September 25, 2007

THE SHAPE OF U.S. ECONOMIC ASSISTANCE TO the Caribbean might dismay North Americans who believe it should be spent to help the hungry. U.S. foreign aid spending is determined, not according to the extent and location of hunger and poverty, but rather in accordance with "U.S. security interests." Consequently, the overwhelming majority of foreign assistance dollars go to a small number of governments considered strategic allies. In 1988, just two countries Israel and Egypt received 52% of all U.S. economic and military assistance to foreign governments. Twelve other countries received more than $1 billion each. These 14 countries out of 125 that received aid got 83.5% of the total U.S. aid package. Only three of these are "low-income" countries (with a gross national product of less than $470 per person per year): Pakistan, Bangladesh, and India. Ten others are "middle income": Turkey, Philippines, El Salvador, Honduras, Guatemala, Morocco, Greece, Portugal, Costa Rica, and Panama. One, Israel, is "high income." In 1988, African countries south of the Sahara desert received about $1.90 per capita in U.S. assistance. While Nicaragua received no U.S. aid funds, other Central American governments received the equivalent of $39.40 for every citizen. Israel received $631 per capita. Equivalent figures for non-military U.S. aid are $1.70 for Sub-Saharan Africa, $26.53 for Central America, $7.95 for Israel, and $19.31 for Egypt. The United States Agency for International Development (AID) is the main channel through which the U.S. government sends non-military assistance to foreign countries. AID funding is divided into three major categories: economic support funds, food aid and development assistance. Economic support funds (ESF) are often sent as cash transfers which can become an indirect form of military aid. The $207 million in ESF money allocated for El Salvador in 1989, for example, allowed the government to cover operating expenses and use its tax and other revenues for military salaries, training, and weapons. Most food aid is sold at low cost or donated to foreign governments through AID under the PL480 "food for peace" program. The government of Jamaica, which has been receiving $30-$40 million in U.S. food aid annually since 1980, re-sells most of it to help finance its debts and deficits, as do many other PL480 recipient states. Increasingly the United States has been making food aid contingent on policy changes by recipient country governments. Thus, U.S. food aid supports U.S. allies financially while obtaining policy changes desired by the United States. It also helps create a market for U.S. commercial food exports. According to Reagan's AID administrator, Alan Woods, "Of the 50 largest buyers of U.S. farm goods, 34 are countries that have received food aid from the United States." What the United States calls "development assistance" serves a variety of purposes, not all of them related to development or the reduction of poverty. In Guatemala, for example, AID development assistance funds have been used to support the displacement and resettlement of the civilian population by military force. A ID WAS ESTABLISHED IN 1961. ITS BUDGET grew from about $2 billion in that year to $7.2 billion in 1987. (Adjusted for inflation, the total value of AID's programs remained about level through most of this period.) Congress allocated only $5.7 billion for AID in 1989. AID priorities shift in response to the U.S. economic and political climate and to events abroad. AID funds to South Vietnam dropped from $600 million in 1966 to zero after the United States pulled out in 1975. AID spending in Israel and Egypt rose from a combined total of less than $500 million in the early 1970s to $5.3 billion in 1988. Before the 1980s, the United States spent relatively little for Caribbean aid. AID's Caribbean budget, which included programs for Belize, the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, Trinidad and Tobago, and the Leeward and Windward Islands of the Eastern Caribbean, averaged $66 million between 1962 and 1982. This figure jumped to $219 million in 1983 and to $353 million in 1985, and then began to decline; AID spent only $159 million in the region in 1988. In the islands of the Eastern Caribbean, then guarded by the aging but still dependable British colonial system, the United States spent an average of only $14 million yearly between 1962 and 1978. As the British backed out and local movements for economic independence grew, U.S. spending jumped. In 1979, the year of Grenada's revolution, AID spent $28.9 million on its Eastern Caribbean Regional Program, which covers AntigualBarbuda, Barbados, Dominica, Grenada, St. Kitts/Nevis, St. Lucia, and St. Vincent and the Grenadines. During the 1980s, U.S. economic aid to the Eastern Caribbean averaged $48 million annually. U.S. official direct military aid to the Eastern Caribbean jumped from zero in fiscal year 1981 to $7.6 million in 1986. As a proportion of total U.S. government spending, AID's budget gradually declined from a peak of 6.2% in 1962 to 2.4% in 1986. Non-military U.S. foreign assistance has fallen further since then. During the first half of the Reagan administration, however, "security assistance" increased 68%, while development assistance rose only 18% in nominal terms. In 1988, the United States ranked eighteenth in the world in terms of the proportion of its total national budget spent on non-military foreign aid. Informed observers predict that funding to Eastern Europe will rise substantially in the coming year, leaving even less for areas of lesser political importance to the Bush administration, such as Sub-Saharan Africa and the Caribbean.

Tags: Caribbean, foreign aid, security interests, USAID

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