| Number 213 | July 11, 2003 |
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This Week:
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Greetings, I talked a little bit a couple of weeks ago about world hunger, in an article called “Hunger, Power, and Politics: Looking for the Key Fact.” The research for that article started me on a bit of an odyssey in search of information about where the United States stands in terms of the gross inequality of wealth among nations. Yikes! What a confusing subject! Confusing, yes, but fascinating at the same time. Everyone can understand that a nation’s motivation for going to war is often, to a greater or lesser degree, motivated by a desire to increase its power and wealth. But it’s not so easy for many people to detect the same motivations at work in the world of “Foreign Aid.” That’s supposed to be about helping people, right? You might see things a little differently after you’ve read this series on the subject, the first part of which you see this week. I don’t know how many parts there will be. You’ll know when I know. Welcome to the new readers this week! I look forward to your feedback if you feel like sending it along. A lot of times, the feedback I get is so interesting that I feel like I should publish it in the Notes, but there’s so little space! Maybe I could put some of it up on the website. If any of you think that would be a good idea, let me know; anything is possible in the world of Nygaard Notes. Until next week, Nygaard |
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In the July 9th Star Tribune (Newspaper of the Twin Cities!) the lead story in the Business Section told of the nationwide competition between states to be the home of a planned airline assembly plant that is going to be built somewhere, pretty soon, by the Boeing Company. States are begging Boeing (the article calls it “making bids”) for the privilege of giving them money. “Boeing is expected to release a list of finalists by the end of July,” we are told, “and make a final decision by the end of 2003.” At stake is a $500 million airplane-assembly plant, set to open in 2005, bringing 1,200 to 1,500 jobs to the state that “wins.” The above summary of such immense power being held by a corporation is startling enough to be the “Quote” of the Week, but I chose the following words, instead. Read them, do some simple arithmetic, and you will see just how far down the loony road of “Private Profit, Public Cost” we have come (the emphasis was in the original):
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In Nygaard Notes #188, back in January, in a story about media coverage of Latin America, I wrote this:
I thought that “3-T” thing was kind of original, so imagine my dismay when Secretary of State Colin Powell visited Santiago, Chile on June 9th to address the General Assembly of the Organization of American States (OAS), and uttered the following words:
I was tipped off to this speech by an article in the June 10th NY Times, headlined “Latin Lands Don't Share Powell's Priorities.” Those “priorities” include the ongoing U.S. obsession with Cuba, as well as a fairly high level of outrage about the U.S. insistence on instituting what our government calls “free trade” agreements. Reporter Larry Rohter also pointed out that the Anglo-American invasion of Iraq had stirred “deep-rooted opposition all over Latin America,” quoting Mr. Powell as saying that “I don't see any lasting consequences” from the war. (Chile, like Mexico, is currently a member of the U.N. Security Council and, like Mexico, voted against the U.S. aggression. Both countries are located in Latin America, “a region,” Rohter points out in a rare moment of candor, “that has experienced numerous American interventions over the past century.”) When I say “tipped off” by the Times article, I mean exactly that. Experience has shown that, when reporting on important events, speeches, or other “news,” articles in the Times, and in many other mainstream papers, often include lots of interesting details but underplay or completely miss the most important points. For instance, what exactly did Powell mean when he referred to these “dynamic economies” that the Bush administration wants to “achieve?” With this and other questions in mind, then, I went and got a copy of Mr. Powell’s speech to the OAS to read for myself. This led me on a journey into the evolving world of the Bush administration’s foreign aid and “assistance.” The article that follows is the first part of the story of what I found on that journey. |
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A common impulse among United Statesians of good will is to look at the fantastic wealth of the U.S. and call for our country to share more of our wealth with poor nations in order to help alleviate their poverty. I’m not sure such a “sharing” is a good idea, which I’ll discuss next week. But imagine that it is a good idea. How is the United States doing in the foreign aid department? The Bush administration, like every administration, likes to brag about its generosity when it comes to foreign economic aid. If you go to the White House website, you’ll find statements like “The United States is the world leader in humanitarian assistance and food aid, providing over $3 billion combined in 2000,” and “The U.S. is one of the top two providers of Official Development Assistance (ODA). In 2000, the United States provided $10 billion in ODA.” It’s always difficult to put one’s finger on exactly how much aid is going out, and what’s happening with it. What we call “foreign aid” might take the form of development assistance, it might be emergency aid, it might be technical support, food aid, cash, loans, credit supports, or who-knows-what. People who are into this stuff are familiar with all sorts of mysterious acronyms, like ODA, PRSP, HIPC, PVO, and on and on. All of these trees make it a little tough to see the forest, but some important facts can be found, nonetheless. There are three ways to measure amounts of foreign aid that a nation gives. One way is in absolute dollars. Ten dollars is twice as much as five dollars; that’s simple enough. Another way to measure aid is as a share of the budget. That is, if a nation’s total budget is $1000 and foreign aid is $10, then your foreign aid budget is one percent of total official spending. A third way to measure is to look at aid as a share of the overall economy (the total national wealth of a nation, usually measured as Gross Domestic Product, or GDP). That’s figured the same way as the share of the budget; it’s just that the overall economy is much bigger. Lies, Damned Lies, and Statistics If you use the first measurement, then it is true that the U.S. is “the world leader in humanitarian assistance and food aid,” as the White House claims. The reason is that our economy is so huge that a small percentage of it still yields a very large number of dollars. But a funny thing happens when you look at U.S. foreign economic (non-military) aid as a share of our national wealth, which is the only meaningful measure to use if one wants to assess how “generous” a nation is. Looked at this way, you find that the United States ranks dead last among wealthy countries in the proportion of its wealth given as foreign economic aid. The typical wealthy country, in fact, gives three times the share of its GDP in ODA as the U.S. That works out to an annual average of $69 per person in most industrial countries to help stem global poverty; for the U.S. taxpayer the figure is $33. As a share of GDP, the U.S. gives 0.11 percent in ODA. Contrast that with Denmark, for example, which gives 1.03 percent (just about 10 times as much), Norway at 0.83 percent, or the Netherlands as 0.82. As far as public opinion, the average United Statesian has no idea how much of the federal budget goes to “foreign aid.” When asked to estimate “how much of the federal budget goes to foreign aid,” the average citizen guesses in the range of 20 percent, about 35 times more than reality. Not surprisingly, a majority of poll respondents think this country spends “too much on foreign aid.” Let’s look at it another way: How are we doing when compared with...ourselves? Not so good there, either. The Bush budget for 2002 proposed the second-lowest level of foreign economic assistance since World War II. (The lowest level was the 1999 budget, proposed by that radical left-winger Bill Clinton.) Even in absolute dollars, the proposed Bush levels would have been 15 percent lower than the average levels under Ronald Reagan, a “conservative” who didn’t even claim to be compassionate. Mr. Bush likes to makes much of his plans to increase foreign aid spending with his so-called “Millennium Challenge Accounts.” In his March 14, 2002 speech announcing the initiative, he said “The United States will lead by example. We will increase our development assistance by $5 billion over the three—over the next three budget cycles. This new money above and beyond existing aid requests...” True enough. He doesn’t like to mention, however that even in 2006, when the proposal would be fully phased in, it calls for a level of aid that, as a percentage of government expenditures and the economy, would be well below historic levels. That is, it would raise spending from 0.11 percent of GDP to a whopping 0.13 percent. Proportionately, that is still only about 1/8th the size of Denmark’s foreign assistance, and about 35 percent lower than the afore-mentioned Mr. Reagan. Is this something to brag about? Apparently Mr. Bush and Mr. Powell think so; they do it quite a bit. It’s bad enough that the world’s richest nation has such a stingy budget for helping poor people. It’s even worse when one considers this comment from the World Bank: “Although industrialized countries set 0.7 percent of GNP [Gross National Product, similar to GDP] as the target for Official Development Assistance in the 1970s, only Denmark, Luxembourg, the Netherlands, Norway, and Sweden have reached or exceeded that target.” The average, in fact, for all rich nations stands at a paltry 0.22, less than one-third of the internationally-agreed-upon target. All Aid Is Not Equal Much foreign aid is “tied” to the purchase of the donor country’s products, meaning that the recipient nation must use the aid to consume goods and services only from the donor country. That is, recipient nations cannot use aid to buy from other countries, even if, for example, those other countries may sell at higher quality or lower price. Such “tying” amounts to an indirect subsidy of whatever multinational corporations may be based in the donor country. Looking at the percentage of a country’s aid that is tied gives a hint as to how much of the motivation for that aid is humanitarian, and how much has other, less generous, origins. Here, again, the U.S. appears to be hanging out with the wrong crowd. Fully 91 percent of U.S. aid in recent years was “tied” to purchases of U.S. goods (only Italy ranked worse, at 93 percent). The gap here is huge, with Ireland tying only six percent of its aid, Sweden eleven percent, and Norway seventeen percent. Countries also vary in how much of their aid goes to support collective international aid institutions and how much goes only through their own bilateral aid agencies. Looking at the percentage of aid that a country is willing to contribute to multilateral aid efforts (like the U.N., the Red Cross, Catholic Relief Services, or whatever) can help give a sense of the degree to which a country is willing to give up control of the political decisions about who gets the aid, where the aid comes from, and so forth. More multilateral aid and less bilateral aid may indicate that a country’s aid dollars driven more by solidarity, compassion, and international cooperation, and less by self-interest and geopolitical strategy. As it turns out, this is another category in which the U.S. ranks close to last among the rich nations. This time we are tied for second-worst. New Zealand gives 76 percent of all its foreign aid bilaterally, while the U.S. is tied with Portugal at 75 percent. The gap here isn’t as great as it is with “tying;” the lowest percentage of bilateral aid is Italy’s 25 percent, followed by Greece at 41 percent. Many readers no doubt would like to see the United States increase the levels of foreign aid it gives out. Not so fast. It’s important to consider exactly why The World’s Only Superpower might want to give money to other countries in the first place, and what happens when we do. That’s the subject of Part II of this series, to be found in next week’s Notes. |