A PROFILE OF FOREIGN AID

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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