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Playing Politics
With Aid

The Unholy Trinity of Defense, Diplomacy and Development in the War on Terrorism
By Anuradha Mittal,
Executive Director, The Oakland Institute

For decades U.S. foreign aid has been accused
of prioritizing U.S. political and military agenda over the needs of the
poor around the globe. Now, the Bush administration has declared this
to be the official foreign assistance policy of the United States.

Changes in the way the U.S. directs foreign aid, announced by Secretary
of State Condoleezza Rice in January 2006, bring the administration of
aid under the control of the State Department and ties foreign assistance
to U.S. strategic military interests. This move marks the Bush administration’s
abandonment of any attempts at subtlety in their efforts to undermine
growing opposition to the Washington Consensus.

The foreign aid changes include the creation of a new post, “Director
of Foreign Assistance” (DFA) who will report directly to the Secretary
of State. The DFA’s mandate is to oversee the Office of the Global
AIDS Coordinator and the Millennium Challenge Corporation as well as head
the U.S. Agency for International Development (USAID), bringing the agency
under State Department’s control and placing a single official in
charge of coordinating about $19 billion worth of U.S. foreign assistance
programs. A closer look reveals the true aim behind this reorganization:
align aid agencies with the military interests of the U.S. government.

Diplomacy: A Fix for Foreign Aid?

Couched in the Bush administration’s code language of promoting
“democracy” and strengthening “national security”,
Secretary of State, Rice introduced the overhaul of the U.S. foreign assistance
programs by saying, “In today's world, America's security is linked
to the capacity of foreign states to govern justly and effectively…We
were attacked on 9/11 by terrorists who had plotted and trained in a failed
state: Afghanistan. Since then, we have cycled tens of thousands of troops
through the country, spent billions of dollars, and sacrificed precious
lives to eliminate the threat -- and to liberate the brutally repressed
people of Afghanistan. In the final analysis, we must now use our foreign
assistance to help prevent future Afghanistans -- and to make America
and the world safer…”

Rice also rationalized the move as an effort to remove bureaucratic redundancies
to better serve the goals of U.S. diplomatic strategy, stating that authority
to allocate foreign assistance is too fragmented among various State Department
bureaus, and between the State Department and USAID, thereby impeding
“our efforts to integrate our foreign assistance with our broader
foreign policy objectives.”

To top it all, Secretary Rice has picked Randall Tobias as the Director
of Foreign Assistance, granting him vast authority over a range of foreign
assistance accounts previously managed by separate entities. Tobias is
the former head of pharmaceutical giant Eli Lilly & Co., and now heads
the Bush Administration’s global AIDS effort. This, in spite of
the fact that he is known for taking an ideological approach to AIDS assistance
by supporting abstinence-only programs and avoiding the use of cheap,
generic drugs to fight AIDS in poor countries. Tobias has also come under
criticism for being a major Republican campaign contributor.

This centralization of foreign aid is accompanied by a change in location
of many U.S. Diplomats, or what Rice termed as “forward deployment”
of diplomats. This movement will shift hundreds of Foreign Service Positions
from Europe and Washington to the Middle East, Asia, and elsewhere, in
what Rice described as “transformational diplomacy”. The unstated
implication of these moves as well as the consolidation of forces is that
the pro-Bush administration policy advocates who replace the more traditional
aid experts will coordinate closely with the U.S. military through political
advisors. The end goal being, to ease the process of aligning foreign
assistance programs with foreign policy goals.

The forward deployment is complemented by plans for regional public diplomacy
centers, American Presence Posts outside capital cities, Virtual Presence
Posts, and local interactive websites to counter anti-U.S. media and to
appeal to the youth and provide support to civil society groups sympathetic
to the U.S.

The current shifts in US Foreign aid policy are part of a long history
of supposedly benevolent assistance being used strategically by the United
States. The Marshall Plan, the first major U.S. foreign aid program, was
designed largely to prevent Soviet expansion in Europe. During the Cold
War, aid went to reward anti-communist allies - the largest recipients
being countries like South Korea and South Vietnam.

Since 9/11, foreign aid
has gained broader strategic significance under the War on Terrorism.
But this new shift signifies a further blurring of the line between
military and diplomacy. In the last four years the Bush Administration
has preferred preemptive military action and now there is a clear
shift to preemptive “diplomacy”.

U.S. Foreign Assistance: A Murky Past

In 1961, dissatisfaction with the foreign assistance structures that had
evolved from the days of the Marshall Plan with its stated goal being
of stabilizing Europe after the World War II, resulted in reorganization
of the U.S. foreign aid programs and the creation of the USAID.

When the Marshall Plan expired on June 30, 1951, Congress pieced together
a new foreign aid proposal designed to unite military and economic programs
with technical assistance. In October 1951, the Mutual Security Act was
passed, creating the Mutual Security Agency. This was followed in 1953,
by the creation of the Foreign Operations Administration, an independent
government agency created outside the Department of State to consolidate
economic and technical assistance on a world-wide basis. A year later,
however, its responsibilities were merged into the International Cooperation
Administration (ICA), established as part of the Department of State,
with many limitations placed upon it.

These restrictions led to growing dissatisfaction with foreign assistance,
so much so that it became an electoral issue during the 1960 U.S. presidential
campaign. The new Kennedy Administration made reorganization of, and recommitment
to, foreign assistance a top priority, stating, “…there is
no escaping our obligations: our moral obligations as a wise leader and
good neighbor in the interdependent community of free nations--our economic
obligations as the wealthiest people in a world of largely poor people,
as a nation no longer dependent upon the loans from abroad that once helped
us develop our own economy--and our political obligations as the single
largest counter to the adversaries of freedom.”

Supposed to be free from political and military functions that plagued
its predecessor organizations like the ICA, the Kennedy administration
created USAID to support long-range economic and social development assistance
efforts in the developing nations of the world. However, almost since
its inception, USAID has primarily promoted U.S. political and military
interests abroad, and it has not enjoyed the level of autonomy it was
supposed to have maintained.

After the end of the Cold War, foreign assistance continued to be a tool
to promote the U.S. interests. Foreign assistance programs have helped
create major markets for agricultural goods, created new markets for American
industrial exports and meant hundreds of thousands of jobs for Americans.
In fact USAID follows and implements the Buy American Act, which requires
that American money aid and grants be used to purchase goods and services
which are U.S. produced and U.S. delivered. In 1996, the U.S. estimated
that 71.6% of bilateral aid commitments were tied to the purchase of U.S.
goods and services. Since then the U.S. has no longer provided data on
the tied status of their aid, though these figures were repeated in the
USAID Agency Performance Report published in April 1999.

Foreign Aid in the War on Terrorism

With the launch of the Global War on Terror (GWOT) after September 11,
2001 U.S. foreign aid once again underwent changes to become a central
team member of the Bush administration’s War on Terrorism. The war
on terrorism has replaced the war on communism, thereby providing a new
rationale for U.S. foreign aid and helping to further integrate foreign
assistance with military policy. The inclusion of development in the 2002
National Security Strategy (NSS), along with defense and diplomacy, enlisted
USAID as a significant contributor and a public relations tool for the
Bush administration. For example, in Afghanistan, the volume of food aid
doubled, from 277,000 tons in 2001, to 552,000 tons in 2002, after the
U.S. victory over the Taliban regime. However, this aid was cut by half
to 230,000 tons, in 2003 (much below the volume of aid provided in 2001)
as the priority shifted to Iraq after the U.S. invasion. Food aid deliveries
to Iraq increased from 2,100 tons in 2002 to more than 1 million tons
in 2003. It was reduced to 10,000 tons in 2004 with food aid not being
deemed necessary by the invasion forces to win domestic and international
public opinion.

Recent developments in foreign assistance make it clear that there is
a concerted effort underway to further politicize U.S. foreign assistance.
Plans to reposition diplomatic resources from Europe and Washington to
Asia, Africa, South America and the Middle East, along with centralization
of aid programs are all moves to ensure that USAID's “development”
workers coordinate more closely with U.S. military and diplomats. In fact
the “dual-hatting” of DFA and USAID Administrator is aimed
at ensuring that development programs cater to political and military
strategic interest of the United States instead of being driven by a development
agenda. Carol Lancaster, former deputy administrator of USAID, wrote in
the Financial Times that “where two agencies have different goals
and modes of operation, the mission of the bigger, stronger agency will
almost always overwhelm that of the smaller agency and undercut its effectiveness.
The day-to-day decisions on how USAID uses its funds for development -
which countries receive the aid, how much they get and how it is used
- can be very different from the priorities of the State Department.”

Aid or Abet: Defeating Terror and Advancing
Liberty and Democracy?

Despite the rhetoric of “providing a helping hand to people overseas
struggling to make a better life, recover from a disaster or striving
to live in a free and democratic country,” U.S. aid is aimed at
advancing its own political agenda. The reorganization of the foreign
assistance programs along with recent diplomatic moves makes this even
more obvious.

On February 15, the State Department requested $75 million to promote
democracy in Iran, which would be added to $10 million already appropriated
for that purpose — the total being an increase from only $3.5 million
the year before. This is to include $25 million to support political dissidents
and to work with nongovernmental organizations outside Iran to build support
inside the country. The administration plans $50 million to increase television
broadcasting to 24 hours a day all week in Farsi in Iran. Another $5 million
is aimed at bringing Iranian students and scholars to study in the West
and $5 million more is earmarked for setting up internet sites.

The goal is to promote political change through supporting dissent groups,
unions, student fellowship and radio and television broadcasts in much
the same way that Congress appropriated funds to Iraqi dissidents in the
1990s, or supported the coup in Iran in 1953. Speaking at the Senate hearing,
Secretary Rice said, “We will use this money to develop support
networks for Iranian reformers, political dissidents and human rights
activists… Over the past two years, the Department of State has
invested over $4 million in projects that empower Iranian citizens in
their call for political and economic liberty, freedom of speech, and
respect for human rights. We are funding programs that train labor activists
and help protect them from government persecution…We will devote
at least $10 million to support these and other programs during this year
(FY 2006), and we are eager to work more closely with Congress to help
Iranian reformers build nationwide networks to support democratic change
in their country.” This follows multiple examples of previous ‘aid’
efforts in other countries including Cuba and North Korea that have been
primarily focused on building support for groups that are in line with
U.S. policy.

In another case, the U.S. has threatened to sever humanitarian aid to
the people of Palestine for exercising their right to vote. In the January
2006 Palestinian parliamentary elections, the Palestinian people voted
massively in support of Hamas, giving it 76 of the 132 seats. Alarmed
by its victory, President Bush’s announced to his Cabinet that “the
Hamas party has made it clear that they do not support the right of Israel
and I have made it clear that so long as that’s their policy, that
we’ll not support a Palestinian government made up of Hamas.”
The U.S. has put pressure on other international donors to follow similar
action with the intention of bankrupting the future Hamas-led Palestinian
Authority. Hamas leader, Ismael Haniyeh, has in the meanwhile assured
the international community that all aid revenues will be used on salaries,
daily lives and infrastructure.

According to the World Bank, nearly one-half of all Palestinians already
live below the poverty line and as many as 600,000 people are unable to
meet their basic needs in food, clothing and shelter. James Wolfensohn,
the former head of the World Bank and the quartet’s special envoy
has warned that cutting off aid would push the Palestinian territories
into chaos.”

This move by the U.S. to threaten the Palestinians with siege and starvation
for voting the wrong way has not necessarily generated international support.
The Russian President Putin, has asked the international donor community
to continue aid to Palestine. Saudi Foreign Minister Prince Saud Al-Faisal
has urged countries to accept the will of the people that was expressed
“through democratic means,” and is advocating for international
engagement with a democratically elected government rather than reactions
that could close the door to peaceful settlement.

The war on terror has also resulted in increases in military assistance,
which come largely at the expense of humanitarian and development assistance
and in blatant disregard of a country’s record on democracy or human
rights. On September 22, 2001, the Bush administration asked Congress
for blanket authority to wave economic sanctions against countries whose
help is needed in the anti-terror coalition. This was done to enlist countries
like Pakistan in fighting terrorism, where virtually all U.S. aid to the
country had been cut off after the Pakistanis revealed they had conducted
nuclear weapons tests in 1998.

Washington also restored military ties with Indonesia, another key ally
in the war on terror in 2005. In 1999, the U.S. had severed relations
with Indonesia following public pressure about its military’s long
track record of brutal repression. The restoration of ties has revitalized
two military aid programs that had been cut off for years and additional
spending is providing loans and credits to buy new U.S. weapons and technology.

In fiscal year 2007, the State Department has requested $6.2 billion to
further strengthen the coalition partners in the fight against terrorism.
Excluding Iraq, the largest recipient remains Israel with $2.34 billion,
followed by Egypt with $1.3 billion. Other requests include $739 million
for Pakistan with $300 million designated for military financing, $560
million for Colombia, $154 million for Indonesia, $457 million for Jordan,
and $335 million for Kenya. In addition, the FY 2007 request for International
Military Education and Training (IMET) is $88.9 million with focus on
building military alliances and capabilities in member countries of the
international coalition against terrorism.

Geopolitical Goals Undermine Development

“Secretary Rice’s reforms are likely
to take even more money from real development. An Agency for International
Development Director inside the State Department will be under tremendous
political pressure to take money away from effective antipoverty programs,
which have very small political constituencies and divert it to the State
Department’s geopolitical goals, which have little to do with development.”

– Editorial, Wrong Fix for Foreign Aid, The New York Times, February
6, 2006

Foreign assistance, the third pillar of U.S. national security policy,
along with military power and diplomacy, is progressively shifting aid
away from poverty-focused assistance to poor countries. Already development
assistance is only 30 percent of the U.S foreign aid budget, while military
and economic aid for strategic allies constitutes more than half of the
same budget.

The 2007 foreign operations budget of $23.72 billion – less than
1 per cent of the total federal budget – further reduces poverty-focused
development assistance programs by over $400 million. These cuts will
affect vital programs such as the Child Survival and Health Fund (cut
by 13 percent, undermining a long term development assistance program
that has emphasized expanding basic health services and strengthening
national health systems to improve people’s health, especially that
of women, children and other vulnerable populations in the developing
world), Development Assistance, Disaster and Famine Assistance, among
others. Included in the president’s proposal are cuts of $15 million
to the United Nations Development Program (UNDP), the primary development
agency in the UN system that works to alleviate poverty, solve environmental
problems, and fight HIV/AIDS.

The drug war is the real winner with the budget, envisioning a 70% increase
in anti-drug spending, to $1.5 billion worldwide, particularly aimed at
Afghanistan which, since the ousting of the Taliban has become the world’s
biggest source of opium and heroin. That is more than the total amount
devoted to the core Development Assistance account. At the same time,
economic assistance for Iraq will increase from $60 million in 2006 to
nearly $500 million in 2007. While the lion’s share goes to Iraq
and Afghanistan, Latin America and the Caribbean face a 28.5 percent cut
in development assistance.

Making Aid Work

Addressing threats to national security is perhaps the biggest challenge
facing America at this moment in history. It was out of this concern that
the 9/11 Commission Report recommended that “[the U.S. government]
should offer an example of moral leadership in the world, committed to
treat people humanely, abide by the rule of law, and be generous and caring
to our neighbors.”

Foreign assistance is one key way through which the U.S. can prove itself
to be a generous, caring member of the international community and to
make a crucial contribution to strengthening global security. This notion
is not new. In his inaugural address in 1949, President Harry S. Truman
noted that “more than half the people of the world are living in
conditions approaching misery… Their poverty is a handicap and a
threat both to them and to more prosperous areas.”

Our world today is characterized by widespread hunger, poverty, and disease
amidst plenty. According to the Food and Agriculture Organization of the
United Nations, an estimated 852 million people are affected by hunger
worldwide while the National Priorities Project estimates that over $242,535,575,550
has been spent on the war in Iraq. This is enough to fully fund global
anti-hunger efforts for 10 years or fully fund world-wide AIDS programs
for 24 years or ensure basic immunizations for every child in the world
for 80 years.

Unfortunately, the Bush administration’s agenda does not consist
of genuine development aid that can serve long-term interests in poverty
reduction and stability abroad. At a time of shrinking budgets, it is
in the interest of the United States to ensure that each dollar of development
aid is invested in building self-reliant societies abroad instead of subjecting
them to its short-term foreign and military policy goals.

Years and years of foreign aid, driven by U.S. political interests have
not won Washington real allies, and in fact have contributed to the destabalization
of national economies and governments, causing resentment against the
U.S. It is time for the U.S. to realize that the promotion of decentralization
of resources and decision-making to the local level as well as encouraging
self-reliance by investing in small producers, such as farmers producing
food for the domestic market, will reap more long-term political profits
for the country.

Properly targeted aid can benefit millions of people. It can provide healthcare,
education, electricity, clean water, and fight disease and poverty. It
can help promote economic development, human rights and even foster democracy.
In other words, well-targeted foreign assistance can make the world a
safer and better place – for all of us. It is time for the Bush
administration to step back and rethink its strategy for the war on terrorism.

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  1. According to John Williamson, the phrase’s originator, “Audiences
    the world over seem to believe that this signifies a set of neoliberal
    policies that have been imposed on hapless countries by the Washington-based
    international financial institutions and have led them to crisis and
    misery.” Global Trade Negotiations Home Page, Center for International
    Development at Harvard University. February 16, 2006 <>.
  2. Stockman, Farah, “New US Post Created to Direct Foreign Assistance:
    Move to Streamline Overseas Aid Efforts,” The Boston Globe, January
    20, 2006.
  3. Remarks by Condoleezza Rice, U.S. Secretary of State, “New
    Direction for U.S. Foreign Assistance,” January 19, 2006.

    February 2, 2006 <>.
  4. Remarks by Condoleezza Rice, U.S. Secretary of State to USAID staff,
    “New Direction for U.S. Foreign Assistance,” January 19,

    February 3, 2006 <>.
  5. Stockman, Farah. “New US Post Created to Direct Foreign Assistance:
    Move to Streamline Overseas Aid Efforts.”
  6. Opening Remarks of Secretary Condoleezza Rice before the Senate Budget
    Committee, International Affairs Budget Request for Fiscal years 2007,
    February 16, 2006, Washington DC.

    February 19, 2006 <>.
  7. Ibid.
  8. USAID History.

    February 20, 2006 <>.
  9. Ibid.
  10. Ibid.
  11. Tied Aid: Promoting Donor’s Self-Interest, South Center, 2003.

    February 24, 2006 <>.
  12. Mousseau, Frederic, Food Aid or Food Sovereignty? Ending World Hunger
    in Our Time, The Oakland Institute, October 2005.
  13. Lancaster, Carol “Bush's Foreign Aid Reforms Do Not Go Far Enough,”
    Financial Times, January 19, 2006.
  14. This is USAID, About USAID. February 25, 2006 <>
  15. Weisman, Steven, “Rice is Seeking $85 Million to Push for Changes
    in Iran,” The New York Times, February 16, 2006.
  16. Opening Remarks of Secretary Condoleezza Rice before the Senate Budget
    Committee, International Affairs Budget Request for Fiscal years 2007.
  17. “U.S. Urges Nations to Freeze Hamas Aid,” CBS News.Com,
    January 30, 2006. February 25, 2006 <>.
  18. Rice: No Aid to Hamas Government, CNN.Com. February 25, 2006 <>
  19. The U.S., EU, United Nations, and Russia are known as the Middle East
  20. Erlanger, Steven, “Hamas Victory Worsens a Financial Crisis,”
    The International Herald Tribune, January 29, 2006.
  21. Foreign Military Financing, FY 2007 International Affairs (Function
    150) Budget Request, Released by the Bureau of Resource Management,
    February 6, 2006.

    February 16, 2006 <>
  22. Editorial, “Wrong Fix for Foreign Aid,” The New York Times,
    February 6, 2006.
  23. Turning Data Into Action, National Priorities Project. February 21,
    2006 <>.