter to Tillerson. Whether the proposed 31 percent foreign aid budget cut goes into effect or not, private businesses will continue to invest in foreign markets and give aid to developing countries. It is also important to note that, in budgetary matters, Congress holds the power of the purse. While the President is able to propose budgetary cuts, they must be approved by Congress before going into effect.

– Vicente Vera

Photo: Flickr

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John Kerry Promotes Foreign Aid Budget with Tunisia

John Kerry
Secretary of State John Kerry and the U.S. Senate remain embroiled in a billion dollar foreign aid battle that has been raging since 2011.

In 2014, the United States signed a $500 million loan agreement with Tunisia, which would allow the people of Tunisia to access international capital and other financing techniques to assist with their “democratic transition.”

According to the New York Times, the U.S. has extended $700 million in direct aid to Tunisia over the past four years and two rounds of loan guarantees totaling $1 billion since 2012, after designating Tunisia a major non-NATO ally in July 2015. This status brings up the promise of added military cooperation.

Being called “the Arab Spring’s only potential success story” by the Al-Monitor, Tunisia has been a central player in the Obama administration’s efforts to promote democracy in the Middle East. Secretary of State John Kerry has been working to increase the amount of USAID dollars sent to Tunisia and has been advocating for other programs of economic growth that may reinforce Tunisia’s march to democracy.

“The eyes of the world are on Tunisia, and America wants Tunisia to succeed,” said John Kerry in a news conference in 2015. “Tunisia is where the Arab Spring was born, and it is where it distinctly continues to bloom in ways that are defining possibilities for other countries in that region.”

The Tunisian government has so far been enthusiastic about transitioning to democracy, despite potential threats they may face from “regional rivals” such as Iran, Syria and Saudi Arabia.

Prime Minister Jomaa of Tunisia says, “We are very proud of our new constitution, of our shared values of democracy and rights […] we need to think about economic and social aspects, and also about teaching and learning because we are eager to develop our youth and to develop new technologies.”

However, not all members of the U.S. Senate are convinced that Tunisia is stable enough to promote Prime Minister Jomaa’s agenda. Senate members were wary of potential terrorist threats within Tunisia this past summer and blocked significant amounts of foreign assistance to the region that were proposed in a House Bill.

The alternative Senate appropriations bill was $10 million short of the foreign assistance demanded by the State Department. It also did increase military aid, although it cited “the terrorist threat Tunisia faces,” as a primary motivator for sending fewer dollars abroad.

The concerns of the Senate are not unfounded. The deteriorating situation in Syria has had profound effects on Tunisia, both with Syrian refugees pouring into the region and Tunisians themselves becoming involved in the civil war. According to Al-Jazeera, 5,500 Tunisians have joined groups like ISIL, al-Nursa Front and al-Qaeda in the neighboring nations of Syria, Iraq and Libya.

However, USAID has been working with Tunisia to create programs of entrepreneurship and economic opportunities that may halt the flow of young Tunisians toward radical groups in Syria, Iraq and Libya. Funds like the Tunisian-American Enterprise Fund, which allocates investments totaling $20 million into small and medium enterprises in Tunisia, is one attempt to jump-start Tunisia’s private sector despite political turmoil that may hinder it.

“Measurable economic progress can help bolster democratic reforms both in Tunisia and elsewhere in the region,” said Alina Romanowski, the Acting Assistant Administrator for the Middle East for USAID. “The Tunisian-American Enterprise Fund will help to address gaps in financing for entrepreneurs and small businesses that overwhelmingly drive Tunisian private sector growth.”

USAID and the budding Tunisian democracy are hoping that these economic reforms can be perfected in Tunisia and then transferred to other nations like Syria. Private sector growth, combined with financial support from the U.S. and USAID, could promote a new era of peace and prosperity for Tunisia while also creating a useful ally for the United States in the Middle East.

John Kerry has called Tunisia “a shining example to those who claim democracy is not possible in this part of the world.”

– Emma Betuel

Sources: NY Times, Al-Monitor, USAID
Photo: Flickr

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Where Could Your Foreign Aid Dollars Go?

Foreign Aid: What Could Your One Percent Do?In a recent poll, 81 percent of Americans said they believe that the U.S. has “a moral responsibility to work and reduce hunger and severe poverty in poor countries.” However, Americans also think that America is already spending a significant portion of its annual budget on foreign aid; when polled, some Americans thought the U.S. spent as much as 30 percent, more than is actually spent on Social Security or Medicare, when in reality only about 1 percent of the budget is allocated to foreign aid.

And while 1 percent of the American budget is a large sum in absolute dollars, even compared to other developed nation’s foreign aid spending, America does not rank in the top 15 industrialized countries when compared to the percent of its gross national income. Britain, who does make the top 15, spent about 6 percent of its gross national income in 2012, so while they are spending less money in actual dollars, they are willing to allocate a higher percentage of their budget toward assisting economically struggling countries.

As the American foreign assistance budget stands now, citizens pay pennies on the dollar toward saving and improving the lives of people living in poverty. The average median income for residents of Washington State in 2013 was $58,405. Households making the median annual income would have paid roughly $10,000 in income taxes. Of their tax money, about $100 would have been put toward foreign aid.

Foreign aid dollars are worked in a variety of ways. In 2012, the economic assistance budget of about $31 billion was split among spending on development assistance, migration and refugee assistance, international narcotics control and law enforcement, and global health and child survival. According to a tax calculator created by the nonprofit ONE.org, that family’s $100 could have been used to provide someone with 268 days of HIV treatments, 61 life-saving vaccines or 11 bed nets that save lives.

Tax season is understandably not everyone’s favorite time of year, but it is good to know not only where our dollars are being spent, but also the amount of good they can do. Even with only a small percentage of our taxes being spent on foreign aid, they are managed through effective programs that make real differences.

– Brittney Dimond

Sources: Gates Notes, One, OFM, National Priorities, OXFAMAmerica
Photo:  Flickr

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The Effect of Conservative Danish Politics on Foreign Aid

danish_politicsOn June 18, Denmark’s center-left government, the Social Democrats, were ousted out of the political limelight as the country moved dramatically to the far right in favor of the ring-wing, populist and anti-immigrant Danish People’s Party (D.P.P). The Danish People’s Party is often regarded with stigma both at home and abroad and is on the outskirts of Danish politics since its founding in 1996.

However, in the most recent elections, the D.P.P. came in second place with 21.1% of the votes, only 5.2% less than the number of votes received by the leading Social Democrats. According to preliminary results published by the DR.DK, Denmark’s national broadcaster, the center-right bloc that includes the D.P.P now holds a majority of 90 seats in Parliament, which, for the first time, has elevated the D.P.P. into the centerfold of Danish politics. The results of this election come on the heels of growing unrest within Denmark over issues related to immigration and the security of the Danish welfare state. Denmark, a socialist and uber-liberal country which was voted “happiest country in the world” last year, is one of the highest-functioning welfare state programs in the world. The thanks is owed to the Danish citizens paying the highest income taxes in the world, at 60.2%.

The Danish welfare state was created in 1933 following the Social Reform Act, which sought to redirect Denmark’s attention inwards following the loss of the last remnants of the former Danish Empire, which once included Southern Sweden, Northern Germany, Iceland and Norway (and continues to include Greenland and the Faroe Islands). A “Denmark for the people” mentality was adopted, which subsequently iterated outwards into a Scandinavian-socialist ethos which has traditionally regarded foreign aid as an obvious centerpiece of Danish foreign policy. Providing welfare services “from the cradle to the grave” for citizens at home, such as free childcare, education through university and healthcare, and providing international aid to citizens abroad was regarded as two sides of the Danish-socialist-mentality coin.

The recent elections reflect the ways in which some Danes have begun to adjust their thinking about the welfare state and its relationship to those outside the “Danish family.” Similar to the recent wave of anti-immigrant parties which have popped up throughout Europe, such as the Finns Party in Finland, the Progress Party in Norway, the Sweden Democrats in Sweden and UKIP in the United Kingdom, the D.P.P. frames itself as the voice of “Old Danes” who regard the growing influx of immigrants within Denmark as a threat to the Danish welfare state and the Danish way of life.

The presence of immigrants in Denmark, who make up around nine percent of the population country-wide, in conjunction with the recent surge of 14,000 mostly Muslim asylum seekers and the Copenhagen shootings of February 14 by the 22-year-old son of Palestinian immigrants, has produced a backlash of growing nationalist sentiment in Denmark. As a result, supporters of the D.P.P. have begun to implicitly redefine how “Denmark for the people” is understood. A motto that traditionally went unchallenged, given the historically monocultural and monoethnic nature of the Danish population, is now being reformulated by the D.P.P. to function more as “Denmark for the Danes;” as the D.P.P. has proposed slashing welfare entitlements for newly arrived immigrants and refugees into the country.

Increasing exclusivity regarding Danish welfare state benefits is being matched in Parliament by talk among the D.P.P and the Liberal Party that Denmark should cut back on foreign aid in order to channel more money into welfare entitlements for native Danish citizens, especially the elderly. In 1970, the world’s richest developed countries agreed to give point seven percent of their Gross National Income (GNI) annually to international development aid.

Historically, Denmark, along with Norway, Sweden, Luxembourg and the Netherlands, has been one of the few developed countries to actually commit to reaching this target. Proposals or talks of cutting foreign aid thus represent a dramatic break from Denmark’s historically extraordinary commitment to reaching the point seven percent goal. A survey conducted for the Ministry of Foreign Affairs has also found that right-wing political opinion about foreign aid is being matched in public opinion, as support among Danes for foreign aid has fallen by 15% in the last five years. The recent shift to the right in Denmark now leaves Sweden as the only country in Scandinavia in which the center-left continues to hold the majority of political power. The Swedish equivalent to the D.P.P. – the Swedish Democrats – also continue to be regarded as political pariahs in mainstream Swedish society.

Despite Denmark’s sudden swing to the conservative anti-immigrant right, the country currently continues not only to meet but to exceed the annual point seven percent foreign development aid target.

– Ana Powell

Sources: BBC, CNN Money DR, The Guardian New York Times 1, New York Times 2 OECD
Photo: Dagens

What is the 152 account?

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Foreign aid is one of the most controversial issues in the U.S., but many people who are against increasing foreign aid fail to realize that only less than 1 percent of the U.S. annual budget is devoted to foreign aid. Most of the people who want to cut foreign aid estimate that the U.S. spends up to 30 times more on foreign aid than it actually does.

The aid that the U.S. gives is divided into two subcategories — the 151 account and the 152 account. As the Center for Global Development states, while the 151 account deals with international development and humanitarian assistance, the 152 account is concerned with international security assistance. The U.S. Agency for International Development and the State Department are the two groups that provide the most money for international aid. In 2010, the 152 account — international security assistance — was given 10.38 billion dollars in aid.

This money for security assistance is utilized in several different ways, and the programs are administered by the Department of Defense and the State Department. One of the most widely known programs that uses this security assistance is International Military Education and Training (IMET). IMET uses the money in order to provide training to foreign troops using U.S. military doctrines, tactics and equipment when necessary. An example of IMET in action is the security assistance that the U.S. has provided to Lebanon. Since 1985, the U.S. has had more than 1,000 Lebanese military students come to the U.S. for training and education.

In 2007, the U.S. spent $10,581 million on the 152 account, $16,287 million on the 151 account and a total of $68,408 million on their international affairs budget. While this may seem like a lot of money, in the same year, the U.S. spent $625,850 million on its national defense budget.

The 152 account is important because it provides security assistance to groups that need tactical training and weapons. It helps to ensure that the three core security objectives of the U.S. – enhancing U.S. security, bolstering America’s economic prosperity and promoting democracy abroad — are carried out. The security assistance training programs, such as IMET, are supposed to improve the relations between the U.S. and other countries and promote self-sufficiency.

– Ashrita Rau

Sources: CGD, Oxfam America Princeton The White House The White House FAS FPC GPO Congressional Research Service
Photo: American Foreign Relations

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Attacking Illegal Immigration With Foreign Aid

illegal immigration
The United States government announced that it is increasing its foreign aid budget to deal with the recent surge of illegal immigration, especially of minors. Since October 2013 the U.S. border patrol has reported 52,000 children illegally crossing the Mexican-United States border. The majority of these children come all the way from Central America in an attempt to escape not only poverty, but also violence.

There is often a direct correlation between poverty and violence, as more and more people will turn toward theft and gangs as their  economic situations become desperate. The U.S. government’s USAID program will feed a total of $93 million dollars into Central America to improve citizen security in the countries that result in the highest number of immigrants, these being Guatemala, El Salvador and Honduras. The money will target crime prevention, youth involvement in gangs and support for local law enforcement. Some of the money will also go toward repatriating Central Americans who are returned to their home countries.

The goal of this increase in foreign aid is to create environments that Central Americans will want to live in instead of run away from. Building secure and prosperous societies that Central Americans can be proud of will result in a lower percentage of the Central American population making the treacherous journey northward.

The increasing number of immigrants is concerning because making it to America is no easy feat. The road is long, hard and dangerous, and many of the children crossing the border are not accompanied by adults. For people to decide that this harrowing experience is worth the risk, conditions in their home countries must be extreme.

However, the especially high number of immigrants is also the result of the “coyotes” who smuggle people into America for a price that is often higher than the immigrants can afford. Many of the recent illegals tell similar stories of coyotes who made promises of U.S. residency due to a new immigration reform. Spokespeople from the White House have stated that this reform does not exist. Coyotes are well known for lying, scamming and taking advantage of desperate travelers. The president of Mexico, Enrique Peña Nieto, has expressed enthusiasm in working with the U.S. government to support legal immigration that is safe and orderly, and not the experience that is given by the coyotes.

Opponents of the government’s foreign aid policy in Central America include the police of southern Texas that deal with illegals on a daily basis. They claim they cannot afford the time it will take to see if this new structure works. They fear they are running out of energy and options when it comes to illegal immigrants and the government should take more immediate action.

While President Obama dismissed House Speaker John Boehner’s call to send the National Guard to the border, the Obama Administration is brining in more lawyers and judges to the immigration courts to speed up processes there, as well as an expansion of detention facilities to house the increasing number of immigrants while they await trial.

-Taylor Lovett

Sources: CBS, WBUR
Photo: Flickr

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Australia Slashes Foreign Aid Budget

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Recipients of Australian foreign aid are up in arms today following a release by the government showing a significant slash in the aid budget. In a mini-budget produced by Treasurer Chris Bowen, the foreign aid budget fell by AU$879 million (approximately USD $782 million). In addition to this cut in expected funds an additional AU$420 million of the appropriated funds will be rerouted to serve Australian asylum-seekers routed to Papa New Guinea.

Overall aid spending will still increase by 26% but the cuts will be felt by Australian aid recipients. The aid budget is projected to reach AU $5.7 billion in fiscal year 2014, which will be the largest aid budget yet for Australia.

As one of the largest markets for human trafficking and smuggling individuals Australia has grappled with its refugee population. Asylum seekers in Australia had reached 7,120 in only the first seven months of 2012. These individuals are at high risk for human trafficking and smuggling. In 2012 Australia issued a new plan for controlling and settling these asylum seekers and refugees. Under this amendment Australia will transfer these individuals to Papa New Guinea and Nauru. Critics claim this is not a solution but rather a transfer of the problem because Papa New Guinea itself has high rates of human trafficking.

Individuals from international development organizations have spoken out against this rerouting of funding. Kelly Dent, a spokeswomen for Oxfam, said, “The purpose of Australia’s overseas aid budget is to fight poverty. It is not an ATM for the government to meet its domestic financial commitments.” Aid recipients have pointed out that the fluctuation of the aid budget forces them to operate in an uncertain funding environment. Those hurt the most will be program recipients in the Middle East and Africa.

Mr. Bowen stated that Australia will still meet its target of foreign aid reaching 0.5% of gross national income (GNI) for 2017/2018. However, this is a push back from the targeted 2016/2017 deadline.

The aid cuts have surprised some because Australian aid was expected be treated more favorably by Prime Minister Kevin Rudd’s administration. Prime Minister Rudd, historically a strong supporter of foreign aid, appointed Australia’s first development minister since 1996. However, the aid cuts come amid an overall budget decrease of AU $17.4 billion. The government blames the massive deficit revealed as a result of GDP slowdown and a reduction of expected tax receipts. This is discouraging news for the Labor party as Australia heads into federal elections this year.

– Callie D. Coleman

Sources: Devex, The Australian, Devex, The Guardian, ABC News
Photo: Australia Network News